<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
----------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: MARCH 31, 2000
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 0-21055
TELETECH HOLDINGS, INC.
-----------------------
(Exact name of registrant as specified in its charter)
DELAWARE 84-1291044
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1700 LINCOLN STREET, SUITE 1400
DENVER, COLORADO 80203
(Address of principal (Zip Code)
executive office)
(303) 894-4000
(Registrant's telephone number, including area code)
Not Applicable
(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, 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.
<TABLE>
<CAPTION>
Outstanding at
Class of Common Stock April 30, 2000
<S> <C>
Common Stock, par value $.01 per share 62,487,115
</TABLE>
<PAGE>
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets--December 31, 1999 and March 31, 2000 3
Condensed consolidated statements of income--Three months ended March 31,
2000 and 1999 5
Condensed consolidated statements of cash flows--Three months ended
March 31, 2000 and 1999 6
Notes to condensed consolidated financial statements--March 31, 2000 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures about Market Risk 13
PART II . OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities and Use of Proceeds 14
Item 5. Recent Developments 14
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
</TABLE>
<PAGE>
Item 1.
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
ASSETS 1999 2000
------ ---- ----
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 14,663 $ 18,531
Short-term investments 41,599 31,486
Accounts receivable, net of allowance for doubtful accounts of $3,787 and
$4,210, respectively 78,753 98,780
Prepaids and other assets 5,361 9,956
Deferred tax asset 4,889 4,835
-------- --------
Total current assets 145,265 163,588
-------- --------
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $65,083 and
$71,570, respectively 108,945 111,897
-------- --------
OTHER ASSETS:
Long-term accounts receivable 3,930 3,700
Investment in customer relationship management software company,
at cost 2,500 9,637
Goodwill, net of amortization of $3,103 and $3,455, respectively 20,633 20,531
Contract acquisition cost, net of amortization of $1,614 and $2,418, 9,286 13,582
respectively
Deferred tax asset 550 550
Other assets 2,621 2,940
-------- --------
Total assets $293,730 $326,425
======== ========
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated balance sheets.
3
<PAGE>
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1999 2000
------------------------------------ ---- ----
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt $ 4,842 $ 4,382
Bank overdraft 1,323 128
Accounts payable 8,217 8,099
Accrued employee compensation 26,282 20,001
Accrued income taxes 1,523 --
Other accrued expenses 16,831 19,287
Customer advances, deposits and deferred income 4,510 2,561
------------ ------------
Total current liabilities 63,528 54,458
LONG-TERM DEBT, net of current portion:
Capital lease obligations 1,697 497
Line of credit 18,000 34,000
Other debt 5,469 4,255
------------ ------------
Total liabilities 88,694 93,210
------------ ------------
MINORITY INTEREST, in consolidated subsidiaries -- 5,100
STOCKHOLDERS' EQUITY:
Stock purchase warrants -- 5,100
Common stock; $.01 par value; 150,000,000 shares authorized;
61,823,645 and 62,442,572 shares, respectively, issued and
outstanding 617 620
Additional paid-in capital 121,060 130,994
Accumulated other comprehensive income (1,148) (1,778)
Retained earnings 84,507 93,179
------------ ------------
Total stockholders' equity 205,036 228,115
------------ ------------
Total liabilities and stockholders' equity $ 293,730 $ 326,425
============ ============
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated balance sheets.
4
<PAGE>
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------
1999 2000
---- ----
<S> <C> <C>
REVENUES $ 110,638 $ 158,494
--------- ---------
OPERATING EXPENSES:
Costs of services 74,368 105,002
Selling, general and administrative
Expenses 28,404 39,063
--------- ---------
Total operating expenses 102,772 144,065
--------- ---------
INCOME FROM OPERATIONS 7,866 14,429
OTHER INCOME (EXPENSE):
Interest expense (416) (806)
Interest income 554 633
Other 65 19
--------- ---------
203 (154)
--------- ---------
INCOME BEFORE INCOME TAXES 8,069 14,275
Provision for income taxes 3,258 5,603
--------- ---------
NET INCOME $ 4,811 $ 8,672
--------- ---------
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 60,770 61,990
--------- ---------
Diluted 62,450 66,732
--------- ---------
NET INCOME PER SHARE
Basic $ .08 $ .14
--------- ---------
Diluted $ .08 $ .13
--------- ---------
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements
5
<PAGE>
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------
1999 2000
------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,811 $ 8,672
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization 6,307 8,067
Allowance for doubtful accounts 192 423
Deferred income taxes 235 (501)
Changes in assets and liabilities:
Accounts receivable (5,783) (20,450)
Prepaids and other assets (2,246) (3,157)
Accounts payable and accrued expenses (2,309) (5,674)
Customer advances, deposits and deferred income (1,254) (2,927)
-------- --------
Net cash used in operating activities (47) (15,547)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (13,440) (10,626)
1999 Acquisitions, net of $339 cash acquired (4,112) --
Investment in customer relationship management software
Company -- (7,304)
Proceeds from minority interest in subsidiary -- 5,100
Changes in accounts payable and accrued liabilities related to
investing activities (55) --
Decrease in short-term investments 852 10,113
-------- --------
Net cash used in investing activities (16,755) (2,717)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in bank overdraft (344) (1,195)
Net increase in short-term borrowings 25,000 16,000
Payments on long-term debt and capital leases (2,001) (1,686)
Proceeds from exercise of stock options 41 9,936
-------- --------
Net cash provided by financing activities 22,696 23,055
-------- --------
Effect of exchange rate changes on cash (943) (923)
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,951 3,868
CASH AND CASH EQUIVALENTS, beginning of period 8,796 14,663
-------- --------
CASH AND CASH EQUIVALENTS, end of period $13,747 $ 18,531
======== ========
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
6
<PAGE>
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE (1)--BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared without audit pursuant to the rules and
regulations of the Securities and Exchange Commission. The condensed
consolidated financial statements reflect all adjustments (consisting of only
normal recurring accruals) which, in the opinion of management, are necessary
to present fairly the financial position, results of operations and cash
flows of TeleTech Holdings, Inc. and subsidiaries as of March 31, 2000 and
1999 and for the periods then ended. Operating results for the three months
ended March 31, 2000 are not necessarily indicative of the results that may
be expected for the year ended December 31, 2000.
The unaudited condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements and footnotes
thereto included in the Company's Form 10-K for the year ended December 31,
1999. Certain 1999 amounts have been reclassified to conform to 2000
presentation.
NOTE (2)-- SEGMENT INFORMATION AND CUSTOMER CONCENTRATIONS
The Company classified its business activities into four fundamental
areas: outsourced operations in the United States, facilities management
operations, international outsourced operations, and technology services and
consulting. These areas are separately managed and each has significant
differences in capital requirements and cost structures. Outsourced,
facilities management and international outsourced operations are reportable
business segments with their respective financial performance detailed
herein. Technology services and consulting is included in corporate
activities as it is not a material business segment. Also included in
corporate activities are general corporate expenses and overall operational
management expenses. Assets of corporate activities include unallocated cash,
short-term investments and deferred income taxes. There are no significant
transactions between the reported segments for the periods presented.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------
(in thousands) 1999 2000
---- ----
<S> <C> <C>
REVENUES:
Outsourced $ 62,914 $ 90,004
Facilities Management 23,666 26,904
International Outsourced 18,137 38,738
Corporate Activities 5,921 2,848
---------- -----------
Total $110,638 $158,494
========== ===========
OPERATING INCOME (LOSS):
Outsourced $ 12,329 $ 21,049
Facilities Management 3,072 2,963
International Outsourced 601 4,756
Corporate Activities (8,136) (14,339)
---------- -----------
Total $ 7,866 $ 14,429
========== ===========
</TABLE>
7
<PAGE>
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 - CONTINUED
<TABLE>
<CAPTION>
BALANCE AS OF
-------------
DECEMBER 31, MARCH 31,
(in thousands) 1999 2000
---------- -----------
<S> <C> <C>
ASSETS:
Outsourced Assets $ 76,401 $ 92,320
Facilities Management Assets 11,290 11,832
International Outsourced Assets 88,643 111,768
Corporate Activities Assets 117,396 110,505
---------- ------------
Total $ 293,730 $ 326,425
========== ============
GOODWILL:
International Outsourced Goodwill, Net $ 10,496 $ 10,664
Corporate Activities Goodwill, Net 10,137 9,867
---------- -----------
Total $ 20,633 $ 20,531
========== ============
</TABLE>
The following geographic data include revenues based on the location
the services are provided (in thousands).
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------
1999 2000
--------- ------
<S> <C> <C>
REVENUES:
United States $ 87,592 $114,448
Australia 10,719 14,553
Canada 8,920 12,725
Latin America 2,244 12,380
Rest of world 1,163 4,388
-------- --------
Total $110,638 $158,494
========= ========
</TABLE>
NOTE (3)--SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION AND NONCASH INVESTING
AND FINANCING ACTIVITIES (IN THOUSANDS):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------
1999 2000
---- ----
<S> <C> <C>
Cash paid for interest $ 416 $ 806
Cash paid for income taxes $ 5,108 $ 352
Noncash investing and financing activities:
Stock issued in purchase of Pamet River, Inc. $ 1,753 $ --
Issuance of stock purchase warrants in connection
with formation of joint venture $ -- $ 5,100
</TABLE>
8
<PAGE>
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 - CONTINUED
NOTE (4)--COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS 130"). The purpose of SFAS 130 is to report a measure of all
changes in equity that result from recognized transactions and other economic
events of the period other than transactions with owners in their capacity as
owners. The only item of other comprehensive income reported by the Company
is the cumulative translation adjustment.
The Company's comprehensive income for the three months ended March
31, 1999 and 2000 was as follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1999 2000
---------- --------
<S> <C> <C>
Net income for the period $ 4,811 $ 8,672
Change in cumulative translation adjustment 118 (630)
---------- --------
Comprehensive income $ 4,929 $ 8,042
========== ========
</TABLE>
NOTE (5)--FORD JOINT VENTURE
During the first quarter, the Company and Ford Motor Company
("Ford") formed the Percept@ joint venture. In connection with this
formation, the Company issued stock purchase warrants to Ford entitling Ford
to purchase 750,000 shares of TeleTech common stock. These warrants were
valued at $5.1 million using the Black Scholes Option model.
NOTE (6)--LEASE COMMITMENT
In March, 2000 the Company and State Street Bank and Trust Company
of Connecticut ("State Street") entered into a lease agreement whereby State
Street acquired 12 acres of land in Arapahoe County, Colorado for
approximately $5.2 million for the purpose of constructing a new corporate
headquarters for the Company. We anticipate that the final design and
approval of the new headquarters will be completed in May 2000 and the lease
will be amended to provide for the construction of the building as well as
the underlying land.
9
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
INTRODUCTION
Management's discussion and analysis of financial condition and
results of operations in this Form 10-Q should be read in conjunction with
the note regarding Forward Looking Information included in the Company's Form
10-K for the year ended December 31, 1999. Specifically, the Company has
experienced, and in the future could experience, quarterly variations in
revenues and earnings as a result of a variety of factors, many of which are
outside the Company's control, including: the timing of new contracts; the
timing of new product or service offerings or modifications in client
strategies; the expiration or termination of existing contracts; the timing
of increased expenses incurred to obtain and support new business; and the
seasonal pattern of certain of the businesses serviced by the Company. In
addition, the Company has concentrated its marketing efforts towards
obtaining larger, more complex, strategic customer care programs. As a
result, the time required to negotiate and execute an agreement with the
client has increased. This may lead to short-term delays in the anticipated
start-up of new client programs and in the Company achieving full capacity
utilization.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31,
1999
Revenues increased $47.9 million or 43% to $158.5 million for the
three months ended March 31, 2000 from $110.6 million for the three months
ended March 31, 1999. The increase resulted primarily from $8.7 million in
revenues from new clients and $34.5 million in increased revenue from
existing clients. Revenues for the three months ended March 31, 2000 include
approximately $26.9 million from facilities management contracts as compared
with $23.7 million for the three months ended March 31, 1999. Revenues in
Latin America grew by $10.1 million as a result of acquisitions and increased
capacity.
Costs of services increased $30.6 million, or 41%, to $105.0
million for the three months ended March 31, 2000 from $74.4 million for the
three months ended March 31, 1999. Costs of services as a percentage of
revenues decreased from 67.2% for the three months ended March 31, 1999 to
66.2% for the three months ended March 31, 2000. The decrease in the costs of
services as a percentage of revenues is a result of increased capacity in
several of the Company's domestic and foreign customer interaction centers as
well as a decline in the level of revenues from facilities management
contracts which have a lower gross margin.
Selling, general and administrative expenses increased $10.7
million, or 38% to $39.1 million for the three months ended March 31, 2000
from $28.4 million for the three months ended March 31, 1999. Selling,
general and administrative expenses as a percentage of revenues decreased
from 25.7% for the three months ended March 31, 1999 to 24.6% for the three
months ended March 31, 2000 primarily as a result of increased capacity
utilization.
As a result of the foregoing factors, income from operations
increased $6.6 million or 83%, to $14.4 million for the three months ended
March 31, 2000 from $7.9 million for the three months ended March 31, 1999.
Operating income as a percentage of revenues increased from 7.1% for the
three months ended March 31, 1999 to 9.1% for the three months ended March
31, 2000.
Other expense totaled $154,000 for the three months ended March 31,
2000 compared with other income of $203,000 during the three months ended
March 31, 1999. This is primarily related to increased
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 -- CONTINUED
interest expense of $390,000 resulting from the increased levels in short-term
borrowings on the line of credit from $25.0 million at March 31, 1999 (of
which, the total was not outstanding for the entire quarter) to $34.0 million
at March 31, 2000.
As a result of the foregoing factors, net income increased $3.9 or 80%,
to $8.7 million for the three months ended March 31, 2000 from $4.8 million for
the three months ended March 31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000 the Company had cash and cash equivalents of
$18.5 million and short-term investments of $31.5 million. Cash used by
operating activities was $15.5 million for the three months ended March 31,
2000, which primarily resulted from increased accounts receivable due to
unscheduled early payments in 1999 totaling approximately $15.0 million the
Company was expecting to receive in January 2000. This helped the Company
achieve cash flow from operations of $14.0 million in the fourth quarter of
1999. Also, the Company's operating cash flow was negatively impacted by
approximately $5.0 million due to the timing of a majority of the Company's
payroll occurring on the last day of the quarter.
Cash used in investing activities was $2.7 million for the three
months ended March 31, 2000 resulting primarily from $10.1 million decrease
in short-term investments, $5.1 million in proceeds from a minority interest
partner offset by $10.6 million toward the purchase of property and equipment
and $7.3 million towards an investment in a customer relationship management
software company.
Cash provided by financing activities was $23.1 million resulting
from the increase in borrowings of $16.0 million and $9.9 million from stock
option exercises and their related tax benefit offset in part by pay downs of
capital leases and other debt.
During the first quarter of 2000, the Company completed an amendment
to its unsecured revolving line of credit with a syndicate of four banks. The
amendment increased the line of credit to $75.0 million from $50.0 million.
The Company has the option to secure at any time up to $20.0 million of the
line with available cash investments. The Company has two interest rate
options: an offshore rate option or a bank base rate option. The Company will
pay interest at a spread of 50 to 150 basis points over the applicable
offshore or bank base rate, depending upon the Company's leverage. Interest
on the secured portion is based on the applicable rate plus 22.5 basis
points. Borrowings under this agreement totaled $34.0 million at March 31,
2000 of which $20.0 million was secured at the Company's option with
temporary short term investments disclosed on the balance sheet. Interest
rates under these borrowings ranged from 6.7% to 9.0% at March 31, 2000.
Under this line of credit, the Company has agreed to maintain certain
financial ratios and capital expenditure limits.
The Company currently expects total capital expenditures in 2000 to
be approximately $70 to $90 million of which $10.6 million was expended in
the first three months. The Company believes that existing cash on hand and
available borrowings under the line of credit together with cash from
operations will be sufficient to finance the Company's operations, planned
capital expenditures and anticipated growth through 2000.
FORWARD-LOOKING STATEMENTS
All statements not based on historical fact are forward-looking
statements that involve substantial risks and uncertainties. In accordance with
the Private Securities Litigation Reform Act of 1995, following are important
factors that could cause TeleTech's actual results to differ materially from
those expressed or implied
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 -- CONTINUED
by such forward-looking statements: lower than anticipated customer interaction
center capacity utilization; the loss or delay in implementation of a customer
management program; TeleTech's ability to build-out facilities in a timely and
economic manner; greater than anticipated competition from new entrants into
the customer care market, causing increased price competition or loss of
clients; the loss of one or more significant clients; higher than anticipated
start-up costs associated with new business opportunities; TeleTech's ability
to predict the potential volume or profitability of any future technology or
consulting sales; TeleTech's agreements with clients may be canceled on
relatively short notice; and TeleTech's ability to generate a specific level of
revenue is dependent upon customer interest in and use of the Company's
clients' products and services. Readers are encouraged to review TeleTech's
1999 Annual Report on Form 10-K, which describes other important factors that
may impact TeleTech's business, results of operations and financial condition.
However, these factors should not be construed as an exhaustive list. TeleTech
cannot always predict which factors could cause actual results to differ
materially from those in its forward-looking statements. In light of these
risks and uncertainties the forward-looking statements might not occur.
TeleTech assumes no obligation to update its forward-looking statements to
reflect actual results or changes in factors affecting such forward-looking
statements.
12
<PAGE>
Item 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
FOR THE THREE MONTHS ENDED MARCH 31, 2000
Market risk represents the risk of loss that may impact the
financial position, results of operations or cash flows of the Company due to
adverse changes in financial and commodity market prices and rates. The
Company is exposed to market risk in the areas of changes in U.S. interest
rates and changes in foreign currency exchange rates as measured against the
U.S. dollar. These exposures are directly related to its normal operating and
funding activities. Historically, and as of March 31, 2000, the Company has
not used derivative instruments or engaged in hedging activities.
INTEREST RATE RISK
The interest on the Company's line of credit and its Canadian
subsidiary's operating loan is variable based on the bank's base rate or
offshore rate, and therefore, affected by changes in market interest rates.
At March 31, 2000, there was approximately $128,000 in borrowings outstanding
on the operating loan and $34.0 million outstanding on the line of credit.
The Company monitors interest rates frequently and has sufficient cash
balances to significantly reduce the line of credit, should interest rates
increase significantly. The Company's investments are typically short-term in
nature and as a result do not expose the Company to significant risk from
interest rate fluctuations. Therefore, the Company does not believe that
reasonably possible near-term changes in interest rates will result in a
material effect on future earnings, fair values or cash flows of the Company.
FOREIGN CURRENCY RISK
The Company has wholly owned subsidiaries in Argentina, Australia,
Brazil, Canada, Mexico, New Zealand, Singapore and the United Kingdom. The
substantial majority of revenues and expenses from these operations are
denominated in local currency, thereby creating exposures to changes in
exchange rates. The changes in the exchange rate may positively or negatively
affect the Company's revenues and net income attributed to these
subsidiaries. For the three months ended March 31, 2000, revenues from
non-U.S. countries represented 28% of consolidated revenues.
OTHER ITEMS
From time to time, we engage in discussions regarding restructuring,
dispositions, acquisitions and other similar transactions. Any such
transaction could include, among other things, the transfer, sale or
acquisition of significant assets, businesses or interests, including joint
ventures, or the incurrence, assumption or refinancing of indebtedness, and
could be material to our financial condition and results of operations. There
is no assurance that any such discussions will result in the consummation of
any such transaction.
13
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, the Company is involved in litigation, most of
which is incidental to its business. In the Company's opinion, no litigation
to which the Company currently is a party is likely to have a material
adverse effect on the Company's results of operations or financial condition.
Item 2. Changes in Securities and Use of Proceeds
The following paragraphs describe the securities issued by the Company
within the past fiscal quarter which were privately placed and not registered
under the Securities Act of 1933 (the "Securities Act").
(a) On February 28, 2000, in reliance on Sections 4(2) and 4(6) of the
Securities Act, the Company issued 50,440 shares of common stock
to Milos Djokovic as an earnout payment based on the 1999
financial performance of Cygnus Computer Associates Ltd., a
company TeleTech acquired from Mr. Djokovic in 1998.
(b) On February 24, 2000, in reliance on Sections 4(2) and 4(6) of the
Securities Act, the Company issued a warrant to purchase 750,000
shares of its common stock to Ford Motor Company ("Ford")
pursuant to a Warrant Agreement dated February 24, 2000 between
Ford and the Company. Ford paid the Company $5,100,000 for the
warrant.
Item 5. Recent Developments
Joint Venture with Ford Motor Company
On February 24, 2000, the Company entered into an Operating
Agreement with Ford to form Ford Tel II, LLC, subsequently renamed
Percept@, LLC ("Percept@"). In connection with the formation of
Percept@, the Company issued a warrant to purchase 750,000 shares of
common stock to Ford for $5,100,000. The strike price for the
warrant is $12.47 per share. See Item 2 of Part II of this Form
10-Q. The Company also agreed to issue performance warrants to Ford
at the end of Percept@'s fiscal years 2000-2004 in the event that
Percept@ achieves certain revenue and EBIT targets. The strike price
for any such performance warrants will be 105% of the average fair
market value of the Company's common stock for the ten trading days
immediately prior to March 31 of each year following a year for
which a performance warrant is earned.
Octane Software, Inc.
In January of 2000, the Company bought 872,459 shares of Series C
Preferred Stock of Octane Software, Inc. ("Octane"), bringing the
Company's ownership interest in Octane to a total of 1,651,275 shares
of Octane's preferred stock. Octane subsequently announced that it
entered into an Agreement and Plan of Reorganization with E.piphany,
Inc. ("E.piphany") pursuant to which a wholly owned subsidiary of
E.piphany plans to merge with and into Octane, with Octane surviving as
a wholly owned subsidiary of E.piphany (the "Merger"). As a result of
the Merger, TeleTech's shares of Octane's preferred stock will be
converted into shares of E.piphany common stock. The Merger is
subject to a number of conditions, including shareholder approval. For
current information regarding the Merger, you are encouraged to
review the publicly filed reports of E.piphany.
14
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits filed through the filing of this Form 10-Q
3.1 Restated Certificate of Incorporation of
TeleTech[1] {Exhibit 3.1}
3.2 Amended and Restated Bylaws of TeleTech[1]
{Exhibit 3.2}
10.22* Amendment to Non-Qualified Stock Option
Agreement (1999 Stock Option and Incentive
Plan) between Scott D. Thompson and TeleTech
10.23* Amendment to Non-Qualified Stock Option
Agreement (1995 Stock Plan) between Scott D.
Thompson and TeleTech
10.24* Amended and Restated Revolving Credit Agreement
dated as of March 24, 2000
10.25* Operating Agreement for Ford Tel II, LLC
effective February 24, 2000 by and among Ford
Motor Company and TeleTech Holdings, Inc.
10.26* Non-Qualified Stock Option Agreement dated
October 27, 1999 between Michael E. Foss and
TeleTech
10.27* Employment Agreement dated December 6, 1999
between Michael E. Foss and TeleTech
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
--------------------------------
* Filed Herewith
[ ] Such exhibit previously filed with the Securities and Exchange
Commission as exhibits to the filings indicated below, under the
exhibit number indicated in brackets { }, and is incorporated by
reference.
[1] TeleTech's Registration Statement on Form S-1, as amended
(Registration Statement No. 333-04097).
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TELETECH HOLDINGS, INC.
-----------------------
(Registrant)
Date: May 12, 2000 By: /s/ Scott D. Thompson
------------------------------ ---------------------------------------
Scott D. Thompson
Chief Executive Officer and President
Date: May 12, 2000 By: /s/ Michael E. Foss
------------------------------ ---------------------------------------
Michael E. Foss
Chief Financial Officer and President
TeleTech Companies Group
16
<PAGE>
AMENDMENT TO NON-QUALIFIED STOCK OPTION AGREEMENT
(1999 STOCK OPTION AND INCENTIVE PLAN)
This Amendment to Non-Qualified Stock Option Agreement (this
"Amendment") is effective as of March 8, 2000 by and between TeleTech
Holdings, Inc., a Delaware corporation ("TeleTech"), and Scott Thompson
("Optionee").
WHEREAS, TeleTech and Optionee entered into that certain Non-Qualified
Stock Option Agreement dated October 18, 1999 (the "Agreement"); and
WHEREAS, the parties wish to amend certain provisions contained in the
Agreement; and
WHEREAS, the Board of Directors of TeleTech has approved the terms of
this Amendment.
NOW, THEREFORE, in consideration of the covenants and promises set
forth in this Amendment, the parties agree as follows:
1. DEFINITIONS. Capitalized terms used but not defined in this
Amendment shall have the meanings given to such terms in the Agreement.
2. AMENDMENT. Section 3A(e) of the Agreement is amended in its
entirety to read as follows:
3A(e) VESTING BASED ON PERFORMANCE CRITERIA. In the event
that the average of the closing stock prices of TeleTech common
stock on Nasdaq as reported in the Wall Street Journal over any
120 consecutive days beginning after the date of the Agreement is
equal to or exceeds any one of the per share prices set forth
below, the corresponding percentage of the portion of the Option
then remaining unvested shall vest and become immediately
exercisable as of the last day of such 120 consecutive day period:
<TABLE>
<CAPTION>
Price per Share Percentage of Option Vested
--------------- ---------------------------
<S> <C>
$25.00 25%
$30.00 50%
$40.00 75%
$50.00 100%
</TABLE>
3. OTHER TERMS UNCHANGED. Except as expressly amended hereby, all
other terms and conditions of the Agreement shall remain in full force and
effect and shall not be modified or affected by this Amendment.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first written above.
TELETECH HOLDINGS, INC.
By: /s/ Michael Foss
------------------------
Name: Michael Foss
------------------------
Title: Chief Financial Officer
------------------------
/s/ Scott Thompson
---------------------
Scott Thompson
2
<PAGE>
AMENDMENT TO NON-QUALIFIED STOCK OPTION AGREEMENT
(1995 STOCK PLAN)
This Amendment to Non-Qualified Stock Option Agreement (this
"Amendment") is effective as of March 8, 2000 by and between TeleTech
Holdings, Inc., a Delaware corporation ("TeleTech"), and Scott Thompson
("Optionee").
WHEREAS, TeleTech and Optionee entered into that certain Non-Qualified
Stock Option Agreement dated October 18, 1999 (the "Agreement"); and
WHEREAS, the parties wish to amend certain provisions contained in the
Agreement; and
WHEREAS, the Board of Directors of TeleTech has approved the terms of
this Amendment.
NOW, THEREFORE, in consideration of the covenants and promises set
forth in this Amendment, the parties agree as follows:
1. DEFINITIONS. Capitalized terms used but not defined in this
Amendment shall have the meanings given to such terms in the Agreement.
2. AMENDMENT. Section 3A(e) of the Agreement is amended in its
entirety to read as follows:
3A(e) VESTING BASED ON PERFORMANCE CRITERIA. In the event
that the average of the closing stock prices of TeleTech common
stock on Nasdaq as reported in the Wall Street Journal over any
120 consecutive days beginning after the date of the Agreement is
equal to or exceeds any one of the per share prices set forth
below, the corresponding percentage of the portion of the Option
then remaining unvested shall vest and become immediately
exercisable as of the last day of such 120 consecutive day period:
<TABLE>
<CAPTION>
Price per Share Percentage of Option Vested
--------------- ---------------------------
<S> <C>
$25.00 25%
$30.00 50%
$40.00 75%
$50.00 100%
</TABLE>
3. OTHER TERMS UNCHANGED. Except as expressly amended hereby, all
other terms and conditions of the Agreement shall remain in full force and
effect and shall not be modified or affected by this Amendment.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first written above.
TELETECH HOLDINGS, INC.
By: /s/ Michael Foss
------------------------
Name: Michael Foss
------------------------
Title: Chief Financial Officer
------------------------
/s/ Scott Thompson
---------------------
Scott Thompson
2
<PAGE>
EXECUTION COPY
================================================================================
$75,000,000
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
Dated as of March 24, 2000
among
TELETECH HOLDINGS, INC.,
BANK OF AMERICA, NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT,
THE CO-AGENTS PARTY HERETO
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
ARRANGED BY
BANC OF AMERICA SECURITIES LLC
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.01 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . .1
1.02 Other Interpretive Provisions . . . . . . . . . . . . . . . . . 21
1.03 Accounting Principles . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE II THE CREDITS. . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.01 Amounts and Terms of Commitments; Tranche Modifications . . . . 23
2.02 Loan Accounts . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.03 Procedure for Borrowing . . . . . . . . . . . . . . . . . . . . 24
2.04 Conversion and Continuation Elections . . . . . . . . . . . . . 25
2.05 Voluntary Termination or Reduction of Commitments . . . . . . . 27
2.06 Optional Prepayments. . . . . . . . . . . . . . . . . . . . . . 27
2.07 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.08 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.09 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.10 Computation of Fees and Interest. . . . . . . . . . . . . . . . 28
2.11 Payments by the Company . . . . . . . . . . . . . . . . . . . . 29
2.12 Payments by the Lenders to the Administrative Agent . . . . . . 29
2.13 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . 30
2.14 Security and Guaranty . . . . . . . . . . . . . . . . . . . . . 30
2.15 Extensions of the Commitments.. . . . . . . . . . . . . . . . . 31
ARTICLE III THE LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . 31
3.01 The Letter of Credit Subfacility. . . . . . . . . . . . . . . . 31
3.02 Issuance, Amendment and Renewal of Letters of Credit. . . . . . 33
3.03 Risk Participations, Drawings and Reimbursements. . . . . . . . 34
3.04 Repayment of Participations . . . . . . . . . . . . . . . . . . 36
3.05 Role of the Issuer. . . . . . . . . . . . . . . . . . . . . . . 36
3.06 Obligations Absolute. . . . . . . . . . . . . . . . . . . . . . 37
3.07 Cash Collateral Pledge. . . . . . . . . . . . . . . . . . . . . 38
3.08 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . 38
3.09 Applicability of ISP98 and UCP. . . . . . . . . . . . . . . . . 39
ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY . . . . . . . . . . . . 39
4.01 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.02 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.03 Increased Costs and Reduction of Return . . . . . . . . . . . . 40
4.04 Funding Losses. . . . . . . . . . . . . . . . . . . . . . . . . 41
4.05 Inability to Determine Rates. . . . . . . . . . . . . . . . . . 42
4.06 Reserves on Offshore Rate Loans . . . . . . . . . . . . . . . . 42
4.07 Certificates of Lenders . . . . . . . . . . . . . . . . . . . . 42
4.08 Substitution of Lenders . . . . . . . . . . . . . . . . . . . . 42
4.09 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE V CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . 43
i
<PAGE>
5.01 Conditions to Effectiveness of Restatement. . . . . . . . . . . 43
5.02 Conditions to All Credit Extensions . . . . . . . . . . . . . . 44
ARTICLE VI REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 45
6.01 Corporate Existence and Power . . . . . . . . . . . . . . . . . 45
6.02 Corporate Authorization; No Contravention . . . . . . . . . . . 45
6.03 Governmental Authorization. . . . . . . . . . . . . . . . . . . 46
6.04 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . 46
6.05 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.06 No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.07 ERISA Compliance. . . . . . . . . . . . . . . . . . . . . . . . 47
6.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . 47
6.09 Title to Properties . . . . . . . . . . . . . . . . . . . . . . 47
6.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.11 Financial Condition . . . . . . . . . . . . . . . . . . . . . . 48
6.12 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 48
6.13 Collateral Documents. . . . . . . . . . . . . . . . . . . . . . 49
6.14 Regulated Entities. . . . . . . . . . . . . . . . . . . . . . . 49
6.15 No Burdensome Restrictions. . . . . . . . . . . . . . . . . . . 49
6.16 Copyrights, Patents, Trademarks and Licenses, etc . . . . . . . 49
6.17 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.18 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.19 Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.20 Swap Obligations. . . . . . . . . . . . . . . . . . . . . . . . 50
6.21 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE VII AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . 50
7.01 Financial Statements and Other Reports. . . . . . . . . . . . . 50
7.02 Certificates; Other Information . . . . . . . . . . . . . . . . 51
7.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.04 Preservation of Corporate Existence, Etc. . . . . . . . . . . . 53
7.05 Maintenance of Property . . . . . . . . . . . . . . . . . . . . 53
7.06 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.07 Payment of Obligations. . . . . . . . . . . . . . . . . . . . . 54
7.08 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . 54
7.09 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . 54
7.10 Inspection of Property and Books and Records. . . . . . . . . . 54
7.11 Environmental Laws. . . . . . . . . . . . . . . . . . . . . . . 55
7.12 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 55
7.13 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE VIII NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 56
8.01 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . 56
8.02 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . 57
8.03 Consolidations and Mergers. . . . . . . . . . . . . . . . . . . 58
8.04 Loans and Investments . . . . . . . . . . . . . . . . . . . . . 58
8.05 Limitation on Indebtedness. . . . . . . . . . . . . . . . . . . 59
8.06 Transactions with Affiliates. . . . . . . . . . . . . . . . . . 59
ii
<PAGE>
8.07 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 60
8.08 Contingent Obligations. . . . . . . . . . . . . . . . . . . . . 60
8.09 Joint Ventures. . . . . . . . . . . . . . . . . . . . . . . . . 60
8.10 Lease Obligations . . . . . . . . . . . . . . . . . . . . . . . 60
8.11 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . 60
8.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.13 Amendments to Charter Documents . . . . . . . . . . . . . . . . 61
8.14 Change in Business. . . . . . . . . . . . . . . . . . . . . . . 61
8.15 Accounting Changes. . . . . . . . . . . . . . . . . . . . . . . 61
8.16 Debt to EBITDAR Ratio . . . . . . . . . . . . . . . . . . . . . 61
8.17 Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . 61
8.18 Quarterly Profitability . . . . . . . . . . . . . . . . . . . . 61
8.19 Maximum Combination of Cash Capital Expenditures and Permitted
Acquisitions. . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.20 Permitted Acquisitions. . . . . . . . . . . . . . . . . . . . . 62
8.21 Secured Amount. . . . . . . . . . . . . . . . . . . . . . . . . 62
8.22 Restrictive Agreements. . . . . . . . . . . . . . . . . . . . . 62
ARTICLE IX EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . 62
9.01 Event of Default. . . . . . . . . . . . . . . . . . . . . . . . 62
9.02 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
9.03 Rights Not Exclusive. . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE X THE ADMINISTRATIVE AGENT. . . . . . . . . . . . . . . . . . . . 66
10.01 Appointment and Authorization; "Administrative Agent". . . . . 66
10.02 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . 66
10.03 Liability of Administrative Agent. . . . . . . . . . . . . . . 66
10.04 Reliance by Administrative Agent . . . . . . . . . . . . . . . 67
10.05 Notice of Default. . . . . . . . . . . . . . . . . . . . . . . 67
10.06 Credit Decision. . . . . . . . . . . . . . . . . . . . . . . . 68
10.07 Indemnification of Administrative Agent. . . . . . . . . . . . 68
10.08 Administrative Agent in Individual Capacity. . . . . . . . . . 69
10.09 Successor Agent. . . . . . . . . . . . . . . . . . . . . . . . 69
10.10 Withholding Tax. . . . . . . . . . . . . . . . . . . . . . . . 69
10.11 Collateral Matters . . . . . . . . . . . . . . . . . . . . . . 71
10.12 Co-Agents. . . . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE XI MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 72
11.01 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . 72
11.02 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
11.03 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . 73
11.04 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . 73
11.05 Company Indemnification. . . . . . . . . . . . . . . . . . . . 74
11.06 Marshalling; Payments Set Aside. . . . . . . . . . . . . . . . 75
11.07 Successors and Assigns . . . . . . . . . . . . . . . . . . . . 75
11.08 Assignments, Participations, etc . . . . . . . . . . . . . . . 75
11.09 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . 77
11.10 Set-off. . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
11.11 Automatic Debits of Fees . . . . . . . . . . . . . . . . . . . 78
iii
<PAGE>
11.12 Notification of Addresses, Lending Offices, Etc. . . . . . . . 78
11.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 78
11.14 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 78
11.15 No Third Parties Benefited . . . . . . . . . . . . . . . . . . 79
11.16 Governing Law and Jurisdiction . . . . . . . . . . . . . . . . 79
11.17 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . 79
11.18 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 80
11.19 Restatement Date . . . . . . . . . . . . . . . . . . . . . . . 80
11.20 Departing Lender . . . . . . . . . . . . . . . . . . . . . . . 80
</TABLE>
iv
<PAGE>
SCHEDULES
Schedule 1.01 Existing Letters of Credit
Schedule 2.01 Commitments
Schedule 6.07 ERISA
Schedule 6.11 Permitted Liabilities
Schedule 6.12 Environmental Matters
Schedule 6.17 Subsidiaries and Minority Interests
Schedule 8.01 Permitted Liens
Schedule 8.05 Permitted Indebtedness
Schedule 8.08 Contingent Obligations
Schedule 11.02 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Assignment and Acceptance
Exhibit E Form of Promissory Note
Exhibit F Form of Control Agreement
v
<PAGE>
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
This AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT is entered into
as of March 24, 2000, among TeleTech Holdings, Inc., a Delaware corporation
(the "COMPANY"), the several financial institutions from time to time party
to this Agreement (collectively, the "LENDERS"; individually, a "LENDER"),
Bank of America, National Association (f/k/a Bank of America National Trust
and Savings Association), as Administrative Agent for the Lenders, and the
parties identified on the signature pages hereto as Co-Agents in such
capacity.
WHEREAS, the Company, the Lenders, the Administrative Agent and the
Co-Agents entered into that certain Revolving Credit Agreement dated as of
November 20, 1998 (the "Prior Credit Agreement"), pursuant to which the Prior
Lenders made a revolving credit facility available to the Company; and
WHEREAS, the Company, the Lenders, the Administrative Agent and the
Co-Agents wish to refinance and increase the existing revolving credit
facility and to make available a letter of credit subfacility and,
concurrently, to amend and restate the Prior Credit Agreement in its entirety;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree, subject to the fulfillment
of the conditions precedent set forth in SECTION 5.01, that the Prior Credit
Agreement is hereby amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
1.01 CERTAIN DEFINED TERMS. The following terms have the following
meanings:
"ACQUISITION" means any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in
(a) the acquisition of all or substantially all of the assets of a
Person, or of any business or division of a Person, (b) the acquisition
of in excess of 50% of the capital stock, partnership interests,
membership interests or equity of any Person, or otherwise causing any
Person to become a Subsidiary, or (c) a merger or consolidation or any
other combination with another Person (other than a Person that is a
Subsidiary) provided that the Company or the Subsidiary is the surviving
entity.
"ADMINISTRATIVE AGENT" means BofA in its capacity as
Administrative Agent for the Lenders hereunder, and any successor agent
arising under SECTION 10.09.
"AFFILIATE" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. A Person shall be deemed to control
another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management
and policies of the other Person, whether through the ownership of voting
securities, membership interests, by contract, or otherwise.
<PAGE>
"AGENT-RELATED PERSONS" means the initial Administrative Agent,
any successor agent arising under SECTION 10.09 and any successor letter
of credit issuing bank hereunder, together with their respective
Affiliates (including, in the case of BofA, the Arranger), and the
officers, directors, employees, agents and attorneys-in-fact of such
Persons and Affiliates.
"AGENT'S PAYMENT OFFICE" means the address for payments set forth
on SCHEDULE 11.02 or such other address as the Administrative Agent may
from time to time specify.
"AGGREGATE COMMITMENT" means the aggregate Commitments of the
Lenders.
"AGREEMENT" means this Amended and Restated Revolving Credit
Agreement.
"APPLICABLE COMMITMENT FEE PERCENTAGE" means (a) with respect to
the Tranche A Commitment Amount, .125% and (b) with respect to the
Tranche B Commitment Amount, subject to the last sentence of this
definition, for any period, the applicable of the following percentages
in effect with respect to such period as the Debt to EBITDAR Ratio of the
Company shall fall within the indicated ranges:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
Debt to EBITDAR Ratio Commitment F
-------------------------------------------------------------------------
<S> <C>
Greater than or equal to 2.50 to 1.0 0.35%
-------------------------------------------------------------------------
Greater than or equal to 2.0 to 1.0 and 0.30%
< 2.50 to 1.0
-------------------------------------------------------------------------
Greater than or equal to 1.0 to 1.0 and 0.25%
< 2.0 to 1.0
-------------------------------------------------------------------------
< 1.0 to 1.0 0.20%
-------------------------------------------------------------------------
</TABLE>
The Debt to EBITDAR Ratio shall be calculated by the Company as of the
end of each fiscal quarter, commencing with the fiscal quarter ended
March 31, 2000, and shall be reported to the Administrative Agent
pursuant to a Compliance Certificate executed by a Responsible Officer of
the Company and delivered pursuant to SUBSECTION 7.02(b) hereof. The
Applicable Commitment Fee Percentage with respect to the Tranche B
Commitment Amount shall be adjusted, if necessary, on the third Business
Day after the delivery of such certificate; PROVIDED, that if such
certificate, together with the financial statements to which such
certificate relates, is not delivered to the Administrative Agent by the
fifth Business Day after the date on which the related financial
statements are due to be delivered to the Administrative Agent pursuant
to SUBSECTION 7.01(a) or (b), then, from such fifth Business Day until
the third Business Day after delivery of such certificate, the Applicable
Commitment Fee Percentage with respect to the Tranche B Commitment Amount
shall be equal to 0.35%. From the Restatement Date until adjusted as
described above, the Applicable Commitment Fee Percentage with respect to
the Tranche B Commitment Amount shall be equal to .25%.
"APPLICABLE MARGIN" means (a) with respect to Tranche A Loans,
.225% per annum and (b) with respect to Tranche B Loans, subject to the
last sentence of this
2
<PAGE>
definition, for any period, the applicable of the following percentages
in effect with respect to such period as the Debt to EBITDAR Ratio of
the Company shall fall within the indicated ranges:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Debt to EBITDAR Ratio Applicable Margin
------------------------------------------------------------------------------------
<S> <C>
Greater than or equal to 2.5 to 1.0 1.50%
------------------------------------------------------------------------------------
Greater than or equal to 2.0 to 1.0 and 1.25%
< 2.50 to 1.0
------------------------------------------------------------------------------------
Greater than or equal to 1.0 to 1.0 and 1.00%
< 2.0 to 1.0
------------------------------------------------------------------------------------
Greater than or equal to 0.5 to 1.0 and 0.75%
< 1.0 to 1.0
------------------------------------------------------------------------------------
< 0.5 to 1.0 0.50%
------------------------------------------------------------------------------------
</TABLE>
The Debt to EBITDAR Ratio shall be calculated by the Company as of the
end of each fiscal quarter, commencing with the fiscal quarter ended March
31, 2000, and shall be reported to the Administrative Agent pursuant to a
Compliance Certificate executed by a Responsible Officer of the Company and
delivered pursuant to SUBSECTION 7.02(b). The Applicable Margin with respect
to Tranche B Loans shall be adjusted, if necessary, on the third Business Day
after the delivery of such certificate, with such adjustment to apply to all
Interest Periods then outstanding and beginning thereafter until the next
adjustment date; PROVIDED, that if such certificate, together with the
financial statements to which such certificate relates, is not delivered to
the Administrative Agent by the fifth Business Day after the date on which
the related financial statements are due to be delivered to the
Administrative Agent pursuant to SUBSECTION 7.01(a) or (b), then, from such
fifth Business Day until the third Business Day after delivery of such
certificate, the Applicable Margin with respect to Tranche B Loans shall be
equal to 1.50%. From the Restatement Date until adjusted as described above,
the Applicable Margin with respect to Tranche B Loans shall be equal to 1.0%.
"ARRANGER" means Banc of America Securities LLC, a Delaware
limited liability company.
"ASSIGNEE" has the meaning specified in SUBSECTION 11.08(a).
"ATTORNEY COSTS" means and includes all fees and disbursements of
any law firm or other external counsel, the allocated cost of internal
legal services and all disbursements of internal counsel.
"BANKRUPTCY CODE" means the Federal Bankruptcy Reform Act of 1978
(11 U.S.C. Section 101, ET SEQ.).
3
<PAGE>
"BASE RATE" means, for any day, the higher of: (a) 0.50% per
annum above the latest Federal Funds Rate; and (b) the rate of interest
in effect for such day as publicly announced from time to time by BofA as
its "reference rate." (The "reference rate" is a rate set by BofA based
upon various factors including BofA's costs and desired return, general
economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such
announced rate.) Any change in the reference rate announced by BofA
shall take effect at the opening of business on the day specified in the
public announcement of such change.
"BASE RATE LOAN" means a Revolving Loan or an L/C Advance that
bears interest based on the Base Rate.
"BOFA" means Bank of America, National Association (f/k/a Bank of
America National Trust and Savings Association), a national banking
association.
"BORROWING" means a borrowing hereunder consisting of Revolving
Loans of the same Type made to the Company on the same day by the Lenders
under ARTICLE II, and in the case of Offshore Rate Loans, having the same
Interest Period.
"BORROWING DATE" means any date on which a Borrowing occurs under
SECTION 2.03.
"BUSINESS DAY" means any day other than a Saturday, Sunday or
other day on which commercial banks are authorized to close under the
laws of, or are in fact closed in, the state where the Administrative
Agent's office is located, and, if the applicable Business Day relates to
any Offshore Rate Loan, means such a day on which dealings are carried on
in the applicable offshore dollar interbank market.
"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law, in
each case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"CAPITAL EXPENDITURES" means, without duplication, any
expenditures for any purchase or other acquisition for value of any asset
that is classified on the consolidated balance sheet of the Company and
the Subsidiaries prepared in accordance with GAAP as a fixed or capital
asset (other than expenditures incurred to effect an Acquisition)
excluding (a) the cost of assets acquired under Capitalized Lease
Obligations, (b) expenditures of insurance proceeds to rebuild or
replace any assets after a casualty loss, and (c) leasehold improvement
expenditures for which the Borrower or a Subsidiary is reimbursed
promptly by the lessor.
"CAPITALIZED LEASE" of a Person means any lease of property by
such Person as lessee which would be capitalized on a balance sheet of
such Person prepared in accordance with GAAP.
4
<PAGE>
"CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount of
the obligations of such Person under Capitalized Leases which would be
shown as a liability on a balance sheet of such Person prepared in
accordance with GAAP.
"CASH COLLATERALIZE" means to pledge and deposit with or deliver
to the Administrative Agent, for the benefit of the Administrative Agent,
the Issuer and the Lenders, as additional collateral for the L/C
Obligations, cash or deposit account balances pursuant to documentation
in form and substance reasonably satisfactory to the Administrative Agent
and the Issuer (which documents are hereby consented to by the Lenders).
Derivatives of such term shall have corresponding meanings. The Company
hereby grants the Administrative Agent, for the benefit of the
Administrative Agent, the Issuer and the Lenders, a security interest in
all such cash and deposit account balances. Cash collateral shall be
maintained in blocked, non-interest bearing deposit accounts at BofA
while an Event of Default is continuing and shall be transferred to an
interest bearing account as soon as practicable after the termination of
such Event of Default.
"CASH EQUIVALENTS" means Investments maturing within one year from
the date of investment in (a) certificates of deposit, Eurodollar time
deposits, other interest bearing deposits or accounts and repurchase
agreements with high quality United States commercial banks having a
combined capital and surplus of at least $500,000,000, (b) certificates
of deposit, other interest bearing accounts or deposits and demand
deposits with other United States commercial banks, which deposits and
accounts are in amounts fully insured by the Federal Deposit Insurance
Corporation, (c) obligations issued or unconditionally guaranteed by the
United States government or issued by an agency thereof, (d) direct
obligations issued by any state of the United States or any political
subdivision thereof which have the highest short-term or long-term rating
obtainable from Standard & Poor's Ratings Group or Moody's Investors
Services, Inc. on the date of investment, (e) commercial paper rated A-1
or better by Standard & Poor Ratings Group or P-1 or better by Moody's
Investors Services, Inc. or (f) money market mutual funds investing in
investments of the types described in clauses (a) through (e).
"CERCLA" has the meaning specified in the definition of
"Environmental Laws."
"CHANGE OF CONTROL" means (a) any acquisition by any Person, or
two or more Persons acting in concert, including without limitation any
acquisition effected by means of any transaction contemplated by
SECTION 8.03, of beneficial ownership (within the meaning of Rule 13d-3
of the SEC under the Exchange Act) of 25% or more of the outstanding
shares of voting stock of the Company or (b) during any period of
25 consecutive calendar months, commencing on the Closing Date, the
ceasing of those individuals (the "CONTINUING DIRECTORS") who either
(i) were directors of the Company on the first day of each such period or
(ii) subsequently became directors of the Company and whose actual
election or initial nomination for election subsequent to that date was
approved by a majority of the Continuing Directors then on the board of
directors of the Company, to constitute a majority of the board of
directors of the Company.
"CLOSING DATE" means November 20, 1998.
5
<PAGE>
"CODE" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"COLLATERAL" means all property and interests in property and
proceeds thereof now owned or hereafter acquired by the Company in or
upon which a Lien now or hereafter exists in favor of the Lenders, or the
Administrative Agent on behalf of the Lenders, whether under this
Agreement, the Collateral Documents or any other documents executed by
any such Person and delivered to the Administrative Agent or the Lenders.
"COLLATERAL ACCOUNTS" means the securities accounts and deposit
accounts maintained by the Company with BofA or other Lenders, which
accounts, the Eligible Securities (if applicable) and amounts therein and
all rights with respect thereto have been pledged for the benefit of the
Administrative Agent and the Lenders pursuant to the Security Agreement.
"COLLATERAL DOCUMENTS" means (a) the Security Agreement, the
Control Agreements and the Subsidiary Guaranty and (b) any amendments,
supplements, modifications, renewals, replacements, consolidations,
substitutions and extensions of any of the foregoing.
"COMMITMENT", as to each Lender, has the meaning specified in
SECTION 2.01.
"COMPANY" has the meaning specified in the introductory clause
hereto.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the
form of EXHIBIT C.
"CONTINGENT OBLIGATION" means, as to any Person, any direct or
indirect liability of that Person (without duplication), whether or not
contingent, with or without recourse, (a) with respect to any
Indebtedness, lease, dividend, letter of credit or other obligation (the
"PRIMARY OBLIGATIONS") of another Person (the "PRIMARY OBLIGOR"),
including any obligation of that Person (i) to purchase, repurchase or
otherwise acquire such primary obligations or any security therefor,
(ii) to advance or provide funds for the payment or discharge of any such
primary obligation, or to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency or
any balance sheet item, level of income or financial condition of the
primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation, or (iv) otherwise to assure or hold harmless the
holder of any such primary obligation against loss in respect thereof
(each, a "GUARANTY OBLIGATION"); (b) with respect to any Surety
Instrument issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings or payments,
including without limitation the outstanding amount of L/C Obligations in
respect of Letters of Credit; (c) to purchase any materials, supplies or
other property from, or to obtain the services of, another Person if the
relevant contract or other related document or obligation requires that
payment for such materials, supplies or other property, or for
6
<PAGE>
such services, shall be made regardless of whether delivery of such
materials, supplies or other property is ever made or tendered, or such
services are ever performed or tendered; or (d) in respect of any Swap
Contract. The amount of any Contingent Obligation shall, in the case of
Guaranty Obligations, be deemed equal to the stated or determinable
amount of the primary obligation in respect of which such Guaranty
Obligation is made or, if not stated or if indeterminable, the maximum
reasonably anticipated liability in respect thereof, and in the case of
other Contingent Obligations shall be equal to the maximum reasonably
anticipated liability in respect thereof.
"CONTRACTUAL OBLIGATION" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument,
document or agreement to which such Person is a party or by which it or
any of its property is bound.
"CONTROL AGREEMENT" means an agreement in substantially the form
of EXHIBIT F hereto entered into among the Company, the Administrative
Agent and the Lender establishing the applicable account.
"CONVERSION/CONTINUATION DATE" means any date on which, under
SECTION 2.04, the Company (a) converts Loans of one Type to another Type,
or (b) continues as Loans of the same Type, but with a new Interest
Period, Loans having Interest Periods expiring on such date.
"CREDIT EXTENSION" means and includes (a) the making of any Loans
hereunder and (b) the Issuance of any Letters of Credit hereunder.
"CURRENT COMMITMENT TERMINATION DATE" has the meaning specified in
SUBSECTION 2.15(a).
"DEBT" means as of the end of any fiscal quarter an amount equal
to the sum of (a) all Indebtedness as of such date and (b) five (5) times
Rental Expenses for the period of four fiscal quarters then ended, in
each case of the Company and its Subsidiaries on a consolidated basis.
"DEBT TO EBITDAR RATIO" means, as of the end of any fiscal
quarter, the ratio of Debt calculated as of such date to EBITDAR for the
period of four fiscal quarters then ended.
"DEFAULT" means any event or circumstance which, with the giving
of notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"DEPARTING LENDER" means Fleet National Bank.
"DOLLARS", "DOLLARS" and "$" each mean lawful money of the United
States.
7
<PAGE>
"DOMESTIC SUBSIDIARY" means a Subsidiary organized under the laws
of the United States or any political subdivision or any agency,
department or instrumentality thereof.
"EBITDAR" means, for any period, for the Company and its
Subsidiaries on a consolidated basis, determined in accordance with GAAP,
the sum of (a) the Net Income (or net loss) for such period, PLUS (b)
all amounts treated as expenses for depreciation and interest and the
amortization of intangibles of any kind to the extent deducted in the
determination of such Net Income (or net loss), PLUS (c) all accrued
taxes on or measured by income to the extent included in the
determination of such Net Income (or net loss), LESS (d) any nonrecurring
gains (or PLUS any nonrecurring losses resulting directly from or
incurred directly as a consequence of the sale or closure of any
operating facilities by the Company and its Subsidiaries), PLUS (e)
Rental Expenses for such period, PLUS (f) all interest payments made in
such period in respect of Synthetic Lease Obligations.
"EFFECTIVE AMOUNT" means (a) with respect to any Revolving Loans
on any date, the aggregate outstanding principal amount thereof after
giving effect to any Borrowings and prepayments or repayments of
Revolving Loans occurring on such date; and (b) with respect to any
outstanding L/C Obligations on any date, the amount of such L/C
Obligations on such date after giving effect to any Issuances of Letters
of Credit occurring on such date and any other changes in the aggregate
amount of the L/C Obligations as of such date, including as a result of
any reimbursements of outstanding unpaid drawings under any Letters of
Credit or any reductions in the maximum amount available for drawing
under Letters of Credit taking effect on such date.
"ELIGIBLE ASSIGNEE" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having a
combined capital and surplus of at least $100,000,000; (b) a commercial
bank organized under the laws of any other country which is a member of
the Organization for Economic Cooperation and Development (the "OECD"),
or a political subdivision of any such country, and having a combined
capital and surplus of at least $100,000,000, PROVIDED that such bank is
acting through a branch or agency located in the United States; (c) a
Person that is primarily engaged in the business of commercial banking
and that is (i) a Subsidiary of a Lender, (ii) a Subsidiary of a Person
of which a Lender is a Subsidiary, or (iii) a Person of which a Lender is
a Subsidiary; (d) (i) an "accredited investor", as such term is defined
in Rule 501(a) of Regulation D under the Securities Act of 1933, as
amended (other than the Company or an Affiliate of the Company) or (ii) a
finance company, insurance company or other financial institution or fund
(whether a corporation, partnership, trust or other entity) that is
primarily engaged in the business of making, purchasing or otherwise
investing in commercial loans, which, in any such case, has assets in
excess of $10,000,000; and (e) any other entity approved by the Company
and the Administrative Agent.
"ELIGIBLE SECURITIES" means "Investment Property" (as defined in
Article 9 of the Uniform Commercial Code as now and hereafter in effect
in the State of Illinois or any other applicable jurisdiction to which
the Administrative Agent shall agree) in which a security interest may be
perfected by the execution of a control agreement among the Company, the
Administrative Agent and the Lender with which the applicable Collateral
8
<PAGE>
Account is maintained, consisting exclusively of Investments meeting the
criteria specified in clauses (a) through (e) of the definition of "Cash
Equivalents".
"ENVIRONMENTAL CLAIMS" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment or threat to public health, personal injury
(including sickness, disease or death), property damage, natural
resources damage, or otherwise alleging liability or responsibility for
damages (punitive or otherwise), investigation, cleanup, removal,
remedial or response costs, restitution, civil or criminal penalties,
injunctive relief, or other type of relief, resulting from or based upon
the presence, placement, discharge, emission or release (including
intentional and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental, placement, spills, leaks,
discharges, emissions or releases) of any Hazardous Material at, in, or
from any property, whether or not owned by the Company or any Subsidiary
or taken as collateral, or in connection with any operations of the
Company or any Subsidiary.
"ENVIRONMENTAL LAWS" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental, health,
safety and land use matters; including without limitation the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"), the Clean Air Act, the Federal Water Pollution Control
Act of 1972, the Solid Waste Disposal Act, the Federal Resource
Conservation and Recovery Act, the Toxic Substances Control Act and the
Emergency Planning and Community Right-to-Know Act.
"ENVIRONMENTAL PERMITS" has the meaning specified in SUBSECTION
6.12(b).
"ERISA" means the Employee Retirement Income Security Act of 1974,
and regulations promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the
Code for purposes of provisions relating to Section 412 of the Code).
"ERISA EVENT" means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Company or any ERISA Affiliate from
a Pension Plan subject to Section 4063 of ERISA during a plan year in
which it was a substantial employer (as defined in Section 4001(a)(2) of
ERISA) or a substantial cessation of operations which is treated as such
a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial
withdrawal by the Company or any ERISA Affiliate from a Multiemployer
Plan or notification that a Multiemployer Plan is in reorganization;
(d) the filing of a notice of intent to terminate, the treatment of a
Plan amendment as a termination under Section 4041 or 4041A of ERISA, or
the commencement of proceedings by the PBGC to terminate a Pension Plan
or Multiemployer Plan; (e) an event or condition which might
9
<PAGE>
reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer,
any Pension Plan or Multiemployer Plan; or (f) the imposition of any
liability under Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the Company or any ERISA
Affiliate.
"EURODOLLAR RESERVE PERCENTAGE" has the meaning specified in the
definition of "Offshore Rate".
"EVENT OF DEFAULT" means any of the events or circumstances
specified in SECTION 9.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"EXTENDED TERMINATION DATE" has the meaning specified in
SUBSECTION 2.15(b).
"EXTENSION CONFIRMATION DATE" has the meaning specified in
SUBSECTION 2.15(b).
"EXTENSION CONFIRMATION NOTICE" has the meaning specified in
SUBSECTION 2.15(b).
"EXTENSION REQUEST" has the meaning specified in
SUBSECTION 2.15(a).
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"FEDERAL FUNDS RATE" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Business Day opposite
the caption "Federal Funds (Effective)"; or, if for any relevant day such
rate is not so published on any such preceding Business Day, the rate for
such day will be the arithmetic mean as determined by the Administrative
Agent of the rates for the last transaction in overnight Federal funds
arranged prior to 9:00 a.m. (New York City time) on that day by each of
three leading brokers of Federal funds transactions in New York City
selected by the Administrative Agent.
"FEE LETTER" has the meaning specified in SUBSECTION 2.09(a).
"FIXED CHARGES" means, with respect to the Company and its
Subsidiaries on a consolidated basis, as of any date of determination,
(a) interest expenses paid or accrued on outstanding Indebtedness for the
period of four fiscal quarters ending on the date of determination, PLUS
(b) principal payments on Indebtedness which are required to be made for
the next succeeding twelve months, PLUS (c) Rental Expenses incurred
during the period of four fiscal quarters ending on the date of
determination.
"FORD JOINT VENTURE" means that certain Joint Venture between the
Company and Ford Motor Company that is being conducted through Fordtel
II, L.L.C., a Delaware limited liability company, and other subsidiaries
and Affiliates of Fordtel II, L.L.C. that
10
<PAGE>
are or may be formed pursuant to that certain Operating Agreement of
Fordtel II, L.L.C. dated as of February 24, 2000.
"FRB" means the Board of Governors of the Federal Reserve System,
and any Governmental Authority succeeding to any of its principal
functions.
"FURTHER TAXES" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar
charges (including, without limitation, net income taxes and franchise
taxes), and all liabilities with respect thereto, imposed by any
jurisdiction on account of amounts payable or paid pursuant to SECTION
3.01.
"GAAP" means generally accepted accounting principles set forth
from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature
and authority within the U.S. accounting profession), which are
applicable to the circumstances as of the date of determination.
"GOVERNMENTAL AUTHORITY" means (a) any nation or government, any
state or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government, and any corporation or other entity owned
or controlled, through stock or capital ownership or otherwise, by any of
the foregoing and (b) the National Association of Insurance
Commissioners.
"GUARANTORS" means each Subsidiary of the Company from time to
time party to the Subsidiary Guaranty. The initial Guarantors shall be
the Domestic Subsidiaries listed on SCHEDULE 6.17.
"GUARANTY OBLIGATION" has the meaning specified in the definition
of "Contingent Obligation."
"HAZARDOUS MATERIALS" means all those substances that are
regulated by, or which form the basis of liability or a standard of
conduct under, any Environmental Law, including any substance identified
under any Environmental Law as a pollutant, contaminant, hazardous waste,
hazardous constituent, special waste, hazardous substance, hazardous
material, or toxic substance, or petroleum or petroleum derived substance
or waste.
"HONOR DATE" has the meaning specified in SUBSECTION 3.03(b).
"INDEBTEDNESS" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken
or assumed as the deferred purchase price of property or services (other
than trade payables entered into in the ordinary course of business on
ordinary terms); (c) all Contingent Obligations with respect to Surety
Instruments; (d) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in
connection with the
11
<PAGE>
acquisition of property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to
property acquired by the Person (even though the rights and remedies of
the seller or bank under such agreement in the event of default are
limited to repossession or sale of such property); (f) all Capitalized
Lease Obligations and Synthetic Lease Obligations; (g) all indebtedness
referred to in clauses (a) through (f) above secured by (or for which
the holder of such indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including
accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such
indebtedness (with the amount of such Indebtedness to be equal to the
lesser of the face amount thereof and the fair market value of the
property made subject to such Lien); and (h) all Guaranty Obligations in
respect of indebtedness or obligations of others of the kinds referred to
in clauses (a) through (g) above. For all purposes of this Agreement,
(x) the Indebtedness of any Person shall include all recourse
Indebtedness of any partnership or joint venture or limited liability
company in which such Person is a general partner or a joint venturer or
a member, to the extent that recourse may be had for such Indebtedness to
such Person, and (y) the amount of any Indebtedness of any Person which
respect to which the creditor may, by its terms, have only limited
recourse to the assets of the obligor, shall be equal to the lesser of
the face amount thereof and the fair market value of the assets to which
recourse may be obtained.
"INDEMNIFIED LIABILITIES" has the meaning specified in SECTION
11.05.
"INDEMNIFIED PERSON" has the meaning specified in SECTION 11.05.
"INDEPENDENT AUDITOR" has the meaning specified in SUBSECTION
7.01(a).
"INSOLVENCY PROCEEDING" means, with respect to any Person, (a) any
case, action or proceeding with respect to such Person before any court
or other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief
of debtors, or (b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial
portion of its creditors; in each case, undertaken under U.S. Federal,
state or foreign law, including the Bankruptcy Code.
"INTEREST EXPENSE" means, for any period, an amount equal to the
interest expense of the Company and its Subsidiaries on a consolidated
basis during such period, determined in accordance with GAAP.
"INTEREST PAYMENT DATE" means, as to any Offshore Rate Loan, the
last day of each Interest Period applicable to such Loan and, as to any
Base Rate Loan, the last Business Day of each calendar quarter, PROVIDED,
HOWEVER, that if any Interest Period for an Offshore Rate Loan exceeds
three months, the date that falls three months after the beginning of
such Interest Period and three months after each Interest Payment Date
thereafter is also an Interest Payment Date.
12
<PAGE>
"INTEREST PERIOD" means, as to any Offshore Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as an Offshore Rate Loan, and ending on the date one, two,
three or six months thereafter as selected by the Company in its Notice
of Borrowing or Notice of Conversion/Continuation;
PROVIDED that:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the
following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period; and
(iii) no Interest Period for any Loan shall extend beyond the
Current Commitment Termination Date.
"INVESTMENTS" has the meaning specified in SECTION 8.04.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
"ISSUANCE DATE" has the meaning specified in SUBSECTION 3.01(a).
"ISSUE" means, with respect to any Letter of Credit, to issue or
extend the expiry of, or to renew or increase the amount of, such Letter
of Credit; and the terms "ISSUED", "ISSUING" and "ISSUANCE" have
corresponding meanings.
"ISSUER" means, in respect of each Letter of Credit, BofA.
"JOINT VENTURE" means a single-purpose corporation, partnership,
limited liability company, joint venture or other similar legal
arrangement (whether created by contract or conducted through a separate
legal entity) now or hereafter formed by the Company or any of its
Subsidiaries with another Person in order to conduct a common venture or
enterprise with such Person.
"L/C ADVANCE" means each Revolving Lender's participation in any
L/C Borrowing in accordance with its Pro Rata Share.
"L/C AMENDMENT APPLICATION" means an application form for
amendment of outstanding standby or commercial documentary letters of
credit as shall at any time be in use at the Issuer, as the Issuer shall
request.
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"L/C APPLICATION" means an application form for issuances of
standby or commercial documentary letters of credit as shall at any time
be in use at the Issuer, as the Issuer shall request.
"L/C BORROWING" means an extension of credit resulting from a
drawing under any Letter of Credit which shall not have been reimbursed
on the date when made and which shall not have been converted into a
Borrowing of Revolving Loans under SUBSECTION 3.03(b).
"L/C COMMITMENT" means the commitment of the Issuer to Issue, and
the commitment of the Revolving Lenders severally to participate in,
Letters of Credit from time to time Issued or outstanding under ARTICLE
III, in an aggregate amount not to exceed on any date the lesser of (a)
$10,000,000 and (b)(i) the Tranche B Commitment Amount less (ii) the
aggregate principal amount of Tranche B Loans then outstanding; PROVIDED
that the L/C Commitment is a part of the Aggregate Commitment, rather
than a separate, independent commitment.
"L/C OBLIGATIONS" means at any time the sum of (a) the aggregate
undrawn amount of all Letters of Credit then outstanding, plus (b) the
amount of all unreimbursed drawings under all Letters of Credit,
including all outstanding L/C Borrowings.
"L/C-RELATED DOCUMENTS" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document
relating to any Letter of Credit, including any standard form documents
used by the Issuer for letter of credit issuances.
"LENDER" has the meaning specified in the introductory clause
hereto. References to the "Lenders" shall include BofA, including in its
capacity as the Issuer; for purposes of clarification only, to the extent
that BofA may have any rights or obligations in addition to those of the
Lenders due to its status as the Issuer, its status as such will be
specifically referenced.
"LENDING OFFICE" means, as to any Lender, the office or offices of
such Lender specified as its "Lending Office" or "Domestic Lending
Office" or "Offshore Lending Office", as the case may be, on SCHEDULE
11.02, or such other office or offices as such Lender may from time to
time notify the Company and the Administrative Agent.
"LETTERS OF CREDIT" means any letters of credit (whether standby
letters of credit or commercial documentary letters of credit) Issued by
the Issuer pursuant to ARTICLE III, including without limitation the
existing letters of credit set forth on SCHEDULE 1.01.
"LIEN" means any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, charge or deposit arrangement,
encumbrance, lien (statutory or other) or preferential arrangement of any
kind or nature whatsoever in respect of any property (including those
created by, arising under or evidenced by any conditional sale or other
title retention agreement, the interest of a lessor under a Capitalized
Lease, any financing lease having substantially the same economic effect
as any of the foregoing, or the filing of any financing statement naming
the owner of the asset to which such lien relates as debtor, under the
Uniform Commercial Code or any comparable law) and any
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contingent or other agreement to provide any of the foregoing, but not
including the interest of a lessor under an operating lease.
"LOAN" means an extension of credit by a Lender to the Company
under ARTICLE II or ARTICLE III in the form of a Revolving Loan or an L/C
Advance.
"LOAN DOCUMENTS" means this Agreement, any Notes, the Collateral
Documents, the Fee Letter, the L/C-Related Documents, the Rate Swap
Documents and all other documents delivered to the Administrative Agent,
the Issuer or any Lender in connection with the transactions contemplated
by this Agreement.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation T, U or X of the FRB.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse change in,
or a material adverse effect upon, the operations, business, properties
or financial condition of the Company or the Company and its Subsidiaries
taken as a whole; (b) a material impairment of the ability of the Company
or any Subsidiary to perform its obligations under any Loan Document and
to avoid any Event of Default; or (c) a material adverse effect upon
(i) the legality, validity, binding effect or enforceability against the
Company or any Subsidiary of any Loan Document, or (ii) the perfection or
priority of any Lien granted under any of the Collateral Documents.
"MAXIMUM LOAN BALANCE" means, as of any date of determination, the
lesser of (a) the sum of (i) the cash and Cash Equivalents held by the
Company and its Domestic Subsidiaries as of such date, PLUS (ii) the
amount equal to the lesser of (A) 75% of the aggregate consolidated
accounts receivable of the Company and its Subsidiaries as of such date
and (B) 85% of the aggregate consolidated accounts receivable of the
Company and its Domestic Subsidiaries as of such date, and (b) the
Aggregate Commitment.
"MULTIEMPLOYER PLAN" means a "multiemployer plan", within the
meaning of Section 4001(a)(3) of ERISA, to which the Company or any ERISA
Affiliate makes, is making, or is obligated to make contributions or,
during the preceding three calendar years, has made, or been obligated to
make, contributions.
"NET INCOME" means, for any period, the net income of the Company
and its Subsidiaries, on a consolidated basis, determined in accordance
with GAAP.
"NOTE" means a promissory note executed by the Company in favor of
a Lender pursuant to SUBSECTION 2.02(b), in substantially the form of
EXHIBIT E.
"NOTICE OF BORROWING" means a notice in substantially the form of
EXHIBIT A.
"NOTICE OF CONVERSION/CONTINUATION" means a notice in
substantially the form of EXHIBIT B.
"OBLIGATIONS" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by the Company
to any Lender, the
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Administrative Agent, or any Indemnified Person, or any Affiliate of any
thereof whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing
or hereafter arising.
"OFFSHORE RATE" means, for any Interest Period, with respect to
Offshore Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward to the next 1/16th of 1%) determined
by the Administrative AGENT AS FOLLOWS:
Offshore Rate = IBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"EURODOLLAR RESERVE PERCENTAGE" means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal,
rounded upward to the next 1/100th of 1%) in effect on such day
(whether or not applicable to any Lender) under regulations issued
from time to time by the FRB for determining the maximum reserve
requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding
(currently referred to as "EUROCURRENCY LIABILITIES"); and
"IBOR" means the rate of interest per annum determined by
the Administrative Agent as the rate at which dollar deposits in
the approximate amount of BofA's Offshore Rate Loan for such
Interest Period would be offered by BofA's Grand Cayman Branch,
Grand Cayman B.W.I. (or such other office as may be designated for
such purpose by BofA), to major banks in the offshore dollar
interbank market at their request at approximately 11:00 a.m. (New
York City time) two Business Days prior to the commencement of
such Interest Period.
The Offshore Rate shall be adjusted automatically as to all
Offshore Rate Loans then outstanding as of the effective date of
any change in the Eurodollar Reserve Percentage.
"OFFSHORE RATE LOAN" means a Loan that bears interest based on the
Offshore Rate.
"ORGANIZATION DOCUMENTS" means, for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate of
determination or instrument relating to the rights of preferred
shareholders of such corporation, any shareholder rights agreement, and
all applicable resolutions of the board of directors (or any committee
thereof) of such corporation.
"OTHER TAXES" means any present or future stamp, court or
documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery, performance, enforcement or registration of, or
otherwise with respect to, this Agreement or any other Loan Documents.
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"PARTICIPANT" has the meaning specified in SUBSECTION 11.08(e).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under
ERISA.
"PENSION PLAN" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA in respect of which the Company or
any ERISA Affiliate has or may have any liability.
"PERMITTED ACQUISITIONS" means Acquisitions that meet all the
following criteria: (a) the Acquisition has been approved by the Board of
Directors (or functional equivalent thereof) of the Person whose stock or
assets are being acquired; (b) the Person or assets being acquired are in
the same or a similar or complementary line of business as the Company;
(c) the Person or assets being acquired had positive net income before
net, non-recurring expenses for the most recently ended 12 calendar
months; and (d) both immediately before and after giving effect to the
Acquisition, no Default or Event of Default exists.
"PERMITTED LIENS" has the meaning specified in SECTION 8.01.
"PERMITTED SWAP OBLIGATIONS" means all obligations (contingent or
otherwise) of the Company or any Subsidiary existing or arising under
Swap Contracts, provided that each of the following criteria is
satisfied: (a) such obligations are (or were) entered into by such
Person in the ordinary course of business for the purpose of directly
mitigating risks associated with liabilities, commitments or assets held
or reasonably anticipated by such Person, or changes in the value of
securities issued by such Person in conjunction with a securities
repurchase program not otherwise prohibited hereunder, and not for
purposes of speculation or taking a "market view"; (b) such Swap
Contracts do not contain any provision ("walk-away" provision)
exonerating the non-defaulting party from its obligation to make payments
on outstanding transactions to the defaulting party.
"PERSON" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"PLAN" means an employee benefit plan (as defined in Section 3(3)
of ERISA) in respect of which the Company or any ERISA Affiliate has or
may have any liability.
"PRINCIPAL BALANCE" means the Effective Amount of the Revolving
Loans.
"PRIOR CREDIT AGREEMENT" has the meaning specified in the Recitals
to this Agreement.
"PRO RATA SHARE" means, as to any Lender at any time, the
percentage equivalent (expressed as a decimal, rounded to the ninth
decimal place) (a) at any time at which the Aggregate Commitments remain
outstanding, such Lender's Commitment divided by the Aggregate
Commitments of all Lenders, and (b) after the termination of the
Aggregate Commitment, the principal amount of such Lender's outstanding
Loans (including such
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Lender's ratable share of outstanding L/C Obligations) divided by the
aggregate principal amount of the outstanding Loans and L/C Obligations
of all the Lenders.
"RATE SWAP DOCUMENTS" means, collectively, all Swap Contracts
entered into between the Company and any Lender in respect of any portion
of the Obligations.
"RENTAL EXPENSE" means, for any period, the sum of the aggregate
payments of the Company and its Subsidiaries on a consolidated basis
under noncancellable agreements to rent or lease any real or personal
property (exclusive of (a) Capital Lease Obligations, (b) Synthetic Lease
Obligations and (c) agreements to rent or lease real or personal property
which are not cancellable at the option of the lessee without penalty
within a three month period), all as determined on a consolidated basis
for the Company and its Subsidiaries in accordance with GAAP.
"REPLACEMENT LENDER" has the meaning specified in SECTION 4.08.
"REPORTABLE EVENT" means, any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder, other than any such event
for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"REQUIRED LENDERS" means at any time Lenders then holding at least
51% of the then aggregate unpaid principal amount of the Loans, or, if no
amounts are outstanding, Lenders then having at least 51% of the
aggregate amount of the Commitments.
"REQUIREMENT OF LAW" means, as to any Person, any law (statutory
or common), treaty, rule or regulation or determination of an arbitrator
or of a Governmental Authority, in each case applicable to or binding
upon the Person or any of its property or to which the Person or any of
its property is subject.
"RESPONSIBLE OFFICER" means the chief executive officer or the
president of the Company, or any other officer having substantially the
same authority and responsibility; or, with respect to compliance with
financial covenants, the chief financial officer or the treasurer of the
Company, or any other officer having substantially the same authority and
responsibility.
"RESTATEMENT DATE" means the date on which all conditions
precedent set forth in SECTION 5.01 are satisfied or waived by all
Lenders (or, in the case of SUBSECTION 5.01(e), waived by the Person
entitled to receive such payment).
"RESTRICTED SUBSIDIARY" means the Ford Joint Venture and any other
Subsidiary designated as such by the Company with the consent of the
Administrative Agent and each Lender.
"REVOLVING LOAN" has the meaning specified in SUBSECTION 2.01(a)
and includes each Tranche A Loan and each Tranche B Loan.
"REVOLVING TERMINATION DATE" means the earlier to occur of:
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(a) the Current Commitment Termination Date; and
(b) the date on which the Aggregate Commitment
terminates in accordance with the provisions of this Agreement.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"SECURED AMOUNT" means the sum of (a) the aggregate cash balances
in the Collateral Accounts and (b) the aggregate fair market value of the
Eligible Securities held in the Collateral Accounts, as to which, in each
case, the Administrative Agent shall have a first priority perfected
security interest.
"SECURITY AGREEMENT" means that certain Security Agreement dated
as of the Closing Date and amended as of the date hereof between the
Company and the Administrative Agent with respect to the various
Collateral Accounts.
"SERVICES" means TeleTech Services Corporation, a Colorado
corporation.
"SOLVENT" means, as to any Person at any time, that (a) the fair
value of the property of such Person is greater than the amount of such
Person's liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated for
purposes of Section 101(31) of the Bankruptcy Code and, in the
alternative, for purposes of the Illinois Uniform Fraudulent Transfer
Act; (b) the present fair saleable value of the property of such Person
is not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and
matured; (c) such Person is able to realize upon its property and pay its
debts and other liabilities (including disputed, contingent and
unliquidated liabilities) as they mature in the normal course of
business; (d) such Person does not intend to, and does not believe that
it will, incur debts or liabilities beyond such Person's ability to pay
as such debts and liabilities mature; and (e) such Person is not engaged
in business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute
unreasonably small capital; PROVIDED, that in each case, the liabilities
of any Subsidiary shall be determined without regard to the Indebtedness
of such Subsidiary owing to the Company or any Wholly-Owned Subsidiary.
"STATED AMOUNT" means the stated or face amount of a Letter of
Credit to the extent available at the time for drawing (subject to
presentment of all requested documents), as the same may be increased or
decreased from time to time in accordance with the terms of such Letter
of Credit.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business
entity of which more than 50% of the voting stock, membership interests
or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the
Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires,
references herein to a "Subsidiary" refer to a Subsidiary of the
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Company. Notwithstanding the foregoing, "Subsidiary" shall not include
any Restricted Subsidiary.
"SUBSIDIARY GUARANTY" means that certain Subsidiary Guaranty dated
as of the Closing Date and amended as of the date hereof by each Domestic
Subsidiary in favor of the Administrative Agent and the Lenders.
"SURETY INSTRUMENTS" means all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties, shipside
bonds, surety bonds and similar instruments.
"SWAP CONTRACT" means any agreement, whether or not in writing,
relating to any transaction that is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index
swap or option, bond, note or bill option, interest rate option, forward
foreign exchange transaction, cap, collar or floor transaction, currency
swap, cross-currency rate swap, swaption, currency option or any other,
similar transaction (including any option to enter into any of the
foregoing) or any combination of the foregoing, and, unless the context
otherwise clearly requires, any master agreement relating to or governing
any or all of the foregoing.
"SWAP TERMINATION VALUE" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally
enforceable netting agreement relating to such Swap Contracts, (a) for
any date on or after the date such Swap Contracts have been closed out
and termination value(s) determined in accordance therewith, such
termination value(s), and (b) for any date prior to the date referenced
in clause (a) the amount(s) determined as the mark-to-market value(s) for
such Swap Contracts, as determined by the Company based upon one or more
mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include any Lender).
"SYNTHETIC LEASE OBLIGATIONS" means all monetary obligations of a
Person under (a) a so-called synthetic, off-balance sheet or tax
retention lease, or (b) an agreement for the use or possession of
property creating obligations which do not appear on the balance sheet of
such Person but which, upon the insolvency or bankruptcy of such Person,
would be characterized as the Indebtedness of such Person (without regard
to accounting treatment).
"TAXES" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the case
of each Lender and the Administrative Agent, respectively, taxes imposed
on or measured by its net income by the jurisdiction (or any political
subdivision thereof) under the laws of which such Lender or the
Administrative Agent, as the case may be, is organized or maintains a
lending office.
"TRANCHE A COMMITMENT AMOUNT" means, at any time, the amount of
the Tranche A Loan Limit at such time.
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"TRANCHE A LOAN LIMIT" means $20,000,000, as such limit may be
adjusted up to $30,000,000 from time to time in accordance with
SUBSECTION 2.01(b).
"TRANCHE A LOANS" means, subject to SUBSECTION 2.01(c) OR (e), all
Loans that are not Tranche B Loans.
"TRANCHE B COMMITMENT AMOUNT" means, at any time (a) the Aggregate
Commitment at such time MINUS (b) the Tranche A Loan Limit at such time.
"TRANCHE B LOANS" means, subject to SUBSECTION 2.01(c) OR (e), (a)
all Revolving Loans made at a time when the Principal Balance (before
giving effect to such Revolving Loans) exceeds the Tranche A Loan Limit,
(b) all Revolving Loans made at a time when, before giving effect to such
Revolving Loans, the Principal Balance is less than or equal to the
Tranche A Loan Limit, but after giving effect to such Revolving Loans,
the Principal Balance exceeds the Tranche A Loan Limit, but only to the
extent of the amount by which, after giving effect to such Revolving
Loans, the Principal Balance exceeds the Tranche A Loan Limit, and (c)
all L/C Advances.
A "TYPE" of Loan means its status as either a Base Rate Loan or an
Offshore Rate Loan.
"UNFUNDED PENSION LIABILITY" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of
that Plan's assets, determined in accordance with the assumptions used
for funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
"UNITED STATES" and "U.S." each means the United States of
America.
"WHOLLY-OWNED SUBSIDIARY" means any corporation in which (other
than directors' qualifying shares required by law) 100% of the capital
stock of each class having ordinary voting power, and, except with
respect to EDM Electronic Direct Marketing Ltd. (which shall be deemed to
be a Wholly-Owned Subsidiary), 100% of the capital stock of every other
class, in each case (or, in the case of Persons other than corporations,
membership interests or other equity interests), at the time as of which
any determination is being made, is owned, beneficially and of record, by
the Company, or by one or more of the other Wholly-Owned Subsidiaries, or
both.
1.02 OTHER INTERPRETIVE PROVISIONS. (a) The meanings of defined terms
are equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
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(ii) The term "including" is not limiting and means
"including without limitation".
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including";
the words "to" and "until" each mean "to but excluding", and the word
"through" means "to and including".
(iv) The term "property" includes any kind of property or
asset, real, personal or mixed, tangible or intangible.
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments, supplements and other
modifications thereto, but only to the extent such amendments and other
modifications are in writing and not prohibited by the terms of any Loan
Document, and (ii) references to any statute or regulation are to be
construed as including all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and
shall each be performed in accordance with their terms. This Agreement and
each of the other Loan Documents shall be construed, to the extent
reasonable, to be consistent one with the other; PROVIDED, that to the extent
that the terms and conditions of this Agreement are actually inconsistent
with the terms and conditions of any other Loan Document, this Agreement
shall govern. Unless otherwise expressly provided, any reference to any
action of the Administrative Agent or the Lenders by way of consent, approval
or waiver shall be deemed modified by the phrase "in its/their sole
reasonable discretion".
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Administrative
Agent, the Company and the other parties, and are the products of all
parties. Accordingly, they shall not be construed against the Lenders or the
Administrative Agent merely because of the Administrative Agent's or Lenders'
involvement in their preparation.
1.03 ACCOUNTING PRINCIPLES. (a) Unless the context otherwise
clearly requires, all accounting terms not expressly defined herein shall be
construed, and all financial computations required under this Agreement shall
be made, in accordance with GAAP, consistently applied; PROVIDED, that
financial results of Restricted Subsidiaries shall not be included in
consolidated results of the Company but shall instead be shown using the
equity method.
(b) References herein to "fiscal year" and "fiscal quarter" refer
to such fiscal periods of the Company.
(c) In the event that any changes in GAAP occur after the date of
this Agreement and such changes result in a material variation in the method
of calculation of financial covenants or
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other terms of this Agreement, then the Company, the Administrative Agent and
the Lenders agree to amend such provisions of this Agreement so as to
equitably reflect such changes so that the criteria for evaluating the
Company's financial condition will be substantially the same after such
changes as if such changes had not occurred.
ARTICLE II
THE CREDITS
2.01 AMOUNTS AND TERMS OF COMMITMENTS; TRANCHE MODIFICATIONS. (a)
Each Lender severally agrees, on the terms and conditions set forth herein,
to make loans to the Company (each such loan, a "REVOLVING LOAN") from time
to time on any Business Day during the period from the Restatement Date to
the Revolving Termination Date, in an aggregate amount not to exceed at any
time outstanding the lesser of (i) the amount set forth next to its name on
SCHEDULE 2.01 (such amount shall be, as the same may be reduced under SECTION
2.05 or as a result of one or more assignments under SECTION 11.08, the
Lender's "COMMITMENT") and (ii) its Pro Rata Share of the Aggregate
Commitment; PROVIDED, HOWEVER, that, after giving effect to any Borrowing of
Revolving Loans, the sum of the Effective Amount of all outstanding Revolving
Loans and the Effective Amount of all L/C Obligations shall not at any time
exceed the Maximum Loan Balance; PROVIDED, FURTHER, that the Effective Amount
of the Revolving Loans of any Lender plus the participation of such Lender in
the Effective Amount of all L/C Obligations shall not at any time exceed such
Lender's Commitment. Within the limits of each Lender's Commitment, and
subject to the other terms and conditions hereof, the Company may borrow
under this Section, prepay under SECTION 2.06 and reborrow under this Section.
(b) Not more than once each fiscal quarter the Company may, upon 10
Business Days' prior written notice to the Administrative Agent elect, as of
any Business Day, to increase or decrease the Tranche A Loan Limit by an
amount of not less than $500,000 or any integral multiple of $100,000 in
excess thereof; PROVIDED, HOWEVER, that (i) the Tranche A Loan Limit may not
exceed the lesser of (A) $30,000,000 and (B) the Aggregate Commitment; (ii)
the Tranche A Loan Limit may not be increased to an amount in excess of the
Secured Amount; and (iii) the Tranche A Loan Limit may not be decreased
during the continuance of any Default or Event of Default. The Administrative
Agent will promptly notify each Lender of its receipt of a notice from the
Company pursuant to this subsection and the effective date of any changes in
the Tranche A Loan Limit.
(c) Revolving Loans shall be made as Tranche A Loans until the
Principal Balance equals the Tranche A Loan Limit, after which all Revolving
Loans shall be made as Tranche B Loans. All L/C Obligations shall be treated
as being outstanding under the Tranche B Commitment Amount. Upon any
increase in the Tranche A Loan Limit, Tranche B Loans (but not including L/C
Obligations) shall be automatically converted to Tranche A Loans in an
aggregate principal amount equal to the lesser of (i) the aggregate
outstanding Principal Balance of the Revolving Loans which are Tranche B
Loans and (ii) the new Tranche A Loan Limit MINUS the old Tranche A Loan
Limit. Such conversion shall be made on a pro rata (relative to Commitment
amount) basis among the Lenders.
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(d) If at any time the sum of (i) the Effective Amount of the
Revolving Loans and (ii) the Effective Amount of the L/C Obligations exceeds
the Maximum Loan Balance, the Company shall immediately repay such Loans
and/or reduce the Stated Amount of outstanding Letters of Credit in an amount
sufficient to eliminate any such excess.
(e) If at any time the outstanding principal amount of the Tranche
A Loans exceeds the lesser of the Secured Amount and the Tranche A Loan
Limit, then the Company shall immediately repay such Loans in an amount
sufficient to eliminate any such excess; PROVIDED, HOWEVER, that if no
Default or Event of Default shall then have occurred and is continuing and
SECTION 2.01(d) is not applicable, Tranche A Loans in a principal amount
equal to such excess shall be automatically converted to Tranche B Loans to
the extent of the amount of the then unutilized Tranche B Commitment.
2.02 LOAN ACCOUNTS. (a) The Loans made by each Lender and the
Letters of Credit Issued by the Issuer shall be evidenced by one or more
accounts or records maintained by such Lender or Issuer, as the case may be,
in the ordinary course of business. The accounts or records maintained by
the Administrative Agent, the Issuer and each Lender shall be conclusive
absent manifest error of the amount of the Loans made by the Lenders to the
Company and the Letters of Credit Issued for the account of the Company and
the interest and payments thereon. Any failure so to record or any error in
doing so shall not, however, limit or otherwise affect the obligation of the
Company hereunder to pay any amount owing with respect to the Loans or any
Letter of Credit.
(b) Upon the request of any Lender made through the Administrative
Agent, the Loans made by such Lender may be evidenced by one or more Notes,
instead of or in addition to loan accounts. Each such Lender shall endorse
on the schedules annexed to its Note(s) the date, amount and maturity of each
Loan made by it and the amount of each payment of principal made by the
Company with respect thereto. Each such Lender is irrevocably authorized by
the Company to endorse its Note(s) and each Lender's record shall be
conclusive absent manifest error; PROVIDED, HOWEVER, that the failure of a
Lender to make, or an error in making, a notation thereon with respect to any
Loan shall not limit or otherwise affect the obligations of the Company
hereunder or under any such Note to such Lender.
2.03 PROCEDURE FOR BORROWING. (a) Each Borrowing shall be made upon
the Company's irrevocable notice delivered to the Administrative Agent in the
form of a Notice of Borrowing (which notice must be received by the
Administrative Agent prior to 10:00 a.m. (Chicago time) (i) two (2) Business
Days prior to the requested Borrowing Date, in the case of Offshore Rate
Loans; and (ii) on the requested Borrowing Date, in the case of Base Rate
Loans, specifying:
(A) the amount of the Borrowing, which shall be in an aggregate
minimum amount of $500,000 or any multiple of $100,000 in excess
thereof;
(B) the requested Borrowing Date, which shall be a Business Day;
(C) the Type of Loans comprising the Borrowing;
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(D) with respect to Offshore Rate Loans, the duration of the Interest
Period applicable to such Loans included in such notice. If the
Notice of Borrowing fails to specify the duration of the Interest
Period for any Borrowing comprised of Offshore Rate Loans, such
Interest Period shall be three months; and
(E) the amount of the requested Loans comprising Tranche A Loans and
Tranche B Loans, respectively.
(b) The Administrative Agent will promptly notify each Lender of
its receipt of any Notice of Borrowing and of the amount of such Lender's Pro
Rata Share of that Borrowing.
(c) Each Lender will make the amount of its Pro Rata Share of each
Borrowing available to the Administrative Agent for the account of the
Company at the Administrative Agent's Payment Office by 1:00 p.m. (Chicago
time) on the Borrowing Date requested by the Company in funds immediately
available to the Administrative Agent. The proceeds of all such Loans will
then be made available to the Company by the Administrative Agent at such
office by crediting the account of the Company on the books of BofA with the
aggregate of the amounts made available to the Administrative Agent by the
Lenders and in like funds as received by the Administrative Agent or by wire
transfer in accordance with the directions of the Company.
(d) After giving effect to any Borrowing, unless the Administrative
Agent shall otherwise consent, there may not be more than six (6) different
Interest Periods in effect.
(e) The Company hereby authorizes the Lenders and the
Administrative Agent to accept Notices of Borrowing based on telephonic
notices made by any person or persons the Administrative Agent or any Lender
believes to be acting on behalf of the Company. The Company agrees to
deliver promptly to the Administrative Agent a written confirmation of each
telephonic notice, signed by a Responsible Officer or an authorized designee.
If the written confirmation differs in any material respect from the action
taken by the Administrative Agent and the Lenders, the records of the
Administrative Agent and the Lenders shall govern absent manifest error.
2.04 CONVERSION AND CONTINUATION ELECTIONS. (a) The Company may,
upon irrevocable notice to the Administrative Agent in accordance with
SUBSECTION 2.04(b):
(i) elect, as of any Business Day, in the case of Base Rate
Loans, or as of the last day of the applicable Interest Period, in the case
of any other Type of Loans, to convert any such Loans (or any part thereof in
an amount not less than $500,000, or that is in an integral multiple of
$100,000 in excess thereof) into Loans of any other Type; or
(ii) elect, as of the last day of the applicable Interest
Period, to continue any Loans having Interest Periods expiring on such day
(or any part thereof in an amount not less than $500,000, or that is in an
integral multiple of $100,000 in excess thereof);
PROVIDED, that if at any time the aggregate amount of Offshore Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $500,000, such Offshore Rate Loans shall
automatically convert into Base Rate Loans, and on
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and after such date the right of the Company to continue such Loans as, and
convert such Loans into Offshore Rate Loans shall terminate.
(b) The Company shall deliver a Notice of Conversion/Continuation
to be received by the Administrative Agent not later than 10:00 a.m. (Chicago
time) (i) at least two (2) Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or
continued as Offshore Rate Loans; and (ii) on the Conversion/Continuation
Date, if the Loans are to be converted into Base Rate Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be converted or continued;
(C) the Type of Loans resulting from the proposed conversion or
continuation; and
(D) other than in the case of conversions into Base Rate Loans, the
duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the Company has failed to select timely a new Interest
Period to be applicable to such Offshore Rate Loans, or if any Default or
Event of Default then exists, the Company shall be deemed to have elected to
convert such Offshore Rate Loans into Base Rate Loans effective as of the
expiration date of such Interest Period.
(d) The Administrative Agent will promptly notify each Lender of
its receipt of a Notice of Conversion/Continuation, or, if no timely notice
is provided by the Company, the Administrative Agent will promptly notify
each Lender of the details of any automatic conversion. All conversions and
continuations shall be made ratably according to the respective outstanding
principal amounts of the Loans with respect to which the notice was given
held by each Lender.
(e) Unless the Required Lenders otherwise consent, during the
existence of a Default or Event of Default, the Company may not elect to have
a Loan converted into or continued as an Offshore Rate Loan.
(f) After giving effect to any conversion or continuation of Loans,
unless the Administrative Agent shall otherwise consent, there may not be
more than six (6) different Interest Periods in effect.
(g) The Company hereby authorizes the Lenders and the
Administrative Agent to accept Notices of Conversion/Continuation based on
telephonic notices made by any person or persons the Administrative Agent or
any Lender believes to be acting on behalf of the Company. The Company
agrees to deliver promptly to the Administrative Agent a written confirmation
of each telephonic notice, signed by a Responsible Officer. If the written
confirmation differs in any material respect from the action taken by the
Administrative Agent and the Lenders, the records of the Administrative Agent
and the Lenders shall govern absent manifest error.
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2.05 VOLUNTARY TERMINATION OR REDUCTION OF COMMITMENTS. The Company
may, upon not less than five (5) Business Days' prior notice to the
Administrative Agent, terminate the Commitments, or permanently reduce the
Commitments by an aggregate minimum amount of $5,000,000 or any multiple of
$1,000,000 in excess thereof; UNLESS, after giving effect thereto and to any
prepayments of Loans made on the effective date thereof, (a) the Effective
Amount of all Revolving Loans and L/C Obligations together would exceed the
amount of the Aggregate Commitment then in effect or (b) the Effective Amount
of all L/C Obligations then outstanding would exceed the L/C Commitment. Once
reduced in accordance with this Section, the Commitments may not be
increased. Any reduction of the Commitments shall be applied to each Lender
according to its Pro Rata Share. All accrued commitment and letter of credit
fees to, but not including the effective date of any reduction or termination
of Commitments, shall be paid on the effective date of such reduction or
termination.
2.06 OPTIONAL PREPAYMENTS. Subject to SECTION 4.04, the Company
may, at any time or from time to time, upon not less than one (1) Business
Day's irrevocable notice to the Administrative Agent for Base Rate Loans and
not less than three (3) Business Days' irrevocable notice to the
Administrative Agent for Offshore Rate Loans, ratably prepay Revolving Loans
in whole or in part, in minimum amounts of $500,000 or any multiple of
$100,000 in excess thereof. Such notice of prepayment shall specify the date
and amount of such prepayment and the Type(s) of Revolving Loans to be
prepaid. The Administrative Agent will promptly notify each Lender of its
receipt of any such notice, and of such Lender's Pro Rata Share of such
prepayment. If such notice is given by the Company, the Company shall make
such prepayment and the payment amount specified in such notice shall be due
and payable on the date specified therein, together, in the case of Offshore
Rate Loans, with accrued interest to each such date on the amount prepaid and
any amounts required pursuant to SECTION 4.04. All prepayments (other than
payments out of proceeds of the Collateral) shall be applied first to reduce
the Tranche B Loans and thereafter to reduce the Tranche A Loans.
2.07 REPAYMENT. (a) The Company shall repay to the Lenders on the
Revolving Termination Date the aggregate principal amount of Loans
outstanding on such date.
(b) If on any date the Effective Amount of L/C Obligations exceeds
the L/C Commitment, the Company shall Cash Collateralize on such date the
outstanding Letters of Credit in an amount equal to the excess of the maximum
amount then available to be drawn under the Letters of Credit over the L/C
Commitment. Subject to SECTION 4.04, if on any date after giving effect to
any Cash Collateralization made on such date pursuant to the preceding
sentence, the Effective Amount of all Revolving Loans then outstanding plus
the Effective Amount of all L/C Obligations exceeds the Aggregate Commitment,
the Company shall immediately, and without notice or demand, prepay the
outstanding principal amount of the Revolving Loans and L/C Advances by an
amount equal to the applicable excess.
2.08 INTEREST. (a) Each Revolving Loan shall bear interest on the
outstanding principal amount thereof from the applicable Borrowing Date at a
rate per annum equal to (i) the Base Rate or (ii) the Offshore Rate PLUS the
Applicable Margin.
(b) Interest on each Revolving Loan shall be paid in arrears on each
Interest Payment Date. Interest on Base Rate Loans shall also be paid on the
date of any payment (including
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prepayment) in full thereof. Interest on Offshore Rate Loans shall also be
paid on the date of any prepayment of Offshore Rate Loans under SECTION
2.01(d) or 2.06 for the portion of the Loans so prepaid and upon payment
(including prepayment) in full thereof. During the existence of any Event of
Default, interest on all Loans shall be paid on demand of the Administrative
Agent at the request or with the consent of the Required Lenders.
(c) Notwithstanding subsection (a) of this Section, while any Event
of Default exists or after acceleration, the Company shall pay interest
(after as well as before any entry of judgment thereon to the extent
permitted by law) on the principal amount of all outstanding Loans, at a
fluctuating rate per annum equal to the Base Rate plus 2%.
(d) Anything herein to the contrary notwithstanding, the
obligations of the Company to any Lender hereunder shall be subject to the
limitation that payments of interest shall not be required for any period for
which interest is computed hereunder, to the extent (but only to the extent)
that contracting for or receiving such payment by such Lender would be
contrary to the provisions of any law applicable to such Lender limiting the
highest rate of interest that may be lawfully contracted for, charged or
received by such Lender, and in such event the Company shall pay such Lender
interest at the highest rate permitted by applicable law.
2.09 FEES. (a) ARRANGEMENT, AGENCY FEES. The Company shall pay
such fees to the Administrative Agent and the Arranger as are required by the
letter agreement ("FEE LETTER") among the Company, the Arranger and the
Administrative Agent dated March 24, 2000.
(b) COMMITMENT FEES. The Company shall pay to the Administrative
Agent for the account of each Lender a commitment fee on the average daily
unused portion of such Lender's Commitment, computed on a quarterly basis in
arrears on the last Business Day of each calendar quarter based upon the
daily utilization and mix of the Tranche A Loans and Tranche B Loans for
that quarter as calculated by the Administrative Agent, equal to the
Applicable Commitment Fee Percentage per annum. For purposes of calculating
utilization under this subsection, the Commitments will be deemed used to the
extent of the Effective Amount of Revolving Loans then outstanding, plus the
Effective Amount of L/C Obligations then outstanding. Such commitment fees
shall accrue from the Restatement Date to the Revolving Termination Date and
shall be due and payable quarterly in arrears on the last Business Day of
each calendar quarter commencing on the Restatement Date through the
Revolving Termination Date, with the final payment to be made on the
Revolving Termination Date; PROVIDED that, in connection with any reduction
or termination of Commitments under SECTION 2.05, the accrued commitment fee
calculated for the period ending on such date shall also be paid on the date
of such reduction or termination, with the following quarterly payment being
calculated on the basis of the period from such reduction or termination date
to such quarterly payment date. The commitment fees provided in this
subsection shall accrue at all times during the period described above,
including at any time during which one or more conditions in ARTICLE IV are
not met.
2.10 COMPUTATION OF FEES AND INTEREST. (a) All computations of
interest for Base Rate Loans when the Base Rate is determined by BofA's
"reference rate" shall be made on the basis of a year of 365 or 366 days, as
the case may be, and actual days elapsed. All other computations of fees and
interest shall be made on the basis of a 360-day year and actual days elapsed
(which results in more interest being paid than if computed on the basis of a
365-day
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year). Interest and fees shall accrue during each period during which
interest or such fees are computed from the first day thereof to the last day
thereof.
(b) Each determination of an interest rate by the Administrative
Agent shall be conclusive and binding on the Company and the Lenders in the
absence of manifest error.
2.11 PAYMENTS BY THE COMPANY. (a) All payments to be made by the
Company shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Company shall be
made to the Administrative Agent for the account of the Lenders at the
Administrative Agent's Payment Office, and shall be made in dollars and in
immediately available funds, no later than 12:00 noon (Chicago time) on the
date specified herein. The Administrative Agent will promptly distribute to
each Lender its Pro Rata Share (or other applicable share as expressly
provided herein) of such payment in like funds as received. Any payment
received by the Administrative Agent later than 2:00 p.m. (Chicago time)
shall be deemed to have been received on the following Business Day and any
applicable interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and
such extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
(c) Unless the Administrative Agent receives notice from the
Company prior to the date on which any payment is due to the Lenders that the
Company will not make such payment in full as and when required, the
Administrative Agent may assume that the Company has made such payment in
full to the Administrative Agent on such date in immediately available funds
and the Administrative Agent may (but shall not be so required), in reliance
upon such assumption, distribute to each Lender on such due date an amount
equal to the amount then due such Lender. If and to the extent the Company
has not made such payment in full to the Administrative Agent, each Lender
shall repay to the Administrative Agent on demand such amount distributed to
such Lender, together with interest thereon at the Federal Funds Rate for
each day from the date such amount is distributed to such Lender until the
date repaid.
(d) All payments received by the Administrative Agent in respect of
the Loans shall be applied first ratably to Tranche B Loans and L/C Advances
and then to Tranche A Loans, other than (i) payments from the proceeds of
Collateral (which shall be applied first to Tranche A Loans to the extent
thereof), (ii) payments of principal in respect of Tranche A Loans required
pursuant to SECTION 2.01(d), (iii) payments to be applied to the payment of
interest in respect of Offshore Rate Loans due on the date of receipt in
accordance with SUBSECTION 2.08(b) and (iv) payments from the proceeds of
Cash Collateralization, which shall be applied exclusively to the repayment
of L/C Obligations.
2.12 PAYMENTS BY THE LENDERS TO THE ADMINISTRATIVE AGENT. (a)
Unless the Administrative Agent receives notice from a Lender, at least one
Business Day prior to the date of such Borrowing, that such Lender will not
make available as and when required hereunder to the Administrative Agent for
the account of the Company the amount of that Lender's Pro Rata Share of the
Borrowing, the Administrative Agent may assume that each Lender has made such
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amount available to the Administrative Agent in immediately available funds
on the Borrowing Date and the Administrative Agent may (but shall not be so
required), in reliance upon such assumption, make available to the Company on
such date a corresponding amount. If and to the extent any Lender shall not
have made its full amount available to the Administrative Agent in
immediately available funds and the Administrative Agent in such
circumstances has made available to the Company such amount, that Lender
shall on the Business Day following such Borrowing Date make such amount
available to the Administrative Agent, together with interest at the Federal
Funds Rate for each day during such period. A notice of the Administrative
Agent submitted to any Lender with respect to amounts owing under this
subsection (a) shall be conclusive, absent manifest error. If such amount is
so made available, such payment to the Administrative Agent shall constitute
such Lender's Loan on the date of Borrowing for all purposes of this
Agreement. If such amount is not made available to the Administrative Agent
on the Business Day following the Borrowing Date, the Administrative Agent
will notify the Company of such failure to fund and, upon demand by the
Administrative Agent, the Company shall pay such amount to the Administrative
Agent for the Administrative Agent's account, together with interest thereon
for each day elapsed since the date of such Borrowing, at a rate per annum
equal to the interest rate applicable at the time to the Loans comprising
such Borrowing.
(b) The failure of any Lender to make any Loan on any Borrowing
Date shall not relieve any other Lender of any obligation hereunder to make a
Loan on such Borrowing Date, but no Lender shall be responsible for the
failure of any other Lender to make the Loan to be made by such other Lender
on any Borrowing Date.
2.13 SHARING OF PAYMENTS, ETC. If, other than as expressly provided
elsewhere herein, any Lender shall obtain on account of the Loans made by it
any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its ratable share (or other
share contemplated hereunder), such Lender shall immediately (a) notify the
Administrative Agent of such fact, and (b) purchase from the other Lenders
such participations in the Loans made by them as shall be necessary to cause
such purchasing Lender to share the excess payment pro rata with each of
them; PROVIDED, HOWEVER, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Lender, such purchase shall to that
extent be rescinded and each other Lender shall repay to the purchasing
Lender the purchase price paid therefor, together with an amount equal to
such paying Lender's ratable share (according to the proportion of (i) the
amount of such paying Lender's required repayment to (ii) the total amount so
recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Company agrees that any Lender so purchasing a participation from
another Lender may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off, but subject to SECTION
11.10) with respect to such participation as fully as if such Lender were the
direct creditor of the Company in the amount of such participation. The
Administrative Agent will keep records (which shall be conclusive and binding
in the absence of manifest error) of participations purchased under this
Section and will in each case notify the Lenders following any such purchases
or repayments.
2.14 SECURITY AND GUARANTY. (a) The cash and the Eligible
Securities held in the Collateral Accounts from time to time shall secure the
repayment of the Tranche A Loans in
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accordance with the Security Agreement and the Control Agreements. The
Company shall provide that the Tranche A Loan Limit shall at no time exceed
the Secured Amount.
(b) All Obligations of the Company under this Agreement, each of
the Notes and all other Loan Documents shall be unconditionally guaranteed by
the Guarantors pursuant to the Guaranty.
2.15 EXTENSIONS OF THE COMMITMENTS.
(a) "CURRENT COMMITMENT TERMINATION DATE" shall initially mean
November 20, 2002. On any Business Day that is not less than 60 days nor
more than 90 days prior to an anniversary of the Closing Date, the Company
may, by written notice (an "EXTENSION REQUEST") given to the Administrative
Agent, request that the Current Commitment Termination Date be extended.
Each such Extension Request shall contemplate an extension of the Current
Commitment Termination Date to a date that is one year after the Current
Commitment Termination Date then in effect. Notwithstanding anything to the
contrary in this SECTION 2.15, the Company may only request two (2)
additional Extension Requests during the term of this Agreement.
(b) The Administrative Agent shall promptly advise each Lender of
its receipt of any Extension Request. Each Lender may, in its sole
discretion, consent to a requested extension by giving written notice thereof
to the Administrative Agent by not later than the Business Day (the
"EXTENSION CONFIRMATION DATE") immediately preceding the date that is 31 days
after the date of the Extension Request. Failure on the part of any Lender
to respond to an Extension Request by the applicable Extension Confirmation
Date shall be deemed to be a denial of such request by such Lender. If all
Lenders shall consent in writing to the requested extension, such request
shall be granted. Promptly following the opening of business on the first
Business Day following the applicable Extension Confirmation Date, the
Administrative Agent shall notify the Company in writing as to whether the
Extension Request has been granted (such written notice being an "EXTENSION
CONFIRMATION NOTICE") and, if granted, such extension shall be confirmed upon
the issuance of such Extension Confirmation Notice. The Administrative Agent
shall promptly thereafter provide a copy of such Extension Confirmation
Notice to each Lender. Each Extension Confirmation Notice shall specify
therein the date to which the Current Commitment Termination Date is to be
extended (such date being referred to herein as the "EXTENDED TERMINATION
DATE"), which shall be the date one year following the Current Commitment
Termination Date then in effect.
ARTICLE III
THE LETTERS OF CREDIT
3.01 THE LETTER OF CREDIT SUBFACILITY. (a) On the terms and
conditions set forth herein (i) the Issuer agrees, (A) from time to time on
any Business Day, during the period from the Restatement Date to the day
which is five days prior to the Revolving Termination Date, to issue Letters
of Credit for the account of the Company or any Subsidiary in an aggregate
Stated Amount in Dollars at any one time that, together with the aggregate
Stated Amount of all other
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outstanding Letters of Credit issued pursuant hereto, does not exceed the L/C
Commitment, and to amend or renew Letters of Credit previously issued by it,
in accordance with SUBSECTIONS 3.02(c) and 3.02(d), and (B) to honor drafts
under the Letters of Credit; and (ii) the Lenders severally agree to
participate in Letters of Credit Issued for the account of the Company;
PROVIDED, that the Issuer shall not be obligated to Issue, and no Lender
shall be obligated to participate in, any Letter of Credit if as of the date
of Issuance of such Letter of Credit (the "ISSUANCE DATE") (1) the Effective
Amount of all L/C Obligations plus the Effective Amount of all Revolving
Loans exceeds the Aggregate Commitment, (2) the participation of any Lender
in the Effective Amount of all L/C Obligations plus the Effective Amount of
the Revolving Loans of such Lender exceeds such Lender's Commitment, or (3)
the Effective Amount of L/C Obligations exceeds the L/C Commitment. Within
the foregoing limits, and subject to the other terms and conditions hereof,
the Company's ability to obtain Letters of Credit shall be fully revolving,
and, accordingly, the Company may, during the foregoing period, obtain
Letters of Credit to replace Letters of Credit which have expired or which
have been drawn upon and reimbursed.
(b) The Issuer is under no obligation to, and shall not, Issue any
Letter of Credit if:
(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or restrain the
Issuer from Issuing such Letter of Credit, or any Requirement of Law
applicable to the Issuer or any request or directive (whether or not having
the force of law) from any Governmental Authority with jurisdiction over the
Issuer shall prohibit, or request that the Issuer refrain from, the Issuance
of letters of credit generally or such Letter of Credit in particular or
shall impose upon the Issuer with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which the Issuer is not
otherwise compensated hereunder) not in effect on the Restatement Date, or
shall impose upon the Issuer any unreimbursed loss, cost or expense which was
not applicable on the Restatement Date and which the Issuer in good faith
deems material to it;
(ii) the Issuer has received written notice from any
Revolving Lender, the Administrative Agent or the Company, on or prior to the
Business Day prior to the requested date of Issuance of such Letter of
Credit, that one or more of the applicable conditions contained in ARTICLE V
is not then satisfied;
(iii) the expiry date of any requested Letter of Credit is (A)
more than 360 days after the date of Issuance, unless the Required Lenders
have approved such expiry date in writing, or (B) after the date which is
five days prior to the Revolving Termination Date, unless all of the Lenders
have approved such expiry date in writing;
(iv) the expiry date of any requested Letter of Credit is
prior to the maturity date of any financial obligation to be supported by the
requested Letter of Credit;
(v) any requested Letter of Credit does not provide for
drafts, or is not otherwise in form and substance acceptable to the Issuer,
or the Issuance of a Letter of Credit shall violate any applicable policies
of the Issuer; or
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(vi) such Letter of Credit is in a face amount less than
$25,000, unless such amount is approved by the Administrative Agent and the
Issuer, or is to be denominated in a currency other than Dollars.
3.02 ISSUANCE, AMENDMENT AND RENEWAL OF LETTERS OF CREDIT. (a) Each
Letter of Credit shall be issued upon the irrevocable written request of the
Company received by the Issuer (with a copy sent by the Company to the
Administrative Agent) at least three days (or such shorter time as the Issuer
may agree in a particular instance in its sole discretion) prior to the
proposed date of issuance. Each such request for issuance of a Letter of
Credit shall be by facsimile, confirmed immediately in an original writing,
in the form of an L/C Application (or such other form as shall be acceptable
to the Issuer), and shall specify in form and detail satisfactory to the
Issuer: (i) the proposed date of issuance of the Letter of Credit (which
shall be a Business Day); (ii) the face amount of the Letter of Credit; (iii)
the expiry date of the Letter of Credit; (iv) the name and address of the
beneficiary thereof; (v) the documents to be presented by the beneficiary of
the Letter of Credit in case of any drawing thereunder; (vi) the full text of
any certificate to be presented by the beneficiary in case of any drawing
thereunder; (vii) the currency in which such Letter of Credit is to be
denominated, which shall be Dollars; and (viii) such other matters as the
Issuer may require.
(b) At least two Business Days prior to the Issuance of any Letter
of Credit (or such shorter time as the Administrative Agent may agree in a
particular instance in its sole discretion), the Issuer will confirm with the
Administrative Agent (by telephone or in writing) that the Administrative
Agent has received a copy of the L/C Application or L/C Amendment Application
from the Company and, if not, the Issuer will provide the Administrative
Agent with a copy thereof. Unless the Issuer has received notice on or
before the Business Day immediately preceding the date the Issuer is to issue
a requested Letter of Credit from the Administrative Agent (A) directing the
Issuer not to issue such Letter of Credit because such issuance is not then
permitted under SUBSECTION 3.01(a) as a result of the limitations set forth
in clauses (1) through (3) thereof or SUBSECTION 3.01(b)(ii); or (B) that one
or more conditions specified in ARTICLE V are not then satisfied; then,
subject to the terms and conditions hereof, the Issuer shall, on the
requested date, issue a Letter of Credit for the account of the Company in
accordance with the Issuer's usual and customary business practices.
(c) From time to time while a Letter of Credit is outstanding and
prior to the Revolving Termination Date, the Issuer will, upon the written
request of the Company received by the Issuer (with a copy sent by the
Company to the Administrative Agent) at least three days (or such shorter
time as the Issuer may agree in a particular instance in its sole discretion)
prior to the proposed date of amendment, amend any Letter of Credit issued by
it. Each such request for amendment of a Letter of Credit shall be made by
facsimile, confirmed immediately in an original writing, made in the form of
an L/C Amendment Application and shall specify in form and detail
satisfactory to the Issuer: (i) the Letter of Credit to be amended; (ii) the
proposed date of amendment of the Letter of Credit (which shall be a Business
Day); (iii) the nature of the proposed amendment; and (iv) such other matters
as the Issuer may require. The Issuer shall be under no obligation to amend
any Letter of Credit if: (A) the Issuer would have no obligation at such
time to issue such Letter of Credit in its amended form under the terms of
this Agreement; or (B) the beneficiary of any such letter of Credit does not
accept the proposed amendment to the
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Letter of Credit. The Administrative Agent will promptly notify the Lenders
of the receipt by it of any L/C Application or L/C Amendment Application.
(d) The Issuer and the Lenders agree that, while a Letter of Credit
is outstanding and prior to the Revolving Termination Date, at the option of
the Company and upon the written request of the Company received by the
Issuer (with a copy sent by the Company to the Administrative Agent) at least
three days (or such shorter time as the Issuer may agree in a particular
instance in its sole discretion) prior to the proposed date of notification
of renewal, the Issuer shall be entitled to authorize the automatic renewal
of any Letter of Credit issued by it. Each such request for renewal of a
Letter of Credit shall be made by facsimile, confirmed immediately in an
original writing, in the form of an L/C Amendment Application, and shall
specify in form and detail satisfactory to the Issuer: (i) the Letter of
Credit to be renewed; (ii) the proposed date of notification of renewal of
the Letter of Credit (which shall be a Business Day); (iii) the revised
expiry date of the Letter of Credit; and (iv) such other matters as the
Issuer may require. The Issuer shall be under no obligation so to renew any
Letter of Credit if: (A) the Issuer would have no obligation at such time to
issue or amend such Letter of Credit in its renewed form under the terms of
this Agreement; or (B) the beneficiary of any such Letter of Credit does not
accept the proposed renewal of the Letter of Credit. If any outstanding
Letter of Credit shall provide that it shall be automatically renewed unless
the beneficiary thereof receives notice from the Issuer that such Letter of
Credit shall not be renewed, and if at the time of renewal the Issuer would
be entitled to authorize the automatic renewal of such Letter of Credit in
accordance with this SUBSECTION 3.02(e) upon the request of the Company but
the Issuer shall not have received any L/C Amendment Application from the
Company with respect to such renewal or other written direction by the
Company with respect thereto, the Issuer shall nonetheless be permitted to
allow such Letter of Credit to renew, and the Company and the Lenders hereby
authorize such renewal, and, accordingly, the Issuer shall be deemed to have
received an L/C Amendment Application from the Company requesting such
renewal.
(e) The Issuer may, at its election (or as required by the
Administrative Agent at the direction of the Required Lenders), deliver any
notices of termination or other communications to any Letter of Credit
beneficiary or transferee, and take any other action as necessary or
appropriate, at any time and from time to time, in order to cause the expiry
date of such Letter of Credit to be a date not later than the date which is
five days prior to the Revolving Termination Date.
(f) This Agreement shall control in the event of any conflict with
any L/C-Related Document (other than any Letter of Credit).
(g) The Issuer will also deliver to the Administrative Agent,
concurrently or promptly following its delivery of a Letter of Credit, or
amendment to or renewal of a Letter of Credit, to an advising bank or a
beneficiary, a true and complete copy of each such Letter of Credit or
amendment to or renewal of a Letter of Credit.
3.03 RISK PARTICIPATIONS, DRAWINGS AND REIMBURSEMENTS. (a)
Immediately upon the Issuance of each Letter of Credit, each Lender shall be
deemed to, and hereby irrevocably and unconditionally agrees to, purchase
from the Issuer a participation in such Letter of Credit and each drawing
thereunder in an amount equal to the product of (i) the Pro Rata Share of
such
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Lender, times (ii) the maximum amount available to be drawn under such Letter
of Credit and the amount of such drawing, respectively. For purposes of
SUBSECTION 2.01(a), each Issuance of a Letter of Credit shall be deemed to
utilize the Commitment of each Lender by an amount equal to the amount of
such participation.
(b) In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, the Issuer will promptly
notify the Company. The Company shall reimburse the Issuer prior to 11:00
a.m. (Chicago time), on each date that any amount is paid by the Issuer under
any Letter of Credit (each such date, an "HONOR DATE"), in an amount equal to
the amount so paid by the Issuer. In the event the Company fails to
reimburse the Issuer for the full amount of any drawing under any Letter of
Credit by 11:00 a.m. (Chicago time) on the Honor Date, the Issuer will
promptly notify the Administrative Agent and the Administrative Agent will
promptly notify each Lender thereof, and the Company shall be deemed to have
requested that Base Rate Loans in an amount equal to such unreimbursed amount
be made by the Lenders to be disbursed on the Honor Date under such Letter of
Credit, subject to the amount of the unutilized portion of the Aggregate
Commitment and subject to the conditions set forth in SECTION 5.02 but
without regard to the procedures set forth in SUBSECTION 2.03(a). Any notice
given by the Issuer or the Administrative Agent pursuant to this SUBSECTION
3.03(b) may be oral if immediately confirmed in writing (including by
facsimile); provided that the lack of such an immediate confirmation shall
not affect the conclusiveness or binding effect of such notice.
(c) Each Lender shall upon any notice pursuant to SUBSECTION
3.03(b) make available to the Administrative Agent for the account of the
Issuer an amount in immediately available funds equal to its Pro Rata Share
of the amount of the drawing, whereupon the participating Lenders shall
(subject to SUBSECTION 3.03(d)) each be deemed to have made a Revolving Loan
consisting of a Base Rate Loan to the Company in that amount. If any Lender
so notified fails to make available to the Administrative Agent for the
account of the Issuer the amount of such Lender's Pro Rata Share of the
amount of the drawing by no later than 1:00 p.m. (Chicago time) on the Honor
Date, then interest shall accrue on such Lender's obligation to make such
payment, from the Honor Date to the date such Lender makes such payment, at a
rate per annum equal to the Federal Funds Rate in effect from time to time
during such period. The Administrative Agent will promptly give notice of
the occurrence of the Honor Date, but failure of the Administrative Agent to
give any such notice on the Honor Date or in sufficient time to enable any
Lender to effect such payment on such date shall not relieve such Revolving
Lender from its obligations under this SECTION 3.03.
(d) With respect to any unreimbursed drawing that is not converted
into Revolving Loans consisting of Base Rate Loans to the Company in whole or
in part, because of the Company's failure to satisfy the conditions set forth
in SECTION 5.02 or for any other reason, the Company shall be deemed to have
incurred from the Issuer an L/C Borrowing in the amount of such drawing,
which L/C Borrowing shall be due and payable on demand (together with
interest) and shall bear interest at a rate per annum equal to the Base Rate,
plus the Applicable Base Rate Margin, plus 2.0% per annum, and each Lender's
payment to the Issuer pursuant to SUBSECTION 3.03(c) shall be deemed payment
in respect of its participation in such L/C Borrowing and shall constitute an
L/C Advance from such Lender in satisfaction of its participation obligation
under this SECTION 3.03.
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(e) Each Lender's obligation in accordance with this Agreement to
make the Revolving Loans or L/C Advances, as contemplated by this SECTION
3.03, as a result of a drawing under a Letter of Credit, shall be absolute
and unconditional and without recourse to the Issuer and shall not be
affected by any circumstance, including (i) any set-off, counterclaim,
recoupment, defense or other right which such Lender may have against the
Issuer, the Company or any other Person for any reason whatsoever; (ii) the
occurrence or continuance of a Default, an Event of Default or a Material
Adverse Effect; or (iii) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing; PROVIDED,
however, that each Lender's obligation to make Revolving Loans under this
SECTION 3.03 is subject to the conditions set forth in SECTION 5.02.
3.04 REPAYMENT OF PARTICIPATIONS. (a) Upon (and only upon) receipt
by the Administrative Agent for the account of the Issuer of immediately
available funds from the Company (i) in reimbursement of any payment made by
the Issuer under the Letter of Credit with respect to which any Lender has
paid the Administrative Agent for the account of the Issuer for such Lender's
participation in the Letter of Credit pursuant to SECTION 3.03 or (ii) in
payment of interest thereon, the Administrative Agent will promptly pay to
each Lender, in the same funds as those received by the Administrative Agent
for the account of the Issuer, the amount of such Lender's Pro Rata Share of
such funds, and the Issuer shall receive the amount of the Pro Rata Share of
such funds of any Lender that did not so pay the Administrative Agent for the
account of the Issuer.
(b) If the Administrative Agent or the Issuer is required at any
time to return to the Company, or to a trustee, receiver, liquidator,
custodian, or any official in any Insolvency Proceeding, any portion of the
payments made by the Company to the Administrative Agent for the account of
the Issuer pursuant to SUBSECTION 3.04(a) in reimbursement of a payment made
under the Letter of Credit or interest or fee thereon, each Lender shall, on
demand of the Administrative Agent, forthwith return to the Administrative
Agent or the Issuer the amount of its Pro Rata Share of any amounts so
returned by the Administrative Agent or the Issuer plus interest thereon from
the date such demand is made to the date such amounts are returned by such
Lender to the Administrative Agent or the Issuer, at a rate per annum equal
to the Federal Funds Rate in effect from time to time.
3.05 ROLE OF THE ISSUER. (a) Each Lender and the Company agree
that, in paying any drawing under a Letter of Credit, the Issuer shall not
have any responsibility to obtain any document (other than any sight drafts
and certificates expressly required by the Letter of Credit) or to ascertain
or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document.
(b) No Agent-Related Person nor any of the respective
correspondents, participants or assignees of the Issuer shall be liable to
any Lender for: (i) any action taken or omitted in connection herewith at the
request or with the approval of the Lenders (including the Required Lenders);
(ii) any action taken or omitted in the absence of gross negligence or
willful misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
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(c) The Company hereby assumes all risks of the acts or omissions
of any beneficiary or transferee with respect to its use of any Letter of
Credit; PROVIDED, however, that this assumption is not intended to, and shall
not, preclude the Company's pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement.
No Agent-Related Person, nor any of the respective correspondents,
participants or assignees of the Issuer, shall be liable or responsible for
any of the matters described in clauses (i) through (vii) of SECTION 3.06;
PROVIDED, however, anything in such clauses to the contrary notwithstanding,
that nothing herein shall limit the Issuer's liability for direct, as opposed
to consequential or exemplary, damages suffered by the Company which the
Company proves were caused by the Issuer's willful misconduct or gross
negligence or the Issuer's willful failure to pay under any Letter of Credit
after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter
of Credit. In furtherance and not in limitation of the foregoing: (i) the
Issuer may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary; and (ii) the Issuer shall not be responsible for
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.
3.06 OBLIGATIONS ABSOLUTE. The obligations of the Company under
this Agreement and any L/C-Related Document to reimburse the Issuer for a
drawing under a Letter of Credit, and to repay any L/C Borrowing and any
drawing under a Letter of Credit converted into Revolving Loans, shall be
unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement and each such other L/C-Related Document under
all circumstances, including the following:
(i) any lack of validity or enforceability of this Agreement
or any L/C-Related Document;
(ii) 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 Company in
respect of any Letter of Credit or any other amendment or waiver of or any
consent to departure from all or any of the L/C-Related Documents;
(iii) the existence of any claim, recoupment, set-off, defense
or other right that the Company may have at any time against any beneficiary
or any transferee of any Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Issuer or any other
Person, whether in connection with this Agreement, the transactions
contemplated hereby or by the L/C-Related Documents or any unrelated
transaction;
(iv) any draft, demand, certificate or other document
presented under any 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; or any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any
Letter of Credit;
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(v) any payment by the Issuer under any Letter of Credit
against presentation of a draft or certificate that does not strictly comply
with the terms of any Letter of Credit in an immaterial manner; or any
payment made by the Issuer under any Letter of Credit to any Person
purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for
the benefit of creditors, liquidator, receiver or other representative of or
successor to any beneficiary or any transferee of any Letter of Credit,
including any arising in connection with any Insolvency Proceeding;
(vi) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to departure
from any other guarantee, for all or any of the obligations of the Company in
respect of any Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing, including any other circumstance that
might otherwise constitute a defense available to, or a discharge of, the
Company or a guarantor.
3.07 CASH COLLATERAL PLEDGE. Upon (i) the request of the
Administrative Agent or the Required Lenders, (A) if any Event of Default has
occurred and is continuing, (B) if the Issuer has honored any full or partial
drawing request on any Letter of Credit and such drawing has resulted in an
L/C Borrowing hereunder, or (C) if, as of the Revolving Termination Date, any
Letters of Credit may for any reason remain outstanding and partially or
wholly undrawn, (ii) the occurrence of the circumstances described in
SUBSECTION 2.07(b) requiring the Company to Cash Collateralize Letters of
Credit, or (iii) the termination of the Aggregate Commitment, then, the
Company shall immediately Cash Collateralize the L/C Obligations in an amount
in Dollars equal to the L/C Obligations.
3.08 LETTER OF CREDIT FEES. (a) The Company shall pay to the
Administrative Agent for the account of each of the Revolving Lenders a
letter of credit fee with respect to the Letters of Credit equal to the
Applicable Margin for Tranche B Loans times the average daily maximum amount
available to be drawn on the outstanding Letters of Credit, computed on a
quarterly basis in arrears on the last Business Day of each calendar quarter
based upon Letters of Credit outstanding for that quarter as calculated by
the Administrative Agent. Such letter of credit fees shall be due and payable
quarterly in arrears on the last Business Day of each calendar quarter during
which Letters of Credit are outstanding, commencing on the first such
quarterly date to occur after the Restatement Date, through the Revolving
Termination Date (or such later date upon which the outstanding Letters of
Credit shall expire), with the final payment to be made on the Revolving
Termination Date (or such later expiration date).
(b) The Company shall pay to the Issuer a letter of credit fronting
fee for each Letter of Credit in an amount equal to .125% of the Stated
Amount of such Letter of Credit. Such Letter of Credit fronting fee shall be
due and payable on each date of Issuance of a Letter of Credit.
(c) The Company shall pay to the Issuer from time to time on demand
the normal issuance, presentation, amendment and other processing fees, and
other standard costs and charges, of the Issuer relating to letters of credit
as from time to time in effect.
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3.09 APPLICABILITY OF ISP98 AND UCP. Unless otherwise expressly
agreed by the Issuer and the Company when a Letter of Credit is issued and
subject to applicable laws, performance under Letters of Credit by the
Issuer, its correspondents and beneficiaries will be governed by (a) with
respect to standby Letters of Credit, the rules of the "International Standby
Practices 1998" (ISP98) or such later revision as may be published by the
International Chamber of Commerce (the "ICC"), and (ii) with respect to
commercial Letters of Credit, the rules of the Uniform Customs and Practice
for Documentary Credits, as published in its most recent version by the ICC
on the date any commercial Letter of Credit is issued, and including the ICC
decision published by the Commission on Banking Technique and Practice on
April 6, 1998 regarding the European single currency (euro).
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 TAXES. (a) Any and all payments by the Company to each Lender
or the Administrative Agent under this Agreement and any other Loan Document
shall be made free and clear of, and without deduction or withholding for,
any Taxes. In addition, the Company shall pay all Other Taxes.
(b) If the Company shall be required by law to deduct or withhold
any Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder or under any other Loan Document to any Lender or the
Administrative Agent, then:
(i) the sum payable shall be increased as necessary so that,
after making all required deductions and withholdings (including deductions
and withholdings applicable to additional sums payable under this Section),
such Lender or the Administrative Agent, as the case may be, receives and
retains an amount equal to the sum it would have received and retained had no
such deductions or withholdings been made;
(ii) the Company shall make such deductions and withholdings;
(iii) the Company shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance
with applicable law; and
(iv) the Company shall also pay to each Lender or the
Administrative Agent for the account of such Lender, at the time interest is
paid, Further Taxes in the amount that the respective Lender specifies as
necessary to preserve the after-tax yield the Lender would have received if
such Taxes, Other Taxes or Further Taxes had not been imposed.
(c) The Company agrees to indemnify and hold harmless each Lender,
the Administrative Agent and the Arranger and each of their affiliates for
the full amount of (i) Taxes, (ii) Other Taxes, and (iii) Further Taxes in
the amount that the respective Lender, in good faith, specifies as necessary
to preserve the after-tax yield the Lender, Administrative Agent or Arranger
would have received if such Taxes, Other Taxes or Further Taxes had not been
imposed, and any liability (including penalties, interest, additions to tax
and expenses) arising therefrom or with respect thereto, whether or not such
Taxes, Other Taxes or Further Taxes were
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correctly or legally asserted. Payment under this indemnification shall be
made within 30 days after the date the Lender, the Administrative Agent or
Arranger makes written demand therefor.
(d) Within 30 days after the date of any payment by the Company of
Taxes, Other Taxes or Further Taxes, the Company shall furnish to each Lender
or the Administrative Agent the original or a certified copy of a receipt
evidencing payment thereof, or other evidence of payment reasonably
satisfactory to such Lender or the Administrative Agent.
(e) If the Company is required to pay any amount to any Lender or
the Administrative Agent pursuant to subsection (b) or (c) of this Section,
then such Lender shall use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its Lending Office so
as to eliminate any such additional payment by the Company which may
thereafter accrue, if such change in the sole reasonable judgment of such
Lender is not otherwise disadvantageous to such Lender.
4.02 ILLEGALITY. (a) If any Lender reasonably determines that the
introduction of any Requirement of Law, or any change in any Requirement of
Law, or in the interpretation or administration of any Requirement of Law,
has made it unlawful, or that any central bank or other Governmental
Authority has asserted that it is unlawful, for any Lender or its applicable
Lending Office to make Offshore Rate Loans, then, on notice thereof by the
Lender to the Company through the Administrative Agent, any obligation of
that Lender to make Offshore Rate Loans shall be suspended until the Lender
notifies the Administrative Agent and the Company that the circumstances
giving rise to such determination no longer exist.
(b) If a Lender determines that it is unlawful to maintain any
Offshore Rate Loan, the Company shall, upon its receipt of notice of such
fact and demand from such Lender (with a copy to the Administrative Agent),
prepay in full such Offshore Rate Loans of that Lender then outstanding,
together with interest accrued thereon and amounts required under SECTION
4.04, either on the last day of the Interest Period thereof, if the Lender
may lawfully continue to maintain such Offshore Rate Loans to such day, or
immediately, if the Lender may not lawfully continue to maintain such
Offshore Rate Loan. If the Company is required to so prepay any Offshore
Rate Loan, then concurrently with such prepayment, the Company shall borrow
from the affected Lender, in the amount of such repayment, a Base Rate Loan.
(c) If the obligation of any Lender to make or maintain Offshore
Rate Loans has been so terminated or suspended, the Company may elect, by
giving notice to the Lender through the Administrative Agent that all Loans
which would otherwise be made by the Lender as Offshore Rate Loans shall be
instead Base Rate Loans.
(d) Before giving any notice to the Administrative Agent under this
Section, the affected Lender shall designate a different Lending Office with
respect to its Offshore Rate Loans if such designation will avoid the need
for giving such notice or making such demand and will not, in the reasonable
judgment of the Lender, be illegal or otherwise disadvantageous to the Lender.
4.03 INCREASED COSTS AND REDUCTION OF RETURN. (a) If any Lender
reasonably determines that, due to either (i) the introduction of or any
change (other than any change by way
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of imposition of or increase in reserve requirements included in the
calculation of the Offshore Rate) in or in the interpretation of any law or
regulation or (ii) the compliance by that Lender 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 of agreeing to make or making, funding or maintaining any Offshore
Rate Loans or participating in Letters of Credit, or, in the case of the
Issuer, any increase in the cost to the Issuer of agreeing to Issue, Issuing
or maintaining any Letter of Credit or of agreeing to make or making, funding
or maintaining any unpaid drawing under any Letter of Credit, then the
Company shall be liable for, and shall from time to time, upon demand (with a
copy of such demand to be sent to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender, additional amounts as
are sufficient to compensate such Lender for such increased costs.
(b) If any Lender shall have reasonably determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any
Capital Adequacy Regulation, (iii) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central bank or
other Governmental Authority charged with the interpretation or
administration thereof, or (iv) compliance by the Lender (or its Lending
Office) or any corporation controlling the Lender with any Capital Adequacy
Regulation, affects or would affect the amount of capital required or
expected to be maintained by the Lender or any corporation controlling the
Lender and (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy and such Lender's desired return on
capital) determines, in good faith, that the amount of such capital is
increased as a consequence of its Commitment, loans, credits or obligations
under this Agreement, then, upon demand of such Lender to the Company through
the Administrative Agent, the Company shall pay to the Lender, from time to
time as specified by the Lender, additional amounts sufficient to compensate
the Lender for such increase.
4.04 FUNDING LOSSES. The Company shall reimburse each Lender and
hold each Lender harmless from any loss or expense which the Lender may
sustain or incur as a consequence of:
(a) the failure of the Company to make on a timely basis any
payment of principal of any Offshore Rate Loan;
(b) the failure of the Company to borrow, continue or convert a
Loan after the Company has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/ Continuation;
(c) the failure of the Company to make any prepayment in accordance
with any notice delivered under SECTION 2.06;
(d) the prepayment (including pursuant to SECTION 2.01(d), 2.05,
2.06 or 2.07(b)) or other payment (including after acceleration thereof) of
an Offshore Rate Loan on a day that is not the last day of the relevant
Interest Period; or
(e) the automatic conversion under SECTION 2.04 of any Offshore
Rate Loan to a Base Rate Loan on a day that is not the last day of the
relevant Interest Period;
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including any such loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain its Offshore Rate Loans or
from fees payable to terminate the deposits from which such funds were
obtained. For purposes of calculating amounts payable by the Company to the
Lenders under this Section and under SUBSECTION 4.03(a), each Offshore Rate
Loan made by a Lender (and each related reserve, special deposit or similar
requirement) shall be conclusively deemed to have been funded at the IBOR
used in determining the Offshore Rate for such Offshore Rate Loan by a
matching deposit or other borrowing in the offshore dollar interbank market
for a comparable amount and for a comparable period, whether or not such
Offshore Rate Loan is in fact so funded.
4.05 INABILITY TO DETERMINE RATES. If the Administrative Agent
determines, in good faith, that for any reason adequate and reasonable means
do not exist for determining the Offshore Rate for any requested Interest
Period with respect to a proposed Offshore Rate Loan, or that the Offshore
Rate applicable pursuant to SUBSECTION 2.08(a) for any requested Interest
Period with respect to a proposed Offshore Rate Loan does not adequately and
fairly reflect the cost to the Lenders of funding such Loan, the
Administrative Agent will promptly so notify the Company and each Lender.
Thereafter, the obligation of the Lenders to make or maintain Offshore Rate
Loans hereunder shall be suspended until the Administrative Agent revokes
such notice in writing. Upon receipt of such notice, the Company may revoke
any Notice of Borrowing or Notice of Conversion/Continuation then submitted
by it. If the Company does not revoke such Notice, the Lenders shall make,
convert or continue the Loans, as proposed by the Company, in the amount
specified in the applicable notice submitted by the Company, but such Loans
shall be made, converted or continued as Base Rate Loans instead of Offshore
Rate Loans, as the case may be.
4.06 RESERVES ON OFFSHORE RATE LOANS. The Company shall pay to each
Lender, as long as such Lender shall be required under regulations of the FRB
to maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency funds or deposits (currently known as "EUROCURRENCY
LIABILITIES"), additional costs on the unpaid principal amount of each
Offshore Rate Loan equal to the actual costs of such reserves allocated to
such Loan by the Lender (as determined by the Lender in good faith, which
determination shall be conclusive absent manifest error), payable on each
date on which interest is payable on such Loan, provided the Company shall
have received at least 15 days' prior written notice (with a copy to the
Administrative Agent) of such additional interest from the Lender. If a
Lender fails to give notice 15 days prior to the relevant Interest Payment
Date, such additional interest shall be payable 15 days from the Company's
receipt of such notice.
4.07 CERTIFICATES OF LENDERS. Any Lender claiming reimbursement or
compensation under this ARTICLE IV shall deliver to the Company (with a copy
to the Administrative Agent) a certificate setting forth in reasonable detail
the amount payable to the Lender hereunder and such certificate shall be
conclusive and binding on the Company in the absence of manifest error.
4.08 SUBSTITUTION OF LENDERS. Upon the receipt by the Company from
any Lender (an "AFFECTED LENDER") of a claim for compensation under SECTION
4.01 or 4.03 or a notice under SECTION 4.02, the Company may: (a) obtain a
replacement bank or financial institution reasonably satisfactory to the
Company and to the Administrative Agent to acquire and assume all or a
ratable part of all of such Affected Lender's Loans and Commitment at the
face amount
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thereof (a "REPLACEMENT LENDER"), or (b) request one or more of the other
Lenders to acquire and assume all or part of such Affected Lender's Loans and
Commitment. Any assignment and assumption pursuant to this Section shall be
consummated in compliance with SECTION 11.08 and shall be subject to the
prior written consent of the Administrative Agent (which consent shall not be
unreasonably delayed or withheld).
4.09 SURVIVAL. The agreements and obligations of the Company in
this ARTICLE IV shall survive the payment of all other Obligations.
ARTICLE V
CONDITIONS PRECEDENT
5.01 CONDITIONS TO EFFECTIVENESS OF RESTATEMENT. This Agreement
shall not become effective unless the Administrative Agent shall have
received on or before the Restatement Date all of the following, in form and
substance satisfactory to the Administrative Agent and each Lender, and in
sufficient copies for each Lender:
(a) CREDIT AGREEMENT AND NOTES. This Agreement and any Notes
requested pursuant to SECTION 2.02 executed by each party thereto;
(b) RESOLUTIONS; INCUMBENCY.
(i) Copies of the resolutions of the board of directors of
the Company and each Subsidiary party to a Loan Document authorizing the
transactions contemplated hereby, certified as of the Restatement Date by the
Secretary or an Assistant Secretary of such Person; and
(ii) A certificate of the Secretary or Assistant Secretary of
the Company, and each Subsidiary party to a Loan Document certifying the
names and true signatures of the officers of the Company or such Subsidiary
authorized to execute, deliver and perform, as applicable, this Agreement,
and all other Loan Documents to be delivered by it hereunder;
(c) ORGANIZATION DOCUMENTS; GOOD STANDING. Each of the following
documents:
(i) the articles or certificate of incorporation and the
bylaws of the Company as in effect on the Restatement Date, certified by the
Secretary or Assistant Secretary of the Company as of the Restatement Date;
and
(ii) a good standing certificate for the Company and each
Subsidiary party to any Loan Document from the Secretary of State (or
similar, applicable Governmental Authority) of its state of incorporation and
each state where the Company or such Subsidiary is qualified to do business
as a foreign corporation as of a recent date;
(d) LEGAL OPINIONS. An opinion of Neal, Gerber & Eisenberg,
counsel to the Company and addressed to the Administrative Agent and the
Lenders, in form and substance satisfactory to the Administrative Agent;
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(e) PAYMENT OF FEES. Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses payable by the Company pursuant
to SECTIONS 2.09 and 11.04 to the extent then due and payable on the
Restatement Date, together with Attorney Costs of BofA to the extent invoiced
prior to or on the Restatement Date, plus such additional amounts of Attorney
Costs as shall constitute BofA's reasonable estimate of Attorney Costs
incurred or to be incurred by it through the closing proceedings (provided
that such estimate shall not thereafter preclude final settling of accounts
between the Company and BofA);
(f) REAFFIRMATION OF AND AMENDMENTS TO COLLATERAL DOCUMENTS. Such
reaffirmations of and amendments to the Collateral Documents as shall be
requested by the Administrative Agent, executed by the Company and its
Subsidiaries, together with evidence that all other actions necessary or, in
the opinion of the Administrative Agent or the Lenders, desirable to perfect
and protect the first priority Lien created by the Collateral Documents, and
to enhance the Administrative Agent's ability to preserve and protect its
interests in and access to the Collateral, have been taken;
(g) CERTIFICATE. A certificate signed by a Responsible Officer,
dated as of the Restatement Date, stating that:
(i) the representations and warranties contained in ARTICLE
VI are true and correct on and as of such date, as though made on and as of
such date;
(ii) no Default or Event of Default exists or would result
from the initial Borrowing; and
(iii) there has occurred since December 31, 1998 no event or
circumstance that has resulted or could reasonably be expected to result in a
Material Adverse Effect; and
(h) DEPARTING LENDER. The Departing Lender shall have consented to
this Agreement and to the reduction to $0 of its Commitment hereunder.
(i) OTHER DOCUMENTS. Such other approvals, opinions, documents or
materials as the Administrative Agent or any Lender may reasonably request.
5.02 CONDITIONS TO ALL CREDIT EXTENSIONS. The obligation of each
Lender to make any Revolving Loan to be made by it or to continue or convert
any Loan under SECTION 2.04 and the obligation of the Issuer to issue any
Letter of Credit is subject to the satisfaction of the following conditions
precedent on the relevant Borrowing Date, Conversion/Continuation Date or
Issuance Date:
(a) NOTICE; APPLICATION. The Administrative Agent shall have
received a Notice of Borrowing or a Notice of Conversion/Continuation, as
applicable, or in the case of any Issuance of any Letter of Credit, the
Issuer and the Administrative Agent shall have received an L/C Application or
L/C Amendment Application, as required under SECTION 3.02;
(b) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties in ARTICLE VI shall be true and correct in all
material respects on and as of such Borrowing Date, Conversion/Continuation
Date or Issuance Date with the same effect as if made
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on and as of such Borrowing Date or Conversion/Continuation Date (except to
the extent such representations and warranties expressly refer to an earlier
date, in which case they shall be true and correct as of such earlier date);
(c) NO EXISTING DEFAULT. No Default or Event of Default shall
exist or shall result from such Borrowing, continuation or conversion or
Issuance;
(d) MAXIMUM LOAN BALANCE. The sum of (i) the Effective Amount of
the Revolving Loans and (ii) the Effective Amount of the L/C Obligations
after giving effect to such Borrowing, conversion or continuation or Issuance
shall not exceed the Maximum Loan Balance; and
(e) NO FUTURE ADVANCE NOTICE. Neither the Administrative Agent nor
any Lender shall have received from the Company any notice that the Security
Agreement will no longer secure on a first priority basis Tranche A Loans
made or to be made under this Agreement.
Each Notice of Borrowing, Notice of Conversion/Continuation and L/C
Application or L/C Amendment Application submitted by the Company hereunder
shall constitute a representation and warranty by the Company hereunder, as
of the date of each such notice and as of each Borrowing Date,
Conversion/Continuation Date or Issuance Date, as applicable, that the
conditions in this SECTION 5.02 are satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Administrative Agent and each
Lender that:
6.01 CORPORATE EXISTENCE AND POWER. The Company and each of its
Subsidiaries:
(a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
(b) has the corporate power and authority and all governmental
licenses, authorizations, consents and approvals to own its assets, to carry
on its business and to execute, deliver, and perform its obligations under
the Loan Documents;
(c) is duly qualified as a foreign corporation and is licensed and
in good standing under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires such
qualification or license; and
(d) is in compliance with all Requirements of Law;
except, in each case referred to in clause (c) or clause (d) of this SECTION
6.01, to the extent that the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
6.02 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution,
delivery and performance by the Company and its Subsidiaries of this
Agreement and each other Loan
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Document to which such Person is party, have been duly authorized by all
necessary corporate action, and do not and will not:
(a) contravene the terms of any of the Company's or any
Subsidiary's Organization Documents;
(b) conflict with or result in any breach or contravention of, or
the creation of any Lien under, any document evidencing any Contractual
Obligation to which the Company or any Subsidiary is a party or any order,
injunction, writ or decree of any Governmental Authority to which the Company
or any Subsidiary or any of such Person's property is subject; or
(c) violate any Requirement of Law.
6.03 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required by or in respect of the
Company or any Subsidiary in connection with the execution, delivery or
performance by, or enforcement against, the Company or any of its
Subsidiaries of the Agreement or any other Loan Document.
6.04 BINDING EFFECT. This Agreement and each other Loan Document to
which the Company or any of its Subsidiaries is a party constitute the legal,
valid and binding obligations of the Company and any of its Subsidiaries to
the extent it is a party thereto, enforceable against such Person in
accordance with their respective terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally or by equitable principles
relating to enforceability.
6.05 LITIGATION. There are no actions, suits, proceedings, claims
or disputes pending or, to the best knowledge of the Company, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, against the Company, or its Subsidiaries or any of their
respective properties:
(a) which purport to affect or pertain to this Agreement or any
other Loan Document, or any of the transactions contemplated hereby or
thereby; or
(b) as to which (either individually or in the aggregate) there
exists a substantial likelihood of an adverse determination, which
determination could reasonably be expected to have a Material Adverse Effect.
No injunction, writ, temporary restraining order or any order of any nature
has been issued by any court or other Governmental Authority purporting to
enjoin or restrain the execution, delivery or performance of this Agreement
or any other Loan Document, or directing that the transactions provided for
herein or therein not be consummated as herein or therein provided.
6.06 NO DEFAULT. No Default or Event of Default exists or would
result from the incurring of any Obligations by the Company or from the grant
or perfection of the Liens of the Administrative Agent and the Lenders on the
Collateral. As of the Restatement Date (after giving effect to the incurring
of any Obligations by the Company and the grant or perfection of the Liens of
the Administrative Agent and the Lenders on the Collateral), neither the
Company nor any Subsidiary is in default under or with respect to any
Contractual Obligation in any
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respect which, individually or together with all such defaults, could
reasonably be expected to have a Material Adverse Effect, or that would, if
such default had occurred after the Restatement Date, create an Event of
Default under SUBSECTION 9.01(e).
6.07 ERISA COMPLIANCE. Except as specifically disclosed in SCHEDULE
6.07:
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law.
Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS and to the best
knowledge of the Company, nothing has occurred which would cause the loss of
such qualification. The Company and each ERISA Affiliate has made all
required contributions to any Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of Company,
threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect. There has been no
prohibited transaction or violation of the fiduciary responsibility rules
with respect to any Plan which has resulted or could reasonably be expected
to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) the Pension Plans do not have aggregate Unfunded Pension
Liabilities in excess of $1,000,000; (iii) neither the Company nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any liability under
Title IV of ERISA with respect to any Pension Plan (other than premiums due
and not delinquent under Section 4007 of ERISA); (iv) neither the Company nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the
Company nor any ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA.
6.08 USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of the Loans
are to be used solely for the purposes set forth in and permitted by SECTION
7.12 and SECTION 8.07. Neither the Company nor any Subsidiary is generally
engaged in the business of purchasing or selling Margin Stock or extending
credit for the purpose of purchasing or carrying Margin Stock.
6.09 TITLE TO PROPERTIES. The Company and each Subsidiary have good
title in fee simple to, or valid leasehold interests in, all real property
necessary or used in the ordinary conduct of their respective businesses,
except for such defects in title as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. As of
the Restatement Date, the property of the Company and its Subsidiaries is
subject to no Liens, other than Permitted Liens.
6.10 TAXES. The Company and its Subsidiaries have filed all Federal
and other material tax returns and reports required to be filed, and have
paid all Federal and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their
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properties, income or assets otherwise due and payable, except those which
are being contested in good faith by appropriate proceedings and for which
adequate reserves have been provided in accordance with GAAP. There is no
proposed tax assessment against the Company or any Subsidiary that would, if
made, have a Material Adverse Effect.
6.11 FINANCIAL CONDITION. (a) Each of (i) the audited consolidated
financial statements of the Company and its Subsidiaries as of December 31,
1998, and the related consolidated statements of income or operations,
shareholders' equity and cash flows for the fiscal year ended on that date
and (ii) the unaudited consolidated financial statements of the Company and
its Subsidiaries as of September 30, 1999 and the related consolidated
statements of income, shareholders' equity and cash flows for the period
ended on that date:
(i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein;
(ii) fairly present the financial condition of the Company
and its Subsidiaries as of the date thereof and results of operations for the
period covered thereby; and
(iii) except as specifically disclosed in SCHEDULE 6.11, show
in accordance with GAAP all material indebtedness and other liabilities,
direct or contingent, of the Company and its consolidated Subsidiaries as of
the date thereof, including liabilities for taxes, material commitments and
Contingent Obligations.
(b) Since December 31, 1998 there has been no Material Adverse
Effect.
6.12 ENVIRONMENTAL MATTERS. (a) Except as specifically disclosed
in SCHEDULE 6.12, the on-going operations of the Company and each of its
Subsidiaries comply in all respects with all Environmental Laws, except such
noncompliance which would not (if enforced in accordance with applicable law)
result in liability in excess of $1,000,000 in the aggregate.
(b) Except as specifically disclosed in SCHEDULE 6.12, the Company
and each of its Subsidiaries have obtained all licenses, permits,
authorizations and registrations required under any Environmental Law and
necessary for their respective ordinary course operations ("ENVIRONMENTAL
PERMITS"), all such Environmental Permits are in good standing, and the
Company and each of its Subsidiaries are in compliance with all material
terms and conditions of such Environmental Permits.
(c) Except as specifically disclosed in SCHEDULE 6.12, none of the
Company, any of its Subsidiaries or any of their respective present property
or operations, is subject to any outstanding written order from or agreement
with any Governmental Authority, nor subject to (i) any judicial or docketed
administrative proceeding, respecting any Environmental Law, Environmental
Claim or Hazardous Material or (ii) any claim, proceeding or written notice
from any Person regarding any Environmental Law, Environmental Claim or
Hazardous Material.
(d) Except as specifically disclosed in SCHEDULE 6.12, there are no
Hazardous Materials or other conditions or circumstances existing with
respect to any property of the Company or any Subsidiary, or arising from
operations prior to the Closing Date, of the Company or any of its
Subsidiaries that would reasonably be expected to give rise to
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Environmental Claims with a potential liability of the Company and its
Subsidiaries in excess of $5,000,000 in the aggregate for all such
conditions, circumstances and properties. In addition, to the Company's
knowledge, (i) neither the Company nor any Subsidiary has any underground
storage tanks (x) that are not properly registered or permitted under
applicable Environmental Laws, or (y) that are leaking or disposing of
Hazardous Materials off-site, which in any such case could reasonably be
expected to have a Material Adverse Effect, and (ii) the Company and its
Subsidiaries have met all material notification requirements under Title III
of CERCLA and all other Environmental Laws.
6.13 COLLATERAL DOCUMENTS. (a) The provisions of each of the
Collateral Documents are effective to create in favor of the Administrative
Agent for the benefit of the Lenders, a legal, valid and enforceable and,
assuming that the secured party has taken all necessary action required by
it, first priority security interest in all right, title and interest of the
Company and its Subsidiaries in the collateral described therein.
(b) All representations and warranties of the Company and any of
its Subsidiaries party thereto contained in the Collateral Documents are true
and correct in all material respects.
6.14 REGULATED ENTITIES. None of the Company, any Person
controlling the Company, or any Subsidiary, is an "Investment Company" within
the meaning of the Investment Company Act of 1940. The Company is not
subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act, the Interstate Commerce Act, any state public
utilities code, or any other Federal or state statute or regulation limiting
its ability to incur Indebtedness.
6.15 NO BURDENSOME RESTRICTIONS. Neither the Company nor any
Subsidiary is a party to or bound by any Contractual Obligation, or subject
to any restriction in any Organization Document, or any Requirement of Law,
which could reasonably be expected to have a Material Adverse Effect, other
than any Material Adverse Effect arising as a result of any reduction in
billable services provided by the Company or any Subsidiary or any
termination of any customer service agreement (in either case, by parties
other than the Company and its Subsidiaries) pursuant to any provision
included in the Contractual Obligations.
6.16 COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES, ETC. The Company
and its Subsidiaries own or are licensed or otherwise have the right to use
all of the patents, trademarks, service marks, trade names, copyrights,
contractual franchises, authorizations and other rights that are reasonably
necessary for the operation of their respective businesses, without
infringing upon or violating the legal rights of any other Person. To the
best knowledge of the Company, no material slogan or other advertising
device, product, process, method, substance, part or other material now
employed, or now contemplated to be employed, by the Company or any
Subsidiary infringes upon any rights held by any other Person. No claim or
litigation regarding any of the foregoing is pending or, to the Company's
knowledge, threatened, and no patent, invention, device, application,
principle or any statute, law, rule, regulation, standard or code is pending
or, to the knowledge of the Company, proposed, which, in either case, could
reasonably be expected to have a Material Adverse Effect.
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6.17 SUBSIDIARIES. As of the Restatement Date, the Company has no
Subsidiaries other than those specifically disclosed in part (a) of SCHEDULE
6.17 hereto and has no equity investments in any other corporation or entity
other than those specifically disclosed in part (b) of SCHEDULE 6.17. As of
the Restatement Date, no Subsidiary which is identified on SCHEDULE 6.17 as
an "inactive subsidiary" has any assets or conducts any business.
6.18 INSURANCE. The properties of the Company and its Subsidiaries
are insured with financially sound and reputable insurance companies not
Affiliates of the Company, in such amounts, with such deductibles and
covering such risks as are customarily carried by companies engaged in
similar businesses and owning similar properties in localities where the
Company or such Subsidiary operates.
6.19 SOLVENCY. The Company and each of its Subsidiaries are Solvent.
6.20 SWAP OBLIGATIONS. Neither the Company nor any of its
Subsidiaries has incurred any outstanding obligations under any Swap
Contracts, other than Permitted Swap Obligations. The Company has undertaken
its own independent assessment of its consolidated assets, liabilities and
commitments and has considered appropriate means of mitigating and managing
risks associated with such matters and has not relied on any swap
counterparty or any Affiliate of any swap counterparty in determining whether
to enter into any Swap Contract.
6.21 FULL DISCLOSURE. None of the representations or warranties
made by the Company or any Subsidiary in the Loan Documents as of the date
such representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate
furnished by or on behalf of the Company or any Subsidiary in connection with
the Loan Documents (including the offering and disclosure materials delivered
by or on behalf of the Company to the Lenders prior to the Closing Date),
contains any untrue statement of a material fact or omits any material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they are made, not
misleading as of the time when made or delivered.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, unless the Required
Lenders waive compliance in writing:
7.01 FINANCIAL STATEMENTS AND OTHER REPORTS. The Company shall
deliver to the Administrative Agent, in form and detail reasonably
satisfactory to the Administrative Agent, with sufficient copies for each
Lender:
(a) as soon as available, but not later than the earlier of (i)
five (5) days after the filing thereof with the SEC and (ii) 90 days after
the end of each fiscal year (commencing with the fiscal year ended December
31, 1999), a copy of the audited consolidated balance sheet of the Company
and its Subsidiaries as at the end of such year and the related consolidated
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statements of income or operations, shareholders' equity and cash flows for
such year, setting forth in each case in comparative form the figures for the
previous fiscal year, and accompanied by the opinion of Arthur Andersen LLP
or another nationally-recognized independent public accounting firm
("INDEPENDENT AUDITOR") which report shall state that such consolidated
financial statements present fairly the financial position for the periods
indicated in conformity with GAAP applied on a basis consistent with prior
years. Such opinion shall not be qualified or limited because of a
restricted or limited examination by the Independent Auditor of any material
portion of the Company's or any Subsidiary's records; and
(b) as soon as available, but not later than the earlier of (i)
five (5) days after the filing thereof with the SEC and (ii) 45 days after
the end of each of the first three fiscal quarters of each fiscal year
(commencing with the fiscal quarter ended March 31, 2000), a copy of the
unaudited consolidated balance sheet of the Company and its Subsidiaries as
of the end of such quarter and the related consolidated statements of income,
shareholders' equity and cash flows for the period commencing on the first
day and ending on the last day of such quarter, setting forth in each case in
comparative form the figures for the previous fiscal year and certified by a
Responsible Officer as fairly presenting, in accordance with GAAP (subject to
ordinary, good faith year-end audit adjustments), the financial position and
the results of operations of the Company and the Subsidiaries.
7.02 CERTIFICATES; OTHER INFORMATION. The Company shall furnish to
the Administrative Agent, with sufficient copies for each Lender:
(a) concurrently with the delivery of the financial statements
referred to in SUBSECTION 7.01(a), a certificate of the Independent Auditor
stating that in making the examination necessary therefor no knowledge was
obtained of any Default or Event of Default, except as specified in such
certificate;
(b) concurrently with the delivery of the financial statements
referred to in SUBSECTIONS 7.01(a) and (b), a Compliance Certificate executed
by a Responsible Officer, which shall include a statement of the Maximum Loan
Balance as of the last day of the applicable period;
(c) concurrently with the delivery of the financial statements
referred to in SUBSECTION 7.01(a), (i) a consolidating income statement for
such year (which need not be audited), and (ii) a budget for the next
succeeding fiscal year;
(d) concurrently with the delivery of the financial statements
referred to in SUBSECTION 7.01(b), a consolidating income statement for such
quarter;
(e) promptly, copies of all financial statements and reports that
the Company sends to its shareholders and within five (5) days of filing with
the SEC, copies of all financial statements and regular, periodic or special
reports (including Forms 10K, 10Q and 8K) that the Company or any Subsidiary
may make to, or file with, the SEC;
(f) promptly, such additional information regarding the business,
financial or corporate affairs of the Company or any Subsidiary as the
Administrative Agent, at the request of any Lender, may from time to time
reasonably request;
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(g) promptly, upon the request of the Administrative Agent, a
computation of the Maximum Loan Balance; and
(h) within ten (10) Business Days after the end of each month and
at any other time, as soon as practicable after requested by the
Administrative Agent, a current listing of the Collateral Accounts (including
a list of the Eligible Securities deposited therein) and a current
calculation of the Secured Amount.
7.03 NOTICES. The Company shall notify the Administrative Agent and
each Lender promptly after any executive officer of the Company obtains
knowledge:
(a) of the occurrence of any Default or Event of Default, and of
the occurrence or existence of any event or circumstance that foreseeably
will become a Default or Event of Default;
(b) of (i) any breach or non-performance of, or any default under,
any Contractual Obligation of the Company or any of its Subsidiaries which
could reasonably be expected to result in a Material Adverse Effect; (ii) any
material dispute, litigation, investigation, proceeding or suspension which
may exist at any time between the Company or any of its Subsidiaries and any
Governmental Authority; and (iii) any other matter or circumstance which has
had or could reasonably be expected to have a Material Adverse Effect;
(c) of the commencement of, or any material development in, any
litigation or proceeding affecting the Company or any Subsidiary (i) in which
the amount of damages claimed is $5,000,000 (or its equivalent in another
currency or currencies) or more, (ii) in which injunctive or similar relief
is sought and which, if adversely determined, would reasonably be expected to
have a Material Adverse Effect, or (iii) in which the relief sought is an
injunction or other stay of the performance of this Agreement or any Loan
Document;
(d) of (but in no event later than 10 days after becoming aware of)
(i) any and all material enforcement, investigation, cleanup, removal or
other governmental or regulatory actions instituted, completed or threatened
against the Company or any Subsidiary or any of their respective properties
pursuant to any applicable Environmental Laws, (ii) all other material
Environmental Claims, and (iii) any environmental or similar condition on any
real property adjoining or in the vicinity of the property of the Company or
any Subsidiary that could reasonably be expected to have a Material Adverse
Effect;
(e) of any other litigation or proceeding affecting the Company or
any of its Subsidiaries which the Company would be required to report to the
SEC pursuant to the Exchange Act, within four days after reporting the same
to the SEC;
(f) of the occurrence of any of the following events affecting the
Company or any ERISA Affiliate (but in no event more than 10 days after such
event), and deliver to the Administrative Agent and each Lender a copy of any
notice with respect to such event that is filed with a Governmental Authority
and any notice delivered by a Governmental Authority to the Company or any
ERISA Affiliate with respect to such event:
(i) an ERISA Event;
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(ii) a material increase in the Unfunded Pension Liability of
any Pension Plan;
(iii) the adoption of, or the commencement of contributions
to, any Plan subject to Section 412 of the Code by the Company or any ERISA
Affiliate; or
(iv) the adoption of any amendment to a Plan subject to
Section 412 of the Code, if such amendment results in a material increase in
contributions or Unfunded Pension Liability; and
(g) of any material change in accounting policies or financial
reporting practices by the Company or any of its consolidated Subsidiaries.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the Company or any affected
Subsidiary proposes to take with respect thereto and at what time. Each
notice under SUBSECTION 7.03(a) shall describe with particularity any and all
clauses or provisions of this Agreement or other Loan Document that have been
(or foreseeably will be) breached or violated.
7.04 PRESERVATION OF CORPORATE EXISTENCE, ETC. Except in connection
with transactions permitted by SECTION 8.03 and sales of assets permitted by
SECTION 8.02, the Company shall, and shall cause each Subsidiary to:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction of
incorporation;
(b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises
necessary in the normal conduct of its business;
(c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could reasonably
be expected to have a Material Adverse Effect.
7.05 MAINTENANCE OF PROPERTY. The Company shall maintain, and shall
cause each Subsidiary to maintain, and preserve all its property, including
intellectual property, which is used or useful in its business in good
working order and condition, ordinary wear and tear excepted and make all
necessary repairs thereto and renewals and replacements thereof except where
the failure to do so could not reasonably be expected to have a Material
Adverse Effect, except as permitted by SECTION 8.02. The Company and each
Subsidiary shall use the standard of care typical in the industry in the
operation and maintenance of its facilities.
7.06 INSURANCE. The Company shall maintain, and shall cause each of
its Subsidiaries to maintain, with financially sound and reputable
independent insurers, insurance with respect to its properties and business
against loss or damage of the kinds customarily insured against by Persons
engaged in the same or similar business, of such types and in such amounts as
are
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customarily carried under similar circumstances by such other Persons;
PROVIDED, that the Company and its Subsidiaries may self-insure against
liabilities in respect of medical and workers' compensation coverage.
7.07 PAYMENT OF OBLIGATIONS. The Company shall, and shall cause
each Subsidiary to, pay and discharge as the same shall become due and
payable, all their respective obligations and liabilities, including:
(a) all material tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same are
being contested in good faith and, to the extent necessary, by appropriate
proceedings and adequate reserves in accordance with GAAP are being
maintained by the Company or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien
upon its property which would not be permitted under SECTION 8.01; and
(c) all Indebtedness (unless such Indebtedness is being contested
in good faith and, if necessary, by appropriate proceedings), as and when due
and payable, but subject to any subordination provisions contained in any
instrument or agreement evidencing such Indebtedness.
7.08 COMPLIANCE WITH LAWS. The Company shall comply, and shall
cause each Subsidiary to comply, in all material respects with all
Requirements of Law of any Governmental Authority having jurisdiction over it
or its business (including the Federal Fair Labor Standards Act), except such
as may be contested in good faith or as to which a bona fide dispute may
exist.
7.09 COMPLIANCE WITH ERISA. The Company shall, and shall cause each
of its ERISA Affiliates to: (a) maintain each Plan in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
federal or state law; (b) cause each Plan which is qualified under Section
401(a) of the Code to maintain such qualification; and (c) make all required
contributions to any Plan subject to Section 412 of the Code.
7.10 INSPECTION OF PROPERTY AND BOOKS AND RECORDS. The Company
shall maintain and shall cause each Subsidiary to maintain proper books of
record and account, in which full, true and correct entries in conformity
with GAAP consistently applied shall be made of all financial transactions
and matters involving the assets and business of the Company and such
Subsidiary. The Company shall permit, and shall cause each Subsidiary to
permit, representatives and independent contractors of the Administrative
Agent and the Lenders, together, to visit and inspect any of their respective
properties, to examine their respective corporate, financial and operating
records, and make copies thereof or abstracts therefrom, and to discuss their
respective affairs, finances and accounts with their respective officers, and
independent public accountants, all at such reasonable times during normal
business hours and as often as may be reasonably desired, upon reasonable
advance notice to the Company; PROVIDED, HOWEVER, when an Event of Default
exists the Administrative Agent or any Lender may do any of the foregoing at
the expense of the Company at any time during normal business hours and
without advance notice.
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7.11 ENVIRONMENTAL LAWS. (a) The Company shall, and shall cause
each Subsidiary to, conduct its operations and keep and maintain its property
in material compliance with all Environmental Laws.
(a) Upon the written request of the Administrative Agent or,
through the Administrative Agent, any Lender, the Company shall submit and
cause each of its Subsidiaries to submit, to the Administrative Agent with
sufficient copies for each Lender, at the Company's sole cost and expense, at
reasonable intervals, a report providing an update of the status of any
environmental, health or safety compliance, hazard or liability issue
identified in any notice or report required pursuant to SUBSECTION 7.03(d),
that could, individually or in the aggregate, result in liability in excess
of $1,000,000.
7.12 USE OF PROCEEDS. The Company shall use the proceeds of the
Loans for working capital and other general corporate purposes, including
Investments in the Ford Joint Venture, repayments of Synthetic Lease
Obligations, Permitted Acquisitions and Capital Expenditures, not in
contravention of any Requirement of Law or of any Loan Document.
7.13 FURTHER ASSURANCES. (a) The Company shall ensure that all
written information, exhibits and reports furnished to the Administrative
Agent or the Lenders do not and will not contain any untrue statement of a
material fact and do not and will not omit to state any material fact or any
fact necessary to make the statements contained therein not misleading in
light of the circumstances in which made, and will promptly disclose to the
Administrative Agent and the Lenders and correct any material defect or error
that may be discovered therein or in any Loan Document or in the execution,
acknowledgment or recordation thereof.
(b) Promptly upon request by the Administrative Agent or the
Required Lenders, the Company shall (and shall cause any of its Subsidiaries
to) do, execute, acknowledge, deliver, record, re-record, file, re-file,
register and re-register, any and all such further acts, deeds, conveyances,
security agreements, mortgages, assignments, estoppel certificates, financing
statements and continuations thereof, termination statements, notices of
assignment, transfers, certificates, assurances and other instruments the
Administrative Agent or such Lenders, as the case may be, may reasonably
require from time to time in order (i) to carry out more effectively the
purposes of this Agreement or any other Loan Document, (ii) to subject to the
Liens created by any of the Collateral Documents any of the properties,
rights or interests covered by any of the Collateral Documents, (iii) to
perfect and maintain the validity, effectiveness and priority of any of the
Collateral Documents and the Liens intended to be created thereby, and (iv)
to better assure, convey, grant, assign, transfer, preserve, protect and
confirm to the Administrative Agent and Lenders the rights granted or now or
hereafter intended to be granted to the Lenders under any Loan Document or
under any other document executed in connection therewith.
(c) The Company shall cause each Domestic Subsidiary which is
acquired or formed after the Closing Date to enter into the Subsidiary
Guaranty.
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ARTICLE VIII
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, unless the Required
Lenders waive compliance in writing:
8.01 LIMITATION ON LIENS. The Company shall not, and shall not
suffer or permit any Subsidiary to, directly or indirectly, make, create,
incur, assume or suffer to exist any Lien upon or with respect to any part of
its property, whether now owned or hereafter acquired, other than the
following ("PERMITTED LIENS"):
(a) any Lien (other than a Lien on the Collateral) existing on
property of the Company or any Subsidiary on the Restatement Date and set
forth in SCHEDULE 8.01 securing Indebtedness outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or to the
extent that non-payment thereof is permitted by SECTION 7.07, provided that
no notice of lien has been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary
course of business which are not delinquent or remain payable without penalty
or which are being contested in good faith and by appropriate proceedings,
which proceedings have the effect of preventing the forfeiture or sale of the
property subject thereto;
(e) Liens (other than any Lien imposed by ERISA and other than a
Lien on the Collateral) consisting of pledges or deposits required in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other social security legislation;
(f) Liens (other than Liens on the Collateral) on the property of
the Company or its Subsidiaries securing (i) the non-delinquent performance
of bids, trade contracts (other than for borrowed money), leases, statutory
obligations, (ii) contingent obligations on surety and appeal bonds, and
(iii) other non-delinquent obligations of a like nature; in each case,
incurred in the ordinary course of business; PROVIDED, that all such Liens in
the aggregate could not (even if enforced) reasonably be expected to cause a
Material Adverse Effect;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the businesses of the Company and its
Subsidiaries;
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(h) Liens on assets of corporations which become Subsidiaries after
the Closing Date, PROVIDED, HOWEVER, that such Liens existed at the time the
respective corporations became Subsidiaries and were not created in
anticipation thereof;
(i) purchase money security interests on any property acquired or
held by the Company or its Subsidiaries in the ordinary course of business,
securing Indebtedness incurred or assumed for the purpose of financing all or
any part of the cost of acquiring such property; PROVIDED THAT (i) any such
Lien attaches to such property concurrently with or within 45 days after the
acquisition thereof, (ii) such Lien attaches solely to the property so
acquired in such transaction, (iii) the principal amount of the debt secured
thereby does not exceed 100% of the cost of such property, and (iv) the
principal amount of the Indebtedness secured by any and all such purchase
money security interests shall not at any time exceed $2,500,000;
(j) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; PROVIDED THAT (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company or any Subsidiary in excess of those set forth by
regulations promulgated by the FRB, and (ii) such deposit account is not
intended by the Company or any Subsidiary to provide collateral to the
depository institution;
(k) Liens on the property financed with the Synthetic Lease
Obligations incurred pursuant to SUBSECTION 8.05(e) which secure such
Synthetic Lease Obligations; and
(l) Liens on any property (other than the Collateral) securing
Indebtedness permitted to be incurred pursuant to SUBSECTION 8.05(e) or
8.10(c); PROVIDED THAT such secured Indebtedness shall not exceed $2,500,000
in aggregate principal amount.
8.02 DISPOSITION OF ASSETS. The Company shall not, and shall not
suffer or permit any Subsidiary to, directly or indirectly, (x) issue any
equity interests of any Subsidiary to any Person which is not the Company or
a Subsidiary or (y) sell, assign, lease (as lessor), convey, transfer or
otherwise dispose of (whether in one or a series of transactions) any
property (including accounts and notes receivable, with or without recourse)
or enter into any agreement to do any of the foregoing, except:
(a) dispositions of inventory, or used, worn-out or surplus
equipment, all in the ordinary course of business;
(b) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly applied to
the purchase price of such replacement equipment; and
(c) the license or sale of software or other proprietary assets of
the Company and its Subsidiaries to their clients in the ordinary course of
business; and
(d) dispositions not otherwise permitted hereunder which are made
for fair market value; PROVIDED, that (i) at the time of any disposition, no
Event of Default shall exist or shall result from such disposition, (ii) the
aggregate sales price from such disposition shall be paid in
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cash, and (iii) the aggregate value of all assets so sold by the Company and
its Subsidiaries, together, shall not exceed in any fiscal year $5,000,000.
8.03 CONSOLIDATIONS AND MERGERS. The Company shall not, and shall
not suffer or permit any Subsidiary to, merge, consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction
or in a series of transactions all or substantially all of its assets
(whether now owned or hereafter acquired) to or in favor of any Person,
except:
(a) any Subsidiary may merge with the Company or with any one or
more Subsidiaries, provided that (i) the Company shall be the continuing or
surviving corporation, and (ii) if any transaction shall be between a
Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall
be the continuing or surviving corporation;
(b) any Subsidiary may sell all or substantially all of its assets
(upon voluntary liquidation or otherwise) to the Company or another
Wholly-Owned Subsidiary; and
(c) any Subsidiary may merge with any Person in order to effect a
Permitted Acquisition or a Joint Venture expressly permitted hereunder.
8.04 LOANS AND INVESTMENTS. The Company shall not purchase or
acquire, or suffer or permit any Subsidiary to purchase or acquire, or make
any commitment therefor, any capital stock, equity interest, or any
obligations or other securities of, or any interest in, any Person, or make
or commit to make any Acquisitions, or make or commit to make any advance,
loan, extension of credit or capital contribution to or any other investment
in, any Person including any Affiliate of the Company (together,
"INVESTMENTS"), except for:
(a) Investments held by the Company or Subsidiary in the form of
(i) Cash Equivalents or (ii) debt obligations of United States corporations
rated BBB or better by Standard & Poor's Ratings Group or Baa or better by
Moody's Investors Services, Inc. and maturing within one year from the date
of investment;
(b) extensions of credit in the nature of accounts receivable,
notes receivable or other trade credit arising from the sale or lease of
goods or services in the ordinary course of business;
(c) extensions of credit by the Company to any of its Wholly-Owned
Subsidiaries or by any of its Wholly-Owned Subsidiaries to another of its
Wholly-Owned Subsidiaries;
(d) Investments constituting Permitted Swap Obligations or payments
or advances under Swap Contracts relating to Permitted Swap Obligations;
(e) advances to employees in an aggregate amount not to exceed
$3,000,000 at any time outstanding;
(f) Permitted Acquisitions as permitted under SECTIONS 8.19 and
8.20;
(g) Investments in Wholly-Owned Subsidiaries;
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(h) Investments in Joint Ventures permitted hereunder which are not
Restricted Subsidiaries in an aggregate amount not in excess of $2,000,000
after the Restatement Date;
(i) Investments in the Ford Joint Venture in an amount not to
exceed $30,000,000 in the aggregate after the Restatement Date, so long as
(i) no Default or Event of Default has occurred and is continuing or would
occur after giving effect thereto (determined in respect of SECTIONS 8.16,
8.17 and 8.18 on a pro forma basis as of the last day of the previous fiscal
quarter) and (ii) the Investments made in the Ford Joint Venture in fiscal
year 2000 do not exceed $20,000,000; and
(j) Investments in Persons in which the Company and its
Subsidiaries hold a minority equity interest in an amount not to exceed
$10,000,000 in the aggregate in any fiscal year, so long as (i) the
Investment is made by the Company or such Subsidiary in the ordinary course
of business and (ii) no Default or Event of Default has occurred and is
continuing or would occur after giving effect thereto (determined in respect
of SECTIONS 8.16, 8.17 and 8.18 on a pro forma basis as of the last day of
the previous fiscal quarter).
8.05 LIMITATION ON INDEBTEDNESS. The Company shall not, and shall
not suffer or permit any Subsidiary to, create, incur, assume, suffer to
exist, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness consisting of Contingent Obligations permitted
pursuant to SECTION 8.08;
(c) Indebtedness existing on the Restatement Date and set forth in
SCHEDULE 8.05;
(d) Indebtedness incurred in connection with leases permitted
pursuant to SECTION 8.10;
(e) Indebtedness in an amount not to exceed $30,000,000 at any time
outstanding, consisting of Synthetic Lease Obligations incurred by Services
pursuant to that certain Participation Agreement dated as of March 1, 2000
among the Company, Services, State Street Bank and Trust Company of
Connecticut, First Security Bank, National Association, and the Persons named
as certificate holders and lenders in the schedules attached thereto, as
amended, supplemented or modified from time to time; and
(f) other Indebtedness in an aggregate amount not to exceed
$5,000,000 at any time outstanding.
8.06 TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall
not suffer or permit any Subsidiary to, enter into any transaction with any
Affiliate of the Company, except upon terms no less favorable to the Company
or such Subsidiary than it would obtain in a comparable arm's-length
transaction with a Person not an Affiliate of the Company or such Subsidiary.
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8.07 USE OF PROCEEDS. The Company shall not, and shall not suffer
or permit any Subsidiary to, use any portion of the proceeds of any Loan or
any Letter of Credit, directly or indirectly, (i) to purchase or carry Margin
Stock, (ii) to repay or otherwise refinance indebtedness of the Company or
others incurred to purchase or carry Margin Stock, (iii) to extend credit for
the purpose of purchasing or carrying any Margin Stock or (iv) to acquire any
security in any transaction that is subject to Section 13 or 14 of the
Exchange Act.
8.08 CONTINGENT OBLIGATIONS. The Company shall not, and shall not
suffer or permit any Subsidiary to, create, incur, assume or suffer to exist
any Contingent Obligations except:
(a) endorsements for collection or deposit in the ordinary course
of business;
(b) Permitted Swap Obligations;
(c) Contingent Obligations of the Company and its Subsidiaries
existing as of the Restatement Date and listed in SCHEDULE 8.08;
(d) Contingent Obligations with respect to a guaranty by the
Company of the Synthetic Lease Obligations incurred pursuant to SUBSECTION
8.05(e);
(e) Contingent Obligations with respect to lease obligations
permitted under SECTION 8.10; and
(f) Contingent Obligations with respect to Surety Instruments
incurred in the ordinary course of business and not exceeding at any time
$1,000,000 in the aggregate in respect of the Company and its Subsidiaries
together.
8.09 JOINT VENTURES. Subject to the limitations of SECTION 8.04(h)
and (i), the Company shall not, and shall not suffer or permit any Subsidiary
to enter into any Joint Venture, other than with respect to any entity whose
primary business, if conducted by the Company or any Subsidiary, would be
considered to be in the ordinary course of the Company's business.
8.10 LEASE OBLIGATIONS. The Company shall not, and shall not suffer
or permit any Subsidiary to, create or suffer to exist any obligations for
the payment of rent for any property under lease or agreement to lease,
except for:
(a) leases of the Company and of Subsidiaries in existence on the
Restatement Date and any renewal, extension or refinancing thereof;
(b) operating leases entered into by the Company or any Subsidiary
after the Restatement Date in the ordinary course of business; and
(c) Capitalized Leases other than those permitted under clause (a)
of this Section, entered into by the Company or any Subsidiary after the
Restatement Date to finance the acquisition of equipment or real property.
8.11 RESTRICTED PAYMENTS. The Company shall not, and shall not
suffer or permit any Subsidiary to, declare or make any dividend payment or
other distribution of assets, properties,
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cash, rights, obligations or securities on account of any shares of any class
of its capital stock, or purchase, redeem or otherwise acquire for value any
shares of its capital stock or any warrants, rights or options to acquire
such shares, now or hereafter outstanding, except that (a) any Subsidiary may
make unlimited payments and distributions to the Company or to any
Wholly-Owned Subsidiary and (b) the Company may:
(i) declare and make dividend payments or other
distributions payable solely in its common stock;
(ii) purchase, redeem or otherwise acquire shares of its
common stock or warrants or options to acquire any such shares with the
proceeds received from the substantially concurrent issue of new shares of
its common stock; and
(iii) declare or pay cash dividends to its stockholders and
purchase, redeem or otherwise acquire shares of its capital stock or
warrants, rights or options to acquire any such shares for cash in an amount
not exceeding $5,000,000 in any calendar year; PROVIDED, that, immediately
after giving effect to such proposed action, no Default or Event of Default
would exist.
8.12 ERISA. The Company shall not, and shall not suffer or permit
any of its ERISA Affiliates to: (a) engage in a prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan
which has resulted or could reasonably expected to result in liability of the
Company in an aggregate amount in excess of $1,000,000; or (b) engage in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.
8.13 AMENDMENTS TO CHARTER DOCUMENTS. The Company will not, nor
will it permit any Subsidiary to make any amendment or modification to any
terms or provisions of its Certificate or Articles of Incorporation or bylaws
which is materially adverse to the Administrative Agent or the Lenders
without the prior written consent of the Required Lenders.
8.14 CHANGE IN BUSINESS. The Company shall not, and shall not
suffer or permit any Subsidiary to, engage in any material line of business
substantially different from those lines of business carried on by the
Company and its Subsidiaries on the Closing Date.
8.15 ACCOUNTING CHANGES. The Company shall not, and shall not
suffer or permit any Subsidiary to, make any significant change in accounting
treatment or reporting practices, except as required by GAAP, or change the
fiscal year of the Company or of any Subsidiary.
8.16 DEBT TO EBITDAR RATIO. The Company shall not, as of the last
day of any fiscal quarter, permit its Debt to EBITDAR Ratio to be greater
than 3.0 to 1.0.
8.17 FIXED CHARGE COVERAGE RATIO. The Company shall not, as of the
last day of any fiscal quarter, permit its ratio of (a) EBITDAR for the
period of four fiscal quarters then ending to (b) Fixed Charges for such four
fiscal quarter period to be less than 2.5 to 1.0.
8.18 QUARTERLY PROFITABILITY. The Company shall have Net Income for
each fiscal quarter of at least $1.00.
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8.19 MAXIMUM COMBINATION OF CASH CAPITAL EXPENDITURES AND PERMITTED
ACQUISITIONS. The Company shall not permit the total amount of the sum of
(a) Capital Expenditures PLUS (b) expenditures incurred to effect Permitted
Acquisitions, in each case made or committed to be made by the Company and
its Subsidiaries and paid for with consideration consisting of cash and other
property, to exceed $75,000,000 in any calendar year; PROVIDED, that to the
extent such sum in any calendar year is less than $75,000,000, the
$75,000,000 limit for the following calendar year shall be increased by the
amount of such shortfall; PROVIDED, FURTHER, the Company shall first use the
initial amount permitted for the current year (without regard to the amount
carried over from the previous calendar year, if any) and then the amount
carried over from the previous calendar year to meet the requirements of this
SECTION 8.19 and any carried over amount not so utilized shall expire; and
PROVIDED, FURTHER, that the Company may utilize in calendar year 2000 an
additional amount equal to $7,032,000 carried forward from calendar year 1999
in accordance with the Prior Credit Agreement.
8.20 PERMITTED ACQUISITIONS. The Company shall not permit the fair
market value of common stock and common stock equivalents of the Company paid
by the Company as consideration for any single Permitted Acquisition to
exceed $50,000,000.
8.21 SECURED AMOUNT. The Company shall not at any time permit the
Secured Amount to be less than the Tranche A Loan Limit.
8.22 RESTRICTIVE AGREEMENTS. The Company shall not, nor shall it
permit any of its Subsidiaries to, enter into any indenture, agreement,
instrument or other arrangement which directly or indirectly prohibits or
restrains, or has the effect of prohibiting or restraining, or imposes
materially adverse conditions upon, the ability of any Subsidiary to (a) pay
dividends or make other distributions (i) on its capital stock or (ii) with
respect to any other interest or participation in, or measured by, its
profits, (b) make loans or advances to the Company or any Subsidiary, (c)
repay loans or advances from the Company or any Subsidiary, (d) grant Liens
on any of its assets (other than assets which are subject to Permitted Liens
and as to which the Company or such Subsidiary has agreed not to extend a
second Lien) in favor of the Administrative Agent or any Lender to secure the
Obligations or (e) transfer any of its properties or assets to the Company or
any Subsidiary; PROVIDED, that any such agreement or arrangement to which any
Subsidiary which is the subject of a Permitted Acquisition is a party at the
time of such Permitted Acquisition may remain in effect for a period of
thirty (30) days following the consummation of such Permitted Acquisition.
ARTICLE IX
EVENTS OF DEFAULT
9.01 EVENT OF DEFAULT. Any of the following shall constitute an
"EVENT OF DEFAULT":
(a) NON-PAYMENT. The Company fails to pay, (i) when and as
required to be paid herein, any amount of principal of any Loan or of any L/C
Obligation, or (ii) within five (5) Business Days after the same becomes due,
any interest, fee or any other amount payable hereunder or under any other
Loan Document; or
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(b) REPRESENTATION OR WARRANTY. Any representation or warranty by
the Company or any Subsidiary made or deemed made herein or in any other Loan
Document, or contained in any certificate, document or financial or other
statement by the Company, any Subsidiary, or any Responsible Officer,
furnished at any time under this Agreement, or in or under any other Loan
Document is incorrect in any material respect on or as of the date made or
deemed made; or
(c) SPECIFIC DEFAULTS. The Company fails to perform or observe any
term, covenant or agreement contained in any of SECTIONS 7.01, 7.02, 7.03 or
7.09 or in ARTICLE VIII; or
(d) OTHER DEFAULTS. The Company or any Subsidiary party thereto
fails to perform or observe any other term or covenant contained in this
Agreement or any other Loan Document, and such default shall continue
unremedied for a period of 20 days after the earlier of (i) the date upon
which a Responsible Officer knew of such failure or (ii) the date upon which
written notice thereof is given to the Company by the Administrative Agent or
any Lender; or
(e) CROSS-DEFAULT. (i) The Company or any Subsidiary (A) fails to
make any payment in respect of any Indebtedness or Contingent Obligation
(other than in respect of Swap Contracts), having an aggregate principal
amount (including undrawn committed or available amounts and including
amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $2,500,000 when due (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise) giving effect to
applicable grace periods; or (B) fails to perform or observe any other
condition or covenant, or any other event shall occur or condition exist,
under any agreement or instrument relating to any such Indebtedness or
Contingent Obligation, if the effect of such failure, event or condition is
to cause, or to permit the holder or holders of such Indebtedness or
beneficiary or beneficiaries of such Indebtedness (or a trustee or
Administrative Agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause such Indebtedness to be declared to be due and
payable or to be required to be repurchased prior to its stated maturity, or
such Contingent Obligation to become payable or cash collateral in respect
thereof to be demanded; or (ii) there occurs under any Swap Contract an Early
Termination Date (as defined in such Swap Contract) resulting from (1) any
event of default under such Swap Contract as to which the Company or any
Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (2)
any Termination Event (as so defined) as to which the Company or any
Subsidiary is an Affected Party (as so defined), and, in either event, the
Swap Termination Value owed by the Company or such Subsidiary as a result
thereof is greater than $1,000,000; or
(f) INSOLVENCY; VOLUNTARY PROCEEDINGS. The Company or any
Subsidiary (i) ceases or fails to be solvent, or generally fails to pay, or
admits in writing its inability to pay, its debts as they become due, subject
to applicable grace periods, if any, whether at stated maturity or otherwise;
(ii) voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
action to effectuate or authorize any of the foregoing; or
(g) INVOLUNTARY PROCEEDINGS. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Company or any Subsidiary, or
any writ, judgment, warrant of attachment, execution or similar process, is
issued or levied against a substantial part of the Company's or any
Subsidiary's properties, and any such proceeding or petition shall not be
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dismissed, or such writ, judgment, warrant of attachment, execution or
similar process shall not be released, vacated or fully bonded within 60 days
after commencement, filing or levy; (ii) the Company or any Subsidiary admits
the material allegations of a petition against it in any Insolvency
Proceeding, or an order for relief (or similar order under non-U.S. law) is
ordered in any Insolvency Proceeding; or (iii) the Company or any Subsidiary
acquiesces in the appointment of a receiver, trustee, custodian, conservator,
liquidator, mortgagee in possession (or agent therefor), or other similar
Person for itself or a substantial portion of its property or business; or
(h) ERISA. (i) An ERISA Event shall occur with respect to a
Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of the Company or any ERISA Affiliate under
Title IV of ERISA to such Pension Plan or Multiemployer Plan or to the PBGC
in an aggregate amount for all such Pension Plans and Multiemployer Plans in
excess of $1,000,000; or (ii) the aggregate amount of Unfunded Pension
Liability among all Pension Plans and Multiemployer Plans at any time exceeds
$1,000,000 (determined, in respect of Multiemployer Plans, by reference to
the Unfunded Pension Liability for which the Company or any ERISA Affiliate
may be liable); or (iii) the Company or any ERISA Affiliate shall fail to pay
when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section
4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of
$1,000,000; or
(i) MONETARY JUDGMENTS. One or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered against
the Company or any Subsidiary involving in the aggregate a liability (to the
extent not covered by independent third-party insurance as to which the
insurer does not dispute coverage) as to any single or related series of
transactions, incidents or conditions, of $1,000,000 or more, and the same
shall remain unsatisfied, unvacated and unstayed pending appeal for a period
of 30 days after the entry thereof; or
(j) NON-MONETARY JUDGMENTS. Any non-monetary judgment, order or
decree is entered against the Company or any Subsidiary which does or would
reasonably be expected to have a Material Adverse Effect, and there shall be
any period of 30 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect; or
(k) CHANGE OF CONTROL. There occurs any Change of Control; or
(l) LOSS OF LICENSES. Any Governmental Authority revokes or fails
to renew any material license, permit or franchise of the Company or any
Subsidiary, or the Company or any Subsidiary for any reason loses any
material license, permit or franchise, or the Company or any Subsidiary
suffers the imposition of any restraining order, escrow, suspension or
impound of funds in connection with any proceeding (judicial or
administrative) with respect to any material license, permit or franchise; or
(m) ADVERSE CHANGE. There occurs a Material Adverse Effect; or
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(n) GUARANTOR DEFAULTS. Any Guarantor fails in any material
respect to perform or observe any term, covenant or agreement in the
Subsidiary Guaranty; or the Subsidiary Guaranty is for any reason in any
material respect (including with respect to future advances) or wholly
revoked or invalidated, or otherwise ceases to be in full force and effect,
or any Guarantor or any other Person contests in any manner the validity or
enforceability thereof or denies that it has any further liability or
obligation thereunder; or any event described in subsection (f) or (g) of
this Section occurs with respect to a Guarantor; or
(o) COLLATERAL.
(i) any provision of any Collateral Document shall for any
reason cease to be valid and binding on or enforceable against the Company or
any Subsidiary party thereto or the Company or any Subsidiary shall so state
in writing or bring an action to limit its obligations or liabilities
thereunder; or
(ii) any Collateral Document shall for any reason (other than
pursuant to the terms thereof) cease to create a valid security interest in
the Collateral purported to be covered thereby or such security interest
shall for any reason cease to be a perfected and first priority security
interest.
9.02 REMEDIES. If any Event of Default occurs, the Administrative
Agent shall, at the request of, or may, with the consent of, the Required
Lenders,
(a) declare the Commitment of each Lender to make Loans and any
obligation of the Issuer to Issue Letters of Credit to be terminated,
whereupon such Commitments and Obligations shall be terminated;
(b) declare an amount equal to the maximum aggregate amount that is
or at any time thereafter may become available for drawing under any
outstanding Letters of Credit (whether or not any beneficiary shall have
presented, or shall be entitled at such time to present, the drafts or other
documents required to draw under such Letters of Credit) to be immediately
due and payable, and declare the unpaid principal amount of all outstanding
Loans, all interest accrued and unpaid thereon, and all other amounts owing
or payable hereunder or under any other Loan Document to be immediately due
and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Lenders all rights and
remedies available to it and the Lenders under the Loan Documents or
applicable law;
PROVIDED, HOWEVER, that upon the occurrence of any event specified in
subsection (f) or (g) of SECTION 9.01 (in the case of clause (i) of
subsection (g) upon the expiration of the 60-day period mentioned therein),
the obligation of each Lender to make Loans and any obligation of the Issuer
to Issue Letters of Credit shall automatically terminate and the unpaid
principal amount of all outstanding Loans and all interest and other amounts
as aforesaid shall automatically become due and payable without further act
of the Administrative Agent, the Issuer or any Lender.
9.03 RIGHTS NOT EXCLUSIVE. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive
of any other rights, powers, privileges or
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remedies provided by law or in equity, or under any other instrument,
document or agreement now existing or hereafter arising.
ARTICLE X
THE ADMINISTRATIVE AGENT
10.01 APPOINTMENT AND AUTHORIZATION; "ADMINISTRATIVE AGENT". (a)
Each Lender hereby irrevocably (subject to SECTION 10.09) appoints,
designates and authorizes the Administrative Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document
and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
nor shall the Administrative Agent have or be deemed to have any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing
sentence, the use of the term "agent" in this Agreement with reference to the
Administrative Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any
applicable law. Instead, such term is used merely as a matter of market
custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.
(b) Each Issuer shall act on behalf of the Lenders with
respect to any Letters of Credit Issued by it and the documents associated
therewith until such time and except for so long as the Administrative Agent
may agree at the request of the Required Lenders to act for such Issuer with
respect thereto; PROVIDED, HOWEVER, that such Issuer shall have all of the
benefits and immunities (i) provided to the Administrative Agent in this
ARTICLE X with respect to any acts taken or omissions suffered by the Issuer
in connection with Letters of Credit Issued by it or proposed to be Issued by
it and the application and agreements for letters of credit pertaining to the
Letters of Credit as fully as if the term "Administrative Agent", as used in
this ARTICLE X, included such Issuer with respect to such acts or omissions,
and (ii) as additionally provided in this Agreement with respect to such
Issuer.
10.02 DELEGATION OF DUTIES. The Administrative Agent may execute any
of its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agent
or attorney-in-fact that it selects with reasonable care.
10.03 LIABILITY OF ADMINISTRATIVE AGENT. None of the Agent-Related
Persons shall (a) be liable for any action taken or omitted to be taken by
any of them under or in connection with this Agreement or any other Loan
Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or (b) be responsible in any manner to any
of the Lenders for any recital, statement, representation or warranty made by
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the Company or any Subsidiary or Affiliate of the Company, or any officer
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for
in, or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document, or for the value of or title to any
Collateral, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure
of the Company or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under
any obligation to any Lender to ascertain or to inquire as to the observance
or performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Company or any of the Company's Subsidiaries or Affiliates.
10.04 RELIANCE BY ADMINISTRATIVE AGENT. (a) The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying,
upon any writing, resolution, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, statement or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to the Company),
independent accountants and other experts selected by the Administrative
Agent. The Administrative Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the Required
Lenders as it deems appropriate and, if it so requests, it shall first be
indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the
Required Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
(a) For purposes of determining compliance with the conditions
specified in SECTION 5.01, each Lender that has executed this Agreement shall
be deemed to have consented to, approved or accepted or to be satisfied with,
each document or other matter either sent by the Administrative Agent to such
Lender for consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable or satisfactory to
such Lender.
10.05 NOTICE OF DEFAULT. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event
of Default, except with respect to defaults in the payment of principal,
interest and fees required to be paid to the Administrative Agent for the
account of the Lenders, unless the Administrative Agent shall have received
written notice from a Lender or the Company referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". The Administrative Agent will notify the Lenders of its
receipt of any such notice. The Administrative Agent shall take such action
with respect to such Default or Event of Default as may be requested by the
Required Lenders in accordance with ARTICLE IX; PROVIDED, HOWEVER, that
unless and until the Administrative Agent has received any such request, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest
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of the Lenders except to the extent that other provisions of this Agreement
expressly require that any such action be taken or not be taken only with the
consent and authorization or at the request of the Lenders or the Required
Lenders, as applicable.
10.06 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by the Administrative Agent hereinafter taken, including any review of
the affairs of the Company and its Subsidiaries, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Lender. Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company
and its Subsidiaries, the value of and title to any Collateral, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to the Company hereunder. Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking
or not taking action under this Agreement and the other Loan Documents, and
to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the
Administrative Agent and financial statements and other materials provided
pursuant to SECTION 7.01 or 7.02, the Administrative Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of the Company which may
come into the possession of any of the Agent-Related Persons.
10.07 INDEMNIFICATION OF ADMINISTRATIVE AGENT. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed by or on
behalf of the Company and without limiting the obligation of the Company to
do so), in accordance with such Lender's Pro Rata Share of all Loans, from
and against any and all Indemnified Liabilities; PROVIDED, HOWEVER, that no
Lender shall be liable for the payment to the Agent-Related Persons of any
portion of such Indemnified Liabilities resulting from such Person's gross
negligence or willful misconduct. Without limitation of the foregoing, each
Lender shall reimburse the Administrative Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including Attorney Costs)
incurred by the Administrative Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any
other Loan Document, or any document contemplated by or referred to herein,
to the extent that the Administrative Agent is not reimbursed for such
expenses by or on behalf of the Company. The undertaking in this Section
shall survive the payment of all Obligations hereunder and the resignation or
replacement of the Administrative Agent.
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10.08 ADMINISTRATIVE AGENT IN INDIVIDUAL CAPACITY. BofA and its
Affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business
with the Company and its Subsidiaries and Affiliates as though BofA were not
the Administrative Agent hereunder and without notice to or consent of the
Lenders. The Lenders acknowledge that, pursuant to such activities, BofA or
its Affiliates may receive information regarding the Company or its
Affiliates (including information that may be subject to confidentiality
obligations in favor of the Company or such Subsidiary) and acknowledge that
the Administrative Agent shall be under no obligation to provide such
information to them. With respect to its Loans, BofA shall have the same
rights and powers under this Agreement as any other Lender and may exercise
the same as though it were not the Administrative Agent, and the terms
"Lender" and "Lenders" include BofA in its individual capacity.
10.09 SUCCESSOR AGENT. The Administrative Agent may, and at the
request of the Required Lenders, shall resign as Administrative Agent upon 30
days' notice to the Lenders. If the Administrative Agent resigns under this
Agreement, the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders. If no successor agent is appointed prior to
the effective date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, after consulting with the Lenders and the
Company, a successor agent from among the Lenders. Upon the acceptance of
its appointment as successor agent hereunder, such successor agent shall
succeed to all the rights, powers and duties of the retiring Administrative
Agent and the term "Administrative Agent" shall mean such successor agent and
the retiring Administrative Agent's appointment, powers and duties as
Administrative Agent shall be terminated. After any retiring Administrative
Agent's resignation hereunder as Administrative Agent, the provisions of this
ARTICLE X and SECTIONS 11.04 and 11.05 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative Agent
under this Agreement. If no successor agent has accepted appointment as
Administrative Agent by the date which is 30 days following a retiring
Administrative Agent's notice of resignation, the retiring Administrative
Agent's resignation shall nevertheless thereupon become effective and the
Lenders shall perform all of the duties of the Administrative Agent hereunder
until such time, if any, as the Required Lenders appoint a successor agent as
provided for above. Notwithstanding the foregoing, however, BofA may not be
removed as the Administrative Agent at the request of the Required Lenders
unless BofA shall also simultaneously be replaced as the "Issuer" hereunder
pursuant to documentation in form and substance reasonably satisfactory to
BofA.
10.10 WITHHOLDING TAX. (a) (i) If any Lender is a "foreign
corporation, partnership or trust" within the meaning of the Code and such
Lender claims exemption from, or a reduction of, U.S. withholding tax under
Sections 1441 or 1442 of the Code, such Lender agrees with and in favor of
the Administrative Agent, to deliver to the Administrative Agent:
(A) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, two properly
completed and executed copies of IRS Form W-8BEN before the
payment of any interest in the first calendar year and before the
payment of any interest in each third succeeding calendar year
during which interest may be paid under this Agreement;
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(B) if such Lender claims that interest paid under this Agreement is
exempt from United States withholding tax because it is
effectively connected with a United States trade or business of
such Lender, two properly completed and executed copies of IRS
Form W-8ECI before the payment of any interest is due in the first
taxable year of such Lender and in each succeeding taxable year of
such Lender during which interest may be paid under this
Agreement; and
(C) such other form or forms as may be required under the Code or
other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Administrative Agent of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(ii) If any foreign Lender claims exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", such Lender agrees with and in favor of the
Administrative Agent and the Company to deliver to the Administrative Agent
and the Company a Form W-8BEN, or any subsequent versions thereof or
successors thereto.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-8BEN
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of the Company to such Lender, such
Lender agrees to notify the Administrative Agent of the percentage amount in
which it is no longer the beneficial owner of Obligations of the Company to
such Lender. To the extent of such percentage amount, the Administrative
Agent will treat such Lender's IRS Form W-8BEN as no longer valid.
(c) If any Lender claiming exemption from United States withholding
tax by filing IRS Form W-8ECI with the Administrative Agent sells, assigns,
grants a participation in, or otherwise transfers all or part of the
Obligations of the Company to such Lender, such Lender agrees to undertake
sole responsibility for complying with the withholding tax requirements
imposed by Sections 1441 and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Administrative Agent may withhold from any interest
payment to such Lender an amount equivalent to the applicable withholding tax
after taking into account such reduction. However, if the forms or other
documentation required by subsection (a) of this Section are not delivered to
the Administrative Agent, then the Administrative Agent may withhold from any
interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax imposed
by Sections 1441 and 1442 of the Code, without reduction.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Administrative Agent
did not properly withhold tax from amounts paid to or for the account of any
Lender (because the appropriate form was not
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delivered or was not properly executed, or because such Lender failed to
notify the Administrative Agent of a change in circumstances which rendered
the exemption from, or reduction of, withholding tax ineffective, or for any
other reason) such Lender shall indemnify the Administrative Agent fully for
all amounts paid, directly or indirectly, by the Administrative Agent as tax
or otherwise, including penalties and interest, and including any taxes
imposed by any jurisdiction on the amounts payable to the Administrative
Agent under this Section, together with all costs and expenses (including
Attorney Costs). The obligation of the Lenders under this subsection shall
survive the payment of all Obligations and the resignation or replacement of
the Administrative Agent.
10.11 COLLATERAL MATTERS. (a) The Administrative Agent is
authorized on behalf of all the Lenders, without the necessity of any notice
to or further consent from the Lenders, from time to time to take any action
with respect to any Collateral or the Collateral Documents which may be
necessary to perfect and maintain perfected the security interest in and
Liens upon the Collateral granted pursuant to the Collateral Documents.
(b) The Lenders irrevocably authorize the Administrative Agent, at
its option and in its discretion, to release any Lien granted to or held by
the Administrative Agent upon any Collateral (i) upon termination of the
Commitments and payment in full of all Loans and all other Obligations known
to the Administrative Agent and payable under this Agreement or any other
Loan Document; (ii) consisting of an instrument evidencing Indebtedness or
other debt instrument, if the Indebtedness evidenced thereby has been paid in
full; or (iii) if approved, authorized or ratified in writing by the Required
Lenders or all the Lenders, as the case may be, as provided in SUBSECTION
11.01(g). Upon request by the Administrative Agent at any time, the Lenders
will confirm in writing the Administrative Agent's authority to release
particular types or items of Collateral pursuant to this SUBSECTION 10.11(b),
provided that the absence of any such confirmation for whatever reason shall
not affect the Administrative Agent's rights under this SECTION 10.11.
(c) Each Lender agrees with and in favor of each other (which
agreement shall not be for the benefit of the Company or any Subsidiary) that
the Company's obligation to such Lender under this Agreement and the other
Loan Documents is not and shall not be secured by any real property
collateral now or hereafter acquired by such Lender.
10.12 CO-AGENTS. None of the Lenders identified on the facing page
or signature pages of this Agreement as a "Co-Agent" shall have any right,
power, obligation, liability, responsibility or duty under this Agreement
other than those applicable to all Lenders as such. Without limiting the
foregoing, none of the Lenders so identified as a "Co-Agent" shall have or be
deemed to have any fiduciary relationship with any Lender. Each Lender
acknowledges that it has not relied and will not rely, on any of the Lenders
so identified in deciding to enter into this Agreement or in taking or not
taking action hereunder.
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ARTICLE XI
MISCELLANEOUS
11.01 AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by the Company or any applicable Subsidiary
therefrom, shall be effective unless the same shall be in writing and signed
by the Required Lenders (or by the Administrative Agent at the written
request of the Required Lenders) and the Company and acknowledged by the
Administrative Agent, and then any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
PROVIDED, HOWEVER, that no such waiver, amendment, or consent shall, unless
in writing and signed by all the Lenders and the Company and acknowledged by
the Administrative Agent, do any of the following:
(a) increase or extend the Commitment of any Lender (or reinstate
any Commitment terminated pursuant to SECTION 9.02);
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts
due to the Lenders (or any of them) hereunder or under any other Loan
Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or (subject to clause (ii) below) any fees or other
amounts payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Lenders or any
of them to take any action hereunder;
(e) amend this Section, the definition of "Required Lenders", or
SECTION 2.13, or any provision herein providing for consent or other action
by all Lenders;
(f) increase the Tranche A Loan Limit to an amount in excess of
$30,000,000 or amend SECTION 8.21; or
(g) discharge any Guarantor, or release all or any material portion
of the Collateral except as otherwise may be provided in the Collateral
Documents or except where the consent of the Required Lenders only is
specifically provided for;
and, PROVIDED FURTHER, that (i) no amendment, waiver or consent shall, unless
in writing and signed by the Administrative Agent in addition to the Required
Lenders or all the Lenders, as the case may be, affect the rights or duties
of the Administrative Agent under this Agreement or any other Loan Document,
(ii) no amendment, waiver or consent shall, unless in writing and signed by
the Issuer in addition to the Required Lenders or all the Lenders, as the
case may be, affect the rights or duties of the Issuer under this Agreement
or any L/C-Related Document relating to any Letter of Credit Issued or to be
Issued by it and (iii) the Fee Letter may be amended, or rights or privileges
thereunder waived, in a writing executed by the parties thereto.
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11.02 NOTICES. (a) All notices, requests, consents, approvals,
waivers and other communications shall be in writing (including, unless the
context expressly otherwise provides, by facsimile transmission, provided
that any matter transmitted by the Company by facsimile (i) shall be
immediately confirmed by a telephone call to the recipient at the number
specified on SCHEDULE 11.02, and (ii) shall be followed promptly by delivery
of a hard copy original thereof) and mailed, faxed or delivered, to the
address or facsimile number specified for notices on SCHEDULE 11.02; or, as
directed to the Company or the Administrative Agent, to such other address as
shall be designated by such party in a written notice to the other parties,
and as directed to any other party, at such other address as shall be
designated by such party in a written notice to the Company and the
Administrative Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the
date deposited into the U.S. mail, or if delivered, upon delivery; except
that notices pursuant to ARTICLE II, III or X to the Administrative Agent
shall not be effective until actually received by the Agent, and notices
pursuant to ARTICLE III to any Issuer shall not be effective until actually
received by such Issuer at the address specified on SCHEDULE 11.02.
(c) Any agreement of the Administrative Agent and the Lenders
herein to receive certain notices by telephone or facsimile is solely for the
convenience and at the request of the Company. The Administrative Agent and
the Lenders shall be entitled to rely on the authority of any Person
purporting to be a Person authorized by the Company to give such notice and
the Administrative Agent and the Lenders shall not have any liability to the
Company or other Person on account of any action taken or not taken by the
Administrative Agent or the Lenders in reliance upon such telephonic or
facsimile notice. The obligation of the Company to repay the Loans and L/C
Obligations shall not be affected in any way or to any extent by any failure
by the Administrative Agent and the Lenders to receive written confirmation
of any telephonic or facsimile notice or the receipt by the Administrative
Agent and the Lenders of a confirmation which is at variance with the terms
understood by the Administrative Agent and the Lenders to be contained in the
telephonic or facsimile notice.
11.03 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender,
any right, remedy, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.
11.04 COSTS AND EXPENSES. The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as
Administrative Agent and Issuer) and the Arranger within five (5) Business
Days after demand (subject to SUBSECTION 5.01(e)) for all reasonable costs
and expenses incurred by BofA (including in its capacity as Administrative
Agent and Issuer) and the Arranger in connection with the development,
preparation, delivery, administration, syndication and execution of, and any
amendment, supplement, waiver or modification to (in each case, whether or
not consummated), this Agreement, any Loan
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Document and any other documents prepared in connection herewith or
therewith, and the consummation of the transactions contemplated hereby and
thereby, including reasonable Attorney Costs incurred by BofA (including in
its capacity as Administrative Agent and Issuer) and the Arranger with
respect thereto;
(b) pay or reimburse the Administrative Agent, the Arranger, the
Issuer and each Lender within five (5) Business Days after demand (subject to
SUBSECTION 4.01(e)) for all costs and expenses (including Attorney Costs)
incurred by them in connection with the enforcement, attempted enforcement,
or preservation of any rights or remedies under this Agreement or any other
Loan Document during the existence of an Event of Default or after
acceleration of the Loans (including in connection with any "workout" or
restructuring regarding the Loans, and including in any Insolvency Proceeding
or appellate proceeding); and
(c) pay or reimburse BofA (including in its capacity as
Administrative Agent and Issuer) within five (5) Business Days after demand
(subject to SUBSECTION 4.01(e)) for all appraisal (including the allocated
cost of internal appraisal services), audit, environmental inspection and
review (including the allocated cost of such internal services), search and
filing costs, fees and expenses, incurred or sustained by BofA (including in
its capacity as Administrative Agent and Issuer) in connection with the
matters referred to under subsections (a) and (b) of this Section.
11.05 COMPANY INDEMNIFICATION. (a) The Company shall indemnify,
defend and hold the Agent-Related Persons, and each Lender and each of its
respective officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "INDEMNIFIED PERSON") harmless from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements (including
Attorney Costs) of any kind or nature whatsoever which may at any time
(including at any time following repayment of the Loans and the termination,
resignation or replacement of the Administrative Agent or replacement of any
Lender or assignment by any Lender of its Loans or Commitment) be imposed
on, incurred by or asserted against any such Person in any way relating to or
arising out of this Agreement or any document contemplated by or referred to
herein, or the transactions contemplated hereby, or any action taken or
omitted by any such Person under or in connection with any of the foregoing,
including with respect to any investigation, litigation or proceeding
(including any Insolvency Proceeding or appellate proceeding) related to or
arising out of this Agreement or the Loans or the use of the proceeds
thereof, whether or not any Indemnified Person is a party thereto (all the
foregoing, collectively, the "INDEMNIFIED LIABILITIES"); PROVIDED, that the
Company shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities resulting from the gross negligence or
willful misconduct of such Indemnified Person. The agreements in this Section
shall survive payment of all other Obligations.
(b) Survival; Defense. The obligations in this Section shall
survive payment of all other Obligations. At the election of any Indemnified
Person, the Company shall defend such Indemnified Person using legal counsel
satisfactory to such Indemnified Person in such Person's sole discretion, at
the sole cost and expense of the Company. All amounts owing under this
Section shall be paid within 30 days after demand.
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11.06 MARSHALLING; PAYMENTS SET ASIDE. Neither the Administrative
Agent nor the Lenders shall be under any obligation to marshall any assets in
favor of the Company or any other Person or against or in payment of any or
all of the Obligations. To the extent that the Company makes a payment to
the Administrative Agent or the Lenders, or the Administrative Agent or the
Lenders exercise their right of set-off, and such payment or the proceeds of
such set-off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Administrative Agent or such Lender in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the
extent of such recovery the obligation or part thereof originally intended to
be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such set-off had not occurred, and (b) each
Lender severally agrees to pay to the Administrative Agent upon demand its
pro rata share of any amount so recovered from or repaid by the
Administrative Agent.
11.07 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of the Administrative Agent and each Lender.
11.08 ASSIGNMENTS, PARTICIPATIONS, ETC. (a) Any Lender may, with the
written consent of the Company at all times other than during the existence
of an Event of Default and the Administrative Agent and the Issuer, which
consent of the Company shall not be unreasonably withheld or delayed, at any
time assign and delegate to one or more Eligible Assignees (provided that no
written consent of the Company, the Administrative Agent or the Issuer shall
be required in connection with any assignment and delegation by a Lender to
an Eligible Assignee that is an Affiliate of such Lender) (each an
"ASSIGNEE") all, or any ratable part of all, of the Loans, the Commitments
and the other rights and obligations of such Lender hereunder, in a minimum
amount of $5,000,000 or, if less, 100% of such Lender's outstanding Loans
and/or Commitment; PROVIDED, HOWEVER, that the Company and the Administrative
Agent may continue to deal solely and directly with such Lender in connection
with the interest so assigned to an Assignee until (A) written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the
Company and the Administrative Agent by such Lender and the Assignee, (B)
such Lender and its Assignee shall have delivered to the Company and the
Administrative Agent an Assignment and Acceptance in the form of EXHIBIT D
("ASSIGNMENT AND ACCEPTANCE") together with any Note or Notes subject to such
assignment and (C) the assignor Lender or Assignee has paid to the
Administrative Agent a processing fee in the amount of $3,500; PROVIDED,
FURTHER, that upon receipt of notice from any Lender that such Lender
intends, pursuant to this SECTION 11.08, to make any such assignment and
delegation to an Assignee other than an Affiliate of such Lender or another
Lender, then, so long as no Event of Default has occurred and is continuing,
the Company shall have 10 days from the date of receipt of such notice to
obtain an Assignee (which Assignee shall be reasonably satisfactory to the
Administrative Agent and the assignor Lender) to accept such assignment and
delegation from such Lender, in lieu of the Assignee specified by such
assignor Lender, with such assignment to be made otherwise in compliance with
this SECTION 11.08, except that the $3,500 processing fee shall be paid by
the Company or the Assignee chosen by the Company; PROVIDED, FURTHER, that if
any Assignee chosen by the Company pursuant to
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preceding proviso is found to be unsatisfactory to the assignor Lender, then
the Company shall have an additional 10-day period to obtain another Assignee.
(b) From and after the date that the Administrative Agent notifies
the assignor Lender that it has received (and, if required, provided its
consent with respect to) an executed Assignment and Acceptance and payment of
the above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, shall have
the rights and obligations of a Lender under the Loan Documents, and (ii) the
assignor Lender shall, to the extent that rights and obligations hereunder
and under the other Loan Documents have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Loan Documents.
(c) Within five (5) Business Days after its receipt of notice by
the Administrative Agent that it has received an executed Assignment and
Acceptance and payment of the processing fee, (and provided that it consents
to such assignment in accordance with SUBSECTION 11.08(a)), the Company shall
execute and deliver to the Administrative Agent, new Notes evidencing such
Assignee's assigned Loans and Commitment and, if the assignor Lender has
retained a portion of its Loans and its Commitment, replacement Notes in the
principal amount of the Loans retained by the assignor Lender (such Notes to
be in exchange for, but not in payment of, the Notes held by such Lender).
Immediately upon each Assignee's making its processing fee payment under the
Assignment and Acceptance, this Agreement shall be deemed to be amended to
the extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Commitments arising therefrom.
The Commitment allocated to each Assignee shall reduce such Commitments of
the assigning Lender PRO TANTO.
(d) The Administrative Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register for the recordation
of the names and addresses of the Lenders and the Commitments of, and
principal amount of the Loans owing to, each Lender from time to time. The
entries in such register shall be conclusive, in the absence of manifest
error, and the Company, the Administrative Agent and the Lenders shall treat
each person whose name is recorded in such register as the owner of the
Commitments and the Loans recorded therein for all purposes of this
Agreement. The register shall be available for inspection by the Company,
any Lender and their representatives, at any reasonable time and from time to
time upon reasonable prior notice.
(e) Any Lender may at any time sell to one or more commercial banks
or other Persons not Affiliates of the Company (a "PARTICIPANT")
participating interests in any Loans, the Commitment of that Lender and the
other interests of that Lender (the "ORIGINATING LENDER") hereunder and under
the other Loan Documents; PROVIDED, HOWEVER, that (i) the originating
Lender's obligations under this Agreement shall remain unchanged, (ii) the
originating Lender shall remain solely responsible for the performance of
such obligations, (iii) the Company and the Administrative Agent shall
continue to deal solely and directly with the originating Lender in
connection with the originating Lender's rights and obligations under this
Agreement and the other Loan Documents, and (iv) no Lender shall transfer or
grant any participating interest under which the Participant has rights to
approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document, except to the extent such amendment,
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<PAGE>
consent or waiver would require unanimous consent of the Lenders as described
in clause (a) (but only in respect of any increase of any Commitment of any
originating Lender), (b) or (c) of the FIRST PROVISO to SECTION 11.01. In the
case of any such participation, the Participant shall be entitled to the
benefit of SECTIONS 4.01, 4.03 and 11.05 as though it were also a Lender
hereunder, and if amounts outstanding under this Agreement are due and
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement.
(f) Notwithstanding any other provision in this Agreement, (i) any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and the Note held
by it in favor of any Federal Reserve Bank in accordance with Regulation A of
the FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law and (ii) any Lender that is a fund that
invests in bank loans may, without the consent of the Administrative Agent or
the Company, pledge all or any portion of its rights under and interest in
this Agreement to any trustee or to any other representative of holders of
obligations owed or securities issued by such fund as security for such
obligations or securities; PROVIDED, that any transfer to any Person upon the
enforcement of such pledge or security interest may only be made subject to
SECTION 11.08.
11.09 CONFIDENTIALITY. Each Lender agrees to take and to cause its
Affiliates to take normal and reasonable precautions, in accordance with such
Lender's customary procedures for handling confidential information of this
nature, and exercise due care to maintain the confidentiality of all
information identified as "nonpublic", "confidential" or "secret" by the
Company and provided to it by the Company or any Subsidiary, or by the
Administrative Agent on the Company's or such Subsidiary's behalf, under this
Agreement or any other Loan Document, and neither it nor any of its
Affiliates shall use any such information other than in connection with or in
enforcement of this Agreement and the other Loan Documents or in connection
with other business now or hereafter existing or contemplated with the
Company or any Subsidiary; except to the extent such information (a) was or
becomes generally available to the public other than as a result of
disclosure by the Lender or its Affiliates, or (b) was or becomes available
on a non-confidential basis from a source other than the Company or any
Subsidiary, provided that such source is not bound by a confidentiality
agreement with the Company or such Subsidiary known to the Lender; PROVIDED,
HOWEVER, that any Lender may disclose such information (i) at the request or
pursuant to any requirement of any Governmental Authority to which the Lender
is subject or in connection with an examination of such Lender by any such
authority; (ii) pursuant to subpoena or other court process; (iii) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; (iv) to the extent reasonably required in connection with
any litigation or proceeding to which the Administrative Agent, any Lender or
their respective Affiliates may be party; (v) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Loan Document; (vi) to such Lender's independent auditors and other
professional advisors, provided that such Person agrees in writing to keep
such information confidential to the same
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<PAGE>
extent required of the Lenders hereunder; (vii) to any Participant or
Assignee, actual or potential, provided that such Person agrees in writing to
keep such information confidential to the same extent required of the Lenders
hereunder; (viii) as to any Lender or its Affiliate, as expressly permitted
under the terms of any other document or agreement regarding confidentiality
to which the Company or any Subsidiary is party or is deemed party with such
Lender or such Affiliate; (ix) to its Affiliates; and (x) to the National
Association of Insurance Commissioners or any similar organization or any
nationally recognized rating agency that requires access to information about
such Lender's investment portfolio in connection with ratings issued with
respect to such Lender.
11.10 SET-OFF. In addition to any rights and remedies of the Lenders
provided by law and regardless of the adequacy of any of the Collateral, if
an Event of Default exists or the Loans have been accelerated, each Lender is
authorized at any time and from time to time, without prior notice to the
Company, any such notice being waived by the Company to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Lender to or for the credit or the
account of the Company against any and all Obligations owing to such Lender,
now or hereafter existing, irrespective of whether or not the Administrative
Agent or such Lender shall have made demand under this Agreement or any Loan
Document and although such Obligations may be contingent or unmatured. Each
Lender agrees promptly to notify the Company and the Administrative Agent
after any such set-off and application made by such Lender; PROVIDED,
HOWEVER, that the failure to give such notice shall not affect the validity
of such set-off and application.
11.11 AUTOMATIC DEBITS OF FEES. With respect to any commitment fee,
arrangement fee, letter of credit fee or other fee, or any other cost or
expense (including Attorney Costs) due and payable to the Administrative
Agent, BofA or the Arranger under the Loan Documents, the Company hereby
irrevocably authorizes BofA to debit any deposit account of the Company with
BofA in an amount such that the aggregate amount debited from all such
deposit accounts does not exceed such fee or other cost or expense. If there
are insufficient funds in such deposit accounts to cover the amount of the
fee or other cost or expense then due, such debits will be reversed (in whole
or in part, in BofA's sole discretion) and such amount not debited shall be
deemed to be unpaid. No such debit under this Section shall be deemed a
set-off.
11.12 NOTIFICATION OF ADDRESSES, LENDING OFFICES, ETC. Each Lender
shall notify the Administrative Agent in writing of any changes in the
address to which notices to the Lender should be directed, of addresses of
any Lending Office, of payment instructions in respect of all payments to be
made to it hereunder and of such other administrative information as the
Administrative Agent shall reasonably request.
11.13 COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
11.14 SEVERABILITY. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement
required hereunder.
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11.15 NO THIRD PARTIES BENEFITED. This Agreement is made and entered
into for the sole protection and legal benefit of the Company, the Lenders,
the Administrative Agent and the Agent-Related Persons, and their permitted
successors and assigns, and no other Person shall be a direct or indirect
legal beneficiary of, or have any direct or indirect cause of action or claim
in connection with, this Agreement or any of the other Loan Documents.
11.16 GOVERNING LAW AND JURISDICTION. (a) THIS AGREEMENT AND THE
NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAW OF THE STATE OF ILLINOIS (WITHOUT REGARD TO CONFLICTS OF LAWS PROVISIONS
THEREOF); PROVIDED THAT THE ADMINISTRATIVE AGENT AND THE LENDERS SHALL RETAIN
ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
ILLINOIS OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE
ADMINISTRATIVE AGENT AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE
COMPANY, THE ADMINISTRATIVE AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING 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 ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY, THE ADMINISTRATIVE
AGENT AND THE LENDERS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT
OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY ILLINOIS
LAW.
11.17 WAIVER OF JURY TRIAL. THE COMPANY, THE LENDERS AND THE
ADMINISTRATIVE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT
BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. THE COMPANY, THE LENDERS AND THE ADMINISTRATIVE AGENT
EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION
OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH
SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER SHALL APPLY TO ANY
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SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
11.18 ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Lenders, the Administrative Agent and the Co-Agents, and supersedes all
prior or contemporaneous agreements and understandings of such Persons,
verbal or written, relating to the subject matter hereof and thereof.
11.19 RESTATEMENT DATE. The Company, each Lender, the Administrative
Agent and the Co-Agents agree that on the Restatement Date the following
transactions shall be deemed to occur automatically, without further action
by any party hereto:
(a) The Prior Credit Agreement shall be deemed to be amended and
restated in its entirety in the form of this Agreement.
(b) The Administrative Agent shall, promptly after receipt of the
Notes reflecting the amendments to the Prior Credit Agreement effected
hereunder, cancel and return to the Company (upon receipt from the Lenders)
the promissory notes being replaced by such Notes.
The Company, each Lender, the Administrative Agent and the Co-Agents
agree that (i) the restatement transactions provided in the foregoing
sentence shall not be effective until the execution of this Agreement by all
of the parties hereto and the satisfaction of the conditions precedent set
forth in SECTION 4.01 hereof; (ii) all terms and conditions of the Prior
Credit Agreement which are amended and restated by this Agreement shall
remain effective until such amendment and restatement becomes effective
hereunder, and thereafter shall continue to be effective only as amended and
restated by this Agreement and (iii) the representations, warranties and
covenants set forth herein shall become effective concurrently with the
execution of this Agreement by all of the parties hereto.
11.20 DEPARTING LENDER. Upon the effectiveness of this Agreement and
the payment to the Departing Lender of the Obligations due it, (a) the
Departing Lender shall have no further Commitment hereunder and (b) the
Departing Lender shall cease to have any rights or duties as Lender
hereunder; PROVIDED, that the Departing Lender shall remain entitled to
indemnities hereunder which by their terms survive termination of this
Agreement.
[signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered in Chicago, Illinois by their proper and duly
authorized officers as of the day and year first above written.
TELETECH HOLDINGS, INC.
By: /s/ Norman Blome
----------------------------------
Title: Treasurer
-------------------------------
BANK OF AMERICA, NATIONAL ASSOCIATION
(F/K/A BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION),
as Administrative Agent
By: /s/ David A. Johanson
----------------------------------
Title: Vice President
-------------------------------
BANK OF AMERICA, NATIONAL ASSOCIATION
(F/K/A BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION),
as a Lender
By: /s/ Charles W.A. Hagel
----------------------------------
Title: Vice President
-------------------------------
FIRST UNION NATIONAL BANK,
as a Lender and as Co-Agent
By: /s/ Douglas A. Nickel
----------------------------------
Title: Vice President
-------------------------------
U.S. BANK NATIONAL ASSOCIATION,
as a Lender and as Co-Agent
By: /s/ Joni M. Fish
----------------------------------
Title: Vice President
-------------------------------
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WELLS FARGO BANK N.A.,
as a Lender and as Co-Agent
By: /s/ Nancy Martorano
----------------------------------
Title: Vice President
-------------------------------
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SCHEDULE 2.01
COMMITMENTS
AND PRO RATA SHARES
<TABLE>
<CAPTION>
Pro Rata
Lender Commitment Share
- ---- ---------- -----
<S> <C> <C>
Bank of America, National Association $21,000,000 28.0%
First Union National Bank $18,000,000 24.0%
U.S. Bank National Association $18,000,000 24.0%
Wells Fargo Bank N.A. $18,000,000 24.0%
TOTAL $75,000,000 100%
</TABLE>
<PAGE>
SCHEDULE 11.02
OFFSHORE AND DOMESTIC LENDING OFFICES
ADDRESSES FOR NOTICES
BANK OF AMERICA, NATIONAL ASSOCIATION,
as Administrative Agent
Bank of America, National Association
Agency Management Services #33499
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Vice President
Telephone: (312) 828-7933
Facsimile: (312) 974-9102
AGENT'S PAYMENT OFFICE:
Bank of America, National Association
Agency Management Services #33499
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Vice President
Telephone: (312) 828-7933
Facsimile: (312) 974-9102
BANK OF AMERICA, NATIONAL ASSOCIATION,
as a Lender and as Issuer
DOMESTIC AND OFFSHORE LENDING OFFICE:
231 South LaSalle Street
Chicago, Illinois 60697
NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF
CONVERSION/CONTINUATION):
Bank of America, National Association
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Vice President
Telephone: (312) 828-4360
Facsimile: (312) 828-1974
<PAGE>
FIRST UNION NATIONAL BANK
DOMESTIC AND OFFSHORE LENDING OFFICE:
201 S. College Street
Charlotte, North Carolina 28288-0749
NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF
CONVERSION/CONTINUATION):
First Union National Bank
201 S. College Street
CP-6
6th Floor
Mail Code NC 0760
Charlotte, North Carolina 28288-0760
Attention: Douglas Nickel
Telephone: (704) 383-4003
Facsimile: (704) 715-1117
U.S. BANK NATIONAL ASSOCIATION
DOMESTIC AND OFFSHORE LENDING OFFICE:
8401 East Belleview
Denver, Colorado 80237
NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF
CONVERSION/CONTINUATION):
U.S. Bank National Association
8401 East Belleview
Denver, Colorado 80237
Attention: Joni M. Fish
Telephone: (303) 771-2009
Facsimile: (303) 290-8671
<PAGE>
WELLS FARGO BANK N.A.
DOMESTIC AND OFFSHORE LENDING OFFICE:
1000 Lakes Drive
Suite 250
West Covina, California 91790
NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF
CONVERSION/CONTINUATION):
Wells Fargo Bank N.A.
1000 Lakes Drive
Suite 250
West Covina, California 91790
Attention: Nancy Martorano
Telephone: (626) 919-6614
Facsimile: (626) 919-2909
TELETECH HOLDINGS, INC.
1700 Lincoln Street
Denver, Colorado 80203-4514
Attention: Norman Blome
Telephone: (303) 894-4040
Facsimile: (303) 894-7372
<PAGE>
OPERATING AGREEMENT
FOR
FORD TEL II, LLC
FEBRUARY 24, 2000
<PAGE>
OPERATING AGREEMENT FOR
FORD TEL II, LLC
THIS OPERATING AGREEMENT (this "Agreement") is made and entered into
this 24thday of February 2000, by and among Ford Motor Company ("Ford") and
TeleTech Holdings, Inc. ("TeleTech"), as initial members of Ford Tel II, LLC,
a Delaware limited liability company (the "Company") (Ford, TeleTech and any
other authorized member of the Company may from time to time be referred to
herein together as the "Members" and, individually as a "Member"). The
Company was organized as a limited liability company under the Delaware
Limited Liability Company Act, as amended, Title 6, Chapter 18-101 ET SEQ.
(the "Act"). Certain defined terms used in this Agreement are set forth in
SCHEDULE I (SCHEDULE OF DEFINITIONS) attached hereto and made a part hereof.
In consideration of the mutual covenants and agreements contained in
this Agreement and other good and valuable consideration, and intending to be
legally bound hereby, the undersigned parties hereby agree as follows:
ARTICLE I
PURPOSES
The purposes of the Company are (a) to provide worldwide Customer
Relationship Center ("CRC") services to (i) Ford and its Affiliates and such
related services as requested by Ford customers, (ii) Ford's independent
dealership network (including without limitation customer satisfaction
indexing, market research, dealer research, lead generation, maintenance
scheduling, product recalls, broadcast electronic mail management, credit and
finance, video kiosk, data base management, dealers contact management
platform, loyalty programs, premium fulfillment, data analysis, etc.) and
(iii) automotive-related markets (such as repair, parts and aftermarket
suppliers) and (b) to engage in any act in furtherance of such activities
which limited liability companies may perform under the Act.
ARTICLE II
ORGANIZATIONAL MATTERS
SECTION 2.1. FORMATION. The Company was formed pursuant to the Act
upon the filing of the Certificate of Formation (the "Certificate"). The
rights and obligations of the Members shall be as provided under the Act, the
Certificate and this Agreement.
SECTION 2.2. PRINCIPAL PLACE OF BUSINESS. The principal place of
business of the Company shall be in Denver, Colorado or at such place as may
be established by the Management Committee (as defined in Section 4.1 of this
Agreement) from time to time.
2
<PAGE>
SECTION 2.3. REGISTERED OFFICE AND REGISTERED AGENT. The Company's
registered office shall be 1209 Orange Street, Wilmington, Delaware 19801 and
the name of its initial registered agent at such address shall be The
Corporation Trust Company. The Company may designate another registered
office or agent at any time by following the procedures set forth in the Act.
SECTION 2.4. DURATION. The existence of the Company shall continue in
perpetuity, unless the Company is sooner dissolved in accordance with ARTICLE
X or the Act.
ARTICLE III
MEMBERS AND CAPITAL STRUCTURE
SECTION 3.1. NAMES AND ADDRESSES OF MEMBERS. All Members of the
Company and their business, residence or mailing address shall be listed on
the attached EXHIBIT A. The Members shall be required to update EXHIBIT A
from time to time as necessary to accurately reflect the information therein,
including the information referred to in SECTION 3.2 below.
SECTION 3.2. UNITS REPRESENTING MEMBERSHIP INTERESTS. The Interests of
Members in the Company are divided into and represented by Units or fractions
thereof. Each Member's respective number of Units is set forth in EXHIBIT A,
as the same shall be amended from time to time to reflect any changes in the
number of Units of Members. The Members agree that each Unit shall entitle
the Member possessing such Unit to:
(a) Subject to ARTICLE VII, an equal proportionate share per Unit
of the Company's net income, gains, losses, deductions and credits; and
(b) Subject to ARTICLE X and ARTICLE XI, an equal proportionate
share per Unit of amounts distributed to the Members in respect of their
Interests both during operation and upon dissolution of the Company.
The Company will not issue certificates representing Units, but at the
written request of a Member, the Company will provide a certified statement
setting forth the total number of Units issued and outstanding and the number
of Units issued to the requesting Member, as of the date of the statement.
SECTION 3.3. CAPITAL CONTRIBUTIONS. The initial Capital Contribution
to the Company of each Member is set forth on EXHIBIT A in accordance with
the Contribution Agreement attached hereto as EXHIBIT B (the "Contribution
Agreement").
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SECTION 3.4. ADDITIONAL CAPITAL.
(a) The Company may, from time to time, issue capital calls
requiring the Members to contribute additional amounts of capital to the
Company, if, but only if, such additional Capital Contribution is authorized
by (i) with respect to any additional Capital Contribution requested on or
prior to December 31, 2000, the Business Plan, after Supermajority Approval,
(ii) the Budget for the fiscal year in which such additional Capital
Contribution is requested or (iii) by Supermajority Approval. Capital calls
for Capital Contributions so authorized may be made by written notice to the
Members by the Management Committee (each, an "Additional Capital
Contribution Notice") in accordance with the needs of the Company. Additional
Capital Contributions shall be paid by each Member within thirty (30) days
after receipt of an Additional Capital Contribution Notice.
(b) If any Member who is required to make an additional Capital
Contribution under Section 3.4(a) herein chooses not to make such Capital
Contribution, the Company shall issue additional Units to the Members making
such Capital Contribution. The additional Units shall be issued at fair
market value based upon the fair market value of the Company's assets, as
determined by the Management Committee. Each time the Company issues
additional Units pursuant to this Section 3.4(b) or Section 3.5, the
Management Committee shall amend EXHIBIT A to reflect the Unit ownership. The
Profits and Losses attributable to the additional Units shall be allocated
among the Members in accordance with the provisions of Article VII.
SECTION 3.5. DELINQUENT MEMBERS. If any Member who is required to
make a Capital Contribution under Section 3.4 fails to make payment when due
of all or any portion of its share of any Capital Contribution required by
this Agreement (a "Delinquent Member"), the Company shall give written notice
of such failure to such Delinquent Member. If the Delinquent Member fails to
pay the amount due within thirty (30) days following delivery of such notice,
then each of the other Members (the "Contributing Members") shall have the
right, but not the obligation, to elect the following
(a) To contribute to the Company its requested additional
capital contribution and, if such Member so elects, its proportionate
share of the capital which the Delinquent Members failed to contribute
based on such Contributing Member's respective percentage Membership
Interest held prior thereto in relation to the Interests held by all
Contributing Members who so elect (any contribution made by the
Contributing Members in respect of the contribution the Delinquent
Members failed to make shall be treated as an additional capital
contribution made by such Contributing Members) and the Interests of the
Members shall be adjusted in accordance with Section 3.4(b); or
(b) To provide to the Company the amount of the capital which
the Delinquent Members failed to contribute, in the form of a loan to
such Delinquent Members (a
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"Member Loan"), which Member Loan shall bear interest at rate equal to
the prime rate reported in the WALL STREET JOURNAL (or successor
publication) for the day prior to the date such Member Loan is made
plus one percentage point. Any such Member Loan, plus interest thereon,
shall be repaid by the Company directly from amounts otherwise
distributable to the Delinquent Member hereunder by remitting such
amount to the Contributing Member who made the Member Loan. Amounts so
paid over to the Contributing Member shall nevertheless be deemed
distributions to the Delinquent Member. At the time the Member Loan is
made, the Delinquent Member shall be deemed to have made a Capital
Contribution to the Company in the amount of the Loan. Upon such
deemed Capital Contribution, the Interests of the Members shall be
adjusted in accordance with the provisions of Section 3.4(b).
SECTION 3.6. CAPITAL ACCOUNTS.
(a) A capital account ("Capital Account") shall be established,
maintained and adjusted for each Member in the manner provided by Treasury
Regulation Section 1.704-1(b)(2)(iv) and such other provisions of Treasury
Regulation Section 1.704-1(b) that must be complied with in order for the
Capital Accounts of the Members to be established, maintained, adjusted and
determined in accordance with the provisions of that Treasury Regulation. The
Capital Account of a Member shall be increased or decreased as provided in
that Treasury Regulation, except to the extent that such adjustment would
materially affect the amount or timing of any amount otherwise distributed
under this Agreement.
(b) The Book Value of all Company assets shall be adjusted to equal
their respective gross fair market values, as determined by the Management
Committee, upon the issuance of additional Units, and the Capital Accounts of
all Members shall be adjusted simultaneously to reflect the aggregate net
adjustment as if the Company recognized gain or loss equal to the amount of
such aggregate net adjustment.
(c) No Member shall have any liability or obligation to restore a
negative or deficit balance in such Member's Capital Account.
SECTION 3.7. NO RIGHTS OF REDEMPTION. No Member shall have the right
to: (a) have that Member's Units or Interest redeemed, (b) have that
Member's Capital Contribution returned, or (c) subject to ARTICLE VII ,
ARTICLE X, and ARTICLE XI, otherwise receive property of the Company; even if
that Member dissociates prior to termination of the Company. At termination,
the Member's rights are limited to those set forth in ARTICLE X and ARTICLE
XI. No Member shall have the right to demand a distribution or return of such
Member's Capital Contributions.
SECTION 3.8. MEMBER LOANS OR SERVICES. Except as set forth in SECTION
3.5, without Supermajority Approval, loans or services by any Member to the
Company shall not be considered Capital Contributions.
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SECTION 3.9. ADMISSION OF ADDITIONAL MEMBERS. The Company may issue or
sell Interests in the Company to additional Members ("Additional Members")
only with Supermajority Approval. Thereafter, such Additional Members will
have the rights of Members as described in SECTION 3.2 and will be allocated
net income, gains, losses, deductions and credits by such method as may be
provided in this Agreement, and if no method is specified, then as may be
permitted by Section 706(d) of the Code.
SECTION 3.10. NO MEMBER RESPONSIBLE FOR OTHER MEMBER'S COMMITMENT. In
the event that any Member (or any of such Member's shareholders, partners,
members, owners, or Affiliates ) has incurred any indebtedness or obligation
prior to the date of this Agreement that relates to or otherwise affects the
Company, neither the Company nor any other Member shall have any liability or
responsibility for or with respect to such indebtedness or obligation.
SECTION 3.11. COMPANY RESPONSIBLE FOR CERTAIN ORGANIZATION EXPENSES.
The Company shall pay or reimburse all expenses directly incurred by the
Company in connection with the formation of the Company and listed on
SCHEDULE 3.11; provided that any expenses incurred by Ford in connection with
middleware development by IBM in North America incurred during the first two
years shall not be reimbursable.
ARTICLE IV
MEETINGS OF MEMBERS
SECTION 4.1. MANAGEMENT COMMITTEE.
(a) FORMATION, DESIGNATION AND AUTHORITY OF MANAGEMENT COMMITTEE.
The Members hereby acknowledge and agree that the business and affairs of the
Company shall be conducted by a Management Committee (the "Management
Committee"). The Management Committee shall have the full power and authority
of the Members. Each action of the Management Committee taken in accordance
with this Agreement shall constitute an action of each of the Members and
shall be final and binding on the Members for all purposes. The Management
Committee shall devote such time to the Company as may be reasonably required
for the achievement of the purposes of the Company.
(b) APPOINTMENT AND REMOVAL OF REPRESENTATIVES. The Management
Committee shall consist of an equal number of representatives appointed by
each Member. Initially, the Management Committee shall consist of a total of
eight representatives, with four representatives appointed by TeleTech and
four representatives appointed by Ford; provided that at least one of the
representatives appointed by both Ford and TeleTech shall be outside
representative not employed by the appointing Member. SCHEDULE 4.1(b) lists
the initial representatives of the Management Committee and will be updated
from time to time with any changes in such representatives made in accordance
with this Section 4.1. The Chairman of
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the Management Committee may be selected by a majority vote of the Management
Committee; provided however, that in the event of a deadlock, the
representatives appointed by TeleTech shall select the Chairman. A Member
may remove and replace its representative to the Management Committee at any
time upon written notice to the other Member, it being understood and agreed
that a representative to the Management Committee may only be removed by the
Member appointing such representative. If any representative of a Member is
unable to attend any meeting of the Management Committee, such Member shall
be entitled to designate an alternate representative to attend and vote at
such meeting in lieu of such Member's regular representative. No member of
the Management Committee shall be compensated by the Company, including
reimbursement for out-of-pocket expenses.
(c) MANAGEMENT COMMITTEE APPROVALS. Notwithstanding any provision
of this Agreement to the contrary, Supermajority Approval of the Management
Committee is required to authorize or permit the Company to:
(i) appoint or change the Company's independent accountants
(the "Accountants") or make any change in any method of accounting or
accounting practice or policy other than those required by GAAP;
(ii) merge or consolidate with any other entity;
(iii) take any action to dissolve or liquidate the Company;
(iv) sell, assign, transfer or convey a significant portion
of its properties or assets other than in the ordinary course of business
or as contemplated by the Business Plan or the Budget;
(v) except as set forth in the Business Plan, make any
investment in or acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing a substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership,
joint venture, association or other business organization or division
thereof, or (B) any assets that are material, individually or in the
aggregate, to the Company;
(vi) engage in any business or operations other than as set
forth in clause (a) of Article I hereof;
(vii) approve any Budget or Business Plan;
(viii) except as provided in Section 5.1, hire, terminate and
set the compensation of the Company's officers;
(ix) (A) incur any indebtedness for borrowed money or
guarantee any such indebtedness , issue or sell any debt securities or
warrants or other rights to acquire any
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debt securities or indebtedness of the Company, guarantee any debt
securities of another person or entity, enter into any "keep well" or
other agreement to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of any
of the foregoing, except as contemplated by the Business Plan or any
Budget, or (B) make any loans, advances or capital contributions to, or
investments in, any other person or entity, except as contemplated by
the Business Plan or any Budget;
(x) execute, terminate or materially amend or modify (A) any
contract or agreement for the annual sale of services to non-Affiliates
exceeding $5,000,000 or (B) any other contract, expenditure or
transaction (other than the sale of services to Affiliates) that was not
in any Budget or the Business Plan and exceeds $1,000,000 or, if in the
Business Plan or Budget, where the expenditure involved exceed those
contemplated by the Budget or the Business Plan by $1,000,000;
(xi) execute, terminate or materially amend or modify any
contract or agreement that commits the Company to contingent liabilities
of more than $1,000,000.
(xii) enter into any trademark, patent, copyright, know-how,
licensing or technology agreement and undertaking any non-routine matter
relating to the intellectual property rights of the Company;
(xiii) mortgage or encumber in any manner any assets of the
Company;
(xiv) pay, discharge, settle or satisfy any litigation or
disputed third party claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge, settlement or satisfaction, in an amount not to
exceed $50,000;
(xv) make any contribution to a charitable or non-profit
organization in excess of $10,000;
(xvi) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect of,
any of the Units, except as expressly permitted under Section 7.11(c) of
this Agreement;
(xvii) request or consent to any Bankruptcy;
(xviii) issue, deliver, sell, pledge or otherwise encumber any
Interest, any other voting securities or any securities convertible into,
or any rights, warrants or options to acquire, any such Interest, voting
securities or convertible securities;
(xix) amend its Certificate of Formation or Articles of
Organization; and
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(xx) delegate any of its authority with respect to any of the
actions listed in clauses (i)-(xix) above.
(d) INDEMNIFICATION. The Company shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person (including any Member) who was or is made or is
threatened to be made a party or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he or she or a person for whom he or
she is the legal representative, is or was a Member, a representative of the
Management Committee or an officer of the Company designated pursuant to Article
V below, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation or of a partnership, joint
venture, trust, enterprise or nonprofit entity, including service with respect
to employee benefit plans (an "Indemnitee"), against all liability and loss
suffered and expenses (including attorneys' fees) reasonably incurred by such
indemnitee, provided, however, that nothing in this Section 4.l(d) shall require
the Company to indemnify any Member or any Affiliate, employee or agent of any
Member against or on account of any claim, loss, expense or liability resulting
from the actions of such Member, Affiliate, employee or agent in a capacity
other than as a Member Management Committee representative, officer, employee or
agent of the Company, including in its capacity as franchisor, lender or
supplier. The Company shall be required to indemnify an Indemnitee in connection
with a proceeding (or part thereof) initiated by such Indemnitee only if the
initiation of such proceeding (or part thereof) by the Indemnitee was authorized
by the Management Committee of the Company.
(i) PREPAYMENT OF EXPENSES. The Company shall pay the
expenses (including attorneys' fees) incurred by an Indemnitee in
defending any proceeding in advance of its final disposition, PROVIDED,
HOWEVER, that the payment of expenses incurred by a representative to
the Management Committee or officer in advance of the final disposition
of the proceeding shall be made only upon receipt of an undertaking by
such individual to repay all amounts advanced if it should be ultimately
determined that the individual is not entitled to be indemnified under
this Section 4.l(d) or otherwise.
(ii) CLAIMS. If a claim for indemnification or payment of
expenses under this Section 4. l(d) is not paid in full within sixty (60)
days after a written claim therefor by the Indemnitee has been received
by the Company, the Indemnitee may file suit to recover the unpaid amount
of such claim and, if successful in whole or in part, shall be entitled
to be paid the expenses of prosecuting such claim. In any such action the
Company shall have the burden of proving that the Indemnitee was not
entitled to the requested indemnification or payment of expenses under
applicable law.
(iii) NONEXCLUSIVITY OF RIGHTS. The rights conferred on any
person by this Section 4.l(d) shall not be exclusive of any other rights
which such person may have or
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hereafter acquire under any statute, provision of the Certificate,
agreement, vote of Members or otherwise.
(iv) OTHER INDEMNIFICATION. The Company's obligation, if any,
to indemnify any person who was or is serving at its request as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust, enterprise, or nonprofit entity shall be reduced by
any amount such person may collect as indemnification from such other
corporation, partnership, joint venture, trust, enterprise or nonprofit
enterprise, provided that such person shall not be required to collect
first from such other corporation, partnership, joint venture, trust,
enterprise, or nonprofit enterprise.
(v) AMENDMENT OR REPEAL. Any repeal or modification of the
foregoing provisions of this Section 4.1(d) shall not adversely affect
any right or protection hereunder of any person in respect of any act or
omission occurring prior to the time of such repeal or modification.
SECTION 4.2. REGULAR MEETINGS. The Management Committee shall meet at
least once during each fiscal quarter of the Company or more or less frequently
and on such specific dates as designated by the Members. Meetings of the
Management Committee shall take place at the principal offices of the Company or
at such other place as may be designated by a majority of the Members.
SECTION 4.3. SPECIAL MEETINGS. A special meeting of the Management
Committee may be called by any representative of the Management Committee, for
any purpose or purposes, unless otherwise prescribed by statute, at any time
upon notice in writing to the Company of the proposed meeting and the matters
proposed to be acted upon.
SECTION 4.4. NOTICE OF MEETINGS. The Company shall deliver notice by
electronic mail regular mail, courier service or facsimile stating the date,
time and place of any meeting of the Management Committee and, in the case of a
special meeting or when otherwise required by law, a description of the purposes
for which the meeting is called, to each Member of record and each
representative of the Member on the Management Committee entitled to vote at the
meeting, at such address as appears in the records of the Company and at least
ten (10), but no more than sixty (60), days before the date of the meeting.
SECTION 4.5. WAIVER OF NOTICE. A representative of the Management
Committee may waive notice of any meeting, before or after the date and time of
the meeting as stated in the notice, by delivering a signed written waiver to
the Company for inclusion in the minutes. A representative's attendance at any
meeting, in person or by proxy (a) waives objection to lack of notice or
defective notice of the meeting, unless such individual at the beginning of the
meeting objects to holding the meeting or transacting business at the meeting,
and (b) waives objection to consideration of a particular matter at the meeting
that is not within the purposes described in
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the meeting notice, unless such individual objects to considering the matter
when it is presented.
SECTION 4.6. VOTING RIGHTS. The presence of the representatives of a
Supermajority of the Members shall constitute a quorum for any meeting of the
Management Committee. Except as otherwise provided in this Agreement,
approval of any action requires the approval of a Supermajority of the
Members using the Voting Interest of each Member listed on EXHIBIT A. The
representatives (or designated alternates) of the Management Committee
appointed by each Member who are present (in person or by written proxy) at
any meeting of the Management Committee (or who are acting by written consent
in lieu of a meeting) shall together (or separately if only one
representative (or designated alternate) designated by a Member is present at
such meeting) have voting power equal to such Member's Voting Interest at the
time of such meeting.
SECTION 4.7. ACTION BY CONSENT. Any action required or permitted to be
taken at a meeting of the Management Committee may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed
by all the representatives or their designated alternatives. The written
consent or consents of the representatives or their designees shall be
delivered to the Company for inclusion in its minutes.
SECTION 4.8. PRESENCE. A representative of the Management Committee
shall be entitled to participate in any regular or special meeting of the
Management Committee by, or through the use of, any means of communication by
which all representatives participating may simultaneously hear each other
during the meeting. A representative so participating is deemed to be present
in person at the meeting.
SECTION 4.9. CONDUCT OF MEETINGS. The Management Committee shall
appoint one of its representatives to preside at the meeting and shall
appoint a person to act as secretary of the meeting. The secretary of the
meeting shall prepare minutes of the meeting which shall be maintained in the
minute book of the Company.
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ARTICLE V
MANAGEMENT
SECTION 5.1. OVERSIGHT BY MANAGEMENT COMMITTEE. The Management
Committee shall, by Supermajority Approval, select a Chief Executive Officer
and such other executive officers of the Company as the Management Committee
shall determine. The Chief Financial Officer shall be appointed and
terminable by Ford, however, such appointee shall be a person acceptable to
TeleTech.
SECTION 5.2. CHIEF EXECUTIVE OFFICER. Subject to the oversight of the
Management Committee, the CEO shall manage the business operations of the
Company in accordance with the operating guidelines and policies adopted from
time to time by the Management Committee. The CEO shall implement the
Business Plan (as defined in Section 5.3 below) and conduct the business of
the Company in accordance with the Business Plan and the relevant Budget. The
CEO and such other officers of the Company as further delegated by the CEO or
the Management Committee shall have the authority to execute on behalf of the
Company all contracts and other documents within the ordinary scope of the
business of the Company and as contemplated by the Business Plan, the
relevant Budget or as specifically authorized by the Management Committee.
SECTION 5.3. INITIAL BUSINESS PLAN; ANNUAL BUDGETS. As promptly as
practicable after the date hereof, the Management Committee shall adopt and
approve, by Supermajority Approval a business plan (the "Business Plan")
which shall contain income statements, balance sheets and statements of cash
flows, the overall business objectives of the Company, projected revenues and
itemized operating and capital expenditures of the Company for the Company's
2000 and 2001 fiscal years, a description of any proposed acquisitions for
the Company and an assessment of the Company's working capital needs over the
period covered. Prior to the commencement of each fiscal year of the
Company, the Management Committee shall, by a Supermajority Approval, adopt
and approve a Business Plan and a Budget for the upcoming fiscal year of the
Company. If, for whatever reason, the Management Committee is unable to adopt
and approve a Business Plan or a Budget prior to the commencement of any
fiscal year of the Company then the Company shall be operated, until a Budget
and Business Plan are approved, subject to the expense limitations set forth
in the Business Plan or a Budget for the immediately preceding fiscal year,
excluding any one-time or extraordinary operating expenses and excluding all
capital expenditures except those which are determined by the CEO to be
reasonably necessary in order to keep the Company's assets in good working
condition.
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ARTICLE VI
ACCOUNTING AND RECORDS
SECTION 6.1. RECORDS AND ACCOUNTING. The books and records of the
Company shall be kept, and the financial position and the results of its
operations recorded, in accordance with generally accepted accounting
principles consistently applied ("GAAP"). The books and records of the
Company shall reflect all Company transactions and shall be appropriate and
adequate for the Company's business. The fiscal year of the Company for
financial reporting and for federal income tax purposes shall be the calendar
year. So long as Ford and TeleTech are Members, the Company shall use
reasonable efforts to maintain and report all required accounting data in
accordance with directions established by Ford and TeleTech.
SECTION 6.2. ACCESS TO ACCOUNTING RECORDS. All books and records of
the Company shall be maintained at an office of the Company or at the
Company's principal place of business, and each Member, and his, her, or its
duly authorized representative, may inspect and copy such books and records
upon reasonable notice and request, during normal business hours.
SECTION 6.3. ANNUAL TAX INFORMATION. The Company shall use its best
efforts to deliver to each Member within 60 days after the end of each fiscal
year all information necessary for the preparation of such Member's federal
and state income tax returns. The Company shall also use its best efforts to
prepare, within 60 days after the end of each fiscal year, a financial report
of the Company for such fiscal year containing a balance sheet as of the last
day of the year then ended, an income statement for the year then ended, a
statement of sources and applications of funds, and a statement of
reconciliation of the Capital Accounts of the Members.
SECTION 6.4. FEDERAL INCOME TAX TREATMENT. The Members intend that the
Company be treated as a partnership for Federal income tax purposes.
SECTION 6.5. NO STATE-LAW PARTNERSHIP. It is the intent of the
Members that the Company shall be operated in a manner consistent with its
treatment as a partnership for federal and state income tax purposes, and no
Member shall take any action inconsistent with such intent. In this regard,
the Members shall make a good faith effort to exercise all measures
reasonably necessary to ensure that the Company is characterized as a
partnership for federal and state tax purposes, either by means of an
affirmative election, or as a result of the applicable default provisions
pursuant to the regulations under Section 301.7701-1,-2 and -3 of the
Treasury regulations relating to entity classifications (the "check-the-box"
regulations). No provision of this Agreement shall be deemed or construed to
constitute the Company a partnership (including, without limitation, a
limited partnership) or joint venture, or any Member or director or Affiliate
of a Member a partner or joint venturer of or with any other Member or
Affiliate of a Member, for any purpose other than federal and state income
tax purposes.
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ARTICLE VII
ALLOCATIONS AND DISTRIBUTIONS
SECTION 7.1. ALLOCATIONS OF PROFITS AND LOSSES. The Company's Profits
and Losses shall be allocated as follows:
(a) LOSSES. The Company's Losses, if any, arising in a fiscal year,
shall be; allocated among the Members in the priorities set forth below:
(i) FIRST: To the extent required so that the Members'
respective Capital Accounts are in proportion to each such Member's
Percentage Interest; and
(ii) SECOND: Pro Rata to the Members in accordance with each
such Member's Percentage Interest.
(b) PROFITS. The Company's Profits arising in a fiscal year shall be
allocated among the Members in the priorities set forth below:
(i) FIRST: To the extent required so that the Members'
respective Capital Accounts are in proportion to each such Member's
Percentage Interest; and
(ii) SECOND: Pro Rata to the Members in accordance with their
respective Percentage Interests.
(c) PRIORITY. Items of income, gain, deduction and loss shall first be
allocated in accordance with Section 7.2. Profits and Losses, as reduced or
increased as the case may be, and shall then be allocated under this Section
7.1.
SECTION 7.2. CODE SECTION 704(b) LIMITATIONS.
(a) MINIMUM GAIN CHARGEBACK. The Company shall (i) keep track of
all minimum gain (within the meaning of Treasury Regulation Section 1.704-2),
and (ii) specifically allocate items of deduction and income of the Company
among the Members, in each case to the extent required to satisfy the
requirements of Treasury Regulation Sections 1.704-2(f) and 1.704-2(i)(4).
(b) QUALIFIED INCOME OFFSET. The Company shall specifically
allocate items of Company income and gain to Members with deficit Capital
Account balances to the extent required to satisfy the "qualified income
offset" requirements in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(3).
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(c) CURATIVE ALLOCATIONS. The allocations set forth in Section
7.2(a) and (b), above (the "Regulatory Allocations") are intended to comply
with certain requirements of Treasury Regulation Sections 1.704-l(b) and
1.704-2. The Regulatory Allocations may not be consistent with the manner in
which the Members intend to allocate Profits or Losses or make distributions.
Accordingly, notwithstanding the other provisions of this Article VII but
subject to the Regulatory Allocations, the Tax Matters Member is hereby
directed to reallocate items of income, gain, deduction or loss among the
Members so as to eliminate the effect of the Regulatory Allocations and
thereby to cause the respective Capital Accounts of the Members to be in
proportion to their respective Percentage Interests.
SECTION 7.3. FEDERAL INCOME TAX ALLOCATIONS.
(a) Sections 7.1 and 7.2 provide for the allocation of Profits and
Losses for Capital Account maintenance purposes. Generally, the Company's
taxable income and loss as determined for federal income tax purposes (and
each item of income, gain, loss or deduction entering into the computation
thereof) will be allocated to the Members in the same proportion as the
corresponding items are allocated for Capital Account maintenance purposes.
(b) Notwithstanding Section 7.3(a), federal income tax items
relating to assets that have a Book Value that is not equal to their adjusted
tax basis will be allocated in accordance with Code Section 704(c). The
Company shall adopt the traditional method of Code Section 704(c) and
Treasury Regulation Section 1.704-3(b) for allocating loss or deduction
(solely for tax purposes) in respect of such assets.
SECTION 7.4. INTEREST IN THE COMPANY PROFITS. Pursuant to Section
1.752-3(a)(3) of the Treasury Regulations, the Members' interests in the
Company profits for purposes of determining the Members' proportionate shares
of the excess nonrecourse liabilities (as defined in Section 1.752-3(a)(3) of
the Treasury Regulations) of the Company shall be determined in accordance
with their respective Membership Interests.
SECTION 7.5. SPECIAL ALLOCATIONS. In the event that the Internal
Revenue Service determines either (a) that any Member's or an Affiliate's
income or expense attributable to any transaction between the Company and any
Member or its Affiliate (other than, with respect to a Member, in its
capacity as a Member) (a "Member Transaction") is greater than or less than
the amount paid by the Company with respect to such Member Transaction or (b)
the Company's income or expense with respect to any such Member Transaction
is greater than or less than the amount paid by the Company with respect to
such Member Transaction, the Company shall specially allocate any resulting
deduction or gain, as the case may be, attributable to such excess to the
Member who (or whose Affiliate) entered into the Member Transaction.
SECTION 7.6. COOPERATION. Each Member agrees to cooperate with and to
take or cause the Company to take all reasonable actions requested by any other
Member with the view to
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minimize federal, state, and local taxes, levies and assessments applicable
to the Company; provided, however, that no Member will be obligated to take
any such action that would, in such Member's reasonable judgment, be
detrimental to such Member. The Company shall make commercially reasonable
efforts to keep its books and records in such a manner and take tax reporting
positions which maximize the tax benefit to the Members; provided that, the
Company shall not be required to take any such position if the effect would
be detrimental to another Member or the Company and such Member of the
Company was not compensated for such detriment or cost by the Member(s)
receiving any such tax benefit.
SECTION 7.7. OTHER TAX AGREEMENTS. The Company shall not elect to be
classified as an association taxable as a corporation pursuant to Treasury
Regulation Section 301.7701-3 and, accordingly, shall be treated as a
partnership for federal income tax purposes and, to the extent possible,
state income tax purposes. The Tax Matters Member shall cause all tax returns
of the Company to be timely filed.
SECTION 7.8. PREPARATION AND FILING OF INCOME TAX RETURNS; ELECTIONS.
The Company shall cause the Accountants to timely prepare and file all the
Company tax returns and shall timely make all other filings required by any
governmental authority having jurisdiction to require filings, the cost of
which shall be borne by the Company. Each Member shall be provided a draft of
such income tax return as soon as available and in no event later than sixty
(60) days after the end of each fiscal year, which Member may respond to the
Accountants with comments within fifteen (15) Business Days of receipt
thereof. The Accountants shall in good faith consult with, and consider the
views of, each other Member regarding the timing and manner of preparation of
such tax returns, reports and similar statements and any tax elections made
thereon and shall make a good faith attempt to reach a consensus on all
issues. In the event that a consensus cannot be reached on any material
issue relating to any substantive position to be taken on such tax returns,
such issue shall be submitted to another mutually acceptable independent
accounting firm of national reputation for a binding resolution of such
issue, provided, however, that in all events positions taken on the Company's
tax returns shall be consistent with the form of the transactions
contemplated by and reflected in this Agreement and the Ancillary Agreements.
The Company shall pay the Accountants their reasonable fees and expenses
relating to carrying out their obligations pursuant to this Section 7.8.
Neither the Company nor any Member shall elect to be excluded from the
provisions of subchapter K of the Code or from any similar provision of state
tax laws. The Management Committee may make, or may cause the Company to
make, those elections that the Management Committee may consider advisable
and in the interests of the Company under any applicable tax law, including
an election in accordance with applicable Treasury Regulations to cause the
basis of any Property to be adjusted for federal income tax purposes as
provided in Code Sections 734, 743, and 754. So long as Ford or TeleTech
shall hold an interest in the Company, the Company shall use reasonable
efforts to maintain and complete all required tax accounting and tax
reporting
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requirements in accordance with the direction of Ford or TeleTech and to
deliver the materials in time to meet Ford's or TeleTech's quarterly and
annual tax return filing deadlines.
SECTION 7.9. CONTROVERSIES WITH TAXING AUTHORITIES. If there is any
controversy with the Internal Revenue Service or any other taxing authority
involving the Company or the amount of the allocation of income, gain, loss,
deduction, or credit of the Company to any Member, the Company shall incur
those expenses that the Management Committee deems necessary or advisable in
the interest of the Company in connection with any such controversy,
including, without limitation, reasonable attorneys' and accountants' fees.
The Company will promptly send to each Member a copy of all material
correspondence the Company sends to or receives from the Internal Revenue
Service with respect to any controversy.
SECTION 7.10. TAX MATTERS MEMBER. The Members hereby designate Ford as
the "tax matters partner" of the Company within the meaning of Code Section
6231(a)(7) (the "Tax Matters Member") and in that capacity Ford shall
represent the Company in any disputes, controversies or proceedings with the
Internal Revenue Service or other taxing authority. The Tax Matters Member
shall act in a similar capacity under applicable state, local and foreign
laws. The Management Committee may at any time hereafter designate another
Member of the Company as a new Tax Matters Member; provided, however, that so
long as Ford is a Member, such designation shall require a Supermajority of
the Members. The Tax Matters Member shall take such action as reasonably may
be necessary to cause each other Member to become a "notice partner" within
the meaning of Section 6231(a)(8) of the Code. The Tax Matters Member shall
notify each other Member of all material matters that may come to its
attention in its capacity as Tax Matters Member. The Tax Matters Member is
authorized to engage legal counsel and accountants and to incur reasonable
expenses on behalf of the Company in contesting, challenging and defending
against any audits, assessments and administrative or judicial proceedings
conducted or participated in by any tax authority with respect to the
Company's operations and affairs so long as such legal counsel and
accountants are approved by the Management Committee. The Tax Matters Member
shall not enter into any settlement, concession, compromise or other form or
type of agreement (other than an agreement to extend the assessment period
described in Section 6229 of the Code) in connection with any such matter
that may adversely affect the Members, or any of them, without the express
approval of a Supermajority of the Members.
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SECTION 7.11. CURRENT DISTRIBUTIONS.
(a) DISTRIBUTION OF PROFITS The Company shall make distributions
of Profits (each, a "Profit Distribution") to the Members in proportion to
their Percentage Interests annually, within 120 days following the end of the
fiscal year. The aggregate Profit Distribution for a fiscal year shall equal
the excess of the cumulative Profits of the Company for the current period
and all prior periods over all prior Tax Distributions and all prior Profit
Distributions, less the amount of any required reserves (the "Required
Reserves") as determined by the Management Committee. In determining the
amount of Required Reserves, the Management Committee shall reasonably take
into account the amount necessary: (i) to maintain a reasonably prudent
Debt-to-Equity Ratio; (ii) to fund expected capital expenditures required by
the Business Plan; (iii) to restore prior year Losses; and (iv) to provide
such additional reserves as the Management Committee determines are necessary.
(b) DISTRIBUTION OF NET CASH FROM CAPITAL TRANSACTIONS. Net Cash
from Capital Transactions, other than from a sale of assets pursuant to a
dissolution, which is distributed under Article XI, shall be distributed to
the Members pro rata in accordance with their respective Percentage Interests.
(c) DISTRIBUTION FOR TAXES. The Company shall make periodic
distributions to the Members in proportion to their Percentage Interests (the
"Tax Distributions") in an aggregate amount equal to the estimated
incremental tax deposit required to be made with respect to the taxable
income of the Company (the "Quarterly Tax Deposit"), as reasonably determined
by the Independent Accountants. The Tax Distributions shall be made no later
than 5 days before Quarterly Tax Deposits are required to be made to the
Internal Revenue Service. The amount of the Quarterly Tax Deposit shall be
determined using the following assumptions: (i) the applicable tax rate shall
be the highest marginal effective federal, state, and local corporate income
tax rate, as reasonably determined by the Accountants for the relevant fiscal
year of the Company, and (ii) any tax losses of the Company will be carried
forward to offset subsequent tax profits. If the Independent Accountants
reasonably determine that the aggregate Tax Distributions for any Fiscal Year
are not sufficient for or shall exceed the aggregate tax liability (computed
in a manner consistent with the computation of the Tax Distributions) for
such fiscal year of the Company, then subsequent Tax Distributions shall be
appropriately adjusted.
(d) DISTRIBUTION IN KIND. If any asset is distributed in kind, such
asset shall be valued to determine the amount of Profits or Losses that would
result if such asset were to be sold at its fair market value on the
distribution date, and such Profits or Losses shall be allocated among the
Capital Accounts of the Members in accordance with Article VII, as
appropriate.
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SECTION 7.12. LIQUIDATION DISTRIBUTIONS. Upon dissolution of the
Company, distributions of the remaining assets of the Company ("Liquidating
Distributions") shall be made as provided in Section 11.3.
SECTION 7.13. GENERAL. Except as specifically provided herein, no
Member shall have the right to receive or power to demand a distribution in
a form other than cash, and no Member shall be required or compelled to
accept a distribution of any asset in kind to the extent that the interest
distributed would exceed the Member's Pro Rata share. No Member shall have
the right to receive interest on any distribution to the Member by the
Company. Notwithstanding anything contained in this Agreement or the
Certificate to the contrary, no Distribution shall be made to a Member in
violation of the Act.
SECTION 7.14. AMOUNTS WITHHELD. All amounts withheld pursuant to any
provision of any federal, state or local tax law with respect to any payment,
distribution or allocation to a Member shall be treated as amounts
distributed to such Member pursuant to this Article VII for all purposes
under this Agreement. The Company is authorized to withhold from
distributions and to pay over to any federal, state or local government any
amounts required to be so withheld pursuant to any federal, state or local
law and shall treat these amounts as distributed to the Members with respect
to which the amount was withheld.
SECTION 7.15. ALLOCATION OF INCOME AND LOSS AND DISTRIBUTIONS IN
RESPECT OF INTERESTS TRANSFERRED.
(a) If any Interest is transferred, or is increased or decreased by
reason of the admission of an Additional Member or otherwise, during any
fiscal year of the Company, each item of net income, gain, loss, deduction,
or credit of the Company for such fiscal year shall be assigned Pro Rata to
each day in the particular period of such fiscal year to which such item is
attributable (i.e., the day on or during which it is accrued or otherwise
incurred), and the amount of each such item so assigned to any such day shall
be allocated among the Members based upon each Member's respective Percentage
Interest at the close of such day.
(b) Authorized distributions of Company assets in respect of an
Interest shall be made only to the Members who, according to the books and
records of the Company, are the holders of record of the Interests in respect
of which such distributions are made on the actual date of distribution.
Neither the Company nor any Member shall incur any liability for making
distributions in accordance with the provisions of the preceding sentence,
whether or not the Company or the Member has knowledge or notice of any
transfer or purported transfer of ownership of an Interest which has not met
the requirements of Article III. Notwithstanding any provision above to the
contrary, gain or loss of the Company realized in connection with a sale or
other disposition of any of the assets of the Company shall be allocated
solely to the parties owning Interests as of the date such sale or other
disposition occurs.
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ARTICLE VIII
RESTRICTIONS ON WITHDRAWAL AND TRANSFERS OF INTERESTS
SECTION 8.1. BASIC RESTRICTIONS ON TRANSFER AND PERMITTED TRANSFERS.
(a) Except as set forth in this Section, Section 8.5 and Section
8.6, none of the Units (Interest) of a Member or any portion thereof shall be
the subject of a Transfer, unless the Member has obtained the prior written
consent of each Member holding a Percentage Interest greater than forty
percent (40%). Any Transfer or purported Transfer not in compliance with this
Article VIII shall be null and void.
(b) A Member may make a Transfer of an interest (in whole or in
part) to any wholly-owned or majority-owned subsidiary of such Member without
the consent of the Management Committee; provided however that such transfer
shall be conditioned and effective upon the execution by the transferee of an
agreement (reasonably satisfactory to each of the Members) to be bound by the
terms of this Agreement.
SECTION 8.2. FURTHER RESTRICTIONS ON TRANSFER. In addition to the
restrictions set forth in Section 8.1, no Member shall Transfer all or any
part of the Member's interest: (a) without registration under applicable
state or federal securities laws, unless an exemption therefrom applies and,
if requested by the Company, the Member delivers an opinion of counsel
satisfactory to the Company, that registration under any such laws is not
required; or (b) if the Interest or portion thereof, when added to the total
of all other Interests sold or exchanged in the preceding 12 consecutive
months prior thereto, would result in the termination of the Company for tax
purposes under Section 708 of the Code.
SECTION 8.3. STATUS OF TRANSFEREE AND TRANSFEROR. Notwithstanding
anything contained in this Agreement to the contrary except as set forth in
Section 8.1(b), any transferee or recipient of a Unit or Units (or any
portion thereof) subject to an effective Transfer shall be an Assignee and
shall have no right to (a) vote any Units or portion thereof subject to the
Transfer or to otherwise participate in the management of the business or
affairs of the Company, (b) become a substitute Member or otherwise exercise
any rights of a Member, or (c) have access to the Company records; provided,
however, an Assignee may become a Substitute Member upon approval by each
Member holding a Percentage Interest greater than forty percent (40%), in
their sole and absolute discretion, which approval shall be conditioned and
effective upon the execution by Assignee of an agreement (satisfactory to
each of the Members) to be bound by the terms of this Agreement. The Assignee
shall pay all reasonable fees and expenses of the Company in connection with
his or her admission as a Substitute Member. Upon any Transfer, the
transferor of any interest to an Assignee shall cease to be a Member with
respect to the portion of such Interest subject to the Transfer, and shall
not have any power to exercise any rights of a Member thereto; provided,
however, that such transferor shall not be released from
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any unpaid capital contributions or liabilities owing to the Company that
were due and payable before the effective date of the Transfer. A transferee
of an Interest shall have the right to become a Substitute Member only if the
requirements of this Agreement, including Article VIII, are met.
SECTION 8.4. PLEDGE OF INTERESTS. The pledge or granting of a security
interest, lien or other encumbrance in or against all or any portion of a
Member's Interest shall not be a Transfer subject to the restrictions of this
Article VIII; provided, that, in any event, the foreclosure, or exercise of
other secured party remedies, with respect to such pledge, security interest,
lien or other encumbrance resulting in a Transfer of any such Interest shall
nonetheless be a Transfer subject to the restrictions of this Article VIII.
SECTION 8.5. PUT AND CALL RIGHTS. Notwithstanding the foregoing
restrictions on Transfers:
(a) TELETECH PUT. At any time after December 31, 2004, TeleTech
shall have the right, but not the obligation, to require Ford to purchase
(the "Put") the Interest then held by TeleTech at a price equal to such
Interest's Fair Market Value at the time of the Put by delivery of written
notice (a "Put Notice") to Ford.
(b) FORD CALL. At any time after December 31, 2004, Ford shall have
the right, but not the obligation, to require TeleTech to sell (the "Call")
TeleTech's Interest at a price equal to such Interest's Fair Market Value at
the time of the Call by delivering written notice (a "Call Notice") to
TeleTech.
(c) VALUATION. For a period of 30 days after a Member's receipt of
a Put Notice or a Call Notice, Ford and TeleTech shall negotiate in good
faith in order to determine the Fair Market Value of TeleTech's Interest,
determined on the basis of the Company as a public entity. If, at the end of
such 30-day period, Ford and TeleTech are unable to agree on such Interest's
Fair Market Value, the Fair Market Value of TeleTech's Interest shall be
determined by a panel of two independent investment banking firms (each an
"Independent Investment Banker"), one of which shall be designated by Ford
and the other of which shall be designated by TeleTech. Such designations
shall be made as promptly as possible after expiration of the foregoing
thirty (30) day good faith negotiation period. The Company shall, upon
reasonable notice, afford each Independent Investment Banker and its
representatives full access during normal business hours to the properties,
books and records of the Company and the Company's subsidiaries and shall
cause the Company's officers and employees and the officers and employees of
the Company's subsidiaries to furnish such additional financial and operating
data and other information as the Independent Investment Bankers and their
representatives shall from time to time reasonably request. Each Independent
Investment Banker shall submit its written determination of the Fair Market
Value of TeleTech's Interest as of the date of the Put Notice or
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Call Notice, as applicable, within 30 days after the date of retention. If
the higher determination of the two Independent Investment Bankers is not
greater than 110% of the lower determination, the Fair Market Value of
TeleTech's Interest as of the date of the Put Notice or Call Notice, as
applicable, shall be an average of such two determinations. If the higher
determination is greater than 110% of the lower determination, then such two
Independent Investment Bankers shall jointly select, within ten days after
the date on which they are informed of such difference, a third Independent
Investment Banker. Such third Independent Investment Banker shall deliver its
written determination of the Fair Market Value within 30 days after its
selection, and the Fair Market Value of TeleTech Interest shall be the
average of the two closest determinations, or if there are not two closest
determinations, the average of all three determinations. The fees and
expenses of such Independent Investment Bankers shall be shared equally by
Ford and TeleTech.
SECTION 8.6. RIGHT OF FIRST OFFER. At any time after December 31,
2004, if any Member who holds a Percentage Interest equal to or greater than
40% proposes to Transfer, directly or indirectly (the "Offering Member"), all
or any portion of its Interest (the "Offered Interest"), then, except as set
forth in Section 8.1(b), the Offering Member shall comply with SECTIONS
8.6(a) through 8.6(g).
(a) The Offering Member shall give a written notice (the "Offering
Notice") to all other Members, but excluding any persons or entities becoming
Members pursuant to Section 13.2 (each an "Eligible Purchaser" and
collectively, the "Eligible Purchasers") which shall state (i) that the
Offering Member desires to Transfer the Offered Interest, (ii) the minimum
sale price (the "Offer Price") for the Offered Interest, and (iii) the other
material terms and conditions of the proposed Transfer. Each Offering Notice
shall constitute an offer by the Offering Member to the Eligible Purchasers
to sell the Offered Interest at the Offer Price in cash.
(b) Within 30 days of receipt of an Offering Notice, each Eligible
Purchaser may elect (the "Right of First Offer") to purchase its pro rata
portion of the Offered Interest at the Offer Price in cash upon delivery to
the Offering Member of a notice (a "Buyer's Notice") (i) stating that the
Eligible Purchaser elects to purchase its pro rata portion (based on the
proportion that its Percentage Interest bears to the Percentage Interests of
all Eligible Purchasers) of the Offered Interest (each Eligible Purchaser who
elects to purchase its pro rata portion of the Offered Interest is referred
to as a "Participating Member," and each Eligible Purchaser who does not
elect to purchase its pro rata portion of the Offered Interest is referred to
as a "Non-Participating Member") at the Offer Price in cash, (ii) stating
that the election is irrevocable, and (iii) identifying the source of
financing for the purchase or providing other evidence that the Participating
Member is able to effect the purchase without financing. Failure of an
Eligible Purchaser to exercise its right within the 30-day period shall be
regarded as a waiver of the right.
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(c) Subject to the rights of the other Participating Members to
participate in such purchase as set forth below, each Participating Member
shall have the right to purchase all (but not less than all) of the Offered
Interest as to which the Non-Participating Members, if any, did not elect to
acquire (the "Remaining Offered Interest"). The right shall be exercised by
delivery of a written notice to the Offering Member and all other
Participating Members within 30 days after receipt of the Offering Notice
(but not less than five days after the Participating Members have received
notice from the Offering Member specifying the portion of the Offered
Interest that remains available). If more than one Participating Member
timely elects to exercise its option with respect to the Remaining Offered
Interest, the right to purchase the Remaining Offered Interest shall be
allocated pro rata among the Participating Members so electing based on the
proportion that a Participating Member's Percentage Interest bears to the
Percentage Interests of all Participating Members who have elected to
increase their purchase. Failure of any Participating Member to exercise its
right within the 30-day period shall be regarded as a waiver of its right to
purchase its pro rata portion of the Remaining Offered Interest.
(d) If Participating Members have not delivered a Buyer's Notice
electing to purchase 100% of the Offered Interest within the period specified
in this SECTION 8.6, the Company shall have the right, by delivering to the
Offering Member a Buyer's Notice, upon a vote of Members (other than the
Offering Member) having 75% or more of the Interests held by such Members,
which Buyer's Notice shall be given to the Offering Member within ten days
after the expiration of the period otherwise specified in this SECTION 8.6(b)
AND (c), to purchase the remaining portion of such Offered Interest; provided
that no Member who does not consent thereto shall be required to make any
additional contribution in or loan to or to incur or assume any personal
liability in order to enable the Company to exercise or finance its right to
purchase such interests.
(e) Delivery of a Buyer's Notice pursuant to SECTION 8.6(b) and the
notice pursuant to SECTION 8.6(c) relating to any Remaining Offered Interest
each shall constitute a contract between the Offering Member and the
Participating Member or the Company, as the case may be, for the sale and
purchase of the relevant portion of the Offered Interest and Remaining
Offered Interest, as the case may be, at the Offer Price in cash and upon the
other terms and conditions set forth in the Offer Notice; provided, however,
that the Offering Member shall be required to sell its Offered Interest to
the participating Members or the Company only if the Participating Members or
the Company agree collectively to purchase all, and not less than all, of the
Offered Interest, including any and all Remaining Offered Interest pursuant
to any provision of this SECTION 8.6.
(f) If the Eligible Purchasers or the Company do not collectively
elect to purchase all of the Offered Interest (pursuant to this SECTION 8.6),
the Offering Member may, within one year of the expiration of the 30-day
period specified in SECTION 8.6(c), Transfer (or enter into an
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agreement to Transfer) all or any portion of the Offered Interest, to one or
more Persons at a price not less than 97.5% of the Offer Price.
(g) The closing of any purchase of the Offered Interest by the
Participating Members shall be held at the principal office of the Company at
11:00 a.m. local time on a Business Day chosen by the Offering Member (upon
at least ten days' notice to the other parties to the transaction), which
date shall be no later than 10 days after the scheduled closing date provided
for in the Offering Notice; provided, however, that the closing may be held
at any other time and place as the parties to the transaction may agree. At
the closing, the Offering Member shall deliver those instruments, executed by
it and in form and substance reasonably satisfactory to the Participating
Members, as shall be necessary to transfer, assign and convey the Offered
Interest to the Participating Members, free and clear of all liens or other
encumbrances (other than those created by the provisions of this Agreement),
against payment of the purchase price therefor. Each party to the purchase
of the Offered Interest shall bear his, her or its own legal, accounting and
other expenses.
SECTION 8.7. EFFECT OF A VIOLATION. Any attempted or purported
Transfer of a Member's Interest in the Company in violation of this
Agreement shall be void and of no force or effect. Without limiting the
preceding sentence in any way, if the transferee of any such attempted or
purported Transfer is nonetheless found to have rights in the subject
Interest, the Transferee shall be an Assignee subject to the rights and
obligations set forth in this Agreement and the Certificate.
ARTICLE IX
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 9.1. AFFIRMATIVE COVENANTS. The Company shall provide to each
Member the following:
(a) as soon as available after the end of each month but no later
than fifteen days after, unaudited consolidated statements of income and cash
flows of the Company for such month, and consolidated balance sheets of the
Company as of the end of such month, all prepared in accordance with GAAP,
subject to the absence of footnote disclosures and to normal year-end
adjustments;
(b) within 60 days after the end of each fiscal year, audited
consolidated statements of income and cash flows of the Company for such
fiscal year, and consolidated balance sheets of the Company as of the end of
such fiscal year, all prepared in accordance with generally accepted
accounting principles, consistently applied, and accompanied by an opinion of
an independent accounting firm mutually selected by the Members;
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(c) within 10 days, after knowledge of any breach of any provision
of this Agreement, regardless of materiality, or any material adverse change
or event, notification of such breach or event which provides a description
thereof ("material adverse change or event" meaning any change or event that
is materially adverse to the business, properties, assets, financial
condition or results of operations of the Company);
(d) upon request by any Member, reasonable access to the
properties, books, records, or personnel of the Company; and
(e) prior to 30 days preceding the commencement of a fiscal year, a
Budget approved by the Management Committee in accordance with this Agreement.
ARTICLE X
DISSOCIATION OF A MEMBER
SECTION 10.1. DISSOCIATION. A person ceases to be a Member upon the
occurrence of any of the following events (each an "Event of Dissociation"):
(a) The Member withdraws from membership in the Company;
(b) The Member Transfers its entire Interest, whether or not the
Assignee is admitted as a Substitute Member;
(c) In the case of a Member who is a Member by virtue of being a
trustee of a trust, the termination of the trust, but not merely the
substitution of a new trustee;
(d) In the case of a Member that is a partnership, limited
partnership, limited liability partnership or limited liability company, the
dissolution and commencement of winding up of the partnership, limited
partnership, limited liability partnership or limited liability company;
(e) In the case of a Member that is a corporation, the dissolution
of the corporation;
(f) In the case of a Member that is an estate, the distribution by
the fiduciary of the estate's entire Interest in the Company; or
(g) Bankruptcy of the Member.
SECTION 10.2. RIGHTS OF DISSOCIATING MEMBER. Upon an Event of
Dissociation as to a Member:
(a) If the Event of Dissociation causes a dissolution and winding
up of the Company under ARTICLE XI, the Member shall be entitled to
participate in the winding up of the Company to
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the same extent as any other Member, except that if the Event of
"Dissociation is a breach of this Agreement, any distributions to which the
Member would have been entitled shall be reduced by any damages sustained by
the Company as a result of the dissolution and winding up; and
(b) If the Event of Dissociation does not cause a dissolution and
winding up of the Company under ARTICLE XI the Member shall not be entitled
to (i) any distribution solely by reason of the Members dissociation, and
thereafter shall only be entitled to participate as an Assignee in the
Company, (ii) a redemption of the Member's Interest or otherwise receive the
value of the Member's Interest until such time, and in the manner, provided
under Article XI for the dissolution and winding up of the Company, and (iii)
any voting rights or any further representation on the Management Committee.
ARTICLE XI
DISSOLUTION AND WINDING UP
SECTION 11.1. DISSOLUTION. The Company shall be dissolved and its
affairs wound up on the first of the following to occur:
(a) A determination by a Supermajority of the Members that the
Company shall be dissolved;
(b) An Event of Dissociation occurs, unless the remaining Members
elect to continue the business of the Company within 90 days after the
remaining Members are notified in writing of the Event of Dissociation; or
(c) At such earlier time as may be provided by applicable law.
SECTION 11.2. WINDING UP. Upon dissolution, the Members shall proceed
to wind up and liquidate the business and affairs of the Company, and the
Company may only carry on business that is appropriate to wind up and
liquidate the business and affairs of the Company, including the following:
(a) collecting the Company's assets, (b) disposing of properties that will
not be distributed in kind to Members, (c) discharging or making provision
for discharging liabilities, (d) distributing the remaining property among
the Members, and (e) doing every other act necessary to wind up and liquidate
the business and affairs of the Company. The Members shall follow the
procedure for disposing of known claims set forth in the Act and shall
publish notice of the dissolution of the Company pursuant to the Act.
SECTION 11.3. DISTRIBUTION OF ASSETS. Upon the winding up of the
Company, the assets shall be distributed as follows:
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(a) To creditors, including Members who are creditors to the extent
permitted by law, in the order of priority as provided by law to satisfy the
liabilities of the Company whether by payment or by the establishment of
adequate reserves, excluding liabilities for distributions to Members
pursuant to ARTICLE VII;
(b) To Members to repay any loans to the Company or to satisfy any
liabilities for distributions pursuant to Article VII which remain unpaid;
(c) To Members in an amount equal to the aggregate positive Capital
Account balances of all Members, pro rata in proportion to each such Member's
positive Capital Account balance as provided in Treasury Regulation 1.704-1
(b)(2)(ii)(b)(2).
(d) To Members pro rata in proportion to their respective
Percentage Interests.
SECTION 11.4. FINAL AUDIT. Within a reasonable time following the
completion of the liquidation, the liquidator shall supply each Member a
statement that shall set forth the assets and liabilities of the Company as
of the date of the complete liquidation and each Member's pro rata portion of
the distributions.
ARTICLE XII
AMENDMENTS
SECTION 12.1. PROPOSAL OF AMENDMENTS. Amendments to the Articles and
this Agreement may be proposed in writing by any Member. If any such proposed
amendment could adversely affect the classification of the Company as a
partnership for federal income tax purposes, the proposed amendment must be
accompanied by an opinion of counsel as to the legality and effect on the
Company and the Members. Copies of any amendments proposed to be made
pursuant to this Section 12.1 shall be sent to the Members.
SECTION 12.2. APPROVAL OF AMENDMENTS. A proposed amendment shall be
voted upon at either a regular or a special meeting of the Management
Committee duly called for the purpose of voting on the amendment. Such votes
shall be exercised as provided in Article IV, and such amendment shall be
approved only by a Supermajority of the Members.
ARTICLE XIII
PUBLIC OFFERING AND INCENTIVES
FOR EMPLOYEES AND
CONSULTANTS TO COMPANY
The Members anticipate that (a) at a later date, direct or indirect
interests in the Company, or its successor, may be sold in a public offering,
and (b) in order for the Company to
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<PAGE>
attract and retain key employees and consultants, it will be necessary to
offer direct or indirect interests in the Company, or its successor, through
option and grant arrangements. The Members agree that upon approval of
Members by a Supermajority Approval, additional Interests (or their
equivalent) may be offered to Additional Members (or their equivalent) for
the foregoing purposes. Any issuances of Interests pursuant to the foregoing
two sentences will be dilutive of all then-existing Members and their
Interests. For purposes of the foregoing, the Members further agree to the
following provisions:
SECTION 13.1. PUBLIC OFFERING PROVISIONS. Interests in the Company
may be sold in a public offering through one of the following three methods,
as selected by Members by a Supermajority Approval.
(a) CONVERSION TO CORPORATION. The Company may be converted into a
corporation ("Successor Corporation"), formed under the laws of a state of
the United States, pursuant to (i) a merger or consolidation of the Company
into a corporation formed for such purpose, (ii) pursuant to a transfer to
the Successor Corporation of all of the assets and all of the liabilities of
the Company, (iii) through a conversion of the Company into a corporation
pursuant to provisions of Section 18-216 of the Act (or successor provisions
thereto), or (iv) through any substantially equivalent method. In connection
with any of the foregoing, the Interests of Members would be converted into
or exchanged for shares of capital stock in the Successor Corporation. The
method used to convert the Company into a Successor Corporation shall be
determined by the Members by a Supermajority Approval. The constituent
documents of the Successor Corporation shall provide that all matters
submitted to shareholders for approval, including mergers, consolidations,
sale or other disposition of all or substantially all of the assets,
amendments to articles of incorporation, dissolutions, and winding up, shall
require the approval of a Supermajority of the votes entitled to vote thereon
and shall otherwise be as determined by the Members by a Supermajority
Approval. The capital stock that each of the Members receive in the Successor
Corporation in exchange for each Interest (or fraction thereof) shall be
identical in all material respects to the capital stock received by all other
Members in the Successor Corporation in exchange for each Interest (or
fraction thereof) (the Members acknowledge that the capital stock in the
Successor Corporation offered to the public or other non-Member Persons may
have different voting rights than the capital stock provided to the Members).
Following conversion of the Company into the Successor Corporation, the
Successor Corporation would sell in a public offering such capital stock of
the Successor Corporation on such terms and conditions as may be determined
by the Members by a Supermajority Approval.
(b) Formation of a Member Corporation for Purposes of a Public
Offering. The Company may cause to be formed a new corporation ("Public
Corp") under the laws of a state of the United States, the sole purpose of
which would be to hold an Interest in the Company. The constituent documents
of Public Corp shall be as determined by the Members by a
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<PAGE>
Supermajority Approval. Public Corp would sell its capital stock in a public
offering on such terms and conditions as may be determined by the Members by
a Supermajority Approval. The net proceeds of the Public Offering would be
used by Public Corp to make a Capital Contribution to the Company and acquire
a Interest in the Company, on such terms as may be determined by the Members
by a Supermajority Approval. Upon the making of such Capital Contribution,
Public Corp would be admitted as a Member of the Company. In connection with
a Public Offering by Public Corp, if the Members determine, by a
Supermajority Approval, that Public Corp must have special management or
other rights in order to avoid registration under the Investment Company Act
of 1940, this Agreement may be amended, by determination of the Members by a
Supermajority Approval, to accommodate such special management and other
rights. Pursuant to the foregoing, but not by way of limitation, the Members
may determine, by Supermajority Approval, that in order to undertake the
Public Offering, Public Corp must become sole Manager of the Company, with
sole and exclusive power to direct the business and affairs of the Company.
In such a case, the Interests shall be restructured so that a substantial
Supermajority of each Member's Interests are converted into Interests with no
votes and the balance of such Interests retain votes. The Interests that
retain votes would in turn be contributed by the Members to Public Corp in
exchange for capital stock of Public Corp that would provide to the Members,
at a minimum, a percentage of the votes in the selection of the board of
directors of Public Corp and on matters submitted to the shareholders of
Public Corp for their approval equivalent to the percentage of Membership
Interests held by the Members in the Company. In connection with any such
restructure, each Member's Interest shall be converted into non-voting and
voting Interests by applying the same conversion ratio and the capital stock
that each of the Members receive in Public Corp in exchange for each voting
Interest shall be identical in all material respects to the capital stock
received by all other Members in Public Corp in exchange for each voting
Interest. Following completion of the contribution of voting Interests to
Public Corp in exchange for Public Corp stock, the Company would be converted
into a Manager-managed limited liability company.
(c) CONTRIBUTION OF ASSETS AND LIABILITIES TO NEW CORPORATION. The
Company may contribute all or substantially all of its assets and liabilities
to a corporation formed under the laws of a state of the United States in
exchange for capital stock of that corporation. That corporation would then
sell in a public offering stock in that corporation on such terms and
conditions as may be determined by the Members by a Supermajority Approval.
The Company shall remain in existence after the public offering, as a
shareholder of the public company. In connection with any public offering
pursuant to the foregoing, but subject to the restrictions and limitations of
the foregoing, this Agreement may be amended as deemed necessary or
convenient by Company counsel or by the Company's anticipated underwriters in
such public offering to permit the public offering upon approval by the
Members by a Supermajority Approval. In addition, each Member agrees to take
all steps, and execute all documents and instruments as may be reasonably
necessary to carry out a public offering pursuant to any of
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<PAGE>
the foregoing methods. The restructuring and transactions contemplated by
this Section 13.1 shall be carried out so as to minimize, to the maximum
extent reasonably possible, adverse tax consequences to the Company, its
successor, and the Members and their Affiliates. In connection with a public
offering, each of the Members shall be afforded substantially the same rights
pro rata (based on relative Interests) as are offered to other Members to
exchange their Interests for registered or registrable shares in Public Corp
or to register pursuant to the Securities Act their direct or indirect
interests in the Company. Nothing herein, or elsewhere, shall however be
construed as a commitment or understanding of any Member (or any of its
Affiliates) to undertake a Public Offering in connection with the Company and
the Members acknowledge that no such commitment or understanding has been
made or reached.
SECTION 13.2. INCENTIVE PROVISIONS. Any offering of direct or
indirect interests in the Company to key employees and consultants of the
Company shall be pursuant to such plans and arrangements as may be approved
by the Members by a Supermajority Approval; provided that any such offerings
shall not alter the relative Membership percentages then held by Ford and
TeleTech.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1. COMPLETE AGREEMENT. This Agreement, the Ancillary
Agreements and the Certificate constitute the complete and exclusive
statement of agreement among the Members with respect to its subject matter.
This Agreement and the Articles replace and supersede all prior agreements by
and among the Members or any of them. This Agreement and the Certificate
supersede all prior written and oral statements, and no representation,
statement, or condition or warranty not contained in this Agreement or the
Articles will be binding on the Members or have any force or effect
whatsoever.
SECTION 14.2. DISPUTE RESOLUTION. If any dispute involving the
Members arises out of or relates to the business of the Company or arises out
of or relates to this Agreement, including, without limitation, any dispute
with respect to any alleged breach of this Agreement or the management of the
Company, the Members shall meet promptly (through representatives with
authority to resolve the dispute). If the Members cannot resolve the dispute
within 30 days (the "Resolution Date"), the Company and any former or current
Member shall arbitrate the dispute in accordance with the Commercial
Arbitration Rules of the American Arbitration Association . Each Member to
the dispute shall select one non-neutral arbitrator expert in the subject
matter of the dispute. In the event that either Member fails to select an
arbitrator as set forth herein within 20 business days from the Resolution
Date, then the matter shall be resolved by the arbitrator selected by the
other party. The two arbitrators shall select a third independent, neutral
arbitrator experienced in the subject matter of the dispute, and the three
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<PAGE>
arbitrators so selected shall resolve the matter according to the procedures
set forth in this Section 14.2. If the two arbitrators selected by the
parties are unable to agree upon a third arbitrator within twenty days after
their selection, the third arbitrator shall be selected by the President of
the AAA. The arbitrators shall so conduct the arbitration that a final
result, determination, finding, judgment and/or award (the "Final
Determination") is made or rendered as soon as practicable, but in no event
later than 90 business days after the selection of the arbitrators, nor later
than ten business days after completion of the arbitration proceeding. The
Final Determination must be agreed upon and signed by the sole arbitrator or
by at least two of the three arbitrators (as the case may be). Except as set
forth in this Section 14.2, arbitration shall be the sole and exclusive
remedy between the parties with respect to any dispute, protest, controversy
or claim arising out of or relating to this Agreement. Unless all the parties
to an arbitration otherwise consent in writing, the location of the
arbitration hearings and the place of entry of the award shall be in
Wilmington, Delaware. The parties consent to exclusive jurisdiction of, and
agree that sole venue will lie in, the state and federal courts in
Wilmington, Delaware or the state of the otherwise agreed location for any
allowable judicial proceeding relating to any arbitration under this
Agreement, including entry of a judgment on the award. The Final
Determination shall be final and binding and shall not be reviewable in any
court on any gounds except corruption, fraud or undue means of a party or for
evident partiality or corruption of the arbitrator. The parties intend to
eliminate all other court review of the award and the arbitration
proceedings. Except for a proceeding to enforce or confirm an award or a
proceeding brought by all parties to the dispute to vacate or modify an
award, the initiation of any suit relating to a dispute that is arbitrable
under this Agreement shall constitute a material breach of this Agreement.
Except as necessary in a judicial proceeding allowable under this Section
14.2, all matters relating to any arbitration shall be confidential.
Notwithstanding the provisions of this Section 14.2, the Members hereby
acknowledge that any breach of the provisions of Article VIII may give rise
to irreparable injury to the Company and/or the Members, inadequately
compensable in monetary damages. Notwithstanding anything to the contrary
stated herein, the parties hereto will be able to seek and obtain equitable
relief, including injunctive relief, against the breach or threatened breach
of any of the provisions for which monetary damages are not adequate and the
non-breaching party shall be entitled to recover from the breaching party its
reasonable attorneys' fees and costs incurred in obtaining such equitable
remedies. This Section 14.2 shall survive any dissolution of the Company and
any termination of this Agreement.
SECTION 14.3. GOVERNING LAW. This Agreement and the rights of the
parties under this Agreement will be governed by, interpreted, and enforced
in accordance with the laws of the State of Delaware.
SECTION 14.4. BINDING EFFECT: CONFLICTS. Subject to the provisions
of this Agreement relating to transferability, this Agreement will be binding
upon and inure to the benefit of the Members and their respective
distributees, successors and assigns. This Agreement is subject
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<PAGE>
to, and governed by, the Act and the Certificate. In the event of a direct
conflict between the provisions of this Agreement and the mandatory
provisions of the Act or the provisions of the Certificate, the provisions of
the Act or the Certificate, as the case may be, will be controlling.
SECTION 14.5. HEADINGS: INTERPRETATION. All headings herein are
inserted only for convenience and ease of reference and are not to be
considered in the construction or interpretation of any provision of this
Agreement. The singular shall include the plural, and the masculine gender
shall include the feminine and neuter, and vice versa, as the context
requires.
SECTION 14.6. SEVERABILITY. If any provision of this Agreement is
held to be illegal, invalid, unreasonable, or unenforceable under the present
or future laws effective during the term of this Agreement, such provision
will be fully severable; this Agreement will be construed and enforced as if
such illegal, invalid, unreasonable, or unenforceable provision had never
comprised a part of this Agreement; and the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by
the illegal, invalid, unreasonable, or unenforceable provision or by its
severance from this Agreement. Furthermore, in lieu of such illegal, invalid,
unreasonable, or unenforceable provision, there will be added automatically
as a part of this Agreement a provision as similar in terms to such illegal,
invalid, unreasonable, or unenforceable provision as may be possible and be
legal, valid, reasonable, and enforceable.
SECTION 14.7. MULTIPLE COUNTERPARTS. This Agreement may be executed
in several counterparts, each of which will be deemed an original but all of
which will constitute one and the same instrument. However, in making proof
with respect to this Agreement it will be necessary to produce only one copy
hereof signed by the party to be charged.
SECTION 14.8. ADDITIONAL DOCUMENTS AND ACTS. Each Member agrees to
promptly execute and deliver to the Company such additional documents,
statements of interest and holdings, designations, powers of attorney, and
other instruments, and to perform such additional acts, as the Company may
determine to be necessary, useful or appropriate to complete the organization
of the Company, effectuate, carry out and perform all of the terms,
provisions, and conditions of this Agreement and the transactions
contemplated by this Agreement, and to comply with all applicable laws, rules
and regulations.
SECTION 14.9. NO THIRD PARTY BENEFICIARY. This Agreement is made
solely and specifically among and for the benefit of the Members and their
respective successors and assigns subject to the express provisions of this
Agreement relating to successors and assigns. This Agreement is expressly not
intended for the benefit of any creditor of the Company or any other third
party. No creditor or other third party will have any rights, interest, or
claims under the Agreement or be entitled to any benefits under or on account
of this Agreement as a third party beneficiary or otherwise.
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<PAGE>
SECTION 14.10. NOTICES. Any notice, demands or other communications
to be given or delivered under or by reason of any provision of this
Agreement shall be in writing and shall be deemed to have been given and
received when delivered personally to the recipient, sent to the recipient by
overnight courier service (charges prepaid) or mailed to, the recipient by
certified or registered mail, return receipt requested and postage prepaid.
Such notices, demands and other communications shall be sent to each Member
at the address indicated on EXHIBIT A and to the Company at the address of
its principal place of business or to such other address or the attention of
such other person as the recipient party has specified by giving five (5)
days written notice to the sending party.
SECTION 14.11. TITLE TO COMPANY PROPERTY. Legal title to all
property of the Company will be held and conveyed in the name of the Company.
SECTION 14.12. OTHER VENTURES. Subject to any separate
noncompetition agreements to which a Member may be a party, each of the
Members and their Affiliates may engage, directly or indirectly, in any other
business venture or ventures of any nature and description, independently or
with others; provided that TeleTech agrees that so long as it is a Member any
new business, customers or technology generated or developed by TeleTech or
its Affiliates coming within the scope of the purposes of the Company set
forth in clause (a) of Article I shall be offered to the Company first.
[SIGNATURE PAGE FOLLOWS]
33
<PAGE>
IN WITNESS WHEREOF, the Members have executed this Agreement on the
date set forth opposite their signatures, to be effective on the Effective
Date.
TELETECH HOLDINGS, INC.
By: /s/ Norman Blome
----------------------------------
Its: Treasurer
----------------------------------
FORD MOTOR COMPANY
By: /s/ Brian P. Kelley
----------------------------------
Its: Vice President
----------------------------------
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<PAGE>
TELETECH HOLDINGS, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the "AGREEMENT") is entered
into between TELETECH HOLDINGS, INC., a Delaware corporation ("TELETECH"),
and Michael Foss ("OPTIONEE"), as of October 27, 1999 (the "GRANT DATE"). In
consideration of the mutual promises and covenants made herein, the parties
hereby agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions of the
TeleTech Holdings, Inc. 1999 Stock Option and Incentive Plan (the "PLAN"), a
copy of which is attached hereto and incorporated herein by this reference,
TeleTech grants to Optionee an option (the "OPTION") to purchase 250,000
shares (the "SHARES") of TeleTech's common stock, $.01 par value (the "COMMON
STOCK"), at a price equal to $12.75 per share (the "OPTION PRICE"). The
Option Price has been determined by the Compensation Committee of the Board
of Directors of TeleTech (the "COMMITTEE"), acting in good faith, to be the
fair market value of the Common Stock on the Grant Date based upon the last
sale price for Common Stock reported by The Nasdaq Stock Market, Inc. as of
the close of business on the Grant Date.
The Option is not intended to qualify as an incentive stock option
described in Section 422 of the Internal Revenue Code of 1986, as amended
(the "CODE"). All provisions of this Agreement are to be construed in
conformity with this intention.
2. TERM: OPTION RIGHTS. Except as provided below, the Option
shall be valid for a term commencing on the Grant Date and ending 10 years
after the Grant Date (the "EXPIRATION DATE").
(a) RIGHTS UPON TERMINATION OF EMPLOYMENT. If Optionee
ceases to be employed by TeleTech or any of its subsidiaries or affiliates
(collectively, the "SUBSIDIARIES") for any reason other than (i) for "Cause"
(as defined herein), (ii) Optionee's death, or (iii) Optionee's mental,
physical or emotional disability or condition (a "DISABILITY"), the Option
shall be exercisable at any time prior to the earlier of the Expiration Date
or the date three months after the date of termination of Optionee's
employment.
(b) RIGHTS UPON TERMINATION FOR CAUSE. If Optionee's
employment with TeleTech and/or its Subsidiaries is terminated for Cause, the
Option shall be immediately cancelled, no portion of the Option may be
exercised thereafter and Optionee shall forfeit all rights to the Option.
The term "Cause" shall have the meaning given to such term or to the term
"For Cause" or other similar phrase in Optionee's Employment Agreement with
TeleTech or any Subsidiary; provided, however, that (i) if at any time
Optionee's employment with TeleTech or any Subsidiary is not governed by an
employment agreement, then the term "Cause" shall have the meaning given to
such term in the Plan, and (ii) "Cause" shall exclude Optionee's death or
Disability.
(c) RIGHTS UPON OPTIONEE'S DEATH OR DISABILITY. If
Optionee's employment
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with TeleTech and/or its Subsidiaries is terminated as a result of (i)
Optionee's death, the Option may be exercised at any time prior to the
earlier of the Expiration Date or the date six months after the date of
Optionee's death, or (ii) Optionee's Disability, the Option may be exercised
at any time prior to the earlier of the Expiration Date or the date six
months after the date of Optionee's employment is terminated as a result of
Optionee's Disability.
3. VESTING. The Option may only be exercised to the extent
vested. Any vested portion of the Option may be exercised at any time in
whole or from time to time in part. Vesting shall commence on October 27,
2000 and Optionee shall vest in the Option according to the following
schedule (each date set forth below, a "VESTING DATE"):
<TABLE>
<CAPTION>
Cumulative
Percentage of
Vesting Date Option Vested
------------ -------------
<S> <C>
October 27, 2000 20%
October 27, 2001 40%
October 27, 2002 60%
October 27, 2003 80%
October 27, 2004 100%
</TABLE>
Optionee must be employed by TeleTech or any Subsidiary on (a) October 27,
2000 in order to vest in any portion of the Option, and (b) on any Vesting
Date, in order to vest in the portion of the Option set forth in the chart
above that vests on such Vesting Date. No portion of the Option shall vest
between Vesting Dates; if Optionee ceases to be employed by TeleTech or any
Subsidiary, then any portion of the Option that is scheduled to vest on any
Vesting Date after the date Optionee's employment is terminated automatically
shall be forfeited as of the termination of employment. If Optionee's
employment with TeleTech or any Subsidiary is terminated for any reason, any
portion of the Option which is not then vested shall be immediately
forfeited; provided, however, that a transfer or reassignment of Optionee
from TeleTech to any Subsidiary, or VICE VERSA, shall not constitute a
termination of employment for purposes of this Agreement.
3A. ACCELERATED VESTING.
(a) VESTING. Notwithstanding the vesting schedule contained
in Section 3,
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<PAGE>
(i) upon a Change in Control (as hereinafter defined),
any unvested portion of the Option that is scheduled to vest (pursuant to
Section 3) within 24 months following the date the Change of Control
becomes effective shall vest and become immediately exercisable as of the
effective date of the Change of Control, with the remainder of the
unvested portion of the Option vesting pursuant to Section 3, as
accelerated by this Section 3A and clarified by the following example:
For example, assume that on June 1, 1999 an optionee was
granted an option to acquire 10,000 shares of Common Stock,
which option vests over five years, pro rata, on each
anniversary of the grant date. On June 5, 2000, a Change
of Control is consummated. As of June 5, 2000, the
optionee will be fully vested in the option with respect to
6,000 shares (i.e., the 2,000 shares that vested on June 1,
2000, plus an additional 4,000 shares that vested on June
5, 2000 in accordance with the accelerated vesting
provisions of this Section 3A), and the remaining unvested
portion of the option would vest (assuming all other
conditions to vesting are satisfied) with respect to the
remaining 4,000 shares on each of June 1, 2001 (2,000
shares) and June 2, 2002 (2,000 shares).
(ii) if Optionee's employment with TeleTech or any
Subsidiary is terminated within 24 months following a Change in Control,
then the entire amount of the Option shall become 100% vested and
immediately exercisable as of Optionee's Termination Date (as defined
herein); PROVIDED, HOWEVER, that the accelerated vesting described in the
foregoing clause (ii) shall not apply if Optionee's employment with
TeleTech is terminated (A) by Optionee for any reason other than for
"Good Reason" (as defined herein), or (B) by TeleTech for "Cause" (as
defined herein).
(b) DEFINITION OF "CHANGE IN CONTROL". For purposes of this
Agreement, "CHANGE IN CONTROL" means the occurrence of any one of the following
events:
(i) any consolidation, merger or other similar
transaction (A) involving TeleTech, if TeleTech is not the continuing or
surviving corporation, or (B) which contemplates that all or
substantially all of the business and/or assets of TeleTech will be
controlled by another corporation;
(ii) any sale, lease, exchange or transfer (in one
transaction or series of related transactions) of all or substantially
all of the assets of TeleTech (a "DISPOSITION"); PROVIDED, HOWEVER, that
the foregoing shall not apply to any Disposition to a corporation with
respect to which, following such Disposition, more than 51% of the
combined voting power of the then outstanding voting securities of such
corporation is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners of at least 51% of the then outstanding Common Stock and/or other
voting securities of TeleTech immediately prior to such Disposition,
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<PAGE>
in substantially the same proportion as their ownership immediately prior
to such Disposition;
(iii) approval by the stockholders of TeleTech of any plan
or proposal for the liquidation or dissolution of TeleTech, unless such
plan or proposal is abandoned within 60 days following such approval;
(iv) the acquisition by any "person" (as such term is
used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended), or two or more persons acting in concert, of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Securities Exchange Act of 1934, as amended) of 51% or more of the
outstanding shares of voting stock of TeleTech; PROVIDED, HOWEVER, that
for purposes of the foregoing, "person" excludes Kenneth D. Tuchman and
his affiliates; PROVIDED, FURTHER that the foregoing shall exclude any
such acquisition (A) by any person made directly from TeleTech, (B) made
by TeleTech or any Subsidiary, or (C) made by an employee benefit plan
(or related trust) sponsored or maintained by TeleTech or any Subsidiary;
or
(v) if, during any period of 15 consecutive calendar
months commencing on September 1, 1999, those individuals (the
"CONTINUING DIRECTORS") who either (A) were directors of TeleTech on the
first day of each such 15-month period, or (B) subsequently became
directors of TeleTech and whose actual election or initial nomination for
election subsequent to that date was approved by a majority of the
Continuing Directors then on the board of directors of TeleTech, cease to
constitute a majority of the board of directors of TeleTech.
(c) OTHER DEFINITIONS. For purposes of this Section 3A, the
following terms have the meanings ascribed to them below:
(i) "CAUSE" has the meaning given to such term, or to
the term "For Cause" or other similar phrase, in Optionee's Employment
Agreement with TeleTech or any Subsidiary, if any; PROVIDED,
HOWEVER, that if at any time Optionee's employment with TeleTech or any
Subsidiary is not governed by an employment agreement, then the term
"Cause" shall have the meaning given to such term in the Plan; PROVIDED,
FURTHER, that, notwithstanding the provisions of Optionee's Employment
Agreement or of the Plan, for purposes of this Agreement, TeleTech shall
have the burden to prove that Optionee's employment was terminated for
"Cause."
(ii) "TERMINATION DATE" means the latest day on which
Optionee is expected to report to work and is responsible for the
performance of services to or on behalf of TeleTech or any Subsidiary,
notwithstanding that Optionee may be entitled to receive payments from
TeleTech (e.g., for unused vacation or sick time, severance payments,
deferred compensation or otherwise) after such date; and
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<PAGE>
(iii) "GOOD REASON" means (A) any reduction in Optionee's
base salary; PROVIDED THAT a reduction in Optionee's base salary of 10%
or less does not constitute "Good Reason" if such reduction is effected
in connection with a reduction in compensation that is applicable
generally to officers and senior management of TeleTech; (B) Optionee's
responsibilities or areas of supervision within TeleTech or its
Subsidiaries are substantially reduced; or (C) Optionee's principal
office is relocated outside the metropolitan area in which Optionee's
office was located immediately prior to the Change in Control; PROVIDED,
HOWEVER, that temporary assignments made for the good of TeleTech's
business shall not constitute such a move of office location.
(d) VESTING FOLLOWING TERMINATION BY TELETECH OTHER THAN FOR
CAUSE. In the event that Optionee's employment with TeleTech is terminated by
TeleTech for any reason other than for "Cause" (as defined above) within two
years of the Grant Date, the unvested portion of the Option that would otherwise
vest at the next Vesting Date shall vest and become immediately exercisable as
of the day after Optionee's Termination Date.
4. PROCEDURE FOR EXERCISE. Exercise of the Option or a portion
thereof shall be effected by the giving of written notice to TeleTech in
accordance with the Plan and payment of the aggregate Option Price for the
number of Shares to be acquired pursuant to such exercise.
5. PAYMENT FOR SHARES. Payment of the Option Price (or portion
thereof) shall be made in cash or by such other method as may be permitted by
the Committee in accordance with the provisions of the Plan. No Shares shall be
delivered upon exercise of the Option until full payment has been made and all
applicable withholding requirements satisfied.
6. OPTIONS NOT TRANSFERABLE AND SUBJECT TO CERTAIN RESTRICTIONS.
The Option may not be sold, pledged, assigned or transferred in any manner
other than by will or the laws of descent and distribution, or pursuant to a
qualified domestic relations order as defined in Section 414(p) of the Code.
During Optionee's lifetime, the Option may be exercised only by the Optionee
or by a legally authorized representative. In the event of Optionee's death,
the Option may be exercised by the distributee to whom Optionee's rights
under the Option shall pass by will or by the laws of descent and
distribution.
7. ACCEPTANCE OF PLAN. Optionee hereby accepts and agrees to be
bound by all the terms and conditions of the Plan.
8. NO RIGHT TO EMPLOYMENT. Nothing herein contained shall confer
upon Optionee any right to continuation of employment by TeleTech or any
Subsidiary, or interfere with the right of TeleTech or any Subsidiary to
terminate at any time the employment of Optionee. Nothing contained herein
shall confer any rights upon Optionee as a stockholder of TeleTech, unless
and until Optionee actually receives Shares.
9. COMPLIANCE WITH SECURITIES LAWS. The Option shall not be
exercisable and Shares shall not be issued pursuant to exercise of the Option
unless the exercise of the Option and the
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<PAGE>
issuance and delivery of Shares pursuant thereto shall comply with all
relevant provisions of law including, without limitation, the Securities Act
of 1933, as amended (the "SECURITIES ACT"), the Securities Exchange Act of
1934, as amended, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which Common Stock may then be
listed, and shall be further subject to the approval of counsel for TeleTech
with respect to such compliance. If, in the opinion of counsel for TeleTech,
a representation is required to be made by Optionee in order to satisfy any
of the foregoing relevant provisions of law, TeleTech may, as a condition to
the exercise of the Option, require Optionee to represent and warrant at the
time of exercise that the Shares to be delivered as a result of such exercise
are being acquired solely for investment and without any present intention to
sell or distribute such Shares.
10. ADJUSTMENTS. Subject to the sole discretion of the Board of
Directors, TeleTech may, with respect to any unexercised portion of the
Option, make any adjustments necessary to prevent accretion, or to protect
against dilution, in the number and kind of shares covered by the Option and
in the applicable exercise price thereof in the event of a change in the
corporate structure or shares of TeleTech; provided, however, that no
adjustment shall be made for the issuance of preferred stock of TeleTech or
the conversion of convertible preferred stock of TeleTech. For purposes of
this Section 10, a change in the corporate structure or shares of TeleTech
includes, without limitation, any change resulting from a recapitalization,
stock split, stock dividend, consolidation, rights offering, spin-off,
reorganization or liquidation, and any transaction in which shares of Common
Stock are changed into or exchanged for a different number or kind of shares
of stock or other securities of TeleTech or another entity.
11. NO OTHER RIGHTS. Optionee hereby acknowledges and agrees that,
except as set forth herein, no other representations or promises, either oral
or written, have been made by TeleTech, any Subsidiary or anyone acting on
their behalf with respect to Optionee's right to acquire any shares of Common
Stock, stock options or awards under the Plan, and Optionee hereby releases,
acquits and forever discharges TeleTech, the Subsidiaries and anyone acting
on their behalf of and from all claims, demands or causes of action
whatsoever relating to any such representations or promises and waives
forever any claim, demand or action against TeleTech, any Subsidiary or
anyone acting on their behalf with respect thereto.
12. CONFIDENTIALITY. OPTIONEE AGREES NOT TO DISCLOSE, DIRECTLY OR
INDIRECTLY, TO ANY OTHER EMPLOYEE OF TELETECH AND TO KEEP CONFIDENTIAL ALL
INFORMATION RELATING TO ANY OPTIONS OR OTHER AWARDS GRANTED TO OPTIONEE,
PURSUANT TO THE PLAN OR OTHERWISE, INCLUDING THE AMOUNT OF ANY SUCH AWARD,
THE EXERCISE PRICE AND THE RATE OF VESTING THEREOF; PROVIDED THAT OPTIONEE
SHALL BE ENTITLED TO DISCLOSE SUCH INFORMATION TO SUCH OF OPTIONEE'S
ADVISORS, REPRESENTATIVES OR AGENTS, OR TO SUCH OF TELETECH'S OFFICERS,
ADVISORS, REPRESENTATIVES OR AGENTS (INCLUDING LEGAL AND ACCOUNTING
ADVISORS), WHO HAVE A NEED TO KNOW SUCH INFORMATION FOR LEGITIMATE TAX,
FINANCIAL PLANNING OR OTHER SUCH PURPOSES.
6
<PAGE>
13. SEVERABILITY. Any provision of this Agreement (or portion
thereof) that is deemed invalid, illegal or unenforceable in any jurisdiction
shall, as to that jurisdiction and subject to this Section 13, be ineffective
to the extent of such invalidity, illegality or unenforceability, without
affecting in any way the remaining provisions thereof in such jurisdiction or
rendering that or any other provisions of this Agreement invalid, illegal, or
unenforceable in any other jurisdiction.
14. REFERENCES. Capitalized terms not otherwise defined herein
shall have the same meaning ascribed to them in the Plan.
15. ENTIRE AGREEMENT. This Agreement (including the Plan, which is
incorporated herein) constitutes the entire agreement between the parties
concerning the subject matter hereof and supersedes all prior and
contemporaneous agreements, oral or written, between TeleTech and Optionee
relating to Optionee's entitlement to stock options, Common Stock or similar
benefits, under the Plan or otherwise.
16. AMENDMENT. This Agreement may be amended and/or terminated at
any time by mutual written agreement of TeleTech and Optionee.
17. NO THIRD PARTY BENEFICIARY. Nothing in this Agreement,
expressed or implied, is intended to confer on any person other than Optionee
and Optionee's respective successors and assigns expressly permitted herein,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
18. GOVERNING LAW. The construction and operation of this
Agreement are governed by the laws of the State of Delaware (without regard
to its conflict of laws provisions).
Executed as of the date first written above.
TELETECH HOLDINGS, INC.
By: /s/ Norman Blome
-----------------------------------
Norman Blome,
Treasurer
/s/ Michael Foss
--------------------------------------
Signature of Michael Foss ("Optionee")
7
<PAGE>
EMPLOYMENT AGREEMENT
This Agreement is between TeleTech Holdings, Inc. (the "Company" or
"TeleTech") and Michael Foss ("Foss"), and shall be effective as of December
6, 1999.
1. APPOINTMENT.
a. TeleTech hereby employs Foss as Chief Financial Officer
and President of TeleTech's Companies Group, and Foss hereby accepts such
employment with TeleTech. Foss' first day of regular, full-time active
employment with TeleTech (the "Start Date") shall be on or before December 6,
1999, unless Foss and TeleTech agree, in advance, that Foss may begin work on
a different date.
b. Reporting to the Chief Executive Officer, the Chief
Financial Officer shall be responsible for managing all of the financial
affairs of the Company and shall otherwise have all the duties and
responsibilities of the highest level financial officer of a publicly held
company, and those duties and responsibilities that may be assigned by the
Chief Executive Officer. Also reporting to the Chief Executive Officer, the
President of TeleTech's Companies Group shall be responsible for managing all
of TeleTech's technology related initiatives and programs.
c. Foss shall devote his full-time and best efforts to the
performance of all duties as shall be assigned to him from time to time by
TeleTech or the Chief Executive Officer. Unless otherwise specifically
authorized in writing by TeleTech, Foss shall not engage in any other
business activity, or otherwise be gainfully employed.
d. Foss acknowledges that, as part of his employment duties
hereunder, Foss may be required to perform services for, and serve as an
officer and/or director of, subsidiaries and affiliates of TeleTech, on
behalf of and as requested by TeleTech, and Foss agrees to perform such
duties.
e. Foss warrants and represents that neither his execution
of this Agreement or any other agreement in connection herewith nor his
performance of his duties hereunder shall breach his contractual or other
obligations or duties to any prior employer, including without limitation,
Eastman Kodak.
2. COMPENSATION.
a. SALARY AND SALARY REVIEW. Foss' starting base salary
shall be $250,000 per year, payable in equal installments in accordance with
TeleTech's standard payroll practice, less legally required withholdings.
TeleTech may, in its sole discretion, increase Foss' base salary, as and when
TeleTech deems appropriate.
<PAGE>
b. ANNUAL BONUS. For each full calendar year hereunder,
Foss shall be entitled to an annual bonus targeted at one hundred percent of
his then current base salary; provided, however, that the actual amount paid
to Foss may be higher or lower than the targeted amount at the Company's sole
discretion. The precise amount of the bonus shall be determined based on the
achievement of Foss' Management Bonus Opportunity ("MBO") performance goals,
which goals shall be determined in advance jointly by Foss and the Chief
Executive Officer. For 1999, Foss' shall be entitled to a bonus of $75,000.
Should Foss, on starting employment with TeleTech, forfeit any additional
portion of his 1999 bonus with his previous employer, TeleTech will pay the
difference up to an additional $37,000. Upon Foss' continued employment by
TeleTech at the time annual bonuses are paid by TeleTech for calendar year
2000, Foss shall receive a bonus of not less than seventy percent of his base
salary. Any and all bonuses hereunder shall be payable in a lump sum, less
legally required withholdings, the year following the calendar year with
respect to which the bonus is earned.
3. STOCK OPTIONS.
a. Foss shall receive a one-time sign-on option award of
250,000 non-qualified stock options with an exercise price of $12.75. This
grant shall be reflected in a stock option agreement providing, among other
things, that upon Foss' continued employment by TeleTech, these options shall
vest in equal installments on the first five anniversaries of the Start Date,
and that the vesting of such options shall be partially accelerated upon a
change of control, as described in detail in the stock option agreement.
Should Foss cease to be employed by TeleTech or any of its subsidiaries or
affiliates for any reason other than (i) for "cause" (as defined in
TeleTech's 1999 Stock Option and Incentive Plan), (ii) Foss' death, or (iii)
disability because of which Foss is unable to perform the essential functions
of his position(s), the Options shall be exercisable at any time prior to
three months after the date Foss' employment terminates.
b. Foss shall be eligible to participate in a management
stock option program ("MSOP") designed to grant stock options to specified
executives at the end of each year based on personal achievements and
business objectives. If awarded, options granted under the MSOP will vest in
equal annual installments over four years unless the Company elects a
different vesting schedule generally applicable to Company executives. Grants
of options in connection with the MSOP shall be made when and in an amount
determined by TeleTech in its sole discretion, and shall be subject to the
terms and conditions of a separate stock option agreement to be executed by
Foss and TeleTech, and to any terms or conditions of TeleTech's MSOP that may
be established, modified or amended from time to time.
4. FRINGE BENEFITS.
a. EXECUTIVE MEDICAL AND DENTAL INSURANCE. Foss and his
dependents shall be eligible for coverage under the group medical and dental
insurance
2
<PAGE>
plans made available from time to time to TeleTech's executive and management
employees, beginning on the Start Date. TeleTech shall pay premiums for Foss
and his dependents under such group medical and dental insurance plans
pursuant to the same premium-payment formula applicable to TeleTech's other
senior executives.
b. LIFE INSURANCE. Subject to Foss' satisfactory
completion of a standard medical examination, Foss shall be eligible for, and
TeleTech shall provide Foss with, a $4,000,000 term life insurance policy.
TeleTech shall pay all premiums relating to such a policy. TeleTech on behalf
of Foss will maintain such insurance policy so long as Foss is employed by
TeleTech. Foss shall be the owner of such policy and shall have the right to
designate the beneficiary or beneficiaries thereof. Upon termination of
Foss' employment for any reason whatsoever, Foss shall have the right to
continue and maintain such policy by his payment of future premiums due under
the policy.
c. DISABILITY INSURANCE. Foss shall be eligible to
participate in TeleTech's group disability insurance program, as that program
may be modified from time to time, under which, in the event of a qualifying
disability and subject to the other terms and conditions of that program,
Foss shall be eligible to receive no less than 50% of his base salary and
annual bonus under paragraph 2(b), above, (calculated at 80% of his then-base
salary) beginning on the ninety-first day of a qualifying disability.
d. MISCELLANEOUS BENEFITS. Foss shall receive all fringe
benefits that other TeleTech executive and management employees may from time
to time receive.
5. PAID LEAVE.
a. VACATION. During each calendar year of Foss'
continuous, full-time active employment with TeleTech, Foss shall earn,
incrementally during each pay period, a total of twenty days of paid vacation
time.
b. SICK LEAVE AND HOLIDAYS. Foss shall receive paid sick
leave and holidays under the guidelines for such leave applicable from time
to time to TeleTech's executive and management employees.
6. RELOCATION EXPENSES. TeleTech shall reimburse Foss for his
reasonable expenses in relocating to the Denver, Colorado metropolitan area
up to $70,000, including, without limitation, expenses, such as the payment
of any agent's or broker's fee and other closing costs, incurred by Foss in
connection with the sale of his home, travel expenses for Foss and his family
between his present residence and Denver, Colorado, and closing costs
associated with Foss' purchase of a new home in the Denver, Colorado
metropolitan area. All such reimbursements shall, if necessary, be grossed
up to make Foss whole on an after-tax basis for his actual out-of-pocket
expenses, up to the $70,000 limit.
3
<PAGE>
7. RELATIONSHIP BETWEEN THIS AGREEMENT AND OTHER TELETECH
PUBLICATIONS. In the event of any conflict between any term of this
Agreement and any TeleTech contract, policy, procedure, guideline or other
publication, the terms of this Agreement shall control.
8. TERM AND TERMINATION.
a. TERM. The term of this Agreement shall be two years,
commencing on the Start Date and ending on the second anniversary thereof.
This Agreement shall be renewed for successive one-year terms if the parties
agree to renew in writing at least ninety days before the expiration of the
initial two-year term or any renewal term, as the case may be.
b. TERMINATION BY CONSENT. This Agreement may be
terminated at any time by the parties' mutual agreement, expressed in
writing.
c. TERMINATION BY TELETECH WITHOUT CAUSE. If TeleTech
terminates Foss' employment without "cause" (as defined in TeleTech's 1999
Stock Option and Incentive Plan) during the term of this Agreement, or if
Foss' position or salary materially changes, after Foss executes a separation
agreement and legal release in a form satisfactory to TeleTech, TeleTech
shall pay Foss (i) severance compensation equal to the sum of eighteen months
of Foss' then-current base salary under paragraph 2(a), above, which shall be
payable in eighteen equal monthly installments, less legally required
withholdings, on the first business day of each month, beginning in the month
following the termination date; (ii) all of Foss' unvested stock options that
would have vested at the next succeeding vesting date under Foss' option
agreements in effect at the date of termination and (iii) a bonus equal to
70% of Foss' then current annual base salary, prorated based on his
termination date, less legally required withholdings. If TeleTech terminates
this Agreement at any time without cause under this paragraph 8(c), pays Foss
all salary and compensation earned and unpaid as of the termination date, and
offers to provide Foss severance compensation and accelerated option vesting
in the amount and on the terms specified above, TeleTech's acts in doing so
shall be in complete accord and satisfaction of any claim that Foss has or
may at any time have for compensation or payments of any kind from TeleTech
arising from or relating in whole or part to Foss' employment with TeleTech
and/or this Agreement. Because this paragraph 8(c) is intended to provide
compensation to enable Foss to support himself in the event of Foss' loss of
employment under certain circumstances specified herein, Foss' right to
severance pay under this paragraph 8(c) shall not be triggered by the sale of
all or a portion of TeleTech's stock or assets, unless such sale results in
Foss' loss of employment, or Foss thereafter terminates this Agreement for
"Good Cause," as that term is defined in paragraph 8(g), below.
d. TERMINATION BY TELETECH FOR CAUSE. TeleTech may
terminate this Agreement effective immediately for cause (as defined in
TeleTech's 1999 Stock Option and Incentive Plan), upon notice to Foss, with
TeleTech's only obligation being the
4
<PAGE>
payment of salary and compensation earned as of the date of termination, and
without liability for severance compensation of any kind.
e. TERMINATION UPON FOSS' DEATH. This Agreement shall
terminate immediately upon Foss' death. Thereafter, TeleTech shall pay to
Foss' estate (i) all compensation fully earned, and benefits fully vested as
of the last date of Foss' continuous, full-time active employment with
TeleTech; (ii) all of Foss' unvested stock options that would have vested at
the next succeeding vesting date under Foss' option agreements then in effect
and (iii) a bonus equal to 70% of Foss' then current annual base salary,
prorated based on his date of death, less legally required withholdings.
Except as specifically set forth above in this subsection (e), TeleTech shall
not be required to pay any form of severance or other compensation concerning
or on account of Foss' employment with TeleTech or the termination thereof.
f. TERMINATION BECAUSE OF DISABILITY. During the first
ninety calendar days of any period during which a medical condition renders
Foss continuously unable to perform the essential functions of his position
(the "Initial Disability Period"), he shall continue to receive his base
salary pursuant to paragraph 2(a), above. Thereafter, if Foss qualifies for
benefits under TeleTech's long term disability insurance plan (the "LTD
Plan"), then he shall remain on leave for so long as he continues to qualify
for such benefits, during which time he shall be entitled to any benefits to
which the LTD Plan entitles him, but no additional compensation from
TeleTech. If at any time after the Initial Disability Period Foss remains
unable to perform the essential functions of his position but is denied or
otherwise becomes ineligible for benefits under the LTD Plan, and then
TeleTech may terminate this Agreement and/or Foss' employment.
g. TERMINATION BY FOSS. Upon the occurrence of "Good
Cause," as that term is defined below, Foss may terminate this Agreement upon
ninety days' prior written notice. As used in this paragraph 8(h), "Good
Cause" shall mean (i) a substantial and material diminution of Foss'
responsibilities and duties concerning the operation of TeleTech's business;
(ii) a material decrease in Foss' base salary and/or a material decrease in
Foss' employee benefits (other than pursuant to a general reduction or
modification of such benefits that is applicable to all of TeleTech's senior
executives); or (iii) a material change in the responsibilities or duties
assigned to Foss, as measured against Foss' responsibilities or duties
immediately prior to such change, that causes Foss to be of materially
reduced stature or responsibility; or (iv) a material change in Foss'
reporting responsibilities or duties, as measured against Foss' reporting
responsibilities or duties immediately prior to such change, that materially
curtails Foss' ability to perform the services required of Foss' position; or
(v) the occurrence of circumstances establishing constructive discharge under
the common law of the State of Colorado. If Foss terminates this agreement
for Good Cause and executes a separation agreement in the form prescribed in
paragraph 8(c), above, he shall be entitled to the severance compensation
specified in paragraph 8(c), above.
5
<PAGE>
9. SUCCESSORS AND ASSIGNS. TeleTech, its successors and assigns
may in their sole discretion assign this Agreement to any person or entity,
with or without Foss' consent. This Agreement thereafter shall bind, and
inure to the benefit of, TeleTech's successor or assign. Foss shall not
assign either this Agreement or any right or obligation arising hereunder.
10. DISPUTE RESOLUTION.
a. Foss and TeleTech agree that in the event of any
controversy or claim arising out of or relating to Foss' employment with
and/or separation from TeleTech, they shall negotiate in good faith to
resolve the controversy or claim privately, amicably and confidentially.
Each party may consult with counsel in connection with such negotiations.
b. Excepting only: (1) worker's compensation claims; (2)
unemployment compensation claims; (3) proceedings to enforce the terms of any
confidentiality covenant or to protect Confidential Information and/or
Confidential Records; and (4) claims brought under the Colorado Wage Act,
C.R.S. Sections 8-4-101, ET SEQ., all controversies and claims arising from
or relating to Foss' employment with TeleTech and/or the termination of that
employment that cannot be resolved by good-faith negotiations ("Arbitrable
Disputes") shall be resolved only by final and binding arbitration conducted
privately and confidentially in the Denver, Colorado, metropolitan area by a
single arbitrator who is a member of the panel of former judges that makes up
the Judicial Arbiter Group ("JAG"); any successor of JAG; or, if JAG or any
successor is not in existence, any entity that can provide a former judge to
serve as arbitrator (collectively, the "Dispute Resolution Service").
Without limiting the generality of the foregoing, the parties understand and
agree that this paragraph 10 shall require arbitration of all disputes and
claims that may arise at common law, such as breach of contract, express or
implied, promissory estoppel, wrongful discharge, tortious interference with
contractual rights, infliction of emotional distress, defamation, or under
federal, state or local laws, such as the Fair Labor Standards Act, the
Employee Retirement Income Security Act, the National Labor Relations Act,
Title VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act, the Rehabilitation Act of 1973, the Equal Pay Act, the
Americans with Disabilities Act, and the Colorado Civil Rights Act. The
parties understand and agree that this Agreement evidences a transaction
involving commerce within the meaning of 9 U.S.C. Section 2, and that this
Agreement shall therefore be governed by the Federal Arbitration Act, 9
U.S.C. Sections 1, ET SEQ.
c. Notwithstanding any statute or rule governing
limitations of actions, any arbitration relating to or arising from any
Arbitrable Dispute shall be commenced by service of an arbitration demand
before the earlier of the one-year anniversary of the accrual of the
aggrieved party's claim pursuant to Colorado law or the one-year anniversary
of Foss' last day of employment with TeleTech. Otherwise, all claims that
6
<PAGE>
were or could have been brought by the aggrieved party against the other
party shall be forever barred.
d. To commence an arbitration pursuant to this Agreement, a
party shall serve a written arbitration demand (the "Demand") on the other
party by certified mail, return receipt requested, and at the same time
submit a copy of the Demand to the Dispute Resolution Service, together with
a check payable to the Dispute Resolution Service in the amount of that
entity's then-current arbitration filing fee; provided that in no event shall
the Foss be required to pay an arbitration filing fee exceeding the sum then
required to file a civil action in the United States District Court for the
District of Colorado. The claimant shall attach a copy of this Agreement to
the Demand, which shall also describe the dispute in sufficient detail to
advise the respondent of the nature of the dispute, state the date on which
the dispute first arose, list the names and addresses of every current or
former employee of TeleTech or any affiliate whom the claimant believes does
or may have information relating to the dispute, and state with particularity
the relief requested by the claimant, including a specific monetary amount,
if the claimant seeks a monetary award of any kind. Within thirty days after
receiving the Demand, the respondent shall mail to the claimant a written
response to the Demand (the "Response"), and submit a copy of the Response to
the Dispute Resolution Service, together with a check for the difference, if
any, between the filing fee paid by the claimant and the Dispute Resolution
Service's then-current arbitration filing fee.
e. Promptly after service of the Response, the parties
shall confer in good faith to attempt to agree upon a suitable arbitrator.
If the parties are unable to agree upon an arbitrator, the Dispute Resolution
Service shall select the arbitrator, based, if possible, on his or her
expertise with respect to the subject matter of the Arbitrable Dispute.
f. Notwithstanding the choice-of-law principles of any
jurisdiction, the arbitrator shall be bound by and shall resolve all
Arbitrable Disputes in accordance with the substantive law of the State of
Colorado, federal law as enunciated by the federal courts situated in the
Tenth Circuit, and all Colorado and Federal rules relating to the
admissibility of evidence, including, without limitation, all relevant
privileges and the attorney work product doctrine.
g. Before the arbitration hearing, TeleTech and Foss shall
each be entitled to take a discovery deposition of up to three persons with
knowledge of the dispute. Upon the written request of either party, the
other party shall promptly produce documents relevant to the Arbitrable
Dispute or reasonably likely to lead to the discovery of admissible evidence.
The manner, timing and extent of any further discovery shall be committed to
the arbitrator's sound discretion, provided that under no circumstances shall
the arbitrator allow more depositions or interrogatories than permitted by
the presumptive limitations set forth in F.R.Civ.P. 30(a)(2)(A) and 33(a).
The arbitrator shall levy appropriate sanctions, including an award of
reasonable
7
<PAGE>
attorneys' fees, against any party that fails to cooperate in good faith in
discovery permitted by this paragraph 10 or ordered by the arbitrator.
h. Before the arbitration hearing, any party may by motion
seek judgment on the pleadings as contemplated by F.R.Civ.P. 12 and/or
summary judgment as contemplated by F.R.Civ.P. 56. The other party may file
a written response to any such motion, and the moving party may file a
written reply to the response. The arbitrator: may in his or her discretion
conduct a hearing on any such motion; shall give any such motion due and
serious consideration, resolving the motion in accordance with F.R.Civ.P. 12
and/or a F.R.Civ.P. 56, as the case may be, and other governing law, pursuant
to paragraph 10(f), above; and shall issue a written award concerning any
such motion no fewer than ten days before any evidentiary hearing conducted
on the merits of any claim asserted in the arbitration.
i. Within thirty days after the arbitration hearing is
closed, the arbitrator shall issue a written award setting forth his or her
decision and the reasons therefor. If a party prevails on a statutory claim
that affords the prevailing party the right to recover attorneys' fees and/or
costs, then the arbitrator shall award to the party that substantially prevails
in the arbitration its costs and expenses, including reasonable attorneys'
fees. The arbitrator's award shall be final, nonappealable and binding upon
the parties, subject only to the provisions of 9 U.S.C. Section 10, and may be
entered as a judgment in any court of competent jurisdiction.
j. The parties agree that reliance upon courts of law and
equity can add significant costs and delays to the process of resolving
disputes. Accordingly, they recognize that an essence of this Agreement is
to provide for the submission of all Arbitrable Disputes to binding
arbitration. Therefore, if any court concludes that any provision of this
paragraph 10 is void or voidable, the parties understand and agree that the
court shall reform each such provision to render it enforceable, but only to
the extent absolutely necessary to render the provision enforceable and only
in view of the parties' express desire that Arbitrable Disputes be resolved
by arbitration and, to the greatest extent permitted by law, in accordance
with the principles, limitations and procedures set forth in this Agreement.
11. MISCELLANEOUS.
a. GOVERNING LAW. This Agreement, and all other disputes
or issues arising from or relating in any way to TeleTech's relationship with
Foss, shall be governed by the internal laws of the State of Colorado,
irrespective of the choice of law rules of any jurisdiction.
b. SEVERABILITY. If any court of competent jurisdiction
declares any provision of this Agreement invalid or unenforceable, the
remainder of the Agreement shall remain fully enforceable. To the extent
that any court concludes that any provision of this Agreement is void or
voidable, the court shall reform such provision(s)
8
<PAGE>
to render the provision(s) enforceable, but only to the extent absolutely
necessary to render the provision(s) enforceable.
c. INTEGRATION. This Agreement constitutes the entire
agreement of the parties and a complete merger of prior negotiations and
agreements and, except as provided in the preceding subparagraph 10(j), shall
not be modified by word or deed, except in a writing signed by Foss and the
Chief Executive Officer.
d. WAIVER. No provision of this Agreement shall be deemed
waived, nor shall there be an estoppel against the enforcement of any such
provision, except by a writing signed by the party charged with the waiver
or estoppel. No waiver shall be deemed continuing unless specifically stated
therein, and the written waiver shall operate only as to the specific term or
condition waived, and not for the future or as to any act other than that
specifically waived.
e. CONSTRUCTION. Headings in this Agreement are for
convenience only and shall not control the meaning of this Agreement.
Whenever applicable, masculine and neutral pronouns shall equally apply to
the feminine genders; the singular shall include the plural and the plural
shall include the singular. The parties have reviewed and understand this
Agreement, and each has had a full opportunity to negotiate the agreement's
terms and to consult with counsel of their own choosing. Therefore, the
parties expressly waive all applicable common law and statutory rules of
construction that any provision of this Agreement should be construed against
the agreement's drafter, and agree that this Agreement and all amendments
thereto shall be construed as a whole, according to the fair meaning of the
language used.
f. COUNTERPARTS AND TELECOPIES. This agreement may be
executed in counterparts, or by copies transmitted by telecopier, which
counterparts and/or facsimile transmissions shall have the same force and
effect as had the contract been executed in person and in original form.
FOSS ACKNOWLEDGES AND AGREES: THAT HE UNDERSTANDS THIS AGREEMENT; THAT HE
ENTERS INTO IT FREELY, KNOWINGLY, AND MINDFUL OF THE FACT THAT IT CREATES
IMPORTANT LEGAL OBLIGATIONS AND AFFECTS HIS LEGAL RIGHTS; AND THAT HE
UNDERSTANDS THE NEED TO CONSULT CONCERNING THIS AGREEMENT WITH LEGAL COUNSEL
OF HIS OWN CHOOSING, AND HAS HAD A FULL AND FAIR OPPORTUNITY TO DO SO.
[SIGNATURES FOLLOW]
9
<PAGE>
TeleTech Holdings, Inc.
/s/ Michael Foss By: /s/ Scott Thompson
- --------------------------------- --------------------------------
Michael Foss Print name: Scott Thompson
------------------------
Date: 12/6/99
---------------------------- As its: CEO and President
----------------------------
Date: 12/6/99
------------------------------
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TELETECH
HOLDINGS, INC.'S 2000 FIRST QUARTER FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FORM 10-Q FILING.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 18,531
<SECURITIES> 31,486
<RECEIVABLES> 98,780
<ALLOWANCES> 4,210
<INVENTORY> 0
<CURRENT-ASSETS> 163,588
<PP&E> 183,467
<DEPRECIATION> 71,570
<TOTAL-ASSETS> 326,425
<CURRENT-LIABILITIES> 54,458
<BONDS> 43,852
0
0
<COMMON> 620
<OTHER-SE> 227,495
<TOTAL-LIABILITY-AND-EQUITY> 326,425
<SALES> 158,494
<TOTAL-REVENUES> 158,494
<CGS> 105,002
<TOTAL-COSTS> 144,065
<OTHER-EXPENSES> (652)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 806
<INCOME-PRETAX> 14,275
<INCOME-TAX> 5,603
<INCOME-CONTINUING> 8,672
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,672
<EPS-BASIC> .14
<EPS-DILUTED> .13
</TABLE>
