UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934
For the quarterly period ended 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 333-57249
NATIONWIDE CREDIT, INC.
----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1900192
- --------------------------------- ---------------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
2015 Vaughn Road, Building 300, Kennesaw, GA 30144
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 933-6659
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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TABLE OF CONTENTS
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PAGE
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets
as of March 31, 2000 and December 31, 1999 ............................................................1
Consolidated Statements of Operations
for the Three Months Ended March 31, 2000 and March 31, 1999...........................................3
Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 2000 and March 31, 1999...........................................4
Notes to Consolidated Financial Statements as of March 31, 2000..........................................5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS ........................................................................6
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK..........................................................................10
PART II. OTHER INFORMATION
SIGNATURE........................................................................................................12
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NATIONWIDE CREDIT, INC.
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
Unaudited Audited
----------------- ------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 7,072 $ --
Cash held for clients 730 1,090
Accounts receivable, net of allowance of
$390 and $351, respectively 15,946 18,209
Prepaid expenses and other current assets 5,115 3,709
------------------ ------------------
Total current assets 28,863 23,008
Property and equipment, less accumulated
depreciation of $10,509 and $8,946, respectively 16,610 14,852
Other assets, net:
Goodwill, less accumulated amortization of $7,940
and $7,058, respectively 97,930 98,812
Other intangible assets, less accumulated amortization
of $17,770 and $17,412, respectively 2,509 2,867
Deferred financing costs, less accumulated amortization
of $2,980 and $2,811, respectively 3,894 4,063
Other assets 64 82
------------------ ------------------
Total assets $ 149,870 $ 143,684
================== ==================
<FN>
The accompanying notes are an integral part of these consolidated balance
sheets.
</FN>
</TABLE>
<PAGE>
NATIONWIDE CREDIT, INC.
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
Unaudited Audited
----------------- ------------------
<S> <C> <C>
Liabilities and stockholder's equity
Current liabilities:
Collections due to clients $ 730 $ 1,090
Accrued compensation 4,973 4,557
Accounts payable 5,261 6,468
Accrued severance and office closure costs, current 582 1,139
Other accrued liabilities 4,868 6,525
Deferred revenue 500 500
Current portion of capital leases 293 293
Current portion of note payable 56 60
Current maturities of long-term debt 6,650 750
----------------- ------------------
Total current liabilities 23,913 21,382
Accrued severance and office closure costs, long-term 1,100 843
Capital lease obligations, less current portion 285 359
Long-term debt, less current maturities 121,231 121,308
----------------- ------------------
Total liabilities 146,529 143,892
Stockholder's equity:
Common stock - $.01 par value
Authorized - 10,000 shares
Issued and outstanding - 1,000 shares -- --
Additional paid in capital 49,465 43,465
Accumulated deficit (45,984) (43,533)
Notes receivable - officers (140) (140)
----------------- ------------------
Total stockholder's equity 3,341 (208)
----------------- ------------------
Total liabilities and stockholder's equity $149,870 $143,684
================= ==================
<FN>
The accompanying notes are an integral part of these consolidated balance
sheets.
</FN>
</TABLE>
<PAGE>
NATIONWIDE CREDIT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
--------------------------------------
2000 1999
Unaudited Unaudited
--------------- ---------------
<S> <C> <C>
Revenue $ 33,493 $ 27,266
Expenses:
Salaries and benefits 22,015 18,432
Telecommunication 1,319 919
Occupancy 1,524 1,025
Other operating and administrative 4,795 3,277
Depreciation and amortization 2,804 2,416
Provision for employee severance, office closure
and other unusual costs -- 243
--------------- ---------------
Total expenses 32,457 26,312
--------------- ---------------
Operating income 1,036 954
Interest expense 3,487 3,114
--------------- ---------------
Loss before income taxes (2,451) (2,160)
Provision for income taxes
-- --
--------------- ---------------
Net loss $ (2,451) $ (2,160)
=============== ===============
<FN>
The accompanying notes are an integral part of these consolidated statements.
</FN>
</TABLE>
<PAGE>
NATIONWIDE CREDIT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
----------------------------------------
2000 1999
Unaudited Unaudited
---------------- ----------------
<S> <C> <C>
Operating activities
Net loss $ (2,451) $ (2,160)
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities:
Depreciation and amortization 3,111 2,540
Other non-cash charges 69 243
Changes in operating assets and liabilities:
Accounts receivable 2,223 1,783
Prepaid expenses and other assets (1,528) 6
Accrued compensation 417 1,435
Accounts payable and other accrued liabilities (2,818) (3,199)
---------------- ----------------
Net cash (used in) provided by operating activities (977) 648
Investing activities
Purchases of property and equipment (3,321) (213)
Financing activities
Capital contribution 6,000 --
Proceeds from short-term debt 5,900
--
Repayment of long-term debt (530) (63)
---------------- ----------------
Net cash provided by (used in) financing activities 11,370 (63)
Increase in cash and cash equivalents 7,072 372
Cash and cash equivalents at beginning of period 3,201
--
---------------- ----------------
Cash and cash equivalents at end of period $ 7,072 $ 3,573
================ ================
Cash paid for interest $ 5,729 $ 5,661
================ ================
<FN>
The accompanying notes are an integral part of these consolidated statements.
</FN>
</TABLE>
<PAGE>
NATIONWIDE CREDIT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, certain information and footnote
disclosures required by generally accepted accounting principles for
complete financial statements have been excluded. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. All
significant intercompany accounts and transactions have been eliminated in
the consolidation. The accompanying unaudited consolidated financial
statements should be read in conjunction with the audited consolidated
financial statements of the Company for the year ended December 31, 1999
included in Form 10K. Operating results for the three-month period ended
March 31, 2000 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2000.
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133 "Accounting for
Derivative and Hedging Activities" (SFAS No. 133). SFAS No. 133 requires
companies to record derivatives on the balance sheet as assets or
liabilities at fair value. It is effective for financial statements for
fiscal years beginning after June 15, 2000, as amended by SFAS No. 137.
Management is evaluating the impact of SFAS No. 133 on the Company's future
earnings and financial position, but does not expect it to be material.
2. Nature of Operations
The Company is among the largest independent providers of accounts
receivable management services in the United States. The Company's client
base is comprised of companies located throughout the United States
primarily in the financial services, telecommunications, retail,
institutional and healthcare industries.
3. Long-Term Debt and Stockholder's Equity
During the first quarter of 2000, the Company raised $6.0 million of equity
from certain existing investors in order to fund the growth of the
business. On April 18, 2000, the Company negotiated an amendment to its
revolving credit facility and term loan (the "Bank Facilities") to create
an additional $6.0 million of borrowing capacity to fund the Company's
working capital needs. Specifically, the existing line of credit under the
revolving credit facility was increased from $6.5 million to $12.5 million,
maturing January 2004 and bearing interest at the Company's option of
either (A) the Base Rate plus the Applicable Margin or (B) the Eurodollar
Rate plus the Applicable Margin. The amendment also revised certain
financial covenants. The Company was in compliance with the revised
financial covenants as of March 31, 2000.
4. Commitments and Contingencies
The Company is involved in certain litigation arising in the ordinary
course of business. In the opinion of management, the ultimate resolution
of these matters will not have a material adverse effect on the Company's
consolidated financial position or results of operations.
5. Provision for Merger Costs, Employee Severance and Office Closure
In 1998, as a result of the acquisition of the Company and in connection
with the implementation of an operating improvement plan, the Company
accrued estimated costs of approximately $4.0 million associated with
closing certain offices and branches ($2.3 million), severance payments to
employees ($0.8 million), and relocation costs ($0.9 million). The
corporate offices were relocated in August 1999 and branches that were not
operating at full capacity were reduced or were consolidated with other
branches. In 1999, the Company incurred $1.1 million of other unusual costs
related to a potential name change and development of a marketing and
strategic plan related to a repositioning of the Company in the
marketplace. In addition, the Company refined its estimates in 1999 and
reduced the provision for office closure by $0.5 million as a result of the
Company experiencing more favorable sub-leasing results. As of March 31,
2000, substantially all charges related to employee severance and
relocation had been incurred. In the first quarter of 2000, the Company
recorded a charge of $0.4 million mostly related to office closure costs.
The remaining accrued office closure costs of $1.6 million as of March 31,
2000 represent estimated future rent obligations under cancelled leases.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations - (first quarter of 2000 compared to first quarter of
1999)
Revenue. Total revenue increased $6.2 million or 22.8% from $27.3 million for
the first quarter of 1999 to $33.5 for the first quarter of 2000. The increase
was primarily the result of (i) an increase in revenue of $2.8 million from
outsourced pre-charge-off management services, (ii) a $1.1 million increase in
revenue from consumer and financial services account placements, (iii) an
increase of $0.3 million from American Express, (iv) a $2.9 million increase in
revenue from telecommunications account placements, and (v) a $0.5 million
increase in revenue from legal collections, offset by (i) a $0.9 million
decrease in revenue from on-site call center management services for a major
telecommunications company and (ii) a $0.8 million decrease in revenue from
healthcare account placements. In the first quarter of 2000, the Company gave
notice of its intent to terminate its service offering of directory assistance
operations for a telecommunications company, as it was not considered part of
the core business of the Company. Revenues generated from directory assistance
services in 1999 were less than 10% of the Company's total revenues for the
year; the impact on net income is expected to be minimal in the year 2000.
Expenses. Salaries and benefits expense increased $3.6 million or 19.4% to $22.0
million for the three months ended March 31, 2000 from $18.4 million for the
three months ended March 31, 1999. This increase is primarily the result of the
Company's service expansion in outsourced pre-charge-off management services and
telecommunications, including the impact of a parallel ramp-up of a new facility
in March 2000.
Telecommunications expense increased $0.4 million or 43.5% to $1.3 million for
the three months ended March 31, 2000 from $0.9 million for the same period in
1999. The increase is primarily the result of increases in activity due to
service expansion and ramp-up costs.
Occupancy expense increased $0.5 million or 48.7% to $1.5 million for the three
months ended March 31, 2000 from $1.0 million for the same period in 1999. The
increase is the result of annual rent escalations and the addition of new
facilities in the fourth quarter of 1999 and the first quarter of 2000. These
new facilities provide the needed capacity for future growth.
Other operating and administrative expense increased $1.5 million or 46.3% to
$4.8 million for the three months ended March 31, 2000 from $3.3 million for the
same period in 1999. The increase is the result of the Company's service
expansion and ramp-up costs.
Depreciation and amortization expense increased $0.4 million or 16.1% to $2.8
million for the three months ended March 31, 2000 from $2.4 million for the same
period ended March 31, 1999. The increase was primarily the result of
depreciation on capital assets acquired subsequent to the first quarter of 1999.
Operating Income. Operating income remained level at $1.0 million for the three
months ended March 31, 2000, compared to $1.0 million for the same period in
1999. This is primarily the result of an increase in revenue of $6.2 million
with an offsetting increase in expenses of $6.1 million. Start-up costs related
to the Company's growth and to the opening of new facilities including the
impact of parallel ramp-up costs temporarily reduced margins in the quarter as
capacity was added to meet the dramatic increase in business activity.
Interest Expense. Interest expense relating to the term loan facility and senior
notes was $3.5 million for the three months ended March 31, 2000 compared to
$3.1 million for the same period in 1999. This increase of $0.4 million in the
first quarter of 2000 is the result of (i) an increase in interest rates on the
term loan facility, (ii) borrowings of $5.9 million against the revolving credit
facility and (iii) interest paid on capital lease obligations.
Net Loss. The Company incurred a net loss for the three months ended March 31,
2000 of $2.5 million as compared to a net loss of $2.2 million in the same
period of 1999. Start-up costs related to the Company's growth and to the
opening of new facilities including the impact of parallel ramp-up costs
temporarily reduced margins in the quarter as capacity was added to meet the
dramatic increase in business activity.
Liquidity and Capital Resources
In the first quarter of 2000, the Company's continued growth resulted in an
increase in working capital requirements. To support this growth, the Company
purchased approximately $3.3 million of property and equipment. These capital
acquisitions along with the additional working capital requirements were
financed by additional equity investment of $6.0 million from the Company's
current investors and borrowings of $5.9 million under the senior credit
facilities.
Cash used by operating activities was $1.0 million for the three months ended
March 31, 2000 as compared to cash provided by operating activities of $0.6
million for the three months ended March 31, 1999, an increase of $1.6 million
of cash used in operating activities. This increase was primarily due to an
increase in working capital needs to support increased levels of activity.
Working capital increased by $1.7 million for the three months ended March 31,
2000, as compared to no change in working capital for the same period in 1999.
Cash used in investing activities for the three months ended March 31, 2000 was
$3.3 million as compared to $0.2 million for the three months ended March 31,
1999. The Company's principal use of cash in investing activities during the
first quarter of 2000 was for capital expenditures, primarily for new computer
and telecommunications equipment for the new facilities.
Cash provided by financing activities was $11.4 million for the three months
ended March 31, 2000 representing $6.0 million of equity contribution from
current investors and $5.9 million of borrowings under the revolving credit
facility offset by the required quarterly repayment of the term loan facility
and the monthly repayments of the note and capital lease obligations. Cash used
in financing activities was $63,000 for the three months ended March 31, 1999,
representing the required quarterly repayment of the term loan facility.
Because of the working capital requirements associated with expanding the
business and the need to finance two new centers, the Company received
additional equity investment from its current investors in the first quarter of
2000 totaling $6.0 million. In addition, during the second quarter of 2000, the
Company negotiated an amendment to its credit agreement (the "Amended and
Restated Credit Agreement") that creates an additional $6.0 million of borrowing
capacity and revises the cumulative EBITDA and related financial covenants to
reflect the Company's revised EBITDA expectations. Substantially all the
agreements relating to the Company's outstanding indebtedness contain covenants
that impact the Company's liquidity and capital resources, including financial
covenants and restrictions on the incurrence of indebtedness, liens, and asset
sales. The Company was in compliance with the revised covenants as of March 31,
2000.
The ability of the Company to meet its debt service obligations and to comply
with the restrictive and financial covenants contained in the senior credit
facility and under the notes will be dependent on the future operating and
financial performance of the Company, which will be subject in part to a number
of factors beyond the control of the Company, such as prevailing economic
conditions, interest rates and demand for credit collection services.
Management believes that, based on current levels of operations and anticipated
improvements in operating results, cash flows from operations and borrowings
available under the senior credit facilities will be adequate to allow for
anticipated capital expenditures, to fund working capital requirements and to
make required payments of principal and interest on its debt. However, if the
Company is unable to generate sufficient cash flows from operations in the
future, it may be necessary for the Company to refinance all or a portion of its
debt or to obtain additional financing, but there can be no assurance that the
Company will be able to effect such refinancing or obtain additional financing
on commercially reasonable terms or at all.
Income Taxes
The Company has not recorded any tax benefit on its loss before income taxes for
the three months ended March 31, 2000 and 1999 due to the uncertainty regarding
the realization of such benefits.
Year 2000
In 1997, the Company initiated a company-wide Year 2000 project based on a
methodology recommended by an outside consultant, with a dedicated Year 2000
project office and coordinator. During the first quarter of 2000, the Company
experienced no disruptions in critical information technology and
non-information technology systems and believes those systems successfully
responded to the Year 2000 date change. The Company will continue to monitor its
critical computer applications and those of its suppliers and vendors throughout
the year 2000 to ensure that any latent Year 2000 matters that may arise are
promptly addressed.
Forward-Looking Statements
This Form 10-Q and other communications, as well as oral statements made by
representatives of the Company, may contain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. These
statements relate to, among other things, the Company's outlook for future
periods, market forces within the industry, cost reduction strategies and their
results, planned capital expenditures, long-term objectives of management and
other statements of expectations concerning matters that are not historical
facts.
Predictions of future results contain a measure of uncertainty and, accordingly,
actual results could differ materially due to various factors. Factors that
could change forward-looking statements are, among others, changes in the
general economy, changes in demand for the Company's services, governmental
regulations and other unforeseen circumstances. A number of these factors are
discussed in this Form 10-Q and in the Company's annual report on Form 10-K for
the year ended December 31, 1999.
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
<TABLE>
<CAPTION>
Long Term Debt
Non-Traded Instruments
As of March 31, 2000
(in $000's)
Fair
2000 2001 2002 2003 2004 Thereafter Total Value
-------- --------- -------- --------- --------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Variable Rate:
(1) Term Loan Facility : $687 $ $ $ 1,200 $17,500 $ -- $21,887 $21,887
1,250 1,250
$18.0 million 9.93% 9.93% 9.93% 9.93% 9.93% 9.93%
$ 0.4 million 11.75% 11.75% 11.75% 11.75% 11.75% 11.75%
$ 3.45 million 12.00% 12.00% 12.00% 12.00% 12.00% 12.00%
(2) Revolving Loan
$ 5.9 million 11.50% -- -- -- -- -- $ 5,900 $5,900
Fixed Rate:
Senior Notes due 2008: $ -- $ -- $ -- $ -- $ -- $100,000 $100,000 $73,000
$100 million @ 10.25% 10.25%
Security Agreement $ 41 $ 62 $ 46 $ 149 $ 149
22.50% 22.50% 22.50%
</TABLE>
In January 1998, the Company implemented a financing plan which included the
issuance of $100 million 10.25% Senior Notes due 2008 in a private placement.
The Company exchanged these notes for $100 million 10.25% Series A Senior Notes
due 2008 which are were registered under the Securities Act of 1933, as amended.
As part of the financing plan, the Company also entered into a credit agreement
(the "Credit Agreement") which, as amended, provides for (1) a term loan
facility in the amount of $25 million (the "Term Loan"), the balance of which
was $21.9 million as of March 31, 2000, and (ii) a revolving credit facility
(the "Revolving Credit Facility") with a borrowing limit of $12.5 million, the
balance of which was $5.9 million as of March 31, 2000.
Amounts outstanding under the Term Loan Facility and the Revolving Credit
Facility bear interest at the Company's option of either (A) the Base Rate plus
the Applicable Margin or (B) the Eurodollar Rate plus the Applicable Margin.
Interest payments are made quarterly for Base Rate loans. Interest payments on
Eurodollar loans are made on the earlier of their maturity date or 90 days
depending on their term. The table above presents the rates paid under variable
instruments at March 31, 2000. Changes in the Base Rate or Eurodollar Rate will
impact the actual interest rates paid by the Company.
The Company's primary market risk exposure with respect to these instruments is
that of interest rate risk. The Base Rate for any given day for the Term Loan
Facility and Revolving Credit Facility is equal to the greater of (i) the Prime
Rate in effect on such day, (ii) the Base CD Rate in effect on such day plus 1%,
and (iii) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%.
The Company is vulnerable to changes in all of these rates.
<PAGE>
PART II. OTHER INFORMATION
Item 1. None
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant, Nationwide Credit, Inc., has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
NATIONWIDE CREDIT, INC.
/s/ Thomas C. Ridenour
- ------------------------------------------------------------
Thomas C. Ridenour
Senior Vice President and Chief Financial Officer
Dated: May 15, 2000
EXHIBIT 10.1
AMENDED AND RESTATED CREDIT AGREEMENT
among
NCI ACQUISITION CORPORATION,
NATIONWIDE CREDIT, INC.,
as Borrower
The Several Lenders
from Time to Time Parties Hereto,
LEHMAN BROTHERS INC.,
as Arranger
LEHMAN COMMERCIAL PAPER INC.,
as Syndication Agent
FLEET CAPITAL CORPORATION,
as Administrative Agent and
Collateral Monitoring Agent
and
BHF (USA) CAPITAL CORPORATION,
as Documentation Agent
Dated as of April 18, 2000
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS 2
1.1 Defined Terms 2
1.2 Other Definitional Provisions 24
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS 24
2.1 Tranche B Term Loan Commitments 24
2.2 Procedure for Tranche B Term Loan Borrowing 24
2.3 Repayment of Tranche B Term Loans 25
2.4 Revolving Credit Commitments 25
2.5 Procedure for Revolving Credit Borrowing 26
2.6 Repayment of Loans; Evidence of Debt 26
2.7 Commitment Fees, etc. 27
2.8 Termination or Reduction of Revolving Credit Commitments 27
2.9 Optional Prepayments 28
2.10 Mandatory Prepayments and Commitment Reductions 28
2.11 Conversion and Continuation Options 29
2.12 Minimum Amounts and Maximum Number of Eurodollar Tranches 30
2.13 Interest Rates and Payment Dates 30
2.14 Computation of Interest and Fees 30
2.15 Inability to Determine Interest Rate 31
2.16 Pro Rata Treatment and Payments 31
2.17 Requirements of Law 33
2.18 Taxes 34
2.19 Indemnity 35
2.20 Illegality 36
2.21 Change of Lending Office 36
2.22 Replacement of Lenders under Certain Circumstances 36
SECTION 3. LETTERS OF CREDIT 37
3.1 L/C Commitment 37
3.2 Procedure for Issuance of Letter of Credit 37
3.3 Commissions, Fees and Other Charges 38
3.4 L/C Participations 38
3.5 Reimbursement Obligation of the Borrower 39
3.6 Obligations Absolute 39
3.7 Letter of Credit Payments 40
3.8 Applications 40
SECTION 4. REPRESENTATIONS AND WARRANTIES 40
4.1 Financial Condition 40
4.2 No Change 41
4.3 Corporate Existence; Compliance with Law 41
4.4 Corporate Power; Authorization; Enforceable Obligations 41
4.5 No Legal Bar 42
4.6 No Material Litigation 42
4.7 No Default 42
4.8 Ownership of Property; Liens 42
4.9 Intellectual Property 42
4.10 Taxes 43
4.11 Federal Regulations 43
4.12 Labor Matters 43
4.13 ERISA 43
4.14 Investment Company Act; Other Regulations 44
4.15 Subsidiaries 44
4.16 Use of Proceeds 44
4.17 Environmental Matters 44
4.18 Accuracy of Information, etc 45
4.19 Security Documents 46
4.20 Solvency 46
SECTION 5. CONDITIONS PRECEDENT 46
5.1 Conditions to Initial Extension of Credit 46
5.2 Conditions to Each Extension of Credit 48
SECTION 6. AFFIRMATIVE COVENANTS 49
6.1 Financial Statements 49
6.2 Certificates; Other Information 50
6.3 Payment of Obligations 51
6.4 Conduct of Business and Maintenance of Existence, etc. 51
6.5 Maintenance of Property; Insurance 51
6.6 Inspection of Property; Books and Records; Discussions 52
6.7 Notices 52
6.8 Environmental Laws 52
6.9 Additional Collateral, etc 53
SECTION 7. NEGATIVE COVENANTS 55
7.1 Financial Covenants 55
7.2 Limitation on Indebtedness 57
7.3 Limitation on Liens 57
7.4 Limitation on Fundamental Changes 58
7.5 Limitation on Sale of Assets 59
7.6 Limitation on Dividends 59
7.7 Limitation on Capital Expenditures 60
7.8 Limitation on Investments, Loans and Advances 60
7.9 Limitation on Optional Payments and Modifications of Debt
Instruments, etc.; Limitation on Modification of
Certificate of Incorporation. 61
7.10 Limitation on Transactions with Affiliates 61
7.11 Limitation on Sales and Leasebacks 62
7.12 Limitation on Changes in Fiscal Periods 62
7.13 Limitation on Negative Pledge Clauses 62
7.14 Limitation on Restrictions on Subsidiary Distributions 62
7.15 Limitation on Lines of Business 62
7.16 Limitation on Amendments to Acquisition Documentation 62
7.17 Limitation on Activities of Holdings 63
SECTION 8. EVENTS OF DEFAULT 63
SECTION 9. THE AGENTS 66
9.1 Appointment 66
9.2 Delegation of Duties 67
9.3 Exculpatory Provisions 67
9.4 Reliance by Agents 67
9.5 Notice of Default 68
9.6 Non-Reliance on Agents and Other Lenders 68
9.7 Indemnification 68
9.8 Agent in Its Individual Capacity 69
9.9 Successor Agents 69
9.10 Authorization to Release Liens 69
9.11 The Arranger 70
9.12 The Documentation Agent 70
SECTION 10. MISCELLANEOUS 70
10.1 Amendments and Waivers 70
10.2 Notices 71
10.3 No Waiver; Cumulative Remedies 72
10.4 Survival of Representations and Warranties 72
10.5 Payment of Expenses 72
10.6 Successors and Assigns; Participations and Assignments 73
10.7 Adjustments; Set-off 76
10.8 Counterparts 76
10.9 Severability 77
10.10 Integration 77
10.11 GOVERNING LAW 77
10.12 Submission To Jurisdiction; Waivers 77
10.13 Acknowledgements 78
10.14 WAIVERS OF JURY TRIAL 78
10.15 Confidentiality 78
</TABLE>
<PAGE>
ANNEX:
A Pricing Grid
SCHEDULES:
1.1A Commitments
4.1 Accounting Adjustments
4.2 Material Events
4.4 Consents, Authorizations, Filings and Notices
4.6 Litigation
4.10 Taxes
4.15 Subsidiaries
4.19 UCC Filing Jurisdictions
7.2(e) Existing Indebtedness
7.3(f) Existing Liens
EXHIBITS:
A Form of Amended and Restated Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Assignment and Acceptance
E-1 Form of Legal Opinion of Weil, Gotshal & Manges LLP
E-2 Form of Legal Opinion of Troutman Sanders LLP
F-1 Form of Tranche B Term Note
F-2 Form of Revolving Credit Note
G Form of Exemption Certificate
H Form of Borrowing Base Certificate
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of April __,
2000, among NCI ACQUISITION CORPORATION, a Delaware corporation ("Holdings"),
NATIONWIDE CREDIT, INC., a Georgia corporation (the "Borrower"), the several
banks and other financial institutions or entities from time to time parties to
this Agreement (the "Lenders"), LEHMAN BROTHERS INC., as advisor and arranger
(in such capacity, the "Arranger"), LEHMAN COMMERCIAL PAPER INC., as syndication
agent (in such capacity, the "Syndication Agent"), FLEET CAPITAL CORPORATION, as
administrative agent (in such capacity, the "Administrative Agent") and
collateral monitoring agent (in such capacity, the "Collateral Monitoring
Agent"), and BHF (USA) CAPITAL CORPORATION, as Documentation Agent (in such
capacity, the "Documentation Agent").
W I T N E S S E T H:
WHEREAS, Holdings, the Borrower, the several banks and other
financial institutions or entities from time to time party thereto, the
Arranger, the Syndication Agent, the Administrative Agent and the Documentation
Agent have entered into a credit agreement, dated as of January 28, 1998 (as
heretofore amended, supplemented or otherwise modified, the "Existing Credit
Agreement"); and
WHEREAS, the parties hereto have agreed to amend and restate
the Existing Credit Agreement upon and subject to the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
agreements hereinafter set forth, the parties hereto hereby agree that on the
Closing Date (as defined below) the Existing Credit Agreement shall be amended
and restated in its entirety as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed in
this Section 1.1 shall have the respective meanings set forth in this
Section 1.1.
"Accounts": as to any Person, all rights to receive payment for
goods sold or leased by such Person or for services rendered in the
ordinary course of business of such Person to the extent not evidenced
by an instrument or chattel paper (except (1) instruments which
constitute a part of chattel paper and which have been individually
marked to show the Lien granted pursuant to the Security Documents and
(2) instruments which have been delivered to the Administrative Agent
), including any rights in, to and under all purchase orders or
receipts now owned or hereafter acquired for goods and services, and
all collateral security and guarantees with respect to any of the
foregoing.
"Adjustment Date": as defined in the Pricing Grid.
"Administrative Agent": as defined in the preamble hereto.
"Advance Rate": up to 85% of Eligible Accounts.
"Affiliate": 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. For purposes of this definition, "control"
of a Person means the power, directly or indirectly, either to (a)
vote 10% or more of the securities having ordinary voting power for
the election of directors (or persons performing similar functions) of
such Person or (b) direct or cause the direction of the management and
policies of such Person, whether by contract or otherwise.
"Agents": the collective reference to the Syndication Agent, the
Administrative Agent and the Collateral Monitoring Agent.
"Aggregate Exposure": with respect to any Lender, an amount equal
to (a) until the Closing Date, the aggregate amount of such Lender's
Commitments and (b) thereafter, the sum of (i) the aggregate unpaid
principal amount of such Lender's Tranche B Term Loans (ii) the
aggregate unpaid principal amount of such Lender's Tranche C Term Loan
and (iii) the amount of such Lender's Revolving Credit Commitment or,
if the Revolving Credit Commitments have been terminated, the amount
of such Lender's Revolving Extensions of Credit.
"Aggregate Exposure Percentage": with respect to any Lender, the
ratio (expressed as a percentage) of such Lender's Aggregate Exposure
to the Aggregate Exposure of all Lenders.
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time after the date hereof.
"Applicable Margin": for each Type of Loan, the rate per annum
determined pursuant to the Pricing Grid. The Applicable Margin for
each Type of Loan as of the Closing Date is set forth under the
relevant column heading below:
Base Rate Eurodollar
Loans Loans
Revolving Credit Loans 2.500% 3.500%
Tranche B Term Loans 2.750% 3.750%
Tranche C Term Loans 3.000% 4.000%
"Application": an application, in such form as the Issuing Lender
may specify from time to time, requesting the Issuing Lender to open a
Letter of Credit.
"Arranger": as defined in the preamble hereto.
"Asset Sale": any Disposition of Property or series of related
Dispositions of Property (other than any such Disposition permitted by
clause (a), (b), (c) or (d) of Section 7.5), excluding any Disposition
which yields gross proceeds to Holdings, the Borrower or any of its
Subsidiaries (valued at the initial principal amount thereof in the
case of non-cash proceeds consisting of notes or other debt securities
and valued at fair market value in the case of other non-cash
proceeds) of less than $100,000 (provided that the aggregate gross
proceeds of Dispositions that may be so excluded shall not exceed
$500,000).
"Assignee": as defined in Section 10.6(c).
"Assignment and Acceptance": as defined in Section 10.6(c).
"Assignor": as defined in Section 10.6(c).
"Available Revolving Credit Commitment": as to any Revolving
Credit Lender at any time, an amount equal to the excess, if any, of
(a) such Lender's Revolving Credit Commitment over (b) such Lender's
Revolving Extensions of Credit.
"Base Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the Prime Rate in effect
on such day. For purposes hereof: "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by the
Reference Bank as its prime or base rate in effect at its principal
office in New York City (the Prime Rate not being intended to be the
lowest rate of interest charged by the Reference Bank in connection
with extensions of credit to debtors). Any change in the Base Rate due
to a change in the Prime Rate shall be effective as of the opening of
business on the effective day of such change in the Prime Rate.
"Base Rate Loans": Loans the rate of interest applicable to which
is based upon the Base Rate.
"Benefitted Lender": as defined in Section 10.7(a).
"Board": the Board of Governors of the Federal Reserve System of
the United States (or any successor).
"Borrower": as defined in the preamble hereto.
"Borrowing Base": on any date of determination, an amount
equal to (i) the product of (A) the aggregate outstanding Eligible
Accounts of the Borrower and its Subsidiaries on such date and (B) the
applicable Advance Rate, minus (ii) any Reserves established by the
Collateral Monitoring Agent at such time. The Borrowing Base shall be
determined by the Collateral Monitoring Agent in its reasonable
judgment by reference to the most recent Borrowing Base Certificate,
and the Borrowing Base so determined shall remain in effect until the
next determination thereof pursuant to this sentence.
"Borrowing Base Certificate": a borrowing base certificate
substantially in the form of Exhibit H.
"Borrowing Date": any Business Day specified by the Borrower as a
date on which the Borrower requests the relevant Lenders to make Loans
hereunder.
"Business": as defined in Section 4.17(b).
"Business Day": (i) for all purposes other than as covered by
clause (ii) below, a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by
law to close and (ii) with respect to all notices and determinations
in connection with, and payments of principal and interest on,
Eurodollar Loans, any day which is a Business Day described in clause
(i) and which is also a day for trading by and between banks in Dollar
deposits in the interbank eurodollar market.
"Capital Expenditures": for any period, with respect to any
Person, the aggregate of all expenditures by such Person and its
Subsidiaries for the acquisition or leasing (pursuant to a capital
lease) of fixed or capital assets or additions to equipment (including
replacements, capitalized repairs and improvements during such period)
which should be capitalized under GAAP on a consolidated balance sheet
of such Person and its Subsidiaries.
"Capital Lease Obligations": as to any Person, the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or
a combination thereof, which obligations are required to be classified
and accounted for as capital leases on a balance sheet of such Person
under GAAP, and, for the purposes of this Agreement, the amount of
such obligations at any time shall be the capitalized amount thereof
at such time determined in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants, rights or options
to purchase any of the foregoing.
"Cash Equivalents": (a) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit
of the United States, in each case maturing within one year from the
date of acquisition; (b) certificates of deposit, time deposits,
eurodollar time deposits or overnight bank deposits having maturities
of six months or less from the date of acquisition issued by any
Lender or by any commercial bank organized under the laws of the
United States or any state thereof having combined capital and surplus
of not less than $500,000,000; (c) commercial paper of an issuer rated
at least A-2 by Standard & Poor's Ratings Services ("S&P") or P-2 by
Moody's Investors Service, Inc. ("Moody's"), or carrying an equivalent
rating by a nationally recognized rating agency, if both of the two
named rating agencies cease publishing ratings of commercial paper
issuers generally, and maturing within six months from the date of
acquisition; (d) repurchase obligations of any Lender or of any
commercial bank satisfying the requirements of clause (b) of this
definition, having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from
the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or
foreign government (as the case may be) are rated at least A by S&P or
A by Moody's; (f) securities with maturities of six months or less
from the date of acquisition backed by standby letters of credit
issued by any Lender or any commercial bank satisfying the
requirements of clause (b) of this definition; or (g) shares of money
market mutual or similar funds which invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this
definition.
"Closing Date": the date on which the conditions precedent set
forth in Section 5.1 shall have been satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral": all Property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by
any Security Document.
"Collateral Monitoring Agent": as defined in the preamble hereto.
"Commitment": as to any Lender, the sum of the Tranche B Term
Loan Commitment and the Revolving Credit Commitment of such Lender.
"Commitment Fee Rate": .625% per annum; provided, that on and
after the first Adjustment Date occurring after the completion of one
full fiscal quarter of the Borrower after the Closing Date, the
Commitment Fee Rate will be determined pursuant to the Pricing Grid.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"Compliance Certificate": a certificate duly executed by a
Responsible Officer, substantially in the form of
Exhibit B.
"Consolidated Current Assets": at any date, all amounts (other
than cash and Cash Equivalents) which would, in conformity with GAAP,
be set forth opposite the caption "total current assets" (or any like
caption) on a consolidated balance sheet of the Borrower and its
Subsidiaries at such date.
"Consolidated Current Liabilities": at any date, all amounts
which would, in conformity with GAAP, be set forth opposite the
caption "total current liabilities" (or any like caption) on a
consolidated balance sheet of the Borrower and its Subsidiaries at
such date, but excluding (a) the current portion of any Funded Debt of
the Borrower and its Subsidiaries and (b) without duplication of
clause (a) above, all Indebtedness consisting of Revolving Credit
Loans to the extent otherwise included therein.
"Consolidated EBITDA": for any period, Consolidated Net Income
for such period plus, without duplication and to the extent reflected
as a charge in the statement of such Consolidated Net Income for such
period, the sum of (a) income tax expense, (b) interest expense,
amortization or writeoff of debt discount and debt issuance costs and
commissions, discounts and other fees and charges associated with
Indebtedness (including the Loans), (c) depreciation and amortization
expense, (d) amortization of intangibles (including, but not limited
to, goodwill) and organization costs, (e) any extraordinary, unusual
or non-recurring expenses or losses (including, whether or not
otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, losses on sales of assets
outside of the ordinary course of business) and (f) any other non-cash
charges, and minus, to the extent included in the statement of such
Consolidated Net Income for such period, the sum of (a) interest
income, (b) any extraordinary, unusual or non-recurring income or
gains (including, whether or not otherwise includable as a separate
item in the statement of such Consolidated Net Income for such period,
gains on the sales of assets outside of the ordinary course of
business) and (c) any other non-cash income, all as determined on a
consolidated basis.
"Consolidated Interest Coverage Ratio": for any period, the ratio
of (a) Consolidated EBITDA for such period to (b) Consolidated
Interest Expense for such period.
"Consolidated Interest Expense": for any period, total cash
interest expense (including that attributable to Capital Lease
Obligations) of the Borrower and its Subsidiaries payable in respect
of such period with respect to all outstanding Indebtedness of the
Borrower and its Subsidiaries (including, without limitation, all
commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing and net costs
under Interest Rate Protection Agreements to the extent such net costs
are allocable to such period in accordance with GAAP).
"Consolidated Lease Expense": for any period, the aggregate
amount of fixed and contingent rentals payable by the Borrower and its
Subsidiaries, determined on a consolidated basis in accordance with
GAAP, for such period with respect to leases of real and personal
property; provided, that payments with respect to Capital Lease
Obligations shall not constitute Consolidated Lease Expense.
"Consolidated Net Income": for any period, the consolidated net
income (or loss) of the Borrower and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP; provided that there shall
be excluded (a) the income (or deficit) of any Person accrued prior to
the date it becomes a Subsidiary of the Borrower or is merged into or
consolidated with the Borrower or any of its Subsidiaries, (b) the
income (or deficit) of any Person (other than a Subsidiary of the
Borrower) in which the Borrower or any of its Subsidiaries has an
ownership interest, except to the extent that any such income is
actually received by the Borrower or such Subsidiary in the form of
dividends or similar distributions and (c) the undistributed earnings
of any Subsidiary of the Borrower to the extent that the declaration
or payment of dividends or similar distributions by such Subsidiary is
not at the time permitted by the terms of any Contractual Obligation
(other than under any Loan Document) or Requirement of Law applicable
to such Subsidiary.
"Consolidated Total Debt": at any date, the aggregate principal
amount of all Indebtedness of the Borrower and its Subsidiaries at
such date, determined on a consolidated basis in accordance with GAAP.
"Consolidated Total Debt Ratio": as at the last day of any period
of four consecutive fiscal quarters, the ratio of (a) Consolidated
Total Debt on such day to (b) Consolidated EBITDA for such period.
"Consolidated Working Capital": at any date, the excess of
Consolidated Current Assets on such date over Consolidated Current
Liabilities on such date.
"Continuing Directors": the directors of Holdings on the Closing
Date, and each other director, if, in each case, such other director's
nomination for election to the board of directors of Holdings is
recommended by at least 66-2/3% of the then Continuing Directors or
such other director receives the vote of the Permitted Investors in
his or her election by the shareholders of Holdings.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or
any of its Property is bound.
"Control Investment Affiliate": as to any Person, any other
Person which (a) directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person and (b) is
organized by such Person primarily for the purpose of making equity or
debt investments in one or more companies. For purposes of this
definition, "control" of a Person means the power, directly or
indirectly, to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise. "Default":
any of the events specified in Section 8, whether or not any
requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Disposition": with respect to any Property, any sale, lease,
sale and leaseback, assignment, conveyance, transfer or other
disposition thereof; and the terms "Dispose" and "Disposed of" shall
have correlative meanings.
"Documentation Agent": as defined in the preamble hereto.
"Dollars" and "$": dollars in lawful currency of the United
States.
"Domestic Subsidiary": any Subsidiary of the Borrower organized
under the laws of any jurisdiction within the United States.
"ECF Percentage": 75%; provided that with respect to each fiscal
year of the Borrower ending on or after December 31, 1998, the ECF
Percentage shall be reduced to 50%, 25% or 0% if the Consolidated
Total Debt Ratio for the period of four consecutive fiscal quarters
ending on the last day of such fiscal year is equal to or below 4.25
to 1.0, 3.5 to 1.0 or 2.5 to 1.0, respectively.
"Eligible Accounts": all Accounts of the Borrower and its
Subsidiaries arising in the ordinary course of business, other than:
(a) Accounts which are outstanding more than 90 days past
the original invoice date;
(b) Accounts as to which the account debtor thereunder has
not been sent an invoice;
(c) Accounts which are owed by an obligor which is an
Affiliate or employee of the Borrower or its Subsidiaries;
(d) Accounts which are pre-petition liabilities owed by an
obligor which has taken any of the actions or suffered any of the
events of the kind described in Section 8(f);
(e) Accounts which are owed by an obligor with respect to
whom more than 50% of the Accounts of such obligor are more than
90 days past the original invoice date;
(f) Accounts which are owed by account debtors located
outside the United States of America;
(g) Accounts (i) upon which the Borrower's right to receive
payment is not absolute or is contingent upon the fulfillment of
any condition whatsoever or (ii) as to which the Borrower is not
able to bring suit or otherwise enforce its remedies against the
account debtor through judicial process or (iii) if the Account
represents a progress billing consisting of an invoice for goods
sold or used or services rendered pursuant to a contract under
which the account debtor's obligation to pay that invoice is
subject to the Borrower's completion of further performance under
such contract or is subject to the equitable lien of a surety
bond issuer;
(h) any Account to the extent that any defense,
counterclaim, setoff or dispute is asserted as to such Account;
(i) any Account that is not a true and correct statement of
bona fide indebtedness incurred in the amount of the Account for
merchandise sold to or services rendered and accepted by the
applicable account debtor;
(j) any Account to the extent the Borrower or any of its
Subsidiaries is liable for goods sold or services rendered by the
applicable account debtor to the Borrower or any of its
Subsidiaries but only to the extent of the potential offset;
(k) any Account as to which any of the representations or
warranties pertaining to Accounts set forth in this Agreement or
the Guarantee and Collateral Agreement is untrue;
(l) any Account which is payable in a currency other than
Dollars;
(m) Accounts which are owed by a Governmental Authority or
an Affiliate thereof, provided, however, that no more than
$2,000,000 of accounts in respect of which the United States
Department of Education is the account debtor shall be considered
Eligible Accounts at any time, (unless, with respect to Accounts
arising from sales to the United States of America or to any
agency, department or division thereof, the Borrower or its
relevant Subsidiary has complied with the Federal Assignment of
Claims Act of 1940 with respect thereto);
(n) Accounts (i) which are not bona fide, valid and legally
enforceable obligations of the parties thereto or the account
debtor in respect thereof and which do not arise from the
rendition of services in the ordinary course of business to such
parties or account debtors, (ii) as to which either the Borrower
or (to the best of the Borrower's knowledge) any other party to
such Account is in default or is likely to become in default in
the performance or observance of any of the terms thereof in any
material respect, (iii) which are not solely owned by the
Borrower or any of its Subsidiaries (subject to the Lien of the
Administrative Agent therein), (iv) in which the Borrower or its
Subsidiaries (1) has not granted a valid and continuing first
lien and first security interest in favor of the Administrative
Agent pursuant to the Security Documents and (2) does not have
good and marketable title, free and clear of any and all Liens
(except inchoate or similar Liens, Liens permitted under Section
7.3, and Liens created under the Security Documents) or rights of
others enforceable as such against all other Persons, (v) as to
which all action necessary or desirable under applicable law to
protect and perfect such lien and security interest has not been
duly taken, and (vi) as to which any security agreement,
financing statement, equivalent security or lien instrument or
continuation statement covering all or any part thereof is on
file or of record in any public office, except such as may have
been filed in favor of the Administrative Agent pursuant to the
Security Documents; or
(o) Accounts which have been deemed necessary to be excluded
in the reasonable judgment of the Collateral Monitoring Agent
exercised in a manner which is customary either in the commercial
finance industry or in the lending practices of the Collateral
Monitoring Agent and/or the Lenders.
"Environmental Law": any and all foreign, Federal, state, local
or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees, requirements of any Governmental Authority or other
Requirements of Law (including common law) regulating, relating to or
imposing liability or standards of conduct concerning protection of
human health or the environment, as now or may at any time hereafter
be in effect.
"Equity Investors": collectively, WPG Corporate Development
Associates V, L.P., WPG Corporate Development Associates V (Overseas),
L.P., Centre Capital Investors II, L.P. (together with certain of its
affiliates), Centre Capital Tax-Exempt Investors II, L.P., Centre
Capital Offshore Investors II, L.P., State Board of Administration of
Florida, Centre Parallel Management Partners, L.P., Centre Partners
Coinvestment, L.P., Avalon Investment Partners, LLC, Weber Family
Trust dated 1/6/89, Lion Investments Limited and Westpool Investment
Trust plc.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum
rates (expressed as a decimal fraction) of reserve requirements in
effect on such day (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of
the Board or other Governmental Authority having jurisdiction with
respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of the Board) maintained by a member bank
of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
determined on the basis of the rate for deposits in Dollars for a
period equal to such Interest Period commencing on the first day of
such Interest Period appearing on Page 3750 of the Dow Jones Markets
screen as of 11:00 A.M., London time, two Business Days prior to the
beginning of such Interest Period. In the event that such rate does
not appear on Page 3750 of the Dow Jones Markets screen (or otherwise
on such service), the "Eurodollar Base Rate" for purposes of this
definition shall be determined by reference to such other comparable
publicly available service for displaying eurodollar rates as may be
selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate at which the Administrative
Agent is offered Dollar deposits at or about 11:00 A.M., New York City
time, two Business Days prior to the beginning of such Interest Period
in the interbank eurodollar market where its eurodollar and foreign
currency and exchange operations are then being conducted for delivery
on the first day of such Interest Period for the number of days
comprised therein.
"Eurodollar Loans": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined
for such day in accordance with the following formula (rounded upward
to the nearest 1/100th of 1%):
Eurodollar Base Rate
---------------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar
Loans the then current Interest Periods with respect to all of which
begin on the same date and end on the same later date (whether or not
such Loans shall originally have been made on the same day).
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of
time, or both, has been satisfied.
"Excess Cash Flow": for any fiscal year of the Borrower, the
excess, if any, of (a) the sum, without duplication, of (i)
Consolidated Net Income for such fiscal year, (ii) an amount equal to
the amount of all non-cash charges (including depreciation and
amortization) deducted in arriving at such Consolidated Net Income,
(iii) decreases in Consolidated Working Capital for such fiscal year,
(iv) an amount equal to the aggregate net non-cash loss on the
Disposition of Property by the Borrower and its Subsidiaries during
such fiscal year (other than sales of inventory in the ordinary course
of business), to the extent deducted in arriving at such Consolidated
Net Income and (v) the net increase during such fiscal year (if any)
in deferred tax accounts of the Borrower over (b) the sum, without
duplication, of (i) an amount equal to the amount of all non-cash
credits included in arriving at such Consolidated Net Income, (ii) the
aggregate amount actually paid by the Borrower and its Subsidiaries in
cash during such fiscal year on account of Capital Expenditures
(excluding the principal amount of Indebtedness incurred in connection
with such expenditures and any such expenditures financed with the
proceeds of any Reinvestment Deferred Amount), (iii) the aggregate
amount of all prepayments of Revolving Credit Loans during such fiscal
year to the extent accompanying permanent optional reductions of the
Revolving Credit Commitments and all optional prepayments of the
Tranche B Term Loans and the Tranche C Term Loans during such fiscal
year, (iv) the aggregate amount of all regularly scheduled principal
payments of Funded Debt (including, without limitation, the Tranche B
Term Loans and the Tranche C Term Loans) of the Borrower and its
Subsidiaries made during such fiscal year (other than in respect of
any revolving credit facility to the extent there is not an equivalent
permanent reduction in commitments thereunder), (v) increases in
Consolidated Working Capital for such fiscal year, (vi) an amount
equal to the aggregate net non-cash gain on the Disposition of
Property by the Borrower and its Subsidiaries during such fiscal year
(other than sales of inventory in the ordinary course of business), to
the extent included in arriving at such Consolidated Net Income, and
(vii) the net decrease during such fiscal year (if any) in deferred
tax accounts of the Borrower.
"Excess Cash Flow Application Date": as defined in Section
2.10(c).
"Excluded Foreign Subsidiaries": any Foreign Subsidiary in
respect of which either (i) the pledge of 65% or more of the Capital
Stock of such Subsidiary as Collateral or (ii) the guaranteeing by such
Subsidiary of the Obligations, would, in the good faith judgment of the
Borrower, result (or is reasonably expected to result) in adverse tax
consequences to the Borrower.
"Existing Credit Agreement": as defined in the recitals hereto.
"Facility": each of (a) the Tranche B Term Loan Commitments and
the Tranche B Term Loans made thereunder (the "Tranche B Term Loan
Facility") and (b) the Tranche C Term Loans deemed to have been made
hereunder ("Tranche C Term Loan Facility") and (c) the Revolving
Credit Commitments and the extensions of credit made thereunder (the
"Revolving Credit Facility").
"Federal Funds Effective Rate"; for any day, the weighted
average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds
brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Reference Bank from three
federal funds brokers of recognized standing selected by it.
"Foreign Subsidiary": any Subsidiary of the Borrower that is not
a Domestic Subsidiary.
"Funded Debt": as to any Person, all Indebtedness of such Person
that matures more than one year from the date of its creation or
matures within one year from such date but is renewable or extendible,
at the option of such Person, to a date more than one year from such
date or arises under a revolving credit or similar agreement that
obligates the lender or lenders to extend credit during a period of
more than one year from such date, including, without limitation, all
current maturities and current sinking fund payments in respect of
such Indebtedness whether or not required to be paid within one year
from the date of its creation and, in the case of the Borrower,
Indebtedness in respect of the Loans.
"Funding Office": the office of the Administrative Agent from
time to time specified by the Administrative Agent as its funding
office by written notice to the parties hereto.
"GAAP": generally accepted accounting principles in the United
States of America as in effect from time to time, except that for
purposes of Section 7.1, GAAP shall be determined on the basis of such
principles in effect on the date hereof and consistent with those used
in the preparation of the most recent audited financial statements
delivered pursuant to Section 4.1(b). In the event that any
"Accounting Change" (as defined below) shall occur and such change
results in a change in the method of calculation of financial
covenants, standards or terms in this Agreement, then the Borrower and
the Administrative Agent agree to enter into negotiations in order to
amend such provisions of this Agreement so as to equitably reflect
such Accounting Changes with the desired result that the criteria for
evaluating the Borrower's financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been
made. Until such time as such an amendment shall have been executed
and delivered by the Borrower, the Administrative Agent and the
Required Lenders, all financial covenants, standards and terms in this
Agreement shall continue to be calculated or construed as if such
Accounting Changes had not occurred. "Accounting Changes" refers to
changes in accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public
Accountants or, if applicable, the SEC.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government (including, without
limitation, any securities exchange, self-regulatory organization or
the National Association of Insurance Commissioners).
"Guarantee and Collateral Agreement": the Amended and Restated
Guarantee and Collateral Agreement to be executed and delivered by
Holdings, the Borrower and each Subsidiary Guarantor, substantially in
the form of Exhibit A, as the same may be amended, supplemented or
otherwise modified from time to time.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "primary obligations") of
any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation
of the guaranteeing person, whether or not contingent, (i) to purchase
any such primary obligation or any Property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for
the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency 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 owner of
any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount
equal to the stated or determinable amount of the primary obligation
in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such guaranteeing person may be liable
pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for
which such guaranteeing person may be liable are not stated or
determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated
liability in respect thereof as determined by the Borrower in good
faith.
"Guarantors": the collective reference to Holdings and the
Subsidiary Guarantors.
"Holdings": as defined in the preamble hereto.
"Indebtedness": of any Person at any date, without duplication,
(a) all indebtedness of such Person for borrowed money, (b) all
obligations of such Person for the deferred purchase price of Property
or services (other than current trade payables incurred in the
ordinary course of such Person's business), (c) all obligations of
such Person evidenced by notes, bonds, debentures or other similar
instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to
Property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such Property), (e) all Capital
Lease Obligations of such Person, (f) all obligations of such Person,
contingent or otherwise, as an account party under acceptance, letter
of credit or similar facilities, (g) all obligations of such Person,
contingent or otherwise, to purchase, redeem, retire or otherwise
acquire for value any Capital Stock (other than common stock) of such
Person, (h) all Guarantee Obligations of such Person in respect of
obligations of the kind referred to in clauses (a) through (g) above;
(i) all obligations of the kind referred to in clauses (a) through (h)
above secured by (or for which the holder of such obligation has an
existing right, contingent or otherwise, to be secured by) any Lien on
Property (including, without limitation, accounts and contract rights)
owned by such Person, whether or not such Person has assumed or become
liable for the payment of such obligation, (j) for the purposes of
Section 8(e) only, all obligations of such Person in respect of
Interest Rate Protection Agreements and (k) the liquidation value of
any preferred Capital Stock of such Person or its Subsidiaries held by
any Person other than such Person and its Wholly Owned Subsidiaries.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or
otherwise, including, without limitation, copyrights, copyright
licenses, patents, patent licenses, trademarks, trademark licenses,
technology, know-how and processes, and all rights to sue at law or in
equity for any infringement or other impairment thereof, including the
right to receive all proceeds and damages therefrom.
"Interest Payment Date": (a) as to any Base Rate Loan, the first
day of each April, July, October and January to occur while such Loan
is outstanding and the final maturity date of such Loan, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the
last day of such Interest Period, (c) as to any Eurodollar Loan having
an Interest Period longer than three months, each day which is three
months, or a whole multiple thereof, after the first day of such
Interest Period and the last day of such Interest Period and (d) as to
any Loan (other than any Revolving Credit Loan that is a Base Rate
Loan), the date of any repayment or prepayment made in respect
thereof.
"Interest Period": as to any Eurodollar Loan, (a) initially, the
period commencing on the borrowing or conversion date, as the case may
be, with respect to such Eurodollar Loan and ending one, two, three or
six months thereafter, as selected by the Borrower in its notice of
borrowing or notice of conversion, as the case may be, given with
respect thereto; and (b) thereafter, each period commencing on the
last day of the next preceding Interest Period applicable to such
Eurodollar Loan and ending one, two, three or six months thereafter,
as selected by the Borrower by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the
last day of the then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the next
succeeding 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 immediately preceding
Business Day;
(ii) any Interest Period that would otherwise extend beyond the
Revolving Credit Termination Date or beyond the date final payment is
due on the Tranche B Term Loans or the Tranche C Term Loans shall end
on the Revolving Credit Termination Date or such due date, as
applicable;
(iii) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(ii) the Borrower shall select Interest Periods so as not to require a
payment or prepayment of any Eurodollar Loan during an Interest Period
for such Loan.
"Interest Rate Protection Agreement": any interest rate
protection agreement, interest rate futures contract, interest rate
option, interest rate cap or other interest rate hedge arrangement, to
or under which the Borrower or any of its Subsidiaries is a party or a
beneficiary on the date hereof or becomes a party or a beneficiary
after the date hereof.
"Issuing Lender": Fleet Capital Corporation, in its capacity as
issuer of any Letter of Credit.
"Joint Ventures": collectively, Yanci Services Company, a Georgia
general partnership, and Health Care Financial Services Associates, a
Georgia joint venture.
"L/C Commitment": $5,000,000.
"L/C Fee Payment Date": the first day of each April, July,
October and January and the last day of the Revolving
Credit Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of (a)
the aggregate then undrawn and unexpired amount of the then
outstanding Letters of Credit and (b) the aggregate amount of drawings
under Letters of Credit which have not then been reimbursed pursuant
to Section 3.5.
"L/C Participants": the collective reference to all the Revolving
Credit Lenders other than the Issuing Lender.
"Lenders": as defined in the preamble hereto.
"Letters of Credit": as defined in Section 3.1(a).
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).
"Loan": any loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement, the Security Documents, the
Applications and the Notes.
"Loan Parties": Holdings, the Borrower and each Subsidiary of the
Borrower which is a party to a Loan Document.
"Majority Facility Lenders": with respect to any Facility, the
holders of more than 51% of the aggregate unpaid principal amount of
the Tranche B Term Loans, Tranche C Term Loans or the Total Revolving
Extensions of Credit, as the case may be, outstanding under such
Facility (or, in the case of the Revolving Credit Facility, prior to
any termination of the Revolving Credit Commitments, the holders of
more than 51% of the Total Revolving Credit Commitments).
"Majority Revolving Credit Facility Lenders": the Majority
Facility Lenders in respect of the Revolving Credit Facility.
"Master Collectors": Master Collectors of Dallas, Inc., a Texas
corporation.
"Material Adverse Effect": a material adverse effect on (a) the
business, assets, property or condition (financial or otherwise) of
the Borrower and its Subsidiaries taken as a whole or (b) the validity
or enforceability of this Agreement or any of the other Loan Documents
or the rights or remedies of the Agents or the Lenders hereunder or
thereunder.
"Material Environmental Amount": an amount payable by the
Borrower and/or its Subsidiaries in excess of $250,000 for remedial
costs, compliance costs, compensatory damages, punitive damages,
fines, penalties or any combination thereof.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or
any hazardous or toxic substances, materials or wastes, defined or
regulated as such in or under any Environmental Law, including,
without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) in connection with any Asset Sale or
any Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred
payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and when
received) of such Asset Sale or Recovery Event, net of attorneys' fees,
accountants' fees, investment banking fees, amounts required to be
applied to the repayment of Indebtedness secured by a Lien expressly
permitted hereunder on any asset which is the subject of such Asset
Sale or Recovery Event (other than any Lien pursuant to a Security
Document) and other customary fees and expenses actually incurred in
connection therewith and net of taxes paid or reasonably estimated to
be payable as a result thereof (after taking into account any available
tax credits or deductions and any tax sharing arrangements) and (b) in
connection with any issuance or sale of debt securities or instruments
or the incurrence of loans, the cash proceeds received from such
issuance or incurrence, net of attorneys' fees, investment banking
fees, accountants' fees, underwriting discounts and commissions and
other customary fees and expenses actually incurred in connection
therewith.
"Non-Excluded Taxes": as defined in Section 2.18(a).
"Non-U.S. Lender": as defined in Section 2.18(d).
"Notes": the collective reference to any promissory note
evidencing Loans.
"Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity
of the Loans and Reimbursement Obligations and interest accruing after
the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the
Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Loans and all other
obligations and liabilities of the Borrower to the Administrative
Agent or to any Lender (or, in the case of Interest Rate Protection
Agreements, any affiliate of any Lender), whether direct or indirect,
absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection
with, this Agreement, any other Loan Document, the Letters of Credit,
any Interest Rate Protection Agreement entered into with any Lender or
any affiliate of any Lender or any other document made, delivered or
given in connection herewith or therewith, whether on account of
principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including, without limitation, all fees, charges and
disbursements of counsel to the Administrative Agent or to any Lender
that are required to be paid by the Borrower pursuant hereto) or
otherwise.
"Original Closing Date": the Closing Date under (and as defined
in) the Existing Credit Agreement.
"Other Taxes": any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies
arising from any payment made hereunder or from the execution,
delivery or enforcement of, or otherwise with respect to, this
Agreement.
"Participant": as defined in Section 10.6(b).
"Payment Office": the office of the Administrative Agent from
time to time specified by the Administrative Agent as its payment
office to the other parties hereto.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"Permitted Investors": the collective reference to the Equity
Investors and their Control Investment Affiliates.
"Person": an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or
other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by Title IV of ERISA and in respect of which the Borrower or
a Commonly Controlled Entity is (or, if such plan were terminated at
such time, would under Section 4069 of ERISA be deemed to be) an
"employer" as defined in Section 3(5) of ERISA.
"Pricing Grid": the pricing grid attached hereto as Annex A.
"Projections": as defined in Section 6.2(c).
"Properties": as defined in Section 4.17(a).
"Property": any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible
or intangible, including, without limitation, Capital Stock; it being
understood, for the avoidance of doubt, that to the extent any Loan
Party has no right or interest in a trust account established in the
ordinary course of its debt collateral business such trust account
shall not be deemed to be "Property".
"Recovery Event": any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding
relating to any asset of Holdings, the Borrower or any of its
Subsidiaries.
"Reference Bank": Citibank, N.A.
"Register": as defined in Section 10.6(d).
"Regulation U": Regulation U of the Board as in effect from time
to time.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 3.5
for amounts drawn under Letters of Credit.
"Reinvestment Deferred Amount": with respect to any Reinvestment
Event, the aggregate Net Cash Proceeds received by Holdings, the
Borrower or any of its Subsidiaries in connection therewith which are
not applied to prepay the Tranche B Term Loans or Tranche C Term Loans
or reduce the Revolving Credit Commitments pursuant to Section 2.10(b)
as a result of the delivery of a Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in respect
of which the Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a Responsible
Officer stating that no Event of Default has occurred and is
continuing and that the Borrower (directly or indirectly through a
Subsidiary) intends and expects to use all or a specified portion of
the Net Cash Proceeds of an Asset Sale or Recovery Event to acquire
assets useful in its business.
"Reinvestment Prepayment Amount": with respect to any
Reinvestment Event, the Reinvestment Deferred Amount relating thereto
less any amount expended prior to the relevant Reinvestment Prepayment
Date to acquire assets useful in the Borrower's business.
"Reinvestment Prepayment Date": with respect to any Reinvestment
Event, the earlier of (a) the date occurring one year after such
Reinvestment Event and (b) the date on which the Borrower shall have
determined not to, or shall have otherwise ceased to, acquire assets
useful in the Borrower's business with all or any portion of the
relevant Reinvestment Deferred Amount.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty day
notice period is waived under regulations promulgated under Title IV
of ERISA.
"Required Lenders": the holders of more than 51% of (a) until the
Closing Date, the Commitments and (b) thereafter, the sum of (i) the
aggregate unpaid principal amount of the Tranche B Term Loans, (ii)
the aggregate unpaid principal amount of the Tranche C Term Loans and
(iii) the Total Revolving Credit Commitments or, if the Revolving
Credit Commitments have been terminated, the Total Revolving
Extensions of Credit.
"Required Prepayment Lenders": the Majority Facility Lenders in
respect of each Facility.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its Property or to which such Person or any of its Property is
subject.
"Reserves": reserves established by the Collateral Monitoring
Agent, from time to time, in the exercise of the Collateral Monitoring
Agent's reasonable credit judgment. Without limiting the generality of
the foregoing, Reserves may be established to insure the payment of
accrued interest expenses on Indebtedness.
"Responsible Officer": the chief executive officer, president or
chief financial officer, vice-president finance or controller of the
Borrower, but in any event, with respect to financial matters, the
chief financial officer, vice-president finance or controller of the
Borrower.
"Restricted Payment": as defined in Section 7.6.
"Revolving Credit Commitment": as to any Lender, the obligation
of such Lender, if any, to make Revolving Credit Loans and participate
in Letters of Credit, in an aggregate principal and/or face amount not
to exceed the amount set forth under the heading "Revolving Credit
Commitment" opposite such Lender's name on Schedule 1.1A or in the
Assignment and Acceptance pursuant to which such Revolving Credit
Lender became a party hereto, as the same may be changed from time to
time pursuant to the terms hereof. The original amount of the Total
Revolving Credit Commitments on the Closing Date is $12,500,000.
"Revolving Credit Commitment Period": the period from and
including the Closing Date to the Revolving Credit Termination Date.
"Revolving Credit Lender": each Lender which has a Revolving
Credit Commitment or which has made Revolving Credit
Loans.
"Revolving Credit Loans": as defined in Section 2.4.
"Revolving Credit Percentage": as to any Revolving Credit Lender
at any time, the percentage which such Lender's Revolving Credit
Commitment then constitutes of the Total Revolving Credit Commitments
(or, at any time after the Revolving Credit Commitments shall have
expired or terminated, the percentage which the aggregate principal
amount of such Lender's Revolving Credit Loans then outstanding
constitutes of the aggregate principal amount of the Revolving Credit
Loans then outstanding).
"Revolving Credit Termination Date": January 28, 2004.
"Revolving Extensions of Credit": as to any Revolving Credit
Lender at any time, an amount equal to the sum of (a) the aggregate
principal amount of all Revolving Credit Loans made by such Lender then
outstanding and (b) such Lender's Revolving Credit Percentage of the
L/C Obligations then outstanding.
"SEC": the Securities and Exchange Commission (or successors
thereto or an analogous Governmental Authority).
"Section 2.4(e) Revolving Credit Loans": as defined in Section
2.4(e).
"Security Documents": the collective reference to the Guarantee
and Collateral Agreement and all other security documents hereafter
delivered to the Administrative Agent granting a Lien on any Property
of any Person to secure the obligations and liabilities of any Loan
Party under any Loan Document.
"Senior Note Indenture": the Indenture, dated as of January 28,
1998, entered into by the Borrower and certain of its Subsidiaries in
connection with the issuance of the Senior Notes, together with all
instruments and other agreements entered into by the Borrower or such
Subsidiaries in connection therewith, as the same may be amended,
supplemented or otherwise modified from time to time in accordance
with Section 7.9.
"Senior Notes": the Series A and Series B 10-1/4% Senior Notes of
the Borrower issued on January 28, 1998 pursuant to the Senior Note
Indenture.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as
of any date of determination, (a) the amount of the "present fair
saleable value" of the assets of such Person will, as of such date,
exceed the amount of all "liabilities of such Person, contingent or
otherwise", as of such date, as such quoted terms are determined in
accordance with applicable federal and state laws governing
determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be
greater than the amount that will be required to pay the liability of
such Person on its debts as such debts become absolute and matured,
(c) such Person will not have, as of such date, an unreasonably small
amount of capital with which to conduct its business, and (d) such
Person will be able to pay its debts as they mature. For purposes of
this definition, (i) "debt" means liability on a "claim", and (ii)
"claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured or (y) right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether
or not such right to an equitable remedy is reduced to judgment,
fixed, contingent, matured or unmatured, disputed, undisputed, secured
or unsecured.
"Specified Change of Control": a "Change of Control" as defined
in the Senior Note Indenture.
"Specified Entities": collectively, any Wholly Owned Foreign
Subsidiary, the Joint Ventures and Master Collectors.
"Subsidiary": as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or
other ownership interests having ordinary voting power (other than
stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation, partnership
or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise qualified,
all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall (i) refer to a Subsidiary or Subsidiaries of the
Borrower and (ii) exclude the Joint Ventures.
"Subsidiary Guarantor": each Subsidiary of the Borrower other
than any Excluded Foreign Subsidiary and Master
Collectors.
"Syndication Agent": as defined in the preamble hereto.
"Total Revolving Credit Commitments": at any time, the aggregate
amount of the Revolving Credit Commitments at such time. For each
Dollar of Capital Lease Obligations incurred by the Borrower and its
Subsidiaries after the Closing Date, the Total Revolving Credit
Commitments shall be reduced by $0.50. Any such reduction shall be
made pro rata among the Revolving Credit Lenders according to their
respective Revolving Credit Percentages.
"Total Revolving Extensions of Credit": at any time, the
aggregate amount of the Revolving Extensions of Credit of the
Revolving Credit Lenders at such time.
"Tranche B Term Loan": as defined in Section 2.1. The aggregate
principal amount of each Lender's Tranche B Term
Loans outstanding as of the Closing Date is set forth on Schedule 1.1A.
"Tranche B Term Loan Commitment": as to any Lender, the
obligation of such Lender, if any, to make a Tranche B Term Loan to
the Borrower under the Existing Credit Agreement. The original
aggregate amount of the Tranche B Term Loan Commitments on the
Original Closing Date was $25,000,000.
"Tranche B Term Loan Lender": each Lender which has a Tranche B
Term Loan Commitment or which has made a Tranche B Term Loan.
"Tranche B Term Loan Percentage": as to any Lender at any time,
the percentage which such Lender's Tranche B Term Loan Commitment then
constitutes of the aggregate Tranche B Term Loan Commitments (or, at
any time after the Closing Date, the percentage which the aggregate
principal amount of such Lender's Tranche B Term Loans then
outstanding constitutes of the aggregate principal amount of the
Tranche B Term Loans then outstanding).
"Tranche C Term Loan": a term loan to the Borrower deemed to have
been made under Section 2.4 of the Existing Credit Agreement. The
aggregate principal amount of each Lender's Tranche C Term Loans
outstanding as of the Closing Date is set forth on Schedule 1.1A.
"Tranche C Term Loan Lender": each Lender which is the holder of
a Tranche C Term Loan.
"Tranche C Term Loan Percentage": as to any Lender at any time,
the percentage which the aggregate principal amount of such Lender's
Tranche C Term Loans then outstanding constitutes of the aggregate
principal amount of the Tranche C Term Loans then outstanding.
"Transferee": as defined in Section 10.15.
"Type": as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan. "Uniform Customs": the Uniform Customs and Practice
for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500, as the same may be amended from time to
time.
"United States": the United States of America.
"Wholly Owned Foreign Subsidiary": any Foreign Subsidiary that is
a Wholly Owned Subsidiary.
"Wholly Owned Subsidiary": as to any Person, any other Person all
of the Capital Stock of which (other than directors' qualifying shares
required by law) is owned by such Person directly and/or through other
Wholly Owned Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor
that is a Wholly Owned Subsidiary of the Borrower.
1.2 Other Definitional Provisions. Unless otherwise specified therein, all
terms defined in this Agreement shall have the defined meanings when used in the
other Loan Documents or any certificate or other document made or delivered
pursuant hereto or thereto.
(a) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to Holdings, the Borrower and its Subsidiaries
not defined in Section 1.1 and accounting terms partly defined in Section
1.1, to the extent not defined, shall have the respective meanings given to
them under GAAP.
(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Tranche B Term Loan Commitments and Tranche C Term Loans.
(a) Each Tranche B Term Loan Lender made a term loan (a "Tranche B
Term Loan") to the Borrower on the Original Closing Date.
(b) As provided for in Section 2.4(c) of the Existing Credit
Agreement, on the Closing Date there shall be deemed to be outstanding
$3,450,000 of Tranche C Term Loans.
(c) The Tranche B Term Loans and Tranche C Term Loans may from time to
time be Eurodollar Loans or Base Rate Loans, as determined by the Borrower
and notified to the Administrative Agent in accordance with Section 2.11.
2.3 Repayment of Tranche B Term Loans and Tranche C Term Loans.
(a) The Tranche B Term Loan of each Tranche B Lender shall mature in
17 installments, commencing on March 31, 2000, each of which shall be in an
amount equal to such Lender's Tranche B Term Loan Percentage multiplied by
the amount set forth below opposite such installment:
Installment Principal Amount
------------------ ------------------
March 31, 2000 62,500
June 30, 2000 62,500
September 30, 2000 62,500
December 31, 2000 62,500
March 31, 2001 62,500
June 30, 2001 62,500
September 30, 2001 62,500
December 31, 2001 62,500
March 31, 2002 62,500
June 30, 2002 62,500
September 30, 2002 62,500
December 31, 2002 62,500
March 31, 2003 62,500
June 30, 2003 62,500
September 30, 2003 62,500
December 31, 2003 62,500
January 28, 2004 17,500,000
(b) The Tranche C Term Loan of each Tranche C Lender shall mature in
14 consecutive quarterly installments, commencing on September 30, 2000,
each of which shall be in an amount equal to such Lender's Tranche C Term
Loan Percentage multiplied by the amount set forth below opposite such
installment:
Installment Principal Amount
----------------- ------------------
September 30, 2000 $250,000
December 31, 2000 250,000
March 31, 2001 250,000
June 30, 2001 250,000
September 30, 2001 250,000
December 31,2001 250,000
March 31, 2002 250,000
June 30, 2002 250,000
September 30, 2002 250,000
December 31, 2002 250,000
March 31, 2003 250,000
June 30, 2003 250,000
September 30, 2003 250,000
December 31, 2003 200,000
2.4 Revolving Credit Commitments.
(a) Subject to the terms and conditions hereof, each Revolving Credit
Lender severally agrees to make revolving credit loans ("Revolving Credit
Loans") to the Borrower from time to time during the Revolving Credit
Commitment Period in an aggregate principal amount at any one time
outstanding which, when added to such Lender's Revolving Credit Percentage
of the L/C Obligations then outstanding, does not exceed the lesser of (i)
the amount of such Lender's Revolving Credit Commitment and (ii) such
Lender's Revolving Credit Percentage of the Borrowing Base then in effect;
provided that the aggregate principal amount of Revolving Credit Loans at
any one time outstanding shall be further governed by Section 2.4(e).
During the Revolving Credit Commitment Period the Borrower may use the
Revolving Credit Commitments by borrowing, prepaying the Revolving Credit
Loans in whole or in part, and reborrowing, all in accordance with the
terms and conditions hereof. The Revolving Credit Loans may from time to
time be Eurodollar Loans or Base Rate Loans, as determined by the Borrower
and notified to the Administrative Agent in accordance with Sections 2.5
and 2.11, provided that no Revolving Credit Loan shall be made as a
Eurodollar Loan after the day that is one month prior to the Revolving
Credit Termination Date.
(b) The Borrower shall repay all outstanding Revolving Credit Loans on
the Revolving Credit Termination Date.
(c) If on any date the Total Revolving Extensions of Credit as of such
date exceed the lesser of (i) the then applicable Borrowing Base and (ii)
the Total Revolving Credit Commitments as of such date, then, without
notice or demand, the Borrower shall, on such date, prepay the Revolving
Credit Loans and, if necessary, cash collateralize (on terms and conditions
satisfactory to the Administrative Agent) the Letters of Credit in an
aggregate principal amount equal to such excess.
(d) Based on the most recent Borrowing Base Certificate delivered by
the Borrower to the Collateral Monitoring Agent and on other information
available to the Collateral Monitoring Agent, the Collateral Monitoring
Agent shall in its reasonable credit judgment determine which Accounts of
the Borrower and its Subsidiaries shall be "Eligible Accounts" for purposes
of this Agreement. In determining whether a particular Account of the
Borrower or its Subsidiaries constitutes an Eligible Account, the
Collateral Monitoring Agent shall not include any such Account to which any
of the exclusionary criteria set forth in the definition of Eligible
Accounts applies. The Collateral Monitoring Agent reserves the right, at
any time and from time to time after the Closing Date upon ten (10)
Business Days' prior written notice to the Borrower, to adjust any such
criteria, to establish new criteria and to adjust the Advance Rate with
respect to Eligible Accounts. Any such adjustment or establishment will be
made in the Collateral Monitoring Agent's reasonable credit judgment
exercised in a manner which is customary either in the commercial finance
industry or in the lending practices of the Collateral Monitoring Agent
and/or the Lenders, subject to the approval of the Lenders in the case of
adjustments or new criteria or changes in the Advance Rate which have the
effect of making more credit available.
(e) The Borrower may only borrow Revolving Credit Loans (other than
Revolving Credit Loans then outstanding which were previously made pursuant
to this Section 2.4(e)) in an aggregate principal amount at any one time
outstanding in excess of $6,000,000 in accordance with this Section 2.4(e)
(any such Revolving Credit Loans hereinafter being referred to as "Section
2.4(e) Revolving Credit Loans"). At any time that the Borrower wishes to
make a borrowing of Section 2.4(e) Revolving Credit Loans, it shall provide
invoices and any other requested documentation to the Administrative Agent,
in the Administrative Agent's reasonable credit judgment exercised in a
manner which is customary either in the commercial finance industry or in
the lending practices of the Administrative Agent and/or the Lenders,
evidencing the fact that such Section 2.4(e) Revolving Credit Loans shall
be used solely to purchase machinery and equipment. The Administrative
Agent shall in its sole discretion determine whether or not such requested
Section 2.4(e) Revolving Credit Loans meet the usage criteria set forth in
the preceding sentence. The Borrower shall provide the invoices and other
requested documentation and the Administrative Agent shall make its
determination prior to the giving of any notice by the Borrower pursuant to
Section 2.5. 1.1 Procedure for Revolving Credit Borrowing. The Borrower may
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, provided that the Borrower shall
give the Administrative Agent irrevocable notice (which notice must be
received by the Administrative Agent (a) prior to 12:00 Noon, New York City
time, three Business Days prior to the requested Borrowing Date, in the
case of Eurodollar Loans, or (b) prior to 10:00 A.M., New York City time,
on the requested Borrowing Date, in the case of Base Rate Loans),
specifying (i) the amount and Type of Revolving Credit Loans to be
borrowed, (ii) the requested Borrowing Date and (iii) in the case of
Eurodollar Loans, the length of the initial Interest Period therefor. Each
borrowing under the Revolving Credit Commitments shall be in an amount
equal to (x) in the case of Base Rate Loans, $500,000 or a whole multiple
of $100,000 in excess thereof (or, if the then aggregate Available
Revolving Credit Commitments are less than $500,000, such lesser amount)
and (y) in the case of Eurodollar Loans, $5,000,000 or a whole multiple of
$1,000,000 in excess thereof. Upon receipt of any such notice from the
Borrower, the Administrative Agent shall promptly notify each Revolving
Credit Lender thereof. Each Revolving Credit Lender will make the amount of
its pro rata share of each borrowing available to the Administrative Agent
for the account of the Borrower at the Funding Office prior to 12:00 Noon,
New York City time, on the Borrowing Date requested by the Borrower in
funds immediately available to the Administrative Agent. Such borrowing
will then be made available to the Borrower by the Administrative Agent in
like funds as received by the Administrative Agent.
2.6 Repayment of Loans; Evidence of Debt.
(a) The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of the appropriate Revolving Credit
Lender, Tranche B Term Loan Lender or Tranche C Lender, as the case may be,
(i) the then unpaid principal amount of each Revolving Credit Loan of such
Revolving Credit Lender on the Revolving Credit Termination Date (or on
such earlier date on which the Loans become due and payable pursuant to
Section 8) and (ii) the principal amount of each Tranche B Term Loan of
such Tranche B Term Loan Lender in installments according to the
amortization schedule set forth in Section 2.3(a) (or on such earlier date
on which the Loans become due and payable pursuant to Section 8) and (iii)
the principal amount of each Tranche C Term Loan of such Tranche C Term
Loan Lender in installments according to the amortization schedule set
forth in Section 2.3(b) (or on such earlier date on which the Loans become
due and payable pursuant to Section 8). The Borrower hereby further agrees
to pay interest on the unpaid principal amount of the Loans from time to
time outstanding from the date hereof until payment in full thereof at the
rates per annum, and on the dates, set forth in Section 2.13.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrower to such
Lender resulting from each Loan of such Lender from time to time, including
the amounts of principal and interest payable and paid to such Lender from
time to time under this Agreement.
(c) The Administrative Agent, on behalf of the Borrower, shall
maintain the Register pursuant to Section 10.6(d), and a subaccount therein
for each Lender, in which shall be recorded (i) the amount of each Loan
made hereunder and any Note evidencing such Loan, the Type thereof and each
Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to
each Lender hereunder and (iii) both the amount of any sum received by the
Administrative Agent hereunder from the Borrower and each Lender's share
thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.6(c) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register
or any such account, or any error therein, shall not in any manner affect
the obligation of the Borrower to repay (with applicable interest) the
Loans made to the Borrower by such Lender in accordance with the terms of
this Agreement.
(e) The Borrower agrees that, upon the request to the Administrative
Agent by any Lender, the Borrower will execute and deliver to such Lender a
promissory note of the Borrower evidencing any Tranche B Term Loans,
Tranche C Term Loans or Revolving Credit Loans, as the case may be, of such
Lender, substantially in the forms of Exhibit F-1(in the case of Tranche B
Term Loans and Tranche C Term Loans) or F-2 (in the case of Revolving
Credit Loans), respectively, with appropriate insertions as to date and
principal amount.
2.7 Commitment Fees, etc.
(a) The Borrower agrees to pay to the Administrative Agent for the
account of each Revolving Credit Lender a commitment fee for the period
from and including the Closing Date to the last day of the Revolving Credit
Commitment Period, computed at the Commitment Fee Rate on the average daily
amount of the Available Revolving Credit Commitment of such Lender during
the period for which payment is made, payable quarterly in arrears on the
last day of each March, June, September and December and on the Revolving
Credit Termination Date, commencing on the first of such dates to occur
after the date hereof.
(b) The Borrower agrees to pay to the Syndication Agent the fees in
the amounts and on the dates previously agreed to in writing by the
Borrower and the Syndication Agent.
(c) The Borrower agrees to pay to the Administrative Agent and the
Collateral Monitoring Agent the fees in the amounts and on the dates from
time to time agreed to in writing by the Borrower and the Administrative
Agent.
2.8 Termination or Reduction of Revolving Credit Commitments.
The Borrower shall have the right, upon not less than three Business
Days' notice to the Administrative Agent, to terminate the Revolving Credit
Commitments or, from time to time, to reduce the amount of the Revolving
Credit Commitments; provided that no such termination or reduction of
Revolving Credit Commitments shall be permitted if, after giving effect
thereto and to any prepayments of the Revolving Credit Loans made on the
effective date thereof, the Total Revolving Extensions of Credit would
exceed the Total Revolving Credit Commitments. Any such reduction shall be
in an amount equal to $500,000, or a whole multiple of $100,000 in excess
thereof, and shall reduce permanently the Revolving Credit Commitments then
in effect.
2.9 Optional Prepayments.
The Borrower may at any time and from time to time prepay the Loans,
in whole or in part, without premium or penalty, upon irrevocable notice
delivered to the Administrative Agent at least three Business Days prior
thereto in the case of Eurodollar Loans and at least one Business Day prior
thereto in the case of Base Rate Loans, which notice shall specify the date
and amount of prepayment and whether the prepayment is of Eurodollar Loans
or Base Rate Loans; provided, that if a Eurodollar Loan is prepaid on any
day other than the last day of the Interest Period applicable thereto, the
Borrower shall also pay any amounts owing pursuant to Section 2.19. Upon
receipt of any such notice the Administrative Agent shall promptly notify
each relevant Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified
therein, together with (except in the case of Revolving Credit Loans which
are Base Rate Loans) accrued interest to such date on the amount prepaid.
Partial prepayments of Tranche B Term Loans, Tranche C Term Loans and
Revolving Credit Loans shall be in an aggregate principal amount of
$500,000 or a whole multiple of $100,000 in excess thereof.
2.10 Mandatory Prepayments and Commitment Reductions.
(a) Unless the Required Prepayment Lenders shall otherwise agree, if
any Indebtedness shall be incurred by Holdings, the Borrower or any of its
Subsidiaries (excluding any Indebtedness permitted by Section 7.2 of this
Agreement), an amount equal to 100% of the Net Cash Proceeds thereof shall
be applied on the date of such issuance or incurrence toward the prepayment
of the Tranche B Term Loans and the Tranche C Term Loans and the reduction
of the Revolving Credit Commitments as set forth in Section 2.10(d).
(b) Unless the Required Prepayment Lenders shall otherwise agree, if
on any date Holdings, the Borrower or any of its Subsidiaries shall receive
Net Cash Proceeds from any Asset Sale or Recovery Event then, unless a
Reinvestment Notice shall be delivered in respect thereof, such Net Cash
Proceeds shall be applied on such date toward the prepayment of the Tranche
B Term Loans and the Tranche C Term Loans and the reduction of the
Revolving Credit Commitments as set forth in Section 2.10(d); provided,
that, notwithstanding the foregoing, (i) the aggregate Net Cash Proceeds of
Asset Sales and Recovery Events that may be excluded from the foregoing
requirement pursuant to a Reinvestment Notice shall not exceed $3,000,000
in any fiscal year of the Borrower and (ii) on each Reinvestment Prepayment
Date, an amount equal to the Reinvestment Prepayment Amount with respect to
the relevant Reinvestment Event shall be applied toward the prepayment of
the Tranche B Term Loans and Tranche C Term Loans and the reduction of the
Revolving Credit Commitments as set forth in Section 2.10(d).
(c) Unless the Required Prepayment Lenders shall otherwise agree, if,
for any fiscal year of the Borrower commencing with the fiscal year ending
December 31, 1998, there shall be Excess Cash Flow, the Borrower shall, on
the relevant Excess Cash Flow Application Date, apply the ECF Percentage of
such Excess Cash Flow toward the prepayment of the Tranche B Term Loans and
Tranche C Term Loans and the reduction of the Revolving Credit Commitments
as set forth in Section 2.10(d). Each such prepayment and commitment
reduction shall be made on a date (an "Excess Cash Flow Application Date")
no later than five days after the earlier of (i) the date on which the
financial statements of the Borrower referred to in Section 6.1(a), for the
fiscal year with respect to which such prepayment is made, are required to
be delivered to the Lenders and (ii) the date such financial statements are
actually delivered.
(d) Amounts to be applied in connection with prepayments and
Commitment reductions made pursuant to Section 2.10 shall be applied,
first, to the prepayment of the Tranche C Term Loans and, second, to the
prepayment of the Tranche B Term Loans, and third, except in the case of
Section 2.10(c), to reduce permanently the Revolving Credit Commitments.
Any such reduction of the Revolving Credit Commitments shall be accompanied
by prepayment of the Revolving Credit Loans to the extent, if any, that the
Total Revolving Extensions of Credit exceed the amount of the Total
Revolving Credit Commitments as so reduced, provided that if the aggregate
principal amount of Revolving Credit Loans then outstanding is less than
the amount of such excess (because L/C Obligations constitute a portion
thereof), the Borrower shall, to the extent of the balance of such excess,
replace outstanding Letters of Credit and/or deposit an amount in cash in a
cash collateral account established with the Administrative Agent for the
benefit of the Lenders on terms and conditions satisfactory to the
Administrative Agent. The application of any prepayment pursuant to Section
2.10 shall be made first to Base Rate Loans and second to Eurodollar Loans.
Each prepayment of the Loans under Section 2.10 (except in the case of
Revolving Credit Loans that are Base Rate Loans) shall be accompanied by
accrued interest to the date of such prepayment on the amount prepaid.
2.11 Conversion and Continuation Options.
(a) The Borrower may elect from time to time to convert Eurodollar
Loans to Base Rate Loans by giving the Administrative Agent at least two
Business Days' prior irrevocable notice of such election, provided that any
such conversion of Eurodollar Loans may only be made on the last day of an
Interest Period with respect thereto. The Borrower may elect from time to
time to convert Base Rate Loans to Eurodollar Loans by giving the
Administrative Agent at least three Business Days' prior irrevocable notice
of such election (which notice shall specify the length of the initial
Interest Period therefor), provided that no Base Rate Loan under a
particular Facility may be converted into a Eurodollar Loan (i) when any
Event of Default has occurred and is continuing and the Administrative
Agent or the Majority Facility Lenders in respect of such Facility have
determined in its or their sole discretion not to permit such conversions
or (ii) after the date that is one month prior to the final scheduled
termination or maturity date of such Facility. Upon receipt of any such
notice the Administrative Agent shall promptly notify each relevant Lender
thereof.
(b) Any Eurodollar Loan may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower
giving irrevocable notice to the Administrative Agent, in accordance with
the applicable provisions of the term "Interest Period" set forth in
Section 1.1 of the length of the next Interest Period to be applicable to
such Loans, provided that no Eurodollar Loan under a particular Facility
may be continued as such (i) when any Event of Default has occurred and is
continuing and the Administrative Agent has or the Majority Facility
Lenders in respect of such Facility have determined in its or their sole
discretion not to permit such continuations or (ii) after the date that is
one month prior to the final scheduled termination or maturity date of such
Facility, and provided, further, that if the Borrower shall fail to give
any required notice as described above in this paragraph or if such
continuation is not permitted pursuant to the preceding proviso such Loans
shall be automatically converted to Base Rate Loans on the last day of such
then expiring Interest Period. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.
2.12 Minimum Amounts and Maximum Number of Eurodollar Tranches.
Notwithstanding anything to the contrary in this Agreement, all
borrowings, conversions, continuations and optional prepayments of
Eurodollar Loans hereunder and all selections of Interest Periods hereunder
shall be in such amounts and be made pursuant to such elections so that,
(a) after giving effect thereto, the aggregate principal amount of the
Eurodollar Loans comprising each Eurodollar Tranche shall be equal to
$5,000,000 or a whole multiple of $1,000,000 in excess thereof and (b) no
more than six Eurodollar Tranches shall be outstanding at any one time.
2.13 Interest Rates and Payment Dates.
(a) Each Eurodollar Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the
Eurodollar Rate determined for such day plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum equal
to the Base Rate plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), all outstanding Loans and
Reimbursement Obligations (whether or not overdue) shall bear interest at a
rate per annum which is equal to (x) in the case of the Loans, the rate
that would otherwise be applicable thereto pursuant to the foregoing
provisions of this Section 2.13 plus 2% or (y) in the case of Reimbursement
Obligations, the rate applicable to Base Rate Loans under the Revolving
Credit Facility plus 2%, and (ii) if all or a portion of any interest
payable on any Loan or Reimbursement Obligation or any commitment fee or
other amount payable hereunder shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), such overdue amount shall
bear interest at a rate per annum equal to the rate applicable to Base Rate
Loans under the relevant Facility plus 2% (or, in the case of any such
other amounts that do not relate to a particular Facility, the Base Rate
plus 4%), in each case, with respect to clauses (i) and (ii) above, from
the date of such non-payment until such amount is paid in full (as well
after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this
Section 2.13 shall be payable from time to time on demand.
2.14 Computation of Interest and Fees.
(a) Interest, fees and commissions payable pursuant hereto shall be
calculated on the basis of a 360-day year for the actual days elapsed,
except that, with respect to Base Rate Loans the rate of interest on which
is calculated on the basis of the Prime Rate, the interest thereon shall be
calculated on the basis of a 365- (or 366-, as the case may be) day year
for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of each
determination of a Eurodollar Rate. Any change in the interest rate on a
Loan resulting from a change in the Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the
day on which such change becomes effective. The Administrative Agent shall
as soon as practicable notify the Borrower and the relevant Lenders of the
effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding
on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative
Agent in determining any interest rate pursuant to Section 2.13(a).
2.15 Inability to Determine Interest Rate.
If prior to the first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period, or
(a) the Administrative Agent shall have received notice from the
Majority Facility Lenders in respect of the relevant Facility that the
Eurodollar Rate determined or to be determined for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (as
conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice
thereof to the Borrower and the relevant Lenders as soon as practicable
thereafter. If such notice is given (x) any Eurodollar Loans under the
relevant Facility requested to be made on the first day of such Interest
Period shall be made as Base Rate Loans, (y) any Loans under the relevant
Facility that were to have been converted on the first day of such Interest
Period to Eurodollar Loans shall be continued as Base Rate Loans and (z)
any outstanding Eurodollar Loans under the relevant Facility shall be
converted, on the last day of the then current Interest Period, to Base
Rate Loans. Until such notice has been withdrawn by the Administrative
Agent, no further Eurodollar Loans under the relevant Facility shall be
made or continued as such, nor shall the Borrower have the right to convert
Loans under the relevant Facility to Eurodollar Loans.
2.16 Pro Rata Treatment and Payments.
(a) Each borrowing by the Borrower from the Lenders hereunder, each
payment by the Borrower on account of any commitment fee and any reduction
of the Commitments of the Lenders shall be made according to the respective
Tranche B Term Loan Percentages or Revolving Credit Percentages, as the
case may be, of the relevant Lenders.
(b) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Tranche B Term Loans and the
Tranche C Term Loans shall be made pro rata according to the respective
outstanding principal amounts of the Tranche B Term Loans and Tranche C
Term Loans then held by the Tranche B Term Loan Lenders and the Tranche C
Term Loan Lenders, as the case may be. The amount of each principal
prepayment of the Tranche B Term Loans and the Tranche C Term Loans shall
be applied to reduce the then remaining installments of the Tranche B Term
Loans and Tranche C Term Loans pro rata based upon the then remaining
principal amount thereof. Amounts prepaid on account of the Tranche B Term
Loans and Tranche C Term Loans may not be reborrowed.
(c) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Revolving Credit Loans shall be
made pro rata according to the respective outstanding principal amounts of
the Revolving Credit Loans then held by the Revolving Credit Lenders.
(d) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise,
shall be made without setoff or counterclaim and shall be made prior to
12:00 Noon, New York City time, on the due date thereof to the
Administrative Agent, for the account of the Lenders, at the Payment
Office, in Dollars and in immediately available funds. The Administrative
Agent shall distribute such payments to the Lenders promptly upon receipt
in like funds as received. If any payment hereunder (other than payments on
the Eurodollar Loans) becomes due and payable on a day other than a
Business Day, such payment shall be extended to the next succeeding
Business Day. If any payment on a Eurodollar Loan becomes due and payable
on a day other than a Business Day, the maturity thereof shall be extended
to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month, in which event
such payment shall be made on the immediately preceding Business Day. In
the case of any extension of any payment of principal pursuant to the
preceding two sentences, interest thereon shall be payable at the then
applicable rate during such extension.
(e) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make
the amount that would constitute its share of such borrowing available to
the Administrative Agent, the Administrative Agent may assume that such
Lender is making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available
to the Borrower a corresponding amount. If such amount is not made
available to the Administrative Agent by the required time on the Borrowing
Date therefor, such Lender shall pay to the Administrative Agent, on
demand, such amount with interest thereon at a rate equal to the daily
average Federal Funds Effective Rate for the period until such Lender makes
such amount immediately available to the Administrative Agent. A
certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this Section 2.16(e) shall be conclusive
in the absence of manifest error. If such Lender's share of such borrowing
is not made available to the Administrative Agent by such Lender within
three Business Days of such Borrowing Date, the Administrative Agent shall
also be entitled to recover such amount with interest thereon at the rate
per annum applicable to Base Rate Loans under the relevant Facility, on
demand, from the Borrower.
(f) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment being made
hereunder that the Borrower will not make such payment to the
Administrative Agent, the Administrative Agent may assume that the Borrower
is making such payment, and the Administrative Agent may, but shall not be
required to, in reliance upon such assumption, make available to the
Lenders their respective pro rata shares of a corresponding amount. If such
payment is not made to the Administrative Agent by the Borrower within
three Business Days of such required date, the Administrative Agent shall
be entitled to recover, on demand, from each Lender to which any amount
which was made available pursuant to the preceding sentence, such amount
with interest thereon at the rate per annum equal to the daily average
Federal Funds Effective Rate. Nothing herein shall be deemed to limit the
rights of the Administrative Agent or any Lender against the Borrower.
2.17 Requirements of Law.
(a) If the adoption of or any change in any Requirement of Law or in
the interpretation or application thereof or compliance by any Lender with
any request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority made subsequent to the date
hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Letter of Credit, any Application
or any Eurodollar Loan made by it, or change the basis of taxation of
payments to such Lender in respect thereof (except for Non-Excluded
Taxes covered by Section 2.18 and changes in the rate of tax on, or
the establishment of a tax based on, the net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances,
loans or other extensions of credit by, or any other acquisition of
funds by, any office of such Lender which is not otherwise included in
the determination of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such
Lender, by an amount which such Lender deems to be material, of
making, converting into, continuing or maintaining Eurodollar Loans or
issuing or participating in Letters of Credit, or to reduce any amount
receivable hereunder in respect thereof, then, in any such case, the
Borrower shall promptly pay such Lender, upon its demand, any
additional amounts necessary to compensate such Lender for such
increased cost or reduced amount receivable. If any Lender becomes
entitled to claim any additional amounts pursuant to this Section
2.17, it shall promptly notify the Borrower (with a copy to the
Administrative Agent) of the event by reason of which it has become so
entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any
Governmental Authority made subsequent to the date hereof shall have the
effect of reducing the rate of return on such Lender's or such
corporation's capital as a consequence of its obligations hereunder or
under or in respect of any Letter of Credit to a level below that which
such Lender or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the
Administrative Agent) of a written request therefor, the Borrower shall pay
to such Lender such additional amount or amounts as will compensate such
Lender for such reduction.
(c) A certificate as to any additional amounts payable pursuant to
this Section submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error.
The obligations of the Borrower pursuant to this Section shall survive the
termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
2.18 Taxes.
(a) All payments made by the Borrower under this Agreement shall be
made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes
(imposed in lieu of net income taxes) imposed on any Agent or any Lender as
a result of a present or former connection between such Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such tax
or any political subdivision or taxing authority thereof or therein (other
than any such connection arising solely from such Agent or such Lender
having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or any other Loan Document). If
any such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions or withholdings ("Non-Excluded Taxes") or Other Taxes are
required to be withheld from any amounts payable to any Agent or any Lender
hereunder, the amounts so payable to such Agent or such Lender shall be
increased to the extent necessary to yield to such Agent or such Lender
(after payment of all Non-Excluded Taxes and Other Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts
specified in this Agreement, provided, however, that the Borrower shall not
be required to increase any such amounts payable to any Lender with respect
to any Non-Excluded Taxes (i) that are attributable to such Lender's
failure to comply with the requirements of paragraph (d) or (e) of this
Section, (ii) that are United States withholding taxes imposed on amounts
payable to such Lender at the time the Lender becomes a party to this
Agreement, except to the extent that such Lender's assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such Non-Excluded Taxes pursuant to Section
2.18(a) or (iii) that are imposed solely as a result of action taken by the
Lender.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for the account of the relevant Agent or Lender, as
the case may be, a certified copy of an original official receipt received
by the Borrower showing payment thereof. If the Borrower fails to pay any
Non-Excluded Taxes or Other Taxes when due to the appropriate taxing
authority or fails to remit to the Agents the required receipts or other
required documentary evidence, the Borrower shall indemnify the
Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by any Agent or any Lender as a result of
any such failure. The agreements in this Section 2.18 shall survive the
termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
(d) Each Lender (or Transferee) that is not a U.S. Person as defined
in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver to
the Borrower and the Administrative Agent (or, in the case of a
Participant, to the Lender from which the related participation shall have
been purchased) two copies of either U.S. Internal Revenue Service Form
1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming exemption
from U.S. federal withholding tax under Section 871(h) or 881(c) of the
Code with respect to payments of "portfolio interest" a statement
substantially in the form of Exhibit H and a Form W-8, or any subsequent
versions thereof or successors thereto properly completed and duly executed
by such Non-U.S. Lender claiming complete exemption from, or a reduced rate
of, U.S. federal withholding tax on all payments by the Borrower under this
Agreement and the other Loan Documents. Such forms shall be delivered by
each Non-U.S. Lender on or before the date it becomes a party to this
Agreement (or, in the case of any Participant, on or before the date such
Participant purchases the related participation). In addition, each
Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender. Each
Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding
any other provision of this Section 2.18(d), a Non-U.S. Lender shall not be
required to deliver any form pursuant to this Section 2.18(d) that such
Non-U.S. Lender is not legally able to deliver.
(e) A Lender that is entitled to an exemption from or reduction of any
other tax with respect to payments under this Agreement shall deliver to
the Borrower (with a copy to the Administrative Agent), at the time or
times prescribed by applicable law or reasonably requested by the Borrower,
such properly completed and executed documentation prescribed by applicable
law as will permit such payments to be made without withholding or at a
reduced rate, provided that such Lender is legally entitled to complete,
execute and deliver such documentation and in such Lender's reasonable
judgment such completion, execution or submission would not materially
prejudice the legal position of such Lender.
(f) If the Administrative Agent or any Lender (or Transferee) receives
a refund in respect of Non-Excluded Taxes paid by the Borrower, which in
the good faith judgment of such Lender is allocable to such payment, it
shall promptly pay such refund, together with any other amounts paid by the
Borrower in connection with such refunded Non-Excluded Taxes, to the
Borrower, net of all out-of-pocket expenses of such Lender incurred in
obtaining such refund, provided, however, that the Borrower agrees to
promptly return such refund to the Administrative Agent or the applicable
Lender (or Transferee), as the case may be, if it receives notice from the
Administrative Agent or applicable Lender (or Transferee) that such
Administrative Agent or Lender (or Transferee) is required to repay such
refund.
2.19 Indemnity.
The Borrower agrees to indemnify each Lender and to hold each
Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans
after the Borrower has given a notice requesting the same in
accordance with the provisions of this Agreement, (b) default by the
Borrower in making any prepayment after the Borrower has given a
notice thereof in accordance with the provisions of this Agreement or
(c) the making of a prepayment of Eurodollar Loans on a day which is
not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of
(i) the amount of interest which would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period
from the date of such prepayment or of such failure to borrow, convert
or continue to the last day of such Interest Period (or, in the case
of a failure to borrow, convert or continue, the Interest Period that
would have commenced on the date of such failure) in each case at the
applicable rate of interest for such Loans provided for herein
(excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such
Lender) which would have accrued to such Lender on such amount by
placing such amount on deposit for a comparable period with leading
banks in the interbank eurodollar market. A certificate as to any
amounts payable pursuant to this Section 2.19 submitted to the
Borrower by any Lender shall be conclusive in the absence of manifest
error. This covenant shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
2.20 Illegality.
Notwithstanding any other provision herein, if the adoption of or
any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or
maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Base Rate Loans to Eurodollar
Loans shall forthwith be cancelled and (b) such Lender's Loans then
outstanding as Eurodollar Loans, if any, shall be converted
automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within
such earlier period as required by law. If any such conversion of a
Eurodollar Loan occurs on a day which is not the last day of the then
current Interest Period with respect thereto, the Borrower shall pay
to such Lender such amounts, if any, as may be required pursuant to
Section 2.19.
2.21 Change of Lending Office.
Each Lender agrees that, upon the occurrence of any event giving
rise to the operation of Section 2.17, 2.18, or 2.20 with respect to
such Lender, it will, if requested by the Borrower, use reasonable
efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event
with the object of avoiding the consequences of such event; provided,
that such designation is made on terms that, in the sole judgment of
such Lender, cause such Lender and its lending office(s) to suffer no
economic, legal or regulatory disadvantage, and provided, further,
that nothing in this Section 2.21 shall affect or postpone any of the
obligations of any Borrower or the rights of any Lender pursuant to
Section 2.17, 2.18 or 2.20.
2.22 Replacement of Lenders under Certain Circumstances.
The Borrower shall be permitted to replace any Lender which (a)
requests reimbursement for amounts owing pursuant to Section 2.17 or
2.18 or (b) defaults in its obligation to make Loans hereunder, with a
replacement financial institution; provided that (i) such replacement
does not conflict with any Requirement of Law, (ii) no Event of
Default shall have occurred and be continuing at the time of such
replacement, (iii) prior to any such replacement, such Lender shall
have taken no action under Section 2.21 so as to eliminate the
continued need for payment of amounts owing pursuant to Section 2.17
or 2.18, (iv) the replacement financial institution shall purchase, at
par, all Loans and other amounts owing to such replaced Lender on or
prior to the date of replacement, (v) the Borrower shall be liable to
such replaced Lender under Section 2.19 if any Eurodollar Loan owing
to such replaced Lender shall be purchased other than on the last day
of the Interest Period relating thereto, (vi) the replacement
financial institution, if not already a Lender, shall be reasonably
satisfactory to the Administrative Agent, (vii) the replaced Lender
shall be obligated to make such replacement in accordance with the
provisions of Section 10.6 (provided that the Borrower shall be
obligated to pay the registration and processing fee referred to
therein), (viii) until such time as such replacement shall be
consummated, the Borrower shall pay all additional amounts (if any)
required pursuant to Section 2.17 or 2.18, as the case may be, and
(ix) any such replacement shall not be deemed to be a waiver of any
rights which the Borrower, the Administrative Agent or any other
Lender shall have against the replaced Lender.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment.
(a) Subject to the terms and conditions hereof, the Issuing
Lender, in reliance on the agreements of the other Revolving Credit
Lenders set forth in Section 3.4(a), agrees to issue letters of credit
("Letters of Credit") for the account of the Borrower on any Business
Day during the Revolving Credit Commitment Period in such form as may
be approved from time to time by the Issuing Lender; provided that the
Issuing Lender shall have no obligation to issue any Letter of Credit
if, after giving effect to such issuance, (i) the L/C Obligations
would exceed the L/C Commitment or (ii) the aggregate amount of the
Available Revolving Credit Commitments would be less than zero. Each
Letter of Credit shall (i) be denominated in Dollars and (ii) expire
no later than the earlier of (x) the first anniversary of its date of
issuance and (y) the date which is five Business Days prior to the
Revolving Credit Termination Date, provided that any Letter of Credit
with a one-year term may provide for the renewal thereof for
additional one-year periods (which shall in no event extend beyond the
date referred to in clause (y) above).
(b) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State
of New York.
(c) The Issuing Lender shall not at any time be obligated to
issue any Letter of Credit hereunder if such issuance would conflict
with, or cause the Issuing Lender or any L/C Participant to exceed any
limits imposed by, any applicable Requirement of Law.
(d) Letters of Credit (as defined in the Existing Credit
Agreement) issued under the Existing Credit Agreement and outstanding
on the Closing Date shall constitute Letters of Credit hereunder.
3.2 Procedure for Issuance of Letter of Credit.
The Borrower may from time to time request that the Issuing
Lender issue a Letter of Credit by delivering to the Issuing Lender at
its address for notices specified herein an Application therefor,
completed to the satisfaction of the Issuing Lender, and such other
certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the
Issuing Lender will process such Application and the certificates,
documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and
shall promptly issue the Letter of Credit requested thereby (but in no
event shall the Issuing Lender be required to issue any Letter of
Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and
other papers and information relating thereto) by issuing the original
of such Letter of Credit to the beneficiary thereof or as otherwise
may be agreed to by the Issuing Lender and the Borrower. The Issuing
Lender shall furnish a copy of such Letter of Credit to the Borrower
promptly following the issuance thereof. The Issuing Lender shall
promptly furnish to the Administrative Agent, which shall in turn
promptly furnish to the Lenders, notice of the issuance of each Letter
of Credit (including the amount thereof).
3.3 Commissions, Fees and Other Charges.
(a) The Borrower will pay a commission on the average daily
amount of all outstanding Letters of Credit at a per annum rate equal
to the Applicable Margin then in effect with respect to Eurodollar
Loans under the Revolving Credit Facility, shared ratably among the
Revolving Credit Lenders and payable quarterly in arrears on each L/C
Fee Payment Date after the issuance date. In addition, the Borrower
shall pay to the Issuing Lender for its own account a fronting fee of
1/4 of 1% per annum of the undrawn and unexpired amount of the Letter
of Credit, payable quarterly in arrears on each L/C Fee Payment Date
after the Issuance Date.
(b) In addition to the foregoing fees and commissions, the
Borrower shall pay or reimburse the Issuing Lender for such normal and
customary costs and expenses as are incurred or charged by the Issuing
Lender in issuing, negotiating, effecting payment under, amending or
otherwise administering any Letter of Credit.
3.4 L/C Participations.
(a) The Issuing Lender irrevocably agrees to grant and hereby
grants to each L/C Participant, and, to induce the Issuing Lender to
issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from
the Issuing Lender, on the terms and conditions hereinafter stated,
for such L/C Participant's own account and risk an undivided interest
equal to such L/C Participant's Revolving Credit Percentage in the
Issuing Lender's obligations and rights under each Letter of Credit
issued hereunder and the amount of each draft paid by the Issuing
Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid
under any Letter of Credit for which the Issuing Lender is not
reimbursed in full by the Borrower in accordance with the terms of
this Agreement, such L/C Participant shall pay to the Issuing Lender
upon demand at the Issuing Lender's address for notices specified
herein an amount equal to such L/C Participant's Revolving Credit
Percentage of the amount of such draft, or any part thereof, which is
not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to
the Issuing Lender pursuant to Section 3.4(a) in respect of any
unreimbursed portion of any payment made by the Issuing Lender under
any Letter of Credit is paid to the Issuing Lender within three
Business Days after the date such payment is due, such L/C Participant
shall pay to the Issuing Lender on demand an amount equal to the
product of such amount, times the daily average Federal Funds
Effective Rate during the period from and including the date such
payment is required to the date on which such payment is immediately
available to the Issuing Lender, times a fraction the numerator of
which is the number of days that elapse during such period and the
denominator of which is 360. If any such amount required to be paid by
any L/C Participant pursuant to Section 3.4(a) is not made available
to the Issuing Lender by such L/C Participant within three Business
Days after the date such payment is due, the Issuing Lender shall be
entitled to recover from such L/C Participant, on demand, such amount
with interest thereon calculated from such due date at the rate per
annum applicable to Base Rate Loans under the Revolving Credit
Facility. A certificate of the Issuing Lender submitted to any L/C
Participant with respect to any amounts owing under this Section shall
be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made
payment under any Letter of Credit and has received from any L/C
Participant its pro rata share of such payment in accordance with
Section 3.4(a), the Issuing Lender receives any payment related to
such Letter of Credit (whether directly from the Borrower or
otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the
Issuing Lender will distribute to such L/C Participant its pro rata
share thereof; provided, however, that in the event that any such
payment received by the Issuing Lender shall be required to be
returned by the Issuing Lender, such L/C Participant shall return to
the Issuing Lender the portion thereof previously distributed by the
Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower.
The Borrower agrees to reimburse the Issuing Lender on each date
on which the Issuing Lender notifies the Borrower of the date and
amount of a draft presented under any Letter of Credit and paid by the
Issuing Lender for the amount of (a) such draft so paid and (b) any
taxes, fees, charges or other costs or expenses incurred by the
Issuing Lender in connection with such payment. Each such payment
shall be made to the Issuing Lender at its address for notices
specified herein in lawful money of the United States and in
immediately available funds. Interest shall be payable on any and all
amounts remaining unpaid by the Borrower under this Section from the
date such amounts become payable (whether at stated maturity, by
acceleration or otherwise) until payment in full at the rate set forth
in Section 2.13(c). Each drawing under any Letter of Credit shall
(unless an event of the type described in clause (i) or (ii) of
Section 8(f) shall have occurred and be continuing with respect to the
Borrower, in which case the procedures specified in Section 3.4 for
funding by L/C Participants shall apply) constitute a request by the
Borrower to the Administrative Agent for a borrowing pursuant to
Section 2.5 of Base Rate Loans in the amount of such drawing. The
Borrowing Date with respect to such borrowing shall be the date of
such drawing.
3.6 Obligations Absolute.
The Borrower's obligations under this Section 3 shall be absolute
and unconditional under any and all circumstances and irrespective of
any setoff, counterclaim or defense to payment which the Borrower may
have or have had against the Issuing Lender, any beneficiary of a
Letter of Credit or any other Person. The Borrower also agrees with
the Issuing Lender that the Issuing Lender shall not be responsible
for, and the Borrower's Reimbursement Obligations under Section 3.5
shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even though
such documents shall in fact prove to be invalid, fraudulent or
forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such
Letter of Credit may be transferred or any claims whatsoever of the
Borrower against any beneficiary of such Letter of Credit or any such
transferee. The Issuing Lender shall not be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery
of any message or advice, however transmitted, in connection with any
Letter of Credit, except for errors or omissions found by a final and
nonappealable decision of a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of the
Issuing Lender. The Borrower agrees that any action taken or omitted
by the Issuing Lender under or in connection with any Letter of Credit
or the related drafts or documents, if done in the absence of gross
negligence or willful misconduct and in accordance with the standards
or care specified in the Uniform Commercial Code of the State of New
York, shall be binding on the Borrower and shall not result in any
liability of the Issuing Lender to the Borrower.
3.7 Letter of Credit Payments.
If any draft shall be presented for payment under any Letter of
Credit, the Issuing Lender shall promptly notify the Borrower of the
date and amount thereof. The responsibility of the Issuing Lender to
the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation
expressly provided for in such Letter of Credit, be limited to
determining that the documents (including each draft) delivered under
such Letter of Credit in connection with such presentment are
substantially in conformity with such Letter of Credit.
3.8 Applications.
To the extent that any provision of any Application related to
any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this Agreement
and to make the Loans and issue or participate in the Letters of
Credit, Holdings and the Borrower hereby jointly and severally
represent and warrant to each Agent and each Lender that:
4.1 Financial Condition.
(a) The audited consolidated balance sheets of the Borrower as at
December 31, 1998, and the related consolidated statements of income
and of cash flows for the fiscal year ended on such date, reported on
by and accompanied by an unqualified report from Arthur Andersen LLP,
present fairly the consolidated financial condition of the Borrower as
at such date, and the consolidated results of its operations and its
consolidated cash flows for the fiscal year then ended. The audited
consolidated balance sheet of the Borrower as at December 31, 1999,
and the related unaudited consolidated statements of income and cash
flows for the twelve month period ended on such date, present fairly
the consolidated financial condition of the Borrower as at such date,
and the consolidated results of its operations and its consolidated
cash flows for the twelve month period then ended (subject to normal
year-end audit adjustments and accounting adjustments described on
Schedule 4.1). All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with
GAAP applied consistently throughout the periods involved (except as
approved by the aforementioned firm of accountants and disclosed
therein). Holdings, the Borrower and its Subsidiaries do not have any
material Guarantee Obligations, contingent liabilities and liabilities
for taxes, or any long-term leases or unusual forward or long-term
commitments, including, without limitation, any interest rate or
foreign currency swap or exchange transaction or other obligation in
respect of derivatives, which are not reflected in the most recent
financial statements referred to in this paragraph
(b). During the period from December 31, 1998 to and including
the date hereof there has been no Disposition by the Borrower of any
material part of its business or Property.
4.2 No Change.
Except as set forth in Schedule 4.2 (which matter is set forth
for purposes of disclosure and has not had and could not reasonably be
expected to have a Material Adverse Effect), since December 31, 1999,
there has been no development or event which has had or could
reasonably be expected to have a Material Adverse Effect.
4.3 Corporate Existence; Compliance with Law.
Each of Holdings, the Borrower and its Subsidiaries (a) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the corporate power and
authority, and the legal right, to own and operate its Property, to
lease the Property it operates as lessee and to conduct the business
in which it is currently engaged, (c) is duly qualified as a foreign
corporation 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 and (d) is in compliance with
all Requirements of Law except to the extent that the failure to
comply therewith could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations.
Each Loan Party has the corporate power and authority, and the
legal right, to make, deliver and perform the Loan Documents to which
it is a party and, in the case of the Borrower, to borrow hereunder.
Each Loan Party has taken all necessary corporate action to authorize
the execution, delivery and performance of the Loan Documents to which
it is a party and, in the case of the Borrower, to authorize the
borrowings on the terms and conditions of this Agreement. No consent
or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required
in connection with the borrowings hereunder or the operation of the
Borrower's business following the Closing Date or with the execution,
delivery, performance, validity or enforceability of this Agreement or
any of the Loan Documents, except (i) consents, authorizations,
filings and notices described in Schedule 4.4, as to which the failure
to obtain could not, in the aggregate, reasonably be expected to have
a Material Adverse Effect and (ii) the filings referred to in Section
4.19. Each Loan Document has been duly executed and delivered on
behalf of each Loan Party party thereto. This Agreement constitutes,
and each other Loan Document upon execution will constitute, a legal,
valid and binding obligation of each Loan Party party thereto,
enforceable against each such Loan Party in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or
at law).
4.5 No Legal Bar.
The execution, delivery and performance of this Agreement and the
other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not
violate any Requirement of Law or any Contractual Obligation of
Holdings, the Borrower or any of its Subsidiaries and will not result
in, or require, the creation or imposition of any Lien on any of their
respective properties or revenues pursuant to any Requirement of Law
or any such Contractual Obligation (other than the Liens created by
the Security Documents). No Requirement of Law or Contractual
Obligation applicable to the Borrower or any of its Subsidiaries could
reasonably be expected to have a Material Adverse Effect.
4.6 No Material Litigation.
Except as set forth in Schedule 4.6 (which matter is set forth
for purposes of disclosure and has not had and could not reasonably be
expected to have a Material Adverse Effect), no litigation,
investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of Holdings or
the Borrower, threatened by or against Holdings, the Borrower or any
of its Subsidiaries or against any of their respective properties or
revenues (a) with respect to any of the Loan Documents or any of the
transactions contemplated hereby or thereby, or (b) which could
reasonably be expected to have a Material Adverse Effect.
4.7 No Default.
Neither Holdings, the Borrower nor any of its Subsidiaries is in
default under or with respect to any of its Contractual Obligations in
any respect which could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is
continuing.
4.8 Ownership of Property; Liens.
Each of Holdings, the Borrower and its Subsidiaries has title in
fee simple to, or a valid leasehold interest in, all its material real
property, and good title to, or a valid leasehold interest in, all its
other material Property, and none of such Property is subject to any
Lien except as permitted by Section 7.3.
4.9 Intellectual Property.
The Borrower and each of its Subsidiaries owns, or is licensed to
use, all Intellectual Property necessary for the conduct of its
business as currently conducted. No material claim has been asserted
and is pending by any Person challenging or questioning the use of any
Intellectual Property or the validity or effectiveness of any
Intellectual Property, nor does Holdings or Borrower know of any valid
basis for any such claim. The use of Intellectual Property by
Holdings, the Borrower and its Subsidiaries does not infringe on the
rights of any Person in any material respect.
4.10 Taxes.
Except as set forth in Schedule 4.10, each of Holdings, the
Borrower and each of its Subsidiaries has filed or caused to be filed
all Federal, state and other material tax returns which are required
to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its Property
and all other taxes, fees or other charges imposed on it or any of its
Property by any Governmental Authority (other than any the amount or
validity of which are currently being contested in good faith by
appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of Holdings, the
Borrower or its Subsidiaries, as the case may be); no tax Lien has
been filed, and, to the knowledge of Holdings and the Borrower, no
material claim is being asserted, with respect to any such tax, fee or
other charge.
4.11 Federal Regulations.
No part of the proceeds of any Loans will be used for
"purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U as now and
from time to time hereafter in effect or for any purpose which
violates the provisions of the Regulations of the Board. If requested
by any Lender or the Administrative Agent, the Borrower will furnish
to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form G-3 or
FR Form U-1 referred to in Regulation U.
4.12 Labor Matters.
There are no strikes or other labor disputes against Holdings,
the Borrower or any of its Subsidiaries pending or, to the knowledge
of Holdings or the Borrower, threatened that (individually or in the
aggregate) could reasonably be expected to have a Material Adverse
Effect. Hours worked by and payment made to employees of Holdings, the
Borrower and its Subsidiaries have not been in violation of the Fair
Labor Standards Act or any other applicable Requirement of Law dealing
with such matters that (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect. All payments
due from Holdings, the Borrower or any of its Subsidiaries on account
of employee health and welfare insurance that (individually or in the
aggregate) could reasonably be expected to have a Material Adverse
Effect if not paid have been paid or accrued as a liability on the
books of Holdings, the Borrower or the relevant Subsidiary.
4.13 ERISA.
Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the
date on which this representation is made or deemed made with respect
to any Plan, and each Plan has complied in all material respects with
the applicable provisions of ERISA and the Code. No termination of a
Single Employer Plan has occurred, and no Lien in favor of the PBGC or
a Plan has arisen, during such five-year period. The present value of
all accrued benefits under each Single Employer Plan (based on those
assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made
or deemed made, exceed the value of the assets of such Plan allocable
to such accrued benefits by a material amount. Neither the Borrower
nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan which has resulted or could
reasonably be expected to result in a material liability under ERISA
to the Borrower, and the Borrower could not reasonably be expected to
become subject to any material liability under ERISA if the Borrower
or any such Commonly Controlled Entity were to withdraw completely
from all Multiemployer Plans as of the valuation date most closely
preceding the date on which this representation is made or deemed
made. No such Multiemployer Plan is in Reorganization or Insolvent.
4.14 Investment Company Act; Other Regulations.
No Loan Party is an "investment company", or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended. No Loan Party is subject
to regulation under any Requirement of Law (other than Regulation X of
the Board) which limits its ability to incur Indebtedness.
4.15 Subsidiaries.
(a) Schedule 4.15 sets forth as of the Closing Date the name and
jurisdiction of incorporation of each Subsidiary and, as to each such
Subsidiary, the percentage of each class of Capital Stock owned by any
Loan Party.
(b) There are no outstanding subscriptions, options, warrants,
calls, rights or other agreements or commitments (other than stock
options granted to employees or directors and directors' qualifying
shares) of any nature relating to any Capital Stock of the Borrower or
any Subsidiary.
4.16 Use of Proceeds.
The proceeds of the Loans and the Letters of Credit shall be used
for general corporate purposes in the ordinary course of business;
provided that Section 2.4(e) Revolving Credit Loans shall be used only
to purchase machinery and equipment.
4.17 Environmental Matters.
Except as individually or in the aggregate could not reasonably
be expected to result in the payment of a Material Environmental
Amount:
(a) The facilities and properties owned, leased or operated by
Holdings, the Borrower or any of its Subsidiaries (the "Properties")
do not contain, and have not previously contained, any Materials of
Environmental Concern in amounts or concentrations or under
circumstances which (i) constitute or constituted a violation of, or
(ii) could give rise to liability under, any Environmental Law.
(b) The Properties and all operations at the Properties are in
material compliance, and have in the last five years been in material
compliance, with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the business
operated by Holdings, the Borrower or any of its Subsidiaries (the
"Business") which could materially interfere with the continued
operation of the Properties or materially impair the fair saleable
value thereof. Neither Holdings, the Borrower nor any of its
Subsidiaries has assumed any liability of any other Person under
Environmental Laws.
(c) Neither Holdings, the Borrower nor any of its Subsidiaries
has received or is aware of any notice of violation, alleged
violation, non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the Business, nor does Holdings or
the Borrower have knowledge or reason to believe that any such notice
will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported
or disposed of from the Properties in violation of, or in a manner or
to a location which could give rise to liability under, any
Environmental Law, nor have any Materials of Environmental Concern
been generated, treated, stored or disposed of at, on or under any of
the Properties in violation of, or in a manner that could give rise to
liability under, any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of Holdings and the Borrower,
threatened, under any Environmental Law to which Holdings, the
Borrower or any Subsidiary is or will be named as a party with respect
to the Properties or the Business, nor are there any consent decrees
or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding
under any Environmental Law with respect to the Properties or the
Business.
(f) There has been no release or threat of release of Materials
of Environmental Concern at or from the Properties, or arising from or
related to the operations of Holdings, the Borrower or any Subsidiary
in connection with the Properties or otherwise in connection with the
Business, in violation of or in amounts or in a manner that could give
rise to liability under Environmental Laws.
4.18 Accuracy of Information, etc.
No statement or information contained in this Agreement, any
other Loan Document or any other material document, certificate or
statement furnished to the Administrative Agent or the Lenders or any
of them, by or on behalf of any Loan Party for use in connection with
the transactions contemplated by this Agreement or the other Loan
Documents, contained as of the date such statement, information,
document or certificate was so furnished, any untrue statement of a
material fact or omitted to state a material fact necessary in order
to make the statements contained herein or therein not misleading.
There is no fact known to any Loan Party that could reasonably be
expected to have a Material Adverse Effect that has not been expressly
disclosed herein, in the other Loan Documents or in any other
documents, certificates and statements furnished to the Administrative
Agent and the Lenders for use in connection with the transactions
contemplated hereby and by the other Loan Documents.
4.19 Security Documents.
The Guarantee and Collateral Agreement is effective to continue
in favor of the Administrative Agent, for the benefit of the Lenders,
a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof. In the case of the Pledged
Stock described in the Guarantee and Collateral Agreement, when stock
certificates representing such Pledged Stock are delivered to the
Administrative Agent, and in the case of the other Collateral
described in the Guarantee and Collateral Agreement, when financing
statements in appropriate form are filed in the offices specified on
Schedule 4.19 and such other filings as are specified on Schedule 3 to
the Guarantee and Collateral Agreement are made, the Guarantee and
Collateral Agreement shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan
Parties in such Collateral and the proceeds thereof, as security for
the Obligations (as defined in the Guarantee and Collateral
Agreement), in each case prior and superior in right to any other
Person (except, in the case of Collateral other than Pledged Stock,
Liens permitted by Section 7.3).
4.20 Solvency.
Each Loan Party is and will continue to be Solvent.
Representations in Existing Credit Agreement. Each of the
representations and warranties made by any Loan Party in the Existing
Credit Agreement were true and correct on and as of the date made as
if made on and as of such date, except to the extent that such
representations and warranties expressly relate to an earlier date, in
which case such representations and warranties were true and correct
on and as of such earlier date.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit.
The agreement of each Lender to make the initial extension of
credit requested to be made by it is subject to the satisfaction,
prior to or concurrently with the making of such extension of credit
on the Closing Date, of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received
(i) this Agreement, executed and delivered by a duly authorized
officer of Holdings and the Borrower, (ii) the Guarantee and
Collateral Agreement, executed and delivered by a duly authorized
officer of Holdings, the Borrower and each Subsidiary Guarantor, (iii)
for the account of each relevant Lender, Notes conforming to the
requirements hereof and executed and delivered by a duly authorized
officer of the Borrower and (iv) a Borrowing Base Certificate, dated
the Closing Date and setting forth a calculation of the Borrowing Base
as of March 31, 2000, showing that the Total Revolving Extensions of
Credit outstanding on the Closing Date (after giving effect to the
making of any extensions of credit on the Closing Date) shall not
exceed the Borrowing Base as set forth in such Borrowing Base
Certificate.
(b) Financial Statements. The Lenders shall have received (i) the
audited consolidated financial statements of the Borrower for the
fiscal year ended on December 31, 1998, (ii) the unaudited
consolidated financial statements of the Borrower as at December 31,
1999 and (iii) unaudited interim consolidated financial statements of
the Borrower for each fiscal month and quarterly period ended
subsequent to the date of the latest applicable financial statements
delivered pursuant to clause (ii) of this paragraph as to which such
financial statements are available (including as of and for the period
ended March 31, 2000 and for such subsequent periods as are
available).
(c) Approvals. All governmental and third party approvals
reasonably necessary or reasonably advisable in connection with the
continuing operations of the Borrower and its Subsidiaries and the
transactions contemplated hereby shall have been obtained and be in
full force and effect.
(d) Fees. The Lenders, the Arranger, the Syndication Agent and
the Administrative Agent shall have received all fees required to be
paid, and all expenses for which invoices have been presented,
including, without limitation, the reasonable fees and expenses of
legal counsel, on or before the Closing Date.
(e) Closing Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each
Loan Party, dated the Closing Date, substantially in the form of
Exhibit C, with appropriate insertions and attachments.
(f) Legal Opinions. The Administrative Agent shall have received
the following executed legal opinions:
(i) the legal opinion of Weil, Gotshal & Manges LLP, counsel
to Holdings, the Borrower and its Subsidiaries, substantially in
the form of Exhibit E-1; and
(ii) the legal opinion of Troutman Sanders LLP, Georgia
counsel to the Borrower, substantially in the form of Exhibit
E-2.
Each such legal opinion shall cover such other matters incident
to the transactions contemplated by this Agreement as the
Administrative Agent may reasonably require.
(g) Pledged Stock; Stock Power. The Administrative Agent shall
have received the certificates representing the shares of Capital
Stock pledged pursuant to the Guarantee and Collateral Agreement,
together with an undated stock power for each such certificate
executed in blank by a duly authorized officer of the pledgor thereof.
To the extent the Administrative Agent received each such certificate
and stock power on the Original Closing Date, this condition (g) shall
be deemed fulfilled.
(h) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code financing
statement) required by the Security Documents or under law or
reasonably requested by the Administrative Agent to be filed,
registered or recorded in order to create in favor of the
Administrative Agent, for the benefit of the Lenders, a perfected Lien
on the Collateral described therein, prior and superior in right to
any other Person (other than with respect to Liens expressly permitted
by Section 7.3), shall be in proper form for filing, registration or
recordation.
(i) Insurance. The Administrative Agent shall have received
insurance certificates satisfying the requirements of Section 5.3 of
the Guarantee and Collateral Agreement.
(j) Accounts Field Examination. The Lenders shall have received
copies of an accounts field examination, prepared by or on behalf of
the Collateral Monitoring Agent, of the Accounts of the Borrower and
its Subsidiaries.
(k) Capital Contributions. The Equity Investors shall have
contributed to the capital of the Borrower and its Subsidiaries cash
in an aggregate amount equal to at least $6,000,000 in a manner and on
terms and conditions reasonably satisfactory to the Lenders (it being
understood that such contribution has been made prior to the Closing
Date). The Borrower shall have used at least $6,000,000 of such
contributions to prepay Revolving Loans outstanding under the Existing
Credit Agreement.
5.2 Conditions to Each Extension of Credit.
The agreement of each Lender to make any extension of credit
requested to be made by it on any date (including, without limitation,
its initial extension of credit) is subject to the satisfaction of the
following conditions precedent:
(a) Representations and Warranties. Each of the representations
and warranties made by any Loan Party in or pursuant to the Loan
Documents shall be true and correct on and as of such date as if made
on and as of such date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
extensions of credit requested to be made on such date.
(c) Credit Limitation. After giving effect to such extension of
credit, the Total Revolving Extensions of Credit shall not exceed the
Borrowing Base then in effect.
Each borrowing by and issuance of a Letter of Credit on behalf of
the Borrower hereunder shall constitute a representation and warranty
by the Borrower as of the date of such extension of credit that the
conditions contained in this Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree that, so
long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or any Agent
hereunder, each of Holdings and the Borrower shall and shall cause each of
its Subsidiaries to:
6.1 Financial Statements.
Furnish to each Agent and each Lender:
(a) as soon as available, but in any event within 90 days after
the end of each fiscal year of the Borrower, a copy of the audited
consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such year and the related audited
consolidated statements of income and of cash flows for such year,
setting forth in each case in comparative form the figures for the
previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of the scope
of the audit, by Arthur Andersen LLP or other independent certified
public accountants of nationally recognized standing;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each
fiscal year of the Borrower, the unaudited consolidated balance sheet
of the Borrower and its Subsidiaries as at the end of such quarter and
the related unaudited consolidated statements of income and of cash
flows for such quarter and the portion of the fiscal year through the
end of such quarter, setting forth in each case in comparative form
the figures for the previous year, certified by a Responsible Officer
as being fairly stated in all material respects (subject to normal
year-end audit adjustments); and
(c) as soon as available, but in any event not later than 30 days
after the end of each month occurring during each fiscal year of the
Borrower (other than the third, sixth, ninth and twelfth such month),
the unaudited consolidated balance sheets of the Borrower and its
Subsidiaries as at the end of such month and the related unaudited
consolidated statements of income and of cash flows for such month and
the portion of the fiscal year through the end of such month, setting
forth in each case in comparative form the figures for the previous
year, certified by a Responsible Officer as being fairly stated in all
material respects (subject to normal year-end audit adjustments);
all such financial statements shall be complete and correct in all
material respects and shall be prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods
reflected therein and with prior periods (except as approved by such
accountants or officer, as the case may be, and disclosed therein).
6.2 Certificates; Other Information.
Furnish to each Agent and each Lender, or, in the case of clause (g),
to the relevant Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent
certified public accountants reporting on such financial statements
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 any financial statements
pursuant to Section 6.1, (i) a certificate of a Responsible Officer
stating that, to the best of each such Responsible Officer's
knowledge, each Loan Party during such period has observed or
performed all of its covenants and other agreements, and satisfied
every condition, contained in this Agreement and the other Loan
Documents to which it is a party to be observed, performed or
satisfied by it, and that such Responsible Officer has obtained no
knowledge of any Default or Event of Default except as specified in
such certificate and (ii) in the case of quarterly or annual financial
statements, (x) a Compliance Certificate containing all information
necessary for determining compliance by Holdings, the Borrower and its
Subsidiaries with the provisions of this Agreement referred to therein
as of the last day of the fiscal quarter or fiscal year of the
Borrower, as the case may be, and (y) to the extent not previously
disclosed to the Administrative Agent, a listing of any county or
state within the United States where any Loan Party keeps inventory or
equipment and of any Intellectual Property acquired by any Loan Party
since the date of the most recent list delivered pursuant to this
clause (y) (or, in the case of the first such list so delivered, since
the Closing Date);
(c) as soon as available, and in any event no later than 45 days
after the end of each fiscal year of the Borrower, a detailed
consolidated budget for the following fiscal year (including a
projected consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of the following fiscal year, and the
related consolidated statements of projected cash flow, projected
changes in financial position and projected income), and, as soon as
available, significant revisions, if any, of such budget and
projections with respect to such fiscal year (collectively, the
"Projections"), which Projections shall in each case be accompanied by
a certificate of a Responsible Officer stating that such Projections
are based on reasonable estimates, information and assumptions and
that such Responsible Officer has no reason to believe that such
Projections are incorrect or misleading in any material respect;
(d) within 45 days after the end of each fiscal quarter of the
Borrower, a narrative discussion and analysis of the financial
condition and results of operations of the Borrower and its
Subsidiaries for such fiscal quarter and for the period from the
beginning of the then current fiscal year to the end of such fiscal
quarter, as compared to the portion of the Projections covering such
periods and to the comparable periods of the previous year;
(e) to the extent approval is required by the Required Lenders
pursuant to Section 7.9, no later than 10 Business Days prior to the
effectiveness thereof, copies of substantially final drafts of any
proposed amendment, supplement, waiver or other modification with
respect to the Senior Note Indenture;
(f) within five days after the same are sent, copies of all
financial statements and reports which Holdings or the Borrower sends
to the holders of any class of its debt securities or public equity
securities and within five days after the same are filed, copies of
all financial statements and reports which Holdings or the Borrower
may make to, or file with, the SEC; and
(g) promptly, such additional financial and other information as
any Lender may from time to time reasonably request.
6.3 Payment of Obligations.
Pay, discharge or otherwise satisfy at or before maturity or
before they become delinquent, as the case may be, all its material
obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto
have been provided on the books of Holdings, the Borrower or its
Subsidiaries, as the case may be.
6.4 Conduct of Business and Maintenance of Existence, etc.
(i) Preserve, renew and keep in full force and effect its
corporate existence and (ii) take all reasonable action to maintain
all rights, privileges and franchises necessary or desirable in the
normal conduct of its business, except, in each case, as otherwise
permitted by Section 7.4 and except, in the case of clause
(ii) above, to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect; and
(iii) comply with all Contractual Obligations and Requirements of
Law except to the extent that failure to comply therewith could not,
in the aggregate, reasonably be expected to have a Material Adverse
Effect.
6.5 Maintenance of Property; Insurance.
(a) Keep all Property useful and necessary in its business in
good working order and condition, ordinary wear and tear excepted and
(b) maintain with financially sound and reputable insurance
companies insurance on all its Property in at least such amounts and
against at least such risks (but including in any event public
liability, product liability and business interruption) as are usually
insured against in the same general area by companies engaged in the
same or a similar business.
6.6 Inspection of Property; Books and Records; Discussions; Audits.
(a) Keep proper books of records and account in which full, true
and correct entries in conformity with GAAP and all Requirements of
Law shall be made of all dealings and transactions in relation to its
business and activities,
(b) permit representatives of any Lender to visit and inspect any
of its properties and examine and make abstracts from any of its books
and records at any reasonable time and as often as may reasonably be
desired and to discuss the business, operations, properties and
financial and other condition of Holdings, the Borrower and its
Subsidiaries with officers and employees of Holdings, the Borrower and
its Subsidiaries and with its independent certified public accountants
and
(c) permit the Collateral Monitoring Agent to perform up to three
audits per calendar year on the Accounts of the Borrower and its
Subsidiaries; provided that after the occurrence and during the
continuation of a Default or Event of Default, the Collateral
Monitoring Agent may perform as many audits on the Accounts of the
Borrower and its Subsidiaries as the Collateral Monitoring Agent shall
in its sole discretion determine to be necessary or appropriate.
6.7 Notices.
Promptly give notice to the Administrative Agent and each Lender
of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of Holdings, the Borrower or any of its Subsidiaries or
(ii) litigation, investigation or proceeding which may exist at any
time between Holdings, the Borrower or any of its Subsidiaries and any
Governmental Authority, which in either case, if not cured or if
adversely determined, as the case may be, could reasonably be expected
to have a Material Adverse Effect;
(c) any litigation or proceeding affecting Holdings, the Borrower
or any of its Subsidiaries in which the amount involved is $2,500,000
or more and not covered by insurance or in which injunctive or similar
relief is sought;
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof:
(i) the occurrence of any Reportable Event with respect to any Plan, a
failure to make any required contribution to a Plan, the creation of
any Lien in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan,
any of which are reasonably likely to result in a material liability
to the Borrower, or (ii) the institution of proceedings or the taking
of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the termination, Reorganization or Insolvency of,
any Plan;
(e) any development or event which has had or could reasonably be
expected to have a Material Adverse Effect; and
(f) any event or condition which, on any day, to the knowledge of
the Borrower, has caused the Borrowing Base to change since the date
of the most recently delivered Borrowing Base Certificate, if as a
result of such change the Total Revolving Extensions of Credit exceed
the Borrowing Base determined as of such day
Each notice pursuant to this Section 6.7 shall be accompanied by a
statement of a Responsible Officer setting forth details of the
occurrence referred to therein and stating what action Holdings, the
Borrower or the relevant Subsidiary proposes to take with respect
thereto.
6.8 Environmental Laws.
(a) Comply in all material respects with, and ensure compliance
in all material respects by all tenants and subtenants, if any, with,
all applicable Environmental Laws, and obtain and comply in all
material respects with and maintain, and ensure that all tenants and
subtenants obtain and comply in all material respects with and
maintain, any and all licenses, approvals, notifications,
registrations or permits required by applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required
under Environmental Laws and promptly comply in all material respects
with all lawful orders and directives of all Governmental Authorities
regarding Environmental Laws.
6.9 Additional Collateral, etc.
(a) With respect to any Property acquired after the Closing Date
by Holdings, the Borrower or any of its Subsidiaries (other than an
Excluded Foreign Subsidiary) (other than any Property described in
paragraph (b), (c) or (d) below and real property having a value
(including improvements thereof) of less than $1,000,000) as to which
the Administrative Agent, for the benefit of the Lenders, does not
have a perfected Lien, promptly (i) execute and deliver to the
Administrative Agent such amendments to the Guarantee and Collateral
Agreement or such other documents as the Administrative Agent deems
necessary or advisable in order to grant to the Administrative Agent,
for the benefit of the Lenders, a security interest in such Property
and (ii) take all actions necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected
first priority security interest in such Property, including without
limitation, the filing of Uniform Commercial Code financing statements
in such jurisdictions as may be required by the Guarantee and
Collateral Agreement or by law or as may be requested by the
Administrative Agent.
(b) With respect to any fee interest in any real property having
a value (together with improvements thereof) of at least $1,000,000
acquired after the Closing Date by Holdings, the Borrower or any of
its Subsidiaries (other than any such real property owned by an
Excluded Foreign Subsidiary or subject to a Lien expressly permitted
by Section 7.3(g)), promptly (i) execute and deliver a first priority
mortgage in form and substance reasonably satisfactory to the
Administrative Agent in favor of the Administrative Agent, for the
benefit of the Lenders, covering such real property, (ii) if requested
by the Administrative Agent, provide the Lenders with (x) title and
extended coverage insurance covering such real property in an amount
at least equal to the purchase price of such real estate (or such
other amount as shall be reasonably specified by the Administrative
Agent) as well as a current ALTA survey thereof, together with a
surveyor's certificate and (y) any consents or estoppels reasonably
deemed necessary or advisable by the Administrative Agent in
connection with such mortgage or deed of trust, each of the foregoing
in form and substance reasonably satisfactory to the Administrative
Agent and (iii) if requested by the Administrative Agent, deliver to
the Administrative Agent legal opinions relating to the matters
described above, which opinions shall be in form and substance, and
from counsel, reasonably satisfactory to the Administrative Agent.
(c) With respect to any new Subsidiary (other than an Excluded
Foreign Subsidiary) created or acquired after the Closing Date by
Holdings (which, for the purposes of this paragraph (c), shall include
any existing Subsidiary that ceases to be an Excluded Foreign
Subsidiary and Master Collector if at any time the fair market value
of Master Collector exceeds $1,000,000), the Borrower or any of its
Subsidiaries, promptly (i) execute and deliver to the Administrative
Agent such amendments to the Guarantee and Collateral Agreement as the
Administrative Agent deems necessary or advisable in order to grant to
the Administrative Agent, for the benefit of the Lenders, a perfected
first priority security interest in the Capital Stock of such new
Subsidiary which is owned by Holdings, the Borrower or any of its
Subsidiaries, (ii) deliver to the Administrative Agent the
certificates representing such Capital Stock, together with undated
stock powers, in blank, executed and delivered by a duly authorized
officer of Holdings, the Borrower or such Subsidiary, as the case may
be, (iii) cause such new Subsidiary (A) to become a party to the
Guarantee and Collateral Agreement and (B) to take such actions
necessary or advisable to grant to the Administrative Agent for the
benefit of the Lenders a perfected first priority security interest in
the Collateral described in the Guarantee and Collateral Agreement
with respect to such new Subsidiary, including, without limitation,
the filing of Uniform Commercial Code financing statements in such
jurisdictions as may be required by the Guarantee and Collateral
Agreement or by law or as may be requested by the Administrative
Agent, and (iv) if requested by the Administrative Agent, deliver to
the Administrative Agent legal opinions relating to the matters
described above, which opinions shall be in form and substance, and
from counsel, reasonably satisfactory to the Administrative Agent.
(d) With respect to any new Excluded Foreign Subsidiary created
or acquired after the Closing Date by Holdings, the Borrower or any of
its Domestic Subsidiaries, promptly (i) execute and deliver to the
Administrative Agent such amendments to the Guarantee and Collateral
Agreement as the Administrative Agent deems necessary or advisable in
order to grant to the Administrative Agent, for the benefit of the
Lenders, a perfected first priority security interest in the Capital
Stock of such new Subsidiary which is owned by Holdings, the Borrower
or any of its Domestic Subsidiaries (provided that in no event shall
more than 65% of the total outstanding Capital Stock of any such new
Subsidiary be required to be so pledged), (ii) deliver to the
Administrative Agent the certificates representing such Capital Stock,
together with undated stock powers, in blank, executed and delivered
by a duly authorized officer of Holdings, the Borrower or such
Subsidiary, as the case may be, and take such other action as may be
necessary or, in the opinion of the Administrative Agent, desirable to
perfect the Lien of the Administrative Agent thereon, and (iii) if
requested by the Administrative Agent, deliver to the Administrative
Agent legal opinions relating to the matters described above, which
opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
(e) If at any time the fair market value of any Foreign
Subsidiary existing on or created after the Closing Date shall exceed
$2,000,000, promptly (i) execute and deliver to the Administrative
Agent a pledge agreement governed by the law of the country in which
such Foreign Subsidiary is organized if the Administrative Agent (upon
notice by the Borrower of such fair market value of a Foreign
Subsidiary) deems such action necessary or advisable in order to grant
to the Administrative Agent, for the benefit of the Lenders, a
perfected first priority security interest in the Capital Stock of
such new Subsidiary which is owned by Holdings, the Borrower or any of
its Domestic Subsidiaries (provided that in no event shall more than
65% of the total outstanding Capital Stock of any such new Subsidiary
be required to be so pledged), (ii) if not previously done so, deliver
to the Administrative Agent the certificates representing such Capital
Stock, together with undated stock powers, in blank, executed and
delivered by a duly authorized officer of Holdings, the Borrower or
such Subsidiary, as the case may be, and take such other action as may
be necessary or, in the opinion of the Administrative Agent, desirable
to perfect the Lien of the Administrative Agent thereon, and (iii) if
requested by the Administrative Agent, deliver to the Administrative
Agent legal opinions relating to the matters described above, which
opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
1.1 Borrowing Base Certificates, etc.
Furnish to the Collateral Monitoring Agent: (a) Upon its request,
and in no event less frequently than twenty (20) days after the end of
each fiscal month (together with a copy of all or any part of such
delivery requested by any Lender in writing after the Closing Date),
each of the following:
(i) a Borrowing Base Certificate, as of the end of such fiscal
month, accompanied by such supporting detail and documentation
as shall be requested by the Collateral Monitoring Agent in
its reasonable discretion; and
(ii) a monthly trial balance showing Accounts outstanding aged
from invoice date as follows: 1 to 30 days, 31 to 60 days, 61
to 90 days and 91 days or more, accompanied by such supporting
detail and documentation as shall be requested by the
Collateral Monitoring Agent in its reasonable discretion;
(a) At the time of delivery of each of the monthly financial statements
delivered pursuant to Section 6.1, a reconciliation of the Accounts trial
balance of the Borrower and its Subsidiaries to its general ledger and monthly
financial statements delivered pursuant to such Section 6.1, in each case
accompanied by such supporting detail and documentation as shall be requested by
the Collateral Monitoring Agent in its reasonable discretion;
(a) At the time of delivery of each of the quarterly financial statements
delivered pursuant to Section 6.1, a listing of government contracts of the
Borrower and its Subsidiaries subject to the Federal Assignment of Claims Act of
1940;
(a) Such appraisals of the Accounts of the Borrower and its Subsidiaries as the
Collateral Monitoring Agent may request at any time after the occurrence and
during the continuance of a Default or an Event of Default, such appraisals to
be conducted by an appraiser, and in form and substance, satisfactory to the
Collateral Monitoring Agent; and
(a) Such other reports, statements and reconciliations with respect to the
Borrowing Base or Collateral of the Borrower and its Subsidiaries as the
Collateral Monitoring Agent shall from time to time request in its reasonable
discretion.
SECTION 7. NEGATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree that, so long
as the Commitments remain in effect, any Letter of Credit remains outstanding or
any Loan or other amount is owing to any Lender or any Agent hereunder, each of
Holdings and the Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly:
7.1 Financial Covenants.
(a) Minimum Consolidated EBITDA. Permit the Consolidated EBITDA for any
period of four consecutive fiscal quarters of the Borrower ending with any
fiscal quarter set forth below to be less than the amount set forth below
opposite such fiscal quarter:
Fiscal Quarter Minimum Consolidated EBITDA
March 31, 2000 $15,360,000
June 30, 2000 $16,800,000
September 30, 2000 $18,750,000
December 31, 2000 $22,660,000
March 31, 2001 $25,250,000
June 30, 2001 $25,500,000
September 30, 2001 $25,750,000
December 31, 2001 $26,000,000
March 31, 2002 $26,250,000
June 30, 2002 $26,500,000
September 30, 2002 $26,750,000
December 31,2002 $27,000,000
March 31, 2003 $27,000,000
June 30, 2003 $27,000,000
September 30, 2003 $27,000,000
December 31, 2003 $27,000,000
(b) Consolidated Total Debt Ratio. Permit the Consolidated Total Debt Ratio
as at the last day of any period of four consecutive fiscal quarters of the
Borrower ending with any fiscal quarter set forth below to exceed the ratio set
forth below opposite such fiscal quarter: Fiscal Quarter Consolidated Total Debt
Ratio
March 31, 2000 8.75 to 1.00
June 30, 2000 8.00 to 1.00
September 30, 2000 7.15 to 1.00
December 31, 2000 5.90 to 1.00
Thereafter 4.00 to 1.00
(a) Consolidated Interest Coverage Ratio. Permit the Consolidated Interest
Coverage Ratio for any period of four consecutive fiscal quarters of the
Borrower ending with any fiscal quarter set forth below to be less than the
ratio set forth below opposite such fiscal quarter:
Consolidated Interest
Fiscal Quarter Coverage Ratio
-------------- ---------------------
March 31, 2000 1.20 to 1.00
June 30, 2000 1.25 to 1.00
September 30, 2000 1.35 to 1.00
December 31, 2000 1.60 to 1.00
March 31, 2001 2.35 to 1.00
June 30, 2001 2.40 to 1.00
September 30, 2001 2.45 to 1.00
December 31, 2001 2.50 to 1.00
Thereafter 2.50 to 1.00
7.2 Limitation on Indebtedness.
Create, incur, assume or suffer to exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
(b) Indebtedness of the Borrower to any Subsidiary and of any Wholly
Owned Subsidiary Guarantor to the Borrower or any other Subsidiary;
(c) (i) Indebtedness of the Borrower in respect of the Senior Notes in
an aggregate principal amount not to exceed $100,000,000 and (ii) Guarantee
Obligations of any Subsidiary Guarantor in respect of such Indebtedness;
(d) (i) Indebtedness secured by Liens permitted by Section 7.3(g) and
(ii) Capital Lease Obligations, so long as the principal amount of the
Indebtedness and the Capital Lease Obligation outstanding pursuant to
clauses (i) and (ii) shall not exceed $5,000,000 in the aggregate at any
one time;
(e) Indebtedness outstanding on the Original Closing Date and listed
on Schedule 7.2(e) and any refinancings, refundings, renewals or extensions
thereof (without any increase in the principal amount thereof);
(f) guarantees made in the ordinary course of business by the Borrower
or any of its Subsidiaries of obligations of any Wholly Owned Subsidiary
Guarantor;
(g) Indebtedness of any Specified Entity to the Borrower or any
Subsidiary Guarantor (so long as no Default or Event of Default shall have
occurred and be continuing at the time of the incurrence of such
Indebtedness), provided that (x) the requirements of Section 6.9 are
satisfied, (y) the aggregate principal amount of such Indebtedness to the
Borrower or any Subsidiary Guarantor at any time outstanding shall not
exceed $2,000,000 less the aggregate amount of all investments made in or
loans to such Specified Entities pursuant to Section 7.8(h) and (z) no such
Indebtedness (other than Indebtedness in an aggregate principal amount not
to exceed $275,000 incurred by Yanci Services Company) shall be incurred by
the Joint Ventures subsequent to the Closing Date; and
(h) additional Indebtedness of the Borrower or any of its Subsidiaries
in an aggregate principal amount (for the Borrower and all Subsidiaries)
not to exceed $5,000,000 at any one time outstanding.
7.3 Limitation on Liens.
Create, incur, assume or suffer to exist any Lien upon any of its
Property or revenues, whether now owned or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's,
collection attorneys' or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 30 days or which
are being contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(e) 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
materially interfere with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries;
(f) Liens in existence on the Original Closing Date and listed on
Schedule 7.3(f), securing Indebtedness permitted by Section 7.2(e),
provided that no such Lien is spread to cover any additional Property after
the Closing Date and that the principal amount of Indebtedness secured
thereby is not increased;
(g) Liens securing Indebtedness of the Borrower or any other
Subsidiary incurred pursuant to Section 7.2(c) to finance the acquisition
of fixed or capital assets, provided that (i) such Liens shall be created
substantially simultaneously with the acquisition of such fixed or capital
assets, (ii) such Liens do not at any time encumber any Property other than
the Property financed by such Indebtedness and (iii) the amount of
Indebtedness secured thereby is not increased;
(h) Liens created pursuant to the Security Documents;
(i) any interest or title of a lessor under any Capital Lease
Obligation or other lease entered into by the Borrower or any other
Subsidiary in the ordinary course of its business and covering only the
assets so leased; and
(j) Liens not otherwise permitted by this Section 7.3 so long as
neither (i) the aggregate outstanding principal amount of the obligations
secured thereby nor (ii) the aggregate fair market value (determined as of
the date such Lien is incurred) of the assets subject thereto exceeds (as
to the Borrower and all Subsidiaries) $2,000,000 at any one time.
7.4 Limitation on Fundamental Changes.
Enter into any merger, consolidation or amalgamation, or liquidate,
wind up or dissolve itself (or suffer any liquidation or dissolution), or
Dispose of all or substantially all of its Property or business except:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (provided that the Borrower shall be the continuing or
surviving corporation) or with or into any Wholly Owned Subsidiary
Guarantor (provided that the Wholly Owned Subsidiary Guarantor shall be the
continuing or surviving corporation);
(b) any Subsidiary of the Borrower may Dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to the Borrower or any
Wholly Owned Subsidiary Guarantor;
(c) each of the Joint Ventures and Master Collectors may Dispose of
any or all of its assets (upon voluntary liquidation or otherwise) to any
Person or liquidate, wind up or dissolve itself in any manner; and
(d) any Excluded Foreign Subsidiary may be merged or consolidated with
or into, or Dispose of any or all of its assets (upon voluntary liquidation
or otherwise) to, any other Excluded Foreign Subsidiary.
7.5 Limitation on Sale of Assets.
Dispose of any of its Property or business (including, without
limitation, receivables and leasehold interests), whether now owned or
hereafter acquired, or, in the case of any Subsidiary, issue or sell any
shares of such Subsidiary's Capital Stock to any Person, except:
(a) the Disposition of obsolete or worn out property in the ordinary
course of business;
(b) Dispositions permitted by Section 7.4;
(c) the sale or issuance of any Subsidiary's Capital Stock to the
Borrower or any Wholly Owned Subsidiary Guarantor;
(d) the Disposition of Property having a book value or a fair market
value not to exceed $1,000,000 in the aggregate for any fiscal year of the
Borrower;
(e) any Recovery Event, provided that the requirements of Section
2.10(b) are complied with in connection therewith; and
(f) Asset Sales in respect of assets having an aggregate book value
not exceeding $5,000,000 in any fiscal year, provided, that the
requirements of Section 2.10(b) are complied with in connection therewith.
7.6 Limitation on Dividends.
Declare or pay any dividend (other than dividends payable solely in
common stock of the Person making such dividend) on, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for,
the purchase, redemption, defeasance, retirement or other acquisition of,
any shares of any class of Capital Stock of Holdings, the Borrower or any
Subsidiary or any warrants or options to purchase any such Capital Stock,
whether now or hereafter outstanding, or make any other distribution in
respect thereof, either directly or indirectly, whether in cash or property
or in obligations of Holdings, the Borrower or any Subsidiary
(collectively, "Restricted Payments"), except that any Subsidiary may make
Restricted Payments to the Borrower or any Wholly Owned Subsidiary
Guarantor, (b) any Excluded Foreign Subsidiary may make Restricted Payments
to any other Excluded Foreign Subsidiary and (c) the Borrower may pay
dividends to Holdings to permit Holdings to pay any taxes which are due and
payable by Holdings and the Borrower (and its Subsidiaries) as part of a
consolidated, combined or unitary tax filing group or which are due and
payable by Holdings with respect to its own operations.
7.7 Limitation on Capital Expenditures.
Make or commit to make (by way of the acquisition of securities of a
Person or otherwise) any Capital Expenditure, except (a) Capital
Expenditures of the Borrower and its Subsidiaries not exceeding $10,000,000
in fiscal year 2000 and $5,500,000 in each fiscal year thereafter,
provided, that (i) any such amount referred to above, if not so expended in
the fiscal year for which it is permitted, may be carried over for
expenditure in the next succeeding fiscal year and (ii) Capital
Expenditures made pursuant to this clause (a) during any fiscally year
shall be deemed made, first, in respect of amounts permitted for such
fiscal year as provided above and second, in respect of amounts carried
over from the prior fiscal year pursuant to subclause (i) above, and (b)
Capital Expenditures made with the proceeds of any Reinvestment Deferred
Amounts.
7.8 Limitation on Investments, Loans and Advances.
Make any advance, loan, extension of credit (by way of guaranty or
otherwise) or capital contribution to, or purchase any stock, bonds, notes,
debentures or other securities of or any assets constituting all or a
material part of a business unit of, or make any other investment in, any
Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 7.2;
(d) the Acquisition;
(e) investments made by the Borrower or any of its Subsidiaries with
the proceeds of any Reinvestment Deferred Amount resulting from a Recovery
Event;
(f) investments by Holdings, the Borrower or any of its Subsidiaries
in the Borrower or a Wholly Owned Subsidiary Guarantor;
(g) so long as no Default or Event of Default shall have occurred and
be continuing, the Borrower and any Subsidiary may make investments in or
loans to, or create, any Specified Entity (by way of capital contribution
or otherwise), provided that (x) the requirements of Section 6.9 are
satisfied, (y) the aggregate amount of all investments in or loans to such
Specified Entities since the Original Closing Date shall not exceed
$2,000,000 minus the aggregate principal amount of any Indebtedness of any
Specified Entity at any such time outstanding in accordance with Section
7.2(h) and (z) no such investments shall be made in and no such loans shall
be made to (other than loans to Yanci Services Company in an aggregate
principal amount not to exceed $275,000) any Joint Ventures subsequent to
the Closing Date;
(h) loans and advances to employees or directors of the Borrower made
pursuant to a form of promissory note provided to the Administrative Agent
prior to the date hereof (with any such changes as are reasonably
satisfactory to the Administrative Agent) and made solely to fund purchases
of Capital Stock of Holdings to the extent the proceeds therefrom are
concurrently received by Holdings and contributed to the Borrower, in an
aggregate amount not to exceed $500,000 at any one time outstanding; and
(i) in addition to investments otherwise expressly permitted by this
Section 7.8, so long as no Default or Event of Default shall have occurred
and be continuing, investments by the Borrower or any of its Subsidiaries
in an aggregate amount (valued at cost) not to exceed $2,000,000 since the
Original Closing Date.
7.9 Limitation on Optional Payments and Modifications of Debt
Instruments, etc.; Limitation on Modification of Certificate of
Incorporation.
(a) Make or offer to make any payment, prepayment, repurchase or
redemption of or otherwise defease or segregate funds (collectively, a
"Repurchase") with respect to the Senior Notes (other than scheduled
interest payments required to be made in cash); provided that if (i) the
Tranche B Term Loans and Tranche C Term Loans have been repaid in full,
(ii) the Consolidated Total Debt Ratio on a pro forma basis after giving
effect to such Repurchase recomputed as of the last day of the most
recently ended fiscal quarter of the Borrower and its Subsidiaries as if
such Repurchase had occurred on the first day of the relevant period for
testing such compliance shall be less than 3.50 to 1.00 and (iii) no
Default or Event of Default shall have occurred and be continuing or would
result therefrom, then the Borrower may Repurchase up to an aggregate
principal amount of $25,000,000 of Senior Notes,
(b) amend, modify, waive or otherwise change, or consent or agree to
any amendment, modification, waiver or other change to, any of the terms of
the Senior Notes (other than any such amendment, modification, waiver or
other change which (i) would extend the maturity or reduce the amount of
any payment of principal thereof or which would reduce the rate or extend
the date for payment of interest thereon and (ii) does not involve the
payment of a consent fee) or
(c) amend its certificate of incorporation in any manner determined by
the Administrative Agent to be adverse to the Lenders without the prior
written consent of the Required Lenders.
7.10 Limitation on Transactions with Affiliates.
Enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of Property, the rendering of any service
or the payment of any management, advisory or similar fees, with any
Affiliate (other than Holdings, the Borrower or any Wholly Owned Subsidiary
Guarantor) unless such transaction is (a) otherwise permitted under this
Agreement, (b) in the ordinary course of business of Holdings, the Borrower
or such Subsidiary, as the case may be, and (c) upon fair and reasonable
terms no less favorable to Holdings, the Borrower or such Subsidiary, as
the case may be, than it would obtain in a comparable arm's length
transaction with a Person which is not an Affiliate, except the provision
to administrative services to any Specified Entity in the ordinary course
of business consistent with past practices.
7.11 Limitation on Sales and Leasebacks.
Enter into any arrangement with any Person providing for the leasing
by Holdings, the Borrower or any Subsidiary of real or personal property
which has been or is to be sold or transferred by Holdings, the Borrower or
such Subsidiary to such Person or to any other Person to whom funds have
been or are to be advanced by such Person on the security of such property
or rental obligations of Holdings, the Borrower or such Subsidiary.
7.12 Limitation on Changes in Fiscal Periods.
Permit the fiscal year of the Borrower to end on a day other than
December 31 or change the Borrower's method of determining fiscal quarters.
7.13 Limitation on Negative Pledge Clauses.
Enter into or suffer to exist or become effective any agreement which
prohibits or limits the ability of Holdings, the Borrower or any of its
Subsidiaries to create, incur, assume or suffer to exist any Lien upon any
of its Property or revenues, whether now owned or hereafter acquired, to
secure the Obligations or, in the case of Holdings or any Subsidiary
Guarantor, its obligations under the Guarantee and Collateral Agreement,
other than (a) this Agreement and the other Loan Documents, (b) any
agreements governing any purchase money Liens or Capital Lease Obligations
otherwise permitted hereby or Indebtedness permitted pursuant to Section
7.2(c) (in which case, any prohibition or limitation shall only be
effective against the assets financed thereby) and (c) the Senior Note
Indenture.
7.14 Limitation on Restrictions on Subsidiary Distributions.
Enter into or suffer to exist or become effective any consensual
encumbrance or restriction on the ability of any Subsidiary of the Borrower
to (a) pay dividends or make any other distributions in respect of any
Capital Stock of such Subsidiary held by, or pay any Indebtedness owed to,
the Borrower or any other Subsidiary of the Borrower, (b) make loans or
advances to the Borrower or any other Subsidiary of the Borrower or (c)
transfer any of its assets to the Borrower or any other Subsidiary of the
Borrower, except for such encumbrances or restrictions existing under or by
reason of (i) any restrictions existing under the Loan Documents and (ii)
any restrictions with respect to a Subsidiary imposed pursuant to an
agreement which has been entered into in connection with the Disposition of
all or substantially all of the Capital Stock or assets of such Subsidiary.
7.15 Limitation on Lines of Business.
Enter into any business, either directly or through any Subsidiary,
except for those businesses in which the Borrower and its Subsidiaries are
engaged on the date of this Agreement or which are reasonably related
thereto.
7.17 Limitation on Activities of Holdings.
In the case of Holdings, notwithstanding anything to the contrary in
this Agreement or any other Loan Document, (a) conduct, transact or
otherwise engage in, or commit to conduct, transact or otherwise engage in,
any business or operations other than (I) those incidental to its ownership
of the Capital Stock of the Borrower or (II) the issuance of Capital Stock
so long as no Default or Event of Default shall have occurred and be
continuing or would result therefrom, (b) incur, create, assume or suffer
to exist any Indebtedness or other liabilities or financial obligations,
except (i) nonconsensual obligations imposed by operation of law, (ii)
pursuant to the Loan Documents to which it is a party and (iii) obligations
with respect to its Capital Stock, or (c) own, lease, manage or otherwise
operate any properties or assets (including cash (other than cash received
in connection with dividends made by the Borrower in accordance with
Section 7.6 pending application in the manner contemplated by said Section)
and cash equivalents) other than the ownership of shares of Capital Stock
of the Borrower.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or
the Borrower shall fail to pay any interest on any Loan or Reimbursement
Obligation, or any other amount payable hereunder or under any other Loan
Document, within five days after any such interest or other amount becomes
due in accordance with the terms hereof; or (b) Any representation or
warranty made or deemed made by any Loan Party herein or in any other Loan
Document or which is contained in any certificate, document or financial or
other statement furnished by it at any time under or in connection with
this Agreement or any such other Loan Document shall prove to have been
inaccurate in any material respect on or as of the date made or deemed
made; or
(b) Any Loan Party shall default in the observance or performance of
any agreement contained in clause (i) or (ii) of Section 6.4(a) (with
respect to Holdings and the Borrower only), Section 6.7(a), Section 7 or
Section 5.6 of the Guarantee and Collateral Agreement; or
(c) Any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section), and
such default shall continue unremedied for a period of 30 days; or
(d) Holdings, the Borrower or any of its Subsidiaries shall (i)
default in making any payment of any principal of any Indebtedness
(including, without limitation, any Guarantee Obligation, but excluding the
Loans) on the scheduled or original due date with respect thereto; or (ii)
default in making any payment of any interest on any such Indebtedness
beyond the period of grace (not to exceed 31 days), if any, provided in the
instrument or agreement under which such Indebtedness was created; or (iii)
default in the observance or performance of any other agreement or
condition relating to any such Indebtedness or contained in any instrument
or agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or
beneficiary) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or (in the case of
any such Indebtedness constituting a Guarantee Obligation) to become
payable; provided, that a default, event or condition described in clause
(i), (ii) or (iii) of this paragraph (e) shall not at any time constitute
an Event of Default unless, at such time, one or more defaults, events or
conditions of the type described in clauses (i), (ii) and (iii) of this
paragraph (e) shall have occurred and be continuing with respect to
Indebtedness the outstanding principal amount of which exceeds in the
aggregate $2,000,000; or
(e) (i) Holdings, the Borrower or any of its Subsidiaries shall
commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment
of a receiver, trustee, custodian, conservator or other similar official
for it or for all or any substantial part of its assets, or Holdings, the
Borrower or any of its Subsidiaries shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against
Holdings, the Borrower or any of its Subsidiaries any case, proceeding or
other action of a nature referred to in clause (i) above which (A) results
in the entry of an order for relief or any such adjudication or appointment
or (B) remains undismissed, undischarged or unbonded for a period of 60
days; or (iii) there shall be commenced against Holdings, the Borrower or
any of its Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in
the entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60 days from
the entry thereof; or (iv) Holdings, the Borrower or any of its
Subsidiaries shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in
clause (i), (ii), or (iii) above; or (v) Holdings, the Borrower or any of
its Subsidiaries shall generally not, or shall be unable to, or shall admit
in writing its inability to, pay its debts as they become due; or
(f) (i) Any Person shall engage in any non-exempt "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist with
respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise
on the assets of the Borrower or any Commonly Controlled Entity, (iii) a
Reportable Event shall occur with respect to, or proceedings shall commence
to have a trustee appointed, or a trustee shall be appointed, to administer
or to terminate, any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
Borrower or any Commonly Controlled Entity shall, or in the reasonable
opinion of the Required Lenders is likely to, incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of,
a Multiemployer Plan or (vi) any other similar event or condition not in
the ordinary course shall occur or exist with respect to a Plan; and in
each case in clauses (i) through (vi) above, such event or condition,
together with all other such events or conditions, if any, could, in the
sole judgment of the Required Lenders, reasonably be expected to have a
Material Adverse Effect; or
(g) One or more judgments or decrees shall be entered against
Holdings, the Borrower or any of its Subsidiaries involving in the
aggregate a liability (not paid or fully covered by insurance as to which
the relevant insurance company has acknowledged coverage or not paid or
covered by an indemnity made by First Data Corporation ("FDC") as to which
FDC has acknowledged responsibility for payment) of $1,000,000 or more, and
all such judgments or decrees shall not have been vacated, discharged,
stayed or bonded pending appeal within 30 days from the entry thereof; or
(h) Any of the Security Documents shall cease, for any reason, to be
in full force and effect, or any Loan Party shall so assert, or any Lien
created by any of the Security Documents shall cease to be enforceable and
of the same effect and priority purported to be created thereby; or
(i) The guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason, to be in full force and
effect or any Loan Party shall so assert; or
(j) (i) The Permitted Investors (including any combination thereof)
shall cease to have the power to vote or direct the voting of securities
having a majority of the ordinary voting power for the election of
directors of Holdings (determined on a fully diluted basis); (ii) the
Permitted Investors (including any combination thereof) shall cease to own
of record and beneficially an amount of common stock of Holdings equal to
at least 80% of the amount of common stock of Holdings owned by the
Permitted Investors of record and beneficially as of the Closing Date;
(iii) the board of directors of Holdings shall cease to consist of a
majority of Continuing Directors; (iv) Holdings shall cease to own and
control, of record and beneficially, directly, 100% of each class of
outstanding Capital Stock of the Borrower free and clear of all Liens
(except Liens created by the Guarantee and Collateral Agreement); or (v) a
Specified Change of Control shall occur; then, and in any such event, (A)
if such event is an Event of Default specified in clause (i) or (ii) of
paragraph (f) above with respect to the Borrower, automatically the
Commitments shall immediately terminate and the Loans hereunder (with
accrued interest thereon) and all other amounts owing under this Agreement
and the other Loan Documents (including, without limitation, all amounts of
L/C Obligations, whether or not the beneficiaries of the then outstanding
Letters of Credit shall have presented the documents required thereunder)
shall immediately become due and payable, and (B) if such event is any
other Event of Default, either or both of the following actions may be
taken: (i) with the consent of the Majority Revolving Credit Facility
Lenders, the Administrative Agent may, or upon the request of the Majority
Revolving Credit Facility Lenders, the Administrative Agent shall, by
notice to the Borrower declare the Revolving Credit Commitments to be
terminated forthwith, whereupon the Revolving Credit Commitments shall
immediately terminate; and (ii) with the consent of the Required Lenders,
the Administrative Agent may, or upon the request of the Required Lenders,
the Administrative Agent shall, by notice to the Borrower, declare the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the other Loan Documents (including, without
limitation, all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) to be due and payable
forthwith, whereupon the same shall immediately become due and payable.
With respect to all Letters of Credit with respect to which presentment for
honor shall not have occurred at the time of an acceleration pursuant to
this paragraph, the Borrower shall at such time deposit in a cash
collateral account opened by the Administrative Agent an amount equal to
the aggregate then undrawn and unexpired amount of such Letters of Credit.
Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit
shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Borrower hereunder and under the other Loan
Documents. After all such Letters of Credit shall have expired or been
fully drawn upon, all Reimbursement Obligations shall have been satisfied
and all other obligations of the Borrower hereunder and under the other
Loan Documents shall have been paid in full, the balance, if any, in such
cash collateral account shall be returned to the Borrower (or such other
Person as may be lawfully entitled thereto).
SECTION 9. THE AGENTS
9.1 Appointment.
Each Lender hereby irrevocably designates and appoints the Agents as
the agents of such Lender under this Agreement and the other Loan
Documents, and each such Lender irrevocably authorizes each Agent, in such
capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and
perform such duties as are expressly delegated to the such Agent by the
terms of this Agreement and the other Loan Documents, together with such
other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement, no Agent shall have
any duties or responsibilities, except those expressly set forth herein, or
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 any Agent.
9.2 Delegation of Duties.
Each Agent may execute any of its duties under this Agreement and the
other Loan Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such
duties. No Agent shall be responsible for the negligence or misconduct of
any agents or attorneys in-fact selected by it with reasonable care.
9.3 Exculpatory Provisions.
Neither any Agent nor any of their respective officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for
any action lawfully taken or omitted to be taken by it or such Person under
or in connection with this Agreement or any other Loan Document (except to
the extent that any of the foregoing are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from its or
such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any
officer thereof contained in this Agreement or any other Loan Document or
in any certificate, report, statement or other document referred to or
provided for in, or received by the Agents under or in connection with,
this Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement
or any other Loan Document or for any failure of any Loan Party a party
thereto to perform its obligations hereunder or thereunder. The Agents
shall not 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 any Loan Party.
9.4 Reliance by Agents.
Each Agent shall be entitled to rely, and shall be fully protected in
relying, upon any instrument, writing, resolution, notice, consent,
certificate, affidavit, letter, telecopy, telex or teletype message,
statement, order 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, without limitation, counsel to Holdings or the Loan Parties),
independent accountants and other experts selected by the Administrative
Agent. The Agents may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation
or transfer thereof shall have been filed with the Administrative Agent.
Each 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 (or, if so
specified by this Agreement, all Lenders) as it deems appropriate or 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. Each Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this
Agreement and the other Loan Documents in accordance with a request of the
Required Lenders (or, if so specified by this Agreement, all Lenders), and
such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders and all future holders of the Loans.
9.5 Notice of Default.
No Agent shall be deemed to have knowledge or notice of the occurrence
of any Default or Event of Default hereunder unless such Agent has received
notice from a Lender, Holdings or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is
a "notice of default". In the event that the Administrative Agent receives
such a notice, the Administrative Agent shall give notice thereof to the
Lenders. The Administrative Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the
Required Lenders (or, if so specified by this Agreement, all Lenders);
provided that unless and until the Administrative Agent shall have received
such directions, 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 in the best
interests of the Lenders.
9.6 Non-Reliance on Agents and Other Lenders.
Each Lender expressly acknowledges that neither the Agents nor any of
their respective officers, directors, employees, agents, attorneys-in-fact
or affiliates have made any representations or warranties to it and that no
act by any Agent hereinafter taken, including any review of the affairs of
a Loan Party or any affiliate of a Loan Party, shall be deemed to
constitute any representation or warranty by any Agent to any Lender. Each
Lender represents to the Agents that it has, independently and without
reliance upon any Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Loan Parties and their affiliates and
made its own decision to make its Loans hereunder and enter into this
Agreement. Each Lender also represents that it will, independently and
without reliance upon any Agent or any other Lender, 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 investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other
condition and creditworthiness of the Loan Parties and their affiliates.
Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Administrative Agent hereunder, no Agent
shall have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, operations, property,
condition (financial or otherwise), prospects or creditworthiness of any
Loan Party or any affiliate of a Loan Party which may come into the
possession of such Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.
9.7 Indemnification.
The Lenders agree to indemnify each Agent in its capacity as such (to
the extent not reimbursed by Holdings or the Borrower and without limiting
the obligation of Holdings or the Borrower to do so), ratably according to
their respective Aggregate Exposure Percentages in effect on the date on
which indemnification is sought under this Section 9.7 (or, if
indemnification is sought after the date upon which the Commitments shall
have terminated and the Loans shall have been paid in full, ratably in
accordance with such Aggregate Exposure Percentages immediately prior to
such date), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including,
without limitation, at any time following the payment of the Loans) be
imposed on, incurred by or asserted against such Agent in any way relating
to or arising out of, the Commitments, this Agreement, any of the other
Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action
taken or omitted by such Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements which are found
by a final and nonappealable decision of a court of competent jurisdiction
to have resulted from such Agent's gross negligence or willful misconduct.
The agreements in this Section 9.7 shall survive the payment of the Loans
and all other amounts payable hereunder.
9.8 Agent in Its Individual Capacity.
Each Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with any Loan Party as though
such Agent was not an Agent. With respect to its Loans made or renewed by
it and with respect to any Letter of Credit issued or participated in by
it, each Agent shall have the same rights and powers under this Agreement
and the other Loan Documents as any Lender and may exercise the same as
though it were not an Agent, and the terms "Lender" and "Lenders" shall
include each Agent in its individual capacity.
9.9 Successor Agents.
The Administrative Agent may resign as Administrative Agent upon 10
days' notice to the Lenders and the Borrower. If the Administrative Agent
shall resign as Administrative Agent under this Agreement and the other
Loan Documents, then the Required Lenders shall appoint from among the
Lenders a successor agent for the Lenders, which successor agent shall
(unless an Event of Default under Section 8(a) or Section 8(f) with respect
to the Borrower shall have occurred and be continuing) be subject to
approval by the Borrower (which approval shall not be unreasonably withheld
or delayed), whereupon such successor agent shall succeed to the rights,
powers and duties of the Administrative Agent, and the term "Administrative
Agent" shall mean such successor agent effective upon such appointment and
approval, and the former Administrative Agent's rights, powers and duties
as Administrative Agent shall be terminated, without any other or further
act or deed on the part of such former Administrative Agent or any of the
parties to this Agreement or any holders of the Loans. If no successor
agent has accepted appointment as Administrative Agent by the date that is
10 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 assume and 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.
The Syndication Agent may, at any time, by notice to the Lenders and the
Administrative Agent, resign as Syndication Agent hereunder, whereupon the
duties, rights, obligations and responsibilities hereunder shall
automatically be assumed by, and inure to the benefit of, the
Administrative Agent, without any further act by the Syndication Agent, the
Administrative Agent or any Lender. After any retiring Agent's resignation
as Agent, the provisions of this Section 9 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under
this Agreement and the other Loan Documents.
9.10 Authorization to Release Liens.
The Administrative Agent is hereby irrevocably authorized by each of
the Lenders to release any Lien covering any Property of the Borrower or
any of its Subsidiaries that is the subject of a Disposition which is
permitted by this Agreement or which has been consented to in accordance
with Section 10.1.
9.11 The Arranger.
The Arranger, in its capacity as such, shall have no duties or
responsibilities, and shall incur no liability, under this Agreement and
the other Loan Documents.
9.12 The Documentation Agent.
The Documentation Agent, in its capacity as such, shall have no duties
or responsibilities, and shall incur no liability, under this Agreement and
the other Loan Documents.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers.
Neither this Agreement, any other Loan Document, nor any terms hereof
or thereof may be amended, supplemented or modified except in accordance
with the provisions of this Section 10.1. The Required Lenders and each
Loan Party party to the relevant Loan Document may, or (with the written
consent of the Required Lenders) the Agents and each Loan Party party to
the relevant Loan Document may, from time to time, (a) enter into written
amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or
of the Loan Parties hereunder or thereunder or (b) waive, on such terms and
conditions as the Required Lenders, or the Agents, as the case may be, may
specify in such instrument, any of the requirements of this Agreement or
the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (i) forgive the principal amount or extend
the final scheduled date of maturity of any Loan, extend the scheduled date
of any amortization payment in respect of any Tranche B Term Loan or any
Tranche C Term Loan, reduce the stated rate of any interest, fee or letter
of credit commission payable hereunder or extend the scheduled date of any
payment thereof, or increase the amount or extend the expiration date of
any Lender's Revolving Credit Commitment, in each case without the consent
of each Lender directly affected thereby; (ii) amend, modify or waive any
provision of this Section 10.1 or reduce any percentage specified in the
definition of Required Lenders or Required Prepayment Lenders, consent to
the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement and the other Loan Documents, release all
or substantially all of the Collateral or release all or substantially all
of the Subsidiary Guarantors from their obligations under the Guarantee and
Collateral Agreement, in each case without the written consent of all
Lenders; (iii) amend, modify or waive any condition precedent to any
extension of credit under the Revolving Credit Facility set forth in
Section 5.2 (including, without limitation, in connection with any waiver
of an existing Default or Event of Default) without the written consent of
the Majority Revolving Credit Facility Lenders; (iv) reduce the percentage
specified in the definition of Majority Facility Lenders without the
written consent of all Lenders under each affected Facility; (v) amend,
modify or waive any provision of Section 9 without the written consent of
the Agents; (vi) amend, modify or waive any provision of Section 3 without
the written consent of the Issuing Lender, (vii) amend, modify or waive any
provision of Section 2.10 without the written consent of the Required
Prepayment Lenders or (viii) increase the Advance Rate beyond the
percentage in effect on the Closing Date or make any eligibility criteria
less restrictive without the consent of Lenders holding at least __% of the
Revolving Credit Commitments. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and
shall be binding upon the Loan Parties, the Lenders, the Administrative
Agent and all future holders of the Loans. In the case of any waiver, the
Loan Parties, the Lenders and the Administrative Agent shall be restored to
their former position and rights hereunder and under the other Loan
Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing; but no such waiver shall extend to any subsequent
or other Default or Event of Default, or impair any right consequent
thereon.
10.2 Notices.
All notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy), and,
unless otherwise expressly provided herein, shall be deemed to have been
duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice,
when received, addressed as follows in the case of Holdings, the Borrower,
the Syndication Agent and the Administrative Agent, and as set forth in an
administrative questionnaire delivered to the Administrative Agent in the
case of the Lenders, or to such other address as may be hereafter notified
by the respective parties hereto:
Holdings: NCI Acquisition Corporation
2255 Northwest Parkway, Suite H
Marietta, Georgia 30067
Attention: Michael Lord
Telecopy: (770) 644-7420
Telephone: (770) 644-7452
The Borrower: Nationwide Credit, Inc.
2255 Northwest Parkway, Suite H
Marietta, Georgia 30067
Attention: Michael Lord
Telecopy: (770) 644-7420
Telephone: (770) 644-7452
In the case of Holdings, and the Weiss, Peck & Greer
Borrower, with a copy to: One New York Plaza, 30th Floor
New York, New York 10004
Attention: Craig S. Whiting
Telecopy: (212) 908-0112
Telephone: (212) 908-9500
Centre Partners Management LLC
30 Rockefeller Plaza, Suite 5050
New York, New York 10020
Attention: Paul Zepf
Telecopy: (212) 332-5801
Telephone: (212) 332-5800
and
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Jane McDonald
The Syndication Agent: Lehman Commercial Paper Inc.
3 World Financial Center
New York, New York 10285
Attention: Michele Swanson
Telecopy: (212) 528-0819
Telephone: (212) 526-0330
The Administrative Agent or the Fleet Capital Corporation
Collateral Monitoring Agent: 200 Glastonbury Boulevard
Glastonbury, CT 06033
Attention: Kim Bushey
Telecopy: (860) 657-7759
Telephone: (860) 657-7769
provided that any notice, request or demand to or upon any Agent or the
Lenders shall not be effective until received.
10.3 No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the part of the
either Agent or any Lender, any right, remedy, power or privilege hereunder
or under the other Loan Documents 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. The rights,
remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties.
All representations and warranties made hereunder, in the other Loan
Documents and in any document, certificate or statement delivered pursuant
hereto or in connection herewith shall survive the execution and delivery
of this Agreement and the making of the Loans hereunder.
10.5 Payment of Expenses.
The Borrower agrees (a) to pay or reimburse the Agents and the
Arranger for all their reasonable out-of-pocket costs and expenses incurred
in connection with the development, preparation and execution of, and any
amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of counsel to the Administrative Agent,
(b) to pay or reimburse each Lender and the Agents for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the fees and disbursements of
counsel (including the allocated fees and expenses of in-house counsel) to
each Lender and of counsel to the Agents, (c) to pay, indemnify, and hold
each Lender and the Agents harmless from, any and all recording and filing
fees or any amendment, supplement or modification of, or any waiver or
consent under or in respect of, this Agreement, the other Loan Documents
and any such other documents, and (d) to pay, indemnify, and hold each
Lender, the Arranger and the Agents and their respective officers,
directors, employees, affiliates, agents and controlling persons (each, an
"indemnitee") harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to
the execution, delivery, enforcement, performance and administration of
this Agreement, the other Loan Documents and any such other documents,
including, without limitation, any of the foregoing relating to the use of
proceeds of the Loans or the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of Holdings, the
Borrower any of its Subsidiaries or any of the Properties and the
reasonable fees and expenses of legal counsel in connection with claims,
actions or proceedings by any indemnitee against the Borrower hereunder
(all the foregoing in this clause (d), collectively, the "indemnified
liabilities"), provided, that the Borrower shall have no obligation
hereunder to any indemnitee with respect to indemnified liabilities to the
extent such indemnified liabilities are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the
gross negligence or willful misconduct of such indemnitee. Without limiting
the foregoing, and to the extent permitted by applicable law, the Borrower
agrees not to assert and to cause its Subsidiaries not to assert, and
hereby waive and agree to cause its Subsidiaries to so waive, all rights
for contribution or any other rights of recovery with respect to all
claims, demands, penalties, fines, liabilities, settlements, damages, costs
and expenses of whatever kind or nature, under or related to Environmental
Laws, that any of them might have by statute or otherwise against any
indemnitee. The agreements in this Section shall survive repayment of the
Loans and all other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of
Holdings, the Borrower, the Lenders, the Agents, all future holders of the
Loans and their respective successors and assigns, except that the Borrower
may not assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of the Agents and each Lender.
(b) Any Lender may, without the consent of the Borrower and with
notice to the Syndication Agent, in accordance with applicable law, at any
time sell to one or more banks, financial institutions or other entities
(each, a "Participant") participating interests in any Loan owing to such
Lender, any Commitment of such Lender or any other interest of such Lender
hereunder and under the other Loan Documents. In the event of any such sale
by a Lender of a participating interest to a Participant, such Lender's
obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan
for all purposes under this Agreement and the other Loan Documents, and the
Borrower and the Agents shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under
this Agreement and the other Loan Documents. In no event shall any
Participant under any such participation have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent
to any departure by any Loan Party therefrom, except to the extent that
such amendment, waiver or consent would reduce the principal of, or
interest on, the Loans or any fees payable hereunder, or postpone the date
of the final maturity of the Loans, in each case to the extent subject to
such participation. The Borrower agrees that if amounts outstanding under
this Agreement and the Loans are due or unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall, to the maximum extent permitted by
applicable law, be deemed to have the right of setoff 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, provided that, in purchasing such
participating interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in Section 10.7(a)
as fully as if it were a Lender hereunder. The Borrower also agrees that
each Participant shall be entitled to the benefits of Sections 2.17, 2.18
and 2.19 with respect to its participation in the Commitments and the Loans
outstanding from time to time as if it was a Lender; provided that, in the
case of Section 2.18, such Participant shall have complied with the
requirements of said Section and provided, further, that no Participant
shall be entitled to receive any greater amount pursuant to any such
Section than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor
Lender to such Participant had no such transfer occurred.
(c) Any Lender (an "Assignor") may, in accordance with applicable law
and with written notice to the Syndication Agent, at any time and from time
to time assign to any Lender or any affiliate thereof or a Person under
common management with a Lender or, with the consent of the Borrower and
the Syndicate Agent (which, in each case, shall not be unreasonably
withheld or delayed), to an additional bank, financial institution or other
entity (an "Assignee") all or any part of its rights and obligations under
this Agreement pursuant to an Assignment and Acceptance (an "Assignment and
Acceptance") substantially in the form of Exhibit D, executed by such
Assignee, such Assignor, the Syndication Agent and the Administrative Agent
(and, where the consent of the Borrower is required pursuant to the
foregoing provisions, by the Borrower) and delivered to the Administrative
Agent for its acceptance and recording in the Register; provided that no
such assignment to an Assignee (other than any Lender or any affiliate
thereof) shall be in an aggregate principal amount of less than $5,000,000
(other than in the case of an assignment of all of a Lender's interests
under this Agreement), unless otherwise agreed by the Borrower, the
Syndication Agent and the Administrative Agent. Any such assignment need
not be ratable as among the Facilities. Upon such execution, delivery,
acceptance and recording, from and after the effective date determined
pursuant to such Assignment and Acceptance, (x) the Assignee thereunder
shall be a party hereto and, to the extent provided in such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder with a
Commitment and/or Loans as set forth therein, and (y) the Assignor
thereunder shall, to the extent provided in such Assignment and Acceptance,
be released from its obligations under this Agreement (and, in the case of
an Assignment and Acceptance covering all of an Assignor's rights and
obligations under this Agreement, such assigning Lender shall cease to be a
party hereto). Notwithstanding any provision of this Section 11.6, the
consent of the Borrower shall not be required for any assignment which
occurs at any time when any Event of Default shall have occurred and be
continuing.
(d) The Administrative Agent (acting for this purpose as agent of the
Borrower) shall maintain at its address referred to in Section 10.2 a copy
of each Assignment and Acceptance delivered to it and a register (the
"Register") for the recordation of the names and addresses of the Lenders
and the Commitment of, and principal amount of the Loans owing to, each
Lender from time to time and any Notes evidencing such Loans. The entries
in the Register shall be conclusive, in the absence of manifest error, and
the Borrower, the Administrative Agent and the Lenders shall treat each
Person whose name is recorded in the Register as the owner of the Loan and
any Note evidencing such Loan recorded therein for all purposes of this
Agreement. Any assignment of any Loan whether or not evidenced by a Note
shall be effective only upon appropriate entries with respect thereto being
made in the Register (and each Note shall expressly so provide). Any
assignment or transfer of all or part of a Loan evidenced by a Note shall
be registered on the Register only upon surrender for registration of
assignment or transfer of the Note evidencing such Loan, accompanied by a
duly executed Assignment and Acceptance, and thereupon one or more new
Notes in the same aggregate principal amount shall be issued to the
designated Assignee and the old Notes shall be returned by the
Administrative Agent to the Borrower marked "cancelled". The Register shall
be available for inspection by the Borrower or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof or a Person under common
management with such Lender, by the Borrower, the Administrative Agent, the
Syndication Agent and the Issuing Lender) together with payment to the
Administrative Agent of a registration and processing fee of $2,000 (except
that no such registration and processing fee shall be payable (y) in
connection with an assignment by or to Lehman Commercial Paper Inc. or (z)
in the case of an Assignee which is already a Lender or is an affiliate of
a Lender or a Person under common management with a Lender), the
Administrative Agent shall (i) promptly accept such Assignment and
Acceptance and (ii) on the effective date determined pursuant thereto
record the information contained therein in the Register and give notice of
such acceptance and recordation to the Lenders and the Borrower. On or
prior to such effective date, the Borrower, at its own expense, upon
request, shall execute and deliver to the Administrative Agent (in exchange
for the Revolving Credit Note and/or Term Notes, as the case may be, of the
assigning Lender) a new Revolving Credit Note and/or Term Notes, as the
case may be, to the order of such Assignee in an amount equal to the
Revolving Credit Commitment and/or applicable Tranche B Term Loans and/or
applicable Tranche C Term Loans, as the case may be, assumed or acquired by
it pursuant to such Assignment and Acceptance and, if the assigning Lender
has retained a Revolving Credit Commitment and/or Tranche B Term Loans
and/or Tranche C Term Loans, as the case may be, upon request, a new
Revolving Credit Note and/or Term Notes, as the case may be, to the order
of the assigning Lender in an amount equal to the Revolving Credit
Commitment and/or applicable Tranche B Term Loans and/or Tranche C Term
Loans, as the case may be, retained by it hereunder. Such new Notes shall
be dated the Closing Date and shall otherwise be in the form of the Note
replaced thereby.
(f) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this Section concerning assignments of Loans and
Notes relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
10.7 Adjustments; Set-off.
(a) Except to the extent that this Agreement provides for payments to
be allocated to the Lenders under a particular Facility, if any Lender (a
"Benefitted Lender") shall at any time receive any payment of all or part
of its Loans or the Reimbursement Obligations owing to it, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily
or involuntarily, by set-off, pursuant to events or proceedings of the
nature referred to in Section 8(f), or otherwise), in a greater proportion
than any such payment to or collateral received by any other Lender, if
any, in respect of such other Lender's Loans or the Reimbursement
Obligations owing to such other Lender, or interest thereon, such
Benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's Loan
and/or of the Reimbursement Obligations owing to each such other Lender, or
shall provide such other Lenders with the benefits of any such collateral,
or the proceeds thereof, as shall be necessary to cause such Benefitted
Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; provided, however, that if all
or any portion of such excess payment or benefits is thereafter recovered
from such Benefitted Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but
without interest.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to Holdings or
the Borrower, any such notice being expressly waived by Holdings and the
Borrower to the extent permitted by applicable law, upon any amount
becoming due and payable by Holdings or the Borrower hereunder (whether at
the stated maturity, by acceleration or otherwise) to set off and
appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case
whether direct or indirect, absolute or contingent, matured or unmatured,
at any time held or owing by such Lender or any branch or agency thereof to
or for the credit or the account of Holdings or the Borrower. Each Lender
agrees promptly to notify Holdings, the Borrower and the Administrative
Agent after any such setoff and application made by such Lender, provided
that the failure to give such notice shall not affect the validity of such
setoff and application.
10.8 Counterparts.
This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts (including by telecopy),
and all of said counterparts taken together shall be deemed to constitute
one and the same instrument. A set of the copies of this Agreement signed
by all the parties shall be lodged with the Borrower and the Administrative
Agent.
10.9 Severability.
Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
10.10 Integration.
This Agreement and the other Loan Documents represent the agreement of
Holdings, the Borrower, the Administrative Agent and the Lenders with
respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or
any Lender relative to subject matter hereof not expressly set forth or
referred to herein or in the other Loan Documents.
10.11 GOVERNING LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers.
Each of Holdings and the Borrower hereby irrevocably and
unconditionally:
(a) submits for itself and its Property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States for the Southern
District of New York, and appellate courts from any thereof; (b) consents
that any such action or proceeding may be brought in such courts and waives
any objection that it may now or hereafter have to the venue of any such
action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the
same;
(b) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to Holdings
or the Borrower, as the case may be at its address set forth in Section
10.2 or at such other address of which the Administrative Agent shall have
been notified pursuant thereto;
(c) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(d) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section 10.12 any special, exemplary, punitive or consequential
damages.
10.13 Acknowledgements.
Each of Holdings and the Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to Holdings or the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between Administrative Agent and Lenders, on one hand, and
Holdings and the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among Holdings, the Borrower and the Lenders.
10.14 WAIVERS OF JURY TRIAL.
HOLDINGS, THE BORROWER, THE AGENTS AND THE LENDERS HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
10.15 Confidentiality.
Each of the Agents and each Lender agrees to keep confidential all
non-public information provided to it by any Loan Party pursuant to this
Agreement that is designated by such Loan Party as confidential; provided
that nothing herein shall prevent any Agent or any Lender from disclosing
any such information (a) to the Administrative Agent, any other Lender or
any affiliate of any Lender, (b) to any Participant or Assignee (each, a
"Transferee") or prospective Transferee which agrees to comply with the
provisions of this Section, (c) to the employees, directors, agents,
attorneys, accountants and other professional advisors of such Lender or
its affiliates, (d) upon the request or demand of any Governmental
Authority having jurisdiction over the such Agent or such Lender, (e) in
response to any order of any court or other Governmental Authority or as
may otherwise be required pursuant to any Requirement of Law, (f) if
requested or required to do so in connection with any litigation or similar
proceeding, (g) which has been publicly disclosed other than in breach of
this Section 10.15, (h) to the National Association of Insurance
Commissioners or any similar organization or any nationally recognized
rating agency that requires access to information about a Lender's
investment portfolio in connection with ratings issued with respect to such
Lender, or (i) in connection with the exercise of any remedy hereunder or
under any other Loan Document.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
<PAGE>
NCI ACQUISITION CORPORATION
By:__________________________________________
Name:
Title:
NATIONWIDE CREDIT, INC.
By:__________________________________________
Name:
Title:
<PAGE>
LEHMAN BROTHERS INC.,
as Arranger
By:__________________________________________
Name:
Title:
LEHMAN COMMERCIAL PAPER INC., as
Syndication Agent and as a Lender
By:__________________________________________
Name:
Title:
<PAGE>
FLEET CAPITAL CORPORATION, as Administrative Agent, Collateral Monitoring Agent
and as a Lender
By:__________________________________________
Name:
Title:
<PAGE>
BHF (USA) CAPITAL CORPORATION, as Documentation Agent and as a Lender
By:__________________________________________
Name:
Title:
By:__________________________________________
Name:
Title:
BALANCED HIGH-YIELD FUND 1 LTD.
By: BHF (USA) Capital Corporation
acting as attorney-in-fact
By:__________________________________________
Name:
Title:
<PAGE>
Annex A
<TABLE>
Pricing Grid
<CAPTION>
Applicable Margin Applicable Margin
for Eurodollar Loans or Base Rate Loans
----------------------------------- ---------------------------------
Consolidated Revolving Tranche B Tranche C Revolving Tranche B Tranche C Commitment
Total Debt Credit Term Term Credit Term Term Fee
Ratio Loans Loans Loans Loans Loans Loans Rate
----------------- -------------- ----------- ---------- ------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
7.00 to 1.00 3.750% 4.000% 4.250% 2.750% 3.000% 3.250% 0.625
< 7.00 to 1.00 3.500% 3.750% 4.000% 2.500% 2.750% 3.000% 0.625
but 6.00 to 1.00
< 6.00 to 1.00 3.250% 3.500% 3.750% 2.250% 2.500% 2.750% 0.500
but 5.50 to 1.00
< 5.50 to 1.00 3.000% 3.250% 3.500% 2.000% 2.250% 2.500% 0.375
but 5.00 to 1.00
< 5.00 to 1.00 2.875% 3.125% 3.375% 1.875% 2.125% 2.375% 0.375
but 4.50 to 1.00
< 4.50 to 1.00 2.625% 3.000% 3.250% 1.625% 2.000% 2.250% 0.375
but 4.00 to 1.00
< 4.00 to 1.00 2.500% 2.875% 3.125% 1.500% 1.875% 2.125% 0.375
but 3.50 to 1.00
< 3.50 to 1.00 2.375% 2.750% 3.000% 1.375% 1.750% 2.000% 0.250
</TABLE>
<PAGE>
Pricing Grid (continued)
Changes in the Applicable Margin with respect to the Revolving Credit Loan and
the Tranche B Term Loans and Tranche C Term Loans resulting from changes in the
Consolidated Total Debt Ratio shall become effective on the date (the
"Adjustment Date") on which financial statements are delivered to the Lenders
pursuant to Section 6.1 (but in any event not later than the 45th day after the
end of each of the first three quarterly periods of each fiscal year or the 90th
day after the end of each fiscal year, as the case may be) and shall remain in
effect until the next change to be effected pursuant to this paragraph. If any
financial statements referred to above are not delivered within the time periods
specified above, then, until such financial statements are delivered, the
Consolidated Total Debt Ratio as at the end of the fiscal period that would have
been covered thereby shall for the purposes of this definition be deemed to be
greater than 7.00 to 1. In addition, at all times while an Event of Default
shall have occurred and be continuing, the Consolidated Total Debt Ratio shall
for the purposes of this definition be deemed to be greater than 7.00 to 1. Each
determination of the Consolidated Total Debt Ratio pursuant to this definition
shall be made with respect to the period of four consecutive fiscal quarters of
the Borrower ending at the end of the period covered by the relevant financial
statements.
It is understood and agreed that, for purposes of the Pricing Grid only, any
Capital Lease Obligations of the Borrower and its Subsidiaries shall be
disregarded for purposes of determining Consolidated Total Debt Ratio.
<PAGE>
SCHEDULE 1.1A
<TABLE>
<CAPTION>
COMMITMENTS: LENDING OFFICES AND ADDRESSES
Name of Lender and Tranche B Tranche C
Information for Notices Revolving Credit Term Loans Term Loans
Commitments Outstanding Outstanding
---------------- --------------- -------------
<S> <C> <C> <C>
Lehman Commercial Paper Inc. $6,071,425.00 $9,685,000.00 $1,675,713.30
Fleet Capital Corporation $3,214,287.50 $4,470,000.00 $887,143.35
BHF (USA) Capital Corporation $3,214,287.50 $887,143.35
Balanced High-Yield Fund I Ltd. $4,470,000.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001059083
<NAME> NATIONWIDE CREDIT, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1.000
<CASH> 7802
<SECURITIES> 0
<RECEIVABLES> 16336
<ALLOWANCES> 390
<INVENTORY> 0
<CURRENT-ASSETS> 28863
<PP&E> 27119
<DEPRECIATION> 10509
<TOTAL-ASSETS> 149870
<CURRENT-LIABILITIES> 23913
<BONDS> 100000
0
0
<COMMON> 0
<OTHER-SE> 3341
<TOTAL-LIABILITY-AND-EQUITY> 149870
<SALES> 33493
<TOTAL-REVENUES> 33493
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 32457
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3487
<INCOME-PRETAX> (2451)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2451)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2451)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
