<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended September 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: 0-28268
USCS INTERNATIONAL, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 94-1727009
- ------------------------------- ----------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification)
2969 PROSPECT PARK DRIVE, RANCHO CORDOVA
CALIFORNIA 95670-6148
- ---------------------------------------- ---------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (916) 636-4500
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at September 30, 1996
----------------------------- ---------------------------------
Common Stock, $.05 par value 23,054,156 shares
1
<PAGE>
USCS INTERNATIONAL, INC.
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
PAGE NO.
--------
Part I. Financial Information
Item 1. Financial Statements 3
Consolidated Condensed Balance Sheets
September 30, 1996 (Unaudited) and December 31, 1995 4
Consolidated Condensed Statements of Operations (Unaudited)
Three months and nine months ended September 30, 1996 and 1995 5
Consolidated Condensed Statements of Cash Flows (Unaudited)
Nine months ended September 30, 1996 and 1995 6
Notes to Consolidated Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition, Results of Operations, and Certain
Factors That May Affect Future Results. 8-12
Part II. Other Information
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signature 13
2
<PAGE>
USCS INTERNATIONAL, INC.
PART I- FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
The following consolidated condensed financial statements, except for the
balance sheet as of December 31, 1995, have been prepared by the Company
without audit by independent public accountants, but in accordance with the
rules and regulations of the Securities and Exchange Commission (SEC), and in
the opinion of the Company, include all adjustments (consisting only of
normal recurring adjustments) necessary for a fair statement of results for
each period shown. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
such SEC rules and regulations. The Company believes that the disclosures
made are adequate to make the information presented not misleading. These
financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Registration Statement
on Form S-1 (Registration No. 333-3842) declared effective by the SEC on June
20, 1996. The results of operations for the three months and nine months
ended September 30, 1996 are not necessarily indicative of the results to be
expected for the entire year ending December 31, 1996.
3
<PAGE>
USCS INTERNATIONAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands except share and per share amounts)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 3,758 $ 6,627
Accounts receivable 72,095 59,907
Current portion of net investment in leases 5,521 6,868
Paper products and other inventory 5,780 5,608
Other 7,560 4,904
------------ ------------
Total current assets 94,714 83,914
Property and equipment, net 90,225 85,385
Net investment in leases, net of current portion 6,573 7,320
Other 4,829 3,831
------------- ------------
Total assets $196,341 $180,450
------------- ------------
------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 47,197 $ 44,974
Current portion of long-term debt 3,694 11,679
Deferred revenue 7,657 3,821
------------- ------------
Total current liabilities 58,548 60,474
Long-term debt, net of current portion 6,303 51,155
Customer deposits 12,723 13,497
Other liabilities 8,177 8,734
------------- ------------
Total liabilities 85,751 133,860
------------- ------------
------------- ------------
Stockholders' Equity:
Preferred Stock, $.05 par value, 10,000,000 shares
authorized; no shares issued and outstanding -- --
Common Stock, $.05 par value
Authorized 40,000,000 shares; Issued and outstanding:
23,054,156 shares at September 30, 1996
(unaudited) and 19,042,015 shares at
December 31, 1995 1,116 952
Additional paid-in capital 54,092 --
Retained earnings 55,693 45,966
Foreign currency translation adjustment (311) (328)
------------- ------------
Total stockholders' equity 110,590 46,590
------------- ------------
Total liabilities and stockholders' equity $196,341 $180,450
------------- ------------
------------- ------------
</TABLE>
4
<PAGE>
USCS INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Software and services $63,140 $50,218 $176,350 $142,831
Equipment sales and services 6,217 6,459 16,834 23,009
------- ------- -------- --------
Total revenue 69,357 56,677 193,184 165,840
------- ------- -------- --------
Cost of revenue:
Software and services 37,895 32,509 109,481 93,424
Equipment sales and services 3,749 4,124 10,095 13,821
------- ------- -------- --------
Total cost of revenue 41,644 36,633 119,576 107,245
------- ------- -------- --------
Gross profit 27,713 20,044 73,608 58,595
------- ------- -------- --------
Operating expenses:
Research and development 6,768 4,295 18,301 12,716
Selling, general and administrative 13,033 9,784 36,111 29,961
------- ------- -------- --------
Total operating expenses 19,801 14,079 54,412 42,677
------- ------- -------- --------
Operating income 7,912 5,965 19,196 15,918
Interest expense 757 1,346 3,106 3,750
------- ------- -------- --------
Income before income taxes 7,155 4,619 16,090 12,168
Income tax provision 2,827 1,825 6,356 4,806
------- ------- -------- --------
Net income $ 4,328 $ 2,794 $ 9,734 $ 7,362
------- ------- -------- --------
------- ------- -------- --------
Earnings per share $ 0.18 $ 0.13 $ 0.44 $ 0.35
------- ------- -------- --------
------- ------- -------- --------
Weighted average common
shares and equivalents 24,154 21,078 22,039 21,253
------- ------- -------- --------
------- ------- -------- --------
</TABLE>
5
<PAGE>
USCS INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Nine months ended
September 30,
-----------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net cash provided by operating activities $ 15,762 $ 17,752
-------- --------
Cash flows from investing activities:
Capital expenditures, net (19,439) (23,717)
Other (603) (927)
-------- --------
Net cash used in investing activities (20,042) (24,644)
-------- --------
Cash flows from financing activities:
Net (paydown) borrowing of revolving credit agreement (28,500) 22,000
Payments on long-term debt (24,337) (10,793)
Proceeds from issuance of common stock less expenses 54,286 812
Repurchase of common stock (38) (2,082)
-------- --------
Net cash provided by financing activities 1,411 9,937
-------- --------
Net (decrease) increase in cash (2,869) 3,045
Cash at January 1 6,627 1,966
-------- --------
Cash at September 30 $ 3,758 $ 5,011
-------- --------
-------- --------
</TABLE>
6
<PAGE>
USCS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. Stockholders' Equity
The Company completed an initial public offering (IPO) of its common
stock in June 1996. The Company sold 2,766,375 shares at an initial
public offering price of $17 per share, resulting in proceeds to the
Company of approximately $41.2 million, after deducting underwriting
discounts and offering expenses.
Prior to the IPO, the Company's common stock consisted of Common
Voting Stock and Common Non-Voting Stock. Upon the closing of the IPO,
Common Voting Stock was split on a 2.1-to-1 basis and Common Non-
Voting Stock was split on a 2-to-1 basis. The effect of those
transactions have been retroactively reflected in the financial
statements resulting in outstanding Common voting and Common
Non-Voting Stock at December 31, 1995 of 12,813,313 and 6,228,702
shares, respectively. Also upon the closing date of the IPO, Common
Non-Voting Stock converted to Common Voting Stock on a one-for-one
basis, and the Common Non-Voting Class was eliminated.
On July 9, 1996, the Company received approximately $11.4 million,
after deducting underwriting discounts and offering expenses, upon the
exercise of the Underwriters' overallotment option to purchase
720,000 shares of common stock in connection with the IPO.
2. Long-term Debt
On September 30, 1996 the Company renegotiated its existing revolving
credit agreements into a new five year unsecured revolving credit line
with two banks in the amount of $50 million. Borrowings under the
agreement bear interest at the Company's choice of LIBOR (plus a
margin ranging from .55% to 1.25%), the bank's base rate or a quoted
rate. Under the borrowing agreement, the Company is required to
maintain certain financial ratios and meet a net worth test.
3. Income Tax
Income tax provisions for interim periods are based on estimated
effective annual income tax rates. The Company recognizes deferred
tax assets and liabilities for the expected future tax consequences of
temporary differences between tax bases and financial reporting bases
of assets and liabilities.
4. Earnings per Share
Earnings per share are based on the weighted average number of shares
outstanding and common stock equivalents during the respective
periods, including the assumed net shares issuable upon exercise of
stock options when dilutive, after giving effect to the splits
described in Note 1 above. Common and common equivalent shares
issued during the twelve month period prior to the IPO are included in
the calculations as if they were outstanding for all periods presented.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition, Results
of Operations, and Certain Factors that May Affect Future Results
Founded in 1969, USCS is a leading provider of customer management software
and services to the global communications industry. Revenue is derived
primarily from providing software and bill presentment services to cable
television and multi-service providers in the U.S. and 15 other countries and
bill presentment services to telecommunication companies in the U.S.
Software and bill presentment services to cable television and multi-service
providers are generally provided under bundled service arrangements. Most of
the Company's revenue is derived, under long-term contracts with terms
ranging from three to seven years, based on the number of subscribers or
end-users of the Company's clients, the number of billing statements mailed
and/or the number of images, generally one page side, produced.
The Company provides software and services to North American cable
television, telecommunication and multi-service providers primarily through a
direct sales force. Outside of North America, the Company markets its
software services primarily through strategic partners, such as system
integrators and computer hardware manufacturers, which provide local sales
and support. Building and maintaining relationships with its clients is an
important part of the Company's strategy because selling cycles can extend a
year or longer. The Company has committed increased resources to the
international, multi-service and telecommunications markets because it
believes these represent opportunities to grow at rates greater than in the
U.S. cable television marketplace alone. In addition, the Company sells
computer hardware and provides associated maintenance. Leasing is provided as
an alternative to equipment purchase for clients.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the Company's
consolidated condensed statements of operations and the percentage of revenue
represented by each line item:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
--------------------------------------- -----------------------------------------
1996 1995 1996 1995
----------------- ----------------- ------------------ ------------------
(Dollars in
thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Software and services $63,140 91.0% $50,218 88.6% $176,350 91.3% $142,831 86.1%
Equipment sales and services 6,217 9.0 6,459 11.4 16,834 8.7 23,009 13.9
------- ------ ------- ------ -------- ------ -------- ------
Total revenue 69,357 100.0 56,677 100.0 193,184 100.0 165,840 100.0
------- ------ ------- ------ -------- ------ -------- ------
Cost of revenue:
Software and services 37,895 54.6 32,509 57.3 109,481 56.7 93,424 56.4
Equipment sales and services 3,749 5.4 4,124 7.3 10,095 5.2 13,821 8.3
------- ------ ------- ------ -------- ------ -------- ------
Total cost of revenue 41,644 60.0 36,633 64.6 119,576 61.9 107,245 64.7
------- ------ ------- ------ -------- ------ -------- ------
Gross profit 27,713 40.0 20,044 35.4 73,608 38.1 58,595 35.3
------- ------ ------- ------ -------- ------ -------- ------
Operating expenses:
Research and development 6,768 9.8 4,295 7.6 18,301 9.5 12,716 7.7
Selling, general and
administrative 13,033 18.8 9,784 17.3 36,111 18.7 29,961 18.0
------- ------ ------- ------ -------- ------ -------- ------
Total operating expenses 19,801 28.6 14,079 24.9 54,412 28.2 42,677 25.7
------- ------ ------- ------ -------- ------ -------- ------
Operating income 7,912 11.4 5,965 10.5 19,196 9.9 15,918 9.6
Interest expense 757 1.1 1,346 2.4 3,106 1.6 3,750 2.3
------- ------ ------- ------ -------- ------ -------- ------
Income before income taxes 7,155 10.3 4,619 8.1 16,090 8.3 12,168 7.3
Income tax provision 2,827 4.1 1,825 3.2 6,356 3.3 4,806 2.9
------- ------ ------- ------ -------- ------ -------- ------
Net income $ 4,328 6.2% $ 2,794 4.9% $ 9,734 5.0% $ 7,362 4.4%
------- ------ ------- ------ -------- ------ -------- ------
------- ------ ------- ------ -------- ------ -------- ------
</TABLE>
8
<PAGE>
Revenue. Total revenue increased by 22% to $69.4 million in the third quarter
of 1996 from $56.7 million in the comparable quarter in 1995. Software and
services, which was 91% of total revenue in the third quarter of 1996 versus
89% in the third quarter in 1995, increased in the third quarter of 1996 by
26% over the prior year quarter. Customer management software and services
revenue increased by 27% to $37.1 million in the third quarter of 1996 from
$29.3 million in the 1995 third quarter. Bill presentment revenue provided
primarily to telecommunications companies as a standalone service increased
by 24% to $26.1 million in the third quarter of 1996 from $21.0 million in
the comparable quarter of the prior year. Equipment sales and services
declined in the third quarter of 1996 by $.2 million or 4% from the
comparable quarter in 1995 and decreased to 9% of total revenue from over 11%
in the 1995 quarter.
Total revenue increased by 16% to $193.2 million for the nine months ended
September 30, 1996 from $165.8 million for the nine months ended September
30, 1995. Software and services was 91% of total revenue in the nine months
ended September 30, 1996 versus 86% in the comparable 1995 nine month period.
Customer management software and services revenue increased by 20% to $103.4
million in the nine months ended September 30, 1996 from $86.2 million in the
comparable prior year nine month period. Bill presentment revenue increased
by 29% to $73.0 million in the nine months ended September 30, 1996 from
$56.6 million in the comparable period of the prior year. Equipment sales
and related revenue declined in the nine month period of 1996 by $6.2
million or 27% from the comparable period in 1995 and decreased to
approximately 9% of total revenue from 14% in the comparable 1995 period.
Although quarter fluctuations will occur, the Company expects the declining
trend in equipment related revenue to continue.
Growth in revenues for the third quarter and the first nine months of 1996
came primarily from higher prices allowed by existing contracts, migration by
clients to higher priced services, sales of additional services and increases
in the number of subscribers in existing and new clients in the U.S. and
international markets.
Cost of Revenue and Gross Profit. The Company's gross profit margin
increased to 40% in the third quarter of 1996 from 35% in the comparable
quarter in 1995. The Company's gross profit margin increased to 38% in the
nine months ended September 30, 1996 from 35% in the comparable period in
1995. Customer management software and services gross profit margin
increased to 50% in the third quarter of 1996 from 44% in the comparable
quarter in 1995. Customer management software and services gross profit
margin increased to 46% in the nine months ended September 30, 1996 from 43%
in the comparable period in 1995. Bill presentment services gross profit
margin increased to 26% in the third quarter of 1996 from 24% in the
comparable 1995 quarter and to 26% in the nine months ended September 30,
1996 from 21% in the comparable 1995 period. Gross profit margins were
increased because of economies of scale associated with higher volume,
increased revenues from selling additional services, price increases and
cost control. The gross profit margin on equipment related revenue increased
to 40% in the third quarter of 1996 from 36% in the comparable quarter in
1995.
Research and Development. Research and development spending in the third
quarter, exclusive of amounts reimbursable by development partners, increased
by $2.5 million over the comparable quarter in the prior year. Research and
development was 10% of total revenue for the quarter ended September 30, 1996
and 8% for the comparable quarter in 1995 and 10% of total revenue, or $18.3
million, for the nine months ended September 30,
9
<PAGE>
1996 versus 8%, or $12.7 million, in the comparable 1995 nine month period.
The added spending was aimed at expanding features and functionality in both
customer management software and bill presentment services.
Selling, General and Administrative. Selling, general and administrative
expenses represented 19% of total revenue for both the three months and the
nine months ended September 30, 1996 versus 17% for the comparable three
months and 18% for the comparable nine months ended September 30, 1995.
Selling, general and administrative expenses in the third quarter of 1996
increased by approximately 33% over the comparable quarter in the prior year.
Sales and marketing increased 30% in the third quarter 1996 compared to the
third quarter 1995 and 31% for the nine month period ended September 30, 1996
compared to the same period in 1995. This increase is attributable to
increased sales and marketing efforts in the domestic and international
markets. General and administrative expenses increased 35% in the third
quarter of 1996 compared to the third quarter of 1995 and 14% for the nine
months ended September 30, 1996 compared to the same period in 1995. This
increase is attributed to increased support for a higher level of sales and,
in the third quarter, support for being a public company.
Net Income. Net income in the third quarter of 1996 increased by 55% to $4.3
million from $2.8 million in the comparable 1995 quarter, and increased by
32% in the nine month period of 1996 to $9.7 million from $7.4 million in the
comparable period of 1995. These increases are primarily because of the
factors cited above and a net reduction of interest expense of approximately
$.6 million in the quarter and nine month period of 1996 in comparison to the
prior year periods primarily because of the retirement of debt. Net income
per share increased 38% in the third quarter and 26% for the first nine
months of 1996 versus the comparable periods in 1995. The increases in net
income per share resulted from the Company's higher earnings partially
offset by an increase in the number of shares used in the calculation of
earnings per share of 15% in the quarter and 4% in the nine month period.
LIQUIDITY AND CAPITAL RESOURCES
The primary sources of financing the Company's growth has been cash provided
by operations, borrowing from banks and financial institutions and the IPO
proceeds. In June 1996, the Company utilized the net proceeds from the IPO of
$41.2 million to reduce debt under certain revolving credit agreements. In
July 1996, the Company received net proceeds of approximately $11.4 million
upon the exercise of the Underwriters' overallottment option to purchase
720,000 shares of common stock. The proceeds combined with positive cash
flow were used to prepay $13.5 million of insurance company loans resulting
in an immaterial prepayment penalty.
The Company collects from its clients and remits to the U.S. Postal Service a
substantial amount of postage. All contracts allow the Company to pre-bill
and/or require deposits from its clients to mitigate the effect on cash flow.
As of September 30, 1996, 29% of the Company's accounts receivable
represented amounts due from clients for postage. Postage collections and
remittances are not included in the Company's statements of operations.
At September 30, 1996, the Company had $3.8 million of cash, $72.1 million of
accounts receivable (including postage receivable of $ 20.9 million), $5.5
million of current net investment in leases, and $36.2 million of working
capital. At the end of the third quarter of 1996, the Company had borrowings
of $1.5 million under unsecured bank credit arrangements with a total
borrowing availability of $50 million. Of the $10.0 million of total debt
outstanding at September 30, 1996, $3.7 million is due over the following
12-month period.
The Company continues to make significant investments in capital equipment
and research and development. The Company believes that the net cash from
operations and the borrowing availability will be sufficient to support
operations through the next twelve months.
The above statements that are not historical facts or statements of current
status are forward-looking statements as defined in the Private Securities
Litigation Reform Act of 1995 and as such are subject to risks and
uncertainties including, but not limited to, the risks and uncertainties set
forth under the caption "Certain Factors That May Affect Future Results."
Actual results may differ materially.
10
<PAGE>
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
This Quarterly Report contains forward-looking statements that involve risks
and uncertainties. The Company's actual results may differ significantly from
the results discussed in the forward-looking statements. A number of
uncertainties exist that could affect the Company's future operating results,
including, without limitation, changes in the cable television market, the
Company's ability to retain existing customers and attract new customers, the
Company's continuing ability to develop products that are responsive to the
evolving needs of its customers, increased competition, changes in operating
expenses, changes in government regulation of the Company's clients and
general economic factors.
The Company is highly dependent on the cable television market. The number of
providers of cable television service in the U.S. is declining, primarily
because larger providers have been purchasing smaller providers, resulting in
a reduction of the number of potential cable television clients in the U.S.
As the number of companies serving the available subscriber base decreases,
the loss of a single client could have a greater adverse impact on the
Company than in the past. Furthermore, a decrease in the number of cable
subscribers or any adverse development in the cable television market could
have a material adverse effect on the financial condition and results of
operations of the Company.
The communications market is characterized by rapid technological
developments, changes in client requirements, evolving industry standards and
frequent new product introductions. The Company's future success will depend,
in part, upon its ability to enhance its existing applications, develop and
introduce new products that take advantage of technological advances and
respond promptly to new client requirements and evolving industry standards.
The Company has expended considerable funds to develop products to serve the
changing communications market. If the communications market fails to
converge or grows more slowly than anticipated or the Company's products and
services fail to achieve market acceptance, there could be a material adverse
effect on the financial condition and results of operations of the Company.
Further, the Company's development projects are subject to all of the risks
associated with the development of new software and other products based on
innovative technologies. The failure of such development projects could have
a material adverse effect on the financial condition and results of
operations of the Company.
The Company's quarterly operating results may fluctuate from quarter to
quarter depending on various factors, including the impact of significant
start-up costs associated with initiating the delivery of contracted services
to new clients, the hiring of additional staff, new product development and
other expenses, introduction of new products by competitors, pricing
pressures, the evolving and unpredictable nature of the markets in which the
Company's products and services are sold and general economic conditions.
The market for the Company's products and services is highly competitive, and
competition is increasing as additional market opportunities arise. The
Company believes its most significant competitors for customer management
software and services are independent providers of such software and services
and in-house systems. TCI, the largest provider in the United States, which
has been a purchaser of other service providers and which represented
approximately 19% of the Company's revenue for the nine months ended
September 30, 1996 and 19% and 21% of the Company's revenue for the years
1995 and 1994, as restated to include cable systems acquired in 1996,
respectively, has announced that it is developing and testing an in-house
system and
11
<PAGE>
that such in-house system will replace the Company's system. Another client,
which accounted for approximately 4% of total revenue for the nine months
ended September 30, 1996 and for the year 1995, and recently extended its
contract with the Company to early 1997, has orally advised the Company that
it may select an alternative solution for its customer management software
requirements. In addition, competitive factors could influence or alter the
Company's overall revenue mix between customer management software, services,
including bill presentment services, and equipment sales and leasing. Any of
these events could have a material adverse effect on the financial conditions
and results of operations, including gross profit margins, of the Company.
Aggregate revenue from the Company's ten largest clients accounted for
approximately 64% of total revenue for the nine months ended September 30,
1996 and 65% and 65% for the years 1995 and 1994, respectively. Loss of all
or a significant part of the business of any of these clients or a decrease
in their respective customer bases would have a material adverse effect on
the financial condition and results of operations of the Company.
Management of the Company's growth may place a considerable strain on the
Company's management, operations and systems. The Company's ability to
execute its business strategy will depend in part upon its ability to manage
the demands of a growing business. Any failure of the Company's management
team to effectively manage growth could have a material adverse effect on the
Company's business, financial condition or results of operations.
Substantially all of the Company's revenue is derived from the sale of
services or products under long-term contracts with its clients. The Company
typically does not have the unilateral option to extend the terms of such
contracts upon their expiration. In addition, certain of the Company's
contracts do not require clients to make any minimum purchase. Others require
minimum purchases that are substantially below the current level of business
under such contracts and all such contracts are cancelable by clients under
certain conditions. The failure of clients to renew contracts, a reduction in
usage by clients under any contracts or the cancellation of contracts, could
have a material adverse effect on the Company's financial condition and
results of operations.
The Company markets its products in a variety of international markets. To
date, the Company's customer management software has been installed in the
U.S. and 15 countries. While about 5% of the Company's customer management
software and services revenue came from international sources, the Company is
expanding its international presence, primarily through third party marketing
and distribution alliances. The Company's current and proposed international
business activities are subject to certain inherent risks. There can be no
assurance that such risks will not have a material adverse effect on the
Company's future international sales and, consequently, the Company's
business, operating results and financial condition.
The Company's existing and potential clients are subject to extensive
regulation, and certain of the Company's revenue opportunities may depend on
continued deregulation in the worldwide communications industry. In addition,
the Company's clients are subject to certain regulations governing the
privacy and use of the customer information that is collected and managed by
the Company's products and services. Regulatory changes that adversely affect
the Company's existing and potential clients could have a material adverse
effect on the financial condition and results of operations of the Company.
Reference is made to the more detailed discussion of the risks associated
with the Company's business contained under the heading "Risk Factors" in the
Company's Registration Statement on Form S-1 (Registration No. 333-3842)
declared effective by the SEC on June 20, 1996.
12
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
Certain administrative and clarification changes to the Company's
Employee Stock Purchase Plan were approved in writing on
September 13, 1996 by holders of a majority of the issued and
outstanding shares.
Item 5. Other information
On September 30, 1996 the Company renegotiated its existing revolving
credit agreement and entered into a new five year $50 million
revolving credit agreement with two banks. See exhibit 10.01
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Certificate of Incorporation
By-laws
Exhibit 10.01 Amended, Consolidated and Restated Credit Agreement
Dated as of September 30, 1996
Among USCS International, Inc. As Borrower
And NationsBank, N.A. and Mellon Bank, N.A. as Lender
Exhibit 11.01 Computation of Per Share Earnings
Exhibit 27.01 Financial Data Schedule
(b) Reports on Form 8-K
None.
USCS INTERNATIONAL, INC.
SIGNATURE
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.
USCS INTERNATIONAL, INC.
(Registrant)
Dated: November 14, 1996 By: /s/ DOUGLAS L. SHURTLEFF
------------------------------
Douglas L. Shurtleff
Senior Vice President, Finance
(Chief Financial Officer)
13
<PAGE>
$50,000,000
AMENDED, CONSOLIDATED AND RESTATED
CREDIT AGREEMENT
DATED AS OF SEPTEMBER 30, 1996
AMONG
USCS INTERNATIONAL, INC.
AS BORROWER
AND
THE LENDER PARTIES NAMED HEREIN
AS LENDER PARTIES
AND
NATIONSBANK OF TEXAS, N.A.
AS ADMINISTRATIVE AGENT
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . 1
SECTION 1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Computation of Time Periods . . . . . . . . . . . . . . . 18
SECTION 1.3 Accounting Terms. . . . . . . . . . . . . . . . . . . . . 18
SECTION 1.4 Other Definitional Provisions . . . . . . . . . . . . . . 18
ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES . . . . . . . . . . . . 18
SECTION 2.1 Amounts of Advances . . . . . . . . . . . . . . . . . . . 18
SECTION 2.2 Borrowing Procedures. . . . . . . . . . . . . . . . . . . 18
SECTION 2.3 Reduction of the Revolving Commitments. . . . . . . . . . 22
SECTION 2.4 Repayment . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.5 Prepayments . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.6 Interest. . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.7 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.8 Increased Costs and Capital Requirements. . . . . . . . . 27
SECTION 2.9 Payments and Computations . . . . . . . . . . . . . . . . 28
SECTION 2.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.11 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . 32
SECTION 2.12 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.13 Evidence of Debt. . . . . . . . . . . . . . . . . . . . . 33
ARTICLE III AMOUNTS AND TERMS OF LETTERS OF CREDIT. . . . . . . . . . 34
SECTION 3.1 The L/C Subfacility . . . . . . . . . . . . . . . . . . . 34
SECTION 3.2 Issuance of Letters of Credit . . . . . . . . . . . . . . 34
SECTION 3.3 Drawing and Reimbursement . . . . . . . . . . . . . . . . 35
SECTION 3.4 Obligations Absolute. . . . . . . . . . . . . . . . . . . 35
SECTION 3.5 Letter of Credit Compensation . . . . . . . . . . . . . . 36
SECTION 3.6 Use of Letters of Credit. . . . . . . . . . . . . . . . . 37
ARTICLE IV CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . 37
SECTION 4.1 Conditions Precedent to Closing . . . . . . . . . . . . . 37
SECTION 4.2 Conditions Precedent to Each Borrowing and Issuance . . . 39
SECTION 4.3 Determinations Under Article IV . . . . . . . . . . . . . 39
ARTICLE V REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 40
SECTION 5.1 Representations and Warranties of the Borrower. . . . . . 40
ARTICLE VI COVENANTS OF THE BORROWER . . . . . . . . . . . . . . . . 46
SECTION 6.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . 46
SECTION 6.2 Negative Covenants. . . . . . . . . . . . . . . . . . . . 49
SECTION 6.3 Reporting Requirements. . . . . . . . . . . . . . . . . . 54
SECTION 6.4 Financial Covenants . . . . . . . . . . . . . . . . . . . 56
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<PAGE>
ARTICLE VII EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.1 Events of Default . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.2 Actions in Respect of the Letters of Credit Upon Default. 60
ARTICLE VIII THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 8.1 Authorization and Action. . . . . . . . . . . . . . . . . 60
SECTION 8.2 Agent's Reliance, Etc . . . . . . . . . . . . . . . . . . 60
SECTION 8.3 NationsBank and Affiliates. . . . . . . . . . . . . . . . 61
SECTION 8.4 Lender Party Credit Decision. . . . . . . . . . . . . . . 61
SECTION 8.5 Indemnification . . . . . . . . . . . . . . . . . . . . . 61
SECTION 8.6 Successor Agents. . . . . . . . . . . . . . . . . . . . . 62
ARTICLE IX MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 9.1 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . 63
SECTION 9.2 Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 9.3 No Waiver; Remedies . . . . . . . . . . . . . . . . . . . 64
SECTION 9.4 Costs, Expenses and Taxes . . . . . . . . . . . . . . . . 64
SECTION 9.5 Right of Set-off. . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.6 Binding Effect. . . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.7 Assignments and Participations. . . . . . . . . . . . . . 66
SECTION 9.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 9.9 Execution in Counterparts . . . . . . . . . . . . . . . . 69
SECTION 9.10 Consent to Jurisdiction and Service of Process. . . . . . 69
SECTION 9.11 Performance of Obligations. . . . . . . . . . . . . . . . 70
SECTION 9.12 Lender Parties' Action for Their Own Protection Only. . . 70
SECTION 9.13 Change in Accounting Principles . . . . . . . . . . . . . 70
SECTION 9.14 Entire Agreement. . . . . . . . . . . . . . . . . . . . . 71
SECTION 9.15 WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . 71
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<PAGE>
LIST OF SCHEDULES
Schedule I-Commitments and Applicable Lending Offices
Schedule 1.1-List of Existing Letters of Credit
Schedule 4.1(d)-Description of Surviving Debt
Schedule 5.1(b)-List of all Subsidiaries of each Loan Party
Schedule 5.1(k)-List of all Plans, Multiemployer Plans and Welfare Plans
Schedule 5.1(n)(i)-List of all Material Contracts of Borrower and its
Subsidiaries
Schedule 5.1(n)(iv)-List of all Joint Venture and Partnership Agreements to
which Borrower or any of its Subsidiaries is a party
Schedule 5.1(o)(ii)-List of each Taxable Year of the Borrower for which Federal
income tax returns have been filed
Schedule 5.1(t)-List of all Investments held by any Loan Party or any of their
Subsidiaries
Schedule 6.2(a)-List of all Liens
LIST OF EXHIBITS
Exhibit A-1-Form of Revolving Note
Exhibit A-2-Form of Swing Line Note
Exhibit B-Form of Notice of Borrowing
Exhibit C-Form of Assignment and Acceptance
Exhibit D-Form of Notice of Issuance
Exhibit E-Form of Subsidiary Guaranty
Exhibit F-Form of Solvency Certificate
Exhibit G-Form of Borrower's Counsel Opinion
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<PAGE>
AMENDED, CONSOLIDATED AND RESTATED CREDIT AGREEMENT
THIS AMENDED, CONSOLIDATED AND RESTATED CREDIT AGREEMENT (as it may be
amended, supplemented or otherwise modified from time to time, this "AGREEMENT")
dated as of September 30, 1996 is by and among USCS INTERNATIONAL, INC., a
Delaware corporation (successor by merger to U.S. Computer Services) (the
"BORROWER"), the financial institutions listed on the signature pages hereof as
Lenders (the "INITIAL LENDERS"), and NATIONSBANK OF TEXAS, N.A. ("NATIONSBANK"),
as L/C Bank (as hereinafter defined) and as administrative agent (in such
capacity, together with any successor in such capacity appointed pursuant to
Article VII, the "AGENT") for the Lender Parties (as hereinafter defined)
hereunder.
PRELIMINARY STATEMENTS
(1) U.S. Computer Services (predecessor in interest to the Borrower),
certain lenders party thereto and NationsBank, as L/C Bank and Agent, entered
into that certain Credit Agreement, dated as of February 15, 1996 (the "USCS
CREDIT AGREEMENT").
(2) International Billing Services, a California corporation ("IBS"),
certain lenders party thereto and NationsBank, as L/C Bank and Agent, entered
into that certain Credit Agreement, dated as of February 15, 1996 (the "IBS
CREDIT AGREEMENT;" together with the USCS Credit Agreement, the "EXISTING CREDIT
AGREEMENTS").
(3) The parties to the Existing Credit Agreements have agreed to amend,
consolidate and restate the terms thereof as set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION I.1 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ADVANCE" means a Revolving Advance, a Swing Line Advance or an L/C
Advance.
<PAGE>
"AFFILIATE" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling," "controlled
by" and "under common control with") of a Person means the possession, direct or
indirect, of the power to vote 5% or more of the Voting Stock of such Person or
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock, by contract or otherwise.
"AGENT" has the meaning specified in the recital of parties to this
Agreement.
"AGENT'S ACCOUNT" means the account of the Agent maintained by the Agent
with NationsBank at its office at 901 Main Street, Dallas, Texas 75202, ABA No.
111-000-025, Account No. 129-2000-883, Reference: USCS International, Inc.
"AGREEMENT" has the meaning specified in the recital of parties to this
Agreement.
"APPLICABLE LENDING OFFICE" means, with respect to each Lender Party, such
Lender Party's Domestic Lending Office in the case of a Base Rate Advance and
such Lender Party's Eurodollar Lending Office in the case of a Eurodollar Rate
Advance.
"APPLICABLE MARGIN" means, at any time of determination, with respect to
any Eurodollar Rate Advances, a percentage per annum equal to the percentage set
forth below opposite the applicable Debt to EBITDA Ratio in effect at such time:
PRICING LEVEL DEBT TO EBITDA RATIO APPLICABLE MARGIN
------------- -------------------- -----------------
I less than 0.50:1.00 0.550%
II 0.50:1.00 or greater, 0.675%
but less than 1.00:1.00
III 1.00:1.00 or greater, 0.750%
but less than 1.50:1.00
IV 1.50:1.00 or greater, 1.000%
but less than 2.00:1.00
V 2.00:1.00 or greater 1.250%
The Applicable Margin for each Eurodollar Rate Advance shall be determined by
reference to the Debt to EBITDA Ratio in effect from time to time; PROVIDED,
HOWEVER, that (a) notwithstanding the current Debt to EBITDA Ratio, at any time
that the long term senior debt rating of the Borrower shall be at least "Baa3"
(or the then equivalent grade) by Moody's or "BBB-" (or the then equivalent
grade) by S&P, the Applicable Margin shall be
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<PAGE>
based on Pricing Level I, (b) until receipt by the Agent of the Borrower's
financial statements, certificates and schedules required pursuant to Section
6.3(b) for the period ended September 30, 1996, the Applicable Margin shall
be based on Pricing Level II, (c) no change (except as provided in clause (d)
below) in the Applicable Margin shall be effective until five Business Days
after the date on which the Agent receives financial statements, certificates
and schedules required pursuant to Section 6.3(b) or (c), as applicable,
demonstrating such change, (d) if at any time, and for so long as, a Default
has occurred and is continuing based on the Borrower's failure to deliver the
financial statements, certificates and schedules referred to in the foregoing
clause (c), the Applicable Margin shall be based on Pricing Level V and any
change in the Applicable Margin resulting from such failure to deliver
financial statements, certificates and schedules shall be effective as of the
date such Default occurs, (e) except as provided in the following clause (f),
upon the effectiveness of any change in the Applicable Margin, the new
Applicable Margin shall be given retroactive effect as to each outstanding
Advance to the then most recent of (i) the first day of the then current
fiscal quarter of the Borrower, and (ii) the last date on which interest was
due and payable in respect of such Advance, and (f) upon the effectiveness of
any change in the Applicable Margin pursuant to the foregoing clause (c) at
any time when the Applicable Margin is determined pursuant to the foregoing
clause (d), the new Applicable Margin shall be given effect only as of the
effectiveness thereof (and shall not be given retroactive effect).
"APPROPRIATE LENDER" means, at any time, (a) with respect to the Revolving
Facility, each Lender and (b) with respect to the Swing Line Advances, the Swing
Line Lender.
"ARRANGER" means NationsBanc Capital Markets, Inc.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered into
by a Lender Party and an Eligible Assignee, and accepted by the Agent, in
accordance with Section 9.7 and in substantially the form of Exhibit C hereto.
"AVAILABLE AMOUNT" of any Letter of Credit means, at any time, the maximum
amount available to be drawn under such Letter of Credit at such time or, if
greater, at any future time (assuming compliance at such time or such future
time with all conditions to drawing).
"BASE RATE" means a fluctuating interest rate per annum in effect from time
to time, which rate per annum shall at all times be equal to the higher of: (a)
the rate of interest announced publicly by NationsBank from time to time as
NationsBank's prime rate; and (b) 1/2 of one percent per annum above the Federal
Funds Rate.
"BASE RATE ADVANCE" means an Advance that bears interest as provided in
Section 2.6(a), which Advance may be a Revolving Advance or a Swing Line
Advance.
"BORROWER" has the meaning set forth in the recital of parties to this
Agreement.
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<PAGE>
"BORROWER'S ACCOUNT" means the account of the Borrower maintained by the
Borrower with NationsBank at its office at 901 Main Street, Dallas, Texas 75202,
ABA No. 111-0000-12, Account No. 3750062065.
"BORROWING" means a Revolving Borrowing or a Swing Line Borrowing.
"BUSINESS DAY" means a day of the year on which banks are not required or
authorized by law to close in Los Angeles, California or Dallas, Texas and, if
the applicable Business Day relates to any Eurodollar Rate Advances, on which
dealings are carried on in the London interbank market.
"CABLEDATA" means CableData, Inc., a California corporation.
"CABLEDATA INTERNATIONAL" means CableData International Ltd., a United
Kingdom corporation.
"CABLELEASE" means CableLease, Inc., a California corporation.
"CAPITAL EXPENDITURES" means, for any period, the sum of (a) all
expenditures during such period for equipment, fixed assets, real property or
improvements, or for replacements or substitutions therefor or additions
thereto, that are purchased or otherwise acquired and recorded as capital assets
in accordance with GAAP plus (b) the aggregate principal amount of all Debt
(including the principal component of obligations under Capitalized Leases)
assumed or incurred during such period in connection with any such expenditures.
"CAPITALIZED LEASES" has the meaning specified in clause (e) of the
definition of Debt.
"CASH EQUIVALENTS" means any of the following, to the extent owned by the
Borrower free and clear of all Liens and having a maturity of not greater than
12 months from the date of acquisition thereof: (a) readily marketable direct
obligations of the Government of the United States or any agency or
instrumentality thereof or obligations unconditionally guaranteed by the full
faith and credit of the Government of the United States, (b) insured
certificates of deposit of or time deposits with any commercial bank that (i) is
a Lender Party or a member of the Federal Reserve System, (ii) issues (or the
parent of which issues) commercial paper rated as described in clause (c), and
(iii) is organized under the laws of the United States or any State thereof and
has combined capital and surplus of at least $1 billion, (c) commercial paper
(other than commercial paper issued by or on behalf of the Borrower or any of
its Affiliates) in an aggregate amount of no more than $5,000,000 per issuer
outstanding at any time, issued by any corporation organized under the laws of
any state of the United States and rated at least "Prime-1" (or the then
equivalent grade) by Moody's or "A-1" (or the then equivalent grade) by S&P, (d)
securities issued by any state of the United States of America or any political
subdivision of any such state or any public instrumentality thereof having
maturities of not more than twelve months from
- 4 -
<PAGE>
the date of acquisition thereof and, at the time of acquisition, having the
highest rating generally obtainable from either S&P or Moody's (or the then
equivalent grade), or (e) investments in money market or mutual funds that
invest in Cash Equivalents of the types described in clauses (a), (b), (c)
and (d) above.
"CASH FLOW COVERAGE RATIO" means, for any period, the ratio of (a)(i)
EBITDA of the Borrower and its Subsidiaries on a Consolidated basis during such
period MINUS (ii) Capital Expenditures of the Borrower and its Subsidiaries on a
Consolidated basis during such period to (b) Consolidated Interest Expense
during such period.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended or supplemented from time to time, and the
regulations promulgated pursuant thereto.
"CLOSING DATE" means the date on which all of the conditions set forth in
Section 4.1 have been satisfied or waived by each of the Lender Parties.
"COMMITMENT" means a Revolving Commitment or a Swing Line Commitment.
"COMMITMENT FEE PERCENTAGE" means, at any time of determination, a
percentage per annum equal to the percentage set forth below opposite the Debt
to EBITDA Ratio in effect at such time:
COMMITMENT FEE
PRICING LEVEL DEBT TO EBITDA RATIO PERCENTAGE
------------- -------------------- --------------
I less than 0.50:1.00 0.175%
II 0.50:1.00 or greater, 0.200%
but less than 1.00:1.00
III 1.00:1.00 or greater, 0.225%
but less than 1.50:1.00
IV 1.50:1.00 or greater, 0.250%
but less than 2.00:1.00
V 2.00:1.00 or greater 0.300%
The Commitment Fee Percentage shall be determined by reference to the Debt to
EBITDA Ratio in effect from time to time; PROVIDED, HOWEVER, that (a)
notwithstanding the current Debt to EBITDA Ratio, at any time that the long
term senior debt rating of the Borrower shall be at least "Baa3" (or the then
equivalent grade) by Moody's or "BBB-" (or the then equivalent grade) by S&P,
the Commitment Fee Percentage shall be based on Pricing Level I, (b) until
receipt by the Agent of the Borrower's financial statements, certificates and
schedules required pursuant to Section 6.3(b) for the period ended September
30, 1996, the
- 5 -
<PAGE>
Commitment Fee Percentage shall be based on Pricing Level II, (c) no change
(except as provided in clause (d) below) in the Commitment Fee Percentage
shall be effective until five Business Days after the date on which the Agent
receives financial statements, certificates and schedules required pursuant
to Section 6.3(b) or (c), as applicable, demonstrating such change, (d) if at
any time, and for so long as, a Default has occurred and is continuing based
on the Borrower's failure to deliver the financial statements, certificates
and schedules referred to in the foregoing clause (c), the Commitment Fee
Percentage shall be based on Pricing Level V and any change in the Commitment
Fee Percentage resulting from such failure to deliver financial statements,
certificates and schedules shall be effective as of the date such Default
occurs, (e) except as provided in the following clause (f), upon the
effectiveness of any change in the Commitment Fee Percentage, the new
Commitment Fee Percentage shall be given retroactive effect as to the first
day of the then current fiscal quarter of the Borrower, and (f) upon the
effectiveness of any change in the Commitment Fee Percentage pursuant to the
foregoing clause (c) at any time when the Commitment Fee Percentage is
determined pursuant to the foregoing clause (d), the new Commitment Fee
Percentage shall be given effect only as of the effectiveness thereof (and
shall not be given retroactive effect).
"COMMITMENT TERMINATION DATE" means the earlier to occur of (a) September
30, 2001 or (b) the date of termination in whole of the Revolving Commitments
pursuant to Section 2.3(a) or 7.1.
"CONSOLIDATED" refers to the consolidation of accounts in accordance with
GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total interest
expense (including the interest component of Capitalized Leases) of the Borrower
and its Subsidiaries on a Consolidated basis for such period in conformity with
GAAP, including, without limitation, all allocable commissions, discounts and
other fees and charges owed with respect to any financings or letters of credit.
"CONSOLIDATED NET INCOME" means, for any period, the net earnings (or loss)
after taxes of the Borrower and its Subsidiaries on a Consolidated basis
determined for such period in conformity with GAAP.
"CONSOLIDATED TANGIBLE NET WORTH" means, as at any date, the excess of (a)
the total assets of the Borrower and its Subsidiaries determined on a
Consolidated basis in accordance with GAAP minus goodwill and any other items
that are classified as "other intangibles" in accordance with GAAP over (b) all
liabilities of the Borrower and its Subsidiaries determined on a Consolidated
basis in accordance with GAAP.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any provision of
any indenture, mortgage, deed of trust, contract, undertaking, document or other
agreement, instrument or securities to which that Person is a party or by which
it or any of its properties is bound, or to which it or any of its properties is
subject.
- 6 -
<PAGE>
"CONVERSION", "CONVERT" and "CONVERTED" each refer to a conversion of
Advances of one Interest Type into Advances of the other Interest Type pursuant
to Section 2.6.
"CURRENCY HEDGING AGREEMENTS" means currency swap agreements, currency
future or option contracts and other similar agreements.
"DEBT" of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money, (b) all Obligations of such Person for the
deferred purchase price of property or services (other than (i) disputed trade
payables in an aggregate amount not to exceed $1,000,000 at any time and trade
payables not overdue by more than 60 days incurred in the ordinary course of
such Person's business and (ii) accrued expenses entered into in the ordinary
course of business), (c) all Obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all Obligations of such
Person created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), (e) the principal
component of all Obligations of such Person as lessee under leases that have
been or should be, in accordance with GAAP, recorded as capital leases
("CAPITALIZED LEASES"), (f) all Obligations, contingent or otherwise, of such
Person under acceptance, letter of credit or similar facilities, (g) all
Obligations of such Person to purchase, redeem, retire, defease or otherwise
make any payment in respect of any capital stock of or other ownership or profit
interest in such Person or any, other Person or any warrants, rights or options
to acquire such capital stock, valued, in the case of Redeemable Preferred
Stock, at the greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends, (h) all Obligations of such Person in respect
of Hedge Agreements, (i) all Debt of others referred to in clauses (a) through
(h) above guaranteed directly or indirectly in any manner by such Person, or in
effect guaranteed directly or indirectly by such Person through an agreement (i)
to pay or purchase such Debt or to advance or supply funds for the payment or
purchase of such Debt, (ii) to purchase, sell or lease (as lessee or lessor)
property, or to purchase or sell services, primarily for the purpose of enabling
the debtor to make payment of such Debt or to assure the holder of such Debt
against loss, (iii) to supply funds to or in any other manner invest in the
debtor (including any agreement to pay for property or services irrespective of
whether such property is received or such services are rendered) or (iv)
otherwise to assure a creditor against loss, and (j) all Debt referred to in
clauses (a) through (i) above secured by (or for which the holder of such Debt
has an existing right, contingent or otherwise, to be secured by) any Lien on
property (including, without limitation, accounts and contract rights) owned by
such Person, whether or not such Person has assumed or become liable for the
payment of such Debt (except that where such Person has not assumed or become
liable for the payment of such Debt, "Debt" under this clause (j) shall include
such Debt only to the extent of the fair market value of the property subject or
potentially subject to any such Lien).
"DEBT TO EBITDA RATIO" means, at any time of determination, the ratio of
(i) Debt on a Consolidated basis as of the end of the most recently ended
fiscal quarter of the Borrower to (ii) EBITDA for the Borrower and its
Subsidiaries on a Consolidated basis for
- 7 -
<PAGE>
the four fiscal quarter period ending as of the end of the then most recently
ended fiscal quarter of the Borrower.
"DEFAULT" means any Event of Default or any event that would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both.
"DEFAULT RATE" has the meaning specified in Section 2.6(e).
"DOMESTIC LENDING OFFICE" means, with respect to any Lender Party, the
office of such Lender Party specified as its "Domestic Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance pursuant to
which it became a Lender Party, or such other office of such Lender Party as
such Lender Party may from time to time specify to the Borrower and the Agent.
"DOMESTIC SUBSIDIARY" means, with respect to any Person, any Subsidiary of
such Person which is incorporated or organized under the laws of any State of
the United States or the District of Columbia.
"EBITDA" means, for any period, net income (or net loss) PLUS, to the
extent deducted in determining such net income (or net loss), the sum of (a)
interest expense, (b) income tax expense, (c) depreciation expense and (d)
amortization expense, in each case determined in accordance with GAAP for such
period.
"ELIGIBLE ASSIGNEE" means (a) any Lender and any Lender Affiliate of any
Lender, and (b) any commercial bank, savings and loan association, savings bank,
finance company, insurance company, mutual fund or other financial institution,
fund or investor or other Person which has been approved in writing (or, in the
case of the Borrower, deemed approved as provided below) by the Agent and,
unless an Event of Default has occurred and is continuing, the Borrower as an
Eligible Assignee for purposes of this Agreement, PROVIDED that in each such
case such approval shall not be unreasonably withheld, and PROVIDED, FURTHER,
that (i) if the Borrower is requested at any time to approve any Person as an
Eligible Assignee hereunder and the Agent has not received written notice from
the Borrower, within five Business Days of such request, that the Borrower does
not approve such Person as an Eligible Assignee, the Borrower shall be deemed to
have approved such Person as an Eligible Assignee and (ii) neither any Loan
Party nor any Affiliate of a Loan Party shall qualify as an Eligible Assignee
under this definition.
"ENVIRONMENTAL ACTION" means any administrative, regulatory or judicial
action, suit, demand, demand letter, claim, notice of non-compliance or
violation, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law or any Environmental Permit
including, without limitation, (a) any claim by any governmental or
regulatory authority for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any Environmental Law and (b) any claim
by any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from Hazardous
Materials or arising from
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alleged injury or threat of injury to health, safety or the environment.
"ENVIRONMENTAL LAW" means any federal, state or local law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
relating to the environment, health, safety or Hazardous Materials, including,
without limitation, CERCLA, the Resource Conservation and Recovery Act, the
Hazardous Materials Transportation Act, the Clean Water Act, the Toxic
Substances Control Act, the Clean Air Act, the Safe Drinking Water Act, the
Atomic Energy Act, the Federal Insecticide, Fungicide and Rodenticide Act and
the Occupational Safety and Health Act.
"ENVIRONMENTAL PERMIT" means any permit, approval, identification number,
license or other authorization required under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA AFFILIATE" of any Person means any other Person that for purposes of
Title IV of ERISA is a member of such Person's controlled group, or under common
control with such Person, within the meaning of Section 414 of the Internal
Revenue Code.
"ERISA EVENT" with respect to any Person means (a) the occurrence of a
reportable event, within the meaning of Section 4043 of ERISA, with respect to
any Plan of such Person or any of its ERISA Affiliates unless the 30-day notice
requirement with respect to such event has been waived by the PBGC; (b) the
provision by the administrator of any Plan of such Person or any of its ERISA
Affiliates of a notice of intent to terminate such Plan, pursuant to Section
4041(a)(2) of ERISA (including any such notice with respect to a plan amendment
referred to in Section 4041(e) of ERISA); (c) the cessation of operations at a
facility of such Person or any of its ERISA Affiliates in the circumstances
described in Section 4062(e) of ERISA; (d) the withdrawal by such Person or any
of its ERISA Affiliates from a Multiple Employer Plan during a plan year for
which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA;
(e) the failure by such Person or any of its ERISA Affiliates to make a payment
to a Plan required under Section 302(f)(1) of ERISA; (f) the adoption of an
amendment to a Plan of such Person or any of its ERISA Affiliates requiring the
provision of security to such Plan, pursuant to Section 307 of ERISA; or (g) the
institution by the PBGC of proceedings to terminate a Plan of such Person or any
of its ERISA Affiliates, pursuant to Section 4042 of ERISA, or the occurrence of
any event or condition described in Section 4042 of ERISA that could constitute
grounds for the termination of, or the appointment of a trustee to administer,
such Plan.
"ESOP" means the USCS International, Inc. Employee Stock Ownership Plan.
"EUROCURRENCY LIABILITIES" has the meaning specified in Regulation D of the
Board of Governors of the Federal Reserve System, as in effect from time to
time.
"EURODOLLAR LENDING OFFICE" means, with respect to any Lender Party, the
office of
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such Lender Party specified as its "Eurodollar Lending Office"
opposite its name on Schedule I hereto or in the Assignment and Acceptance
pursuant to which it became a Lender Party (or, if no such office is specified,
its Domestic Lending Office), or such other office of such Lender Party as such
Lender Party may from time to time specify to the Borrower and the Agent.
"EURODOLLAR RATE" means, for any Interest Period for any Eurodollar Rate
Advance, an interest rate per annum equal to the rate per annum obtained by
dividing (a) the rate per annum at which deposits in U.S. dollars in immediately
available funds are offered to NationsBank in London, England by prime banks in
the London interbank market at 11:00 A.M. (London time) two Business Days before
the first day of such Interest Period for delivery on the first day of such
Interest Period in an amount substantially equal to NationsBank's Eurodollar
Rate Advance to be outstanding during such Interest Period and for a period
equal to such Interest Period by (b) a percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage for such Interest Period.
"EURODOLLAR RATE ADVANCE" means an Advance that bears interest as provided
in Section 2.6(c).
"EURODOLLAR RATE RESERVE PERCENTAGE" means, for any Interest Period for any
Eurodollar Rate Advance, the reserve percentage applicable two Business Days
before the first day of such Interest Period under regulations issued from time
to time by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve requirement)
for a member bank of the Federal Reserve System in New York City with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities (or
with respect to any other category of liabilities that includes deposits by
reference to which the interest rate on Eurodollar Rate Advances is determined)
having a term equal to such Interest Period.
"EVENTS OF DEFAULT" has the meaning specified in Section 7.1.
"EXISTING CREDIT AGREEMENTS" has the meaning set forth in the Preliminary
Statements to this Agreement.
"EXISTING LETTERS OF CREDIT" means the letters of credit described by date
of issuance, letter of credit number, undrawn amount, name of beneficiary and
date of expiry on Schedule 1.1.
"FACILITY" means the Revolving Facility, the Swing Line Subfacility or the
L/C Subfacility.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by
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Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day for such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"FEE LETTER" has the meaning specified in Section 2.7(a).
"GAAP" has the meaning specified in Section 1.3.
"GOVERNMENTAL AUTHORITY" means any nation, state, sovereignty or any
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"HAZARDOUS MATERIALS" means (a) petroleum or petroleum products, natural or
synthetic gas, asbestos in any form that is or could become friable, urea
formaldehyde foam insulation and radon gas, (b) any substances defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "contaminants" or "pollutants,"
or words of similar import, under any Environmental Law, and (c) any other
substance exposure to which is regulated under any Environmental Law.
"HEDGE AGREEMENTS" means Interest Rate Contracts and Currency Hedging
Agreements.
"IBS" has the meaning set forth in the Preliminary Statements to this
Agreement.
"IBS CREDIT AGREEMENT" has the meaning set forth in the Preliminary
Statements to this Agreement.
"IBS POSTAL RELATIONS" means IBS Postal Relations, a California
corporation, together with any successor entity thereto.
"INDEMNIFIED PARTY" has the meaning specified in Section 9.4(b).
"INITIAL LENDERS" has the meaning specified in the recital of parties to
this Agreement.
"INSUFFICIENCY" means, with respect to any Plan, the amount, if any, of its
unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
"INTEREST PERIOD" has the meaning specified in Section 2.6(b).
"INTEREST RATE CONTRACTS" means interest rate swap, cap or collar
agreements, interest rate future or option contracts and other similar
agreements.
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"INTEREST TYPE" refers to the distinction between Advances bearing interest
at the Base Rate and Advances bearing interest at the Eurodollar Rate.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.
"INVESTMENT" in any Person means any loan or advance to such Person, any
purchase or other acquisition of any capital stock, warrants, rights, options,
obligations or other securities of such Person, any capital contribution to such
Person or any other investment in such Person, including, without limitation,
any arrangement pursuant to which (and to the extent to which) the investor
incurs Debt of the types referred to in clause (i) or (j) of the definition of
"Debt" in respect of such Person.
"ISSUE" means, with respect to any Letter of Credit, either the issuance of
such Letter of Credit, extension of the expiry of such Letter of Credit (other
than any such extension occurring pursuant to the terms of such Letter of
Credit), renewal of such Letter of Credit (other than any such renewal occurring
pursuant to the terms of such Letter of Credit), or an increase in the amount of
such Letter of Credit, and the terms "Issued", "Issuing", and "Issuance" shall
have corresponding meanings.
"L/C ADVANCE" means a payment made by the L/C Bank under a Letter of
Credit.
"L/C AGREEMENT" has the meaning specified in Section 3.2(a).
"L/C BANK" means (i) NationsBank and (ii) each Eligible Assignee to which
all of the rights and obligations of the L/C Bank to Issue Letters of Credit
hereunder have been assigned pursuant to Section 9.7.
"L/C CASH COLLATERAL ACCOUNT" has the meaning specified in Section 6.1(m).
"L/C OBLIGATIONS" means, as of any date of determination with respect to
any Letter of Credit, the sum of (a) the then outstanding Available Amount of
such Letter of Credit, and (b) the aggregate amount of the Unreimbursed Letter
of Credit Liability thereunder.
"L/C RELATED DOCUMENTS" has the meaning specified in Section 3.4(a).
"L/C SUBFACILITY" has the meaning specified in Section 3.1.
"L/C SUBLIMIT" means, at any time of determination, the lesser of (a)
$10,000,000 and (b) the aggregate Revolving Commitments of the Revolving Lenders
minus the sum of all Revolving Advances, Swing Line Advances and Unreimbursed
Letter of Credit Liability then outstanding.
"LENDER AFFILIATE" means, as to any Lender, any Person that, directly or
indirectly,
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controls, is controlled by or is under common control with such
Lender. For purposes of this definition, the term "control" (including the
terms "controlling," "controlled by" and "under common control with") of a
Person means the possession, direct or indirect, of the power to vote 20% or
more of the Voting Stock of such Person or to direct or cause the direction of
the management and policies of such Person, whether through the ownership of
Voting Stock, by contract or otherwise.
"LENDER PARTY" means any Revolving Lender, the Swing Line Lender or the L/C
Bank.
"LENDERS" means the Revolving Lenders and the Swing Line Lender.
"LETTER OF CREDIT" means (i) any standby or trade letter of credit issued
by the Issuing Lender for the account of the Borrower in accordance with the
terms of Section 3.1 and (ii) any Existing Letter of Credit.
"LIEN" means any lien, security interest or other charge or encumbrance of
any kind, or any other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.
"LOAN DOCUMENTS" means this Agreement, the Notes, each Subsidiary Guaranty
and each L/C Agreement.
"LOAN PARTIES" means the Borrower and each Subsidiary of the Borrower that
executes a Subsidiary Guaranty (or a guaranty supplement) pursuant to Sections
4.1(e)(viii) or 6.1(l).
"MARGIN STOCK" has the meaning specified in Regulation U.
"MATERIAL ADVERSE CHANGE" means any material adverse change in the
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Loan Party and its Subsidiaries, taken as a
whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower and its Subsidiaries, taken as a whole,
(b) the rights and remedies of the Agent or any Lender Party under any Loan
Document, or (c) the ability of any Loan Party to perform its Obligations under
any Loan Document to which it is or is to be a party.
"MATERIAL CONTRACT" means, with respect to the Borrower or any of its
Subsidiaries, each contract to which any such Person is a party involving
aggregate consideration payable to or by such Person of $10,000,000 or more in
any fiscal year of such Person or the loss of which would have a Material
Adverse Effect.
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"MATERIAL DOMESTIC SUBSIDIARY" means any Domestic Subsidiary (other than
CableLease or RPA) having a net worth in excess of $1,000,000 in accordance with
GAAP.
"MOODY'S" means Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" of any Person means a multiemployer plan, as defined
in Section 4001(a)(3) of ERISA, to which such Person or any of its ERISA
Affiliates is making or accruing an obligation to make contributions, or has
within any of the preceding five plan years made or accrued an obligation to
make contributions.
"MULTIPLE EMPLOYER PLAN" of any Person means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of
such Person or any of its ERISA Affiliates and at least one Person other than
such Person and its ERISA Affiliates or (b) was so maintained and in respect of
which such Person or any of its ERISA Affiliates could have liability under
Section 4064 or 4069 of ERISA in the event such plan has been or were to be
terminated.
"NATIONSBANK" has the meaning specified in the recital of parties to this
Agreement.
"NOTE" means a Revolving Note or a Swing Line Note.
"NOTICE OF BORROWING" means a notice in substantially the form of Exhibit B.
"NOTICE OF ISSUANCE" means a notice in substantially the form of Exhibit D.
"OBLIGATION" means, with respect to any Person, any obligation of such
Person of any kind, including, without limitation, any liability of such Person
on any claim, whether or not the right of any creditor to payment in respect of
such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, disputed, undisputed, legal, equitable, secured or unsecured, and
whether or not such claim is discharged, stayed or otherwise affected by any
proceeding of the type referred to in Section 7.1(f). Without limiting the
generality of the foregoing, the Obligations of the Loan Parties under the Loan
Documents include (a) the obligation to pay principal, interest, Letter of
Credit commissions, charges, expenses, fees, attorneys' fees and disbursements,
indemnities and other amounts payable by any Loan Party under any Loan Document,
(b) the obligation to reimburse amounts drawn under, and provide cash collateral
for amounts available to be drawn under, Letters of Credit and (c) the
obligation to reimburse any amount in respect of any of the foregoing that any
Lender, in its sole discretion, may elect to pay or advance on behalf of such
Loan Party.
"OPEN YEAR" has the meaning specified in Section 5.1(o)(ii).
"OTHER TAXES" has the meaning specified in Section 2.10(b).
"PBGC" means the Pension Benefit Guaranty Corporation.
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"PERMITTED LIENS" means such of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been commenced:
(a) Liens for taxes, assessments and governmental charges or levies not yet due
and payable; (b) Liens imposed by law, such as materialmen's, mechanics',
carriers', workmen's and repairmen's Liens and other similar Liens arising in
the ordinary course of business securing obligations that are not overdue for a
period of more than 30 days; (c) pledges or deposits to secure obligations under
workers' compensation laws or similar legislation or to secure public or
statutory obligations; and (d) easements, rights of way and other encumbrances
on title to real property that do not render title to the property encumbered
thereby unmarketable or materially adversely affect the use of such property for
its intended purposes.
"PERSON" means an individual, partnership, limited liability company,
corporation (including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"PLAN" means a Single Employer Plan or a Multiple Employer Plan.
"PREFERRED STOCK" means, with respect to any corporation, capital stock
issued by such corporation that is entitled to a preference or priority over any
other capital stock issued by such corporation upon any distribution of such
corporation's assets, whether by dividend or upon liquidation.
"PRO RATA SHARE" of any amount means, with respect to any Revolving Lender
at any time, the product of (a) a fraction the numerator of which is such
Lender's Revolving Commitment (without giving effect to any termination thereof
pursuant to Section 7.1) at such time and the denominator of which is the
Revolving Facility (without giving effect to any termination of Commitments
pursuant to Section 7.1) at such time and (b) such amount.
"QUOTED RATE" has the meaning specified in Section 2.6(d).
"QUOTED RATE ADVANCE" has the meaning specified in Section 2.6(d).
"REDEEMABLE" means, with respect to any capital stock, Debt or other right
or Obligation, any such right or Obligation that (a) the issuer has undertaken
to redeem at a fixed or determinable date or dates, whether by operation of a
sinking fund or otherwise, or upon the occurrence of a condition not solely
within the control of the issuer, or (b) is redeemable at the option of the
holder.
"REGISTER" has the meaning specified in Section 9.7(d).
"REGULATION U" means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
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"REQUIRED LENDERS" means at any time Lenders owed or holding at least 66
2/3% of the sum of (a) the aggregate principal amount of the Advances then
outstanding, and (b) the aggregate Available Amount of all Letters of Credit
then outstanding, or, if no such principal amount and no Letters of Credit are
outstanding at such time, Lenders holding at least 66 2/3% of the aggregate
Revolving Commitments (without giving effect to any termination thereof pursuant
to Section 7.1) at such time. For purposes of this definition, the Available
Amount of each Letter of Credit and the principal amount of each outstanding
Swing Line Advance shall be considered to be owed to the Lenders ratably in
accordance with their respective Revolving Commitments.
"REVOLVING ADVANCE" has the meaning specified in Section 2.1(a).
"REVOLVING BORROWING" means a borrowing consisting of simultaneous
Revolving Advances of the same Interest Type made by the Revolving Lenders.
"REVOLVING COMMITMENT" means, (i) with respect to any Revolving Lender
listed on Schedule I, the amount set forth opposite such Lender's name on
Schedule I under the caption "Revolving Commitment," (ii) with respect to any
Revolving Lender not listed on Schedule I hereto, the amount set forth in the
Assignment and Acceptance pursuant to which such Person became a Lender
hereunder, or (iii) if any of such Lenders has entered into one or more
Assignments and Acceptances, the amount set forth for such Lender in the
Register maintained by the Agent pursuant to Section 9.7 as such Lender's
"Revolving Commitment", in the case of each of the foregoing clauses (i), (ii)
and (iii), as such amount may be reduced at or prior to such time pursuant to
Section 2.3(a).
"REVOLVING FACILITY" means, at any time, the aggregate amount of the
Revolving Lenders' Revolving Commitments at such time.
"REVOLVING LENDERS" means the Initial Lenders and each Eligible Assignee
that shall become a party hereto pursuant to Section 9.7.
"REVOLVING NOTE" means a promissory note of the Borrower payable to the
order of any Revolving Lender, in substantially the form of Exhibit A-1 hereto,
evidencing the aggregate indebtedness of the Borrower to such Lender resulting
from the Revolving Advances made by such Lender.
"RPA" means RPA, Inc., a California corporation.
"S&P" means Standard & Poor's Ratings Group.
"SENIOR NOTE DOCUMENTS" means (a) the Note Agreement dated as of February
19, 1992 among the Borrower and the Purchasers named in Schedule I thereto which
are signatories thereto, as the same may be amended, supplemented or otherwise
modified from time to time, the Senior Notes and all other instruments,
documents and agreements
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related thereto, and (b) any agreements, instruments
and other documents relating to any Debt permitted under Section 6.2(b)(v)(B).
"SENIOR NOTES" means the 7.91% senior notes of the Borrower due February
19, 1999 including (a) any amendments, supplements or modifications thereto and
any notes issued in replacement thereof, and (b) any Debt permitted pursuant to
Section 6.2(b)(v)(B).
"SINGLE EMPLOYER PLAN" of any Person means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of
such Person or any of its ERISA Affiliates and no Person other than such Person
and its ERISA Affiliates or (b) was so maintained and in respect of which such
Person or any of its ERISA Affiliates could have liability under Section 4069 of
ERISA in the event such plan has been or were to be terminated.
"SOLVENT" and "SOLVENCY" mean, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such Person, (b) the present fair salable value of
the assets of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become absolute
and matured, (c) 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 (d) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute an unreasonably small capital.
The amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"SUBSIDIARY" of any Person means any corporation, partnership, limited
liability company, joint venture, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such partnership,
limited liability company or joint venture or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or controlled
by such Person, by such Person and one or more of its other Subsidiaries or by
one or more of such Person's other Subsidiaries.
"SUBSIDIARY GUARANTY" has the meaning specified in Section 4.1(e)(viii).
"SURVIVING DEBT" has the meaning specified in Section 4.1(d).
"SWING LINE ADVANCE" has the meaning specified in Section 2.1(b).
"SWING LINE BORROWING" means a borrowing consisting of Swing Line Advances
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made by the Swing Line Lender.
"SWING LINE COMMITMENT" means $5,000,000.
"SWING LINE LENDER" means NationsBank or any Eligible Assignee to whom the
Swing Line Commitment is assigned.
"SWING LINE NOTE" means a promissory note of the Borrower payable to the
order of the Swing Line Lender, in substantially the form of Exhibit A-2 hereto,
evidencing the aggregate indebtedness of the Borrower to such Lender resulting
from the Swing Line Advances made by such Lender.
"SWING LINE SUBFACILITY" means, at any time, the Swing Line Commitment at
such time.
"SWING LINE SUBLIMIT" means, at any time, the lesser of (a) the Swing Line
Commitment and (b) the aggregate Revolving Commitments of the Revolving Lenders
minus the sum of all Revolving Advances and L/C Obligations then outstanding.
"TAXES" has the meaning specified in Section 2.10(a).
"TYPE" refers to the distinction between Revolving Advances and Swing Line
Advances.
"UNFUNDED REVOLVING COMMITMENT" means, with respect to any Revolving Lender
at any time, (a) such Lender's Revolving Commitment at such time minus (b) the
sum of (i) the aggregate principal amount of all Revolving Advances of such
Lender outstanding at such time PLUS (ii) such Lender's Pro Rata Share of all
L/C Obligations then outstanding.
"UNREIMBURSED LETTER OF CREDIT LIABILITY" means, as of any date of
determination with respect to any Letter of Credit, the aggregate amount of all
L/C Advances which have been made by, and not reimbursed to, the L/C Bank under
such Letter of Credit.
"UNUSED REVOLVING COMMITMENT" means, with respect to any Revolving Lender
at any time, (a) such Lender's Revolving Commitment at such time minus (b) the
sum of (i) the aggregate principal amount of all Revolving Advances of such
Lender outstanding at such time PLUS (ii) such Lender's Pro Rata Share of the
sum of all L/C Obligations and Swing Line Advances then outstanding.
"USCS CREDIT AGREEMENT" has the meaning set forth in the Preliminary
Statements to this Agreement.
"VOTING STOCK" means capital stock issued by a corporation, or equivalent
interests in any other Person, the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of directors (or
persons performing similar functions) of
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such Person, even though the right so to vote has been suspended by the
happening of such a contingency.
"WELFARE PLAN" means a welfare plan, as defined in Section 3(1) of ERISA.
"WITHDRAWAL LIABILITY" has the meaning specified in Part I of Subtitle E of
Title IV of ERISA.
SECTION I.2 COMPUTATION OF TIME PERIODS. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding."
SECTION I.3 ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 5.1(f)(i) ("GAAP").
SECTION I.4 OTHER DEFINITIONAL PROVISIONS. References to Sections and
subsections shall be to Sections and subsections, respectively, of this
Agreement unless otherwise specified. Any of the terms defined in Section 1.1
may be used in the singular or the plural. The term "including" means including
without limitation.
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ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION II.1 AMOUNTS OF ADVANCES.
(a) REVOLVING ADVANCES. Each Revolving Lender severally agrees, on
the terms and conditions hereinafter set forth, to make advances (each a
"REVOLVING ADVANCE") to the Borrower from time to time on any Business Day
during the period from the Closing Date until the Commitment Termination Date in
an amount for each such Advance not to exceed (except in the case of Revolving
Advances pursuant to Section 2.2(b)(ii)(B) the proceeds of which are applied to
prepay or repay outstandingly Swing Line Advances) such Lender's Unused
Revolving Commitment on such Business Day. Each Revolving Borrowing shall
consist of Revolving Advances made by the Revolving Lenders ratably according to
their respective Revolving Commitments and, except for any Revolving Borrowing
pursuant to Section 2.2(b)(ii)(B), shall be in an aggregate amount of (i) if
such Borrowing consists of Revolving Advances which are Base Rate Advances,
$250,000 or an integral multiple of $50,000 in excess thereof and (ii) if such
Borrowing consists of Revolving Advances which are Eurodollar Rate Advances,
$1,000,000 or an integral multiple of $100,000 in excess thereof. Within the
limits set forth above, the Borrower may borrow under this Section 2.1(a),
prepay pursuant to Section 2.5 and reborrow under this Section 2.1(a).
(b) SWING LINE ADVANCES. The Swing Line Lender agrees, on the terms and
conditions hereinafter set forth, to make advances (each a "SWING LINE ADVANCE")
to the Borrower from time to time on any Business Day during the period from the
Closing Date until the Commitment Termination Date in an amount for each such
Advance not to exceed the Swing Line Sublimit minus the aggregate amount of
other Swing Line Advances then outstanding. Each Swing Line Advance shall be in
an amount equal to $100,000 or an integral multiple of $50,000 in excess
thereof. Within the limits set forth above, the Borrower may borrow under this
Section 2.1(b), prepay pursuant to Section 2.5 and reborrow under this Section
2.1(b).
SECTION II.2 BORROWING PROCEDURES.
(a) BORROWINGS. Each Borrowing shall be made on notice received by the
Agent from the Borrower (pursuant to a Notice of Borrowing) not later than 11:00
a.m. (Dallas, Texas time) (i) on the Business Day of such Borrowing if such
Borrowing consists of Swing Line Advances or if such Borrowing consists of
Revolving Advances which are Base Rate Advances, and (ii) on the third Business
Day prior to the date of such Borrowing if such Borrowing consists of Eurodollar
Rate Advances. Each such Notice of Borrowing shall be irrevocable upon receipt
by the Agent and, in the case of any Notice of Borrowing for Eurodollar Rate
Advances, the Borrower shall indemnify each Lender against any loss, cost or
expense incurred by such Lender as a result of any failure to fulfill on or
before the date specified by such Notice of Borrowing the applicable conditions
set forth in this Section 2.2
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or Article IV, including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other
funds acquired by such Lender to fund the Advance to be made by such Lender
as a part of such Borrowing when such Advance, as a result of such failure,
is not made on such date. If the Agent receives a Notice of Borrowing, the
Agent shall promptly (and, in any event not later than 2:00 p.m. (Dallas,
Texas time), if such Borrowing consists of Swing Line Advances or if such
Borrowing consists of Revolving Advances which are Base Rate Advances, on the
Business Day of such Borrowing or, if such Borrowing consists of Eurodollar
Rate Advances, the third Business Day prior to the date of such Borrowing)
give each Appropriate Lender notice of such Notice of Borrowing. Each
Appropriate Lender shall fund its portion of such Borrowing as provided in
Section 2.2(b).
(b) ADVANCES BY LENDERS.
(i) REVOLVING ADVANCES. Each Appropriate Lender shall before
2:00 p.m. (Dallas, Texas time) on the date of each Borrowing, make
available for the account of its Applicable Lending Office to the Agent
such Lender's ratable portion of such Borrowing by depositing same day
funds in the Agent's Account.
(ii) SWING LINE ADVANCES.
(A) Each Swing Line Advance shall be funded directly by the
Swing Line Lender to the Borrower. Immediately upon the making of
each Swing Line Advance by the Swing Line Lender, the Swing Line
Lender shall be deemed to have sold and transferred to each Revolving
Lender, and each Revolving Lender shall be deemed to have purchased
and received from the Swing Line Lender, in each case irrevocably and
without any further action by any party, an undivided interest and
participation in such Swing Line Advance and the Obligations of the
Borrower under this Agreement in respect thereof in an amount equal to
such Revolving Lender's Pro Rata Share, PROVIDED, HOWEVER, that (1) no
Revolving Lender shall be required to fund its participation in any
such Swing Line Advance until demand therefor is made by the Agent
pursuant to Section 2.2(b)(ii)(C) hereof, and (2) no Revolving Lender
shall be entitled to share in any payments of principal or interest in
respect of its participation in any such Swing Line Advance except to
the extent set forth in Section 2.2(b)(ii)(C) hereof with respect to
any such participation which has been funded by such Lender as
provided therein.
(B) The Agent may, and upon request of the Swing Line Lender the
Agent shall, at any time and from time to time, give to the Revolving
Lenders a Notice of Borrowing on behalf of the Borrower for Revolving
Advances, in each case in an amount equal to the aggregate amount of
Swing Line Advances then owing by the Borrower (or such lesser amount
as the Agent or the Swing Line Lender shall specify). Upon receipt of
any such
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Notice of Borrowing, each Revolving Lender shall (whether or not
the conditions set forth in Section 4.2 are then satisfied), on
or before the time specified by the Agent (which in no event shall be
earlier than 10:00 a.m. nor later than 2:00 p.m. (Dallas, Texas time)
on the Business Day following the date on which such Notice of
Borrowing is given), make available for the account of its Applicable
Lending Office to the Agent such Lender's ratable portion of such
Revolving Borrowing by depositing same day funds in the Agent's
Account. The proceeds of any such Borrowing shall be distributed by
the Agent to the Swing Line Lender (subject to Section 2.2(b)(ii)(E))
as a prepayment or repayment of all or a portion of the Swing Line
Advances then owing by the Borrower.
(c) In addition to the right of the Swing Line Lender to require
a Revolving Borrowing under Section 2.2(b)(ii)(B), the Swing Line
Lender may at any time and from time to time request the Agent to, and
upon receipt of such request the Agent shall, make demand on each
Revolving Lender for payment of its participation in each Swing Line
Advance then outstanding, and upon receipt of any such demand each
Revolving Lender shall (subject to Section 2.2(b)(ii)(E)) promptly
fund such participation by paying to the Agent, for the account of the
Swing Line Lender, the amount of such participation in same day funds.
With respect to each such participation in any Swing Line Advance
which is funded by any Revolving Lender, the Swing Line Lender shall
promptly pay to the Agent, and the Agent shall promptly pay to such
Lender, in lawful money of the United States and in the kind of funds
so received, an amount equal to such Lender's ratable share of all
payments received by the Swing Line Lender in respect of (1) the
principal of such Swing Line Advance, and (2) interest on such Swing
Line Advance for the period from and after the date on which such
Participation was funded. If any payment received by the Swing Line
Lender on account of any Swing Line Advance and distributed to any
Revolving Lender as a participant under the preceding sentence is
thereafter recovered from the Swing Line Lender in connection with any
bankruptcy or insolvency proceeding relating to the Borrower or
otherwise, each Lender which received such distribution shall, upon
demand by the Swing Line Lender through the Agent, repay to the Swing
Line Lender such Lender's ratable share of the amount so recovered
together with such Lender's ratable share (according to the proportion
of (y) the amount of such Lender's required repayment to (z) the total
amount so recovered) of any interest or other amount paid or payable
by the Swing Line Lender in respect of the total amount so recovered.
The Borrower agrees that any Revolving Lender purchasing a
participation in any Swing Line Advance from the Swing Line Lender
hereunder may, to the fullest extent permitted by law, exercise all
its rights of payment with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount
of such participation.
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(D) Anything contained herein to the contrary notwithstanding
(but subject to Section 2.2(b)(ii)(E) below), the obligation of each
Revolving Lender to make any Advance pursuant to Section 2.2(b)(ii)(B)
or to fund its participation in any Swing Line Advances pursuant to
Section 2.2(b)(ii)(C) shall be absolute and unconditional and shall
not be subject to any conditions set forth in Article IV hereof or
otherwise affected by any circumstance including, without limitation,
(1) any set-off, counterclaim, recoupment, defense or other right
which such Lender may have against the Swing Line Lender or any Loan
Party; (2) the occurrence or continuance of a Default or Event of
Default; (3) any adverse change in the business, condition (financial
or otherwise), operations, performance, properties or prospects of any
Loan Party; (4) any breach of this Agreement by the Borrower; or (5)
any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
(E) Notwithstanding Section 2.2(b)(ii)(D) above, if at the time
that any Revolving Lender is required to make any Revolving Advance or
fund any participation pursuant to Section 2.2(b)(ii)(B) or (C) above,
the Borrower would not otherwise be entitled to obtain a Revolving
Borrowing as a result of the failure of any of the conditions set
forth in Article IV hereof, the obligation of each Revolving Lender to
make any such Revolving Advance or to fund any such participation with
respect to any Swing Line Advance owing to the Swing Line Lender shall
be subject to the condition that at least one of the following is
true: (1) the Swing Line Lender shall have believed in good faith that
all conditions under Article IV to the making of such Swing Line
Advance were satisfied at the time such Swing Line Advance was made,
or (2) such Lender shall have had actual knowledge that any such
condition had not been satisfied and failed to notify the Swing Line
Lender and the Agent in writing that the Swing Line Lender had no
obligation to make Swing Line Advances until such condition was
satisfied (which notice shall be effective as of the date of receipt
by the Swing Line Lender and the Agent), or (3) the satisfaction of
any such condition not satisfied shall have been waived by the
Required Lenders prior to or at the time such Swing Line Advance was
made.
(c) PRESUMPTION OF FUNDING. Unless the Agent shall have received written
notice from a Lender prior to the date of any Borrowing hereunder that such
Lender will not make available to the Agent such Lender's ratable portion of
such Borrowing, the Agent may assume that such Lender has made such ratable
portion available to the Agent on the date of such Borrowing in accordance
with the terms hereof and the Agent may, in reliance upon such assumption,
but shall not be required to, make available to or for the account of the
Borrower on such date a corresponding amount. If and to the extent that such
Lender shall not have so made such ratable portion available to the Agent and
the Agent makes such ratable portion available to the Borrower, such Lender
and the Borrower, without prejudice to any rights or remedies that the
Borrower may have against such Lender,
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severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount
is made available to or for the account of the Borrower until the date such
amount is repaid to the Agent, at (i) in the case of the Borrower, the
interest rate applicable at the time to the Advances of such Lender
comprising a part of such Borrowing, and (ii) in the case of such Lender, the
Federal Funds Rate. If such Lender shall pay to the Agent such amount, such
amount so paid shall constitute such Lender's Advance as part of the
applicable Borrowing for purposes of this Agreement and, to the extent that
the Borrower previously paid such amount to the Agent, the Agent will refund
to the Borrower such amount so paid, but without interest.
(d) DISBURSEMENT OF ADVANCES. Upon fulfillment of the applicable
conditions set forth in Article IV (which fulfillment the Agent may assume in
the absence of actual knowledge, or notice received from the Borrower or the
Required Lenders, to the contrary), the Agent will make funds for any Borrowing
available to the Borrower by crediting the Borrower's Account, SUBJECT to the
Agent's receipt of funds from the Appropriate Lenders.
(e) NATURE OF LENDERS' OBLIGATIONS. The failure of any Lender to make the
Advance to be made by it as part of any Borrowing shall not relieve any other
Lender of its obligation, if any, hereunder to make its Advance on the date of
such Borrowing, but no Lender shall be responsible for the failure of any other
Lender to make the Advance to be made by such other Lender on the date of any
Borrowing.
SECTION II.3 REDUCTION OF THE REVOLVING COMMITMENTS.
(a) OPTIONAL REDUCTIONS. The Borrower shall have the right, upon at least
five Business Days' notice to the Agent, to terminate in whole or from time to
time reduce ratably in part, the unused portions of the respective Revolving
Commitments of the Lenders; PROVIDED, HOWEVER, that (i) each partial reduction
shall be in an aggregate amount of $5,000,000 or any multiple of $1,000,000 in
excess thereof, and (ii) the aggregate amount of the Revolving Commitments shall
not be reduced pursuant to this Section 2.3(a) to an amount less than the
aggregate principal amount of all Revolving Advances and Swing Line Advances and
all L/C Obligations then outstanding.
(b) AUTOMATIC REDUCTIONS OF L/C SUBFACILITY AND SWING LINE COMMITMENT.
The L/C Subfacility and the Swing Line Commitment shall be permanently reduced
from time to time on the date of each reduction in the Revolving Commitments by
the amount, if any, by which the amount of the L/C Subfacility or the Swing Line
Commitment, as the case may be, exceeds the aggregate Revolving Commitments of
the Lenders after giving effect to such reduction of the Revolving Commitments.
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SECTION II.4 REPAYMENT.
(a) REVOLVING ADVANCES. The Borrower shall repay to the Agent for the
account of each Revolving Lender (in accordance with the provisions of Section
2.9(a)) on the Commitment Termination Date the aggregate principal amount of all
Revolving Advances owing to such Lender on such date.
(b) SWING LINE ADVANCES. The Borrower shall repay to the Agent for the
account of the Swing Line Lender (in accordance with the provisions of Section
2.9(a)) on the Commitment Termination Date the aggregate principal amount of
all outstanding Swing Line Advances.
(c) L/C ADVANCES. The Borrower shall repay each L/C Advance as provided
in Section 3.3.
SECTION II.5 PREPAYMENTS.
(a) OPTIONAL PREPAYMENTS. The Borrower may, from time to time upon prior
notice to the Agent (which may be given on the same Business Day in the case of
a prepayment of Swing Line Advances and which shall be given at least one
Business Day in advance in the case of prepayment of Revolving Advances which
consist of Base Rate Advances and three Business Days in advance in the case of
prepayment of Advances which are Eurodollar Rate Advances), stating the proposed
date and aggregate principal amount of the prepayment and the Type and Interest
Type of Advances to be prepaid (and if such notice is given the Borrower shall),
prepay in whole or in part the outstanding principal of Advances of such Type
and Interest Type, together with interest thereon to the date of such prepayment
on the principal amounts prepaid; PROVIDED, HOWEVER, that (i) each partial
prepayment shall (A) in the case of Revolving Advances which are Eurodollar Rate
Advances, be in an aggregate principal amount of $1,000,000 or an integral
multiple of $100,000 in excess thereof, (B) in the case of Revolving Advances
which are Base Rate Advances, be in an aggregate principal amount of $250,000 or
an integral multiple of $50,000 in excess thereof and (C) in the case of Swing
Line Advances, in an aggregate principal amount of $100,000 or an integral
multiple of $50,000 in excess thereof and (ii) if any prepayment of a Eurodollar
Rate Advance is made on a date other than the last day of an Interest Period for
such Advance the Borrower shall also pay on demand any amounts owing pursuant to
Section 9.4.
(b) MANDATORY PREPAYMENTS.
(i) If, at any time, the then outstanding aggregate principal
amount of all Revolving Advances shall exceed the aggregate amount of the
Revolving Commitments of the Lenders at such time MINUS the aggregate
amount of the L/C Obligations and Swing Line Advances then outstanding, the
Borrower shall immediately prepay, for the ratable account of the Revolving
Lenders, the outstanding principal amount of Revolving Advances in an
aggregate amount equal
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to such excess.
(ii) If, at any time, the then outstanding aggregate amount of
the Swing Line Advances shall exceed the Swing Line Sublimit, the Borrower
shall prepay, for the account of the Swing Line Lender, the outstanding
principal amount of Swing Line Advances in an aggregate amount equal to
such excess.
(iii) If, at any time, the aggregate Available Amount of all
Letters of Credit then outstanding exceeds the L/C Sublimit, the Borrower
shall immediately pay to the Agent for deposit in the L/C Cash Collateral
Account an amount sufficient to cause the aggregate amount on deposit in
such account to equal the amount of such excess.
(c) INTEREST PAYABLE ON AMOUNTS PREPAID. All prepayments of Eurodollar
Rate Advances under this Section 2.5 shall be made together with accrued
interest to the date of such prepayment on the principal amount prepaid.
SECTION II.6 INTEREST. The Borrower shall pay interest on the unpaid
principal amount of each Advance from the date of such Advance until such
principal is paid in full at the applicable rate set forth below.
(a) INTEREST ON BASE RATE ADVANCES. Except to the extent that the
Borrower shall elect to pay interest on all or any part of any Advance made or
to be made to the Borrower under Section 2.1(a) for any Interest Period pursuant
to subsections (b), (c) and (d) of this Section 2.6, the Borrower shall pay
interest on the unpaid principal amount of each Advance, from the date of such
Advance until such principal amount is paid in full, payable quarterly in
arrears on the first day of each January, April, July and October, commencing
January 1, 1997 and on the Commitment Termination Date, in each case at a
fluctuating interest rate per annum equal, subject to Section 2.6(e), to the
Base Rate in effect from time to time.
(b) INTEREST PERIODS FOR EURODOLLAR RATE ADVANCES. The Borrower may,
pursuant to Section 2.6(c), elect to have the interest on the principal amount
of all or any portion of any Revolving Advances in each case ratably according
to the respective outstanding principal amounts of such Advances owing to each
Revolving Lender (each such principal amount owing to a Lender as to which such
election has been made being a "EURODOLLAR RATE ADVANCE" owing to such Lender)
determined and payable for a specified period (an "INTEREST PERIOD" for such
Eurodollar Rate Advance) in accordance with subsection (c) below, PROVIDED,
HOWEVER, that the Borrower may not have more than eight Eurodollar Rate Advances
owing to any Lender outstanding at any one time. Each Interest Period shall be
one, two, three, or six months, at the Borrower's selection pursuant to
subsection (c) below, PROVIDED, HOWEVER, that:
(i) the first day of an Interest Period for any Eurodollar Rate
Advance shall be either the last day of any then current Interest Period
for such
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Advance or, if there shall be no then current Interest Period for such
Advance, any Business Day;
(ii) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest
Period shall be extended to occur on the next succeeding Business Day;
PROVIDED, HOWEVER, that if such extension would cause the last day of such
Interest Period to occur in the next following month, the last day of such
Interest Period shall occur on the next preceding Business Day; and
(iii) whenever the first day of any Interest Period occurs on
a day of the month for which there is no numerically corresponding day in
the calendar month that succeeds such initial calendar month by the number
of months equal to the number of months of such Interest Period, such
Interest Period shall end on the last Business Day of such succeeding
calendar month.
(c) INTEREST ON EURODOLLAR RATE ADVANCES. The Borrower may, on the
condition that no Event of Default has occurred and is continuing, and subject
to the provisions of Sections 2.6(b) and 2.6(f), elect to pay interest on all or
any portion of any Revolving Advances during any Interest Period therefor at a
rate per annum equal to the sum of the Eurodollar Rate for such Interest Period
for such Advances plus the Applicable Margin in effect from time to time, by
notice, specifying the amount of the Advances as to which such election is made
(which amount shall aggregate at least $1,000,000 or any multiple of $100,000 in
excess thereof) and the first day and duration of such Interest Period, received
by the Agent before 11:00 a.m. (Dallas, Texas time) three Business Days prior to
the first day of such Interest Period. If the Borrower has made such election
for Eurodollar Rate Advances for any Interest Period, the Borrower shall pay
interest on the unpaid principal amount of such Eurodollar Rate Advances during
such Interest Period, payable in arrears on the last day of such Interest Period
and, in the case of any Interest Period which is longer than three months, on
each three month anniversary of the first day of such Interest Period, in each
case at a rate equal, subject to Section 2.6(e), to the sum of the Eurodollar
Rate for such Interest Period for such Eurodollar Rate Advances plus the
Applicable Margin in effect from time to time during such Interest Period. On
the last day of each Interest Period for any Eurodollar Rate Advance, the unpaid
principal balance thereof shall automatically become and bear interest as a Base
Rate Advance, except to the extent that the Borrower has elected to pay interest
on all or any portion of such amount for a new Interest Period commencing on
such day in accordance with this Section 2.6(c). Each notice by the Borrower
under this Section 2.6(c) shall be irrevocable upon receipt by the Agent, and
the Borrower shall indemnify each Lender against any loss, cost or expense
incurred by such Lender as a result of any failure to fulfill on or before the
date specified by such notice the applicable conditions set forth in this
Section 2.6(c) or Article IV, including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender to fund any such Eurodollar Rate Advance
when such Eurodollar Rate Advance, as a result of such failure, is not made or
does not become effective.
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(d) INTEREST ON QUOTED RATE ADVANCES. When the Borrower provides a Notice
of Borrowing for a Swing Line Advance, the Borrower may request the Swing Line
Lender to provide a fixed percentage rate per annum (each a "QUOTED RATE") for
such Swing Line Advance. If the Borrower and the Swing Line Lender agree as to
a Quoted Rate for Swing Line Advance (a "QUOTED RATE ADVANCE"), the Borrower
shall pay interest on the unpaid principal amount of such Quoted Rate Advance,
from the date of such Advance until such principal amount is paid in full at
such Quoted Rate. Interest on Quoted Rate Advances shall be payable quarterly
in arrears on the first day of each January, April, July and October, commencing
January 1, 1997 and on the Commitment Termination Date. Each Quoted Rate
Advance shall be payable on demand and, in the event that the unpaid principal
balance of any Quoted Rate Advance is not paid upon the demand of the Swing Line
Lender, such unpaid principal balance shall automatically become and bear
interest as a Swing Line Advance which is a Base Rate Advance.
(e) DEFAULT INTEREST. Upon the occurrence and during the continuance of
an Event of Default, the Borrower shall, at the dates set forth herein for the
payment of interest and upon demand, (i) pay interest on all Base Rate Advances
and any other amounts owing hereunder not paid when due (other than then
outstanding Eurodollar Rate Advances) at a rate per annum (the "DEFAULT RATE")
equal at all times to the rate otherwise applicable to Base Rate Advances PLUS
2.0% per annum and (ii) pay interest on each then outstanding Quoted Rate
Advance or Eurodollar Rate Advance at a rate per annum equal at all times to the
rate otherwise applicable to such Quoted Rate Advance or Eurodollar Rate
Advance, respectively, PLUS 2.0% per annum.
(f) SUSPENSION OF EURODOLLAR RATE ADVANCES.
(i) ILLEGALITY. Notwithstanding any other provision of this
Agreement, if the introduction of or any change in or in the interpretation
of any law or regulation shall make it unlawful, or any central bank or
other governmental authority shall assert that it is unlawful, for any
Lender or its Eurodollar Lending Office to perform its obligations
hereunder to make Eurodollar Rate Advances or to continue to fund or
maintain Eurodollar Rate Advances hereunder, then, on notice thereof and
demand therefor by such Lender to the Borrower through the Agent, (A) each
Eurodollar Rate Advance will automatically, upon such demand, Convert into
a Base Rate Advance and (B) the obligation of the Revolving Lenders to
make, or to Convert Advances into, Eurodollar Rate Advances shall be
suspended until the Agent shall notify the Borrower that such Lender has
determined that the circumstances causing such suspension no longer exist;
PROVIDED, HOWEVER, that, before making any such demand, such Lender agrees
to use reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions) to designate a different Eurodollar Lending
Office if the making of such a designation would allow such Lender or its
Eurodollar Lending Office to continue to perform its obligations to make
Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate
Advances and would not, in the judgment of such Lender, be
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otherwise disadvantageous to such Lender.
(ii) OTHER CIRCUMSTANCES. If, with respect to any Eurodollar
Rate Advances, Lenders owed at least 51% of the then aggregate unpaid
principal amount thereof notify the Agent that the Eurodollar Rate for any
Interest Period for such Advances will not adequately reflect the cost to
such Lenders of making, funding or maintaining their Eurodollar Rate
Advances for such Interest Period, the Agent shall forthwith so notify the
Borrower and the Revolving Lenders, whereupon (A) each such Eurodollar Rate
Advance will automatically, on the last day of the then existing Interest
Period therefor, Convert into a Base Rate Advance and (B) the obligation of
the Revolving Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended until the Agent shall notify the Borrower that
such Lenders have determined that the circumstances causing such suspension
no longer exist.
(iii) SUSPENSION ON EVENT OF DEFAULT. Upon the occurrence
and during the continuance of any Event of Default, (A) each Eurodollar
Rate Advance will automatically, on the last day of the then existing
Interest Period therefor, convert into a Base Rate Advance and (B) the
obligation of the Revolving Lenders to make, or to convert Advances into,
Eurodollar Rate Advances shall be suspended.
(iv) LENDERS' OBLIGATION TO NOTIFY AGENT. If any Lender shall
give notice to the Agent under Section 2.6(f)(i) or (ii) and such Lender
shall thereafter determine that the circumstances causing such notice no
longer exist, such Lender shall promptly give written notice thereof to the
Borrower and the Agent, and the Agent shall thereafter give notice thereof
to the other Lenders.
SECTION II.7 FEES.
(a) COMMITMENT FEES. The Borrower agrees to pay to the Agent a commitment
fee on the average daily Unfunded Revolving Commitment of each Revolving Lender,
for the account of such Lender, for the period from the Closing Date in the case
of each Initial Lender and from the effective date specified in the Assignment
and Acceptance pursuant to which it became a Lender in the case of each other
Revolving Lender until the Commitment Termination Date, at the rate per annum
equal to the Commitment Fee Percentage in effect from time to time, payable in
arrears on the first day of each January, April, July and October, commencing
January 1, 1997, and on the Commitment Termination Date.
(b) L/C FEES. The Borrower agrees to pay the Letter of Credit Fees
specified in Section 3.5.
(c) AGENT'S FEES. The Borrower agrees to pay to the Agent, for its own
account, (i) the fees in the amounts and at the times set forth in the fee
letter (the "FEE LETTER") dated as of the Closing Date from the Agent to the
Borrower, and agreed to and accepted by the Borrower on the Closing Date, and
(ii) such other fees as may from time to time be agreed
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between the Borrower and the Agent.
(d) ABSOLUTE OBLIGATION. The Borrower's obligation hereunder to pay the
fees referred to in this Section 2.7 shall be absolute and unconditional and
shall survive the making and repayment of Advances, the termination of all L/C
Obligations and the termination of this Agreement. All fees which are due or
become due pursuant to this Section 2.7 are nonrefundable.
SECTION II.8 INCREASED COSTS AND CAPITAL REQUIREMENTS.
(a) INCREASED COSTS. If any Lender Party determines that due to either
(i) the introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law),
there shall be any increase in the cost to such Lender Party of agreeing to make
or of making, funding or maintaining Eurodollar Rate Advances or of agreeing to
issue or of issuing or maintaining Letters of Credit or of agreeing to make or
making or maintaining L/C Advances, then the Borrower shall from time to time,
upon demand by such Lender Party (with a copy of such demand to the Agent), pay
to the Agent for the account of such Lender Party additional amounts sufficient
to compensate such Lender Party for such increased cost. A certificate as to
the amount of such increased cost and setting forth in reasonable detail the
computation thereof submitted to the Borrower by such Lender Party with its
demand shall be conclusive and binding for all purposes, absent manifest error.
(b) CAPITAL REQUIREMENTS. If any Lender Party determines that compliance
with any law or regulation or any guideline or request from any central bank or
other governmental authority (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be maintained by such
Lender Party or any corporation controlling such Lender Party and that the
amount of such capital is increased by or based upon the existence of such
Lender Party's commitment to lend or to issue Letters of Credit hereunder and
other commitments of such type or the issuance or maintenance of the Letters of
Credit (or similar contingent obligations), or any participation in any of the
foregoing, then, upon demand by such Lender Party (with a copy of such demand to
the Agent), the Borrower shall pay to the Agent for the account of such Lender
Party, from time to time as specified by such Lender Party, additional amounts
sufficient to compensate such Lender Party in the light of such circumstances,
to the extent that such Lender Party reasonably determines such increase in
capital to be allocable to the existence of such Lender Party's commitment to
lend or to issue Letters of Credit hereunder or to the issuance or maintenance
of any Letters of Credit, or any participation in any of the foregoing. A
certificate as to such amounts setting forth in reasonable detail the
computation thereof submitted to the Borrower by such Lender Party with its
demand shall be conclusive and binding for all purposes, absent manifest error.
(c) NOTICE OF DEMANDS FOR COMPENSATION. Each Lender Party shall use
reasonable efforts to notify the Borrower in writing not more than 30 days after
the date an
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officer of such Lender Party responsible for the administration of
this Agreement becomes aware of any event or circumstance as a result of which
it will demand compensation pursuant to this Section 2.8; PROVIDED, HOWEVER,
that the failure to give any such notice shall not affect the Borrower's
obligations under this Section 2.8.
SECTION II.9 PAYMENTS AND COMPUTATIONS.
(a) PAYMENTS BY BORROWER. The Borrower shall make each payment hereunder
and under any other Loan Document to which it is a party, irrespective of and
without condition or deduction for any counterclaim, defense, recoupment or
setoff, in lawful money of the United States and in same day funds delivered to
the Agent not later than 1:00 p.m. (Dallas, Texas time) on the day when due by
deposit of such funds to the Agent's Account. Any payment so delivered to the
Agent after 1:00 p.m. (Dallas, Texas time) on any Business Day, or on any day
which is not a Business Day, shall be deemed received by the Agent on the next
succeeding Business Day. The Agent will promptly after receipt of each payment
cause to be distributed like funds relating to the payment of principal,
interest, commitment fees or letter of credit fees ratably to each Appropriate
Lender for the account of its Applicable Lending Office, and like funds relating
to the payment of any other amount payable to any Lender Party (including
payments with respect to Letters of Credit and payments for the account of any
Lender Party under Sections 2.8, 2.10 or 9.4(c)) to such Lender Party for the
account of its Applicable Lending Office or to the L/C Bank, in each case to be
applied in accordance with, and subject to, the terms of this Agreement,
including Section 2.9(e) below. Upon its acceptance of an Assignment and
Acceptance and recording of the information contained therein in the Register
pursuant to Section 9.7(d), from and after the effective date specified in such
Assignment and Acceptance, the Agent shall make all payments hereunder and under
any other Loan Document in respect of the interest assigned thereby to the
Lender Party assignee thereunder, and the parties to such Assignment and
Acceptance shall make all appropriate adjustments in such payments for periods
prior to such effective date directly between themselves.
(b) COMPUTATIONS. All computations of interest in respect of Base Rate
Advances (and in respect of any other amount payable hereunder other than
Eurodollar Rate Advances and Letter of Credit fees) and all computations in
respect of commitment fees shall be made by the Agent on the basis of a year of
365 days and all computations of interest in respect of Quoted Rate Advances and
Eurodollar Rate Advances and all computations in respect of Letter of Credit
fees shall be made by the Agent on the basis of a year of 360 days, in each case
for the actual number of days (including the first day but excluding the last
day) occurring in the period for which such interest or fees are payable;
PROVIDED that if any Advance is repaid on the same day on which it is made, one
day's interest shall be paid on such Advance. Each determination by the Agent
of an interest rate or fee hereunder shall be conclusive and binding for all
purposes, absent manifest error.
(c) PAYMENTS ASSUMED. Unless the Agent shall have received notice from
the Borrower prior to the date on which any payment is due to any Lender Party
hereunder that the Borrower will not make such payment in full, the Agent may
assume that the
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Borrower has made such payment in full to the Agent on such date
and the Agent may, in reliance upon such assumption, but shall not be required
to, cause to be distributed to each such Lender Party on such due date an amount
equal to the amount then due to such Lender Party. If and to the extent that
the Borrower shall not have so made such payment in full to the Agent, each such
Lender Party shall repay to the Agent forthwith on demand such amount
distributed to such Lender Party together with interest thereon, for each day
from the date such amount is distributed to such Lender Party until the date
such Lender Party repays such amount to the Agent, at the Federal Funds Rate.
(d) APPLICATION OF PAYMENTS SPECIFIED BY THE BORROWER. Except as
otherwise specified herein, so long as no Event of Default has occurred and is
continuing, all payments shall be applied as instructed by the Borrower if such
instructions are received by the Agent prior to or contemporaneously with
receipt of funds therefor.
(e) APPLICATION OF PAYMENTS NOT OTHERWISE SPECIFIED. If the Agent
receives funds for application to the Advances or any L/C Obligations or other
Obligations of the Borrower under the Loan Documents under circumstances for
which the Loan Documents do not specify the Advances or the Facility or the
Obligations to which, or the manner in which, such funds are to be applied, the
Agent may elect to distribute such funds FIRST, to the L/C Bank ratably in
payment of the principal of and interest on any outstanding L/C Advances,
SECOND, to the Swing Line Lender in payment of the principal of and interest on
any outstanding Swing Line Advances, THIRD to each Lender ratably in accordance
with such Lender's proportionate share of all Advances then outstanding, in
repayment or prepayment of such of the outstanding Advances, and for application
to such principal installments, as the Agent may direct, and thereafter ratably
to the Lenders in repayment or prepayment of any other Obligations of the
Borrower then outstanding under the Loan Documents as the Agent shall direct,
PROVIDED that if an Event of Default has occurred and is continuing and the
Revolving Commitments of the Revolving Lenders have been terminated in full, the
Agent shall distribute any payments FIRST, to the payment of all costs and
expenses of the Agent under the Loan Documents, SECOND, to the L/C Bank in
payment of the principal of and interest on any outstanding L/C Advances, THIRD
to the Swing Line Lender in payment of the principal of and interest on any
outstanding Swing Line Advances, and FOURTH, to each Lender ratably in
accordance with such Lender's proportionate share of the principal amount of all
Advances and L/C Obligations then outstanding, in payment or prepayment of such
Obligations owed to such Lender under the Loan Documents, and for application to
such principal installments (if applicable) as the Agent shall direct and
thereafter ratably to the Lenders in repayment or prepayment of any other
Obligations of the Borrower then outstanding under the Loan Documents as the
Agent shall direct.
(f) PAYMENTS ON BUSINESS DAYS. Whenever any payment hereunder or under
any other Loan Document shall be stated to be due on a day other than 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 payment
of interest and commitment and other fees; PROVIDED, HOWEVER, if such extension
would cause payment of
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interest on or principal of any Eurodollar Rate Advance to be made in the
next following month, such payment shall be made on the next preceding
Business Day.
(g) PAYMENTS FROM BORROWER'S ACCOUNTS. The Borrower hereby authorizes
each Lender Party, if and to the extent payment owed by the Borrower to such
Lender Party is not made when due hereunder or under the Note or Notes held by
such Lender Party, to charge from time to time against any or all of the
Borrower's accounts with such Lender Party any amount so due.
(h) CERTAIN TERMS. The terms "pay", "paid" or "payment" under this
Agreement shall include prepay, prepaid or prepayment, respectively, under this
Agreement, and the term "due" under this Agreement shall include due by reason
of a mandatory prepayment (including upon an actual or deemed entry of an order
for relief with respect to a Loan Party under the Federal Bankruptcy Code or
upon acceleration).
SECTION II.10 TAXES.
(a) WITHHOLDING TAXES. Any and all payments by the Borrower hereunder or
under the Notes shall be made, in accordance with Section 2.9 and subject to
Sections 2.10(e) and (f), free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, EXCLUDING, in the case
of each Lender Party and the Agent, net income taxes that are imposed by the
United States and franchise taxes and net income taxes that are imposed on such
Lender Party or the Agent by the state or foreign jurisdiction under the laws of
which such Lender Party or the Agent (as the case may be) is organized or any
political subdivision thereof and, in the case of each Lender Party, franchise
taxes and net income taxes that are imposed on such Lender Party by the state or
foreign jurisdiction of such Lender Party's Applicable 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"). If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder or under any Note to any Lender Party
or the Agent, (i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.10) such Lender Party or the Agent
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.
(b) OTHER TAXES. In addition, the Borrower shall pay any present or
future stamp, documentary, excise, property or similar taxes, charges or levies
that arise from any payment made hereunder or under the Notes or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or the Notes (hereinafter referred to as "OTHER TAXES").
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(c) INDEMNIFICATION. The Borrower shall indemnify each Lender Party and
the Agent for the full amount of Taxes and Other Taxes (and for the full amount
of taxes imposed by any jurisdiction on amounts payable under this Section 2.10)
paid by such Lender Party or the Agent (as the case may be) and any liability
(including penalties, additions to tax, interest and expenses not resulting from
such Lender Party's gross negligence or willful misconduct) arising therefrom or
with respect thereto. This indemnification shall be made within 30 days from
the date such Lender Party or the Agent (as the case may be) makes written
demand therefor. A certificate as to such amounts setting forth in reasonable
detail the basis therefor and the calculation thereof shall be conclusive and
binding for all purposes, absent manifest error.
(d) EVIDENCE OF PAYMENT. Within 30 days after the date of any payment of
Taxes, the Borrower shall furnish to the Agent, at its address referred to in
Section 9.2, the original receipt of payment thereof or a certified copy of such
receipt. In the case of any payment hereunder or under the Notes by the
Borrower through an account or branch outside the United States or on behalf of
the Borrower by a payor that is not a United States person, if the Borrower
determines that no Taxes are payable in respect thereof, the Borrower shall
furnish, or shall cause such payor to furnish, to the Agent, at such address, an
opinion of counsel acceptable to the Agent stating that such payment is exempt
from Taxes. For purposes of this subsection (d) and subsection (e), the terms
"UNITED STATES" and "UNITED STATES PERSON" shall have the meanings specified in
Section 7701 of the Internal Revenue Code.
(e) FOREIGN LENDERS AND THE L/C BANK. Each Lender Party organized under
the laws of a jurisdiction outside the United States shall, on or prior to the
date of its execution and delivery of this Agreement in the case of each Initial
Lender, and on the date of the Assignment and Acceptance pursuant to which it
became a Lender Party in the case of each other Lender Party, and from time to
time thereafter if requested in writing by the Borrower or the Agent (but only
so long thereafter as such Lender Party remains lawfully able to do so), provide
the Agent and the Borrower with Internal Revenue Service form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Lender Party is entitled to benefits under an income tax
treaty to which the United States is a party that reduces the rate of
withholding tax on payments under this Agreement or the Notes or certifying that
the income receivable pursuant to this Agreement or the Notes is effectively
connected with the conduct of a trade or business in the United States. If the
form provided by a Lender Party at the time such Lender Party first becomes a
party to this Agreement indicates a United States interest withholding tax rate
in excess of zero, withholding tax at such rate shall be considered excluded
from Taxes unless and until such Lender Party provides the appropriate form
certifying that a lesser rate applies, whereupon withholding tax at such lesser
rate only shall be considered excluded from Taxes for periods governed by such
form; PROVIDED, HOWEVER, that, if at the date of the Assignment and Acceptance
pursuant to which a Lender Party assignee becomes a party to this Agreement, the
Lender Party assignor was entitled to payments under subsection (a) in respect
of United States withholding tax with respect to interest paid at such date,
then, to such extent, the term Taxes shall include (in addition to
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withholding taxes that may be imposed in the future or other amounts
otherwise includable in Taxes) United States withholding tax, if any,
applicable with respect to the Lender Party assignee on such date. If any
form or document referred to in this Section 2.10(e) requires the disclosure
of information, other than information necessary to compute the tax payable
and information required on the date hereof by Internal Revenue Service form
1001 or 4224, that the Lender Party reasonably considers to be confidential,
the Lender Party shall give notice thereof to the Borrower and shall not be
obligated to include in such form or document such confidential information.
(f) FAILURE TO PROVIDE FORMS. For any period with respect to which a
Lender Party has failed to provide the Borrower with the appropriate form
described in Section 2.10(e) (OTHER THAN if such failure is due to a change in
law occurring after the date on which a form originally was required to be
provided or if such form otherwise is not required under Section 2.10(e)), such
Lender Party shall not be entitled to) indemnification under Section 2.10(a) or
Section 2.10(c) with respect to Taxes imposed by the United States; PROVIDED,
HOWEVER, that should a Lender Party become subject to Taxes because of its
failure to deliver a form required hereunder, the Borrower shall take such steps
as such Lender Party shall reasonably request to assist such Lender Party to
recover such Taxes.
(g) SURVIVAL. Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower contained
in this Section 2.10 shall survive the payment in full of principal and interest
hereunder and under the Notes.
(h) NOTIFICATION. Each Lender Party shall use reasonable efforts to
notify the Borrower in writing not more than 30 days after the date an officer
of such Lender Party responsible for the administration of this Agreement
becomes aware of any event or circumstance as a result of which it will demand
payments pursuant to subsections (a), (b) or (c) of this Section 2.10; PROVIDED,
HOWEVER, that the failure to give any such notice shall not affect the
Borrower's obligations under this Section 2.10.
SECTION II.11 SHARING OF PAYMENTS, ETC. If any Lender Party shall obtain
at any time any payment (whether voluntary, involuntary, through the exercise of
any right of set-off, or otherwise) (a) on account of Obligations due and
payable to such Lender Party hereunder and under the Notes at such time in
excess of its ratable share (according to the proportion of (i) the amount of
such Obligations due and payable to such Lender Party at such time to (ii) the
aggregate amount of the Obligations due and payable to all Lender Parties
hereunder and under the Notes at such time) of payments on account of the
Obligations due and payable to all Lender Parties hereunder and under the Notes
at such time obtained by all the Lender Parties at such time or (b) on account
of Obligations
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owing (but not due and payable) to such Lender Party hereunder and under the
Notes at such time in excess of its ratable share (according to the
proportion of (i) the amount of such Obligations owing (but not due and
payable) to such Lender Party at such time to (ii) the aggregate amount of
the Obligations owing (but not due and payable) to all Lender Parties
hereunder and under the Notes at such time) of payments on account of the
Obligations owing (but not due and payable) to all Lender Parties hereunder
and under the Notes at such time obtained by all the Lender Parties at such
time, such Lender Party shall forthwith purchase from the other Lender
Parties such participations in the Obligations due and payable or owing to
them, as the case may be, as shall be necessary to cause such purchasing
Lender Party to share the excess payment ratably with each of them; PROVIDED,
HOWEVER, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender Party, such purchase from each other
Lender Party shall be rescinded and such other Lender Party shall repay to
the purchasing Lender Party the purchase price to the extent of such other
Lender Party's ratable share (according to the proportion of (i) the purchase
price paid to such Lender Party to (ii) the aggregate purchase price paid to
all Lender Parties) of such recovery together with an amount equal to such
Lender Party's ratable share (according to the proportion of (i) the amount
of such other Lender Party's required repayment to (ii) the total amount so
recovered from the purchasing Lender Party) of any interest or other amount
paid or payable by the purchasing Lender Party in respect of the total amount
so recovered. The Borrower agrees that any Lender Party so purchasing a
participation from another Lender Party pursuant to this Section 2.11 may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of setoff) with respect to such participation as fully
as if such Lender Party were the direct creditor of the Borrower in the
amount of such participation.
SECTION II.12 USE OF PROCEEDS. The proceeds of the Advances shall be
available (and the Borrower agrees that it shall use such proceeds) to (i)
refinance existing Debt of the Borrower and its Subsidiaries, (ii) to provide
working capital for the Borrower and its Subsidiaries and (iii) subject to the
provisions of this Agreement and the other Loan Documents, for other general
corporate purposes of the Borrower and its Subsidiaries, including for capital
expenditures and acquisitions to the extent permitted hereunder.
SECTION II.13 EVIDENCE OF DEBT.
(a) MAINTENANCE OF ACCOUNTS BY LENDER PARTIES. Each Lender Party shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Borrower to such Lender Party resulting from each
Advance owing to such Lender Party from time to time, including the amounts of
principal and interest payable and paid to such Lender Party from time to time
hereunder.
(b) MAINTENANCE OF ACCOUNTS BY AGENT. The Register maintained by the
Agent pursuant to Section 9.7(d) shall include a control account, and a
subsidiary account for each Lender Party, in which accounts (taken together)
shall be recorded (i) the date and amount of each Borrowing made hereunder, the
Type and Interest Type of the Advances comprising such Borrowing and any
Interest Period applicable thereto, (ii) the terms of each Assignment and
Acceptance delivered to and accepted by it, (iii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender Party hereunder, and (iv) the amount of any sum received by the Agent
from the Borrower hereunder and each Lender Party's share thereof. The entries
made in the Register shall be conclusive and binding for all purposes, absent
manifest error.
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(c) EXECUTION OF PROMISSORY NOTES BY BORROWER. The Borrower hereby agrees
that if, in the opinion of any Lender, a promissory note or other evidence of
debt is required, appropriate or desirable to reflect or enforce the
indebtedness of the Borrower resulting from the Revolving Advances or, in the
case of the Swing Line Lender, Swing Line Advances made, or to be made, by such
Lender, then upon request of such Lender, the Borrower shall promptly execute
and deliver to such Lender, for each of the Advances made or to be made by such
Lender, a promissory note substantially in the form of Exhibit A-1 for Revolving
Advances and Exhibit A-2 for Swing Line Advances, each payable to the order of
such Lender in an amount equal to the Revolving Commitment or Swing Line
Commitment, as the case may be, of such Lender.
ARTICLE III
AMOUNTS AND TERMS OF LETTERS OF CREDIT
SECTION III.1 THE L/C SUBFACILITY. The Borrower may request, on the terms
and conditions hereinafter set forth, and the L/C Bank shall Issue, Letters of
Credit for the account of the Borrower from time to time on any Business Day
during the period after the Closing Date until the Commitment Termination Date
(a) in an aggregate Available Amount for all Letters of Credit not to exceed at
any time the L/C Sublimit (the "L/C SUBFACILITY"), and (b) in an Available
Amount for each such Letter of Credit not to exceed the Unused Revolving
Commitments of the Revolving Lenders on such Business Day. No Letter of Credit
shall have an expiration date (including all rights of the Borrower or the
beneficiary to require renewal) later than the earlier of the Commitment
Termination Date and two years after the date of issuance thereof, but may by
its terms be renewable with the consent of the L/C Bank. Within the limits of
the L/C Subfacility, and subject to the limits referred to above, the Borrower
may request the Issuance of one or more Letters of Credit under this Section
3.1, repay amounts due resulting from L/C Advances thereunder pursuant to
Section 3.3, and request the Issuance of one or more additional Letters of
Credit under this Section 3.1.
SECTION III.2 ISSUANCE OF LETTERS OF CREDIT.
(a) NOTICE OF ISSUANCE. Each Letter of Credit shall be Issued pursuant to
a Notice of Issuance, which must be received by the Agent and the L/C Bank not
later than 12:00 noon (Dallas, Texas time) on the tenth Business Day prior to
the date of the proposed Issuance of such Letter of Credit (or such shorter
period as may be acceptable to the L/C Bank). Each such Notice of Issuance
shall specify the requested (i) date of such Issuance (which shall be a Business
Day), (ii) Available Amount of such Letter of Credit, (iii) expiration date of
such Letter of Credit, (iv) name and address of the beneficiary of such Letter
of Credit, and (v) form of such Letter of Credit, and shall be accompanied by
such customary application and agreement for letter of credit of the L/C Bank
(an "L/C AGREEMENT") as the L/C Bank may specify to the Borrower for use in
connection with such
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requested Letter of Credit.
(b) CONDITIONS TO ISSUANCE. If (i) the requested form of such Letter of
Credit is acceptable to the Agent and the L/C Bank in the reasonable discretion
of each and (ii) the L/C Bank has not received notice from the Agent or
Revolving Lenders holding at least 51% of the Revolving Commitments that the
Issuance of such Letter of Credit is not authorized because such Issuance would
not comply with the requirements of clause (a) or (b) of Section 3.1 or one or
more of the conditions set forth in Section 4.2 has not been satisfied, then the
L/C Bank will, upon fulfillment of the applicable conditions set forth in
Section 4.2 (which fulfillment the L/C Bank may assume in the absence of actual
knowledge, or notice received from the Borrower, the Agent or the Required
Lenders, to the contrary) and subject to the provisions of this Article III,
make such Letter of Credit available to the Borrower at its office referred to
in Section 9.2 or as otherwise agreed upon with the Borrower in connection with
such Issuance. In the event and to the extent that the provisions of any L/C
Agreement shall conflict with this Agreement, the provisions of this Agreement
shall govern.
(c) REPORTS BY THE L/C BANK. The L/C Bank shall furnish to each Lender
Party (i) on the fifth Business Day following the last Business Day of each
March, June, September and December, a written report summarizing Issuance and
expiration dates of Letters of Credit Issued during the preceding calendar
quarter and any L/C Advances made during such calendar quarter under all Letters
of Credit Issued, and (ii) two Business Days prior to the last Business Day of
each March, June, September and December, a written report setting forth the
average daily aggregate Available Amount during the preceding calendar quarter
of all Letters of Credit Issued.
SECTION III.3 DRAWING AND REIMBURSEMENT. The Borrower agrees to reimburse
the L/C Bank under each Letter of Credit, within one Business Day after it has
notice of any L/C Advance by the L/C Bank thereunder, for the principal amount
of such L/C Advance, and shall pay to the L/C Bank, on demand, interest on the
unreimbursed principal of such L/C Advance at a rate per annum equal to (a) from
the date of such L/C Advance to the first Business Day after notice thereof has
been given to the Borrower, the rate applicable to Base Rate Advances in effect
from time to time, and (b) from and after such first Business Day, the Default
Rate. If the Borrower shall fail to so reimburse the L/C Bank within one
Business Day after the Borrower receives notice that any such L/C Advance has
been made, then upon demand by the L/C Bank, and whether or not a Default has
occurred and is continuing or any conditions set forth in Section 4.2 are
satisfied, each Revolving Lender shall purchase from the L/C Bank, and the L/C
Bank shall sell and assign to each Revolving Lender, such Lender's Pro Rata
Share of such outstanding L/C Advance as of the date of such purchase, by making
available for the account of the L/C Bank, by deposit to the Agent's Account, in
same day funds, an amount equal to the sum of (i) the portion of the outstanding
principal amount of such L/C Advance to be purchased by such Lender, plus (ii)
interest on such amount, for each day from the date on which such L/C Advance is
made until the date such amount is paid to the Agent, at the Federal Funds Rate.
Each Revolving Lender agrees to so purchase its Pro Rata Share of an outstanding
L/C Advance
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on (A) the Business Day on which demand therefor is made by the L/C
Bank which made such L/C Advance, provided notice of such demand is given not
later than 12:00 noon (Dallas, Texas time) on such Business Day, or (B) the
first Business Day next succeeding such demand if notice of such demand is given
after such time. Upon any such assignment by the L/C Bank to any Lender of a
portion of an L/C Advance, the L/C Bank represents and warrants to such Lender
that the L/C Bank is the legal and beneficial owner of such interest being
assigned by it, but makes no other representation or warranty and assumes no
responsibility with respect to such L/C Advance, the Loan Documents or any Loan
Party.
SECTION III.4 OBLIGATIONS ABSOLUTE. The Obligations of the Borrower under
this Agreement, any L/C Agreement and any other agreement or instrument relating
to any Letter of Credit shall be unconditional and irrevocable, and shall be
paid strictly in accordance with the terms of this Agreement, such L/C Agreement
and such other agreement or instrument under all circumstances, including,
without limitation, the following circumstances:
(a) any lack of validity or enforceability of this Agreement, any L/C
Agreement, any Letter of Credit or any other agreement or instrument relating
thereto (this Agreement and all of the other foregoing being collectively
referred to herein as the "L/C RELATED DOCUMENTS");
(b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Obligations of the Borrower in respect of any L/C
Related Document or any other amendment or waiver of or any consent to departure
from all or any of the L/C Related Documents;
(c) the existence of any claim, set-off, defense or other right that the
Borrower or any of its Subsidiaries may have at any time against any beneficiary
or any transferee of a Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the L/C Bank or any other
Person, whether in connection with the transactions contemplated by the L/C
Related Documents or any unrelated transaction;
(d) any statement or any other document presented under a Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(e) payment by the L/C Bank under a Letter of Credit against presentation
of a draft or certificate that does not strictly comply with the terms of such
Letter of Credit;
(f) any exchange, release or non-perfection of any collateral, or any
release or amendment or waiver of or consent to departure from any guarantee,
for all or any of the Obligations of the Borrower in respect of the L/C Related
Documents; or
(g) any other circumstance or happening whatsoever, whether or not
similar to
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any of the foregoing, including, without limitation, any other circumstance
that might otherwise constitute a defense available to, or a discharge of, any
Loan Party;
PROVIDED, HOWEVER, and notwithstanding anything to the contrary herein, nothing
herein shall adversely affect or prejudice the rights of the Borrower against
the L/C Bank for wrongful disbursement made by the L/C Bank under a Letter of
Credit as a result of acts or omissions constituting gross negligence or willful
misconduct on the part of the L/C Bank.
SECTION III.5 LETTER OF CREDIT COMPENSATION.
(a) The Borrower shall pay to the Agent:
(i) for the account of the L/C Bank, a fronting fee for each
Letter of Credit in an amount equal to 0.125 % of the Available Amount of
such Letter of Credit on the date of Issuance of such Letter of Credit (or,
with respect to any increase in such Available Amount, on the date of such
increase) payable on such date;
(ii) for the account of each Revolving Lender, a letter of credit
issuance fee with respect to each standby Letter of Credit in an amount
equal to a rate per annum equal to the Applicable Margin in effect from
time to time for Eurodollar Rate Advances on such Lender's Pro Rata Share
of the average daily Available Amount of such standby Letter of Credit
outstanding from time to time; and
(iii) for the account of each Revolving Lender, a letter of
credit drawing fee with respect to each trade Letter of Credit in an amount
equal to a rate per annum equal to the Applicable Margin in effect from
time to time for Eurodollar Rate Advances on such Lender's Pro Rata Share
of the amount of each drawing under such trade Letter of Credit.
The letter of credit issuance fee payable under Section 3.5(a)(ii) shall be
payable quarterly in arrears on the first day of each January, April, July and
October, commencing January 1, 1997, and on the Commitment Termination Date.
The letter of credit drawing fee payable under Section 3.5(a)(iii) shall be
payable on each date of drawing under a trade Letter of Credit. For purposes of
computing any fees under this Section 3.5(a), the determination of the maximum
amount available to be drawn under a Letter of Credit at any time shall assume
strict compliance with all conditions for drawing. Any fees paid pursuant to
this Section 3.5(a) are nonrefundable.
(b) The Borrower shall pay to the L/C Bank, for its own account and on
demand, such transfer fees and other fees, charges and expenses in connection
with the Issuance, amendment, transfer, cancellation or administration of each
Letter of Credit as the Borrower and the L/C Bank shall agree; PROVIDED that in
no event shall the L/C Bank require, after giving effect to the amounts payable
to it pursuant to Section 3.5(a) above (in
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the case of the Issuance of any Letter of Credit), more than the standard
fees, charges and expenses which it normally charges in connection with such
matters.
SECTION III.6 USE OF LETTERS OF CREDIT. Any Letters of Credit Issued
hereunder shall be used solely to support Obligations of the Borrower and its
Subsidiaries not prohibited hereunder.
ARTICLE IV
CONDITIONS OF LENDING
SECTION IV.1 CONDITIONS PRECEDENT TO CLOSING. The obligation of each
Lender to enter into this Agreement and for the outstanding Advances and Letters
of Credit to be governed by this Agreement is subject to the satisfaction of the
following conditions:
(a) MATERIAL ADVERSE CHANGE. There shall have occurred no Material
Adverse Change since December 31, 1995.
(b) LITIGATION. There shall exist no action, suit, investigation,
litigation or proceeding affecting any Loan Party or any of their Subsidiaries
pending or threatened before any court, governmental agency or arbitrator that
(i) could reasonably be expected to have a Material Adverse Effect or (ii)
purports to affect the legality, validity or enforceability of this Agreement,
any Note, any other Loan Document or the consummation of the transactions
contemplated hereby or thereby.
(c) FEES. The Borrower shall have paid all accrued fees and expenses of
the Agent and the Lenders provided for in this Agreement or in the Fee Letter
and payable at or prior to the Closing Date (including the billed accrued fees
and expenses of counsel to the Agent).
(d) SURVIVING DEBT. The Lender Parties shall be satisfied that all
existing Debt of the Borrower and its Subsidiaries, other than the Debt
identified on Schedule 4.1(d) (the "SURVIVING DEBT"), has been prepaid, redeemed
or defeased in full or otherwise satisfied and extinguished and that all such
Surviving Debt shall be on terms and conditions satisfactory to the Lender
Parties.
(e) DELIVERY OF DOCUMENTS. The Agent shall have received on or before the
Closing Date the following, each dated such day (unless otherwise specified)
and, except for the Notes, in sufficient copies for each Lender Party:
(i) The Notes to the order of each Revolving Lender and the
Swing Line Lender, as appropriate.
(ii) The Fee Letter.
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(iii) A Certificate of the Secretary or an Assistant
Secretary of each Loan Party certifying (A) copies of the resolutions of
the Board of Directors of such Loan Party approving the execution, delivery
and performance of each Loan Document to which it is or is to be a party,
and of all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Agreement, the Notes,
and each other Loan Document and (B) the names and true signatures of the
officers of such Loan Party authorized to sign the Loan Documents to which
such Loan Party is or is to be a party and the other documents to be
delivered hereunder and thereunder.
(iv) A copy of the certificate or articles of incorporation of
each Loan Party and each amendment thereto, certified (as of a date
reasonably near the Closing Date) by the Secretary of State of the state of
such Loan Party's incorporation as being a true and correct copy thereof
and certifying as to such Loan Party's due incorporation and good standing
under the laws of such State.
(v) A certificate of each Loan Party, signed on behalf of such
Loan Party by its President or a Vice President and its Secretary or any
Assistant Secretary, dated the Closing Date (the statements made in which
certificate shall be true on and as of the Closing Date), certifying as to
(A) the absence of any amendments to the charter of such Loan Party since
the date of the Secretary of State's certificate referred to in Section
4.1(e)(iv), (B) a true and correct copy of the bylaws of such Loan Party as
in effect on the Closing Date, (C) the due incorporation and good standing
of such Loan Party as a corporation organized under the laws of the state
of such Loan Party's incorporation, and the absence of any proceeding for
the dissolution or liquidation of such Loan Party, (D) the truth of the
representations and warranties contained in the Loan Documents as though
made on and as of the Closing Date and (E) the absence of any event
occurring and continuing, or resulting from the execution and delivery of
the Loan Documents, that constitutes a Default.
(vi) Such financial, business and other information regarding any
Loan Party and its Subsidiaries as the Lenders shall have reasonably
requested.
(vii) Certificates, in substantially the form of Exhibit F,
attesting to the Solvency of each Loan Party from its chief financial
officer.
(viii) A guaranty in substantially the form of Exhibit E (as
amended, supplemented or otherwise modified from time to time, the
"SUBSIDIARY GUARANTY"), duly executed by CableData and IBS.
(xi) A favorable opinion of Greene Radovsky Maloney & Share LLP,
counsel for the Borrower, in substantially the form of Exhibit G hereto and
as to such other matters as any Lender Party through the Agent may
reasonably request.
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SECTION IV.2 CONDITIONS PRECEDENT TO EACH BORROWING AND ISSUANCE. The
obligation of each Lender to make an Advance (other than an L/C Advance made by
the L/C Bank or a Lender pursuant to Section 3.3 and other than an Advance made
by a Revolving Lender pursuant to Section. 2.2(b)(ii)(B)) on the occasion of
each Borrowing (including the initial Borrowing), and the right of the Borrower
to request the Issuance of Letters of Credit, shall be subject to the further
conditions precedent that on the date of such Borrowing or Issuance the
following statements shall be true (and each of the giving of the applicable
Notice of Borrowing or Notice of Issuance and the acceptance by the Borrower of
the proceeds of such Borrowing or of such Letter of Credit shall constitute a
representation and warranty by the Borrower that on the date of such Borrowing
or Issuance such statements are true):
(i) the representations and warranties contained in each Loan
Document are correct on and as of the date of such Borrowing or Issuance,
before and after giving effect to such Borrowing or Issuance and to the
application of the proceeds therefrom, as though made on and as of such
date other than any such representations or warranties that, by their
terms, are specifically made as of a date other than the date of such
Borrowing or issuance; and
(ii) no event has occurred and is continuing, or would result
from such Borrowing or Issuance or from the application of the proceeds
therefrom, that constitutes a Default or an Event of Default.
SECTION IV.3 DETERMINATIONS UNDER ARTICLE IV. For purposes of determining
compliance with the conditions specified in Sections 4.1 and 4.2, each Lender
shall be deemed to have consented to, approved or accepted or to be satisfied
with each document or other matter required thereunder to be consented to or
approved by or acceptable or satisfactory to the Lender Parties (or the Required
Lenders) unless an officer of the Agent responsible for the transactions
contemplated by the Loan Documents shall have received written notice from such
Lender Party prior to the applicable Borrowing or Issuance specifying its
objection thereto and, in the case of any such Borrowing, such Lender Party
shall not have made available to the Agent such Lender Party's Pro Rata Share of
such Borrowing. In the absence of any such notice or actual knowledge to the
contrary, the Agent shall be entitled to assume that such conditions are
satisfied and shall have no liability or duty for the making or funding of any
Advances, or the Issuance of any Letters of Credit, at a time when any
applicable condition set forth in Section 4.1 or 4.2 has not been met.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION V.1 REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower
represents and warrants as follows:
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(a) INCORPORATION, QUALIFICATION, CORPORATE POWER AND AUTHORITY. Each
Loan Party (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (ii) is duly
qualified and in good standing as a foreign corporation in each other
jurisdiction in which it owns or leases property or in which the conduct of its
business requires it to so qualify or be licensed except where the failure to so
qualify or be licensed would not have a Material Adverse Effect, and (iii) has
all requisite corporate power and authority to own or lease and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted.
(b) CAPITAL STOCK. Set forth on Schedule 5.1(b) hereto is a complete and
accurate list, as of the Closing Date, of all Subsidiaries of each Loan Party,
showing as of the Closing Date (as to each such Subsidiary) (i) the jurisdiction
of its incorporation, (ii) the number of shares of each class of capital stock
authorized, and the number outstanding, (iii) the percentage of the outstanding
shares of each such class owned (directly or indirectly) by such Loan Party and
(iv) the number of shares covered by all outstanding options, warrants, rights
of conversion or purchase and similar rights. All of the outstanding capital
stock of all of such Subsidiaries has been validly issued, is fully paid and
non-assessable and is owned by such Loan Party or one or more of its
Subsidiaries free and clear of all Liens. Each such Subsidiary (A) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, (B) is duly qualified and in good
standing as a foreign corporation in each other jurisdiction in which it owns or
leases property or in which the conduct of its business requires it to so
qualify or be licensed except where the failure to so qualify or be licensed
would not have a Material Adverse Effect and (C) has all requisite corporate
power and authority to own or lease and operate its properties and to carry on
its business as now conducted and as proposed to be conducted.
(c) AUTHORIZATION; NO CONFLICT OR VIOLATION; COMPLIANCE WITH LAWS. The
execution, delivery and performance by each Loan Party of each Loan Document to
which it is or is to be a party are within such Loan Party's corporate powers,
have been duly authorized by all necessary corporate action, and do not (i)
contravene such Loan Party's charter or by-laws, (ii) violate any law
(including, without limitation, the Securities Exchange Act of 1934 and the
Racketeer Influenced and Corrupt Organizations Chapter of the Organized Crime
Control Act of 1970), rule, regulation (including, without limitation,
Regulation X of the Board of Governors of the Federal Reserve System), order,
writ, judgment, injunction, decree, determination or award, (iii) conflict with
or result in the breach of, or constitute a default under, any contract, loan
agreement, indenture, mortgage, deed of trust, lease or other instrument binding
on or affecting any Loan Party, any of its Subsidiaries or any of their
properties or (iv) result in or require the creation or imposition of any Lien
upon or with respect to any of the properties of any Loan Party or any of its
Subsidiaries. No Loan Party or any of its Subsidiaries is in violation of or
subject to any contingent liability on account of any such law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award or
in breach of any such contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument, the violation or
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breach of which could reasonably be expected to have a Material Adverse Effect.
(d) APPROVALS AND CONSENTS. No authorization or approval or other action
by, and no notice to or filing or registration with, any governmental authority
or regulatory body or any other third party is required for (i) the due
execution, delivery, recordation, filing or performance by any Loan Party of any
Loan Document to which it is or is to be a party, or for the consummation of the
transactions contemplated hereby, or (ii) the exercise by the Agent or any
Lender Party of its rights under the Loan Documents.
(e) ENFORCEABILITY. This Agreement has been, and each of the Notes and
each other Loan Document when delivered hereunder will have been, duly executed
and delivered by each Loan Party thereto. This Agreement is, and each of the
Notes and each other Loan Document when delivered hereunder will be, the legal,
valid and binding obligation of each Loan Party thereto, enforceable against
such Loan Party in accordance with its terms except as enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally or by general equitable principles.
(f) FINANCIAL STATEMENTS.
(i) The Consolidated balance sheet of the Borrower and its
Subsidiaries as at December 31, 1995, and the related Consolidated
statements of income and cash flows of the Borrower and its Subsidiaries
for the fiscal year then ended, accompanied by an opinion of Price
Waterhouse LLP, independent public accountants, copies of which have been
furnished to each Lender Party, fairly present the Consolidated financial
condition of the Borrower and its Subsidiaries as at such date and the
Consolidated results of the operations of the Borrower and its Subsidiaries
for the period ended on such date, all in accordance with generally
accepted accounting principles applied on a consistent basis. Since
December 31, 1995, there has been no Material Adverse Change.
(ii) The consolidating balance sheets as at December 31, 1995,
and the consolidating income statements for the twelve-month period then
ended, in each case of the Borrower and its Subsidiaries, copies of which
have been furnished to each Lender Party, fairly present (subject to
year-end adjustments and footnote disclosures) the Consolidated financial
condition of the Borrower and its Subsidiaries as at such date and the
Consolidated results of operations of the Borrower and its Subsidiaries for
such period, all in accordance with generally accepted accounting
principles applicable to pro forma financial statements.
(iii) The interim Consolidated balance sheets of the Borrower
and its Subsidiaries as at the end of, and the related interim Consolidated
statements of earnings and cash flows for, each quarterly period ended
after December 31, 1995 and prior to the Closing Date, copies of which have
been furnished to each Lender Party, fairly present (subject to year-end
adjustments and footnote disclosures) the
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Consolidated financial condition of the Borrower and its Subsidiaries as at
such date and the Consolidated results of operations of the Borrower and its
Subsidiaries for such period, all in accordance with generally accepted
accounting principles applied on a consistent basis.
(iv) The Consolidated forecasted balance sheets, income
statements and cash flows statements of the Borrower and its Subsidiaries
delivered to the Lender Parties pursuant to Section 6.3 were prepared in
good faith on the basis of the assumptions stated therein, which
assumptions were fair in the light of conditions existing at the time of
delivery of such forecasts, and represented, at the time of delivery, the
Borrower's best estimate of its future financial performance.
(g) GOVERNMENTAL REGULATION. Neither the Borrower nor any Subsidiary of
the Borrower is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act, the Investment
Company Act of 1940, or any other federal or state regulatory scheme such that
its ability to incur Debt is limited or its ability to consummate the
transactions contemplated hereby is impaired.
(h) DISCLOSURE. None of the written information (including, without
limitation, exhibits or reports) furnished by any Loan Party to the Agent or any
Lender Party in connection with this Agreement contained any untrue statement of
a material fact or omitted to state a material fact necessary to make the
statements made therein not misleading at the time of delivery thereof (it being
understood that the Borrower's representation as to any forecasts and
projections included in the foregoing are that such forecasts and projections
were prepared in good faith on the basis of the assumptions stated therein,
which assumptions were reasonable at the time of delivery of such forecasts and
projections, and that actual results during the period or periods covered by
such forecasts and projections may differ therefrom).
(i) LITIGATION. There is no action, suit, investigation, litigation or
proceeding affecting any Loan Party or any of their Subsidiaries, including any
Environmental Action, pending or, to the best of the Borrower's knowledge,
threatened before any court, governmental agency or arbitrator that (i) could
reasonably be expected to have a Material Adverse Effect or (ii) purports to
affect the legality, validity or enforceability of this Agreement, any Note, any
other Loan Document or the consummation of the transactions contemplated hereby.
(j) USE OF PROCEEDS.
(i) No proceeds of any Advance will be used to acquire any
equity security of a class that is registered pursuant to Section 12 of the
Securities Exchange Act of 1934 or to finance all or any part of any
hostile acquisition.
(ii) Neither the Borrower nor any of its Subsidiaries is engaged
in the business of extending credit for the purpose of purchasing or
carrying Margin
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Stock, and no proceeds of any Advance will be used to purchase or carry any
Margin Stock or to extend credit to others for the purpose of purchasing or
carrying any Margin Stock.
(iii) Following application of the proceeds of each Advance,
not more than 25 percent of the value of the assets (either of the Borrower
only or of any Loan Party and its Subsidiaries on a Consolidated basis),
subject to the provisions of Section 6.2(a) or 6.2(e) or subject to any
restriction contained in any agreement or instrument between the Borrower
and any Lender Party or any Affiliate of any Lender Party relating to Debt
and within the scope of Section 7.1(e), will be Margin Stock.
(k) ERISA MATTERS.
(i) Set forth on Schedule 5.1(k) hereto is a complete and
accurate list as at the Closing Date of all Plans, Multiemployer Plans and
Welfare Plans with respect to any employees of any Loan Party or any of its
Subsidiaries.
(ii) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan of any Loan Party or any of its ERISA
Affiliates that has resulted in or is reasonably likely to result in a
material liability of any Loan Party or any of its ERISA Affiliates.
(iii) Schedule B (Actuarial Information) to the 1995 annual
report (Form 5500 Series) for each Plan of any Loan Party or any of its
ERISA Affiliates, (copies of which have been filed with the Internal
Revenue Service and furnished to the Lender Parties, is complete and
accurate and fairly presents the funding status of such Plan, and since the
date of such Schedule B there has been no material adverse change in such
funding status.
(iv) Neither any Loan Party nor any of its ERISA Affiliates has
incurred or is reasonably expected to incur any Withdrawal Liability to any
Multiemployer Plan.
(v) Neither any Loan Party nor any of its ERISA Affiliates has
been notified by the sponsor of a Multiemployer Plan of any Loan Party or
any of its ERISA Affiliates that such Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of
ERISA, and no such Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, within the meaning of Title IV of
ERISA.
(vi) Except as set forth in the financial statements referred to
in Sections 5.1(f) and 6.3, the Borrower and its Subsidiaries have no
material liability with respect to "expected post retirement benefit
obligations" within the meaning of Statement of Financial Accounting
Standards No. 106.
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(l) NO ADVERSE CONDITIONS. Neither the business nor the properties of any
Loan Party or any of its Subsidiaries are affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that could reasonably be expected to have
a Material Adverse Effect.
(m) COMPLIANCE WITH ENVIRONMENTAL LAWS.
(i) The operations and properties of each Loan Party and each of
its Subsidiaries comply in all material respects with all Environmental
Laws, all necessary Environmental Permits have been obtained and are in
effect for the operations and properties of each Loan Party and its
Subsidiaries, each Loan Party and its Subsidiaries are in compliance in all
material respects with all such Environmental Permits, and no circumstances
exist that could reasonably be expected to (A) form the basis of an
Environmental Action against any Loan Party or any of its Subsidiaries or
any of their properties that could reasonably be expected to have a
Material Adverse Effect or (B) cause any such property to be subject to any
material restrictions on ownership, occupancy, use or transferability under
any Environmental Law.
(ii) None of the properties of any Loan Party or any of its
Subsidiaries is listed or, to its knowledge, proposed for listing on the
National Priorities List under CERCLA or on the Comprehensive Environmental
Response, Compensation and Liability Information System maintained by the
Environmental Protection Agency or any analogous state list of sites
requiring investigation or cleanup or is adjacent to any such property,
and, to its knowledge, no underground storage tanks, as such term is
defined in 42 U.S.C. Section 6991, are located on any property of any Loan
Party or any of its Subsidiaries or, to its knowledge, on any adjoining
property.
(iii) Neither any Loan Party nor any of its Subsidiaries has
transported or arranged for the transportation of any Hazardous Materials
to any location that is listed or, to its knowledge, proposed for listing
on the National Priorities List under CERCLA or on the Comprehensive
Environmental Response, Compensation and Liability Information System
maintained by the Environmental Protection Agency or any analogous state
list. No Hazardous Materials have been generated, used, treated, handled,
stored or disposed of on, or released or transported to or from, any
property of any Loan Party or any of its Subsidiaries or, to its knowledge,
any adjoining property, except in compliance with all material
Environmental Laws and Environmental Permits, and all other wastes
generated at any such properties have been disposed of in compliance with
all material Environmental Laws and Environmental Permits.
(n) CONTRACTUAL OBLIGATIONS.
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(i) Set forth on Schedule 5.1(n)(i) hereto is a complete and
accurate list of all Material Contracts of the Borrower and its
Subsidiaries, showing as of the Closing Date the parties, subject matter
and term thereof. Each such Material Contract has been duly authorized,
executed and delivered by any Loan Party thereto, has not been amended or
otherwise modified, is in full force and effect, and there exists no
default under any Material Contract by any Loan Party or, to the Borrower's
knowledge, any other party thereto.
(ii) Neither any Loan Party nor any of its Subsidiaries is a
party to any indenture, loan or credit agreement or any lease or other
agreement or instrument the performance of which could have a Material
Adverse Effect, or is subject to any charter or corporate restriction that
could have a Material Adverse Effect.
(iii) Neither the Borrower nor any of its Subsidiaries is in
default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Contractual
Obligation applicable to it, and no condition exists which, with the giving
of notice or the lapse of time or both, would constitute a default under
such Contractual Obligation, except, in any such case, where the
consequences, direct or indirect, of such default or defaults, if any,
would not have a Material Adverse Effect.
(iv) Schedule 5.1(n)(iv) sets forth a complete and accurate list
as of the Closing Date of (A) all joint venture and partnership agreements
to which the Borrower or any of its Subsidiaries is a party, and (B) all
covenants not to compete restricting the Borrower or any of its
Subsidiaries to which the Borrower or any of its Subsidiaries is a party or
by which the Borrower or any of its Subsidiaries is bound.
(o) TAX INFORMATION.
(i) Each Loan Party and each of its Subsidiaries has filed, has
caused to be filed or has been included in all tax returns (Federal, state,
local and foreign) required to be filed and has paid all taxes shown
thereon to be due, together with applicable interest and penalties, except,
in the case of state, local or foreign tax returns, where the failure to
file or pay taxes would not have a Material Adverse Effect.
(ii) Set forth on Schedule 5.1(o)(ii) hereto is a complete and
accurate list, as of the Closing Date, of each taxable year of the Borrower
for which Federal income tax returns have been filed and for which the
expiration of the applicable statute of limitations for assessment or
collection has not occurred by reason of extension or otherwise (an "OPEN
YEAR").
(iii) There is no unpaid amount, as of the Closing Date, of
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adjustments to the Federal income tax liability of any Loan Party or any of
its Subsidiaries proposed by the Internal Revenue Service with respect to
Open Years. No issues have been raised by the Internal Revenue Service in
respect of Open Years that, in the aggregate, could reasonably be expected
to have a Material Adverse Effect.
(iv) There is no unpaid amount or inadequate provision made in
accordance with GAAP, as of the Closing Date, of or with respect to
adjustments to the state, local and foreign tax liability of any Loan Party
or any of its Subsidiaries proposed by all state, local and foreign taxing
authorities (other than amounts arising from adjustments to Federal income
tax returns, if any). No issues have been raised by such taxing
authorities that, in the aggregate, could have a Material Adverse Effect.
(p) NO INVESTMENT COMPANY. Neither any Loan Party nor any of its
Subsidiaries is an "investment company," or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as
such terms are defined in the Investment Company Act of 1940, as amended.
Neither the making of any Advances, nor the issuance of any Letters of
Credit, nor the application of the proceeds or repayment thereof by the
Borrower, nor the consummation of the other transactions contemplated hereby,
will violate any provision of such Act or any rule, regulation or order of
the Securities and Exchange Commission thereunder.
(q) SOLVENCY. Each Loan Party is, individually and together with its
Subsidiaries, Solvent.
(r) SURVIVING DEBT. Set forth on Schedule 4.1(d) hereto is a complete and
accurate list of all Surviving Debt, showing as of the Closing Date the
principal amount outstanding thereunder.
(s) PROPERTY. The Borrower has good and marketable title to each of the
assets reflected on the financial statements provided pursuant to Section 5.1(f)
except for such assets sold or otherwise disposed of (i) in the ordinary course
of business prior to the Closing Date, and (ii) as permitted hereunder after the
Closing Date. No assets or revenues of the Borrower or any of its Subsidiaries
is subject to any Lien except Permitted Liens or as otherwise permitted under
the terms of this Agreement.
(t) INVESTMENTS. Set forth on Schedule 5.1(t) hereto is a complete and
accurate list, as of the Closing Date, of all Investments of at least
$10,000,000 held by any Loan Party, or any of its Subsidiaries, showing as of
the Closing Date the amount, obligor or issuer and maturity, if any, thereof.
ARTICLE VI
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COVENANTS OF THE BORROWER
SECTION VI.1 AFFIRMATIVE COVENANTS. So long as any Advance shall remain
unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have
any Commitment hereunder, the Borrower will, unless the Required Lenders shall
otherwise consent in writing:
(a) COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its Subsidiaries
to comply, in all material respects, with all applicable laws, rules,
regulations and orders, such compliance to include, without limitation,
compliance with ERISA and the Racketeer Influenced and Corrupt Organizations
Chapter of the Organized Crime Control Act of 1970.
(b) PAYMENT OF TAXES, ETC. Pay and discharge, and cause each of its
Subsidiaries to pay and discharge, before the same shall become delinquent, (i)
all taxes, assessments and governmental charges or levies imposed upon it or
upon its property and (ii) all lawful claims that, if unpaid, might by law
become a Lien upon its property; PROVIDED, HOWEVER, that neither the Borrower
nor any of its Subsidiaries shall be required to pay or discharge any such tax,
assessment, charge or claim that is being contested in good faith and by proper
proceedings and as to which appropriate reserves in accordance with GAAP are
being maintained, unless and until any Lien resulting therefrom attaches to its
property and becomes enforceable against its other creditors.
(c) COMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS. Comply, and cause each of
its Subsidiaries and all lessees and other Persons occupying its properties to
comply, in all material respects, with all Environmental Laws and Environmental
Permits applicable to its operations and properties; obtain and renew all
Environmental Permits necessary for its operations and properties; and conduct,
and cause each of its Subsidiaries to conduct, any investigation, study,
sampling and testing, and undertake any cleanup, removal, remedial or other
action necessary to remove and clean up all Hazardous Materials from any of its
properties, in accordance with the requirements of all Environmental Laws;
PROVIDED, HOWEVER, that neither the Borrower nor any of its Subsidiaries shall
be required to undertake any such cleanup, removal, remedial or other action to
the extent that its obligation to do so is being contested in good faith and by
proper proceedings and appropriate reserves in accordance with GAAP are being
maintained with respect to such circumstances.
(d) MAINTENANCE OF INSURANCE. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which the Borrower or such Subsidiary operates and
furnish to the Agent, upon request by the Agent from time to time, certificates
of insurance or duplicate policies evidencing such coverage.
(e) PRESERVATION OF CORPORATE EXISTENCE, ETC. Preserve and maintain,
and cause
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each of its Subsidiaries (other than IBS Postal Relations and CableData
Limited, a Canadian corporation) to preserve and maintain, its corporate
existence, rights (charter and statutory) and franchises; PROVIDED, HOWEVER,
that neither the Borrower nor any of its Subsidiaries shall be required to
preserve any right or franchise if the Board of Directors of the Borrower or
such Subsidiary shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Borrower or such Subsidiary, as
the case may be, and that the loss thereof is not disadvantageous in any
material respect to the Borrower, such Subsidiary or the Lender Parties.
(f) VISITATION RIGHTS. Upon reasonable advance notice and at any
reasonable time and from time to time, permit the Agent or any of the Lender
Parties, or any agents or representatives thereof, to examine and make copies of
and abstracts from the records and books of account of, and visit the properties
of, the Borrower and any of its Subsidiaries, and to discuss the affairs,
finances and accounts of the Borrower and any of its Subsidiaries with any of
their appropriate officers or directors and with their independent public
accountants; PROVIDED, that any documentation to be examined, copied or
extracted or other information sought by the Agent or any of the Lender Parties
(or any agent or representative thereof) has some reasonable relationship to an
inquiry related to this Agreement and that, in any case, the documentation and
other information so obtained be (i) used solely in connection with the
transactions contemplated by this Agreement and (ii) be held by the recipient
thereof in accordance with such Person's customary confidentiality procedures
for the handling of information of the type so received.
(g) KEEPING OF BOOKS. Keep, and cause each of its Subsidiaries to keep,
proper books of record and account, in which full and correct entries shall be
made of all financial transactions and the assets and business of the Borrower
and each such Subsidiary in accordance with GAAP.
(h) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve, and cause each
of its Subsidiaries to maintain and preserve, all of its properties that are
used or useful in the conduct of its business in good working order and
condition, ordinary wear and tear excepted.
(i) COMPLIANCE WITH TERMS OF LEASEHOLDS. To the extent it is in the
Borrower's best interests to do so (as determined in good faith by the
Borrower), (i) make all payments and otherwise perform all its obligations in
respect of all leases of real property to which it is a party, (ii) keep such
leases in full force and effect and not allow such leases to lapse or be
terminated or any rights to renew such leases to be forfeited or canceled, (iii)
notify the Agent of any material default by any party with respect to such
leases and cooperate with the Agent in all respects to cure any such default by
it, and (iv) cause each of its Subsidiaries to do so.
(j) PERFORMANCE OF MATERIAL CONTRACTS. To the extent it is in the
Borrower's best interests to do so (as determined in good faith by the
Borrower), (i) perform and observe all the material terms and provisions of each
Material Contract to be performed or observed by
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it, (ii) maintain each such Material Contract in full force and effect,
enforce each such Material Contract in accordance with its terms and take
such action to such end and (iii) make to each other party to each such
Material Contract when appropriate such demands and requests for information
and reports or for action as the Borrower is entitled to make under such
Material Contract, and cause each of its Subsidiaries to do so.
(k) TRANSACTIONS WITH AFFILIATES. Conduct, and cause each of its
Subsidiaries to conduct, all transactions otherwise permitted under the Loan
Documents with any of their Affiliates, including, without limitation, the
making of any Investments, on terms that are fair and reasonable and no less
favorable to the Borrower or such Subsidiary than it would obtain in a
comparable arm's-length transaction with a Person not an Affiliate.
(l) ADDITIONAL LOAN PARTIES.
(i) Substantially concurrently with any Subsidiary of the Borrower
becoming a Material Domestic Subsidiary after the Closing Date, cause such
Subsidiary to execute and deliver a Subsidiary Guaranty or a guaranty
supplement referred to therein, as the case may be.
(ii) Substantially concurrently with the formation or acquisition of
any Subsidiary of the Borrower after the Closing Date, cause such
Subsidiary to execute and deliver a Subsidiary Guaranty or a guaranty
supplement referred to therein, as the case may be.
(m) L/C CASH COLLATERAL ACCOUNT. Take such actions as may be requested
by the Agent to establish and maintain, and create and maintain a perfected
first priority security interest in favor of the Agent for the benefit of the
Lender Parties in, a collateral account (the "L/C CASH COLLATERAL
ACCOUNT"), over which the Agent shall have sole dominion and control, for
purposes of making and holding the deposits required or permitted hereunder
to be made to the L/C Cash Collateral Account.
SECTION VI.2 NEGATIVE COVENANTS. So long as any Advance shall remain
unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have
any Commitment hereunder, the Borrower will not, at any time:
(a) LIENS, ETC. Create, incur, assume or suffer to exist, or permit any
of its Subsidiaries to create, incur, assume or suffer to exist, any Lien on or
with respect to any of its properties of any character (including, without
limitation, accounts) whether now owned or hereafter acquired, or sign or file,
or permit any of its Subsidiaries to sign or file, under the Uniform Commercial
Code of any jurisdiction, a financing statement that names the Borrower or any
of its Subsidiaries as debtor, or sign, or permit any of its Subsidiaries to
sign, any security agreement authorizing any secured party thereunder to file
such financing statement, or assign, or permit any of its Subsidiaries to
assign, any accounts or other right to receive income, EXCLUDING, HOWEVER, from
the operation of the foregoing restrictions the following:
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(i) Permitted Liens;
(ii) Liens granted the Agent pursuant to Section 6.1(m);
(iii) the Liens described on Schedule 6.2(a);
(iv) purchase money Liens upon or in property acquired or held by
the Borrower or any of its Subsidiaries in the ordinary course of business
to secure the purchase price of such property or to secure Debt incurred
solely for the purpose of financing the acquisition of any such property to
be subject to such Liens, or Liens existing on any such property at the
time of acquisition, or extensions, renewals or replacements of any of the
foregoing for the same or a lesser amount; PROVIDED, HOWEVER, that no such
Lien shall extend to or cover any property other than the property being
acquired, and no such extension, renewal or replacement shall extend to or
cover any property not theretofore subject to the Lien being extended,
renewed or replaced; and PROVIDED further that the aggregate principal
amount of the Debt secured by Liens permitted by this clause (iv) shall not
exceed $5,000,000 at any time outstanding and that any such Debt shall not
otherwise be prohibited by the terms of the Loan Documents;
(v) Liens arising in connection with Capitalized Leases, the
aggregate principal component of which does not exceed $5,000,000 at any
time outstanding;
(vi) involuntary Liens which, in the aggregate, would not have a
Material Adverse Effect and which, in any event, do not exceed $250,000;
(vii) other Liens which do not secure Debt affecting property
with an aggregate fair value not to exceed $5,000,000;
(viii) Liens on the assets of CableLease (other than the
capital stock of any Loan Party) securing Debt of CableLease permitted
under Section 6.2(b)(viii); and
(ix) the replacement, extension or renewal of any Lien permitted
by clause (iii) above upon or in the same property theretofore subject
thereto or the replacement, extension or renewal (without increase in the
amount or change in any direct or contingent obligor) of the Debt secured
thereby.
(b) DEBT. Create, incur, assume or suffer to exist, or permit any of its
Subsidiaries to create, incur, assume or suffer to exist, any Debt, contingent
or otherwise, other than:
(i) Debt under the Loan Documents;
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(ii) Debt consisting of Investments permitted under Sections
6.2(f)(i), (iv) or (v);
(iii) Debt of the Borrower in respect of Hedge Agreements in
an aggregate notional amount not to exceed $20,000,000 at any time
outstanding;
(iv) Debt secured by Liens permitted by Section 6.2(a)(iv) or (v)
not to exceed in the aggregate the respective amounts set forth in such
Sections;
(v) the Surviving Debt;
(vi) indorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(vii) Debt of the Borrower in respect of the Obligation to
repurchase capital stock of the Borrower pursuant to Section 6.2(g)(ii);
(viii) Debt of CableLease not otherwise permitted by this
Section 6.2(b) so long as the aggregate amount of all Debt of CableLease
does not and would not cause a Default under Section 6.4(d); and
(ix) Debt of RPA not otherwise permitted by this Section 6.2(b)
in an aggregate principal amount not to exceed $12,000,000 outstanding at
any time, the proceeds of which may be used only for the expansion and/or
improvement of existing facilities or properties that support the
Borrower's existing businesses.
(x) Debt of the Borrower not otherwise permitted by this Section
6.2(b) in an aggregate principal amount not to exceed $5,000,000
outstanding at any time.
(c) LEASE OBLIGATIONS. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist, any
obligations, as lessee, for the rental or hire of real and personal property of
any kind under (i) a sale and leaseback transaction; PROVIDED that any Loan
Party may enter into a sale and leaseback transaction with any other Loan Party,
or (ii) leases or agreements to lease including Capitalized Leases having an
original term of one year or more that would cause the direct and contingent
liabilities of the Borrower and its Subsidiaries, on a Consolidated basis, in
respect of all such obligations to exceed $12,000,000 payable in any period of
12 consecutive months.
(d) MERGERS, ETC. Merge into or consolidate with any Person or permit any
Person to merge into it, or permit any of its Subsidiaries to do so, except that
any Solvent, wholly owned Subsidiary of the Borrower that is a Loan Party may
merge into or consolidate with the Borrower or any other Solvent, wholly owned
Subsidiary of the Borrower that is a Loan Party.
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(e) SALES, ETC. OF ASSETS. Sell, lease, transfer or otherwise dispose of,
or permit any of its Subsidiaries to sell, lease, transfer or otherwise dispose
of, or grant any option or other right to purchase, lease or otherwise acquire
any property of the Borrower or its Subsidiaries except (i) sales of inventory
in the ordinary course of its business, (ii) sales of obsolete, worn out or
materially damaged or replaced property, (iii) sales, leases, transfers or other
dispositions of assets of CableLease and RPA in the ordinary course of business
and (iv) sales of other assets in an aggregate amount not to exceed $2,000,000
in any fiscal year and not to exceed $10,000,000 in the aggregate after the
Closing Date.
(f) INVESTMENTS IN OTHER PERSONS. Make or hold, or permit any of its
Subsidiaries to make or hold, any Investment in any Person other than:
(i) Investments by the Borrower and its Subsidiaries in their
Subsidiaries outstanding on the Closing Date and additional Investments by
any Loan Party in any Person that is a Loan Party as of the Closing Date;
(ii) loans and advances to employees in the ordinary course of
the business of the Borrower and its Subsidiaries as presently conducted in
an aggregate principal amount not to exceed $1,000,000 at any time
outstanding;
(iii) Investments by the Borrower and its Subsidiaries in
Cash Equivalents;
(iv) Investments by the Borrower to any of its Subsidiaries
(other than any Loan Party) in the ordinary course of business which do not
exceed $3,000,000, in the aggregate, at any time outstanding;
(v) Investments by any Loan Party of the type referred to in
clause (i) of the definition of "Debt" with respect to Obligations
permitted hereunder of the Borrower; and
(vi) other Investments (but not consisting of Investments in
Subsidiaries that are not Loan Parties); PROVIDED that: (A) such Investment
is in a Person engaged in a business or businesses substantially similar to
any business currently conducted by the Borrower or any of its
Subsidiaries; (B) if such Investment is in all or any substantial part of
the assets of any other Person, such Investment is approved by the board of
directors of such Person; and (C) either (1) after giving effect on a pro
forma basis (using the most recent audited financial statements of the
Person in which such Investment is to be made) to any such Investment
(including but not limited to any Debt to be incurred or assumed by the
Borrower and its Subsidiaries in connection therewith), the Debt to EBITDA
Ratio does not exceed 1.50 to 1.00, or (2) the aggregate amount of all such
Investments made in any fiscal quarter of the Borrower does not exceed 10%
of Consolidated Tangible Net Worth as of the last day of the immediately
preceding fiscal quarter of
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the Borrower.
(g) DIVIDENDS, ETC. Declare or pay any dividends, purchase, redeem,
retire, defease or otherwise acquire for value any of its capital stock or any
warrants, rights or options to acquire such capital stock, now or hereafter
outstanding, return any capital to its stockholders as such, make any
distribution of assets, capital stock, warrants, rights, options, obligations or
securities, to its stockholders as such, or permit any of its Subsidiaries to
purchase, redeem, retire, defease or otherwise acquire for value any capital
stock of the Borrower or any warrants, rights or options to acquire such capital
stock, except that, so long as no Default shall have occurred and be continuing,
the Borrower may:
(i) declare and deliver dividends and distributions to its
shareholders payable only in common stock of the Borrower;
(ii) purchase, redeem, retire, defease or otherwise acquire
shares of its capital stock in accordance with the Borrower's Obligations
with respect to the ESOP; and
(iii) declare and pay cash dividends to its stockholders and
purchase, redeem, retire, defease or otherwise acquire for cash any of its
capital stock or any warrants, rights or options to acquire such capital
stock, if after giving effect thereto the aggregate amount of such cash so
paid by the Borrower after the Closing Date in connection with any of the
foregoing would be less than the difference between (A) 50% of positive
Consolidated Net Income of the Borrower on a cumulative basis for all
fiscal years ending on or after December 31, 1996 (MINUS 100% of any
negative Consolidated Net Income for any such fiscal year) MINUS (B) the
aggregate consideration paid by the Borrower in connection with any
transaction permitted pursuant to Section 6.2(g)(ii).
(h) CHANGE IN NATURE OF BUSINESS. Make, or permit any of its Subsidiaries
to make, any material change in the nature of its business as carried on at the
Closing Date. Without limiting the generality of the foregoing, the Borrower
shall not (i) permit CableData International to enter into material contracts or
other agreements for the provision of, or otherwise provide, services to Persons
doing business outside of the United Kingdom, Norway, Sweden, Denmark or Finland
without the prior written consent of the Required Lenders (which consent shall
not be unreasonably withheld), or (ii) assign or otherwise transfer to CableData
International contracts or other agreements for the provision of services.
(i) CHARTER AMENDMENTS. Amend, or permit any of its Subsidiaries to amend
its certificate of incorporation or bylaws in any manner that could be adverse
to the Agent or any Lender Party.
(j) ACCOUNTING CHANGES. Make or permit, or permit any of its Subsidiaries
to make or permit, any change in accounting policies or reporting practices,
except as required
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or permitted by generally accepted accounting principles or as required by
law.
(k) PREPAYMENTS, ETC. OF DEBT. (i) Prepay, redeem, purchase, defease or
otherwise satisfy prior to the scheduled maturity thereof in any manner, or make
any payment in violation of any subordination terms of, any Debt, other than (A)
the prepayment of Debt secured by Liens permitted by Section 6.2(a)(iv) in an
aggregate amount for all such prepayments not to exceed $500,000 in any fiscal
year, (B) the prepayment of the Advances in accordance with the terms of this
Agreement, (C) any prepayment or redemption of the Senior Notes and (D)
regularly scheduled or required installment repayments or redemptions of
Surviving Debt, or (ii) amend, modify or change in any manner that could be
adverse to the Lender Parties any term or condition of any Debt, or permit any
of its Subsidiaries to do any of the foregoing, other than to prepay Debt
payable to the Borrower or any of its Subsidiaries.
(l) AMENDMENT, ETC. OF MATERIAL CONTRACTS. Cancel or terminate any
Material Contract or consent to or accept any cancellation or termination
thereof; amend or otherwise modify any Material Contract or give any consent,
waiver or approval thereunder, waive any default under or breach of any Material
Contract; agree in any manner to any other amendment, modification or change of
any term or condition of any Material Contract or take any other action in
connection with any Material Contract, in each case if the effect thereof could
have a Material Adverse Effect, or permit any of its Subsidiaries to do any of
the foregoing.
(m) NO NEGATIVE PLEDGES. Enter into or suffer to exist, or permit any of
its Subsidiaries (other than CableLease and RPA) to enter into or suffer to
exist, any agreement prohibiting or conditioning the creation or assumption of
any Lien upon any of its property or assets other than (i) in favor of the Agent
and the Lender Parties, (ii) customary restrictions on further encumbrances
affecting any property under the terms of any purchase money financing of such
property otherwise permitted hereunder, and (iii) as set forth in the Senior
Note Documents as in effect on the date hereof.
(n) PARTNERSHIPS. Become a general partner in any general or limited
partnership, or permit any of its Subsidiaries to do so.
(o) CERTAIN COVENANTS REGARDING IBS POSTAL RELATIONS. Any contrary
provision of this Agreement or any other Loan Document notwithstanding (i) the
Borrower shall not and shall not permit any of its Subsidiaries to (A) sell,
contribute or otherwise transfer any assets to or for the benefit of IBS Postal
Relations, or (B) permit IBS Postal Relations to have any assets or liabilities
(other than liabilities, such as franchise tax obligations, required by law in
connection with the maintenance of its corporate existence but only for so long
as is reasonably required to dissolve IBS Postal Relations) or to engage in any
business activities other than business activities incidental to the dissolution
of IBS Postal Relations, and (ii) the Borrower shall cause IBS Postal Relations
to be dissolved as soon as is reasonably practicable.
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(p) LIMITATION ON RESTRICTIONS ON SUBSIDIARY DIVIDENDS AND OTHER
DISTRIBUTIONS, ETC. Create or otherwise cause, incur, assume, suffer or permit
to exist or become effective, or permit any of its Subsidiaries (other than
CableLease and RPA) to create or otherwise cause, incur, assume, suffer or
permit to exist or become effective, any consensual encumbrance or restriction
of any kind on the ability of any such Person to (a) pay dividends or make any
other distribution on any of such Person's capital stock, (b) subject to
subordination provisions, pay any Indebtedness owed to the Borrower or any other
Loan Party, (c) make loans or advances to any other Loan Party or (d) transfer
any of its assets to any other Loan Party, except for encumbrances or
restrictions existing under or by reason of (i) customary non-assignment
provisions in any lease governing a leasehold interest and (ii) this Agreement
and the other Loan Documents.
SECTION VI.3 REPORTING REQUIREMENTS. So long as any Advance shall remain
unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have
any Commitment hereunder, the Borrower will furnish to the Lender Parties:
(a) DEFAULT NOTICE. As soon as possible and in any event within three
Business Days after any Loan Party first learns of the occurrence of each
Default continuing on the date of such statement, a statement of the chief
financial officer of the Borrower setting forth details of such Default and the
action, if any, that the Borrower has taken and proposes to take with respect
thereto.
(b) QUARTERLY FINANCIALS. As soon as available and in any event within 45
days after the end of each of the first three quarters of each fiscal year of
the Borrower, Consolidated and consolidating balance sheets of the Borrower and
its Subsidiaries as of the end of such quarter and Consolidated and
consolidating statements of income and cash flows of the Borrower and its
Subsidiaries for the period commencing at the end of the previous fiscal year
and ending as of the end of such quarter, setting forth in each case in
comparative form the corresponding Consolidated figures for the corresponding
period of the preceding fiscal year, all in reasonable detail and duly certified
(subject to year-end audit adjustments and footnote disclosures) by the Borrower
and signed on behalf of the Borrower by its chief financial officer or chief
accounting officer as having been prepared in accordance with GAAP, together
with (i) a certificate of the Borrower signed on behalf of the Borrower by said
officer stating that (A) no Default has occurred and is continuing and (B) as of
the close of such fiscal quarter, the Borrower is in compliance with the
covenants in Section 6.4 and (ii) a schedule in form and detail satisfactory to
the Agent of the computations used by the Borrower in determining compliance
with the covenants contained in Section 6.4.
(c) ANNUAL FINANCIALS. As soon as available and in any event within 90
days after the end of each fiscal year of the Borrower, a copy of the annual
audit report for such year for the Borrower and its Subsidiaries, including
therein Consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as of the end of such fiscal year and Consolidated and
consolidating statements of income and cash flows of the Borrower and its
Subsidiaries for such fiscal year, in each case accompanied by an opinion
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acceptable to the Required Lenders of Price Waterhouse LLP or other independent
public accountants of recognized standing reasonably acceptable to the Required
Lenders, together with (i) a certificate of such accounting firm to the Lenders
stating that such accounting firm has reviewed Section 6.4 hereof (including all
relevant definitions) and in the course of the regular audit of the business of
the Borrower and its Subsidiaries, which audit was conducted by such accounting
firm in accordance with generally accepted auditing standards, such accounting
firm has obtained no knowledge that a Default has occurred and is continuing, or
if, in the opinion of such accounting firm, a Default has occurred and is
continuing, a statement as to the nature thereof, (ii) a schedule in form and
detail satisfactory to the Agent of the computations used by such accountants in
determining, as of the end of such fiscal year, compliance with the covenants
contained in Section 6.4 and (iii) a certificate of the Borrower signed on
behalf of the Borrower by its chief financial officer stating that no Default
has occurred and is continuing or, if a Default has occurred and is continuing,
a statement as to the nature thereof and the action that the Borrower has taken
and proposes to take with respect thereto.
(d) ANNUAL FORECASTS. As soon as available and in any event no later than
31 days after the end of each fiscal year of the Borrower, an annual forecast
prepared by management of the Borrower, in form satisfactory to the Agent,
consisting of a balance sheet, income statement and cash flow statement for the
fiscal year following such fiscal year then ended.
(e) ERISA EVENTS. Promptly and in any event within 10 days after any Loan
Party or any of its ERISA Affiliates first learns that any ERISA Event with
respect to any Loan Party or any of its ERISA Affiliates has occurred, a
statement of the chief financial officer of the Borrower describing such ERISA
Event and the action, if any, that such Loan Party or such ERISA Affiliate has
taken and proposes to take with respect thereto.
(f) PLAN TERMINATIONS. Promptly and in any event within three Business
Days after receipt thereof by any Loan Party or any of its ERISA Affiliates,
copies of each notice from the PBGC stating its intention to terminate any Plan
of any Loan Party or any of its ERISA Affiliates or to have a trustee appointed
to administer any such Plan.
(g) MULTIEMPLOYER PLAN NOTICES. Promptly and in any event within five
Business Days after receipt thereof by any Loan Party or any of its ERISA
Affiliates from the sponsor of a Multiemployer Plan of any Loan Party or any of
its ERISA Affiliates, copies of each notice concerning (i) the imposition of
Withdrawal Liability by any such Multiemployer Plan, (ii) the reorganization or
termination, within the meaning of Title IV of ERISA, of any such Multiemployer
Plan, or (iii) the amount of liability incurred, or that may be incurred, by
such Loan Party or any of its ERISA Affiliates in connection with any event
described in clause (i) or (ii).
(h) LITIGATION. Promptly after the commencement thereof, notice of all
actions, suits, investigations, litigation and proceedings before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign,
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affecting any Loan Party or any of its Subsidiaries of the type described in
Section 5.1(i).
(i) SECURITIES REPORTS, PRESS RELEASES. Promptly after the sending or
filing thereof, copies of all press releases and of all proxy statements,
financial statements and reports that any Loan Party or any of its Subsidiaries
sends to its stockholders, and copies of all regular, periodic and special
reports, and all registration statements, that any Loan Party or any of its
Subsidiaries files with the Securities and Exchange Commission or any
governmental authority that may be substituted therefor, or with any national
securities exchange.
(j) CREDITOR REPORTS. Promptly after the furnishing thereof, copies of
any statement or report furnished to any other holder of the securities of any
Loan Party or of any of its Subsidiaries pursuant to the terms of any note,
indenture, loan or credit or similar agreement and not otherwise required to be
furnished to the Lender Parties pursuant to any other clause of this Section
6.3.
(k) AGREEMENT NOTICES. Promptly upon receipt thereof, copies of all
material notices, requests and other documents received by any Loan Party or any
of its Subsidiaries under or pursuant to any Material Contract and, from time to
time upon request by the Agent, such information and reports regarding the
Material Contracts as the Agent may reasonably request.
(l) ENVIRONMENTAL CONDITIONS. Promptly after the occurrence thereof,
notice of any condition or occurrence on any property of any Loan Party or any
of its Subsidiaries that results in a material noncompliance by any Loan Party
or any of its Subsidiaries with any Environmental Law or Environmental Permit or
could (i) form the basis of an Environmental Action against any Loan Party or
any of its Subsidiaries or such property that could have a Material Adverse
Effect or (ii) cause any such property to be subject to any restrictions on
ownership, occupancy, use or transferability under any Environmental Law.
(m) NOTIFICATION. Promptly after learning thereof, notice of (i) any
substantial dispute between the Borrower and any Governmental Authority; (ii)
any labor controversy which has resulted in or, to the Borrower's knowledge,
threatens to result in a strike which could reasonably be expected to have a
Material Adverse Affect.
(n) OTHER INFORMATION. Such other information respecting the business,
condition (financial or otherwise), operations, performance, properties or
prospects of any Loan Party or any of its Subsidiaries as any Lender Party may
from time to time reasonably request.
SECTION VI.4 FINANCIAL COVENANTS. So long as any Advance shall remain
unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have
any Commitment hereunder, the Borrower will:
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(a) CONSOLIDATED TANGIBLE NET WORTH. Maintain Consolidated Tangible Net
Worth, as of the last day of each fiscal quarter of the Borrower, in an amount
not less than the sum of (i) $80,000,000 plus (ii) 50% of cumulative
Consolidated Net Income for all fiscal quarters of the Borrower commencing with
and including the fiscal quarter which began January 1, 1996 (but excluding
Consolidated Net Income for any fiscal quarter for which Consolidated Net Income
is a negative number) plus (iii) 75% of the net proceeds from the issuance or
sale by the Borrower of any of its equity securities after the Closing Date;
PROVIDED, HOWEVER, that the value of any goodwill received by the Borrower in
exchange for any of its equity securities shall be excluded from the calculation
of net proceeds under the foregoing subsection (iii).
(b) CASH FLOW RATIO. Maintain for each period of four consecutive fiscal
quarters of the Borrower ended as of the last day of any fiscal quarter of the
Borrower ending during the fiscal years of the Borrower set forth below a Cash
Flow Coverage Ratio of not less than the amount set forth below opposite such
fiscal year:
FISCAL
YEAR RATIO
------ -----
1996 and 1997 1.00 to 1.00
1998 1.50 to 1.00
1999 and thereafter 2.50 to 1.00
(c) DEBT TO EBITDA RATIO. Maintain at all times a Debt to EBITDA Ratio of
not more than 2.25 to 1.00.
(d) CABLELEASE NET WORTH. Cause CableLease to maintain at all times a
ratio of (i) all liabilities of CableLease and its Subsidiaries determined on a
Consolidated basis in accordance with GAAP to (ii) the excess of (A) the total
assets of CableLease and its Subsidiaries determined on a Consolidated basis in
accordance with GAAP MINUS goodwill and any other items that are classified as
"other intangibles" in accordance with GAAP over (B) all liabilities of
CableLease and its Subsidiaries determined on a Consolidated basis in accordance
with GAAP of not more than 4.0 to 1.0.
ARTICLE VII
EVENTS OF DEFAULT
SECTION VII.1 EVENTS OF DEFAULT. If any of the following events ("EVENTS
OF DEFAULT") shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any Advance when the
same
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becomes due and payable, or the Borrower shall fail to pay any interest on
any Advance within 2 days after the same becomes due and payable, or any Loan
Party shall fail to make any other payment under any Loan Document within 5 days
after the same becomes due and payable; or
(b) any representation or warranty made by any Loan Party (or any of its
officers) under any Loan Document or any written statement or certificate
delivered in connection therewith shall prove to have been incorrect in any
material respect when made; or
(c) the Borrower shall fail to perform or observe any term, covenant or
agreement contained in Section 6.2, 6.3(a), (b), (c), (e), (f), (g), (h) or (l)
or 6.4; or
(d) any Loan Party shall fail to perform any other term, covenant or
agreement contained in any Loan Document on its part to be performed or observed
if such failure shall remain unremedied for 10 Business Days after written
notice thereof shall have been given to the Borrower by the Agent or any Lender
Party; or
(e) any Loan Party or any of its Subsidiaries shall fail to pay any
principal of, premium or interest on or any other amount payable in respect of
any Debt that is outstanding in a principal or notional amount of at least
$1,000,000 in the aggregate (but excluding Debt outstanding hereunder) of such
Loan Party or such Subsidiary (as the case may be), when the same becomes due
and payable (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after the applicable grace
or cure period, if any, specified in the agreement or instrument relating to
such Debt; or any other event shall occur or condition shall exist under any
agreement or instrument relating to any such Debt and shall continue after the
applicable grace or cure period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or to
permit the acceleration of, the maturity of such Debt or otherwise to cause, or
to permit the holder thereof to cause, such Debt to mature; or any such Debt
shall be declared to be due and payable or required to be prepaid or redeemed
(other than by a regularly scheduled required prepayment or redemption),
purchased or defeased, or an offer to prepay, redeem, purchase or defease such
Debt shall be required to be made, in each case prior to the stated maturity
thereof; or
(f) any Loan Party or any of its Subsidiaries shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to pay
its debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against any Loan Party or
any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property and, in the
case of any such proceeding instituted against it (but not instituted by it)
that is being diligently contested by it in good faith, either
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such proceeding shall remain undismissed or unstayed for a period of 60 days
or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, it or any
substantial part of its property) shall occur; or any Loan Party or any of
its Subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this subsection (f); or
(g) any judgment or order for the payment of money in excess of $500,000
(other than any such judgment or order with respect to which insurance coverage
has been acknowledged by the applicable insurance company in writing as to all
amounts in excess of $500,000) shall be rendered against any Loan Party or any
of its Subsidiaries and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there shall be any
period of 10 consecutive Business 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
(h) any non-monetary judgment or order shall be rendered against any Loan
Party or any of its Subsidiaries that could have a Material Adverse Effect, and
there shall be any period of 10 consecutive Business 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
(i) any provision of any Loan Document after delivery thereof pursuant to
Section 4.1 or Section 6.1(l) shall for any reason cease to be valid and binding
on or enforceable against any Loan Party to it, or any such Loan Party shall so
state in writing; or
(j) any Person (other than Westar Capital, a California limited
partnership ("WESTAR"), and its Affiliates, the then current management and
employees of the Borrower and the ESOP) or two or more Persons acting in concert
shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities Exchange Act of
1934), in the aggregate, directly or indirectly, of Voting Stock of the Borrower
(or other securities convertible into Voting Stock) representing 30% or more of
the combined voting power of all Voting Stock of the Borrower; or
(k) any ERISA Event shall have occurred with respect to a Plan of any Loan
Party or any of its ERISA Affiliates and the sum (determined as of the date of
occurrence of such ERISA Event) of the Insufficiency of such Plan and the
Insufficiency of any and all other Plans of the Loan Parties and their ERISA
Affiliates with respect to which an ERISA Event shall have occurred and then
exist (or the liability of the Loan Parties and their ERISA Affiliates related
to such ERISA Event) exceeds $1,000,000; or
(l) any Loan Party or any of its ERISA Affiliates shall have been notified
by the sponsor of a Multiemployer Plan of any Loan Party or any of its ERISA
Affiliates that it has incurred Withdrawal Liability to such Multiemployer Plan
in an amount that, when aggregated with all other amounts required to be paid to
Multiemployer Plans by the Loan Parties and their ERISA Affiliates as Withdrawal
Liability (determined as of the date of
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such notification), exceeds $1,000,000 or requires payments exceeding $500,000
per annum; or
(m) any Loan Party or any of its ERISA Affiliates shall have been notified
by the sponsor of a Multiemployer Plan of any Loan Party or any of its ERISA
Affiliates that such Multiemployer Plan is in reorganization or is being
terminated, within the meaning of Title IV of ERISA, and as a result of such
reorganization or termination the aggregate annual contributions of the Loan
Parties and their ERISA Affiliates to all Multiemployer Plans that are then in
reorganization or being terminated have been or will be increased over the
amounts contributed to such Multiemployer Plans for the plan years of such
Multiemployer Plans immediately preceding the plan year in which such
reorganization or termination occurs by an amount exceeding $1,000,000.
then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Advances and of the L/C Bank to issue Letters
of Credit to be terminated, whereupon the same shall forthwith terminate, and
(ii) shall at the request, or may with the consent, of the Required Lenders, by
notice to the Borrower, declare the Advances, all interest thereon and all other
amounts payable by the Borrower under this Agreement and the other Loan
Documents to be forthwith due and payable, whereupon the Advances, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; PROVIDED, HOWEVER, that in the
event of an actual or deemed entry of an order for relief with respect to any
Loan Party or any of its Subsidiaries under the Federal Bankruptcy Code, (x) the
obligation of each Lender to make Advances and of the L/C Bank to issue Letters
of Credit shall automatically be terminated and (y) the Notes, all such interest
and all such amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower.
SECTION VII.2 ACTIONS IN RESPECT OF THE LETTERS OF CREDIT UPON DEFAULT. If
any Event of Default shall have occurred and be continuing, the Agent may (and
shall at the request of the Required Lenders), irrespective of whether it is
taking any of the actions described in Section 7.1 or otherwise, make demand
upon the Borrower to, and forthwith upon such demand the Borrower will, pay to
the Agent on behalf of the L/C Bank and the Revolving Lenders in same day funds
at the Agent's office designated in such demand, for deposit in the L/C Cash
Collateral Account, an amount equal to the aggregate Available Amount of all
Letters of Credit then outstanding. If at any time the Agent determines that
any funds held in the L/C Cash Collateral Account are subject to any right or
claim of any Person other than the Agent and the Lender Parties or that the
total amount of such funds is less than the aggregate Available Amount of all
Letters of Credit, the Borrower will, forthwith upon demand by the Agent, pay to
the Agent, as additional funds to be deposited and held in the L/C Cash
Collateral Account, an amount equal to the excess of (a) such aggregate
Available Amount over (b) the total amount of funds, if any, then held in the
L/C Cash Collateral Account that the Agent determines to be free and clear of
any such
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right and claim.
ARTICLE VIII
THE AGENT
SECTION VIII.1 AUTHORIZATION AND ACTION. Each Lender Party hereby
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers and discretion under this Agreement and the other Loan
Documents as are delegated to the Agent by the terms hereof and thereof,
together with such powers and discretion as are reasonably incidental thereto.
As to any matters not expressly provided for by the Loan Documents (including,
without limitation, enforcement or collection of the Debt resulting from the
Advances and the Notes), the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding upon all Lender Parties and all holders of Notes; PROVIDED, HOWEVER,
that the Agent shall not be required to take any action that exposes the Agent
to personal liability or that is contrary to this Agreement or applicable law.
The Agent agrees to give to each Lender Party prompt notice of each notice given
to it by the Borrower pursuant to the terms of this Agreement.
SECTION VIII.2 AGENT'S RELIANCE, ETC. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with the Loan
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent: (i) may treat
the Lender that made any Advance as the holder of the Debt resulting therefrom
until the Agent receives and accepts an Assignment and Acceptance entered into
by such Lender, as assignor, and an Eligible Assignee, as assignee, as provided
in Section 9.7; (ii) may consult with legal counsel (including counsel for any
Loan Party), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (iii)
makes no warranty or representation to any Lender Party and shall not be
responsible to any Lender Party for any statements, warranties or
representations made in or in connection with the Loan Documents; (iv) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of any Loan Document on the part of
any Loan Party or to inspect the property (including the books and records) of
any Loan Party; (v) shall not be responsible to any Lender Party for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of any Loan Document or any other instrument or document furnished pursuant
hereto; and (vi) shall incur no liability under or in respect of any Loan
Document by acting upon any notice, consent, certificate or other instrument or
writing (which may be by telegram, telecopy, cable or telex) believed by it to
be genuine and signed or sent by the proper party or parties.
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SECTION VIII.3 NATIONSBANK AND AFFILIATES. With respect to its
Commitments, the Advances made by it and the Notes issued to it, NationsBank
shall have the same rights and powers under the Loan Documents as any other
Lender Party and may exercise the same as though it were not the Agent; and the
term "Lender Party" or "Lender Parties" shall, unless otherwise expressly
indicated, include NationsBank in its individual capacity. NationsBank and its
affiliates may accept deposits from, lend money to, act as trustee under
indentures of, accept investment banking engagements from and generally engage
in any kind of business with, any Loan Party, any of its Subsidiaries and any
Person who may do business with or own securities of any Loan Party or any such
Subsidiary, all as if NationsBank were not the Agent and without any duty to
account therefor to the Lender Parties.
SECTION VIII.4 LENDER PARTY CREDIT DECISION. Each Lender Party
acknowledges that it has, independently and without reliance upon the Agent or
any other Lender Party and based on the financial statements referred to in
Section 5.1 and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender Party also acknowledges that it will, independently and
without reliance upon the Agent or any other Lender Party and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement.
SECTION VIII.5 INDEMNIFICATION. (a) Each Lender Party severally agrees to
indemnify the Agent and the Arranger (to the extent not promptly reimbursed by
the Borrower) from and against such Lender Party's ratable share of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against the Agent, the Arranger or any of
their respective officers, directors, employees, agents or advisors in any way
relating to or arising out of the Loan Documents or any action taken or omitted
by the Agent or the Arranger under the Loan Documents; PROVIDED, HOWEVER, that
no Lender Party shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of the Person seeking such indemnification. Without limitation of
the foregoing, each Lender Party agrees to reimburse the Agent and the Arranger
promptly upon demand for its ratable share of any costs and expenses payable by
the Borrower under Section 9.4, to the extent that the Agent or the Arranger is
not promptly reimbursed for such costs and expenses by the Borrower. For
purposes of this Section 8.5, the Lenders' respective ratable shares of any
amount shall be determined, at any time, according to the sum of (a) the
aggregate principal amount of the Revolving Advances outstanding at such time
and owing to the Revolving Lenders, (b) their respective Pro Rata Shares of the
aggregate Available Amount of all Letters of Credit outstanding at such time,
and (c) their respective Unused Revolving Commitments at such time. The failure
of any Lender Party to reimburse the Agent or the Arranger promptly upon demand
for its ratable share of any amount required to be paid by the Lender Parties to
the Agent and the Arranger as provided herein shall not relieve any other Lender
Party of its obligations hereunder to reimburse the Agent or the Arranger
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for its ratable share of such amount, but no Lender Party shall be
responsible for the failure of any other Lender Party to reimburse the Agent
or the Arranger for such other Lender Party's ratable share of such amount.
(b) Each Lender Party severally agrees to indemnify the L/C Bank (to the
extent not promptly reimbursed by the Borrower) from and against such Lender
Party's ratable share of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against the L/C Bank or any of its officers, directors, employees, agents or
advisors in any way relating to or arising out of any Letter of Credit or the
Loan Documents or any action taken or omitted by the L/C Bank under any Letter
of Credit or the Loan Documents; PROVIDED, HOWEVER, that no Lender Party shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the L/C Bank's gross negligence or willful misconduct. Without limitation
of the foregoing, each Lender Party agrees to reimburse the L/C Bank promptly
upon demand for its ratable share of any costs and expenses (including, without
limitation, fees and expenses of counsel) payable by the Borrower under Section
9.4, to the extent that the L/C Bank is not promptly reimbursed for such costs
and expenses by the Borrower. The failure of any Lender Party to reimburse the
L/C Bank promptly upon demand for its Pro Rata Share of any amount required to
be paid by the Lender Parties to the L/C Bank as provided herein shall not
relieve any other Lender Party of its obligation hereunder to reimburse the L/C
Bank for its Pro Rata Share of such amount, but no Lender Party shall be
responsible for the failure of any other Lender Party to reimburse the L/C Bank
for such other Lender Party's Pro Rata Share of such amount.
(c) Without prejudice to the survival of any other agreement of any Lender
Party hereunder, the agreement and obligations of each Lender Party contained in
this Section 8.5 shall survive the payment in full of principal, interest and
all other amounts payable hereunder and under the other Loan Documents.
SECTION VIII.6 SUCCESSOR AGENTS. The Agent may resign as to any or all of
the Facilities effective 30 days after giving written notice thereof to the
Lender Parties and the Borrower (or upon the appointment of a successor Agent
prior thereto) and, upon show of cause, may be removed as to all the Facilities
at any time by the Required Lenders. Upon any such resignation or removal, the
Required Lenders shall have the right to appoint another Lender Party or, with
the prior consent of the Borrower (which consent shall not be unreasonably
withheld or delayed), any other Person as successor Agent as to such of the
Facilities as to which the Agent has resigned or been removed. If no successor
Agent shall have been so appointed by the Required Lenders, and shall have
accepted such appointment, within 30 days after the retiring Agent's giving of
notice of resignation or the Required Lenders' removal of the retiring Agent,
then the retiring Agent may, on behalf of the Lender Parties, appoint a
successor Agent, reasonably acceptable to the Borrower, which shall be a
commercial bank organized under the laws of the United States or of any State
thereof and having a combined capital and surplus of at least $250,000,000.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent
as to all Facilities,
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such successor Agent shall succeed to and become vested with all the rights,
powers, discretion, privileges and duties of the retiring Agent as to such
Facilities, other than with respect to funds transfers and other similar
aspects of the administration of Borrowings under the Facilities, issuances
of Letters of Credit (notwithstanding any resignation as Agent with respect
to the L/C Subfacility) and payments by the Borrower in respect of such
Facilities, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement as to such Facilities, other than as
aforesaid. After any retiring Agent's resignation or removal hereunder as
Agent as to all of the Facilities, the provisions of this Article VIII shall
inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent as to any of the Facilities under this Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION IX.1 AMENDMENTS, ETC. No amendment or waiver of any provision of
this Agreement or the Notes, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Required Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; PROVIDED, HOWEVER, that (a) no amendment, waiver or consent shall, unless
in writing and signed by all the Lender Parties, do any of the following at any
time: (i) waive any of the conditions specified in Section 4.1, (ii) change the
percentage of the Commitments or of the aggregate unpaid principal amount of the
Advances, or the number or percentage of Lender Parties, that shall be required
for the Lender Parties or any of them to take any action hereunder, (iii) except
as contemplated by the Loan Documents, release any Subsidiary of the Borrower
from liability under any Subsidiary Guaranty entered into pursuant to Sections
4.1(e)(viii) or 6.1(l) or (iv) amend this Section 9.1, and (b) no amendment,
waiver or consent shall, unless in writing and signed by the Required Lenders
and each Lender Party that has a Commitment under the Facility affected by such
amendment, waiver or consent, (i) increase the Commitments of such Lender Party,
(ii) subject such Lender Party to any additional obligations, (iii) reduce the
principal of, or interest on, the Advances held by such Lender Party or any fees
or other amounts payable hereunder to such Lender Party, or (iv) postpone any
date fixed for any payment of principal of, or interest on, the Advances held by
such Lender Party or any fees or other amounts payable hereunder to such Lender
Party; PROVIDED FURTHER that no amendment, waiver or consent shall, unless in
writing and signed by the Swing Line Lender or the L/C Bank, as the case may be,
in addition to the Lender Parties required above to take such action, affect the
rights or obligations of the Swing Line Lender or the L/C Bank, as the case may
be, under this Agreement; and PROVIDED FURTHER that no amendment, waiver or
consent shall, unless in writing and signed by the Agent in addition to the
Lender Parties required above to take such action, affect the rights or duties
of the Agent under this Agreement or any other Loan Document.
SECTION IX.2 NOTICES, ETC. All notices, consents and other communications
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provided for hereunder shall be in writing (including telegraphic, telecopy,
telex or cable communication) and mailed, telegraphed, telecopied, telexed,
cabled or delivered by an overnight courier of nationally recognized standing,
if to the Borrower, at its address at 2969 Prospect Park Drive, Rancho Cordova,
California 95670, Telecopier No. (916) 636-5833, Attention: Douglas L.
Shurtleff, Senior Vice President, Finance (with a copy to Mary G. Jordan, Esq.,
General Counsel, at such address); if to any Initial Lender or the L/C Bank, at
its Domestic Lending Office specified opposite its name on Schedule I hereto; if
to any other Lender, at its Domestic Lending Office specified in the Assignment
and Acceptance pursuant to which it became a Lender Party; and if to the Agent,
at its address at 901 Main Street, 13th Floor, Dallas, Texas 75202, Telecopier
No. (214) 508-2118, Attention: Agency Services - Marie Lancaster, with a copy to
NationsBank, One Embarcadero Center, Suite 3860, San Francisco, California
94111, Telecopier No. (415) 438-3912, Attn: Ms. E. Brooke Berg, Vice President;
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other parties. All such notices and communications
shall, when mailed, telegraphed, telecopied, telexed or cabled, or delivered by
overnight courier be effective (in the case of the mail, three Business Days
after deposited in the mail), when delivered to the telegraph company,
transmitted by telecopier, confirmed by telex answerback, delivered to the cable
company or delivered to the overnight courier, respectively, except that notices
and communications to the Agent pursuant to Article II, III, IV, VII or VIII
shall not be effective until received by the Agent.
SECTION IX.3 NO WAIVER; REMEDIES. No failure on the part of any Lender
Party or the Agent to exercise, and no delay in exercising, any right hereunder
or under any other Loan Document shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION IX.4 COSTS, EXPENSES AND TAXES. (a) The Borrower agrees to pay on
demand (i) all reasonable costs and expenses of the Agent and the Arranger in
connection with the preparation, execution, delivery, administration,
modification and amendment of the Loan Documents and the syndication of the
Revolving Commitments (including, without limitation, (A) all reasonable due
diligence, transportation, appraisal, audit, search, filing and recording fees
and expenses and (B) the reasonable fees and expenses of counsel for the Agent
with respect thereto, with respect to advising the Agent as to its rights and
responsibilities, or the perfection, protection or preservation of rights or
interests, under the Loan Documents, with respect to negotiations with any Loan
Party or with other creditors of any Loan Party or any of its Subsidiaries
arising out of any Default or any events or circumstances that may give rise to
a Default and with respect to presenting claims in or otherwise participating in
or monitoring any bankruptcy, insolvency or other similar proceeding involving
creditors' rights generally and any proceeding ancillary thereto) and (ii) all
costs and expenses of the Agent and the Lender Parties in connection with the
enforcement of the Loan Documents, whether in any action, suit or litigation,
any bankruptcy, insolvency or other similar proceeding affecting creditors'
rights generally or otherwise (including, without limitation, the reasonable
fees and expenses of counsel for
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the Agent and each Lender Party with respect thereto).
(b) The Borrower agrees to indemnify and hold harmless the Agent, the
Arranger and each Lender Party and each of their Affiliates and their officers,
directors, employees, attorneys, agents and advisors (each, an "INDEMNIFIED
PARTY") from and against any and all claims, damages, losses, liabilities and
expenses (including, without limitation, reasonable fees and expenses of
counsel) that may be incurred by or asserted or awarded against any Indemnified
Party, in each case arising out of or in connection with or by reason of, or in
connection with the preparation for a defense of, any investigation, litigation
or proceeding arising out of, related to or in connection with (i) this
Agreement, the Loan Documents or the transactions contemplated hereby or the use
of proceeds of Advances or (ii) the actual or alleged presence of Hazardous
Materials on any property of any Loan Party or any of its Subsidiaries or any
Environmental Action relating in any way to any Loan Party or any of its
Subsidiaries, in each case whether or not such investigation, litigation or
proceeding is brought by any Loan Party, its directors, shareholders or
creditors or an Indemnified Party or any Indemnified Party is otherwise a party
thereto and whether or not the transactions contemplated hereby are consummated,
except to the extent such claim, damage, loss, liability or expense is found in
a final, non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct.
The Borrower also agrees not to assert any claim against the Agent, the
Arranger, any Lender Party, any of their Affiliates, or any of their respective
directors, officers, employees, attorneys, advisors or agents, on any theory of
liability, for special, indirect, consequential or punitive damages arising out
of or otherwise relating to any of the transactions contemplated herein or in
any other Loan Document or the actual or proposed use of the proceeds of the
Advances.
(c) If any payment of principal of, or Conversion of, any Eurodollar Rate
Advance is made by the Borrower to or for the account of a Lender Party other
than on the last day of the Interest Period for such Advance, as a result of a
payment or conversion pursuant to Section 2.8, acceleration of the maturity of
the Advances pursuant to Section 7.1 or for any other reason, the Borrower
shall, upon written demand by such Lender Party (with a copy of such demand to
the Agent), pay to the Agent for the account of such Lender any amounts required
to compensate such Lender Party for any additional losses, costs or expenses
that it may incur as a result of such payment, including, without limitation,
any loss, cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by any Lender Party to fund or maintain such
Advance. A certificate of such Lender Party setting forth in reasonable detail
the basis for such losses, costs or expenses and the computation thereof shall
be conclusive and binding for all purposes, absent manifest error.
(d) If any Loan Party fails to pay when due any costs, expenses or other
amounts payable by it under any Loan Document, including, without limitation,
fees and expenses of counsel and indemnities, such amount may be paid on behalf
of such Loan Party by the Agent or any Lender Party, in its sole discretion.
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<PAGE>
(e) Without prejudice to the survival of any other agreement of any Loan
Party hereunder or under any other Loan Document, the agreements and obligations
of the Borrower contained in Sections 2.8, and 2.10 and this Section 9.4 shall
survive the payment in full of principal, interest and all other amounts payable
hereunder and under any of the other Loan Documents.
SECTION IX.5 RIGHT OF SET-OFF. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 7.1 to authorize the Agent to
declare the Advances due and payable pursuant to the provisions of Section 7.1,
each Lender Party is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender Party or its
Affiliates to or for the credit or the account of the Borrower against any and
all of the Obligations of the Borrower now or hereafter existing under this
Agreement and the Note or Notes held by such Lender Party, irrespective of
whether such Lender Party shall have made any demand under this Agreement or
such Note or Notes and although such obligations may be unmatured. Each Lender
Party agrees promptly to notify the Borrower after any such set-off and
application; PROVIDED, HOWEVER, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Lender
Party under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) that such Lender Party
may have.
SECTION IX.6 BINDING EFFECT. This Agreement shall become effective when
it shall have been executed by the Borrower and the Agent and when the Agent
shall have been notified by each Initial Lender and the L/C Bank that such
Initial Lender and such L/C Bank has executed it and thereafter shall be binding
upon and inure to the benefit of the Borrower, the Agent and each Lender Party
and their respective successors and assigns, except that the Borrower shall not
have the right to assign its rights hereunder or any interest herein without the
prior written consent of the Lender Parties.
SECTION IX.7 ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender may assign to
one or more banks or other entities all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitments or Commitments, the Advances owing to it and the Note
or Notes held by it), but excluding, in the case of the L/C Bank, its rights and
obligations to Issue Letters of Credit hereunder; PROVIDED, HOWEVER, that (i)
any such assignment (other than any assignment to an existing Lender) shall be
in a minimum aggregate amount of $5,000,000 (of, if less, the remaining amount
of the Commitment being assigned by such Lender) of the Commitments or an
integral multiple of $1,000,000 in excess thereof, (ii) each such assignment
shall be of a uniform, and not a varying, percentage of all rights and
obligations under and in respect of one or more of the Facilities, (iii) each
such assignment shall be to an Eligible Assignee and (iv) the parties to each
such assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with any Note
or Notes subject to such assignment and a processing and recordation fee of
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<PAGE>
$2,500. Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in such Assignment and Acceptance, (x) 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, have the rights and obligations of a Lender hereunder and (y) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto).
(b) The L/C Bank may assign to an Eligible Assignee all (but not less than
all) of its rights and obligations to Issue Letters of Credit hereunder;
PROVIDED, HOWEVER, that (i) each such assignment shall be to an Eligible
Assignee to whom a Lender has assigned a portion of its Revolving Commitments
and (ii) the parties to each such assignment shall execute and deliver to the
Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance, together with a processing and recordation fee of $2,500. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in such Assignment and Acceptance, 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, have the rights and
obligations of the L/C Bank hereunder and the L/C Bank assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance (but, in any event, not with
respect to any outstanding Letter of Credit issued by such L/C Bank), relinquish
its rights and be released from its obligations under this Agreement and such
L/C Bank shall cease to be a party hereto to such extent.
(c) By executing and delivering an Assignment and Acceptance, the Lender
Party assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender Party makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such assigning Lender Party makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any other Loan Party or the performance
or observance by the Borrower or any other Loan Party of any of its obligations
under this Agreement or any other instrument or document furnished pursuant
hereto; (iii) such assignee confirms that it has received a copy of this
Agreement, together with copies of the financial statements referred to in
Section 5.1(f) and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, such assigning Lender Party or any other Lender Party
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit
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<PAGE>
decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee
appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers and discretion under this Agreement as are
delegated to the Agent by the terms hereof, together with such powers and
discretion as are reasonably incidental thereto; and (vii) such assignee
agrees that it will perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed
by it as a Lender Party.
(d) The Agent shall maintain at its address referred to in Section 9.2 a
copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lender Parties
and the Commitment under each Facility of, and principal amount of the Advances
owing under each Facility to, each Lender Party from time to time (the
"REGISTER"). The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and the Borrower, the Agent and the Lender
Parties may treat each Person whose name is recorded in the Register as a Lender
Party hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Lender Party at any reasonable
time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender Party and an assignee, together with any Note or Notes subject
to such assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of Exhibit C hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower. Within five
Business Days after its receipt of such notice, the Borrower, at its own
expense, shall, on request, execute and deliver to the Agent in exchange for any
surrendered Note or Notes a new Note to the order of such Eligible Assignee in
an amount equal to the Commitment assumed by it under a Facility pursuant to
such Assignment and Acceptance and, if the assigning Lender Party has retained a
Commitment hereunder under such Facility, a new Note to the order of the
assigning Lender Party in an amount equal to the Commitment retained by it
hereunder. Such new Note or Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered Note or Notes, shall
be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit A-1 or A-2 hereto, as the case
may be.
(f) Each Lender Party may sell participations in or to all or a portion of
its rights and obligations under this Agreement (including, without limitation,
all or a portion of its Commitments, the Advances owing to it and the Note or
Notes, if any, held by it); PROVIDED, HOWEVER, that (i) such Lender Party's
obligations under this Agreement (including, without limitation, its
Commitments) shall remain unchanged, (ii) such Lender Party shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender Party shall remain the holder of any such Note for all
purposes of this Agreement, (iv) the Borrower, the Agent and the other Lender
Parties shall continue to deal solely and directly with such Lender Party in
connection with such Lender Party's rights and obligations under this Agreement
and (v) no participant under any such
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<PAGE>
participation shall have any right to approve any amendment or waiver of any
provision of any Loan Document, or any consent to any departure by any Loan
Party therefrom, except and solely to the extent that such amendment, waiver
or consent would reduce the principal of, or interest on, the Advances or any
fees or other amounts payable hereunder, in each case to the extent subject
to such participation, postpone any date fixed for any payment of principal
of, or interest on, the Advances or any fees or other amounts payable
hereunder, in each case to the extent subject to such participation or,
except as contemplated by the Loan Documents, release of any Subsidiary of
the Borrower from liability under any Subsidiary Guaranty entered into
pursuant to Sections 4.1(e)(viii) or 6.1(l).
(g) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.7, disclose to the assignee or participant or proposed assignee or participant
any information relating to the Borrower furnished to such Lender Party by or on
behalf of the Borrower; PROVIDED, that such assignee or participant or proposed
assignee or participant agrees to maintain the confidentiality of any
confidential information delivered pursuant hereto.
(h) Notwithstanding any other provision set forth in this Agreement, any
Lender Party may at any time create a security interest in all or any portion of
its rights under this Agreement (including, without limitation, the Advances
owing to it and the Note or Notes, if any, held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System.
SECTION IX.8 GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA.
SECTION IX.9 EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION IX.10 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST THE BORROWER WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE STATE OF CALIFORNIA, AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, THE BORROWER ACCEPTS, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO
BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS FROM WHICH NO APPEAL HAS BEEN
TAKEN OR IS AVAILABLE. THE BORROWER IRREVOCABLY
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<PAGE>
CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO ITS NOTICE ADDRESS SPECIFIED IN SECTION
9.2, SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING. EACH OF THE
BORROWER, THE AGENT AND EACH LENDER PARTY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION (INCLUDING WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
SHALL LIMIT THE RIGHT OF ANY LENDER PARTY TO BRING PROCEEDINGS AGAINST THE
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION IX.11 PERFORMANCE OF OBLIGATIONS. The Borrower agrees that the
Agent may, but shall have no obligation to, make any payment or perform any act
required of the Borrower under any Loan Document or take any other action which
the Agent in its discretion deems necessary or desirable to protect or preserve
any and all assets of the Borrower and its Subsidiaries, including, without
limitation, any action to (a) pay or discharge taxes, liens, security interests
or other encumbrances levied or placed on or threatened against any such assets
and (b) effect any repairs or obtain any insurance called for by the terms of
any of the Loan Documents and to pay all or any part of the premiums therefor
and the costs thereof. The Agent shall use its best efforts to give the
Borrower notice of any action taken under this Section 9.11 prior to the taking
of such action or promptly thereafter. Any funds advanced by the Agent under
this Section 9.11 shall constitute Obligations hereunder and shall be repaid by
the Borrower on demand with interest from the date of disbursement by the Agent
to the date of payment by the Borrower accrued at the rate applicable at the
time interest accrues to a Borrowing of Base Rate Advances.
SECTION IX.12 LENDER PARTIES' ACTION FOR THEIR OWN PROTECTION ONLY. The
authority herein conferred upon the Agent and the Lender Parties, and any action
taken by the Agent and the Lender Parties to review, approve, consult with or be
consulted by or otherwise affect the business and operations of the Borrower,
will be exercised and taken by the Lender Parties, their agents and
representatives for their own protection only and may not be relied upon by the
Borrower or any third party for any purposes whatever; and neither the Lender
Parties, nor their agents or representatives shall be assumed to have assumed
any responsibility to the Borrower with respect to any such action herein
authorized or taken with respect to the Borrower, or the business or operations
of the Borrower. Any review, investigation or inspection conducted by the
Lender Parties or their agents or representatives in order to verify
independently the Borrower's satisfaction of any conditions precedent to the
disbursement of any Advances, the Borrower's performance of any of its
covenants, agreements and obligations under the Loan Documents, or the validity
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<PAGE>
of any representations and warranties made by the Borrower under the Loan
Documents (regardless of whether or not the party conducting such review,
investigation or inspection should have discovered that any of such conditions
precedent were not satisfied or that any such covenants, agreements or
obligations were not performed or that any such representations or warranties
were not true) shall not affect (or constitute a waiver by the Agent or the
Lender Parties of) (a) any of the representations and warranties made by the
Borrower under the Loan Documents or the Agent's or the Lender Parties' reliance
thereon or (b) the Agent's or the Lender Parties' reliance upon any
certifications of the Borrower, its agents or representatives required under the
Loan Documents or any other facts, information or reports furnished to the
Agent's or the Lender Parties by the Borrower, its agents or representatives.
SECTION IX.13 CHANGE IN ACCOUNTING PRINCIPLES. If any changes in
accounting principles from those used in the preparation of the financial
statements referred to in Section 5.1(f) are hereafter required or permitted by
the rules, regulations, pronouncements and opinions of the Financial Accounting
Standards Board or the American Institute of Certified Public Accountants (or
successors thereto or agencies with similar functions) and are adopted by the
Borrower with the agreement of its independent public accountants and such
changes result in a change in the method of calculation of any of the financial
covenants, standards or terms found in Sections 6.2 or 6.4, the parties hereto
agree to enter into negotiations in order to amend such provisions so as to
reflect equitably such changes with the desired result that the criteria for
evaluating the Borrower's financial condition shall be the same after such
changes as if such changes had not been made; PROVIDED, that no change in
generally accepted accounting principles that would affect the method of
calculation of any of the financial covenants, standards or terms shall be given
effect in such calculations until such provisions are amended, in a manner
satisfactory to the Required Lenders, to so reflect such change in accounting
principles.
SECTION IX.14 ENTIRE AGREEMENT. This Agreement, taken together with all
of the other Loan Documents and the Fee Letter and all certificates and other
documents delivered by the Borrower to the Agent or the Lender Parties on or
after the date hereof, embodies the entire agreement and supersedes all prior
agreements, written and oral, including, without limitation, NationsBank's
September 5, 1996 commitment letter, accepted by the Borrower, relating to the
subject matter hereof.
SECTION IX.15 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENT AND
EACH LENDER PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE ADVANCES
OR THE ACTIONS OF THE AGENT, THE ARRANGER OR ANY LENDER PARTY IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
SECTION IX.16 TERMINATION OF EXISTING CREDIT AGREEMENTS. This
Agreement shall become effective at such time on or after the Closing Date
and satisfaction, or waiver by
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<PAGE>
each of the Loan Parties, of the conditions precedent
set forth in Section 4.1 when it shall have been executed by the Borrower and
each Lender Party and, thereafter, this Agreement shall be binding upon and
inure to the benefit of the Borrower, the Agent and each Lender Party and their
respective successors and assigns. At such time as this Agreement shall have
become effective pursuant to the terms of the immediately preceding sentence,
each Existing Credit Agreement, the Commitments thereunder and as defined
therein, and each other agreement executed in connection therewith shall be
terminated.
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<PAGE>
BORROWER: USCS INTERNATIONAL, INC.
By:__________________________________________
Title:
AGENT AND LENDERS: NATIONSBANK OF TEXAS, N.A., in its capacity as
Agent, the L/C Bank and the Swing Line Bank and
in its capacity as a Lender
By:__________________________________________
Title:
MELLON BANK, N.A.,
By:__________________________________________
Title:
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<PAGE>
SCHEDULE I
LENDER: COMMITMENTS:
NationsBank of Texas, N.A. Revolving Commitment: $27,500,000.00
1 Embarcadero Center
Suite 3860 Swingline Commitment: $5,000,000.00
San Francisco, CA 94111
Attn: E. Brooke Berg L/C Commitment: $10,000,000.00
Telefax: 415-438-3912
Mellon Bank, N.A. Revolving Commitment: $22,500,000.00
300 S. Grand, Suite 3800
Los Angeles, CA 90071
Attn: Everett Orrick
Telefax: 213-617-9691
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<PAGE>
Exhibit 11.01
USCS INTERNATIONAL, INC.
COMPUTATION OF PER SHARE EARNINGS
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------- -----------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Weighted average number of
common shares outstanding
during the period 22,957 19,478 20,537 19,481
Common stock equivalents
considered to be outstanding
for the periods presented 1,197 1,600 1,502 1,772
------- ------- ------- -------
24,154 21,078 22,039 21,253
------- ------- ------- -------
------- ------- ------- -------
Net income $ 4,328 $ 2,794 $ 9,734 $ 7,362
------- ------- ------- -------
------- ------- ------- -------
Earnings per share $ 0.18 $ 0.13 $ 0.44 $ 0.35
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF USCS INTERNATIONAL, INC. AS
OF SEPTEMBER 30, 1996 FOR THE NINE MONTHS THEN ENDED AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 3758
<SECURITIES> 0
<RECEIVABLES> 72095
<ALLOWANCES> 0
<INVENTORY> 5780
<CURRENT-ASSETS> 94714
<PP&E> 175211
<DEPRECIATION> 84986
<TOTAL-ASSETS> 196341
<CURRENT-LIABILITIES> 58548
<BONDS> 6303 <F1>
0
0
<COMMON> 1116
<OTHER-SE> 109474 <F2>
<TOTAL-LIABILITY-AND-EQUITY> 196341
<SALES> 0
<TOTAL-REVENUES> 193184
<CGS> 0
<TOTAL-COSTS> 119576
<OTHER-EXPENSES> 54412 <F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3106
<INCOME-PRETAX> 16090
<INCOME-TAX> 6356
<INCOME-CONTINUING> 9734
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9734
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
<FN>
<F1> Consists of Notes Payable, Credit Line and Bonds Payable
<F2> Consists of Additional Paid-in Capital, Retained Earnings and Foreign
Currency Translation Adjustments
<F3> Consists of Research and Development and Selling, General Administrative
Expenses
</FN>
</TABLE>
