<PAGE> 1
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
-----------
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
-----------
Commission File No. 33-63838
NEODATA SERVICES, INC.
(a Delaware Corporation)
I.R.S. Employer Identification Number 75-2333190
833 W. South Boulder Road
Louisville, Colorado 80027
(303) 666-7000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days. Yes X No
--- ---
As of February 4, 1997, the registrant had outstanding 1,173 shares
of its common stock, $.01 par value per share.
================================================================================
<PAGE> 2
Neodata Services, Inc.
Form 10-Q
Table of Contents
<TABLE>
<CAPTION>
Page No.
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PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets........................................................ 3
Consolidated Statements of Operations.............................................. 4
Consolidated Statements of Cash Flows.............................................. 5
Notes to Consolidated Financial Statements......................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................................... 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................................................... 11
SIGNATURE........................................................................................... 12
</TABLE>
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NEODATA SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1996 AND JUNE 30, 1996
(IN THOUSANDS, EXCEPT SHARE INFORMATION)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
ASSETS 1996 1996
---- ----
(UNAUDITED) (AUDITED)
<S> <C> <C>
Current assets:
Cash ................................................................. $ 353 $ 1,304
Accounts receivable, net of allowance of $1,158 and $1,593 ........... 70,582 54,996
Prepaid expense and other ............................................ 5,986 7,052
--------- ---------
Total current assets ............................................... 76,921 63,352
Property, plant and equipment, net of depreciation of $43,992 and $39,944 48,709 51,649
Computer software, net of amortization of $17,713 and $14,337 ........... 18,928 18,819
Debt issue costs and other assets, net .................................. 8,900 5,717
--------- ---------
Total assets ....................................................... $ 153,458 $ 139,537
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable ..................................................... $ 26,808 $ 18,323
Accrued liabilities .................................................. 27,253 22,062
Current maturities of long-term debt and capital lease obligations ... 624 599
--------- ---------
Total current liabilities .......................................... 54,685 40,984
Long-term debt and capital lease obligations, net of current maturities . 185,956 184,651
Customer deposits ....................................................... 11,848 10,522
Other liabilities ....................................................... 4,857 5,757
--------- ---------
Total liabilities .................................................. 257,346 241,914
--------- ---------
Commitments and contingencies
Stockholders' deficit:
Common stock, par value $.01 per share, 10,000 shares
authorized, 1,173 shares issued and outstanding .................... -- --
Additional paid-in capital ........................................... 28,029 28,029
Contributed capital .................................................. 55,719 56,522
Accumulated deficit .................................................. (187,649) (187,018)
Cumulative translation adjustment .................................... 13 90
--------- ---------
Total stockholders' deficit ........................................ (103,888) (102,377)
--------- ---------
Total liabilities and stockholders' deficit ........................ $ 153,458 $ 139,537
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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NEODATA SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31 DECEMBER 31
----------- -----------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue ....................................... $ 71,302 $ 65,548 $ 128,685 $ 122,396
--------- --------- --------- ---------
Expenses:
Operating and production .................... 48,054 48,750 88,223 91,336
Selling, general and administrative ......... 11,283 7,476 20,950 16,063
Restructuring charges ....................... -- 1,667 -- 1,667
Depreciation of property, plant and equipment 2,221 2,340 4,425 4,905
Amortization of computer software ........... 1,850 1,642 3,430 2,658
--------- --------- --------- ---------
Income before interest expense ................ 7,894 3,673 11,657 5,767
Interest expense .............................. 6,142 6,160 12,288 11,895
--------- --------- --------- ---------
Net income (loss) ............................. $ 1,752 $ (2,487) $ (631) $ (6,128)
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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NEODATA SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net cash provided by operating activities .................. $ 1,895 $ 13,681
-------- --------
Cash flows from investing activities:
Purchases of property, plant and equipment ........... (1,091) (1,758)
Proceeds from sales of property, plant, and equipment 120 138
Purchase of subscription fulfillment assets .......... (3,218) --
Purchases and development of computer software ....... (3,538) (5,304)
-------- --------
Net cash used in investing activities ............ (7,727) (6,924)
-------- --------
Cash flows from financing activities:
Change in book overdrafts ............................. 4,444 (664)
Borrowings under long-term line of credit ............. 64,370 80,300
Payments on long-term line of credit .................. (62,710) (88,300)
Dividends to Holding for payments on Meredith Note .... (815) --
Other, net ............................................ (331) (810)
-------- --------
Net cash provided by (used in) financing activities 4,958 (9,474)
-------- --------
Effects of exchange rate changes on cash .......... (77) 187
-------- --------
Net change in cash ......................................... (951) (2,530)
Cash at beginning of period ................................ 1,304 2,716
-------- --------
Cash at end of period ...................................... $ 353 $ 186
======== ========
</TABLE>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Total cash interest payments were $11,568,000 and $2,325,000 for the
six months ended December 30, 1996 and 1995, respectively.
The accompanying notes are an integral part of these financial statements.
5
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NEODATA SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared
by Neodata Services, Inc. (the "Company"), pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC"). The Company is a
wholly owned subsidiary of Neodata Corporation ("Holding"). Certain information
and footnote disclosures normally accompanying financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such SEC rules and regulations. In management's opinion,
all adjustments necessary for a fair presentation of the results of operations
for the periods presented have been made and are of a normal and recurring
nature.
These consolidated financial statements and accompanying notes should
be read in conjunction with the consolidated financial statements and notes
thereto, together with management's discussion and analysis of financial
condition and results of operations, contained in the Company's Report on Form
10-K for the period ended June 30, 1996, as filed with the SEC.
2. REVOLVING LINE OF CREDIT
On May 5, 1993, the Company entered into a five year senior revolving
line of credit facility (the "Senior Credit Facility"). The Senior Credit
Facility, as amended, provides a line of credit, calculated pursuant to a
borrowing base formula, of up to $30,000,000 in the event that certain
financial thresholds are met. At December 31, 1996, $1,660,000 was outstanding
under the Senior Credit Facility. No amounts were outstanding under the Senior
Credit Facility as of June 30, 1996. Letters of credit outstanding against the
Senior Credit Facility were $5,013,000 and $4,886,000 as of December 31, 1996
and June 30, 1996, respectively. Total remaining availability under the Senior
Credit Facility was $23,327,000 and $25,114,000 as of December 31, 1996 and
June 30, 1996, respectively.
3. SUBSEQUENT EVENT
On January 31, 1997, the Company and Holding entered into a revolving
line of credit facility with a new lender to replace the Senior Credit
Facility. The new line of credit provides for advances up to $40,000,000,
subject to certain limitations, is collateralized by the Company's accounts
receivable and Holding's common stock in the Company, and has a term of five
years. Interest on loans outstanding under the new line of credit is based, at
the Company's option, on 1) the greater of the agent bank's prime rate (as
defined) plus 1.25% or the certificate of deposit rate (as defined) plus 1.75%,
or 2) LIBOR plus 2.5%. The Company is also obligated to pay an unused line fee
equal to 0.5% computed on the average unutilized portion of the facility, in
addition to an annual administrative fee of $75,000. The new line of credit
facility includes certain covenants that, among other things, limit the
Company's ability to incur additional debt, create liens, pay cash dividends
(with certain exceptions), or make certain other payments, and which require
the Company to meet certain financial provisions on a quarterly basis. Subject
to certain limitations, the Company may complete acquisitions or make
investments in subsidiaries up to $10,000,000 in the aggregate. Debt issue
costs of approximately $960,000 under the new line of credit facility will be
amortized using the straight-line method over five years. Unamortized debt
issue costs of approximately $816,000 under the Senior Credit Facility will be
charged as an extraordinary loss.
6
<PAGE> 7
4. HOLDING STOCK OPTIONS
Holding's only asset is its equity investment in the issued and
outstanding shares of common stock of the Company. Information relating to
Holding stock options is presented to provide a more complete description of
the Company's equity transactions.
1994 Stock Option Plan. Effective November 13, 1996, Holding adopted
the Amended and Restated 1994 Stock Option Plan (the "Amended 1994 Plan"). The
Amended 1994 Plan is substantially equivalent to the 1994 Plan, except that
under the Amended 1994 Plan Holding may grant options to acquire shares of
Holding Nonvoting Common Stock. The maximum number of shares of common stock as
to which options may be granted, whether for voting or nonvoting shares, is
2,631,579. In December 1996 Holding issued options to certain Company employees
to acquire a total of 2,225,500 shares of Holding Nonvoting Common Stock, each
at an exercise price of $0.50. The options vest ratably over a three-year
period, and expire after ten years or upon termination of employment.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This discussion should be read in conjunction with the Company's
unaudited consolidated financial statements and accompanying notes included
herein and the Company's Report on Form 10-K for the period ended June 30,
1996, as filed with the SEC.
RESULTS OF OPERATIONS
GENERAL
All references herein to "fiscal 1997" relate to the year ended June
30, 1997.
THREE MONTHS ENDED DECEMBER 31, 1996, COMPARED TO THE THREE MONTHS ENDED
DECEMBER 31, 1995
Revenue. Revenue for the three months ended December 31, 1996 was
$71.3 million, as compared to $65.5 million for the comparable period in 1995.
The $5.8 million, or 8.8% increase is due primarily to increased demand from
existing clients as well as revenue from new clients, offset by decreased
revenues from other clients resulting from the Company's decision to downsize
certain unprofitable telephone customer service operations, and decreased
revenues resulting from the sale of the Meredith book club and continuity
business.
Operating and Production Expenses. Operating and production expenses
for the three months ended December 31, 1996 were $48.1 million, a decrease of
$0.7 million, or 1.4%, from $48.8 million for the comparable period in 1995. As
a percentage of revenue, operating and production expenses decreased from 74.4%
in 1995 to 67.4% in 1996. The decrease in operating and production expenses is
primarily due to the downsizing of certain telephone customer service
operations, and to continuing improvements in the Company's production
efficiency.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the three months ended December 31, 1996 increased
$3.8 million, or 50.9%, to $11.3 million, from $7.5 million during the
comparable period in 1995 and increased as a percentage of revenue from 11.4%
in 1995 to 15.8% in 1996. The increase is primarily due to the recovery in 1995
of certain amounts previously written off, increased general corporate
expenses, an increase in certain information technology costs, and increased
sales and marketing efforts.
Depreciation and Amortization Expenses. Depreciation and amortization
expenses for the three months ended December 31, 1996 were $4.1 million, an
increase of 2.2%, or $0.1 million, from $4.0 million during the comparable
period in 1995. The increase is the result of increased amortization due to
additions to computer software, offset by decreased depreciation of plant,
property, and equipment as a result of certain assets reaching full
depreciation or amortization.
Income before Interest Expense. Income before interest expense for the
three months ended December 31, 1996 was $7.9 million, an increase of $4.2
million, or 114.9%, from $3.7 million during the comparable period in 1995. The
increase is due to increased revenues and decreased operating and production
expenses, offset by increased selling, general, and administrative expenses,
all as discussed above.
Interest Expense. Interest expense for the three months ended
December 31, 1996 was $6.1 million, essentially comparable to the similar
period in 1995.
8
<PAGE> 9
Net Income (Loss). The Company reported net income of $1.8 million for
the three months ended December 31, 1996, as compared to a net loss of $2.5
million for the similar period in 1995. The $4.2 million increase from the
prior year is primarily due to increased revenues and decreased operating and
production expenses, offset by increased selling, general, and administrative
expenses, all as discussed above.
SIX MONTHS ENDED DECEMBER 31, 1996, COMPARED TO THE SIX MONTHS ENDED DECEMBER
31, 1995
Revenue. Revenue for the six months ended December 31, 1996 was $128.7
million, an increase of $6.3 million, or 5.1%, from $122.4 million during the
comparable period in 1995. The increase is due primarily to increased demand
from existing clients as well as revenue from new clients, offset by decreased
revenues from other clients resulting from the Company's decision to downsize
certain unprofitable telephone customer service operations, and decreased
revenues resulting from the sale of the Meredith book club and continuity
business.
Operating and Production Expenses. Operating and production expenses
for the six months ended December 31, 1996 decreased by $3.1 million, or 3.4%,
to $88.2 million, from $91.3 million during the comparable period in 1995. As a
percentage of revenue, operating and production expenses decreased from 74.6%
in 1995 to 68.6% in 1996. The decrease in operating and production expenses is
primarily due to the downsizing of certain telephone customer service
operations, and to continuing improvements in the Company's production
efficiency.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the six months ended December 31, 1996 increased
$4.8 million, or 30.4%, to $20.9 million, from $16.1 million during the
comparable period in 1995 and increased as a percentage of revenue from 13.1%
in 1995 to 16.3% in 1996. The increase is primarily due to increased general
corporate expenses, an increase in certain information technology costs, and
increased sales and marketing efforts.
Depreciation and Amortization Expenses. Depreciation and amortization
expenses for the six months ended December 31, 1996 were $7.9 million, an
increase of 3.9%, or $0.3 million, from $7.6 million during the comparable
period in 1995. The increase is the result of increased amortization due to
additions to computer software, offset by decreased depreciation of plant,
property, and equipment as a result of certain assets reaching full
depreciation or amortization.
Income before Interest Expense. Income before interest expense for the
six months ended December 31, 1996 was $11.7 million, an increase of $5.9
million, or 102.1%, from $5.8 million during the comparable period in 1995. The
increase is due to increased revenues and decreased operating and production
expenses, offset by increased selling, general, and administrative expenses and
depreciation and amortization expenses, all as discussed above.
Interest Expense. Interest expense for the six months ended December
31, 1996 was $12.3 million, an increase of $0.4 million, or 3.3%, from $11.9
million during the comparable period in 1995. The increase in interest expense
is primarily the result of increased interest expense under the Company's
Senior Deferred Coupon Notes (the "Notes"), which reached their full accreted
value during 1996.
9
<PAGE> 10
Net Loss. The Company reported a net loss of $0.6 million for the six
months ended December 31, 1996, a $5.5 million decrease from $6.1 million for
the comparable period in 1995. The decrease in net loss is due to increased
revenues and decreased operating and production expenses, offset by increased
selling, general, and administrative expenses, depreciation and amortization
expenses, and interest expense, all as discussed above.
LIQUIDITY & CAPITAL RESOURCES
Cash provided by operations during the six months ended December 31,
1996 was $1.9 million, a decrease of $11.8 million from operating cash flow of
$13.7 million during the comparable period in 1995. The decrease in cash
provided by operations is primarily due to cash interest paid under the Notes
of $9.8 million, in addition to increased accounts receivable. Working capital
at December 31, 1996 was $22.2 million, comparable to $22.4 million at June 30,
1996.
In accordance with the terms of the Notes, interest expense at 12% was
added to the balance of the Notes through April 1996 and accrued for payment
thereafter. Semi-annual interest payments on the Notes of $9.8 million are due
each November and May. On November 1, 1996 the Company made its first interest
payment as scheduled. The Notes mature on May 1, 2003, when the principal
balance of $163.0 million becomes due and payable.
The Company has a significant investment in property, plant and
equipment and computer software utilized in providing service to its clients,
which requires annual routine capital and maintenance expenditures. Cash used
in investing activities during the six months ended December 31, 1996 totaled
$7.7 million, up $0.8 million from the comparable period in 1995. The increase
from 1995 is primarily due to the purchase in July 1996 of the subscription
fulfillment assets of International Subscription Services Limited ("ISS"), a
United Kingdom based subscription fulfillment subsidiary of The Economist
Newspaper Limited. The ISS asset purchase was offset by decreased purchases of
plant, property, and equipment and computer software. Management believes that
cash flow from operations will be sufficient to fund anticipated capital
expenditures for the remainder of fiscal 1997.
As of December 31, 1996, the Company had $1.7 million outstanding
under the Senior Credit Facility, $5.0 million outstanding under letters of
credit, and remaining availability of $23.3 million. The Company anticipates
that, due to seasonality and interest payments on the Notes, utilization of the
Company's new line of credit facility will be necessary at times for the
remainder of fiscal 1997. The Company also anticipates the new line of credit
facility (see Note 3) will be used, to the extent permitted under the new line
of credit facility and the Notes, for acquisitions during fiscal 1997 and 1998.
The company was in compliance with all financial and technical
requirements of the Senior Credit Facility and the Centennial Building Capital
Lease as of December 31, 1996.
10
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
10.1 Neodata Corporation Amended and Restated 1994 Stock Option Plan
10.2 Credit Agreement, dated as of January 31, 1997, among Neodata
Corporation, Neodata Services, Inc., Various Banks and Bankers
Trust Company, as Agent
27 Financial Data Schedule
REPORTS ON FORM 8-K
None.
11
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
NEODATA SERVICES, INC.
Date: February 4, 1997 /s/ Nicholas J. Cuccaro
------------------------------------------
Nicholas J. Cuccaro
Senior Vice President and Chief Financial
Officer
(principal financial and accounting
officer of the Company)
12
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS
- --------
<S> <C>
10.1 Neodata Corporation Amended and Restated 1994 Stock Option Plan
10.2 Credit Agreement, dated as of January 31, 1997, among Neodata
Corporation, Neodata Services, Inc., Various Banks and Bankers
Trust Company, as Agent
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.1
NEODATA CORPORATION
AMENDED AND RESTATED
1994 STOCK OPTION PLAN
1. Purpose.
Neodata Corporation, a Delaware corporation (herein, together with its
successors, referred to as the "Company"), by means of this Amended and
Restated 1994 Stock Option Plan (the "Plan"), desires to afford certain
individuals and key employees of the Company and any parent corporation or
subsidiary corporation thereof now existing or hereafter formed or acquired
(such parent and subsidiary corporations sometimes referred to herein as
"Related Entities") who are responsible for the continued growth of the Company
an opportunity to acquire a proprietary interest in the Company, and thus to
create in such persons an increased interest in and a greater concern for the
welfare of the Company and any Related Entities. As used in the Plan, the
terms "parent corporation" and "subsidiary corporation" shall mean,
respectively, a corporation within the definition of such terms contained in
Sections 424(e) and 424(f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code"). The Plan amends and restates in its entirety the
Neodata Corporation 1994 Stock Option Plan.
The stock options described in Sections 6 and 7 (the "Options"), and the
shares of Common Stock or Nonvoting Common Stock (each as hereinafter defined)
acquired pursuant to the exercise of such Options are a matter of separate
inducement and are not in lieu of any salary or other compensation for
services.
2. Administration.
The Plan shall be administered by the Option Committee, or any successor
thereto, of the Board of Directors of the Company (the "Board of Directors"),
or by any other committee appointed by the Board of Directors to administer
this Plan (the "Committee"); provided, the entire Board of Directors may act as
the Committee if it chooses to do so. The number of individuals that shall
constitute the Committee shall be determined from time to time by a majority of
all the members of the Board of Directors, and, unless that majority of the
Board of Directors determines otherwise, shall be no less than two individuals.
A majority of the Committee shall constitute a quorum (or if the Committee
consists of only two members, then both members shall constitute a quorum), and
subject to the
<PAGE> 2
provisions of Section 5, the acts of a majority of the members present at any
meeting at which a quorum is present, or acts approved in writing by all
members of the Committee, shall be the acts of the Committee. Whenever the
Company shall have a class of equity securities registered pursuant to Section
12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
each member of the Committee shall be required to be (i) a "disinterested
person" within the meaning of Rule 16b-3, as amended ("Rule 16b-3"), or other
applicable rules under Section 16(b) of the Exchange Act and (ii) an "outside
director" within the meaning of Section 162(m)(4)(C) of the Code and any
regulations promulgated thereunder (hereinafter, collectively "Section 162"),
and the Committee shall administer the Plan so as to comply at all times with
the Exchange Act and Section 162.
The members of the Committee shall serve at the pleasure of the Board of
Directors, which shall have the power, at any time and from time to time, to
remove members from or add members to the Committee. Removal from the
Committee may be with or without cause. Any individual serving as a member of
the Committee shall have the right to resign from membership in the Committee
by written notice to the Board of Directors. The Board of Directors, and not
the remaining members of the Committee, shall have the power and authority to
fill vacancies on the Committee, however caused. The Board of Directors shall
promptly fill any vacancy that causes the number of members of the Committee to
be below two or, if the Company has a class of equity securities registered
pursuant to Section 12 of the Exchange Act, any other number that Rule 16b-3 or
Section 162 may require from time to time.
3. Shares Available.
Subject to the adjustments provided in Section 10, the maximum aggregate
number of shares of Common Stock, par value $0.01 per share, of the Company
("Common Stock") and Nonvoting Common Stock, par value $0.01 per share, of the
Company ("Nonvoting Common Stock" and, collectively with the Common Stock, the
"Capital Stock") which may be granted for all purposes under the Plan shall be
2,631,579 shares. If, for any reason, any shares as to which Options have been
granted cease to be subject to purchase thereunder, including the expiration of
such Option, the termination of such Option prior to exercise, or the
forfeiture of such Option, such shares shall thereafter be available for grants
to such individual or other individuals under the Plan. Options granted under
the Plan may be fulfilled in accordance with the terms of the Plan with (i)
authorized and unissued shares of Capital Stock, (ii) issued shares of Capital
Stock held in the Company's treasury, or (iii) issued shares of Capital Stock
reacquired by the
2
<PAGE> 3
Company in each situation as the Board of Directors or the Committee may
determine from time to time.
4. Eligibility and Bases of Participation.
Grants of Incentive Options (as hereinafter defined) and Non-Qualified
Options (as hereinafter defined) may be made under the Plan, subject to and in
accordance with Section 6, to Key Employees. As used herein, the term "Key
Employee" shall mean any employee of the Company or any Related Entity,
including officers and directors of the Company or any Related Entity who are
also employees of the Company or any Related Entity, who are regularly employed
on a salaried basis and who are so employed on the date of such grant, whom the
Committee identifies as having a direct and significant effect on the
performance of the Company or any Related Entity.
Grants of Non-Qualified Options may be made, subject to and in
accordance with Section 7, to any Eligible Non- Employee. As used herein, the
term "Eligible Non-Employee" shall mean any person or entity of any nature
whatsoever, specifically including an individual, a firm, a company, a
corporation, a partnership, a trust, or other entity (collectively, a
"Person"), that the Committee designates as eligible for a grant of Options
pursuant to this Plan because such Person performs bona fide consulting,
advisory, or other services for the Company or any Related Entity (other than
services in connection with the offer or sale of securities in a
capital-raising transaction) and the Board of Directors or the Committee
determines that the Person has a direct and significant effect on the financial
development of the Company or any Related Entity.
The adoption of this Plan shall not be deemed to give any Person a right
to be granted any Options.
5. Authority of Committee.
Subject to and not inconsistent with the express provisions of the Plan,
the Code and, if applicable, Rule 16b-3 and Section 162, the Committee shall
have plenary authority to:
3
<PAGE> 4
a. determine the Key Employees and Eligible Non-Employees to whom
Options shall be granted, the time when such Options shall be
granted, the number of Options, the purchase price or exercise
price of each Option, the period(s) during which such Options
shall be exercisable (whether in whole or in part), the
restrictions to be applicable to Options and all other terms and
provisions thereof (which need not be identical);
b. require, as a condition to the granting of any Option, that the
Person receiving such Option agree not to sell or otherwise
dispose of such Option, any Capital Stock acquired pursuant to
such Option, or any other "derivative security" (as defined by
Rule 16a-1(c) under the Exchange Act) for a period of six months
following the later of (i) the date of the grant of such Option
or (ii) the date when the exercise price of such Option is fixed
if such exercise price is not fixed at the date of grant of such
Option, or for such other period as the Committee may determine;
c. provide an arrangement through registered broker-dealers whereby
temporary financing may be made available to an optionee by the
broker-dealer, under the rules and regulations of the Board of
Governors of the Federal Reserve, for the purpose of assisting
the optionee in the exercise of an Option, such authority to
include the payment by the Company of the commissions of the
broker-dealer;
d. provide the establishment of procedures for an optionee (i) to
have withheld from the total number of shares of Capital Stock to
be acquired upon the exercise of an Option (other than an
Incentive Option) that number of shares having a Fair Market
Value (as defined in Section 18) which, together with such cash
as shall be paid in respect of fractional shares, shall equal the
Option exercise price, and (ii) to exercise a portion of an
Option by delivering that number of shares of Capital Stock
already owned by such optionee having an aggregate Fair Market
Value which shall equal the partial Option exercise price and to
deliver the shares thus acquired by such optionee in payment of
shares to be received pursuant to the exercise of additional
portions of such Option, the effect of which shall be that such
optionee can in sequence utilize such newly acquired shares in
payment of the exercise price of the entire Option, together with
such cash as shall be paid in respect of fractional shares;
provided,
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<PAGE> 5
however, that in the case of an Incentive Option, no shares shall
be used to pay the exercise price unless such shares were not
acquired through the exercise of an Incentive Option or, if so
acquired, have been held for more than two years since the grant
of such Option and for more than one year since the exercise of
such Option;
e. provide (in accordance with Section 13 or otherwise) the
establishment of a procedure whereby a number of shares of
Capital Stock or other securities may be withheld from the total
number of shares of Capital Stock or other securities to be
issued upon exercise of an Option (other than an Incentive
Option) to meet the obligation of withholding for income, social
security and other taxes incurred by an optionee upon such
exercise or required to be withheld by the Company or a Related
Entity in connection with such exercise;
f. prescribe, amend, modify and rescind rules and regulations
relating to the Plan;
g. make all determinations permitted or deemed necessary,
appropriate or advisable for the administration of the Plan,
interpret any Plan or Option provision, perform all other acts,
exercise all other powers, and establish any other procedures
determined by the Committee to be necessary, appropriate, or
advisable in administering the Plan or for the conduct of the
Committee's business. Any act of the Committee, including
interpretations of the provisions of the Plan or any Option and
determinations under the Plan or any Option shall be final,
conclusive and binding on all parties.
The Committee may delegate to one or more of its members, or to one or
more agents, such administrative duties as it may deem advisable, and the
Committee or any Person to whom it has delegated duties as aforesaid may employ
one or more Persons to render advice with respect to any responsibility the
Committee or such Person may have under the Plan; provided, however, that
whenever the Company has a class of equity securities registered under Section
12 of the Exchange Act, the Committee may not delegate any duties to a member
of the Board of Directors who, if elected to serve on the Committee, would not
qualify as a "disinterested person" to administer the Plan as contemplated by
Rule 16b-3, as amended, or other applicable rules under the Exchange Act, or as
an "outside director" pursuant to Section 162. The Committee may employ
attorneys, consultants, accountants, or other Persons and the Committee, the
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<PAGE> 6
Company, and its officers and directors shall be entitled to rely upon the
advice, opinions, or valuations of any such Persons. No member or agent of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan and all members and
agents of the Committee shall be fully protected by the Company in respect of
any such action, determination or interpretation.
6. Stock Options for Key Employees.
Subject to the express provisions of this Plan, the Committee shall have
the authority to grant incentive stock options pursuant to Section 422 of the
Code ("Incentive Options"), to grant non-qualified stock options (options which
do not qualify under Section 422 of the Code) ("Non-Qualified Options"), and to
grant both types of Options to Key Employees. No Incentive Option shall be
granted pursuant to this Plan after the earlier of ten years from the date of
adoption of the Plan or ten years from the date of approval of the Plan by the
stockholders of the Company. Notwithstanding anything in this Plan to the
contrary, Incentive Options may be granted only to Key Employees. The terms
and conditions of the Options granted under this Section 6 shall be determined
from time to time by the Committee; provided, however, that the Options granted
under this Section 6 shall be subject to all terms and provisions of the Plan
(other than Section 7), including the following:
a. Option Exercise Price. The Committee shall establish the Option
exercise price at the time any Option is granted at such amount
as the Committee shall determine; provided, that, in the case of
an Incentive Option or an Option intended to qualify under
Section 162, such price shall not be not less than the Fair
Market Value per share of the applicable class of Capital Stock
at the date the Option is granted; and provided, further, that in
the case of an Incentive Option granted to a person who, at the
time such Incentive Option is granted, owns shares of the Company
or any Related Entity which possess more than 10% of the total
combined voting power of all classes of shares of the Company or
of any Related Entity, the option exercise price shall not be
less than 110% of the Fair Market Value per share of the
applicable class of Capital Stock at the date the Option is
granted. The Option exercise price shall be subject to
adjustment in accordance with the provisions of Section 10 of the
Plan.
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<PAGE> 7
b. Payment. The price per share of Capital Stock with respect to
each Option exercise shall be payable at the time of such
exercise. Such price shall be payable in cash or by any other
means acceptable to the Committee, including delivery to the
Company of shares of Capital Stock owned by the optionee or by
the delivery or withholding of shares pursuant to a procedure
created pursuant to Section 5.d. of the Plan (but, with respect
to Incentive Options, subject to the limitations described in
such Section 5.d.). Shares delivered to or withheld by the
Company in payment of the Option exercise price shall be valued
at the Fair Market Value of the applicable class of Capital Stock
on the day preceding the date of the exercise of the Option.
c. Continuation of Employment. Each Incentive Option shall require
the optionee to remain in the continuous employ of the Company or
any Related Entity from the date of grant of the Incentive Option
until no more than three months prior to the date of exercise of
the Incentive Option.
d. Exercisability of Stock Option. Subject to Section 8, each
Option shall be exercisable in one or more installments as the
Committee may determine at the time of the grant. No Option by
its terms shall be exercisable after the expiration of ten years
from the date of grant of the Option, unless, as to any Non-
Qualified Option, otherwise expressly provided in such Option;
provided, however, no Incentive Option shall be exercisable after
the expiration of ten years from the date such Option is granted;
and provided, further, that no Incentive Option granted to a
person who, at the time such Option is granted, owns stock of the
Company, or any Related Entity, possessing more than 10% of the
total combined voting power of all classes of stock of the
Company, or any Related Entity, shall be exercisable after the
expiration of five years from the date such Option is granted.
e. Death. If any optionee's employment with the Company or a
Related Entity terminates due to the death of such optionee, the
estate of such optionee, or a Person who acquired the right to
exercise such Option by bequest or inheritance or by reason of
the death of the optionee, shall have the right to exercise such
Option in accordance with its terms at any time and from time to
time within one year after the date of death unless a longer or
shorter period is expressly
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<PAGE> 8
provided in such Option or established by the Committee pursuant
to Section 8 (but in no event after the expiration date of such
Option).
f. Disability. If the employment of any optionee terminates because
of his Disability (as defined in Section 18), such optionee or
his legal representative shall have the right to exercise the
Option in accordance with its terms at any time and from time to
time within one year after the date of such termination unless a
longer or shorter period is expressly provided in such Option or
established by the Committee pursuant to Section 8 (but not after
the expiration date of the Option); provided, however, that in
the case of an Incentive Option, the optionee or his legal
representative shall in any event be required to exercise the
Incentive Option within one year after termination of the
optionee's employment due to his Disability.
g. Other Termination of Employment. If the employment of an
optionee with the Company or a Related Entity terminates for any
reason other than those specified in subsections 6(e) and (f)
above, such optionee shall have the right to exercise his Option
in accordance with its terms, within 30 days after the date of
such termination, unless a longer or shorter period is expressly
provided in such Option or established by the Committee pursuant
to Section 8 (but not after the expiration date of the Option);
provided, that no Incentive Option shall be exercisable more than
three months after such termination; and, provided, further,
that, unless the Option expressly provides otherwise, if such
optionee's employment was terminated by the Company or any
Related Entity for Good Cause (as defined below), or if the
optionee voluntarily terminates employment without the consent of
the Company or any Related Entity, such optionee shall
immediately forfeit all rights under his Option except as to the
shares of stock already purchased. The determination that there
exists Good Cause for termination shall be made by the Option
Committee (unless otherwise agreed to in writing by the Company
and the optionee).
h. Maximum Exercise. The aggregate Fair Market Value of stock
(determined at the time of the grant of the Option) with respect
to which Incentive Options are exercisable for the first time by
an optionee during any calendar year under all plans of the
Company and any Related Entity shall not exceed $100,000.
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<PAGE> 9
i. Maximum Number of Options to be Issued to a Key Employee. The
maximum number of shares of Capital Stock with respect to which
Options may be granted to any Key Employee hereunder is
1,600,019.
7. Stock Option Grants to Eligible Non-Employees.
Subject to the express provisions of this Plan, the Committee shall have
the authority to grant Non-Qualified Options to Eligible Non-Employees;
provided, however, that whenever the Company has any class of equity securities
registered pursuant to Section 12 of the Exchange Act, no Eligible Non-Employee
then serving on the Committee (or such other committee then administering the
Plan) shall be granted Options hereunder if the grant of such Options would
cause such Eligible Non-Employee to no longer be a "disinterested person" as
set forth in Section 2 hereof or an "outside director" pursuant to Section 162.
The terms and conditions of the Options granted under this Section 7 shall be
determined from time to time by the Committee; provided, however, that the
Options granted under this Section 7 shall be subject to all terms and
provisions of the Plan (other than Section 6), including the following:
a. Option Exercise Price. The Committee shall establish the Option
exercise price at the time any Non- Qualified Option is granted
at such amount as the Committee shall determine. The Option
exercise price shall be subject to adjustment in accordance with
the provisions of Section 10 of the Plan.
b. Payment. The price per share of Capital Stock with respect to
each Option exercise shall be payable at the time of such
exercise. Such price shall be payable in cash or by any other
means acceptable to the Committee, including delivery to the
Company of shares of Capital Stock owned by the optionee or by
the delivery or withholding of shares pursuant to a procedure
created pursuant to Section 5.d. of the Plan. Shares delivered
to or withheld by the Company in payment of the Option exercise
price shall be valued at the Fair Market Value of the applicable
class of Capital Stock on the day preceding the date of the
exercise of the Option.
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<PAGE> 10
c. Exercisability of Stock Option. Subject to Section 8, each
Option shall be exercisable in one or more installments as the
Committee may determine at the time of the grant. No Option
shall be exercisable after the expiration of ten years from the
date of grant of the Option, unless otherwise expressly provided
in such Option.
d. Death. If the retention by the Company or any Related Entity of
the services of any Eligible Non-Employee terminates because of
his death, the estate of such optionee, or a Person who acquired
the right to exercise such Option by bequest or inheritance or by
reason of the death of the optionee, shall have the right to
exercise such Option in accordance with its terms, at any time
and from time to time within one year after the date of death
unless a longer or shorter period is expressly provided in such
Option or established by the Committee pursuant to Section 8 (but
in no event after the expiration date of such Option).
e. Disability. If the retention by the Company or any Related
Entity of the services of any Eligible Non- Employee terminates
because of his Disability, such optionee or his legal
representative shall have the right to exercise the Option in
accordance with its terms at any time and from time to time
within one year after the date of the optionee's termination
unless a longer or shorter period is expressly provided in such
Option or established by the Committee pursuant to Section 8 (but
not after the expiration of the Option).
f. Other Termination of Relationship. If the retention by the
Company or any Related Entity of the services of any Eligible
Non-Employee terminates for any reason other than those specified
in subsections 7(d) and (e) above, such optionee shall have the
right to exercise his or its Option in accordance with its terms
within 30 days after the date of such termination, unless a
longer or shorter period is expressly provided in such Option or
established by the Committee pursuant to Section 8 (but not after
the expiration date of the Option); provided, that, in the case
of an Eligible Non-Employee serving as a director of the Company
or of any Related Entity, unless the Committee provides
otherwise, if the optionee is removed from office for cause by
action of the stockholders in accordance with the by-laws of the
Company or such Related Entity, as applicable, and the General
Corporation Law of the State of Delaware or if such optionee
voluntarily terminates his
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<PAGE> 11
service without the consent of the Company or any Related Entity,
then such optionee shall immediately forfeit his rights under his
Option except as to the shares of stock already purchased.
g. Ineligibility for Other Grants. Any Eligible Non-Employee who
receives an Option pursuant to this Section 7 shall be ineligible
to receive any Options under any other Section of the Plan.
8. Change of Control.
If a Change of Control shall occur, or if the Company shall enter into
an agreement providing for a Change of Control, the Committee may declare any
or all Options outstanding under the Plan to be exercisable in full at such
time or times as the Committee shall determine, notwithstanding the express
provisions of such Options. Each Option accelerated by the Committee in
connection with a Change of Control pursuant to the preceding sentence shall
terminate, notwithstanding any express provision thereof or any other provision
of the Plan, on such date (not later than the stated exercise date) as the
Committee shall determine.
9. Purchase Option.
a. Except as otherwise expressly provided in any particular Option,
if any optionee's employment (or, in the case of any Option
granted under Section 7, the optionee's relationship) with the
Company or a Related Entity terminates for any reason at any
time, the Company and/or its designee(s) shall have the option
(the "Purchase Option") to purchase, and if the option is
exercised, the optionee (or the optionee's executor or the
administrator of the optionee's estate, in the event of the
optionee's death, or the optionee's legal representative in the
event of the optionee's incapacity (hereinafter, collectively
with such optionee, the "Grantor")) shall sell to the Company
and/or its assignee(s), all or any portion (at the Company's
option) of the shares of Capital Stock and/or Options held by the
Grantor (such shares of Capital Stock and Options collectively
being referred to as the "Purchasable Shares").
b. The Company shall give notice in writing to the Grantor of the
exercise of the Purchase Option within one year from the date of
the termination of the optionee's employment or engagement. Such
notice shall state the number of Purchasable Shares to be
purchased and the determination of the Board of Directors of the
Fair Market
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<PAGE> 12
Value per share of such Purchasable Shares. If no notice is
given within the time limit specified above, the Purchase Option
shall terminate.
c. The purchase price to be paid for the Purchasable Shares
purchased pursuant to the Purchase Option shall be, in the case
of any Capital Stock, the Fair Market Value per share times the
number of shares being purchased, and in the case of any Option,
the Fair Market Value per share times the number of vested shares
subject to such Option which are being purchased, less the
applicable per share Option exercise price. The purchase price
shall be paid in cash. The closing of such purchase shall take
place at the Company's principal executive offices within ten
days after the purchase price has been determined. At such
closing, the Grantor shall deliver to the purchaser(s) the
certificates or instruments evidencing the Purchasable Shares
being purchased, duly endorsed (or accompanied by duly executed
stock powers) and otherwise in good form for delivery, against
payment of the purchase price by check of the purchaser(s). In
the event that, notwithstanding the foregoing, the Grantor shall
have failed to obtain the release of any pledge or other
encumbrance on any Purchasable Shares by the scheduled closing
date, at the option of the purchaser(s) the closing shall
nevertheless occur on such scheduled closing date, with the cash
purchase price being reduced to the extent of all unpaid
indebtedness for which such Purchasable Shares are then pledged
or encumbered.
d. To assure the enforceability of the Company's rights under this
Paragraph 9, each certificate or instrument representing Capital
Stock or an Option held by him or it shall bear a conspicuous
legend in substantially the following form:
"THE SHARES [REPRESENTED BY THIS CERTIFICATE] [ISSUABLE
PURSUANT TO THIS AGREEMENT] ARE SUBJECT TO AN OPTION TO
REPURCHASE PROVIDED UNDER THE PROVISIONS OF THE COMPANY'S
AMENDED AND RESTATED 1994 STOCK OPTION PLAN AND A STOCK
OPTION AGREEMENT ENTERED INTO PURSUANT THERETO. A COPY OF
SUCH OPTION PLAN AND OPTION AGREEMENT ARE AVAILABLE
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<PAGE> 13
UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL
EXECUTIVE OFFICES."
The Company's rights under this Section 9 shall terminate upon the
consummation of an underwritten public offering of the Common Stock, registered
under the Securities Act of 1933, as amended, pursuant to which the Company
receives aggregate cash sales proceeds, before underwriting discount, of at
least $25 million or such lesser amount as the Committee shall determine.
10. Adjustment of Shares.
Unless otherwise expressly provided in a particular Option, in the event
that, by reason of any merger, consolidation, combination, liquidation,
reorganization, recapitalization, stock dividend, stock split, split-up, split-
off, spin-off, combination of shares, exchange of shares or other like change
in capital structure of the Company (collectively, a "Reorganization"), the
Capital Stock is substituted, combined, or changed into any cash, property, or
other securities, or the shares of Capital Stock are changed into a greater or
lesser number of shares of Capital Stock, the number and/or kind of shares
and/or interests subject to an Option and the per share price or value thereof
shall be appropriately adjusted by the Committee to give appropriate effect to
such Reorganization. Any fractional shares or interests resulting from such
adjustment shall be eliminated. Notwithstanding the foregoing, (i) each such
adjustment with respect to an Incentive Option shall comply with the rules of
Section 424(a) of the Code, and (ii) in no event shall any adjustment be made
which would render any Incentive Option granted hereunder other than an
"incentive stock option" for purposes of Section 422 of the Code.
In the event the Company is not the surviving entity of a Reorganization
and, following such Reorganization, any optionee will hold Options issued
pursuant to this Plan which have not been exercised, cancelled, or terminated
in connection therewith, the Company shall cause such Options to be assumed (or
cancelled and replacement Options issued) by the surviving entity or a Related
Entity.
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<PAGE> 14
11. Assignment or Transfer.
Except as otherwise expressly provided in any Nonqualified Option, no
Option granted under the Plan or any rights or interests therein shall be
assignable or transferable by an optionee except by will or the laws of descent
and distribution, and during the lifetime of an optionee, Options granted to
him or her hereunder shall be exercisable only by the optionee or, in the event
that a legal representative has been appointed in connection with the
Disability of an optionee, such legal representative.
12. Compliance with Securities Laws.
The Company shall not in any event be obligated to file any registration
statement under the Securities Act or any applicable state securities law to
permit exercise of any Option or to issue any Capital Stock in violation of the
Securities Act or any applicable state securities law. Each optionee (or, in
the event of his death or, in the event a legal representative has been
appointed in connection with his Disability, the Person exercising the Option)
shall, as a condition to his right to exercise any Option, deliver to the
Company an agreement or certificate containing such representations, warranties
and covenants as the Company may deem necessary or appropriate to ensure that
the issuance of shares of Capital Stock pursuant to such exercise is not
required to be registered under the Securities Act or any applicable state
securities law.
Certificates for shares of Capital Stock, when issued, may have
substantially the following legend, or statements of other applicable
restrictions, endorsed thereon, and may not be immediately transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE,
SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF UNTIL THE
HOLDER HEREOF PROVIDES EVIDENCE SATISFACTORY TO THE ISSUER
(WHICH, IN THE DISCRETION OF THE ISSUER, MAY INCLUDE AN OPINION
OF COUNSEL SATISFACTORY TO THE ISSUER) THAT SUCH OFFER, SALE,
PLEDGE, TRANSFER OR OTHER DISPOSITION WILL NOT VIOLATE APPLICABLE
FEDERAL OR STATE LAWS.
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<PAGE> 15
This legend shall not be required for shares of Capital Stock issued
pursuant to an effective registration statement under the Securities Act and in
accordance with applicable state securities laws.
13. Withholding Taxes.
By acceptance of the Option, the optionee will be deemed to (i) agree to
reimburse the Company or Related Entity by which the optionee is employed for
any federal, state, or local taxes required by any government to be withheld or
otherwise deducted by such corporation in respect of the optionee's exercise of
all or a portion of the Option; (ii) authorize the Company or any Related
Entity by which the Grantee is employed to withhold from any cash compensation
paid to the optionee or in the optionee's behalf, an amount sufficient to
discharge any federal, state, and local taxes imposed on the Company, or the
Related Entity by which the optionee is employed, and which otherwise has not
been reimbursed by the optionee, in respect of the optionee's exercise of all
or a portion of the Option; and (iii) agree that the Company may, in its
discretion, hold the stock certificate to which the optionee is entitled upon
exercise of the Option as security for the payment of the aforementioned
withholding tax liability, until cash sufficient to pay that liability has been
accumulated, and may, in its discretion, effect such withholding by retaining
shares issuable upon the exercise of the Option having a Fair Market Value on
the date of exercise which is equal to the amount to be withheld.
14. Costs and Expenses.
The costs and expenses of administering the Plan shall be borne by the
Company and shall not be charged against any Option nor to any employee
receiving an Option.
15. Funding of Plan.
The Plan shall be unfunded. The Company shall not be required to make
any segregation of assets to assure the payment of any Option under the Plan.
16. Other Incentive Plans.
The adoption of the Plan does not preclude the adoption by appropriate
means of any other incentive plan for employees.
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<PAGE> 16
17. Effect on Employment.
Nothing contained in the Plan or any agreement related hereto or
referred to herein shall affect, or be construed as affecting, the terms of
employment of any Key Employee except to the extent specifically provided
herein or therein. Nothing contained in the Plan or any agreement related
hereto or referred to herein shall impose, or be construed as imposing, an
obligation on (i) the Company or any Related Entity to continue the employment
of any Key Employee, and (ii) any Key Employee to remain in the employ of the
Company or any Related Entity.
18. Definitions.
In addition to the terms specifically defined elsewhere in the Plan, as
used in the Plan, the following terms shall have the respective meanings
indicated:
a. "Affiliate" shall mean, as to any Person, a Person that directly,
or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person.
b. "Board of Directors" shall have the meaning set forth in Section
2 hereof.
c. "Capital Stock" shall have the meaning set forth in Section 3
hereof.
d. "Change of Control" shall mean the first to occur of the
following events: (i) any sale, lease, exchange, or other
transfer (in one transaction or a series of related transactions)
of all or substantially all of the assets of the Company or NSI
to any Person or group of related Persons for purposes of Section
13(d) of the Exchange Act (a "Group"), other than to Hicks, Muse,
Tate & Furst Incorporated or any of its Affiliates or their
employees, officers, and directors (the "HMC Group"); (ii) a
majority of the Board of Directors of the Company or NSI shall
consist of Persons who are not Continuing Directors; or (iii) the
acquisition by any Person or Group (other than the HMC Group) of
the power, directly or indirectly, to vote or direct the voting
of securities having more than 50% of the ordinary voting power
for the election of directors of the Company or NSI.
e. "Code" shall have the meaning set forth in Section 1 hereof.
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<PAGE> 17
f. "Committee" shall have the meaning set forth in Section 2 hereof.
g. "Company" shall have the meaning set forth in Section 1 hereof.
h. "Continuing Director" shall mean, as of the date of
determination, any Person who (i) was a member of the Board of
Directors of the Company or NSI on the date of adoption of this
Plan, (ii) was nominated for election or elected to the Board of
Directors of the Company or NSI with the affirmative vote of a
majority of the Continuing Directors who were members of such
Board of Directors at the time of such nomination or election, or
(iii) is a member of the HMC Group.
i. "Disability" shall mean permanent disability as defined under the
appropriate provisions of the long-term disability plan
maintained for the benefit of employees of the Company or any
Related Entity who are regularly employed on a salaried basis
unless another meaning shall be agreed to in writing by the
Committee and the optionee; provided, however, that in the case
of an Incentive Option "disability" shall have the meaning
specified in Section 22(e)(3) of the Code.
j. "Eligible Non-Employee" shall have the meaning set forth in
Section 3 hereof.
k. "Exchange Act" shall have the meaning set forth in Section 2
hereof.
l. "Fair Market Value" shall, as it relates to either class of
Capital Stock, mean the average of the high and low prices of
such class of Capital Stock as reported on the principal national
securities exchange on which such shares of Capital Stock are
then listed on the date specified herein, or if there were no
sales on such date, on the next preceding day on which there were
sales, or if such Capital Stock is not listed on a national
securities exchange, the last reported bid price in the
over-the-counter market, or if such shares are not traded in the
over-the-counter market, the per share cash price for which all
of the outstanding Capital Stock could be sold to a willing
purchaser in an arms length transaction (without regard to
minority discount, absence of liquidity, or transfer restrictions
imposed by any applicable law or agreement) at the date of the
event giving rise to a need for a determination. Except as may
be otherwise expressly provided in a
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<PAGE> 18
particular Option, Fair Market Value shall be determined in good
faith by the Committee.
m. "Good Cause" shall mean (unless another definition is agreed to
in writing by the Company and the optionee) termination by action
of the Board of Directors because of: (A) the optionee's
conviction of, or plea of nolo contendere to, a felony or a crime
involving moral turpitude; (B) the optionee's personal
dishonesty, incompetence, willful misconduct, willful violation
of any law, rule, or regulation (other than minor traffic
violations or similar offenses) or breach of fiduciary duty which
involves personal profit; (C) the optionee's commission of
material mismanagement in the conduct of his duties as assigned
to him by the Board of Directors or the President of the Company;
(D) the optionee's willful failure to execute or comply with the
policies of the Company or his stated duties as established by
the Board of Directors or the President of the Company, or
intentional failure to perform his stated duties; or (E)
substance abuse or addiction on the part of the optionee.
n. "Grantor" shall have the meaning set forth in Section 9 hereof.
o. "Group" shall have the meaning set forth in Section 18(c) hereof.
p. "HMC Group" shall have the meaning set forth in Section 18(c)
hereof.
q. "Incentive Options" shall have the meaning set forth in Section 6
hereof.
r. The term "including" when used herein shall mean "including, but
not limited to".
s. "Key Employee" shall have the meaning set forth in Section 3
hereof.
t. "Non-Qualified Options" shall have the meaning set forth in
Section 6 hereof.
u. "NSI" shall mean Neodata Services, Inc., a Delaware corporation
which is a wholly owned subsidiary of the Company.
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v. "Options" shall have the meaning set forth in Section 1 hereof.
w. "Person" shall have the meaning set forth in Section 3 hereof.
x. "Plan" shall have the meaning set forth in Section 1 hereof.
y. "Purchasable Shares" shall have the meaning set forth in Section
9 hereof.
z. "Purchase Option" shall have the meaning set forth in Section 9
hereof.
aa. "Related Entities" shall have the meaning set forth in Section 1
hereof.
ab. "Reorganization" shall have the meaning set forth in Section 10
hereof.
ac. "Rule 16b-3" shall have the meaning set forth in Section 3
hereof.
ad. "Section 162" shall have the meaning set forth in Section 2
hereof.
12. Amendment of Plan.
The Board of Directors shall have the right to amend, modify, suspend or
terminate the Plan at any time; provided, that no amendment shall be made which
shall increase the total number of shares of Capital Stock which may be issued
and sold pursuant to Options granted under the Plan or decrease the minimum
Option exercise price in the case of an Incentive Option, or modify the
provisions of the Plan relating to eligibility with respect to Incentive
Options unless such amendment is made by or with the approval of the
stockholders. The Board of Directors shall be authorized to amend the Plan and
the Options granted thereunder (i) to qualify as "incentive stock options"
within the meaning of Section 422 of the Code, (ii) to comply with Rule 16b-3
(or any successor rule) under the Exchange Act or (iii) to comply with Section
162 of the Code (or any successor law) and the regulations (including any
temporary regulations) promulgated thereunder. No amendment, modification,
suspension or termination of the Plan shall alter or impair any Options
previously granted under the Plan, without the consent of the holder thereof.
19
<PAGE> 20
13. Effective Date.
The Plan shall become effective on the date on which it is approved by
the Board of Directors of the Company and shall be void retroactively if not
approved by the stockholders of the Company within twelve months of the date of
approval by the Board of Directors.
20
<PAGE> 1
EXHIBIT 10.2
================================================================================
CREDIT AGREEMENT
among
NEODATA CORPORATION,
NEODATA SERVICES, INC.,
VARIOUS BANKS
and
BANKERS TRUST COMPANY,
as AGENT
----------------------------
Dated as of January 31, 1997
----------------------------
===============================================================================
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TABLE OF CONTENTS
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SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 The Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Amount of Each Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.03 Notice of Borrowing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.04 Disbursement of Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.05 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.06 Conversions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.07 Pro Rata Borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.08 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.09 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.10 Increased Costs, Illegality, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.11 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.12 Change of Lending Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.13 Replacement of Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.01 Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.02 Letter of Credit Requests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.03 Letter of Credit Participations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.04 Agreement to Repay Letter of Credit Drawings . . . . . . . . . . . . . . . . . . . . . . . 15
2.05 Increased Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3. Commitment Commission; Fees; Reductions of Commitment . . . . . . . . . . . . . . . . . . . . 17
3.01 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.02 Voluntary Termination or Reduction of the Total Unutilized
Revolving Loan Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.03 Mandatory Reduction of Revolving Loan Commitments. . . . . . . . . . . . . . . . . . . . . 19
SECTION 4. Prepayments; Payments; Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.01 Voluntary Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.02 Mandatory Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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4.03 Method and Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.04 Net Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5. Conditions Precedent to Initial Credit Events . . . . . . . . . . . . . . . . . . . . . . . . 26
5.01 Execution of Agreement; Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.02 Fees, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.03 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.04 Corporate Documents; Proceedings; etc. . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.05 Employee Benefit Plans; Shareholders' Agreements;
Management Agreements; Collective Bargaining Agree-
ments; Tax Allocation Agreements; Existing Debt Agree-
ments . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.06 Initial Borrowing Base Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.07 Existing Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.08 Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.09 Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.10 Consent Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.11 Adverse Change, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.12 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.13 Solvency Certificate; Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.14 Pro Forma Balance Sheet; etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.15 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6. Conditions Precedent to All Credit Events . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.01 No Default; Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 32
6.02 Notice of Borrowing; Letter of Credit Request . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7. Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.01 Corporate Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.02 Corporate Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.03 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.04 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.06 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.07 True and Complete Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.09 Tax Returns and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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7.11 Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.12 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.13 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.14 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.15 Compliance with Statutes, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.16 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.17 Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.19 Labor Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.20 Patents, Licenses, Franchises and Formulas . . . . . . . . . . . . . . . . . . . . . . . . 42
7.21 Existing Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.22 Special Purpose Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.23 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.01 Information Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.02 Books, Records and Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.03 Maintenance of Property; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.04 Corporate Franchises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.05 Compliance with Statutes, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.06 Compliance with Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.07 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.08 End of Fiscal Years; Fiscal Quarters. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.09 Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.10 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.12 Ownership of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.13 Lockboxes, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.01 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc. . . . . . . . . . . . . . . . . . 55
9.03 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.04 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.05 Advances, Investments and Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.06 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.07 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.08 Minimum Consolidated Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . 64
9.09 Minimum Consolidated EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
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9.10 Limitation on Modifications of Indebtedness and Payments of
Indebtedness; Modifications of Certificate of Incorporation,
By-Laws and Certain Other Agreements; etc. . . . . . . . . . . . . . . . . . . . . . . 66
9.1 1 Limitation on Certain Restrictions on Subsidiaries . . . . . . . . . . . . . . . . . . . 66
9.12 Limitation on Issuance of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.13 Changes in Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.14 Limitation on Creation of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 10. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.02 Representations, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.04 Default Under Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.05 Bankruptcy, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.06 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.07 Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.08 Holdings Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.09 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.10 Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11. Definitions and Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.01 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 12. The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
12.01 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
12.02 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
12.03 Lack of Reliance on the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
12.04 Certain Rights of the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
12.05 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
12.06 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
12.07 The Agent in its Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . 98
12.08 Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
12.09 Resignation by the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
SECTION 13. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
13.01 Payment of Expenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
13.02 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
13.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
13.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
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13.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
13.06 Payments Pro Rata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
13.07 Calculations; Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE; WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
13.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
13.10 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
13.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
13.12 Amendment or Waiver; etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
13.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
13.14 Domicile of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
13.15 Limitation on Additional Amounts, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 108
13.16 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
13.17 Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
13.18 Post-Closing Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
SECTION 14. Holdings Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
14.01 The Holdings Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
14.02 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
14.03 Nature of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
14.04 Independent Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
14.05 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
14.06 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
14.07 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
14.08 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
14.09 Nature of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
</TABLE>
SCHEDULE I List of Banks
SCHEDULE II Bank Addresses
SCHEDULE III Subsidiaries
SCHEDULE IV Existing Indebtedness
SCHEDULE V Insurance
SCHEDULE VI Existing Liens
SCHEDULE VII Existing Investments
EXHIBIT A Notice of Borrowing
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EXHIBIT B Revolving Note
EXHIBIT C Letter of Credit Request
EXHIBIT D Section 4.04(b)(iii) Certificate
EXHIBIT E Opinion of Weil, Gotshal & Manges LLP, Special Counsel to the
Credit Parties
EXHIBIT F Officers' Certificate
EXHIBIT G Pledge Agreement
EXHIBIT H Security Agreement
EXHIBIT I Consent Letter
EXHIBIT J Solvency Certificate
EXHIBIT K Borrowing Base Certificate
EXHIBIT L Assignment and Assumption Agreement
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CREDIT AGREEMENT, dated as of January 31, 1997, among NEODATA
CORPORATION, a Delaware corporation ("Holdings"), NEODATA SERVICES, INC., a
Delaware corporation (the "Borrower"), the Banks party hereto from time to time
and BANKERS TRUST COMPANY, as Agent (all capitalized terms used herein and
defined in Section 11 are used herein as therein defined).
WITNESSETH:
WHEREAS, subject to and upon the terms and conditions herein set
forth, the Banks are willing to make available to the Borrower the respective
credit facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 The Commitments. Subject to and upon the terms and
conditions set forth herein, each Bank severally agrees to make, at any time
and from time to time on and after the Initial Borrowing Date and prior to the
Final Maturity Date, a revolving loan or revolving loans (each, a "Revolving
Loan" and, collectively, the "Revolving Loans") to the Borrower, which
Revolving Loans (i) shall, at the option of the Borrower, be Base Rate Loans or
Eurodollar Loans, provided that (A) except as otherwise specifically provided
in Section 1.10(b), all Revolving Loans comprising the same Borrowing shall at
all times be of the same Type and (B) no Revolving Loans maintained as
Eurodollar Loans may be incurred prior to the earlier of (1) the 60th day after
the Initial Borrowing Date and (2) the Syndication Date, (ii) may be repaid and
reborrowed in accordance with the provisions hereof, (iii) shall not exceed for
any Bank at any time outstanding that aggregate principal amount which, when
added to the product of (x) such Bank's Adjusted Percentage and (y) the
aggregate amount of all Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) at such time,
equals the Revolving Loan Commitment of such Bank at such time and (iv) shall
not exceed for all Banks at any time outstanding that aggregate principal
amount which, when added to the amount of all Letter of Credit Outstandings
(exclusive of Unpaid Drawings which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence of Revolving
Loans) at such time, equals the lesser of (x) the Borrowing Base then in effect
and (y) the Total Revolving Loan Commitment at such time.
<PAGE> 9
1.02 Minimum Amount of Each Borrowing. The aggregate principal
amount of each Borrowing of Revolving Loans shall not be less than $200,000
(and, if greater, shall be in an integral multiple of $50,000). More than one
Borrowing may occur on the same date, but at no time shall there be outstanding
more than ten Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever the Borrower desires to
incur a Borrowing hereunder, it shall give the Agent at its Notice Office on
the date that a Base Rate Loan is to be made prior written notice (or
telephonic notice promptly confirmed in writing) of each Base Rate Loan and at
least three Business Days' prior written (or telephonic notice promptly
confirmed in writing) notice of each Eurodollar Loan to be made hereunder,
provided that any such notice shall be deemed to have been given on a certain
day only if given before 12:00 Noon (New York time) on such day. Each such
written notice or written confirmation of telephonic notice (each a "Notice of
Borrowing"), except as otherwise expressly provided in Section 1.10, shall be
irrevocable and shall be given by the Borrower in the form of Exhibit A,
appropriately completed to specify the aggregate principal amount of the
Revolving Loans to be made pursuant to such Borrowing, the date of such
Borrowing (which shall be a Business Day) and whether the Revolving Loans being
made pursuant to such Borrowing are to be initially maintained as Base Rate
Loans or Eurodollar Loans and, if Eurodollar Loans, the initial Interest Period
to be applicable thereto. The Agent shall promptly give each Bank notice of
such proposed Borrowing, of such Bank's proportionate share thereof and of the
other matters required by the immediately preceding sentence to be specified in
the Notice of Borrowing.
(b) Without in any way limiting the obligation of the Borrower
to confirm in writing any telephonic notice of any Borrowing of Revolving
Loans, the Agent may act without liability upon the basis of telephonic notice
of such Borrowing, believed by the Agent in good faith to be from an Authorized
Officer prior to receipt of written confirmation. In each such case, the
Borrower hereby waives the right to dispute the Agent's record of the terms of
such telephonic notice of such Borrowing of Revolving Loans.
1.04 Disbursement of Funds. No later than 2:00 P.M. (New York
time) on the date specified in each Notice of Borrowing, each Bank will make
available its pro rata portion of each such Borrowing requested to be made on
such date in the manner provided below. All such amounts shall be made
available in Dollars and in immediately available funds at the Payment Office
of the Agent, and the Agent will make available to the Borrower at the Payment
Office the aggregate of the amounts so made available by the Banks (prior to
3:00 P.M. on such day, to the extent of funds actually received by the Agent
prior to 2:00 P.M. on such day). Unless the Agent shall
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<PAGE> 10
have been notified by any Bank prior to the date of Borrowing that such Bank
does not intend to make available to the Agent such Bank's portion of any
Borrowing to be made on such date, the Agent may assume that such Bank has made
such amount available to the Agent on such date of Borrowing and the Agent may,
in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made
available to the Agent by such Bank and the Agent has made available the same
to the Borrower, the Agent shall be entitled to recover such corresponding
amount on demand from such Bank. If such Bank does not pay such corresponding
amount forthwith upon the Agent's demand therefor, the Agent shall promptly
notify the Borrower and the Borrower shall immediately pay such corresponding
amount to the Agent. The Agent shall also be entitled to recover on demand
from such Bank or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Agent to the Borrower until the date such
corresponding amount is recovered by the Agent, at a rate per annum equal to
(i) if recovered from such Bank, at the overnight Federal Funds Rate and (ii)
if recovered from the Borrower, the rate of interest applicable to the
respective Borrowing, as determined pursuant to Section 1.08. Nothing in this
Section 1.04 shall be deemed to relieve any Bank from its obligation to make
Revolving Loans hereunder or to prejudice any rights which the Borrower may
have against any Bank as a result of any failure by such Bank to make Revolving
Loans hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the principal
of, and interest on, the Revolving Loans made by each Bank shall be evidenced
by a promissory note duly executed and delivered by the Borrower substantially
in the form of Exhibit B, with blanks appropriately completed in conformity
herewith (each, a "Revolving Note" and, collectively, the "Revolving Notes").
(b) The Revolving Note issued to each Bank shall (i) be
executed by the Borrower, (ii) be payable to the order of such Bank or its
registered assigns and be dated the Initial Borrowing Date, (iii) be in a
stated principal amount equal to the Revolving Loan Commitment of such Bank and
be payable in the principal amount of the Revolving Loans evidenced thereby,
(iv) mature on the Final Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary prepayment as provided in Section 4.01, and mandatory repayment as
provided in Section 4.02 and (vii) be entitled to the benefits of this
Agreement and the other Credit Documents.
(c) Each Bank will note on its internal records the amount of
each Revolving Loan made by it and each payment in respect thereof and will
prior to any
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<PAGE> 11
transfer of any of its Revolving Notes endorse on the reverse side thereof the
outstanding principal amount of Revolving Loans evidenced thereby. Failure to
make any such notation or endorsement or any error in any such notation or
endorsement shall not affect the Borrower's obligations in respect of such
Revolving Loans.
1.06 Conversions. The Borrower shall have the option to
convert, on any Business Day occurring on or after the earlier of (1) the 60th
day after the Initial Borrowing Date and (2) the Syndication Date, all or a
portion equal to at least $200,000 (and, if greater, in an integral multiple of
$50,000) of the outstanding principal amount of Revolving Loans made pursuant
to one or more Borrowings of one or more Types of Revolving Loans into a
Borrowing of another Type of Revolving Loan, provided that (i) except as
otherwise provided in Section 1.10(b), Eurodollar Loans may be converted into
Base Rate Loans only on the last day of an Interest Period applicable to the
Revolving Loans being converted and no such partial conversion of Eurodollar
Loans shall reduce the outstanding principal amount of such Eurodollar Loans
made pursuant to a single Borrowing to less than $200,000, (ii) Base Rate Loans
may only be converted into Eurodollar Loans if no Default or Event of Default
is in existence on the date of the conversion and (iii) no conversion pursuant
to this Section 1.06 shall result in a greater number of Eurodollar Borrowings
than is permitted under Section 1.02. Each such conversion shall be effected by
the Borrower by giving the Agent at its Notice Office prior to 1:00 P.M. (New
York time) at least three Business Days' prior written notice (or telephonic
notice promptly confirmed in writing) (each a "Notice of Conversion")
specifying the Revolving Loans to be so converted, the Borrowing or Borrowings
pursuant to which such Revolving Loans were made and, if to be converted into
Eurodollar Loans, the Interest Period to be initially applicable thereto. The
Agent shall give each Bank prompt notice of any such proposed conversion
affecting any of its Revolving Loans.
1.07 Pro Rata Borrowings. All Borrowings of Revolving Loans
under this Agreement shall be incurred from the Banks pro rata on the basis of
their Revolving Loan Commitments. It is understood that no Bank shall be
responsible for any default by any other Bank of its obligation to make
Revolving Loans hereunder and that each Bank shall be obligated to make the
Revolving Loans provided to be made by it hereunder, regardless of the failure
of any other Bank to make its Revolving Loans hereunder.
1.08 Interest. (a) The Borrower agrees to pay interest in
respect of the unpaid principal amount of each Base Rate Loan from the date the
proceeds thereof are made available to the Borrower until the earlier of (i)
the maturity (whether by acceleration or otherwise) of such Base Rate Loan and
(ii) the conversion of such Base Rate Loan to a Eurodollar Loan pursuant to
Section 1.06, at a rate per annum which
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<PAGE> 12
shall be equal to the sum of the Applicable Margin plus the Base Rate in effect
from time to time.
(b) The Borrower agrees to pay interest in respect of the
unpaid principal amount of each Eurodollar Loan from the date the proceeds
thereof are made available to the Borrower until the earlier of (i) the
maturity (whether by acceleration or otherwise) of such Eurodollar Loan and
(ii) the conversion of such Eurodollar Loan to a Base Rate Loan pursuant to
Section 1.06, 1.09 or 1.10, as applicable, at a rate per annum which shall,
during each Interest Period applicable thereto, be equal to the sum of the
Applicable Margin plus the Eurodollar Rate for such Interest Period.
(c) Overdue principal and, to the extent permitted by law,
overdue interest in respect of each Revolving Loan and any other overdue amount
payable hereunder shall, in each case, bear interest at a rate per annum equal
to the greater of (x) 2% per annum in excess of the rate otherwise applicable
to Base Rate Loans from time to time and (y) the rate which is 2% in excess of
the rate then borne by such Revolving Loans, in each case with such interest to
be payable on demand.
(d) Accrued (and theretofore unpaid) interest shall be payable
(i) in respect of each Base Rate Loan, quarterly in arrears on each Quarterly
Payment Date, (ii) in respect of each Eurodollar Loan, on (x) the date of any
conversion into a Base Rate Loan pursuant to Section 1.06, 1.09 or 1.10(b), as
applicable (on the amount converted) and (y) the last day of each Interest
Period applicable thereto and, in the case of an Interest Period in excess of
three months, on each date occurring at three month intervals after the first
day of such Interest Period and (iii) in respect of each Revolving Loan, on any
repayment or prepayment (on the amount repaid or prepaid), at maturity (whether
by acceleration or otherwise) and, after such maturity, on demand.
(e) Upon each Interest Determination Date, the Agent shall
determine the Eurodollar Rate for each Interest Period applicable to Eurodollar
Loans and shall promptly notify the Borrower and the Banks thereof. Each such
determination shall, absent manifest error, be final and conclusive and binding
on all parties hereto.
1.09 Interest Periods. At the time it gives any Notice of
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or on the third Business Day prior to the expiration
of an Interest Period applicable to a Borrowing of Eurodollar Loans (in the
case of any subsequent Interest Period), the Borrower shall have the right to
elect, by giving the Agent written notice (or telephonic notice promptly
confirmed in writing) thereof, the interest period (each an "Interest
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<PAGE> 13
Period") applicable to such Eurodollar Loan, which Interest Period shall, at
the option of the Borrower, be a one, two, three or six-month period, provided
that:
(i) all Eurodollar Loans comprising a Borrowing
shall at all times have the same Interest Period;
(ii) the initial Interest Period for any
Eurodollar Loan shall commence on the date of Borrowing of such
Eurodollar Loan (including the date of any conversion thereto
from a Revolving Loan of a different Type) and each Interest
Period occurring thereafter in respect of such Eurodollar Loan
shall commence on the day on which the next preceding Interest
Period applicable thereto expires;
(iii) if any Interest Period relating to a
Eurodollar Loan begins on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last
Business Day of such calendar month;
(iv) if any Interest Period would otherwise
expire on a day which is not a Business Day, such Interest Period
shall expire on the next succeeding Business Day; provided,
however, that if any Interest Period for a Eurodollar Loan would
otherwise expire on a day which 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;
(v) no Interest Period may be selected at any
time when a Default or Event of Default is then in existence; and
(vi) no Interest Period shall be selected which
extends beyond the Final Maturity Date.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to such Eurodollar
Loans as provided above, the Borrower shall be deemed to have elected to
convert such Eurodollar Loans into Base Rate Loans effective as of the
expiration date of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that any
Bank shall have determined (which determination shall, absent manifest error,
be final and conclusive and binding upon all parties hereto but, with respect
to clause (i) below, may be made only by the Agent):
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<PAGE> 14
(i) on any Interest Determination Date
that, by reason of any changes arising after the date of this
Agreement affecting the interbank Eurodollar market, adequate and
fair means do not exist for ascertaining the applicable interest
rate on the basis provided for in the definition of Eurodollar
Rate; or
(ii) at any time, that such Bank shall incur
increased costs or reductions in the amounts received or
receivable hereunder with respect to any Eurodollar Loan because
of (x) any change since the date of this Agreement in any
applicable law or governmental rule, regulation, order, guideline
or request (whether or not having the force of law) or in the
interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation,
order, guideline or request, including, but not limited to: (A) a
change in the basis of taxation of payment to any Bank of the
principal of or interest on such Eurodollar Loan or any other
amounts payable hereunder (except for changes in the rate of tax
on, or determined by reference to, the net income or profits of
such Bank, or any franchise tax based on the net income or
profits of such Bank, in either case pursuant to the laws of the
United States of America, the jurisdiction in which it is
organized or in which its principal office or applicable lending
office is located or any subdivision thereof or therein), but
without duplication of any amounts payable in respect of Taxes
pursuant to Section 4.04(a), or (B) a change in official reserve
requirements, but, in all events, excluding reserves required
under Regulation D to the extent included in the computation of
the Eurodollar Rate and/or (y) other circumstances since the date
of this Agreement affecting such Bank or the interbank Eurodollar
market or the position of such Bank in such market; or
(iii) at any time, that the making or continuance
of any Eurodollar Loan has been made (x) unlawful by any law or
governmental rule, regulation or order, (y) impossible by
compliance by any Bank in good faith with any governmental request
(whether or not having force of law) or (z) impracticable as a
result of a contingency occurring after the date of this Agreement
which materially and adversely affects the interbank Eurodollar
market;
then, and in any such event, such Bank (or the Agent, in the case of clause (i)
above) shall promptly give notice (by telephone confirmed in writing) to the
Borrower and, except in the case of clause (i) above, to the Agent of such
determination (which notice the Agent shall promptly transmit to each of the
other Banks). Thereafter (x) in the case of clause (i) above, Eurodollar Loans
shall no longer be available until such time as the Agent notifies the Borrower
and the Banks that the circumstances giving rise to such notice by the Agent no
longer exist, and any Notice of Borrowing or Notice of Conversion given by the
Borrower with respect to Eurodollar Loans which have not yet
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<PAGE> 15
been incurred (including by way of conversion), shall be deemed rescinded by
the Borrower, (y) in the case of clause (ii) above, the Borrower shall, subject
to the provisions of Section 13.15 (to the extent applicable) pay to such Bank,
upon written demand therefor, such additional amounts (in the form of an
increased rate of, or a different method of calculating, interest or otherwise
as such Bank in its sole discretion shall determine) as shall be required to
compensate such Bank for such increased costs or reductions in amounts received
or receivable hereunder (a written notice as to the additional amounts owed to
such Bank, showing the basis for the calculation thereof, submitted to the
Borrower by such Bank in good faith shall, absent manifest error, be final and
conclusive and binding on all the parties hereto) and (z) in the case of clause
(iii) above, the Borrower shall take one of the actions specified in Section
1.10(b) as promptly as possible and, in any event, within the time period
required by law. Each of the Agent and each Bank agrees that if it gives notice
to the Borrower of any of the events described in clause (i) or (iii) above, it
shall promptly notify the Borrower and, in the case of any such Bank, the
Agent, if such event ceases to exist. If any such event described in clause
(iii) above ceases to exist as to a Bank, the obligations of such Bank to make
Eurodollar Loans and to convert Base Rate Loans into Eurodollar Loans on the
terms and conditions contained herein shall be reinstated.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected by the circumstances described in
Section 1.10(a)(iii) shall) either (x) if the affected Eurodollar Loan is then
being made initially or pursuant to a conversion, cancel the respective
Borrowing by giving the Agent telephonic notice (confirmed in writing) on the
same date that the Borrower was notified by the affected Bank or the Agent
pursuant to Section 1.10(a)(ii) or (iii) or (y) if the affected Eurodollar Loan
is then outstanding, upon at least three Business Days' written notice to the
Agent, require the affected Bank to convert such Eurodollar Loan into a Base
Rate Loan, provided that, if more than one Bank is affected at any time, then
all affected Banks must be treated the same pursuant to this Section 1.10(b).
(c) If at any time after the date of this Agreement any Bank
determines that the introduction of or any change in any applicable law or
governmental rule, regulation, order, guideline, directive or request (whether
or not having the force of law) concerning capital adequacy, or any change in
interpretation or administration thereof by any governmental authority, central
bank or comparable agency, will have the effect of increasing the amount of
capital required or expected to be maintained by such Bank or any corporation
controlling such Bank based on the existence of such Bank's Revolving Loan
Commitment hereunder or its obligations hereunder, then the Borrower shall,
subject to the provisions of Section 13.15 (to the extent applicable), pay to
such Bank, upon its written demand therefor, such additional amounts as shall
be re-
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<PAGE> 16
quired to compensate such Bank or such other corporation for the increased cost
to such Bank or such other corporation or the reduction in the rate of return
to such Bank or such other corporation as a result of such increase of capital.
In determining such additional amounts, each Bank will act reasonably and in
good faith and will use averaging and attribution methods which are reasonable,
provided that such Bank's reasonable good faith determination of compensation
owing under this Section 1.10(c) shall, absent manifest error, be final and
conclusive and binding on all the parties hereto. Each Bank, upon determining
that any additional amounts will be payable pursuant to this Section 1.10(c),
will give prompt written notice thereof to the Borrower, which notice shall
show the basis for calculation of such additional amounts.
1.11 Compensation. The Borrower shall, subject to the provisions
of Section 13.15 (to the extent applicable), compensate each Bank, upon its
written request (which request shall set forth the basis for requesting such
compensation), for all reasonable losses, expenses and liabilities (including,
without limitation, any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required by such Bank to
fund its Eurodollar Loans but excluding any loss of anticipated profit) which
such Bank may sustain: (i) if for any reason (other than a default by such Bank
or the Agent) a Borrowing of, or conversion from or into, Eurodollar Loans does
not occur on a date specified therefor in a Notice of Borrowing or Notice of
Conversion (whether or not withdrawn by the Borrower or deemed withdrawn
pursuant to Section 1.10(a)); (ii) if any repayment (including any repayment
made pursuant to Section 4.01 or 4.02 or as a result of an acceleration of the
Revolving Loans pursuant to Section 10) or conversion of any of its Eurodollar
Loans occurs on a date which is not the last day of an Interest Period with
respect thereto; (iii) if any prepayment of any of its Eurodollar Loans is not
made on any date specified in a notice of prepayment given by the Borrower; or
(iv) as a consequence of (x) any other default by the Borrower to repay its
Revolving Loans when required by the terms of this Agreement or any Revolving
Note held by such Bank or (y) any election made pursuant to Section 1.10(b).
1.12 Change of Lending Office. Each Bank agrees that on the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c), Section 2.05 or Section 4.04 with respect to such Bank,
it will, if requested by the Borrower, use reasonable efforts (subject to
overall policy considerations of such Bank) to designate another lending office
for any Revolving Loans or Letters of Credit affected by such event, provided
that such designation is made on such terms that such Bank and its lending
office suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of such
Section. Nothing in this Section 1.12 shall affect or
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<PAGE> 17
postpone any of the obligations of the Borrower or the right of any Bank
provided in Sections 1.10, 2.05 and 4.04.
1.13 Replacement of Banks. (x) If any Bank becomes a Defaulting
Bank or otherwise defaults in its obligations to make Revolving Loans or fund
Unpaid Drawings, (y) upon the occurrence of any event giving rise to the
operation of Section 1.10(a)(ii) or (iii), Section 1.10(c), Section 2.05 or
Section 4.04 with respect to any Bank which results in such Bank charging to
the Borrower increased costs in excess of those being generally charged by the
other Banks or (z) as provided in Section 13.12(b) in the case of certain
refusals by a Bank to consent to certain proposed changes, waivers, discharges
or terminations with respect to this Agreement which have been approved by the
Required Banks, the Borrower shall have the right, if no Default or Event of
Default will exist immediately after giving effect to the respective
replacement, to either replace such Bank (the "Replaced Bank") with one or more
other Eligible Transferee or Transferees, none of whom shall constitute a
Defaulting Bank at the time of such replacement (collectively, the "Replacement
Bank") reasonably acceptable to the Agent, provided that (i) at the time of any
replacement pursuant to this Section 1.13, the Replacement Bank shall enter
into one or more Assignment and Assumption Agreements pursuant to Section
13.04(b) (and with all fees payable pursuant to said Section 13.04(b) to be
paid by the Replacement Bank) pursuant to which the Replacement Bank shall
acquire the Revolving Loan Commitment and outstanding Revolving Loans of, and
in each case participations in Letters of Credit by, the Replaced Bank and, in
connection therewith, shall pay to (x) the Replaced Bank in respect thereof an
amount equal to the sum of (A) an amount equal to the principal of, and all
accrued interest on, all outstanding Revolving Loans of the Replaced Bank, (B)
an amount equal to all Unpaid Drawings that have been funded by (and not
reimbursed to) such Replaced Bank, together with all then unpaid interest with
respect thereto at such time and (C) an amount equal to all accrued, but
theretofore unpaid, Fees owing to the Replaced Bank pursuant to Section 3.01
and (y) the Issuing Bank an amount equal to such Replaced Bank's Adjusted
Percentage (for this purpose, determined as if the adjustment described in
clause (y) of the immediately succeeding sentence had been made with respect to
such Replaced Bank) of any Unpaid Drawing (which at such time remains an Unpaid
Drawing) to the extent such amount was not theretofore funded by such Replaced
Bank, and (ii) all obligations of the Borrower owing to the Replaced Bank
(other than those specifically described in clause (i) above in respect of
which the assignment purchase price has been, or is concurrently being, paid)
shall be paid in full to such Replaced Bank concurrently with such replacement.
Upon the execution of the respective Assignment and Assumption Agreements, the
payment of amounts referred to in clauses (i) and (ii) above, the recordation
of the assignment on the Register by the Agent pursuant to Section 13.17 and,
if so requested by the Replacement Bank, delivery to the Replacement Bank of
the appropriate Revolving Note or Revolving Notes
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<PAGE> 18
executed by the Borrower, (x) the Replacement Bank shall become a Bank
hereunder and the Replaced Bank shall cease to constitute a Bank hereunder,
except with respect to indemnification provisions under this Agreement
(including, without limitation, Sections 1.10, 1.11, 2.05, 4.04, 12.06 and
13.01), which shall survive as to such Replaced Bank and (y) in the case of a
replacement of a Defaulting Bank with a Non-Defaulting Bank, the Adjusted
Percentages of the Banks shall be automatically adjusted at such time to give
effect to such replacement (and to give effect to the replacement of a
Defaulting Bank with one or more Non-Defaulting Banks).
SECTION 2. Letters of Credit.
2.01 Letters of Credit. (a) Subject to and upon the terms and
conditions herein set forth, the Borrower may request that any Issuing Bank
issue, at any time and from time to time on and after the Initial Borrowing
Date and prior to the Final Maturity Date, (x) for the account of the Borrower
and for the benefit of any holder (or any trustee, agent or other similar
representative for any such holders) of L/C Supportable Obligations of the
Borrower or any of its Subsidiaries, an irrevocable sight standby letter of
credit, in a form customarily used by such Issuing Bank or in such other form
as has been approved by such Issuing Bank (each such standby letter of credit,
a "Standby Letter of Credit") in support of such L/C Supportable Obligations
and (y) for the account of the Borrower and for the benefit of sellers of goods
to the Borrower or any of its Subsidiaries, an irrevocable sight commercial
letter of credit in a form customarily used by such Issuing Bank or in such
other form as has been approved by such Issuing Bank (each such commercial
letter of credit, a "Trade Letter of Credit", and each such Trade Letter of
Credit and each Standby Letter of Credit, a "Letter of Credit") in support of
commercial transactions of the Borrower and its Subsidiaries.
(b) Each Issuing Bank may agree, in its sole discretion, and
BTCo hereby agrees that, in the event a requested Letter of Credit is not
issued by one of the other Issuing Banks, it will (subject to the terms and
conditions contained herein), at any time and from time to time on or after the
Initial Borrowing Date and prior to the Final Maturity Date, following its
receipt of the respective Letter of Credit Request, issue for the account of
the Borrower one or more Letters of Credit (x) in the case of Standby Letters
of Credit, in support of such L/C Supportable Obligations of the Borrower or
any of its Subsidiaries as is permitted to remain outstanding without giving
rise to a Default or Event of Default hereunder and (y) in the case of Trade
Letters of Credit, in support of sellers of goods as referenced in Section
2.01(a), provided that the respective Issuing Bank shall be under no obligation
to issue any Letter of Credit of the types described above if at the time of
such issuance:
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<PAGE> 19
(i) any order, judgment or decree of any
governmental authority or arbitrator shall purport by its terms to
enjoin or restrain such Issuing Bank from issuing such Letter of
Credit or any requirement of law applicable to such Issuing Bank
or any request or directive (whether or not having the force of
law) from any governmental authority with jurisdiction over such
Issuing Bank shall prohibit, or request that such Issuing Bank
refrain from, the issuance of letters of credit generally or such
Letter of Credit in particular or shall impose upon such Issuing
Bank with respect to such Letter of Credit any restriction or
reserve or capital requirement (for which such Issuing Bank is not
otherwise compensated) not in effect on the date hereof, or any
unreimbursed loss, cost or expense which was not applicable, in
effect or known to such Issuing Bank as of the date hereof and
which such Issuing Bank in good faith deems material to it; or
(ii) such Issuing Bank shall have received notice
from any Bank prior to the issuance of such Letter of Credit of
the type described in the penultimate sentence of Section
2.02(b).
(c) Notwithstanding the foregoing, (i) no Letter of Credit
shall be issued the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and
prior to the issuance of, the respective Letter of Credit) at such time would
exceed either (x) $7,000,000, (y) when added to the aggregate principal amount
of all Revolving Loans made by Non-Defaulting Banks and then outstanding, the
Adjusted Total Revolving Loan Commitment at such time or (z) when added to the
aggregate principal amount of all outstanding Revolving Loans made by all
Banks, the Borrowing Base at such time; (ii) each Letter of Credit shall be
denominated in Dollars; (iii) the Stated Amount of each Letter of Credit shall
not be less than $50,000 or such lesser amount as is acceptable to the Issuing
Bank; and (iv) each Letter of Credit shall by its terms terminate (x) in the
case of Standby Letters of Credit, on or before the earlier of (A) the date
which occurs 12 months after the date of the issuance thereof (although any
such Standby Letter of Credit may be extendable for successive periods of up to
12 months each, but not beyond the Business Day next preceding the Final
Maturity Date, on terms acceptable to the Issuing Bank thereof) and (B) the
Business Day next preceding the Final Maturity Date, and (y) in the case of
Trade Letters of Credit, on or before the earlier of (A) the date which occurs
180 days after the date of issuance thereof and (B) the date which is 30
days prior to the Final Maturity Date.
2.02 Letter of Credit Requests. (a) Whenever the Borrower
desires that a Letter of Credit be issued for its account, the Borrower shall
give the Agent and the respective Issuing Bank at least two Business Days' (or
such shorter period as is accept-
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able to the respective Issuing Bank) written notice thereof. Each notice shall
be in the form of Exhibit C (each a "Letter of Credit Request").
(b) The making of each Letter of Credit Request shall be
deemed to be a representation and warranty by the Borrower that such Letter of
Credit may be issued in accordance with, and will not violate the requirements
of, Section 2.01(c). Unless the respective Issuing Bank has received notice
from any Bank before it issues a Letter of Credit that one or more of the
conditions specified in Section 5 or Section 6 are not then satisfied, or that
the issuance of such Letter of Credit would violate Section 2.01(c), then such
Issuing Bank shall issue the requested Letter of Credit for the account of the
Borrower in accordance with such Issuing Bank's usual and customary practices.
Upon its issuance of or amendment to any Standby Letter of Credit, such Issuing
Bank shall promptly notify each Bank of such issuance or amendment and such
notice shall be accompanied by a copy of the issued Standby Letter of Credit or
amendment, as the case may be. For Trade Letters of Credit on which the Issuing
Bank is other than the Agent, the Issuing Bank will send to the Agent by
facsimile transmission, promptly on the first Business Day of each week, the
daily aggregate Stated Amount of Trade Letters of Credit issued by such Issuing
Bank and outstanding during the preceding week. The Agent shall deliver to each
Bank, after each calendar month end and upon each payment of the Letter of
Credit Fee, a report setting forth for the relevant period the daily aggregate
Stated Amount of all outstanding Trade Letters of Credit during such period.
2.03 Letter of Credit Participations. (a) Immediately upon the
issuance by any Issuing Bank of any Letter of Credit, such Issuing Bank shall
be deemed to have sold and transferred to each Bank (each such Bank, in its
capacity under this Section 2.03, a "Participant"), and each such Participant
shall be deemed irrevocably and unconditionally to have purchased and received
from such Issuing Bank, without recourse or warranty, an undivided interest and
participation, to the extent of such Participant's Adjusted Percentage in such
Letter of Credit, each drawing made thereunder and the obligations of the
Borrower under this Agreement with respect thereto, and any security therefor
or guaranty pertaining thereto. Upon any change in the Revolving Loan
Commitments or Adjusted Percentages of the Banks pursuant to Section 1.13 or
13.04 or as a result of a Bank Default, it is hereby agreed that, with respect
to all outstanding Letters of Credit and Unpaid Drawings, there shall be an
automatic adjustment to the participations pursuant to this Section 2.03 to
reflect the new Adjusted Percentages of the assignor and assignee Bank.
(b) In determining whether to pay under any Letter of Credit,
such Issuing Bank shall have no obligation relative to the other Banks other
than to confirm that any documents required to be delivered under such Letter
of Credit appear to have
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been delivered and that they appear to substantially comply on their face with
the requirements of such Letter of Credit. Any action taken or omitted to be
taken by such Issuing Bank under or in connection with any Letter of Credit if
taken or omitted in the absence of gross negligence or willful misconduct,
shall not create for such Issuing Bank any resulting liability to the Borrower
or any Bank.
(c) In the event that any Issuing Bank makes any payment under
any Letter of Credit and the Borrower shall not have reimbursed such amount in
full to such Issuing Bank pursuant to Section 2.04(a), such Issuing Bank shall
promptly notify the Agent, which shall promptly notify each Participant of such
failure, and each Participant shall promptly and unconditionally pay to such
Issuing Bank the amount of such Participant's Adjusted Percentage of such
unreimbursed payment in Dollars and in same day funds. If the Agent so
notifies, prior to 11:00 A.M. (New York time) on any Business Day, any
Participant required to fund a payment under a Letter of Credit, such
Participant shall make available to such Issuing Bank in Dollars such
Participant's Adjusted Percentage of the amount of such payment on such
Business Day in same day funds. If and to the extent such Participant shall not
have so made its Adjusted Percentage of the amount of such payment available to
such Issuing Bank, such Participant agrees to pay to such Issuing Bank,
forthwith on demand such amount, together with interest thereon, for each day
from such date until the date such amount is paid to such Issuing Bank at the
overnight Federal Funds Rate. The failure of any Participant to make available
to such Issuing Bank its Adjusted Percentage of any payment under any Letter of
Credit shall not relieve any other Participant of its obligation hereunder to
make available to such Issuing Bank its Adjusted Percentage of any Letter of
Credit on the date required, as specified above, but no Participant shall be
responsible for the failure of any other Participant to make available to such
Issuing Bank such other Participant's Adjusted Percentage of any such payment.
(d) Whenever any Issuing Bank receives a payment of a
reimbursement obligation as to which it has received any payments from the
Participants pursuant to clause (c) above, such Issuing Bank shall pay to each
Participant which has paid its Adjusted Percentage thereof, in Dollars and in
same day funds, an amount equal to such Participant's share (based upon the
proportionate aggregate amount originally funded by such Participant to the
aggregate amount funded by all Participants) of the principal amount of such
reimbursement obligation and interest thereon accruing after the purchase of
the respective participations.
(e) Upon the request of any Participant, each Issuing Bank
shall furnish to such Participant copies of any Letter of Credit issued by it
and such other documentation as may reasonably be requested by such
Participant.
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<PAGE> 22
(f) The obligations of the Participants to make payments to
each Issuing Bank with respect to Letters of Credit issued by it shall be
irrevocable and not subject to any qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the other Credit Documents;
(ii) the existence of any claim, setoff, defense or other
right which the Borrower or any of its Subsidiaries may have at any
time against a beneficiary named in a Letter of Credit, any
transferee of any Letter of Credit (or any Person for whom any such
transferee may be acting), the Agent, the Issuing Bank, any
Participant, or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated
herein or any unrelated transactions (including any underlying
transaction between the Borrower and the beneficiary named in any
such Letter of Credit);
(iii) any draft, certificate or any 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) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the
Credit Documents; or
(v) the occurrence of any Default or Event of Default.
2.04 Agreement to Repay Letter of Credit Drawings. (a) The
Borrower hereby agrees to reimburse the Issuing Bank, by making payment to the
Agent in immediately available funds at the Payment Office, for any payment or
disbursement made by it under any Letter of Credit (each such amount, so paid
until reimbursed, an "Unpaid Drawing"), no later than three Business Days after
the date of such payment or disbursement, with interest on the amount so paid
or disbursed by such Issuing Bank, to the extent not reimbursed prior to 1:00
P.M. (New York time) on the date of such payment or disbursement, from and
including the date paid or disbursed to but excluding the date such Issuing
Bank was reimbursed by the Borrower therefor at a rate per annum which shall be
the Base Rate in effect from time to time plus the Applicable Margin for Base
Rate Loans, provided, however, to the extent such amounts are not reimbursed
prior to 1:00 P.M. (New York time) on the fifth Business Day following such
payment or disbursement, interest shall thereafter accrue on the amounts so
paid or disbursed by such Issuing Bank (and until reimbursed by the Borrower)
at a rate per
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<PAGE> 23
annum which shall be the Base Rate in effect from time to time plus the
Applicable Margin for Revolving Loans maintained as Base Rate Loans plus 2%, in
each such case, with interest to be payable on demand. The respective Issuing
Bank shall give the Borrower prompt notice of each Drawing under any Letter of
Credit, provided that the failure to give any such notice shall in no way
affect, impair or diminish the Borrower's obligations hereunder.
(b) The obligations of the Borrower under this Section 2.04 to
reimburse the respective Issuing Bank with respect to drawings on Letters of
Credit (each, a "Drawing") (including, in each case, interest thereon) shall be
absolute and unconditional under any and all circumstances and irrespective of
any setoff, counterclaim or defense to payment which the Borrower may have or
have had against any Bank (including in its capacity as issuer of the Letter of
Credit or as Participant), or any nonapplication or misapplication by the
beneficiary of the proceeds of such Drawing, the respective Issuing Bank's only
obligation to the Borrower being to confirm that any documents required to be
delivered under such Letter of Credit appear to have been delivered and that
they appear to comply on their face with the requirements of such Letter of
Credit. Any action taken or omitted to be taken by any Issuing Bank under or in
connection with any Letter of Credit if taken or omitted in the absence of
gross negligence or willful misconduct, shall not create for such Issuing Bank
any resulting liability to the Borrower.
2.05 Increased Costs. If at any time after the date of this
Agreement, the introduction of or any change in any applicable law, rule,
regulation, order, guideline or request or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Issuing Bank or
any Participant with any request or directive by any such authority (whether or
not having the force of law), or any change in generally accepted accounting
principles, shall either (i) impose, modify or make applicable any reserve,
deposit, capital adequacy or similar requirement against letters of credit
issued by any Issuing Bank or participated in by any Participant, or (ii)
impose on any Issuing Bank or any Participant any other conditions relating,
directly or indirectly, to this Agreement or any Letter of Credit; and the
result of any of the foregoing is to increase the cost to any Issuing Bank or
any Participant of issuing, maintaining or participating in any Letter of
Credit, or reduce the amount of any sum received or receivable by any Issuing
Bank or any Participant hereunder or reduce the rate of return on its capital
with respect to Letters of Credit (except for changes in the rate of tax on, or
determined by reference to, the net income or profits of such Issuing Bank or
such Participant, or any franchise tax based on the net income or profits of
such Bank or Participant, in either case pursuant to the laws of the United
States of America, the jurisdiction in which it is organized or in which its
principal office or applicable lending office is
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<PAGE> 24
located or any subdivision thereof or therein), but without duplication of any
amounts payable in respect of Taxes pursuant to Section 4.04(a), then, upon
demand to the Borrower by such Issuing Bank or any Participant (a copy of which
demand shall be sent by such Issuing Bank or such Participant to the Agent) and
subject to the provisions of Section 13.15 (to the extent applicable), the
Borrower shall pay to such Issuing Bank or such Participant such additional
amount or amounts as will compensate such Bank for such increased cost or
reduction in the amount receivable or reduction on the rate of return on its
capital. Any Issuing Bank or any Participant, upon determining that any
additional amounts will be payable pursuant to this Section 2.05, will give
prompt written notice thereof to the Borrower, which notice shall include a
certificate submitted to the Borrower by such Issuing Bank or such Participant
(a copy of which certificate shall be sent by such Issuing Bank or such
Participant to the Agent), setting forth in reasonable detail the basis for the
calculation of such additional amount or amounts necessary to compensate such
Issuing Bank or such Participant. The certificate required to be delivered
pursuant to this Section 2.05 shall, if delivered in good faith and absent
manifest error, be final and conclusive and binding on the Borrower.
SECTION 3. Commitment Commission; Fees; Reductions of
Commitment.
3.01 Fees. (a) The Borrower agrees to pay to the Agent for
distribution to each Non-Defaulting Bank a commitment commission (the
"Commitment Commission") for the period from and including the Effective Date
to but not including the date the Total Revolving Loan Commitment has been
terminated, computed at the rate of 1/2 of 1% per annum on the daily average
Unutilized Revolving Loan Commitment of such Bank. Accrued Commitment
Commissions shall be due and payable quarterly in arrears on each Quarterly
Payment Date and the date upon which the Total Revolving Loan Commitment is
terminated.
(b) The Borrower agrees to pay to the Agent for distribution
to each Non-Defaulting Bank (based on their respective Adjusted Percentages) a
fee in respect of each Letter of Credit issued hereunder (the "Letter of Credit
Fee"), for the period from and including the date of issuance of such Letter of
Credit to and including the termination of such Letter of Credit, computed at a
rate per annum equal to the difference between (i) the Applicable Margin for
Revolving Loans which are maintained as Eurodollar Loans as in effect from time
to time and (ii) 1/4 of 1% on the daily Stated Amount of such Letter of Credit.
Accrued Letter of Credit Fees shall be due and payable quarterly in arrears on
each Quarterly Payment Date and upon the first day on or after the termination
of the Total Revolving Loan Commitment upon which no Letters of Credit remain
outstanding.
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<PAGE> 25
(c) The Borrower agrees to pay to the respective Issuing Bank,
for its own account, a facing fee in respect of each Letter of Credit issued
for its account hereunder (the "Facing Fee") for the period from and including
the date of issuance of such Letter of Credit to and including the termination
of such Letter of Credit, computed at a rate equal to 1/4 of 1% per annum of
the daily Stated Amount of such Letter of Credit; provided, that in no event
shall the annual Facing Fee with respect to each Letter of Credit be less than
$500, it being agreed that, on the date of issuance of any Letter of Credit and
on each anniversary thereof prior to the termination of such Letter of Credit,
if $500 will exceed the amount of Facing Fees that will accrue with respect to
such Letter of Credit for the immediately succeeding 12-month period, the full
$500 shall be payable on the date of issuance of such Letter of Credit and on
each such anniversary thereof prior to the termination of such Letter of
Credit. Except as provided in the immediately preceding sentence, accrued
Facing Fees shall be due and payable quarterly in arrears on each Quarterly
Payment Date and on the date upon which the Total Revolving Loan Commitment has
been terminated and such Letter of Credit has been terminated in accordance
with its terms.
(d) The Borrower shall pay, upon each payment under, issuance
of, or amendment to, any Letter of Credit, such amount as shall at the time of
such event be the administrative charge and reasonable out-of-pocket expenses
which the respective Issuing Bank is generally imposing in connection with such
occurrence with respect to letters of credit.
(e) The Borrower shall pay to the Agent, for its own account,
such other fees as have been agreed to in writing by the Borrower and the
Agent.
3.02 Voluntary Termination or Reduction of the Total Unutilized
Revolving Loan Commitment. (a) Upon at least two Business Days' prior written
notice (or telephonic notice promptly confirmed in writing) to the Agent at its
Notice Office (which notice the Agent shall promptly transmit to each of the
Banks), the Borrower shall have the right, at any time or from time to time,
without premium or penalty, to terminate or partially reduce the Total
Unutilized Revolving Loan Commitment, in whole or in part, provided that (x)
each such reduction shall apply proportionately to permanently reduce the
Revolving Loan Commitment of each Bank, (y) any partial reduction pursuant to
this Section 3.02 shall be in integral multiples of $500,000 and (z) the
reduction to the Total Unutilized Revolving Loan Commitment shall in no case be
in an amount which would cause the Revolving Loan Commitment of any Bank to be
reduced (as required by preceding clause (x)) by an amount which exceeds the
Unutilized Revolving Loan Commitment of such Bank as in effect immediately
before giving effect to such reduction.
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<PAGE> 26
(b) In the event of certain refusals by a Bank as provided in
Section 13.12(b) to consent to certain proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved by the
Required Banks, the Borrower may, upon five Business Days' written notice to
the Agent at its Notice Office (which notice the Agent shall promptly transmit
to each of the Banks) terminate the entire Revolving Loan Commitment of such
Bank so long as all Revolving Loans, together with accrued and unpaid interest,
Fees and all other amounts, owing to such Bank are repaid concurrently with the
effectiveness of such termination (at which time Schedule I shall be deemed
modified to reflect such changed amounts), and at such time, such Bank shall no
longer constitute a "Bank" for purposes of this Agreement, except with respect
to indemnifications under this Agreement (including, without limitation,
Sections 1.10, 1.11, 2.05, 4.04, 12.06 and 13.01), which shall survive as to
such repaid Bank.
3.03 Mandatory Reduction of Revolving Loan Commitments. (a) The
Total Revolving Loan Commitment (and the Revolving Loan Commitment of each
Bank) shall terminate in its entirety on February 15, 1997 unless the Initial
Borrowing Date shall have occurred on or prior to such date.
(b) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date on or after the Effective Date on
which Holdings or any of its Subsidiaries receives proceeds from any sale of
assets (including capital stock and securities held thereby, but excluding (i)
sales or transfers of inventory in the ordinary course of business, (ii) the
sale or other disposition of obsolete equipment, (iii) the sale of overdue
receivables in the ordinary course of business, (iv) the licensing of general
intangibles in the ordinary course of business, (v) the first $1,000,000 in Net
Sale Proceeds from sales of other assets after the Effective Date and (vi) the
first $7,500,000 in Net Sale Proceeds from the sale-leaseback transaction
permitted by Section 9.02(xiii)), the Total Revolving Loan Commitment shall be
permanently reduced by an amount equal to 100% of the Net Sale Proceeds
therefrom; provided that up to an aggregate of $5,000,000 of Net Sale Proceeds
in any Fiscal Year shall not give rise to a reduction to the Total Revolving
Loan Commitment on such date to the extent the Borrower elects, as hereinafter
provided, to cause such Net Sale Proceeds to be reinvested in Reinvestment
Assets (a "Reinvestment Election"). The Borrower may exercise its Reinvestment
Election (within the parameters specified in the preceding sentence) with
respect to a sale of assets if (x) no Default or Event of Default then exists
and (y) the Borrower delivers a Reinvestment Notice to the Agent within 15 days
following the date of the consummation of the respective sale of assets, with
such Reinvestment Election being effective with respect to the Net Sale
Proceeds of such sale of assets equal to the Anticipated Reinvestment Amount
specified in such Reinvestment Notice.
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<PAGE> 27
(c) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, within 10 days following each date on or after
the Effective Date on which Holdings or any of its Subsidiaries receives any
proceeds from any Recovery Event, the Total Revolving Loan Commitment shall be
permanently reduced by an amount equal to 100% of such proceeds of such
Recovery Event (net of reasonable costs, including, without limitation, legal
costs and expenses, and taxes incurred in connection with such Recovery Event
and other than the proceeds of business interruption insurance), provided that
(x) so long as no Default or Event of Default then exists and such proceeds do
not exceed $5,000,000, such proceeds shall not give rise to a reduction to the
Total Revolving Loan Commitment on such date to the extent that the Borrower
has delivered a certificate to the Agent on or prior to such date stating that
such proceeds shall be used or shall be committed to be used to replace or
restore any properties or assets in respect of which such proceeds were paid
within one year following the date of such Recovery Event (which certificate
shall set forth the estimates of the proceeds to be so expended) and (y) so
long as no Default or Event of Default then exists and to the extent that (a)
the amount of such proceeds exceeds $5,000,000, (b) the amount of such
proceeds, together with other cash available to the Borrower and permitted to
be spent by it on Capital Expenditures during the relevant period pursuant to
Section 9.07 (without regard to Section 9.07(c)(i) in the case of such other
cash), equals 100% of the cost of replacement or restoration of the properties
or assets in respect of which such proceeds were paid as determined by the
Borrower and as supported by such estimates or bids from contractors or
subcontractors or such other supporting information as the Agent may reasonably
request, (c) the Borrower has delivered to the Agent a certificate on or prior
to the date the application would otherwise be required pursuant to this
Section 3.03(c) in the form described in clause (x) above and also certifying
its determination as required by preceding clause (b) and certifying the
sufficiency of business interruption insurance as required by succeeding clause
(d), and (d) the Borrower has delivered to the Agent such evidence as the Agent
may reasonably request in form and substance reasonably satisfactory to the
Agent establishing that the Borrower has sufficient business interruption
insurance and that the Borrower will be receiving regular payments thereunder
in such amounts and at such times as are necessary to satisfy all obligations
and expenses of the Borrower (including, without limitation, all debt service
requirements, including pursuant to this Agreement) without any delay or
extension thereof, for the period from the date of the respective casualty,
condemnation or other event giving rise to the Recovery Event and continuing
through the completion of the replacement or restoration of respective
properties or assets, then the entire amount of the proceeds of such Recovery
Event and not just the portion in excess of $5,000,000 shall be deposited with
the Agent pursuant to a cash collateral arrangement reasonably satisfactory to
the Agent whereby such proceeds shall be disbursed to the Borrower from time to
time as needed to pay actual costs incurred by it in connection with the
replacement or restoration of the respective
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properties or assets (pursuant to such certification requirements as may
reasonably be established by the Agent), provided further, that at any time
while an Event of Default has occurred and is continuing (other than an Event
of Default existing solely as a result of the violation of any or all of
Sections 9.08 through 9.10, inclusive, but in each case only if, and to the
extent, that the violation of said covenant has occurred as a result of the
underlying event giving rise to the Recovery Event), the Required Banks may
direct the Agent (in which case the Agent shall, and is hereby authorized by
the Borrower to, follow said directions) to apply any or all proceeds then on
deposit in such collateral account to the repayment of Obligations hereunder in
the same manner as proceeds would be applied pursuant to the Security
Agreement, provided further, that if all or any portion of such proceeds not
required to reduce the Total Revolving Loan Commitment pursuant to the second
preceding proviso (whether pursuant to clause (x) or (y) thereof) are either
(A) not so used or committed to be so used within one year after the date of
the respective Recovery Event or (B) if committed to be used within one year
after the date of receipt of such proceeds and not so used within 18 months
after the date of the respective Recovery Event then, in either such case, the
Total Revolving Loan Commitment shall be permanently reduced by such remaining
portion not used or committed to be used in the case of preceding clause (A)
and not used in the case of preceding clause (B) on the date which is the first
anniversary of the date of the respective Recovery Event in the case of clause
(A) above or the date occurring 18 months after the date of the respective
Recovery Event in the case of clause (B) above.
(d) On the Reinvestment Reduction Date with respect to a
Reinvestment Election, the Total Revolving Loan Commitment shall be permanently
reduced by an amount equal to the Reinvestment Reduction Amount, if any, for
such Reinvestment Election.
(e) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, the Total Revolving Loan Commitment (and the
Revolving Loan Commitment of each Bank) shall terminate in its entirety on the
Final Maturity Date.
(f) Each reduction to the Total Revolving Loan Commitment
pursuant to this Section 3.03 shall be applied proportionately to reduce the
Revolving Loan Commitment of each Bank.
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<PAGE> 29
SECTION 4. Prepayments, Payments, Taxes.
4.01 Voluntary Prepayments. The Borrower shall have the right
to prepay the Revolving Loans, without premium or penalty, in whole or in part
at any time and from time to time on the following terms and conditions: (i)
the Borrower shall give the Agent prior to 12:00 Noon (New York time) at its
Notice Office (x) on the date that a prepayment of Base Rate Loans is to be
made prior written notice (or telephonic notice promptly confirmed in writing)
of its intent to prepay Base Rate Loans and (y) at least three Business Days'
prior written notice (or telephonic notice promptly confirmed in writing) of
its intent to prepay Eurodollar Loans, the amount of such prepayment and the
Types of Revolving Loans to be prepaid and, in the case of Eurodollar Loans,
the specific Borrowing or Borrowings pursuant to which made, which notice the
Agent shall promptly transmit to each of the Banks; (ii) each prepayment shall
be in an aggregate principal amount of at least $50,000, provided that if any
partial prepayment of Eurodollar Loans made pursuant to any Borrowing shall
reduce the outstanding Eurodollar Loans made pursuant to such Borrowing to an
amount less than $200,000, then such Borrowing may not be continued as a
Borrowing of Eurodollar Loans and any election of an Interest Period with
respect thereto given by the Borrower shall have no force or effect; (iii)
prepayments of Eurodollar Loans made pursuant to this Section 4.01 on any day
other than the last day of an Interest Period applicable thereto shall be
accompanied by the amounts required under Section 1.11; (iv) each prepayment
in respect of any Revolving Loans made pursuant to a Borrowing shall, except as
set forth in clauses (v) and (vi) below, be applied pro rata among such
Revolving Loans; (v) in the event of certain refusals by a Bank as provided in
Section 13.12(b) to consent to certain proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved by the
Required Banks, the Borrower may, upon 5 Business Days' written notice to the
Agent at its Notice Office (which notice the Agent shall promptly transmit to
each of the Banks) repay all Revolving Loans, together with accrued and unpaid
interest, Fees, and other amounts owing to such Bank in accordance with said
Section 13.12(b) so long as (A) the Revolving Loan Commitment of such Bank is
terminated concurrently with such repayment (at which time Schedule I shall be
deemed modified to reflect the changed Revolving Loan Commitments) and (B) the
consents required by Section 13.12(b) in connection with the repayment pursuant
to this clause (v) have been obtained; and (vi) at the Borrower's election in
connection with any prepayment of Revolving Loans pursuant to this Section
4.01, such prepayment shall not be applied to any Revolving Loan of a
Defaulting Bank.
4.02 Mandatory Repayments. (a) (i) On any day on which the sum
of the aggregate outstanding principal amount of the Revolving Loans made by
Non-Defaulting Banks and the Letter of Credit Outstandings exceeds the Adjusted
Total
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Revolving Loan Commitment as then in effect, the Borrower shall repay Revolving
Loans of Non-Defaulting Banks in an amount equal to such excess. If, after
giving effect to the repayment of all outstanding Revolving Loans of Non-
Defaulting Banks, the aggregate amount of the Letter of Credit Outstandings
exceeds the Adjusted Total Revolving Loan Commitment as then in effect, the
Borrower shall pay to the Agent at the Payment Office on such date an amount of
cash or Cash Equivalents equal to the amount of such excess (up to a maximum
amount equal to the Letter of Credit Outstandings at such time), such cash or
Cash Equivalents to be held as security for all Obligations of the Borrower to
Non-Defaulting Banks hereunder in a cash collateral account to be established
by the Agent.
(ii) On any day on which the aggregate outstanding principal
amount of the Revolving Loans made by any Defaulting Bank exceeds the Revolving
Loan Commitment of such Defaulting Bank, the Borrower shall repay principal of
Revolving Loans of such Defaulting Bank in an amount equal to such excess.
(b) In addition to any other mandatory repayments pursuant to
this Section 4.02, on each date after the Effective Date that any Borrowing
Base Certificate shall disclose the existence of a Borrowing Base Deficiency,
the Borrower shall repay on the date of the delivery thereof in accordance with
Section 8.01(k), the principal of outstanding Revolving Loans in an amount
equal to such Borrowing Base Deficiency and, to the extent such Borrowing Base
Deficiency exceeds the principal amount of then outstanding Revolving Loans
required to be repaid, the Borrower shall pay an amount of cash or Cash
Equivalents equal to such excess to the Agent at the Payment Office, such cash
or Cash Equivalents to be held as security for all Obligations of the Borrower
hereunder in a cash collateral account established and maintained (including
the investments made pursuant thereto) by the Agent pursuant to a cash
collateral agreement in form and substance satisfactory to the Agent.
(c) With respect to each repayment of Revolving Loans required
by this Section 4.02, the Borrower may designate the Types of Loans which are
to be repaid and, in the case of Eurodollar Loans, the specific Borrowing or
Borrowings pursuant to which made, provided that: (i) repayments of Eurodollar
Loans pursuant to this Section 4.02 may only be made on the last day of an
Interest Period applicable thereto unless all Eurodollar Loans with Interest
Periods ending on such date of required repayment and all Base Rate Loans have
been paid in full; (ii) if any repayment of Eurodollar Loans made pursuant to a
single Borrowing shall reduce the outstanding Eurodollar Loans made pursuant to
such Borrowing to an amount less than $200,000, such Borrowing shall be
converted at the end of the then current Interest Period into a Borrowing of
Base Rate Loans; and (iii) each repayment of any Revolving Loans made pursuant
to a Borrowing shall be applied pro rata among such Revolving Loans.
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In the absence of a designation by the Borrower as described in the preceding
sentence, the Agent shall, subject to the above, make such designation in its
sole discretion with a view, but no obligation, to minimize breakage costs
owing under Section 1.11.
(d) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, all then outstanding Revolving Loans shall be
repaid in full on the Final Maturity Date.
4.03 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement or any
Revolving Note shall be made to the Agent for the account of the Bank or Banks
entitled thereto not later than 1:00 P.M. (New York time) on the date when due
and shall be made in Dollars in immediately available funds at the Payment
Office of the Agent. Whenever any payment to be made hereunder or under any
Revolving Note shall be stated to be due on a day which is not a Business Day,
the due date thereof shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest shall be payable at the
applicable rate during such extension.
4.04 Net Payments. (a) All payments made by the Borrower
hereunder or under any Revolving Note will be made without setoff, counterclaim
or other defense. Except as provided in Section 4.04(b), all such payments
will be made free and clear of, and without deduction or withholding for, any
present or future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction or by
any political subdivision or taxing authority thereof or therein with respect
to such payments (but excluding, except as provided in the second succeeding
sentence, any tax imposed on or measured by the net income or profits of a
Bank, or any franchise tax based on the net income or profits of a Bank, in
either case pursuant to the laws of the United States of America, the
jurisdiction in which it is organized or the jurisdiction in which the
principal office or applicable lending office of such Bank is located or any
subdivision thereof or therein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imports,
duties, fees, assessments or other charges being referred to collectively as
"Taxes"). If any such Taxes are so levied or imposed, the Borrower agrees to
pay the full amount of such Taxes, and such additional amounts as may be
necessary so that every payment of all amounts due under this Agreement or
under any Revolving Note, after withholding or deduction for or on account of
any Taxes, will not be less than the amount provided for herein or in such
Revolving Note. If any amounts are payable in respect of Taxes pursuant to the
preceding sentence, the Borrower agrees to reimburse each Bank, upon the
written request of such Bank, for taxes imposed on or measured by the net
income or profits of such Bank, or any franchise tax based on the net income or
profits of such Bank, in either case pursuant to the laws of the jurisdiction
in which
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such Bank is organized or in which the principal office or applicable lending
office of such Bank is located or under the laws of any political subdivision
or taxing authority of any such jurisdiction in which such Bank is organized or
in which the principal office or applicable lending office of such Bank is
located and for any withholding of taxes as such Bank shall reasonably
determine are payable by, or withheld from, such Bank in respect of such
amounts so paid to or on behalf of such Bank pursuant to the preceding sentence
and in respect of any amounts paid to or on behalf of such Bank pursuant to
this sentence. The Borrower will furnish to the Agent within 60 days after the
date the payment of any Taxes is due pursuant to applicable law certified
copies of tax receipts evidencing such payment by the Borrower. The Borrower
agrees to indemnify and hold harmless each Bank, and reimburse such Bank upon
its written request, for the amount of any Taxes so levied or imposed and paid
by such Bank.
(b) Each Bank which is not a United States person (as such
term is defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes agrees (i) in the case of any such Bank that is a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and which constitutes a Bank
hereunder on the Effective Date, to provide to the Borrower and the Agent on
or prior to the Effective Date two original signed copies of Internal Revenue
Service Form 4224 or Form 1001 certifying to such Bank's entitlement to an
exemption from United States withholding tax with respect to payments to be
made under this Agreement and under any Revolving Note, (ii) in the case of any
such Bank that is a "bank" within the meaning of Section 881(c)(3)(A) of the
Code, that, to the extent legally entitled to do so, (x) with respect to a Bank
that is an assignee or transferee of an interest under this Agreement pursuant
to Section 1.13 or 13.04 (unless the respective Bank was already a Bank
hereunder immediately prior to such assignment or transfer), upon the date of
such assignment or transfer to such Bank, and (y) with respect to any such
Bank, from time to time upon the reasonable written request of the Borrower or
the Agent after the Effective Date, such Bank will provide to the Borrower and
the Agent two original signed copies of Internal Revenue Service Form 4224 or
Form 1001 (or any successor forms) certifying to such Bank's entitlement to an
exemption from, or reduction in, United States withholding tax with respect to
payments to be made under this Agreement and under any Revolving Note, (iii) in
the case of any such Bank (other than a Bank described in clause (i) or (ii)
above) which constitutes a Bank hereunder on the Effective Date, to provide to
the Borrower and the Agent, on or prior to the Effective Date (x) a certificate
substantially in the form of Exhibit D (any such certificate, a "Section
4.04(b)(iii) Certificate") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8, certifying to such Bank's
entitlement at the date of such certificate (assuming compliance by the
Borrower with Section 13.17) to an exemption from U.S. withholding tax under
the provisions of Section 881(c) of the Code with respect to payments to be
made under this Agreement and under any Revolving Note and (iv) in the case
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of any such Bank (other than a Bank described in clause (i) or (ii) above), to
the extent legally entitled to do so, (x) with respect to a Bank that is an
assignee or transferee of an interest under this Agreement pursuant to Section
1.13 or 13.04 (unless the respective Bank was already a Bank hereunder
immediately prior to such assignment or transfer), upon the date of such
assignment or transfer to such Bank, and (y) with respect to any such Bank,
from time to time upon the reasonable written request of the Borrower or the
Agent after the Effective Date, to provide to the Borrower and the Agent such
other forms as may be required in order to establish the entitlement of such
Bank to an exemption from withholding with respect to payments under this
Agreement and under any Revolving Note. Notwithstanding anything to the
contrary contained in Section 4.04(a), but subject to the immediately
succeeding sentence, the Borrower shall be entitled, to the extent it is
required to do so by law, to deduct or withhold income or similar taxes imposed
by the United States (or any political subdivision or taxing authority thereof
or therein) from interest, fees or other amounts payable hereunder (without any
obligation to pay the respective Bank additional amounts with respect thereto)
for the account of any Bank which is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes and which has not provided to the Borrower such forms required to be
provided to the Borrower pursuant to the first sentence of this Section 4.04(b)
(or to the extent such forms do not establish a complete exemption from such
withholding). Notwithstanding anything to the contrary contained in the
preceding sentence or elsewhere in this Section 4.04 and except as set forth in
Section 13.04(b), the Borrower agrees to indemnify each Bank in the manner set
forth in Section 4.04(a) (without regard to the identity of the jurisdiction
requiring the deduction or withholding) in respect of any amounts deducted or
withheld by it as described in the immediately preceding sentence as a result
of any changes after the Effective Date in any applicable law, treaty,
governmental rule, regulation, guideline or order, or in the interpretation
thereof, relating to the deducting or withholding of income or similar Taxes.
(c) The provisions of this Section 4.04 are subject to the
provisions of Section 13.15 (to the extent applicable).
SECTION 5. Conditions Precedent to Initial Credit Events. The
obligation of each Bank to make Revolving Loans, and the obligation of each
Issuing Bank to issue Letters of Credit, on the Initial Borrowing Date, is
subject at the time of the making of such Revolving Loans or the issuance of
such Letters of Credit to the satisfaction of the following conditions:
5.01 Execution of Agreement; Notes. On or prior to the Initial
Borrowing Date (i) the Effective Date shall have occurred and (ii) there shall
have been delivered to the Agent for the account of each of the Banks the
appropriate Revolving
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Note executed by the Borrower, in each case in the amount, maturity and as
otherwise provided herein.
5.02 Fees, etc. On the Initial Borrowing Date, the Borrower
shall have paid to the Agent and the Banks all costs, fees and expenses
(including, without limitation, legal fees and expenses) payable to the Agent
and the Banks to the extent then due.
5.03 Opinions of Counsel. On the Initial Borrowing Date, the
Agent shall have received (i) from Weil, Gotshal & Manges LLP, counsel to the
Credit Parties, an opinion addressed to the Agent and each of the Banks and
dated the Initial Borrowing Date covering the matters set forth in Exhibit E
and (ii) from local counsel reasonably satisfactory to the Agent, opinions each
of which shall be in form and substance reasonably satisfactory to the Agent
and the Required Banks and shall cover the perfection of the security interests
granted pursuant to the Security Agreement and such other matters incident to
the transactions contemplated herein as the Agent may reasonably request.
5.04 Corporate Documents; Proceedings; etc. (a) On the
Initial Borrowing Date, the Agent shall have received from each Credit Party a
certificate, dated the Initial Borrowing Date, signed by an Authorized Officer
and attested to by the secretary or any assistant secretary of such Credit
Party, in the form of Exhibit F with appropriate insertions, together with
copies of the Certificate of Incorporation and By-Laws of such Credit Party and
the resolutions of such Credit Party referred to in such certificate, and the
foregoing shall be reasonably acceptable to the Agent.
(b) On the Initial Borrowing Date, all corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Credit Documents
shall be reasonably satisfactory in form and substance to the Agent and the
Required Banks, and the Agent shall have received all information and copies of
all documents and papers, including records of corporate proceedings,
governmental approvals, good standing certificates and bring-down telegrams or
facsimiles, if any, which the Agent reasonably may have requested in connection
therewith, such documents and papers where appropriate to be certified by
proper corporate or governmental authorities.
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5.05 Employee Benefit Plans; Shareholders' Agreements;
Management Agreements; Collective Bargaining Agreements; Tax Allocation
Agreements; Existing Debt Agreements. On the Initial Borrowing Date, there
shall have been delivered to the Agent true and correct copies, certified as
true and complete by an appropriate officer of the Borrower of (i) all Plans
(and for each Plan that is required to file an annual report on Internal
Revenue Service Form 5500-series, a copy of the most recent such report
(including, to the extent required, the related financial and actuarial
statements and opinions and other supporting statements, certifications,
schedules and information), and for each Plan that is a "single-employer
plan," as defined in Section 4001(a)(15) of ERISA, the most recently prepared
actuarial valuation therefor) and any other "employee benefit plans," as
defined in Section 3(3) of ERISA, and any other material agreements, plans or
arrangements, with or for the benefit of current or former employees of
Holdings or any of its Subsidiaries or any ERISA Affiliate (provided that the
foregoing shall apply in the case of any multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, only to the extent that any document described
therein is in the possession of Holdings or any Subsidiary of Holdings or any
ERISA Affiliate or reasonably available thereto from the sponsor or trustee of
any such plan) (collectively, the "Employee Benefit Plans"), (ii) all
agreements entered into by Holdings or any of its Subsidiaries governing the
terms and relative rights of its capital stock and any agreements entered into
by shareholders relating to any such entity with respect to its capital stock
(collectively, the "Shareholders' Agreements"), (iii) all agreements with
members of, or with respect to, the management of Holdings or any of its
Subsidiaries (collectively, the "Management Agreements"), (iv) all collective
bargaining agreements applying or relating to any employee of Holdings or any
of its Subsidiaries (collectively, the "Collective Bargaining Agreements"), (v)
any tax sharing or tax allocation agreements entered into by Holdings or any of
its Subsidiaries (collectively, the "Tax Allocation Agreements"), and (vi) all
agreements evidencing or relating to Indebtedness of Holdings or any of its
Subsidiaries which are to remain outstanding after giving effect to the
incurrence of Revolving Loans on the Initial Borrowing Date (collectively, the
"Existing Debt Agreements"); all of which Employee Benefit Plans, Shareholders'
Agreements, Management Agreements, Collective Bargaining Agreements, Tax
Allocation Agreements and Existing Debt Agreements shall be in form and
substance reasonably satisfactory to the Agent and the Required Banks and shall
be in full force and effect on the Initial Borrowing Date.
5.06 Initial Borrowing Base Certificate. The Borrower shall
have delivered to the Agent an initial Borrowing Base Certificate meeting the
requirements of Section 8.01(k).
5.07 Existing Credit Agreement. (a) On or prior to the
Initial Borrowing Date or concurrently with the Credit Events then occurring,
the total com-
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mitments under the Existing Credit Agreement shall have been terminated, and
all loans and notes issued thereunder shall have been repaid in full, together
with interest thereon, all letters of credit issued thereunder shall have been
terminated or collateralized by new back-to-back letters of credit in form and
substance, and issued by an issuer, satisfactory to the respective letter of
credit issuers or otherwise supported in a manner satisfactory to the
respective letter of credit issuers, and all other amounts owing pursuant to
the Existing Credit Agreement shall have been repaid in full and the Existing
Credit Agreement shall have been terminated and be of no further force or
effect except for continuing indemnification obligations described therein.
The Agent shall have received evidence in form, scope and substance reasonably
satisfactory to it that the matters set forth in this Section 5.07(a) have been
satisfied on such date.
(b) On or prior to the Initial Borrowing Date or concurrently
with the Credit Events then occurring, the creditors under the Existing Credit
Agreement shall have terminated and released all security interests and Liens
on the assets owned or to be owned by the Borrower or any of its Subsidiaries
granted in connection with the Existing Credit Agreement. The Agent shall have
received such releases of security interests in and Liens on the assets owned
or to be owned by the Borrower as may have been reasonably requested by the
Agent, which releases shall be in form and substance reasonably satisfactory to
the Agent. Without limiting the foregoing, there shall have been delivered (i)
proper termination statements (Form UCC-3 or the appropriate equivalent) for
filing under the UCC of each jurisdiction where a financing statement (Form
UCC-1 or the appropriate equivalent) was filed with respect to the Borrower or
any of its Subsidiaries, or their respective predecessors in interest, in
connection with the security interests created with respect to the Existing
Credit Agreement and the documentation related thereto, (ii) terminations or
assignments of any security interest in, or Lien on, any patents, trademarks,
copyrights, or similar interests of the Borrower or any of its Subsidiaries, on
which filings have been made and (iii) terminations of all mortgages, leasehold
mortgages and deeds of trust created with respect to property of the Borrower
or any of its Subsidiaries, or their respective predecessors in interest, in
each case to secure the obligations under the Existing Credit Agreement, all of
which shall be in form and substance reasonably satisfactory to the Agent.
5.08 Pledge Agreement. On the Initial Borrowing Date, Holdings
shall have duly authorized, executed and delivered a Pledge Agreement in the
form of Exhibit G (as modified, supplemented or amended from time to time, the
"Pledge Agreement") and shall have delivered to the Collateral Agent, as
pledgee, all the Pledged Stock, if any, referred to therein then owned by
Holdings, together with executed and undated stock powers, and the Pledge
Agreement shall be in full force and effect.
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5.09 Security Agreement. On the Initial Borrowing Date, the
Borrower shall have duly authorized, executed and delivered a Security
Agreement in the form of Exhibit H (as modified, supplemented or amended from
time to time, the "Security Agreement") covering all of the Borrower's present
and future Security Agreement Collateral, together with:
(a) proper Financing Statements (Form UCC-1) fully executed
for filing under the UCC in the appropriate filing offices of each jurisdiction
as may be necessary or, in the reasonable opinion of the Collateral Agent,
desirable to perfect the security interests purported to be created by the
Security Agreement;
(b) certified copies of Requests for Information or Copies
(Form UCC-11), or equivalent reports, listing all effective financing
statements that name Holdings and its Subsidiaries, or any of their
predecessors in interest as debtor and that are filed in the jurisdictions
referred to in clause (a) above, together with copies of such other financing
statements (none of which shall cover the Collateral except to the extent
evidencing Permitted Liens or in respect of which the Collateral Agent shall
have received termination statements (Form UCC-3) or such other termination
statements as shall be required by local law) fully executed for filing;
(c) evidence of the completion of all other recordings and
filings of, or with respect to, the Security Agreement as may be necessary or,
in the reasonable opinion of the Collateral Agent, desirable to perfect the
security interests intended to be created by the Security Agreement; and
(d) evidence that all other actions necessary or, in the
reasonable opinion of the Collateral Agent, desirable to perfect and protect
the security interests purported to be created by the Security Agreement have
been taken;
and the Security Agreement shall be in full force and effect.
5.10 Consent Letter. On the Initial Borrowing Date, the Agent
shall have received a letter from CT Corporation System, presently located at
1633 Broadway, New York, New York 10019, substantially in the form of Exhibit
I, indicating its consent to its appointment by each Credit Party as its agent
to receive service of process as specified in Section 13.08.
5.11 Adverse Change, etc. (a) On the Initial Borrowing Date,
nothing shall have occurred (and the Banks shall have become aware of no facts,
conditions or other information not previously known) which the Agent or the
Required Banks reasonably believe could have a material adverse effect on the
rights or remedies of the
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Agent or the Banks, or on the ability of any Credit Party to perform its
obligations to the Agent and the Banks hereunder or under any other Credit
Document or which the Agent or the Required Banks reasonably believe would have
a material adverse effect on the Transaction or the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the Borrower or Holdings and its Subsidiaries taken as a whole.
(b) On or prior to the Initial Borrowing Date, all necessary
and material governmental (domestic and foreign) and third party approvals in
connection with the Transaction and the transactions contemplated by the Credit
Documents and otherwise referred to herein or therein shall have been obtained
and remain in effect, and all applicable waiting periods shall have expired
without any action being taken by any competent authority which restrains,
prevents or imposes materially adverse conditions upon the consummation of the
Transaction and the transactions contemplated by this Agreement. Additionally,
there shall not exist any judgment, order, injunction or other restraint issued
or filed or a hearing seeking injunctive relief or other restraint pending or
notified prohibiting or imposing materially adverse conditions upon the
consummation of the Transaction or the transactions contemplated by this
Agreement.
5.12 Litigation. On the Initial Borrowing Date, no litigation
by any entity (private or governmental) shall be pending or, to the knowledge
of Holdings or the Borrower, threatened (a) with respect to this Agreement or
any other Credit Document or (b) which the Agent or the Required Banks shall
determine could reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower or Holdings and its Subsidiaries taken
as a whole.
5.13 Solvency Certificate; Insurance. On or prior to the
Initial Borrowing Date, the Borrower shall cause to be delivered to the Agent:
(i) a certificate in the form of Exhibit J, addressed to the Agent and each of
the Banks and dated the Initial Borrowing Date, from the chief financial
officer of Holdings, providing the opinion of such chief financial officer as
to the solvency of the Borrower and Holdings and its Subsidiaries taken as a
whole and (ii) evidence of insurance complying with the requirements of Section
8.03 for the business and properties of Holdings and its Subsidiaries, in
scope, form and substance reasonably satisfactory to the Agent and the Required
Banks and naming the Collateral Agent as an additional insured and/or loss
payee, and stating that such insurance shall not be cancelled or materially
revised without 30 days prior written notice by the insurer to the Collateral
Agent.
5.14 Pro Forma Balance Sheet; etc. (a) On or prior to the
Initial Borrowing Date, there shall have been delivered to the Agent, an
unaudited pro forma
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consolidated balance sheet of Holdings and its Subsidiaries as at December 31,
1996, after giving effect to the Transaction and prepared in accordance with
GAAP, together with a related funds flow memorandum which pro forma balance
sheet and funds flow memorandum shall be satisfactory in form and substance to
the Agent and the Required Banks.
(b) On or prior to the Initial Borrowing Date, the Banks shall
have received the financial statements referred to in Section 7.05(a).
(c) On the Initial Borrowing Date, the Banks shall have
received the Projections described in Section 7.05(d), which Projections shall
be in form and substance reasonably satisfactory to the Agent and the Required
Banks.
5.15 Senior Notes. On or prior to the Initial Borrowing Date,
the Borrower shall have delivered to the Agent such evidence as may be required
by the Agent to the effect that under the terms of the Senior Note Indenture,
this Agreement constitutes the "Revolving Credit Facility" under, and as
defined in, the Senior Note Indenture, and neither the execution, delivery or
performance by any Credit Party of the Credit Documents to which it is a party
nor the extensions of credit contemplated by this Agreement will conflict with,
result in any breach of any of the terms, covenants or provisions of, or
constitute a default under the Senior Note Indenture.
SECTION 6. Conditions Precedent to All Credit Events. The
obligation of each Bank to make Revolving Loans (including Revolving Loans made
on the Initial Borrowing Date), and the obligation of the Issuing Bank to issue
any Letter of Credit (including Letters of Credit issued on the Initial
Borrowing Date), is subject, at the time of each such Credit Event (except as
hereinafter indicated), to the satisfaction of the following conditions:
6.01 No Default; Representations and Warranties. At the time
of each such Credit Event and also after giving effect thereto (i) there shall
exist no Default or Event of Default and (ii) all representations and
warranties contained herein and in any other Credit Document shall be true and
correct in all material respects with the same effect as though such
representations and warranties had been made on the date of the making of such
Credit Event (it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date shall be required to
be true and correct in all material respects only as of such specified date).
6.02 Notice of Borrowing; Letter of Credit Request. (a) Prior
to the making of each Revolving Loan, the Agent shall have received the notice
required by Section 1.03(a).
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(b) Prior to the issuance of each Letter of Credit, the Agent
and the Issuing Bank shall have received a Letter of Credit Request meeting the
requirements of Section 2.02.
The acceptance of the benefits of each Credit Event shall
constitute a representation and warranty by each Credit Party to the Agent and
each of the Banks that all the conditions specified in Section 5 and in this
Section 6 and applicable to such Credit Event exist as of that time (except to
the extent that any of the conditions specified in Section 5 are required to be
satisfactory to or determined by any Bank, the Required Banks and/or the
Agent). All of the Revolving Notes, certificates, legal opinions and other
documents and papers referred to in Section 5 and in this Section 6, unless
otherwise specified, shall be delivered to the Agent at the Notice Office for
the account of each of the Banks and, except for the Revolving Notes, in
sufficient counterparts or copies for each of the Banks and shall be in form
and substance reasonably satisfactory to the Banks.
SECTION 7. Representations, Warranties and Agreements. In
order to induce the Banks to enter into this Agreement and to make the
Revolving Loans, and issue (or participate in) the Letters of Credit as
provided herein, each of Holdings and the Borrower makes the following
representations, warranties and agreements, in each case after giving effect to
the Transaction consummated on the Initial Borrowing Date, all of which shall
survive the execution and delivery of this Agreement and the Revolving Notes
and the making of the Revolving Loans and issuance of the Letters of Credit,
with the occurrence of each Credit Event on or after the Initial Borrowing Date
being deemed to constitute a representation and warranty that the matters
specified in this Section 7 are true and correct in all material respects on
and as of the Initial Borrowing Date and on the date of each such Credit Event
(it being understood and agreed that any representation or warranty which by
its terms is made as of a specified date shall be required to be true and
correct in all material respects only as of such specified date).
7.01 Corporate Status. Each of Holdings and each of its
Subsidiaries (i) is a duly organized and validly existing corporation in
good standing under the laws of the jurisdiction of its incorporation, (ii) has
the corporate power and authority to own its property and assets and to
transact the business in which it is engaged and presently proposes to engage
and (iii) is duly qualified and is authorized to do business and is in good
standing in each jurisdiction where the conduct of its business requires such
qualifications except for failures to be so qualified which, individually or in
the aggregate, could not reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower or of Holdings and its
Subsidiaries taken as a whole.
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7.02 Corporate Power and Authority. Each Credit Party has the
corporate power and authority to execute, deliver and perform the terms and
provisions of each of the Credit Documents to which it is party and has taken
all necessary corporate action to authorize the execution, delivery and
performance by it of each of such Credit Documents. Each Credit Party has duly
executed and delivered each of the Credit Documents to which it is party, and
each of such Credit Documents constitutes the legal, valid and binding
obligation of such Credit Party enforceable in accordance with its terms,
except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
7.03 No Violation. Neither the execution, delivery or
performance by any Credit Party of the Credit Documents to which it is a party,
nor compliance by it with the terms and provisions thereof, (i) will contravene
any provision of any applicable law, statute, rule or regulation or any
applicable order, writ, injunction or decree of any court or governmental
instrumentality, (ii) will conflict with or result in any breach of any of the
terms, covenants, conditions or provisions of, or constitute a default under,
or result in the creation or imposition of (or the obligation to create or
impose) any Lien (except pursuant to the Security Documents) upon any of the
properties or assets of Holdings or any of its Subsidiaries pursuant to the
terms of any indenture, mortgage, deed of trust, credit agreement or loan
agreement, or any other material agreement, contract or instrument, to which
Holdings or any of its Subsidiaries is a party or by which it or any of its
property or assets is bound or to which it may be subject or (iii) will violate
any provision of the Certificate of Incorporation or By-Laws of Holdings or any
of its Subsidiaries.
7.04 Governmental Approvals. No order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with (except as have been obtained or made prior to the Initial Borrowing
Date), or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection
with, (i) the execution, delivery and performance of any Credit Document or
(ii) the legality, validity, binding effect or enforceability of any such
Credit Document, except where the failure to so obtain would not reasonably be
expected to have a material adverse effect on the Transaction or the business,
operations, property, assets, liabilities, condition (financial or otherwise)
or prospects of the Borrower or of Holdings and its Subsidiaries taken as a
whole.
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7.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc. (a) The consolidated statements of financial
condition of Holdings and its Subsidiaries at June 30, 1996 and September 30,
1996, and the related consolidated statements of income and cash flow and
shareholders' equity of Holdings and its Subsidiaries for the fiscal year and
three-month period ended on such dates, as the case may be, and furnished to
the Banks prior to the Effective Date, present fairly the financial condition
of Holdings and its Subsidiaries at the date of such statements of financial
condition and the results of the operations of Holdings and its Subsidiaries
for the respective fiscal year or three-month period, as the case may be. All
such financial statements have been prepared in accordance with generally
accepted accounting principles and practices consistently applied except to the
extent provided in the notes to said financial statements and subject to normal
year end adjustments in the case of the September 30, 1996 financial
statements. After giving effect to the Transaction, since June 30, 1996, there
has been no material adverse change in the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of the
Borrower or of Holdings and its Subsidiaries taken as a whole.
(b) (i) On and as of the Initial Borrowing Date, after giving
effect to the Transaction and to all Indebtedness (including the Revolving
Loans) being incurred or assumed and Liens created by Holdings and its
Subsidiaries in connection therewith (assuming the full utilization of the
Revolving Loan Commitment on the Initial Borrowing Date), (a) the sum of the
assets, at a fair valuation, of each of the Borrower, individually, and
Holdings and its Subsidiaries taken as a whole, will exceed its or their debts;
(b) each of the Borrower, individually, and Holdings and its Subsidiaries taken
as a whole, have not incurred and do not intend to incur, and do not believe
that it or they will incur, debts beyond its or their ability to pay such debts
as such debts mature; and (c) each of the Borrower, individually, and Holdings
and its Subsidiaries taken as a whole, will have sufficient capital with which
to conduct its or their businesses. For purposes of this Section 7.05(b),
"debt" means any liability on a claim, and "claim" means (i) right to payment,
whether or not such a right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured, or unsecured or (ii) right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or not such right
to an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured.
(c) Except as fully disclosed in the financial statements
delivered pursuant to Section 7.05(a), there were as of the Initial Borrowing
Date no liabilities or obligations with respect to Holdings or any of its
Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether or not due) which, either individually or in aggregate,
would be material to the Borrower or to
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Holdings and its Subsidiaries taken as a whole. As of the Initial Borrowing
Date, neither Holdings nor the Borrower knows of any basis for the assertion
against it or any of its Subsidiaries of any liability or obligation of any
nature whatsoever that is not fully disclosed in the financial statements
delivered pursuant to Section 7.05(a) which, either individually or in the
aggregate, could be material to the Borrower or Holdings and its Subsidiaries
taken as a whole.
(d) On and as of the Initial Borrowing Date, the financial
projections (the "Projections") previously delivered to the Agent and the Banks
have been prepared on a basis consistent with the financial statements referred
to in Section 7.05(a) (other than as set forth or presented in such
Projections), and there are no statements or conclusions in any of the
Projections which are based upon or include information known to the Borrower
to be misleading in any material respect or which fail to take into account
material information regarding the matters reported therein. On the Initial
Borrowing Date, the Borrower believed that the Projections were reasonable and
attainable.
7.06 Litigation. There are no actions, suits or proceedings
pending or, to the best knowledge of Holdings and the Borrower, threatened (i)
with respect to any Credit Document or (ii) that could reasonably be expected
to materially and adversely affect the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower or
of Holdings and its Subsidiaries taken as a whole.
7.07 True and Complete Disclosure. All factual information
(taken as a whole) furnished by or on behalf of Holdings or any of its
Subsidiaries in writing to the Agent or any Bank (including, without
limitation, all information contained in the Credit Documents) for purposes of
or in connection with this Agreement, the other Credit Documents or any
transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of Holdings
or any of its Subsidiaries in writing to the Agent or any Bank will be, true
and accurate in all material respects on the date as of which such information
is dated or certified and not incomplete by omitting to state any fact
necessary to make such information (taken as a whole) not misleading in any
material respect at such time in light of the circumstances under which such
information was provided.
7.08 Use of Proceeds; Margin Regulations. (a) All proceeds of
the Revolving Loans incurred on the Initial Borrowing Date shall be used by the
Borrower (i) to consummate the Transaction, (ii) to pay fees and expenses
related to the Transaction and (iii) to provide for the general corporate and
working capital requirements of the Borrower and its Subsidiaries.
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(b) No part of the proceeds of any Revolving Loan will be used
to purchase or carry any Margin Stock or to extend credit for the purpose of
purchasing or carrying any Margin Stock. Neither the making of any Revolving
Loan nor the use of the proceeds thereof nor the occurrence of any other Credit
Event will violate or be inconsistent with the provisions of Regulation G, T, U
or X of the Board of Governors of the Federal Reserve System.
7.09 Tax Returns and Payments. Holdings and each of its
Subsidiaries have timely filed or caused to be timely filed, on the due dates
thereof or within applicable grace periods, with the appropriate taxing
authority, all Federal and all material state and other returns, statements,
forms and reports for taxes (the "Returns") required to be filed by or with
respect to the income, properties or operations of Holdings and/or any of its
Subsidiaries. The Returns accurately reflect in all material respects all
liability for taxes of Holdings and its Subsidiaries for the periods covered
thereby. Holdings and each of its Subsidiaries have paid all material taxes
payable by them other than taxes which are not delinquent, and other than those
contested in good faith and for which adequate reserves have been established
in accordance with generally accepted accounting principles. Except as
disclosed in the financial statements referred to in Section 7.05(a), there is
no material action, suit, proceeding, investigation, audit, or claim now
pending or, to the best knowledge of Holdings and the Borrower, threatened by
any authority regarding any taxes relating to Holdings or any of its
Subsidiaries. As of the Initial Borrowing Date, neither Holdings nor any of
its Subsidiaries has entered into an agreement or waiver or been requested to
enter into an agreement or waiver extending any statute of limitations relating
to the payment or collection of taxes of Holdings or any of its Subsidiaries,
or is aware of any circumstances that would cause the taxable years or other
taxable periods of Holdings or any of its Subsidiaries not to be subject to the
normally applicable statute of limitations. Neither Holdings nor any of its
Subsidiaries has incurred, or will incur, any material tax liability in
connection with the consummation of the Transaction and the other transactions
contemplated hereby.
7.10 Compliance with ERISA. (a) Each Plan (other than
a multiemployer plan (as defined in Section 4001(a)(13) of ERISA)) is in
substantial compliance with its terms and with all applicable laws, including,
without limitation, ERISA and the Code; no Reportable Event has occurred with
respect to a Plan (other than a multiemployer plan (as defined in Section
4001(a)(13) of ERISA)); no Plan is insolvent or in reorganization; no Plan
other than a multiemployer plan (as defined in Section 4001(a)(13) of ERISA)
has an Unfunded Current Liability; no Plan which is subject to Section 412 of
the Code or Section 302 of ERISA has an accumulated funding deficiency with the
meaning of such Sections of the Code or ERISA, or has applied for or received a
waiver of an accumulated funding deficiency or an extension
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of any amortization period within the meaning of Section 412 of the Code or
Section 303 or 304 of ERISA; all contributions required to be made by Holdings,
any of its Subsidiaries or any ERISA Affiliate with respect to a Plan have been
timely made; none of Holdings, any of its Subsidiaries nor any ERISA Affiliate
has incurred any material liability (including any indirect, contingent or
secondary liability) to or on account of a Plan pursuant to Section 409,
502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
Section 401(a)(29), 4971, 4975 or 4980 of the Code or reasonably expects to
incur any material liability under any of the foregoing Sections with respect
to any Plan; no proceedings have been instituted to terminate or appoint a
trustee to administer any Plan which is subject to Title IV of ERISA; no
condition exists which presents a material risk to Holdings or any of its
Subsidiaries or any ERISA Affiliate of incurring a liability to or on account
of a Plan pursuant to the foregoing provisions of ERISA and the Code; using
actuarial assumptions and computation methods consistent with Part 1 of
subtitle E of Title IV of ERISA, the annual aggregate liability of Holdings,
its Subsidiaries and its ERISA Affiliates to all Plans which are multiemployer
plans (as defined in Section 4001(a)(3) of ERISA) in the event of a complete
withdrawal therefrom, as of the close of the most recent fiscal year of each
such Plan ended prior to the date of the most recent Credit Event, would not
exceed $1,000,000; no lien imposed under the Code or ERISA on the assets of
Holdings or any of its Subsidiaries or any ERISA Affiliate exists or is likely
to arise on account of any Plan; and Holdings and its Subsidiaries do not
maintain or contribute to any employee welfare benefit plan (as defined in
Section 3(l) of ERISA) which provides benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or any
employee pension benefit plan (as defined in Section 3(2) of ERISA) the
obligations with respect to which could reasonably be expected to have a
material adverse effect on the ability of Holdings or any of its Subsidiaries
to perform their respective obligations under the Credit Documents to which
they are a party.
7.11 Security Documents. (a) The provisions of the
Security Agreement are effective to create in favor of the Collateral Agent for
the benefit of the Secured Creditors a legal, valid and enforceable security
interest in all right, title and interest of the Borrower in the Security
Agreement Collateral described therein, and the Security Agreement, upon the
filing of Form UCC-1 financing statements or the appropriate equivalent (which
filings, if this representation is being made more than 10 days after the
Initial Borrowing Date, have been made), create a fully perfected first lien
on, and security interest in, all right, title and interest in all of the
Security Agreement Collateral described therein, subject to no other Liens
other than Permitted Liens. The Borrower has good and valid title to all
Security Agreement Collateral described therein, free and clear of all Liens
except those described above in this clause (a).
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(b) The security interests created in favor of the Collateral
Agent, as pledgee, for the benefit of the Secured Creditors under the Pledge
Agreement constitute first priority perfected security interests in the Pledged
Securities described in the Pledge Agreement, subject to no security interests
of any other Person. No filings or recordings are required in order to perfect
(or maintain the perfection or priority of) the security interests created in
the Pledged Securities and the proceeds thereof under the Pledge Agreement.
7.12 Properties. Holdings and each of its Subsidiaries have
good and valid title to all properties owned by them, including all property
reflected in the balance sheets of the Borrower referred to in Section 7.05(a)
and in the pro forma balance sheet referred to in Section 5.14 (except as sold
or otherwise disposed of since the date of such balance sheet in the ordinary
course of business or in accordance with the terms of this Agreement), free and
clear of all Liens, other than (i) as referred to in the balance sheet or in
the notes thereto or in the pro forma balance sheet or (ii) Permitted Liens
otherwise permitted by Section 9.01.
7.13 Capitalization. (a) On the Initial Borrowing Date and
after giving effect to the Transaction and the other transactions contemplated
hereby, the authorized capital stock of Holdings shall consist of (i)
63,000,000 shares of Holdings Common Stock, of which 388,395 shares shall be
issued and outstanding, (ii) 3,000,000 shares of nonvoting common stock, $.0l
par value per share, of which no shares shall be issued and outstanding, (iii)
18,000,000 shares of Class A Convertible Preferred Stock, $.0l par value per
share, of which (x) 9,000,000 shares are designated Class A Convertible
Preferred Stock - Series 1, and 8,600,000 shares of which are issued and
outstanding and (y) 9,000,000 shares are designated Class A Convertible
Preferred Stock - Series 2, and 6,680,394 shares of which are issued and
outstanding, and (iv) 3,090,000 shares of Class B Junior Convertible Preferred
Stock, $.0l par value per share, all of which shares are issued and
outstanding. All such outstanding shares of capital stock have been duly and
validly issued, are fully paid and non-assessable and have been issued free of
preemptive rights. As of the Initial Borrowing Date and after giving effect to
the Transaction and the other transactions contemplated hereby, Holdings does
not have outstanding any securities convertible into or exchangeable for its
capital stock or outstanding any rights to subscribe for or to purchase, or any
options for the purchase of, or any agreement providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock, other than (i) the nonvoting common
stock, (ii) the Class A Convertible Preferred Stock - Series 1, (iii) the Class
A Convertible Preferred Stock - Series 2, (iv) the Class B Junior Convertible
Preferred Stock, (v) the options issued pursuant to the Neodata Corporation
Amended and Restated 1994 Stock Option Plan, (vi) the options issued pursuant
to the Neodata Corporation Amended and Restated 1990 Employee
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Incentive Plan, (vii) the performance options, as amended, granted by Holdings
in December 1990 to executive officers of the Borrower and (viii) the warrants
issued (x) in August 1990 and (y) in connection with the Shareholders'
Agreements.
(b) On the Initial Borrowing Date and after giving effect to
the Transaction and the other transactions contemplated hereby, the authorized
capital stock of the Borrower shall consist of 10,000 shares of common stock,
$.0l par value per share, of which 1,173 shares shall be issued and
outstanding, owned by Holdings, and delivered for pledge pursuant to the Pledge
Agreement. All such outstanding shares of common stock have been duly and
validly issued, are fully paid and nonassessable and are free of preemptive
rights. As of the Initial Borrowing Date, the Borrower does not have
outstanding any securities convertible into or exchangeable for its capital
stock or outstanding any rights to subscribe for or to purchase, or any options
for the purchase of, or any agreements providing for the issuance (contingent
or otherwise) of, or any calls, commitments or claims of any character relating
to, its capital stock.
7.14 Subsidiaries. After the consummation of the Transaction,
Holdings has no Subsidiaries other than the Borrower and its Subsidiaries and
those Subsidiaries acquired after the Initial Borrowing Date pursuant to
Section 9.14 and the Borrower has no Subsidiaries other than those Subsidiaries
listed on Schedule III and those Subsidiaries acquired after the Initial
Borrowing Date pursuant to Section 9.14. Schedule III correctly sets forth, as
of the Initial Borrowing Date and after giving effect to the Transaction, the
percentage ownership (direct or indirect) of Holdings in each class of capital
stock of each of its Subsidiaries and also identifies the direct owner thereof.
7.15 Compliance with Statutes, etc. Each of Holdings and each
of its Subsidiaries is in compliance with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and the
ownership of its property (including applicable statutes, regulations, orders
and restrictions relating to environmental standards and controls), except such
noncompliances as could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the Borrower or Holdings and its Subsidiaries taken as a whole.
7.16 Investment Company Act. Neither Holdings nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940, as amended.
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7.17 Public Utility Holding Company Act. Neither Holdings nor
any of its Subsidiaries 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.
7.18 Environmental Matters. (a) Each of Holdings and each of
its Subsidiaries has complied with, and on the date of each Credit Event will
be in compliance with, all applicable Environmental Laws and the requirements
of any permits issued under such Environmental Laws. There are no pending or,
to the best knowledge of Holdings and the Borrower after due inquiry,
threatened Environmental Claims against Holdings or any of its Subsidiaries or
any Real Property owned or operated by Holdings or any of its Subsidiaries.
There are no facts, circumstances, conditions or occurrences on any Real
Property owned or operated by Holdings or any of its Subsidiaries or, to the
best knowledge of Holdings and the Borrower after due inquiry, on any property
adjoining or in the vicinity of any such Real Property that, to the best
knowledge of Holdings and the Borrower after due inquiry, could reasonably be
expected (i) to form the basis of an Environmental Claim against Holdings or
any of its Subsidiaries or any such Real Property, or (ii) to cause any such
Real Property to be subject to any restrictions on the ownership, occupancy,
use or transferability of such Real Property by Holdings or any of its
Subsidiaries under any applicable Environmental Law.
(b) Hazardous Materials have not at any time been generated,
used, treated or stored on, or transported to or from, any Real Property owned
or operated by Holdings or any of its Subsidiaries where such generation, use,
treatment, storage or transportation has violated or could reasonably be
expected to violate any Environmental Law or give rise to an Environmental
Claim. Hazardous Materials have not at any time been Released on or from any
Real Property owned or operated by Holdings or any of its Subsidiaries where
such Release has violated or could reasonably be expected to violate any
applicable Environmental Law or give rise to an Environmental Claim. There are
not now any underground storage tanks located on any Real Property owned or
operated by Holdings or any of its Subsidiaries.
(c) Notwithstanding anything to the contrary in this Section
7.18, the representations made in this Section 7.18 shall only be untrue if the
aggregate effect of all failures and noncompliances of the types described
above could reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower or of Holdings and its Subsidiaries
taken as a whole.
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7.19 Labor Relations. Neither Holdings nor any of its
Subsidiaries is engaged in any unfair labor practice that could reasonably be
expected to have a material adverse effect on the Borrower or on Holdings and
its Subsidiaries taken as a whole. There is (i) no unfair labor practice
complaint pending against Holdings or any of its Subsidiaries or, to the best
knowledge of Holdings and the Borrower, threatened against Holdings or any of
its Subsidiaries, before the National Labor Relations Board, and no grievance
or arbitration proceeding arising out of or under any collective bargaining
agreement is so pending against Holdings or any of its Subsidiaries or, to the
best knowledge of Holdings and the Borrower, threatened against Holdings or any
of its Subsidiaries, (ii) no strike, labor dispute, slowdown or stoppage
pending against Holdings or any of its Subsidiaries or, to the best knowledge
of Holdings and the Borrower, threatened against Holdings or any of its
Subsidiaries and (iii) to the best knowledge of Holdings and the Borrower, no
union representation proceeding is pending with respect to the employees of
Holdings or any of its Subsidiaries, except (with respect to any matter
specified in clause (i), (ii) or (iii) above, either individually or in the
aggregate) such as could not reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower or of Holdings and its
Subsidiaries taken as a whole.
7.20 Patents, Licenses, Franchises and Formulas. Each of
Holdings and each of its Subsidiaries owns all material patents, trademarks,
permits, service marks, trade names, copyrights, licenses, franchises and
formulas, or rights with respect to the foregoing, and has obtained assignments
of all leases and other rights of whatever nature, reasonably necessary for the
present conduct of its business, without any known conflict with the rights of
others which, or the failure to obtain which, as the case may be, would result
in a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects. of the Borrower
or of Holdings and its Subsidiaries taken as a whole.
7.21 Existing Indebtedness. Schedule IV sets forth a true and
complete list of all Indebtedness for borrowed money of Holdings and its
Subsidiaries as of the Initial Borrowing Date and which is to remain
outstanding after giving effect thereto (excluding the Indebtedness hereunder
and the Senior Notes) (the "Existing Indebtedness"), in each case showing the
aggregate principal amount thereof and the name of the respective borrower and
any other entity which directly or indirectly guaranteed such debt, all of
which shall be evidenced by the Existing Debt Agreements.
7.22 Special Purpose Corporation. Holdings engages in no
business activities and has no significant assets (other than the capital stock
of the Borrower) or
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liabilities (other than its guaranties pursuant to Section 14 and as otherwise
permitted by this Agreement).
7.23 Senior Notes. This Agreement constitutes the "Revolving
Credit Facility" under, and as defined in, the Senior Note Indenture and
neither the execution, delivery or performance by any Credit Party of the
Credit Documents to which it is a party nor the extensions of credit
contemplated by this Agreement will conflict with, result in any breach of any
of the terms, covenants or provisions of, or constitute a default under the
Senior Note Indenture.
SECTION 8. Affirmative Covenants. Holdings and the Borrower
hereby covenant and agree that on and after the Effective Date and until the
Total Revolving Loan Commitment and all Letters of Credit have terminated and
the Revolving Loans, Revolving Notes and Unpaid Drawings, together with
interest, Fees and all other obligations incurred hereunder and thereunder, are
paid in full:
8.01 Information Covenants. Holdings and/or the Borrower will
furnish to each Bank:
(a) Monthly Reports. Within 45 days after the end of each
fiscal month of Holdings, the consolidated balance sheet of Holdings and its
Subsidiaries as at the end of such month and the related consolidated
statements of income and retained earnings and of cash flows for such month and
for the elapsed portion of the Fiscal Year ended with the last day of such
month, in each case setting forth comparative figures for the corresponding
month in the prior Fiscal Year and the budgeted figures for such month as set
forth in the respective budget delivered pursuant to Section 8.01(e).
(b) Quarterly Financial Statements. Within 45 days after the
close of the first three quarterly accounting periods in each fiscal year of
Holdings, the consolidated balance sheet of Holdings and its Subsidiaries as at
the end of such quarterly accounting period and the related consolidated
statements of income and retained earnings and of cash flows for such quarterly
accounting period and for the elapsed portion of the fiscal year ended with the
last day of such quarterly accounting period; all of which shall be in
reasonable detail and certified by the chief financial officer or other
Authorized Officer of Holdings that they fairly present the financial condition
of Holdings and its Subsidiaries as of the dates indicated and the results of
their operations and changes in their cash flows for the periods indicated,
subject to normal year-end audit adjustments.
(c) Annual Financial Statements. Within 90 days after the
close of each fiscal year of Holdings, the consolidated balance sheets of
Holdings and its
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Subsidiaries as at the end of such fiscal year and the related consolidated
statements of income and retained earnings and of cash flows for such fiscal
year and setting forth comparative consolidated figures for the preceding
fiscal year and comparable budgeted figures for such fiscal year and certified
by Coopers & Lybrand L.L.P. or such other independent certified public
accountants of recognized national standing as shall be reasonably acceptable
to the Agent, in each case to the effect that such statements fairly present
the financial condition of Holdings and its Subsidiaries as of the dates
indicated and the results of their operations and changes, together with a
certificate of such accounting firm stating that in the course of its regular
audit of the business of Holdings and its Subsidiaries, which audit was
conducted in accordance with generally accepted auditing standards, no Default
or Event of Default under Sections 9.02, 9.04, 9.05 or 9.07 through 9.09
inclusive which has occurred and is continuing has come to their attention or,
if such a Default or an Event of Default under Sections 9.02, 9.04, 9.05 or
9.07 through 9.09 inclusive has occurred and is continuing and has come to
their attention, a statement as to the nature thereof.
(d) Management Letters. Promptly after the receipt thereof by
Holdings or the Borrower, a copy of any final "management letter" received by
the Borrower or such Subsidiary from its certified public accountants and the
management's responses thereto.
(e) Budgets. No later than 90 days following the commencement
of the first day of each Fiscal Year (beginning with Fiscal Year 1998), a
budget in form reasonably satisfactory to the Agent (including budgeted
statements of income and cash flow and balance sheets) prepared by Holdings for
(x) each of the twelve months of such Fiscal Year prepared in detail and (y)
each of the five years immediately following such Fiscal Year prepared in
summary form, in each case, of Holdings and its Subsidiaries, accompanied by
the statement of an Authorized Officer of the Borrower to the effect that, to
the best of his knowledge, the budget is a reasonable estimate for the period
covered thereby.
(f) Officer's Certificates. At the time of the delivery of
the financial statements provided for in Sections 8.01(b) and (c), a
certificate of an Authorized Officer of the Borrower to the effect that, to the
best of such officer's knowledge, no Default or Event of Default has occurred
and is continuing or, if any Default or Event of Default has occurred and is
continuing, specifying the nature and extent thereof, which certificate shall,
in the case of any such financial statements delivered in respect of a period
ending on the last day of a fiscal quarter or year of Holdings, set forth the
calculations required to establish whether the Borrower was in compliance with
the provisions of Sections 3.03(b), 9.02(vii), 9.03, 9.04, 9.05 and 9.07
through 9.09, inclusive, at the end of such fiscal quarter or year, as the case
may be.
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(g) Notice of Default or Litigation. Promptly, and in any
event within three Business Days after an officer of Holdings or the Borrower
obtains knowledge thereof, notice of (i) the occurrence of any event which
constitutes a Default or Event of Default and (ii) any litigation or
governmental investigation or proceeding pending (x) against Holdings, the
Borrower or any of their respective Subsidiaries which could reasonably be
expected to materially and adversely affect the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of the
Borrower or Holdings and its Subsidiaries taken as a whole, (y) with respect to
any material Indebtedness of the Borrower and its Subsidiaries taken as a whole
or (z) with respect to any Credit Document.
(h) Other Reports and Filings. Promptly, copies of all
financial information, proxy materials and other information and reports, if
any, which Holdings, the Borrower or any of their respective Subsidiaries shall
file with the Securities and Exchange Commission or any successor thereto (the
"SEC") or deliver to holders of its Indebtedness pursuant to the terms of the
documentation governing such Indebtedness (or any trustee, agent or other
representative therefor).
(i) Environmental Matters. Promptly upon, and in any event
within ten (10) Business Days after, an officer of Holdings or any of its
Subsidiaries obtains knowledge thereof, notice of one or more of the following
environmental matters, unless such environmental matters could not,
individually or when aggregated with all other such environmental matters, be
reasonably expected to materially and adversely affect the business,
operations, property, assets, liabilities, condition (financial or otherwise)
or prospects of the Borrower or of Holdings and its Subsidiaries taken as a
whole:
(i) any pending or threatened Environmental Claim against
Holdings or any of its Subsidiaries or any Real Property owned or
operated by Holdings or any of its Subsidiaries;
(ii) any condition or occurrence on or arising from any Real
Property owned or operated by Holdings or any of its Subsidiaries that
(x) results in noncompliance by Holdings or any of its Subsidiaries with
any applicable Environmental Law or (y) could reasonably be expected to
form the basis of an Environmental Claim against Holdings or any of its
Subsidiaries or any such Real Property;
(iii) any condition or occurrence on any Real Property owned or
operated by Holdings or any of its Subsidiaries that could reasonably be
expected to cause such Real Property to be subject to any restrictions
on the
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<PAGE> 53
ownership, occupancy, use or transferability by Holdings or any of its
Subsidiaries of such Real Property under any Environmental Law; and
(iv) the taking of any removal or remedial action in response
to the actual or alleged presence of any Hazardous Material on any Real
Property owned or operated by Holdings or any of its Subsidiaries as
required by any Environmental Law or any governmental or other
administrative agency; provided that in any event Holdings and the
Borrower shall deliver to each Bank all material notices received by it
or any of their respective Subsidiaries from any government or
governmental agency under, or pursuant to, CERCLA.
All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and
Holdings', the Borrower's or such Subsidiary's response thereto. In addition,
the Borrower will provide the Banks with copies of all material communications
with any government or governmental agency relating to Environmental Laws, all
communications with any Person (other than its attorneys) relating to any
Environmental Claim of which notice is required to be given pursuant to this
Section 8.01(i), and such detailed reports of any such Environmental Claim as
may reasonably be requested by the Banks.
(j) Annual Meetings with Banks. At the request of Agent,
Holdings shall within 120 days after the close of each Fiscal Year hold a
meeting at a time and place selected by Holdings and reasonably acceptable to
the Agent with all of the Banks at which meeting shall be reviewed the
financial results of the previous Fiscal Year and the financial condition of
Holdings and its Subsidiaries and the budgets presented for the current Fiscal
Year.
(k) Borrowing Base Certificate. (i) On the Initial Borrowing
Date and (ii) thereafter, not later than 1:00 P.M. (New York time) on the
fifteenth Business Day after the end of each fiscal month, a borrowing base
certificate substantially in the form of Exhibit K (each, a "Borrowing Base
Certificate"), with respect to the Eligible Receivables of the Borrower and its
Subsidiaries as of (x) in the case of clause (i), no earlier than December 31,
1996 and (y) in the case of clause (ii), the last day of the immediately
preceding fiscal month, and in each case, certified by an Authorized Officer of
the Borrower.
(l) Other Information. From time to time, such other
information or documents (financial or otherwise) with respect to Holdings or
its Subsidiaries as any Bank may reasonably request in writing.
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8.02 Books, Records and Inspections. Holdings and the Borrower
will, and will cause each of their respective Subsidiaries to, keep proper
books of record and account in which full, true and correct entries in
conformity with generally accepted accounting principles and all requirements
of law shall be made of all dealings and transactions in relation to its
business and activities. Holdings and the Borrower will, and will cause each
of their respective Subsidiaries to, permit officers and designated
representatives of the Agent or any Bank to visit and inspect, during regular
business hours and under guidance of officers of Holdings and the Borrower or
such Subsidiary, any of the properties of Holdings and the Borrower or such
Subsidiary, and to examine the books of account of Holdings and the Borrower or
such Subsidiary and discuss the affairs, finances and accounts of Holdings and
the Borrower or such Subsidiary with, and be advised as to the same by, its and
their officers and independent accountants, all at such reasonable times and
intervals and to such reasonable extent as the Agent or such Bank may request.
8.03 Maintenance of Property; Insurance. (a) Schedule V sets
forth a true and complete listing of all insurance maintained by Holdings, the
Borrower and their respective Subsidiaries as of the Initial Borrowing Date.
Holdings and the Borrower will, and will cause each of their respective
Subsidiaries to, (i) keep all property necessary in its business in good
working order and condition (ordinary wear and tear excepted), (ii) maintain
insurance on all its property in at least such amounts and against at least
such risks as is consistent and in accordance with industry practice and (iii)
furnish to each Bank, upon written request, full information as to the
insurance carried. In addition to the requirements of the immediately
preceding sentence, Holdings and the Borrower will at all times cause insurance
of the types described in Schedule V to be maintained (with the same scope of
coverage as that described in Schedule V) at levels which are at least as great
as the respective amount described opposite the respective type of insurance on
Schedule V under the column headed "Maximum Amount Required to be Maintained."
(b) If Holdings, the Borrower or any of their respective
Subsidiaries shall fail to maintain all insurance in accordance with this
Section 8.03, or if Holdings, the Borrower or any of their respective
Subsidiaries shall fail to so endorse and deposit all policies or certificates
with respect thereto, the Agent and/or the Collateral Agent shall have the
night (but shall be under no obligation) to procure such insurance and the
Borrower agrees to reimburse the Agent or the Collateral Agent, as the case may
be, for all costs and expenses of procuring such insurance.
8.04 Corporate Franchises. Holdings and the Borrower will,
and will cause each of their respective Subsidiaries to, do or cause to
be done, all things necessary to preserve and keep in full force and
effect its existence and its material
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rights, franchises, licenses and patents; provided, however, that nothing in
this Section 8.04 shall prevent (i) sales of assets by Holdings, the Borrower
or any of their respective Subsidiaries in accordance with Section 9.02 or (ii)
the withdrawal by Holdings, the Borrower or any of their respective
Subsidiaries of their qualification as a foreign corporation in any
jurisdiction where such withdrawal could not reasonably be expected to have a
material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower or
of Holdings and its Subsidiaries taken as a whole.
8.05 Compliance with Statutes, etc. Holdings and the Borrower
will, and will cause each of their respective Subsidiaries to, comply with all
applicable statutes, regulations and orders of, and all applicable restrictions
imposed by, all governmental bodies, domestic or foreign, in respect of the
conduct of its business and the ownership of its property, except such
noncompliances as could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the Borrower or of Holdings and its Subsidiaries taken as a whole.
8.06 Compliance with Environmental Laws. (a) Holdings and the
Borrower will comply, and will cause each of their respective Subsidiaries to
comply, in all material respects with all Environmental Laws applicable to the
ownership or use of its Real Property now or hereafter owned or operated by
Holdings, the Borrower or any of their respective Subsidiaries, will within a
reasonable time-period pay or cause to be paid all costs and expenses incurred
in connection with such compliance, and will keep or cause to be kept all such
Real Property free and clear of any Liens imposed pursuant to such
Environmental Laws. None of Holdings, the Borrower nor any of their respective
Subsidiaries will generate, use, treat, store, release or dispose of, or permit
the generation, use, treatment, storage, release or disposal of Hazardous
Materials on any Real Property now or hereafter owned or operated by Holdings,
the Borrower or any of their respective Subsidiaries, or transport or permit
the transportation of Hazardous Materials to or from any such Real Property
except for Hazardous Materials used or stored at any such Real Properties in
material compliance with all applicable Environmental Laws and reasonably
required in connection with the operation, use and maintenance of any such Real
Property.
(b) At the written request of the Agent or the Required Banks,
which request shall specify in reasonable detail the basis therefor, at any
time and from time to time, the Borrower will provide, at the Borrower's sole
cost and expense, an environmental site assessment report concerning any Real
Property now or hereafter owned or operated by Holdings, the Borrower or any of
their respective Subsidiaries, prepared by an environmental consulting firm
approved by the Agent, indicating the
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presence or absence of Hazardous Materials and the potential cost of any
removal or remedial action in connection with any Hazardous Materials on such
Real Property, provided that such request may be made only if (i) there has
occurred and is continuing an Event of Default, (ii) the Agent reasonably
believes that Holdings, the Borrower or any such Real Property is not in
material compliance with Environmental Law, or (iii) circumstances exist that
reasonably could be expected to form the basis of a material Environmental
Claim against Holdings, the Borrower or any such Real Property. If the
Borrower fails to provide the same within 90 days after such request was made,
the Agent may order the same, and the Borrower shall grant and hereby grants to
the Agent and the Banks and their agents access to such Real Property and
specifically grants the Agent and the Banks an irrevocable non-exclusive
license, subject to the rights of tenants, to undertake such an assessment, all
at the Borrower's expense.
8.07 ERISA. As soon as possible and, in any event, within 20
days after Holdings, the Borrower or any of their respective Subsidiaries or
any ERISA Affiliate knows or has reason to know of the occurrence of any of the
following, Holdings or the Borrower will deliver to each of the Banks a
certificate of an Authorized Officer of Holdings or the Borrower setting forth
details as to such occurrence and the action, if any, that Holdings, the
Borrower, such Subsidiary or such ERISA Affiliate is required or proposes to
take, together with any notices required or proposed to be given to or filed
with or by Holdings, the Borrower, such Subsidiary, the ERISA Affiliate, the
PBGC, or a Plan participant or the Plan administrator with respect thereto:
that a Reportable Event has occurred (except to the extent that Holdings or the
Borrower has previously delivered to the Banks a certificate and notices (if
any) concerning such event pursuant to the next clause hereof); that a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan
subject to Title IV of ERISA is subject to the advance reporting requirement of
PBGC Regulation Section 4043.61 (without regard to subparagraph (b)(1)
thereof), and an event described in subsection .62, .63, .64, .65, .66, .67 or
.68 of PBGC Regulation Section 4043 is reasonably expected to occur with
respect to such Plan within the following 30 days; that an accumulated funding
deficiency, within the meaning of Section 412 of the Code or Section 302 of
ERISA, has been incurred or an application is likely to be or has been made to
the Secretary of the Treasury for a waiver or modification of the minimum
funding standard (including any required installment payments) or an extension
of any amortization period under Section 412 of the Code or Section 303 or 304
of ERISA with respect to a Plan; that a contribution required to be made to a
Plan has not been timely made; that a Plan has been or is reasonably expected
to be terminated, reorganized, partitioned or declared insolvent under Title IV
of ERISA; that a Plan has an Unfunded Current Liability giving rise to a lien
under ERISA or the Code; that proceedings are likely to be or have been
instituted or notice has been given to terminate or appoint a trustee to
administer a Plan which is subject to Title IV of
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ERISA; that a proceeding has been instituted pursuant to Section 515 of ERISA
to collect a delinquent contribution to a Plan; that Holdings, the Borrower,
any of their respective Subsidiaries or any ERISA Affiliate will or is
reasonably expected to incur any liability (including any indirect, contingent
or secondary liability) to or on account of the termination of or withdrawal
from a Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA
or with respect to a Plan under Section 401(a)(29), 4971, 4975 or 4980 of the
Code or Section 409 or 502(i) or 502(l) of ERISA; or that Holdings, the
Borrower or any Subsidiary is reasonably expected to incur any material
liability pursuant to any employee welfare benefit plan (as defined in Section
3(l) of ERISA) that provides benefits to retired employees or other former
employees (other than as required by Section 601 of ERISA) or any employee
pension benefit plan (as defined in Section 3(2) of ERISA). Upon request, the
Borrower will deliver to each of the Banks a complete copy of the annual report
(Form 5500) of each Plan required to be filed with the Internal Revenue
Service. In addition to any certificates or notices delivered to the Banks
pursuant to the first sentence hereof, copies of annual reports and any
material notices received by Holdings, the Borrower or any of their respective
Subsidiaries or any ERISA Affiliate with respect to any Plan shall be delivered
to the Banks no later than 20 days after the date such report has been filed
with the Internal Revenue Service or such notice has been received by Holdings,
the Borrower, the Subsidiary or the ERISA Affiliate, as applicable.
8.08 End of Fiscal Years, Fiscal Quarters. Holdings shall
cause (i) each of its, and each of its Subsidiaries', Fiscal Years to end on
June 30, and (ii) each of its, and each of its Subsidiaries', fiscal quarters
to end in a manner consistent therewith.
8.09 Performance of Obligations. Each of Holdings and the
Borrower will, and will cause each of its Subsidiaries to, perform all of its
obligations under the terms of each mortgage, indenture, security agreement and
other debt instrument by which it is bound, except such non-performances as
could not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower or
of Holdings and its Subsidiaries taken as a whole.
8.10 Payment of Taxes. Each of Holdings and the Borrower will
pay and discharge or cause to be paid and discharged, and will cause each of
their respective Subsidiaries to pay and discharge, all material taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any material properties belonging to it, in each
case on a timely basis, and all lawful claims which, if unpaid, might become a
lien or charge upon any properties of Holdings, the Borrower or any of their
respective Subsidiaries; provided that none of Holdings, the Borrower or any of
their respective Subsidiaries shall be required to pay
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any such tax, assessment, charge, levy or claim which is being contested in
good faith and by proper proceedings if it has maintained adequate reserves
with respect thereto in accordance with generally accepted accounting
principles.
8.11 Further Assurances. (a) Holdings and the Borrower will,
and will cause each of their respective Subsidiaries to, at the expense of the
Borrower, make, execute, endorse, acknowledge, file and/or deliver to the
Collateral Agent from time to time such vouchers, invoices, schedules,
confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, reports, and other assurances
or instruments and take such further steps relating to the Collateral covered
by any of the Security Documents as the Collateral Agent may reasonably require
pursuant to this Section 8. 11. Furthermore, Holdings and the Borrower shall
cause to be delivered to the Collateral Agent such opinions of counsel and
other related documents as may be requested by the Collateral Agent to assure
itself that this Section 8.11 has been complied with.
(b) Each of Holdings and the Borrower agrees that each action
required above by Section 8.11 (a) shall be completed as soon as possible, but
in no event later than 60 days after such action is requested to be taken by
the Agent or the Required Banks.
8.12 Ownership of Subsidiaries. Holdings shall at all times
own 100% of the outstanding capital stock of the Borrower and at least a
majority of the outstanding capital stock of each of its Subsidiaries which may
be created after the Initial Borrowing Date in accordance with Section 9.14,
and the Borrower shall directly own at least a majority of the outstanding
capital stock of each of its Subsidiaries as described on Schedule III hereof
and which may be created after the Initial Borrowing Date in accordance with
Section 9.14.
8.13 Lockboxes, etc. Upon the request of the Agent or the
Required Banks, each of Holdings and the Borrower agrees to take all action
necessary to establish lockboxes and concentration accounts satisfactory to the
Agent for the deposit of all proceeds owing under the Borrower's accounts
receivable pursuant documentation reasonably satisfactory to the Agent. Each
of Holdings and the Borrower agrees that the action required by this Section
8.13 shall be completed as soon as possible, but in no event later than 30 days
after such action is requested to be taken by the Agent or the Required Banks.
SECTION 9. Negative Covenants. Holdings and the Borrower
covenant and agree that on and after the Effective Date and until the Total
Revolving Loan Commitment and all Letters of Credit have terminated and the
Revolving Loans,
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Revolving Notes and Unpaid Drawings, together with interest, Fees and all other
Obligations incurred hereunder and thereunder, are paid in full:
9.01 Liens. Holdings and the Borrower will not, and will not
permit any of their respective Subsidiaries to, create, incur, assume or suffer
to exist any Lien upon or with respect to any property or assets (real or
personal, tangible or intangible) of Holdings or any of its Subsidiaries,
whether now owned or hereafter acquired, or sell any such property or assets
subject to an understanding or agreement, contingent or otherwise, to
repurchase such property or assets (including sales of accounts receivable with
recourse to Holdings or any of its Subsidiaries), or assign any right to
receive income or permit the filing of any financing statement under the UCC or
any other similar notice of Lien under any similar recording or notice statute;
provided that the provisions of this Section 9.01 shall not prevent the
creation, incurrence, assumption or existence of the following (Liens described
below are herein referred to as "Permitted Liens"):
(i) inchoate Liens for taxes, assessments or governmental
charges or levies not yet due and payable or Liens for taxes,
assessments or governmental charges or levies being contested in good
faith and by appropriate proceedings for which adequate reserves have
been established in accordance with generally accepted accounting
principles in the United States;
(ii) Liens in respect of property or assets of the Borrower or
any of its Subsidiaries imposed by law, which were incurred in the
ordinary course of business and do not secure Indebtedness for borrowed
money, such as carriers', warehousemen's, materialmen's and mechanics'
liens and other similar Liens arising in the ordinary course of
business, and (x) which do not in the aggregate materially detract from
the value of the Borrower's or such Subsidiary's property or assets or
materially impair the use thereof in the operation of the business of
the Borrower or such Subsidiary or (y) which are being contested in good
faith by appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property or assets subject to
any such Lien;
(iii) Liens in existence on the Effective Date which are listed,
and the property subject thereto described, in Schedule VI, but only to
the respective date, if any, set forth in such Schedule VI for the
removal and termination of any such Liens, plus renewals, replacements
and extensions of such Liens to the extent set forth on Schedule VI,
provided that (x) the aggregate principal amount of the Indebtedness, if
any, secured by such Liens does not increase from that amount
outstanding at the time of any such renewal or extension and (y) any
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such renewal or extension does not encumber any additional assets or
properties of Holdings or any of its Subsidiaries;
(iv) Liens in favor of customs and revenue authorities arising
as a matter of law to secure the payment of customs duties in connection
with the importation of goods;
(v) Liens created pursuant to the Security Documents;
(vi) licenses, leases or subleases granted to other Persons in
the ordinary course of business not materially interfering with the
conduct of the business of Holdings and its Subsidiaries taken as a
whole;
(vii) Liens upon assets subject to Capitalized Lease Obligations
to the extent permitted by Section 9.04, provided that (x) such Liens
only serve to secure the payment of Indebtedness arising under such
Capitalized Lease Obligation and (y) the Lien encumbering the asset
giving rise to the Capitalized Lease Obligation does not encumber any
other asset of the Borrower or any Subsidiary of the Borrower;
(viii) Liens placed upon equipment or machinery used in the
ordinary course of business of the Borrower or any of its Subsidiaries
at the time of acquisition thereof by the Borrower or any such
Subsidiary or within 150 days thereafter to secure Indebtedness incurred
to pay all or a portion of the purchase price thereof, and all renewals,
replacements and extensions thereof, provided that (x) the aggregate
outstanding principal amount of all Indebtedness secured by Liens
permitted by this clause (viii) shall not at any time exceed $2,000,000
at any time outstanding and (y) in all events, the Lien encumbering the
equipment or machinery so acquired does not encumber any other asset of
the Borrower or such Subsidiary;
(ix) easements, rights-of-way, restrictions (including zoning
restrictions), encroachments, protrusions and other similar charges or
encumbrances, and minor title deficiencies, in each case whether now or
hereafter in existence, not securing Indebtedness and not materially
interfering with the conduct of the business of the Borrower or any of
its Subsidiaries;
(x) Liens arising from precautionary UCC financing statement
filings regarding operating leases entered into by the Borrower or any
of its Subsidiaries in the ordinary course of business;
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(xi) Liens arising out of the existence of judgments or awards
not constituting an Event of Default under Section 10.09, provided that
no cash or property is deposited or delivered to secure the respective
judgment or award (or any appeal bond in respect thereof, except as
permitted by following clause (xiii));
(xii) statutory and contractual landlords' liens under leases to
which the Borrower or any of its Subsidiaries is a party;
(xiii) Liens (other than any Lien imposed by ERISA) (x) incurred
or deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security or (y) to secure the performance of tenders, statutory
obligations (other than excise taxes), surety, stay, customs and appeal
bonds, statutory 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)
and (z) deposits made in the ordinary course of business to secure
liability for premiums to insurance carriers, provided that the
aggregate amount of deposits at any time pursuant to clauses (y) and (z)
shall not exceed $1,000,000 in the aggregate;
(xiv) any interest or title of a lessor, sublessor, licensee or
licensor under any lease or license agreement permitted by this
Agreement;
(xv) Liens in favor of a banking institution arising as matter
of law encumbering the deposits (including the right of setoff) held by
such banking institution incurred in the ordinary course of business and
which are within the general parameters customary in the banking
industry;
(xvi) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into
by the Borrower or any of its Subsidiaries in the ordinary course of
business in accordance with the past practices of the Borrower and its
Subsidiaries prior to the Initial Borrowing Date;
(xvii) deposits made to secure statutory obligations in the form
of excise taxes;
(xiii) Liens arising out of barter transactions or arrangements
for the sale or purchase of goods or services entered into by the
Borrower or any of its Subsidiaries in the ordinary course of business
in accordance with the past
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practices of the Borrower and its Subsidiaries prior to the Initial
Borrowing Date;
(xix) Liens on cash collateral not to exceed $500,000 arising in
connection with Other Hedging Agreements permitted under Section
9.05(iii);
(xx) Liens on one (but not both) Specified Property arising
pursuant to, and created as a result of, a sale-leaseback transaction
permitted pursuant to Section 9.02(xiii); and
(xxi) Liens not otherwise permitted by the foregoing clauses (i)
through (xx) to the extent attaching to properties and assets with an
aggregate fair value not in excess of, and securing liabilities not in
excess of, $1,500,000 in the aggregate at any time outstanding.
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc.
Holdings and the Borrower will not, and will not permit any of their respective
Subsidiaries to, wind up, liquidate or dissolve its affairs or enter into any
transaction of merger or consolidation, or convey, sell, lease or otherwise
dispose of (or agree to do any of the foregoing at any time prior to the Final
Maturity Date except with the Agent's prior written consent) all or any part of
its property or assets, or enter into any sale-leaseback transactions, or
purchase or otherwise acquire (in one or a series of related transactions) any
part of the property or assets (other than purchases or other acquisitions of
inventory, materials, equipment and intangible assets in the ordinary course of
business) of any Person, except that:
(i) Capital Expenditures by the Borrower and its Subsidiaries
shall be permitted to the extent not in violation of Section 9.07;
(ii) each of the Borrower and its Subsidiaries may (x) in the
ordinary course of business, sell, lease or otherwise dispose of any
assets which, in the reasonable judgment of such Person, are obsolete,
worn out or otherwise no longer useful in the conduct of such Person's
business and (y) sell, lease or otherwise dispose of any other assets,
provided that the aggregate Net Sale Proceeds of all assets subject to
sales or other dispositions pursuant to this clause (ii) which are not
reinvested to acquire Reinvestment Assets in accordance with Section
3.03(b) shall not exceed $1,000,000 in any Fiscal Year;
(iii) sales of assets the Net Sale Proceeds of which are used
to acquire Reinvestment Assets in accordance with Section 3.03(b);
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(iv) investments may be made to the extent permitted by Section
9.05;
(v) each of the Borrower and its Subsidiaries may lease (as
lessee) real or personal property in the ordinary course of business (so
long as any such lease does not create a Capitalized Lease Obligation
except to the extent permitted by Section 9.04);
(vi) each of the Borrower and its Subsidiaries may make sales
or transfers of inventory in the ordinary course of business and
consistent with past practices (including, without limitation, sales or
transfers of inventory by the Borrower to its Subsidiaries so long as at
fair market value);
(vii) so long as no Default or Event of Default then exists or
would result therefrom, Holdings and its Wholly-Owned Subsidiaries
(other than NSL) may acquire the capital stock or assets of any Person
provided that(x) any such acquisition is for at least a majority of the
capital stock or all or substantially all of the business of, or an
operating division or a business unit, of such Person (each such
acquisition permitted by this clause (vii), a "Permitted Section
9.02(vii) Acquisition") and (y) the aggregate amount expended pursuant
to this clause (vii) does not exceed $10,000,000 minus the aggregate
amount of investments made by Holdings or any of its Wholly-Owned
Subsidiaries (other than NSL) pursuant to Section 9.05(xiii), it being
understood that if any such Permitted Section 9.02(vii) Acquisitions are
made by Holdings, the Borrower may Dividend, advance or loan such amount
to Holdings so long as the aggregate amount of all such Dividends,
advances and loans does not exceed the limitation set forth above;
(viii) the Borrower and its Subsidiaries may sell or discount, in
each case without recourse and in the ordinary course of business,
accounts receivable arising in the ordinary course of business (x) which
are overdue or (y) which the Borrower may reasonably determine are
difficult to collect, but only in connection with the compromise or
collection thereof consistent with customary industry practice (and not
as part of any bulk sale or financing of receivables);
(ix) transfers of condemned property to the respective
governmental authority or agency that have condemned same (whether by
deed in lieu of condemnation or otherwise), and transfers of properties
that have been subject to a casualty to the respective insurer of such
property as part of an insurance settlement, so long as the proceeds
thereof are applied as required by Section 3.03(c);
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(x) license or sublicenses by the Borrower and its
Subsidiaries of software, trademarks and other intellectual property in
the ordinary course of business and which do not materially interfere
with the business of the Borrower or any Subsidiary;
(xi) the Borrower or any Wholly-Owned Subsidiary of the
Borrower may transfer assets to or lease assets to or acquire or lease
assets from the Borrower or any other Wholly-Owned Subsidiary so long as
the aggregate fair market value of all assets transferred or leased
pursuant to this clause (xi) does not exceed $500,000;
(xii) any Wholly-Owned Subsidiary of the Borrower may be merged
into the Borrower (as long as the Borrower is the surviving corporation
of such merger) or any other Wholly-Owned Subsidiary of the Borrower;
and
(xiii) so long as no Default or Event of Default is in existence
at the time the respective sale-leaseback transaction is effected or
would exist immediately after giving effect thereto, the Borrower may
enter into a sale-leaseback transaction in respect of either (but not
both) of the Specified Properties so long as (x) such sale is for cash
and at fair market value (as determined in good faith by management of
the Borrower), (y) the cash consideration is received at the time of the
closing of such transaction, and (z) the documentation with respect to
such transaction is reasonably satisfactory to the Agent.
To the extent the Required Banks waive the provisions of this Section 9.02 with
respect to the sale of any Collateral, or any Collateral is sold as permitted
by this Section 9.02, such Collateral (unless sold to Holdings or a Subsidiary
of Holdings) shall be sold free and clear of the Liens created by the Security
Documents, and the Agent and Collateral Agent shall be authorized to take any
actions deemed appropriate in order to effect the foregoing.
9.03 Dividends. Holdings shall not, and shall not permit any
of its Subsidiaries to, authorize, declare or pay any Dividends with respect to
Holdings or any of its Subsidiaries, except that:
(i) any Subsidiary of the Borrower may pay Dividends to the
Borrower or any Wholly-Owned Subsidiary of the Borrower;
(ii) the Borrower may pay cash Dividends to Holdings for the
purpose of paying, so long as all proceeds thereof are promptly used by
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Holdings to pay, its operating expenses incurred in the ordinary course
of business and other corporate overhead costs and expenses (including,
without limitation, legal and accounting expenses and similar expenses),
provided that the aggregate amount of cash Dividends paid pursuant to
this clause (ii) shall not exceed $250,000 during any Fiscal Year;
(iii) the Borrower may pay cash Dividends to Holdings for the
purpose of paying, so long as all proceeds thereof are promptly used by
Holdings to pay, franchise taxes and federal, state and local income
taxes and interest and penalties with respect thereto, if any, payable
by Holdings, provided that any refund shall be promptly returned by
Holdings to the Borrower;
(iv) the Borrower may pay cash Dividends to Holdings for the
purpose of paying, so long as all proceeds thereof are promptly used by
Holdings to pay, management fees or executive compensation to the extent
such management fees or executive compensation are permitted by Section
9.06(iv);
(v) Holdings may repurchase Holdings Common Stock and/or
options to purchase Holdings Common Stock held by (x) directors,
executive officers, members of management or employees of Holdings, the
Borrower or any of their Subsidiaries upon the death, disability,
retirement or termination of such director, executive officer, member of
management or employee or (y) other stockholders of Holdings so long as
the purpose is to acquire Holdings Common Stock for reissuance to new
employees of Holdings and its Subsidiaries, provided that (1) no Default
or Event of Default then exists or would result therefrom and (2) the
aggregate amount of cash expended by Holdings pursuant to this clause
(v) shall not exceed $1,000,000 in the aggregate (plus the amount of
cash proceeds received by Holdings from reissuance to a new employee of
such Holdings Common Stock), and provided further, that Holdings may
purchase, redeem or otherwise acquire common stock of Holdings (or
options to purchase such common stock) pursuant to this clause (v)
without regard to the restrictions set forth in the first proviso above
for consideration consisting of the proceeds of key man life insurance
obtained for the purposes described in clause (v);
(vi) so long as no Default or Event of Default then exists or
would result therefrom, the Borrower may pay cash Dividends to Holdings
for the purpose of enabling Holdings to pay the fees owing under the
Monitoring Agreements;
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(vii) the Borrower may pay cash Dividends to Holdings for the
purpose of enabling Holdings to make the purchases referred to in clause
(v) above, so long as all proceeds thereof are promptly used by Holdings
to make such purchases and/or pay such Dividends;
(viii) so long as no Default or Event of Default then exists or
would result therefrom, the Borrower may pay cash Dividends to Holdings
for the purpose of enabling Holdings to make payments on the Meredith
Note, provided that the amounts of such payments do not exceed the
amount necessary for the payment of scheduled principal and interest
thereon; and
(ix) the Borrower may pay cash Dividends to Holdings for the
purpose of enabling Holdings to make Permitted Section 9.02(vii)
Acquisitions or investments permitted by Section 9.05(xiii), provided
the amount of such Dividends is permitted by Section 9.02(vii) or
9.05(xiii), as the case may be.
9.04 Indebtedness. Holdings and the Borrower will not, and will
not permit any of their respective Subsidiaries to, contract, create, incur,
assume or suffer to exist any Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the
other Credit Documents;
(ii) Indebtedness of the Borrower pursuant to the Senior Notes
in an aggregate principal amount not to exceed $163,000,000 at any time
outstanding;
(iii) Existing Indebtedness shall be permitted to the extent the
same is listed on Schedule IV, and any refinancings or renewals thereof
so long as any such refinancing or renewal (x) shall not exceed the
principal amount of such Existing Indebtedness outstanding at the time
of the refinancing or renewal thereof, and (y) shall be on terms and
conditions (including, without limitation, with respect to the obligor
and guarantors, if any, in respect of such Existing Indebtedness,
amortization schedules, interest rates, redemption provisions,
covenants, defaults, security and remedies) no less favorable to the
Borrower and its Subsidiaries or the Banks than the terms and conditions
of the Existing Indebtedness so refinanced or renewed;
(iv) accrued expenses and current trade accounts payable
incurred in the ordinary course of business;
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(v) Indebtedness under Interest Rate Protection Agreements and
Other Hedging Agreements on terms acceptable to the Agent;
(vi) Indebtedness evidenced by Capitalized Lease Obligations to
the extent permitted pursuant to Section 9.07;
(vii) intercompany Indebtedness of any Wholly-Owned Subsidiary
of Holdings owing to the Borrower or any other Wholly-Owned Subsidiary
of Holdings, or of the Borrower owing to any Wholly-Owned Subsidiary of
Holdings, to the extent permitted by Section 9.05(iv);
(viii) Indebtedness of any Wholly-Owned Subsidiary of the
Borrower to the Borrower or another Wholly-Owned Subsidiary of the
Borrower constituting the purchase price in respect of intercompany
transfers of goods made in the ordinary course of business to the extent
not constituting Indebtedness for borrowed money;
(ix) Indebtedness subject to liens permitted under Section
9.01(viii);
(x) Contingent Obligations of the Borrower or any Subsidiary
as a guarantor of the lessee under any lease pursuant to which the
Borrower or a Subsidiary is the lessee so long as such lease is
otherwise permitted hereunder;
(xi) Indebtedness evidenced by Capitalized Lease Obligations to
the extent incurred pursuant to Section 9.02(xiii);
(xii) additional indebtedness not to exceed $5,000,000 in
aggregate principal amount outstanding at any one time; and
(xiii) accounts payable incurred by the Borrower and owing to NSL
in existence on the Effective Date that arose from services rendered by
NSL to the Borrower and accounts payable arising from time to time after
the Effective Date, consistent with past practices, incurred by the
Borrower as a result of services rendered by NSL to the Borrower to the
extent permitted by Section 9.06(ix), which accounts payable, at the
time of the creation thereof, do not exceed the costs incurred by NSL
(as determined on any reasonable basis) in providing the respective
services to the Borrower; provided that the proceeds from any payments
received by NSL are promptly used within ten Business Days by NSL to pay
its operating expenses incurred in the ordinary course of business and
other corporate overhead costs and expenses.
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9.05 Advances, Investments and Loans. Holdings and the
Borrower will not, and will not permit any of their respective Subsidiaries to,
directly or indirectly, lend money or credit or make advances to any Person, or
purchase or acquire any stock, obligations or securities of, or any other
interest in, or make any capital contribution to, any other Person, or purchase
or own a futures contract or otherwise become liable for the purchase or sale
of currency or other commodities at a future date in the nature of a futures
contract, or hold any cash or Cash Equivalents, except that the following shall
be permitted:
(i) the Borrower and its Subsidiaries may acquire and hold
accounts receivables owing to any of them, if created or acquired in the
ordinary course of business and payable or dischargeable in accordance
with customary terms;
(ii) the Borrower and its Subsidiaries may acquire and hold
cash and Cash Equivalents, provided that during any time that Revolving
Loans of Non-Defaulting Banks are outstanding, the aggregate amount of
cash and Cash Equivalents permitted to be held by the Borrower and its
Subsidiaries shall not exceed $3,000,000 for any period of five
consecutive days;
(iii) the Borrower may enter into Interest Rate Protection
Agreements and Other Hedging Agreements to the extent permitted by
Section 9.04(v);
(iv) any Wholly-Owned Subsidiary of the Borrower may make
intercompany loans and advances to the Borrower or any other
Wholly-Owned Subsidiary of the Borrower, and the Borrower may make
intercompany loans and advances to any Wholly-Owned Subsidiary of the
Borrower, provided that the aggregate principal amount of all such loans
and advances (determined without regard to any write-downs or write-offs
thereof) does not exceed $500,000 at any time outstanding;
(v) the Borrower and it Subsidiaries may sell or transfer
assets to each other to the extent permitted by Section 9.02;
(vi) the Borrower may establish Subsidiaries to the extent
permitted by Section 9.14;
(vii) Holdings may repurchase Holdings Common Stock to the
extent permitted by Section 9.03;
(viii) promissory notes and other similar non-cash consideration
received by the Borrower and its Subsidiaries in connection with
dispositions
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<PAGE> 69
permitted by Section 9.02 so long as the aggregate principal amount
thereof does not exceed $1,000,000 at any one time outstanding;
(ix) the Borrower and its Subsidiaries may acquire and own
investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in
settlement of delinquent obligations of, and other disputes with,
customers and suppliers arising in the ordinary course of business;
(x) advances, loans and investments in existence on the
Effective Date and set forth on Schedule VII without giving effect to
any additions thereto or replacements thereof, shall be permitted;
(xi) the Borrower and its Subsidiaries may make loans and
advances to officers, employees and directors of Holdings and its
Subsidiaries for moving, entertainment, travel and other similar
expenses, in each case incurred in the ordinary course of business, in
an aggregate outstanding principal amount not to exceed $250,000 at any
time;
(xii) Permitted Section 9.02(vii) Acquisitions shall be
permitted; and
(xiii) in addition to investments permitted by clauses (i)
through (xii) above, Holdings and its Wholly-Owned Subsidiaries (other
than NSL) may make additional investments, which may (but shall not be
required to be) be made in Unrestricted Subsidiaries, in a Person in an
aggregate amount which, when added to the aggregate amount expended on
Permitted Section 9.02(vii) Acquisitions, equals $10,000,000, it being
understood that if any such additional investments are made by Holdings,
the Borrower may Dividend, advance or loan such amount to Holdings so
long as the aggregate amount of all such Dividends, advances and loans
does not exceed the limitation set forth above.
9.06 Transactions with Affiliates. Holdings and the Borrower
will not, and will not permit any of their respective Subsidiaries to, enter
into any transaction or series of related transactions, whether or not in the
ordinary course of business, with any Affiliate of Holdings or any of its
Subsidiaries, other than in the ordinary course of business and on terms and
conditions substantially as favorable to Holdings or such Subsidiary as would
reasonably be obtained by Holdings or such Subsidiary at that time in a
comparable arm's-length transaction with a Person other than an Affiliate,
except that:
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(i) Dividends may be paid to the extent provided in Section
9.03;
(ii) loans may be made and other transactions may be entered
into between the Borrower and its Subsidiaries to the extent permitted
by Sections 9.02, 9.04 and 9.05;
(iii) customary fees may be paid to non-officer directors of
Holdings;
(iv) Holdings and its Subsidiaries may enter into employment
arrangements with respect to the procurement of services of their
respective officers and employees in the ordinary course of business;
(v) Holdings may make capital contributions to the Borrower;
(vi) Holdings and its Subsidiaries may make payments under the
Holdings Tax Allocation Agreement;
(vii) Holdings and/or the Borrower may make payments in
connection with the Monitoring Agreements;
(viii) the Borrower may make payments required by the EDS
Agreement; and
(ix) the Borrower may make payments to NSL in respect of
services rendered by NSL in accordance with past practices.
Except as specifically provided above, no management or similar
fees shall be paid or payable by Holdings or any of its Subsidiaries to any
Person.
9.07 Capital Expenditures. (a) Holdings and the Borrower will
not, and will not permit any of their respective Subsidiaries to, make any
Capital Expenditures, except that during any Fiscal Year the Borrower and its
Subsidiaries may make Capital Expenditures so long as the aggregate amount of
such Capital Expenditures made under this Section 9.07(a) does not exceed in
any Fiscal Year set forth below the amount set forth opposite such Fiscal Year:
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
1997 $14,000,000
1998 $12,000,000
1999 $12,000,000
</TABLE>
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<TABLE>
<S> <C>
2000 $12,000,000
2001 $12,000,000
2002 $ 7,000,000
</TABLE>
(b) Notwithstanding anything to the contrary contained in
clause (a) above, to the extent that the aggregate amount of Capital
Expenditures made by the Borrower and its Subsidiaries (excluding only those
Capital Expenditures made pursuant to clause (c)) in any Fiscal Year are less
than the amount set forth above with respect to such Fiscal Year, up to 50% of
the amount of such difference may be carried forward and used to make Capital
Expenditures in the immediately succeeding Fiscal Year.
(c) In addition to the Capital Expenditures permitted pursuant
to preceding clauses (a) and (b), the Borrower and its Subsidiaries may make
additional Capital Expenditures as follows: (i) Capital Expenditures consisting
of the reinvestment of Net Sale Proceeds of asset sales not required to reduce
the Total Revolving Loan Commitment pursuant to Section 3.03(b) as a result of
(x) clause (ii) of the first parenthetical phrase contained therein and (y) the
acquisition of Reinvestment Assets pursuant to the proviso thereto and (ii) the
reinvestment of proceeds of Recovery Events not required to reduce the Total
Revolving Loan Commitment pursuant to Section 3.03(c).
9.08 Minimum Consolidated Interest Coverage Ratio. Holdings and
the Borrower will not permit the Consolidated Interest Coverage Ratio for any
Test Period (taken as one accounting period) ended on the last day of a fiscal
quarter of the Borrower described below to be less than the amount set forth
opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ended
Closest
to the Last Day In Ratio
-------------------- -----
<S> <C>
June, 1997 1.20:1.00
September, 1997 1.20:1.00
December, 1997 1.30:1.00
March, 1998 1.35:1.00
June, 1998 1.45:1.00
September, 1998 1.45:1.00
December, 1998 1.55:1.00
March, 1999 1.65:1.00
June, 1999 1.70:1.00
</TABLE>
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<PAGE> 72
<TABLE>
<S> <C>
September, 1999 1.75:1.00
December, 1999 1.80:1.00
March, 2000 1.90:1.00
June, 2000 1.95:1.00
September, 2000 2.00:1.00
December, 2000 2.05:1.00
March, 2001 2.15:1.00
June, 2001 2.25:1.00
September, 2001 2.30:1.00
December, 2001 and thereafter 2.35:1.00
</TABLE>
9.09 Minimum Consolidated EBITDA. Holdings and the Borrower
will not permit Consolidated EBITDA for any Test Period, in each case taken as
one accounting period, ended on the last day of a fiscal quarter of the
Borrower set forth below to be less than the amount set forth opposite such
fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ended
Closest
to the Last Day In Amount
-------------------- ------
<S> <C>
June, 1997 $29,000,000
September, 1997 $30,000,000
December, 1997 $32,000,000
March, 1998 $34,000,000
June, 1998 $35,500,000
September, 1998 $36,500,000
December, 1998 $38,500,000
March, 1999 $40,500,000
June, 1999 $42,000,000
September, 1999 $42,000,000
December, 1999 $43,000,000
March, 2000 $45,500,000
June, 2000 $47,500,000
September, 2000 $48,500,000
December, 2000 $50,000,000
March, 2001 $52,000,000
June, 2001 $53,500,000
September, 2001 $54,500,000
December, 2001 and thereafter $56,500,000
</TABLE>
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<PAGE> 73
9.10 Limitation on Modifications of Indebtedness and Payments
of Indebtedness: Modifications of Certificate of Incorporation, By-Laws and
Certain Other Agreements; etc. Holdings and the Borrower will not, and will not
permit any of their respective Subsidiaries to (i) amend or modify, or permit
the amendment or modification of, any provision of the Existing Indebtedness,
the Senior Notes, the Senior Note Indenture, any Tax Allocation Agreement, the
Monitoring Agreements, the EDS Agreement or of any agreement (including,
without limitation, any purchase agreement, indenture, loan agreement or
security agreement) relating thereto other than any amendments or modifications
to the Existing Indebtedness which do not in any way adversely affect the
interests of the Banks, (ii) make (or give any notice in respect of) any
voluntary or optional payment or prepayment on or redemption or acquisition for
value of, or any prepayment or redemption as a result of any asset sale, change
of control or similar event of, any Existing Indebtedness or the Senior Notes,
or (iii) amend, modify or change its Certificate of Incorporation (including,
without limitation, by the filing or modification of any certificate of
designation) or By-Laws, or any agreement entered into by it, with respect to
its capital stock (including any Shareholders' Agreement), or enter into any
new agreement with respect to its capital stock, other than any amendments,
modifications or changes pursuant to this clause (iii) or any such new
agreements pursuant to this clause (iii) which do not in any way materially
adversely affect the interests of the Banks.
9.11 Limitation on Certain Restrictions on Subsidiaries.
Holdings and the Borrower will not, and will not permit any of their respective
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
such Subsidiary to (a) pay dividends or make any other distributions on its
capital stock or any other interest or participation in its profits owned by
Holdings or any Subsidiary of Holdings, or pay any Indebtedness owed to
Holdings or a Subsidiary of Holdings, (b) make loans or advances to Holdings or
any of Holdings' Subsidiaries or (c) transfer any of its properties or assets
to Holdings, the Borrower or any other Subsidiary, except for such encumbrances
or restrictions existing under or by reason of (i) applicable law, (ii) this
Agreement and the other Credit Documents, (iii) customary provisions
restricting subletting or assignment of any lease governing a leasehold
interest of the Borrower or a Subsidiary of the Borrower and (iv) customary
provisions restricting assignment of any licensing agreement entered into by
the Borrower or a Subsidiary of the Borrower in the ordinary course of
business.
9.12 Limitation on Issuance of Capital Stock. Holdings and the
Borrower shall not issue, or permit any of their respective Subsidiaries to
issue (i) any preferred stock or (ii) any redeemable common stock unless, in
either case, all terms thereof are satisfactory to the Required Banks in their
sole discretion, provided that (x)
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Holdings may issue Qualified Capital Stock and (y) Subsidiaries formed after
the Effective Date pursuant to Section 9.14 may issue capital stock to the
Borrower or the Subsidiary of the Borrower which is to own such stock.
9.13 Changes in Business. (a) The Borrower and its Subsidiaries
will not engage in any business other than the business engaged in by them as
of the Effective Date and activities directly related thereto, and businesses
complementary to the business or similar or related businesses.
(b) Holdings will engage in no business other than its
ownership of the capital stock of the Borrower (except for activities
associated with its rights and obligations pursuant to (x) the Monitoring
Agreements and (y) as otherwise permitted by this Agreement).
(c) NSL shall engage in no business other than the furnishing
of services for the account of the Borrower in a manner consistent with the
activities of NSL prior to the Effective Date. In addition, in no case shall
NSL acquire any equity interests in any other Person.
9.14 Limitation on Creation of Subsidiaries. Neither Holdings
nor the Borrower shall, or shall permit any Subsidiary to, establish, create or
acquire any additional Subsidiaries without the prior written consent of the
Required Banks; provided that Holdings and its Wholly-Owned Subsidiaries shall
be permitted to establish or create Subsidiaries to the extent otherwise
permitted in this Agreement.
SECTION 10. Events of Default. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
10.01 Payments. The Borrower shall (i) default in the payment
when due of any principal of any Revolving Loan or any Revolving Note or (ii)
default, and such default shall continue unremedied for three or more Business
Days, in the payment when due of any Unpaid Drawings or interest on any
Revolving Loan or Revolving Note, or any Fees or any other amounts owing
hereunder or thereunder; or
10.02 Representations, etc. Any representation, warranty or
statement made by any Credit Party herein or in any other Credit Document or in
any certificate delivered pursuant hereto or thereto shall prove to be untrue
in any material respect on the date as of which made or deemed made; or
10.03 Covenants. Holdings or the Borrower shall (i) default in
the due performance or observance by it of any term, covenant or agreement
contained in
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Section 8.01(g)(i), 8.08, 8.12, Section 9 or Section 13.18 or (ii) default in
the due performance or observance by it of any other term, covenant or
agreement contained in this Agreement and such default shall continue
unremedied for a period of 30 days after written notice to the Borrower by the
Agent or any Bank; or
10.04 Default Under Other Agreements. Holdings, the Borrower or
any of their respective Subsidiaries shall (i) default in any payment of any
Indebtedness (other than the Obligations) beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created or (ii) default in the observance or performance of any agreement or
condition relating to any Indebtedness (other than the Obligations) or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the holder or
holders of such Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause (determined without regard to whether any notice is
required), any such Indebtedness to become due prior to its stated maturity, or
(iii) any Indebtedness (other than the Obligations) of Holdings, the Borrower
or any of their respective Subsidiaries shall be declared to be due and
payable, or required to be prepaid other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof, provided that (x) it shall
not be a Default or Event of Default under this Section 10.04 unless the
aggregate principal amount of all Indebtedness as described in preceding
clauses (i) through (iii), inclusive, is at least $5,000,000; or
10.05 Bankruptcy, etc. Holdings, the Borrower or any of their
respective Subsidiaries shall commence a voluntary case concerning itself under
Title II of the United States Code entitled "Bankruptcy," as now or hereafter
in effect, or any successor thereto (the "Bankruptcy Code"); or an involuntary
case is commenced against Holdings, the Borrower or any of their respective
Subsidiaries and the petition is not controverted within 10 days, or is not
dismissed within 60 days, after commencement of the case; or a custodian (as
defined in the Bankruptcy Code) is appointed for, or takes charge of, all or
substantially all of the property of Holdings, the Borrower or any of their
respective Subsidiaries, or Holdings, the Borrower or any of their respective
Subsidiaries commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to Holdings, the Borrower or any of their respective
Subsidiaries, or there is commenced against Holdings, the Borrower or any of
their respective Subsidiaries any such proceeding which remains undismissed for
a period of 60 days, or Holdings, the Borrower or any of their respective
Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief or
other order approving any such case or proceeding is entered; or Holdings, the
Borrower or any of their respective Subsidiaries suffers any
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<PAGE> 76
appointment of any custodian or the like for it or any substantial part of its
property to continue undischarged or unstayed for a period of 60 days; or
Holdings, the Borrower or any of their respective Subsidiaries makes a general
assignment for the benefit of creditors; or any corporate action is taken by
Holdings, the Borrower or any of their respective Subsidiaries for the purpose
of effecting any of the foregoing; or
10.06 ERISA. (a) Any Plan shall fail to satisfy the minimum
funding standard required for any plan year or part thereof or a waiver of such
standard or extension of any amortization period is sought or granted under
Section 412 of the Code, any Plan shall have had or, in the reasonable opinion
of the Required Banks, is reasonably expected to have a trustee appointed to
administer such Plan, any Plan is, shall have been or is reasonably expected to
be terminated or to be the subject of termination proceedings under ERISA, any
Plan shall have an Unfunded Current Liability, a contribution required to be
made to a Plan has not been made, Holdings, the Borrower or any of their
respective Subsidiaries or any ERISA Affiliate has incurred or is reasonably
expected to incur a liability to or on account of a Plan under Section 409,
502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
Section 401(a)(29), 4971, 4975 or 4980 of the Code, or Holdings, the Borrower
or any of their respective Subsidiaries has incurred or is reasonably expected
to incur liabilities pursuant to one or more employee welfare benefit plans (as
defined in Section 3(l) of ERISA) which provide benefits to retired employees
or other former employees (other than as required by Section 601 of ERISA) or
employee pension benefit plans (as defined in Section 3(2) of ERISA); (b) there
shall result from any such event or events the imposition of a lien, the
granting of a security interest, or a liability or a material risk of incurring
a liability; and in each case in clauses (a) and (b) above, such lien, security
interest or liability, in the reasonable opinion of the Required Banks, will
have a material adverse effect upon the business, operations, property, assets,
liabilities or condition (financial or otherwise) of the Borrower or of
Holdings and its Subsidiaries taken as a whole; or
10.07 Security Documents. At any time after the execution and
delivery thereof, any of the Security Documents shall cease to be in full force
and effect, or shall cease in any material respect to give the Collateral Agent
for the benefit of the Secured Creditors the Liens, rights, powers and
privileges purported to be created thereby (including, without limitation, a
perfected security interest in, and Lien on, all of the Collateral), in favor
of the Collateral Agent, superior to and prior to the rights of all third
Persons (except as permitted by Section 9.01), and subject to no other Liens
(except as permitted by Section 9.01), or any Credit Party shall default in the
due performance or observance of any term, covenant or agreement on its part to
be performed or observed pursuant to any of the Security Documents and such
default shall continue
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beyond any grace period specifically applicable thereto pursuant to the terms
of such Security Document; or
10.08 Holdings Guaranty. The Holdings Guaranty or any provision
thereof shall cease to be in full force or effect, or Holdings or any Person
acting by or on behalf of Holdings shall deny or disaffirm Holdings'
obligations under the Holdings Guaranty, or Holdings shall default in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to the Holdings Guaranty; or
10.09 Judgments. One or more judgments or decrees shall be
entered against Holdings, the Borrower or any of their respective Subsidiaries
involving in the aggregate for Holdings, the Borrower and their respective
Subsidiaries a liability (not paid or fully covered by a reputable and solvent
insurance company) and such judgments and decrees either shall be final and
non-appealable or shall not be vacated, discharged or stayed or bonded pending
appeal for any period of 60 consecutive days, and the aggregate amount of all
such judgments exceeds $5,000,000; or
10.10 Change of Control. A Change of Control shall occur;
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, the Agent, upon the written request of the
Required Banks, shall by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent, any Bank or
the holder of any Revolving Note to enforce its claims against any Credit Party
(provided that, if an Event of Default specified in Section 10.05 shall occur
with respect to the Borrower, the result which would occur upon the giving of
written notice by the Agent to the Borrower as specified in clauses (i) and
(ii) below shall occur automatically without the giving of any such notice):
(i) declare the Total Revolving Loan Commitment terminated, whereupon the
Revolving Loan Commitments of each Bank shall forthwith terminate immediately
and any Commitment Commission shall forthwith become due and payable without
any other notice of any kind; (ii) declare the principal of and any accrued
interest in respect of all Revolving Loans and the Revolving Notes and all
Obligations owing hereunder (including Unpaid Drawings) and thereunder to be,
whereupon the same shall become, forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
each Credit Party; (iii) terminate any Letter of Credit, which may be
terminated, in accordance with its terms; (iv) direct the Borrower to pay (and
the Borrower agrees that upon receipt of such notice, or upon the occurrence of
an Event of Default specified in Section 10.05 with respect to the Borrower, it
will pay) to the Collateral Agent at the Payment Office such additional amount
of cash, to be held as security by the Collateral Agent, as is equal to the
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aggregate Stated Amount of all Letters of Credit issued for the account of the
Borrower and then outstanding; (v) enforce, as Collateral Agent, all of the
Liens and security interests created pursuant to the Security Documents; and
(vi) apply any cash collateral as provided in Section 4.02(b).
SECTION 11. Definitions and Accounting Terms.
11.01 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Account Component" shall have the meaning provided in the
definition of Borrowing Base.
"Adjusted Certificate of Deposit Rate" shall mean, on any day,
the sum (rounded to the nearest 1/100 of 1%) of (1) the rate obtained by
dividing (x) the most recent weekly average dealer offering rate for negotiable
certificates of deposit with a three-month maturity in the secondary market as
published in the most recent Federal Reserve System publication entitled
"Select Interest Rates," published weekly on Form H.15 as of the date hereof,
or if such publication or a substitute containing the foregoing rate
information shall not be published by the Federal Reserve System for any week,
the weekly average offering rate determined by the Agent on the basis of
quotations for such certificates received by it from three certificate of
deposit dealers in New York of recognized standing or, if such quotations are
unavailable, then on the basis of other sources reasonably selected by the
Agent, by (y) a percentage equal to 100% minus the stated maximum rate of all
reserve requirements as specified in Regulation D applicable on such day to a
three-month certificate of deposit of a member bank of the Federal Reserve
System in excess of $100,000 (including, without limitation, any marginal,
emergency, supplemental, special or other reserves), plus (2) the then daily
net annual assessment rate as estimated by the Agent for determining the
current annual assessment payable by the Agent to the Federal Deposit Insurance
Corporation for insuring three-month certificates of deposit.
"Adjusted Percentage" shall mean (x) at a time when no Bank
Default exists, for each Bank, such Bank's Percentage and (y) at a time when a
Bank Default exists (i) for each Bank that is a Defaulting Bank, zero and (ii)
for each Bank that is a Non-Defaulting Bank, the percentage determined by
dividing such Bank's Revolving Loan Commitment at such time by the Adjusted
Total Revolving Loan Commitment at such time, it being understood that all
references herein to Revolving Loan Commitments and the Adjusted Total
Revolving Loan Commitment at a time when the Total Revolving Loan Commitment or
Adjusted Total Revolving Loan Commitment,
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as the case may be, has been terminated shall be references to the Revolving
Loan Commitments or Adjusted Total Revolving Loan Commitment, as the case may
be, in effect immediately prior to such termination, provided that (A) no
Bank's Adjusted Percentage shall change upon the occurrence of a Bank Default
from that in effect immediately prior to such Bank Default if after giving
effect to such Bank Default, and any repayment of Revolving Loans at such time
pursuant to Section 4.02(a) or otherwise, the sum of (i) the aggregate
outstanding principal amount of Revolving Loans of all Non-Defaulting Banks
plus (ii) the Letter of Credit Outstandings, exceed the Adjusted Total
Revolving Loan Commitment; (B) the changes to the Adjusted Percentage that
would have become effective upon the occurrence of a Bank Default but that did
not become effective as a result of the preceding clause (A) shall become
effective after the occurrence of the relevant Bank Default to the extent the
sum of (i) the aggregate outstanding principal amount of the Revolving Loans of
all Non-Defaulting Banks plus (ii) the Letter of Credit Outstandings is equal
to or less than the Adjusted Total Revolving Loan Commitment; and (C) if (i) a
Non-Defaulting Bank's Adjusted Percentage is changed pursuant to the preceding
clause (B) and (ii) any repayment of such Bank's Revolving Loans, or of Unpaid
Drawings with respect to Letters of Credit, that were made during the period
commencing after the date of the relevant Bank Default and ending on the date
of such change to its Adjusted Percentage must be returned to the Borrower as a
preferential or similar payment in any bankruptcy or similar proceeding of the
Borrower, then the change to such Non-Defaulting Bank's Adjusted Percentage
effected pursuant to said clause (B) shall be reduced to that positive change,
if any, as would have been made to its Adjusted Percentage if (x) such
repayments had not been made and (y) the maximum change to its Adjusted
Percentage would have resulted in the sum of the outstanding principal of
Revolving Loans made by such Bank plus such Bank's new Adjusted Percentage of
the outstanding principal amount of Letter of Credit Outstandings equalling
such Bank's Revolving Loan Commitment at such time.
"Adjusted Total Revolving Loan Commitment" shall mean at any time
the Total Revolving Loan Commitment less the aggregate Revolving Loan
Commitments of all Defaulting Banks.
"Affiliate" shall mean, with respect to any Person, any other
Person (including, for purposes of Section 9.06 only, all directors, officers
and partners of such Person) directly or indirectly controlling, controlled by,
or under direct or indirect common control with, such Person; provided,
however, that for purposes of Section 9.06, an Affiliate of Holdings shall
include any Person that directly or indirectly owns more than 5% of any class
of the capital stock of Holdings and any officer or director of Holdings or any
such Person. A Person shall be deemed to control another Person if such Person
possesses, directly or indirectly, the power to direct or cause the
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direction of the management and policies of such other Person, whether through
the ownership of voting securities, by contract or otherwise.
"Agent" shall mean Bankers Trust Company, in its capacity as
Agent for the Banks hereunder, and shall include any successor to the Agent
appointed pursuant to Section 12.09.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented, amended, restated, extended, renewed or replaced from time to
time.
"Anticipated Reinvestment Amount" shall mean, with respect to any
Reinvestment Election, the amount specified in the Reinvestment Notice
delivered by the Borrower in connection therewith as the amount that the
Borrower intends to use to purchase, construct or otherwise acquire
Reinvestment Assets.
"Applicable Margin" shall mean a percentage per annum equal to
(x) in the case of Base Rate Loans, 1.25% and (y) in the case of Eurodollar
Loans, 2.50%.
"Assignment and Assumption Agreement" shall mean the Assignment
and Assumption Agreement substantially in the form of Exhibit L (appropriately
completed).
"Authorized Officer" of any Credit Party shall mean any of the
Chairman of the Board, the President, any Vice President, the Treasurer, the
Secretary, any Assistant Secretary, any Assistant Treasurer or the Controller
of such Credit Party or any other officer of such Credit Party which is
designated in writing to the Agent, BTCo and the Issuing Bank by any of the
foregoing officers of such Credit Party as being authorized to give such
notices under this Agreement.
"Bank" shall mean each financial institution listed on Schedule
I, as well as any Person which becomes a "Bank" hereunder pursuant to Section
13.04(b).
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing or to fund
its portion of any unreimbursed payment under Section 2.03(c) or (ii) a Bank
having notified in writing the Borrower and/or the Agent that it does not
intend to comply with its obligations under Section 1.01 or Section 2, in the
case of either clause (i) or (ii) as a result of any takeover of such Bank by
any regulatory authority or agency.
"Bankruptcy Code" shall have the meaning provided in Section
10.05.
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"Base Rate" at any time shall mean the higher of (i) 1/2 of 1% in
excess of the Adjusted Certificate of Deposit Rate and (ii) the Prime Lending
Rate.
"Base Rate Loan" shall mean each Revolving Loan designated or
deemed designated as such by the Borrower at the time of the incurrence thereof
or conversion thereto.
"Borrower" shall have the meaning provided in the first paragraph
of this Agreement.
"Borrowing" shall mean the borrowing of one Type of Revolving
Loan from all the Banks on a given date (or resulting from a conversion or
conversions on such date) having in the case of Eurodollar Loans the same
Interest Period, provided that Base Rate Loans incurred pursuant to Section
1.10(b) shall be considered part of the related Borrowing of Eurodollar Loans.
"Borrowing Base" shall mean, as of the time any determination
thereof is to be made, the lesser of (A) the sum of (a) 85% of Eligible
Receivables (the "Account Component") plus (b) 50% of Unbilled Revenue (the
"Unbilled Component"), each as reported in the most recent Borrowing Base
Certificate delivered to the Agent pursuant to Section 8.01(k), provided that
the Unbilled Component shall not exceed an amount equal to 35% of the sum of
the Account Component plus the Unbilled Component and, if at any time of
determination, the Unbilled Component exceeds an amount equal to 35% of such
sum, the term "Borrowing Base" shall mean, as of such date of determination,
the quotient obtained by dividing the Account Component by.65, and (B) 80% of
the book value of the accounts receivable at such time of the Borrower and its
Subsidiaries.
"Borrowing Base Certificate" shall have the meaning provided in
Section 8.01(k).
"Borrowing Base Deficiency" shall mean, at any time, the amount,
if any, by which the sum of the aggregate principal amount of Revolving Loans
then outstanding plus the Letter of Credit Outstandings at such time exceeds
the Borrowing Base then in effect.
"BTCo" shall mean Bankers Trust Company in its individual
capacity.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day except Saturday, Sunday and any day which
shall be in New York City a legal holiday or a day on which banking
institutions are authorized or
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required by law or other government action to close and (ii) with respect to
all notices and determinations in connection with, and payments of principal
and interest on, Eurodollar Loans, any day which is a Business Day described in
clause (i) above and which is also a day for trading by and between banks in
the New York interbank Eurodollar market.
"Capital Expenditures" shall mean, with respect to any Person,
all expenditures by such Person which should be capitalized in accordance with
generally accepted accounting principles, including all such expenditures with
respect to fixed or capital assets (including, without limitation, expenditures
for maintenance and repairs which should be capitalized in accordance with
generally accepted accounting principles) and the amount of Capitalized Lease
Obligations incurred by such Person.
"Capitalized Lease Obligations" of any Person shall mean all
rental obligations which, under generally accepted accounting principles, are
or will be required to be capitalized on the books of such Person, in each case
taken at the amount thereof accounted for as indebtedness in accordance with
such principles.
"Cash Equivalents" shall mean, as to any Person, (i) securities
issued or directly and fully guaranteed or insured by the United States or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States is pledged in support thereof) having maturities of not more
than one year from the date of acquisition, (ii) time deposits and certificates
of deposit of any commercial bank having, or which is the principal banking
subsidiary of a bank holding company organized under the laws of the United
States, any State thereof, the District of Columbia or any foreign jurisdiction
having capital, surplus and undivided profits aggregating in excess of
$200,000,000, with maturities of not more than one year from the date of
acquisition by such Person, (iii) repurchase obligations with a term of not
more than 90 days for underlying securities of the types described in clause
(i) above entered into with any bank meeting the qualifications specified in
clause (ii) above, (iv) commercial paper issued by any Person incorporated in
the United States rated at least A-1 or the equivalent thereof by Standard &
Poor's Rating Group or at least P-1 or the equivalent thereof by Moody's
Investors Service, Inc. and in each case maturing not more than one year after
the date of acquisition by such Person, (v) investments in money market funds
substantially all of whose assets are comprised of securities of the types
described in clauses (i) through (iv) above and (vi) deposit accounts
maintained in the ordinary course of business not in excess of $100,000 at any
single institution.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time
to time, 42 U.S.C. Section 9601 et seq.
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"Change of Control" shall mean (i) Holdings shall at any time
cease to own 100% of the capital stock of the Borrower; (ii) at any time, and
for any reason whatsoever, (x) HM Group shall not have the right to elect, or
shall for any reason not have elected, a majority of the directors of Holdings
or (y) HM Group shall own less than a majority of the outstanding common stock
of Holdings, provided that a failure to meet the foregoing test set forth in
this sub-clause (y) shall not constitute a "Change of Control" if, and only
if, at all times when the foregoing test is not met each of the following two
tests are met: (1) HM Group shall own at least 15% of the outstanding common
stock of Holdings and (2) HM Group shall own at least 75% of the number of
shares (adjusted for stock splits, stock dividends and other similar events on
an equitable basis) of common stock of Holdings that it owned on the Initial
Borrowing Date and after giving effect thereto; or (iii) at any time a "Change
of Control" under and as defined in the Senior Note Indenture shall have
occurred.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and the rulings issued
thereunder. Section references to the Code are to the Code, as in effect at the
date of this Agreement, and to any subsequent provision of the Code, amendatory
thereof, supplemental thereto or substituted therefor.
"Collateral" shall mean all property with respect to which any
security interests have been granted (or purported to be granted) pursuant to
any Security Document, including, without limitation, all Pledge Agreement
Collateral, all Security Agreement Collateral and all cash and Cash Equivalents
delivered as collateral pursuant to Section 4.02 or 10 hereof.
"Collateral Agent" shall mean the Agent acting as collateral
agent for the Secured Creditors pursuant to the Security Documents.
"Collective Bargaining Agreements" shall have the meaning
provided in Section 5.05.
"Commitment Commission" shall have the meaning provided in
Section 3.01 (a).
"Consolidated EBIT" shall mean, for any period, the Consolidated
Net Income of Holdings and its Consolidated Subsidiaries, before interest
expense and provision for taxes and without giving effect to any extraordinary
gains or losses or gains or losses from sales of assets other than inventory
sold in the ordinary course of business.
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"Consolidated EBITDA" shall mean, for any period, Consolidated
EBIT, adjusted by adding thereto the amount of all amortization of intangibles
and depreciation that were deducted in arriving at Consolidated EBIT for such
period.
"Consolidated Interest Coverage Ratio" for any period shall mean
the ratio of Consolidated EBITDA to Consolidated Net Cash Interest Expense for
such period.
"Consolidated Net Cash Interest Expense" shall mean, for any
period, without duplication, total cash interest expense (including that
attributable to Capitalized Lease Obligations in accordance with GAAP) of
Holdings and its Subsidiaries on a consolidated basis with respect to all
outstanding Indebtedness of Holdings and its Subsidiaries, including, without
limitation, all commissions, discounts and other fees and charges paid with
respect to letters of credit and bankers' acceptance financing and net costs
under Interest Rate Protection Agreements, but excluding the amortization of
any deferred financing costs incurred in connection with this Agreement net of
the total consolidated cash interest income of Holdings and its Consolidated
Subsidiaries for such period.
"Consolidated Net Income" shall mean, for any period, the
consolidated net after tax income of Holdings and its Consolidated Subsidiaries
determined in accordance with GAAP; provided that for purposes of this
definition, the net after tax income of any Subsidiary of the Borrower that is
not a Wholly-Owned Subsidiary of the Borrower shall be included in Consolidated
Net Income in an amount equal to the percentage equity ownership (direct or
indirect) of the Borrower in such non-Wholly-Owned Subsidiary multiplied by the
net after tax income of such non-Wholly-Owned Subsidiary.
"Consolidated Subsidiaries" shall mean, as to any Person, all
Subsidiaries of such Person which are consolidated with such Person for
financial reporting purposes. Notwithstanding anything to the contrary
contained in this Agreement (and except for purposes of the definition of
Unrestricted Subsidiary), an Unrestricted Subsidiary shall be deemed not to be
a Subsidiary of the Borrower or any of its other Subsidiaries for purposes of
this Agreement.
"Contingent Obligation" shall mean, as to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to
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advance or supply funds (x) for the purchase or payment of any such primary
obligation or (y) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the holder of such primary obligation
against loss in respect thereof; provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made (or, if less, the maximum amount of such primary obligation for which
such Person may be liable pursuant to the terms of the instrument evidencing
such Contingent Obligation) or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Credit Documents" shall mean this Agreement and, after the
execution and delivery thereof pursuant to the terms of this Agreement, each
Revolving Note and each Security Document.
"Credit Event" shall mean the making of any Revolving Loan or the
issuance of any Letter of Credit.
"Credit Party" shall mean Holdings and the Borrower.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a
Bank Default is in effect.
"Disqualified Stock" shall mean any capital stock which, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, (i) matures
(excluding any maturity as the result of an optional redemption by the issuer
thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof, in whole or in
part, on or prior to the first anniversary of the Final Maturity Date, or (ii)
is convertible into or exchangeable (unless at the sole option of the issuer
thereof) for (a) debt securities or (b) any capital stock referred to
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in (i) above, in each case at any time prior to the first anniversary of the
Final Maturity Date.
"Dividend" with respect to any Person shall mean that such Person
has declared or paid a dividend or returned any equity capital to its
stockholders or authorized or made any other distribution, payment or delivery
of property (other than common stock of such Person) or cash to its
stockholders as such, or redeemed, retired, purchased or otherwise acquired,
directly or indirectly, for a consideration any shares of any class of its
capital stock outstanding on or after the Effective Date (or any options or
warrants issued by such Person with respect to its capital stock), or set aside
any funds for any of the foregoing purposes, or shall have permitted any of its
Subsidiaries to purchase or otherwise acquire for a consideration any shares of
any class of the capital stock of such Person outstanding on or after the
Effective Date (or any options or warrants issued by such Person with respect
to its capital stock). Without limiting the foregoing, "Dividends" with respect
to any Person shall also include all payments made or required to be made by
such Person with respect to any stock appreciation rights, plans, equity
incentive or achievement plans or any similar plans or setting aside of any
funds for the foregoing purposes.
"Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States.
"Drawing" shall have the meaning provided in Section 2.04(b).
"EDS Agreement" shall mean the Agreement for Information
Technology Services, dated as of November 11, 1994, between the Borrower and
Electronic Data Systems Corporation, in the form delivered to the Banks on the
Initial Borrowing Date and as the same may be amended from time to time in
accordance with the terms hereof and thereof.
"Effective Date" shall have the meaning provided in Section
13.10.
"Eligible Receivables" shall mean the total face amount of the
receivables of the Borrower and its Subsidiaries which conform to the
representations and warranties contained in the Security Agreement (including,
without limitation, that the Collateral Agent shall have and maintain a first
priority perfected security interest in all such receivables), and at all times
continue to be acceptable to the Collateral Agent in its reasonable judgment,
less any returns, discounts, claims, credits and allowances of any nature
(whether issued, owing, granted or outstanding). Without limiting the
generality of the foregoing, unless otherwise agreed by Agent the following are
not Eligible Receivables:
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(a) receivables which, at the date of issuance of the
respective invoice therefor, were payable more than sixty (60) days
after the date of issuance of such invoice, provided that such
receivables shall be included as eligible if approved in advance in
writing by the Agent;
(b) receivables which remain unpaid for more than ninety (90)
days after the original invoice date;
(c) receivables due from an account debtor whose principal
place of business is located outside the United States of America unless
such receivable is backed by an irrevocable letter of credit which has
been issued or confirmed by a financial institution satisfactory to the
Agent and which has been delivered to Agent as additional collateral
under the Security Documents for payment of such receivable, together
with such other documentation as may be reasonably requested by the
Agent;
(d) receivables due from an account debtor that the Agent has
notified (in writing) the Borrower has an unsatisfactory credit standing
(as determined in the sole and reasonable credit judgment of Agent) to
the extent such receivables (or portions thereof) have been created or
renewed after such notification;
(e) receivables with respect to which the account debtor is
the United States of America or any department, agency or
instrumentality thereof unless the Borrower has, with respect to such
receivables, complied with the Federal Assignment of Claims Act of 1940,
as amended (31 U.S.C. Section 3727);
(f) receivables with respect to which the account debtor is an
Affiliate of the Borrower or a director, officer, agent, stockholder or
employee of the Borrower or any of its Affiliates;
(g) receivables due from an account debtor if more than twenty
percent (20%) of the aggregate face amount of the receivables of such
account debtor have at any time remained unpaid for more than ninety
(90) days after the original invoice date;
(h) receivables with respect to which there is any unresolved
dispute with the respective account debtor (but only to the extent of
such dispute);
(i) receivables evidenced by an instrument (as defined in
Article 9 of the UCC) not in the possession of the Agent;
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(j) receivables with respect to which the Agent does not
have a valid, first priority and fully perfected security interest in or
Lien (subject to Permitted Liens) on such receivables or the receivables
do not otherwise conform to the representations and warranties contained
in the Security Agreement or the other Credit Documents, except that the
value of any receivable shall be reduced by the amount of any
obligations secured by Permitted Liens which are prior to the Lien in
favor of the Collateral Agent;
(k) receivables with respect to which the account debtor
is the subject of any bankruptcy or other insolvency proceeding;
provided that such receivables shall not be excluded if approved in
advance in writing by the Agent;
(l) receivables due from an account debtor to the extent
that such receivables exceed in the aggregate an amount equal to twenty
percent (20%) of the aggregate of all receivables at said date (but only
to the extent of such excess);
(m) receivables with respect to which the account
debtor's obligation to pay is conditional or subject to a repurchase
obligation or right to return, including bill and hold sales, guarantied
sales, sale or return transactions, sales on approval or consignment
sales; and
(n) receivables with respect to which the account debtor
is located in New Jersey, Minnesota, or any other state denying
creditors access to its courts in the absence of a Notice of Business
Activities Report or other similar filing, unless the Borrower has
either qualified as a foreign corporation authorized to transact
business in such state or has filed a Notice of Business Activities
Report or similar filing with the applicable state agency for the then
current year.
"Eligible Transferee" shall mean and include a commercial
bank, financial institution or other "accredited investor" (as defined in
Regulation D of the Securities Act).
"Employee Benefit Plans" shall have the meaning provided in
Section 5.05.
"Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, notices of noncompliance or violation, investigations or
proceedings relating in any way to any Environmental Law or any permit issued,
or any approval given, under any such
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Environmental Law (hereafter, "Claims"), including, without limitation, (a) any
and all Claims by governmental or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages pursuant to
any applicable Environmental Law, and (b) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief in connection with alleged injury or threat of injury to
health, safety or the environment due to the presence of Hazardous Materials.
"Environmental Law" means any applicable Federal, state,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy and rule of
common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, to the extent binding on
Holdings, the Borrower or any of their respective Subsidiaries, relating to the
environment, employee health and safety or Hazardous Materials, including,
without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33
U.S.C. Section 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq.; the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the
Safe Drinking Water Act, 42 U.S.C. Section 3803 et @.; the Oil Pollution Act of
1990, 33 U.S.C. Section 2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq., the Hazardous
Material Transportation Act, 49 U.S.C. Section 1801 et seq. and the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq. (to the
extent it regulates occupational exposure to Hazardous Materials); and any
state and local or foreign counterparts or equivalents, in each case as amended
from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder. Section references to ERISA are to ERISA, as in
effect at the date of this Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in
Section 3(9) of ERISA) which together with Holdings or any Subsidiary of
Holdings would be deemed to be a "single employer" (i) within the meaning of
Section 414(b), (c), (m) or (o) of the Code or (ii) as a result of Holdings or
a Subsidiary of Holdings being or having been a general partner of such person.
"Eurodollar Loan" shall mean each Revolving Loan designated as
such by the Borrower at the time of the incurrence thereof or conversion
thereto.
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"Eurodollar Rate" shall mean (a) the offered quotation to
first-class banks in the New York interbank Eurodollar market by BTCo for
Dollar deposits of amounts in immediately available funds comparable to the
outstanding principal amount of the Eurodollar Loan of BTCo with maturities
comparable to the Interest Period applicable to such Eurodollar Loan commencing
two Business Days thereafter as of 10:00 A.M. (New York time) on the date which
is two Business Days prior to the commencement of such Interest Period, divided
(and rounded off to the nearest 1/16 of 1%) by (b) a percentage equal to 100%
minus the then stated maximum rate of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves required by applicable law) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency funding or liabilities as
defined in Regulation D (or any successor category of liabilities under
Regulation D).
"Event of Default" shall have the meaning provided in Section
10.
"Existing Credit Agreement" shall mean the Credit Agreement,
dated as of May 5, 1993, among the Borrower, certain lenders named therein and
Heller Financial, Inc., as agent, as the same has been amended, modified or
supplemented through the Initial Borrowing Date.
"Existing Debt Agreements" shall have the meaning provided in
Section 5.05.
"Existing Indebtedness" shall have the meaning provided in
Section 7.2 1.
"Facing Fee" shall have the meaning provided in Section
3.01(c).
"Federal Funds Rate" shall mean 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 the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
"Fees" shall mean all amounts payable pursuant to or referred
to in Section 3.01.
"Final Maturity Date" shall mean January 31_, 2002.
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"Fiscal Year" shall mean any fiscal year of Holdings or the
Borrower, as the case may be.
"GAAP" shall have the meaning provided in Section 13.07(a).
"Guaranteed Obligations" shall mean all obligations of the
Borrower (i) to each Bank for the full and prompt payment when due (whether at
the stated maturity, by acceleration or otherwise) of the principal and
interest on each Revolving Note issued by the Borrower to such Bank, and
Revolving Loans made, under this Agreement and all reimbursement obligations
and Unpaid Drawings with respect to Letters of Credit, together with all the
other obligations and liabilities (including, without limitation, indemnities,
Fees and interest thereon) of the Borrower to such Bank now existing or
hereafter incurred under, arising out of or in connection with this Agreement
or any other Credit Document and the due performance and compliance with all
the terms, conditions and agreements contained in the Credit Documents by the
Borrower and (ii) to each Bank and each Affiliate of a Bank which enters into
an Interest Rate Protection Agreement and/or Other Hedging Agreement with the
Borrower, which by its express terms are entitled to the benefit of the
Holdings Guaranty pursuant to Section 14 with the written consent of the
Holdings, the full and prompt payment when due (whether by acceleration or
otherwise) of all obligations of the Borrower owing, under any such Interest
Rate Protection Agreement and/or Other Hedging Agreement, whether now in
existence or hereafter arising, and the due performance and compliance with all
terms, conditions and agreements contained therein.
"Hazardous Materials" means (a) any petroleum or petroleum
products, radioactive materials, friable asbestos, urea formaldehyde foam
insulation, transformers or other equipment that contain dielectric fluid
containing levels of polychlorinated biphenyls in excess of 50 parts per
million, and radon gas; (b) any chemicals, materials or substances defined as
or included in the definition of "hazardous substances," "hazardous waste,"
"hazardous materials," "extremely hazardous substances," "restricted hazardous
waste," "toxic substances," "toxic pollutants," "contaminants," or
"pollutants," or words of similar import, under any applicable Environmental
Law; and (c) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority under
Environmental Laws.
"HM Group" shall mean, collectively, (i) Hicks, Muse, Tate &
Furst Incorporated and its Affiliates (including, without limitation, HMEF),
(ii) so long as Hicks, Muse, Tate & Furst Incorporated and its Affiliates
possess sole voting right with respect to the capital stock held by each such
individual, such individuals who are or were employees, officers, directors or
partners of Hicks, Muse, Tate & Furst
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Incorporated or such Affiliate and the family members of such individuals or
trusts created for the sole benefit of such family members and (iii) so long as
Hicks, Muse, Tate & Furst Incorporated and its Affiliates possess sole voting
right with respect to the capital stock held by each such Person, any Person
not otherwise described by clause (i) and (ii) above, provided that the
aggregate number of shares held by all such Persons in accordance with this
clause (iii) at any time shall not exceed 5.0% of the aggregate number of
shares held by the Persons described in clause (i) and (ii) above at such time.
"HMEF" shall mean Hicks, Muse, Tate & Furst Equity Fund I,
L.P., a Delaware limited partnership.
"Holdings" shall have the meaning provided in the first
paragraph of this Agreement.
"Holdings Common Stock" shall mean the voting common stock of
Holdings, $.0l par value per share.
"Holdings Guaranty" shall mean the guaranty issued pursuant to
Section 14 herein.
"Holdings Tax Allocation Agreement" shall mean the Tax Sharing
Agreement, dated May 5, 1993, among Holdings, the Borrower and certain
Subsidiaries of Holdings noted on the signature pages thereto, in the form
delivered to the Banks on the Initial Borrowing Date.
"Indebtedness" shall mean, as to any Person, without
duplication, (i) all indebtedness (including principal, interest, fees and
charges) of such Person for borrowed money or for the deferred purchase price
of property or services, (ii) the maximum amount available to be drawn under
all letters of credit issued for the account of such Person and all unpaid
drawings in respect of such letters of credit, (iii) all Indebtedness of the
types described in clause (i), (ii), (iv), (v), (vi) or (vii) of this
definition secured by any Lien on any property owned by such Person, whether or
not such Indebtedness has been assumed by such Person (to the extent of the
value of the respective property), (iv) the aggregate amount required to be
capitalized under leases under which such Person is the lessee, (v) all
obligations of such person to pay a specified purchase price for goods or
services, whether or not delivered or accepted, i.e.., take-or-pay and similar
obligations, (vi) all Contingent Obligations of such Person and (vii) all
obligations under any Interest Rate Protection Agreement and Other Hedging
Agreements or under any similar type of agreement.
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"Initial Borrowing Date" shall mean the date occurring on or
after the Effective Date on which the initial Borrowing of Revolving Loans
hereunder occurs.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section
1.09.
"Interest Rate Protection Agreement" shall mean any interest
rate swap agreement, interest rate cap agreement, interest collar agreement,
interest rate hedging agreement, interest rate floor agreement or other similar
agreement or arrangement.
"Issuing Bank" shall mean BTCo and any Bank which at the
request of the Borrower and with the consent of the Agent agrees, in such
Bank's sole discretion, to become an Issuing Bank for the purpose of issuing
Letters of Credit pursuant to Section 2. The sole Issuing Bank on the Initial
Borrowing Date is BTCo.
"L/C Supportable Obligations" shall mean (i) obligations of
the Borrower or its Subsidiaries incurred in the ordinary course of business
with respect to insurance obligations and workers' compensation, surety bonds
and other similar statutory obligations and (ii) such other obligations of the
Borrower or any of its Subsidiaries as are reasonably acceptable to the
respective Issuing Bank and otherwise permitted to exist pursuant to the terms
of this Agreement.
"Leaseholds" of any Person means all the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Letter of Credit Fee" shall have the meaning provided in
Section 3.01 (b).
"Letter of Credit Outstandings" shall mean, at any time, the
sum of (i) the aggregate Stated Amount of all outstanding Letters of Credit and
(ii) the amount of all Unpaid Drawings.
"Letter of Credit Request" shall have the meaning provided in
Section 2.02(a).
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"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing or similar statement or notice filed under
the UCC or any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Management Agreements" shall have the meaning provided in
Section 5.05.
"Margin Stock" shall have the meaning provided in Regulation
U.
"Meredith Note" shall mean the promissory note, dated June 26,
1991, in the original principal amount of $7,000,000 executed by NBD and
payable to the order of Meredith Corporation.
"Monitoring Agreements" shall mean, collectively, (i) the
Financial Advisory Agreement, dated as of August 22, 1990, by and among the
Borrower, Holdings and Hicks, Muse & Co. Incorporated and (ii) the Financial
Advisory Agreement, dated as of August 20, 1990, by and among the Borrower,
Holdings and Wand/Neodata Investments, L.P., in each case as in effect on the
Initial Borrowing Date and as amended, modified or supplemented from time to
time in accordance with the terms thereof and hereof.
"NBD" shall mean Neodata Books/Distribution Holdings, Inc., a
Delaware corporation, which was merged with and into Holdings, with Holdings
the surviving corporation of such merger.
"Net Sale Proceeds" shall mean for any sale of assets, the
gross cash proceeds (including any cash received by way of deferred payment
pursuant to a promissory note, receivable or otherwise, but only as and when
received) received from such sale of assets, net of reasonable transaction
costs (including, without limitation, any underwriting, brokerage or other
customary selling commissions and reasonable legal, advisory and other fees and
expenses, including title and recording expenses, associated therewith) and
payments of unassumed liabilities relating to the assets sold at the time of,
or within 30 days after, the date of such sale, the amount of such gross cash
proceeds required to be used to repay any Indebtedness (other than Indebtedness
of the Banks pursuant to this Agreement) which is secured by the respective
assets which were sold, and the estimated marginal increase in income taxes
which will be payable by Holdings' consolidated group with respect to the
fiscal year in which the sale occurs as a result of such sale; but excluding
any portion of any such gross cash
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proceeds which Holdings determines in good faith should be reserved for post-
closing adjustments (to the extent Holdings delivers to the Banks a certificate
signed by its chief financial officer, controller or chief accounting officer
as to such determination), it being understood and agreed that on the day that
all such post-closing adjustments have been determined, (which shall not be
later than six months following the date of the respective asset sale), the
amount (if any) by which the reserved amount in respect of such sale or
disposition exceeds the actual post-closing adjustments payable by Holdings or
any of its Subsidiaries shall constitute Net Sale Proceeds on such date
received by Holdings and/or any of its Subsidiaries from such sale, lease,
transfer or other disposition.
"Non-Defaulting Bank" shall mean and include each Bank other
than a Defaulting Bank.
"Notice of Borrowing" shall have the meaning provided in
Section 1.03 (a).
"Notice of Conversion" shall have the meaning provided in
Section 1.06.
"Notice Office" shall mean the office of the Agent located at
130 Liberty Street, New York, New York 10006, Attention: Jennifer Quinn, or
such other office as the Agent may hereafter designate in writing as such to
the other parties hereto.
"NSL" shall mean Neodata Services Limited, a corporation
organized under the laws of Ireland.
"Obligations" shall mean all amounts owing to the Agent, the
Collateral Agent or any Bank pursuant to the terms of this Agreement or any
other Credit Document.
"Other Hedging Agreement" shall mean any foreign exchange
contracts, currency swap agreements, commodity agreements or other similar
agreements or arrangements designed to protect against the fluctuations in
currency values.
"Participant" shall have the meaning provided in Section
2.03(a).
"Payment Office" shall mean the office of the Agent located at
One Bankers Trust Plaza, New York, New York 10006, or such other office as the
Agent may hereafter designate in writing as such to the other parties hereto.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" of any Bank at any time shall mean a fraction
(expressed as a percentage) the numerator of which is the Revolving Loan
Commitment of such Bank at such time and the denominator of which is the Total
Revolving Loan Commitment at such time, provided that if the Percentage of any
Bank is to be determined after the Total Revolving Loan Commitment has been
terminated, then the Percentages of the Banks shall be determined immediately
prior (and without giving effect) to such termination.
"Permitted Liens" shall have the meaning provided in Section
9.01.
"Permitted Section 9.02(vii) Acquisition" shall have the
meaning provided in Section 9.02(vii).
"Person" shall mean any individual, partnership, joint
venture, firm, corporation, association, trust or other enterprise or any
government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" shall mean any pension plan, as defined in Section 3(2)
of ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of), Holdings or a Subsidiary of Holdings or an ERISA
Affiliate, and each such plan for the five year period immediately following
the latest date on which Holdings, a Subsidiary of Holdings or an ERISA
Affiliate maintained, contributed or had an obligation to contribute to such
plan.
"Pledge Agreement" shall have the meaning provided in Section
5.08.
"Pledge Agreement Collateral" shall mean all "Collateral" as
defined in the Pledge Agreement.
"Pledged Stock" shall mean "Pledged Stock" as defined in the
Pledge Agreement.
"Prime Lending Rate" shall mean the rate which BTCo announces
from time to time as its prime lending rate, the Prime Lending Rate to change
when and as such prime lending rate changes. The Prime Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. BTCo may make commercial loans or other loans
at rates of interest at, above or below the Prime Lending Rate.
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"Projections" shall have the meaning provided in Section
7.05(d).
"Qualified Capital Stock" of any Person shall mean any capital
stock of such Person which is not Disqualified Stock.
"Quarterly Payment Date" shall mean the last Business Day of
each March, June, September and December occurring after the Initial Borrowing
Date.
"RCRA" shall mean the Resource Conservation and Recovery Act,
as the same may be amended from time to time, 42 U.S.C. Section 6901 et seq.
"Real Property" of any Person shall mean all the right, title
and interest of such Person in and to land, improvements and fixtures,
including Leaseholds.
"Recovery Event" shall mean the receipt by Holdings or any of
its Subsidiaries of any cash insurance proceeds or condemnation award payable
(i) by reason of theft, loss, physical destruction or damage or any other
similar event with respect to any property or assets of the Borrower or any of
its Subsidiaries and (ii) under any policy of insurance required to be
maintained under Section 8.03.
"Register" shall have the meaning provided in Section 13.17.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation T" shall mean Regulation T of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
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"Reinvestment Assets" shall mean any assets to be employed in
the business of the Borrower and its Subsidiaries in compliance with this
Agreement.
"Reinvestment Election" shall have the meaning provided in
Section 3.03(b).
"Reinvestment Notice" shall mean a written notice signed by an
Authorized Officer of the Borrower stating that the Borrower, in good faith,
intends and expects to use all or a specified portion of Net Sale Proceeds of
asset sales to purchase, construct or otherwise acquire Reinvestment Assets.
"Reinvestment Reduction Amount" shall mean, with respect to
any Reinvestment Election, the amount, if any, on the Reinvestment Reduction
Date relating thereto by which (a) the Anticipated Reinvestment Amount in
respect of such Reinvestment Election exceeds (b) the aggregate amount thereof
expended by the Borrower and its Subsidiaries to acquire Reinvestment Assets.
"Reinvestment Reduction Date" shall mean, with respect to any
Reinvestment Election, the earliest of (i) the date, if any, upon which the
Agent, on behalf of the Required Banks, shall have delivered a written
termination notice to the Borrower, provided that such notice may only be given
while an Event of Default exists, (ii) the date occurring one year after such
Reinvestment Election and (iii) the date on which the Borrower shall have
determined not to, or shall have otherwise ceased to, proceed with the
purchase, construction or other acquisition of Reinvestment Assets with the
related Anticipated Reinvestment Amount.
"Related Business" shall mean the outsourced product and
management support services business conducted by the Borrower and its
Subsidiaries (or, if the reference is to an Unrestricted Subsidiary, by such
Unrestricted Subsidiary) and any and all related businesses in support of and
ancillary to or reasonably related to such outsourced product and management
support services business.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing or migration into the environment.
"Replaced Bank" shall have the meaning provided in Section
1.13.
"Replacement Bank" shall have the meaning provided in Section
1.13.
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"Reportable Event" shall mean an event described in Section
4043(c) of ERISA with respect to a Plan that is subject to Title IV of ERISA
other than those events as to which the 30-day notice period is waived under
subsection.22,.23,.25,.27, or.28 of PBGC Regulation Section 4043.
"Required Banks" shall mean Non-Defaulting Banks, the sum of
whose Revolving Loan Commitments (or after the termination thereof, outstanding
Revolving Loans and Adjusted Percentage of Letter of Credit Outstandings)
represent an amount greater than 50% of the Adjusted Total Revolving Loan
Commitment (or after the termination thereof, the sum of the then total
outstanding Revolving Loans of NonDefaulting Banks and the aggregate Adjusted
Percentages of all Non-Defaulting Banks of the total outstanding Letter of
Credit Outstandings at such time).
"Returns" shall have the meaning provided in Section 7.09.
"Revolving Loan" shall have the meaning provided in Section
1.01.
"Revolving Loan Commitment" shall mean, for each Bank, the
amount set forth opposite such Bank's name in Schedule I hereto directly below
the column entitled "Revolving Loan Commitment," as same may be (x) reduced
from time to time pursuant to Sections 3.02, 3.03 and/or 10 or (y) adjusted
from time to time as a result of assignments to or from such Bank pursuant to
Section 1.13 or 13.04(b).
"Revolving Note" shall have the meaning provided in Section
1.05(a).
"SEC" shall have the meaning provided in Section 8.01(h).
"Section 4.04(b)(iii) Certificate" shall have the meaning
provided in Section 4.04(b)(iii).
"Secured Creditors" shall have the meaning assigned that term
in the Security Documents.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Security Agreement" shall have the meaning provided in
Section 5.09.
"Security Agreement Collateral" shall mean all "Collateral" as
defined in the Security Agreement.
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"Security Document" shall mean the Pledge Agreement and
Security Agreement.
"Senior Note Indenture" shall mean the Indenture, dated as of
May 5, 1993, between the Borrower and Ameritrust Texas National Association, as
trustee thereunder, as in effect on the Initial Borrowing Date and as the same
may be amended, modified or supplemented from time to time in accordance with
the terms thereof and hereof.
"Senior Notes" shall mean the Borrower's 12% Senior Deferred
Coupon Notes due 2003, as in effect on the Initial Borrowing Date and as the
same may be amended, modified or supplemented from time to time in accordance
with the terms thereof and hereof.
"Shareholders' Agreements" shall have the meaning provided in
Section 5.05.
"Specified Properties" shall mean the Borrower's facilities
currently located at (x) 833 West South Boulder Road, Louisville, Colorado
80027 and (y) 200 Eighth Street, N.W., Clarion, Iowa 50525.
"Standby Letter of Credit" shall have the meaning provided in
Section 2.01 (a).
"Stated Amount" of each Letter of Credit shall, at any time,
mean the maximum amount available to be drawn thereunder (in each case
determined without regard to whether any conditions to drawing could then be
met).
"Subsidiary" shall mean, as to any Person, (i) any corporation
more than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person and/or
one or more Subsidiaries of such Person and (ii) any partnership, association,
joint venture or other entity in which such Person and/or one or more
Subsidiaries of such Person has more than a 50% equity interest at the time.
Notwithstanding the foregoing (and except for purposes of the definition of
Unrestricted Subsidiary contained herein) an Unrestricted Subsidiary shall be
deemed not to be a Subsidiary of the Borrower or any of its other Subsidiaries
for purposes of this Agreement.
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"Syndication Date" shall mean that date upon which the Agent
determines in its sole discretion (and notifies the Borrower) that the primary
syndication (and resultant addition of institutions as Banks pursuant to
Section 13.04) has been completed.
"Tax Allocation Agreements" shall have the meaning provided in
Section 5.05.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Test Period" shall mean, for any determination, the four
consecutive fiscal quarters then last ended (taken as one accounting period).
"Total Revolving Loan Commitment" shall mean, at any time, the
sum of the Revolving Loan Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at
any time, an amount equal to the remainder of (x) the then Total Revolving Loan
Commitment, less (y) the sum of the aggregate principal amount of Revolving
Loans plus the then aggregate amount of Letter of Credit Outstandings.
"Trade Letter of Credit" shall have the meaning provided in
Section 2.01 (a).
"Transaction" shall mean, collectively, (i) the repayment of
all amounts owing under the Existing Credit Agreement, (ii) the incurrence of
Revolving Loans hereunder on the Initial Borrowing Date and (iii) the payment
of fees and expenses in connection with the foregoing.
"Type" shall mean the type of Revolving Loan determined with
regard to the interest option applicable thereto, i.e., whether a Base Rate
Loan or a Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to
time in effect in the relevant jurisdiction.
"Unbilled Component" shall have the meaning provided in the
definition of Borrowing Base.
"Unbilled Revenue" shall mean, as at any date of determination
thereof, the Dollar amount stated on the books of the Borrower in accordance
with GAAP which
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is to be included on an invoice issued to a customer of the Borrower with
respect to inventory sold and shipped or services performed in the ordinary
course of business or the licensing of software in the ordinary course of
business (including amounts representing reimbursable expenses), net of any
prepayments (including customer prepayments of postage), credits, rebates or
offsets owed by the Borrower to the respective customer and net of any
commissions payable by the Borrower to third parties (other than commissions
payable by the Borrower to salespersons employed by the Borrower).
"Unfunded Current Liability" of any Plan shall mean the
amount, if any, by which the actuarial present value of the accumulated
benefits under the Plan as of the close of its most recent plan year,
determined in accordance with actuarial assumptions at such time consistent
with Statement of Financial Accounting Standards No. 87, exceeds the fair
market value of the assets allocable thereto.
"United States" and "U.S." shall each mean the United States
of America.
"Unpaid Drawing" shall have the meaning provided for in
Section 2.04(a).
"Unrestricted Subsidiary" shall mean any Subsidiary of the
Borrower that, at the time of determination, shall be an Unrestricted
Subsidiary (as designated by the Borrower, as provided below) provided that
such Subsidiary does not and shall not engage, to any substantial extent, in
any line or lines of business activity other than a Related Business. The
Borrower may designate any Person to be an Unrestricted Subsidiary if (a) no
Default or Event of Default is existing or will occur as a consequence thereof,
(b) either (x) such Subsidiary, at the time of designation thereof, has no
assets (except assets which could be invested in such Unrestricted Subsidiary
at the time of designation as described in the immediately succeeding sentence)
or (y) such Subsidiary is designated an "Unrestricted Subsidiary" at the time
of the acquisition thereof by the Borrower, in the case of Subsidiaries
acquired after the Effective Date and (c) such Subsidiary does not own any
equity interests in, or hold any Lien on any property of, the Borrower or any
other Subsidiary (excluding other Unrestricted Subsidiaries). Any such
designation shall also be deemed to constitute an investment pursuant to
Section 9.05(xiii) in an amount equal to the sum of the net assets (with assets
other than cash and Cash Equivalents valued at fair market value) of such
Subsidiary at the time of the designation (which investment must be permitted
to be made in accordance with the requirements of Section 9.05(xiii)), unless
the designation is made pursuant to clause (b)(y) of the first sentence of this
definition, in which case the amount of consideration paid by the Borrower and
its Subsidiaries to effect such
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acquisition shall be included as such an investment. The Borrower may designate
any Unrestricted Subsidiary to be a Subsidiary, provided that no Default or
Event of Default is existing or will occur as a consequence thereof. Each such
designation shall be evidenced by filing with the Agent a certified copy of the
resolution giving effect to such designation and an officers' certificate of an
Authorized Officer certifying that such designation complied with the foregoing
conditions.
"Unutilized Revolving Loan Commitment" with respect to any
Bank, at any time, shall mean such Bank's Revolving Loan Commitment at such
time less the sum of (i) the aggregate outstanding principal amount of
Revolving Loans made by such Bank and (ii) such Bank's Adjusted Percentage of
the Letter of Credit Outstandings in respect of Letters of Credit issued under
this Agreement.
"Voting Stock" shall mean any class or classes of capital
stock of Holdings pursuant to which the holders thereof have the general voting
power under ordinary circumstances to elect at least a majority of the Board of
Directors of Holdings.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i)
any corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person,and/or one or more Wholly-Owned
Subsidiaries of such Person has a 100% equity interest at such time.
SECTION 12. The Agent.
12.01 Appointment. Each Bank hereby irrevocably designates
and appoints BTCo as Agent of such Bank (for purposes of this Section 12, the
term "Agent" shall include BTCo in its capacity as Collateral Agent pursuant to
the Security Documents) to act as specified herein and in the other Credit
Documents. Each Bank hereby irrevocably authorizes, and each holder of any
Revolving Note by the acceptance of such Revolving Note shall be deemed
irrevocably to authorize, the Agent to take such action on its behalf under the
provisions of this Agreement, the other Credit Documents and any other
instruments and agreements referred to herein or therein and to exercise such
powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of the Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto. The Agent may perform any of
its duties hereunder by or through its respective officers, directors, agents,
employees or affiliates.
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12.02 Nature of Duties. The Agent shall not have any duties
or responsibilities except those expressly set forth in this Agreement and the
other Credit Documents. Neither the Agent nor any of its respective officers,
directors, agents, employees or affiliates shall be liable for any action taken
or omitted by it or them hereunder or under any other Credit Document or in
connection herewith or therewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Agent shall be mechanical
and administrative in nature; the Agent shall not have by reason of this
Agreement or any other Credit Document a fiduciary relationship in respect of
any Bank or the holder of any Revolving Note; and nothing in this Agreement or
any other Credit Document, expressed or implied, is intended to or shall be so
construed as to impose upon the Agent any obligations in respect of this
Agreement or any other Credit Document except as expressly set forth herein or
therein.
12.03 Lack of Reliance on the Agent. Independently and
without reliance upon the Agent, each Bank and the holder of each Revolving
Note, to the extent it deems appropriate, has made and shall continue to make
(i) its own independent investigation of the financial condition and affairs of
Holdings and its Subsidiaries in connection with the making and the continuance
of the Revolving Loans and the taking or not taking of any action in connection
herewith and (ii) its own appraisal of the creditworthiness of Holdings and its
Subsidiaries and, except as expressly provided in this Agreement, the Agent
shall not have any duty or responsibility, either initially or on a continuing
basis, to provide any Bank or the holder of any Revolving Note with any credit
or other information with respect thereto, whether coming into its possession
before the making of the Revolving Loans or at any time or times thereafter.
The Agent shall not be responsible to any Bank or the holder of any Revolving
Note for any recitals, statements, information, representations or warranties
herein or in any document, certificate or other writing delivered in connection
herewith or for the execution, effectiveness, genuineness, validity,
enforceability, perfection, collectibility, priority or sufficiency of this
Agreement or any other Credit Document or the financial condition of Holdings
and its Subsidiaries or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any other Credit Document, or the financial condition of Holdings
and its Subsidiaries or the existence or possible existence of any Default or
Event of Default.
12.04 Certain Rights of the Agent. If the Agent shall
request instructions from the Required Banks with respect to any act or action
(including failure to act) in connection with this Agreement or any other
Credit Document, the Agent shall be entitled to refrain from such act or taking
such action unless and until the Agent shall have received instructions from
the Required Banks; and the Agent shall not incur
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liability to any Person by reason of so refraining. Without limiting the
foregoing, no Bank or the holder of any Revolving Note shall have any right of
action whatsoever against the Agent as a result of the Agent acting or
refraining from acting hereunder or under any other Credit Document in
accordance with the instructions of the Required Banks.
12.05 Reliance. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon an writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
any Person that the Agent believed to be the proper Person, and, with respect
to all legal matters pertaining to this Agreement and any other Credit Document
and its duties hereunder and thereunder, upon advice of counsel selected by the
Agent (which may be counsel for the Credit Parties).
12.06 Indemnification. To the extent the Agent is not
reimbursed and indemnified by Holdings or any of its Subsidiaries, the Banks
will reimburse and indemnify the Agent, in proportion to their respective
"percentages" as used in determining the Required Banks, for and against any
and all liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, costs, expenses or disbursements of whatsoever kind or nature which
may be imposed on, asserted against or incurred by the Agent in performing its
respective duties hereunder or under any other Credit Document, in any way
relating to or arising out of this Agreement or any other Credit Document,
provided that no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross negligence or
willful misconduct.
12.07 The Agent in its Individual Capacity. With respect to
its obligation to make Revolving Loans under this Agreement; the Agent shall
have the rights and powers specified herein for a "Bank" and may exercise the
same rights and powers as though it were not performing the duties specified
herein; and the term "Banks," "Required Banks," "holders of Revolving Notes" or
any similar terms shall, unless the context clearly otherwise indicates,
include the Agent in its individual capacity. The Agent may accept deposits
from, lend money to, and generally engage in any kind of banking, trust or
other business with any Credit Party or any Affiliate of any Credit Party as if
they were not performing the duties specified herein, and may accept fees and
other consideration from the Borrower or any other Credit Party for services in
connection with this Agreement and otherwise without having to account for the
same to the Banks.
12.08 Holders. The Agent may deem and treat the payee of
any Revolving Note as the owner thereof for all purposes hereof unless and
until a written
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notice of the assignment, transfer or endorsement thereof, as the case may be,
shall have been filed with the Agent. Any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is the holder of any Revolving Note shall be conclusive and binding on
any subsequent holder, transferee, assignee or endorsee, as the case may be, of
such Revolving Note or of any Revolving Note or Revolving Notes issued in
exchange therefor.
12.09 Resignation by the Agent. (a) The Agent may resign
from the performance of all its functions and duties hereunder and/or under the
other Credit Documents at any time by giving 15 Business Days' prior written
notice to the Borrower and the Banks. Such resignation shall take effect upon
the appointment of a successor Agent pursuant to clauses (b) and (c) below or
as otherwise provided below.
(b) Upon any such notice of resignation, the Banks shall
appoint a successor Agent hereunder or thereunder who shall be a commercial
bank or trust company reasonably acceptable to the Borrower.
(c) If a successor Agent shall not have been so appointed
within such 15 Business Day period, the Agent, with the consent of the
Borrower, shall then appoint a commercial bank or trust company with capital
and surplus of not less than $500,000,000 as successor Agent who shall serve as
Agent hereunder or thereunder until such time, if any, as the Banks appoint a
successor Agent as provided above.
(d) If no successor Agent has been appointed
pursuant to clause (b) or (c) above by the 20th Business Day after the date
such notice of resignation was given by the Agent, the Agent's resignation
shall become effective and the Required Banks shall thereafter perform all the
duties of the Agent hereunder and/or under any other Credit Document until such
time, if any, as the Banks appoint a successor Agent as provided above.
SECTION 13. Miscellaneous.
13.01 Payment of Expenses. etc. The Borrower shall: (i)
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of the Agent (including, without
limitation, the reasonable fees and disbursements of White & Case and local
counsel) in connection with the preparation, execution and delivery of this
Agreement and the other Credit Documents and the documents and instruments
referred to herein and therein and any amendment, waiver or consent relating
hereto or thereto, of the Agent in connection with its syndication efforts with
respect to this Agreement and of the Agent and, following and
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during the continuation of an Event of Default, each of the Banks in connection
with the enforcement of this Agreement and the other Credit Documents and the
documents and instruments referred to herein and therein (including, without
limitation, the reasonable fees and disbursements of counsel for the Agent and,
following and during the continuation of an Event of Default, for each of the
Banks); (ii) pay and hold each of the Banks harmless from and against any and
all present and future stamp, excise and other similar taxes with respect to
the foregoing matters and save each of the Banks harmless from and against any
and all liabilities with respect to or resulting from any delay or omission
(other than to the extent attributable to such Bank) to pay such taxes; and
(iii) indemnify the Agent and each Bank, and each of their respective officers,
directors, employees, representatives and agents from and hold each of them
harmless against any and all liabilities, obligations (including removal or
remedial actions), losses, damages, penalties, claims, actions, judgments,
suits, costs, expenses and disbursements (including reasonable attorneys' and
consultants' fees and disbursements) incurred by, imposed on or assessed
against any of them as a result of, or arising out of, or in any way related
to, or by reason of, (a) any investigation, litigation or other proceeding
(whether or not the Agent or any Bank is a party thereto) related to the
entering into and/or performance of this Agreement or any other Credit Document
or the use of any Letter of Credit or the proceeds of any Revolving Loans
hereunder or the consummation of any transactions contemplated herein
(including, without limitation, the Transaction) or in any other Credit
Document or the exercise of any of their rights or remedies provided herein or
in the other Credit Documents, or (b) the actual or alleged presence of
Hazardous Materials in the air, surface water or groundwater or on the surface
or subsurface of any Real Property owned or at any time operated by Holdings or
any of its Subsidiaries, the generation, storage, transportation, handling or
disposal of Hazardous Materials at any location, whether or not owned or
operated by Holdings or any of its Subsidiaries, the non-compliance of any Real
Property with foreign, federal, state and local laws, regulations, and
ordinances (including applicable permits thereunder) applicable to any Real
Property, or any Environmental Claim asserted against Holdings, any of its
Subsidiaries or any Real Property owned or at any time operated by Holdings or
any of its Subsidiaries, including, in each case, without limitation, the
reasonable fees and disbursements of counsel and other consultants incurred in
connection with any such investigation, litigation or other proceeding (but
excluding any losses, liabilities, claims, damages or expenses to the extent
incurred by reason of the gross negligence or willful misconduct of the Person
to be indemnified). To the extent that the undertaking to indemnify, pay or
hold harmless the Agent or any Bank set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, the Borrower
shall make the maximum contribution to the payment and satisfaction of each of
the indemnified liabilities which is permissible under applicable law.
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13.02 Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence of an Event of Default, each
Bank is hereby authorized at any time or from time to time, without
presentment, demand, protest or other notice of any kind to Holdings or any of
its Subsidiaries or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits (general
or special) and any other Indebtedness at any time held or owing by such Bank
(including, without limitation, by branches and agencies of such Bank wherever
located) to or for the credit or the account of Holdings, the Borrower or any
other Credit Party against and on account of the Obligations and liabilities of
Holdings, the Borrower or such Credit Party to such Bank under this Agreement
or under any of the other Credit Documents, including, without limitation, all
interests in Obligations purchased by such Bank pursuant to Section 13.06(b),
and all other claims of any nature or description arising out of or connected
with this Agreement or any other Credit Document, irrespective of whether or
not such Bank shall have made any demand hereunder and although said
Obligations, liabilities or claims, or any of them, shall be contingent or
unmatured.
13.03 Notices. Except as otherwise expressly provided
herein, all notices and other communications provided for hereunder shall be in
writing (including telegraphic, telex, telecopier or cable communication) and
mailed, telegraphed, telexed, telecopied, cabled or delivered: if to any Credit
Party, at the address specified opposite its signature below or in the other
relevant Credit Documents; if to any Bank, at its address specified opposite
its name on Schedule 11 below; and if to the Agent, at its Notice Office; or,
as to any Credit Party or the Agent, at such other address as shall be
designated by such party in a written notice to the other parties hereto and,
as to each Bank, at such other address as shall be designated by such Bank in a
written notice to the Borrower and the Agent. All such notices and
communications shall, when mailed, telegraphed, telexed, telecopied, or cabled
or sent by overnight courier, be effective when deposited in the mails,
delivered to the telegraph company, cable company or overnight courier, as the
case may be, or sent by telex or telecopier, except that notices and
communications to the Agent and the Borrower shall not be effective until
received by the Agent or the Borrower, as the case may be.
13.04 Benefit of Agreement. (a) This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided, however, the Borrower
may not assign or transfer any of its rights, obligations or interest hereunder
without the prior written consent of the Banks and, provided further, that,
although any Bank may transfer, assign or grant participations in its rights
hereunder, such Bank shall remain a "Bank" for all purposes hereunder (and may
not transfer or assign all or any portion of its Revolving Loan
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Commitment hereunder except as provided in Section 13.04(b)) and the
transferee, assignee or participant, as the case may be, shall not constitute a
"Bank" hereunder and, provided further, that no Bank shall transfer or grant
any participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (i) extend the final scheduled
maturity of any Revolving Loan, Revolving Note or Letter of Credit (unless such
Letter of Credit is not extended beyond the Final Maturity Date) in which such
participant is participating, or reduce the rate or extend the time of payment
of interest or Fees thereon (except in connection with a waiver of
applicability of any post-default increase in interest rates) or reduce the
principal amount thereof, or increase the amount of the participant's
participation over the amount thereof then in effect (it being understood that
waivers or modifications of conditions precedent, covenants, the Borrowing
Base, Defaults or Events of Default or of a mandatory reduction in the Total
Revolving Loan Commitment shall not constitute a change in the terms of such
participation, and that an increase in any Revolving Loan Commitment or
Revolving Loan shall be permitted without the consent of any participant if the
participant's participation is not increased as a result thereof), (ii) consent
to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement or (iii) release all or substantially all of
the Collateral under all of the Security Documents (except as expressly
provided in the Credit Documents) supporting the Revolving Loans hereunder in
which such participant is participating. In the case of any such participation,
the participant shall not have any rights under this Agreement or any of the
other Credit Documents (the participant's rights against such Bank in respect
of such participation to be those set forth in the agreement executed by such
Bank in favor of the participant relating thereto) and all amounts payable by
the Borrower hereunder shall be determined as if such Bank had not sold such
participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank
together with one or more other Banks) may (x) assign all or a portion of its
Revolving Loan Commitment (and related outstanding Obligations hereunder) to
its parent company and/or any affiliate of such Bank which is at least 50%
owned by such Bank or its parent company or to one or more Banks or (y) assign
all, or if less than all, a portion equal to at least $5,000,000 in the
aggregate for the assigning Bank or assigning Banks, of such Revolving Loan
Commitment (and related outstanding Obligations hereunder) to one or more
Eligible Transferees, each of which assignees shall become a party to this
Agreement as a Bank by execution of an Assignment and Assumption Agreement,
provided that, (i) at such time Schedule I shall be deemed modified to reflect
the Revolving Loan Commitment of such new Bank and of the existing Banks, (ii)
new Notes will be issued, at the Borrower's expense, to such new Bank and to
the assigning Bank upon the request of such new Bank or assigning Bank, such
new Notes to be in
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conformity with the requirements of Section 1.05 (with appropriate
modifications) to the extent needed to reflect the revised Revolving Loan
Commitment, (iii) the consent of BTCo shall be required in connection with any
such assignment pursuant to clause (y) of this Section 13.04(b) (which consent
shall not be unreasonably withheld) and (iv) the Agent shall receive at the
time of each such assignment, from the assigning or assignee Bank, the payment
of a non-refundable assignment fee of $3,500 and, provided further, that such
transfer or assignment will not be effective until recorded by the Agent on the
Register pursuant to Section 13.17. To the extent of any assignment pursuant to
this Section 13.04(b), the assigning Bank shall be relieved of its obligations
hereunder with respect to its assigned Revolving Loan Commitment. At the time
of each assignment pursuant to this Section 13.04(b) to a Person which is not
already a Bank hereunder and which is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) for Federal income tax purposes,
the respective assignee Bank shall, to the extent legally entitled to do so,
provide to the Borrower in the case of a Bank described in clause (ii) or (iv)
of Section 4.04(b), the forms described in such clause (ii) or (iv), as the
case may be. To the extent that an assignment of all or any portion of a Bank's
Revolving Loan Commitment and related outstanding Obligations pursuant to
Section 1.13 or this Section 13.04(b) would, at the time of such assignment,
result in increased costs under Section 1.10, 1.1 1 or 4.04 from those being
charged by the respective assigning Bank prior to such assignment, then the
Borrower shall not be obligated to pay such increased costs (although the
Borrower shall be obligated to pay any other increased costs of the type
described above resulting from changes after the date of the respective
assignment).
(c) Nothing in this Agreement shall prevent or prohibit
any Bank from pledging its Revolving Loans and Revolving Notes hereunder to a
Federal Reserve Bank in support of borrowings made by such Bank from such
Federal Reserve Bank.
13.05 No Waiver, Remedies Cumulative. No failure or delay
on the part of the Agent or any Bank or any holder of any Revolving Note in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrower or any other Credit
Party and the Agent or any Bank or the holder of any Revolving Note shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or under any other Credit Document preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder or thereunder. The rights, powers and remedies herein or
in any other Credit Document expressly provided are cumulative and not
exclusive of any rights, powers or remedies which the Agent or any Bank or the
holder of any Revolving Note would otherwise have. No notice to or demand on
any Credit Party in any case shall entitle any Credit Party to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the
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Agent or any Bank or the holder of any Revolving Note to any other or further
action in any circumstances without notice or demand.
13.06 Payments Pro Rata. (a) Except as otherwise provided
in this Agreement, the Agent agrees that promptly after its receipt of each
payment from or on behalf of the Borrower in respect of any Obligations
hereunder, it shall distribute such payment to the Banks (other than any Bank
that has consented in writing to waive its pro rata share of any such payment)
pro rata based upon their respective shares, if any, of the Obligations with
respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive
any amount hereunder (whether by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, by the enforcement of any right under the Credit
Documents, or otherwise), which is applicable to the payment of the principal
of, or interest on, the Revolving Loans, Unpaid Drawings, Commitment Commission
or Letter of Credit Fees, of a sum which with respect to the related sum or
sums received by other Banks is in a greater proportion than the total of such
Obligation then owed and due to such Bank bears to the total of such Obligation
then owed and due to all of the Banks immediately prior to such receipt, then
such Bank receiving such excess payment shall purchase for cash without
recourse or warranty from the other Banks an interest in the Obligations of the
respective Credit Party to such Banks in such amount as shall result in a
proportional participation by all the Banks in such amount; provided that if
all or any portion of such excess amount is thereafter recovered from such
Bank, such purchase shall be rescinded and the purchase price restored to the
extent of such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained
herein, the provisions of the preceding Sections 13.06(a) and (b) shall be
subject to the express provisions of this Agreement which require, or permit,
differing payments to be made to Non-Defaulting Banks as opposed to Defaulting
Banks.
13.07 Calculations; Computations. (a) The financial
statements to be furnished to the Banks pursuant hereto shall be made and
prepared in accordance with generally accepted accounting principles in the
United States consistently applied throughout the periods involved (except as
set forth in the notes thereto or as otherwise disclosed in writing by the
Borrower to the Banks); provided that, except as otherwise specifically
provided herein, all computations determining compliance with Sections 9.07
through 9.09, inclusive, shall utilize accounting principles and policies in
conformity with those used to prepare the historical financial statements
delivered to the Banks pursuant to Section 7.05(a) (with the foregoing
generally accepted accounting principles, subject to the preceding proviso,
herein called "GAAP"). Notwithstanding
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anything to the contrary contained herein, all computations determining
compliance with Sections 9.07 through 9.09, inclusive, including definitions
used therein, shall treat Unrestricted Subsidiaries as if the same did not
exist.
(b) All computations of interest and Fees hereunder shall
be made on the basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day) occurring in the period
for which such interest or Fees are payable.
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE;
WAIVER OF JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW
YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR
OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH OF HOLDINGS AND THE BORROWER HEREBY
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF HOLDINGS AND
THE BORROWER HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT
CORPORATION SYSTEM, WITH OFFICES ON THE DATE HEREOF AT 1633 BROADWAY, NEW YORK,
NEW YORK 10019 AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND
ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF
ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED
IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE
AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH SUCH CREDIT PARTY
AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK CITY ON THE
TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT UNDER
THIS AGREEMENT. EACH OF HOLDINGS AND THE BORROWER FURTHER IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO ANY CREDIT PARTY AT ITS ADDRESS SET FORTH
OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER
SUCH
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MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT UNDER THIS
AGREEMENT, ANY BANK OR THE HOLDER OF ANY REVOLVING NOTE TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANY CREDIT PARTY IN ANY OTHER JURISDICTION.
(B) EACH OF HOLDINGS AND THE BORROWER HEREBY IRREVOCABLY
WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED
TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO
PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(C) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13.09 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. A set of counterparts executed by all the parties hereto shall be
lodged with the Borrower and the Agent.
13.10 Effectiveness. This Agreement shall become effective
on the date (the "Effective Date") on which Holdings, the Borrower and each of
the Banks shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered the same to the Agent at its Notice
Office or, in the case of the Banks, shall have given to the Agent telephonic
(confirmed in writing), written or telex notice (actually received) at such
office that the same has been signed and mailed to it. The Agent will give the
Borrower and each Bank prompt written notice of the occurrence of the Effective
Date.
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13.11 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience only
and shall not in any way affect the meaning or construction of any provision of
this Agreement.
13.12 Amendment or Waiver: etc. (a) Neither this Agreement
nor any other Credit Document nor any terms hereof or thereof may be changed,
waived, discharged or terminated unless such change, waiver, discharge or
termination is in writing-signed by the respective Credit Parties party thereto
and the Required Banks, provided that no such change, waiver, discharge or
termination shall, without the consent of each Bank (other than a Defaulting
Bank) directly affected thereby, (i) extend the final scheduled maturity of any
Revolving Loan or Revolving Note or extend the stated maturity of any Letter of
Credit beyond the Final Maturity Date, or reduce the rate or extend the time of
payment of interest or Fees thereon (except in connection with a waiver of
applicability of any post-default increase in interest rates), or reduce the
principal amount thereof (except to the extent repaid in cash), (ii) release
all or substantially all of the Collateral (except as expressly provided in the
Credit Documents) under all the Security Documents, (iii) amend, modify or
waive any provision of this Section 13.12, (iv) reduce the percentage specified
in the definition of Required Banks (it being understood that, with the consent
of the Required Banks, additional extensions of credit pursuant to this
Agreement may be included in the determination of the Required Banks on
substantially the same basis as the extensions of Revolving Loan Commitments
are included on the Effective Date) or (v) consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement; provided further, that no such change, waiver, discharge or
termination shall (w) increase the Revolving Loan Commitment of any Bank over
the amount thereof then in effect without the consent of such Bank (it being
understood that waivers or modifications of conditions precedent, covenants,
the Borrowing Base, Defaults or Events of Default or of a mandatory reduction
in the Total Revolving Loan Commitment shall not constitute an increase of the
Revolving Loan Commitment of any Bank, and that an increase in the available
portion of any Revolving Loan Commitment of any Bank shall not constitute an
increase in the Revolving Loan Commitment of such Bank), (x) without the
consent of BTCo and any other Issuing Bank, amend, modify or waive any
provision of Section 2 or alter its rights or obligations with respect to
Letters of Credit issued by it, (y) without the consent the Agent, amend,
modify or waive any provision of Section 12 or any other provision as same
relates to the rights or obligations of the Agent, or (z) without the consent
of the Collateral Agent, amend, modify or waive any provision relating to the
rights or obligations of the Collateral Agent.
(b) If, in connection with any proposed change, waiver,
discharge or termination to any of the provisions of this Agreement as
contemplated by clauses (i)
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through (v), inclusive, of the first proviso to Section 13.12(a), the consent
of the Required Banks is obtained but the consent of one or more of such other
Banks whose consent is required is not obtained, then the Borrower shall have
the right, so long as all non-consenting Banks whose individual consent is
required are treated as described in either clause (A) or (B) below, to either
(A) replace each such non-consenting Bank or Banks with one or more Replacement
Banks pursuant to Section 1.13 so long as at the time of such replacement, each
such Replacement Bank consents to the proposed change, waiver, discharge or
termination or (B) terminate such non-consenting Bank's Revolving Loan
Commitment and repay all outstanding Revolving Loans of such Bank in accordance
with Sections 3.02(b) and/or 4.01(v), provided that, unless the Revolving Loan
Commitments are terminated, and Revolving Loans repaid, pursuant to preceding
clause (B) are immediately replaced in full at such time through the addition
of new Banks or the increase of the Revolving Loan Commitments and/or
outstanding Revolving Loans of existing Banks (who in each case must
specifically consent thereto), then in the case of any action pursuant to
preceding clause (B) the Required Banks (determined before giving effect to the
proposed action) shall specifically consent thereto, provided further, that in
any event the Borrower shall not have the right to replace a Bank, terminate
its Revolving Loan Commitment or repay its Revolving Loans solely as a result
of the exercise of such Bank's rights (and the withholding of any required
consent by such Bank) pursuant to the second proviso to Section 13.12(a).
13.13 Survival. All indemnities set forth herein including,
without limitation, in Sections 1.10, 1.11, 2.05, 4.04, 12.06 and 13.01 shall,
subject to Section 13.15 (to the extent applicable), survive the execution,
delivery and termination of this Agreement and the Revolving Notes and the
making and repayment of the Revolving Loans.
13.14 Domicile of Loans. Each Bank may transfer and carry
its Revolving Loans at, to or for the account of any office, Subsidiary or
Affiliate of such Bank. Notwithstanding anything to the contrary contained
herein, to the extent that a transfer of Revolving Loans pursuant to this
Section 13.14 would, at the time of such transfer, result in increased costs
under Section 1.10, 1.11, 2.05 or 4.04 from those being charged by the
respective Bank prior to such transfer, then the Borrower shall not be
obligated to pay such increased costs (although the Borrower shall be obligated
to pay any other increased costs of the type described above resulting from
changes after the date of the respective transfer).
13.15 Limitation on Additional Amounts, etc.
Notwithstanding anything to the contrary contained in Section 1.10, 1.11,
2.05 or 4.04 of this Agreement, unless a Bank gives notice to the Borrower that
it is obligated to pay an amount under any such Section within one year after
the later of (x) the date the Bank incurs the respec-
-108-
<PAGE> 116
tive increased costs, Taxes, loss, expense or liability, reduction in amounts
received or receivable or reduction in return on capital or (y) the date such
Bank has actual knowledge of its incurrence of the respective increased costs,
Taxes, loss, expense or liability, reductions in amounts received or receivable
or reduction in return on capital, then such Bank shall only be entitled to be
compensated for such amount by the Borrower pursuant to said Section 1.10, 1.11
1, 2.05 or 4.04, as the case may be, to the extent the costs, Taxes, loss,
expense or liability, reduction in amounts received or receivable or reduction
in return on capital are incurred or suffered on or after the date which occurs
one year prior to such Bank giving notice to the Borrower that it is obligated
to pay the respective amounts pursuant to said Section 1.10, 1.11, 2.05 or
4.04, as the case may be. This Section 13.15 shall have no applicability to any
Section of this Agreement other than said Sections 1.10, 1.11, 2.05 and 4.04.
13.16 Confidentiality. (a) Subject to the provisions of
clause (b) of this Section 13.16, each Bank agrees that it will use its best
efforts not to disclose without the prior consent of Holdings or the Borrower
(other than to its employees, auditors, advisors or counsel or to another Bank
if the Bank or such Bank's holding or parent company in its sole discretion
determines that any such party should have access to such information, provided
such Persons shall be subject to the provisions of this Section 13.16 to the
same extent as such Bank) any information with respect to Holdings or any of
its Subsidiaries which is now or in the future furnished pursuant to this
Agreement or any other Credit Document and which is designated by Holdings to
the Banks in writing as confidential, provided that any Bank may disclose any
such information (a) as has become generally available to the public, (b) as
may be required or appropriate in any report, statement or testimony submitted
to any municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such Bank or to the Federal Reserve Board or the Federal
Deposit Insurance Corporation or similar organizations (whether in the United
States or elsewhere) or their successors, (c) as may be required or appropriate
in respect to any summons or subpoena-or in connection with any litigation,
(d) in order to comply with any law, order, regulation or ruling applicable to
such Bank, (e) to the Agent or the Collateral Agent and (f) to any prospective
or actual transferee or participant in connection with any contemplated
transfer or participation of any of the Revolving Notes or Revolving Loan
Commitment or any interest therein by such Bank, provided, that such
prospective transferee agrees to be bound by the provisions of this Section
13.16.
(b) Each of Holdings and the Borrower hereby acknowledges
and agrees that each Bank may share with any of its affiliates any information
related to Holdings or any of its Subsidiaries (including, without limitation,
any nonpublic customer information regarding the creditworthiness of Holdings
and its Subsidiaries,
-109-
<PAGE> 117
provided such Persons shall be subject to the provisions of this Section 13.16
to the same extent as such Bank).
13.17 Register. The Borrower hereby designates the Agent to
serve as the Borrower's agent, solely for purposes of this Section 13.17, to
maintain a register (the "Register") on which it will record the Revolving Loan
Commitments from time to time of each of the Banks, the Revolving Loans made by
each of the Banks and each repayment in respect of the principal amount of the
Revolving Loans of each Bank. Failure to make any such recordation, or any
error in such recordation shall not affect the Borrower's obligations in
respect of such Revolving Loans. With respect to any Bank, the transfer of the
Revolving Loan Commitment of such Bank and the rights to the principal of, and
interest on, any Revolving Loan made pursuant to such Revolving Loan Commitment
shall not be effective until such transfer is recorded on the Register
maintained by the Agent with respect to ownership of such Revolving Loan
Commitment and Revolving Loans and prior to such recordation all amounts owing
to the transferor with respect to such Revolving Loan Commitment and Revolving
Loans shall remain owing to the transferor. The registration of assignment or
transfer of all or part of any Revolving Loan Commitment and Revolving Loans
shall be recorded by the Agent on the Register only upon the acceptance by the
Agent of a properly executed and delivered Assignment and Assumption Agreement
pursuant to Section 13.04(b). Coincident with the delivery of such an
Assignment and Assumption Agreement to the Agent for acceptance and
registration of assignment or transfer of all or part of a Revolving Loan, or
as soon thereafter as practicable, the assigning or transferor Bank shall
surrender the Revolving Note evidencing such Revolving Loan, and thereupon one
or more new Revolving Notes in the same aggregate principal amount shall be
issued to the assigning or transferor Bank and/or the new Bank. The Borrower
agrees to indemnify the Agent from and against any and all losses, claims,
damages and liabilities of whatsoever nature which may be imposed on, asserted
against or incurred by the Agent in performing its duties under this Section
13.17.
13.18 Post-Closing-Actions. Holdings hereby acknowledges
that it has failed to deliver the Pledged Stock to the Collateral Agent on the
Initial Borrowing Date as required by Section 5.08 and agrees that it will take
all necessary action to deliver the Pledged Stock, together with executed and
undated stock powers, to the Collateral Agent no later than five Business Days
after the Initial Borrowing Date. Holdings further agrees that failure to
deliver such Pledged Stock within the period of time specified above shall
constitute an Event of Default.
-110-
<PAGE> 118
SECTION 14. Holdings Guaranty.
14.01 The Holdings Guaranty. In order to induce the Banks
to enter into this Agreement and to extend credit hereunder and in recognition
of the direct benefits to be received by Holdings from the proceeds of the
Revolving Loans and the issuance of the Letters of Credit and to induce the
Banks or any of their respective Affiliates to enter into Interest Rate
Protection and Other Hedging Agreements, Holdings hereby agrees with the Banks
as follows: Holdings hereby unconditionally and irrevocably guarantees as
primary obligor and not merely as surety the full and prompt payment when due,
whether upon maturity, by acceleration or otherwise, of any and all of the
Guaranteed Obligations of the Borrower to the Secured Creditors. If any or all
of the Guaranteed Obligations of the Borrower to the Secured Creditors becomes
due and payable hereunder, Holdings unconditionally promises to pay such
indebtedness to the Secured Creditors, on order, or demand, together with any
and all reasonable expenses which may be incurred by the Agent or the Secured
Creditors in collecting any of the Guaranteed Obligations.
14.02 Bankruptcy. Additionally, Holdings unconditionally
and irrevocably guarantees the payment of any and all of the Guaranteed
Obligations of the Borrower to the Secured Creditors whether or not then due or
payable by the Borrower upon the occurrence in respect of the Borrower of any
of the events specified in Section 10.05, and unconditionally and irrevocably
promises to pay such Guaranteed Obligations to the Secured Creditors, on order,
or demand, in lawful money of the United States.
14.03 Nature of Liability. (a) The liability of Holdings
hereunder is exclusive and independent of any security for or other guaranty of
the Guaranteed Obligations of the Borrower whether executed by Holdings, any
other Guarantor or by any other party, and the liability of Holdings hereunder
shall not be affected or impaired by (a) any direction as to application of
payment by the Borrower or by any other party, or (b) any other continuing or
other guaranty, undertaking or maximum liability of a guarantor or of any other
party as to the Guaranteed Obligations of the Borrower, or (c) any payment on
or in reduction of any such other guaranty or undertaking, or (d) any
dissolution, termination or increase, decrease or change in personnel by the
Borrower, or (e) any payment made to the Agent or the Secured Creditors on the
indebtedness which the Agent or such Secured Creditors repay the Borrower
pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and Holdings waives any right to
the deferral or modification of its obligations hereunder by reason of any such
proceeding.
-111-
<PAGE> 119
(b) If claim is ever made upon any Secured Creditor for
repayment or recovery of any amount or amounts received in payment or on
account of any of the Guaranteed Obligations and any of the aforesaid payees
repays all or part of said amount by reason of (i) any judgment, decree or
order of any court or administrative body having jurisdiction over such payee
or any of its property or (ii) any settlement or compromise of any such claim
effected by such payee with any such claimant (including the Borrower), then
and in such event Holdings agrees that any such judgment, decree, order,
settlement or compromise shall be binding upon Holdings, notwithstanding any
revocation hereof or other instrument evidencing any liability of the Borrower,
and Holdings shall be and remain liable to the aforesaid payees hereunder for
the amount so repaid or recovered to the same extent as if such amount had
never originally been received by any such payee.
14.04 Independent Obligation. The obligations of Holdings
hereunder are independent of the obligations of any other guarantor or the
Borrower, and a separate action or actions may be brought and prosecuted
against Holdings whether or not action is brought against any other guarantor
or the Borrower and whether or not any other guarantor or the Borrower be
joined in any such action or actions. Holdings waives, to the fullest extent
permitted by law, the benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof. Any payment by the Borrower or
other circumstance which operates to toll any statute of limitations as to the
Borrower shall operate to toll the statute of limitations as to Holdings. This
Guaranty is a continuing one and all liabilities to which it applies or may
apply under the terms hereof shall be conclusively presumed to have been
created in reliance hereon.
14.05 Authorization. Holdings authorizes the Agent and the
Secured Creditors without notice or demand (except as shall be required by
applicable statute and cannot be waived), and without affecting or impairing
its liability hereunder, from time to time to:
(a) change the manner, place or terms of payment of,
and/or change or extend the time of payment of, renew, increase, accelerate or
alter, any of the Guaranteed Obligations (including any increase or decrease in
the rate of interest thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the Holdings Guaranty herein
made shall apply to the Guaranteed Obligations as so changed, extended, renewed
or altered;
(b) take and hold security for the payment of the
Guaranteed Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by whomsoever
at any time pledged or mortgaged to secure, or howsoever securing, the
Guaranteed Obligations or any
-112-
<PAGE> 120
liabilities (including any of those hereunder) incurred directly or indirectly
in respect thereof or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights
against the Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers,
guarantors, the Borrower or other obligors;
(e) settle or compromise any of the Guaranteed
Obligations, any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof or hereof, and
may subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Borrower to its creditors other than the
Banks;
(f) apply any sums by whomsoever paid or howsoever
realized to any liability or liabilities of the Borrower to the Secured
Creditors regardless of what liability or liabilities of Holdings or the
Borrower remain unpaid;
(g) consent to or waive any breach of, or any act,
omission or default under, this Agreement or any of the instruments or
agreements referred to herein, or otherwise amend, modify or supplement this
Agreement or any of such other instruments or agreements; and/or
(h) take any other action which would, under otherwise
applicable principles of common law, give rise to a legal or equitable
discharge of Holdings from its liabilities under this Section 14.
14.06 Reliance. It is not necessary for the Agent or the
Secured Creditors to inquire into the capacity or powers of the Borrower or the
officers, directors, partners or agents acting or purporting to act on its
behalf, and any Guaranteed Obligations made or created in reliance upon the
professed exercise of such powers shall be guaranteed hereunder.
14.07 Subordination. Any of the indebtedness of the
Borrower now or hereafter owing to Holdings is hereby subordinated to the
Guaranteed Obligations of the Borrower owing to the Agent and the Secured
Creditors; and if the Agent so requests at a time when an Event of Default
exists, all such indebtedness relating to the Guaranteed Obligations of the
Borrower to Holdings shall be collected, enforced and received by Holdings for
the benefit of the Secured Creditors and be paid over to the Agent on behalf of
the Secured Creditors on account of the Guaranteed Obligations of
-113-
<PAGE> 121
the Borrower to the Secured Creditors, but without affecting or impairing in
any manner the liability of Holdings under the other provisions of this
Holdings Guaranty. Prior to the transfer by Holdings of any note or negotiable
instrument evidencing any of the indebtedness of the Borrower to Holdings,
Holdings shall mark such note or negotiable instrument with a legend that the
same is subject to this subordination. Without limiting the generality of the
foregoing, Holdings hereby agrees with the Secured Creditors that it will not
exercise any right of subrogation which it may at any time otherwise have as a
result of this Holdings Guaranty (whether contractual, under Section 509 of the
Bankruptcy Code or otherwise) until all Guaranteed Obligations have been
irrevocably paid in full in cash.
14.08 Waiver. (a) Holdings waives any right (except as
shall be required by applicable statute and cannot be waived) to require the
Agent or the Secured Creditors to (i) proceed against the Borrower, any other
guarantor or any other party, (ii) proceed against or exhaust any security held
from the Borrower, any other guarantor or any other party or (iii) pursue any
other remedy in the Agent's or the Secured Creditors' power whatsoever.
Holdings waives any defense based on or arising out of any defense of the
Borrower, any other guarantor or any other party, other than payment in full of
the Guaranteed Obligations, based on or arising out of the disability of the
Borrower, any other guarantor or any other party, or the unenforceability of
the Guaranteed Obligations or any part thereof from any cause, or the cessation
from any cause of the liability of the Borrower other than payment in full of
the Guaranteed Obligations. The Agent and the Secured Creditors may, at their
election, foreclose on any security held by the Agent, the Collateral Agent or
the Secured Creditors by one or more judicial or nonjudicial sales, whether or
not every aspect of any such sale is commercially reasonable (to the extent
such sale is permitted by applicable law), or exercise any other right or
remedy the Agent and the Secured Creditors may have against the Borrower or any
other party, or any security, without affecting or impairing in any way the
liability of Holdings hereunder except to the extent the Guaranteed Obligations
have been paid. Holdings waives any defense arising out of any such election by
the Agent and the Secured Creditors, even though such election operates to
impair or extinguish any right of reimbursement or subrogation or other right
or remedy of Holdings against any Borrower or any other party or any security.
(b) Holdings waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Holdings Guaranty, and notices of the existence, creation or incurring
of new or additional Guaranteed Obligations. Holdings assumes all
responsibility for being and keeping itself informed of the Borrower's
financial condition and assets, and of all other circumstances bearing upon the
risk of nonpayment of the Guaranteed Obligations and the nature, scope and
-114-
<PAGE> 122
extent of the risks which Holdings assumes and incurs hereunder, and agrees
that the Agent and the Secured Creditors shall have no duty to advise Holdings
of information known to them regarding such circumstances or risks.
14.09 Nature of Liability. It is the desire and intent of
Holdings and the Secured Creditors that this Holdings Guaranty shall be
enforced against Holdings to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought.
If, however, and to the extent that, the obligations of Holdings under this
Holdings Guaranty shall be adjudicated to be invalid or unenforceable for any
reason (including, without limitation, because of any applicable state or
federal law relating to fraudulent conveyances or transfers), then the amount
of the Guaranteed Obligations of Holdings shall be deemed to be reduced and
Holdings shall pay the maximum amount of the Guaranteed Obligations which would
be permissible under applicable law.
-115-
<PAGE> 123
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address:
- --------
833 West South Boulder Road NEODATA CORPORATION
Louisville, CO 80027
Attn: Chief Financial Officer
Telephone: (303) 666-7000 By: /s/ NICHOLAS J. CUCCARO
Telecopy: (303) 666-7007 ---------------------------
Name: Nicholas J. Cuccaro
Title: Chief Financial Officer
with a copy to:
Hicks, Muse, Tate & Furst
Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75201
Attn: Thomas O. Hicks,
John R. Muse
Jack D. Furst and
Lawrence D. Stuart, Jr.
Telephone: (214) 740-7300
Telecopy: (214) 740-7313
and
Hicks, Muse, Tate & Furst
Incorporated
1325 Avenue of the Americas
25th Floor
New York, New York 10019
Attn: Mr Charles W. Tate
Telephone: (212) 424-1400
Telecopy: (212) 424-1450
<PAGE> 124
BANKERS TRUST COMPANY,
Individually and as Agent
By: /s/ ANTHONY LoGRIPPO
-----------------------
Name: ANTHONY LoGRIPPO
Title: VICE PRESIDENT
<PAGE> 125
SCHEDULE I
LIST OF BANKS
<TABLE>
<CAPTION>
Revolving
Loan
Bank Commitment
---- ----------
<S> <C>
Bankers Trust Company $40,000,000
-----------
Total $40,000,000
</TABLE>
<PAGE> 126
SCHEDULE II
BANK ADDRESSES
<TABLE>
<S> <C>
Bankers Trust Company 130 Liberty Street
New York, New York 10006
Telephone No.: (212) 250-4886
Telecopier No.: (212) 250-7218
Attention: Anthony Logrippo
</TABLE>
<PAGE> 127
SCHEDULE III
SUBSIDIARIES
Neodata Corporation
Neodata Services, Inc. 100%
Neodata Services, Inc.
Neodata Services Limited 100%
Neodata Services Limited
Sarsfield Systems Limited 100%
Schedule III to Credit Agreement Page 1 of 1
<PAGE> 128
SCHEDULE IV
EXISTING INDEBTEDNESS
1. Capital Leases:
<TABLE>
<CAPTION>
Lessor Outstanding Balance as of 12/31/96
<S> <C>
Siemens Credit Corp. $ 13,780
Bell & Howell $ 13,133
Siemens Credit Corp. $ 275,952
Bell & Howell $ 17,522
Northland Financial $ 7,196,089
Northland Financial $ 13,008,134
Ireland $ 6,070
</TABLE>
2. Fredericksburg Mortgage - $1,383,946 outstanding as of December 31, 1996.
3. Master Agreement for Neodata Services by and between NEODATA SERVICES,
INC. and MEREDITH CORPORATION - $3,987,022 outstanding as of December 31,
1996.
4. Lease Agreement by and between NEOSERV (CO) QRS 10-13, INC., a Colorado
corporation, and NEOSERV (CO) QRS 11-8, INC., a Colorado corporation, as
Landlord, and NEODATA SERVICES, INC., a Delaware corporation, as Tenant,
pertaining to premises located in Louisville, Colorado.
5. Lease Agreement by and between NEODATA SERVICES, INC., as Tenant, and
PRATT PARTNERSHIP, as Landlord, pertaining to premises located at 1800 and
1844 Nelson Road, Longmont, Colorado.
Schedule IV to Credit Agreement Page 1 of 1
<PAGE> 129
SCHEDULE V
INSURANCE
SEE ATTACHED
Schedule V to Credit Agreement Page 1 of 1
<PAGE> 130
SCHEDULE VI
EXISTING LIENS
1. Neodata Corporation
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Jurisdiction File Number Filing Date Secured Party
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Neodata Corporation 952010588 2-9-95 Yale Financial Services, Inc.
("Yale Financial")
================================================================================
</TABLE>
II. Neodata Services, Inc.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Jurisdiction File Number Filing Date Secured Party
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Arizona SOS 855648 11-27-95 Colorado National Leasing,
Inc.("Colorado National")
- --------------------------------------------------------------------------------
868755 3-5-96 Colorado National
- --------------------------------------------------------------------------------
Colorado SOS 962043839 6-6-96 Crown Credit Company
("Crown")
- --------------------------------------------------------------------------------
962050228 7-2-96 Crown
- --------------------------------------------------------------------------------
962054298 7-17-96 Crown
- --------------------------------------------------------------------------------
962057899 7-31-96 Crown
- --------------------------------------------------------------------------------
962087527 11-21-96 Electronic Data Systems
Corporation ("Electronic
Data")
- --------------------------------------------------------------------------------
942049005 6-29-94 Forsythe/McArthur
Associates, Inc.
("Forsythe/McArthur")
- --------------------------------------------------------------------------------
942057688 8-1-94 Amdahl Capital Corporation
("Amdahl")
- --------------------------------------------------------------------------------
942071725 9-26-94 Siemens Credit Corporation
("Siemens ")
- --------------------------------------------------------------------------------
942079302 10-25-94 Siemens Nixdorf Printing
Systems("Siemens Nixdorf")
- --------------------------------------------------------------------------------
942079303 10-25-94 Siemens Nixdorf
- --------------------------------------------------------------------------------
</TABLE>
Schedule VI to Credit Agreement Page 1 of 1
<PAGE> 131
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Jurisdiction File Number Filing Date Secured Party
- --------------------------------------------------------------------------------
<S> <C> <C>
942089436 12-5-94 Amdahl
- --------------------------------------------------------------------------------
942089435 12-5-94 Amdahl
- --------------------------------------------------------------------------------
942089437 12-5-94 Amdahl
- --------------------------------------------------------------------------------
952006494 1-25-95 Siemens Nixdorf
- --------------------------------------------------------------------------------
952024676 4-3-95 Raymond Leasing
Corporation
- --------------------------------------------------------------------------------
952030942 4-25-95 Siemens Nixdorf
- --------------------------------------------------------------------------------
952030943 4-25-95 Siemens Nixdorf
- --------------------------------------------------------------------------------
952035000 5-8-95 Bell & Howell Acceptance
Corporation ("Bell &
Howell")
- --------------------------------------------------------------------------------
952071655 9-26-95 Colorado National
- --------------------------------------------------------------------------------
952088180 11-30-95 Computer Systems of
America Inc. ("Computer
Systems")
- --------------------------------------------------------------------------------
962015692 2-29-96 Colorado National
- --------------------------------------------------------------------------------
962067000 9-6-96 Colorado National
- --------------------------------------------------------------------------------
962088246 11-22-96 Colorado National
- --------------------------------------------------------------------------------
942080864 10-31-94 Colorado Copier Systems
Inc. ("Colorado Copier")
- --------------------------------------------------------------------------------
942081323 11-1-94 Hewlett Packard Company
("Hewlett Packard")
- --------------------------------------------------------------------------------
952031394 4-25-95 Mountain Sales & Service
("Mountain Sales")
- --------------------------------------------------------------------------------
952031393 4-25-95 Mountain Sales
- --------------------------------------------------------------------------------
952036176 5-11-95 Mountain Sales
- --------------------------------------------------------------------------------
952055065 7-25-95 Hewlett Packard
- --------------------------------------------------------------------------------
952086158 11-21-95 Crown
- --------------------------------------------------------------------------------
962021427 3-20-96 Crown
- --------------------------------------------------------------------------------
962036485 5-10-96 Crown
- --------------------------------------------------------------------------------
882049715 Continuation Sanwa Business Credit
4-9-93 Corporation
(Release of
certain
collateral
5-26-92)
- --------------------------------------------------------------------------------
932017184 3-5-93 Storagetek Financial
Services Corp.
- --------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 132
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Jurisdiction File Number Filing Date Secured Party
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
932061336 8-17-93 Siemens
- --------------------------------------------------------------------------------
932061337 8-17-93 Siemens
- --------------------------------------------------------------------------------
932063517 8-26-93 Siemens
- --------------------------------------------------------------------------------
932063519 8-26-93 Siemens
- --------------------------------------------------------------------------------
942026852 4-11-94 Comdisco,Inc.
- --------------------------------------------------------------------------------
942034655 5-9-94 Siemens
- --------------------------------------------------------------------------------
942034657 5-9-94 Siemens
- --------------------------------------------------------------------------------
942045654 6-17-94 Siemens
- --------------------------------------------------------------------------------
942045648 6-17-94 Siemens
- --------------------------------------------------------------------------------
942049293 6-30-94 Siemens
- --------------------------------------------------------------------------------
942071726 9-26-94 Siemens
- --------------------------------------------------------------------------------
952001125 1-5-95 Master Lease Division of
TOKAI Financial
Services, Inc.
- --------------------------------------------------------------------------------
952030104 4-21-95 Storage Technology
Corporation
- --------------------------------------------------------------------------------
962023203 3-27-96 Siemens
- --------------------------------------------------------------------------------
952013178 2-21-95 Colorado Copier
- --------------------------------------------------------------------------------
952037042 5-15-95 Siemens
- --------------------------------------------------------------------------------
952044433 6-12-95 Siemens
- --------------------------------------------------------------------------------
952044436 6-12-95 Siemens
- --------------------------------------------------------------------------------
952072433 9-28-95 TOKAI Financial
Services, Inc.
- --------------------------------------------------------------------------------
952079994 10-30-95 Nissan Motor Acceptance
Corporation
- --------------------------------------------------------------------------------
962028264 4-12-96 Mountain Sales
- --------------------------------------------------------------------------------
962038513 5-17-96 Siemens
- --------------------------------------------------------------------------------
962067000 6-6-96 Colorado National
- --------------------------------------------------------------------------------
962078863 10-21-96 Hyster Credit Company
- --------------------------------------------------------------------------------
Boulder County, Colorado U0137588 3-9-93 Storagetek Financial
Services Corporation
- --------------------------------------------------------------------------------
U0143481 5-9-95 Bell & Howell
- --------------------------------------------------------------------------------
U0143944 7-31-95 Mountain Sales
- --------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 133
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Jurisdiction File Number Filing Date Secured Party
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
U0143946 7-31-95 Mountain Sales
- --------------------------------------------------------------------------------
U0144175 9-5-95 Bell & Howell
- --------------------------------------------------------------------------------
U0144230 9-15-95 Bell & Howell
- --------------------------------------------------------------------------------
U0144643 11-30-95 Computer Systems
- --------------------------------------------------------------------------------
U0145425 4-12-96 Mountain Sales
- --------------------------------------------------------------------------------
Iowa SOS K580926 10-4-94 Norwest Equipment
Finance, Inc.
- --------------------------------------------------------------------------------
K584539 10-17-94 Norstan Financial
Services, Inc.
- --------------------------------------------------------------------------------
K585102 10-18-94 Siemens
- --------------------------------------------------------------------------------
K691636 11-27-95 Colorado National
- --------------------------------------------------------------------------------
K694092 12-7-95 Textron Financial
Corporation ("Textron")
- --------------------------------------------------------------------------------
K715804 3-1-96 Textron
- --------------------------------------------------------------------------------
K716530 3-4-96 Colorado National
- --------------------------------------------------------------------------------
K720722 3-18-96 Textron
- --------------------------------------------------------------------------------
K737326 5-20-96 AT&T Credit Corporation
- --------------------------------------------------------------------------------
K762998 9-9-96 Colorado National
- --------------------------------------------------------------------------------
K783600 11-21-96 Electronic Data
- --------------------------------------------------------------------------------
K785080 11-25-96 Colorado National
- --------------------------------------------------------------------------------
Nebraska Secretary of State 625892 6-20-94 Forsythe/McArthur
- --------------------------------------------------------------------------------
Ohio SOS AM74264 5-17-96 Newfield Publications,
Inc.
- --------------------------------------------------------------------------------
Virginia State Corporation 9609097418 9-9-96 Colorado National
Commission
- --------------------------------------------------------------------------------
9611257100 11-25-96 Colorado National
- --------------------------------------------------------------------------------
Fredericksburg City, Va. Book 25, 10-23-96 Department of Taxation
Page 17
- --------------------------------------------------------------------------------
95-333 8-10-95 Microsoft Corporation
("Microsoft")
- --------------------------------------------------------------------------------
95-348 8-23-95 Microsoft
- --------------------------------------------------------------------------------
Stafford County, Virginia 960001645 10-30-96 Department of Taxation
================================================================================
</TABLE>
4
<PAGE> 134
SCHEDULE VII
Existing Investments
Winchester Associates Limited Liability Partnership
(a Colorado Limited Liability Partnership) $129,000
Schedule VII to Credit Agreement Page 1 of 1
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 353
<SECURITIES> 0
<RECEIVABLES> 71,740
<ALLOWANCES> 1,158
<INVENTORY> 0
<CURRENT-ASSETS> 76,921
<PP&E> 92,701
<DEPRECIATION> 43,992
<TOTAL-ASSETS> 153,458
<CURRENT-LIABILITIES> 54,685
<BONDS> 185,956
0
0
<COMMON> 0
<OTHER-SE> (103,888)
<TOTAL-LIABILITY-AND-EQUITY> 153,458
<SALES> 0
<TOTAL-REVENUES> 71,302
<CGS> 0
<TOTAL-COSTS> 48,054
<OTHER-EXPENSES> 14,848
<LOSS-PROVISION> 506
<INTEREST-EXPENSE> 6,142
<INCOME-PRETAX> 1,752
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,752
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,752
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
