SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20429
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
File Number 333-16867
Outsourcing Solutions Inc.
(Exact name of registrant as specified in its charter)
Delaware 58-2197161
(State or other jurisdiction of (I.R.S. Employer Identification
Number)
incorporation or organization)
390 South Woods Mill Road, Suite 150
Chesterfield, Missouri 63017
(Address of principal executive office) (Zip Code)
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Registrant's telephone number, including area code: (314) 576-0022
Check here whether the issuer (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
As of September 30, 1997, the following shares of the Registrant's common
stock were issued and outstanding:
Voting common stock 3,425,126.01
Class A convertible nonvoting
common stock 391,740.58
Class B convertible nonvoting
common stock 400,000.00
Class C convertible nonvoting
common stock 1,040,000.00
5,256,866.59
Transitional Small Disclosure _______(check one): Yes [ ] No[X]
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OUTSOURCING SOLUTIONS INC.
AND SUBSIDIARIES
INDEX
<TABLE>
Part I. - Financial Information
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Item 1. - Financial Statements
Consolidated Balance Sheets
September 30, 1997 (unaudited) and December 31, 1996. . . . . . . . . . . .. . . . . . . 3
Consolidated Statements of Operations for the three and nine
month periods ended September 30, 1997 and 1996 (unaudited). . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the nine
month periods ended September 30, 1997 and 1996 (unaudited). . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements (unaudited) . . . . . . . . . . . . . . . . . 6
Item 2. - Management's Discussion and Analysis of Financial Condition
and Results of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Part II. - Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
</TABLE>
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<TABLE>
OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
SEPTEMBER 30, DECEMBER 31,
1997 1996
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,883 $ 14,497
Cash and cash equivalents held for clients 19,241 20,255
Current portion of purchased loans and accounts receivable portfolios 47,913 42,481
Accounts receivable - trade, net of allowance for doubtful
receivables of $850 and $879, respectively 22,939 20,738
Deferred income taxes 8,196 2,617
Other current assets 4,156 3,736
Total current assets 111,328 104,324
PURCHASED LOANS AND ACCOUNTS RECEIVABLE PORTFOLIOS 23,868 25,519
PROPERTY AND EQUIPMENT - Net 27,300 36,168
GOODWILL - Less accumulated amortization of $7,095 and $2,986, respectively 170,364 152,707
OTHER INTANGIBLE ASSETS - Less accumulated amortization of $29,911 and $12,751, respectively 3,603 20,763
DEFERRED FINANCING COSTS - Less accumulated amortization of $1,463 and $337, respectively 11,761 12,563
DEFERRED INCOME TAXES 10,010 3,163
TOTAL $ 358,234 $355,207
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $ 4,233 $6,495
Collections due to clients 19,241 20,255
Accrued severence and office closing costs 9,855 11,938
Accrued compensation 8,735 9,574
Other current liabilities 1,200 4,289
Accrued expenses 16,523 3,378
Current portion of long-term debt 13,194 10,032
Total current liabilities 72,981 65,961
LONG-TERM DEBT 254,027 237,584
OTHER LONG-TERM LIABILITIES 50 64
STOCKHOLDERS' EQUITY:
8% nonvoting cumulative redeemable exchangeable preferred stock; authorized 1,000,000 shares,
935,886.85 and 865,280.01 shares, respectively, issued and outstanding, at liquidation value
of $12.50 per share 11,699 10,816
Voting common stock; $.01 par value; authorized 7,500,000 shares and 3,425,126.01
shares, issued and outstanding 35 35
Class A convertible nonvoting common stock; $.01 par value; authorized 7,500,000 shares,
391,740.58 shares issued and outstanding 4 4
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Class B convertible nonvoting common stock; $.01 par value; authorized 500,000 shares,
400,000 shares issued and outstanding 4 4
Class C convertible nonvoting common stock; $.01 par value; authorized 1,500,000 shares,
1,040,000 shares issued and outstanding 10 10
Additional paid-in capital 65,658 65,658
Accumulated deficit (46,234) (24,929)
Total stockholders' equity 31,176 51,598
TOTAL $ 358,234 $ 355,207
</TABLE>
See notes to the unaudited consolidated financial statements.
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<TABLE>
OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
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REVENUES $ 67,537 $ 21,017 $ 197,663 $ 60,443
EXPENSES:
Salaries and benefits 32,218 8,896 97,018 23,060
Service fees and other operating and
administrative expenses 16,314 6,063 49,882 17,000
Amortization of loans and accounts
receivable purchased 13,138 7,868 31,174 20,586
Amortization of goodwill and other intangibles 5,293 3,028 21,269 6,046
Depreciation expense 2,558 320 7,615 876
Total expenses 69,521 26,175 206,958 67,568
OPERATING LOSS (1,984) (5,158) (9,295) (7,125)
INTEREST EXPENSE - Net 7,153 1,864 20,950 5,645
LOSS BEFORE INCOME TAXES (9,137) (7,022) (30,245) (12,770)
INCOME TAX BENEFIT (2,797) (1,892) (9,626) (4,424)
NET LOSS (6,340) (5,130) (20,619) (8,346)
PREFERRED STOCK DIVIDEND
REQUIREMENTS 266 200 686 613
NET LOSS TO COMMON STOCKHOLDERS $ (6,606) $ (5,330) $ (21,305) $ (8,959)
See notes to the unaudited consolidated financial statements.
</TABLE>
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<TABLE>
OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
NINE MONTHS ENDED
SEPTEMBER 30,
1997 1996
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OPERATING ACTIVITIES:
Net loss $(20,619) $(8,346)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 28,884 6,922
Amortization of loans and accounts receivable purchased 31,174 20,586
Deferred taxes (9,626) (4,444)
Change in assets and liabilities:
Accounts receivable - trade (2,201) (14)
Other current assets (420) -
Accounts payable, accrued expenses, and other current liabilities (10,773) (120)
Net cash provided by operating activities 16,419 14,584
INVESTING ACTIVITIES:
Payments for acquisitions - net of cash acquired - (35,096)
Payment of prior acquisition costs (1,200) (1,125)
Loans and accounts receivable purchased (34,955) (8,299)
Acquisition of property and equipment (5,729) (1,902)
Net cash used in investing activities (41,884) (46,422)
FINANCING ACTIVITIES:
Proceeds from term loans - 95,000
Repayments of term loans and capital lease obligations (7,225) (43,202)
Net proceeds from revolving credit facilities 27,400 5,210
Repayment of notes payable to stockholders - (35,012)
Other financing costs (324) (1,965)
Proceeds from issuance of stock - 14,975
Net cash provided by financing activities 19,851 35,006
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (5,614) 3,168
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 14,497 1,469
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 8,883 $ 4,637
See notes to the unaudited consolidated financial statements.
</TABLE>
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OUTSOURCING SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 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, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and nine month periods ended September 30, 1997 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 1997. For purposes of comparability, certain prior
year's amounts have been reclassified to conform with the current year
presentation. For further information, refer to the Company's consolidated
financial statements and footnotes thereto for the year ended December 31,
1996.
NOTE 2 - ORGANIZATION
Pursuant to an Agreement and Plan of Merger, dated as of August 13, 1996
the Company acquired Payco American Corp (Payco) on November 6, 1996 in a
merger transaction for an aggregate cash consideration of approximately
$150.2 million. The assets and liabilities of Payco were recorded at their
estimated fair market value and an amount equal to the excess of the
purchase price over the fair value of assumed liabilities was allocated to
property and equipment, identifiable tangible and intangible assets and
goodwill. Goodwill is being amortized over 30 years. During the third
quarter the Company finalized the purchase price allocation related to the
acquisition of Payco. Based upon the final purchase price allocation,
adjustments were made in the third quarter to: reduce the recorded value
of fixed assets by $7.0 million, increase the liability for certain pre-
acquisition contingencies and planned exit costs incurred in conjunction
with the acquisition by $16.4 million, increase the deferred tax asset
created as a result of this adjustment by $2.8 million, and to record the
resulting increase in goodwill of $20.6 million. A summary of the cash and
non-cash components of the Payco acquisition after consideration of the
aforementioned adjustments is as follows:
Fair value of assets acquired, including
goodwill and transaction costs $ 228,222
Liabilities assumed (73,423)
Cash purchase price 154,799
Acquired cash (5,711)
Total cash paid, net of acquired cash $149,088
NOTE 3 - PURCHASED LOANS AND ACCOUNTS RECEIVABLE PORTFOLIOS AND
AMORTIZATION
During the three and nine month periods ended September 30, 1997 the
Company purchased $10.0 million and $35.0 million of loans and accounts
receivable portfolios, respectively. The costs of purchased portfolios are
generally amortized on an individual portfolio basis based on the ratio of
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current collections to current and anticipated future collections for that
portfolio. Such portfolio cost is generally amortized over a three year
period from the date of purchase based upon amounts collected. In
addition, as a result of having over two years of collection experience and
data pertaining to certain purchased portfolios acquired in conjunction
with the acquisition of Account Portfolios, L.P. in September 1995, the
Company has commenced an in-depth analysis and evaluation of these
portfolios. This in-depth analysis of the purchased portfolios acquired in
September 1995 will include an evaluation of the achieved portfolio
amortization rates, historical and projected future costs to collect, as
well as, projected future collection levels including estimated terminal
values, if any. The Company expects to complete this in-depth evaluation
in the fourth quarter of fiscal 1997 and will determine the need to record
additional amortization of these purchased portfolios, if any.
NOTE 4 - LIABILITIES RECOGNIZED IN CONJUNCTION WITH THE PAYCO ACQUISITION
At September 30, 1997 the company had a remaining liability provision in
the amount of $13,599 related to certain planned exit, employee termination
and relocation costs related to the integration of the Payco acquisition,
of which $9,755 is included in "Accrued severance and office closing costs"
and $5,944 is included in "Accrued expenses" in the accompanying
consolidated balance sheet.
Amounts funded related to liabilities provided related to the acquisition
of Payco were $2,842 for the quarter ended September 30, 1997. Of this
amount, $2,310 was for planned exit costs, $402 was for severance payments
and $130 was for relocation costs. Amounts funded to these liabilities
were $7,263 for the nine months ended September 30, 1997, of which $3,200
was for planned exit costs, $3,033 was for severance payments, and $1,030
was for relocation costs.
NOTE 5 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments for interest during the periods ended September 30, 1997 and
1996 were $12,146 and $5,103, respectively.
During the nine months ended September 30, 1997 and 1996, the Company
issued 70,606.84 shares and 65,280 shares of preferred stock, respectively,
in satisfaction of preferred stock dividends of $883 and $816,
respectively.
During July 1997, a working capital adjustment resulting from the
acquisition of A. M. Miller & Associates in January 1996 was agreed to with
the seller which resulted in a reduction to the seller note (retroactively
effective June 30, 1997) in the amount of $571. As a result of this
adjustment, a reduction to goodwill in the amount of $221 was recorded.
NOTE 6 - SUBSEQUENT EVENTS
On October 8, 1997 the Company entered into an amended bank credit facility
("Amended Credit Facility") which amended and restated the bank credit
facility ("Credit Facility") entered into in November 1996. The Amended
Credit Facility allows for two borrowings up to an additional aggregate
amount of $55,000 of Tranche B Term Loans to be used for specific potential
acquisitions. The unfunded Tranche B Term Loan Commitment expires
immediately on November 10, 1997 if the acquisitions are not made on or
before that date. The maturity dates and interest rates under the Amended
Credit Facility remain unchanged from the Credit Facility, however
scheduled principal payments of Tranche B Term Loans increase effective
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October 15, 1997 in the event additional borrowings are made to fund
acquisitions.
On October 9, 1997, the Company acquired North Shore Agency, Inc. (NSA) for
cash of $19,500 (before transaction costs of approximately $1,600). The
acquisition was funded with $22,000 of additional Tranche B Term Loans
provided under the Amended Credit Facility described above. The
acquisition will be accounted for as a purchase with the costs of the
acquisition to be allocated to the assets acquired and the liabilities
assumed based on their estimated fair values at the date of acquisition.
On November 10, 1997, the Company acquired Accelerated Bureau of
Collections (ABC) for cash of $32,000 (before transaction costs of
approximately $1,160). The acquisition was funded with $33,000 of
additional Tranche B Term Loans provided under the Amended Credit Facility
described above. The acquisition will be accounted for as a purchase with
the costs of the acquisition to be allocated to the assets acquired and the
liabilities assumed based on their estimated fair values at the date of
acquisition.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
Three Months Ended September 30, 1997 Compared to Three Months Ended
September 30, 1996
Revenues for the three months ended September 30, 1997 were $67.5 million,
compared to $21.0 million in the comparable period for 1996. Revenues from
contingent fee services were $48.5 million for the three months ended
September 30, 1997 compared to $8.7 million in the comparable period in
1996. The increase in contingent fee revenues was a result of the
acquisition of Payco in November 1996. Revenues generated from the
collection of purchased loans and accounts receivable portfolios (purchased
portfolios) increased to $19.0 million for the three months ended September
30, 1997 compared to $12.3 million for the comparable period in 1996. The
increase in collections from purchased portfolios resulted from both an
increase in purchased portfolio levels and related collection effort as
well as from the Payco acquisition. Revenues from outsourcing services
increased to $16.8 million for the three months ended September 30, 1997
compared to $0 in the comparable period in 1996. The increase was due to
the acquisition of Payco.
Operating Expenses for the three months ended September 30, 1997 were $69.5
million compared to $26.2 million for the comparable period in 1996, an
increase of $43.3 million. Operating expenses, exclusive of amortization
and depreciation charges, were $48.5 million for the three months ended
September 30, 1997 and $15.0 million for the comparable period in 1996.
Operating expenses increased primarily as a result of the Payco
acquisition. Of the $69.5 million in expenses for the three months ended
September 30, 1997, $13.1 million was attributable to amortization of the
purchase price of purchased portfolios (compared to $7.9 million in 1996),
$3.5 million was attributable to amortization of account inventory
(compared to $2.5 million in 1996), $1.8 million was attributable to
amortization of goodwill associated with the acquisitions of Account
Portfolios, L.P. (API), A.M. Miller & Associates, Inc. (Miller),
Continental Credit Services, Inc. (Continental) and Payco (compared to $0.5
million in 1996) and $2.6 million was attributable to depreciation
(compared to $0.3 million in 1996). The increase in amortization and
depreciation expense was the result of additional goodwill and step-up in
basis of fixed assets recorded in connection with the Payco acquisition.
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Operating Loss for the three months ended September 30, 1997 was $2.0
million compared to $5.2 million for the comparable period in 1996. The
reduction in the operating loss was a result of increased revenues
attributable to the acquisition of Payco partially offset by increased
salaries and benefits, outside service fees and increased amortization
related to the step-up in basis of purchased portfolios, goodwill and
account inventory related to Payco.
Operating earnings before interest expense, taxes, depreciation and
amortization (EBITDA) for the three months ended September 30, 1997 was
$19.0 million compared to $6.1 million for the comparable period in 1996.
The increase of $12.9 million in EBITDA reflects additional revenues
associated with the acquisition of Payco and additional portfolios at API.
Interest Expense, net for the three months ended September 30, 1997 was
$7.2 million compared to $1.9 million for the comparable period in 1996.
The increase was primarily due to higher debt levels to finance the
acquisition of Payco and to finance additional purchased portfolio
purchases.
Net Loss for the three months ended September 30, 1997 was $6.3 million
compared to $5.1 million for the comparable period in 1996. The increase
in net loss resulted primarily from increased amortization expense from the
step-up in basis of acquired portfolios, goodwill and account inventory
recorded in connection with the acquisition of Payco and the increase in
interest expense related to the indebtedness incurred to finance the Payco
acquisition and purchased portfolio purchases.
Nine Months Ended September 30, 1997 Compared to Nine Months Ended
September 30, 1996
Revenues for the nine months ended September 30, 1997 were $197.7 million,
compared to $60.4 million in the comparable period for 1996. Revenues from
contingent fee services were $145.5 million for the nine months ended
September 30, 1997 compared to $27.9 million in the comparable period in
1996. The increase in contingent fee revenues was a result of the
acquisition of Payco in November 1996. Revenues generated from the
collection of purchased portfolios increased to $52.1 million for the nine
months ended September 30, 1997 compared to $34.6 million for the
comparable period in 1996. The increase in collections from purchased
portfolios resulted from both an increase in purchased portfolio levels and
related collection effort as well as from the Payco acquisition. Revenues
from outsourcing services increased to $48.3 million for the nine months
ended September 30, 1997 compared to $0 in the comparable period in 1996.
The increase was due to the acquisition of Payco.
Operating Expenses for the nine months ended September 30, 1997 were $207.0
million compared to $67.6 million for the comparable period in 1996, an
increase of $139.4 million. Operating expenses, exclusive of amortization
and depreciation charges, were $146.9 million for the nine months ended
September 30, 1997 and $40.1 million for the comparable period in 1996.
Operating expenses increased as a result of the Payco acquisition in
addition to the use of outside collection agencies to service purchased
portfolios. Of the $207.0 million in expenses for the nine months ended
September 30, 1997, $31.2 million was attributable to amortization of the
purchase price of purchased portfolios(compared to $20.6 million in 1996),
$15.5 million was attributable to amortization of account inventory
(compared to $4.4 million in 1996), $5.8 million was attributable to
amortization of goodwill associated with the acquisitions of API, Miller,
Continental and Payco (compared to $1.6 million in 1996) and $7.6 million
was attributable to depreciation (compared to $0.9 million in 1996). The
increase in amortization and depreciation expense was the result of
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additional goodwill and step-up in basis of fixed assets recorded in
connection with the Payco acquisition.
Operating Loss for the nine months ended September 30, 1997 was $9.3
million compared to $7.1 million for the comparable period in 1996. The
operating loss was a result of increased amortization related to the step-
up in basis of purchased portfolios, goodwill and account inventory related
to the acquisition of Payco.
Operating earnings before interest expense, taxes, depreciation and
amortization (EBITDA) for the nine months ended September 30, 1997 was
$50.8 million compared to $20.4 million for the comparable period in 1996.
The increase of $30.4 million in EBITDA reflects additional revenues
associated with the acquisition of Payco and additional portfolios at API,
partially offset by the costs associated with the use of outside collection
agencies to service purchased portfolios.
Interest Expense, net for the nine months ended September 30, 1997 was
$21.0 million compared to $5.6 million for the comparable period in 1996.
The increase was primarily due to higher debt levels to finance the
acquisition of Payco and to finance additional purchased portfolio
purchases.
Net Loss for the nine months ended September 30, 1997 was $20.6 million
compared to $8.3 million for the comparable period in 1996. The increase
in net loss resulted primarily from increased amortization expense from the
step-up in basis of acquired portfolios, goodwill and account inventory
recorded in connection with the acquisition of Payco and the increase in
interest expense related to the indebtedness incurred to finance the Payco
acquisition and purchased portfolio purchases.
Financial Condition
September 30, 1997 Compared to December 31, 1996
Cash and Cash Equivalents decreased from $14.5 million at December 31, 1996
to $8.9 million at September 30, 1997 principally due to the use of $41.9
million for investing activities primarily for the purchase of portfolios,
offset by cash provided by operations and financing activities of $16.6
million and $19.7 million, respectively. The Company also held $19.2
million of cash for clients in restricted accounts at September 30, 1997.
Purchased Loans and Accounts Receivable Portfolios increased from $68.0
million at December 31, 1996 to $71.8 million at September 30, 1997 due to
new portfolio purchases of $35.0 million during the nine month period which
were partially offset by amortization of purchased portfolios of $31.2
million. The amount of purchased loans and accounts receivable portfolios
which were considered collectible within one year increased from $42.5
million at December 31, 1996 to $47.9 million at September 30, 1997 mainly
due to the timing of cash collections based on the relative age and length
of ownership of the portfolios.
The purchased loans and accounts receivable portfolios consist primarily of
consumer loans and credit card receivables, commercial loans, student loan
receivables and health club receivables. Consumer loans purchased
primarily consist of unsecured term debt. A summary of purchased loans and
accounts receivable portfolios at December 31, 1996 and September 30, 1997
by type of receivable is shown below:
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December 31, 1996 September 30, 1997
Original Gross Original Gross
Principal Value Current Long-term Principal Value Current Long-term
(in millions) (in thousands) (in millions) (in thousands)
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Consumer loans . . . . . . $1,770 $ 7,445 $ 4,592 $2,051 $11,419 $3,803
Student loans . . . . . . . . 322 7,456 4,699 322 7,462 -
Credit cards . . . . . . . . . 101 2,359 1,453 470 7,073 9,451
Health clubs . . . . . . . . . 954 23,364 13,865 1,271 19,416 8,489
Commercial . . . . . . . . . 41 1,857 910 17 2,543 2,125
$3,188 $42,481 $25,519 $4,131 $47,913 $23,868
</TABLE>
Most of the portfolio purchases involve tertiary paper (i.e. accounts more
than 360 days past due which have been previously placed with a contingent
fee servicer) with the exception of portfolios purchased under forward flow
agreements under which the Company agrees to purchase charged off credit
card and health club receivables on a monthly basis as they become due.
Deferred Taxes increased from an asset of $5.8 million at December 31, 1996
to an asset of $15.7 million at September 30, 1997. The net deferred tax
asset at September 30, 1997 and December 31, 1996 relates principally to
net operating loss carryforwards. The realization of this asset is
dependent on generating sufficient taxable income prior to expiration of
the loss carryforwards in years through 2012. Management has analyzed the
potential sources of taxable income available to realize the deferred tax
asset. The principal assumptions underlying management's current
determination that the asset will be realized and there is no need for a
valuation allowance are that the earning history of the acquired operations
will continue (no improvement has been assumed). The more significant non-
recurring and unusual items reflected in operating results are additional
amortization of purchased loans and receivable portfolios resulting from
the step up in recorded value to fair value, amortization of account
inventory, additional financing costs expensed in connection with the
refinancing, and other one time expenses. Currently this level of
amortization is not expected to continue beyond fiscal 1998. In addition,
the Company during the fourth quarter of fiscal 1997 will be finalizing its
operating business plan for fiscal 1998 and beyond including potential
acquisitions, if any, and the impact on the Company's operations and
capital structure. As a result of this planning process, the Company will
continue to assess the realization of the net deferred tax asset as well as
the need for a valuation allowance, if any.
The Long Term Portion of Notes Payable increased from $237.6 million at
December 31, 1996 to $254.0 million at September 30, 1997. The increase
was primarily due to revolver borrowings of $27.4 million used to finance
purchased portfolio acquisitions which was offset by principal payments and
reductions of principal of $7.2 million and the increase in the current
portion of long-term debt of $3.2 million.
Stockholders' Equity decreased from $51.6 million at December 31, 1996 to
$31.2 million at September 30, 1997 due to the net loss to common
stockholders incurred for the nine month period of $21.3 million, partially
offset by an increase in preferred stock of $0.9 million.
Liquidity and Capital Resources
As of September 30, 1997, the Company had cash and cash equivalents of $8.9
million. The Company derives substantially all of its cash flow from the
operations of its subsidiaries. Capital expenditures were $5.7 million for
the nine month period ended September 30, 1997. Portfolio purchases were
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$35.0 million for the nine month period ended September 30, 1997. The
Company had working capital of $38.5 million at September 30, 1997.
Of the $5.7 million of capital expenditures for the nine months ended
September 30, 1997, $3.9 million represents data processing capital
expenditures and $1.8 million was for other capital expenditures, which
include telecommunications equipment, leasehold improvements, other
computer equipment and office furniture and equipment.
The Company's debt structure consists of senior debt under the Bank Credit
Facility (the Credit Facility) of $139.6 million, indebtedness represented
by 11% Senior Subordinated Notes (The Senior Notes) of $100.0 million and
other indebtedness of $4.4 million. Under the Credit Facility, the Company
has the ability to borrow an additional $30.6 million (net of outstanding
revolver borrowings of $27.4 million at September 30, 1997) for working
capital, general corporate purposes and acquisitions, subject to certain
conditions. See Note 6 to the unaudited consolidated financial statements
for a description of the amended bank credit facility effective October 8,
1997 which provides additional financing for the NSA and ABC acquisitions.
The Senior Notes and the Credit Facility contain financial and operating
covenants and restrictions on the ability of the Company to incur
indebtedness, make investments and take certain other corporate actions.
The debt service requirements associated with the borrowings under the
Credit Facility and the Senior Notes significantly impact the Company's
liquidity requirements. The Company anticipates that its operating cash
flow together with borrowings under the Credit Facility will be sufficient
to meet its anticipated future operating expenses and to meet its debt
service requirements as they become due. Additionally, future portfolio
purchases may require significant financing or investment. However, actual
capital requirements may change, particularly as a result of acquisitions
the Company may make. The ability of the Company to meet its debt service
obligations and reduce its total debt will be dependent, however, upon the
future performance of the Company and its subsidiaries which, in turn, will
be subject to general economic conditions and to financial, business and
other factors including factors beyond the Company's control.
Inflation
The Company believes that inflation has not had a material impact on its
results of operations for the three and nine month periods ended September
30, 1997.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As described in the Company's March 31, 1997 10-Q filing, Payco and its
wholly owned subsidiary Payco-General American Credits, Inc. ("Payco") are
party to a class action lawsuit filed in July 1996 by Jimmy Rogers, Lillian
H. Rogers, Randy Humphrey, Nancy Humphrey, Carl Christopher, David Clapper
and Virginia Clapper, as individuals and as class representatives, in the
Circuit Court of Etowah County, Alabama. On September 16, 1997, the
Circuit Court entered an order certifying the case as a class action.
Following this certification order, Payco applied to the Alabama Supreme
Court for a writ of mandamus to enjoin the case from proceeding as a class
action and for an emergency stay of the Circuit Court proceedings. The
Alabama Supreme Court granted the emergency stay and ordered a response to
the application for a writ of mandamus. Payco subsequently negotiated a
settlement with the plaintiff class, and the Alabama Supreme Court lifted
the emergency stay for the purpose of allowing the Circuit Court to
<PAGE>
consider approval of this class settlement. The Circuit Court has
preliminarily approved the class settlement and set a hearing on final
approval for November 18, 1997. Under the class settlement, Payco agreed
in principle to pay an amount in cash to individual class members that
submit a claim under procedures described in the settlement papers; to make
credit counseling services available to individual class members; and to
pay attorneys' fees to class counsel. The amount the Company has agreed to
pay is not material to the operations or financial condition of the
Company. Transamerica Business Credit Corporation ("TBCC"), however, has
opposed the class settlement and moved the Alabama Supreme Court for leave
to continue discovery on TBCC's cross-claims against Payco. The Company
believes that it has meritorious defenses to the cross-claim in this suit
and believes that the outcome of this litigation will not have a material
adverse effect on the operations or the financial condition of the Company.
There have been no further developments in the FTC inquiry at API.
ITEM 2. CHANGES IN SECURITIES
NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
2.1 Purchase Agreement dated October 31, 1996 by and among
the Company, CFC Services Corp., A.M. Miller &
Associates, Inc., Continental Credit Services, Inc.,
Alaska Financial Services, Inc., Southwest Credit
Services, Inc., Account Portfolios, Inc., Account
Portfolios G.P., Inc., Account Portfolios, L.P.,
Perimeter Credit, L.P., Gulf State Credit, L.P. and
Goldman Sachs & Co. and Chase Securities Inc.
(incorporated by reference to the Company's Registration
Statement on Form S-4 as filed on December 5, 1996).
2.2 Agreement and Plan of Merger dated as of August 13, 1996
by and among the Company, Boxer Acquisition Corp. and
Payco American Corporation (incorporated by reference to
the Company's Registration Statement on Form S-4 as filed
with the Commission on December 5, 1996).
2.3 Purchase Agreement dated as of September 21, 1995 by and
among the Company, Account Portfolios, Inc., Account
Portfolios G.P., Inc., AP Management, Inc., GSC
Management, Inc., Perimeter Credit Management
Corporation, Account Portfolios Trust One and Account
Portfolios Trust Two (incorporated by reference to the
Company's Registration Statement on Form S-4 as filed
with the Commission on December 5, 1996).
<PAGE>
2.4 Stock Purchase Agreement dated as of January 10, 1996 by
and among the Company, The Continental Alliance, Inc. and
Peter C. Rosvall (incorporated by reference to the
Company's Registration Statement on Form S-4 as filed
with the Commission on December 5, 1996).
2.5 Stock Purchase Agreement dated as of December 13, 1995 by
and among the Company, Outsourcing Solutions
Incorporated, A.M. Miller & Associates, Inc. and Alan M.
Miller (incorporated by reference to the Company's
Registration Statement on Form S-4 as filed with the
Commission on December 5, 1996).
2.6 Purchase and Inducement Agreement dated as of May 17,
1996 by and among the Company, Account Portfolios, Inc.,
Account Portfolios, L.P., Gulf State Credit, L.P.,
Perimeter Credit, L.P., MLQ Investors, L.P. and Goldman,
Sachs & Co (incorporated by reference to the Company's
Registration Statement on Form S-4 as filed with the
Commission on December 5, 1996).
3.1 Certificate of Incorporation of the Company, as amended
to date, filed with the Secretary of State of the State
of Delaware on September 21, 1995 (incorporated by
reference to the Company's Registration Statement on Form
S-4 as filed with the Commission on December 5, 1996).
3.2 By-laws of the Company (incorporated by reference to the
Company's Registration Statement on Form S-4 as filed
with the Commission on December 5, 1996).
4.1 Indenture dated as of November 6, 1996 by and among the
Company, the Guarantors and Wilmington Trust Company (the
"Indenture") (incorporated by reference to the Company's
Registration Statement on Form S-4 as filed with the
Commission on December 5, 1996).
4.2 Specimen Certificate of 11% Senior Subordinated Note due
2006 (included in Exhibit 4.1 hereto) (incorporated by
reference to the Company's Registration Statement on Form
S-4 as filed with the Commission on December 5, 1996).
4.3 Specimen Certificate of 11% Series B Subordinated Note
due 2006 (the "New Notes") (included in Exhibit 4.1
hereto) (incorporated by reference to the Company's
Registration Statement on Form S-4 as filed with the
Commission on December 5, 1996).
4.4 Form of Guarantee of securities issued pursuant to the
Indenture (included in Exhibit 4.1 hereto) (incorporated
by reference to the Company's Registration Statement on
Form S-4 as filed with the Commission on December 5,
1996).
10.1 Amended and Restated Stockholders Agreement dated as of
February 16, 1996 by and among the Company and various
stockholders of the Company (incorporated by reference to
the Company's Registration Statement on Form S-4 as filed
with the Commission on December 5, 1996).
10.2 Advisory Services Agreement dated September 21, 1995
between the Company and MDC Management Company III, L.P.
(incorporated by reference to the Company's Registration
<PAGE>
Statement on Form S-4 as filed with the Commission on
December 5, 1996)
10.3 Master Services Agreement dated as of October 1, 1992
between Account Portfolios L.P. and HBR Capital, Ltd.
(incorporated by reference to the Company's Registration
Statement on Form S-4 as filed with the Commission on
December 5, 1996).
10.4 Amended Credit Agreement dated as of October 8, 1997 by
and among the Company, the Lenders listed therein,
Goldman Sachs Credit Partners L.P. and the Chase
Manhattan Bank, as Co-Administrative Agents, Goldman
Sachs Credit Partners L.P. and Chase Securities, Inc., as
Arranging Agents and Suntrust Bank, Atlanta as Collateral
Agent and Exhibits thereto.
10.5 Amended Employment Agreement dated as of August 27, 1997
between the Company and Timothy G. Beffa
27. Financial Data Schedule (Unaudited)
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the three month period
ended September 30, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to signed on its behalf by the
undersigned thereunto duly authorized.
OUTSOURCING SOLUTIONS INC.
(Registrant)
Date: November 14, 1997 /s/ DANIEL J. DOLAN
---------------------------------------------
Daniel J. Dolan
Executive Vice President
and Chief Financial Officer
/s/ TIMOTHY G. BEFFA
---------------------------------------------
Timothy G. Beffa
President and Chief Executive Officer
<PAGE>
OUTSOURCING SOLUTIONS INC.
CREDIT AGREEMENT
TABLE OF CONTENTS
Page
SECTION 1.
DEFINITIONS . . . . . . . . . . . 2
1.1 Certain Defined Terms . . . . . 2
1.2 Accounting Terms; Utilization
of GAAP for Purposes of
Calculations Under Agreement . 34
1.3 Other Definitional Provisions . 34
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS . . . 34
2.1 Commitments; Loans . . . . . . 34
2.2 Interest on the Loans. . . . . 43
2.3 Fees . . . . . . . . . . . . . 47
2.4 Repayments, Prepayments and
Reductions in Revolving Loan
Commitments; General Provi-
sions Regarding Payments. . . . 47
2.5 Use of Proceeds. . . . . . . . 56
2.6 Special Provisions Governing
Eurodollar Rate Loans. . . . . 57
2.7 Increased Costs; Taxes;
Capital Adequacy. . . . . . . . 60
2.8 Obligation of Lenders and
Issuing Lenders to Mitigate. . 64
SECTION 3.
LETTERS OF CREDIT . . . . . . . . . 65
3.1 Issuance of Letters of Credit
and Lenders' Purchase of
Participations Therein. . . . . 65
3.2 Letter of Credit Fees . . . . . 68
3.3 Drawings and Payments and
Reimbursement of Amounts Paid
Under Letters of Credit. . . . 69
3.4 Obligations Absolute . . . . . 72
3.5 Indemnification; Nature of
Issuing Lender's Duties . . . . 73
3.6 Increased Costs and Taxes
Relating to Letters of Credit. 74
SECTION 4.
CONDITIONS TO LOANS AND LETTERS OF CREDIT . . . 75
4.1 Conditions to Additional
Tranche B Term Loans. . . . . . 75
4.2 Conditions to Accelerated
Acquisition Loans. . . . . . . 79
4.3 Conditions to NSA Acquisition
Loans. . . . . . . . . . . . . 82
<PAGE>
4.4 Conditions to All Loans. . . . 86
4.5 Conditions to Letters of
Credit. . . . . . . . . . . . . 88
SECTION 5.
REPRESENTATIONS AND WARRANTIES . . . . . . 88
5.1 Organization, Powers,
Qualification, Good Standing,
Business and Subsidiaries. . . 88
5.2 Authorization of Borrowing,
etc. . . . . . . . . . . . . . 89
5.3 Financial Condition;
Projections. . . . . . . . . . 90
5.4 No Material Adverse Change; No
Restricted Junior Payments. . . 92
5.5 Title to Properties; Liens. . . 92
5.6 Litigation; Adverse Facts. . . 92
5.7 Payment of Taxes. . . . . . . . 93
5.8 Performance of Agreements;
Materially Adverse Agreements. 93
5.9 Governmental Regulation. . . . 94
5.10 Securities Activities. . . . . 94
5.11 Employee Benefit Plans. . . . . 94
5.12 Certain Fees. . . . . . . . . . 94
5.13 Environmental Protection. . . . 95
5.14 Employee Matters. . . . . . . . 96
5.15 Solvency. . . . . . . . . . . . 96
5.16 Matters Relating to Collateral 96
5.17 Related Agreements . . . . . . 97
5.18 Disclosure. . . . . . . . . . . 98
5.19 Subordination of Seller Notes. 99
SECTION 6.
AFFIRMATIVE COVENANTS . . . . . . . . 99
6.1 Financial Statements and Other
Reports. . . . . . . . . . . . 99
6.2 Corporate Existence, etc. . . . 105
6.3 Payment of Taxes and Claims;
Tax Consolidation. . . . . . . 105
6.4 Maintenance of Properties;
Insurance. . . . . . . . . . . 105
6.5 Inspection; Lender Meeting. . . 106
6.6 Compliance with Laws, etc. . . 106
6.7 Environmental Disclosure and
Inspection. . . . . . . . . . . 106
6.8 Company's Remedial Action
Regarding Hazardous Materials. 108
6.9 Execution of Subsidiary
Guaranty and Subsidiary
Security Agreements by
Subsidiaries and Future
Subsidiaries. . . . . . . . . . 108
6.10 Interest Rate Protection . . . 109
6.11 Further Assurances . . . . . . 109
6.12 Post-Closing Deliveries . . . . 110
SECTION 7.
NEGATIVE COVENANTS . . . . . . . . . 110
7.1 Indebtedness. . . . . . . . . . 110
7.2 Liens and Related Matters. . . 111
7.3 Investments; Joint Ventures . . 112
7.4 Contingent Obligations. . . . . 114
7.5 Restricted Junior Payments . . 115
<PAGE>
7.6 Financial Covenants. . . . . . 115
7.7 Restriction on Fundamental
Changes; Asset Sales. . . . . . 118
7.8 Sales and Lease-Backs. . . . . 120
7.9 Transactions with Shareholders
and Affiliates. . . . . . . . . 120
7.10 Disposal of Subsidiary Stock. . 121
7.11 Conduct of Business. . . . . . 121
7.12 Amendments or Waivers of
Certain Related Agreements;
Amendments of Documents
Relating to Subordinated
Indebtedness; Designation of
"Designated Senior Debt";
Preferred Stock. . . . . . . . 121
7.13 Fiscal Year. . . . . . . . . . 122
SECTION 8.
EVENTS OF DEFAULT . . . . . . . . . 122
8.1 Failure to Make Payments When
Due. . . . . . . . . . . . . . 122
8.2 Default in Other Agreements. . 123
8.3 Breach of Certain Covenants. . 123
8.4 Breach of Warranty. . . . . . . 123
8.5 Other Defaults Under Loan
Documents. . . . . . . . . . . 123
8.6 Involuntary Bankruptcy;
Appointment of Receiver, etc. . 124
8.7 Voluntary Bankruptcy;
Appointment of Receiver, etc. . 124
8.8 Judgments and Attachments. . . 125
8.9 Dissolution. . . . . . . . . . 125
8.10 Employee Benefit Plans. . . . . 125
8.11 Change in Control. . . . . . . 125
8.12 Invalidity of Guaranties. . . . 126
8.13 Failure of Security. . . . . . 126
8.14 Failure to Consummate
Acquisitions. . . . . . . . . . 126
8.15 Default Under Subordination
Provisions. . . . . . . . . . . 127
SECTION 9.
AGENTS . . . . . . . . . . . . 128
9.1 Appointment. . . . . . . . . . 128
9.2 Powers; General Immunity. . . . 129
9.3 Representations and
Warranties; No Responsibility
For Appraisal of Creditworthi-
ness. . . . . . . . . . . . . . 131
9.4 Right to Indemnity. . . . . . . 131
9.5 Successor Agents and Swing
Line Lender. . . . . . . . . . 132
9.6 Collateral Documents. . . . . . 132
SECTION 10.
MISCELLANEOUS . . . . . . . . . . 133
10.1 Assignments and Participations
in Loans, Letters of Credit. . 133
10.2 Expenses. . . . . . . . . . . . 136
10.3 Indemnity. . . . . . . . . . . 137
10.4 Set-Off; Security Interest in
Deposit Accounts. . . . . . . . 137
10.5 Ratable Sharing. . . . . . . . 138
<PAGE>
10.6 Amendments and Waivers. . . . . 139
10.7 Independence of Covenants. . . 140
10.8 Notices. . . . . . . . . . . . 141
10.9 Survival of Representations,
Warranties and Agreements. . . 141
10.10 Failure or Indulgence Not
Waiver; Remedies Cumulative. . 141
10.11 Marshalling; Payments Set
Aside. . . . . . . . . . . . . 141
10.12 Severability. . . . . . . . . . 142
10.13 Obligations Several;
Independent Nature of Lenders'
Rights. . . . . . . . . . . . . 142
10.14 Headings. . . . . . . . . . . . 142
10.15 Applicable Law. . . . . . . . . 142
10.16 Successors and Assigns. . . . . 143
10.17 Consent to Jurisdiction and
Service of Process . . . . . . 143
10.18 Waiver of Jury Trial . . . . . 144
10.19 Confidentiality. . . . . . . . 144
10.20 Counterparts; Effectiveness. . 145
10.21 Amendments to Subsection
10.6A. . . . . . . . . . . . . 145
10.22 Addition and Deletion of
Lenders . . . . . . . . . . . . 146
Signature pages . . . . . . . . . . . . . . . . . . . . S-1
<PAGE>
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTICE OF ISSUANCE OF LETTER OF
CREDIT
IV-A FORM OF TRANCHE A TERM NOTE
IV-B FORM OF TRANCHE B TERM NOTE
IV-C FORM OF TRANCHE B TERM NOTE ALLONGE
IV-D FORM OF NEW TRANCHE B TERM NOTE
V FORM OF REVOLVING NOTE
VI FORM OF SWING LINE NOTE
VII FORM OF SUBSIDIARY GUARANTY
VIII FORM OF PLEDGE AGREEMENT
IX-A FORM OF SECURITY AGREEMENT
IX-B FORM OF LIMITED PARTNERSHIP SECURITY
AGREEMENT
IX-C FORM OF TRADEMARK SECURITY AGREEMENT
X FORM OF COMPLIANCE CERTIFICATE
XI FORM OF OPINION OF LOAN PARTIES' COUNSEL
XII [INTENTIONALLY OMITTED]
XIII FORM OF ASSIGNMENT AGREEMENT
XIV FORM OF PERMITTED SELLER NOTE
XV FORM OF CERTIFICATE RE NON-BANK STATUS
XVI FORM OF COLLATERAL ACCOUNT AGREEMENT
XVII FORM OF ACKNOWLEDGEMENT AND CONSENT
<PAGE>
SCHEDULES
2.1 LENDERS' COMMITMENTS, EXISTING LOANS AND PRO RATA SHARES;
LENDING OFFICES
3.1 EXISTING LETTERS OF CREDIT
4.1J CORPORATE AND CAPITAL STRUCTURE; MANAGEMENT
5.1 SUBSIDIARIES OF COMPANY
5.13 CERTAIN ENVIRONMENTAL MATTERS
7.1 CERTAIN EXISTING INDEBTEDNESS
7.2 CERTAIN EXISTING LIENS
7.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
7.4(iv)(a) CERTAIN EXISTING EARN OUT AGREEMENTS
7.4(iv)(b) CERTAIN EXISTING FORWARD FLOW CONTRACTS
<PAGE>
OUTSOURCING SOLUTIONS INC.
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT is dated as of October 8,
1997 and entered into by and among OUTSOURCING SOLUTIONS INC., a Delaware
corporation ("COMPANY"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE
PAGES HEREOF (each individually referred to herein as a "LENDER" and
collectively as "LENDERS"), GOLDMAN SACHS CREDIT PARTNERS L.P. and THE
CHASE MANHATTAN BANK, as co-administrative agents (each, in such capacity,
a "CO-ADMINISTRATIVE AGENT" and, collectively, "CO-ADMINISTRATIVE AGENTS"),
GOLDMAN SACHS CREDIT PARTNERS L.P. and CHASE SECURITIES INC., as arranging
agents (each, in such capacity, an "ARRANGING AGENT" and collectively,
"ARRANGING AGENTS"), and SUNTRUST BANK, ATLANTA, as collateral agent (in
such capacity, "COLLATERAL AGENT").
R E C I T A L S
WHEREAS, Company and certain financial institutions (the "EXISTING
LENDERS") are parties to that certain Credit Agreement dated as of November
6, 1996 (as heretofore amended, supplemented or otherwise modified, the
"EXISTING CREDIT AGREEMENT"), pursuant to which the Existing Lenders
(capitalized terms used in these Recitals without definition shall have the
respective meanings assigned in subsection 1.1 hereof) agreed to extend
certain credit facilities to Company, the proceeds of which were or will be
used (i) together with the proceeds of the Subordinated Notes and certain
other funds, to fund the Acquisition and refinance certain indebtedness of
Company and Payco and pay certain transaction fees and expenses relating
thereto, and (ii) to provide working capital and financing for certain
acquisitions by Company and its Subsidiaries;
WHEREAS, certain domestic Subsidiaries of Company have guarantied all
of the obligations of Company with respect to the credit facilities
provided by Lenders under the Existing Credit Agreement;
WHEREAS, Company has secured all of the Obligations under the Existing
Credit Agreement, and each such Subsidiary of Company has secured its
respective obligations under the Subsidiary Guaranty, by granting to
Collateral Agent, for the benefit of Agents and Lenders, (i) a first
priority Lien on substantially all of their respective real and personal
property and (ii) a first priority pledge of all of the capital stock of
their respective direct Subsidiaries;
WHEREAS, Company has entered into (i) the Accelerated Acquisition
Agreement with Accelerated Bureau of Collections, Inc., a Colorado
corporation ("ACCELERATED"), pursuant to which, among other things, Company
will acquire all or substantially all of the assets (the "ACCELERATED
ACQUIRED ASSETS") of Accelerated, and (ii) the NSA Acquisition Agreement
with North Shore Agency, Inc., a New York corporation ("NSA"), and certain
other Persons, pursuant to which, among other things, Company will acquire
all or substantially all of the assets (the "NSA ACQUIRED ASSETS") of NSA;
WHEREAS, Company desires that Existing Lenders and New Lenders amend
and restate the Existing Credit Agreement in its entirety (i) to provide
for additional term loans in an aggregate principal amount of $55,000,000
to be added to and made a part of the existing Tranche B Term Loans, the
proceeds of which additional term loans will be used (a) to fund the
acquisitions of Accelerated and NSA, (b) to refinance certain existing
indebtedness of Accelerated and NSA, (c) to pay Transaction Costs, and (d)
<PAGE>
to repay outstanding Revolving Loans, (ii) to modify subsection 10.6
thereof as more fully set forth herein, and (iii) to make certain other
changes as more fully set forth herein, which amendment and restatement
shall become effective upon satisfaction of the conditions precedent set
forth herein;
WHEREAS, it is the intent of the parties hereto that this Agreement
not constitute a novation of the obligations and liabilities of the parties
under the Existing Credit Agreement or be deemed to evidence or constitute
repayment of all or any portion of such obligations and liabilities and
that this Agreement amend and restate in its entirety the Existing Credit
Agreement and re-evidence the Obligations of Company outstanding
thereunder; and
WHEREAS, it is the intent of Loan Parties to confirm that all
Obligations of Loan Parties under the other Loan Documents shall continue
in full force and effect and that, from and after the Effective Date, all
references to the "CREDIT AGREEMENT" contained therein shall be deemed to
refer to this Agreement:
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Lenders, Co-
Administrative Agents, Arranging Agents and Collateral Agent agree that on
the Effective Date the Existing Credit Agreement shall be amended and
restated in its entirety as follows:
SECTION 1.
DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the following
meanings:
"ACCELERATED" has the meaning assigned to that term in the Recitals to
this Agreement.
"ACCELERATED ACQUIRED ASSETS" has the meaning assigned to that term in
the Recitals to this Agreement.
"ACCELERATED ACQUISITION" means the transactions contemplated by the
Accelerated Acquisition Agreement.
"ACCELERATED ACQUISITION AGREEMENT" means the Asset Purchase Agreement
by and between Company and Accelerated, in the form delivered to Arranging
Agents on or prior to the Funding Date for the Accelerated Acquisition
Loans and as such agreement may be amended, restated, supplemented or
otherwise modified from time to time to the extent permitted under
subsection 7.12A.
"ACCELERATED ACQUISITION LOANS" means Additional Tranche B Term Loans
in an aggregate principal amount of up to $33,000,000 to be made to Company
on or after the conditions precedent set forth in subsection 4.2 hereof
shall have been satisfied or waived in accordance with the terms hereof.
"ACKNOWLEDGEMENT AND CONSENT" means that certain Acknowledgement and
Consent executed by Company and the Subsidiary Guarantors dated as of the
Effective Date and substantially in the form of Exhibit XVII annexed
hereto, as such Acknowledgement and Consent may be amended, restated,
supplemented or otherwise modified from time to time.
"ACQUISITION" means the transactions contemplated by the Acquisition
<PAGE>
Agreement.
"ACQUISITION AGREEMENT" means that certain Agreement and Plan of
Merger dated as of August 13, 1996, by and among Company, Acquisition Sub
and Payco, as in effect on the Closing Date and as such agreement may
heretofore have been or hereafter may be amended, restated, supplemented or
otherwise modified from time to time to the extent permitted under
subsection 7.12A.
"ACQUISITION LOANS" means the Accelerated Acquisition Loans and the
NSA Acquisition Loans, collectively.
"ACQUISITION SUB" means Boxer Acquisition Corp., a Delaware
corporation.
"ADDITIONAL TRANCHE B TERM LOANS" means the Loans made by Lenders to
Company pursuant to subsection 2.1A(ii).
"ADJUSTMENT EURODOLLAR RATE" means, for any Interest Rate
Determination Date, the rate per annum obtained by dividing (i) the London
Interbank offered rate for deposits in U.S. Dollars for maturities
comparable to the Interest Period for which such Adjusted Eurodollar Rate
will apply as of approximately 11:00 A.M. (London time) on such Interest
Rate Determination Date as set forth on Telerate Page 3750 by (ii) a
percentage equal to 100% minus the stated maximum rate of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable on such Interest Rate
Determination Date to any member bank of the Federal Reserve System in
respect of "Eurocurrency liabilities" as defined in Regulation D (or any
successor category of liabilities under Regulation D).
"AFFECTED LENDER" has the meaning assigned to that term in subsection
2.6C.
"AFFILIATE" means, as applied to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling", "controlled by" and
"under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through
the ownership of voting securities or by contract or otherwise; provided,
however, that "Affiliate" as applied to Company or its Subsidiaries shall
not include Chase, CSI, GSCP, Goldman, Sachs & Co. or CS First Boston
Corporation and their respective Affiliates, except that Goldman, Sachs &
Co. and GSCP shall be considered Affiliates of Company and its Subsidiaries
for purposes of subsection 7.9 hereof to the extent such Persons are acting
as agents or brokers for Company or any of its Subsidiaries in connection
with any sales of receivables portfolios.
"AGENT" means, individually, each of Collateral Agent, Co-
Administrative Agents and Arranging Agents, and "AGENTS" means Collateral
Agent, Co-Administrative Agents and Arranging Agents, collectively.
"AGREEMENT" means this Amended and Restated Credit Agreement dated as
of October 8, 1997, as it may be amended, restated, supplemented or
otherwise modified from time to time.
"ANNIVERSARY" means each of the dates that are anniversaries of the
Closing Date.
<PAGE>
"APPLICABLE BASE RATE MARGIN" means, with respect to the applicable
Loan set forth below, the corresponding per annum rate set forth below:
APPLICABLE
LOAN BASE RATE MARGIN
Tranche A Term Loans 1.50%
Tranche B Term Loans 2.00%
Revolving Loans 1.50%
; provided that the Applicable Base Rate Margin set forth above with
respect to Tranche A Term Loans and Revolving Loans shall be reduced by the
Pricing Reduction, if any.
"APPLICABLE EURODOLLAR RATE MARGIN" means, with respect to the
applicable Loan set forth below, the corresponding per annum rate set forth
below:
APPLICABLE
EURODOLLAR RATE MARGIN
LOAN
Tranche A Term Loans 2.50%
Tranche B Term Loans 3.00%
Revolving Loans 2.50%
; provided that the Applicable Eurodollar Rate Margin set forth above with
respect to Tranche A Term Loans and Revolving Loans shall be reduced by the
Pricing Reduction, if any.
"ARRANGING AGENT" and "ARRANGING AGENTS" have the respective meanings
assigned to such terms in the introduction to this Agreement; provided that
after the Effective Date, Arranging Agents shall only mean and include
GSCP.
"ARTICLES OF MERGER" means the Articles of Merger dated as of
November 6, 1996 by and between Acquisition Sub and Payco to be filed with
the Secretary of State of Wisconsin, as in effect on the Closing Date and
as such articles may heretofore have been or hereafter may be amended,
restated, supplemented or otherwise modified from time to time thereafter
to the extent permitted under subsection 7.12A.
"ASSET SALE" means the sale (including in any sale-leaseback
transaction) by Company or any of its Subsidiaries to any Person (other
than Company or any of its Wholly Owned Subsidiaries) of (i) any of the
stock of any of Company's Subsidiaries, (ii) all or substantially all of
the assets of any division or line of business of Company or any of its
Subsidiaries, or (iii) any other assets other than sales of assets in the
ordinary course of business and sales of obsolete equipment, excluding any
such other assets to the extent that the aggregate value of such assets
sold in any single transaction or transactions is equal to $250,000 or less
in any one Fiscal Year; provided that in no event shall a sale of all or
any portion of a receivables portfolio be deemed a sale of assets in the
ordinary course of business.
"ASSIGNMENT AGREEMENT" means an assignment agreement in substantially
the form of Exhibit XIII annexed hereto or in such other form as may be
approved by Co-Administrative Agents.
<PAGE>
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"BASE RATE" means, at any time, the higher of (x) the Prime Rate or
(y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective
Rate.
"BASE RATE LOANS" means Loans bearing interest at rates determined by
reference to the Base Rate as provided in subsection 2.2A.
"BUSINESS DAY" means (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which is
a legal holiday under the laws of the State of New York or is a day on
which banking institutions located in such state are authorized or required
by law or other governmental action to close, and (ii) with respect to all
notices, determinations, fundings, issuances and payments in connection
with the Adjusted Eurodollar Rate or any Eurodollar Rate Loans, any day
that is a Business Day described in clause (i) above and that is also (a) a
day for trading by and between banks in Dollar deposits in the London
interbank market and (b) a day on which banking institutions are open for
business in London.
"CAPITAL LEASE" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee that,
in conformity with GAAP, is accounted for as a capital lease on the balance
sheet of that Person.
"CASH" means money, currency or a credit balance in a Deposit Account.
"CASH EQUIVALENTS" means (i) marketable securities issued or directly
and 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
thereof; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date
of acquisition thereof and, at the time of acquisition, having the highest
rating obtainable from either Standard & Poor's Rating Service ("S&P") or
Moody's Investors Service, Inc. ("MOODY'S"); (iii) commercial paper
maturing no more than one year from the date of creation thereof and, at
the time of acquisition, having a rating of at least A-1 from S&P or at
least P-1 from Moody's; (iv) certificates of deposit or bankers'
acceptances maturing within one year from the date of acquisition thereof
and, at the time of acquisition, having a rating of at least A-1 from S&P
or at least P-1 from Moody's, issued by any Lender or any commercial bank
organized under the laws of the United States of America or any state
thereof or the District of Columbia having unimpaired capital and surplus
of not less than $250,000,000 (each Lender and each such commercial bank
being herein called a "CASH EQUIVALENT BANK"); and (v) Eurodollar time
deposits having a maturity of less than one year purchased directly from
any Cash Equivalent Bank (provided such deposit is with such Cash
Equivalent Bank or any other Cash Equivalent Bank).
"CASH PROCEEDS" means, with respect to any Asset Sale, Cash payments
(including any Cash received by way of deferred payment pursuant to, or
monetization of, a note receivable or otherwise, but only as and when so
received) received by Company or any of its Subsidiaries from such Asset
Sale.
"CERTIFICATE OF MERGER" means the Certificate of Merger dated as of
November 6, 1996 by and between Acquisition Sub and Payco to be filed with
the Secretary of State of Delaware, as in effect on the Closing Date and as
such certificate may heretofore have been or hereafter may be amended,
<PAGE>
restated, supplemented or otherwise modified from time to time thereafter
to the extent permitted under subsection 7.12A.
"CERTIFICATE RE NON-BANK STATUS" means a certificate substantially in
the form of Exhibit XV annexed hereto delivered by a Lender to Chase Co-
Administrative Agent pursuant to subsection 2.7B(iii).
"CHASE" means The Chase Manhattan Bank and its successors, including,
without limitation, its successors by merger.
"CHASE CO-ADMINISTRATIVE AGENT" means Chase, in its capacity as a Co-
Administrative Agent, and any successor to Chase in such capacity appointed
pursuant to subsection 9.5A.
"CLOSING DATE" means November 6, 1996.
"CO-ADMINISTRATIVE AGENT" and "CO-ADMINISTRATIVE AGENTS" have the
respective meanings assigned to such terms in the introduction to this
Agreement and also mean and include any successor Co-Administrative Agent
appointed pursuant to subsection 9.5A.
"COLLATERAL" means all of the properties and assets (including capital
stock) in which Liens are purported to be granted by the Collateral
Documents.
"COLLATERAL ACCOUNT" has the meaning assigned to that term in the
Collateral Account Agreement.
"COLLATERAL ACCOUNT AGREEMENT" means the Collateral Account Agreement
executed and delivered by Company and Chase Co-Administrative Agent on the
Closing Date, substantially in the form of Exhibit XVI annexed hereto,
pursuant to which Company may pledge cash to Chase Co-Administrative Agent
to secure the obligations of Company to reimburse Issuing Lenders for
payments made under one or more Letters of Credit as such Collateral
Account Agreement may heretofore have been or hereafter may be amended,
restated, supplemented or otherwise modified from time to time.
"COLLATERAL AGENT" means SunTrust, in its capacity as Collateral
Agent, and any successor to SunTrust, in such capacity appointed pursuant
to subsection 9.5A.
"COLLATERAL DOCUMENTS" means the Pledge Agreement, the Security
Agreement, the Limited Partnership Security Agreement, the Trademark
Security Agreement, the Collateral Account Agreement, the Mortgages, the
Deeds of Trust, and any other documents, instruments or agreements
delivered by any Loan Party pursuant to this Agreement or any of the other
Loan Documents in order to grant or perfect liens on any assets of such
Loan Party as security for the Obligations.
"COMMERCIAL LETTER OF CREDIT" means any letter of credit or similar
instrument issued for the purpose of providing the primary payment
mechanism in connection with the purchase of any materials, goods or
services by Company or any of its Subsidiaries in the ordinary course of
business of Company or such Subsidiary.
"COMMITMENTS" means (i) with respect to the period prior to the
Effective Date, the commitments of Lenders to make Loans as set forth in
subsection 2.1A of the Existing Credit Agreement, and (ii) thereafter, the
commitments of Lenders to make Loans as set forth in subsection 2.1A of
this Agreement.
"COMPANY COMMON STOCK" means, collectively, Company's (i) Voting
Common Stock, par value $0.01 per share, (ii) Class A Non-Voting Common
<PAGE>
Stock, par value $0.01 per share, (iii) Class B Non-Voting Common Stock,
par value $0.01 per share, and (iv) Class C Non-Voting Common Stock, par
value $0.01 per share.
"COMPANY PREFERRED STOCK" means Company's 8.0% Non-Voting Cumulative
Redeemable Exchangeable Preferred Stock outstanding as of the Closing Date
in the approximate amount of $10,800,000, together with any shares of such
preferred stock issued after the Closing Date as dividends thereon
permitted under subsection 7.5 of the Existing Credit Agreement or under
subsection 7.5 of this Agreement.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of Exhibit X annexed hereto delivered to Chase Co-Administrative Agent by
Company pursuant to subsection 6.1(iv).
"CONDEMNATION PROCEEDS" has the meaning assigned to that term in
subsection 2.4B(iii)(d).
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the sum of
(i) the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of
Capital Leases which is capitalized on the consolidated balance sheet of
Company and its Subsidiaries) by Company and its Subsidiaries during that
period that, in conformity with GAAP, are included in "purchases of
property, plant or equipment" or comparable items reflected in the
consolidated statement of cash flows of Company and its Subsidiaries plus
(ii) to the extent not covered by clause (i) of this definition, the
aggregate of all expenditures by Company and its Subsidiaries during that
period to acquire (by purchase or otherwise) the business, property (except
inventory, other than any receivables portfolios, in the ordinary course of
business) or fixed assets of any Person, or stock or other evidence of
beneficial ownership of any Person that, as a result of the acquisition of
such stock or other evidence, becomes a Subsidiary of Company.
"CONSOLIDATED CURRENT ASSETS" means, as at any date of determination,
the total assets of Company and its Subsidiaries on a consolidated basis
which may properly be classified as current assets in conformity with GAAP,
excluding Cash and Cash Equivalents.
"CONSOLIDATED CURRENT LIABILITIES" means, as at any date of
determination, the total liabilities of Company and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities
in conformity with GAAP.
"CONSOLIDATED EBITDA" means, for any period, (i) the sum of the
amounts for such period of (a) Consolidated Net Income, (b) Consolidated
Interest Expense, (c) provisions for taxes based on income, (d) total
depreciation expense, (e) total amortization expense, (f) other non-cash
items reducing Consolidated Net Income, (g) to the extent deducted in
determining Consolidated Net Income, (x) non-recurring charges not
exceeding $10,000,000 identified prior to December 31, 1997 (whether or not
incurred prior to December 31, 1997) with respect to the rationalization of
the business of Company and its Subsidiaries following the Acquisition and
(y) charges not in excess of $3,600,000 with respect to the relocation of
offices at Continental Credit Services, Inc. and costs of implementing a
new computer system at Payco and duplicative costs of operating the old
system concurrently and (h) to the extent deducted in determining
Consolidated Net Income, any non-recurring charges incurred after the
Closing Date in connection with the resolution of litigation of Company and
its Subsidiaries disclosed in that certain Offering Circular dated October
31, 1996 prepared in connection with the offering of the Subordinated
Notes, less (ii) the sum of the amounts for such period of (a) other non-
cash items increasing Consolidated Net Income and (b) to the extent not
<PAGE>
otherwise deducted in determining Consolidated Net Income, payments made
during such period with respect to Earn Out Agreements permitted hereunder
and Management Fees, all of the foregoing as determined on a consolidated
basis for Company and its Subsidiaries in conformity with GAAP.
"CONSOLIDATED EXCESS CASH FLOW" means, for any period, an amount (if
positive) equal to (i) the sum, without duplication, of the amounts for
such period of (a) Consolidated EBITDA and (b) the Consolidated Working
Capital Adjustment minus (ii) the sum, without duplication, of the amounts
for such period of (a) voluntary and scheduled cash repayments of
Consolidated Total Debt (excluding repayments of Revolving Loans except to
the extent the Revolving Loan Commitments are permanently reduced in
connection with such repayments), (b) Consolidated Capital Expenditures
(net of any proceeds of any related financings with respect to such
expenditures), (c) Consolidated Interest Expense, (d) the provision for
current taxes based on income of Company and its Subsidiaries and payable
in cash with respect to such period, and (e) to the extent not otherwise
deducted in calculating Consolidated Excess Cash Flow, cash payments made
during such period with respect to non-recurring charges described in
subdivisions (g) and (h) of the definition of Consolidated EBITDA.
"CONSOLIDATED FIXED CHARGES" means, for any period, an amount equal to
the sum of the amounts for such period of (i) scheduled cash repayments of
principal of all Indebtedness, as reduced by prepayments previously made,
(ii) Consolidated Interest Expense, (iii) Consolidated Maintenance Capital
Expenditures and (iv) the portion of taxes based on income actually paid in
cash.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total interest
expense (including that portion attributable to Capital Leases in
accordance with GAAP) payable in cash of Company and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Company
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
Agreements, but excluding, however, any amounts referred to in subsection
2.3 of this Agreement or subsection 2.3 of the Existing Credit Agreement
payable to Agents and Lenders on or before the Effective Date or the
Closing Date, respectively.
"CONSOLIDATED MAINTENANCE CAPITAL EXPENDITURES" means, for any period,
all Consolidated Capital Expenditures for such period other than
Consolidated Capital Expenditures expended to make Permitted Acquisitions
or Permitted Portfolio Acquisitions.
"CONSOLIDATED NET INCOME" means, for any period, the net income (or
loss) of Company and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with
GAAP; provided that there shall be excluded (i) the income (or loss) of any
Person (other than a Subsidiary of Company) in which any other Person
(other than Company or any of its Subsidiaries) has a joint interest,
except to the extent of the amount of dividends or other distributions
actually paid to Company or any of its Subsidiaries by such Person during
such period, (ii) the income (or loss) of any Person accrued prior to the
date it becomes a Subsidiary of Company or is merged into or consolidated
with Company or any of its Subsidiaries or that Person's assets are
acquired by Company or any of its Subsidiaries, (iii) the income of any
Subsidiary of Company to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not
at the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary, (iv) any after-tax
gains or losses attributable to Asset Sales, and (v) (to the extent not
<PAGE>
included in clauses (i) through (iv) above) any net extraordinary gains or
net non-cash extraordinary losses.
"CONSOLIDATED TOTAL DEBT" means, as at any date of determination, the
aggregate stated balance sheet amount of all outstanding Indebtedness of
Company and its Subsidiaries on a consolidated basis as determined in
conformity with GAAP.
"CONSOLIDATED WORKING CAPITAL" means, as at any date of determination,
the excess of Consolidated Current Assets over Consolidated Current
Liabilities.
"CONSOLIDATED WORKING CAPITAL ADJUSTMENT" means, for any period on a
consolidated basis, the amount (which may be a negative number) by which
Consolidated Working Capital as of the beginning of such period exceeds (or
is less than) Consolidated Working Capital as of the end of such period.
"CONTINGENT OBLIGATION" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person (i) with
respect to any Indebtedness, lease, dividend or other obligation of another
if the primary purpose or intent thereof by the Person incurring the
Contingent Obligation is to provide assurance to the obligee of such
obligation of another that such obligation of another will be paid or
discharged, or that any agreements relating thereto will be complied with,
or that the holders of such obligation will be protected (in whole or in
part) against loss in respect thereof, (ii) with respect to any letter of
credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings, or (iii) under Interest
Rate Agreements. Contingent Obligations shall include, without limitation,
(a) the direct or indirect guaranty, endorsement (otherwise than for
collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of the
obligation of another, (b) the obligation to make take-or-pay or similar
payments if required regardless of non-performance by any other party or
parties to an agreement, and (c) any liability of such Person for the
obligation of another through any agreement (contingent or otherwise)
(x) to purchase, repurchase or otherwise acquire such obligation or any
security therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock purchases,
capital contributions or otherwise) or (y) to maintain the solvency or any
balance sheet item, level of income or financial condition of another if,
in the case of any agreement described under subclauses (x) or (y) of this
sentence, the primary purpose or intent thereof is as described in the
preceding sentence. The amount of any Contingent Obligation shall be equal
to the amount of the obligation so guaranteed or otherwise supported or, if
less, the amount to which such Contingent Obligation is specifically
limited.
"CONTINUING DIRECTOR" shall mean, as of any date of determination, any
member of the Board of Directors of Company who (i) was a member of such
Board of Directors on the Closing Date or (ii) was nominated for election
or elected to such Board of Directors with the affirmative vote of the MDC
Entities.
"CONTRACTUAL OBLIGATION" means, as applied to any Person, any
provision of any Security issued by that Person or of any material
indenture, mortgage, deed of trust, contract, undertaking, agreement or
other instrument to which that Person is a party or by which it or any of
its properties is bound or to which it or any of its properties is subject.
"CORPORATE LOAN PARTY" means any Loan Party which is a corporation.
"CSI" means Chase Securities Inc. and its successors and assigns,
<PAGE>
including, without limitation, its successors by merger.
"DEBT COLLECTION LAWS" means the Fair Debt Collection Practices Act
and any similar state laws relating to the collection of consumer debt.
"DEED OF TRUST" means any deed of trust granted by Company or any of
its Subsidiaries in any interest in real property to secure the
Obligations, as such deed of trust may be amended, restated, supplemented
or otherwise modified from time to time.
"DEFAULTING LENDER" means any Lender with respect to which a Lender
Default is in effect.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate
of deposit.
"DOLLARS" and the sign "$" mean the lawful money of the United States
of America.
"EARN OUT AGREEMENT" shall mean (i) the agreements set forth in
Schedule 7.4(iv)(a) hereto and (ii) any other agreement entered into after
the Closing Date by Company to pay the seller or sellers of any Person or
assets acquired in accordance with the provisions of subsection 7.7(v) at
any time following the consummation of such acquisition by reference to the
financial performance of Company or the Person or assets acquired.
"EFFECTIVE DATE" means the date on or before November 10, 1997 on
which (i) the conditions precedent to effectiveness set forth in subsection
10.20 shall be satisfied and (ii) the conditions precedent set forth in
subsections 4.1 and 4.4 shall be satisfied or waived in accordance with the
terms hereof.
"ELIGIBLE ASSIGNEE" means (i) (a) a commercial bank organized under
the laws of the United States or any state thereof; (b) a commercial bank
organized under the laws of any other country or a political subdivision
thereof; provided that (x) such bank is acting through a branch or agency
located in the United States or (y) such bank is organized under the laws
of a country that is a member of the Organization for Economic Cooperation
and Development or a political subdivision of such country; (c) any other
entity which is an "accredited investor" (as defined in Regulation D under
the Securities Act) which extends credit or buys loans as one of its
businesses including, but not limited to, insurance companies, mutual funds
and lease financing companies; and (d) any other financial institution or
fund (whether a corporation, partnership, trust or other entity) that is
engaged in making, purchasing or otherwise investing in commercial loans in
the ordinary course of its business and has combined capital and surplus or
net assets of at least $100,000,000, in each case (under clauses (a)
through (d) above) that is reasonably acceptable to Co-Administrative
Agents; and (ii) any Lender and any Affiliate of any Lender; provided that
no Affiliate of Company shall be an Eligible Assignee.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined
in Section 3(3) of ERISA which is subject to ERISA and which is maintained
or contributed to by Company or any of its ERISA Affiliates.
"EMPLOYMENT AGREEMENTS" means, collectively, (i) that certain
Employment Agreement and that certain Covenant Not-To-Compete Agreement, in
each case dated as of August 13, 1996 by and between Payco and David S.
Patterson, (ii) that certain Employment Agreement and that certain Covenant
Not-To-Compete Agreement, in each case dated as of August 13, 1996 by and
between Payco and James R. Bohmann, (iii) that certain Employment Agreement
<PAGE>
and that certain Covenant Not-To-Compete Agreement, in each case dated as
of August 13, 1996 by and between Payco and William W. Kagel, (iv) that
certain Employment Agreement and that certain Covenant Not-To-Compete
Agreement, in each case dated as of August 13, 1996 by and between Payco
and Patrick E. Carroll, (v) that certain Employment Agreement and that
certain Covenant Not-To-Compete Agreement, in each case dated as of
August 13, 1996 by and between Payco and Alvin W. Keeley, (vi) that certain
Employment Agreement and that certain Covenant Not-To-Compete Agreement, in
each case dated as of August 13, 1996 by and between Payco and Susan
Mathison, (vii) that certain Employment Agreement and that certain Covenant
Not-To-Compete Agreement, in each case dated as of August 13, 1996 by and
between Payco and John P. Stetzenbach, (viii) that certain Employment
Agreement and that certain Covenant Not-To-Compete Agreement, in each case
dated as of August 13, 1996 by and between Payco and Neal R. Sparby, and
(ix) that certain Consulting Agreement and that certain Covenant Not-To-
Compete Agreement, in each case dated as of August 13, 1996 by and between
Payco and Dennis Punches.
"ENVIRONMENTAL CLAIM" means any written accusation, allegation, notice
of violation, claim, demand, abatement order or other order or direction
(conditional or otherwise) by any governmental authority or any Person for
any damage, including, without limitation, personal injury (including
sickness, disease or death), tangible or intangible property damage,
contribution, indemnity, indirect or consequential damages, damage to the
environment, nuisance, pollution, contamination or other adverse effects on
the environment, or for fines, penalties or restrictions, in each case
relating to, resulting from or in connection with Hazardous Materials and
relating to Company, any of its Subsidiaries, any of their respective
Affiliates that are directly or indirectly controlled by Company, or any
Facility.
"ENVIRONMENTAL LAWS" means all laws, statutes, ordinances, orders,
rules, regulations, plans, policies or decrees and the like relating to
(i) environmental matters, including, without limitation, those relating to
fines, injunctions, penalties, damages, contribution, cost recovery
compensation, losses or injuries resulting from the Release or threatened
Release of Hazardous Materials, (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, or (iii) occupational
safety and health, public health and safety, industrial hygiene or
protection of wetlands, in any manner applicable to Company or any of its
Subsidiaries or any of their respective properties, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Section 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the Federal
Water Pollution Control Act ( 33 U.S.C. Section 1251 et seq.), the Clean
Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act
(15 U.S.C. Section 2601 et seq.), the Federal Insecticide, Fungicide and
Rodenticide Act (7 U.S.C. Section 136 et seq.), the Occupational Safety and
Health Act (29 U.S.C. Section 651 et seq.) and the Emergency Planning and
Community Right-to-Know Act (42 U.S.C. Section 11001 et seq.), each as
amended or supplemented, and any analogous future or present local, state
and federal statutes and regulations promulgated pursuant thereto, each as
in effect as of the date of determination.
"EQUITY PROCEEDS" means the cash proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith)
from the issuance of any equity Securities of Company after the Closing
Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
<PAGE>
"ERISA AFFILIATE" means, as applied to any Person, (i) any corporation
which is a member of a controlled group of corporations within the meaning
of Section 414(b) of the Internal Revenue Code of which that Person is a
member; (ii) any trade or business (whether or not incorporated) which is a
member of a group of trades or businesses under common control within the
meaning of Section 414(c) of the Internal Revenue Code of which that Person
is a member; and (iii) solely for purposes of obligations under Section 412
of the Internal Revenue Code or under the applicable sections set forth in
Section 414(t)(2) of the Internal Revenue Code, any member of an affiliated
service group within the meaning of Section 414(m) or (o) of the Internal
Revenue Code of which that Person, any corporation described in clause
(i) above or any trade or business described in clause (ii) above is a
member.
"ERISA EVENT" means (i) a "reportable event" within the meaning of
Section 4043(c) of ERISA and the regulations issued thereunder with respect
to any Pension Plan (excluding those for which the provision for 30-day
notice to the PBGC has been waived by regulation); (ii) the failure to meet
the minimum funding standard of Section 412 of the Internal Revenue Code
with respect to any Pension Plan (whether or not waived in accordance with
Section 412(d) of the Internal Revenue Code) or the failure to make by its
due date a required installment under Section 412(m) of the Internal
Revenue Code with respect to any Pension Plan or the failure to make any
required contribution to a Multiemployer Plan; (iii) the provision by the
administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA
of a notice of intent to terminate such plan in a distress termination
described in Section 4041(c) of ERISA; (iv) the withdrawal by Company or
any of its ERISA Affiliates from any Pension Plan with two or more
contributing sponsors or the termination of any such Pension Plan
resulting, in either case, in liability pursuant to Section 4063 or 4064 of
ERISA, respectively; (v) the institution by the PBGC of proceedings to
terminate any Pension Plan pursuant to Section 4042 of ERISA; (vi) the
imposition of liability on Company or any of its ERISA Affiliates pursuant
to Section 4062(e) or 4069 of ERISA or by reason of the application of
Section 4212(c) of ERISA; (vii) the withdrawal by Company or any of its
ERISA Affiliates in a complete or partial withdrawal (within the meaning of
Sections 4203 and 4205 of ERISA) from any Multiemployer Plan resulting in
withdrawal liability pursuant to Section 4201 of ERISA, or the receipt by
Company or any of its ERISA Affiliates of written notice from any
Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA, or that it intends to terminate or has
terminated under Section 4042 of ERISA or under Section 4041A of ERISA if
such termination would result in liability to Company or any of its ERISA
Affiliates; (viii) the imposition on Company or any of its ERISA Affiliates
of fines, penalties or taxes under Chapter 43 of the Internal Revenue Code
or under Section 409 or 502(c), (i) or (l) or 4071 of ERISA in respect of
any Employee Benefit Plan; (ix) the failure of any Pension Plan (or any
other Employee Benefit Plan intended to be qualified under Section 401(a)
of the Internal Revenue Code) to qualify under Section 401(a) of the
Internal Revenue Code, or the failure of any trust forming part of any
Pension Plan to qualify for exemption from taxation under Section 501(a) of
the Internal Revenue Code; or (x) the imposition of a Lien pursuant to
Section 401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to
ERISA with respect to any Pension Plan.
"EURODOLLAR RATE LOANS" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"EVENT OF DEFAULT" means each of the events set forth in Section 8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
<PAGE>
"EXISTING CREDIT AGREEMENT" has the meaning assigned to that term in
the Recitals to this Agreement.
"EXISTING LENDERS" has the meaning assigned to that term in the
Recitals to this Agreement.
"EXISTING LETTERS OF CREDIT" has the meaning assigned to that term in
subsection 3.1.
"EXISTING LOAN" or "EXISTING LOANS" means, as the context requires,
one or more of the Existing Tranche A Term Loans, Existing Tranche B Term
Loans or Existing Revolving Loans or any combination thereof.
"EXISTING REVOLVING LOANS" means, with respect to any Existing Lender,
the Revolving Loans under, as defined in, the Existing Credit Agreement
held by such Existing Lender, in the principal amount of such Loans
outstanding immediately prior to the Effective Date.
"EXISTING SELLER NOTE" means that certain 9% Non-Negotiable
Subordinated Note issued by Outsourcing Solutions Incorporated to Alan
Miller in the principal amount of $5,000,000, due July 10, 2001, as in
effect on the Closing Date and as such note may heretofore have been or
hereafter may be amended, restated, supplemented or otherwise modified from
time to time thereafter to the extent permitted under subsection 7.12B.
"EXISTING TRANCHE A TERM LOAN" means, with respect to any Existing
Lender, the Tranche A Term Loan under, as defined in, the Existing Credit
Agreement held by such Existing Lender, in the principal amount of such
Loan outstanding immediately prior to the Effective Date, and "EXISTING
TRANCHE A TERM LOANS" means such Loans of all Existing Lenders,
collectively.
"EXISTING TRANCHE B TERM LOAN" means, with respect to any Existing
Lender, the Tranche B Term Loan under, as defined in, the Existing Credit
Agreement held by such Existing Lender, in the principal amount of such
Loan outstanding immediately prior to the Effective Date, and "EXISTING
TRANCHE B TERM LOANS" means such Loans of all Existing Lenders,
collectively.
"FACILITIES" means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon)
now, hereafter or heretofore owned, leased, operated or used by Company or
any of its Subsidiaries (but only as to portions of buildings actually
leased or used) or any of their respective predecessors or any of their
respective Affiliates that are directly or indirectly controlled by
Company.
"FAIR DEBT COLLECTION PRACTICES ACT" means the Federal Fair Debt
Collection Practices Act, as amended from time to time, and any successor
statute.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average
of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is
not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by Chase Co-
Administrative Agent from three Federal funds brokers of recognized
standing selected by Chase Co-Administrative Agent.
"FISCAL QUARTER" means a fiscal quarter of a Fiscal Year.
<PAGE>
"FISCAL YEAR" means the fiscal year of Company and its Subsidiaries
ending on December 31 of each calendar year.
"FORWARD FLOW CONTRACT" shall mean (i) the agreement set forth in
Schedule 7.4(iv)(b) hereto and (ii) any other agreement entered into after
the Closing Date by Company or any of its Subsidiaries to purchase
receivables portfolios from time to time meeting the criteria enumerated
therein.
"FUNDING AND PAYMENT OFFICE" means the office of Chase Co-
Administrative Agent and Swing Line Lender located at 270 Park Avenue, New
York, New York 10017 or such offices of Chase Co-Administrative Agent or
any successor Chase Co-Administrative Agent specified by Chase Co-
Administrative Agent or such successor Chase Co-Administrative Agent in a
written notice to Loan Parties and Lenders).
"FUNDING DATE" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application thereof
set forth in subsection 1.2, generally accepted accounting principles set
forth in opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment
of the accounting profession, in each case as the same are applicable to
the circumstances as of the date of determination and specifically, terms
used herein applicable to Company and its Subsidiaries defined by reference
to GAAP shall give effect to the subtraction of minority interests.
"GOVERNMENTAL ACTS" has the meaning assigned to that term in
subsection 3.5.
"GOVERNMENTAL AUTHORIZATION" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal,
state or local governmental authority, agency or court.
"GSCP" means Goldman Sachs Credit Partners L.P., a Bermuda limited
partnership.
"GUARANTY" means the Subsidiary Guaranty and any other guaranty of the
Obligations.
"GUARANTORS" means the Subsidiary Guarantors.
"HAZARDOUS MATERIALS" means (i) any chemical, material or substance
defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste",
"restricted hazardous waste", "infectious waste", "toxic substances" or any
other formulations intended to define, list or classify substances by
reason of deleterious properties such as ignitability, corrosivity,
reactivity, carcinogenicity, toxicity, reproductive toxicity, "TCLP
toxicity" or "EP toxicity" or words of similar import under any applicable
Environmental Laws; (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters and
other wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal resources; (iv) any flammable
substances or explosives; (v) any radioactive materials; (vi) asbestos in
any form; (vii) urea formaldehyde foam insulation; (viii) electrical
equipment which contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of fifty parts per million;
(ix) pesticides; and (x) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental
authority.
<PAGE>
"HBR SERVICES AGREEMENT" means that certain Master Services Agreement
dated as of October 1, 1992, by and between Account Portfolios, L.P. and
HBR Capital, Ltd., as in effect on the Closing Date and as such agreement
may heretofore have been or hereafter may be amended, restated, supplement-
ed or otherwise modified from time to time thereafter to the extent
permitted under subsection 7.12A.
"IMMATERIAL SUBSIDIARIES" means, with respect to any Person, any
Subsidiary or Subsidiaries of such Person the assets of which constitute,
individually or in the aggregate, less than 5% of the total assets of such
Person and its Subsidiaries.
"INDEBTEDNESS" means, as applied to any Person, (i) all indebtedness
for borrowed money, (ii) that portion of obligations with respect to
Capital Leases that is properly classified as a liability on a balance
sheet in conformity with GAAP, (iii) notes payable and drafts accepted
representing extensions of credit whether or not representing obligations
for borrowed money (other than accounts payable incurred in the ordinary
course of business and accrued expenses incurred in the ordinary course of
business), (iv) any obligation owed for all or any part of the deferred
purchase price of property or services (excluding any such obligations
incurred under ERISA or under Earn Out Agreements), which purchase price is
(a) due more than six months from the date of incurrence of the obligation
in respect thereof or (b) evidenced by a note or similar written
instrument, and (v) all indebtedness secured by any Lien on any property or
asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to
the credit of that Person. Obligations under Interest Rate Agreements,
Currency Agreements and Earn Out Agreements constitute Contingent
Obligations and not Indebtedness.
"INDEMNITEE" has the meaning assigned to that term in subsection 10.3.
"INSURANCE PROCEEDS" has the meaning assigned to that term in subsec-
tion 2.4B(iii)(d).
"INTEREST COVERAGE RATIO" means, as of any date of determination, the
ratio of Consolidated EBITDA to Consolidated Interest Expense, in each case
calculated for the 12 consecutive months ending on the last day of the
month preceding such date of determination.
"INTEREST PAYMENT DATE" means (i) with respect to any Base Rate Loan,
each January 15, April 15, July 15 and October 15 of each year, commencing
on January 15, 1997 and (ii) with respect to any Eurodollar Rate Loan, the
last day of each Interest Period applicable to such Loan; provided that in
the case of each Interest Period of longer than three months, "Interest
Payment Date" shall also include the date that is three months after the
commencement of such Interest Period.
"INTEREST PERIOD" has the meaning assigned to that term in subsection
2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to hedge Company or any of its
Subsidiaries against fluctuations in interest rates.
"INTEREST RATE DETERMINATION DATE" means each date for calculating the
Adjusted Eurodollar Rate, for purposes of determining the interest rate in
respect of an Interest Period. The Interest Rate Determination Date in
respect of calculating the Adjusted Eurodollar Rate shall be the second
Business Day prior to the first day of the related Interest Period.
<PAGE>
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"INVESTMENT" means (i) any direct or indirect purchase or other
acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, stock or other Securities of any other Person (other than a
Person that, prior to such purchase or acquisition, was a Wholly Owned
Subsidiary of Company), or (ii) any direct or indirect loan, advance (other
than advances to employees for moving, entertainment and travel expenses,
drawing accounts and similar expenditures in the ordinary course of
business) or capital contribution by Company or any of its Subsidiaries to
any other Person other than a Wholly Owned Subsidiary of Company, including
all indebtedness and accounts receivable acquired from that other Person
that are not current assets or did not arise from sales to that other
Person in the ordinary course of business; provided, however, that the term
"Investment" shall not include (a) current trade and customer accounts
receivable for goods furnished or services rendered in the ordinary course
of business and payable in accordance with customary trade terms, (b)
advances and prepayments to suppliers for goods and services in the
ordinary course of business, (c) stock or other securities acquired in
connection with the satisfaction or enforcement of Indebtedness or claims
due or owing to Company or any of its Subsidiaries or as security for any
such Indebtedness or claims, (d) Cash held in Deposit Accounts with banks
and trust companies (other than Lenders) not exceeding $2,000,000 in
aggregate amount, (e) Cash held in Deposit Accounts with banks and trust
companies (other than Lenders) in which amounts received from credit card
issuers are concentrated and held to be swept to Company's operating
accounts with a Lender on a daily basis, (f) Cash held in any Deposit
Account with a Lender and (g) shares in a mutual fund that invests solely
in Cash Equivalents. The amount of any Investment shall be the original
cost of such Investment plus the cost of all additions thereto, without any
adjustments for increases or decreases in value, or write-ups, write-downs
or write-offs with respect to such Investment.
"ISSUING LENDER" means, with respect to any Letter of Credit, the
Lender which agrees or is otherwise obligated to issue such Letter of
Credit, determined as provided in subsection 3.1B(ii).
"JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form;
provided that in no event shall any corporate Subsidiary of any Person be
considered to be a Joint Venture to which such Person is a party.
"LENDER" and "LENDERS" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their
successors and permitted assigns pursuant to subsection 10.1, and the term
"Lenders" shall include Swing Line Lender unless the context otherwise
requires provided that the term "Lenders", when used in the context of a
particular Commitment, shall mean Lenders having that Commitment. To the
extent the context so requires, the terms "LENDER" and "LENDERS" shall
include "Lenders" under, and as defined in, the Existing Credit Agreement.
"LENDER DEFAULT" shall mean (i) the refusal (which has not been
retracted) of a Lender to make available its portion of any Loans
(including any Revolving Loans made to pay Refunded Swing Line Loans or to
reimburse drawings under Letters of Credit) in accordance with subsection
2.1A(iii) or its portion of any unreimbursed drawing or payment under a
Letter of Credit in accordance with subsection 3.3C or (ii) a Lender having
notified Company and/or Chase Co-Administrative Agent in writing that it
does not intend to comply with its obligations under subsection 2.1 or
subsections 3.1C, 3.3B or 3.3C, in any such case as a result of any
takeover of such Lender by any regulatory authority or agency.
<PAGE>
"LENDING OFFICE" means, as to any Lender, the office or offices of
such Lender specified as its "Lending Office" on Schedule 2.1, or such
other office or offices as such Lender may from time to time notify Company
and Chase Co-Administrative Agent.
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means Commercial Letters of
Credit and Standby Letters of Credit issued or to be issued by Issuing
Lenders for the account of Company pursuant to subsection 3.1.
"LETTER OF CREDIT USAGE" means, as at any date of determination, the
sum of (i) the maximum aggregate amount which is or at any time thereafter
may become available for drawing under all Letters of Credit then
outstanding plus (ii) the aggregate amount of all drawings under Letters of
Credit honored by Issuing Lenders and not theretofore reimbursed by Company
(including any such reimbursement out of the proceeds of Revolving Loans
pursuant to subsection 3.3B).
"LEVERAGE RATIO" means, as of any date of determination, the ratio of
Consolidated Total Debt, as of the date of determination, to Consolidated
EBITDA, for the 12 consecutive months ending on the last day of such month,
in each case, calculated for Company and its Subsidiaries on a consolidated
basis in accordance with GAAP.
"LIEN" means any lien, mortgage, pledge, assignment, security
interest, fixed or floating charge or encumbrance of any kind (including
any conditional sale or other title retention agreement, any lease in the
nature thereof, and any agreement to give any security interest) and any
option, trust or other preferential arrangement having the practical effect
of any of the foregoing.
"LIMITED PARTNERSHIP SECURITY AGREEMENT" means the Limited Partnership
Security Agreement entered into by and among Company, certain Subsidiary
Guarantors and Collateral Agent dated as of the Closing Date, substantially
in the form of Exhibit IX-B annexed hereto, as such Limited Partnership
Security Agreement may heretofore have been or hereafter may be amended,
restated, supplemented or otherwise modified from time to time.
"LOAN" or "LOANS" means, as the context requires, one or more of the
Tranche A Term Loans, Tranche B Term Loans, Revolving Loans and Swing Line
Loans or any combination thereof.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Letters of
Credit (and any applications for, or reimbursement agreements or other
documents or certificates executed by Company in favor of an Issuing Lender
relating to, the Letters of Credit), the Guaranty, the Collateral Documents
and the Acknowledgement and Consent.
"LOAN PARTIES" means Company and each Subsidiary Guarantor.
"MANAGEMENT FEES" means the fees payable by Company pursuant to the
MDC Advisory Services Agreement and the HBR Services Agreement.
"MARGIN STOCK" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from
time to time.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect upon the
business, operations, properties, assets, condition (financial or
otherwise) or prospects of Company and its Subsidiaries, taken as a whole,
(ii) the material impairment of the ability of any Loan Party to perform
the Obligations and (iii) a material adverse effect upon the legality,
validity, binding effect or enforceability against a Loan Party of a Loan
Document to which it is a party; provided that Company's consummation of
<PAGE>
the Acquisition in accordance with the terms of the Acquisition Agreement
shall not be deemed to have a Material Adverse Effect for purposes of
subsection 5.4.
"MDC ADVISORY SERVICES AGREEMENT" means that certain Advisory Services
Agreement dated as of September 21, 1995, by and between Company and MDC
Management Company III, L.P., as in effect on the Closing Date and as such
agreement may heretofore have been or hereafter may be amended, restated,
supplemented or otherwise modified from time to time thereafter to the
extent permitted under subsection 7.12A.
"MDC ENTITIES" means McCown De Leeuw & Co. III, L.P., a California
limited partnership, McCown De Leeuw & Co. Offshore (Europe) III, L.P., a
Bermuda limited partnership, McCown De Leeuw & Co. III (Asia), L.P., a
Bermuda limited partnership and Gamma Fund LLC, a California limited
liability company.
"MERGER" means the merger of Acquisition Sub with and into Payco in
accordance with the terms of the Acquisition Agreement, the Articles of
Merger and the Certificate of Merger, with Payco being the surviving
corporation in such merger.
"MORTGAGE" means any mortgage or legal charge granted by Company or
any of its Subsidiaries in any interest in real property to secure the
Obligations, as such mortgage may be amended, restated, supplemented or
otherwise modified from time to time.
"MULTIEMPLOYER PLAN" means a "multiemployer plan", as defined in Sec-
tion 4001(a)(3) of ERISA which is subject to Title IV of ERISA, to which
Company or any of its ERISA Affiliates is contributing or to which Company
or any of its ERISA Affiliates has an obligation to contribute.
"NET CASH PROCEEDS" means, with respect to any Asset Sale, Cash
Proceeds of such Asset Sale net of bona fide direct costs of sale
including, without limitation, (i) income taxes reasonably estimated to be
actually payable as a result of such Asset Sale within one year of the date
of receipt of such Cash Proceeds, (ii) transfer, sales, use and other taxes
payable in connection with such Asset Sale, (iii) payment of the
outstanding principal amount of, premium or penalty, if any, and interest
on any Indebtedness (other than the Loans) that is secured by a Lien on the
stock or assets in question and that is required to be repaid under the
terms thereof as a result of such Asset Sale, and (iv) broker's commissions
and reasonable fees and expenses of counsel in connection with such Asset
Sale.
"NEW LENDER" means any Lender which is a party to this Agreement on
the Effective Date which is not an Existing Lender.
"NON-DEFAULTING LENDER" means and includes each Lender other than a
Defaulting Lender.
"NOTES" means one or more of the Term Notes, Revolving Notes or Swing
Line Note or any combination thereof.
"NOTICE OF BORROWING" means (i) with respect to an Existing Loan, the
Notice of Borrowing under the Existing Credit Agreement delivered by
Company with respect to such Existing Loan and (ii) with respect to Loans
to be made under subsection 2.1A(ii), 2.1A(iii) or 2.1A(iv), a notice
substantially in the form of Exhibit I annexed hereto delivered by Company
to Chase Co-Administrative Agent pursuant to subsection 2.1B with respect
to a proposed borrowing.
"NOTICE OF CONVERSION/CONTINUATION" means a notice substantially in
<PAGE>
the form of Exhibit II annexed hereto delivered by Company to Chase Co-
Administrative Agent pursuant to subsection 2.2D with respect to a proposed
conversion or continuation of the applicable basis for determining the
interest rate with respect to the Loans specified therein.
"NOTICE OF ISSUANCE OF LETTER OF CREDIT" means a notice in the form of
Exhibit III annexed hereto delivered by Company to Chase Co-Administrative
Agent pursuant to subsection 3.1B(i) with respect to the proposed issuance
of a Letter of Credit.
"NSA" has the meaning assigned to that term in the Recitals to this
Agreement.
"NSA ACQUIRED ASSETS" has the meaning assigned to that term in the
Recitals to this Agreement.
"NSA ACQUISITION" means the transactions contemplated by the NSA
Acquisition Agreement.
"NSA ACQUISITION AGREEMENT" means the Asset Purchase Agreement by and
among Company, NSA, NSA Acquisition Company, certain Subsidiaries of NSA,
certain stockholders of NSA and other parties indicated on the signature
pages thereof, in the form delivered to Arranging Agents on or prior to the
Funding Date for the NSA Acquisition Loans and as such agreement may be
amended, restated, supplemented or otherwise modified from time to time to
the extent permitted under subsection 7.12A.
"NSA ACQUISITION LOANS" means Additional Tranche B Term Loans in an
aggregate principal amount of up to $22,000,000 to be made to Company on or
after the conditions precedent set forth in subsection 4.3 hereof shall
have been satisfied or waived in accordance with the terms hereof.
"OBLIGATIONS" means all obligations of every nature of each Loan Party
from time to time owed to Agents, Lenders or any of them under the Loan
Documents, whether for principal, interest, reimbursement of amounts drawn
under Letters of Credit or payments for early termination of Interest Rate
Agreements, fees, expenses, indemnification or otherwise.
"OFFICER'S CERTIFICATE" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the
board (if an officer), its president, its chief financial officer or a vice
president; provided that every Officer's Certificate with respect to the
compliance with a condition precedent to the making of any Loans hereunder
shall include (i) a statement that the officer making or giving such
Officer's Certificate has read such condition and any definitions or other
provisions contained in this Agreement relating thereto, (ii) a statement
that, in the opinion of the signer he or she has made or has caused to be
made such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether or not such condition has been
complied with, and (iii) a statement as to whether, in the opinion of the
signer, such condition has been complied with.
"OPERATING LEASE" means, as applied to any Person, any lease
(including, without limitation, leases that may be terminated by the lessee
at any time) of any property (whether real, personal or mixed) that is not
a Capital Lease other than any such lease under which that Person is the
lessor.
"PARTNERSHIP LOAN PARTY" means any Loan Party which is a limited
partnership.
"PAYCO" has the meaning assigned to that term in the Recitals to this
Agreement.
<PAGE>
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA (or any successor thereto).
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Title IV of ERISA.
"PERMITTED ACQUISITION" means an acquisition of assets or a business
(other than receivables portfolios) effected in accordance with the
provisions of subsection 7.7(v).
"PERMITTED ENCUMBRANCES" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or
claims the payment of which is not, at the time, required by
subsection 6.3;
(ii) statutory Liens of landlords, statutory Liens of
carriers, warehousemen, mechanics and materialmen and other Liens
imposed by law (other than any such Lien imposed pursuant to Section
401(a)(29) or 412(n) of the Internal Revenue Code or by ERISA)
incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have
been made therefor;
(iii) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, trade contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(iv) any attachment or judgment Lien not constituting an
Event of Default under subsection 8.8;
(v) leases or subleases granted to others not interfering
in any material respect with the ordinary conduct of the business of
Company or any of its Subsidiaries;
(vi) easements, rights-of-way, restrictions, minor defects,
encroachments or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the ordinary
conduct of the business of Company or any of its Subsidiaries;
(vii) any (a) interest or title of a lessor or sublessor
under any Capital Lease permitted by subsection 7.1(iii) or any
operating lease not prohibited by this Agreement, (b) restriction or
encumbrance that the interest or title of such lessor or sublessor may
be subject to, or (c) subordination of the interest of the lessee or
sublessee under such lease to any restriction or encumbrance referred
to in the preceding clause (b);
(viii) Liens arising from filing UCC financing statements
relating solely to leases permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in
connection with the importation of goods;
(x) deposits in the ordinary course of business to secure
liabilities to insurance carriers, lessors, utilities and other
service providers; and
<PAGE>
(xi) bankers liens and rights of setoff with respect to
customary depository arrangements entered into in the ordinary course
of business.
"PERMITTED JOINT VENTURE" means a Subsidiary engaged in substantially
the same line of business as Company and its Subsidiaries on the date
hereof in which (i) at least 51% of the outstanding equity interests are
owned by Company or a Wholly Owned Subsidiary of Company, (ii) any equity
interests (other than Regulatory Shares) not owned by Company or a Wholly
Owned Subsidiary of Company are beneficially owned by non-Affiliates of
Company and (iii) Company or a Wholly Owned Subsidiary, as a general
partner or otherwise, controls the management, operations and policies.
"PERMITTED PORTFOLIO ACQUISITION" means an acquisition of a
receivables portfolio effected in accordance with the provisions of
subsection 7.7(v).
"PERMITTED SELLER NOTE" means a promissory note substantially in the
form of Exhibit XIV annexed hereto representing any Indebtedness of Company
incurred in connection with any Permitted Acquisition payable to the seller
in connection therewith, as such note may be amended, restated,
supplemented or otherwise modified from time to time to the extent
permitted under subsection 7.12B; provided that no Permitted Seller Note
shall (i) be guarantied by any Subsidiary of Company or secured by any
property of Company or any of its Subsidiaries or (ii) bear cash interest
at a rate in excess of 12% per annum; and provided further, that no
Permitted Seller Note issued after the first Anniversary shall provide for
any prepayment or repayment of all or any portion of the principal thereof
prior to the date of the final scheduled installment of principal of any of
the Loans.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, Joint Ventures,
associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.
"PLEDGE AGREEMENT" means that certain Pledge Agreement by and among
Company, the Subsidiary Guarantors and Collateral Agent dated as of the
Closing Date and substantially in the form of Exhibit VIII annexed hereto,
as such Pledge Agreement may heretofore have been or hereafter may be
amended, restated, supplemented or otherwise modified from time to time.
"PORTFOLIO PURCHASE BUSINESS" means assets or operations generating
revenues from collections on acquired or purchased portfolios of loans,
accounts, chattel paper, general intangibles or instruments.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that, after
notice or after any applicable grace period has lapsed, or both, would
constitute an Event of Default.
"PRICING REDUCTION" means, at any time after the Closing Date, a
pricing reduction determined by reference to the correlative Leverage Ratio
set forth below:
LEVERAGE RATIO PRICING
REDUCTION
Greater than or equal to 2.25:1.0, but less .25%
than 2.75:1.0
<PAGE>
Less than 2.25:1.0 .50%
The Pricing Reduction shall be determined by reference to the Leverage
Ratio set forth in the most recent financial statements delivered by
Company pursuant to clause (ii) or (iii) of subsection 6.1 (accompanied by
a Compliance Certificate delivered by Company pursuant to clause (iv) of
subsection 6.1) commencing with the delivery of audited financial
statements pursuant to subsection 6.1(iii) with respect to the Fiscal Year
ending December 31, 1996; provided, however, that for purposes of
determining the Leverage Ratio for any four-Fiscal Quarter period including
the Closing Date, Consolidated EBITDA shall be calculated on a pro forma
basis assuming that the Closing Date, the related borrowings by Company
pursuant to this Agreement and the Subordinated Notes, and the Acquisition
occurred on the first day of the applicable four-Fiscal Quarter period, all
such calculations to be in form and substance reasonably satisfactory to
Co-Administrative Agents. The Pricing Reduction shall be effective on the
day following delivery of the relevant Compliance Certificate to Chase Co-
Administrative Agent and shall remain in effect through the next scheduled
date for delivery of a Compliance Certificate. It is understood that the
Pricing Reductions set forth in the table above are not cumulative.
Notwithstanding anything herein to the contrary, at any time an Event of
Default shall have occurred and be continuing the Pricing Reduction shall
be zero.
"PRIME RATE" means the rate of interest per annum publicly announced
from time to time by Chase as its prime commercial lending rate in effect
at its principal office in New York City. The Prime Rate is a reference
rate and does not necessarily represent the lowest or best rate actually
charged to any customer. Chase or any other Lender may make commercial
loans or other loans at rates of interest at, above or below the Prime
Rate.
"PROJECTIONS" has the meaning assigned thereto in subsection 5.3B.
"PRO RATA SHARE" means (i) with respect to all payments, computations
and other matters relating to the Tranche A Term Loan Commitment or the
Tranche A Term Loan of any Lender, the percentage obtained by dividing
(x) the Tranche A Term Loan Exposure of that Lender by (y) the aggregate
Tranche A Term Loan Exposure of all Lenders; (ii) with respect to all
payments, computations and other matters relating to the Tranche B Term
Loan Commitment or the Tranche B Term Loan of any Lender, the percentage
obtained by dividing (x) the Tranche B Term Loan Exposure of that Lender by
(y) the aggregate Tranche B Term Loan Exposure of all Lenders; (iii) with
respect to all payments, computations and other matters relating to the
Revolving Loan Commitment or the Revolving Loans of any Lender or any
Letters of Credit issued by any Lender or any participations purchased by
any Lender therein or in any Swing Line Loans, the percentage obtained by
dividing (x) the Revolving Loan Exposure of that Lender by (y) the
aggregate Revolving Loan Exposure of all Lenders; and (iv) for all other
purposes with respect to each Lender, the percentage obtained by dividing
(x) the sum of the Tranche A Term Loan Exposure of that Lender plus the
Tranche B Term Loan Exposure of that Lender plus the Revolving Loan
Exposure of that Lender by (y) the sum of the aggregate Tranche A Term Loan
Exposure of all Lenders plus the aggregate Tranche B Term Loan Exposure of
all Lenders plus the aggregate Revolving Loan Exposure of all Lenders; in
any such case as the applicable percentage may be adjusted by assignments
permitted pursuant to subsection 10.1. The initial Pro Rata Share of each
Lender for purposes of each of clauses (i), (ii), (iii), and (iv) of the
preceding sentence is set forth opposite the name of that Lender in
Schedule 2.1 annexed hereto.
"QUALIFIED LOAN PORTFOLIO" means a portfolio of loans, accounts,
<PAGE>
chattel paper, general intangibles or instruments acquired or purchased by
Company or one of its Subsidiaries from any Person, where (i) the portfolio
is free and clear of all Liens, except Liens in favor of Collateral Agent
for the benefit of Agents and Lenders under this Agreement; (ii) no
participation or other interest in the portfolio or the collections from
the portfolio exists in favor of any other Person other than a
participation or other interest which does not exceed 50% of the portfolio
or collections from the portfolio and which is on terms approved in advance
by Co-Administrative Agents and Requisite Lenders; and (iii) the portfolio
consists of loans, accounts, chattel paper, general intangibles or
instruments similar in type, characteristics and quality to those owned or
previously owned by Company and its Subsidiaries. Notwithstanding the
foregoing, a Qualified Loan Portfolio may be subject to participations,
interests and/or Liens granted to Goldman, Sachs & Co. pursuant to
arrangements in effect as of the Effective Date or substantially similar
thereto.
"REFUNDED SWING LINE LOANS" has the meaning assigned to that term in
subsection 2.1A(iv).
"REGISTER" has the meaning assigned to that term in subsection 2.1D.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"REGULATORY SHARES" means, with respect to any Person, shares of such
Person required to be issued as qualifying shares to directors or persons
similarly situated or shares issued to Persons other than Company or a
Wholly Owned Subsidiary of Company in response to regulatory requirements
of foreign jurisdictions pursuant to a resolution of the Board of Directors
of such Person, so long as such shares do not exceed one percent of the
total outstanding shares of equity such Person and any owners of such
shares irrevocably covenant with Company to remit to Company or waive any
dividends or distributions paid or payable in respect of such shares.
"REIMBURSEMENT DATE" has the meaning assigned to that term in
subsection 3.3B.
"RELATED AGREEMENTS" means the Subordinated Notes, the Subordinated
Note Indenture, the other Subordinated Note Documents, the Acquisition
Agreement, the Articles of Merger, the Certificate of Merger and, upon the
execution thereof, the NSA Acquisition Agreement and the Accelerated
Acquisition Agreement.
"RELEASE" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials into the indoor or
outdoor environment (including, without limitation, the abandonment or
disposal of any barrels, containers or other closed receptacles containing
any Hazardous Materials), or into or out of any Facility, including the
movement of any Hazardous Material through the air, soil, surface water,
groundwater or property.
"REQUISITE LENDERS" means Non-Defaulting Lenders having or holding not
less than 51% of the sum of the aggregate Tranche A Term Loan Exposure of
all Non-Defaulting Lenders plus the aggregate Tranche B Term Loan Exposure
of all Non-Defaulting Lenders plus the aggregate Revolving Loan Exposure of
all Non-Defaulting Lenders.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock of Company now or hereafter outstanding, except a dividend payable
solely in shares of that class of stock to the holders of that class,
<PAGE>
(ii) any redemption, retirement, sinking fund or similar payment, purchase
or other acquisition for value, direct or indirect, of any shares of any
class of stock of Company now or hereafter outstanding, (iii) any payment
made to retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of stock of Company
now or hereafter outstanding, and (iv) any payment or prepayment of
principal of, premium, if any, or interest on, or redemption, purchase,
retirement, defeasance (including in-substance or legal defeasance),
sinking fund or similar payment with respect to, any Subordinated
Indebtedness.
"REVOLVING LOAN COMMITMENT" means the commitment of a Lender to make
Revolving Loans to Company pursuant to subsection 2.1A(iii) and "REVOLVING
LOAN COMMITMENTS" means such commitments of all Lenders in the aggregate.
"REVOLVING LOAN COMMITMENT TERMINATION DATE" means October 15, 2001.
"REVOLVING LOAN EXPOSURE" means, with respect to any Lender as of any
date of determination (i) prior to the termination of the Revolving Loan
Commitments, that Lender's Revolving Loan Commitment and (ii) after the
termination of the Revolving Loan Commitments, the sum of (a) the aggregate
outstanding principal amount of the Revolving Loans of that Lender plus
(b) in the event that Lender is an Issuing Lender, the aggregate Letter of
Credit Usage in respect of all Letters of Credit issued by that Lender (net
of any participations purchased by other Lenders in such Letters of Credit)
plus (c) the aggregate amount of all participations purchased by that
Lender in any outstanding Letters of Credit or any unreimbursed drawings
under any Letters of Credit plus (d) the aggregate amount of all
participations purchased by that Lender in any outstanding Swing Line Loans
plus (e) in the case of Swing Line Lender, the sum of the aggregate
outstanding principal amount of all Swing Line Loans (in each case net of
any participations therein purchased by other Lenders).
"REVOLVING LOANS" means (i) the Loans made by Lenders to Company
pursuant to subsection 2.1A(iii) of the Existing Credit Agreement and
outstanding after the Effective Date and (ii) the Loans made by Lenders to
Company pursuant to subsection 2.1A(iii) of this Agreement.
"REVOLVING NOTES" means (i) the promissory notes of Company issued
pursuant to the Existing Credit Agreement and (ii) any promissory notes
issued by Company pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Revolving Loan Commitment and Revolving
Loans of any Lender, in each case substantially in the form of Exhibit V
annexed hereto, as they may be amended, restated, supplemented or otherwise
modified from time to time.
"SECURITIES" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds,
debentures, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of interest,
shares or participations in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to, purchase or
acquire, any of the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"SECURITY AGREEMENT" means the Security Agreement entered into by and
among Company, the Subsidiary Guarantors and Collateral Agent dated as of
the Closing Date and substantially in the form of Exhibit IX annexed
hereto, as such Security Agreement may heretofore have been or hereafter
<PAGE>
may be amended, restated, supplemented or otherwise modified from time to
time.
"SOLVENT" means, with respect to any Person, that as of the date of
determination both (i) (a) the then fair saleable value of the property of
such Person is (y) greater than the total amount of liabilities (including
contingent liabilities) of such Person and (z) not less than the amount
that will be required to pay the probable liabilities on such Person's then
existing debts as they become absolute and matured considering all
financing alternatives and potential asset sales reasonably available to
such Person; (b) such Person's capital is not unreasonably small in
relation to its business or any contemplated or undertaken transaction; and
(c) such Person does not intend to incur, or believe (nor should it
reasonably believe) that it will incur, debts beyond its ability to pay
such debts as they become due; and (ii) such Person is "solvent" within the
meaning given that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances. For purposes of this definition, the
amount of any contingent liability at any time shall be computed as the
amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become
an actual or matured liability.
"STANDBY LETTER OF CREDIT" means any standby letter of credit or
similar instrument issued for the purpose of supporting (i) workers'
compensation liabilities of Company or any of its Subsidiaries, (ii) the
obligations of third party insurers of Company or any of its Subsidiaries
arising by virtue of the laws of any jurisdiction requiring third party
insurers, (iii) performance, payment, deposit or surety obligations of
Company or any of its Subsidiaries, in any case if required by law or
governmental rule or regulation or in accordance with custom and practice
in the industry, and (iv) such other obligations of Company and its
Subsidiaries as may be reasonably acceptable to Co-Administrative Agents;
provided that Standby Letters of Credit may not be issued for the purpose
of supporting (a) trade payables or (b) Indebtedness constituting
"antecedent debt" (as that term is used in Section 547 of the Bankruptcy
Code).
"STOCKHOLDERS AGREEMENT" means that certain Amended and Restated
Stockholders Agreement dated as of February 16, 1996, by and among Company
and various stockholders of Company, as in effect on the Closing Date and
as such agreement may heretofore have been or hereafter may be amended,
restated, supplemented or otherwise modified from time to time thereafter
to the extent permitted under subsection 7.12A.
"SUBORDINATED INDEBTEDNESS" means (i) the Indebtedness of Company evi-
denced by the Subordinated Notes, (ii) the Indebtedness of Company evi-
denced by the Existing Seller Note and any Permitted Seller Notes and (iii)
any other Indebtedness of Company or any of its Subsidiaries subordinated
in right of payment to the Obligations pursuant to documentation containing
maturities, amortization schedules, covenants, defaults, remedies,
subordination provisions and other material terms in form and substance
satisfactory to Co-Administrative Agents and Requisite Lenders.
"SUBORDINATED NOTE DOCUMENTS" means the Subordinated Notes, the
Subordinated Note Indenture, the Subordinated Note Guaranty and each other
document executed in connection with the Subordinated Notes, as each such
document may heretofore have been or hereafter may be amended, restated,
supplemented or otherwise modified from time to time to the extent
permitted by subsection 7.12B.
"SUBORDINATED NOTE GUARANTY" means the guaranty of the Subordinated
Notes executed by certain Subsidiaries of Company and contained in the
Subordinated Note Indenture, as such guaranty may heretofore have been or
<PAGE>
hereafter may be amended, restated, supplemented or otherwise modified from
time to time (including by any supplemental indenture thereto executed by
any Subsidiary of Company after the Closing Date) to the extent permitted
under subsection 7.12B.
"SUBORDINATED NOTE INDENTURE" means the indenture pursuant to which
the Subordinated Notes are issued, as in effect on the Closing Date and as
such indenture may heretofore have been or hereafter may be amended,
restated, supplemented or otherwise modified from time to time to the
extent permitted under subsection 7.12B.
"SUBORDINATED NOTES" means the $100,000,000 in aggregate principal
amount of 11% Senior Subordinated Notes due 2006 of Company issued pursuant
to the Subordinated Note Indenture.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, association, joint venture or other business entity of which
more than 50% of the total voting power of shares of stock or other
ownership interests entitled (without regard to the occurrence of any
contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar
functions) having the power to direct or cause the direction of the
management and policies thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"SUBSIDIARY GUARANTOR" means any Wholly Owned Subsidiary of Company
that is a party to the Subsidiary Guaranty on the Effective Date or at any
time thereafter pursuant to subsection 6.9.
"SUBSIDIARY GUARANTY" means the Subsidiary Guaranty, substantially in
the form of Exhibit VII annexed hereto, dated as of the Closing Date and
delivered by the existing Subsidiary Guarantors on the Effective Date and
any additional Subsidiary Guarantor from time to time thereafter pursuant
to subsection 6.9, as such Subsidiary Guaranty may heretofore have been or
hereafter may be amended, restated, supplemented or otherwise modified from
time to time.
"SUNTRUST" means SunTrust Bank, Atlanta and its successors and
assigns, including, without limitation, its successors by merger.
"SWING LINE LENDER" means Chase, or any Person serving as a successor
Chase Co-Administrative Agent hereunder, in its capacity as Swing Line
Lender hereunder.
"SWING LINE LOAN COMMITMENT" means the commitment of Swing Line Lender
to make Swing Line Loans to Company pursuant to subsection 2.1A(iv).
"SWING LINE LOANS" means the Loans made by Swing Line Lender pursuant
to subsection 2.1A(iv).
"SWING LINE NOTE" means (i) the promissory note of Company issued
pursuant to the Existing Credit Agreement and (ii) any promissory note
issued by Company to any successor Chase Co-Administrative Agent and Swing
Line Lender pursuant to the last sentence of subsection 9.5B, in each case
substantially in the form of Exhibit VI annexed hereto, as it may be
amended, restated, supplemented or otherwise modified from time to time.
"TAX" or "TAXES" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld
or assessed; provided that "TAX ON THE OVERALL NET INCOME" of a Person
shall be construed as a reference to a tax imposed by the jurisdiction in
<PAGE>
which that Person's principal office (and/or, in the case of a Lender, its
relevant Lending Office) is located or in which that Person is deemed to be
doing business on all or part of the net income, profits or gains of that
Person (whether worldwide, or only insofar as such income, profits or gains
are considered to arise in or to relate to a particular jurisdiction, or
otherwise).
"TERM LOANS" means, collectively, the Tranche A Term Loans and the
Tranche B Term Loans.
"TOTAL UTILIZATION OF REVOLVING LOAN COMMITMENTS" means, as at any
date of determination, the sum of (i) the aggregate principal amount of all
outstanding Revolving Loans (other than Revolving Loans made for the
purpose of repaying any Refunded Swing Line Loans or reimbursing the
applicable Issuing Lender for any amount drawn under any Letter of Credit
but not yet so applied) plus (ii) the aggregate principal amount of all
outstanding Swing Line Loans plus (iii) the Letter of Credit Usage.
"TRADEMARK SECURITY AGREEMENT" means the Trademark Security Agreement
entered into by and among Company, the Subsidiary Guarantors and Collateral
Agent dated as of the Closing Date, substantially in the form of
Exhibit IX-C annexed hereto, as such Trademark Security Agreement may
heretofore have been or hereafter may be amended, restated, supplemented or
otherwise modified from time to time.
"TRANCHE A TERM LOAN COMMITMENT" means the commitment of a Lender to
make a Tranche A Term Loan to Company on the Closing Date pursuant to
subsection 2.1A(i) of the Existing Credit Agreement, and "TRANCHE A TERM
LOAN COMMITMENTS" means such commitments of all Lenders in the aggregate.
"TRANCHE A TERM LOAN EXPOSURE" means, with respect to any Lender as of
any date of determination, the outstanding principal amount of the Tranche
A Term Loan of that Lender.
"TRANCHE A TERM LOANS" means the Loans made on the Closing Date by
Lenders to Company pursuant to subsection 2.1A(i) of the Existing Credit
Agreement and maintained pursuant to subsection 2.1A(i) of this Agreement.
"TRANCHE A TERM NOTES" means (i) the promissory notes of Company
issued pursuant to the Existing Credit Agreement and (ii) any promissory
notes issued by Company pursuant to the last sentence of subsection
10.1B(i) in connection with assignments of the Tranche A Term Loans of any
Lenders, in each case substantially in the form of Exhibit IV-A annexed
hereto, as they may be amended, restated, supplemented or otherwise
modified from time to time.
"TRANCHE B TERM LOAN COMMITMENT" means the commitment of a Lender to
make a Tranche B Term Loan to Company on the Closing Date pursuant to
subsection 2.1A(ii) of the Existing Credit Agreement and the commitment of
a Lender to make Additional Tranche B Term Loans to Company pursuant to
subsection 2.1A(ii) of this Agreement, and "TRANCHE B TERM LOAN COMMITMEN-
TS" means such commitments of all Lenders in the aggregate.
"TRANCHE B TERM LOAN EXPOSURE" means, with respect to any Lender as of
any date of determination (i) prior to any funding of the Additional
Tranche B Term Loans, the outstanding principal amount of the Existing
Tranche B Term Loan of that Lender, (ii) after the initial funding of
Acquisition Loans but before November 10, 1997 or (if earlier) the date
(such date being the "TRANCHE B TERM LOAN COMMITMENT TERMINATION DATE") on
which the remaining Acquisition Loans are made, the outstanding principal
amount of the Tranche B Term Loan of that Lender plus that Lender's
unfunded Tranche B Term Loan Commitment, and (iii) after the Tranche B Term
Loan Commitment Termination Date, the outstanding principal amount of the
<PAGE>
Tranche B Term Loan of that Lender.
"TRANCHE B TERM LOANS" means (i) the Existing Tranche B Term Loans and
(ii) the Additional Tranche B Term Loans.
"TRANCHE B TERM NOTES" means (i) the promissory notes of Company
issued pursuant to the Existing Credit Agreement, in each case as amended
on the Effective Date by the Tranche B Term Note Allonges, (ii) the
promissory notes of Company issued pursuant to subsection 2.1E(ii) on the
Effective Date, and (iii) any promissory notes issued by Company pursuant
to the last sentence of subsection 10.1B(i) in connection with assignments
of the Tranche B Term Loans of any Lenders, in each case substantially in
the form of Exhibit IV-B annexed hereto, as they may be amended, restated,
supplemented or otherwise modified from time to time.
"TRANCHE B TERM NOTE ALLONGE" means the Allonges issued pursuant to
subsection 2.1E on the Effective Date, in each case substantially in the
form of Exhibit IV-C annexed hereto, as they may be amended, restated,
supplemented or otherwise modified from time to time.
"TRANSACTION COSTS" means the fees, costs and expenses payable by
Company and its Subsidiaries on or before the applicable Funding Dates for
the Accelerated Acquisition Loans and the NSA Acquisition Loans in
connection with the transactions contemplated hereby to occur on such
Funding Dates.
"UNFUNDED CURRENT LIABILITY" means, with respect to any Pension Plan,
the amount, if any, by which the actuarial present value of the accumulated
plan benefits under such Pension Plan as of the close of its most recent
plan year exceeds the fair market value of the assets allocable thereto,
each determined in accordance with Statement of Financial Accounting
Standards No. 35, based upon the actuarial assumptions used by such Pension
Plan's actuary in the most recent annual valuation of such Pension Plan.
"WHOLLY OWNED SUBSIDIARY" means, with respect to any Person, a
Subsidiary of such Person all of the outstanding capital stock or other
ownership interests of which (other than Regulatory Shares) shall at the
time be owned by such Person or by one or more Wholly Owned Subsidiaries of
such Person or by such Person and one or more Wholly Owned Subsidiaries of
such Person.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS
UNDER AGREEMENT.
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings
assigned to them in conformity with GAAP. Financial statements and other
information required to be delivered by Company to Lenders pursuant to
clauses (i), (ii), (iii) and (xiii) of subsection 6.1 shall be prepared in
accordance with GAAP (except, with respect to interim financial statements,
normal year-end audit adjustments and the absence of explanatory footnotes)
as in effect at the time of such preparation (and delivered together with
the reconciliation statements provided for in subsection 6.1(v)).
Calculations in connection with the definitions, covenants and other
provisions of this Agreement shall utilize accounting principles and
policies in conformity with those used to prepare the financial statements
referred to in subsection 5.3A.
1.3 OTHER DEFINITIONAL PROVISIONS.
References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 1.1 may, unless the
<PAGE>
context otherwise requires, be used in the singular or the plural,
depending on the reference. The words "includes", "including" and similar
terms used in any Loan Document shall be construed as if followed by the
words "without limitation".
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; LOANS.
A. COMMITMENTS. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Loan
Parties set forth herein and in the other Loan Documents, each Lender
hereby severally agrees to make (or maintain, as the case may be) the Loans
described in subsections 2.1A(i), 2.1A(ii) and 2.1A(iii) and Swing Line
Lender hereby agrees to make the Swing Line Loans as described in
subsection 2.1A(iv).
(i) Existing Loans. Company acknowledges and confirms that
each Existing Lender holds Existing Loans in the respective principal
amounts outstanding as of the Effective Date set forth opposite its
name on Schedule 2.1 annexed hereto. Company hereby represents,
warrants, agrees, covenants and (1) reaffirms that it has no (and it
permanently and irrevocably waives and releases Agents and Lenders
from any, to the extent arising on or prior to the Effective Date)
defense, set off, claim or counterclaim against any Agent or Lender in
regard to its Obligations in respect of such Existing Loans and (2)
reaffirms its obligation to pay such Loans in accordance with the
terms and conditions of this Agreement and the other Loan Documents.
Based on the foregoing, (A) Company and each Lender agree that (x) the
Existing Tranche A Term Loans, (y) the Existing Tranche B Term Loans
and (z) the Existing Revolving Loans, and any amounts owed (whether or
not presently due and payable, and including all interest accrued to
the Effective Date (which shall be payable on the next Interest
Payment Date with respect to the Loans to which such interest
relates)) by Company to Lenders thereunder or in respect thereof,
shall, as of the Effective Date, be converted to, maintained as, and
owed by Company under or in respect of Tranche A Term Loans, Tranche B
Term Loans and Revolving Loans, respectively, hereunder. Amounts
repaid or prepaid in respect of Tranche A Term Loans and Tranche B
Term Loans may not be reborrowed. Amounts repaid or prepaid in
respect of the foregoing Revolving Loans may be repaid and reborrowed
to but excluding the Revolving Loan Commitment Termination Date.
(ii) Additional Tranche B Term Loans. Each Lender
severally agrees, subject to the limitations set forth below with
respect to the maximum amount of Additional Tranche B Term Loans
permitted to be borrowed hereunder, to lend to Company (a) on the
Funding Date for the Accelerated Acquisition Loans, an amount not
exceeding the product of (x) the aggregate amount of Accelerated
Acquisition Loans to be made on such date multiplied by (y) the
quotient obtained by dividing (1) the unfunded Tranche B Term Loan
Commitment held by such Lender by (2) the aggregate unfunded Tranche B
Term Loan Commitments on such date, to be used for the purposes
identified in subsection 2.5A(i), and (b) on the Funding Date for the
NSA Acquisition Loans, an amount not exceeding the product of (x) the
aggregate amount of NSA Acquisition Loans to be made on such date
multiplied by (y) the quotient obtained by dividing (1) the unfunded
Tranche B Term Loan Commitment held on such date by such Lender by (2)
the aggregate unfunded Tranche B Term Loan Commitments on such date,
to be used for the purposes identified in subsection 2.5A(ii). The
amount of each Lender's unfunded Tranche B Term Loan Commitment is set
<PAGE>
forth opposite its name on Schedule 2.1 annexed hereto and the
aggregate amount of the unfunded Tranche B Term Loan Commitments is
$55,000,000; provided that the unfunded Tranche B Term Loan Com-
mitments of Lenders shall be adjusted to give effect to any
assignments of the Tranche B Term Loan Commitments pursuant to
subsection 10.1B; and provided further, that the amount of the
unfunded Tranche B Term Loan Commitments shall be reduced from time to
time by the amount of any reductions thereto made pursuant to subsec-
tion 2.4B. Each Lender's unfunded Tranche B Term Loan Commitment
shall expire immediately and without further action on November 10,
1997 if either the Accelerated Acquisition Loans or the NSA
Acquisition Loans are not made on or before that date, and, upon and
after the first Funding Date for any of the Acquisition Loans, each
Lender's unfunded Tranche B Term Loan Commitment in respect of the
remaining Acquisition Loans shall expire immediately and without
further action on November 10, 1997, in the event such other
Acquisition Loans are not made on or before that date. Company may
make only two borrowings on and after the Effective Date under the
Tranche B Term Loan Commitments. Amounts borrowed under this subsec-
tion 2.1A(ii) and subsequently repaid or prepaid may not be reborro-
wed. Notwithstanding anything contained herein to the contrary, in no
event shall the aggregate principal amount of Additional Tranche B
Term Loans borrowed under this subsection 2.1A(ii) exceed $55,000,000.
(iii) Revolving Loans. Each Lender severally agrees,
subject to the limitations set forth below with respect to the maximum
amount of Revolving Loans permitted to be outstanding from time to
time, to lend to Company from time to time during the period from the
Effective Date to but excluding the Revolving Loan Commitment
Termination Date an aggregate amount which shall not exceed its Pro
Rata Share of the aggregate amount of the Revolving Loan Commitments,
to be used for the purposes identified in subsection 2.5B. The
original amount of each Lender's Revolving Loan Commitment is set
forth opposite its name on Schedule 2.1 annexed hereto and the
aggregate original amount of the Revolving Loan Commitments is
$58,000,000; provided that the Revolving Loan Commitments of Lenders
shall be adjusted to give effect to any assignments of the Revolving
Loan Commitments pursuant to subsection 10.1B; provided further that
the amount of the Revolving Loan Commitments shall be reduced from
time to time by the amount of any reductions thereto made pursuant to
subsection 2.4B. Each Lender's Revolving Loan Commitment shall expire
on the Revolving Loan Commitment Termination Date and all Revolving
Loans and all other amounts owed hereunder with respect to the
Revolving Loans and the Revolving Loan Commitments shall be paid in
full no later than that date. Amounts borrowed under this subsec-
tion 2.1A(iii) as Revolving Loans may be repaid and reborrowed to but
excluding the Revolving Loan Commitment Termination Date.
Notwithstanding anything contained herein to the contrary,
in no event shall the Total Utilization of Revolving Loan Commitments
at any time exceed the Revolving Loan Commitments then in effect.
(iv) Swing Line Loans. Swing Line Lender hereby agrees,
subject to the limitations set forth below with respect to the maximum
aggregate amount of all Swing Line Loans outstanding from time to
time, to make a portion of the Revolving Loan Commitments available to
Company from time to time during the period from the Effective Date to
but excluding the Revolving Loan Commitment Termination Date by making
Base Rate Loans as Swing Line Loans to Company in an aggregate amount
not to exceed the amount of the Swing Line Loan Commitment, to be used
for the purposes identified in subsection 2.5B, notwithstanding the
fact that such Swing Line Loans, when aggregated with the sum of Swing
Line Lender's outstanding Revolving Loans and Swing Line Lender's Pro
<PAGE>
Rata Share of the Letter of Credit Usage then in effect, may exceed
Swing Line Lender's Revolving Loan Commitment. The original amount of
the Swing Line Loan Commitment is $2,000,000; provided that the
amounts of the Swing Line Loan Commitment are subject to reduction as
provided in clause (b) of the next paragraph. The Swing Line Loan
Commitment shall expire on the Revolving Loan Commitment Termination
Date and all Swing Line Loans and all other amounts owed hereunder
with respect to the Swing Line Loans shall be paid in full no later
than that date. Amounts borrowed under this subsection 2.1A(iv) may
be repaid and reborrowed to but excluding the Revolving Loan
Commitment Termination Date.
Notwithstanding anything contained herein to the contrary,
the Swing Line Loans, and the Swing Line Loan Commitment shall be
subject to the following limitations in the amounts indicated:
(a) in no event shall the Total Utilization of
Revolving Loan Commitments at any time exceed the Revolving
Loan Commitments then in effect;
(b) any reduction of the Revolving Loan Commitments
made pursuant to subsection 2.4B which reduces the aggregate
Revolving Loan Commitments to an amount less than the then
current sum of the Swing Line Loan Commitment shall result
in an automatic corresponding pro rata reduction of the
Swing Line Loan Commitment such that the sum thereof equals
the amount of the Revolving Loan Commitments, as so reduced,
without any further action on the part of Company, Chase Co-
Administrative Agent or Swing Line Lender.
With respect to any Swing Line Loans which have not been
voluntarily prepaid by Company pursuant to subsection 2.4B(i), Swing
Line Lender may, at any time in its sole and absolute discretion,
deliver to Chase Co-Administrative Agent (with a copy to Company), no
later than 12:00 Noon (New York time) at least one Business Day in
advance of the proposed Funding Date, a notice (which shall be deemed
to be a Notice of Borrowing given by Company) requesting Lenders to
make Revolving Loans that are Base Rate Loans to Company on such
Funding Date in an amount equal to the amount of such Swing Line Loans
(the "REFUNDED SWING LINE LOANS") outstanding on the date such notice
is given which Swing Line Lender requests Lenders to prepay. Anything
contained in this Agreement to the contrary notwithstanding, (i) the
proceeds of such Revolving Loans made by Lenders other than Swing Line
Lender shall be immediately delivered by Co-Administrative Agents to
Swing Line Lender (and not to Company) and applied to repay a
corresponding portion of the Refunded Swing Line Loans and (ii) on the
day such Revolving Loans are made, Swing Line Lender's Pro Rata Share
of the Refunded Swing Line Loans shall be deemed to be paid with the
proceeds of a Revolving Loan made by Swing Line Lender to Company, and
such portion of the Swing Line Loans deemed to be so paid shall no
longer be outstanding as Swing Line Loans and shall no longer be due
under the Swing Line Note of Swing Line Lender but shall instead
constitute part of Swing Line Lender's outstanding Revolving Loans to
Company and shall be due under the Revolving Note issued by Company to
Swing Line Lender. Company hereby authorizes each of Chase Co-A-
dministrative Agent and Swing Line Lender to charge Company's accounts
with Chase Co-Administrative Agent and Swing Line Lender (up to the
amount available in each such account) in order to immediately pay
Swing Line Lender the amount of the Refunded Swing Line Loans to the
extent the proceeds of such Revolving Loans made by Lenders, including
the Revolving Loan deemed to be made by Swing Line Lender, are not
sufficient to repay in full the Refunded Swing Line Loans. If any
portion of any such amount paid (or deemed to be paid) to Swing Line
<PAGE>
Lender should be recovered by or on behalf of Company from Swing Line
Lender in bankruptcy, by assignment for the benefit of creditors or
otherwise, the loss of the amount so recovered shall be ratably shared
among all Lenders in the manner contemplated by subsection 10.5.
If for any reason Revolving Loans are not made pursuant to
this subsection 2.1A(iv) in an amount sufficient to repay any amounts
owed to Swing Line Lender in respect of any outstanding Swing Line
Loans on or before the third Business Day after demand for payment
thereof by Swing Line Lender, each Lender shall be deemed to, and
hereby agrees to, have purchased a participation in such outstanding
Swing Line Loans, and in an amount equal to its Pro Rata Share of the
applicable unpaid amount together with accrued interest thereon. Upon
one Business Day's notice from Swing Line Lender, each Lender shall
deliver to Swing Line Lender an amount in equal to its respective
participation in the applicable unpaid amount in same day funds at the
Funding and Payment Office. In order to evidence such participation
each Lender agrees to enter into a participation agreement at the
request of Swing Line Lender in form and substance satisfactory to
Swing Line Lender. In the event any Lender fails to make available to
Swing Line Lender the amount of such Lender's participation as
provided in this paragraph, Swing Line Lender shall be entitled to
recover such amount on demand from such Lender together with interest
thereon at the rate customarily used by Swing Line Lender for the
correction of errors among banks for three Business Days and
thereafter at the Base Rate, as applicable.
Notwithstanding anything contained herein to the contrary,
(i) each Lender's obligation to make Revolving Loans for the purpose
of repaying any Refunded Swing Line Loans pursuant to the second
preceding paragraph and each Lender's obligation to purchase a
participation in any unpaid Swing Line Loans pursuant to the
immediately preceding paragraph shall be absolute and unconditional
and shall not be affected by any circumstance, including, without
limitation, (a) any set-off, counterclaim, recoupment, defense or
other right which such Lender may have against Swing Line Lender,
Company or any other Person for any reason whatsoever; (b) the
occurrence or continuation of an Event of Default or a Potential Event
of Default; (c) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of
Company or any of its Subsidiaries; (d) any breach of this Agreement
or any other Loan Document by any party thereto; or (e) any other
circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing; provided that no Lender shall have any such
obligation unless (x) Swing Line Lender believed in good faith that
all conditions under Section 4 to the making of the applicable
Refunded Swing Line Loans or other unpaid Swing Line Loans, were
satisfied at the time such Refunded Swing Line Loans or unpaid Swing
Line Loans were made, or (y) such Lender had actual knowledge, by
receipt of any notices required to be delivered to Lenders pursuant to
subsection 6.1(ix) or otherwise, that any such condition under Section
4 had not been satisfied and such Lender failed to notify Swing Line
Lender and Chase Co-Administrative Agent in writing that it had no
obligation to make Revolving Loans until such condition was satisfied
(any such notice to be effective as of the date of receipt thereof by
Swing Line Lender and Chase Co-Administrative Agent), or (z) the
satisfaction of any such condition under Section 4 not satisfied had
been waived by Requisite Lenders prior to or at the time such Refunded
Swing Line Loans or other unpaid Swing Line Loans were made; and
(ii) Swing Line Lender shall not be obligated to make any Swing Line
Loans if it has elected not to do so after the occurrence and during
the continuation of a Potential Event of Default or Event of Default.
<PAGE>
B. BORROWING MECHANICS. Term Loans or Revolving Loans
(including any such Loans made as Eurodollar Rate Loans with a particular
Interest Period) made on any Funding Date (other than Revolving Loans made
pursuant to a request by Swing Line Lender pursuant to subsection 2.1A(iv)
for the purpose of repaying any Refunded Swing Line Loans or Revolving
Loans made pursuant to subsection 3.3B for the purpose of reimbursing any
Issuing Lender for the amount of a drawing or payment under a Letter of
Credit issued by it) shall be in an aggregate minimum amount of $1,000,000
and integral multiples of $100,000 in excess of that amount. Swing Line
Loans made on any Funding Date shall be in an aggregate minimum amount of
$250,000 and integral multiples of $100,000 in excess of that amount.
Whenever Company desires that Lenders make Term Loans or Revolving Loans it
shall deliver to Chase Co-Administrative Agent on behalf of Company a
Notice of Borrowing no later than 12:00 Noon (New York time), at least
three Business Days in advance of the proposed Funding Date in the case of
a Eurodollar Rate Loan, or at least one Business Day in advance of the
proposed Funding Date in the case of a Base Rate Loan. Whenever Company
desires that Swing Line Lender make a Swing Line Loan, it shall deliver to
Chase Co-Administrative Agent a Notice of Borrowing no later than 12:00
Noon (New York time) on the proposed Funding Date. The Notice of Borrowing
shall specify (i) the proposed Funding Date (which shall be a Business
Day), (ii) the amount and type of Loans requested, (iii) in the case of
Swing Line Loans and Additional Tranche B Term Loans to be borrowed on or
prior to October 15, 1997, that such Loans shall be Base Rate Loans,
(iv) in the case of any Loans other than Swing Line Loans, whether such
Loans shall be Base Rate Loans or Eurodollar Rate Loans, and (v) in the
case of any Loans requested to be made as Eurodollar Rate Loans, the
initial Interest Period requested therefor. Term Loans and Revolving Loans
may be continued as or converted into Base Rate Loans and Eurodollar Rate
Loans in the manner provided in subsection 2.2D. In lieu of delivering the
above-described Notice of Borrowing, Company may give Chase Co-
Administrative Agent telephonic notice by the required time of any proposed
borrowing under this subsection 2.1B; provided that such notice shall be
promptly confirmed in writing by delivery of a Notice of Borrowing to Chase
Co-Administrative Agent on or before the applicable Funding Date.
Neither Chase Co-Administrative Agent nor any Lender shall incur any
liability to Company in acting upon any telephonic notice referred to above
that Chase Co-Administrative Agent believes in good faith to have been
given by a duly authorized officer or other person authorized to borrow on
behalf of Company or for otherwise acting in good faith under this
subsection 2.1B, and upon funding of Loans by Lenders in accordance with
this Agreement pursuant to any such telephonic notice Company shall have
effected Loans hereunder.
Company shall notify Chase Co-Administrative Agent prior to the
funding of any Loans in the event that any of the matters to which Company
is required to certify in the applicable Notice of Borrowing are no longer
true and correct as of the applicable Funding Date, and the acceptance by
Company of the proceeds of any Loans shall constitute a re-certification by
Company, as of the applicable Funding Date, as to the matters to which
Company is required to certify in the applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Borrowing for a Eurodollar Rate Loan (or telephonic notice in
lieu thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Company shall be bound to make a borrowing in
accordance therewith.
C. DISBURSEMENT OF FUNDS. All Term Loans and all Revolving
Loans under this Agreement shall be made by Lenders simultaneously and
proportionately to their respective Pro Rata Shares, it being understood
that no Lender shall be responsible for any default by any other Lender in
<PAGE>
that other Lender's obligation to make a Loan requested hereunder nor shall
the Commitment of any Lender to make the particular type of Loan requested
be increased or decreased as a result of a default by any other Lender in
that other Lender's obligation to make a Loan requested hereunder.
Promptly after receipt by Co-Administrative Agents of a Notice of Borrowing
pursuant to subsection 2.1B (or telephonic notice in lieu thereof), Chase
Co-Administrative Agent shall notify each Lender or Swing Line Lender, as
the case may be, of the proposed borrowing and of the amount of such
Lender's Pro Rata Share of the applicable Loans.
Each Lender shall make the amount of its Loan available to Chase Co-
Administrative Agent not later than 12:00 Noon (New York time) on the
applicable Funding Date, and Swing Line Lender shall make the amount of its
Swing Line Loan available to Chase Co-Administrative Agent not later than
12:00 Noon (New York time) on the applicable Funding Date, in each case in
same day funds, at the Funding and Payment Office. Except as provided in
subsection 2.1A(iv) or subsection 3.3B with respect to Revolving Loans used
to repay Refunded Swing Line Loans or to reimburse any Issuing Lender for
the amount of an honored drawing or payment under a Letter of Credit issued
by it, upon satisfaction or waiver of the conditions precedent specified in
subsections 4.1 (in the case of Loans made on the Effective Date), 4.2 (in
the case of Accelerated Acquisition Loans), 4.3 (in the case of NSA
Acquisition Loans) and 4.4 (in the case of all Loans), Chase Co-Administra-
tive Agent shall make the proceeds of such Loans available to Company on
the applicable Funding Date by causing an amount of same day funds equal to
the proceeds of all such Loans received by Chase Co-Administrative Agent
from Lenders or Swing Line Lender, as the case may be, to be credited to
the account of Company at the Funding and Payment Office.
Unless Chase Co-Administrative Agent shall have been notified by any
Lender prior to the Funding Date for any Loans that such Lender does not
intend to make available to Chase Co-Administrative Agent the amount of
such Lender's Loan requested on such Funding Date, Chase Co-Administrative
Agent may assume that such Lender has made such amount available to Chase
Co-Administrative Agent on such Funding Date and Chase Co-Administrative
Agent may, in its sole discretion, but shall not be obligated to, make
available to Company a corresponding amount on such Funding Date. If such
corresponding amount is not in fact made available to Chase Co-
Administrative Agent by such Lender, Chase Co-Administrative Agent shall be
entitled to recover such corresponding amount on demand from such Lender
together with interest thereon, for each day from such Funding Date until
the date such amount is paid to Chase Co-Administrative Agent, at the
customary rate set by Chase Co-Administrative Agent for the correction of
errors among banks for three Business Days and thereafter at the Base Rate.
If such Lender does not pay such corresponding amount forthwith upon Chase
Co-Administrative Agent's demand therefor, Chase Co-Administrative Agent
shall promptly notify Company and Company shall immediately pay such
corresponding amount in the to Chase Co-Administrative Agent together with
interest thereon, for each day from such Funding Date until the date such
amount is paid to Chase Co-Administrative Agent, at the rate applicable to
such Loan. Nothing in this subsection 2.1C shall be deemed to relieve any
Lender from its obligation to fulfill its Commitments hereunder or to
prejudice any rights that Company may have against any Lender as a result
of any default by such Lender hereunder.
D. THE REGISTER.
(i) Chase Co-Administrative Agent shall maintain, at the
address referred to in subsection 10.8, a register for the recordation
of the names and addresses of Lenders and the Commitments and Loans of
each Lender from time to time (the "REGISTER"). The Register shall be
available for inspection by Company or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
<PAGE>
(ii) Chase Co-Administrative Agent shall record in the
Register the Commitments and the outstanding Loans from time to time
of each Lender and each repayment or prepayment in respect of the
principal amount of the outstanding Loans of each Lender. Any such
recordation shall be conclusive and binding on Company and each
Lender, absent manifest error; provided that failure to make any such
recordation, or any error in such recordation, shall not affect
Company's Obligations in respect of the applicable Loans.
(iii) Each Lender shall record on its internal records
(including, without limitation, the Notes held by such Lender) the
amount of each Loan made by it and each payment in respect thereof.
Any such recordation shall be prima facie evidence of the amount of
such Loans; provided that failure to make any such recordation, or any
error in such recordation, shall not affect Company's Obligations in
respect of the applicable Loans; and provided, further that in the
event of any inconsistency between the Register and any Lender's
records, the recordations in the Register shall govern.
(iv) Company, Agents and Lenders shall deem and treat the
Persons listed as Lenders in the Register as the holders and owners of
the corresponding Commitments and Loans listed therein for all
purposes hereof, and no assignment or transfer of any Commitment or
Loan shall be effective, in each case unless an until an Assignment
Agreement effecting the assignment or transfer thereof shall have been
accepted by Chase Co-Administrative Agent and recorded in the Register
as provided in subsection 10.1B(ii). Prior to such recordation, all
amounts owed with respect to the applicable Commitment or Loan shall
be owed to the Lender listed in the Register as the owner thereof, and
any request, authority or consent of any Person who, at the time of
making such request or giving such authority or consent, is listed in
the Register as a Lender shall be conclusive and binding on any
subsequent holder, assignee or transferee of the corresponding
Commitments or Loans.
(v) Company hereby designates Chase, and any financial
institution serving as a successor Chase Co-Administrative Agent, to
serve as Company's agent solely for purposes of maintaining the
Register as provided in this subsection 2.1D, and Company hereby
agrees that, to the extent Chase serves in such capacity, Chase and
its officers, directors, employees, agents and affiliates shall
constitute Indemnitees for all purposes under subsection 10.3.
E. TRANCHE B TERM NOTES. Company shall execute and deliver on the
Effective Date (i) to each Existing Lender (or to Co-Administrative Agents
for that Lender) that executes a counterpart hereof a Tranche B Term Note
Allonge substantially in the form of Exhibit IV-C annexed hereto to
evidence that Lender's Additional Tranche B Term Loan, and (ii) to each New
Lender (or to Co-Administrative Agents for that Lender) a Tranche B Term
Note substantially in the form of Exhibit IV-D annexed hereto to evidence
that New Lender's Tranche B Term Loan, with appropriate insertions. The
Notes and the Obligations evidenced thereby shall be governed by, subject
to and benefit from all of the terms and conditions of this Agreement and
the other Loan Documents and shall be guarantied and/or secured by the
Collateral as provided in the Loan Documents.
2.2 INTEREST ON THE LOANS.
A. RATE OF INTEREST. Subject to the provisions of subsections 2.6
and 2.7, each Term Loan and each Revolving Loan shall bear interest on the
unpaid principal amount thereof from the date made through maturity
(whether by acceleration or otherwise) at a rate determined by reference to
the Base Rate or the Adjusted Eurodollar Rate, as the case may be. Subject
<PAGE>
to the provisions of subsection 2.7, each Swing Line Loan shall bear
interest on the unpaid principal amount thereof from the date made through
maturity (whether by acceleration or otherwise) at a rate determined by
reference to the Base Rate. The applicable basis for determining the rate
of interest with respect to any Loan shall be selected by Company initially
at the time a Notice of Borrowing is given with respect to such Loan
pursuant to subsection 2.1B. The basis for determining the interest rate
with respect to any Term Loan or any Revolving Loan may be changed from
time to time pursuant to subsection 2.2D. If on any day any Term Loan or
Revolving Loan is outstanding with respect to which notice has not been
delivered to Co-Administrative Agents in accordance with the terms of this
Agreement specifying the applicable basis for determining the rate of
interest, then for that day that Loan shall bear interest determined by
reference to the Base Rate.
Subject to the provisions of subsections 2.2E and 2.7, the Term Loans
and the Revolving Loans shall bear interest through maturity as follows:
(i) if a Base Rate Loan, then at the sum of the Base Rate
plus the Applicable Base Rate Margin; or
(ii) if a Eurodollar Rate Loan, then at the sum of the
Adjusted Eurodollar Rate plus the Applicable Eurodollar Rate Margin.
Subject to the provisions of subsections 2.2E and 2.7, the Swing Line
Loans shall bear interest through maturity at the sum of the Base Rate plus
the Applicable Base Rate Margin less 0.50% per annum.
B. INTEREST PERIODS. In connection with each Eurodollar Rate Loan,
Company may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period
(each an "INTEREST PERIOD") to be applicable to such Loan, which Interest
Period shall be, at Company's option, either a one, three or six month
period; provided that:
(i) the initial Interest Period for any Eurodollar Rate
Loan shall commence on the Funding Date in respect of such Loan, in
the case of a Loan initially made as a Eurodollar Rate Loan, or on the
date specified in the applicable Notice of Conversion/Continuation, in
the case of a Loan converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan continued as such pursuant to a
Notice of Conversion/Continuation, each successive Interest Period
shall commence on the day on which the next preceding Interest Period
expires;
(iii) if an Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided that, if any Interest Period
would otherwise expire on a day that is not a Business Day but is a
day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding
Business Day;
(iv) 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, subject to clause (v) of this subsection 2.2B, end on
the last Business Day of a calendar month;
(v) no Interest Period with respect to any portion of the
Tranche A Term Loans shall extend beyond the fifth Anniversary, no
<PAGE>
Interest Period with respect to any portion of the Tranche B Term
Loans shall extend beyond the seventh Anniversary and no Interest
Period with respect to any portion of the Revolving Loans shall extend
beyond the Revolving Loan Commitment Termination Date;
(vi) no Interest Period with respect to any portion of the
Tranche A Term Loans or Tranche B Term Loans shall extend beyond a
date on which Company is required to make a scheduled payment of
principal of the Tranche A Term Loans or Tranche B Term Loans, as the
case may be, unless the sum of (a) the aggregate principal amount of
Tranche A Term Loans or Tranche B Term Loans, as the case may be, that
are Base Rate Loans plus (b) the aggregate principal amount of Tranche
A Term Loans or Tranche B Term Loans, as the case may be, that are
Eurodollar Rate Loans with Interest Periods expiring on or before such
date equals or exceeds the principal amount required to be paid on the
Tranche A Term Loans or Tranche B Term Loans, as the case may be, on
such date;
(vii) no Interest Period with respect to any portion of the
Revolving Loans shall extend beyond the date on which a permanent
reduction of the Revolving Loan Commitments is scheduled to occur
unless the sum of (a) the aggregate principal amount of Revolving
Loans that are Base Rate Loans plus (b) the aggregate principal amount
of Revolving Loans that are Eurodollar Rate Loans with Interest
Periods expiring on or before such date plus (c) the excess of the
Revolving Loan Commitments then in effect over the aggregate principal
amount of Revolving Loans then outstanding equals or exceeds the
permanent reduction of the Revolving Loan Commitments that is
scheduled to occur on such date;
(viii) Company may not select an Interest Period of longer
than two months prior to the end of the Initial Period;
(ix) there shall be no more than ten (10) Interest Periods
outstanding at any time; and
(x) in the event Company fails to specify an Interest
Period for any Eurodollar Rate Loan in the applicable Notice of
Borrowing or Notice of Conversion/Continuation, Company shall be
deemed to have selected an Interest Period of one month.
C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to
the extent accrued on the amount being prepaid) and at maturity (including
final maturity); provided that in the event that any Swing Line Loans, any
Revolving Loans or any Term Loans that are Base Rate Loans are prepaid
pursuant to subsection 2.4B(i), interest accrued on such Swing Line Loans,
Revolving Loans or Term Loans through the date of such prepayment shall be
payable on the next succeeding Interest Payment Date applicable to Base
Rate Loans (or, if earlier, at final maturity).
D. CONVERSION OR CONTINUATION. Subject to the provisions of
subsection 2.6, Company shall have the option (i) to convert at any time
all or any part of its outstanding Term Loans or Revolving Loans equal to
$1,000,000 and integral multiples of $100,000 in excess of that amount from
Loans bearing interest at a rate determined by reference to one basis to
Loans bearing interest at a rate determined by reference to an alternative
basis or (ii) upon the expiration of any Interest Period applicable to a
Eurodollar Rate Loan, to continue all or any portion of such Loan equal to
$1,000,000 and integral multiples of $100,000 in excess of that amount as a
Eurodollar Rate Loan; provided, however, that a Eurodollar Rate Loan may
only be converted into a Base Rate Loan on the expiration date of an
<PAGE>
Interest Period applicable thereto; and provided further, however, that
Tranche B Term Loans may not be converted to or continued as Eurodollar
Rate Loans during the period commencing on and including the Effective Date
and ending on October 15, 1997, inclusive.
Company shall deliver a Notice of Conversion/Continuation to Chase Co-
Administrative Agent no later than 12:00 Noon (New York time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan), and at least three Business Days in
advance of the proposed conversion/continuation date (in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan). A Notice of
Conversion/Continuation shall specify (i) the proposed conversion/
continuation date (which shall be a Business Day), (ii) the amount and type
of the Loan to be converted/continued, (iii) the nature of the proposed
conversion/continuation, (iv) in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan, the requested Interest Period, and
(v) in the case of a conversion to, or a continuation of, a Eurodollar Rate
Loan, that no Potential Event of Default or Event of Default has occurred
and is continuing. In lieu of delivering the above-described Notice of
Conversion/Continuation, Company may give Chase Co-Administrative Agent
telephonic notice by the required time of any proposed conversion/
continuation under this subsection 2.2D; provided that such notice shall be
promptly confirmed in writing by delivery of a Notice of Conversion/
Continuation to Chase Co-Administrative Agent on or before the proposed
conversion/continuation date.
Neither Chase Co-Administrative Agent nor any Lender shall incur any
liability to Company in acting upon any telephonic notice referred to above
that Chase Co-Administrative Agent believes in good faith to have been
given by a duly authorized officer or other person authorized to act on
behalf of Company or for otherwise acting in good faith under this
subsection 2.2D, and upon conversion or continuation of the applicable
basis for determining the interest rate with respect to any Loans in
accordance with this Agreement pursuant to any such telephonic notice
Company shall have effected a conversion or continuation, as the case may
be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Conversion/Continuation for conversion to, or continuation of, a
Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be
irrevocable on and after the related Interest Rate Determination Date, and
Company shall be bound to effect a conversion or continuation in accordance
therewith.
E. POST-DEFAULT INTEREST. Upon the occurrence and during the
continuation of any Event of Default, the outstanding principal amount of
all Loans and, to the extent permitted by applicable law, any interest
payments thereon not paid when due and any fees and other amounts then due
and payable hereunder, shall thereafter bear interest (including post-
petition interest in any proceeding under the Bankruptcy Code, or other
applicable bankruptcy or insolvency laws) payable upon demand at a rate
that is 2% per annum in excess of the interest rate otherwise payable under
this Agreement with respect to the applicable Loans (or, in the case of any
such fees and other amounts, at a rate which is 2% per annum in excess of
the interest rate otherwise payable under this Agreement for Revolving
Loans bearing interest at a rate determined by reference to the Base Rate);
provided that, in the case of Eurodollar Rate Loans, upon the expiration of
the Interest Period in effect at the time any such increase in interest
rate is effective such Eurodollar Rate Loans shall thereupon become Base
Rate Loans and shall thereafter bear interest payable upon demand at a rate
equal to 2% per annum in excess of the interest rate otherwise payable
under this Agreement for Base Rate Loans that are Tranche A Term Loans,
Tranche B Term Loans or Revolving Loans, as applicable. Payment or
<PAGE>
acceptance of the increased rates of interest provided for in this
subsection 2.2E is not a permitted alternative to timely payment and shall
not constitute a waiver of any Event of Default or otherwise prejudice or
limit any rights or remedies of any Agent or Lender.
F. COMPUTATION OF INTEREST. Interest on Loans shall be computed on
the basis of a 360-day year and for the actual number of days elapsed in
the period during which it accrues. In computing interest on any Loan, the
date of the making of such Loan or the first day of an Interest Period
applicable to such Loan or, with respect to a Base Rate Loan being
converted from a Eurodollar Rate Loan, the date of conversion of such
Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be
included, and the date of payment of such Loan or the expiration date of an
Interest Period applicable to such Loan or, with respect to a Base Rate
Loan being converted to a Eurodollar Rate Loan, the date of conversion of
such Base Rate Loan to such Eurodollar Rate Loan, as the case may be, shall
be excluded; provided that if a Loan is repaid on the same day on which it
is made, one day's interest shall be paid on that Loan.
2.3 FEES.
A. COMMITMENT FEES. Company agrees to pay to Chase Co-Administrative
Agent, for distribution to each Lender in proportion to that Lender's Pro
Rata Share with respect to the Revolving Loan Commitments or the Tranche B
Term Loan Commitments, as applicable, commitment fees for the period from
and including the Closing Date to and excluding the Revolving Loan
Commitment Termination Date equal to (i) the sum of (a) the average of the
daily excess of the Revolving Loan Commitments over the sum of (x) the
aggregate principal amount of Revolving Loans outstanding (but not any
Swing Line Loans outstanding) plus (y) the Letter of Credit Usage, plus (b)
the average daily unfunded portion of the Tranche B Term Loan Commitments
that is available for borrowing as Acquisition Loans, multiplied by (ii)
1/2 of 1% per annum. All such commitment fees shall be calculated on the
basis of a 360-day year and the actual number of days elapsed and shall be
payable quarterly in arrears on January 15, April 15, July 15 and October
15 of each year, commencing on January 15, 1997.
B. ANNUAL COLLATERAL AGENT'S FEE. Company agrees to pay to
Collateral Agent an annual Collateral Agent's fee in such amounts as may be
agreed between them from time to time.
C. OTHER FEES. Company agrees to pay to Agents such other fees in
the amounts and at the times separately agreed upon between Company and the
applicable Agents.
2.4 REPAYMENTS, PREPAYMENTS AND REDUCTIONS IN REVOLVING LOAN COMMITMENTS;
GENERAL PROVISIONS REGARDING PAYMENTS.
A. SCHEDULED PAYMENTS OF TERM LOANS.
(i) Scheduled Payments of Tranche A Term Loans. Company
shall make principal payments on the Tranche A Term Loans in
installments on the dates and in the amounts set forth below:
SCHEDULED REPAYMENT
DATE OF TRANCHE A
TERM LOANS
October 15, 1997 $2,125,000
<PAGE>
January 15, 1998 $3,312,500
April 15, 1998 $3,312,500
July 15, 1998 $3,312,500
October 15, 1998 $3,312,500
January 15, 1999 $3,312,500
April 15, 1999 $3,312,500
July 15, 1999 $3,312,500
October 15, 1999 $3,312,500
January 15, 2000 $4,250,000
April 15, 2000 $4,250,000
July 15, 2000 $4,250,000
October 15, 2000 $4,250,000
January 15, 2001 $4,750,000
April 15, 2001 $4,750,000
July 15, 2001 $4,750,000
October 15, 2001 $4,750,000
; provided that the scheduled installments of principal of the Tranche
A Term Loans set forth above shall be reduced in connection with any
voluntary or mandatory prepayments of the Tranche A Term Loans in
accordance with subsection 2.4C; and provided further, that the
Tranche A Term Loans and all other amounts owed hereunder with respect
to the Tranche A Term Loans shall be paid in full no later than
October 15, 2001, and the final installment payable by Company in
respect of the Tranche A Term Loans on such date shall be in an
amount, if such amount is different from that specified above,
sufficient to repay all amounts owing by Company under this Agreement
with respect to the Tranche A Term Loans.
(ii) Scheduled Payments of Tranche B Term Loans. Company
shall make principal payments on the Tranche B Term Loans in
installments on the dates and in the amounts set forth below (it being
understood and agreed that (a) the amounts set forth below reflect the
borrowing of the full amount of Additional Tranche B Term Loans on or
prior to October 15, 1997; (b) in the event only one Funding Date for
Additional Tranche B Term Loans has occurred on or prior to October
15, 1997, the amounts of the scheduled installments of principal
(including the installment due October 15, 1997) set forth below shall
be reduced ratably in an aggregate amount equal to the amount of
unfunded Tranche B Term Loan Commitments; and (c) in the event a
Funding Date for Additional Tranche B Term Loans occurs after October
15, 1997, the amounts of the scheduled installments of principal (as
adjusted in accordance with clause (b) above) after October 15, 1997
shall be, as of such Funding Date, increased ratably in an aggregate
amount equal to the amount of such borrowing of Additional Tranche B
Term Loans):
SCHEDULED REPAYMENT
DATE OF TRANCHE B
TERM LOANS
October 15, 1997 $ 445,730
January 15, 1998 $ 445,730
April 15, 1998 $ 445,730
July 15, 1998 $ 445,730
October 15, 1998 $ 445,730
January 15, 1999 $ 445,730
April 15, 1999 $ 445,730
July 15, 1999 $ 445,730
October 15, 1999 $ 445,730
<PAGE>
January 15, 2000 $ 445,730
April 15, 2000 $ 445,730
July 15, 2000 $ 445,730
October 15, 2000 $ 445,730
January 15, 2001 $ 445,730
April 15, 2001 $ 445,730
July 15, 2001 $ 445,730
October 15, 2001 $ 445,730
January 15, 2002 $12,480,427
April 15, 2002 $12,480,427
July 15, 2002 $12,480,427
October 15, 2002 $12,480,427
January 15, 2003 $16,937,722
April 15, 2003 $16,937,722
July 15, 2003 $16,937,722
October 15, 2003 $16,937,716
; provided that the scheduled installments of principal of the Tranche
B Term Loans set forth above shall be reduced in connection with any
voluntary or mandatory prepayments of the Tranche B Term Loans in
accordance with subsection 2.4C; and provided, further that the
Tranche B Term Loans and all other amounts owed hereunder with respect
to the Tranche B Term Loans shall be paid in full no later than
October 15, 2003, and the final installment payable by Company in
respect of the Tranche B Term Loans on such date shall be in an
amount, if such amount is different from that specified above,
sufficient to repay all amounts owing by Company under this Agreement
with respect to the Tranche B Term Loans.
B. PREPAYMENTS AND UNSCHEDULED REDUCTIONS IN REVOLVING LOAN
COMMITMENTS AND TRANCHE B TERM LOAN COMMITMENTS.
(i) Voluntary Prepayments. Company may, upon written or
telephonic notice to Chase Co-Administrative Agent on or prior to
12:00 Noon (New York time) on the date of prepayment, which notice, if
telephonic, shall be promptly confirmed in writing, at any time and
from time to time prepay, without premium or penalty, any Swing Line
Loan on any Business Day in whole or in part in an aggregate minimum
amount of $250,000 and integral multiples of $50,000 in excess of that
amount. In addition, so long as no Swing Line Loans are then
outstanding, Company may, upon not less than one Business Day's prior
written or telephonic notice, in the case of Base Rate Loans, and
three Business Days' prior written or telephonic notice, in the case
of Eurodollar Rate Loans, in each case confirmed in writing to Chase
Co-Administrative Agent (which notice Chase Co-Administrative Agent
will promptly transmit by telefacsimile or telephone to each Lender),
at any time and from time to time prepay, without premium or penalty,
the Loans other than Swing Line Loans on any Business Day in whole or
in part in an aggregate minimum amount of $1,000,000 and integral
multiples of $250,000 in excess of that amount; provided, however,
that in the event Company shall prepay a Eurodollar Rate Loan other
than on the expiration of the Interest Period applicable thereto,
Company shall, at the time of such prepayment, also pay the amount
payable under Section 2.6D hereof. Notice of prepayment having been
given as aforesaid, the Loans shall become due and payable on the
prepayment date specified in such notice and in the aggregate
principal amount specified therein. Any voluntary prepayments
pursuant to this subsection 2.4B(i) shall be applied as specified in
subsection 2.4C.
(ii) Voluntary Reductions of Revolving Loan Commitments and
<PAGE>
Tranche B Term Loan Commitments. Company may, upon not less than
three Business Days' prior written or telephonic notice confirmed in
writing to Chase Co-Administrative Agent (which notice Chase Co-
Administrative Agent will promptly transmit by telefacsimile or
telephone to each Lender), at any time and from time to time terminate
in whole or permanently reduce in part, without premium or penalty,
(a) the Revolving Loan Commitments in an amount up to the amount by
which the Revolving Loan Commitments exceed the Total Utilization of
Revolving Loan Commitments at the time of such proposed termination or
reduction and/or (b) the unfunded Tranche B Term Loan Commitments up
to the full amount thereof; provided that any such partial reduction
of the Revolving Loan Commitments or the unfunded Tranche B Term Loan
Commitments shall be in an aggregate minimum amount of $1,000,000 and
integral multiples of $250,000 in excess of that amount. Company's
notice to Chase Co-Administrative Agent shall designate the date
(which shall be a Business Day) of such termination or reduction and
the amount of any partial reduction, and such termination or reduction
of the Revolving Loan Commitments or the unfunded Tranche B Term Loan
Commitments shall be effective on the date specified in such notice
and shall reduce the Revolving Loan Commitment or the unfunded Tranche
B Term Loan Commitment, as applicable, of each Lender proportionately
to its Pro Rata Share with respect thereto. Any such voluntary
reduction of the Revolving Loan Commitments shall be applied as
specified in subsection 2.4C.
(iii) Mandatory Prepayments and Mandatory Reductions of
Revolving Loan Commitments.
The Loans shall be prepaid and the Revolving Loan Commitments
shall be reduced in the manner provided in subsection 2.4C upon the
occurrence of the following circumstances:
(a) Prepayments and Reductions from Asset Sales. No later
than the first Business Day following the date of receipt by
Company or any of its Subsidiaries of the Cash Proceeds of any
Asset Sale (other than any portion of such proceeds that is
reinvested (or scheduled for reinvestment) in a Qualified Loan
Portfolio and/or assets of the general type used in the business
of Company and its Subsidiaries within 270 days from the date of
receipt of such proceeds), Company shall prepay the Loans (and/or
the Revolving Loan Commitments shall be reduced) in the amount of
such proceeds not so reinvested (or scheduled for such
reinvestment); provided, that if (1) the Net Cash Proceeds of any
individual Asset Sale of receivables portfolios exceed $5,000,000
or (2) the Net Cash Proceeds of all such Asset Sales in any
Fiscal Year exceed $10,000,000, then in each case the amount of
such excess Net Cash Proceeds may not be reinvested (or scheduled
for reinvestment); provided further, that if the Net Cash
Proceeds of Asset Sales of businesses in any Fiscal Year exceed
10% of Consolidated EBITDA for the preceding Fiscal Year, then
the amount of such excess Net Cash Proceeds may not be reinvested
(or scheduled for reinvestment); and provided further, that
Company may not reinvest (or schedule for reinvestment) Net Cash
Proceeds upon the occurrence and during the continuation of an
Event of Default. Company shall, no later than 365 days after
receipt of any such Net Cash Proceeds that have not theretofore
been applied to the Obligations, make an additional prepayment of
the Loans (and/or the Revolving Loan Commitments shall be
reduced) in the full amount of all such proceeds that have not
therefore been so reinvested. Concurrently with any prepayment
of the Loans and/or reduction of the Commitments pursuant to this
subsection 2.4B(iii)(a), Company shall deliver to Chase Co-
Administrative Agent an Officer's Certificate demonstrating the
<PAGE>
derivation of the Net Cash Proceeds of the correlative Asset Sale
from the gross sales price thereof. In the event that Company
shall, at any time after receipt of Cash Proceeds of any Asset
Sale requiring a prepayment or a reduction of the Revolving Loan
Commitments pursuant to this subsection 2.4B(iii)(a), determine
that the prepayments and/or reductions of the Revolving Loan
Commitments previously made in respect of such Asset Sale were in
an aggregate amount less than that required by the terms of this
subsection 2.4B(iii)(a), Company shall promptly cause to be made
an additional prepayment of the Loans (and/or reduction in the
Revolving Loan Commitments) in an amount equal to the amount of
any such deficit, and Company shall concurrently therewith
deliver to Co-Administrative Agents an Officer's Certificate
demonstrating the derivation of the additional Net Cash Proceeds
resulting in such deficit.
(b) Prepayments and Reductions Due to Issuance of Debt. On
or prior to the first Business Day after receipt by Company or
any of its Subsidiaries of any proceeds of any Indebtedness
(other than the Loans and any other Indebtedness permitted by
this Agreement), Company shall prepay the Loans (and/or the
Revolving Loan Commitments shall be reduced) in an amount equal
to the amount of such proceeds; provided that payment or
acceptance of the amounts provided for in this subsection
2.4B(iii)(b) shall not constitute a waiver of any Event of
Default resulting from the incurrence of such Indebtedness or
otherwise prejudice any rights or remedies of Agents or Lenders.
(c) Prepayments and Reductions Due to Issuance of Equity
Securities. On or prior to the first Business Day after receipt
by Company or any of its Subsidiaries of any Equity Proceeds,
Company shall prepay the Loans (and/or the Revolving Loan
Commitments shall be reduced) in an amount equal to such Equity
Proceeds; provided that such Equity Proceeds shall not be applied
to prepay Loans pursuant to this subsection if (1) such Equity
Proceeds were not derived from a public offering of Securities
and (2) such Equity Proceeds (y) are, upon receipt, designated
for reinvestment in the businesses of Company and its
Subsidiaries and (z) are within 30 days of receipt thereof by
Company or any of its Subsidiaries, reinvested in the businesses
of Company and its Subsidiaries.
(d) Prepayments and Reductions from Insurance and Condemna-
tion Proceeds. No later than the second Business Day following
the date of receipt by Company or any of its Subsidiaries of any
cash payments under any of the casualty insurance policies
covering damage to or loss of property maintained pursuant to
subsection 6.4 resulting from damage to or loss of all or any
portion of the Collateral or any other tangible asset (net of
actual and documented reasonable costs incurred by Company or any
of its Subsidiaries in connection with adjustment and settlement
thereof, "INSURANCE PROCEEDS") or any proceeds resulting from the
taking of assets by the power of eminent domain, condemnation or
otherwise (net of actual and documented reasonable costs incurred
by Company or any of its Subsidiaries in connection with
adjustment and settlement thereof, "CONDEMNATION PROCEEDS")
(other than any portion of any such proceeds that is reinvested
(or scheduled for reinvestment) in assets of the general type
used in the business of Company and its Subsidiaries within 270
days from the date of receipt of such proceeds), Company shall
prepay the Loans (and/or the Revolving Loan Commitments shall be
reduced) in the amount of such proceeds not so reinvested (or
scheduled for such reinvestment). Company shall, no later than
<PAGE>
270 days after receipt of any such Insurance Proceeds or
Condemnation Proceeds that have not theretofore been applied to
the Obligations, make an additional prepayment of the Loans
(and/or the Revolving Loan Commitments shall be reduced) in the
full amount of all such proceeds that have not therefore been
reinvested in such assets.
(e) Prepayments and Reductions from Consolidated Excess
Cash Flow. In the event that there shall be Consolidated Excess
Cash Flow for any Fiscal Year (commencing with the Fiscal Year
ending December 31, 1997), Company shall, no later than 100 days
after the end of such Fiscal Year, prepay the Loans (and/or the
Revolving Loan Commitments shall be reduced) in an aggregate
amount equal to (1) for Fiscal Year 1997, 50% of the portion of
such Consolidated Excess Cash Flow for such Fiscal Year in excess
of $7,500,000, and (2) for any Fiscal Year thereafter, 50% of
such Consolidated Excess Cash Flow for such Fiscal Year.
(f) Prepayments Due to Reductions or Restrictions of
Revolving Loan Commitments. Company shall prepay the Swing Line
Loans and/or the Revolving Loans from time to time to the extent
necessary so that (y) the Total Utilization of Revolving Loan
Commitments shall not at any time exceed the Revolving Loan
Commitments then in effect, and (z) the aggregate principal
amount of all outstanding Swing Line Loans shall not at any time
exceed the Swing Line Loan Commitment then in effect. All Swing
Line Loans shall be prepaid in full prior to the prepayment of
any Revolving Loans pursuant to this subsection 2.4B(iii)(f).
C. APPLICATION OF PREPAYMENTS AND REDUCTIONS OF REVOLVING LOAN
COMMITMENTS.
(i) Application of Voluntary Prepayments by Type of Loans. Any
voluntary prepayments pursuant to subsection 2.4B(i) shall be applied:
first to repay outstanding Swing Line Loans to the full extent
thereof, second to repay outstanding Revolving Loans to the full
extent thereof, and third, to repay outstanding Term Loans to the full
extent thereof.
(ii) Application of Mandatory Prepayments by Type of Loans. Any
amount (the "APPLIED AMOUNT") required to be applied as a mandatory
prepayment of the Loans and/or a reduction of the Revolving Loan
Commitments pursuant to subsections 2.4B(iii)(a)-(e) shall be applied
first to prepay the Term Loans to the full extent thereof, second, to
the extent of any remaining portion of the Applied Amount, to prepay
the Swing Line Loans to the full extent thereof and to permanently
reduce the Revolving Loan Commitments by the amount of such
prepayment, third, to the extent of any remaining portion of the
Applied Amount, to prepay the Revolving Loans to the full extent
thereof and to further permanently reduce the Revolving Loan
Commitments by the amount of such prepayment, and fourth, to the
extent of any remaining portion of the Applied Amount, to further
permanently reduce the Revolving Loan Commitments to the full extent
thereof.
(iii) Application of Prepayments of Term Loans to Tranche A Term
Loans and Tranche B Term Loans and the Scheduled Installments of
Principal Thereof. Any prepayments of the Term Loans pursuant to
subsection 2.4B(i) or 2.4B(iii) shall be applied to prepay the Tranche
A Term Loans and the Tranche B Term Loans on a pro rata basis in
accordance with the respective outstanding principal amounts thereof.
Any mandatory prepayments applied to the Tranche A Term Loans or the
Tranche B Term Loans pursuant to this subsection shall be applied on a
<PAGE>
pro rata basis (in accordance with the respective outstanding
principal amounts thereof) to each scheduled installment of principal
of the Tranche A Term Loans or the Tranche B Term Loans, as the case
may be, set forth in subsection 2.4A(i) or 2.4A(ii), respectively,
that is unpaid at the time of such prepayment.
(iv) Application of Prepayments to Base Rate Loans and
Eurodollar Rate Loans. Considering Tranche A Term Loans, Tranche B
Term Loans and Revolving Loans being prepaid separately, any
prepayment thereof shall be applied first to Base Rate Loans to the
full extent thereof before application to Eurodollar Rate Loans, in
each case in a manner which minimizes the amount of any payments
required to be made by Company pursuant to subsection 2.6D.
D. APPLICATION OF PROCEEDS OF COLLATERAL AND PAYMENTS UNDER
SUBSIDIARY GUARANTY.
(i) Application of Proceeds of Collateral. Except as provided
in subsection 2.4B(iii)(a) with respect to prepayments from Net Asset
Sale Proceeds, all proceeds received by Collateral Agent in respect of
any sale of, collection from, or other realization upon all or any
part of the Collateral under any Collateral Document may, in the
discretion of Collateral Agent, be held by Collateral Agent as
Collateral for, and/or (then or at any time thereafter) applied in
full or in part by Collateral Agent against, the applicable Secured
Obligations (as defined in such Collateral Document) in the following
order of priority:
(a) To the payment of all costs and expenses of such sale,
collection or other realization, including without limitation
reasonable compensation to Collateral Agent and its agents and
counsel, and all other reasonable expenses, liabilities and
advances made or incurred by Collateral Agent in connection
therewith, and all amounts for which Collateral Agent is entitled
to indemnification under such Collateral Document and all
advances made by Collateral Agent thereunder for the account of
the applicable Loan Party, and to the payment of all reasonable
costs and expenses paid or incurred by Collateral Agent in
connection with the exercise of any right or remedy under such
Collateral Document, all in accordance with the terms of this
Agreement and such Collateral Document;
(b) thereafter, to the extent of any excess such proceeds,
to the payment of all other such Secured Obligations for the
ratable benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such proceeds,
to the payment to or upon the order of such Loan Party or to
whosoever may be lawfully entitled to receive the same or as a
court of competent jurisdiction may direct.
(ii) Application of Payments Under Subsidiary Guaranty. All
payments received by Collateral Agent under the Subsidiary Guaranty
shall be applied promptly from time to time by Collateral Agent in the
following order of priority:
(a) To the payment of the reasonable costs and expenses of
any collection or other realization under the Subsidiary
Guaranty, including without limitation reasonable compensation to
Collateral Agent and its agents and counsel, and all expenses,
liabilities and advances made or incurred by Collateral Agent in
connection therewith, all in accordance with the terms of this
Agreement and the Subsidiary Guaranty;
<PAGE>
(b) thereafter, to the extent of any excess such payments,
to the payment of all other Guarantied Obligations (as defined in
the Subsidiary Guaranty) for the ratable benefit of the holders
thereof; and
(c) thereafter, to the extent of any excess such payments,
to the payment to the applicable Subsidiary Guarantor or to
whosoever may be lawfully entitled to receive the same or as a
court of competent jurisdiction may direct.
E. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by Company of
principal, interest, fees and other Obligations hereunder and under
the Notes shall be made in same day funds and without defense, setoff
or counterclaim, free of any restriction or condition, and delivered
to Chase Co-Administrative Agent not later than 12:00 Noon (New York
time) on the date due at the Funding and Payment Office for the
account of Lenders; funds received by Chase Co-Administrative Agent
after that time on such due date shall be deemed to have been paid by
Company on the next succeeding Business Day. Company hereby
authorizes Chase Co-Administrative Agent to charge its accounts with
such Chase Co-Administrative Agent in order to cause timely payment to
be made to Chase Co-Administrative Agent of all principal, interest,
fees and expenses due hereunder (subject to sufficient funds being
available in its accounts for that purpose).
(ii) Application of Payments to Principal and Interest. Except
as provided in subsection 2.2C, all payments in respect of the
principal amount of any Loan shall include payment of accrued interest
on the principal amount being repaid or prepaid, and all such payments
(and in any event any payments made in respect of any Loan on a date
when interest is due and payable with respect to such Loan) shall be
applied to the payment of interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and
interest payments shall be apportioned among all outstanding Loans to
which such payments relate, in each case proportionately to Lenders'
respective Pro Rata Shares. Chase Co-Administrative Agent shall
promptly distribute to each Lender, at its applicable Lending Office
specified on Schedule 2.1 or at such other address as such Lender may
request, its Pro Rata Share of all such payments received by Chase Co-
Administrative Agent and the commitment fees of such Lender when
received by Chase Co-Administrative Agent pursuant to subsection 2.3.
Notwithstanding the foregoing provisions of this subsection 2.4E(iii)
if, pursuant to the provisions of subsection 2.6C, any Notice of
Conversion/Continuation is withdrawn as to any Affected Lender or if
any Affected Lender makes Base Rate Loans in lieu of its Pro Rata
Share of any Eurodollar Rate Loans, Chase Co-Administrative Agent
shall give effect thereto in apportioning payments received
thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business
Day, such payment shall be made on the next succeeding Business Day
and such extension of time shall be included in the computation of the
payment of interest hereunder or of the commitment fees hereunder, as
the case may be.
(v) Notation of Payment. Each Lender agrees that before
disposing of any Note held by it, or any part thereof (other than by
granting participations therein), that Lender will make a notation
thereon of all Loans evidenced by that Note and all principal payments
<PAGE>
previously made thereon and of the date to which interest thereon has
been paid; provided that the failure to make (or any error in the
making of) a notation of any Loan made under such Note shall not limit
or otherwise affect the obligations of Company hereunder or under such
Note with respect to any Loan or any payments of principal or interest
on such Note.
2.5 USE OF PROCEEDS.
A. ADDITIONAL TRANCHE B TERM LOANS.
(i) The proceeds of the Accelerated Acquisition Loans shall be
applied to (a) finance the Accelerated Acquisition, (b) refinance certain
existing Indebtedness of Accelerated, (c) repay Revolving Loans, and
(d) pay Transaction Costs relating to the Accelerated Acquisition.
(ii) The proceeds of the NSA Acquisition Loans shall be applied to
(a) finance the NSA Acquisition, (b) refinance certain existing Indebted-
ness of NSA, (c) repay Revolving Loans, and (d) pay Transaction Costs
relating to the NSA Acquisition.
(iii) Notwithstanding the foregoing, in the event NSA shall have been
acquired under the NSA Acquisition Agreement prior to the Effective Date in
accordance with the terms of the Existing Credit Agreement, the proceeds of
the NSA Acquisition Loans shall be applied to repay Revolving Loans.
B. REVOLVING LOANS; SWING LINE LOANS. Revolving Loans and Swing Line
Loans in an aggregate amount not to exceed $10,000,000 at any time
outstanding may be used to finance the general corporate purposes of
Company and its Subsidiaries. Revolving Loans and Swing Line Loans in an
additional amount not to exceed $48,000,000 at any time outstanding may be
used to finance expenditures which are included in the definition of
Consolidated Capital Expenditures; provided that Revolving Loans and Swing
Line Loans in an aggregate amount not to exceed $58,000,000 at any time
outstanding may be used to finance such acquisitions if at all times such
additional amount of Revolving Loans is outstanding the sum of (i)
unrestricted Cash and Cash Equivalents on the balance sheet of Company plus
(ii) the excess of the Revolving Loan Commitments over the Total
Utilization of Revolving Loan Commitments equals or exceeds $7,500,000.
C. COMPLIANCE WITH LAWS. Company hereby undertakes that no portion
of the proceeds of any Loans or other extensions of credit under this
Agreement shall be used by any Loan Party in any manner which would be
illegal under, or which would cause the invalidity or unenforceability (in
each case in whole or in part) of any Loan Document under, any applicable
law.
D. MARGIN REGULATIONS. Without limiting the generality of subsection
2.5C, no portion of the proceeds of any borrowing under this Agreement
shall be used by Company or any of its Subsidiaries in any manner that
might cause the borrowing or the application of such proceeds to violate
Regulation G, Regulation U, Regulation T or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such
Board or to violate the Exchange Act, in each case as in effect on the date
or dates of such borrowing and such use of proceeds.
2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.
Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to Eurodollar Rate Loans
as to the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable
<PAGE>
after 11:00 A.M. (New York time) on each Interest Rate Determination Date,
Chase Co-Administrative Agent shall determine (which determination shall,
absent manifest error, be final, conclusive and binding upon all parties)
the interest rate that shall apply to the Eurodollar Rate Loans for which
an interest rate is then being determined for the applicable Interest
Period and shall promptly give notice thereof (in writing or by telephone
confirmed in writing) to Company and each Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event
that Chase Co-Administrative Agent shall have reasonably determined (which
determination shall be final and conclusive and binding upon all parties
hereto), on any Interest Rate Determination Date with respect to any
Eurodollar Rate Loans, that by reason of circumstances arising after the
date of this Agreement affecting the London interbank market, adequate and
fair means do not exist for ascertaining the interest rate applicable to
such Loans on the basis provided for in the definition of Adjusted
Eurodollar Rate Chase Co-Administrative Agent shall on such date give
notice (by telecopy or by telephone confirmed in writing) to Company and
each Lender of such determination, whereupon (i) no Loans may be made as,
or converted to, Eurodollar Rate Loans, until such time as Chase Co-A-
dministrative Agent notifies Company and Lenders that the circumstances
giving rise to such notice no longer exist (such notification not to be
unreasonably withheld or delayed) and (ii) any Notice of Borrowing or
Notice of Conversion/Continuation given by Company with respect to the
Loans in respect of which such determination was made shall be deemed to be
rescinded by Company.
C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS. In the
event that on any date any Lender shall have reasonably determined (which
determination shall be final and conclusive and binding upon all parties
hereto but shall be made only after consultation with Company and Chase Co-
Administrative Agent) that the making, maintaining or continuation of its
Eurodollar Rate Loans (i) has become unlawful as a result of compliance by
such Lender in good faith with any law, treaty, governmental rule,
regulation, guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the force of
law even though the failure to comply therewith would not be unlawful) or
(ii) has become impracticable, or would cause such Lender material
hardship, as a result of contingencies occurring after the date of this
Agreement which materially and adversely affect the London interbank
market, then, and in any such event, such Lender shall be an "AFFECTED
LENDER" and it shall on that day give notice (by telecopy or by telephone
confirmed in writing) to Company and Chase Co-Administrative Agent of such
determination (which notice Chase Co-Administrative Agent shall promptly
transmit to each other Lender). Thereafter (a) the obligation of the
Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate
Loans, shall be suspended until such notice shall be withdrawn by the
Affected Lender, (b) to the extent such determination by the Affected
Lender relates to a Eurodollar Rate Loan then being requested by Company
pursuant to a Notice of Borrowing or a Notice of Conversion/Continuation,
the Affected Lender shall make such Loan as (or convert such Loan to, as
the case may be) a Base Rate Loan, (c) the Affected Lender's obligation to
maintain its outstanding Eurodollar Rate Loans, as the case may be (the
"AFFECTED LOANS"), shall be terminated at the earlier to occur of the
expiration of the Interest Period then in effect with respect to the
Affected Loans or when required by law, and (d) the Affected Loans shall
automatically convert into Base Rate Loans on the date of such termination.
Notwithstanding the foregoing, to the extent a determination by an Affected
Lender as described above relates to a Eurodollar Rate Loan then being
requested by Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, Company shall have the option, subject to the
provisions of subsection 2.6D, to rescind such Notice of Borrowing or
Notice of Conversion/Continuation as to all Lenders by giving notice (by
<PAGE>
telecopy or by telephone confirmed in writing) to Chase Co-Administrative
Agent of such rescission on the date on which the Affected Lender gives
notice of its determination as described above (which notice of rescission
Chase Co-Administrative Agent shall promptly transmit to each other
Lender). Except as provided in the immediately preceding sentence, nothing
in this subsection 2.6C shall affect the obligation of any Lender other
than an Affected Lender to make or maintain Loans as, or to convert Loans
to, Eurodollar Rate Loans in accordance with the terms of this Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS.
Company shall compensate each Lender, upon written request by that Lender
(which request shall set forth the basis for requesting such amounts), for
all reasonable losses, expenses and liabilities (including, without
limitation, any interest paid by that Lender to lenders of funds borrowed
by it to make or carry its Eurodollar Rate Loans and any loss, expense or
liability sustained by that Lender in connection with the liquidation or
re-employment of such funds) which that Lender may sustain: (i) if for any
reason (other than a default by that Lender) a borrowing of any Eurodollar
Rate Loan does not occur on a date specified therefor in a Notice of
Borrowing or a telephonic request for borrowing, or a conversion to or
continuation of any Eurodollar Rate Loan does not occur on a date specified
therefor in a Notice of Conversion/Continuation or a telephonic request for
conversion or continuation, (ii) if any prepayment (including without
limitation any prepayment pursuant to subsection 2.4B(i)) or conversion of
any of its Eurodollar Rate Loans occurs on a date that is not the last day
of an Interest Period applicable to that Loan, (iii) if any prepayment of
any of its Eurodollar Rate Loans is not made on any date specified in a
notice of prepayment given by Company, or (iv) as a consequence of any
other default by Company in the repayment of its Eurodollar Rate Loans when
required by the terms of this Agreement.
E. BOOKING OF EURODOLLAR RATE LOANS. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its
branch offices or the office of an Affiliate of that Lender.
F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS. Calcula-
tion of all amounts payable to a Lender under this subsection 2.6 and under
subsection 2.7A shall be made as though that Lender had actually funded
each of its relevant Eurodollar Rate Loans through the purchase of a
Eurodollar deposit bearing interest at the rate obtained pursuant to clause
(i) of the definition of Adjusted Eurodollar Rate in an amount equal to the
amount of such Eurodollar Rate Loan and having a maturity comparable to the
relevant Interest Period and through the transfer of such Eurodollar
deposit from an offshore office of that Lender to a domestic office of that
Lender in the United States of America; provided, however, that each Lender
may fund each of its Eurodollar Rate Loans in any manner it sees fit and
the foregoing assumptions shall be utilized only for the purposes of
calculating amounts payable under this subsection 2.6 and under subsection
2.7A.
G. EURODOLLAR RATE LOANS AFTER DEFAULT. After the occurrence of and
during the continuation of a Potential Event of Default or an Event of
Default, (i) Company may not elect to have a Loan be made or maintained as,
or converted to, a Eurodollar Rate Loan after the expiration of any
Interest Period then in effect for that Loan and (ii) subject to the
provisions of subsection 2.6D, any Notice of Borrowing or Notice of
Conversion/Continuation given by Company with respect to a requested
borrowing or conversion/continuation that has not yet occurred shall be
deemed to be rescinded by Company.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the
<PAGE>
provisions of subsection 2.7B (which shall be controlling with respect to
the matters covered thereby), in the event that any law, treaty or
governmental rule, regulation or order, or any change therein or in the
interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or
order), or any determination of a court or governmental authority, in each
case that becomes effective after the Closing Date, or compliance by such
Lender with any guideline, request or directive issued or made after the
Closing Date by any central bank or other governmental or quasi-govern-
mental authority (whether or not having the force of law):
(i) results in a change in the basis of taxation of such Lender
(or its applicable lending office) (other than a change with respect
to any Tax on the overall net income of such Lender) with respect to
this Agreement or any of its obligations hereunder or any payments to
such Lender (or its applicable lending office) of principal, interest,
fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve
(including, without limitation, any marginal, emergency, supplemental,
special or other reserve), special deposit, compulsory loan, FDIC
insurance or similar requirement against assets held by, or deposits
or other liabilities in or for the account of, or advances or loans
by, or other credit extended by, or any other acquisition of funds by,
any office of such Lender (other than any such reserve or other
requirements with respect to Eurodollar Rate Loans that are reflected
in the definition of Adjusted Eurodollar Rate; or
(iii) imposes any other condition (other than with respect to a
Tax matter) on or affecting such Lender (or its applicable lending
office) or its obligations hereunder, or the London interbank market;
and the result of any of the foregoing is to increase the cost to such
Lender of agreeing to make, making or maintaining Eurodollar Rate Loans
hereunder or to reduce any amount received or receivable by such Lender (or
its applicable lending office) with respect thereto; then, in any such
case, Lender shall promptly notify Company and Chase Co-Administrative
Agent thereof and Company shall promptly pay to such Lender, upon receipt
of the statement referred to in the next sentence, such additional amount
or amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Lender shall reasonably
determine) as may be necessary to compensate such Lender for any such
increased cost or reduction in amounts received or receivable hereunder.
Such Lender shall deliver to Company (with a copy to Chase Co-
Administrative Agent) a written statement, setting forth in reasonable
detail the basis for calculating the additional amounts owed to such Lender
under this subsection 2.7A, which statement shall be prima facie evidence
of such additional amounts.
B. WITHHOLDING OF TAXES.
(i) Payments to Be Free and Clear. All sums payable by Company
under this Agreement and the other Loan Documents shall (except to the
extent required by law) be paid free and clear of, and without any
deduction or withholding on account of, any Tax (other than a Tax on
the overall net income of any Lender) imposed, levied, collected,
withheld or assessed by or within the United States of America or any
political subdivision in or of the United States of America or any
other jurisdiction from which a payment is made by or on behalf of
Company.
(ii) Withholding of Taxes. If Company or any other Person is
required by law to make any deduction or withholding on account of any
<PAGE>
such Tax from any sum paid or payable by Company to Chase Co-
Administrative Agent or any Lender under any of the Loan Documents:
(a) Company shall notify Chase Co-Administrative Agent of
any such requirement or any change in any such requirement as
soon as Company becomes aware of it;
(b) Company shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the
liability to pay is imposed on Company) for its own account or
(if that liability is imposed on Chase Co-Administrative Agent or
such Lender, as the case may be) on behalf of and in the name of
Chase Co-Administrative Agent or such Lender;
(c) the sum payable by Company in respect of which the
relevant deduction, withholding or payment is required shall be
increased to the extent necessary to ensure that, after the
making of that deduction, withholding or payment, Chase Co-
Administrative Agent or such Lender, as the case may be, receives
on the due date a net sum equal to what it would have received
had no such deduction, withholding or payment been required or
made; and
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within
30 days after the due date of payment of any Tax which it is
required by clause (b) above to pay, Company shall deliver to
Chase Co-Administrative Agent evidence of such deduction,
withholding or payment and of the remittance thereof to the
relevant taxing or other authority;
provided that no such additional amount shall be required to be paid to
any Lender under clause (c) above except to the extent that any change
after the Closing Date (in the case of each Existing Lender), after the
Effective Date (in the case of each New Lender) or after the date of the
Assignment Agreement pursuant to which such Lender became a Lender (in the
case of each other Lender) in any such requirement for a deduction,
withholding or payment as is mentioned therein shall result in an increase
in the rate of such deduction, withholding or payment from that in effect
at the date of this Agreement or at the date of such Assignment Agreement,
as the case may be, in respect of payments to such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection
2.7B(iii), a "NON-US LENDER") shall deliver to Chase Co-
Administrative Agent for transmission to Company, on or prior to
the Closing Date (in the case of each Existing Lender), on or
prior to the Effective Date (in the case of each New Lender) or
on or prior to the date of the Assignment Agreement pursuant to
which it becomes a Lender (in the case of each other Lender), and
at such other times as may be necessary in the determination of
Company or Chase Co-Administrative Agent (each in the reasonable
exercise of its discretion), (1) two original copies of Internal
Revenue Service Form 1001 or 4224 (or any successor forms),
accurately completed and duly executed by such Lender, together
with any other certificate or statement of exemption required
under the Internal Revenue Code or the regulations issued
thereunder to establish that such Lender is not subject to
deduction or withholding of United States federal income tax with
respect to any payments to such Lender of principal, interest,
<PAGE>
fees or other amounts payable under any of the Loan Documents or
(2) if such Lender is not a "bank" or other Person described in
Section 881(c)(3) of the Internal Revenue Code and cannot deliver
either Internal Revenue Service Form 1001 or 4224 (or any
successor forms) pursuant to clause (1) above, a Certificate re
Non-Bank Status together with two original copies of Internal
Revenue Service Form W-8 (or any successor form), properly
completed and duly executed by such Lender, together with any
other certificate or statement of exemption required under the
Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect to
any payments to such Lender of interest payable under any of the
Loan Documents.
(b) Each Lender required to deliver any forms, certificates
or other evidence with respect to United States federal income
tax withholding matters pursuant to subsection 2.7B(iii)(a)
hereby agrees, from time to time after the initial delivery by
such Lender of such forms, certificates or other evidence,
whenever a lapse in time or change in circumstances renders such
forms, certificates or other evidence obsolete or inaccurate in
any material respect, such Lender shall (1) deliver to Chase Co-
Administrative Agent for transmission to Company two new original
copies of Internal Revenue Service Form 1001 or 4224 (or any
successor forms), or a Certificate re Non-Bank Status and two
original copies of Internal Revenue Service Form W-8 (or any
successor form), as the case may be, accurately completed and
duly executed by such Lender, together with any other certificate
or statement of exemption required in order to confirm or
establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect to
payments to such Lender under the Loan Documents or (2)
immediately notify Chase Co-Administrative Agent and Company of
its inability to deliver any such forms, certificates or other
evidence.
(c) Company shall not be required to pay any additional
amount to any Non-US Lender under clause (c) of subsection
2.7B(ii) in respect of deductions or withholdings of United
States federal income taxes if such Lender shall have failed to
satisfy the requirements of subsection 2.7B(iii)(a) or
2.7B(iii)(b); provided that if such Lender shall have satisfied
such requirements on the Closing Date (in the case of each
Existing Lender), on the Effective Date (in the case of each New
Lender) or on the date of the Assignment Agreement pursuant to
which it became a Lender (in the case of each other Lender),
nothing in this subsection 2.7B(iii)(c) shall relieve Company of
its obligation to pay any additional amounts pursuant to clause
(c) of subsection 2.7B(ii) in the event that, as a result of any
change in any applicable law, treaty or governmental rule,
regulation or order, or any change in the interpretation,
administration or application thereof, such Lender is no longer
properly entitled to deliver forms, certificates or other
evidence at a subsequent date establishing the fact that such
Lender is not subject to withholding as described in subsection
2.7B(iii)(a) or 2.7B(iii)(b).
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have determined
that the adoption, effectiveness, phase-in or applicability after the
Closing Date of any law, rule or regulation (or any provision thereof)
regarding capital adequacy, or any change therein or in the interpretation
or administration thereof by the National Association of Insurance
<PAGE>
Commissioners, any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or
compliance by any Lender (or its applicable lending office) with any
guideline, request or directive regarding capital adequacy (whether or not
having the force of law) of the National Association of Insurance
Commissioners, any such governmental authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on the
capital of such Lender or any corporation controlling such Lender as a
consequence of, or with reference to, such Lender's Loans or Commitments or
Letters of Credit or participations therein or other obligations hereunder
with respect to the Loans or the Letters of Credit to a level below that
which such Lender reasonably determines such Lender or such controlling
corporation could have achieved but for such adoption, effectiveness,
phase-in, applicability, change or compliance (taking into consideration
the policies of such Lender or such controlling corporation with regard to
capital adequacy), then from time to time, within fifteen Business Days
after receipt by Company from such Lender of the statement referred to in
the next sentence, Company shall pay to such Lender such additional amount
or amounts as will compensate such Lender or such controlling corporation
on an after-tax basis for such reduction. Such Lender shall deliver to
Company (with a copy to Chase Co-Administrative Agent) a written statement,
setting forth in reasonable detail the basis of the calculation of such
additional amounts, which statement shall be conclusive and binding upon
all parties hereto absent manifest error.
D. SUBSTITUTE LENDERS. In the event Company is required under the
provisions of this subsection 2.7 to make payments in a material amount to
any Lender or in the event any Lender fails to lend to Company in
accordance with this Agreement, Company may, so long as no Event of Default
or Potential Event of Default shall have occurred and be continuing, elect
to terminate such Lender as a party to this Agreement; provided that,
concurrently with such termination, (i) Company shall pay that Lender all
principal, interest and fees and other amounts (including without
limitation amounts, if any, owed under this subsection 2.7) due to be paid
to such Lender with respect to all periods through such date of
termination, (ii) another financial institution satisfactory to Company and
Co-Administrative Agents (or, in the case of a Co-Administrative Agent that
is also the Lender to be terminated, its successor Co-Administrative Agent)
shall agree, as of such date, to become a Lender for all purposes under
this Agreement (whether by assignment or amendment) and to assume all
obligations of the Lender to be terminated as of such date, and (iii) all
documents and supporting materials necessary, in the judgment of Co-
Administrative Agents (or, in the case of a Co-Administrative Agent that is
also the Lender to be terminated, its successor Co-Administrative Agent) to
evidence the substitution of such Lender shall have been received and
approved by Co-Administrative Agents as of such date.
2.8 OBLIGATION OF LENDERS AND ISSUING LENDERS TO MITIGATE.
Each Lender and Issuing Lender agrees that, as promptly as practicable
after the officer of such Lender or Issuing Lender responsible for
administering the Loans or Letters of Credit of such Lender or Issuing
Lender, as the case may be, becomes aware of the occurrence of an event or
the existence of a condition that would cause such Lender to become an
Affected Lender or that would entitle such Lender or Issuing Lender to
receive payments under subsection 2.7 or subsection 3.6, it will, to the
extent not inconsistent with the internal policies of such Lender or
Issuing Lender and any applicable legal or regulatory restrictions, use
reasonable efforts (i) to make, issue, fund or maintain the Commitments of
such Lender or the affected Loans or Letters of Credit of such Lender or
Issuing Lender through another lending or letter of credit office of such
Lender or Issuing Lender, or (ii) take such other measures as such Lender
or Issuing Lender may deem reasonable, if as a result thereof the
<PAGE>
circumstances which would cause such Lender to be an Affected Lender would
cease to exist or the additional amounts which would otherwise be required
to be paid to such Lender or Issuing Lender pursuant to subsection 2.7 or
subsection 3.6 would be materially reduced and if, as determined by such
Lender or Issuing Lender in its sole discretion, the making, issuing,
funding or maintaining of such Commitments or Loans or Letters of Credit
through such other lending or letter of credit office or in accordance with
such other measures, as the case may be, would not otherwise materially
adversely affect such Commitments or Loans or Letters of Credit or the
interests of such Lender or Issuing Lender; provided that such Lender or
Issuing Lender will not be obligated to utilize such other lending or
letter of credit office pursuant to this subsection 2.8 unless Company
agrees to pay all incremental expenses incurred by such Lender or Issuing
Lender as a result of utilizing such other lending or letter of credit
office. A certificate as to the amount of any such expenses payable by
Company pursuant to this subsection 2.8 (setting forth in reasonable detail
the basis for requesting such amount) submitted by such Lender or Issuing
Lender to Company (with a copy to Chase Co-Administrative Agent) shall be
conclusive absent manifest error.
SECTION 3.
LETTERS OF CREDIT
3.1 ISSUANCE OF LETTERS OF CREDIT AND LENDERS' PURCHASE OF PARTICIPATIONS
THEREIN.
A. LETTERS OF CREDIT. Company acknowledges and confirms that
Schedule 3.1 annexed hereto sets forth each letter of credit issued under
the Existing Credit Agreement (collectively, the "EXISTING LETTERS OF
CREDIT") and outstanding as of the Effective Date. Company hereby
represents, warrants, agrees, covenants and (a) reaffirms that it has no
(and it permanently and irrevocably waives and releases Agents and Lenders
from any, to the extent arising on or prior to the Effective Date) defense,
set off, claim or counterclaim against any Agent or Lender in regard to its
Obligations in respect of such Existing Letters of Credit and (b) reaffirms
its obligation to reimburse the applicable Issuing Lenders for honored
drawings under such Existing Letters of Credit in accordance with the terms
and conditions of this Agreement and the other Loan Documents applicable to
Letters of Credit issued hereunder. Based on the foregoing, each Lender
agrees that (1) each Existing Letter of Credit which is a Standby Letter of
Credit shall, as of the Effective Date, be deemed for all purposes of this
Agreement to be a Standby Letter of Credit issued hereunder, and (2) each
Existing Letter of Credit which is a Commercial Letter of Credit shall, as
of the Effective Date, be deemed for all purposes of this Agreement to be a
Commercial Letter of Credit issued hereunder. In addition to the foregoing
and in addition to Company requesting that Lenders make Revolving Loans
pursuant to subsection 2.1A(iii), and that Swing Line Lender make Swing
Line Loans pursuant to subsection 2.1A(iv), Company may request, in
accordance with the provisions of this subsection 3.1, from time to time
during the period from the Effective Date to but excluding the Revolving
Loan Commitment Termination Date, that one or more Lenders issue Letters of
Credit for the account of Company for the purposes specified in the
definitions of Commercial Letters of Credit and Standby Letters of Credit.
Subject to the terms and conditions of this Agreement and in reliance upon
the representations and warranties of Company herein set forth, any one or
more Lenders may, but (except as provided in subsection 3.1B(ii)) shall not
be obligated to, issue such Letters of Credit in accordance with the
provisions of this subsection 3.1; provided that Company shall not request
that any Lender issue (and no Lender shall issue):
(i) any Letter of Credit if, after giving effect to such
issuance, the Total Utilization of Revolving Loan Commitments would
<PAGE>
exceed the Revolving Loan Commitments then in effect;
(ii) any Letter of Credit if, after giving effect to such
issuance, the Letter of Credit Usage would exceed $5,000,000;
(iii) any Standby Letter of Credit having an expiration date
later than the earlier of (a) the Revolving Loan Commitment
Termination Date and (b) the date which is one year from the date of
issuance of such Standby Letter of Credit; provided that the
immediately preceding clause (b) shall not prevent any Issuing Lender
from agreeing that a Standby Letter of Credit will automatically be
extended for one or more successive periods not to exceed one year
each unless such Issuing Lender elects not to extend for any such
additional period; provided further that, unless Requisite Lenders
otherwise consent, such Issuing Lender shall give notice that it will
not extend such Standby Letter of Credit if it has knowledge that an
Event of Default has occurred and is continuing on the last day on
which such Issuing Lender may give notice to the beneficiary that it
will not extend such Standby Letter of Credit;
(iv) any Commercial Letter of Credit (a) having an expiration
date later than the earlier of (X) 30 days prior to the Revolving Loan
Commitment Termination Date and (Y) the date which is 180 days from
the date of issuance of such Commercial Letter of Credit or (b) that
is otherwise unacceptable to the applicable Issuing Lender in its
reasonable discretion;
(v) any Letter of Credit denominated in a currency other than
Dollars; or
(vi) any Letter of Credit during any period when a Lender
Default exists, unless each Issuing Lender has entered into
arrangements satisfactory to it and Company to eliminate such Issuing
Lender's risk with respect to the Defaulting Lender, including by cash
collateralizing such Defaulting Lender's Pro Rata Share of the Letter
of Credit Usage (after giving effect to the issuance of the proposed
Letter of Credit).
B. MECHANICS OF ISSUANCE.
(i) Notice of Issuance. Whenever Company desires the issuance
of a Letter of Credit, it shall deliver to Chase Co-Administrative
Agent, at the Funding and Payment Office, a Notice of Issuance of
Letter of Credit no later than 12:00 Noon (New York time) at least
five Business Days, or such shorter period as may be agreed to by the
Issuing Lender in any particular instance, in advance of the proposed
date of issuance. The Notice of Issuance of Letter of Credit shall
specify (a) the proposed date of issuance (which shall be a Business
Day), (b) the face amount of or maximum aggregate liability under, as
applicable, the Letter of Credit, (c) the expiration date of the
Letter of Credit, (d) the name and address of the beneficiary, and
(e) the verbatim text of the proposed Letter of Credit or the proposed
terms and conditions thereof, including a precise description of any
documents and the verbatim text of any certificates to be presented by
the beneficiary which, if presented by the beneficiary prior to the
expiration date of the Letter of Credit, would require the Issuing
Lender to make payment under the Letter of Credit; provided that the
Issuing Lender, in its reasonable discretion, may require changes in
the text of the proposed Letter of Credit or any such documents or
certificates; provided further that no Letter of Credit shall require
payment against a conforming draft or other request for payment to be
made thereunder on the same business day (under the laws of the
jurisdiction in which the office of the Issuing Lender to which such
<PAGE>
draft or other request for payment is required to be presented is
located) that such draft or other request for payment is presented if
such presentation is made after 10:00 A.M. (in the time zone of such
office of the Issuing Lender) on such business day.
Company shall notify the applicable Issuing Lender (and Chase
Co-Administrative Agent, if Chase Co-Administrative Agent is not such
Issuing Lender) prior to the issuance of any Letter of Credit in the
event that any of the matters to which Company is required to certify
in the applicable Notice of Issuance of Letter of Credit is no longer
true and correct as of the proposed date of issuance of such Letter of
Credit, and upon the issuance of any Letter of Credit, Company shall
be deemed to have re-certified, as of the date of such issuance, as to
the matters to which Company is required to certify in the applicable
Notice of Issuance of Letter of Credit.
(ii) Determination of Issuing Lender. Upon receipt by Chase Co-
Administrative Agent of a Notice of Issuance of Letter of Credit
pursuant to subsection 3.1B(i) requesting the issuance of a Letter of
Credit, in the event Chase Co-Administrative Agent elects to issue
such Letter of Credit, Chase Co-Administrative Agent shall promptly so
notify Company, and such Chase Co-Administrative Agent shall be the
Issuing Lender with respect thereto. In the event that Chase Co-
Administrative Agent, in its sole discretion, elects not to issue such
Letter of Credit, Chase Co-Administrative Agent shall promptly so
notify the Company, whereupon Company may request any other Lender to
issue such Letter of Credit by delivering to such Lender a copy of the
applicable Notice of Issuance of Letter of Credit. Any Lender so
requested to issue such Letter of Credit shall promptly notify Company
and Chase Co-Administrative Agent whether or not, in its sole
discretion, it has elected to issue such Letter of Credit, and any
such Lender which so elects to issue such Letter of Credit shall be
the Issuing Lender with respect thereto. In the event that all other
Lenders shall have declined to issue such Letter of Credit, notwith-
standing the prior election of Chase Co-Administrative Agent not to
issue such Letter of Credit, Chase Co-Administrative Agent shall be
obligated to issue such Letter of Credit and shall be the Issuing
Lender with respect thereto, notwithstanding the fact that the sum of
the Letter of Credit Usage with respect to such Letter of Credit and
with respect to all other Letters of Credit issued by Chase Co-
Administrative Agent, when aggregated with Chase Co-Administrative
Agent's outstanding Revolving Loans and Swing Line Loans, may exceed
Chase Co-Administrative Agent's Revolving Loan Commitment then in
effect.
(iii) Issuance of Letter of Credit. Upon satisfaction or waiver
(in accordance with subsection 10.6) of the conditions set forth in
subsection 4.5, the Issuing Lender shall issue the requested Letter of
Credit in accordance with the Issuing Lender's standard operating
procedures (any such issuance by Chase Co-Administrative Agent being
effected through the Funding and Payment Office), and upon its
issuance of such Letter of Credit the Issuing Lender shall promptly
notify Chase Co-Administrative Agent and each Lender of such issuance,
which notice shall be accompanied by a copy of such Letter of Credit.
(iv) Reports to Lenders. Within 30 days after the end of each
calendar quarter ending after the Closing Date, so long as any Letter
of Credit shall have been outstanding during such calendar quarter,
each Issuing Lender shall deliver to Chase Co-Administrative Agent and
Chase Co-Administrative Agent shall deliver to each Lender a report
setting forth for such calendar quarter the daily maximum amount
available to be drawn under the Letters of Credit that were
outstanding during such calendar quarter.
<PAGE>
C. LENDERS' PURCHASE OF PARTICIPATIONS IN LETTERS OF CREDIT.
Immediately upon the issuance of each Letter of Credit, each Lender having
a Revolving Loan Commitment shall be deemed to, and hereby agrees to, have
irrevocably purchased from the Issuing Lender a participation in such
Letter of Credit and any drawings honored or payments made thereunder in an
amount equal to such Lender's Pro Rata Share (with respect to the Revolving
Loan Commitments) of the maximum amount which is or at any time may become
available to be drawn or required to be paid thereunder.
3.2 LETTER OF CREDIT FEES.
Company agrees to pay the following amounts to each Issuing Lender
with respect to Letters of Credit issued by it for the account of Company:
(i) with respect to each Letter of Credit, (a) a fronting fee
equal to 1/4 of 1% per annum of the daily maximum amount available to
be drawn under such Letter of Credit and (b) a Letter of Credit fee
equal to the product of (x) the Applicable Eurodollar Rate Margin with
respect to Revolving Loans and (y) the daily maximum amount available
to be drawn under such Letter of Credit, in each case payable in
arrears on and to each January 15, April 15, July 15 and October 15 of
each year, commencing on January 15, 1997, and computed on the basis
of a 360-day year for the actual number of days elapsed; and
(ii) with respect to the issuance, amendment or transfer of each
Letter of Credit and each drawing made thereunder (without duplication
of the fees payable under clause (i) above), documentary and
processing charges in accordance with such Issuing Lender's standard
schedule for such charges in effect at the time of such issuance,
amendment, transfer or drawing, as the case may be.
Promptly upon receipt by such Issuing Lender of any amount described in
clause (i)(b) of this subsection 3.2, such Issuing Lender shall distribute
to each other Lender its Pro Rata Share of such amount.
3.3 DRAWINGS AND PAYMENTS AND REIMBURSEMENT OF AMOUNTS PAID UNDER LETTERS
OF CREDIT.
A. RESPONSIBILITY OF ISSUING LENDER WITH RESPECT TO REQUESTS FOR
DRAWINGS AND PAYMENTS. In determining whether to honor any drawing or
request for payment under any Letter of Credit by the beneficiary thereof,
the Issuing Lender shall be responsible only to determine that the
documents and certificates required to be delivered under such Letter of
Credit have been delivered and that they comply on their face with the
requirements of such Letter of Credit.
B. REIMBURSEMENT BY COMPANY OF AMOUNTS PAID UNDER LETTERS OF CREDIT.
In the event an Issuing Lender has determined to honor a drawing or request
for payment under a Letter of Credit issued by it, such Issuing Lender
shall immediately notify Company and Chase Co-Administrative Agent, and
Company shall reimburse such Issuing Lender on or before the Business Day
immediately following the date on which such drawing is honored or such
payment is made (the applicable "REIMBURSEMENT DATE"), in an amount in same
day funds equal to the amount of such drawing; provided that, anything
contained in this Agreement to the contrary notwithstanding, (i) unless
Company shall have notified Chase Co-Administrative Agent and such Issuing
Lender prior to 12:00 Noon (New York time) on the date of such drawing or
request for payment that Company intends to reimburse such Issuing Lender
for the amount of such honored drawing or payment with funds other than the
proceeds of Revolving Loans, Company shall be deemed to have given a timely
Notice of Borrowing to Chase Co-Administrative Agent requesting Lenders to
make Revolving Loans which are Base Rate Loans, on the applicable
Reimbursement Date in an amount equal to the amount of such honored drawing
<PAGE>
or payment and (ii) subject to satisfaction or waiver of the conditions
specified in subsection 4.4B, Lenders shall, on the applicable
Reimbursement Date, make Revolving Loans and in the amount of such honored
drawing or payment, the proceeds of which shall be applied directly by
Chase Co-Administrative Agent to reimburse such Issuing Lender for the
amount of such honored drawing or payment; provided further that if for any
reason proceeds of Revolving Loans are not received by such Issuing Lender
on the applicable Reimbursement Date in an amount equal to the amount of
such honored drawing or payment, Company shall reimburse such Issuing
Lender, on demand, in an amount in Dollars and in same day funds equal to
the excess of the amount of such honored drawing or payment over the
aggregate amount of such Revolving Loans, if any, which are so received.
Nothing in this subsection 3.3B shall be deemed to relieve any Lender from
its obligation to make Revolving Loans on the terms and conditions set
forth in this Agreement, and Company shall retain any and all rights it may
have against any Lender resulting from the failure of such Lender to make
such Revolving Loans under this subsection 3.3B.
C. PAYMENT BY LENDERS OF UNREIMBURSED PAYMENTS UNDER LETTERS OF
CREDIT.
(i) Payment by Lenders. In the event that Company shall fail
for any reason to reimburse any Issuing Lender as provided in
subsection 3.3B in an amount equal to the amount of any honored
drawing or payment made by such Issuing Lender under a Letter of
Credit issued by it, such Issuing Lender shall promptly notify each
other Lender of the unreimbursed amount of such honored drawing or
payment and of such other Lender's respective participation therein
based on such Lender's Pro Rata Share of the Revolving Loan
Commitments. Each Lender shall make available to such Issuing Lender
an amount equal to its respective participation, in same day funds, at
the office of such Issuing Lender specified in such notice, not later
than 12:00 Noon (New York time) on the first business day (under the
laws of the jurisdiction in which such office of such Issuing Lender
is located) after the date notified by such Issuing Lender. In the
event that any Lender fails to make available to such Issuing Lender
on such business day the amount of such Lender's participation in such
Letter of Credit as provided in this subsection 3.3C, such Issuing
Lender shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the rate customarily used by
such Issuing Lender for the correction of errors among banks for three
Business Days and thereafter at the Base Rate. Nothing in this
subsection 3.3C shall be deemed to prejudice the right of any Lender
to recover from any Issuing Lender any amounts made available by such
Lender to such Issuing Lender pursuant to this subsection 3.3C in the
event that it is determined by the final judgment of a court of
competent jurisdiction that the payment with respect to a Letter of
Credit by such Issuing Lender in respect of which payment was made by
such Lender constituted gross negligence or willful misconduct on the
part of such Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received From
Company. In the event any Issuing Lender shall have been reimbursed
by other Lenders pursuant to subsection 3.3C(i) for all or any portion
of any honored drawing or payment made by such Issuing Lender under a
Letter of Credit issued by it, such Issuing Lender shall distribute to
each other Lender which has paid all amounts payable by it under
subsection 3.3C(i) with respect to such honored drawing or payment
such other Lender's Pro Rata Share of all payments subsequently
received by such Issuing Lender from Company in reimbursement of such
honored drawing or payment when such payments are received. Any such
distribution shall be made to a Lender at its primary address set
forth below its name on the appropriate signature page hereof or at
<PAGE>
such other address as such Lender may request.
D. INTEREST ON AMOUNTS PAID UNDER LETTERS OF CREDIT.
(i) Payment of Interest by Company. Company agrees to pay to
each Issuing Lender, with respect to drawings honored or payments made
under any Letters of Credit issued by it, interest on the amount paid
by such Issuing Lender in respect of each such drawing or payment from
the date such drawing is honored or payment is made to but excluding
the date such amount is reimbursed by Company (including any such
reimbursement out of the proceeds of Revolving Loans pursuant to
subsection 3.3B) at a rate equal to (a) for the period from the date
such drawing is honored or payment is made to but excluding the
applicable Reimbursement Date, the Base Rate plus the Applicable Base
Rate Margin with respect to Revolving Loans, and (b) thereafter, a
rate which is 2% per annum in excess of the rate of interest described
in the foregoing clause (a). Interest payable pursuant to this
subsection 3.3D(i) shall be computed on the basis of a 360-day year
for the actual number of days elapsed in the period during which it
accrues and shall be payable on demand or, if no demand is made, on
the date on which the related drawing or payment under a Letter of
Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender.
Promptly upon receipt by any Issuing Lender of any payment of interest
pursuant to subsection 3.3D(i), (a) such Issuing Lender shall
distribute to each other Lender, out of the interest received by such
Issuing Lender in respect of the period from the date of the
applicable honored drawing or payment under a Letter of Credit issued
by such Issuing Lender to but excluding the date on which such Issuing
Lender is reimbursed for the amount of such drawing or payment
(including any such reimbursement out of the proceeds of Revolving
Loans pursuant to subsection 3.3B), the amount that such other Lender
would have been entitled to receive in respect of the Letter of Credit
fee that would have been payable in respect of such Letter of Credit
for such period pursuant to subsection 3.2 if no drawing had been
honored or payment had been made under such Letter of Credit, and
(b) in the event such Issuing Lender shall have been reimbursed by
other Lenders pursuant to subsection 3.3C(i) for all or any portion of
such drawing or payment, such Issuing Lender shall distribute to each
other Lender which has paid all amounts payable by it under subsection
3.3C(i) with respect to such drawing or payment such other Lender's
Pro Rata Share of any interest received by such Issuing Lender in
respect of that portion of such drawing or payment so reimbursed by
other Lenders for the period from the date on which such Issuing
Lender was so reimbursed by other Lenders to and including the date on
which such portion of such drawing or payment is reimbursed by
Company. Any such distribution shall be made to a Lender at its
Lending Office set forth on Schedule 2.1 or at such other address as
such Lender may request.
3.4 OBLIGATIONS ABSOLUTE.
The obligation of Company to reimburse each Issuing Lender for
drawings honored or payments made under the Letters of Credit issued by it
and to repay any Revolving Loans made by Lenders pursuant to subsection
3.3B and the obligations of Lenders under subsection 3.3C(i) shall be
unconditional and irrevocable and shall be paid strictly in accordance with
the terms of this Agreement under all circumstances including, without
limitation, the following circumstances:
(i) any lack of validity or enforceability of any Letter of
Credit;
<PAGE>
(ii) the existence of any claim, set-off, defense or other right
which Company or any Lender may have at any time against a beneficiary
or any transferee of any Letter of Credit (or any Persons for whom any
such transferee may be acting), any Issuing Lender or other Lender or
any other Person or, in the case of a Lender, against Company whether
in connection with this Agreement, the transactions contemplated
herein or any unrelated transaction (including any underlying
transaction between Company or one of its Subsidiaries and the
beneficiary for which any Letter of Credit was procured);
(iii) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue
or inaccurate in any respect;
(iv) payment by the applicable Issuing Lender under any Letter of
Credit against presentation of a demand, draft or certificate or other
document which does not substantially comply with the terms of such
Letter of Credit;
(v) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Company or
any of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by
any party thereto;
(vii) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event of
Default shall have occurred and be continuing;
provided, in each case, that payment by the applicable Issuing Lender under
the applicable Letter of Credit shall not have constituted gross negligence
or willful misconduct of such Issuing Lender under the circumstances in
question (as determined by a final judgment of a court of competent
jurisdiction).
3.5 INDEMNIFICATION; NATURE OF ISSUING LENDER'S DUTIES.
A. INDEMNIFICATION. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including
reasonable fees, expenses and disbursements of counsel and allocated costs
of internal counsel) which such Issuing Lender may incur or be subject to
as a consequence, direct or indirect, of (i) the issuance of any Letter of
Credit by such Issuing Lender, other than as a result of (a) the gross
negligence or willful misconduct of such Issuing Lender as determined by a
final judgment of a court of competent jurisdiction or (b) subject to the
following clause (ii), the wrongful dishonor by such Issuing Lender of a
proper demand for payment made under any Letter of Credit issued by it or
(ii) the failure of such Issuing Lender to honor a drawing or other request
for payment under any such Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or future de jure or
de facto government or governmental authority (all such acts or omissions
herein called "GOVERNMENTAL ACTS").
B. NATURE OF ISSUING LENDERS' DUTIES. As between Company and any
Issuing Lender, Company assumes all risks of the acts and omissions of, or
misuse of the Letters of Credit issued by such Issuing Lender by, the
respective beneficiaries of such Letters of Credit. In furtherance and not
<PAGE>
in limitation of the foregoing, such Issuing Lender shall not be
responsible for: (i) the form, validity, sufficiency, accuracy, genuine-
ness or legal effect of any document submitted by any party in connection
with the application for and issuance of any such Letter of Credit, even if
it should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign
any such Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or ineffective
for any reason; (iii) failure of the beneficiary of any such Letter of
Credit to comply fully with any conditions required in order to draw upon
such Letter of Credit; (iv) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex
or otherwise, whether or not they be in cipher; (v) errors in interpreta-
tion of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any
such Letter of Credit or of the proceeds thereof; (vii) the misapplication
by the beneficiary of any such Letter of Credit of the proceeds of any
drawing or payment under such Letter of Credit; or (viii) any consequences
arising from causes beyond the control of such Issuing Lender, including,
without limitation, any Governmental Acts, and none of the above shall
affect or impair, or prevent the vesting of, any of such Issuing Lender's
rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any
action taken or omitted by any Issuing Lender under or in connection with
the Letters of Credit issued by it or any documents and certificates
delivered thereunder, if taken or omitted in good faith, shall not put such
Issuing Lender under any resulting liability to Company.
Notwithstanding anything to the contrary contained in this subsection
3.5, Company shall retain any and all rights it may have against any
Issuing Lender for any liability arising solely out of the gross negligence
or willful misconduct of such Issuing Lender, as determined by a final
judgment of a court of competent jurisdiction.
3.6 INCREASED COSTS AND TAXES RELATING TO LETTERS OF CREDIT.
In the event that any law, treaty or governmental rule, regulation or
order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the
Closing Date, or compliance by any Issuing Lender or Lender with any
guideline, request or directive issued or made after the Closing Date by
any central bank or other governmental or quasi-governmental authority
(whether or not having the force of law):
(i) results in any change in the basis of taxation of such
Issuing Lender or Lender (or its applicable lending or letter of
credit office) (other than a change with respect to any Tax on the
overall net income of such Issuing Lender or Lender) with respect to
the issuing or maintaining of any Letters of Credit or the purchasing
or maintaining of any participations therein or any other obligations
under this Section 3, whether directly or by such being imposed on or
suffered by any particular Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve
(including, without limitation, any marginal, emergency, supplemental,
special or other reserve), special deposit, compulsory loan, FDIC
insurance or similar requirement in respect of any Letters of Credit
issued by any Issuing Lender or participations therein purchased by
<PAGE>
any Lender; or
(iii) imposes any other condition on or affecting such Issuing
Lender or Lender (or its applicable lending or letter of credit
office) regarding this Section 3 or any Letter of Credit or any
participation therein;
and the result of any of the foregoing is to increase the cost to such
Issuing Lender or Lender of agreeing to issue, issuing or maintaining any
Letter of Credit or agreeing to purchase, purchasing or maintaining any
participation therein or to reduce any amount received or receivable by
such Issuing Lender or Lender (or its applicable lending or letter of
credit office) with respect thereto; then, in any case, Company shall
promptly pay to such Issuing Lender or Lender, upon receipt of the
statement referred to in the next sentence, such additional amount or
amounts (reasonably determined by such Issuing Lender or Lender) as may be
necessary to compensate such Issuing Lender or Lender for any such
increased cost or reduction in amounts received or receivable hereunder.
Such Issuing Lender or Lender shall deliver to Company a written statement,
setting forth in reasonable detail the basis for calculating the additional
amounts owed to such Issuing Lender or Lender under this subsection 3.6,
which statement shall be prima facie evidence of such additional amounts.
SECTION 4.
CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make (or maintain, as the case may be)
Loans and the issuance of Letters of Credit hereunder are subject to the
satisfaction of the following conditions.
4.1 CONDITIONS TO ADDITIONAL TRANCHE B TERM LOANS.
The obligations of Lenders to maintain the Existing Loans and the
Existing Letters of Credit as Loans and Letters of Credit hereunder and to
make the initial funding of Additional Tranche B Term Loans are, in
addition to the conditions precedent specified in subsection 4.4 and either
subsection 4.2 or 4.3, subject to prior or concurrent satisfaction of the
following conditions:
A. COMPANY DOCUMENTS. On or before the Effective Date, Company shall
deliver or cause to be delivered to Lenders (or to Chase Co-Administrative
Agent for Lenders with sufficient originally executed copies, where
appropriate, for each Lender and its counsel) the following, each, unless
otherwise noted, dated the Effective Date:
(i) Certified copies of its Certificate of Incorporation,
together with a good standing certificate from the Secretary of State
of the State of Delaware and each other state in which it is qualified
as a foreign corporation to do business, each dated a recent date
prior to the Effective Date;
(ii) Copies of its Bylaws, certified as of the Effective Date by
its corporate secretary or an assistant secretary;
(iii) Resolutions of its Board of Directors approving and
authorizing the execution, delivery and performance of this Agreement
and the other Loan Documents and Related Agreements to which it is a
party, certified as of the Effective Date by its corporate secretary
or an assistant secretary as being in full force and effect without
modification or amendment;
(iv) Signature and incumbency certificates of its officers
<PAGE>
executing this Agreement and the other Loan Documents;
(v) Executed originals of this Agreement and (to the extent not
previously executed and delivered to Lenders) the other Loan Documents
to which it is a party; and
(vi) Such other documents as Agents may reasonably request.
B. SUBSIDIARY DOCUMENTS. On or before the Effective Date, Company
shall deliver or cause to be delivered to Lenders (or to Chase Co-
Administrative Agent for Lenders with sufficient originally executed
copies, where appropriate, for each Lender and its counsel) the following,
each, unless otherwise noted, dated the Effective Date:
(i) Certified copies of the Certificate of Incorporation (or
equivalent organizational document) of each domestic corporate Wholly
Owned Subsidiary of Company (or, in lieu thereof, a certificate of the
corporate secretary of such Subsidiary certifying as of the Effective
Date that its Certificate of Incorporation delivered on the Closing
Date pursuant to subsection 4.1 of the Existing Credit Agreement is in
full force and effect without modification or amendment), together
with a good standing certificate from the secretary of state of its
jurisdiction of incorporation and each other state in which it is
qualified as a foreign corporation to do business (except any such
other state or states in which failure to be so qualified could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect), each dated a recent date prior to the
Effective Date;
(ii) Copies of the Bylaws of each such domestic corporate Wholly
Owned Subsidiary of Company, certified as of the Effective Date by its
corporate secretary, or an assistant secretary (or, in lieu thereof, a
certificate of such secretary certifying as of the Effective Date that
the Bylaws of such Subsidiary delivered on the Closing Date pursuant
to subsection 4.1 of the Existing Credit Agreement are in full force
and effect without modification or amendment);
(iii) Resolutions of the Board of Directors of each such domestic
corporate Wholly Owned Subsidiary of Company approving and authorizing
the execution, delivery and performance of the Subsidiary Guaranty,
the Security Agreement, the Pledge Agreement, the Trademark Security
Agreement, the Limited Partnership Security Agreement (as applicable)
and the other Loan Documents and Related Agreements to which such
Subsidiary is party, certified as of the Effective Date by its
corporate secretary or an assistant secretary as being in full force
and effect without modification or amendment;
(iv) Conformed copies of the partnership agreement of each
domestic Subsidiary of Company that is a partnership, certified by
each general partner of such partnership Subsidiary as of the
Effective Date as being in full force and effect without modification
or amendment (or, in lieu thereof, a certificate of such general
partner certifying as of the Effective Date that the partnership
agreement of such partnership Subsidiary delivered on the Closing Date
pursuant to subsection 4.1 of the Existing Credit Agreement is in full
force and effect without modification or amendment);
(v) Certificates of limited partnership or statements of
partnership, as applicable, of each such Subsidiary of Company that is
a partnership, certified by the Secretary of State (or similar
official) of its jurisdiction of formation (or, in lieu thereof, a
certificate of the general partner of such partnership Subsidiary
certifying as of the Effective Date that the certificate of limited
<PAGE>
partnership or statement of partnership of such Subsidiary delivered
on the Closing Date pursuant to subsection 4.1 of the Existing Credit
Agreement is in full force and effect without modification or
amendment), and a certificate of existence or good standing, as the
case may be, from the Secretary of State (or similar official) of such
jurisdiction, together with a certificate or other evidence of good
standing from the secretary of state of each other state in which it
is authorized as a foreign limited partnership to do business (except
any such other state or states in which failure to be so qualified
could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect), each dated as of a recent date prior
to the Effective Date;
(vi) All documents executed by the appropriate partners
approving or authorizing the execution, delivery and performance of
the Subsidiary Guaranty, the Security Agreement, the Pledge Agreement,
the Trademark Security Agreement, the Limited Partnership Security
Agreement (as applicable) and the other Loan Documents and Related
Agreements to which such Subsidiary is a party, each certified as of
the Effective Date by the general partner of such partnership
Subsidiary or other Loan Party;
(vii) Signature and incumbency certificates of its officers,
partners or other Persons executing the Subsidiary Guaranty, the
Security Agreement, the Pledge Agreement, the Trademark Security
Agreement, the Limited Partnership Security Agreement (as applicable)
and the other Loan Documents to which such Subsidiary is party;
(viii) Executed originals (to the extent not previously executed
and delivered to Lenders) of the Subsidiary Guaranty, the Security
Agreement, the Pledge Agreement and the other Loan Documents to which
any corporate or partnership Subsidiary of Company is a party; and
(ix) Such other documents as Agents may reasonably request.
C. NO MATERIAL ADVERSE EFFECT. Since December 31, 1996, no Material
Adverse Effect (in the sole opinion of Arranging Agents) shall have
occurred.
D. NECESSARY CONSENTS. Company shall have obtained all consents
necessary or advisable in connection with the transactions contemplated by
the Loan Documents and Related Agreements to occur on or prior to the
Effective Date and the continued operation of the business conducted by
Company and its Subsidiaries, and each of the foregoing shall be in full
force and effect and in form and substance satisfactory to Arranging Agents
(except as disclosed to and approved by Arranging Agents).
E. [INTENTIONALLY OMITTED].
F. [INTENTIONALLY OMITTED].
G. OPINIONS OF LOAN PARTIES' COUNSEL. Lenders and their respective
counsel shall have received originally executed copies of one or more
favorable written opinions of White & Case and Bryan Cave LLP, counsel for
the Loan Parties, in form and substance reasonably satisfactory to
Arranging Agents and their counsel, dated as of the Effective Date and
setting forth substantially the matters in the opinions designated in
Exhibit XI annexed hereto and as to such other matters as Arranging Agents
acting on behalf of Lenders may reasonably request. Company hereby
requests that such counsel deliver such opinions on the Effective Date to
Agents and Lenders.
H. FEES. Company shall have paid to Agents, for distribution (as
<PAGE>
appropriate hereunder or under the terms of the Existing Credit Agreement,
as the case may be) to Agents and Lenders, the fees payable on the
Effective Date referred to in subsection 2.3C.
I. [INTENTIONALLY OMITTED].
J. CORPORATE STRUCTURE; MANAGEMENT.
(i) Corporate Structure. The corporate organizational
structure, capital structure and ownership of Company and its
Subsidiaries, after giving effect to the NSA Acquisition and the
Accelerated Acquisition, shall be as set forth on Schedule 4.1J
annexed hereto.
(ii) Management. The management structure of Company after
giving effect to the NSA Acquisition and the Accelerated Acquisition
shall be as set forth on Schedule 4.1J annexed hereto.
K. BUSINESS PLAN. Arranging Agents shall have received a business
plan in form, scope and substance reasonably satisfactory to Arranging
Agents submitted by management of Company and its Subsidiaries with respect
to the incorporation of the Accelerated Acquired Assets and the NSA
Acquired Assets into Company's existing business.
L. REPAYMENT OF SWING LINE LOANS. On the Effective Date, immediately
before and after giving effect to any borrowings hereunder on such date, no
Swing Line Loans shall be outstanding.
M. NO EVENT OF DEFAULT. Company shall have delivered to Chase Co-
Administrative Agent an Officer's Certificate, in form and substance
satisfactory to Chase Co-Administrative Agent, to the effect that
immediately prior to the Effective Date, no event has occurred and is
continuing that would constitute an Event of Default or Potential Event of
Default under the Existing Credit Agreement.
N. COMPLETION OF PROCEEDINGS. All corporate and other proceedings
taken or to be taken in connection with the transactions contemplated
hereby and all documents incidental thereto not previously found acceptable
by Arranging Agents, acting on behalf of Requisite Lenders, and their
counsel shall be satisfactory in form and substance to Arranging Agents and
such counsel, and Arranging Agents and such counsel shall have received all
such counterpart originals or certified copies of such documents as
Arranging Agents may reasonably request.
Each Lender, by delivering its signature page to this Agreement and,
in the case of Lenders having Tranche B Term Loan Exposure, funding its
Tranche B Term Loan Commitment with respect to either the Accelerated
Acquisition Loans or the NSA Acquisition Loans on the Effective Date, shall
be deemed to have acknowledged receipt of, and consented to and approved
(as long as substantially in the form delivered to Lenders including any
changed pages thereto delivered to Lenders), each Loan Document and each
other document required to be approved by Requisite Lenders or Lenders, as
applicable.
4.2 CONDITIONS TO ACCELERATED ACQUISITION LOANS.
The obligations of Lenders to make the Accelerated Acquisition Loans
are, in addition to the conditions precedent specified in subsections 4.1
and 4.4, subject to satisfaction of the following conditions:
A. NO MATERIAL ADVERSE EFFECT. Since July 31, 1997, there shall not
have been an adverse change, or any development involving a prospective
adverse change, in or affecting the Accelerated Acquired Assets or the
<PAGE>
general affairs, management, financial position, shareholders' equity or
results of operation of Accelerated and its Subsidiaries which is, in the
reasonable judgment of Arranging Agents, Co-Administrative Agents or
Requisite Lenders, material.
B. ACCELERATED ACQUISITION AGREEMENT. On the Funding Date for the
Accelerated Acquisition Loans, (i) Arranging Agents shall have received
executed or conformed copies of the Accelerated Acquisition Agreement and
any amendments thereto and documents executed in connection therewith,
(ii) the Accelerated Acquisition Agreement shall be in full force and
effect and no term or condition thereof shall have been amended, modified
or waived after the execution thereof except with the prior written consent
of Arranging Agents, (iii) the parties thereto shall not have failed in any
material respect to perform any material obligation or covenant required by
the Accelerated Acquisition Agreement to be performed or complied with by
any of them on or before the Funding Date for the Accelerated Acquisition
Loans, and (iv) Arranging Agents shall have received an Officer's
Certificate from Company to the effect set forth in clauses (ii) and (iii).
In addition, all opinions by counsel delivered in connection with the
Accelerated Acquisition to Company or any of its Subsidiaries shall be, to
the extent agreed to by the person delivering such opinion, addressed to
Agents and Lenders or accompanied by written authorization from each person
delivering such an opinion stating that Agents and Lenders may rely on such
opinion as though it were addressed to them.
C. CONSUMMATION OF ACCELERATED ACQUISITION.
(i) All conditions to the Accelerated Acquisition set forth in
the Accelerated Acquisition Agreement shall have been satisfied or the
fulfillment of any such conditions shall have been waived with the
consent of Arranging Agents;
(ii) Arranging Agents shall have received evidence in form and
substance satisfactory to Arranging Agents that the Accelerated
Acquisition shall become effective in accordance with the terms of the
Accelerated Acquisition Agreement immediately upon the Funding Date
for the Accelerated Acquisition Loans;
(iii) the aggregate cash consideration paid to Accelerated in
connection with the Accelerated Acquisition shall not exceed
$32,000,000;
(iv) Transaction Costs relating to the Accelerated Acquisition,
together with Transaction Costs relating to the NSA Acquisition (if
the NSA Acquisition precedes the Accelerated Acquisition), shall not
exceed $2,500,000, and Arranging Agents shall have received evidence
satisfactory in form and substance to Arranging Agents to such effect:
and
(v) Arranging Agents shall have received an Officer's
Certificate of Company to the effect set forth in clauses (i)-(iv)
above and stating that Company will proceed to consummate the
Accelerated Acquisition immediately upon the making of the Accelerated
Acquisition Loans.
D. FINANCIAL STATEMENTS; PRO FORMA BALANCE SHEET. On or before the
Funding Date for the Accelerated Acquisition Loans, Lenders shall have
received from Company (i) financial statements of Accelerated and its
Subsidiaries for the seven-month period ending July 31, 1997, consisting of
a balance sheet and the related consolidated statements of income,
stockholders' equity and cash flows for such seven-month period, all in
reasonable detail and prepared in accordance with GAAP and certified by the
chief financial officer of Company that they fairly present the financial
<PAGE>
condition of Accelerated and its Subsidiaries as at the date indicated and
the results of their operations and cash flows for the period indicated,
subject to changes resulting from audit and normal year-end adjustments,
and (ii) pro forma consolidated and consolidating balance sheets of Company
and its Subsidiaries as at July 31, 1997 prepared in accordance with GAAP
and reflecting the consummation of the Accelerated Acquisition, the related
financings and the other transactions contemplated by the Loan Documents
and the Accelerated Acquisition Agreement, which pro forma balance sheets
shall be in form and substance satisfactory to Requisite Lenders.
E. REPAYMENT OF EXISTING DEBT. All Indebtedness of Accelerated and
its Subsidiaries (other than Indebtedness in an aggregate amount not
exceeding $1,250,000 identified in a schedule delivered by Company to
Arranging Agents prior to the Funding Date for the Accelerated Acquisition,
the terms and conditions of which Indebtedness shall be in form and
substance satisfactory to Arranging Agents (it being understood that such
schedule shall be deemed to supplement Schedule 7.1 annexed hereto for all
purposes of this Agreement)) shall have been paid in full, redeemed or
defeased, any commitments to lend thereunder shall have been terminated,
all security interests created to secure the obligations arising in
connection therewith shall have been terminated or effectively assigned to
Collateral Agent for the benefit of Agents and Lenders, and Company shall
have delivered to Chase Co-Administrative Agent UCC-3 termination state-
ments or assignments (or comparable forms) and any and all other
instruments of release, satisfaction, assignment and/or reconveyance (or
evidence of the filing thereof) as may be necessary or advisable to
terminate or assign to Agents and Lenders all such security interests and
all other security interests in the Collateral.
F. NECESSARY CONSENTS. Company shall have obtained all material
consents necessary or advisable in connection with the Accelerated
Acquisition, the transactions contemplated by the Loan Documents and
Related Agreements to occur on or prior to the Funding Date for the
Accelerated Acquisition Loans and the continued operation of the business
conducted by Company and its Subsidiaries, and each of the foregoing shall
be in full force and effect and in form and substance satisfactory to
Arranging Agents (except as disclosed to and approved by Arranging Agents).
All applicable waiting periods shall have expired without any action being
taken or threatened by any competent authority which would restrain,
prevent or otherwise impose adverse conditions on the Accelerated
Acquisition or the financing thereof, and no action, request for stay,
petition for review or rehearing, reconsideration or appeal shall be
pending and any time for agency action to set aside its consent on its own
motion shall have expired.
G. REPAYMENT OF REVOLVING LOANS. On the Funding Date for the
Accelerated Acquisition Loans, Arranging Agents shall have received
evidence reasonably satisfactory to them that after giving effect to the
payment of consideration for the Accelerated Acquisition, the repayment of
existing Indebtedness of Accelerated and the payment of Transaction Costs,
the remaining proceeds of the Accelerated Acquisition Loans shall be
applied on such date to repay Revolving Loans.
H. PERFECTION OF SECURITY INTERESTS IN PERSONAL PROPERTY AND MIXED
COLLATERAL. Company shall have taken or caused to be taken such actions in
such a manner so that Collateral Agent has, for the benefit of Agents and
Lenders, a valid and perfected first priority security interest in the
entire personal property and mixed Collateral (subject to Liens permitted
by this Agreement). Such actions shall include: (i) the delivery pursuant
to the applicable Collateral Documents of all promissory notes or other
instruments (duly endorsed, where appropriate, in a manner reasonably
satisfactory to Chase Co-Administrative Agent) evidencing any Collateral;
(ii) delivery to Agents of (a) the results of a recent search, by a Person
<PAGE>
satisfactory to Agents, of all effective UCC financing statements and
fixture filings and all judgment and tax lien filings which may have been
made with respect to any personal or mixed property of Accelerated and its
Subsidiaries, together with copies of all such filings disclosed by such
search; (iii) the delivery to Chase Co-Administrative Agent of UCC
financing statements executed by the applicable Loan Parties as to all such
Collateral granted by such Loan Parties for all jurisdictions as may be
necessary or desirable to perfect Collateral Agent's security interest in
such Collateral; and (iv) the delivery to Chase Co-Administrative Agent of
evidence reasonably satisfactory to Chase Co-Administrative Agent that all
other filings (including, without limitation, UCC-3 termination statements
and filings with the United States Patent and Trademark Office of trademark
assignments for all trademarks used by Company and its Subsidiaries
registered in the United States), recordings and other actions that either
Chase Co-Administrative Agent or Collateral Agent deems necessary or
advisable to establish, preserve and perfect the first priority Liens
(subject to Liens consented to in writing by Co-Administrative Agents and
Requisite Lenders or permitted by subsection 7.2 with respect to such
Collateral) granted to Collateral Agent in personal and mixed property
shall have been made.
I. ENVIRONMENTAL REPORTS. Lenders shall have received reports and/or
other information reasonably satisfactory to Arranging Agents regarding
environmental matters with respect to the Accelerated Acquired Assets.
J. TRANSACTION COSTS. Company shall have delivered to Co-
Administrative Agents and Lenders a schedule, in a form satisfactory to Co-
Administrative Agents, setting forth Company's reasonable best estimate of
the Transaction Costs (other than amounts payable to Agents and Lenders)
relating to the Accelerated Acquisition.
K. FINANCIAL CONDITION CERTIFICATE. Company shall have delivered to
Co-Administrative Agents and Lenders a certificate from the chief financial
officer of Company, in form, scope and substance satisfactory to Arranging
Agents, with appropriate attachments demonstrating that, after giving
effect to the consummation of the Accelerated Acquisition and the making of
the Accelerated Acquisition Loans, Company and its Subsidiaries are
Solvent.
L. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. Compa-
ny shall have delivered to Chase Co-Administrative Agent an Officer's
Certificate, in form and substance satisfactory to Chase Co-Administrative
Agent, to the effect that the representations and warranties in Section 5
hereof are true and correct in all material respects on and as of the
Funding Date for the Accelerated Acquisition Loans to the same extent as
though made on and as of such date and that Company shall have performed in
all material respects all agreements and satisfied all conditions which
this Agreement provides shall be performed or satisfied by them on or
before such date, except as otherwise disclosed to and agreed to in writing
by Chase Co-Administrative Agent.
4.3 CONDITIONS TO NSA ACQUISITION LOANS.
The obligations of Lenders to make the NSA Acquisition Loans are, in
addition to the conditions precedent specified in subsections 4.1 and 4.4,
subject to satisfaction of the following conditions:
A. NO MATERIAL ADVERSE EFFECT. Since December 31, 1996, there shall
not have been an adverse change, or any development involving a prospective
adverse change, in or affecting the NSA Acquired Assets or the general
affairs, management, financial position, shareholders' equity or results of
operation of NSA and its Subsidiaries which is, in the reasonable judgment
of Arranging Agents, Co-Administrative Agents or Requisite Lenders,
<PAGE>
material.
B. NSA ACQUISITION AGREEMENT. On the Funding Date for the NSA
Acquisition Loans, (i) Arranging Agents shall have received executed or
conformed copies of the NSA Acquisition Agreement and any amendments
thereto and documents executed in connection therewith, (ii) the NSA
Acquisition Agreement shall be in full force and effect and no term or
condition thereof shall have been amended, modified or waived after the
execution thereof except with the prior written consent of Arranging
Agents, (iii) the parties thereto shall not have failed in any material
respect to perform any material obligation or covenant required by the NSA
Acquisition Agreement to be performed or complied with by any of them on or
before the Funding Date for the NSA Acquisition Loans, and (iv) Arranging
Agents shall have received an Officer's Certificate from Company to the
effect set forth in clauses (ii) and (iii). In addition, all opinions by
counsel delivered in connection with the NSA Acquisition to Company or any
of its Subsidiaries shall be, to the extent agreed to by the person
delivering such opinion, addressed to Agents and Lenders or accompanied by
written authorization from each person delivering such an opinion stating
that Agents and Lenders may rely on such opinion as though it were
addressed to them.
C. CONSUMMATION OF NSA ACQUISITION.
(i) All conditions to the NSA Acquisition set forth in the NSA
Acquisition Agreement shall have been satisfied or the fulfillment of
any such conditions shall have been waived with the consent of
Arranging Agents;
(ii) Arranging Agents shall have received evidence in form and
substance satisfactory to Arranging Agents that the NSA Acquisition
shall become effective in accordance with the terms of the NSA
Acquisition Agreement immediately upon the Funding Date for the NSA
Acquisition Loans;
(iii) the aggregate cash consideration paid to NSA in connection
with the NSA Acquisition shall not exceed $21,000,000;
(iv) Transaction Costs relating to the NSA Acquisition, together
with Transaction Costs relating to the Accelerated Acquisition (if the
Accelerated Acquisition precedes the NSA Acquisition), shall not
exceed $2,500,000, and Arranging Agents shall have received evidence
satisfactory in form and substance to Arranging Agents to such effect:
and
(v) Arranging Agents shall have received an Officer's Certificate
of Company to the effect set forth in clauses (i)-(iv) above and
stating that Company will proceed to consummate the NSA Acquisition
immediately upon the making of the NSA Acquisition Loans.
D. FINANCIAL STATEMENTS; PRO FORMA BALANCE SHEET. On or before the
Funding Date for the NSA Acquisition Loans, Lenders shall have received
from Company (i) financial statements of NSA and its Subsidiaries for its
fiscal year ending December 31, 1995, consisting of balance sheets and the
related consolidated statements of income, stockholders' equity and cash
flows for such fiscal year, (ii) audited financial statements of NSA and
its Subsidiaries for its fiscal year ending December 31, 1996, consisting
of balance sheets and the related consolidated statements of income,
stockholders' equity and cash flows for such fiscal year, and (iii)
unaudited financial statements of NSA and its Subsidiaries for the seven-
month period ending July 31, 1997, consisting of a balance sheet and the
related consolidated statements of income, stockholders' equity and cash
flows for such seven-month period, all in reasonable detail and prepared in
<PAGE>
accordance with GAAP and certified by the chief financial officer of
Company that they fairly present the financial condition of NSA and its
Subsidiaries as at the dates indicated and the results of their operations
and cash flows for the periods indicated, subject to changes resulting from
audit and normal year-end adjustments, and (iv) pro forma consolidated and
consolidating balance sheets of Company and its Subsidiaries as at July 31,
1997 prepared in accordance with GAAP and reflecting the consummation of
the NSA Acquisition, the related financings and the other transactions
contemplated by the Loan Documents and the NSA Acquisition Agreement, which
pro forma balance sheets shall be in form and substance satisfactory to
Requisite Lenders.
E. REPAYMENT OF EXISTING DEBT. All Indebtedness of NSA and its
Subsidiaries (other than Indebtedness in an aggregate amount not exceeding
$250,000 identified in a schedule delivered by Company to Arranging Agents
prior to the Funding Date for the NSA Acquisition, the terms and conditions
of which Indebtedness shall be in form and substance satisfactory to
Arranging Agents (it being understood that such schedule shall be deemed to
supplement Schedule 7.1 annexed hereto for all purposes of this Agreement))
shall have been paid in full, redeemed or defeased, any commitments to lend
thereunder shall have been terminated, all security interests created to
secure the obligations arising in connection therewith shall have been
terminated or effectively assigned to Collateral Agent for the benefit of
Agents and Lenders, and Company shall have delivered to Chase Co-
Administrative Agent UCC-3 termination statements or assignments (or
comparable forms) and any and all other instruments of release,
satisfaction, assignment and/or reconveyance (or evidence of the filing
thereof) as may be necessary or advisable to terminate or assign to Agents
and Lenders all such security interests and all other security interests in
the Collateral.
F. NECESSARY CONSENTS. Company shall have obtained all material
consents necessary or advisable in connection with the NSA Acquisition, the
transactions contemplated by the Loan Documents and Related Agreements to
occur on or prior to the Funding Date for the NSA Acquisition Loans and the
continued operation of the business conducted by Company and its
Subsidiaries, and each of the foregoing shall be in full force and effect
and in form and substance satisfactory to Arranging Agents (except as
disclosed to and approved by Arranging Agents). All applicable waiting
periods shall have expired without any action being taken or threatened by
any competent authority which would restrain, prevent or otherwise impose
adverse conditions on the NSA Acquisition or the financing thereof, and no
action, request for stay, petition for review or rehearing, reconsideration
or appeal shall be pending and any time for agency action to set aside its
consent on its own motion shall have expired.
G. REPAYMENT OF REVOLVING LOANS. On the Funding Date for the NSA
Acquisition Loans, Arranging Agents shall have received evidence reasonably
satisfactory to them that after giving effect to the payment of
consideration for the NSA Acquisition, the repayment of existing
Indebtedness of NSA and the payment of Transaction Costs, the remaining
proceeds of the NSA Acquisition Loans shall be applied on such date to
repay Revolving Loans.
H. PERFECTION OF SECURITY INTERESTS IN PERSONAL PROPERTY AND MIXED
COLLATERAL. Company shall have taken or caused to be taken such actions in
such a manner so that Collateral Agent has, for the benefit of Agents and
Lenders, a valid and perfected first priority security interest in the
entire personal property and mixed Collateral (subject to Liens permitted
by this Agreement). Such actions shall include: (i) the delivery pursuant
to the applicable Collateral Documents of all promissory notes or other
instruments (duly endorsed, where appropriate, in a manner reasonably
satisfactory to Chase Co-Administrative Agent) evidencing any Collateral;
<PAGE>
(ii) delivery to Agents of (a) the results of a recent search, by a Person
satisfactory to Agents, of all effective UCC financing statements and
fixture filings and all judgment and tax lien filings which may have been
made with respect to any personal or mixed property of NSA and its
Subsidiaries, together with copies of all such filings disclosed by such
search; (iii) the delivery to Chase Co-Administrative Agent of UCC
financing statements executed by the applicable Loan Parties as to all such
Collateral granted by such Loan Parties for all jurisdictions as may be
necessary or desirable to perfect Collateral Agent's security interest in
such Collateral; and (iv) the delivery to Chase Co-Administrative Agent of
evidence reasonably satisfactory to Chase Co-Administrative Agent that all
other filings (including, without limitation, UCC-3 termination statements
and filings with the United States Patent and Trademark Office of trademark
assignments for all trademarks used by Company and its Subsidiaries
registered in the United States), recordings and other actions that either
Chase Co-Administrative Agent or Collateral Agent deems necessary or
advisable to establish, preserve and perfect the first priority Liens
(subject to Liens consented to in writing by Co-Administrative Agents and
Requisite Lenders or permitted by subsection 7.2 with respect to such
Collateral) granted to Collateral Agent in personal and mixed property
shall have been made.
I. ENVIRONMENTAL REPORTS. Lenders shall have received reports and/or
other information reasonably satisfactory to Arranging Agents regarding
environmental matters with respect to the NSA Acquired Assets.
J. TRANSACTION COSTS. Company shall have delivered to Co-
Administrative Agents and Lenders a schedule, in a form satisfactory to Co-
Administrative Agents, setting forth Company's reasonable best estimate of
the Transaction Costs (other than amounts payable to Agents and Lenders)
relating to the NSA Acquisition.
K. FINANCIAL CONDITION CERTIFICATE. Company shall have delivered to
Co-Administrative Agents and Lenders a certificate from the chief financial
officer of Company, in form, scope and substance satisfactory to Arranging
Agents, with appropriate attachments demonstrating that, after giving
effect to the consummation of the NSA Acquisition and the making of the NSA
Acquisition Loans, Company and its Subsidiaries are Solvent.
L. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. Compa-
ny shall have delivered to Chase Co-Administrative Agent an Officer's
Certificate, in form and substance satisfactory to Chase Co-Administrative
Agent, to the effect that the representations and warranties in Section 5
hereof are true and correct in all material respects on and as of the
Funding Date for the NSA Acquisition Loans to the same extent as though
made on and as of such date and that Company shall have performed in all
material respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by them on or before
such date, except as otherwise disclosed to and agreed to in writing by
Chase Co-Administrative Agent.
Notwithstanding anything in this subsection 4.3 to the contrary, in
the event NSA shall have been acquired under the NSA Acquisition Agreement
in accordance with the terms of the Existing Credit Agreement prior to the
initial Funding Date for the Acquisition Loans, all of the conditions
precedent to the obligations of the Lenders to make the NSA Acquisition
Loans set forth in this subsection 4.3 shall be deemed satisfied.
Notwithstanding anything herein to the contrary, it is understood and
agreed that the documents and other items described in subsection 6.12
shall be delivered after the Funding Date for the NSA Acquisition Loans in
accordance with subsection 6.12.
<PAGE>
4.4 CONDITIONS TO ALL LOANS.
The obligations of Lenders to make Loans on each Funding Date are
subject to the following further conditions precedent:
A. Chase Co-Administrative Agent shall have received on or before
that Funding Date, in accordance with the provisions of subsection 2.1B, an
originally executed Notice of Borrowing, signed by the chief executive
officer, the chief financial officer or the controller of Company or by any
executive officer of Company designated by any of the above-described
officers on behalf of Company in a writing delivered to Chase Co-
Administrative Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in
the other Loan Documents shall be true and correct in all material
respects on and as of that Funding Date to the same extent as though
made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case
such representations and warranties shall have been true and correct
in all material respects on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would
result from the consummation of the borrowing contemplated by such
Notice of Borrowing that would constitute an Event of Default or a
Potential Event of Default;
(iii) Each Loan Party shall have performed in all material
respects all agreements and satisfied all conditions which this
Agreement and the other Loan Documents provide shall be performed or
satisfied by it on or before that Funding Date;
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender
from making the Loans to be made by it, on that Funding Date;
(v) The making of the Loans requested on such Funding Date shall
not violate any law including, without limitation, Regulation G,
Regulation T, Regulation U or Regulation X of the Board of Governors
of the Federal Reserve System; and
(vi) There shall not be pending or, to the knowledge of Company,
threatened, any action, suit, proceeding, governmental investigation
or arbitration against or affecting Company or any of its Subsidiaries
or any property of Company or any of its Subsidiaries that has not
been disclosed by Company in writing and that is required to be so
disclosed pursuant to subsection 5.6 or 6.1(x) prior to the making of
the last preceding Loans (or, in the case of the Additional Tranche B
Term Loans, prior to the execution of this Agreement), and there shall
have occurred no development not so disclosed in any such action,
suit, proceeding, governmental investigation or arbitration so
disclosed that, in either event, in the opinion of Chase Co-
Administrative Agent or of Requisite Lenders, would be expected to
have a Material Adverse Effect; and no injunction or other restraining
order shall have been issued and no hearing to cause an injunction or
other restraining order to be issued shall be pending or noticed with
respect to any action, suit or proceeding seeking to enjoin or
otherwise prevent the consummation of, or to recover any damages or
obtain relief as a result of, the transactions contemplated by this
Agreement or the making of Loans hereunder.
4.5 CONDITIONS TO LETTERS OF CREDIT.
<PAGE>
The issuance of any Letter of Credit hereunder (whether or not the
applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
A. On or before the date of issuance of the initial Letter of Credit
pursuant to this Agreement, the initial Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit, Chase
Co-Administrative Agent shall have received, in accordance with the
provisions of subsection 3.1B(i), an originally executed Notice of Issuance
of Letter of Credit, signed by the chief executive officer, the chief
financial officer or the controller of Company or by any executive officer
of Company designated by any of the above-described officers on behalf of
Company in a writing delivered to Chase Co-Administrative Agent, together
with all other information specified in subsection 3.1B(i) and such other
documents or information as the applicable Issuing Lender may reasonably
require in connection with the issuance of such Letter of Credit.
C. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.4B shall be satisfied to the same
extent as if the issuance of such Letter of Credit were the making of a
Loan and the date of issuance of such Letter of Credit were a Funding Date.
SECTION 5.
REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make
(or maintain, as the case may be) the Loans, to induce Issuing Lender to
issue (or maintain, as the case may be) Letters of Credit and to induce
other Lenders to purchase participations therein, Company represents and
warrants to each Lender, on the date of this Agreement, on the Effective
Date, on each Funding Date, and on the date of issuance of each Letter of
Credit, that the following statements are true and correct:
5.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
SUBSIDIARIES.
A. ORGANIZATION AND POWERS. Each Corporate Loan Party is a
corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation. Each Partnership Loan Party is a duly
organized and validly existing limited partnership under the laws of its
jurisdiction of formation and is in good standing in such jurisdiction.
Each Loan Party has all requisite corporate or partnership (as applicable)
power and authority to own and operate its properties, to carry on its
business as now conducted and as proposed to be conducted, to enter into
the Loan Documents and to carry out the transactions contemplated thereby.
Company has all requisite corporate power and authority to issue and pay
the Notes.
B. QUALIFICATION AND GOOD STANDING. Each Corporate Loan Party is
qualified to do business and in good standing, and each Partnership Loan
Party is authorized as a foreign limited partnership to do business, in
every jurisdiction where its assets are located and wherever necessary to
carry out its business and operations, except in jurisdictions where the
failure to be so qualified, authorized or in good standing has not had and
will not have a Material Adverse Effect.
C. CONDUCT OF BUSINESS. Company and its Subsidiaries are engaged
only in the businesses permitted to be engaged in pursuant to subsection
7.11.
D. COMPANY AND SUBSIDIARIES. All of the Subsidiaries of Company as
<PAGE>
of the Effective Date after giving effect to the acquisition occurring on
such date are identified in Schedule 5.1 annexed hereto. The capital stock
of each of the domestic Subsidiaries of Company identified in Schedule 5.1
annexed hereto which are corporations is duly authorized, validly issued,
fully paid and nonassessable and none of such capital stock constitutes
Margin Stock. The limited and general partnership interests of each of the
subsidiaries of Company identified in Schedule 5.1 annexed hereto which are
limited partnerships are duly and validly issued. Company and each of the
domestic Subsidiaries of Company identified in Schedule 5.1 annexed hereto
are duly organized, validly existing and in good standing under the laws of
their respective jurisdictions of incorporation or formation set forth
therein, have full corporate or partnership (as applicable) power and
authority to own their assets and properties and to operate their business
as presently owned and conducted and as proposed to be conducted, and are
qualified to do business and in good standing in every jurisdiction where
their assets are located and wherever necessary to carry out their business
and operations, in each case except where failure to be so qualified or in
good standing or a lack of such corporate power and authority has not had
and will not have a Material Adverse Effect. Schedule 5.1 annexed hereto
correctly sets forth the ownership interest of Company in each of its
Subsidiaries identified therein.
5.2 AUTHORIZATION OF BORROWING, ETC.
A. AUTHORIZATION OF BORROWING. The execution, delivery and
performance of the Loan Documents and the Related Agreements and the
issuance, delivery and payment of the Notes have been duly authorized by
all necessary corporate and/or partnership (as applicable) action on the
part of each of the Loan Parties thereto.
B. NO CONFLICT. After giving effect to the consummation of the
transactions contemplated hereby to occur on the Effective Date, the
execution, delivery and performance by each of the Loan Parties of the Loan
Document and the Related Agreements to which they are parties, the
issuance, delivery and payment of the Notes and the consummation of the
transactions contemplated by the Loan Documents do not and will not
(i) violate any provision of any law or any governmental rule or regulation
applicable to Company or any of its Subsidiaries, the Certificate or
Articles of Incorporation or Bylaws (or other analogous organizational
document) of Company or any of its Subsidiaries or any order, judgment or
decree of any court or other agency of government binding on Company or any
of its Subsidiaries, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of Company or any of its Subsidiaries, (iii) result
in or require the creation or imposition of any Lien upon any of the
properties or assets of Company or any of its Subsidiaries (other than any
Liens created under any of the Loan Documents in favor of Chase Co-
Administrative Agent on behalf of Lenders), or (iv) require any approval of
stockholders or partners or any approval or consent of any Person under any
Contractual Obligation of Company or any of its Subsidiaries, except for
such approvals or consents which will be obtained on or before the
Effective Date.
C. GOVERNMENTAL CONSENTS. The execution, delivery and performance by
the Loan Parties of the Loan Documents and Related Agreements to which they
are party, the issuance, delivery and payment of the Notes and the
consummation of the transactions contemplated by the Loan Documents do not
and will not require any registration with, consent or approval of, or
notice to, or other action to, with or by, any federal, state or other
governmental authority or regulatory body except for such registrations,
consents, approvals, notices or other actions which will be made, obtained
or taken on or before the Effective Date.
<PAGE>
D. BINDING OBLIGATION. Each of the Loan Documents and the Related
Agreements has been duly executed and delivered by each of the Loan Parties
party thereto and is the legally valid and binding obligation of each such
Loan Party, enforceable against such Loan Party in accordance with its
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally or by equitable principles relating to
enforceability.
E. VALID ISSUANCE OF SUBORDINATED NOTES. The Subordinated Notes are
the legally valid and binding obligations of Company, enforceable against
Company in accordance with their respective terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability. The subordination provisions of the
Subordinated Notes will be enforceable against the holders thereof and the
Loans and all other monetary Obligations hereunder are and will be within
the definition of "Senior Debt" included in such provisions. The
Subordinated Notes, when issued and sold, will either (a) have been
registered or qualified under applicable federal and state securities laws
or (b) be exempt therefrom.
5.3 FINANCIAL CONDITION; PROJECTIONS.
A. FINANCIAL STATEMENTS. Company has heretofore delivered to
Lenders, at Lenders' request, the following financial statements and
information: (i) the audited consolidated balance sheets of Company and
its Subsidiaries (or, with respect to years prior to 1995, Account
Portfolios, L.P. (as predecessor of Company) and its Subsidiaries) as at
December 31 of 1994, 1995 and 1996, and the related audited consolidated
statements of operations, stockholders' equity and cash flows of Company
and its Subsidiaries for the periods then ended, together with the report
on such consolidated financial statements of Deloitte & Touche LLP setting
forth in each case in comparative form the corresponding figures for the
previous Fiscal Year (other than the Fiscal Year ending December 31, 1992),
(ii) the unaudited consolidated balance sheet of Company and its
Subsidiaries as at June 30, 1997 and the related unaudited consolidated
statements of income, stockholders' equity and cash flows of Company and
its Subsidiaries for the six months then ended, together with the
corresponding figures for the corresponding periods of the previous Fiscal
Year (other than the Fiscal Year ending December 31, 1993), (iii) the
audited consolidated balance sheet of Payco and its subsidiaries as at
December 31 of 1993, 1994 and 1995, and the audited consolidated statement
of operations, stockholders' equity, and cash flows of Payco and its
Subsidiaries for the fiscal year then ended, together with the report on
such consolidated financial statements of Arthur Andersen & Co setting
forth in comparative form the corresponding figures for the previous fiscal
year (other than the fiscal year ending December 31, 1992), (iv) the
unaudited consolidated balance sheet of Payco and its Subsidiaries as at
June 30, 1996 and the related unaudited consolidated statements of
operations, stockholders' equity and cash flows of Payco and its
Subsidiaries for the six months then ended, together with the corresponding
figures for the corresponding period of the previous fiscal year (other
than the fiscal year ending December 31, 1992), (v) the consolidated
balance sheet of Accelerated and its Subsidiaries as at July 31, 1997 and
the related consolidated statements of income, stockholders' equity and
cash flows of Accelerated and its Subsidiaries for the seven months then
ended, together with the corresponding figures for the corresponding period
ending on July 31 of the previous year, (vi) the audited consolidated
balance sheet of NSA and its Subsidiaries as at December 31, 1996, and the
related audited consolidated statements of income, stockholders' equity and
cash flows of NSA and its Subsidiaries for the period then ended, together
with the report on such consolidated financial statements of Weisberg,
<PAGE>
Polansky, Kulberg, Einhorn & Mole, LLP setting forth in comparative form
the corresponding figures for the previous fiscal year of NSA, (vii) the
consolidated balance sheet of NSA and its Subsidiaries as at December 31,
1995, and the related audited consolidated statements of income,
stockholders' equity and cash flows of NSA and its Subsidiaries for the
fiscal year of NSA then ended, and (viii) the consolidated balance sheet of
NSA and its Subsidiaries as at July 31, 1997 and the related consolidated
statements of income, stockholders' equity and cash flows of NSA and its
Subsidiaries for the seven months then ended, together with the correspond-
ing figures for the corresponding period of the previous fiscal year. All
such statements were prepared in conformity with GAAP and fairly present,
in all material respects, the financial position (on a consolidated basis)
of the entities described in such financial statements as at the respective
dates thereof and the results of operations and cash flows (on a
consolidated basis) of the entities described therein for each of the
periods then ended, subject, in the case of any such unaudited financial
statements, to changes resulting from audit and normal year-end adjustments
and the absence of footnote disclosure required in accordance with GAAP.
Neither Company nor Payco has (and did not immediately following the
funding of the initial Loans under the Existing Credit Agreement, have),
and each of Accelerated and NSA does not (and will not immediately
following the funding of the applicable Acquisition Loans) have, any
Contingent Obligation, contingent liability or liability for taxes, long-
term lease or unusual forward or long-term commitment that is not reflected
in the most recent financial statements delivered pursuant to subsection
6.1, the notes thereto and which in any such case is material in relation
to the business, operations, properties, assets, condition (financial or
otherwise) or prospects of Company and its Subsidiaries taken as a whole.
Notwithstanding the foregoing, Company shall not be deemed to make any
representation hereunder with respect to (x) the financial statements
described in clause (v) of this subsection prior to consummation of the
Accelerated Acquisition and (y) the financial statements described in
clauses (vi), (vii) and (viii) of this subsection prior to consummation of
the NSA Acquisition.
B. PROJECTIONS. On and as of the Effective Date, the financial
projections of Company and its Subsidiaries for the period from December
31, 1996 through December 31, 2002 (giving effect to the NSA Acquisition
and the Accelerated Acquisition) previously delivered to Lenders (the
"PROJECTIONS") are based on good faith estimates and assumptions made by
the management of Company, it being recognized, however, that projections
as to future events are not to be viewed as facts and that the actual
results during the period or periods covered by the Projections may differ
from the projected results and that the differences may be material.
Notwithstanding the foregoing, as of the Effective Date, management of
Company believed that the Projections were reasonable and attainable.
5.4 NO MATERIAL ADVERSE CHANGE; NO RESTRICTED JUNIOR PAYMENTS.
Since December 31, 1996, no event or change has occurred that has
caused or evidences, either in any case or in the aggregate, a Material
Adverse Effect. Since the Closing Date, neither Company nor any of its
Subsidiaries has directly or indirectly declared, ordered, paid or made, or
set apart any sum or property for, any Restricted Junior Payment or agreed
to do so except as permitted by subsection 7.5.
5.5 TITLE TO PROPERTIES; LIENS.
After giving effect to the transactions contemplated by this Agreement
to occur on the Effective Date, Company and its Subsidiaries have good,
sufficient and legal title to all of their respective properties and assets
reflected in the financial statements referred to in the financial
statements referred to in subsection 5.3 or in the most recent financial
<PAGE>
statements delivered pursuant to subsection 6.1 of the Existing Credit
Agreement, except for assets disposed of since the date of such financial
statements in the ordinary course of business or as otherwise permitted
under subsection 7.7. Except as permitted by this Agreement, all such
properties and assets are free and clear of Liens.
5.6 LITIGATION; ADVERSE FACTS.
There is no action, suit, proceeding, arbitration or governmental
investigation (whether or not purportedly on behalf of Company or any of
its Subsidiaries) at law or in equity or before or by any federal, state,
municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, pending or, to the
knowledge of Company, threatened against or affecting Company or any of its
Subsidiaries or any property of Company or any of its Subsidiaries that,
either individually or in the aggregate together with all other such
actions, proceedings and investigations, has had, or could reasonably be
expected to result in, a Material Adverse Effect, it being understood,
solely for purposes of this sentence, that any money judgments or
settlements the occurrence of which do not give rise to an Event of Default
under subsection 8.8 shall not be deemed to have a Material Adverse Effect.
Neither Company nor any of its Subsidiaries is or has been (i) in violation
of any applicable law (including any Debt Collection Laws) that has had, or
could reasonably be expected to result in, a Material Adverse Effect, it
being understood for purposes of this clause (i) that any such violation
which results in money judgments or settlements the occurrence of which do
not give rise to an Event of Default under subsection 8.8 shall not be
deemed to have a Material Adverse Effect, or (ii) subject to or in default
with respect to any final judgment, writ, injunction, decree, rule or
regulation of any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that has had, or could reasonably be
expected to result in, a Material Adverse Effect.
5.7 PAYMENT OF TAXES.
Except to the extent permitted by subsection 6.3, all material tax
returns and reports of Company and its Subsidiaries required to be filed by
any of them have been timely filed, and all material taxes, assessments,
fees and other governmental charges upon Company and its Subsidiaries and
upon their respective properties, assets, income, businesses and franchises
which are due and payable have been paid when due and payable. Company
does not know of any proposed tax assessment against Company or any of its
Subsidiaries other than those which are being actively contested by Company
or such Subsidiary in good faith and by appropriate proceedings and for
which reserves or other appropriate provisions, if any, as may be required
in conformity with GAAP shall have been made or provided therefor.
5.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS.
A. Neither Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any of its Contractual Obligations, and no
condition exists that, with the giving of notice or the lapse of time or
both, would constitute such a default, except where the consequences,
direct or indirect, of such default or defaults, if any, would not have a
Material Adverse Effect.
B. Neither Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreement or instrument or any charter or other
internal restriction which has had, or could reasonably be expected (based
upon assumptions that are reasonable at the time made) to result in,
individually or in the aggregate, a Material Adverse Effect.
<PAGE>
5.9 GOVERNMENTAL REGULATION.
Neither Company nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power
Act, the Interstate Commerce Act or the Investment Company Act of 1940 or
under any other federal or state statute or regulation which may limit its
ability to incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable.
5.10 SECURITIES ACTIVITIES.
Neither Company nor any of its Subsidiaries is engaged principally, or
as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying any Margin Stock.
5.11 EMPLOYEE BENEFIT PLANS.
A. Company and each of its ERISA Affiliates are in substantial
compliance with all applicable provisions and requirements of ERISA with
respect to each Employee Benefit Plan, and have substantially performed all
their obligations under each Employee Benefit Plan, except to the extent
that any non-compliance with ERISA or any such failure to perform would not
result in material liability of Company or any of its ERISA Affiliates.
B. No ERISA Event has occurred which has resulted or is reasonably
likely to result in any material liability to the PBGC or to any other
Person.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code and/or Section 601 of ERISA, neither Company nor any of its
Subsidiaries maintains or contributes to any employee welfare benefit plan
(as defined in Section 3(1) of ERISA) that provides health or welfare
benefits (through the purchase of insurance or otherwise) for any retired
or former employees of Company or any of its Subsidiaries, except to the
extent that the provision of such benefits would not have a Material
Adverse Effect.
D. No Pension Plan has an Unfunded Current Liability in an amount
that would have a Material Adverse Effect.
5.12 CERTAIN FEES.
No broker's or finder's fee or commission will be payable with respect
to this Agreement or any of the loan transactions contemplated hereby, and
Company hereby indemnifies Lenders against, and agrees that it will hold
Lenders harmless from, any claim, demand or liability for any such broker's
or finder's fees alleged to have been incurred in connection herewith or
therewith and any expenses (including reasonable fees, expenses and
disbursements of counsel) arising in connection with any such claim, demand
or liability.
5.13 ENVIRONMENTAL PROTECTION.
Except as set forth on Schedule 5.13 annexed hereto:
(i) the operations of Company and each of its Subsidiaries
(including, without limitation, all operations and conditions at or in
the Facilities) comply in all material respects with all Environmental
Laws;
(ii) Company and each of its Subsidiaries have obtained all
material Governmental Authorizations under Environmental Laws
necessary to their respective operations, and all such Governmental
<PAGE>
Authorizations are in good standing, and Company and each of its
Subsidiaries are in compliance with all material terms and conditions
of such Governmental Authorizations;
(iii) neither Company nor any of its Subsidiaries has received
(a) any notice or claim to the effect that it is or may be liable to
any Person as a result of or in connection with any Hazardous
Materials or (b) any letter or request for information under
Section 104 of the Comprehensive Environmental Response, Compensation,
and Liability Act (42 U.S.C. Section 9604) or comparable state laws,
and, to the best knowledge of Company, none of the operations of
Company or any of its Subsidiaries is the subject of any federal or
state investigation relating to or in connection with any Hazardous
Materials at any Facility or at any other location;
(iv) none of the operations of Company or any of its Subsidiaries
is subject to any judicial or administrative proceeding alleging the
violation of or liability under any Environmental Laws which could
reasonably be expected to have a Material Adverse Effect;
(v) to the knowledge of Company, neither Company nor any of its
Subsidiaries nor any of their respective Facilities or operations are
subject to any outstanding written order or agreement with any
governmental authority or private party relating to (a) any
Environmental Laws or (b) any Environmental Claims that could
reasonably be expected to have a Material Adverse Effect;
(vi) neither Company nor any of its Subsidiaries has any material
contingent liability in connection with any Release of any Hazardous
Materials by Company or any of its Subsidiaries;
(vii) neither Company nor any of its Subsidiaries nor, to the
knowledge of Company, any predecessor of Company or any of its
Subsidiaries has filed any notice under any Environmental Law
indicating past or present treatment or Release of Hazardous Materials
at any Facility, and none of Company's or any of its Subsidiaries'
operations involves the generation, transportation, treatment, storage
or disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-
270 or any state equivalent;
(viii) to the knowledge of Company, no Hazardous Materials exist
on or under any Facility in a manner that has a reasonable possibility
of giving rise to an Environmental Claim having a Material Adverse
Effect, and neither Company nor any of its Subsidiaries has filed any
notice or report of a Release of any Hazardous Materials that has a
reasonable possibility of giving rise to an Environmental Claim having
a Material Adverse Effect;
(ix) neither Company nor any of its Subsidiaries nor, to the
knowledge of Company, any of their respective predecessors has
disposed of any Hazardous Materials in a manner that has a reasonable
possibility of giving rise to an Environmental Claim having a Material
Adverse Effect;
(x) to the knowledge of Company, no underground storage tanks or
surface impoundments are on or at any Facility; and
(xi) to the knowledge of Company, no Lien in favor of any Person
relating to or in connection with any Environmental Claim has been
filed or has been attached to any Facility.
5.14 EMPLOYEE MATTERS.
<PAGE>
There is no strike or work stoppage in existence or threatened
involving Company or any of its Subsidiaries that could reasonably be
expected to have a Material Adverse Effect.
5.15 SOLVENCY.
Each Loan Party is, and Company and its Subsidiaries, taken as a
whole, are, and, upon the incurrence of any Obligations by any Loan Party
on any date on which this representation is made, will be, Solvent.
5.16 MATTERS RELATING TO COLLATERAL.
A. CREATION, PERFECTION AND PRIORITY OF LIENS. The execution and
delivery of the Collateral Documents by Loan Parties, together with (i) the
actions taken on or prior to the date hereof pursuant to subsection 4.1J of
the Existing Credit Agreement and subsections 4.2H, 4.3H and 6.9 of this
Agreement and (ii) the delivery to Collateral Agent of any Pledged
Collateral not delivered to Collateral Agent at the time of execution and
delivery of the applicable Collateral Document (all of which Pledged
Collateral has been so delivered) are effective to create in favor of
Collateral Agent for the benefit of Agents and Lenders, as security for the
respective Secured Obligations (as defined in the applicable Collateral
Document in respect of any Collateral), a valid and perfected first
priority Lien on all of the Collateral, and all filings and other actions
necessary or desirable to perfect and maintain the perfection and first
priority status of such Liens have been duly made or taken and remain in
full force and effect, other than the filing of any UCC financing
statements delivered to Collateral Agent for filing (but not yet filed) and
the periodic filing of UCC continuation statements in respect of UCC
financing statements filed by or on behalf of Collateral Agent.
B. GOVERNMENTAL AUTHORIZATIONS. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge or grant by any Loan
Party of the Liens purported to be created in favor of Chase Co-
Administrative Agent pursuant to any of the Collateral Documents or
(ii) the exercise by Chase Co-Administrative Agent of any rights or
remedies in respect of any Collateral (whether specifically granted or
created pursuant to any of the Collateral Documents or created or provided
for by applicable law), except for filings or recordings contemplated by
subsection 5.16A and except as may be required, in connection with the
disposition of any Pledged Collateral, by laws generally affecting the
offering and sale of securities.
C. ABSENCE OF THIRD-PARTY FILINGS. Except such as may have been
filed in favor of Chase Co-Administrative Agent as contemplated by
subsection 5.16A, (i) no effective UCC financing statement, fixture filing
or other instrument similar in effect covering all or any part of the
Collateral is on file in any filing or recording office and (ii) no
effective filing covering all or any part of the intellectual property
Collateral is on file in the United States Patent and Trademark Office.
D. MARGIN REGULATIONS. The pledge of the Pledged Collateral pursuant
to the Collateral Documents does not violate Regulation G, Regulation T,
Regulation U or Regulation X of the Board of Governors of the Federal
Reserve System.
E. INFORMATION REGARDING COLLATERAL. All information supplied to any
Agent by or on behalf of any Loan Party with respect to any of the
Collateral (in each case taken as a whole with respect to any particular
Collateral) is accurate and complete in all material respects.
5.17 RELATED AGREEMENTS.
<PAGE>
A. DELIVERY OF RELATED AGREEMENTS. Company has delivered to Agents
complete and correct copies of each Related Agreement and of all exhibits
and schedules thereto.
B. PAYCO'S WARRANTIES. Except to the extent otherwise set forth
herein or in the schedules hereto, each of the representations and
warranties given by Payco to Company in the Acquisition Agreement was true
and correct in all material respects as of the Closing Date (or as of any
earlier date to which such representation and warranty specifically
relates), subject to the qualifications set forth in the schedules to the
Acquisition Agreement.
C. SELLER'S WARRANTIES. Except to the extent otherwise set forth
herein or in the schedules hereto, each of the representations and
warranties given by Accelerated to Company in the Accelerated Acquisition
Agreement and by NSA to Company in the NSA Acquisition Agreement is true
and correct in all material respects as of the date hereof (or as of any
earlier date to which such representation and warranty specifically
relates) and will be true and correct in all material respects as of the
Effective Date (or as of such earlier date, as the case may be), in each
case subject to the qualifications set forth in the schedules to the
Accelerated Acquisition Agreement or the NSA Acquisition Agreement, as
applicable. Notwithstanding the foregoing, Company shall not be deemed to
make any representation hereunder with respect to representations and
warranties of Accelerated and NSA described in this subsection prior to
consummation of the Accelerated Acquisition or the NSA Acquisition,
respectively.
D. WARRANTIES OF COMPANY. Subject to the qualifications and the
schedules set forth therein, (i) each of the representations and warranties
given by Company to Payco in the Acquisition Agreement was true and correct
in all material respects as of the Closing Date, (ii) each of the
representations and warranties given by Company to Accelerated in the
Accelerated Acquisition Agreement is true and correct in all material
respects as of the date hereof (or its later date of execution) and will be
true and correct in all material respects as of the Funding Date for the
Accelerated Acquisition Loans, and (iii) each of the representations and
warranties given by Company to NSA and its Subsidiaries in the NSA
Acquisition Agreement is true and correct in all material respects as of
the date hereof (or its later date of execution) and will be true and
correct in all material respects as of the Funding Date for the NSA
Acquisition Loans. Notwithstanding the foregoing, Company shall not be
deemed to make any representation hereunder with respect to (x) representa-
tions and warranties described in clause (ii) of this subsection prior to
consummation of the Accelerated Acquisition and (y) representations and
warranties described in clause (iii) of this subsection prior to consumma-
tion of the NSA Acquisition.
E. SURVIVAL. Notwithstanding anything in the Acquisition Agreement,
the Accelerated Acquisition Agreement or the NSA Acquisition Agreement to
the contrary, (i) the representations and warranties of Company set forth
in subsections 5.17B and 5.17D(i) shall, solely for purposes of this
Agreement, survive the Closing Date for the benefit of Agents and Lenders,
and (ii) the representations and warranties of Company set forth in
subsections 5.17C and 5.17D(ii) shall, solely for purposes of this
Agreement, survive the Effective Date for the benefit of Agents and
Lenders.
5.18 DISCLOSURE.
The representations of Company and its Subsidiaries contained in the
Loan Documents, Related Documents and in any other document, certificate or
written statement furnished to Lenders by or on behalf of Company or any of
<PAGE>
its Subsidiaries for use in connection with the transactions contemplated
by this Agreement, when taken as a whole, do not contain any untrue
statement of a material fact or omit to state a material fact (known to
Company or the applicable Subsidiary, in the case of any document not
furnished by Company or such Subsidiary) necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances in which the same were made. Any projections and pro forma
financial information contained in such materials are based upon good faith
estimates and assumptions believed by Company to be reasonable at the time
made, it being recognized by Lenders that such projections as to future
events are not to be viewed as facts and that actual results during the
period or periods covered by any such projections may differ from the
projected results. There is no fact known (or which should upon the
reasonable exercise of diligence be known) to Company (other than matters
of a general economic nature) that has had, or could reasonably be expected
to result in, a Material Adverse Effect and that has not been disclosed
herein or in such other documents, certificates and statements furnished to
Lenders for use in connection with the transactions contemplated hereby.
5.19 SUBORDINATION OF SELLER NOTES.
The subordination provisions of the Existing Seller Note and any
Permitted Seller Notes are enforceable against the holders thereof, and the
Loans and other monetary Obligations hereunder are and will be within the
definition of "Senior Indebtedness" included in such provisions.
SECTION 6.
AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the
Loans and other Obligations and the cancellation or expiration of all
Letters of Credit, unless Requisite Lenders shall otherwise give prior
written consent, Company shall perform, and shall cause each of its
Subsidiaries to perform, all covenants in this Section 6.
6.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
Company will maintain, and cause each of its Subsidiaries to maintain,
a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
conformity with GAAP. Company will deliver to Chase Co-Administrative
Agent (and Chase Co-Administrative Agent will, after receipt thereof,
deliver to each Lender):
(i) Monthly Financials: as soon as available and in any event
within 20 days after each calendar month-end commencing with the
calendar month of August 1997, (a) the consolidated balance sheets of
Company and its Subsidiaries as at the end of each fiscal month ending
after the Closing Date and the related consolidated statements of
income, stockholders' equity and cash flows of Company and its
Subsidiaries for such month and for the period from the beginning of
the then current Fiscal Year to the end of such month, setting forth
in each case in comparative form the corresponding figures for the
corresponding periods of the previous fiscal year and the correspond-
ing figures from the consolidated plan and financial forecast for the
current Fiscal Year delivered pursuant to subsection 6.1(xiii), all in
reasonable detail and certified by the chief financial officer of
Company that they fairly present, in all material respects, the
financial condition of Company and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for
the periods indicated, subject to changes resulting from audit and
<PAGE>
normal year-end adjustments; and (b) a narrative report describing the
operations of Company and its Subsidiaries in the form prepared for
presentation to senior management for such month and for the period
from the beginning of the then current Fiscal Year to the end of such
month;
(ii) Quarterly Financials: as soon as available and in any event
within 45 days after the end of each Fiscal Quarter, (a) the
consolidated balance sheets of Company and its Subsidiaries as at the
end of such Fiscal Quarter and the related consolidated statements of
income, stockholders' equity and cash flows of Company 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, setting forth in each case in comparative form the
corresponding figures for the corresponding periods of the previous
fiscal year and the corresponding figures from the consolidated plan
and financial forecast for the current Fiscal Year delivered pursuant
to subsection 6.1(xiii), all in reasonable detail and certified by the
chief financial officer of Company that they fairly present, in all
material respects, the financial condition of Company and its
Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to
changes resulting from audit and normal year-end adjustments, and
(b) a narrative report describing the operations of Company and its
Subsidiaries in the form prepared for presentation to senior manage-
ment for such Fiscal Quarter and for the period from the beginning of
the then current Fiscal Year to the end of such Fiscal Quarter;
(iii) Year-End Financials: as soon as available and in any event
within 90 days after the end of each Fiscal Year, (a) the consolidated
and consolidating balance sheets of Company and its Subsidiaries as at
the end of such Fiscal Year and the related consolidated and
consolidating statements of income, stockholders' equity and cash
flows of Company and its Subsidiaries for such Fiscal Year, setting
forth in each case in comparative form the corresponding figures for
the previous fiscal year and the corresponding figures from the
consolidated plan and financial forecast delivered pursuant to
subsection 6.1(xiii) for the Fiscal Year covered by such financial
statements, all in reasonable detail and certified by the chief
financial officer of Company that they fairly present, in all material
respects, the financial condition of Company and its Subsidiaries as
at the dates indicated and the results of their operations and their
cash flows for the periods indicated, (b) a narrative report
describing the operations of Company and its Subsidiaries in the form
prepared for presentation to senior management for such Fiscal Year,
and (c) in the case of such consolidated financial statements, a
report thereon of independent certified public accountants of
recognized national standing selected by Company and reasonably
satisfactory to Chase Co-Administrative Agent, which report shall be
unqualified as to the ability of Company and its Subsidiaries to
continue as a going concern and as to scope of audit, and shall state
that such consolidated financial statements fairly present, in all
material respects, the consolidated financial position of Company and
its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years
(except as otherwise disclosed in such financial statements) and that
the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with
generally accepted auditing standards;
(iv) Officer's and Compliance Certificates: together with each
delivery of financial statements of Company and its Subsidiaries
<PAGE>
pursuant to subdivisions (ii) and (iii) above, (a) an Officer's
Certificate of Company stating that the signer has reviewed the terms
of this Agreement and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions and
condition of Company and its Subsidiaries during the accounting period
covered by such financial statements and that such review has not
disclosed the existence during or at the end of such accounting
period, and that the signer does not have knowledge of the existence
as at the date of such Officer's Certificate, of any condition or
event that constitutes an Event of Default or Potential Event of
Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
Company has taken, is taking and proposes to take with respect
thereto; and (b) a Compliance Certificate demonstrating in reasonable
detail compliance during and at the end of the applicable accounting
periods with the restrictions contained in Section 7;
(v) Reconciliation Statements: if, as a result of any change in
accounting principles and policies from those used in the preparation
of the audited financial statements referred to in subsection 5.3, the
consolidated financial statements of Company and its Subsidiaries
delivered pursuant to subdivisions (i), (ii), (iii) or (xiii) of this
subsection 6.1 will differ in any material respect from the
consolidated financial statements that would have been delivered
pursuant to such subdivisions had no such change in accounting
principles and policies been made, then (a) together with the first
delivery of financial statements pursuant to subdivision (i), (ii),
(iii) or (xiii) of this subsection 6.1 following such change,
consolidated financial statements of Company and its Subsidiaries for
(y) the current Fiscal Year to the effective date of such change and
(z) the two full Fiscal Years immediately preceding the Fiscal Year in
which such change is made, in each case prepared on a pro forma basis
as if such change had been in effect during such periods, and
(b) together with each delivery of financial statements pursuant to
subdivision (i), (ii), (iii) or (xiii) of this subsection 6.1
following such change, a written statement of the chief accounting
officer or chief financial officer of Company setting forth the
differences which would have resulted if such financial statements had
been prepared without giving effect to such change;
(vi) Accountants' Certification: together with each delivery of
consolidated financial statements of Company and its Subsidiaries
pursuant to subdivision (iii) above, a written statement by the
independent certified public accountants giving the report thereon (a)
stating that their audit examination has included a reading of the
terms of this Agreement and the other Loan Documents as they relate to
accounting matters, and (b) stating whether, in connection with their
audit examination, any condition or event, insofar as such condition
or event relates to the covenants set forth in subsection 7.6 or to
accounting matters, that constitutes an Event of Default or Potential
Event of Default has come to their attention and, if such a condition
or event has come to their attention, specifying the nature and period
of existence thereof; provided that such accountants shall not be
liable by reason of any failure to obtain knowledge of any such Event
of Default or Potential Event of Default that would not be disclosed
in the course of their audit examination;
(vii) Accountants' Reports: promptly upon receipt thereof
(unless restricted by applicable professional standards), copies of
all reports submitted to Company by independent certified public
accountants in connection with each annual, interim or special audit
of the financial statements of Company and its respective Subsidiaries
made by such accountants, including, without limitation, any comment
<PAGE>
letter submitted by such accountants to management in connection with
their annual audit;
(viii) SEC Filings and Press Releases: promptly upon their
becoming available, copies of (a) all financial statements, reports,
notices and proxy statements sent or made available generally by
Company to its security holders, (b) all regular and periodic reports
and all registration statements (other than on Form S-8 or a similar
form) and prospectuses, if any, filed by Company or any of its Subsid-
iaries with any securities exchange or with the Securities and
Exchange Commission or any governmental or private regulatory
authority, and (c) all press releases and other statements made
available generally by Company or any of its Subsidiaries to the
public concerning material developments in the business of Company or
any of its Subsidiaries;
(ix) Events of Default, etc.: promptly upon any officer of
Company obtaining knowledge (a) of any condition or event that
constitutes an Event of Default or Potential Event of Default, or
becoming aware that any Lender has given any notice (other than to
Chase Co-Administrative Agent) or taken any other action with respect
to a claimed Event of Default or Potential Event of Default, (b) that
any Person has given any notice to Company or any of its Subsidiaries
or taken any other action with respect to a claimed default or event
or condition of the type referred to in subsection 8.2, (c) of any
condition or event that would be required to be disclosed in a current
report filed by Company with the Securities and Exchange Commission on
Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in effect on the date
hereof) if Company were required to file such reports under the
Exchange Act, or (d) of the occurrence of any event or change that has
caused or evidences, either in any case or in the aggregate, a
Material Adverse Effect, an Officer's Certificate specifying the
nature and period of existence of such condition, event or change, or
specifying the notice given or action taken by any such Person and the
nature of such claimed Event of Default, Potential Event of Default,
default, event or condition, and what action Company has taken, is
taking and proposes to take with respect thereto;
(x) Litigation or Other Proceedings: (a) promptly upon any
officer of Company obtaining knowledge of the institution of, or non-
frivolous threat of, any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or
any property of Company or any of its Subsidiaries (collectively,
"PROCEEDINGS") not previously disclosed in writing by Company to
Lenders or Chase Co-Administrative Agent any material development in
any Proceeding that, in any case:
(1) if adversely determined, has a reasonable possibility of
giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation
of, or to recover any damages or obtain relief as a result of,
the transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters; and (b) within 45 days after the end of each
Fiscal Quarter, a schedule of all Proceedings involving an alleged
liability of, or claims against or affecting, Company or any of its
Subsidiaries equal to or greater than $250,000 and promptly after
request by either Co-Administrative Agent such other information as
may be reasonably requested by such Co-Administrative Agent to enable
<PAGE>
such Co-Administrative Agent and its counsel to evaluate any of such
Proceedings;
(xi) ERISA Events: promptly upon becoming aware of the
occurrence of any ERISA Event, a written notice specifying the nature
thereof, what action Company or any of its ERISA Affiliates has taken,
is taking or proposes to take with respect thereto and, when known,
any action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto;
(xii) ERISA Notices: with reasonable promptness, copies of
(a) all written notices received by Company or any of its ERISA
Affiliates from a Multiemployer Plan sponsor concerning an ERISA
Event; and (b) such other documents or governmental reports or filings
relating to any Employee Benefit Plan as either Co-Chase Co-A-
dministrative Agent shall reasonably request;
(xiii) Financial Plans: as soon as practicable and in any event
no later than the beginning of each Fiscal Year, a monthly
consolidated and consolidating plan and financial forecast for the
next succeeding Fiscal Year, including, without limitation, (a)
forecasted consolidated and consolidating balance sheets and
forecasted consolidated and consolidating statements of income and
cash flows of Company and its Subsidiaries for such Fiscal Year,
together with a pro forma Compliance Certificate for such Fiscal Year
and an explanation of the assumptions on which such forecasts are
based, and (b) such other information and projections as either Co-
Administrative Agent may reasonably request;
(xiv) Insurance: as soon as practicable and in any event by the
last day of each Fiscal Year, a report in form and substance
satisfactory to Co-Administrative Agents outlining all material
insurance coverage maintained as of the date of such report by Company
and its Subsidiaries and all material insurance coverage planned to be
maintained by Company and its Subsidiaries in the immediately
succeeding Fiscal Year;
(xv) Environmental Audits and Reports: as soon as practicable
following receipt thereof, copies of all environmental audits and
reports, whether prepared by personnel of Company or any of its
Subsidiaries or by independent consultants, with respect to
significant environmental matters at any Facility or which relate to
an Environmental Claim which could result in a Material Adverse
Effect;
(xvi) Board of Directors: with reasonable promptness, written
notice of any change in the Board of Directors of Company;
(xvii) New Subsidiaries: promptly upon any Person becoming a
Subsidiary of Company, a written notice setting forth with respect to
such Person (a) the date on which such Person became a Subsidiary of
Company and (b) all of the data required to be set forth in Schedule
5.1 annexed hereto with respect to all Subsidiaries of Company (it
being understood that such written notice shall be deemed to
supplement Schedule 5.1 annexed hereto for all purposes of this
Agreement); and
(xviii) Other Information: with reasonable promptness, such
other information and data with respect to Company or any of its
Subsidiaries as from time to time may be reasonably requested by
either Co-Administrative Agent.
For purposes of subsections 4.2D(ii) and 4.3D(iv) and this subsection
<PAGE>
6.1, "consolidating" balance sheets and "consolidating" statements of
income, stockholders equity and cash flows refer to financial statements
consolidating the financial position, results of operations and cash flows
of the major operating groups of Company's Subsidiaries, which operating
groups as of the Effective Date consist of (1) A.M. Miller & Associates,
Inc. and its Subsidiaries, (2) Account Portfolios, Inc. and its
Subsidiaries, (3) Continental Credit Services, Inc., Alaska Financial
Services, Inc., Southwest Credit Services, Inc. and their respective
Subsidiaries, and (4) Payco and its Subsidiaries, and will (A) on and after
consummation of the NSA Acquisition, also include any Subsidiary of
Company holding the NSA Acquired Assets and the Subsidiaries of such
Subsidiary and (B) on and after consummation of the Accelerated
Acquisition, also include any Subsidiary of Company holding the Accelerated
Acquired Assets and the Subsidiaries of such Subsidiary.
6.2 CORPORATE EXISTENCE, ETC.
Except as permitted under subsection 7.7, Company will, and will cause
each of its Subsidiaries to, at all times preserve and keep in full force
and effect its corporate existence and all rights and franchises material
to the business of Company and its Subsidiaries (on a consolidated basis).
Without limiting the foregoing, Company shall, and shall cause each of its
Subsidiaries to, file and diligently process to completion applications for
all material permits, licenses and other governmental approvals necessary
for the operation of its debt collection business.
6.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
A. Company will, and will cause each of its Subsidiaries to, pay all
material taxes and all assessments and other governmental charges imposed
upon it or any of its properties or assets or in respect of any of its
income, businesses or franchises before any penalty accrues thereon, and
all claims (including, without limitation, claims for labor, services,
materials and supplies) for sums that have become due and payable and that
by law have or may become a Lien upon any of its properties or assets,
prior to the time when any penalty or fine shall be incurred with respect
thereto; provided that no such charge or claim need be paid if it is being
contested in good faith by appropriate proceedings timely instituted and
diligently conducted and if such reserve or other appropriate provision, if
any, as shall be required in conformity with GAAP shall have been made
therefor.
B. Company will not, nor will it permit any of its Subsidiaries to,
file or consent to the filing of any consolidated income tax return with
any Person (other than Company and its Subsidiaries).
6.4 MAINTENANCE OF PROPERTIES; INSURANCE.
Company will, and will cause each of its Subsidiaries to, maintain or
cause to be maintained in good repair, working order and condition,
ordinary wear and tear excepted, all material properties used or useful in
the business of Company and its Subsidiaries and from time to time will
make or cause to be made all appropriate repairs, renewals and replacements
thereof. Company will maintain or cause to be maintained, with financially
sound and reputable insurers, insurance with respect to its properties and
business and the properties and businesses of its Subsidiaries against loss
or damage of the kinds customarily carried or maintained under similar
circumstances by corporations of established reputation engaged in similar
businesses. Each such policy of casualty insurance covering damage to or
loss of property shall name Chase Co-Administrative Agent for the benefit
of Agent and Lenders as the loss payee thereunder for all losses, subject
to application of proceeds as required by subsection 2.4B(iii)(d), and
shall provide for at least 30 days' prior written notice to Chase Co-
<PAGE>
Administrative Agent of any modification or cancellation of such policy.
6.5 INSPECTION; LENDER MEETING.
Company shall, and shall cause each of its Subsidiaries to, permit any
authorized representatives designated by any Agent or Lender to visit and
inspect any of the properties of Company or any of its Subsidiaries,
including its and their financial and accounting records, and to make
copies and take extracts therefrom, and to discuss its and their affairs,
finances and accounts with its and their officers and independent public
accountants, all upon reasonable advance notice and at such reasonable
times during normal business hours and as often as may be reasonably
requested. Without in any way limiting the foregoing, Company will, upon
the request of Chase Co-Administrative Agent, participate in a meeting of
Agents and Lenders once during each Fiscal Year to be held at Company's
corporate offices (or such other location as may be agreed to by Company
and Chase Co-Administrative Agent) at such time as may be agreed to by
Company and Chase Co-Administrative Agent.
6.6 COMPLIANCE WITH LAWS, ETC.
Company shall, and shall cause each of its Subsidiaries to, comply
with the requirements of all applicable laws, rules, regulations and orders
of any governmental authority (including all Debt Collection Laws),
noncompliance with which could reasonably be expected to cause a Material
Adverse Effect.
6.7 ENVIRONMENTAL DISCLOSURE AND INSPECTION.
A. Company shall, and shall cause each of its Subsidiaries to,
exercise all due diligence in order to comply and cause (i) all tenants
under any leases or occupancy agreements affecting any portion of the
Facilities and (ii) all other Persons on or occupying such property, to
comply with all Environmental Laws.
B. Company agrees that Chase Co-Administrative Agent may, from time
to time and in its reasonable discretion, retain, at Company's expense, an
independent professional consultant to review any report relating to
Hazardous Materials prepared by or for Company and to conduct its own
investigation of any Facility currently owned, leased, operated or used by
Company or any of its Subsidiaries, and Company agrees to use all
reasonable efforts to obtain permission for Chase Co-Administrative Agent's
professional consultant to conduct its own investigation of any such
Facility previously owned, leased, operated or used by Company or any of
its Subsidiaries. Company shall use its reasonable efforts to obtain for
Chase Co-Administrative Agent and its agents, employees, consultants and
contractors the right, upon reasonable notice to Company, to enter into or
on to the Facilities currently owned, leased, operated or used by Company
or any of its Subsidiaries to perform such tests on such property as are
reasonably necessary to conduct such a review and/or investigation. Any
such investigation of any Facility shall be conducted, unless otherwise
agreed to by Company and Chase Co-Administrative Agent, during normal
business hours and, to the extent reasonably practicable, shall be
conducted so as not to interfere with the ongoing operations at any such
Facility or to cause any damage or loss to any property at such Facility.
Company and Chase Co-Administrative Agent hereby acknowledge and agree that
any report of any investigation conducted at the request of Chase Co-
Administrative Agent pursuant to this subsection 6.7B will be obtained and
shall be used by Chase Co-Administrative Agent and Lenders for the purposes
of Lenders' internal credit decisions, to monitor and police the Loans and
to protect Lenders' security interests, if any, created by the Loan
Documents. Chase Co-Administrative Agent agrees to deliver a copy of any
such report to Company with the understanding that Company acknowledges and
<PAGE>
agrees that (i) it will indemnify and hold harmless each Agent and Lender
from any costs, losses or liabilities relating to any Loan Party's use of
or reliance on such report, (ii) no Agent nor any Lender makes any
representation or warranty with respect to such report, and (iii) by
delivering such report to Company, no Agent nor any Lender is requiring or
recommending the implementation of any suggestions or recommendations
contained in such report.
C. Company shall promptly advise Chase Co-Administrative Agent in
writing and in reasonable detail of (i) any Release of any Hazardous
Materials required to be reported to any federal, state, local or foreign
governmental or regulatory agency under any applicable Environmental Laws,
(ii) any and all written communications with respect to any Environmental
Claims that have a reasonable possibility of giving rise to a Material
Adverse Effect or with respect to any Release of Hazardous Materials
required to be reported to any federal, state or local governmental or
regulatory agency, (iii) any remedial action taken by Company or any other
Person in response to (x) any Hazardous Materials on, under or about any
Facility, the existence of which has a reasonable possibility of resulting
in an Environmental Claim having a Material Adverse Effect, or (y) any
Environmental Claim that could have a Material Adverse Effect,
(iv) Company's discovery of any occurrence or condition on any real
property adjoining or in the vicinity of any Facility that could cause such
Facility or any part thereof to be subject to any restrictions on the
ownership, occupancy, transferability or use thereof under any
Environmental Laws, and (v) any request for information from any
governmental agency that suggests such agency is investigating whether
Company or any of its Subsidiaries may be potentially responsible for a
Release of Hazardous Materials.
D. Company shall promptly notify Chase Co-Administrative Agent of
(i) any proposed acquisition of stock, assets, or property by Company or
any of its Subsidiaries that could reasonably be expected to expose Company
or any of its Subsidiaries to, or result in, Environmental Claims that
could have a Material Adverse Effect or that could reasonably be expected
to have a material adverse effect on any Governmental Authorization then
held by Company or any of its Subsidiaries and (ii) any proposed action to
be taken by Company or any of its Subsidiaries to commence manufacturing,
industrial or other similar operations that could reasonably be expected to
subject Company or any of its Subsidiaries to additional laws, rules or
regulations, including, without limitation, laws, rules and regulations
requiring additional environmental permits or licenses.
E. Company shall, at its own expense, provide copies of such
documents or information as either Co-Administrative Agent may reasonably
request in relation to any matters disclosed pursuant to this subsection
6.7.
6.8 COMPANY'S REMEDIAL ACTION REGARDING HAZARDOUS MATERIALS.
Company shall promptly take, and shall cause each of its Subsidiaries
promptly to take, any and all necessary remedial action in connection with
the presence, storage, use, disposal, transportation or Release of any
Hazardous Materials on or under any Facility in order to comply with all
applicable Environmental Laws and Governmental Authorizations unless the
failure to so comply could not reasonably be expected to have a Material
Adverse Effect. In the event Company or any of its Subsidiaries takes any
remedial action with respect to any Hazardous Materials on or under any
Facility, Company or such Subsidiary shall conduct and complete such
remedial action in material compliance with all applicable Environmental
Laws, and in accordance with the policies, orders and directives of all
federal, state and local governmental authorities except when, and only to
the extent that, Company's or such Subsidiary's liability for such
<PAGE>
presence, storage, use, disposal, transportation or Release of any
Hazardous Materials is being contested in good faith by Company or such
Subsidiary.
6.9 EXECUTION OF SUBSIDIARY GUARANTY AND SUBSIDIARY SECURITY AGREEMENTS BY
SUBSIDIARIES AND FUTURE SUBSIDIARIES.
In the event that any Person becomes a domestic Subsidiary after the
date hereof, Company will promptly notify Chase Co-Administrative Agent of
that fact and cause such Subsidiary to execute and deliver to Chase Co-
Administrative Agent and Collateral Agent a counterpart of the Subsidiary
Guaranty and the Pledge Agreement, the Security Agreement, the Limited
Partnership Security Agreement and the Trademark Security Agreement
(collectively, the "SUBSIDIARY SECURITY AGREEMENTS"), and to take all such
further actions and execute all such further documents and instruments as
may be required to grant and perfect in favor of Collateral Agent, for the
benefit of Lenders, a first-priority security interest in all of the
personal property assets of such Subsidiary described in the Subsidiary
Security Agreements. Company shall deliver to Chase Co-Administrative
Agent and Collateral Agent, together with such Loan Documents, (i)
certified copies of such Subsidiary's Articles or Certificate of
Incorporation (or comparable constituent documents), together, if
applicable, with a good standing certificate from the Secretary of State of
the jurisdiction of its incorporation, each to be dated a recent date prior
to their delivery to Chase Co-Administrative Agent, (ii) a copy, if
applicable, of such Subsidiary's Bylaws, certified by its corporate
secretary or an assistant corporate secretary as of a recent date prior to
their delivery to Chase Co-Administrative Agent and Collateral Agent, (iii)
a certificate executed by the secretary or an assistant secretary of such
Subsidiary as to (a) the incumbency and signatures of the officers of such
Subsidiary executing the Subsidiary Guaranty and to which such Subsidiary
is a party and (b) the fact that the attached resolutions of the Board of
Directors of such Subsidiary authorizing the execution, delivery and
performance of the Subsidiary Guaranty and the Subsidiary Security
Agreements to which such Subsidiary is a party are in full force and effect
and have not been modified or rescinded, and (iv) a favorable opinion of
counsel to such Subsidiary, in form and substance satisfactory to Chase Co-
Administrative Agent and its counsel, as to (a) the due organization and
good standing of such Subsidiary, (b) the due authorization, execution and
delivery by such Subsidiary of the Subsidiary Guaranty and the Subsidiary
Security Agreements to which such Subsidiary is a party, (c) the
enforceability of the Subsidiary Guaranty and the Subsidiary Security
Agreements to which such Subsidiary is a party against such Subsidiary, and
(d) such other matters as Chase Co-Administrative Agent and Collateral
Agent may reasonably request, all of the foregoing to be reasonably
satisfactory in form and substance to Chase Co-Administrative Agent and its
counsel and Collateral Agent.
6.10 INTEREST RATE PROTECTION.
At all times after the Effective Date, Company shall maintain in
effect one or more Interest Rate Agreements with respect to the Loans, in
an aggregate notional principal amount of not less than $50,000,000, which
Interest Rate Agreements shall have the effect of establishing a maximum
interest rate of not more than 10% per annum with respect to such notional
principal amount, each such Interest Rate Agreement to be in form and
substance satisfactory to Co-Administrative Agents and with a term of not
less than three years.
6.11 FURTHER ASSURANCES.
At any time or from time to time upon the request of either Co-
Administrative Agent, Company will, at its expense, promptly execute,
<PAGE>
acknowledge and deliver such further documents and do such other acts and
things as such Co-Administrative Agent may reasonably request in order to
effect fully the purposes of the Loan Documents and to provide for payment
of the Obligations in accordance with the terms of this Agreement, the
Notes and the other Loan Documents. In furtherance and not in limitation
of the foregoing, Company shall take, and cause each of its Subsidiaries to
take, such actions as either Co-Administrative Agent may reasonably request
from time to time (including, without limitation, the execution and
delivery of guaranties, security agreements, pledge agreements, mortgages,
deeds of trust, stock powers, financing statements and other documents, the
filing or recording of any of the foregoing, title insurance with respect
to any of the foregoing that relates to an interest in real property, and
the delivery of stock certificates and other collateral with respect to
which perfection is obtained by possession) to ensure that the Obligations
are guarantied by Subsidiary Guarantors and are secured by substantially
all of the assets of Company and its domestic Subsidiaries. In the event
that Company or any of its Subsidiaries creates a new domestic Subsidiary,
all of the capital stock or partnership interests of such new domestic
Subsidiary shall be duly and validly pledged to Collateral Agent for the
benefit of Agents and Lenders pursuant to the Collateral Documents, subject
to no other Liens.
6.12 POST-CLOSING DELIVERIES.
Company shall (i) deliver to Agents the results of a recent search, by
a Person satisfactory to Agents, of all effective UCC financing statements
and fixture filings which may have been made with respect to any personal
or mixed property of NSA and its Subsidiaries, together with copies of all
such filings disclosed by such search, and (ii) deliver to Chase Co-
Administrative Agent evidence reasonably satisfactory to Chase Co-
Administrative Agent that all other filings (including, without limitation,
UCC-3 termination statements and filings with the United States Patent and
Trademark Office of trademark assignments for all trademarks used by
Company and its Subsidiaries registered in the United States), recordings
and other actions that either Chase Co-Administrative Agent or Collateral
Agent deems necessary or advisable to establish, preserve and perfect the
first priority Liens (subject to Liens consented to in writing by Co-
Administrative Agents and Requisite Lenders or permitted by subsection 7.2
with respect to such Collateral) granted to Collateral Agent in personal
and mixed property shall have been made, in each case within 30 days after
the Funding Date for the NSA Acquisition Loans.
SECTION 7.
NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the
Loans and other Obligations and the cancellation or expiration of all
Letters of Credit, unless Requisite Lenders shall otherwise give prior
written consent, Company shall perform, and shall cause each of its
Subsidiaries to perform, all covenants in this Section 7.
7.1 INDEBTEDNESS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise
become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(i) Company may become and remain liable with respect to the
Obligations;
<PAGE>
(ii) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations permitted by subsection 7.4
and, upon any matured obligations actually arising pursuant thereto,
the Indebtedness corresponding to the Contingent Obligations so
extinguished;
(iii) Company and its Subsidiaries, as applicable, may remain
liable with respect to Indebtedness described in Schedule 7.1 annexed
hereto;
(iv) Indebtedness of Company and its Subsidiaries (a) under
Capital Leases capitalized on the consolidated balance sheet of
Company as liabilities or (b) secured by Liens permitted under
subsection 7.2A(iii), in an aggregate amount not exceeding $15,000,000
at any time outstanding;
(v) Company may become and remain liable with respect to
Indebtedness to any of its domestic Wholly Owned Subsidiaries, and any
domestic Wholly Owned Subsidiary of Company may become and remain
liable with respect to Indebtedness to Company or any other domestic
Wholly Owned Subsidiary of Company provided that (a) all such
intercompany Indebtedness shall be evidenced by promissory notes,
(b) all such intercompany Indebtedness owed by Company to any of its
respective Subsidiaries shall be subordinated in right of payment to
the payment in full of the Obligations pursuant to the terms of the
applicable promissory notes or an intercompany subordination
agreement, in each case in form and substance satisfactory to Co-
Administrative Agents, and (c) any payment by Company or by any
Subsidiary of Company under any guaranty of the Obligations shall
result in a pro tanto reduction of the amount of any intercompany
Indebtedness owed by Company or by such Subsidiary to Company or to
any of its Subsidiaries for whose benefit such payment is made;
(vi) Company may become and remain liable with respect to the
Subordinated Notes;
(vii) Company may become and remain liable with respect to
Permitted Seller Notes, provided that the aggregate principal amount
of such notes issued shall not exceed $5,000,000 prior to the first
Anniversary and $25,000,000 thereafter; and
(viii) Company and its Subsidiaries may become and remain liable
with respect to other Indebtedness in an aggregate principal amount
not to exceed at any time outstanding $5,000,000.
7.2 LIENS AND RELATED MATTERS.
A. PROHIBITION ON LIENS. Company shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, create, incur, assume or
permit to exist any Lien on or with respect to any property or asset of any
kind (including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit
the filing of, or permit to remain in effect, any financing statement, or
other similar notice of any Lien with respect to any such property, asset,
income or profits under the Uniform Commercial Code of any state or under
any similar recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens described in Schedule 7.2 annexed hereto;
(iii) Purchase money security interests (including mortgages,
<PAGE>
conditional sales, Capital Leases and any other title retention or
deferred purchase devices) in tangible personal property of Company or
any of its Subsidiaries existing or created at the time of acquisition
thereof or within 30 days thereafter, and the renewal, extension and
refunding of any such security interest in an amount not exceeding the
amount thereof remaining unpaid immediately prior to such renewal,
extension or refunding; provided, however, that such Indebtedness is
permitted by subsection 7.1(iv) hereof;
(iv) Other Liens on assets of Company and its Subsidiaries
securing Indebtedness in an aggregate amount not to exceed $2,000,000
at any time outstanding; and
(v) Liens granted pursuant to the Collateral Documents.
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If Company or any of its
Subsidiaries shall create or assume any consensual Lien upon any of its
properties or assets, whether now owned or hereafter acquired, other than
Liens excepted by the provisions of subsection 7.2A, it shall make or cause
to be made effective provision whereby the Obligations will be secured by
such Lien equally and ratably with any and all other Indebtedness secured
thereby as long as any such Indebtedness shall be so secured; provided
that, notwithstanding the foregoing, this covenant shall not be construed
as a consent by Requisite Lenders to the creation or assumption of any such
Lien not permitted by the provisions of subsection 7.2A.
C. NO FURTHER NEGATIVE PLEDGES. Except with respect to specific
property encumbered to secure payment of particular Indebtedness or to be
sold pursuant to an executed agreement with respect to an Asset Sale,
neither Company nor any of its Subsidiaries shall enter into any agreement
prohibiting the creation or assumption of any Lien upon any of its
properties or assets, whether now owned or hereafter acquired.
D. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO COMPANY OR OTHER
SUBSIDIARIES. Except as provided herein Company will not, and will not
permit any of its Subsidiaries to, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any
kind on the ability of any such Subsidiary to (i) pay dividends or make any
other distributions on any of such Subsidiary's capital stock owned by
Company or any other Subsidiary of Company, (ii) repay or prepay any
Indebtedness owed by such Subsidiary to Company or any other Subsidiary of
Company, (iii) make loans or advances to Company or any other Subsidiary of
Company, or (iv) transfer any of its property or assets to Company or any
other Subsidiary of Company.
7.3 INVESTMENTS; JOINT VENTURES.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including
any Joint Venture, except:
(i) Company and its Subsidiaries may make and own Investments in
Cash Equivalents;
(ii) Company and its Subsidiaries may continue to own (a) the
Investments owned by them as of the Effective Date in any Subsidiaries
of Company and (b) Investments in any Subsidiaries of Company formed
or acquired in accordance with the terms hereof pursuant to the NSA
Acquisition and the Accelerated Acquisition on or prior to the Funding
Dates for Acquisition Loans;
(iii) Company and its Subsidiaries may make intercompany loans to
the extent permitted under subsection 7.1(v);
<PAGE>
(iv) Payco may continue to own the Joint Ventures owned by it as
of the Effective Date;
(v) Company and its Subsidiaries may make and own Investments in
Permitted Joint Ventures; provided that (a) at the time of such
Investment, and after giving effect thereto, no Potential Event of
Default or Event of Default shall have occurred and be continuing,
(b) the aggregate amount of all such Investments made after the
Closing Date shall not exceed $5,000,000, and (c) Company and its
Subsidiaries shall pledge all of their respective equity interests in
any Permitted Joint Venture to Collateral Agent to secure the
Obligations under the Loan Documents (except to the extent, and only
to the extent, such pledge of the equity interests in a Permitted
Joint Venture organized under the laws of a foreign country would
result in Company incurring additional liabilities for taxes);
(vi) Company may make and own Investments consisting of notes
received in connection with any Asset Sale limited to 20% of the total
sale price of the assets sold in such Asset Sale; provided that the
aggregate principal amount of such notes at any time outstanding shall
not exceed $2,000,000;
(vii) Company and its Subsidiaries may make and own Investments
in connection with a Permitted Acquisition or a Permitted Portfolio
Acquisition;
(viii) Company and its Subsidiaries may make Consolidated
Maintenance Capital Expenditures permitted by subsection 7.8;
(ix) Company and its Subsidiaries may make and own other
Investments in an aggregate amount not to exceed at any time
$2,500,000; and
(x) Company may make the Investments permitted under subsection
7.7(vi).
7.4 CONTINGENT OBLIGATIONS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to
any Contingent Obligation, except:
(i) Company may become and remain liable with respect to
Contingent Obligations in respect of Letters of Credit, as applicable,
and Subsidiaries of Company may become and remain liable with respect
to Contingent Obligations arising under the Subsidiary Guaranty;
(ii) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations under Interest Rate Agreements
required under subsection 6.10;
(iii) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of customary
indemnification and purchase price adjustment obligations incurred in
the ordinary course of business in connection with Asset Sales or
other sales of assets;
(iv) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations under guarantees in the
ordinary course of business of the obligations of suppliers,
landlords, customers, franchisees and licensees of Company and its
Subsidiaries in an aggregate amount not to exceed at any time
$1,000,000;
<PAGE>
(v) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations under guarantees in the
ordinary course of business with respect to the performance by Company
or any of its Subsidiaries of obligations under collection contracts;
(vi) Company may become and remain liable with respect to
Contingent Obligations in respect of Earn Out Agreements in connection
with Permitted Acquisitions and Company and its Subsidiaries may
become and remain liable with respect to Contingent Obligations in
respect of Forward Flow Contracts; provided that to the extent that
purchases of receivables portfolios from a single seller (together
with all Affiliates of such seller) party to a Forward Flow Contract
with Company or any of its Subsidiaries exceed $750,000 in any 12-
month period, any receivables portfolio purchased during such 12-month
period under a Forward Flow Contract with such seller shall be a
Qualified Loan Portfolio;
(vii) Company and its Subsidiaries, as applicable, may remain
liable with respect to Contingent Obligations described in
Schedule 7.4 annexed hereto;
(viii) Subsidiaries of Company may become and remain liable with
respect to the Subordinated Note Guaranty; and
(ix) Company and its Subsidiaries may become and remain liable
with respect to other Contingent Obligations; provided that the
maximum aggregate liability, contingent or otherwise, of Company and
its Subsidiaries in respect of all such Contingent Obligations shall
at no time exceed $1,000,000.
7.5 RESTRICTED JUNIOR PAYMENTS.
Company shall not, and shall not permit any of its respective
Subsidiaries to, directly or indirectly, declare, order, pay, make or set
apart any sum for any Restricted Junior Payment; provided that (i) Company
may make scheduled interest payments in respect of the Subordinated Notes
in accordance with the terms of the Subordinated Note Indenture; (ii)
Company may make scheduled interest and principal payments in respect of
the Existing Seller Note and any Permitted Seller Notes permitted by
subsection 7.1(viii) in accordance with the terms of the Existing Seller
Note and such Permitted Seller Notes; (iii) so long as no Event of Default
or Potential Event of Default shall have occurred and be continuing or
shall be caused thereby, Company may make payments in an aggregate amount
not to exceed $1,000,000 in any Fiscal Year to the extent necessary to
repurchase shares of Company Common Stock from officers, directors or
employees of Company or any of its Subsidiaries following termination of
employment of any such officer, director or employee by reason of death,
disability, retirement or resignation or following other events customarily
requiring or permitting such repurchase, in each case in accordance with
the terms of customary terms of management and/or employee stock plans,
stock subscription agreements or shareholder agreements entered into with
officers, directors or employees of Company or any of its Subsidiaries;
(iv) so long as no Event of Default or Potential Event of Default shall
have occurred and be continuing or shall be caused thereby, Company may
repurchase Company Preferred Stock and make payments of accrued and unpaid
dividends to the holders of Company Preferred Stock, provided that in no
event may Company pay any dividend on or repurchase Company Preferred Stock
unless both (x) the Leverage Ratio for the most recently ended four-Fiscal
Quarter period does not exceed 2.0:1.0 and (y) at least 50% of the initial
aggregate principal amount of the Term Loans has been repaid.
7.6 FINANCIAL COVENANTS.
<PAGE>
A. MINIMUM INTEREST COVERAGE RATIO. The ratio of (i) Consolidated
EBITDA to (ii) Consolidated Interest Expense for any four-Fiscal Quarter
period (each such four-Fiscal Quarter period being a "CALCULATION PERIOD")
ending during any of the periods set forth below shall not be less than the
correlative ratio indicated:
PERIOD DURING MINIMUM
WHICH CALCULATION INTEREST COVERAGE
PERIOD ENDS RATIO
Closing Date - 2.25:1.00
12/31/97
01/01/98 - 12/31/98 2.50:1.00
01/01/99 - 12/31/99 2.75:1.00
Thereafter 3.00:1.00
B. MAXIMUM LEVERAGE RATIO. The ratio of (i) Consolidated Total Debt
as of the last day (any such day being a "CALCULATION DATE") of any Fiscal
Quarter ending during any of the periods set forth below to (ii)
Consolidated EBITDA for the Calculation Period ending on such Calculation
Date shall not exceed the correlative ratio indicated:
PERIOD DURING MAXIMUM
WHICH CALCULATION DATE LEVERAGE
OCCURS RATIO
Closing Date - 4.00:1.00
12/31/97
01/01/98 - 12/31/98 3.75:1.00
01/01/99 - 12/31/99 3.50:1.00
01/01/00 - 12/31/00 3.25:1.00
01/01/01 - 12/31/01 3.00:1.00
Thereafter 2.75:1.00
C. MINIMUM FIXED CHARGE COVERAGE RATIO. The ratio of (i)
Consolidated EBITDA to (ii) Consolidated Fixed Charges for any Calculation
Period ending after the Closing Date shall not be less than 1.05:1.00.
D. CONSOLIDATED MAINTENANCE CAPITAL EXPENDITURES. Company shall not,
and shall not permit its Subsidiaries to, make or incur Consolidated
Maintenance Capital Expenditures, in any Fiscal Year indicated below, in an
aggregate amount in excess of the corresponding amount (the "MAXIMUM
CONSOLIDATED MAINTENANCE CAPITAL EXPENDITURES AMOUNT") set forth below
opposite such Fiscal Year; provided that the Maximum Consolidated
Maintenance Capital Expenditures Amount for any Fiscal Year other than
Fiscal Year 1997 shall be increased by an amount equal to the excess, if
any (but in no event more than 25% of the Maximum Consolidated Maintenance
Capital Expenditures Amount for the previous Fiscal Year), of the Maximum
Consolidated Maintenance Capital Expenditures Amount for the previous
Fiscal Year over the actual amount of Consolidated Maintenance Capital
Expenditures for such previous Fiscal Year; and provided further, that
immediately following any acquisition permitted under subsection 7.7(v) or
7.7(vi), the Maximum Consolidated Maintenance Capital Expenditures Amount
for the Fiscal Year during which such acquisition occurs (other than Fiscal
Year 1997) and for each Fiscal Year thereafter shall be increased, in each
<PAGE>
case, by an amount equal to the product of (i) the Maximum Consolidated
Maintenance Capital Expenditures Amount in effect immediately prior to such
acquisition multiplied by (ii) the ratio of (a) Consolidated EBITDA
attributable to the business or assets so acquired but not attributable to
any Portfolio Purchase Business so acquired to (b) Consolidated EBITDA not
attributable to the Portfolio Purchase Business of Company and its
Subsidiaries without giving effect to such acquisition, determined in the
case of clauses (a) and (b) for the four-Fiscal Quarter period most
recently ended prior to such acquisition.
MAXIMUM CONSOLIDATED
MAINTENANCE
FISCAL YEAR CAPITAL EXPENDITURES
1997 $9,500,000
Thereafter $8,000,000
E. CERTAIN CALCULATIONS. With respect to any period during which new
Subsidiaries, assets or businesses are acquired pursuant to
subsection 7.7(v) or 7.7(vi), for purposes of determining compliance with
the financial covenants set forth in this subsection 7.6, Consolidated
EBITDA and Consolidated Interest Expense shall be calculated with respect
to such periods and such Subsidiaries, assets or businesses on a pro forma
basis (including pro forma adjustments arising out of events which are
directly attributable to a specific transaction, are factually supportable
and are expected to have a continuing impact, in each case determined on a
basis consistent with Article 11 of Regulation S-X promulgated under the
Securities Act and as interpreted by the staff of the Securities and
Exchange Commission prior to December 1996, which would include cost
savings resulting from head count reduction, closure of facilities and
similar restructuring charges, which pro forma adjustments shall be
certified by the chief financial officer of Company) using the historical
financial statements of all entities or assets so acquired or to be
acquired and the consolidated financial statements of Company and its
Subsidiaries which shall be reformulated (i) as if such acquisition, and
any acquisitions which have been consummated during such period, and any
Indebtedness or other liabilities incurred in connection with any such
acquisition had been consummated or incurred at the beginning of such
period (and assuming that such Indebtedness bears interest during any
portion of the applicable measurement period prior to the relevant
acquisition at the weighted average of the interest rates applicable to
outstanding Loans during such period), and (ii) otherwise in conformity
with certain procedures to be agreed upon between Co-Administrative Agents
and Company, all such calculations to be in form and substance satisfactory
to Co-Administrative Agents. Notwithstanding anything to the contrary set
forth in this subsection 7.6, with respect to the calculation of Con-
solidated EBITDA and Consolidated Interest Expense for purposes of this
subsection 7.6, for any Four Fiscal Quarter period ending prior to Decem-
ber 31, 1997, Consolidated EBITDA and Consolidated Interest Expense shall
be calculated with respect to such period on a pro forma basis (including
pro forma adjustments (not in excess of $10,000,000) arising out of events
which are directly attributable to a specific transaction, are factually
supportable and are expected to have a continuing impact, in each case
determined on a basis consistent with Article 11 of Regulation S-X
promulgated under the Securities Act and as interpreted by the staff of the
Securities and Exchange Commission prior to December 1996, which would
include cost savings resulting from head count reduction, closure of
facilities and similar restructuring charges) using the historical
financial statements of the Company and Subsidiaries, MLQ Investors, L.P.
("MLQ") and Payco and its Subsidiaries which shall be reformulated as if
the Acquisition and the acquisition by Company of participation interests
<PAGE>
in certain portfolios of delinquent accounts held by MLQ (the "MLQ
PURCHASE") had been consummated at the beginning of such period and any
Indebtedness or other liabilities incurred in connection with the
Acquisition and the MLQ Purchase had been consummated or incurred at the
beginning of such period (and assuming that such Indebtedness bears
interest during any portion of the applicable measurement period prior to
the Acquisition at the weighted average of the interest rates applicable to
outstanding Loans during the portion of such period since the Closing
Date). At the time of delivery of a Compliance Certificate with respect to
any period for which the foregoing adjustments are made, Company shall
deliver an Officer's Certificate certifying that the cost savings and other
adjustments included in such calculation are expected to be implemented on
or prior to December 31, 1997.
7.7 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES.
Company shall not, and shall not permit any of its Subsidiaries to,
alter the corporate, capital or legal structure of Company or any of its
Subsidiaries, create any new Subsidiaries or enter into any transaction of
merger or consolidation, or liquidate, wind-up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, sub-lease,
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its business, property or
fixed assets, whether now owned or hereafter acquired, or acquire by
purchase or otherwise any part of the business, property or fixed assets
of, or stock or other evidence of beneficial ownership of, any Person,
except:
(i) any Subsidiary of Company may be merged with or into Company
or any domestic Wholly Owned Subsidiary of Company, or be liquidated,
wound up or dissolved, or all or any substantial part of its business,
property or assets may be conveyed, sold, leased, transferred or
otherwise disposed of, in one transaction or a series of transactions,
to Company or any domestic Wholly Owned Subsidiary of Company;
provided that, in the case of such a merger, Company or such Wholly
Owned Subsidiary shall be the continuing or surviving corporation;
(ii) Company and its Subsidiaries may acquire inventory (other
than receivables portfolios), equipment and other assets in the
ordinary course of business;
(iii) Company and its Subsidiaries may sell or otherwise dispose
of assets in transactions that do not constitute Asset Sales; provided
that the consideration received for such assets shall be in an amount
at least equal to the fair market value thereof (determined in good
faith by the board of directors of Company);
(iv) Company and its Subsidiaries may make any Asset Sale of
assets that have, in the aggregate, a fair market value (determined in
good faith by the board of directors of Company) not in excess of 20%
of Consolidated EBITDA for the four-Fiscal Quarter period most
recently ended prior to such Asset Sale; provided that (x) the
consideration received for such assets shall be in an amount at least
equal to the fair market value thereof (determined in good faith by
the board of directors of Company); (y) not less than 80% of the
consideration received therefor shall be cash; and (z) the proceeds of
such Asset Sales shall be applied as required by subsection
2.4B(iii)(a);
(v) Company may make acquisitions of receivables portfolios and
other assets and businesses (including acquisitions of the capital
stock of another Person), provided that:
<PAGE>
(a) in the event that the aggregate amount of all such
acquisitions in any Fiscal Year would exceed $5,000,000 after
giving effect to any such proposed acquisition, (x) the Interest
Coverage Ratio (calculated on a pro forma basis giving effect to
the proposed acquisition) shall not be less than the ratio set
forth in subsection 7.6A applicable at the time of such
acquisition plus 0.25 and (y) the Leverage Ratio (calculated on a
pro forma basis giving effect to the proposed acquisition) shall
not be greater than (1) the ratio set forth in subsection 7.6B
applicable at the time of such acquisition, if such acquisition
is consummated on or prior to December 31, 1997, and (2) the
ratio set forth in subsection 7.6B applicable at the time of such
acquisition minus 0.25, if such acquisition is consummated after
December 31, 1997;
(b) any receivables portfolio acquired shall be a Qualified
Loan Portfolio;
(c) the aggregate amount expended for such acquisitions
during (1) Fiscal Year 1997 shall not exceed $60,000,000 and (2)
any Fiscal Year thereafter shall not exceed $30,000,000;
provided, however, that amounts expended in connection with the
acquisition permitted under subsection 7.7(vi) shall not be
included in the calculation of such aggregate amount; and
provided further, that such amount shall (A) in Fiscal Year 1998,
be increased by an amount equal to the excess, if any, of
$60,000,000 over the actual amount expended for acquisitions
permitted under this subsection 7.7(v) for Fiscal Year 1997, and
(B) in Fiscal Year 1999 and each Fiscal Year thereafter, be
increased by an amount equal to the excess, if any (but in no
event more than $10,000,000), of $30,000,000 over the actual
amount expended for acquisitions permitted under this subsection
7.7(v) for the immediately preceding Fiscal Year;
(d) that portion of Consolidated EBITDA attributable to any
assets so acquired in any single acquisition or series of related
acquisitions, as projected by Company for the twelve-month period
immediately following the date of such acquisition or the date of
the first of such series of related acquisitions, as the case may
be, shall not exceed 20% of Consolidated EBITDA for the four-
Fiscal Quarter period most recently ended prior to the date of
such acquisition, and Company shall have delivered an Officer's
Certificate to Co-Administrative Agents (together with supporting
information therefor) to the foregoing effect; and
(e) no Event of Default or Potential Event of Default shall
have occurred and be continuing at the time of such acquisition
or shall be caused thereby; and
(vi) Company may consummate the Accelerated Acquisition and the
NSA Acquisition on the Effective Date and on the relevant Funding Date
thereafter for Acquisition Loans.
7.8 SALES AND LEASE-BACKS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor
or other surety with respect to any lease, whether an Operating Lease or a
Capital Lease, of any property (whether real, personal or mixed), whether
now owned or hereafter acquired, (i) which Company or any of its
Subsidiaries has sold or transferred or is to sell or transfer to any other
Person (other than Company or any of its Subsidiaries) or (ii) which
Company or any of its Subsidiaries intends to use for substantially the
<PAGE>
same purpose as any other property which has been or is to be sold or
transferred by Company or any of its Subsidiaries to any Person (other than
Company or any of its Subsidiaries) in connection with such lease.
7.9 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of
any property or the rendering of any service) with any holder of 5% or more
of any class of equity Securities of Company or with any Affiliate of
Company or of any such holder, on terms that are less favorable to Company
or that Subsidiary, as the case may be, than those that might be obtained
at the time from Persons who are not such a holder or Affiliate; provided
that the foregoing restriction shall not apply to (i) any transaction
between Company and any of its Wholly Owned Subsidiaries or between any of
its Wholly Owned Subsidiaries, (ii) reasonable and customary fees paid to
members of the boards of directors of Company and its Subsidiaries,
(iii) fees, expenses and other amounts payable to the MDC Entities on the
Closing Date and/or the Effective Date, and (iv) the Management Fees.
7.10 DISPOSAL OF SUBSIDIARY STOCK.
Company shall not:
(i) directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity
Securities of any of its Subsidiaries, except as permitted under this
Agreement or the Collateral Documents or to qualify directors if
required by applicable law; or
(ii) permit any of its Subsidiaries directly or indirectly to
sell, assign, pledge or otherwise encumber or dispose of any shares of
capital stock or other equity Securities of any of its Subsidiaries
(including such Subsidiary), except as permitted under this Agreement
or the Collateral Documents or to Company, another wholly-owned
Subsidiary of Company, or to qualify directors if required by
applicable law.
7.11 CONDUCT OF BUSINESS.
Company shall not, and shall not permit any of its Subsidiaries to,
engage in any business other than (i) the businesses engaged in by Company
and its Subsidiaries on the Effective Date (after giving effect to the
Accelerated Acquisition) and similar or related businesses and (ii) such
other lines of business as may be consented to by Co-Administrative Agents
and Requisite Lenders.
7.12 AMENDMENTS OR WAIVERS OF CERTAIN RELATED AGREEMENTS; AMENDMENTS OF
DOCUMENTS RELATING TO SUBORDINATED INDEBTEDNESS; DESIGNATION OF "DESIGNATED
SENIOR DEBT"; PREFERRED STOCK.
A. AMENDMENTS OR WAIVERS OF CERTAIN RELATED AGREEMENTS. Neither
Company nor any of its Subsidiaries will agree to any material amendment
to, or waive any of its material rights under, any Related Agreement (other
than any Related Agreement evidencing or governing any Subordinated
Indebtedness), the MDC Advisory Services Agreement, the HBR Services
Agreement or the Stockholders Agreement after the Closing Date if such
amendment or waiver would be adverse to Lenders without in each case
obtaining the prior written consent of Requisite Lenders to such amendment
or waiver; provided, however, that if certain performance criteria
determined by the Board of Directors of Company are met from time to time,
Company may amend the MDC Advisory Services Agreement without the consent
<PAGE>
of Lenders to provide for an increase or increases in the annual Management
Fee payable thereunder, provided that such Management Fee shall not exceed
$750,000 annually.
B. AMENDMENTS OF DOCUMENTS RELATING TO SUBORDINATED INDEBTEDNESS.
Company shall not, and shall not permit any of its Subsidiaries to, amend
or otherwise change the terms of any Subordinated Indebtedness or
Subordinated Note Document, or make any payment consistent with an
amendment thereof or change thereto, if the effect of such amendment or
change is to increase the interest rate on such Subordinated Indebtedness,
change (to earlier dates) any dates upon which payments of principal or
interest are due thereon, change any event of default or condition to an
event of default with respect thereto (other than to eliminate any such
event of default or increase any grace period related thereto), change the
redemption, prepayment or defeasance provisions thereof, change the
subordination provisions thereof (or of any guaranty thereof), or change
any collateral therefor (other than to release such collateral), or if the
effect of such amendment or change, together with all other amendments or
changes made, is to increase materially the obligations of the obligor
thereunder or to confer any additional rights on the holders of such
Subordinated Indebtedness (or trustee or other representative on their
behalf) which would be adverse to Company or Lenders.
C. DESIGNATION OF "DESIGNATED SENIOR DEBT". Company shall not
designate any Indebtedness as "Designated Senior Debt" (as defined in the
Subordinated Note Indenture) for purposes of the Subordinated Note
Indenture without the prior written consent of Requisite Lenders.
D. PREFERRED STOCK. Without the prior written approval of Requisite
Lenders, Company shall not amend, restate, supplement or otherwise modify
its Articles of Incorporation if the effect of such amendment, restatement,
supplement or modification is to (i) increase the dividend rate payable on,
or change the redemption provisions of, the Company Preferred Stock, (ii)
together with all other amendments or changes made, increase materially the
obligations of Company to the holders of the Company Preferred Stock, (iii)
confer any additional rights on the holders of the Company Preferred Stock
which would be adverse to Company or Lenders, or (iv) provide for the
issuance of any preferred stock of Company in addition to the Company
Preferred Stock or the filing or amendment of any certificate of
designation with respect thereto.
7.13 FISCAL YEAR.
Company shall not change its Fiscal Year-end from December 31.
SECTION 8.
EVENTS OF DEFAULT
IF any of the following conditions or events ("EVENTS OF DEFAULT")
shall occur:
8.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
Failure by Company to pay any installment of principal of any Loan
when due, whether at stated maturity, by acceleration, by notice of
prepayment or otherwise; failure by Company to pay when due any amount
payable to an Issuing Lender in reimbursement of any drawing honored or
payment made under a Letter of Credit; or failure by Company to pay any
interest on any Loan or any fee or any other amount due under this
Agreement within five days after the date due; or
<PAGE>
8.2 DEFAULT IN OTHER AGREEMENTS.
(i) Failure of Company or any of its Subsidiaries to pay when due
(a) any principal of or interest on any Indebtedness (other than
Indebtedness referred to in subsection 8.1) in an individual principal
amount of $2,500,000 or more or any items of Indebtedness with an aggregate
principal amount of $5,000,000 or more or (b) any Contingent Obligation in
an individual principal amount of $2,500,000 or more or any Contingent
Obligations with an aggregate principal amount of $5,000,000 or more, in
each case beyond the end of any grace period provided therefor; or
(ii) breach or default by Company or any of its Subsidiaries with respect
to any other material term of (a) any evidence of any Indebtedness in an
individual principal amount of $2,500,000 or more or any items of
Indebtedness with an aggregate principal amount of $5,000,000 or more or
any Contingent Obligation in an individual principal amount of $2,500,000
or more or any Contingent Obligations with an aggregate principal amount of
$5,000,000 or more or (b) any loan agreement, mortgage, indenture or other
agreement relating to such Indebtedness or Contingent Obligation(s), if in
any case under this clause (ii) the effect of such breach or default is to
cause, or to permit the holder or holders of that Indebtedness or
Contingent Obligation(s) (or a trustee on behalf of such holder or holders)
to cause, that Indebtedness or Contingent Obligation(s) to become or be
declared due and payable prior to its stated maturity or the stated
maturity of any underlying obligation, as the case may be (upon the giving
or receiving of notice, lapse of time, both, or otherwise); or
8.3 BREACH OF CERTAIN COVENANTS.
Failure of Company to perform or comply with any term or condition
contained in subsection 2.4, 2.5 or 6.2 or Section 7 of this Agreement; or
8.4 BREACH OF WARRANTY.
Any material representation, warranty, certification or other
statement made by Company or any of its Subsidiaries in any Loan Document
or in any statement or certificate at any time given by Company or any of
its Subsidiaries in writing pursuant hereto or thereto or in connection
herewith or therewith shall be false in any material respect on the date as
of which made; or
8.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.
Any Loan Party shall default in the performance of or compliance with
any term contained in this Agreement or any of the other Loan Documents,
other than any such term referred to in any other subsection of this
Section 8, and such default shall not have been remedied or waived within
30 days after the earlier of (i) an officer of Company becoming aware of
such default or (ii) receipt by Company of notice from any Agent or Lender
of such default; or
8.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) A court having jurisdiction in the premises shall enter a decree
or order for relief in respect of Company or any of its Subsidiaries (other
than Immaterial Subsidiaries) in an involuntary case under the Bankruptcy
Code or under any other applicable bankruptcy, insolvency or similar law
now or hereafter in effect, which decree or order is not stayed; or any
other similar relief shall be granted under any applicable federal or state
law; or (ii) an involuntary case shall be commenced against Company or any
of its Subsidiaries (other than Immaterial Subsidiaries) under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect; or a decree or order of a court
having jurisdiction in the premises for the appointment of a receiver,
<PAGE>
liquidator, sequestrator, trustee, custodian or other officer having
similar powers over Company or any of its Subsidiaries (other than
Immaterial Subsidiaries), or over all or a substantial part of its
property, shall have been entered; or there shall have occurred the
involuntary appointment of an interim receiver, trustee or other custodian
of Company or any of its Subsidiaries (other than Immaterial Subsidiaries)
for all or a substantial part of its property; or a warrant of attachment,
execution or similar process shall have been issued against any substantial
part of the property of Company or any of its Subsidiaries (other than
Immaterial Subsidiaries), and any such event described in this clause (ii)
shall continue for 60 days unless dismissed, bonded or discharged; or
8.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) Company or any of its Subsidiaries (other than Immaterial
Subsidiaries) shall have an order for relief entered with respect to it or
commence a voluntary case under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of
or taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; or Company or any of its Subsidiaries
(other than Immaterial Subsidiaries) shall make any assignment for the
benefit of creditors; or (ii) Company or any of its Subsidiaries (other
than Immaterial Subsidiaries) shall be unable, or shall fail generally, or
shall admit in writing its inability, to pay its debts as such debts become
due; or the Board of Directors of Company or any of its Subsidiaries (other
than Immaterial Subsidiaries) (or any committee thereof) shall adopt any
resolution or otherwise authorize any action to approve any of the actions
referred to in clause (i) above or this clause (ii); or
8.8 JUDGMENTS AND ATTACHMENTS.
(i) Any money judgment, writ or warrant of attachment or similar
process involving (a) in any individual case an amount in excess of
$2,500,000 or (b) in the aggregate at any time an amount in excess of
$5,000,000 (in either case not adequately covered by insurance as to which
a solvent and unaffiliated insurance company has acknowledged coverage)
shall be entered or filed against Company or any of its Subsidiaries or any
of their respective assets and shall remain undischarged, unvacated,
unbonded or unstayed for a period of 60 days (or in any event later than
five days prior to the date of any proposed sale thereunder); or (ii) any
money judgment shall be rendered against Company or any of its Subsidiaries
or any of their respective assets, or any settlement shall require payment
by, Company or any of its Subsidiaries in any individual case in an amount
in excess of $12,000,000; (iii) any of the following shall occur twice or
both of the following shall occur: (a) a money judgment in excess of
$5,000,000 in an individual case shall be rendered against Company or any
of its Subsidiaries or any of their respective assets, or (b) a settlement
shall require payment by Company or any of its Subsidiaries in excess of
$5,000,000 in an individual case; provided, however, that the amount of any
money judgment or required settlement under the preceding clauses (ii) and
(iii) shall not include for the purposes of such clauses any portion
thereof which has been paid for by insurance or which is adequately covered
by insurance as to which a solvent and unaffiliated insurance company has
acknowledged coverage; or
8.9 DISSOLUTION.
Any order, judgment or decree shall be entered against Company or any
of its Subsidiaries decreeing the dissolution or split up of Company or
that Subsidiary and such order shall remain undischarged or unstayed for a
<PAGE>
period in excess of 30 days; or
8.10 EMPLOYEE BENEFIT PLANS.
There shall occur one or more ERISA Events which individually or in
the aggregate results in a Material Adverse Effect; or there shall exist an
Unfunded Current Liability, individually or in the aggregate for all
Pension Plans (excluding for purposes of such computation any Pension Plans
with respect to which there is no Unfunded Current Liability), which would
have a Material Adverse Effect; or
8.11 CHANGE IN CONTROL.
(i) Prior to the consummation of any initial public offering of
Company Common Stock, (a) the MDC Entities shall at any time not own, in
the aggregate, at least 51% of the combined voting power of Company voting
Securities; or (b) any Person (other than the MDC Entities), including a
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange
Act) which includes such Person, shall purchase or otherwise acquire,
directly or indirectly, beneficial ownership of Securities of Company and,
as a result of such purchase or acquisition, any Person (together with its
associates and Affiliates), shall directly or indirectly beneficially own
in the aggregate Securities representing more than 35% of the combined
voting power of Company voting Securities; or (ii) at any time thereafter,
(a) the MDC Entities together shall own, directly or indirectly, in the
aggregate, a lesser percentage of the combined voting power of Company
voting Securities than any other holder, including a "group" (within the
meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) which includes
such holder, of such voting Securities; (b) a majority of the members of
the Board of Directors of Company shall not be Continuing Directors; or
(c) any Person (other than the MDC Entities), including a "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) which
includes such Person, shall purchase or otherwise acquire, directly or
indirectly, beneficial ownership of Securities of Company and, as a result
of such purchase or acquisition, any Person (together with its associates
and Affiliates), shall directly or indirectly beneficially own in the
aggregate Securities representing more than 25% of the combined voting
power of Company voting Securities; or
8.12 INVALIDITY OF GUARANTIES.
At any time after the execution and delivery thereof, any Guaranty of
the Obligations of Company, for any reason other than the satisfaction in
full of all Obligations, ceases to be in full force and effect or is
declared to be null and void (except with respect to the obligations
thereunder of Immaterial Subsidiaries of Company) or any Loan Party (other
than Immaterial Subsidiaries of Company) denies in writing that it has any
further liability, including, without limitation, with respect to future
advances by Lenders, under any Loan Document to which it is a party; or
8.13 FAILURE OF SECURITY.
Any Collateral Document shall, at any time, cease to be in full force
and effect (other than by reason of a release of Collateral thereunder in
accordance with the terms hereof or thereof, the satisfaction in full of
the Obligations or any other termination of such Collateral Document in
accordance with the terms hereof or thereof) or shall be declared null and
void; or the validity or enforceability thereof shall be contested in
writing by any Loan Party; or Agent shall not have or shall cease to have a
valid security interest in any Collateral purported to be covered thereby,
perfected and with the priority required by the relevant Collateral
Document, for any reason other than the failure of Agents or any Lender to
take any action within its control, subject only to Liens permitted under
<PAGE>
the applicable Collateral Documents; or
8.14 FAILURE TO CONSUMMATE ACQUISITIONS.
The Accelerated Acquisition shall not be consummated in accordance
with this Agreement and the applicable Related Agreements concurrently with
the making of the Accelerated Acquisition Loans, or the NSA Acquisition
shall not be consummated in accordance with this Agreement and the
applicable Related Agreements concurrently with the making of the NSA
Acquisition Loans, or the Acquisition, the Accelerated Acquisition or the
NSA Acquisition shall be unwound, reversed or otherwise rescinded in whole
or in part for any reason; provided, however, that (i) if NSA shall have
been acquired under the NSA Acquisition Agreement in accordance with the
terms of the Existing Credit Agreement prior to the initial Funding Date
for the Acquisition Loans, the failure of the NSA Acquisition to be
consummated concurrently with the making of the NSA Acquisition Loans shall
not constitute an Event of Default hereunder, and (ii) the failure of
either the NSA Acquisition or the Accelerated Acquisition to be consummated
shall not constitute an Event of Default hereunder; or
8.15 DEFAULT UNDER SUBORDINATION PROVISIONS.
Company or any guarantor of Subordinated Indebtedness shall fail to
comply with the subordination provisions contained in the Subordinated Note
Indenture or any other instrument, indenture or agreement pursuant to which
such Subordinated Indebtedness is issued;
THEN (i) upon the occurrence of any Event of Default described in
subsection 8.6 or 8.7, each of (a) the unpaid principal amount of and
accrued interest on the Loans, (b) an amount equal to the maximum amount
that may at any time be drawn under all Letters of Credit then outstanding
(whether or not any beneficiary under any such Letter of Credit shall have
presented, or shall be entitled at such time to present, the drafts or
other documents or certificates required to draw under such Letter of
Credit) and (c) all other Obligations shall automatically become
immediately due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by
Company, and the obligation of each Lender to make any Loan, the obligation
of Chase Co-Administrative Agent to issue any Letter of Credit and the
right of any Lender to issue any Letter of Credit hereunder shall thereupon
terminate, and (ii) upon the occurrence and during the continuation of any
other Event of Default, Chase Co-Administrative Agent shall, upon the
written request of Requisite Lenders, by written notice to Company, declare
all or any portion of the amounts described in clauses (a) through (c)
above to be, and the same shall forthwith become, immediately due and
payable, and the obligation of each Lender to make any Loan, the obligation
of Chase Co-Administrative Agent to issue any Letter of Credit and the
right of any Lender to issue any Letter of Credit hereunder shall thereupon
terminate; provided that the foregoing shall not affect in any way the
obligations of Lenders under subsection 3.3C(i) or the obligations of
Lenders to purchase participations in any unpaid Swing Line Loans as
provided in subsection 2.1A(iv).
Any amounts described in clause (b) above, when received by Chase Co-
Administrative Agent, shall be held by Chase Co-Administrative Agent
pursuant to the terms of the Collateral Account Agreement and shall be
applied as therein provided.
Notwithstanding anything contained in the second preceding paragraph,
if at any time within 60 days after an acceleration of the Loans pursuant
to such paragraph Company shall pay all arrears of interest and all
payments on account of principal which shall have become due otherwise than
as a result of such acceleration (with interest on principal and, to the
<PAGE>
extent permitted by law, on overdue interest, at the rates specified in
this Agreement) and all Events of Default and Potential Events of Default
(other than non-payment of the principal of and accrued interest on the
Loans, in each case which is due and payable solely by virtue of
acceleration) shall be remedied or waived pursuant to subsection 10.6, then
Requisite Lenders, by written notice to Company, may at their option
rescind and annul such acceleration and its consequences; but such action
shall not affect any subsequent Event of Default or Potential Event of
Default or impair any right consequent thereon. The provisions of this
paragraph are intended merely to bind Lenders to a decision which may be
made at the election of Requisite Lenders and are not intended to benefit
Company and do not grant Company the right to require Lenders to rescind or
annul any acceleration hereunder or preclude Agents or Lenders from
exercising any of the rights or remedies available to them under any of the
Loan Documents, even if the conditions set forth in this paragraph are met.
SECTION 9.
AGENTS
9.1 APPOINTMENT.
A. Each of GSCP and Chase is hereby appointed a Co-Administrative
Agent hereunder and under the other Loan Documents and each Lender hereby
authorizes each Co-Administrative Agent to act as its agent in accordance
with the terms of this Agreement and the other Loan Documents. Each of
GSCP and CSI is hereby appointed an Arranging Agent hereunder and under the
other Loan Documents and each Lender hereby authorizes each Arranging Agent
to act as its agent in accordance with the terms of this Agreement and the
other Loan Documents. SunTrust is hereby appointed Collateral Agent
hereunder and under the other Loan Documents and each Lender hereby
authorizes Collateral Agent to act as its agent in accordance with the
terms of this Agreement and the other Loan Documents. Each Agent agrees to
act upon the express conditions contained in this Agreement and the other
Loan Documents, as applicable. The provisions of this Section 9 are solely
for the benefit of Agents and Lenders and Company shall have no rights as a
third party beneficiary of any of the provisions thereof. In performing
its functions and duties under this Agreement, each Agent shall act solely
as an agent of Lenders and does not assume and shall not be deemed to have
assumed any obligation towards or relationship of agency or trust with or
for Company or any of its Subsidiaries. Upon the Effective Date, all
obligations of Arranging Agents hereunder shall terminate.
B. APPOINTMENT OF SUPPLEMENTAL COLLATERAL AGENTS. It is the purpose
of this Agreement and the other Loan Documents that there shall be no
violation of any law of any jurisdiction denying or restricting the right
of banking corporations or associations to transact business as agent or
trustee in such jurisdiction. It is recognized that in case of litigation
under this Agreement or any of the other Loan Documents, and in particular
in case of the enforcement of any of the Loan Documents, or in case Chase
Co-Administrative Agent deems that by reason of any present or future law
of any jurisdiction Collateral Agent may not exercise any of the rights,
powers or remedies granted herein or in any of the other Loan Documents or
take any other action which may be desirable or necessary in connection
therewith, it may be necessary that Chase Co-Administrative Agent appoint
an additional individual or institution as a separate trustee, co-trustee,
collateral agent or collateral co-agent (any such additional individual or
institution being referred to herein individually as a "SUPPLEMENTAL
COLLATERAL AGENT" and collectively as "SUPPLEMENTAL COLLATERAL AGENTS").
In the event that Chase Co-Administrative Agent appoints a
Supplemental Collateral Agent with respect to any Collateral, (i) each and
every right, power, privilege or duty expressed or intended by this
<PAGE>
Agreement or any of the other Loan Documents to be exercised by or vested
in or conveyed to Chase Co-Administrative Agent with respect to such
Collateral shall be exercisable by and vest in such Supplemental Collateral
Agent to the extent, and only to the extent, necessary to enable such
Supplemental Collateral Agent to exercise such rights, powers and
privileges with respect to such Collateral and to perform such duties with
respect to such Collateral, and every covenant and obligation contained in
the Loan Documents and necessary to the exercise or performance thereof by
such Supplemental Collateral Agent shall run to and be enforceable by
either Agent or such Supplemental Collateral Agent, and (ii) the provisions
of this Section 9 and of subsections 10.2 and 10.3 that refer to Collateral
Agent shall inure to the benefit of such Supplemental Collateral Agent and
all references therein to Collateral Agent shall be deemed to be references
to Collateral Agent and/or such Supplemental Collateral Agent, as the
context may require.
Should any instrument in writing from Company or any other Loan Party
be required by any Supplemental Collateral Agent so appointed by Chase Co-
Administrative Agent for more fully and certainly vesting in and confirming
to him or it such rights, powers, privileges and duties, Company shall, or
shall cause such Loan Party to, execute, acknowledge and deliver any and
all such instruments promptly upon request by Chase Co-Administrative
Agent. In case any Supplemental Collateral Agent, or a successor thereto,
shall die, become incapable of acting, resign or be removed, all the
rights, powers, privileges and duties of such Supplemental Collateral
Agent, to the extent permitted by law, shall vest in and be exercised by
Collateral Agent until the appointment of a new Supplemental Collateral
Agent.
9.2 POWERS; GENERAL IMMUNITY.
A. DUTIES SPECIFIED. Each Lender irrevocably authorizes each Agent
to take such action on such Lender's behalf and to exercise such powers
hereunder and under the other Loan Documents as are specifically delegated
to such Agent by the terms hereof and thereof, together with such powers as
are reasonably incidental thereto. Each Agent shall have only those duties
and responsibilities that are expressly specified in this Agreement and the
other Loan Documents, and it may perform such duties by or through its
agents or employees. No Agent shall have, by reason of this Agreement or
any of the other Loan Documents, a fiduciary relationship in respect of any
Lender; and nothing in this Agreement or any of the other Loan Documents,
expressed or implied, is intended to or shall be so construed as to impose
upon any Agent any obligations in respect of this Agreement or any of the
other Loan Documents except as expressly set forth herein or therein.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. No Agent shall be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement
or any other Loan Document or for any representations, warranties, recitals
or statements made herein or therein or made in any written or oral
statement or in any financial or other statements, instruments, reports or
certificates or any other documents furnished by any Agent to Lenders or by
or on behalf of Company and/or its Subsidiaries to any Agent or any Lender
in connection with the Loan Documents and the transactions contemplated
thereby or for the financial condition or business affairs of Company or
any other Person liable for the payment of any Obligations, nor shall any
Agent be required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions, covenants or
agreements contained in any of the Loan Documents or as to the use of the
proceeds of the Loans or the use of the Letters of Credit or as to the
existence or possible existence of any Event of Default or Potential Event
of Default. Anything contained in this Agreement to the contrary
notwithstanding, neither Co-Administrative Agent shall have any liability
<PAGE>
arising from confirmations of the amount of outstanding Loans or the Total
Utilization of Revolving Loan Commitments or the component amounts thereof.
C. EXCULPATORY PROVISIONS. Neither any Agent nor any of such Agent's
respective officers, directors, employees or agents shall be liable to
Lenders for any action taken or omitted by such Agent under or in
connection with any of the Loan Documents except to the extent caused by
such Agent's gross negligence or willful misconduct. If any Agent shall
request instructions from Lenders with respect to any act or action
(including the failure to take an action) in connection with this Agreement
or any of the other Loan Documents, such Agent shall be entitled to refrain
from such act or taking such action unless and until such Agent shall have
received instructions from Requisite Lenders (or such other Lenders as may
be required to give such instructions under subsection 10.6). Without
prejudice to the generality of the foregoing, (i) such Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons,
and shall be entitled to rely and shall be protected in relying on opinions
and judgments of attorneys (who may be attorneys for Company and its
Subsidiaries), accountants, experts and other professional advisors
selected by it; and (ii) no Lender shall have any right of action
whatsoever against such Agent as a result of such Agent acting or (where so
instructed) refraining from acting under this Agreement or any of the other
Loan Documents in accordance with the instructions of Requisite Lenders (or
such other Lenders as may be required to give such instructions under
subsection 10.6). Such Agent shall be entitled to refrain from exercising
any power, discretion or authority vested in it under this Agreement or any
of the other Loan Documents unless and until it has obtained the
instructions of Requisite Lenders (or such other Lenders as may be required
to give such instructions under subsection 10.6).
D. AGENTS ENTITLED TO ACT AS LENDER. The agency hereby created shall
in no way impair or affect any of the rights and powers of, or impose any
duties or obligations upon, any Agent in its individual capacity as a
Lender hereunder. With respect to its participation in the Loans and the
Letters of Credit, each Agent shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were
not performing the duties and functions delegated to it hereunder, and the
term "Lender" or "Lenders" or any similar term shall, unless the context
clearly otherwise indicates, include such Agent in its individual capacity.
Each Agent and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of banking, trust, financial advisory or other
business with Company or any of its Affiliates as if it were not performing
the duties specified herein, and may accept fees and other consideration
from Company and/or its Subsidiaries for services in connection with this
Agreement and otherwise without having to account for the same to Lenders.
9.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF
CREDITWORTHINESS.
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company
and its Subsidiaries in connection with the making of the Loans and the
issuance of Letters of Credit hereunder and that it has made and shall
continue to make its own appraisal of the creditworthiness of Company and
its Subsidiaries. No Agent shall have any duty or responsibility, either
initially or on a continuing basis, to make any such investigation or any
such appraisal on behalf of Lenders or to provide any Lender with any
credit or other information with respect thereto, whether coming into its
possession before the making of the Loans or at any time or times
thereafter, and no Agent shall have any responsibility with respect to the
accuracy of or the completeness of any information provided to Lenders.
<PAGE>
9.4 RIGHT TO INDEMNITY.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify each Agent, to the extent that such Agent shall not have been
reimbursed by Company, for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including, without limitation, counsel fees and disbursements) or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against such Agent in performing its duties
hereunder or under the other Loan Documents or otherwise in its capacity as
such Agent in any way relating to or arising out of this Agreement or the
other Loan Documents; provided that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
such Agent's gross negligence or willful misconduct.
9.5 SUCCESSOR AGENTS AND SWING LINE LENDER.
A. SUCCESSOR AGENTS. Any Agent may resign at any time by giving 30
days' prior written notice thereof to the other Agents, Lenders and
Company, and any Agent may be removed at any time with or without cause by
an instrument or concurrent instruments in writing delivered to Company and
Co-Administrative Agents and signed by Requisite Lenders. Upon any such
notice of resignation or any such removal, Requisite Lenders shall have the
right, upon five Business Days' notice to Company, to appoint a successor
Agent. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, that successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
or removed Agent and the retiring or removed Agent shall be discharged from
its duties and obligations under this Agreement. After any retiring or
removed Agent's resignation or removal hereunder as 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.
B. SUCCESSOR SWING LINE LENDER. Any resignation or removal of Chase
Co-Administrative Agent pursuant to subsection 9.5A shall also constitute
the resignation or removal of Chase or its successor as Swing Line Lender,
and any successor Chase Co-Administrative Agent appointed pursuant to
subsection 9.5A shall, upon its acceptance of such appointment, become the
successor Swing Line Lender for all purposes hereunder. In such event
(i) Company shall prepay any outstanding Swing Line Loans made by the
retiring or removed Chase Co-Administrative Agent in its capacity as Swing
Line Lender, (ii) upon such prepayment, the retiring or removed Chase Co-
Administrative Agent and Swing Line Lender shall surrender the Swing Line
Note held by it to Company for cancellation, and (iii) Company shall issue
a new Swing Line Note to the successor Chase Co-Administrative Agent and
Swing Line Lender substantially in the form of Exhibit VI annexed hereto,
in the principal amount of the Swing Line Loan Commitment then in effect
and with other appropriate insertions.
9.6 COLLATERAL DOCUMENTS.
Each Lender and Agent hereby further authorizes Collateral Agent to
enter into each Collateral Document as secured party on behalf of and for
the benefit of Agents and Lenders and agrees to be bound by the terms of
each Collateral Document; provided that Collateral Agent shall not enter
into or consent to any amendment, modification, termination or waiver of
any provision contained in any Collateral Document without the prior
consent of Requisite Lenders (or, if required pursuant to subsection 10.6,
all Lenders); provided further, however, that, without further written
consent or authorization from Requisite Lenders, Collateral Agent may
execute any documents or instruments necessary to effect the release of any
asset constituting Collateral from the Lien of the applicable Collateral
<PAGE>
Document in the event that such asset is sold or otherwise disposed of in a
transaction effected in accordance with subsection 7.7. Anything contained
in any of the Loan Documents to the contrary notwithstanding, each Lender
agrees that no Lender shall have any right individually to realize upon any
of the Collateral under any Collateral Document (including, without
limitation, through the exercise of a right of set-off against call
deposits of such Lender in which any funds on deposit in the Collateral
Account may from time to time be invested), it being understood and agreed
that all rights and remedies under the Collateral Documents may be
exercised solely by Collateral Agent for the benefit of Lenders in accor-
dance with the terms thereof.
SECTION 10.
MISCELLANEOUS
10.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS, LETTERS OF CREDIT.
A. GENERAL. Subject to subsection 10.1B, each Lender shall have the
right at any time to (i) sell, assign, transfer or negotiate to any
Eligible Assignee, or (ii) sell participations to any Person in, all or any
part of its Commitments (together with its Letters of Credit or
participations therein made or arising pursuant to its Revolving Loan
Commitment) or any Loan or Loans made by it or any other interest herein or
in any other Obligations owed to it; provided that no such sale,
assignment, transfer or participation shall, without the consent of
Company, require Company to file a registration statement with the
Securities and Exchange Commission or apply to qualify such sale,
assignment, transfer or participation under the securities laws of any
state; provided further, that no such sale, assignment or transfer
described in clause (i) above shall be effective unless and until an
Assignment Agreement effecting such sale, assignment or transfer shall have
been accepted by Chase Co-Administrative Agent and recorded in the Register
as provided in subsection 10.1B(ii); provided, further that no such sale,
assignment, transfer or participation of any Letter of Credit or any
participation therein may be made separately from a sale, assignment,
transfer or participation of a corresponding interest in the Revolving Loan
Commitment and the Revolving Loans of the Lender effecting such sale,
assignment, transfer or participation; and provided further that, anything
contained herein to the contrary notwithstanding, the Swing Line Loan
Commitment and the Swing Line Loans of Swing Line Lender may not be sold,
assigned or transferred as described in clause (i) above to any Person
other than a successor Chase Co-Administrative Agent and Swing Line Lender
to the extent contemplated by subsection 9.5. Except as otherwise provided
in this subsection 10.1, no Lender shall, as between Company and such
Lender, be relieved of any of its obligations hereunder as a result of any
sale, assignment, transfer or negotiation of, or any granting of
participations in, all or any part of its Commitments or the Loans, the
Letters of Credit or participations therein or the other Obligations owed
to such Lender.
B. ASSIGNMENTS.
(i) Amounts and Terms of Assignments. Each Commitment, Loan,
Letter of Credit, or participation therein or other Obligation may
(a) be assigned in any amount to another Lender who is a Non-
Defaulting Lender, or to an Affiliate of the assigning Lender or
another Lender who, in either such case, is a Non-Defaulting Lender,
with the consent of Co-Administrative Agents (which consent shall not
be unreasonably withheld) and the giving of notice to Company;
provided that, after giving effect to a proposed assignment to another
Lender, the assigning Lender shall have an aggregate Commitment of at
least $5,000,000 unless the proposed assignment constitutes the
<PAGE>
aggregate amount of the Commitments, Loans, Letters of Credit, and
participations therein and other Obligations of the assigning Lender,
or (b) be assigned in an aggregate amount of not less than $5,000,000
(or such lesser amount as shall constitute the aggregate amount of the
Commitments, Loans, Letters of Credit, and participations therein and
other Obligations of the assigning Lender) to any other Eligible
Assignee with the consent of Co-Administrative Agents (which consent
shall not be unreasonably withheld) and the giving of notice to
Company. To the extent of any such assignment in accordance with
either clause (a) or (b) above, the assigning Lender shall be relieved
of its obligations with respect to its Commitments, Loans, Letters of
Credit, or participations therein or other Obligations or the portion
thereof so assigned. The parties to each such assignment shall
execute and deliver to Chase Co-Administrative Agent, for its
acceptance and recording in the Register, an Assignment Agreement,
together with a processing fee of $3,000 payable by the assigning
Lender and such certificates, documents or other evidence, if any,
with respect to United States federal income tax withholding matters
as the assignee under such Assignment Agreement may be required to
deliver to Chase Co-Administrative Agent pursuant to subsection
2.7B(iii) (a). Upon such execution, delivery, acceptance and
recordation, from and after the effective date specified in such
Assignment Agreement, (y) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment Agreement, shall have
the rights and obligations of a Lender hereunder and (z) the assigning
Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish its rights (other than any rights which survive
the termination of this Agreement under subsection 10.9B) and be
released from its obligations under this Agreement (and, in the case
of an Assignment Agreement covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto; provided that, anything
contained in any of the Loan Documents to the contrary
notwithstanding, if such Lender is the Issuing Lender with respect to
any outstanding Letters of Credit such Lender shall continue to have
all rights and obligations of an Issuing Lender with respect to such
Letters of Credit until the cancellation or expiration of such Letters
of Credit and the reimbursement of any amounts drawn thereunder). The
Commitments hereunder shall be modified to reflect the Commitments of
such assignee and any remaining Commitments of such assigning Lender
and, if any such assignment occurs after the issuance of the Notes
hereunder, the assigning Lender shall surrender its applicable Notes
and, upon such surrender, new Notes shall be issued to the assignee
and, if applicable, to the assigning Lender, substantially in the form
of Exhibit IV, Exhibit V or Exhibit VI annexed hereto, as the case may
be, with appropriate insertions, to reflect the new Commitments and/or
outstanding Term Loans of the assignee and the assigning Lender.
(ii) Acceptance by Chase Co-Administrative Agent; Recordation in
Register. Upon its receipt of an Assignment Agreement executed by an
assigning Lender and an assignee representing that it is an Eligible
Assignee, together with the processing fee referred to in subsection
10.1B(i) and any certificates, documents or other evidence with
respect to United States federal income tax withholding matters that
such assignee may be required to deliver to Chase Co-Administrative
Agent pursuant to subsection 2.7B(iii) (a), Chase Co-Administrative
Agent shall, if such Assignment Agreement has been completed and is in
substantially the form of Exhibit XIII hereto and if Co-Administrative
Agents have consented to the assignment evidenced thereby (to the
extent such consent is required pursuant to subsection 10.1B(i)),
(a) accept such Assignment Agreement by executing a counterpart
<PAGE>
thereof as provided therein (which acceptance shall evidence any
required consent of Chase Co-Administrative Agent to such assignment),
(b) record the information contained therein in the Register, and (c)
give prompt notice thereof to Company. Chase Co-Administrative Agent
shall maintain a copy of each Assignment Agreement delivered to and
accepted by it as provided in this subsection 10.1B(ii).
C. PARTICIPATIONS. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled
to require such Lender to take or omit to take any action hereunder except
action (i) effecting the extension of the final maturity of the Loan
allocated to such participation, (ii) effecting a reduction of the
principal amount of or affecting the rate of interest payable on any Loan
allocated to such participation, (iii) releasing all or substantially all
of the Collateral, or (iv) releasing all of the Guarantors from their
obligations under the Guaranties, and all amounts payable by Company
hereunder (including, without limitation, amounts payable to such Lender
pursuant to subsections 2.6D, 2.7 and 3.6) shall be determined as if such
Lender had not sold such participation. Company and each Lender hereby
acknowledge and agree that, solely for purposes of subsections 10.4 and
10.5, (a) any participation will give rise to a direct obligation of
Company to the participant and (b) the participant shall be considered to
be a "Lender".
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the
assignments and participations permitted under the foregoing provisions of
this subsection 10.1, any Lender may assign and pledge all or any portion
of its Loans, the other Obligations owed to such Lender and its Notes to
any Federal Reserve Bank as collateral security pursuant to Regulation A of
the Board of Governors of the Federal Reserve System and any operating
circular issued by such Federal Reserve Bank; provided that (i) no Lender
shall, as between Company and such Lender, be relieved of any of its
obligations hereunder as a result of any such assignment and pledge and
(ii) in no event shall such Federal Reserve Bank be considered to be a
"Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.
E. INFORMATION. Each Lender may furnish any information concerning
Company and its Subsidiaries in the possession of that Lender from time to
time to assignees and participants (including prospective assignees and
participants), subject to subsection 10.20.
F. LIMITATION. No assignee, participant or other transferee or any
Lender's rights shall be entitled to receive any greater payment under
subsection 2.7 than such Lender would have been entitled to receive with
respect to the rights transferred, unless such transfer is made with
Company's prior written consent or at a time when the circumstances giving
rise to such greater payment did not exist.
G. REPRESENTATIONS OF LENDERS. Each Lender listed on the signature
pages hereof hereby represents and warrants (i) that it is an Eligible
Assignee described in clause (i) of the definition thereof; (ii) that it
has experience and expertise in the making of loans such as the Loans; and
(iii) that it will make its Loans for its own account in the ordinary
course of its business and without a view to distribution of such Loans
within the meaning of the Securities Act or the Exchange Act or other
federal securities laws (it being understood that, subject to the
provisions of this subsection 10.1, the disposition of such Loans or any
interests therein shall at all times remain within its exclusive control).
Each Lender that becomes a party hereto pursuant to an Assignment Agreement
shall be deemed to agree that the representations and warranties of such
Lender contained in Section 2(c) of such Assignment Agreement are
incorporated herein by this reference.
<PAGE>
10.2 EXPENSES.
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual and
reasonable costs and out of pocket expenses of Co-Administrative Agents in
connection with the preparation of the Loan Documents; (ii) all the actual
and reasonable costs of furnishing all opinions by counsel for Company
(including, without limitation, any opinions requested by Lenders as to any
legal matters arising hereunder) and of Company's performance of and
compliance with all agreements and conditions on its part to be performed
or complied with under this Agreement and the other Loan Documents
including, without limitation, with respect to confirming compliance with
environmental and insurance requirements; (iii) the reasonable fees,
expenses and disbursements of counsel to Agents (including allocated costs
of internal counsel) in connection with the negotiation, preparation,
execution and administration of the Loan Documents and the Loans and any
consents, amendments, waivers or other modifications hereto or thereto and
any other documents or matters requested by Company; (iv) all other actual
and reasonable costs and expenses incurred by Agents in connection with the
negotiation, preparation and execution of the Loan Documents and the
transactions contemplated hereby and thereby; and (v) after the occurrence
of an Event of Default, all costs and expenses, including reasonable
attorneys' fees (including allocated costs of internal counsel) and costs
of settlement, incurred by Agents and Lenders in enforcing any Obligations
of or in collecting any payments due from Company hereunder or under the
other Loan Documents by reason of such Event of Default or in connection
with any refinancing or restructuring of the credit arrangements provided
under this Agreement in the nature of a "work-out" or pursuant to any
insolvency or bankruptcy proceedings.
10.3 INDEMNITY.
In addition to the payment of expenses pursuant to subsection 10.2,
whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend, indemnify, pay and hold harmless Agents and
Lenders, and the officers, directors, trustees, partners, employees,
agents, attorneys and affiliates of any of Agents and Lenders (collectively
called the "INDEMNITEES") from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever
(including, without limitation, the reasonable fees and disbursements of
counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened by any
Person, whether or not any such Indemnitee shall be designated as a party
or a potential party thereto), whether direct, indirect or consequential
and whether based on any federal, state or foreign laws, statutes, rules or
regulations (including, without limitation, securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on,
incurred by, or asserted against any such Indemnitee, in any manner
relating to or arising out of this Agreement or the other Loan Documents or
the transactions contemplated hereby or thereby (including, without
limitation, Lenders' agreement to make the Loans hereunder or the use or
intended use of the proceeds of any of the Loans or the issuance of Letters
of Credit hereunder or the use or intended use of any of the Letters of
Credit) (collectively called the "INDEMNIFIED LIABILITIES"); provided that
Company shall not have any obligation to any Indemnitee hereunder with
respect to any Indemnified Liabilities to the extent, and only to the
extent, of any particular liability, obligation, loss, damage, penalty,
claim, cost, expense or disbursement that arose from the gross negligence
or willful misconduct of that Indemnitee as determined by a final judgment
of a court of competent jurisdiction. To the extent that the undertaking
to defend, indemnify, pay and hold harmless set forth in the preceding
<PAGE>
sentence may be unenforceable because it is violative of any law or public
policy, Company shall contribute the maximum portion that it is permitted
to pay and satisfy under applicable law to the payment and satisfaction of
all Indemnified Liabilities incurred by the Indemnitees or any of them.
10.4 SET-OFF; SECURITY INTEREST IN DEPOSIT ACCOUNTS.
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence
and during the continuance of any Event of Default each Lender is hereby
authorized by Company at any time or from time to time, without notice to
Company or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits
(general or special, including, but not limited to, Indebtedness evidenced
by certificates of deposit, whether matured or unmatured, but not including
trust accounts) and any other Indebtedness at any time held or owing by
that Lender (at any office of that Lender wherever located) to or for the
credit or the account of Company against and on account of the obligations
and liabilities of Company to that Lender under this Agreement, the Notes,
the Letters of Credit and participations therein, including, but not
limited to, all claims of any nature or description arising out of or
connected with this Agreement, the Notes, the Letters of Credit and
participations therein or any other Loan Document, irrespective of whether
or not (i) that Lender shall have made any demand hereunder or (ii) the
principal of or the interest on the Loans or any amounts in respect of the
Letters of Credit or any other amounts due hereunder shall have become due
and payable pursuant to Section 8 and although said obligations and
liabilities, or any of them, may be contingent or unmatured. Company
hereby further grants to each Agent and Lender a security interest in all
deposits and accounts maintained with such Agent or Lender as security for
the Obligations.
10.5 RATABLE SHARING.
Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment (other than a voluntary prepayment of Loans
made and applied in accordance with the terms of this Agreement), by
realization upon security, through the exercise of any right of set-off or
banker's lien, by counterclaim or cross action or by the enforcement of any
right under the Loan Documents or otherwise, or as adequate protection of a
deposit treated as cash collateral under the Bankruptcy Code, receive
payment or reduction of a proportion of the aggregate amount of principal,
interest, amounts payable in respect of Letters of Credit, fees and other
amounts then due and owing to that Lender hereunder or under the other Loan
Documents (collectively, the "AGGREGATE AMOUNTS DUE" to such Lender) which
is greater than the proportion received by any other Lender in respect of
the Aggregate Amounts Due to such other Lender, then the Lender receiving
such proportionately greater payment shall (i) notify Chase Co-
Administrative Agent and each other Lender of the receipt of such payment
and (ii) apply a portion of such payment to purchase participations (which
it shall be deemed to have purchased from each seller of a participation
simultaneously upon the receipt by such seller of its portion of such
payment) in the Aggregate Amounts Due to the other Lenders so that all such
recoveries of Aggregate Amounts Due shall be shared by all Lenders in
proportion to the Aggregate Amounts Due to them; provided that if all or
part of such proportionately greater payment received by such purchasing
Lender is thereafter recovered from such Lender upon the bankruptcy,
reorganization or insolvency proceeding of Company or otherwise, those
purchases shall be rescinded and the purchase prices paid for such
participations shall be returned to such purchasing Lender ratably to the
extent of such recovery, but without interest. Company expressly consents
to the foregoing arrangement and agrees that any holder of a participation
so purchased may exercise any and all rights of banker's lien, set-off or
<PAGE>
counterclaim with respect to any and all monies owing by Company to that
holder with respect thereto as fully as if that holder were owed the amount
of the participation held by that holder.
10.6 AMENDMENTS AND WAIVERS.
A. No amendment, modification, termination or waiver of any provision
of this Agreement or of the Notes, or consent to any departure by Company
or any other Loan Party therefrom, shall in any event be effective without
the written concurrence of Requisite Lenders; provided that any such
amendment, modification, termination, waiver or consent which: reduces the
principal amount of any of the Loans; changes in any manner the definition
of "Requisite Lenders" or "Pro Rata Share"; changes in any manner any
provision of this Agreement which, by its terms, expressly requires the
approval or concurrence of all Lenders; postpones the scheduled final
maturity date of any of the Loans; postpones the date or reduces the amount
of any scheduled payment (but not prepayment) of principal of any of the
Loans; postpones the date on which any interest or any fees are payable;
decreases the interest rate borne by any of the Loans (other than any
waiver of any increase in the interest rate applicable to any of the Loans
pursuant to subsection 2.2E) or the amount of any fees payable hereunder;
increases the maximum duration of Interest Periods permitted hereunder;
releases all or substantially all of the Collateral; releases all of the
Guarantors from their obligations under the Guaranties; reduces the amount
or postpones the due date of any amount payable in respect of, or extends
the required expiration date of, any Letter of Credit; changes the
obligations of Lenders relating to the purchase of participations in
Letters of Credit in any manner that could be adverse to any Issuing
Lender; or changes in any manner the provisions contained in subsection 8.1
or this subsection 10.6; shall be effective only if evidenced by a writing
signed by or on behalf of all Lenders to whom are owed Obligations being
directly affected by such amendment, modification, termination, waiver or
consent. In addition, (i) any amendment, modification, termination or
waiver of any of the provisions contained in Section 4 shall be effective
only if evidenced by a writing signed by or on behalf of Co-Administrative
Agents and Requisite Lenders, (ii) no amendment, modification, termination
or waiver of any provision of any Note shall be effective without the
written concurrence of the Lender which is the holder of that Note, (iii)
no amendment, modification, termination or waiver of any provision of this
Agreement which disproportionately and adversely affects the obligation of
any Loan Party to make payments (including without limitation mandatory
prepayments) to the holders of the Tranche A Term Loans, the holders of the
Tranche B Term Loans or the holders of the Revolving Loans and Revolving
Loan Commitments, shall be effective without the written concurrence of the
holders of 51% in principal amount of the class (i.e., Tranche A Term
Loans, Tranche B Term Loans or Revolving Loans and Revolving Loan
Commitments each being a "class" of Loans) of Loans so disproportionately
and adversely affected; (iv) no increase in the Commitments of any Lender
over the amount thereof then in effect shall be effective without the
written concurrence of that Lender, it being understood and agreed that in
no event shall waivers or modifications of conditions precedent, covenants,
Events of Default, Potential Events of Default or of a mandatory prepayment
or a reduction of any or all of the Commitments be deemed to constitute an
increase of the Commitment of any Lender and that an increase in the
available portion of any Commitment of any Lender shall not be deemed to
constitute an increase in the Commitment of such Lender, (v) no amendment,
modification, termination or waiver of any provision of subsection
2.1A(iii) or any other provision of this Agreement relating to the Swing
Line Loan Commitment or the Swing Line Loans shall be effective without the
written concurrence of Swing Line Lender, (vi) no amendment, modification,
termination or waiver of any provision of Section 3 relating to the rights
or obligations of any or all Issuing Lenders shall be effective without the
written concurrence of Chase Co-Administrative Agent and each Lender who is
<PAGE>
an Issuing Lender with respect to any Letter of Credit then outstanding,
and (vii) no amendment, modification, termination or waiver of any
provision of Section 9 or of any other provision of this Agreement which,
by its terms, expressly requires the approval or concurrence of Chase Co-
Administrative Agent or Co-Administrative Agent shall be effective without
the written concurrence of Chase Co-Administrative Agent or Co-
Administrative Agent, as the case may be, Chase Co-Administrative Agent
may, but shall have no obligation to, with the concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf of that
Lender. Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to
or demand on Company in any case shall entitle Company to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with
this subsection 10.6 shall be binding upon each Lender at the time
outstanding, each future Lender and, if signed by Company, on Company.
B. If, in connection with any proposed change, waiver, discharge or
termination to any of the provision of this Agreement as contemplated by
the proviso in the first sentence of this subsection 10.6, the consent of
Requisite Lenders is obtained but consent of one or more of such other
Lenders whose consent is required is not obtained, then Company may, so
long as all non-consenting Lenders are so treated, elect to terminate such
Lender as a party to this Agreement; provided that, concurrently with such
termination, (i) Company shall pay that Lender all principal, interest and
fees and other amounts due to be paid to such Lender with respect to all
periods through such date of termination, (ii) another financial
institution satisfactory to Company and Co-Administrative Agents (or if
either Co-Administrative Agent is also a Lender to be terminated, the
successor Co-Administrative Agent and the Co-Administrative Agent not so
terminated) shall agree, as of such date, to become a Lender for all
purposes under this Agreement (whether by assignment or amendment) and to
assume all obligations of the Lender to be terminated as of such date, and
(iii) all documents and supporting materials necessary, in the judgment of
Co-Administrative Agents (or if either Co-Administrative Agent is also a
Lender to be terminated, the successor Co-Administrative Agent and the Co-
Administrative Agent not so terminated) to evidence the substitution of
such Lender shall have been received and approved by Co-Administrative
Agents as of such date.
10.7 INDEPENDENCE OF COVENANTS.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants,
the fact that it would be permitted by an exception to, or would otherwise
be within the limitations of, another covenant shall not avoid the
occurrence of an Event of Default or Potential Event of Default if such
action is taken or condition exists.
10.8 NOTICES.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing
and may be personally served, telecopied, telexed or sent by United States
mail or courier service and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of telecopy or
telex, or four Business Days after depositing it in the United States mail,
registered or certified, with postage prepaid and properly addressed;
provided that notices to Chase Co-Administrative Agent shall not be
effective until received. For the purposes hereof, the address of each
party hereto shall be as set forth under such party's name on the signature
pages hereof or (i) as to Company and Chase Co-Administrative Agent, such
other address as shall be designated by such Person in a written notice
<PAGE>
delivered to the other parties hereto and (ii) as to each other party, such
other address as shall be designated by such party in a written notice
delivered to Chase Co-Administrative Agent.
10.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the
Loans and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to
the contrary, the agreements of Company set forth in subsections 2.6D, 2.7,
3.5A, 3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in
subsections 9.2C, 9.4, 10.4, 10.5 and 10.20 shall survive the payment of
the Loans, the cancellation or expiration of the Letters of Credit and the
reimbursement of any amounts drawn or paid thereunder, and the termination
of this Agreement.
10.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Chase Co-Administrative Agent,
Collateral Agent or any Lender in the exercise of any power, right or
privilege hereunder or under any other Loan Document shall impair such
power, right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or of
any other power, right or privilege. All rights and remedies existing
under this Agreement and the other Loan Documents are cumulative to, and
not exclusive of, any rights or remedies otherwise available.
10.11 MARSHALLING; PAYMENTS SET ASIDE.
Neither Chase Co-Administrative Agent nor any Lender shall be under
any obligation to marshal any assets in favor of Company or any other party
or against or in payment of any or all of the Obligations. To the extent
that Company makes a payment or payments to Chase Co-Administrative Agent,
Collateral Agent or Lenders (or to Chase Co-Administrative Agent or
Collateral Agent for the benefit of Lenders), or Chase Co-Administrative
Agent, Collateral Agent or Lenders enforce any security interests or
exercise their rights of setoff, and such payment or payments or the
proceeds of such enforcement or setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law or any equitable
cause, then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies
therefor or related thereto, shall be revived and continued in full force
and effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.
10.12 SEVERABILITY.
In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
10.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
The obligations of Lenders hereunder are several and no Lender shall
be responsible for the obligations or Commitments of any other Lender
hereunder. Nothing contained herein or in any other Loan Document, and no
<PAGE>
action taken by Lenders pursuant hereto or thereto, shall be deemed to
constitute Lenders as a partnership, an association, a joint venture or any
other kind of entity. The amounts payable at any time hereunder to each
Lender shall be a separate and independent debt, and each Lender shall be
entitled to protect and enforce its rights arising out of this Agreement
and it shall not be necessary for any other Lender to be joined as an
additional party in any proceeding for such purpose.
10.14 HEADINGS.
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.15 APPLICABLE LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
10.16 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the
parties hereto and the successors and assigns of Lenders (it being
understood that Lenders' rights of assignment are subject to subsection
10.1). Company's rights or obligations hereunder nor any interest therein
may not be assigned or delegated by Company without the prior written
consent of all Lenders.
10.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND
DELIVERING THIS AGREEMENT, COMPANY, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING
IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE
WITH SUBSECTION 10.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST COMPANY
IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17 RELATING
TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE
FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW
<PAGE>
SECTION 5-1402 OR OTHERWISE.
10.18 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN
TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED.
The scope of this waiver is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the subject
matter of this transaction, including, without limitation, contract claims,
tort claims, breach of duty claims and all other common law and statutory
claims. Each party hereto acknowledges that this waiver is a material
inducement to enter into a business relationship, that each has already
relied on this waiver in entering into this Agreement, and that each will
continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this
waiver with its legal counsel and that it knowingly and voluntarily waives
its jury trial rights following consultation with legal counsel. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR
IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO
THIS SUBSECTION 10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO
ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In
the event of litigation, this Agreement may be filed as a written consent
to a trial by the court.
10.19 CONFIDENTIALITY.
Each Lender shall hold all non-public information obtained pursuant to
the requirements of this Agreement which has been identified as
confidential by Company in accordance with such Lender's customary
procedures for handling confidential information of this nature, it being
understood and agreed by Company that in any event a Lender may make
disclosures reasonably required by any bona fide assignee, transferee or
participant in connection with the contemplated assignment or transfer by
such Lender of any Loans or any participation therein or as required or
requested by any governmental agency or representative thereof or pursuant
to legal process or by the National Association of Insurance Commissioners
or in connection with the exercise of any remedy under the Loan Documents;
provided that, unless specifically prohibited by applicable law or court
order, each Lender shall notify Company of any request by any governmental
agency or representative thereof (other than any such request in connection
with any examination of the financial condition of such Lender by such
governmental agency) for disclosure of any such non-public information
prior to disclosure of such information; and provided, further that in no
event shall any Lender be obligated or required to return any materials
furnished by Company or any of its Subsidiaries.
10.20 COUNTERPARTS; EFFECTIVENESS.
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same
instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature
pages are physically attached to the same document.
It is the intention of each of the parties hereto that the Existing
<PAGE>
Credit Agreement be amended and restated so as to preserve the perfection
and priority of all security interests securing indebtedness and
obligations under the Existing Credit Agreement and the other Loan
Documents and that all indebtedness and obligations of Company and its
Subsidiaries hereunder and thereunder shall be secured by the Collateral
Documents and that this Agreement shall not constitute a novation of the
obligations and liabilities existing under the Existing Credit Agreement or
be deemed to evidence or constitute repayment of all or any portion of any
such obligations or liabilities. The parties hereto further acknowledge
and agree that this Agreement constitutes an amendment of the Existing
Credit Agreement made under the terms of subsection 10.6 thereof.
This Agreement (other than the provisions amending subsection 10.6A
hereof set forth in subsection 10.21, the effectiveness of which is
governed by subsection 10.21) shall become effective upon the execution of
a counterpart hereof by Company, Co-Administrative Agents and Requisite
Lenders (as such term is defined in the Existing Credit Agreement) and
receipt by Company and Chase Co-Administrative Agent of written or
telephonic notification of such execution and authorization of delivery
thereof; provided that, unless and until all of the conditions set forth in
subsections 4.1 and 4.4 have been satisfied or waived in accordance with
subsection 10.6 of the Existing Credit Agreement, the Existing Credit
Agreement shall remain in full force and effect without giving effect to
the amendments set forth herein, all as if this Agreement had never been
executed and delivered.
10.21 AMENDMENTS TO SUBSECTION 10.6A.
Upon the execution of a counterpart hereof by Company, Co-
Administrative Agents and all Existing Lenders and receipt by Company and
Chase Co-Administrative Agent of written or telephonic notification of such
execution and authorization of delivery thereof, notwithstanding anything
in this Agreement or the other Loan Documents to the contrary, subsection
10.6A as set forth above shall be amended by (i) deleting the reference to
"2.1A(iii)" contained therein and substituting therefor "2.1A(iv)", and
(ii) deleting the first sentence therefrom in its entirety and substituting
therefor the following:
"No amendment, modification, termination or waiver of any provision of
this Agreement or of the Notes, or consent to any departure by Company
or any other Loan Party therefrom, shall in any event be effective
without the written concurrence of Requisite Lenders; provided that
any such amendment, modification, termination, waiver or consent
which: reduces the principal amount of any of the Loans; reduces the
percentage specified in the definition of "Requisite Lenders" (it
being understood that, with the consent of Requisite Lenders,
additional extensions of credit pursuant to this Agreement may be
included in the determination of "Requisite Lenders" on substantially
the same basis as the Tranche A Term Loan Commitments, Tranche A Term
Loans, Tranche B Term Loan Commitments, Tranche B Term Loans,
Revolving Loan Commitments and Revolving Loans are included on the
Effective Date); changes in any manner any provision of this Agreement
which, by its terms, expressly requires the approval or concurrence of
all Lenders; postpones the scheduled final maturity date of any of the
Loans; postpones the date or reduces the amount of any scheduled
payment (but not prepayment) of principal of any of the Loans;
postpones the date on which any interest or any fees are payable;
decreases the interest rate borne by any of the Loans (other than any
waiver of any increase in the interest rate applicable to any of the
Loans pursuant to subsection 2.2E) or the amount of any fees payable
hereunder; increases the maximum duration of Interest Periods
permitted hereunder; releases all or substantially all of the
Collateral; releases all of the Guarantors from their obligations
<PAGE>
under the Guaranties; reduces the amount or postpones the due date of
any amount payable in respect of, or extends the required expiration
date of, any Letter of Credit; changes the obligations of Lenders
relating to the purchase of participations in Letters of Credit in any
manner that could be adverse to any Issuing Lender; or changes in any
manner the provisions contained in subsection 8.1 or this subsection
10.6; shall be effective only if evidenced by a writing signed by or
on behalf of all Lenders to whom are owed Obligations being directly
affected by such amendment, modification, termination, waiver or
consent."
10.22 ADDITION AND DELETION OF LENDERS.
The parties hereto agree that on the Effective Date, (i) The First
National Bank of Chicago ("FIRST CHICAGO") shall be included as a Lender
hereunder for all purposes and as such First Chicago shall become vested
with all the rights, powers, privileges and duties of a Lender under this
Agreement and each of the other Loan Documents and (ii) NBD Bank ("NBD")
shall no longer be a Lender hereunder. Accordingly, the Loans, Pro Rata
Shares and Commitments of NBD reflected on Schedule 2.1 annexed hereto
shall, as of the Effective Date, become Loans, Pro Rata Shares and
Commitments, respectively, of First Chicago. By its execution hereof, (a)
First Chicago agrees to the terms of this Agreement and (b) NBD agrees to
the terms of this Agreement and acknowledges that, from and after the
Effective Date, other than as set forth in subsection 10.9 hereof, the
rights and obligations of NBD under this Agreement shall be terminated.
Company shall execute and deliver on the Effective Date to First Chicago a
Tranche A Term Note substantially in the form of Exhibit VI-A annexed
hereto and a Revolving Note substantially in the form of Exhibit V annexed
hereto to evidence First Chicago's Tranche A Term Loan and its Revolving
Loan Commitment, respectively, in the principal amounts of First Chicago's
Tranche A Term Loan and its Revolving Loan Commitment, respectively, and
with other appropriate insertions. On the Effective Date, the Notes issued
to NBD under the Existing Credit Agreement shall be of no further force and
effect, and as soon as practicable after the Effective Date, NBD shall
deliver such Notes to Company.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY: OUTSOURCING SOLUTIONS INC.
By: /s/ James F. Whalen
James F. Whalen
Executive Vice President
and Chief Financial Officer
Notice Address:
390 South Woods Mill Road, Suite 150
Chesterfield, Missouri 63017
Attention: James F. Whalen,
Chief Financial Officer
Facsimile: (314) 576-1867
with a copy to:
McCown De Leeuw & Co.
101 East 52nd Street
31st Floor
New York, New York 10022
Attention: Tyler T. Zachem
Facsimile: (212) 355-6283
(212) 355-6945
and a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention: Frank L. Schiff, Esq.
Facsimile: (212) 819-7817
<PAGE>
AGENTS AND LENDERS: GOLDMAN SACHS CREDIT PARTNERS L.P.,
individually, as a Co-Administrative Agent
and as an Arranging Agent
By:___________________________
Authorized Signatory
Notice Address:
Goldman Sachs Credit Partners L.P.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention:Stephen King
Telephone:(212) 902-8123
Facsimile:(212) 902-2417
with a copy to:
Goldman Sachs Credit Partners L.P.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention:Maureen Carpenter
Telephone:(212) 902-4425
Facsimile:(212) 902-3757
<PAGE>
THE CHASE MANHATTAN BANK,
individually and as a Co-Administrative Agent
By:___________________________
Gail Weiss
Vice President
Notice Address:
270 Park Avenue, 36th Floor
New York, New York 10017
Attention:William J. Caggiano
Telephone:(212) 270-5049
Facsimile:(212) 270-1789
with a copy to:
One Chase Manhattan Plaza
8th Floor
New York, New York 10081
Attention:Sandra Miklave
Loan Servicing Group
Telephone:(212) 552-7953
Facsimile:(212) 552-5658
<PAGE>
SUNTRUST BANK, ATLANTA,
individually and as Collateral Agent
By:___________________________
Dennis H. James, Jr.
Assistant Vice President
By:___________________________
Name:
Title:
Notice Address:
Suntrust Bank, Atlanta
25 Park Place, 23rd Floor
Atlanta, Georgia 30303
Attention: Dennis H. James, Jr.
Telephone: (404) 588-7963
Facsimile: (404) 588-8833
With a copy to:
Suntrust Bank, Atlanta
25 Park Place, 23rd Floor
Atlanta, Georgia 30303
Attention: Devyonne Aabeel
Telephone: (404) 588-7077
Facsimile: (404) 588-8833
<PAGE>
FLEET NATIONAL BANK
By:_________________________
Name:
Title:
Notice Address:
Fleet National Bank
One Federal Street, MAOFD03C
Boston, Massachusetts 02211
Attention: James Silva
Telephone: (617) 346-4399
Facsimile: (617) 346-4806
With a copy to:
Fleet National Bank
One Federal Street, MAOFD03C
Boston, Massachusetts 02211
Attention: Paul Tarantino
Telephone: (617) 346-4401
Facsimile: (617) 346-4806
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
By:____________________________
Name:
Title:
Notice Address:
The First National Bank of Chicago
One First National Plaza
Mail Suite 0173
Chicago, IL 60670-0173
Attention:William J. Oleferchik
Telephone:(312) 732-2947
Facsimile:(312) 732-1117
With a copy to:
The First National Bank of Chicago
One First National Plaza
Mail Suite 0364
Chicago, IL 60670-0364
Telephone:(312) 732-6503
Facsimile:(312) 732-1117
NBD BANK
By:___________________________
Name:
Title:
<PAGE>
BANK OF SCOTLAND
By:___________________________
Name:
Title:
Notice Address:
Bank of Scotland
565 Fifth Avenue, 5th Floor
New York, New York 10017
Attention: John Kelly
Telephone: (212) 450-0830
Facsimile: (212) 682-5720
With a copy to:
Bank of Scotland
565 Fifth Avenue, 5th Floor
New York, New York 10017
Attention: Janet Taffe
Assistant Vice President
Telephone: (212) 450-0872
Facsimile: (212) 557-9460
<PAGE>
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
By: Merrill Lynch Asset Management, L.P.,
as Investment Advisor
By:________________________________
Name:
Title:
Notice Address:
Merrill Lynch Asset Management
800 Scudders Mill Road - Area 2C
Plainsboro, New Jersey 08536
Attention: Douglas Henderson
Telephone: (609) 282-2059
Facsimile: (609) 282-2756
<PAGE>
LASALLE NATIONAL BANK
By:____________________________
Name:
Title:
Notice Address:
LaSalle National Bank
135 South LaSalle Street, Suite 307
Chicago, Illinois 60603
Attention: Marc A. Pressler
Telephone: (312) 904-8284
Facsimile: (312) 904-4605
With a copy to:
LaSalle National Bank
135 South LaSalle Street, Suite 301
Chicago, Illinois 60603
Attention: Rosemary Rodriguez
Telephone: (312) 904-7329
Facsimile: (312) 904-4605
<PAGE>
CREDITANSTALT - BANKVEREIN
By:____________________________
Robert M. Biringer
Executive Vice President
By:____________________________
Carl G. Drake
Senior Associate
Notice Address:
Creditanstalt
Two Ravina Drive, Suite 1680
Atlanta, Georgia 30346
Attention: Robert M. Biringer
Telephone: (770) 390-1850
Facsimile: (770) 390-1851
With a copy to:
Troutman Sanders
600 Peachtree Street, N.W.
Suite 5200
Atlanta, GA 30308
Attention: Hazen Dempster
Telephone: (404) 885-3000
Facsimile: (404) 885-3947
Creditanstalt
Two Greenwich Plaza
Greenwich, CT 06830
Attention: Lisa Bruno
Telephone: (203) 861-6464
Facsimile: (203) 861-6594
<PAGE>
BANKBOSTON, N.A.
By:____________________________
Name:
Title:
Notice Address:
BankBoston, N.A.
Diversified Finance
100 Federal Street, MS 01-08-05
Boston, Massachusetts 02110
Attention: Clifford A. Gaysunas
Assistant Vice President
Telephone: (617) 434-3051
Facsimile: (617) 434-4929
With a copy to:
BankBoston, N.A.
Commercial Loan Services
100 Federal Street, MS 01-08-04
Boston, Massachusetts 02110
Attention: Joan Broderick
Administrative Officer
Telephone: (617) 434-2456
Facsimile: (617) 434-9820
<PAGE>
HELLER FINANCIAL, INC.
By:_____________________________
Name:
Title:
Notice Address:
Heller Financial
500 West Monroe Street
Chicago, Illinois 60661
Attention: Patrick Hayes
Telephone: (312) 441-7035
Facsimile: (312) 441-7357
<PAGE>
GIROCREDIT BANK AKTIENGESELLSCHAFT DER
SPARKASSEN
By:________________________________
Name:
Title:
Notice Address:
GiroCredit Bank A.G. Sparkassen, NY Branch
Park Avenue Tower
65 East 55th Street, 29th Floor
New York, New York 10022
Attention: Timothy Daileader
Assistant Vice President
Telephone: (212) 644-0660
Facsimile: (212) 644-0644
With a copy to:
GiroCredit Bank A.G. Sparkassen, NY Branch
Park Avenue Tower
65 East 55th Street, 29th Floor
New York, New York 10022
Attention: JoMarie Rivera
Telephone: (212) 909-0747
Facsimile: (212) 223-0283
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
By:____________________________
Name:
Title:
Notice Address:
PNC Bank
345 Park Avenue, 29th Floor
New York, New York 10154
Attention: Mark Williams
Telephone: (212) 409-3724
Facsimile: (212) 409-3737
With a copy to:
PNC Bank
345 Park Avenue, 29th Floor
New York, New York 10154
Attention: Anna Di Rocco
Telephone: (212) 409-3717
Facsimile: (212) 409-3737
<PAGE>
SOUTHERN PACIFIC THRIFT & LOAN
ASSOCIATION
By:__________________________
Name:
Title:
Notice Address:
Southern Pacific Thrift & Loan Association
12300 Wilshire Blvd., Suite 200
Los Angeles, California 90025
Attention: Chris Kelleher
Charles T. Martorano
Telephone: (310) 442-3351/3315
Facsimile: (310) 207-4067
With a copy to:
Southern Pacific Thrift & Loan Association
12300 Wilshire Blvd., Suite 200
Los Angeles, California 90025
Attention: Charles Williams
Telephone: (310) 442-3312
Facsimile: (310) 207-4067
<PAGE>
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By:__________________________
Name:
Title:
Notice Address:
Van Kampen American Capital
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Attention: Jeffrey Maillet
Telephone: (630) 684-6438
Facsimile: (630) 684-6740
<PAGE>
INDOSUEZ CAPITAL FUNDING II, LTD.
By: INDOSUEZ CAPITAL LUXEMBOURG,
as Collateral Manager
By:__________________________
Name:
Title:
INDOSUEZ CAPITAL FUNDING III, LTD.
By: INDOSUEZ CAPITAL LUXEMBOURG,
as Collateral Manager
By:__________________________
Name:
Title:
Notice Address:
Indosuez Capital
1211 Avenue of the Americas
New York, NY 10036
Attention: Francoise Berthelot
Telephone: (212) 278-2213
Facsimile: (212) 278-2254
<PAGE>
SENIOR DEBT PORTFOLIO
By: BOSTON MANAGEMENT AND
RESEARCH, as Investment Advisor
By:__________________________
Name:
Title:
Notice Address:
Eaton Vance Management
24 Federal Street
Boston, MA 02210
Attention: Scott Page
Telephone: (617) 654-8486
Facsimile: (617) 695-9594
<PAGE>
PILGRIM AMERICA PRIME RATE TRUST
By:__________________________
Name:
Title:
Notice Address:
Pilgrim Group
Two Rennaissance Square
40 N. Central Avenue, Suite 1200
Phoenix, AZ 85004
Attention: Michael Bacevich
Telephone: (602) 417-8258
Facsimile: (602) 417-8327
<PAGE>
EXHIBIT I
[FORM OF NOTICE OF BORROWING]
NOTICE OF BORROWING
Pursuant to that certain Amended and Restated Credit Agreement dated
as of October 8, 1997, as amended, restated, supplemented or otherwise
modified to the date hereof (said Amended and Restated Credit Agreement, as
so amended, restated, supplemented or otherwise modified, being the "CREDIT
AGREEMENT", the terms defined therein and not otherwise defined herein
being used herein as therein defined), by and among Outsourcing Solutions
Inc., a Delaware corporation ("COMPANY"), the financial institutions listed
therein as Lenders, Goldman Sachs Credit Partners L.P. and The Chase
Manhattan Bank ("CHASE"), as Co-Administrative Agents (Chase, in such
capacity, "CHASE CO-ADMINISTRATIVE AGENT"), SunTrust Bank, Atlanta, as
Collateral Agent, and Goldman Sachs Credit Partners L.P. and Chase
Securities Inc., as Arranging Agents, this represents Company's request to
borrow as follows:
1. DATE OF BORROWING: ___________________, [199_] [200_]
2. AMOUNT OF BORROWING: $___________________
3. LENDER(S): ( ) a. Lenders, in accordance with their applica-
ble Pro Rata Shares
( ) b. Swing Line Lender
4. TYPE OF LOANS: ( ) a. Tranche B Term Loans
( ) b. Revolving Loans
( ) c. Swing Line Loan
5. INTEREST RATE OPTION:<F1> ( ) a. Base Rate Loan(s)
( ) b. Eurodollar Rate Loans with an
initial Interest Period of
____________ month(s)
<F1> Term Loans and Revolving Loans may be Base Rate Loans or Eurodollar
Rate Loans. Swing Line Loans shall be Base Rate Loans.
The proceeds of such Loans are to be deposited in Company's account at
Chase Co-Administrative Agent.
The undersigned officer, to the best of his or her knowledge, and
Company certify that:
(i) The representations and warranties contained in the Credit
Agreement and the other Loan Documents are true and correct in all
material respects on and as of the date hereof to the same extent as
though made on and as of the date hereof, except to the extent such
representations and warranties specifically relate to an earlier date,
in which case such representations and warranties were true and
correct in all material respects on and as of such earlier date;
(ii) No event has occurred and is continuing or would result from
the consummation of the borrowing contemplated hereby that would
constitute an Event of Default or a Potential Event of Default; [and]
(iii) Company has performed in all material respects all
<PAGE>
agreements and satisfied all conditions which the Credit Agreement
provides shall be performed or satisfied by it on or before the date
hereof[; and][.]
[(iv) FOR REVOLVING LOANS: The amount of the proposed
borrowing will not cause the Total Utilization of Revolving Loan
Commitments to exceed the Revolving Loan Commitments.]
DATED: ____________________ OUTSOURCING SOLUTIONS INC.
By:__________________________
Name:
Title:
<PAGE>
EXHIBIT II
[FORM OF NOTICE OF CONVERSION/CONTINUATION]
NOTICE OF CONVERSION/CONTINUATION
Pursuant to that certain Amended and Restated Credit Agreement dated
as of October 8, 1997, as amended, restated, supplemented or otherwise
modified to the date hereof (said Amended and Restated Credit Agreement, as
so amended, restated, supplemented or otherwise modified, being the "CREDIT
AGREEMENT", the terms defined therein and not otherwise defined herein
being used herein as therein defined), by and among Outsourcing Solutions
Inc., a Delaware corporation ("COMPANY"), the financial institutions listed
therein as Lenders, Goldman Sachs Credit Partners L.P. and The Chase
Manhattan Bank, as Co-Administrative Agents, SunTrust Bank, Atlanta, as
Collateral Agent, and Goldman Sachs Credit Partners L.P. and Chase
Securities Inc., as Arranging Agents, this represents Company's request to
convert or continue Loans as follows:
1. DATE OF CONVERSION/CONTINUATION:__________________, [199_] [200_]
2. AMOUNT OF LOANS BEING CONVERTED/CONTINUED: $___________________
3. TYPE OF LOANS BEING CONVERTED/CONTINUED:
( ) a. Tranche A Term Loans
( ) b. Tranche B Term Loans
( ) c. Revolving Loans
4. NATURE OF CONVERSION/CONTINUATION:
( ) a. Conversion of Base Rate Loans to Eurodollar Rate Loans
( ) b. Conversion of Eurodollar Rate Loans to Base Rate Loans
( ) c. Continuation of Eurodollar Rate Loans as such
5. If Loans are being continued as or converted to Eurodollar Rate
Loans, the duration of the new Interest Period that commences on
the conversion/ continuation date: _______________ month(s)
In the case of a conversion to or continuation of Eurodollar Rate
Loans, the undersigned officer, to the best of his or her knowledge, and
Company certify that no Event of Default or Potential Event of Default has
occurred and is continuing under the Credit Agreement.
DATED: _____________________ OUTSOURCING SOLUTIONS INC.
By:__________________________
Name:
Title:
<PAGE>
EXHIBIT III
[FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT]
NOTICE OF ISSUANCE OF LETTER OF CREDIT
Pursuant to that certain Amended and Restated Credit Agreement dated
as of October 8, 1997, as amended, restated, supplemented or otherwise
modified to the date hereof (said Credit Agreement, as so amended,
restated, supplemented or otherwise modified, being the "CREDIT AGREEMENT",
the terms defined therein and not otherwise defined herein being used
herein as therein defined), by and among Outsourcing Solutions Inc., a
Delaware corporation ("COMPANY"), the financial institutions listed therein
as Lenders, Goldman Sachs Credit Partners L.P. and The Chase Manhattan
Bank, as Co-Administrative Agents, SunTrust Bank, Atlanta, as Collateral
Agent, and Goldman Sachs Credit Partners L.P. and Chase Securities Inc., as
Arranging Agents, this represents Company's request for the issuance of a
Letter of Credit by Chase Co-Administrative Agent as follows:
1. DATE OF ISSUANCE OF LETTER OF CREDIT: ________________, [199_]
[200_]
2. TYPE OF LETTER OF CREDIT:
( ) a. Commercial Letter of Credit
( ) b. Standby Letter of Credit
3. FACE AMOUNT OF LETTER OF CREDIT: $________________________
4. EXPIRATION DATE OF LETTER OF CREDIT: ________________, [199_]
[200_]
5. NAME AND ADDRESS OF BENEFICIARY:
___________________________________________
___________________________________________
___________________________________________
___________________________________________
6. ATTACHED HERETO IS:
( ) a. the verbatim text of such proposed Letter of Credit
( ) b. a description of the proposed terms and conditions of
such Letter of Credit, including a precise description
of any documents to be presented by the beneficiary
which, if presented by the beneficiary prior to the
expiration date of such Letter of Credit, would require
the Issuing Lender to make payment under such Letter of
Credit.
The undersigned officer, to the best of his or her knowledge, and
Company certify that:
(i) The representations and warranties contained in the Credit
Agreement and the other Loan Documents are true and correct in all
material respects on and as of the date hereof to the same extent as
though made on and as of the date hereof, except to the extent such
representations and warranties specifically relate to an earlier date,
in which case such representations and warranties were true and
correct in all material respects on and as of such earlier date;
<PAGE>
(ii) No event has occurred and is continuing or would result from
the issuance of the Letter of Credit contemplated hereby that would
constitute an Event of Default or a Potential Event of Default;
(iii) Company has performed in all material respects all
agreements and satisfied all conditions which the Credit Agreement
provides shall be performed or satisfied by it on or before the date
hereof; and
(iv) The issuance of the proposed Letter of Credit will not cause
(a) the Letter of Credit Usage to exceed $5,000,000 or (b) the Total
Utilization of Revolving Loan Commitments to exceed the Revolving Loan
Commitments.
DATED: ____________________ OUTSOURCING SOLUTIONS INC.
By:__________________________
Name:
Title:
<PAGE>
EXHIBIT IV-C
[FORM OF TRANCHE B TERM NOTE ALLONGE]
ALLONGE
In connection with that certain Amended and Restated Credit
Agreement dated as of October 8, 1997 (the "AMENDED CREDIT AGREEMENT"; all
capitalized terms defined therein and not otherwise defined herein being
used herein as therein defined) by and among Outsourcing Solutions Inc., a
Delaware corporation ("COMPANY"), the lenders party thereto, The Chase
Manhattan Bank ("CHASE") and Goldman Sachs Credit Partners L.P. ("GSCP"),
as Co-Administrative Agents, GSCP and Chase Securities Inc. ("CSI"), as
Arranging Agents, and SunTrust Bank, Atlanta ("SUNTRUST"), as Collateral
Agent, which amends and restates that certain Credit Agreement dated as of
November 6, 1996, (as amended, restated supplemented or otherwise modified
prior to the date hereof, the "EXISTING CREDIT AGREEMENT") by and among
Company, the lenders party thereto, Chase and GSCP, as co-administrative
agents, GSCP and CSI, as arranging agents and SunTrust, as collateral
agent, Company hereby agrees that the Tranche B Term Note of Company dated
November 6, 1996 payable to the order of<F1>, is hereby amended, as of the
Effective Date, by:
<F1> Insert Lender's name in capital letters.
(a) deleting the first paragraph in its entirety and replacing it
with the following:
"FOR VALUE RECEIVED, OUTSOURCING SOLUTIONS INC., a Delaware
corporation ("COMPANY"), promises to pay to <F1> ("PAYEE") or its
registered assigns, in the installments referred to below, the lesser
of (x)<F2> ($<F3>) and (y) the unpaid principal amount of all Tranche
B Loans held by Payee under the Credit Agreement referred to below.";
<F2> Insert amount of Lender's Tranche B Term Loan and Tranche B Term Loan
Commitment in words.
<F3> Insert amount of Lender's Tranche B Term Loan and Tranche B Term Loan
Commitment in numbers.
(b) deleting the fourth paragraph in its entirety and replacing
it with the following:
"This Note is one of Company's "Tranche B Term Notes" in the
maximum aggregate principal amount of $125,250,000 and is issued
pursuant to and entitled to the benefits of the Credit Agreement, to
which reference is hereby made for a more complete statement of the
terms and conditions under which the Tranche B Term Loans evidenced
hereby were made and are to be repaid."; and
(c) delete the first reference to "<F4>".
<F4> Insert the amount of Lender's Tranche B Term Loan prior to the
Effective Date in numbers.
<PAGE>
Date __________________ OUTSOURCING SOLUTIONS INC.
By:__________________________
Timothy G. Beffa
President and Chief Executive Officer
<PAGE>
EXHIBIT IV-D
[FORM OF NEW TRANCHE B TERM NOTE]
OUTSOURCING SOLUTIONS INC.
PROMISSORY NOTE DUE OCTOBER 15, 2003
New York, New
York
[Effective
Date]
FOR VALUE RECEIVED, OUTSOURCING SOLUTIONS INC., a Delaware corporation
("COMPANY"), promises to pay to <F1> ("PAYEE") or its registered assigns,
in the installments referred to below, the lesser of (x) <F2> ($<F3>) and
(y) the unpaid principal amount of all Tranche B Term Loans held by Payee
under the Credit Agreement referred to below.
<F1> Insert Lender's name in capital letters.
<F2> Insert amount of the sum of Lender's Tranche B Term Loan and Tranche B
Term Loan Commitment in words.
<F3> Insert amount of the sum of Lender's Tranche B Term Loan and Tranche B
Term Loan Commitment in numbers.
Company also promises to pay interest on the unpaid principal amount
hereof, from the date hereof until paid in full, at the rates and at the
times which shall be determined in accordance with the provisions of that
certain Amended and Restated Credit Agreement dated as of October ,
1996, by and among Company, the financial institutions listed therein as
Lenders, Goldman Sachs Credit Partners L.P. and The Chase Manhattan Bank
("CHASE"), as Co-Administrative Agents (Chase, in such capacity, "CHASE CO-
ADMINISTRATIVE AGENT"), SunTrust Bank, Atlanta, as Collateral Agent, and
Goldman Sachs Credit Partners L.P. and Chase Securities Inc., as Arranging
Agents (said Credit Agreement, as it may be amended, restated, supplemented
or otherwise modified from time to time, being the "CREDIT AGREEMENT", the
terms defined therein and not otherwise defined herein being used herein as
therein defined).
Company shall make principal payments on this Note in consecutive
quarterly installments as set forth in the Credit Agreement, commencing on
October 15, 1997 and ending on October 15, 2003. Each such installment
shall be due on the date specified in the Credit Agreement and in an amount
determined in accordance with the provisions thereof; provided that the
last such installment shall be in an amount sufficient to repay the entire
unpaid principal balance of this Note, together with all accrued and unpaid
interest thereon.
This Note is one of Company's "Tranche B Term Notes" in the maximum
aggregate principal amount of $125,250,000 and is issued pursuant to and
entitled to the benefits of the Credit Agreement, to which reference is
hereby made for a more complete statement of the terms and conditions under
which the Tranche B Term Loans evidenced hereby were made and are to be
repaid.
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in same day funds
at the Funding and Payment Office or at such other place as shall be
designated in writing for such purpose in accordance with the terms of the
<PAGE>
Credit Agreement. Unless and until an Assignment Agreement effecting the
assignment or transfer of this Note shall have been accepted by Chase Co-
Administrative Agent and recorded in the Register as provided in subsection
10.1B(ii) of the Credit Agreement, Company and Chase Co-Administrative
Agent shall be entitled to deem and treat Payee as the owner and holder of
this Note and the Loan evidenced hereby. Payee hereby agrees, by its
acceptance hereof, that before disposing of this Note or any part hereof it
will make a notation hereon of all principal payments previously made
hereunder and of the date to which interest hereon has been paid; provided,
however, that the failure to make a notation of any payment made on this
Note shall not limit or otherwise affect the obligations of Company
hereunder with respect to payments of principal of or interest on this
Note.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in subsection
2.4B(iii) of the Credit Agreement and to prepayment at the option of
Company as provided in subsection 2.4B(i) of the Credit Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING
WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note, together with all accrued and unpaid
interest thereon, may become, or may be declared to be, due and payable in
the manner, upon the conditions and with the effect provided in the Credit
Agreement.
This Note is entitled to the benefits of the Guaranty and is secured
pursuant to the Collateral Documents.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment as
provided in subsections 10.1 and 10.16 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligations of
Company, which are absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.
Company promises to pay all costs and expenses, including reasonable
attorneys' fees, all as provided in subsection 10.2 of the Credit
Agreement, incurred in the collection and enforcement of this Note.
Company and any endorsers of this Note hereby consent to renewals and
extensions of time at or after the maturity hereof, without notice, and
hereby waive diligence, presentment, protest, demand and notice of every
kind and, to the full extent permitted by law, the right to plead any
statute of limitations as a defense to any demand hereunder.
IN WITNESS WHEREOF, Company has caused this Note to be duly executed
and delivered by its officer thereunto duly authorized as of the date and
at the place first written above.
<PAGE>
OUTSOURCING SOLUTIONS INC.
By:__________________________
Name:
Title:
<PAGE>
EXHIBIT XI
[FORM OF OPINION OF LOAN PARTIES' COUNSEL]
October __, 1997
Goldman Sachs Credit Partners L.P.,
as Arranging Agent and Co-Administrative Agent
under the Credit Agreement referred to below
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
The Chase Manhattan Bank,
as Co-Administrative Agent under the Credit
Agreement referred to below, and
Chase Securities Inc.,
as Arranging Agent under the Credit Agreement
referred to below
270 Park Avenue
New York, New York 10025
SunTrust Bank, Atlanta,
as Collateral Agent
25 Park Place
23rd Floor
Atlanta, Georgia 30303
and
The Lenders Listed on
Schedule A Annexed Hereto
<PAGE>
Re: Amended and Restated Credit Agreement dated as of October 8,
1997, by and among Outsourcing Solutions Inc., the financial
institutions listed therein as Lenders, Goldman Sachs Credit
Partners L.P. and Chase Securities Inc., as Arranging
Agents, Goldman Sachs Credit Partners L.P. and The Chase
Manhattan Bank, as Co-Administrative Agents, and SunTrust
Bank, Atlanta, as Collateral Agent
Ladies and Gentlemen:
We have acted as special counsel to (i) Outsourcing Solutions Inc., a
Delaware corporation ("Company"), in connection with that certain Amended
and Restated Credit Agreement dated as of October 8, 1997 (the "Credit
Agreement"; capitalized terms used herein without definition have the same
meanings as in the Credit Agreement), by and among Company, the financial
institutions listed therein as Lenders, Goldman Sachs Credit Partners L.P.
and Chase Securities Inc., as Arranging Agents, Goldman Sachs Credit
Partners L.P. and The Chase Manhattan Bank, as Co-Administrative Agents,
and SunTrust Bank, Atlanta, as Collateral Agent, and (ii) each Subsidiary
of Company listed on Schedule B annexed hereto (each such Subsidiary being
a "Subsidiary Guarantor" and collectively, "Subsidiary Guarantors") that
executed that certain Subsidiary Guaranty dated as of November 6, 1996 (the
"Subsidiary Guaranty"), in favor of and for the benefit of Collateral Agent
as Guarantied Party thereunder (Company and Subsidiary Guarantors are
collectively referred to herein as "Loan Parties" and each individually as
a "Loan Party"), and (iii) Loan Parties in connection with documents
executed in connection with the Credit Agreement and the Subsidiary
Guaranty. This opinion is rendered to you in compliance with subsection
4.1G of the Credit Agreement.
Each Subsidiary Guarantor which is a corporation and Company are
referred to herein individually as a "Corporate Loan Party" and
collectively as "Corporate Loan Parties", and each Subsidiary Guarantor
which is a limited partnership is referred to herein individually as a
"Partnership Loan Party" and collectively as "Partnership Loan Parties".
In our capacity as such counsel, we have examined originals, or copies
identified to our satisfaction as being true copies, of such records,
documents or other instruments as in our judgment are necessary or
appropriate to enable us to render the opinions expressed below. These
records, documents and instruments included the following:
(a) The Articles or Certificate of Incorporation of each of the
Corporate Loan Parties and the certificate of limited partnership or
statement of partnership of each of the Partnership Loan Parties, in each
case as amended to date;
(b) The partnership agreement of each of the Partnership Loan Parties
and the Bylaws of each of the Corporate Loan Parties, in each case as
amended to date;
(c) All records of proceedings and actions of the respective Boards of
Directors of each of the Loan Parties or of their general partners relating
to the Credit Agreement and the transactions contemplated thereby;
(d) The Credit Agreement;
(e) Tranche B Term Note Allonges (the "Notes");
(f) The Acknowledgement and Consent;
(g) The Subsidiary Guaranty;
<PAGE>
(h) The Pledge Agreement;
(i) The Security Agreement;
(j) The Limited Partnership Security Agreement;
(k) The Trademark Security Agreement;
(l) The Subordinated Notes and the Subordinated Note Indenture;
[(m) the Accelerated Acquisition Agreement and the NSA Acquisition
Agreement;]
(n) The Existing Seller Note; and
(o) Copies of Uniform Commercial Code financing statements (the
"Financing Statements") filed and to be filed in the filing offices listed
for the Borrower and its Subsidiaries on Schedule 1 annexed hereto (the
"Filing Offices").
The documents referenced in items (d) through (k) above are
collectively referred to herein as the "Loan Documents".
In connection with this opinion, we have also examined such other
agreements, documents, certificates and other statements of government
officials and corporate officers and/or partners of the Loan Parties and
such other papers as we have deemed necessary as a basis for such opinions.
In all such examinations, we have assumed the genuineness of all signatures
on original and certified documents (other than the signatures of officers
of the Loan Parties on the Loan Documents and the Financing Statements),
and the conformity to original or certified documents of all documents
submitted to us as conformed or photostatic copies.
On the basis of the foregoing, and in reliance thereon, and subject to
the limitations, qualifications and exceptions set forth below, we are of
the opinion that:
1. Each Corporate Loan Party is duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation
set forth on Schedule B annexed hereto and has all requisite corporate
power and authority to own and operate its properties and to carry on its
business as now conducted.
2. Each Partnership Loan Party is a duly formed and validly existing
limited partnership under the laws of its jurisdiction of formation set
forth on Schedule B annexed hereto and has all requisite partnership power
and authority to own and operate its properties and to carry on its
business as now conducted.
3. Each Corporate Loan Party has all requisite corporate power and
authority, and each Partnership Loan Party has all requisite partnership
power and authority, to execute and deliver the Loan Documents to which it
is a party and the Financing Statements in which it is named as Debtor and
to perform the Loan Documents to which it is a party and to carry out the
transactions contemplated thereby.
4. The execution and delivery of each of the Loan Documents and the
Financing Statements and the performance of each of the Loan Documents have
been duly authorized (i) by all necessary corporate action on the part of
each Corporate Loan Party which is a party thereto or which is named
therein as a Debtor and (ii) by all necessary partnership action on the
part of each Partnership Loan Party which is a party thereto or which is
named therein as a Debtor. Each Loan Document and each Financing Statement
<PAGE>
has been duly executed and delivered by each Loan Party which is a party
thereto or which is named therein as a Debtor, and each Loan Document
constitutes the valid and binding obligation of such Loan Party,
enforceable against such Loan Party in accordance with its terms, except as
the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement
of creditors' rights generally or by general equitable principles
(regardless of whether the issue of enforceability is considered in a
proceeding in equity or at law).
5. None of the execution or delivery by the Loan Parties of the Loan
Documents to which it is a party or the Financing Statements in which it is
named as a debtor nor the performance by the Loan Parties of the Loan
Documents nor the consummation of the transactions contemplated thereby
will (i) conflict with, result in a breach or violation of, or constitute a
default under, any of the terms, conditions or provisions of (a) the
Certificate of Incorporation, Articles of Incorporation, certificate of
limited partnership, statement of partnership or partnership agreement or
Bylaws, as applicable, of any Loan Party, (b) any term of any material
agreement or instrument known to us to which any of the Loan Parties is a
party or by which any of their respective properties or assets are bound,
or (c) any New York State or Federal or Delaware corporation law, statute,
rule or regulation (including, without limitation, Regulations G, T, U or X
of the Board of Governors of the Federal Reserve System) or any order,
writ, judgment, injunction or decree of any New York State or Federal court
or other adjudicative body or arbitrator to which Company or any Loan Party
or any of their respective assets or properties is subject and of which we
are aware, or (ii) result in the creation of any Lien upon any of the
properties or assets of any Loan Party under any agreement or order
referred to in clause (b) or (c) above (other than Liens created pursuant
to the Loan Documents and the Financing Statements).
6. To our knowledge, the authorized and outstanding capital stock of
each Corporate Loan Party is as set forth on Schedule C annexed hereto. To
our knowledge, the Loan Parties indicated without an asterisk on Schedule B
annexed hereto are the record owners of the Pledged Shares (as defined in
the Pledge Agreement). The Loan Parties indicated with an asterisk on
Schedule B annexed hereto are the record owners Of the Pledged Shares.
Assuming (i) continued possession by Collateral Agent (or an agent of
Collateral Agent) of the certificates representing the Pledged Shares in
the State or New York, (ii) that Collateral Agent has taken delivery of the
certificates representing the Pledged Shares in good faith and (iii) that
neither Collateral Agent nor any Lender has notice, prior to or on the date
of delivery of such Pledged Shares, of an adverse claim within the meaning
of the Uniform Commercial Code (the "UCC") as in effect on the date hereof
in the State of New York (the "New York UCC"), the Pledge Agreement creates
a perfected security interest in favor of the Collateral Agent in the
Pledged Shares, which security interest has priority over all other liens
except as follows:
(a) we express no opinion as to any Loan Party's right in or
title to the Pledged Shares;
(b) priority may be subject to claims or liens in favor of the
United States, or any State of the United States or any agency,
instrumentality or political subdivision thereof, including, without
limitation, (i) liens for the payment of Federal, state or local taxes
which are given priority by operation of law, (ii) liens under Title
IV of the Employee Retirement Income Security Act of 1974, as amended,
and (iii) claims arising under the Federal Priority Statute (31 U.S.C.
Section 3713);
(c) we express no opinion as to the security interest of the
<PAGE>
Collateral Agent in proceeds of or distributions on the Pledged
Shares; and
(d) we express no opinion as to the priority of the security
interests in the Pledged Shares as against any lien creditor (as such
term in defined in Article 9 of the New York UCC) or any buyer, to the
extent that the security interests therein purport to secure any
advances or other extensions of credit other than obligations incurred
pursuant to existing commitments under the Credit Agreement.
7. Assuming (i) continued possession by Collateral Agent (or an agent
of Collateral Agent) of the instruments representing the Pledged Debt in
the State or New York, (ii) that Collateral Agent has taken delivery of the
instruments representing the Pledged Debt in good faith and (iii) that
neither Collateral Agent nor any Lender has notice, prior to or on the date
of delivery of such Pledged Debt, of an adverse claim within the meaning of
the New York UCC, the Pledge Agreement will create a perfected security
interest in favor of the Collateral Agent in the Pledged Debt, which
security interest has priority over all other liens except as follows:
(a) we express no opinion as to any Loan Party's right in or
title to the Pledged Debt;
(b) priority may be subject to claims or liens in favor of the
United States, or any State of the United States or any agency,
instrumentality or political subdivision thereof, including, without
limitation, (i) liens for the payment of Federal, state or local taxes
which are given priority by operation of law, (ii) liens under Title
IV of the Employee Retirement Income Security Act of 1974, as amended,
and (iii) claims arising under the Federal Priority Statute (31 U.S.C.
Section 3713);
(c) we express no opinion as to the security interest of the
Collateral Agent in proceeds of or distributions on the Pledged Debt;
and
(d) we express no opinion as to the priority of the security
interests in the Pledged Debt as against any lien creditor (as such
term in defined in Article 9 of the New York UCC) or any buyer, to the
extent that the security interests therein purport to secure any
advances or other extensions of credit other than obligations incurred
pursuant to existing commitments under the Credit Agreement.
8. To our knowledge, the general and limited partnership interests in
each Partnership Loan Party are as set forth on Schedule C annexed hereto.
Loan Parties indicated on Schedule I annexed to the Pledge Agreement are
the registered owners of the general and limited partnership interests in
the Partnerships (as defined in the Limited Partnership Security Agreement)
(collectively such interests are the "Partnership Interests"). Assuming
(i) continued possession by Collateral Agent (or an agent of Collateral
Agent) of the certificates representing the Partnership Interests in the
State of New York, (ii) that Collateral Agent has taken delivery of the
Partnership Interests in good faith, (iii) that neither Collateral Agent
nor any Lender has notice, prior to or on the date of delivery of such
Partnership Interests, of an adverse claim within the meaning of the New
York UCC, and (iv) that the representations made by each of the Loan
Parties in the Limited Partnership Security Agreement are true and correct,
the Limited Partnership Security Agreement creates a perfected security
interest in favor of the Collateral Agent in all Partnership Interests
which are represented by certificates, which security interest has priority
over all other liens except as follows:
(a) we express no opinion as to any Loan Party's right in or
<PAGE>
title to the Partnership Interests;
(b) priority may be subject to claims or liens in favor of the
United States, or any State of the United States or any agency,
instrumentality or political subdivision thereof, including, without
limitation, (i) liens for the payment of Federal, state or local taxes
which are given priority by operation of law, (ii) liens under Title
IV of the Employee Retirement Income Security Act of 1974, as amended,
and (iii) claims arising under the Federal Priority Statute (31 U.S.C.
Section 3713);
(c) we express no opinion as to the security interest of the
Collateral Agent in proceeds of or distributions on the Partnership
Interests; and
(d) we express no opinion as to the priority of the security
interests in the Partnership Interests as against any lien creditor
(as such term in defined in Article 9 of the New York UCC) or any
buyer, to the extent that the security interests therein purport to
secure any advances or other extensions of credit other than
obligations incurred pursuant to existing commitments under the Credit
Agreement.
9. The Security Agreement creates a valid lien and security interest
in favor of Collateral Agent in the Collateral (as defined in the Security
Agreement) purported to be covered thereby. The Financing Statements are
in appropriate form, and assuming that the representations made by each of
the Loan Parties in the Security Agreement with respect to the locations of
their respective Collateral (as defined in the Security Agreement) are true
and correct, all filings, registrations and recordings necessary or
appropriate to create, maintain, preserve, protect and perfect the security
interests granted by each Loan Party to Collateral Agent under the Security
Agreement in respect of all Collateral (as defined in the Security
Agreement) will have been accomplished in accordance with the UCC as in
effect on the date hereof in the respective Relevant States and the
security interests granted by the Loan Parties to Collateral Agent pursuant
to the Security Agreement in and to such Collateral will constitute
perfected security interests therein to the extent that such Collateral
consists of the type of property in which a security interest may be
perfected by filing a financing statement under the UCC as in effect on the
date hereof in the Relevant States except as follows:
(a) we express no opinion as to the security interest of the
Collateral Agent in proceeds of or distributions on the Collateral;
(b) in the case of Collateral referred to in this paragraph 9,
Article 9 of the UCC requires the filing of continuation statements
within the period of six months prior to the expiration of five years
from the date of the original filings, in order to maintain the
effectiveness of the filings referred to in this paragraph; and
(c) in the case of property which becomes Collateral after the
date hereof, Section 552 of the United States Bankruptcy Code limits
the extent to which priority acquired by a debtor after the
commencement of a case under the Federal Bankruptcy Code may be
subject to a security interest arising from a security agreement
entered into by the debtor before the commencement of such case.
10. Assuming the truth and accuracy of the representations of the Loan
Parties in the Trademark Security Agreement, we are aware of no additional
actions to be taken in order to create and perfect security interests in
favor of Collateral Agent in the Trademarks (as defined in the Trademark
Security Agreement) described on Schedule I annexed to the Trademark
<PAGE>
Security Agreement. However, we express no opinion as to the sufficiency of
the foregoing actions to create and perfect security interests in such
Trademarks to the extent federal law is determined to be applicable to the
creation and perfection of such security interests. In addition, we express
no opinion as to whether federal law or the laws of the states in which the
Filing Offices are located govern the validity or perfection of such
security interests.
11. Upon receipt by Collateral Agent of any cash representing
Collateral under the Collateral Account Agreement and assuming Collateral
Agent maintains dominion and control of the Collateral Account in the
manner set forth in the Collateral Account Agreement, the Collateral
Account Agreement will create in favor of Collateral Agent a perfected
security interest in the Collateral Account.
12. The Obligations under, and as defined in, the Credit Agreement
constitute "Secured Obligations" as defined in each of the Security
Agreement, the Pledge Agreement, the Trademark Security Agreement and the
Limited Partnership Security Agreement. The Obligations under, and as
defined, in the Credit Agreement constitute "Guarantied Obligations" under
the Subsidiary Guaranty.
13. The choice of law of the State of New York as the governing law of
each of the Loan Documents is a valid choice of law.
14. None of the Loan Parties 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 a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate"
of a "holding company" or of a "subsidiary company" of a "holding company"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
15. All Obligations under the Credit Agreement are (i) within the
definition of "Designated Senior Debt" contained in the subordination
provisions of the Subordinated Note Indenture and (ii) within the
definition of "Senior Indebtedness" contained in the subordination
provisions of the Existing Seller Note.
16. No law of the State of New York regulating the maximum rate of
interest which may be charged, taken or received applies to the Loans.
To the extent that the obligations of any of the Loan Parties may be
dependent upon such matters, we have assumed for purposes of this opinion,
other than with respect to the Loan Parties, that each additional party to
the agreements and contracts referred to herein is duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation; that each such other party has the requisite corporate or
other organizational power and authority to perform its obligations under
such agreements and contracts, as applicable; and that such agreements and
contracts have been duly authorized, executed and delivered by, and each of
them constitutes the legally valid and binding obligation of, such other
parties, as applicable, enforceable against such other parties in
accordance with their respective terms. Except as expressly covered in this
opinion, we are not expressing any opinion as to the effect of compliance
by any Lender with any state or federal laws or regulations applicable to
the transactions because of the nature of any of its businesses.
The opinions contained in paragraphs 4, 7, 8, 9, 10 and 11 are subject
to the following additional limitations, qualifications, exceptions and
assumptions:
(a) We express no opinion as to the enforceability of any
<PAGE>
indemnification or contribution provisions in the Loan Documents to
the extent the rights to indemnification or contribution provided for
therein are violative of any law, rule or regulation (including any
securities law, rule or regulation) or public policy relating thereto.
(b) There may be limitations upon the exercise of remedial or
procedural provisions contained in the Loan Documents, but such
limitations do not make the rights and remedies provided in or
contemplated by the Loan Documents inadequate for the practical
realization of the rights and remedies afforded thereby.
(c) We express no opinion as the applicability to the Loan
Documents of Section 548 of the Bankruptcy Code (11 U.S.C. Section
548) or Article 10 of the New York Debtor and Creditor Law relating to
fraudulent transfers and obligations.
(d) We wish to point out that the law of the State of New York
generally imposes an obligation of good faith and reasonableness in
the performance and enforcement of contracts.
A copy of this opinion letter may be delivered by any of you to any
Eligible Assignee in connection with and at the time of any assignment and
delegation by any of you as a Lender to such Eligible Assignee of all or a
portion of your Loans and Commitments in accordance with the provisions of
the Credit Agreement, and such Eligible Assignee may rely on the opinions
expressed above as if this opinion letter were addressed and delivered to
such Eligible Assignee on the date hereof.
This opinion is rendered only to Arranging Agents, Co-Administrative
Agents, Collateral Agent and Lenders and is solely for their benefit in
connection with the above transactions. This opinion may not be relied upon
by Arranging Agents, Co-Administrative Agent, Collateral Agent or Lenders
for any other purpose, or quoted to or relied upon by any other person,
firm or corporation for any purpose without our prior written consent.
The opinions expressed above are limited to questions arising under
the Federal law of the United States, the General Corporation Law of the
State of Delaware and the law of the State of New York. Our opinions set
forth in paragraphs 1, 2, 3 and 6 above (to the extent governed by a law
other than that of the Federal law of the United States of America, the
General Corporation Law of the State of Delaware and the law of the State
of New York) are based upon our review of generally available compilations
of law relating to such matters.
Very truly yours,
<PAGE>
SCHEDULE A
GOLDMAN SACHS CREDIT PARTNERS L.P.
THE CHASE MANHATTAN BANK
SUNTRUST BANK, ATLANTA
FLEET NATIONAL BANK
NBD BANK
BANK OF SCOTLAND
LASALLE NATIONAL BANK
CREDITANSTALT-BANKVEREIN
BANKBOSTON, N.A.
HELLER FINANCIAL, INC.
GIROCREDIT BANK AKTIENGESELLSCHAFT DER SPARKASSEN
PNC BANK, NATIONAL ASSOCIATION
SOUTHERN PACIFIC THRIFT & LOAN ASSOCIATION
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST
INDOSUEZ CAPITAL FUNDING II, LTD.
INDOSUEZ CAPITAL FUNDING III, LTD.
SENIOR DEBT PORTFOLIO
PILGRIM AMERICA PRIME RATE TRUST
<PAGE>
SCHEDULE B
I. Company* Delaware
II.
CFC SERVICES CORP.* Delaware
A.M. MILLER & ASSOCIATES, INC.* Minnesota
ACCOUNT PORTFOLIOS, L.P.* Georgia
GULF STATE CREDIT, L.P.* Georgia
PERIMETER CREDIT, L.P.* Georgia
ACCOUNT PORTFOLIOS G.P., INC.* Delaware
ACCOUNT PORTFOLIOS, INC.* Delaware
ALASKA FINANCIAL SERVICES, INC.* Alaska
THE CONTINENTAL ALLIANCE, INC.* Washington
ASSET RECOVERY & MANAGEMENT CORP. Wisconsin
FURST AND FURST, INC. Wisconsin
INDIANA MUTUAL CREDIT ASSOCIATION, INC. Indiana
JENNIFER LOOMIS & ASSOCIATES, INC. Arizona
NATIONAL ACCOUNT SYSTEMS INC. Delaware
PAYCO AMERICAN CORPORATION Wisconsin
PAYCO AMERICAN INTERNATIONAL CORP. Wisconsin
PAYCO-GENERAL AMERICAN CREDITS, INC. Wisconsin
PROFESSIONAL RECOVERIES INC. Wisconsin
QUALINK, INC. Wisconsin
UNIVERSITY ACCOUNTING SERVICE, INC. Wisconsin
[**OTHER SUBSIDIARIES?**]
<PAGE>
SCHEDULE C
<TABLE>
Shares Issued
Shares and Outstand-
Entity Par Value of Capital Stock Authorized ing
<S> <C> <C> <C>
Outsourcing Solutions Preferred -- no par 3,465,126.01 935,886.85
Voting Common Stock $.01 7,500,000 3,417,134.01
Class A Non-Voting
Common Stock $.01 7,500,000 391,740.58
Class B Non-Voting
Common Stock $.01 500,000 400,000
Class C Non-Voting
Common Stock $.01 1,500,000 1,040,000
CFC Services Corp. $.01 100 100
A.M. Miller & Associates, Inc. $1.00 25,000 100
Continental Credit Services, Inc. $1.00 50,000 3,466 2/3
Alaska Financial Services, Inc. $.01 100 100
Account Portfolios, Inc. $.01 100 100
Account Portfolios G.P., Inc. $.01 100 100
Payco American Corporation Common $.10 50,000,000 100
Preferred No Par 500,000 0
Payco-General American Credits, $1.00 1,000 1,000
Inc.
University Accounting Service, $1.00 1,000 100
Inc.
Asset Recovery & Management Corp. $1.00 1,000 1,000
Indiana Mutual Credit No par 100 100
Association, Inc.
Furst and Furst, Inc. No par 9,000 100
National Account Systems, Inc. $1.00 1,000 200
Jennifer Loomis & Associates, $1.00 1,000,000 500
Inc.
Qualink, Inc. No par 9,000 1,000
Professional Recoveries, Inc. No par 9,000 100
Payco American International No par 9,000 100
Corp.
Account Portfolios, L.P. N/A N/A N/A
Perimeter Credit, L.P. N/A N/A N/A
Gulf State Credit, L.P. N/A N/A N/A
<PAGE>
Reliance National Insurance Co. N/A N/A N/A
Ltd.
Federal Collection Bureau, S.A. N/A N/A N/A
de C.V.
Pay Tech, Inc. N/A N/A N/A
</TABLE>
<PAGE>
SCHEDULE 1
FILING OFFICES AND STATES
Secretary of State, Arizona
Secretary of State, California
Secretary of State, Colorado
Secretary of State, Florida
Cobb County, Georgia
Secretary of State, Illinois
Secretary of State, Indiana
Secretary of State, Kentucky
Campbell County, Kentucky
Secretary of State, Maine
Secretary of State, Maryland
Prince George's County, Maryland
Baltimore County, Maryland
Secretary of State, Minnesota
Secretary of Commonwealth, Massachusetts
Secretary of State, Michigan
Secretary of State, Missouri
Greene County, Missouri
Secretary of State, New Jersey
Secretary of State, New York
Westchester County, New York
Secretary of State, Nevada
Secretary of State, North Carolina
Wake County, North Carolina
Secretary of State, Ohio
Oklahoma County, Oklahoma
Secretary of State, Oregon
Secretary of Commonwealth, Pennsylvania
Montgomery County, Pennsylvania
Secretary of State, Texas
Secretary of State, Washington
Secretary of State, Wisconsin
Secretary of Commonwealth, Virginia
Richmond Independent City, Virginia
<PAGE>
EXHIBIT XIII
[FORM OF ASSIGNMENT AGREEMENT]
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT (this "AGREEMENT") is entered into by and
between the parties designated as Assignor ("ASSIGNOR") and Assignee
("ASSIGNEE") above the signatures of such parties on the Schedule of Terms
attached hereto and hereby made an integral part hereof (the "SCHEDULE OF
TERMS") and relates to that certain Amended and Restated Credit Agreement
described in the Schedule of Terms (said Amended and Restated Credit Agree-
ment, as amended, restated, supplemented or otherwise modified to the date
hereof and as it may hereafter be amended, restated, supplemented or
otherwise modified from time to time, being the "CREDIT AGREEMENT", the
terms defined therein and not otherwise defined herein being used herein as
therein defined).
IN CONSIDERATION of the agreements, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
SECTION 1. ASSIGNMENT AND ASSUMPTION.
(a) Effective upon the Settlement Date specified in Item 4 of the
Schedule of Terms (the "SETTLEMENT DATE"), Assignor hereby sells and
assigns to Assignee, without recourse, representation or warranty (except
as expressly set forth herein), and Assignee hereby purchases and assumes
from Assignor, that percentage interest in all of Assignor's rights and
obligations as a Lender arising under the Credit Agreement and the other
Loan Documents with respect to Assignor's Commitments and outstanding
Loans, if any, which represents, as of the Settlement Date, the percentage
interest specified in Item 3 of the Schedule of Terms of all rights and
obligations of Lenders arising under the Credit Agreement and the other
Loan Documents with respect to the Commitments and any outstanding Loans
(the "ASSIGNED SHARE"). Without limiting the generality of the foregoing,
the parties hereto hereby expressly acknowledge and agree that any
assignment of all or any portion of Assignor's rights and obligations
relating to Assignor's Revolving Loan Commitment shall include (i) in the
event Assignor is an Issuing Lender with respect to any outstanding Letters
of Credit (any such Letters of Credit being "ASSIGNOR LETTERS OF CREDIT"),
the sale to Assignee of a participation in the Assignor Letters of Credit
and any drawings thereunder as contemplated by subsection 3.1C of the
Credit Agreement and (ii) the sale to Assignee of a ratable portion of any
participations previously purchased by Assignor pursuant to said subsection
3.1C with respect to any Letters of Credit other than the Assignor Letters
of Credit.
(b) In consideration of the assignment described above, Assignee
hereby agrees to pay to Assignor, on the Settlement Date, the principal
amount of any outstanding Loans included within the Assigned Share, such
payment to be made by wire transfer of immediately available funds in
accordance with the applicable payment instructions set forth in Item 5 of
the Schedule of Terms.
(c) Assignor hereby represents and warrants that Item 3 of the
Schedule of Terms correctly sets forth the amount of the Commitments, the
outstanding Tranche A Term Loan, the outstanding Tranche B Term Loan and
the Pro Rata Share corresponding to the Assigned Share.
(d) Assignor and Assignee hereby agree that, upon giving effect to the
assignment and assumption described above, (i) Assignee shall be a party to
<PAGE>
the Credit Agreement and shall have all of the rights and obligations under
the Loan Documents, and shall be deemed to have made all of the covenants
and agreements contained in the Loan Documents, arising out of or otherwise
related to the Assigned Share, and (ii) Assignor shall be absolutely
released from any of such obligations, covenants and agreements assumed or
made by Assignee in respect of the Assigned Share. Assignee hereby
acknowledges and agrees that the agreement set forth in this Section 1(d)
is expressly made for the benefit of Company, Agents, Assignor and the
other Lenders and their respective successors and permitted assigns.
(e) Assignor and Assignee hereby acknowledge and confirm their
understanding and intent that (i) this Agreement shall effect the
assignment by Assignor and the assumption by Assignee of Assignor's rights
and obligations with respect to the Assigned Share, (ii) any other
assignments by Assignor of a portion of its rights and obligations with
respect to the Commitments and any outstanding Loans shall have no effect
on the Commitments, the outstanding Tranche A Term Loan, the outstanding
Tranche B Term Loan and the Pro Rata Share corresponding to the Assigned
Share as set forth in Item 3 of the Schedule of Terms or on the interest of
Assignee in any outstanding Revolving Loans corresponding thereto, and
(iii) from and after the Settlement Date, Chase Co-Administrative Agent
shall make all payments under the Credit Agreement in respect of the
Assigned Share (including without limitation all payments of principal and
accrued but unpaid interest, commitment fees and letter of credit fees with
respect thereto) (1) in the case of any such interest and fees that shall
have accrued prior to the Settlement Date, to Assignor, and (2) in all
other cases, to Assignee; provided that Assignor and Assignee shall make
payments directly to each other to the extent necessary to effect any
appropriate adjustments in any amounts distributed to Assignor and/or
Assignee by Chase Co-Administrative Agent under the Loan Documents in
respect of the Assigned Share in the event that, for any reason whatsoever,
the payment of consideration contemplated by Section 1(b) occurs on a date
other than the Settlement Date.
SECTION 2. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
(a) Assignor represents and warrants that it is the legal and
beneficial owner of the Assigned Share, free and clear of any adverse
claim.
(b) Assignor shall not be responsible to Assignee for the execution,
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of any of the Loan Documents or for any representations,
warranties, recitals or statements made therein or made in any written or
oral statements or in any financial or other statements, instruments,
reports or certificates or any other documents furnished or made by
Assignor to Assignee or by or on behalf Company or of any other Loan Party
to Assignor or Assignee in connection with the Loan Documents and the
transactions contemplated thereby or for the financial condition or
business affairs of Company or any other Person liable for the payment of
any Obligations, nor shall Assignor be required to ascertain or inquire as
to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents
or as to the use of the proceeds of the Loans or the use of the Letters of
Credit or as to the existence or possible existence of any Event of Default
or Potential Event of Default.
(c) Assignee represents and warrants that it is an Eligible Assignee;
that it has experience and expertise in the making or purchasing of loans
such as the Loans; that it has acquired the Assigned Share for its own
account in the ordinary course of its business and without a view to
distribution of the Loans within the meaning of the Securities Act or the
<PAGE>
Exchange Act or other federal securities laws (it being understood that,
subject to the provisions of subsection 10.1 of the Credit Agreement, the
disposition of the Assigned Share or any interests therein shall at all
times remain within its exclusive control); and that it has received,
reviewed and approved a copy of the Credit Agreement (including all
Exhibits and Schedules thereto).
(d) Assignee represents and warrants that it has received from
Assignor such financial information regarding Company and its Subsidiaries
as is available to Assignor and as Assignee has requested, that it has made
its own independent investigation of the financial condition and affairs of
Company and its Subsidiaries in connection with the assignment evidenced by
this Agreement, and that it has made and shall continue to make its own
appraisal of the creditworthiness of Company and its Subsidiaries.
Assignor shall have no duty or responsibility, either initially or on a
continuing basis, to make any such investigation or any such appraisal on
behalf of Assignee or to provide Assignee with any other credit or other
information with respect thereto, whether coming into its possession before
the making of the initial Loans or at any time or times thereafter, and
Assignor shall not have any responsibility with respect to the accuracy of
or the completeness of any information provided to Assignee.
(e) Each party to this Agreement represents and warrants to the other
party hereto that it has full power and authority to enter into this
Agreement and to perform its obligations hereunder in accordance with the
provisions hereof, that this Agreement has been duly authorized, executed
and delivered by such party and that this Agreement constitutes a legal,
valid and binding obligation of such party, enforceable against such party
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by general
principles of equity.
SECTION 3. MISCELLANEOUS.
(a) Each of Assignor and Assignee hereby agrees from time to time,
upon request of the other such party hereto, to take such additional
actions and to execute and deliver such additional documents and
instruments as such other party may reasonably request to effect the
transactions contemplated by, and to carry out the intent of, this
Agreement.
(b) Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated, except by an instrument in writing signed by the
party (including, if applicable, any party required to evidence its consent
to or acceptance of this Agreement) against whom enforcement of such
change, waiver, discharge or termination is sought.
(c) Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing
and may be personally served, telexed or sent by telefacsimile or United
States mail or courier service and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of telefacsimile or
telex, or three Business Days after depositing it in the United States mail
with postage prepaid and properly addressed. For the purposes hereof, the
notice address of each of Assignor and Assignee shall be as set forth on
the Schedule of Terms or, as to either such party, such other address as
shall be designated by such party in a written notice delivered to the
other such party. In addition, the notice address of Assignee set forth on
the Schedule of Terms shall serve as the initial notice address of Assignee
for purposes of subsection 10.8 of the Credit Agreement.
<PAGE>
(d) In case any provision in or obligation under this Agreement shall
be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or
of such provision or obligation in any other jurisdiction, shall not in any
way be affected or impaired thereby.
(e) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING
WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
(f) This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective successors and assigns.
(g) This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are physically
attached to the same document.
(h) This Agreement shall become effective upon the date (the
"EFFECTIVE DATE") upon which all of the following conditions are satisfied:
(i) the execution of a counterpart hereof by each of Assignor and Assignee,
(ii) the giving of notice to Company, (iii) the receipt by Chase Co-
Administrative Agent of the processing and recordation fee referred to in
subsection 10.1B(i) of the Credit Agreement, (iv) in the event Assignee is
a Non-US Lender (as defined in subsection 2.7B(iii)(a) of the Credit
Agreement), the delivery by Assignee to Chase Co-Administrative Agent of
such forms, certificates or other evidence with respect to United States
federal income tax withholding matters as Assignee may be required to
deliver to Chase Co-Administrative Agent pursuant to said subsection
2.7B(iii)(a), (v) the execution of a counterpart hereof by each Co-
Administrative Agent as evidence of its consent hereto to the extent
required under subsection 10.1B(i) of the Credit Agreement and by Chase Co-
Administrative Agent as evidence of its acceptance hereof in accordance
with subsection 10.1B(ii) of the Credit Agreement, (vi) the receipt by
Chase Co-Administrative Agent of originals or telefacsimiles of the
counterparts described above and authorization of delivery thereof, and
(vii) the recordation by Chase Co-Administrative Agent in the Register of
the pertinent information regarding the assignment effected hereby in
accordance with subsection 10.1B(ii) of the Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized, such execution being made as of the Effective Date in the
applicable spaces provided on the Schedule of Terms.
<PAGE>
SCHEDULE OF TERMS
1. COMPANY: OUTSOURCING SOLUTIONS INC.
2. NAME AND DATE OF CREDIT AGREEMENT: Amended and Restated Credit
Agreement dated as of October 8, 1997, by and among Company, the
financial institutions listed therein as Lenders, Goldman Sachs Credit
Partners L.P. and The Chase Manhattan Bank, as Co-Administrative
Agents, SunTrust Bank, Atlanta, as Collateral Agent, and Goldman Sachs
Credit Partners L.P. and Chase Securities Inc., as Arranging Agents.
<TABLE>
3. AMOUNTS: RE: TRANCHE A RE: TRANCHE B RE: REVOLVING
TERM LOANS TERM LOANS LOANS
<S> <C> <C> <C>
(a) Aggregate Commitments of all
all Lenders: $____ $____ $____
(b) Assigned Share/Pro Rata Share: ____ ____% ____%
(c) Amount of Assigned Share of
Commitments: $____ $____ $____
(d) Amount of Assigned Share of
Term Loans: $____ $____
</TABLE>
4. SETTLEMENT DATE: ____________, [199_][200_]
5. PAYMENT INSTRUCTIONS:
ASSIGNOR: ASSIGNEE:
________________________ ________________________
________________________ ________________________
________________________ ________________________
Attention:______________ Attention:______________
Reference:______________ Reference:______________
6. NOTICE ADDRESSES:
ASSIGNOR: ASSIGNEE:
________________________ ________________________
________________________ ________________________
________________________ ________________________
Attention:______________ Attention:______________
Reference:______________ Reference:______________
<PAGE>
7. SIGNATURES:
[NAME OF ASSIGNOR], [NAME OF ASSIGNEE],
as Assignor as Assignee
By: _________________ By: __________________
Name: Name:
Title: Title:
Consented to in Consented to and accepted
accordance with subsec- in accordance with
tion 10.1B(i) of the subsections 10.1B(i) and
Credit Agreement (ii) of the Credit
Agreement
GOLDMAN SACHS CREDIT THE CHASE MANHATTAN
PARTNERS L.P., BANK,
as Co-Administrative as Chase Co-
Agent Administrative Agent
By: _________________ By: __________________
Name: Name:
Title: Title:
<PAGE>
EXHIBIT XV
[FORM OF CERTIFICATE RE NON-BANK STATUS]
CERTIFICATE RE NON-BANK STATUS
Reference is hereby made to that certain Amended and Restated Credit
Agreement dated as of October 8, 1997 (said Amended and Restated Credit
Agreement, as amended, restated, supplemented or otherwise modified to the
date hereof, being the "CREDIT AGREEMENT"), by and among Outsourcing
Solutions Inc., a Delaware corporation, the financial institutions listed
therein as Lenders ("LENDERS"), Goldman Sachs Credit Partners L.P. and The
Chase Manhattan Bank, as co-administrative agents for Lenders, SunTrust
Bank, Atlanta, as collateral agent, and Goldman Sachs Credit Partners L.P.
and Chase Securities Inc., as arranging agents. Pursuant to subsection
2.7B(iii) of the Credit Agreement, the undersigned hereby certifies that it
is not a "bank" or other Person described in Section 881(c)(3) of the
Internal Revenue Code of 1986, as amended.
[NAME OF LENDER]
By:____________________________
Name:
Title:
<PAGE>
EXHIBIT XVII
[FORM OF ACKNOWLEDGEMENT AND CONSENT
TO AMENDED AND RESTATED CREDIT AGREEMENT]
This ACKNOWLEDGEMENT AND CONSENT TO AMENDED AND RESTATED CREDIT
AGREEMENT (this "ACKNOWLEDGEMENT AND CONSENT") is dated as of October 8,
1997 and entered into by the undersigned, and is made with reference to
that certain Amended and Restated Credit Agreement dated as of the date
hereof (the "AMENDED CREDIT AGREEMENT"), by and among Outsourcing Solutions
Inc. ("COMPANY"), the lenders party thereto (the "LENDERS"), The Chase
Manhattan Bank ("CHASE") and Goldman Sachs Credit Partners L.P. ("GSCP"),
as Co-Administrative Agents, GSCP and Chase Securities Inc. ("CSI"), as
Arranging Agents, and SunTrust Bank, Atlanta ("SUNTRUST"), as Collateral
Agent, which amends and restates that certain Credit Agreement dated as of
November 6, 1996, (as amended, restated, supplemented or otherwise modified
prior to the date hereof, the "EXISTING CREDIT AGREEMENT") by and among
Company, the lenders party thereto, Chase and GSCP, as co-administrative
agents, GSCP and CSI, as arranging agents and SunTrust, as collateral
agent. Capitalized terms used herein without definition shall have the
same meanings herein as set forth in the Amended Credit Agreement.
Company is a party to the Pledge Agreement, Security Agreement,
Trademark Security Agreement and Collateral Account Agreement, in each case
as amended through the Effective Date, pursuant to which Company has
created Liens in favor of Collateral Agent on certain Collateral to secure
the Obligations. Account Portfolios G.P., Inc., a Delaware corporation
("APGP"), Account Portfolios, Inc., a Delaware corporation ("API") and
Account Portfolios, L.P., a Georgia limited partnership ("APLPC";
collectively with APGP and API, the "LIMITED PARTNERSHIP GRANTORS" and each
individually a "LIMITED PARTNERSHIP GRANTOR") are parties to the Limited
Partnership Security Agreement, as amended through the Effective Date,
pursuant to which each Limited Partnership Grantor has (i) guarantied the
Obligations and (ii) created Liens in favor of Agent on certain Collateral
to secure the obligations of each Limited Partnership Grantor under the
Subsidiary Guarantee. Each of the Persons indicated as Subsidiary
Guarantors on the signature pages hereof (each, a "SUBSIDIARY GUARANTOR")
is a party to the Subsidiary Guaranty, Pledge Agreement, Security Agreement
and Trademark Security Agreement, in each case as amended through the
Effective Date, pursuant to which such Subsidiary Guarantor has
(i) guarantied the Obligations and (ii) created Liens in favor of Agent on
certain Collateral to secure the obligations of such Subsidiary Guarantor
under the Subsidiary Guaranty. Company, Limited Partnership Grantors and
Subsidiary Guarantors are collectively referred to herein as the "CREDIT
SUPPORT PARTIES", and the Subsidiary Guaranty, Limited Partnership Security
Agreement, Pledge Agreement, Security Agreement, Trademark Security
Agreement and Collateral Account Agreement are collectively referred to
herein as the "CREDIT SUPPORT DOCUMENTS".
Each Credit Support Party hereby acknowledges that it has
reviewed the terms and provisions of the Amended Credit Agreement and
consents to the amendment and restatement of the Existing Credit Agreement
effected pursuant to the Amended Credit Agreement. Each Credit Support
Party hereby confirms that each Credit Support Document to which it is a
party or otherwise bound and all Collateral encumbered thereby will
continue to guaranty or secure, as the case may be, to the fullest extent
possible the payment and performance of all "Guarantied Obligations" and
"Secured Obligations," as the case may be (in each case as such terms are
defined in the applicable Credit Support Document), including without
limitation the payment and performance of all such "Guarantied Obligations"
or "Secured Obligations," as the case may be, in respect of the Obligations
of Company now or hereafter existing under or in respect of the Amended
<PAGE>
Credit Agreement and the Notes defined therein. Without limiting the
generality of the foregoing, each Credit Support Party hereby acknowledges
and confirms the understanding and intent of such party that, upon the
Effective Date, the definition of "Obligations" contained in the Amended
Credit Agreement includes the obligations of Company under the Tranche B
Term Notes, as amended by the Tranche B Term Note Allonges.
Each Credit Support Party acknowledges and agrees that any of the
Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations
thereunder (which obligations on the date hereof remain absolute and
unconditional and are not subject to any defense, set-off or counterclaim)
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of the Amended Credit Agreement. Each Credit
Support Party represents and warrants that all representations and
warranties contained in the Amended Credit Agreement and the Credit Support
Documents to which it is a party or otherwise bound are true and correct in
all material respects on and as of the Effective Date to the same extent as
though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in
which case they were true and correct in all material respects on and as of
such earlier date.
Each Credit Support Party (other than Company) acknowledges and
agrees that (i) notwithstanding the conditions to effectiveness set forth
in the Amended Credit Agreement, such Credit Support Party is not required
by the terms of the Credit Agreement or any other Loan Document to consent
to the amendments to the Existing Credit Agreement effected pursuant to the
Amended Credit Agreement and (ii) nothing in the Amended Credit Agreement
or any other Loan Document shall be deemed to require the consent of such
Credit Support Party to any future amendments to the Amended Credit
Agreement.
THIS ACKNOWLEDGEMENT AND CONSENT AND THE RIGHTS AND OBLIGATIONS
OF THE UNDERSIGNED SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Acknowledge-
ment and Consent to be duly executed and delivered by their respective
officers thereunto duly authorized as of the date first written above.
COMPANY: OUTSOURCING SOLUTIONS INC.
By:____________________________
Name:
Title:
SUBSIDIARY
GUARANTORS: ALASKA FINANCIAL SERVICES, INC.
CFC SERVICES CORP.
THE CONTINENTAL ALLIANCE, INC.
SOUTHWEST CREDIT SERVICES, INC.
By:____________________________
Name:
Title:
ACCOUNT PORTFOLIOS, L.P.
GULF STATE CREDIT, L.P.
PERIMETER CREDIT, L.P.
By: ACCOUNT PORTFOLIOS G.P., INC., general
partner
By:____________________________
Name:
Title:
<PAGE>
A.M. MILLER & ASSOCIATES, INC.
ACCOUNT PORTFOLIOS G.P., INC.
ACCOUNT PORTFOLIOS, INC.
ASSET RECOVERY & MANAGEMENT CORP.
FM SERVICES CORPORATION
FURST AND FURST, INC.
INDIANA MUTUAL CREDIT
ASSOCIATION, INC.
JENNIFER LOOMIS & ASSOCIATES, INC.
NATIONAL ACCOUNT SYSTEMS, INC.
PAYCO AMERICAN CORPORATION
PAYCO AMERICAN INTERNATIONAL CORP.
PAYCO-GENERAL AMERICAN CREDITS, INC.
PROFESSIONAL RECOVERIES INC.
QUALINK, INC.
UNIVERSITY ACCOUNTING SERVICE, INC.
By:____________________________
Name:
Title:
Notice Address for Company and each of the
foregoing Subsidiary Guarantors:
390 South Woods Mill Road, Suite 150
Chesterfield, Missouri 63017
Attention: James F. Whalen, Chief
Financial Officer
Facsimile: (314) 576-1867
with a copy to:
McCown De Leeuw & Co.
101 East 52nd Street
31st Floor
New York, New York 10022
Attention:Tyler T. Zachem
Facsimile:(212) 355-6283
(212) 355-6945
and a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention:Frank L. Schiff, Esq.
Facsimile:(212) 819-7817
<PAGE>
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
This Second Amendment to the Employment Agreement (this "Amendment"),
is made as of the 27th day of August, 1997 between Outsourcing Solutions
Inc., a Delaware corporation (formerly OSI Holdings Corp.) (the "Company")
and Timothy G. Beffa, and individual residing in the State of Missouri (the
"Employee").
RECITALS
WHEREAS, the Company and the Employee are parties to a certain
Employment Agreement dated as of August 27, 1996, as amended by the First
Amendment to Employment Agreement dated as of May 14, 1997 (the "Employment
Agreement"); terms which are defined in the Employment Agreement shall have
the same meanings when used herein unless otherwise defined;
WHEREAS, the Company and the Employee desire to amend the Employment
Agreement by making certain modifications upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, IT IS AGREED:
1. Section 3 of the Employment Agreement shall be amended by
deleting that section in its entirety and inserting in lieu thereof the
following:
"3. Employment Term. The employment term shall begin on the
date of this Agreement and continue until December 31, 1998, unless
earlier terminated pursuant to Section 7 below (the "Employment
Term"); provided, that on December 31, 1998 and on each anniversary
thereafter, the Employment Term shall be automatically extended for an
additional twelve month period unless 30 days prior to such
anniversary date either the Company or the Employee shall give written
notice of termination of the Agreement, in which case the Agreement
will terminate at the end of the then existing Employment Term."
2. Section 4(a) of the Employment Agreement shall be amended by
deleting the words "Three Hundred Thousand Dollars ($300,000.00)" from the
end of such section and inserting in lieu thereof "Three Hundred Fifty
Thousand Dollars ($350,000.00)".
3. Section 4(b) of the Employment Agreement shall be amended by
deleting the first and second sentences in their entirety and inserting in
lieu thereof the following:
"For the period commencing on August 28, 1997 and ending on December
31, 1997, the Employee shall be eligible for a bonus of up to 150% of his
base salary for such period; and commencing on January 1, 1998 and each
January 1 thereafter, the Employee shall be eligible for an annual bonus of
up to 150% of his base salary."
4. The first sentence of Section 7 shall be deleted in its
entirety. The second sentence of Section 7 shall be amended by deleting
the word "also" from such sentence.
<PAGE>
5. As used in the Employment Agreement and any documents
referring thereto, the term "Employment Agreement" on and subsequent to the
date hereof shall mean the Employment Agreement as amended hereby.
6. This Amendment shall be limited precisely as written and
shall not be deemed to (i) be a consent to any waiver or modification of
any other terms and conditions of the Employment Agreement or (ii)
prejudice any right or rights which the Company may now have or may have in
the future under or in connection with the Employment Agreement. Except as
expressly amended hereby, the terms and provisions of the Employment
Agreement shall remain in full force and effect.
7. This Amendment (i) may be executed in any number of
counterparts and all such counterparts shall together constitute one and
the same instrument. Complete sets of counterparts shall be lodged with
the Company and the Employee.
8. This Amendment shall be governed by, and construed in
accordance with, the law of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have hereunto executed this Second Amendment the day and year first written
above.
OUTSOURCING SOLUTIONS INC.
By:/s/ Tyler T. Zachem
Name: Tyler T. Zachem
Title: Vice President
EMPLOYEE
/s/ Timothy G. Beffa
TIMOTHY G. BEFFA
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Note: This schedule contains summary financial information extracted from
the Form 10-Q for the Quarter Ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001027574
<NAME> Outsourcing Solutions Inc.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,124
<SECURITIES> 0
<RECEIVABLES> 23,789
<ALLOWANCES> 850
<INVENTORY> 47,913
<CURRENT-ASSETS> 111,328
<PP&E> 81,845
<DEPRECIATION> 54,545
<TOTAL-ASSETS> 358,234
<CURRENT-LIABILITIES> 72,981
<BONDS> 0
0
11,699
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 358,234
<SALES> 0
<TOTAL-REVENUES> 197,663
<CGS> 0
<TOTAL-COSTS> 206,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,950
<INCOME-PRETAX> (30,245)
<INCOME-TAX> (9,626)
<INCOME-CONTINUING> (20,619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,619)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Note: This schedule contains summary financial information extracted from
the Form 10-Q for the Quarter Ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001029300
<NAME> CFC Services Corp.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,124
<SECURITIES> 0
<RECEIVABLES> 23,789
<ALLOWANCES> 850
<INVENTORY> 47,913
<CURRENT-ASSETS> 111,328
<PP&E> 81,845
<DEPRECIATION> 54,545
<TOTAL-ASSETS> 358,234
<CURRENT-LIABILITIES> 72,981
<BONDS> 0
0
11,699
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 358,234
<SALES> 0
<TOTAL-REVENUES> 197,663
<CGS> 0
<TOTAL-COSTS> 206,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,950
<INCOME-PRETAX> (30,245)
<INCOME-TAX> (9,626)
<INCOME-CONTINUING> (20,619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,619)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Note: This schedule contains summary financial information extracted from
the Form 10-Q for the Quarter Ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001029301
<NAME> A M Miller & Associates Inc.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,124
<SECURITIES> 0
<RECEIVABLES> 23,789
<ALLOWANCES> 850
<INVENTORY> 47,913
<CURRENT-ASSETS> 111,328
<PP&E> 81,845
<DEPRECIATION> 54,545
<TOTAL-ASSETS> 358,234
<CURRENT-LIABILITIES> 72,981
<BONDS> 0
0
11,699
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 358,234
<SALES> 0
<TOTAL-REVENUES> 197,663
<CGS> 0
<TOTAL-COSTS> 206,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,950
<INCOME-PRETAX> (30,245)
<INCOME-TAX> (9,626)
<INCOME-CONTINUING> (20,619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,619)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Note: This schedule contains summary financial information extracted from
the Form 10-Q for the Quarter Ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001029305
<NAME> Alaska Financial Services Inc.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,124
<SECURITIES> 0
<RECEIVABLES> 23,789
<ALLOWANCES> 850
<INVENTORY> 47,913
<CURRENT-ASSETS> 111,328
<PP&E> 81,845
<DEPRECIATION> 54,545
<TOTAL-ASSETS> 358,234
<CURRENT-LIABILITIES> 72,981
<BONDS> 0
0
11,699
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 358,234
<SALES> 0
<TOTAL-REVENUES> 197,663
<CGS> 0
<TOTAL-COSTS> 206,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,950
<INCOME-PRETAX> (30,245)
<INCOME-TAX> (9,626)
<INCOME-CONTINUING> (20,619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,619)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Note: This schedule contains summary financial information extracted from
the Form 10-Q for the Quarter Ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001029307
<NAME> Account Portfolios Inc.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,124
<SECURITIES> 0
<RECEIVABLES> 23,789
<ALLOWANCES> 850
<INVENTORY> 47,913
<CURRENT-ASSETS> 111,328
<PP&E> 81,845
<DEPRECIATION> 54,545
<TOTAL-ASSETS> 358,234
<CURRENT-LIABILITIES> 72,981
<BONDS> 0
0
11,699
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 358,234
<SALES> 0
<TOTAL-REVENUES> 197,663
<CGS> 0
<TOTAL-COSTS> 206,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,950
<INCOME-PRETAX> (30,245)
<INCOME-TAX> (9,626)
<INCOME-CONTINUING> (20,619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,619)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Note: This schedule contains summary financial information extracted from
the Form 10-Q for the Quarter Ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001029715
<NAME> Account Portfolios G.P. Inc.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,124
<SECURITIES> 0
<RECEIVABLES> 23,789
<ALLOWANCES> 850
<INVENTORY> 47,913
<CURRENT-ASSETS> 111,328
<PP&E> 81,845
<DEPRECIATION> 54,545
<TOTAL-ASSETS> 358,234
<CURRENT-LIABILITIES> 72,981
<BONDS> 0
0
11,699
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 358,234
<SALES> 0
<TOTAL-REVENUES> 197,663
<CGS> 0
<TOTAL-COSTS> 206,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,950
<INCOME-PRETAX> (30,245)
<INCOME-TAX> (9,626)
<INCOME-CONTINUING> (20,619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,619)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Note: This schedule contains summary financial information extracted from
the Form 10-Q for the Quarter Ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001029308
<NAME> Account Portfolios LP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,124
<SECURITIES> 0
<RECEIVABLES> 23,789
<ALLOWANCES> 850
<INVENTORY> 47,913
<CURRENT-ASSETS> 111,328
<PP&E> 81,845
<DEPRECIATION> 54,545
<TOTAL-ASSETS> 358,234
<CURRENT-LIABILITIES> 72,981
<BONDS> 0
0
11,699
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 358,234
<SALES> 0
<TOTAL-REVENUES> 197,663
<CGS> 0
<TOTAL-COSTS> 206,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,950
<INCOME-PRETAX> (30,245)
<INCOME-TAX> (9,626)
<INCOME-CONTINUING> (20,619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,619)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Note: This schedule contains summary financial information extracted from
the Form 10-Q for the Quarter Ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001029309
<NAME> Perimeter Credit LP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,124
<SECURITIES> 0
<RECEIVABLES> 23,789
<ALLOWANCES> 850
<INVENTORY> 47,913
<CURRENT-ASSETS> 111,328
<PP&E> 81,845
<DEPRECIATION> 54,545
<TOTAL-ASSETS> 358,234
<CURRENT-LIABILITIES> 72,981
<BONDS> 0
0
11,699
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 358,234
<SALES> 0
<TOTAL-REVENUES> 197,663
<CGS> 0
<TOTAL-COSTS> 206,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,950
<INCOME-PRETAX> (30,245)
<INCOME-TAX> (9,626)
<INCOME-CONTINUING> (20,619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,619)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Note: This schedule contains summary financial information extracted from
the Form 10-Q for the Quarter Ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001029310
<NAME> Gulf State Credit L.P.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,124
<SECURITIES> 0
<RECEIVABLES> 23,789
<ALLOWANCES> 850
<INVENTORY> 47,913
<CURRENT-ASSETS> 111,328
<PP&E> 81,845
<DEPRECIATION> 54,545
<TOTAL-ASSETS> 358,234
<CURRENT-LIABILITIES> 72,981
<BONDS> 0
0
11,699
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 358,234
<SALES> 0
<TOTAL-REVENUES> 197,663
<CGS> 0
<TOTAL-COSTS> 206,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,950
<INCOME-PRETAX> (30,245)
<INCOME-TAX> (9,626)
<INCOME-CONTINUING> (20,619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,619)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Note: This schedule contains summary financial information extracted from
the Form 10-Q for the Quarter Ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000076741
<NAME> Payco American Corp.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,124
<SECURITIES> 0
<RECEIVABLES> 23,789
<ALLOWANCES> 850
<INVENTORY> 47,913
<CURRENT-ASSETS> 111,328
<PP&E> 81,845
<DEPRECIATION> 54,545
<TOTAL-ASSETS> 358,234
<CURRENT-LIABILITIES> 72,981
<BONDS> 0
0
11,699
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 358,234
<SALES> 0
<TOTAL-REVENUES> 197,663
<CGS> 0
<TOTAL-COSTS> 206,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,950
<INCOME-PRETAX> (30,245)
<INCOME-TAX> (9,626)
<INCOME-CONTINUING> (20,619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,619)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Note: This schedule contains summary financial information extracted from
the Form 10-Q for the Quarter Ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001029315
<NAME> Payco General American Credits Inc
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,124
<SECURITIES> 0
<RECEIVABLES> 23,789
<ALLOWANCES> 850
<INVENTORY> 47,913
<CURRENT-ASSETS> 111,328
<PP&E> 81,845
<DEPRECIATION> 54,545
<TOTAL-ASSETS> 358,234
<CURRENT-LIABILITIES> 72,981
<BONDS> 0
0
11,699
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 358,234
<SALES> 0
<TOTAL-REVENUES> 197,663
<CGS> 0
<TOTAL-COSTS> 206,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,950
<INCOME-PRETAX> (30,245)
<INCOME-TAX> (9,626)
<INCOME-CONTINUING> (20,619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,619)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Note: This schedule contains summary financial information extracted from
the Form 10-Q for the Quarter Ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001029317
<NAME> National Account Systems Inc.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,124
<SECURITIES> 0
<RECEIVABLES> 23,789
<ALLOWANCES> 850
<INVENTORY> 47,913
<CURRENT-ASSETS> 111,328
<PP&E> 81,845
<DEPRECIATION> 54,545
<TOTAL-ASSETS> 358,234
<CURRENT-LIABILITIES> 72,981
<BONDS> 0
0
11,699
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 358,234
<SALES> 0
<TOTAL-REVENUES> 197,663
<CGS> 0
<TOTAL-COSTS> 206,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,950
<INCOME-PRETAX> (30,245)
<INCOME-TAX> (9,626)
<INCOME-CONTINUING> (20,619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,619)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Note: This schedule contains summary financial information extracted from
the Form 10-Q for the Quarter Ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001029318
<NAME> University Accounting Service Inc.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,124
<SECURITIES> 0
<RECEIVABLES> 23,789
<ALLOWANCES> 850
<INVENTORY> 47,913
<CURRENT-ASSETS> 111,328
<PP&E> 81,845
<DEPRECIATION> 54,545
<TOTAL-ASSETS> 358,234
<CURRENT-LIABILITIES> 72,981
<BONDS> 0
0
11,699
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 358,234
<SALES> 0
<TOTAL-REVENUES> 197,663
<CGS> 0
<TOTAL-COSTS> 206,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,950
<INCOME-PRETAX> (30,245)
<INCOME-TAX> (9,626)
<INCOME-CONTINUING> (20,619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,619)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Note: This schedule contains summary financial information extracted from
the Form 10-Q for the Quarter Ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001029319
<NAME> Asset Recovery & Management Corp.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,124
<SECURITIES> 0
<RECEIVABLES> 23,789
<ALLOWANCES> 850
<INVENTORY> 47,913
<CURRENT-ASSETS> 111,328
<PP&E> 81,845
<DEPRECIATION> 54,545
<TOTAL-ASSETS> 358,234
<CURRENT-LIABILITIES> 72,981
<BONDS> 0
0
11,699
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 358,234
<SALES> 0
<TOTAL-REVENUES> 197,663
<CGS> 0
<TOTAL-COSTS> 206,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,950
<INCOME-PRETAX> (30,245)
<INCOME-TAX> (9,626)
<INCOME-CONTINUING> (20,619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,619)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Note: This schedule contains summary financial information extracted from
the Form 10-Q for the Quarter Ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001029320
<NAME> Indiana Mutual Credit Association Inc.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,124
<SECURITIES> 0
<RECEIVABLES> 23,789
<ALLOWANCES> 850
<INVENTORY> 47,913
<CURRENT-ASSETS> 111,328
<PP&E> 81,845
<DEPRECIATION> 54,545
<TOTAL-ASSETS> 358,234
<CURRENT-LIABILITIES> 72,981
<BONDS> 0
0
11,699
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 358,234
<SALES> 0
<TOTAL-REVENUES> 197,663
<CGS> 0
<TOTAL-COSTS> 206,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,950
<INCOME-PRETAX> (30,245)
<INCOME-TAX> (9,626)
<INCOME-CONTINUING> (20,619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,619)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Note: This schedule contains summary financial information extracted from
the Form 10-Q for the Quarter Ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001029386
<NAME> Furst & Furst Inc.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,124
<SECURITIES> 0
<RECEIVABLES> 23,789
<ALLOWANCES> 850
<INVENTORY> 47,913
<CURRENT-ASSETS> 111,328
<PP&E> 81,845
<DEPRECIATION> 54,545
<TOTAL-ASSETS> 358,234
<CURRENT-LIABILITIES> 72,981
<BONDS> 0
0
11,699
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 358,234
<SALES> 0
<TOTAL-REVENUES> 197,663
<CGS> 0
<TOTAL-COSTS> 206,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,950
<INCOME-PRETAX> (30,245)
<INCOME-TAX> (9,626)
<INCOME-CONTINUING> (20,619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,619)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Note: This schedule contains summary financial information extracted from
the Form 10-Q for the Quarter Ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001029387
<NAME> Jennifer Loomis & Associates Inc.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,124
<SECURITIES> 0
<RECEIVABLES> 23,789
<ALLOWANCES> 850
<INVENTORY> 47,913
<CURRENT-ASSETS> 111,328
<PP&E> 81,845
<DEPRECIATION> 54,545
<TOTAL-ASSETS> 358,234
<CURRENT-LIABILITIES> 72,981
<BONDS> 0
0
11,699
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 358,234
<SALES> 0
<TOTAL-REVENUES> 197,663
<CGS> 0
<TOTAL-COSTS> 206,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,950
<INCOME-PRETAX> (30,245)
<INCOME-TAX> (9,626)
<INCOME-CONTINUING> (20,619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,619)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Note: This schedule contains summary financial information extracted from
the Form 10-Q for the Quarter Ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001029389
<NAME> Qualink Inc.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,124
<SECURITIES> 0
<RECEIVABLES> 23,789
<ALLOWANCES> 850
<INVENTORY> 47,913
<CURRENT-ASSETS> 111,328
<PP&E> 81,845
<DEPRECIATION> 54,545
<TOTAL-ASSETS> 358,234
<CURRENT-LIABILITIES> 72,981
<BONDS> 0
0
11,699
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 358,234
<SALES> 0
<TOTAL-REVENUES> 197,663
<CGS> 0
<TOTAL-COSTS> 206,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,950
<INCOME-PRETAX> (30,245)
<INCOME-TAX> (9,626)
<INCOME-CONTINUING> (20,619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,619)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Note: This schedule contains summary financial information extracted from
the Form 10-Q for the Quarter Ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001029390
<NAME> Professional Recoveries Inc.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,124
<SECURITIES> 0
<RECEIVABLES> 23,789
<ALLOWANCES> 850
<INVENTORY> 47,913
<CURRENT-ASSETS> 111,328
<PP&E> 81,845
<DEPRECIATION> 54,545
<TOTAL-ASSETS> 358,234
<CURRENT-LIABILITIES> 72,981
<BONDS> 0
0
11,699
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 358,234
<SALES> 0
<TOTAL-REVENUES> 197,663
<CGS> 0
<TOTAL-COSTS> 206,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,950
<INCOME-PRETAX> (30,245)
<INCOME-TAX> (9,626)
<INCOME-CONTINUING> (20,619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,619)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Note: This schedule contains summary financial information extracted from
the Form 10-Q for the Quarter Ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001029391
<NAME> Payco American International Corp.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,124
<SECURITIES> 0
<RECEIVABLES> 23,789
<ALLOWANCES> 850
<INVENTORY> 47,913
<CURRENT-ASSETS> 111,328
<PP&E> 81,845
<DEPRECIATION> 54,545
<TOTAL-ASSETS> 358,234
<CURRENT-LIABILITIES> 72,981
<BONDS> 0
0
11,699
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 358,234
<SALES> 0
<TOTAL-REVENUES> 197,663
<CGS> 0
<TOTAL-COSTS> 206,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,950
<INCOME-PRETAX> (30,245)
<INCOME-TAX> (9,626)
<INCOME-CONTINUING> (20,619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,619)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Note: This schedule contains summary financial information extracted from
the Form 10-Q for the Quarter Ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001029303
<NAME> Continental Credit Services, Inc.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,124
<SECURITIES> 0
<RECEIVABLES> 23,789
<ALLOWANCES> 850
<INVENTORY> 47,913
<CURRENT-ASSETS> 111,328
<PP&E> 81,845
<DEPRECIATION> 54,545
<TOTAL-ASSETS> 358,234
<CURRENT-LIABILITIES> 72,981
<BONDS> 0
0
11,699
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 358,234
<SALES> 0
<TOTAL-REVENUES> 197,663
<CGS> 0
<TOTAL-COSTS> 206,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,950
<INCOME-PRETAX> (30,245)
<INCOME-TAX> (9,626)
<INCOME-CONTINUING> (20,619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,619)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
