CREDIT AGREEMENT
Dated as of June 30, 2000
among
VIDEO SERVICES CORPORATION, A DELAWARE CORPORATION, AND EACH OF THE DIRECT AND
INDIRECT SUBSIDIARIES OF VIDEO SERVICES CORPORATION DESIGNATED AS "BORROWERS"
IN THE SIGNATURE PAGES HERETO,
as Borrowers,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS PARTY HERETO,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Term Agent
and
Administrative Agent
and
KEYBANK NATIONAL ASSOCIATION,
as Revolver Agent
<PAGE>
viii
TABLE OF CONTENTS
Page
1. AMOUNT AND TERMS OF CREDIT..............................................2
1.1 Credit Facilities..................................................2
1.2 Letters of Credit..................................................6
1.3 Prepayment.........................................................7
1.4 Use of Proceeds...................................................10
1.5 Interest and Applicable Margins...................................10
1.6 Cash Management Systems...........................................14
1.7 Fees..............................................................14
1.8 Receipt of Payments...............................................15
1.9 Application and Allocation of Payments............................15
1.10 Loan Accounts and Accounting......................................16
1.11 Indemnity.........................................................17
1.12 Access............................................................18
1.13 Taxes.............................................................19
1.14 Capital Adequacy; Increased Costs; Illegality.....................20
1.15 Single Loan.......................................................21
1.16 Pro Rata Treatment................................................21
1.17 Non-Receipt Of Funds By Applicable Agent..........................21
1.18 Sharing Of Payments, Etc....... ..................................22
1.19 Settlement Procedures.............................................23
2. CONDITIONS PRECEDENT...................................................25
2.1 Conditions to the Initial Loans...................................25
2.2 Further Conditions to Each Loan...................................26
<PAGE>
3. REPRESENTATIONS AND WARRANTIES.........................................27
3.1 Corporate Existence; Compliance with Law..........................27
3.2 Executive Offices; FEIN...........................................28
3.3 Corporate Power, Authorization, Enforceable Obligations...........28
3.4 Financial Statements and Projections..............................28
3.5 Material Adverse Effect...........................................29
3.6 Ownership of Property; Liens......................................30
3.7 Labor Matters.....................................................30
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness......................................................31
3.9 Government Regulation.............................................31
3.10 Margin Regulations................................................31
3.11 Taxes.............................................................32
3.12 ERISA.............................................................32
3.13 No Litigation.....................................................33
3.14 Brokers...........................................................33
3.15 Intellectual Property.............................................33
3.16 Full Disclosure...................................................33
3.17 Environmental Matters.............................................34
3.18 Insurance.........................................................35
3.19 Deposit and Disbursement Accounts.................................35
3.20 Government Contracts..............................................35
3.21 Customer and Trade Relations......................................35
3.22 Agreements and Other Documents....................................35
3.23 Solvency..........................................................35
3.24 Year 2000 Representations.........................................36
3.27 Subordinated Debt.................................................36
3.27 FCC Compliance....................................................36
<PAGE>
4. FINANCIAL STATEMENTS AND INFORMATION...................................37
4.1 Reports and Notices...............................................37
4.2 Communication with Accountants....................................37
5. AFFIRMATIVE COVENANTS..................................................37
5.1 Maintenance of Existence and Conduct of Business..................37
5.2 Payment of Obligations............................................38
5.3 Books and Records.................................................38
5.4 Insurance; Damage to or Destruction of Collateral.................38
5.5 Compliance with Laws..............................................40
5.6 Supplemental Disclosure...........................................40
5.7 Intellectual Property.............................................41
5.8 Environmental Matters.............................................41
5.9 Landlords' Agreements, Mortgagee Agreements and Bailee Letters....41
5.10 Interest Rate/Currency Fluctuations Protection....................42
5.11 Further Assurances................................................42
5.12 Agreements With Management........................................42
6. NEGATIVE COVENANTS.....................................................43
6.1 Mergers, Subsidiaries, Etc........................................43
6.2 Investments; Loans and Advances...................................44
6.3 Indebtedness......................................................44
6.4 Employee Loans and Affiliate Transactions.........................45
6.5 Capital Structure and Business....................................46
6.6 Guaranteed Indebtedness...........................................46
6.7 Liens.............................................................46
6.8 Sale of Stock and Assets..........................................47
6.9 ERISA.............................................................47
6.10 Financial Covenants...............................................47
6.11 Hazardous Materials...............................................48
6.12 Sale-Leasebacks...................................................48
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6.13 Cancellation of Indebtedness......................................48
6.14 Restricted Payments...............................................48
6.15 Change of Corporate Name or Location; Change of Fiscal Year.......48
6.16 No Impairment of Intercompany Transfers...........................49
6.17 No Speculative Transactions.......................................49
6.18 Leases............................................................49
6.19 Changes Relating to Subordinated Debt.............................49
6.20 Credit Parties Other Than Borrowers...............................49
6.21 Limitation On Capital Expenditures................................49
7. Term...................................................................50
7.1 Termination.......................................................50
7.2 Survival of Obligations Upon Termination of Financing Arrangement.50
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES.................................50
8.1 Events of Default.................................................50
8.2 Remedies..........................................................53
8.3 Waivers by Credit Parties.........................................54
9. ASSIGNMENTS AND PARTICIPATIONS.........................................54
9.1 Assignments And Participations....................................54
10. SUCCESSORS AND ASSIGNS................................................56
10.1 Successors and Assigns............................................56
11. MISCELLANEOUS.........................................................56
11.1 Complete Agreement; Modification of Agreement.....................56
11.2 Amendments and Waivers............................................57
11.3 Fees and Expenses.................................................57
11.4 No Waiver.........................................................58
11.5 Remedies..........................................................59
11.6 Severability......................................................59
11.7 Conflict of Terms.................................................59
11.8 Confidentiality...................................................59
11.9 GOVERNING LAW.....................................................60
11.10 Notices............ ..............................................61
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11.11 Section Titles....................................................61
11.12 Counterparts......................................................61
11.13 WAIVER OF JURY TRIAL..............................................61
11.14 Press Releases....................................................62
11.15 Reinstatement.....................................................62
11.16 Advice of Counsel.................................................62
11.17 No Strict Construction............................................62
12. AGENTS.................................................................62
12.1 Appointment, Powers And Immunities................................62
12.2 Reliance By Agents................................................63
12.3 Defaults..........................................................63
12.4 Rights As A Lender................................................64
12.5 Indemnification...................................................64
12.6 Non-Reliance On Agents And Other Lenders..........................64
12.7 Failure To Act....................................................65
12.8 Resignation Of Agents.............................................65
12.9 Consents Under Loan Documents.....................................66
12.10 Collateral Matters................................................66
13. CROSS-GUARANTY........................................................66
13.1 Cross-Guaranty....................................................66
13.2 Waivers by Borrowers..............................................67
13.3 Benefit of Guaranty...............................................67
13.4 Subordination of Subrogation, Etc.................................68
13.5 Election of Remedies..............................................68
13.6 Limitation........................................................68
13.7 Contribution with Respect to Guaranty Obligations.................69
13.8 Liability Cumulative..............................................70
<PAGE>
INDEX OF APPENDICES
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b) - Form of Term Note
Exhibit 1.1(c)(i) - Form of Notice of SCIL Loan Advance
Exhibit 1.1(c)(ii) - Form of SCIL Note
Exhibit 1.4(e) - Form of Notice of Conversion
Exhibit 1.5(e) - Form of Notice of Revolving Credit Advance
Conversion
Exhibit A-1 - Form of Intercreditor Agreement
Exhibit 9.1(b) - Form of Assignment Agreement
Schedule 1.3 - Sources and Uses; Funds Flow Memorandum
Schedule 3.2 - Executive Offices; FEIN
Schedule 3.4(a) - Financial Statements
Schedule 3.4(b) - Pro Forma
Schedule 3.4(c) - Projections
Schedule 3.4(d) - Fair Salable Balance Sheet
Schedule 3.6 - Real Estate and Leases
Schedule 3.7 - Labor Matters
Schedule 3.8 - Ventures, Subsidiaries and Affiliates;
Outstanding Stock and Indebtedness
Schedule A-1 - Existing Letters of Credit
Schedule 3.11 - Tax Matters
Schedule 3.12 - ERISA Plans
Schedule 3.13 - Litigation
Schedule 3.15 - Intellectual Property
Schedule 3.17 - Hazardous Materials
Schedule 3.18 Insurance
Schedule 3.19 - Deposit and Disbursement Accounts
Schedule 3.20 - Government Contracts
Schedule 3.22 - Material Agreements
Schedule 5.1 - Trade Names
Schedule 6.3 - Indebtedness
Schedule 6.4(a) - Transactions with Affiliates
Schedule 6.4(c) - Compensation Levels
Schedule 6.7 - Existing Liens
Schedule 6.2 - Permitted Investments
Schedule 6.18 - Existing Leases
Schedule 6.20 - Credit Parties Other Than Borrower
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
Annex C (Section 1.5) - Cash Management System
Annex D (Section 2.1(a)) - Schedule of Additional Closing Documents
Annex E (Section 4.1(a)) - Financial Statements and Projections-Reporting
Annex F (Section 4.1(b)) - Collateral Reports
Annex G (Section 6.10) - Financial Covenants
Annex H (Section 11.10) - Notice Addresses
<PAGE>
CREDIT AGREEMENT, dated as of June 30, 2000 among Video Services
Corporation, a Delaware corporation ("VSC"), and each of its direct and indirect
subsidiaries designated as "Borrowers" on the signature pages of this Agreement
(each of VSC and such entities are collectively referred to herein as
"Borrowers" and each individually as a "Borrower"), the other credit parties
signatory hereto ("Credit Parties"), each of the lenders signatory hereto and
those Persons who become lenders in accordance with the terms and conditions
hereof (each, a "Lender" and collectively, "Lenders"), General Electric Capital
Corporation, a New York corporation ("GE Capital" or, as administrative and term
agent for the Lenders, as the context requires, together with its successors in
each of such capacities, "Term Agent") and KeyBank National Association, as
revolver agent for the applicable Lenders (together with its successors in such
capacity, "Revolver Agent;" and each of Term Agent and Revolver Agent, an
"Agent," and collectively "Agents").
RECITALS
WHEREAS, Borrowers desire that Lenders extend revolving and term credit
facilities to Borrowers of up to $55,000,000 in the aggregate for the Qualified
Purposes; and
WHEREAS, Lenders are willing to make certain loans and other extensions
of credit to Borrowers of up to such amount for such Qualified Purposes in
accordance with the terms and conditions set forth herein and in the other Loan
Documents; and
WHEREAS, Borrowers desire to secure all of their obligations under this
Agreement and the other Loan Documents by granting to Term Agent for the benefit
of Lender Group security interests in and Liens upon all of their existing and
after-acquired personal and real property; and
WHEREAS, Guarantors are willing to guaranty all of the obligations of
Borrowers, and each Borrower is willing to guaranty all of the obligations of
each other Borrower, to Agents and Lenders under this Agreement and the other
Loan Documents; and
WHEREAS, VSC is willing to pledge to Term Agent for the benefit of
Lender Group all of the capital stock of each Subsidiary of VSC or other Person
with respect to which VSC owns Stock to secure the Obligations; and
WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in Annex A; and
WHEREAS, all Annexes, Disclosure Schedules, Exhibits and other
attachments (collectively, "Appendices") hereto, or expressly identified to this
Agreement, are incorporated herein by reference, and, taken together with this
Agreement including the foregoing Recitals, shall constitute but a single
agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:
<PAGE>
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities.
(a) Revolving Credit Facility. (i) Subject to the terms and
conditions hereof, until the applicable Commitment Termination Date each of the
applicable Lenders severally agrees to make advances available (each, a
"Revolving Credit Advance" and collectively, the "Revolving Credit Advances")
from time to time in an aggregate principal amount outstanding at any time up to
but not exceeding the Revolving Loan Commitment of such applicable Lender, less
such Lender's pro rata share (based on the Revolving Loan Commitments) of the
aggregate Letter of Credit Obligations outstanding at such time. The aggregate
amount of Revolving Credit Advances outstanding at any time shall not exceed the
aggregate Revolving Loan Commitments, less the aggregate Letter of Credit
Obligations then outstanding. Until the applicable Commitment Termination Date,
Borrowers may from time to time borrow, repay and reborrow under this Section
1.1(a); provided, however, that (x) Borrowers shall not obtain Revolving Credit
Advances, make any conversions contemplated in Section 1.5(e)(ii), or
voluntarily prepay the Revolving Loan, or any part thereof, more than two times
in any week for all such transactions, and (y) the aggregate amount of the
Revolving Credit Advances requested by Borrowers at any one time shall equal no
less than $500,000 or an integral multiple of $100,000 in excess thereof. Each
Revolving Credit Advance shall be made on notice (each, a "Notice of Revolving
Credit Advance") by Borrower Representative on behalf of the applicable Borrower
to each Agent and, subject to the terms and conditions of this Agreement,
including, without limitation, Section 1.19, on the date specified in each such
Notice of Revolving Credit Advance for each such borrowing, each of the
applicable Lenders shall make available the amount of Revolving Credit
Advance(s) to be made by it on such date to Revolver Agent or to such account of
Revolver Agent as Revolver Agent may designate, in immediately available funds,
for the account of the applicable Borrower. Each such Notice of Revolving Credit
Advance must be given no later than 12:00 noon (New York time) on the date which
is three Business Days prior to the proposed Revolving Credit Advance. Each such
Notice of Revolving Credit Advance must be given in writing (by telecopy or
overnight courier) substantially in the form of Exhibit 1.1(a)(i), and shall
include the information required in such Exhibit, and such other information as
may be required by Revolver Agent.
(ii).....Each Borrower shall execute and deliver to
Term Agent for delivery to each Lender having a Revolving Loan Commitment a note
(totaling the initial aggregate Revolving Loan Commitments) to evidence the
aggregate Revolving Loan Commitments. Each note shall be dated the Closing Date
and shall be substantially in the form of Exhibit 1.1(a)(ii) (each a "Revolving
Note" and, collectively, "Revolving Notes"). Each Revolving Note shall represent
the obligation of each Borrower to pay the amount of the aggregate Revolving
Loan Commitments or, if less, the aggregate unpaid principal amount of all
Revolving Credit Advances made by the applicable Lender to such Borrower,
together with interest thereon as prescribed in Section 1.5. Each of the
Borrowers under this Agreement shall be jointly and severally liable as
co-borrowers with each other Borrower for the aggregate Revolving Loan. The
entire unpaid balance of the aggregate Revolving Loan and all other
noncontingent Obligations shall be immediately due and payable in full, in
immediately available funds, on the earlier of (A) 39 months after the Closing
Date, and (B) the date of termination, pursuant to Section 8.2(b), of Lenders'
obligations to permit existing Revolving Loans to remain outstanding.
(b) Term Loans. Subject to the terms and conditions hereof,
each applicable Lender severally agrees to make term loans on the Closing Date
(A) to Borrowers ("Term Loan A") in the original principal amount equal to the
Term Loan A Commitment of such Lender; (B) to Borrowers ("Term Loan B" and,
together with Term Loan A, "Term Loans" and each individually, a "Term Loan") in
the original principal amount equal to the Term Loan B Commitment of such
Lender. Upon payment of the Term Loans, or any portion thereof, the principal
amount so repaid may not be reborrowed. Each such Term Loan made by each
applicable Lender shall be evidenced by promissory notes substantially in the
form of Exhibit 1.1(b) (each, a "Term Note" and, collectively, the "Term
Notes"), and each Borrower shall execute and deliver its respective Term Notes
to Term Agent for delivery to the applicable Lenders. Each Term Note shall
represent the obligation of the applicable Borrower to pay the amount of the
applicable Term Loans made to such Borrower, together with interest thereon as
prescribed in Section 1.5.
(i)......Borrowers shall pay the principal amount of
Term Loan A in thirteen consecutive quarterly installments commencing on July 1,
2000 and on the first day of each three month period thereafter, all such
payments to be made as follows:
Principal Amount
----------------
Payment Date Payable on Each Payment Date
------------- ----------------------------
July 1, 2000 and on the first day of $ 1,000,000
each three month period thereafter
through and including April 1,2003
July 1, 2003 Remaining principal balance
(ii).....Borrowers shall pay the principal amount of
Term Loan B in twenty-one consecutive quarterly installments commencing on July
1, 2000 and on the first day of each three month period thereafter (or the
nearest day thereto which is the last day of the applicable LIBOR Period), all
such payments to be made as follows:
<PAGE>
Principal Amount
----------------
Payment Date Payable on Each Payment Date
------------ ----------------------------
July 1, 2000 and on the first day of $ 112,500
each three month period thereafter
through and including July 1, 2003
October 1, 2003 and January 2, 2004 $ 500,000
April 1, 2004 $ 1,000,000
July 1, 2004 and on the first day of $ 1,250,000
each three month period thereafter
through and including April 1, 2005
July 1, 2005 Remaining principal balance
(iii)....Notwithstanding the foregoing clauses (i) and
(ii), the aggregate outstanding principal balance of each of Term Loan A and
Term Loan B shall be due and payable in full in immediately available funds on
the applicable Commitment Termination Date, if not sooner paid in full.
(c) SCIL Loans.
(i) Subject to the terms and conditions hereof, each of
the applicable Lenders severally agrees to make advances available (each, a
"SCIL Loan Advance") from time to time until the applicable Commitment
Termination Date in an aggregate principal amount outstanding at any time up to
but not exceeding the SCIL Loan Commitment of such applicable Lender; provided,
however, that on the Closing Date Borrower Representative, on behalf of the
applicable Borrowers, shall only be entitled to request SCIL Loan Advances up to
an aggregate principal amount of $5,000,000, and thereafter until the applicable
Commitment Termination Date, Borrower Representative, on behalf of the
applicable Borrowers, shall only be entitled to request SCIL Loan Advances in
amounts and at the times corresponding to the required scheduled payments of
interest and principal under the Subordinated Notes, or any prepayment thereof,
to the extent such interest and principal has actually been paid in cash by the
applicable Borrower within one (1) year prior to the date of the making of the
request SCIL Advance. Upon payment of the SCIL Loan Advance(s), or any portion
thereof, the principal amount so repaid may not be reborrowed. Each SCIL Loan
Advance shall be made on notice (each, a "Notice of SCIL Loan Advance") by
Borrower Representative on behalf of the applicable Borrower to Term Agent and,
on the date specified in each such Notice of SCIL Loan Advance for each such
borrowing, each of the applicable Lenders shall make available the amount of
SCIL Loan Advance(s) to be made by it on such date to Term Agent or to such
account of Term Agent as Term Agent may designate, in immediately available
funds, for the account of the applicable Borrower. Each Notice of SCIL Loan
Advance must be given no later than 12:00 noon (New York time) on the date which
is three Business Days prior to the proposed SCIL Loan Advance. Each such Notice
of SCIL Loan Advance must be given in writing (by telecopy or overnight courier)
substantially in the form of Exhibit 1.1(c)(i), and shall include the
information required in such Exhibit and such other information as may be
required by Term Agent.
(ii).....Each SCIL Loan Advance made by each applicable
Lender shall be evidenced by a separate note substantially in the form of
Exhibit 1.1(c)(ii) (each, a "SCIL Note" and, collectively, "SCIL Notes"), and
each applicable Borrower shall execute and deliver its respective SCIL Notes to
Term Agent for delivery to the applicable Lenders on or prior to the date of the
requested SCIL Loan Advance. Each SCIL Note shall represent the obligation of
the applicable Borrower to pay the amount of the applicable SCIL Loan Advances
made by the applicable SCIL Lender to such Borrower, together with interest
thereon as prescribed in Section 1.5.
(iii)....Borrowers shall pay the principal amount of
the SCIL Loans in 20 consecutive equal quarterly installments commencing on July
1, 2000 and on the first day of each three month period thereafter (or the
nearest day thereto which is the last day of the applicable LIBOR Period) as
follows:
<PAGE>
Principal Amount
----------------
Payment Date Payable on Each Payment Date
------------ ----------------------------
July 1, 2000 and on the first day of $ 25,000
each three month period thereafter
through and including April 1, 2005
July 1, 2005 and on the first day of 1/4 of 50% of the remaining principal
each three month period thereafter balance as of July 1, 2005
through and including April 1, 2006
July 1, 2006 and on the first day of 1/4 of 50% of the remaining principal
each three month period thereafter balance as of July 1, 2006
through and including April 1, 2007
(iv) ....Notwithstanding the foregoing clause (iii),
the aggregate outstanding principal balance of all SCIL Loan Advances shall be
due and payable in full in immediately available funds on the applicable
Commitment Termination Date if not sooner paid in full.
(d) Reliance on Notices; Appointment of Borrower
Representative. Each Agent and each Lender shall be entitled to rely upon, and
shall be fully protected in relying upon, any Notice of Revolving Credit
Advance, Notice of SCIL Loan Advance, Notice of Conversion or similar notice
believed by any such Agent or Lender, as the case may be, to be genuine. Each
Agent and each Lender may assume that each Person executing and delivering such
a notice was duly authorized to execute and deliver such notice, unless the
responsible individual acting thereon for such Agent or such Lender has actual
knowledge to the contrary. Each Borrower hereby designates VSC ("Borrower
Representative") as its representative and agent on its behalf for the purposes
of issuing Notices of Revolving Credit Advances, Notices of SCIL Loan Advances
and Notices of Conversion, giving instructions with respect to the disbursement
of the proceeds of the Loans, selecting interest rate options, requesting the
issuance of Letters of Credit, giving and receiving all other notices and
consents hereunder or under any of the other Loan Documents and taking all other
actions (including in respect of compliance with covenants) on behalf of any
Borrower or Borrowers under the Loan Documents. Borrower Representative hereby
accepts such appointment. Each Agent and each Lender may regard any notice or
other communication pursuant to any Loan Document from Borrower Representative
as a notice or communication from all Borrowers, and may give any notice or
communication required or permitted to be given to any Borrower or Borrowers
hereunder to Borrower Representative on behalf of such Borrower or Borrowers.
Each Borrower agrees that each notice, election, representation and warranty,
covenant, agreement and undertaking made on its behalf by Borrower
Representative shall be deemed for all purposes to have been made by such
Borrower and shall be binding upon and enforceable against such Borrower to the
same extent as if the same had been made directly by such Borrower.
(e) Non-Funding Lenders. The failure of any Lender (each such
Lender, a "Non-Funding Lender") to make any Revolving Credit Advance, including,
without limitation, in respect of a Letter of Credit Obligation, or SCIL Loan
Advance required to be made by it hereunder on the date specified therefor shall
not relieve any other Lender (each such other Lender, an "Other Lender") of its
obligation to make its Revolving Credit Advance or SCIL Loan Advance on such
date; but no Other Lender nor either Agent (except solely to the extent such
Agent is a Non-Funding Lender) shall be responsible for the failure of any
Non-Funding Lender to make any Revolving Credit Advance or SCIL Loan Advance,
and no Non-Funding Lender shall have any obligation to either Agent or any Other
Lender by reason of any such failure by such Non-Funding Lender. Notwithstanding
anything set forth herein to the contrary, unless and until a Non-Funding Lender
has cured all funding defaults hereunder, such Non-Funding Lender shall not have
any voting or consent rights under or with respect to any Loan Document or
constitute a "Lender" (or be included in the calculation of "Required Lenders"
hereunder) for any voting or consent rights under or with respect to any Loan
Document nor have any right to the Applicable Unused Line Fee Margin.
Notwithstanding anything to the contrary in this Agreement, each Lender hereby
agrees with each other Lender that no Lender shall exercise any remedies or take
any action to protect or enforce its rights arising out of or relating to this
Agreement, any of the Notes or any of the other Loan Documents (including
exercising any rights of offset) without first obtaining the prior written
consent of Applicable Agent and Required Lenders, it being the agreement of
Lenders that any remedies or such action to protect or enforce rights under this
Agreement, any of the Notes or any of the other Loan Documents shall be taken in
concert and at the direction or with the consent of Applicable Agent and
Required Lenders and not independently by a single Lender. Notwithstanding the
foregoing, any Lender may enforce its right to receive any amount due and unpaid
under any Note held by such Lender, but may not unilaterally exercise any other
rights under the Loan Documents.
1.2 Letters of Credit. Subject to and in accordance with the terms and
conditions contained herein and in Annex B, Borrower Representative, on behalf
of the applicable Borrower, shall have the right to request, and each Lender
agrees to incur, Letter of Credit Obligations in respect of each Borrower.
1.3 Prepayment.
a) Voluntary Prepayments. Borrowers may at any time on at
least five days' prior written notice by Borrower Representative to Applicable
Agent (i) voluntarily prepay all or part of the Loans other than the Revolving
Loan, provided that such payments are applied in the manner set forth in Section
1.3(c), or (ii) voluntarily reduce the Revolving Loans or the Revolving Loan
Commitments; provided, however, that (a) any such partial prepayments or
reductions shall be in a minimum amount of $500,000 and integral multiples of
$250,000, in excess of such amount and (b) the Revolving Loan Commitment shall
not be reduced to an amount less than one hundred and five percent (105%) of the
L/C Sublimit. In addition, Borrowers may at any time on at least ten days' prior
written notice by Borrower Representative to Applicable Agent terminate the
Revolving Loan Commitment; provided, however, that upon such termination of the
Revolving Loan Commitment (or upon any reduction of the Revolving Loan
Commitment below the aggregate amount of $8,000,000), all Loans and other
Obligations shall be immediately due and payable in full. Any such voluntary
prepayment and any such reduction or termination of the Revolving Loan
Commitments must be accompanied by the payment of the fee required by Section
1.7(c), if any, plus the payment of any LIBOR funding breakage costs in
accordance with Section 1.11(b). Upon any such repayment and reduction or
termination of the Revolving Loan Commitments, each Borrower's right to request
Revolving Credit Advances, or request that Letter of Credit Obligations be
incurred on its behalf, as the case may be, shall simultaneously be permanently
reduced or terminated, as the case may be; provided that a permanent reduction
of the Revolving Loan Commitment shall not require a corresponding pro rata
reduction in the L/C Sublimit. Each notice of partial prepayment shall designate
the Loans or other Obligations to which such prepayment is to be applied,
provided that any partial prepayments of the Term Loans made by or on behalf of
any Borrower shall be applied to prepay the scheduled installments of such
Borrower's Term Loans in inverse order of maturity.
(b) Mandatory Prepayments.
(i)......If at any time the outstanding balance of any
Loan exceeds the aggregate Commitments in respect of such Loan, Borrowers shall
immediately repay the aggregate outstanding amount of such Loan to the extent
required to eliminate such excess. If any such excess remains after repayment in
full of the aggregate outstanding Revolving Credit Advances, Borrowers shall
provide cash collateral for the Letter of Credit Obligations in the manner set
forth in Annex B to the extent required to eliminate such excess.
(ii)....Immediately upon receipt by any Credit Party of
proceeds of any asset disposition (including condemnation proceeds and any
Allowed Sale, but excluding proceeds of asset dispositions permitted by Section
6.8 or proceeds of asset dispositions to the extent used to purchase replacement
assets within 120 days of the applicable asset disposition), Borrowers shall
prepay the Loans in an amount equal to all such proceeds, net of (A) commissions
and other reasonable and customary transaction costs, fees and expenses properly
attributable to such transaction and payable by Borrowers in connection
therewith (in each case, paid to non-Affiliates), (B) transfer taxes, (C) the
amount necessary to discharge any Liens on such asset that are senior to the
Liens created under the Loan Documents (to the extent such Liens constitute
Permitted Encumbrances hereunder), if any, and (D) an appropriate reserve for
income taxes in accordance with GAAP in connection therewith. Any such
prepayment shall be applied in accordance with clause (c) below.
(iii)......If any Borrower or any Subsidiary thereof
issues (A) Stock, no later than the Business Day following the date of receipt
of the proceeds thereof, Borrowers shall prepay the Loans in an amount equal to
50% of such proceeds, or (B) debt securities (other than (x) debt incurred under
Section 6.3(a)(i) and (iv), and (y) Intercompany Notes otherwise permitted under
this Agreement), no later than the Business Day following the date of receipt of
the proceeds thereof, Borrowers shall prepay the Loans in an amount equal to
100% of such proceeds, in each case, net of underwriting discounts and
commissions and other reasonable costs, fees and expenses actually paid to
non-Affiliates in connection therewith. Each such prepayment shall be applied in
accordance with clause (c) below.
(iv).....Until the Termination Date, Borrowers shall
prepay the Obligations on the earlier of the date which is ten days after (A)
the date on which Borrowers' annual audited Financial Statements for the
immediately preceding Fiscal Year are delivered pursuant to Annex E or (B) the
date on which such annual audited Financial Statements were required to be
delivered pursuant to Annex E, in an amount equal to 50% of Excess Cash Flow for
the immediately preceding Fiscal Year. Each prepayment from Excess Cash Flow
paid pursuant to this clause (iv) shall be allocated to each Borrower's
Obligations based upon such Borrower's relative contribution to Excess Cash Flow
and shall be applied in accordance with clause (c) below. Each such prepayment
shall be accompanied by a certificate signed by Borrower Representative's chief
accounting officer certifying the manner in which Excess Cash Flow, the
resulting prepayment, and the method of allocation to each Borrower's
Obligations were calculated, which certificate shall be in form and substance
satisfactory to Term Agent.
(c) Application of Prepayments. Except as otherwise provided
in Section 1.9: (i) each prepayment by a Borrower made under this Agreement
shall be applied first to the Loans and related Obligations extended to such
Borrower in the order set forth in this Subsection 1.9(c) 1.3(c), and thereafter
to the Loans extended to the other Borrowers, pro rata in accordance with clause
(ii) below, or to such Loans of such Borrowers as the Agent, with the consent of
all Lenders, shall direct; and (ii) all such prepayments as to any Borrower
shall be applied as follows: first, to Fees and reimbursable expenses of Agents
then due and payable pursuant to any of the Loan Documents; second, to Fees and
reimbursable expenses of Lenders then due and payable pursuant to any of the
Loan Documents; third, to interest then due and payable on Term Loan A; fourth,
to pay the scheduled principal installments of Term Loan A in inverse order of
maturity until such Loan shall have been prepaid in full; fifth, to interest
then due and payable on Term Loan B; sixth, to pay the scheduled principal
installments of Term Loan B in inverse order of maturity until such Loan shall
have been prepaid in full; seventh, to interest then due and payable on the
Revolving Loan; eighth, to the principal balance of the Revolving Loan until the
same shall have been paid in full; ninth, to any Letter of Credit Obligations of
Borrowers whether under this Agreement, or otherwise, to provide cash collateral
in respect of Letter of Credit Obligations in the manner set forth in Annex B,
until all such Letter of Credit Obligations have been fully cash collateralized
in the manner set forth in Annex B; tenth, to interest then due and payable on
the SCIL Loan; and eleventh, to the principal balance obligations of the SCIL
Loan until the same shall have been paid in full. The Term Loan A Commitment,
the SCIL Loan Commitment, and the Term Loan B Commitment, as the case may be,
shall be permanently reduced by the amount of each such prepayment. The
Revolving Loan Commitments shall not be permanently reduced by the amount of any
such prepayments, unless Borrower Representative on behalf of Borrowers gives
notice that Borrowers are electing to permanently reduce the applicable
Commitment in connection with the applicable prepayment. Notwithstanding the
foregoing or anything to the contrary in this Agreement or any other Loan
Document, each applicable Lender that has a Term Loan A Commitment may, at any
such Lender's option, irrevocably forego the aforereferenced prepayment with
respect to Term Loan A and, in such event, any such foregone prepayment shall be
applied to the other portions of Term Loan A held by Lenders not electing to
forego such prepayment ratably in accordance with the outstanding principal
amount of Term Loan A held by such Lenders respectively. If all Lenders having
Term Loan A Commitments elect to forego prepayment or if such prepayments are in
excess of the aggregate accrued interest and outstanding principal amount of
Term Loan A, any such foregone prepayments or excess amounts shall be applied,
subject to the rights of Lenders holding Term Loan B Commitments to forego
prepayments on Term Loan B as hereafter set forth, to Term Loan B ratably in
accordance with the outstanding principal amounts held by the applicable
Lenders. Each applicable Lender that has a Term Loan B Commitment may, at any
such Lender's option, irrevocably forego the aforereferenced prepayment with
respect to Term Loan B and, in such event, any such foregone prepayment shall be
applied to the other portions of Term Loan B held by Lenders not electing to
forego such prepayment ratably in accordance with the outstanding principal
amount of Term Loan B held by such Lenders. If all Lenders having Term Loan B
Commitments elect to forego prepayment or if such prepayments are in excess of
the aggregate accrued interest and outstanding principal amount of Term Loan B,
any such foregone prepayments or excess amounts shall be applied to the
Revolving Loan and the SCIL Loan and outstanding Advances in the order set forth
in clauses seventh, eighth, ninth and tenth of this Section 1.3(c). Any
applicable Lender may notify Term Agent and Borrower Representative of its
election to irrevocably forego its share of any of the aforementioned
prepayments, in which event such notice shall be effective until such Lender
notifies Term Agent and Borrower Representative to the contrary. Any applicable
Lender that wishes to decline receipt of its share of any such prepayment
pursuant to this Section 1.3(c) shall promptly, and in any event no later than
2:00 p.m. (New York time) on the date following receipt of its notice of such
prepayment, notify Term Agent and Borrower Representative of such election. Any
applicable Lender that has not provided notice pursuant to one of the two
preceding sentences prior to the 2:00 p.m. (New York time) deadline shall be
assumed to have elected to accept such prepayment. Term Agent shall promptly
provide, to all such applicable electing Lenders, notice of the principal amount
of the Term Loans that such Lenders have elected to decline.
(d) Application of Prepayments from Insurance Proceeds.
Prepayments from insurance proceeds in accordance with Section 5.4(c) shall be
applied in accordance with clause (c) above.
(e) Nothing in this Section 1.3 shall be construed to
constitute any Agent's or any Lender's consent to any transaction referred to in
clauses (b)(ii) and (b)(iii) above which is not permitted by other provisions of
this Agreement or the other Loan Documents.
1.4 Use of Proceeds. Borrowers shall utilize the proceeds of (i) the
Term Loans and, to the extent necessary, the Revolving Loan (and any Letter of
Credit issued pursuant to this Agreement) solely for the Refinancing (and to pay
any related transaction expenses), and (ii) thereafter, the Revolving Loan, for
the financing of Borrowers' ordinary working capital and general corporate needs
(but excluding in any event (A) the prepayment of all or any portion of the
Subordinated Debt, and (B) the making of any Restricted Payment not specifically
permitted by Section 6.14) and the proceeds of the SCIL Loan for the Refinancing
(and to pay any related transaction expenses) and to make or finance or
refinance (but only the extent permitted under this Agreement) scheduled cash
payments of interest and principal as required under the Subordinated Notes, or
to prepay, in whole or in part, the principal of the Subordinated Debt (the
aforementioned permitted uses of proceeds, collectively, the "Qualified
Purposes"). Disclosure Schedule (1.4) contains a description of Borrowers'
sources and uses of funds as of the Closing Date, including Loans and Letter of
Credit Obligations to be made or incurred on that date, and a funds flow
memorandum detailing how funds from each source are to be transferred to
particular uses.
1.5 Interest and Applicable Margins.
(a) Borrowers shall pay interest to Applicable Agent for the
account of Lenders, in arrears on each applicable Interest Payment Date via
electronic funds, at the following rates: (i) with respect to the Revolving
Credit Advances, the applicable LIBOR Rate plus the Applicable Revolver LIBOR
Margin per annum, or at the Index Rate plus the Applicable Revolver Index Margin
per annum if Borrower Representative on behalf of the applicable Borrowers
elects to convert the Revolving Credit Advances to an Index Rate Loan pursuant
to and in accordance with Section 1.5(e), (ii) with respect to Term Loan A, the
applicable LIBOR Rate plus the Applicable Term Loan A LIBOR Margin per annum, or
at the Index Rate plus the Applicable Term Loan A Index Margin per annum if
Borrower Representative on behalf of the applicable Borrowers elects to convert
Term Loan A to an Index Rate Loan pursuant to and in accordance with Section
1.5(e), (iii) with respect to Term Loan B, the applicable LIBOR rate plus the
Applicable Term Loan B LIBOR Margin per annum, or at the Index Rate plus the
Applicable Term Loan B Index Margin per annum if Borrower Representative on
behalf of the applicable Borrowers elects to convert Term Loan B to an Index
Rate Loan pursuant to and in accordance with Section 1.5(e) and (iv) with
respect to the SCIL Loan, the applicable LIBOR rate plus the Applicable SCIL
Loan LIBOR Margin, or at the Index Rate plus the Applicable SCIL Loan Index
Margin per annum if Borrower Representative on behalf of the applicable
Borrowers elects to convert the SCIL Loan to an Index Rate Loan pursuant to and
in accordance with Section 1.5(e).
The Applicable Revolver LIBOR Margin will be 3.25% per
annum, the Applicable Revolver Index Margin will be 1.25% per annum, the
Applicable Term Loan A LIBOR Margin will be 3.25% per annum, the Applicable Term
Loan A Index Margin will be 1.25% per annum, the Applicable Term Loan B LIBOR
Margin will be 3.50% per annum and the Applicable Term Loan B Index Margin will
be 1.50% per annum. The Applicable L/C Margin will be 3.25%. The Applicable SCIL
Loan LIBOR Margin will be 4.00%, plus an additional 4.00% to accrue monthly
commencing on November 1, 2001 (and, solely with respect to such additional
4.00% interest accruing from and after such date, payable on the applicable
Commitment Termination Date) per annum, and the Applicable SCIL Loan Index
Margin will be 2.00% plus an additional 4.00% to accrue monthly commencing on
November 1, 2001 (and, solely with respect to such additional 4.00% interest
accruing from and after such date, payable on the applicable Commitment
Termination Date) per annum; provided, however, that if, on or prior to on
November 1, 2001, (A) a portion of Borrowers' assets are sold for cash to a bona
fide third party in an arm's length transaction approved in writing in advance
by Term Agent in its sole and absolute discretion (an "Allowed Sale"), (B) no
Default or Event of Default has occurred and is continuing before giving effect
to such Allowed Sale and no Default or Event of Default will occur as a result
of and after giving effect to such Allowed Sale, (C) the net proceeds of such
Allowed Sale are applied to the Loans in accordance with Section 1.3(c) and the
Term Loan Commitments are thereby automatically reduced to the extent prepaid as
provided in Section 1.3(c) and (D) Borrowers' Leverage Ratio on a consolidated
basis is lower (after taking into account the Allowed Sale) than immediately
preceding the Allowed Sale, then the Applicable SCIL Loan LIBOR Margin will be
4.00% per annum and the Applicable SCIL Loan Index Margin will be 2.00% per
annum.
(b) If any payment on any Loan becomes due and payable on a
day other than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis
and of interest shall be made by Applicable Agent on the basis of a 360-day
year, in each case for the actual number of days occurring in the period for
which such interest and Fees are payable. The Index Rate shall be determined
each day based upon the Index Rate as in effect each day. Each determination by
Applicable Agent of an interest rate hereunder shall be conclusive, absent
manifest error.
(d) So long as an Event of Default shall have occurred and be
continuing under Sections 8.1(a), (h) or (i) and without the necessity of any
notice from any Agent or any Lender to any Credit Party, or so long as any other
Default or Event of Default shall have occurred and be continuing, and at the
election of Term Agent and Required Lenders confirmed by written notice from
Term Agent to Borrower Representative, the interest and other rates applicable
to the Loans and the applicable L/C Margin shall be increased by 2% per annum
above such rates otherwise applicable hereunder (the "Default Rate"), and all
outstanding Obligations shall bear interest at the Default Rate applicable to
such Obligations. Interest and Letter of Credit fees at the Default Rate shall
accrue from the initial date of such Default or Event of Default until that
Default or Event of Default is cured or waived and shall be payable upon demand.
(e) So long as no Default or Event of Default shall have
occurred and be continuing, and subject to the additional conditions precedent
set forth in Section 2.2:
(i)Borrower Representative on behalf of the applicable
Borrowers shall have the option on the 120th day after the Closing Date to
convert collectively (but not individually) the Term Loans and SCIL Loans from
LIBOR Loans to Index Rate Loans, subject to payment of LIBOR breakage costs in
accordance with Section 1.11(b) if such conversion is made prior to the
expiration of the LIBOR Period applicable thereto. Any such election must be
made by 12:00 noon (New York time) on the fifth Business Day prior to the date
on which Borrower Representative on behalf of the applicable Borrowers wishes to
convert the Term Loans and SCIL Loans from LIBOR Loans to Index Rate Loans. If
no election is received with respect to the Term Loans and SCIL Loans by 12:00
noon (New York time) on such fifth Business Day prior to the 120th day after the
Closing Date (or if a Default or an Event of Default shall have occurred and be
continuing or if the additional conditions precedent set forth in Section 2.2
shall not have been satisfied), then the Term Loans and SCIL Loans may not be
converted to Index Rate Loans; provided, however, that if the 120th day after
the Closing Date is not the last day of any applicable LIBOR Period, then
Borrower may make such election to convert the Term Loans and SCIL Loans from
LIBOR Loans to Index Rate Loans on such fifth Business Day prior to the nearest
day preceding or succeeding the 120th day after the Closing Date which preceding
or succeeding day is the last day of any such applicable LIBOR Period. Borrower
Representative must make such election to convert by notice to Term Agent in
writing, by telecopy or overnight courier pursuant to a written notice (each, a
"Notice of Conversion") in substantially the form of Exhibit 1.5(e).
(ii)Borrower Representative, on behalf of the
applicable Borrowers may elect at any time and from time to time to convert one
or more Revolving Credit Advances from LIBOR Rate Loans to Index Rate Loans by
giving the Revolver Agent irrevocable notice thereof (each, a "Notice of
Revolving Credit Advance Conversion"), specifying the amount to be so converted,
provided, that any such conversion shall only be made on the last day of the
LIBOR Period applicable to each such Revolving Credit Advance constituting a
LIBOR Rate Loan. In addition, the Borrowers may elect from time to time to
convert a Revolving Credit Advance constituting Index Rate Loans to one or more
new LIBOR Rate Loans or to convert any one or more existing Revolving Advances
constituting a LIBOR Rate Loan to one or more new Revolving Credit Advances
constituting a LIBOR Rate Loan, by giving the Revolver Agent an irrevocable
Notice of Revolving Credit Advance Conversion, specifying the amount to be so
converted and the initial LIBOR Period relating thereto. Revolving Credit
Advances may be converted pursuant to this Section 1.5(e)(ii) in whole or in
part, provided that the amount to be converted to a LIBOR Rate Loan, when
aggregated with any Revolving Credit Advance to be made on such date in
accordance with Section 1.1(a) and having the same LIBOR Period as such first
Revolving Credit Advance, shall equal no less than $500,000 or an integral
multiple of $100,000 in excess thereof. Each such Notice of Revolving Credit
Advance Conversion must be given no later than 12:00 noon (New York time) on the
date which is three Business Days prior to the proposed conversion of the
Revolving Credit Advance. Each such Notice of Revolving Credit Advance
Conversion must be given in writing (by telecopy or overnight courier)
substantially in the form of Exhibit 1.5(e), and shall include the information
required in such Exhibit, and such other information as may be required by
Revolver Agent. The Revolver Agent shall promptly provide the applicable Lenders
with notice of each such election
(iii)Notwithstanding anything to the contrary contained
herein, (A) any conversion of a Revolving Credit Advance from an Index Rate Loan
to a LIBOR Rate Loan shall only be made on a LIBOR Business Day, and (B) any
conversion of an existing Revolving Credit Advance from a LIBOR Rate Loan to an
Index Rate Loan shall only be made on the last day of the LIBOR Period
applicable thereto.
(iv)Each such conversion shall be effected by each
applicable Lender by applying the proceeds of the new Index Rate Loan or LIBOR
Rate Loan, as the case may be, to the existing Revolving Credit Advance (or
portion thereof) being converted.
(v)Notwithstanding anything in this Agreement to the
contrary, upon the occurrence and during the continuance of a Default or an
Event of Default, the Borrowers shall have no right to elect to convert any
existing Revolving Credit Advance which is an Index Rate Loan to a new LIBOR
Rate Loan or to convert any existing LIBOR Rate Loan to a new LIBOR Rate Loan.
In such event, such Index Rate Loan shall be automatically continued as an Index
Rate Loan or such LIBOR Rate Loan shall be automatically converted to an Index
Rate Loan on the last day of the LIBOR Period applicable to such LIBOR Rate
Loan, as the case may be.
(vi)Notwithstanding any other provision of this
Agreement or any other Loan Document:
(A) If the Borrowers shall have failed to elect a
LIBORRate Loan in connection with any borrowing of new Revolving Credit Advances
or expiration of a LIBOR Period with respect to any existing Revolving Credit
Advance which is a LIBOR Rate Loan, the amount of the Revolving Credit Advances
subject to such borrowing or such existing Revolving Credit Advance which is a
LIBOR Rate Loan shall thereafter be an Index Rate Loan until such time, if any,
as the Borrower Representative, on behalf of the applicable Borrowers, shall
elect a new LIBOR Rate Loan pursuant to this Section 1.5(e),
(B) The Borrowers shall not be permitted to select
any Revolving Credit Advance the Interest Period in respect of which ends later
than the Commitment Termination Date for the Revolving Loan.
(C) The Borrowers shall not be permitted to have
more than five (5) LIBOR Rate Loans in respect of Revolving Credit Advances
outstanding at any one time.
(D) The provisions set forth in clauses 1.5(e)(ii)
through (vi) are applicable only to the Revolving Loan and Borrowers shall have
no interest rate conversion rights in respect of any other Obligations other
than as set forth in clause (i) of Subsection 1.5(e)
(f) Notwithstanding anything to the contrary set forth in this
Section 1.5, if the rate of interest payable hereunder exceeds the highest rate
of interest permissible under law (the "Maximum Lawful Rate"), then so long as
the Maximum Lawful Rate would be so exceeded, the rate of interest payable
hereunder shall be equal to the Maximum Lawful Rate; provided, however, that if
at any time thereafter the rate of interest payable hereunder is less than the
Maximum Lawful Rate, Borrowers shall continue to pay interest hereunder at the
Maximum Lawful Rate until such time as the total interest received by Lenders is
equal to the total interest which would have been received had the interest rate
payable hereunder been (but for the operation of this clause (f)) the interest
rate payable since the Closing Date as otherwise provided in this Agreement.
Thereafter, interest hereunder shall be paid at the rate(s) of interest and in
the manner provided in Sections 1.5(a) through (e) above, unless and until the
rate of interest again exceeds the Maximum Lawful Rate, and at that time this
clause (f) shall again apply. In no event shall the total interest received by
Lenders pursuant to the terms hereof exceed the amount which Lenders lawfully
could have received had the interest due hereunder been calculated for the full
term hereof at the Maximum Lawful Rate. If the Maximum Lawful Rate is calculated
pursuant to this paragraph, such interest shall be calculated at a daily rate
equal to the Maximum Lawful Rate divided by the number of days in the year in
which such calculation is made. If, notwithstanding the provisions of this
Section 1.5(f), Lenders have received interest hereunder in excess of the
Maximum Lawful Rate, Lenders shall, to the extent permitted by applicable law,
promptly apply such excess in the order specified in Section 1.9 and thereafter
shall refund any excess to Borrowers, or as a court of competent jurisdiction
may otherwise order.
1.6 Cash Management Systems. On or prior to the Closing Date, Borrowers
will establish and will maintain until the Termination Date, the cash management
systems described on Annex C (the "Cash Management Systems").
1.7 Fees.
(a) Borrowers shall pay to Term Agent, a Closing Fee in the
amount set forth in, and in accordance with the terms and provisions of, the Fee
Agreement. Borrowers agree to pay the Revolver Agent the fees, in the amount and
at the time set forth in a letter dated the date of this Agreement, from the
Revolver Agent and Summit Bank to the Borrower Representative.
(b) As additional compensation for the applicable Lenders'
Revolving Loan Commitments and SCIL Loan Commitments (except in the case of a
Non-Funding Lender to the extent set forth in Section 1.1(e)), as the case may
be, Borrowers agree to pay to Applicable Agent for the benefit of such
applicable Lenders, in arrears, on the first Business Day of each month prior to
the applicable Commitment Termination Date and on the applicable Commitment
Termination Date, a fee for Borrowers' non-use of available funds in an amount
equal to (i) in the case of the Revolving Loan, 0.50% per annum (calculated on
the basis of a 360 day year for actual days elapsed) of the difference between
(x) the aggregate Revolving Loan Commitments (as the same may be reduced from
time to time) and (y) the average for the period of the daily closing balance of
the aggregate Revolving Loan outstanding during the period for which such fee is
due and (ii) in the case of the SCIL Loan, 0.50% per annum (calculated on the
basis of a 360 day year for actual days elapsed) of the difference between (A)
the aggregate SCIL Loan Commitments (as the same may be reduced from time to
time) and (B) the average for the period of the daily closing balance of the
SCIL Loans outstanding during the period for which such fee is due (each of the
foregoing, an "Applicable Unused Line Fee Margin).
(c) If Borrowers (i)prepay all or any portion of the Term
Loans, (ii) reduce or terminate the Revolving Loan Commitments or (iii) to the
extent permitted under this Agreement prepay all or any portion of the SCIL
Loans or reduce or, to the extent permitted under this Agreement, terminate the
SCIL Loan Commitments, whether voluntarily or involuntarily and whether before
or after acceleration of the Obligations, Borrowers shall simultaneously pay to
Term Agent for the benefit of the Lenders, as liquidated damages and
compensation for the costs of being prepared to make funds available hereunder,
an amount determined by multiplying the Applicable Percentage (as defined below)
by (i) in the event of a prepayment, the principal amount of the Loans prepaid,
and (ii) in the event of a commitment reduction, the amount of the reduction of
the Revolving Loan Commitments or SCIL Loan Commitments, as the case may be. As
used herein, the term "Applicable Percentage" shall mean 1.0%, in the case of a
prepayment on or prior to October 31, 2001, and nil thereafter. Notwithstanding
the foregoing, no prepayment fee shall be payable by Borrowers upon a voluntary
prepayment made in accordance with Section 1.3(a) (but only up to an aggregate
amount of $15,000,000 as to all such prepayments and solely to the extent that
such prepayments are applied to the applicable Loans as provided therein) or a
mandatory prepayment made pursuant to Section 1.3(b) or Section 1.14(c);
provided, however, that Borrowers do not permanently reduce the Revolving Loan
Commitments or SCIL Loan Commitments upon any such prepayment and, in the case
of prepayments made pursuant to Section 1.3(b)(ii) or Section 1.3(b)(iii), the
transaction giving rise to the applicable prepayment is expressly permitted
under Section 6.
1.8 Receipt of Payments. Borrowers shall make each payment under this
Agreement not later than 2:00 p.m. (New York time) on the day when due in
immediately available funds in Dollars. For purposes of computing interest and
Fees and determining Net Borrowing Availability as of any date, all payments
shall be deemed received on the day of receipt of immediately available funds
therefor prior to 2:00 p.m. (New York time). Payments received after 2:00 p.m.
(New York time) on any Business Day shall be deemed to have been received on the
following Business Day. All payments of principal, interest and fees with
respect to the Revolving Loan and the Revolving Loan Commitment, all Fees due to
the Revolver Agent under Section 1.7(a), all payments in respect of Letters of
Credit and all indemnity payments for the account of the Revolver Agent shall be
made to the Revolver Agent for the benefit of the applicable parties hereto. All
other payments shall be made to the Term Agent for its account or distribution
to the party entitled thereto, as the case may be.
1.9 Application and Allocation of Payments.
(a) So long as no Default or Event of Default shall have
occurred and be continuing, (i) payments matching specific scheduled payments
then due shall be applied to those scheduled payments; (ii) voluntary
prepayments shall be applied as determined by Borrower Representative, subject
to the provisions of Section 1.3(c)(ii); and (iii) mandatory prepayments shall
be applied as set forth in Sections 1.3(c) and (d). If an Activation Notice has
been sent in accordance with the provisions of Annex C and no Event of Default
has occurred and is continuing, Term Agent (or, if any Revolving Loan balance is
outstanding or the Revolving Loan Commitments have not been terminated, Revolver
Agent) shall apply amounts swept into the Collection Account in the same manner.
As to each other payment, and as to all payments made when a Default or Event of
Default shall have occurred and be continuing or following the applicable
Commitment Termination Date, each Borrower hereby irrevocably waives the right
to direct the application of any and all payments received from or on behalf of
such Borrower, and each Borrower hereby irrevocably agrees that Agents and
Lenders shall have the continuing exclusive right to apply any and all such
payments against the Obligations of Borrowers as Applicable Agent may deem
advisable, notwithstanding any previous entry by Applicable Agent or applicable
Lenders in the applicable Loan Account or any other books and records. The
absence of a specific determination by both Agents and all Lenders to the
contrary, payments shall be applied to amounts then due and payable in the
following order: first, to Fees of Agents and Agents' expenses reimbursable
hereunder; second, to Fees of Lenders and Lenders' expenses reimbursable
hereunder; third, to interest on the Revolving Loans and Term Loans, ratably in
proportion to the interest accrued as to each such Loan; fourth, to principal
payments of the Revolving Loan and Term Loans, and to provide cash collateral
for Letter of Credit Obligations in the manner described in Annex B, ratably to
the aggregate combined principal balance of each such Loan and outstanding
Letter of Credit Obligations; fifth, to interest on the SCIL Loan; sixth, to
principal on the SCIL Loan; and last, to all other Obligations to the extent
reimbursable under Section 11.3.
(b) So long as no Event of Default shall have occurred and be
continuing, either Agent is authorized to, and at its sole election may, charge
to the Revolving Loan balance on behalf of each Borrower and cause to be paid
all Fees, expenses, Charges, costs (including insurance premiums in accordance
with Section 5.4(a)) and interest and principal (other than principal of the
Revolving Loan) due and owing by Borrowers under this Agreement or any of the
other Loan Documents if and to the extent any Borrower fails to promptly pay any
such amounts as and when due; provided that immediately after each such change,
Net Borrowing Availability shall not be less than $1.00. To the extent permitted
by law, any charges so made shall constitute part of the Revolving Loan
hereunder.
1.10 Loan Accounts and Accounting. The Revolver Agent shall maintain a
loan account on its books to record all Revolving Credit Advances, and all
payments of principal, interest and fees paid to the Revolver Agent with respect
thereto. The Term Agent shall maintain a loan account on its books to record the
Term Loans and all SCIL Loan Advances, all payments of principal, interest and
fees paid to the Term Agent with respect thereto, and all other debits and
credits as provided in this Agreement with respect to the Loans or any other
Obligations. All entries in the applicable Loan Account shall be made in
accordance with Applicable Agent's customary accounting practices as in effect
from time to time. The balance in the applicable Loan Account, as recorded on
Applicable Agent's most recent printout or other written statement, shall be
presumptive evidence of the amounts due and owing to the applicable Lenders by
each Borrower, absent manifest error; provided, however, that any failure to so
record or any error in so recording shall not limit or otherwise affect any
Borrower's duty to pay the Obligations. Upon request (but not more frequently
than monthly), Applicable Agent shall render to Borrower Representative an
accounting of transactions with respect to the Loans setting forth the balance
of the applicable Loan Account as to each Borrower. Unless Borrower
Representative notifies Applicable Agent in writing of any objection to any such
accounting (specifically describing the basis for such objection), within 30
days after the date thereof, each and every such accounting shall be deemed
final, binding and conclusive upon Borrowers in all respects as to all matters
reflected therein, absent manifest error. Only those items expressly objected to
in such notice shall be deemed to be disputed by Borrowers.
1.11 Indemnity.
(a) Each Credit Party that is a signatory hereto shall jointly
and severally indemnify and hold harmless each Agent, each Lender and each of
their respective Affiliates, and each such Person's respective officers,
directors, employees, attorneys, agents and representatives (each, an
"Indemnified Person"), from and against any and all suits, actions, proceedings,
claims, costs, damages, losses, liabilities and expenses (including reasonable
attorneys' fees and disbursements and other costs of investigation or defense,
including those incurred upon any appeal) which may be instituted or asserted
against or incurred by any such Indemnified Person as the result of credit
having been extended, suspended or terminated under this Agreement and the other
Loan Documents and the administration of such credit, and in connection with,
relating to or arising out of the transactions contemplated hereunder and
thereunder and any actions or failures to act in connection therewith, including
any and all Environmental Liabilities and legal costs and expenses arising out
of, relating to or incurred in connection with disputes between or among any
parties to any of the Loan Documents other than disputes solely between or among
one or more of the Lenders or the Agents, which have not arisen as a result of
any act or omission by one or more of the Credit Parties (collectively,
"Indemnified Liabilities"); provided, however, that no Credit Party shall be
liable for any indemnification to an Indemnified Person to the extent that any
such suit, action, proceeding, claim, cost, damage, loss, liability or expense
results from that Indemnified Person's gross negligence or willful misconduct.
NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY
LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON
OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR
INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A
RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN
DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR
THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the
terms provided herein, if (i) any LIBOR Loans are repaid or converted in whole
or in part prior to the last day of any applicable LIBOR Period (whether that
repayment or conversion is made pursuant to any provision of this Agreement or
any other Loan Document or is the result of acceleration, by operation of law or
otherwise); (ii) any Borrower shall default in payment when due of the principal
amount of or interest on any LIBOR Loan; (iii) any Borrower shall default in
making any borrowing of or conversion of the applicable Index Rate Loans into
LIBOR Loans after Borrower Representative has given notice requesting the same
in accordance herewith; or (iv) any Borrower shall fail to make any prepayment
of a LIBOR Loan after Borrower Representative has given a notice thereof in
accordance herewith, Borrowers shall jointly and severally indemnify and hold
harmless each Agent and each Lender from and against all losses, costs and
expenses resulting or arising from any of the foregoing. Such indemnification
shall include any loss (including loss of margin) or expense arising from the
reemployment of funds obtained by it or from fees payable to terminate deposits
from which such funds were obtained, including, without limitation, any and all
applicable damages and costs provided in Section 1.14. For the purpose of
calculating amounts payable to Lenders under this subsection, Lenders shall be
deemed to have actually funded the relevant LIBOR Loan through the purchase of a
deposit bearing interest at the LIBOR Rate in an amount equal to the amount of
that LIBOR Loan and having a maturity comparable to the relevant LIBOR Period;
provided, however, that Lenders may fund each of their respective LIBOR Loans in
any manner any such Lender sees fit, and the foregoing assumption shall be
utilized only for the calculation of amounts payable under this subsection. This
covenant shall survive the termination of this Agreement and the payment of the
Notes and all other amounts payable hereunder. As promptly as practicable under
the circumstances, Applicable Agent shall provide Borrower Representative with
its written calculation of all amounts payable pursuant to this Section 1.11(b),
and such calculation shall be binding on the parties hereto unless Borrower
Representative shall object in writing within ten Business Days of receipt
thereof, specifying the basis for such objection in detail.
1.12 Access.
(a) Each Credit Party shall, during normal business hours,
from time to time upon one Business Day's prior notice and as frequently as
Applicable Agent determines to be appropriate: (i) provide Applicable Agent and
any of its officers, employees and agents access to its properties, facilities,
advisors and employees (including officers) and to the Collateral, (ii) permit
Applicable Agent, and any of its officers, employees and agents, to inspect,
audit and make extracts from such Credit Party's books and records, and (iii)
permit Applicable Agent, and any of its officers, employees and agents, to
inspect, review, evaluate and make test verifications and counts of the
Accounts, Inventory and other Collateral of any Credit Party. If a Default or
Event of Default shall have occurred and be continuing or if access is necessary
to preserve or protect the Collateral as determined by Applicable Agent, each
such Credit Party shall provide such access at all times and without advance
notice. Furthermore, so long as any Event of Default shall have occurred and be
continuing, each Credit Party shall provide Applicable Agent and any of its
officers, employees and agents with access to its suppliers and customers. Each
Credit Party shall make available to Lender and its counsel, as quickly as is
possible under the circumstances, originals or copies of all books and records
which Applicable Agent may request. Each Credit Party shall deliver any document
or instrument necessary for Applicable Agent, as it may from time to time
request, to obtain records from any service bureau or other Person which
maintains records for such Credit Party, and shall maintain duplicate records or
supporting documentation on media, including computer tapes and discs owned by
such Credit Party.
(b) Borrowers shall pay Applicable Agent a Fee of $650 per day
per individual (plus all out-of-pocket costs and expenses) in connection with
Applicable Agent's field examinations permitted under Section 1.12(a) above and
Section 4(c) of the Security Agreement; provided, however, that so long as no
Event of Default shall have occurred and be continuing, Borrowers shall not be
obligated for such Fees for more than four (4) field examinations in any Fiscal
Year.
1.13 Taxes.
(a) Any and all payments by each Borrower hereunder (including
any payments made pursuant to Section 13), under the Notes, or under any other
Loan Document) shall be made, in accordance with this Section 1.13, free and
clear of and without deduction for any and all present or future Taxes. If any
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder (including any sum payable pursuant to Section 13) or
under the Notes, (i) the sum payable shall be increased as much as shall be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 1.13) Applicable Agent
and each Lender receives an amount equal to the sum it would have received had
no such deductions been made, (ii) such Borrower shall make such deductions, and
(iii) such Borrower shall pay the full amount deducted to the relevant taxing or
other authority in accordance with applicable law. Within 30 days after the date
of any payment of Taxes, Borrower Representative shall furnish to Applicable
Agent the original or a certified copy of a receipt evidencing payment thereof.
(b) Each Credit Party that is a signatory hereto shall jointly
and severally indemnify (for avoidance of doubt, which indemnification shall
survive indefinitely) and, within ten days of demand therefor, pay Applicable
Agent for the full amount of Taxes (including any Taxes imposed by any
jurisdiction on amounts payable under this Section 1.13) paid by Applicable
Agent or any Lender, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted.
(c) Each Lender organized under the laws of a jurisdiction
outside the United States (a "Foreign Lender") as to which payments to be made
under this Agreement or under the Notes are exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to
Borrower and Agent a properly completed and executed IRS Form 4224 or Form 1001
or other applicable form, certificate or document prescribed by the IRS or the
United States certifying as to such Foreign Lender's entitlement to such
exemption (a "Certificate of Exemption"). Any foreign Person that seeks to
become a Lender under this Agreement shall provide a Certificate of Exemption to
Borrower and Agent prior to becoming a Lender hereunder. No foreign Person may
become a Lender hereunder if such Person is unable to deliver a Certificate of
Exemption.
1.14 Capital Adequacy; Increased Costs; Illegality.(a) If Applicable
Agent or any Lender shall have determined that the adoption after the date
hereof of any law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital adequacy, reserve requirements
or similar requirements or compliance by Applicable Agent or any Lender (or any
holding company thereof) with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law), in each case, adopted after the Closing Date, from any
central bank or other Governmental Authority increases or would have the effect
of increasing the amount of capital, reserves or other funds required to be
maintained by such party and thereby reducing the rate of return on such party's
capital or increasing the cost of making or maintaining any Loan as a
consequence of its obligations hereunder, then Borrowers shall from time to time
upon demand by Applicable Agent pay to Applicable Agent for the benefit of the
applicable Persons in Lender Group additional amounts sufficient to compensate
such Persons for such reduction (taking into consideration their policies with
respect to capital adequacy). A certificate as to the amount of such reduction
and showing the basis of the computation thereof submitted by the affected
Person in Lender Group to Borrower Representative shall be final, conclusive and
binding for all purposes, absent manifest error.
(b) If, due to either (i) the introduction of or any change in
any law or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan, then
Borrowers shall from time to time, upon demand by Applicable Agent, pay to
Applicable Agent for the benefit of such Lender additional amounts sufficient to
compensate such Lender for such increased cost. A certificate as to the amount
of such increased cost, submitted to Borrower Representative by such Lender,
with a copy to Applicable Agent, shall be conclusive and binding on Borrowers
for all purposes, absent manifest error. Each Lender agrees that, as promptly as
practicable after it becomes aware of any circumstances referred to above which
would result in any such increased cost, such Lender shall, to the extent not
inconsistent with such Lender's internal policies of general application, use
reasonable commercial efforts to minimize costs and expenses incurred by it and
payable to it by Borrowers pursuant to this Section 1.14(b).
(c) Notwithstanding anything to the contrary contained herein,
if the introduction of or any change in any law or regulation (or any change in
the interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless such Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of such Lender without, in such Lender's
opinion, adversely affecting it or its Loans or the income obtained therefrom,
on notice thereof and demand therefor by Applicable Agent or such Lender to
Borrower Representative, (i) the obligation of such Lender to agree to make or
to make or to continue to fund or maintain LIBOR Loans shall terminate and (ii)
each Borrower shall forthwith prepay in full all outstanding LIBOR Loans owing
by such Borrower to such Lender, together with interest accrued thereon, unless
Borrower Representative on behalf of such Borrower, within five Business Days
after the delivery of such notice and demand, converts all such Loans into a
Loan bearing interest based on the Index Rate.
1.15 Single Loan. Subject to the terms and conditions of the Loan
Documents, all Loans (including, without limitation, all Letter of Credit
Obligations) to Borrowers and all of the other Obligations of each Borrower
arising under this Agreement and the other Loan Documents shall constitute one
general obligation of Borrowers secured by all of their Collateral.
1.16 Pro Rata Treatment. Except to the extent otherwise provided
herein, (a) each Loan shall be incurred and made by the Lenders which have made
a Commitment for such Loan, and each payment of the Fees pursuant to Section 1.7
or elsewhere in this Agreement shall be made for the accounts of such Lenders,
pro rata according to the amounts of their respective Commitments with respect
to such Loan, (b) each payment or prepayment by any Borrower of principal of any
Loan shall be made to Applicable Agent for the account of the applicable Lenders
ratably in accordance with the respective unpaid principal amounts of such Loan
held by such Lenders, and (c) each payment of interest by any Borrower on any
Loan shall be made to Applicable Agent for the account of the applicable Lenders
ratably in accordance with the amounts of interest on such Loan then due and
payable to such Lenders.
1.17 Non-Receipt Of Funds By Applicable Agent. Unless Applicable Agent
shall have been notified by any Lender or the applicable Borrower (in either
case, "Payor") prior to the date on which such Payor is to make payment to
Applicable Agent of (in the case of any Lender) the proceeds of a Revolving
Credit Advance or SCIL Loan Advance to be made by such Lender hereunder or (in
the case of the applicable Borrower) a payment to Applicable Agent for the
account of one or more Lenders hereunder (any such payment by any such Payor
being herein called the "Required Payment"), which notice shall be effective
upon receipt by Applicable Agent, that such Payor does not intend to make the
Required Payment to Applicable Agent, Applicable Agent may assume that the
Required Payment has been made and may, in reliance upon such assumption (but
shall not be required to), make the amount thereof available to the intended
recipient(s) on such date and, if such Payor has not in fact made the Required
Payment to Applicable Agent, the recipient(s) of such payment shall, on demand,
repay to Applicable Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date (the
"Advance Date") such amount was so made available by Applicable Agent until the
date Applicable Agent recovers such amount, at a rate per annum equal to the
Federal Funds Rate for such day and, if such recipient(s) shall fail promptly to
make such payment, Applicable Agent shall be entitled to recover such amount, on
demand, from such Payor, together with interest as aforesaid; provided, however,
that if neither the recipient(s) nor such Payor shall return the Required
Payment to Applicable Agent within three Business Days of the Advance Date, then
retroactively to the Advance Date, such Payor and the recipient(s) shall each be
obligated to pay interest on the Required Payment as follows:
(a) if the Required Payment shall represent a payment to be
made by the applicable Borrower to Lenders, such Borrower and the recipient(s)
shall (without duplication) each be obligated retroactively to the Advance Date
to pay interest in respect of the Required Payment at the Default Rate (and, in
case the recipient(s) shall return the Required Payment to Applicable Agent,
without limiting the obligation of the applicable Borrower hereunder to pay
interest to such recipient(s) at the Default Rate in respect of the Required
Payment); and
(b) if the Required Payment shall represent proceeds of a
Revolving Credit Advance or SCIL Loan Advance to be made by the applicable
Lenders to the applicable Borrower, such Payor and the applicable Borrower shall
(without duplication) each be obligated retroactively to the Advance Date to pay
interest in respect of the Required Payment at the rate of interest provided for
such Required Payment pursuant hereto (and, in case the applicable Borrower
shall return the Required Payment to Applicable Agent, without limiting any
claim such Borrower may have against Payor in respect of the Required Payment).
Nothing in this Section 1.17 or elsewhere in this Agreement or the other Loan
Documents shall be deemed to require Applicable Agent to advance funds on behalf
of any Lender or to relieve any Lender from its obligation to fulfill its
Revolving Loan Commitment or its SCIL Loan Commitment hereunder, as the case may
be, or to prejudice any rights that the applicable Borrower may have against any
Lender as a result of any default by any Lender hereunder.
1.18 Sharing Of Payments, Etc.
(a) Each Borrower agrees that, in addition to (and without
limitation of) any right of setoff, banker's lien or counterclaim any Lender may
otherwise have, each Lender shall be entitled, at such Lender's option (but
subject, as between Lenders, to the provisions of Section 1.1(e)), to offset
balances held by it for the account of such Borrower at any of its offices, in
Dollars or any other currency, against any principal of or interest on any of
such Lender's pro rata portion of any Loan (including any Revolving Credit
Advances or SCIL Loan Advances deemed made by such Lender under Section 1.17) or
any other amount payable to such Lender hereunder or under any of the other Loan
Documents, that is not paid when due (regardless of whether such balances are
then due to the applicable Borrower), in which case such Lender shall promptly
notify Borrower Representative and Applicable Agent thereof; provided, however,
that such Lender's failure to give such notice shall not affect the validity of
any such offset.
(b) If any Lender shall obtain from any Borrower payment of
any principal of or interest on any Loan owing to it or payment of any other
amount under this Agreement or any Note held by it or any other Loan Document,
through the exercise of any right of setoff, banker's lien or counterclaim or
similar right or otherwise (other than from Applicable Agent as provided
herein), and, as a result of such payment, such Lender shall have received a
greater pro rata percentage of the principal of or interest on such Loan or such
other amounts then due from the applicable Borrower to such Lender hereunder or
thereunder than the pro rata percentage of such obligation received by any other
Lender, such overpaid Lender shall promptly pay to Applicable Agent for the
benefit of the applicable Lenders the amount of such excess, and simultaneously
purchase from such other Lenders a participation in (or, if and to the extent
specified by such Lender, direct interests in) such Loan or such other amounts,
respectively, owing to such other Lenders (or interest due thereon, as the case
may be) in such amounts, and make such other adjustments from time to time as
shall be equitable, to the end that all Lenders shall share the benefit of such
excess payment (net of any expenses that may be incurred by such Lender in
obtaining or preserving such excess payment) pro rata in accordance with the
unpaid principal of and interest on any such Loan or such other amounts,
respectively, owing to such Lenders. Amounts received by Applicable Agent under
this Section 1.18(b) shall be treated as a payment by the applicable Borrower
under Section 1.8. To such end, all Lenders shall make appropriate adjustments
among themselves (by the resale of any participation or direct interest sold or
otherwise) if such payment is rescinded or must otherwise be restored.
(c) Each Borrower agrees that any Lender so purchasing such a
participation or direct interest may exercise, in a manner consistent with
Section 1.18(b), all rights of set-off, banker's lien, counterclaim or similar
rights with respect to such participation or direct interest as fully as if such
Lender were a direct holder of the applicable Loan or other amounts, as the case
may be, owing to such Lender in the amount of such participation or direct
interest.
(d) Nothing contained herein shall require any Lender to
exercise any right as against the applicable Borrower as described in this
Section 1.18, or shall affect the right of any Lender to exercise, and retain
the benefits of exercising, any such right with respect to any other
indebtedness or obligation of such Borrower. If, under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured claim
in lieu of a setoff or right as against any Borrower to which this Section 1.18
applies, such Lender shall, to the extent practicable, assign such rights to
Term Agent for the benefit of Lender Group in accordance with this Section and,
in any event, exercise its rights in respect of such secured claim in a manner
consistent with the rights of Lenders entitled under this Section 1.18 to share
in the benefits of any recovery on such secured claims.
1.19 Settlement Procedures.
(a) The balance of any Revolving Loan may fluctuate during any
week from Revolver Agent's distribution of funds to, and receipt of funds from,
Borrowers. In order to minimize the frequency of transfers of funds between
Revolver Agent and Lenders, Revolving Credit Advances may be made by Revolver
Agent (but Revolver Agent shall have no obligation to do so) and payments in
respect thereof will be settled according to the procedures set forth in this
Section 1.19. Notwithstanding these procedures, each applicable Lender's
obligation to fund its portion of any Revolving Credit Advance made to any
Borrower will commence on the date such Revolving Credit Advance is made. Such
payments will be made by each Lender without setoff, counterclaim or reduction
of any kind.
(b) Notwithstanding anything to the contrary contained in this
Agreement, Revolver Agent may elect, at its sole option, to fund the entire
amount of any Revolving Credit Advance requested by any Borrower. In the event
Revolver Agent makes such election, such Revolving Credit Advance made by
Revolver Agent shall be deemed, and shall constitute, as of the date of making
thereof, a Revolving Credit Advance made by each of the applicable Lenders in an
amount equal to each such applicable Lender's pro rata share thereof, and each
such applicable Lender shall be obligated, regardless of whether or not,
subsequent to the making by the Revolver Agent of a Revolving Credit Advance,
any Default or Event of Default shall have occurred or be continuing, any
representation or warranty set forth in any Loan Document is false or
misleading, any conditions precedent for borrowing are satisfied or any other
reason whatsoever, to deliver to Revolver Agent such share of such Revolving
Credit Advance on the Weekly Settlement Date in accordance with the procedure
for weekly settlement set forth in Section 1.19(c) or as otherwise provided in
Section 1.19(d). Notwithstanding anything to the contrary contained in this
Agreement, for purposes of calculating interest payable to any Lender (i)
Revolver Agent shall be deemed a "Lender" with respect to any outstanding
Revolving Credit Advances funded by Revolver Agent, and (ii) the amount of
Revolving Credit Advances of any applicable Lender that are outstanding on any
day shall be equal to the amount of such applicable Lender's Revolving Credit
Advances outstanding on such day (A) excluding any Revolving Credit Advances
that have been funded entirely by Revolver Agent with respect to which such
applicable Lender has not funded its pro rata share and (B) including Revolving
Credit Advances of such applicable Lender which have been repaid by Borrowers to
Revolver Agent but not yet received by such applicable Lender from Revolver
Agent.
(c) Each applicable Lender shall settle with Revolver Agent,
upon Revolver Agent's request, on the third Business Day of each week (or on
such other day of the week as may be designated from time to time by Revolver
Agent) in each successive week (the "Weekly Settlement Date"), on the net
Revolving Credit Advances and payments made since the date of the last
settlement. On each Weekly Settlement Date, prior to 12:00 noon (New York time)
Revolver Agent shall notify each applicable Lender by telephone or by telex,
telecopy or other form of teletransmission, of such applicable Lender's pro rata
share of the outstanding Revolving Credit Advances and the amount of the payment
necessary to adjust such applicable Lender's outstanding Revolving Credit
Advances to such applicable Lender's pro rata share of such Revolving Credit
Advances as of such Weekly Settlement Date (on a net basis, taking into account
any funds in the applicable Collection Account which Revolver Agent determines
are available). Any such payment shall be made by the party from which such
payment is due to the other party, in same day funds, not later than 2:00 p.m.
(New York time) on such Weekly Settlement Date. If any applicable Lender shall,
for any reason, not settle with Revolver Agent within one Business Day after the
Weekly Settlement Date, such overpaid Lender agrees to pay, and Borrowers agree
to repay to Revolver Agent forthwith on demand, the amount due Revolver Agent on
such Weekly Settlement Date, together with interest thereon for each day from
such Weekly Settlement Date until the day such amount is paid to Revolver Agent,
at the Federal Funds Rate for each day after the date of demand that such amount
remains unpaid. If such Lender shall pay to Revolver Agent such corresponding
amount, such amount so paid shall constitute such Lender's Revolving Credit
Advance and, if both such Lender and Borrowers shall have paid and repaid,
respectively, such corresponding amount, then Revolver Agent shall promptly pay
over to Borrower Representative such corresponding amount in same day funds, but
Borrowers shall remain obligated for all interest thereon.
(d) As an alternative to the weekly settlement provided for in
Section 1.19(c), Revolver Agent may elect, at its sole option, to use the
following same day settlement procedure for borrowings of Revolving Credit
Advances: prior to 12:00 noon (New York time), on any date specified for a
borrowing of a Revolving Credit Advance in a Notice of Revolving Credit Advance,
Revolver Agent may notify each applicable Lender by telephone or by telex,
telecopy or other form of teletransmission, of the requested Revolving Credit
Advance. Not later than 2:00 p.m. (New York time) on the date of such proposed
Revolving Credit Advance each applicable Lender shall make available to Revolver
Agent, in same day funds, to such account of Revolver Agent as Revolver Agent
may designate, such Lender's pro rata share of such Revolving Credit Advance.
Notwithstanding the foregoing, to the extent that there are available funds in
the applicable Collection Account, Revolver Agent may, at Revolver Agent's
discretion, notify each applicable Lender that such Lender's obligation to make
such Lender's pro rata share of such Revolving Credit Advance available to
Revolver Agent in same day funds as provided in the preceding sentence shall be
satisfied to the extent of its pro rata share out of such funds in the
applicable Collection Account, or such portion of such funds as Revolver Agent
shall indicate are to be applied to fund such Revolving Credit Advance.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans. No Agent nor any Lender shall be
obligated to make any Loan or Advance or incur any Letter of Credit Obligations
on the Closing Date, or to take, fulfill, or perform any other action hereunder,
until the following conditions have been satisfied, in Applicable Agent's sole
discretion, or waived in writing by Applicable Agent:
(a) Credit Agreement; Loan Documents. This Agreement or
counterparts hereof shall have been duly executed by, and delivered to,
Borrowers, the other Credit Parties, Agents and Lenders, and Agents and Lenders
shall have received such documents, instruments, agreements and legal opinions
or solvency opinions as Agents and Lenders shall reasonably request in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, including all those listed in the Closing Checklist attached
hereto as Annex D, each in form and substance satisfactory to Agents.
(b) Repayment of Prior Lender Obligations; Satisfaction of
Outstanding L/Cs etc. Agents shall have received a fully executed original of a
pay-off letter satisfactory to Lender confirming that all of the Prior Lender
Obligations will be repaid in full from the proceeds of the Term Loans, the
initial Revolving Credit Advance and the initial SCIL Loan Advance and all Liens
upon any of the property of Borrowers or any of their Subsidiaries in favor of
Prior Lenders shall be terminated by Prior Lenders immediately upon such
payment; (ii) all letters of credit, bankers acceptances and/or other contingent
obligations, issued or guaranteed by Prior Lender shall have been cash
collateralized, supported by a guaranty of Lender or supported by a Letter of
Credit issued pursuant to Annex B, as mutually agreed upon by Lender, Borrowers
and Prior Lender, and (iii) the Borrowers, the Agents, and the Lenders shall
have executed and delivered a closing statement in form and substance
satisfactory to all of the Agents and the Lenders irrevocably authorizing and
directing the payoff of the Prior Lender Obligations and covering such other
matters as the Term Agent may require in its sole discretion.
(c) Approvals. Agents shall have received (i) satisfactory
evidence that the Credit Parties have obtained all required consents and
approvals of all Persons, including all requisite Governmental Authorities, to
the execution, delivery and performance of this Agreement and the other Loan
Documents and the consummation of the Related Transactions or (ii) an officer's
certificate from an officer of Borrower Representative in form and substance
satisfactory to Agents affirming that no such consents or approvals are
required.
(d) Payment of Fees. Borrowers shall have paid the Fees
required to be paid on the Closing Date and shall have reimbursed Agents and
Lenders for all fees, costs and expenses of closing presented as of the Closing
Date.
(e) Capital Structure: Other Indebtedness. The capital
structure of each Credit Party and the terms and conditions of all Indebtedness
of each Credit Party shall be acceptable to Term Agent in its sole discretion.
(f) Consummation of Related Transactions. Agents shall have
received fully executed copies of each of the Related Transactions Documents
(other than in respect of Allowed Sales) each of which shall be in form and
substance satisfactory to Agents and their respective counsel. The Related
Transactions shall have been consummated in accordance with the terms of the
Related Transactions Documents.
(g) Due Diligence. Agents shall have completed their legal due
diligence, and shall have, in their respective sole discretion, determined that
the results thereof are acceptable. Without limiting the generality of the
foregoing, with respect to each Credit Party, the corporate structure, capital
structure, terms and conditions of all Indebtedness, material contracts and
lease contracts, all organizational and operational documents (including,
articles or certificates of incorporation or organization, bylaws, partnership
agreements, operating agreements, shareholder agreements and any other governing
documents) and any tax effects resulting from any of the transactions
contemplated under the Agreement or any other Loan Document shall be acceptable
to Agents in their respective sole discretion.
(h) Representations, Warranties and Covenants. All
representations and warranties by any Credit Party contained in the Loan
Documents shall be true, complete and correct, and all covenants and other
agreements of any Credit Party contained in the Loan Documents shall have been
complied with in full.
(i) Commitments of Other Lenders. Lenders acceptable to GE
Capital shall have committed, on terms acceptable to GE Capital, to fund the
Commitments in an aggregate amount equal to or greater than $15,000,000.
2.2 Further Conditions to Each Loan. No Agent nor any Lender shall
be obligated to fund any Loan or convert or cause the conversion of any Index
Rate Loan to a LIBOR Loan or incur any Letter of Credit Obligation, if, as of
the date thereof:
(a) Any representation by or warranty of any Credit Party
contained herein or in any of the other Loan Documents shall be untrue,
incomplete or incorrect as of such date, except to the extent that such
representation or warranty expressly relates to an earlier date and except for
changes therein expressly permitted or expressly contemplated by this Agreement;
(b) Any event or circumstance having a Material Adverse Effect
shall have occurred since the date hereof;
(c) Any Default or Event of Default shall have occurred and be
continuing or would result after giving effect to any Loan (or the incurrence of
any Letter of Credit Obligations); or
(d) After giving effect to any Advance (or the incurrence of
any Letter of Credit Obligations), (i) the outstanding principal amount of the
aggregate applicable Loan would exceed the aggregate Commitments in respect of
such Loan.
The request and acceptance by any Borrower of the proceeds of any Loan, the
incurrence of any Letter of Credit Obligations, or the conversion of any Loan
into an Index Rate Loan, as the case may be, shall be deemed to constitute, as
of the date of such request or acceptance or conversion, (i) a representation
and warranty by each Credit Party that the conditions in this Section 2.2 have
been satisfied and (ii) a reaffirmation by Borrowers of the cross-guaranty
provisions set forth in Section 13 and of the granting and continuance of Term
Agent's Liens for the benefit of Lender Group pursuant to the Collateral
Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans, to incur Letter of Credit
Obligations, and to induce Agents to undertake their respective obligations
hereunder and under the other Loan Documents, the Credit Parties executing this
Agreement, jointly and severally, make the following representations and
warranties to each Agent and each Lender with respect to all Credit Parties,
each and all of which representations and warranties shall survive the execution
and delivery of this Agreement.
3.1 Corporate Existence; Compliance with Law. Each Credit Party (a) is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation; (b) is duly qualified to conduct
business and is in good standing in each other jurisdiction where its ownership
or lease of property or the conduct of its business requires such qualification,
except where the failure to be so qualified would not result in exposure to
losses, damages or liabilities in excess of $50,000; (c) has the requisite
corporate power and authority and the legal right to own, pledge, mortgage or
otherwise encumber and operate its properties, to lease the property it operates
under lease and to conduct its business as now, heretofore and proposed to be
conducted; (d) subject to specific representations regarding Environmental Laws,
has all licenses, permits, consents or approvals from or by, and has made all
filings with, and has given all notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation and conduct;
(e) is in compliance with its charter and bylaws (or, in the case of any Credit
Party that is a limited liability company, its operating agreement); and (f)
subject to specific representations set forth herein regarding ERISA,
Environmental Laws, tax and other laws, is in compliance with all applicable
provisions of law, except where the failure to comply, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
3.2 Executive Offices; FEIN. As of the Closing Date, the current
location of each Credit Party's chief executive office and principal place of
business is set forth in Disclosure Schedule (3.2) and none of such locations
have changed within the 12 months preceding the Closing Date. In addition,
Disclosure Schedule (3.2) lists the federal employer identification number of
each Credit Party.
3.3 Corporate Power, Authorization, Enforceable Obligations. The
execution, delivery and performance by each Credit Party of the Loan Documents
to which it is a party and the creation of all Liens provided for therein (a)
are within such Person's corporate (or limited liability company) power; (b)
have been duly authorized by all necessary or proper corporate (or limited
liability company) and shareholder (or limited liability company member or
manager) action; (c) do not contravene any provision of such Person's charter or
bylaws (or, in the case of any Credit Party that is a limited liability company,
its operating agreement); (d) do not violate any law or regulation, or any order
or decree of any court or Governmental Authority; (e) do not conflict with or
result in the breach or termination of, constitute a default under or accelerate
or permit the acceleration of any performance required by, any indenture,
mortgage, deed of trust, lease, agreement or other instrument to which such
Person is a party or by which such Person or any of its property is bound; (f)
do not result in the creation or imposition of any Lien upon any of the property
of such Person other than Liens in favor of Term Agent for the benefit of Lender
Group pursuant to the Loan Documents; and (g) do not require the consent or
approval of any Governmental Authority or any other Person, except those
referred to in Section 2.1(c), all of which will have been duly obtained, made
or complied with prior to the Closing Date. On or prior to the Closing Date,
each of the Loan Documents shall have been duly executed and delivered by each
Credit Party thereto and each such Loan Document shall then constitute a legal,
valid and binding obligation of such Credit Party enforceable against it in
accordance with its terms.
3.4 Financial Statements and Projections. Except for the Projections
and the Fair Salable Balance Sheet, all Financial Statements concerning
Borrowers and their respective Subsidiaries which are referenced below have been
prepared in accordance with GAAP consistently applied throughout the periods
covered (except as disclosed therein and except, with respect to unaudited
Financial Statements, for the absence of footnotes and normal year-end audit
adjustments) and present fairly in all material respects the financial position
of the Persons covered thereby as at the dates thereof and the results of their
operations and cash flows for the periods then ended.
(a) The following Financial Statements attached hereto
as Disclosure Schedule (3.4(a)) have been delivered on the date hereof:
(i)....The audited consolidated and consolidating
balance sheets at June 30, 1998 and 1999 and the related statements of income
and cash flows of Borrowers and their Subsidiaries for the Fiscal Years then
ended, certified by Ernst & Young LLP.
(ii)....The unaudited balance sheet(s) at December 31,
1999 and the related statement(s) of income and cash flows of Borrowers and
their Subsidiaries for the Fiscal Quarter then ended.
(b) Pro Forma. The Pro Forma delivered on the date hereof
and attached hereto as Disclosure Schedule (3.4(b)) was prepared by Borrowers
giving pro forma effect to the Related Transactions, was based on the unaudited
consolidated and consolidating balance sheets of Borrowers and their
Subsidiaries dated December 31, 1999, and was prepared in accordance with GAAP,
with only such adjustments thereto as would be required in accordance with GAAP.
(c) Projections. The Projections delivered on the date hereof
and attached hereto as Disclosure Schedule (3.4(c)) have been prepared by
Borrowers in light of the past operations of their businesses, but including
future payments of known contingent liabilities reflected on the Fair Salable
Balance Sheet, and reflect projections for the five year period beginning on
June 30, 1999 on a quarterly basis for the first year and on a year-by-year
basis thereafter. The Projections are based upon estimates and assumptions
stated therein, all of which Borrowers believe to be reasonable and fair in
light of current conditions and current facts known to Borrowers and, as of the
Closing Date, reflect Borrowers' good faith and reasonable estimates of the
future financial performance of Borrowers and their Subsidiaries and of the
other information projected therein for the period set forth therein.
(d) Fair Salable Balance Sheet. The Fair Salable Balance Sheet
delivered on the date hereof and attached hereto as Disclosure Schedule (3.4(d))
was prepared by Borrowers on the same basis as the Pro Forma, except that
Borrowers' assets are set forth therein at their fair salable values on a going
concern basis and the liabilities set forth therein include all contingent
liabilities of Borrowers stated at the reasonably estimated present values
thereof.
3.5 Material Adverse Effect. Between June 30, 1999 and the Closing
Date, (a) no Credit Party has incurred any obligations, contingent or
non-contingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments which are not reflected in the Pro Forma and
which, alone or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, (b) no contract, lease or other agreement or instrument
has been entered into by any Credit Party or has become binding upon any Credit
Party's assets and no law or regulation applicable to any Credit Party has been
adopted which has had or could reasonably be expected to have a Material Adverse
Effect, and (c) no Credit Party is in default and to the best of each Credit
Party's knowledge no third party is in default under any material contract,
lease or other agreement or instrument, which alone or in the aggregate could
reasonably be expected to have a Material Adverse Effect. Between June 30, 1999
and the Closing Date no event has occurred, which alone or together with other
events, could reasonably be expected to have a Material Adverse Effect.
3.6 Ownership of Property; Liens. As of the Closing Date, the real
estate ("Real Estate") listed on Disclosure Schedule (3.6) constitutes all of
the real property owned, leased, subleased, or used by any Credit Party. Each
Credit Party owns good and marketable fee simple title to all of its owned real
estate, and valid and marketable leasehold interests in all of its leased Real
Estate, all as described on Disclosure Schedule (3.6), and copies of all such
leases or a summary of the terms thereof satisfactory to Term Agent have been
delivered to Term Agent. Disclosure Schedule (3.6) further describes any Real
Estate with respect to which any Credit Party is a lessor, sublessor or assignor
as of the Closing Date. Each Credit Party also has good and marketable title to,
or valid leasehold interests in, all of its personal properties and assets. As
of the Closing Date, none of the properties and assets of any Credit Party are
subject to any Liens other than Permitted Encumbrances, and there are no facts,
circumstances or conditions known to any Credit Party that may result in any
Liens (including Liens arising under Environmental Laws) other than Permitted
Encumbrances. Each Credit Party has received all deeds, assignments, waivers,
consents, non-disturbance and recognition or similar agreements, bills of sale
and other documents, and has duly effected all recordings, filings and other
actions necessary to establish, protect and perfect such Credit Party's right,
title and interest in and to all such Real Estate and other properties and
assets. Disclosure Schedule (3.6) also describes any purchase options, rights of
first refusal or other similar contractual rights pertaining to any Real Estate.
As of the Closing Date, no portion of any Credit Party's Real Estate has
suffered any material damage by fire or other casualty loss which has not
heretofore been repaired and restored in all material respects to its original
condition or otherwise remedied. As of the Closing Date, all material permits
required to have been issued or appropriate to enable the Real Estate to be
lawfully occupied and used for all of the purposes for which they are currently
occupied and used have been lawfully issued and are in full force and effect.
3.7 Labor Matters. As of the Closing Date (a) no strikes or other
material labor disputes against any Credit Party are pending or, to any Credit
Party's best knowledge, threatened; (b) hours worked by and payment made to
employees of each Credit Party comply with the Fair Labor Standards Act and each
other federal, state, local or foreign law applicable to such matter; (c) all
payments due from any Credit Party for employee health and welfare insurance
have been paid or accrued as a liability on the books of such Credit Party; (d)
except as set forth in Disclosure Schedule (3.7), no Credit Party is a party to
or bound by any collective bargaining agreement, management agreement,
consulting agreement or any employment agreement (and true and complete copies
of any agreements described on Disclosure Schedule (3.7) have been delivered to
Agents); (e) there is no organizing activity involving any Credit Party pending
or, to any Credit Party's best knowledge, threatened by any labor union or group
of employees; (f) there are no representation proceedings pending or, to any
Credit Party's best knowledge, threatened with the National Labor Relations
Board, and no labor organization or group of employees of any Credit Party has
made a pending demand for recognition; and (g) except as set forth in Disclosure
Schedule (3.7), there are no complaints or charges against any Credit Party
pending or, to the best knowledge of any Credit Party, threatened to be filed
with any Governmental Authority or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment of any individual by any Credit Party.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. Except as set forth in Disclosure Schedule (3.8), no Credit Party
has any Subsidiaries, is engaged in any joint venture or partnership with any
other Person, or is an Affiliate of any other Person. All of the issued and
outstanding Stock of each Credit Party other than VSC is owned by each of the
stockholders and in the amounts set forth on Disclosure Schedule (3.8), and all
holders of five percent (5%) or more of the issued and outstanding Stock of VSC
are listed, together with the amount of Stock held by each such Person, on
Disclosure Schedule 3.8. There are no outstanding rights to purchase, options,
warrants or similar rights or agreements pursuant to which any Credit Party may
be required to issue, sell, repurchase or redeem any of its Stock or other
equity securities or any Stock or other equity securities of its Subsidiaries.
All outstanding Indebtedness of each Credit Party as of the Closing Date is
described in Section 6.3 (including Disclosure Schedule (6.3)). None of the
Credit Parties other than Borrowers has any assets (except stock of their
Subsidiaries) or any Indebtedness or Guaranteed Indebtedness (except the
Obligations).
3.9 Government Regulation. No Credit Party is an "investment company"
or an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940 as amended. No Credit Party is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, in either case as
amended, or any other federal or state statute that restricts or limits its
ability to incur Indebtedness or to perform its obligations hereunder. The
making of the Loans by Lenders to Borrowers, the incurrence of the Letter of
Credit Obligations on behalf of Borrowers, the application of the proceeds
thereof and repayment thereof and the consummation of the Related Transactions
will not violate any provision of any such statute or any rule, regulation or
order issued by the Securities and Exchange Commission.
3.10 Margin Regulations. No Credit Party is engaged, nor will it
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
security" as such terms are defined in Regulation U of the Federal Reserve Board
as now and from time to time hereafter in effect (such securities being referred
to herein as "Margin Stock"). No Credit Party owns any Margin Stock, and none of
the proceeds of the Loans or other extensions of credit under this Agreement
will be used, directly or indirectly, for the purpose of purchasing or carrying
any Margin Stock, for the purpose of reducing or retiring any Indebtedness which
was originally incurred to purchase or carry any Margin Stock or for any other
purpose which might cause any of the Loans or other extensions of credit under
this Agreement to be considered a "purpose credit" within the meaning of
Regulation T, U or X of the Federal Reserve Board. No Credit Party will take or
permit to be taken any action which might cause any Loan Document to violate any
regulation of the Federal Reserve Board.
3.11 Taxes. All tax returns, reports and statements, including
information returns, required by any Governmental Authority to be filed by any
Credit Party have been filed with the appropriate Governmental Authority and all
Charges have been paid prior to the date on which any fine, penalty, interest or
late charge may be added thereto for nonpayment thereof (or any such fine,
penalty, interest, late charge or loss has been paid), excluding Charges or
other amounts being contested in accordance with Section 5.2(b). Proper and
accurate amounts have been withheld by each Credit Party from its respective
employees for all periods in full and complete compliance with all applicable
federal, state, local and foreign law, and such withholdings have been timely
paid to the respective Governmental Authorities. Disclosure Schedule (3.11) sets
forth as of the Closing Date those taxable years for which any Credit Party's
tax returns are currently being audited by the IRS or any other applicable
Governmental Authority and any assessments or threatened assessments in
connection with such audit, or otherwise currently outstanding. Except as
described on Disclosure Schedule (3.11), no Credit Party has executed or filed
with the IRS or any other Governmental Authority any agreement or other document
extending, or having the effect of extending, the period for assessment or
collection of any Charges. None of the Credit Parties and their respective
predecessors are liable for any Charges (a) under any agreement (including any
tax sharing agreements) or (b) to each Credit Party's best knowledge, as a
transferee. As of the Closing Date, no Credit Party has agreed or been requested
to make any adjustment under IRC Section 481(a), by reason of a change in
accounting method or otherwise, which could have a Material Adverse Effect.
3.12 ERISA.
(a) Disclosure Schedule (3.12) lists and separately identifies
all Title IV Plans, Multiemployer Plans, ESOPs and Retiree Welfare Plans. Copies
of all such listed Plans, together with a copy of the latest form 5500 for each
such Plan, have been delivered to Agents and Lenders. Except with respect to
Multiemployer Plans, each Qualified Plan has been determined by the IRS to
qualify under Section 401 of the IRC, and the trusts created thereunder have
been determined to be exempt from tax under the provisions of Section 501 of the
IRC, and nothing has occurred which would cause the loss of such qualification
or tax-exempt status. Each Plan is in compliance with the applicable provisions
of ERISA and the IRC, including the filing of reports required under the IRC or
ERISA. No Credit Party or ERISA Affiliate has failed to make any contribution or
pay any amount due as required by either Section 412 of the IRC or Section 302
of ERISA or the terms of any such Plan. No Credit Party or ERISA Affiliate has
engaged in a prohibited transaction, as defined in Section 4975 of the IRC, in
connection with any Plan, which would subject any Credit Party to a material tax
on prohibited transactions imposed by Section 4975 of the IRC.
(b) Except as set forth in Disclosure Schedule (3.12) (i) no
Title IV Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event
described in Section 4062(e) of ERISA with respect to any Title IV Plan has
occurred or is reasonably expected to occur; (iii) there are no pending, or to
the best knowledge of any Credit Party, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to
incur any liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years no Title IV Plan with
Unfunded Pension Liabilities has been transferred outside of the "controlled
group" (within the meaning of Section 4001(a)(14) of ERISA) of any Credit Party
or ERISA Affiliate; and (vi) no liability under any Title IV Plan has been
satisfied with the purchase of a contract from an insurance company that is not
rated AAA by the Standard & Poor's Rating Group or the equivalent rating by
another nationally recognized rating agency.
3.13 No Litigation. No action, claim, lawsuit, demand, investigation
or proceeding is now pending or, to the best knowledge of any Credit Party,
threatened against any Credit Party before any Governmental Authority or before
any arbitrator or panel of arbitrators (collectively, "Litigation"), (a) which
challenges any Credit Party's right or power to enter into or perform any of its
obligations under the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder, or (b) which
has a reasonable risk of being determined adversely to any Credit Party and
which, if so determined, could have a Material Adverse Effect. Except as set
forth on Disclosure Schedule (3.13), as of the Closing Date there is no
Litigation pending or threatened which seeks damages in excess of $100,000 or
injunctive relief or alleges criminal misconduct of any Credit Party.
3.14 Brokers. No broker or finder acting on behalf of any Credit Party
(other than People's Capital and Leasing Corp.) brought about the obtaining,
making or closing of the Loans or the Related Transactions, and no Credit Party
has any obligation to any Person in respect of any finder's or brokerage fees in
connection therewith.
3.15 Intellectual Property. As of the Closing Date, each Credit Party
owns or has rights to use all Intellectual Property necessary to continue to
conduct its business as now or heretofore conducted by it or proposed to be
conducted by it, and each Patent, Trademark, Copyright and License is listed,
together with application or registration numbers, as applicable, in Disclosure
Schedule (3.15) hereto. Each Credit Party conducts its business and affairs
without infringement of or interference with any Intellectual Property of any
other Person, nor, to the best knowledge of each Credit Party, do any other
Person's activities constitute infringement of or interference with any
Intellectual Property of any Credit Party.
3.16 Full Disclosure. No information contained in this Agreement, any
of the other Loan Documents, any Projections, Financial Statements or Collateral
Reports or other reports from time to time delivered hereunder or any written
statement furnished by or on behalf of any Credit Party to any Agent or any
Lender pursuant to the terms of this Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained herein or therein not misleading
in light of the circumstances under which they were made. The Liens granted to
Term Agent for the benefit of Lender Group pursuant to the Collateral Documents
will at all times be fully perfected first priority Liens in and to the
Collateral described therein (except those Liens in favor of Term Agent for the
benefit of Lender Group with respect to the SCIL Loan, which shall be fully
perfected second priority Liens), subject, as to priority, only to Permitted
Encumbrances with respect to the Collateral other than Accounts.
3.17 Environmental Matters.
(a) Except as set forth in Disclosure Schedule (3.17), as of
the Closing Date: (i) the Real Estate is free of contamination from any
Hazardous Material except for such contamination that would not adversely impact
the value or marketability of such Real Estate and which would not result in
Environmental Liabilities which could reasonably be expected to exceed $25,000;
(ii) no Credit Party has caused or suffered to occur any Release of Hazardous
Materials on, at, in, under, above, to, from or about any of its Real Estate;
(iii) the Credit Parties are and have been in compliance with all Environmental
Laws, except for such noncompliance which would not result in Environmental
Liabilities which could reasonably be expected to exceed $25,000; (iv) the
Credit Parties have obtained, and are in compliance with, all Environmental
Permits required by Environmental Laws for the operations of their respective
businesses as presently conducted or as proposed to be conducted, except where
the failure to so obtain or comply with such Environmental Permits would not
result in Environmental Liabilities which could reasonably be expected to exceed
$25,000, and all such Environmental Permits are valid, uncontested and in good
standing; (v) no Credit Party is involved in operations or knows of any facts,
circumstances or conditions, including any Releases of Hazardous Materials, that
are likely to result in any Environmental Liabilities of such Credit Party which
could reasonably be expected to exceed $25,000, and no Credit Party has
permitted any current or former tenant or occupant of the Real Estate to engage
in any such operations; (vi) there is no Litigation arising under or related to
any Environmental Laws, Environmental Permits or Hazardous Material which seeks
damages, penalties, fines, costs or expenses in excess of $25,000 or injunctive
relief, or which alleges criminal misconduct by any Credit Party; (vii) no
notice has been received by any Credit Party identifying it as a "potentially
responsible party" or requesting information under CERCLA or analogous state
statutes, and, to the best knowledge of the Credit Parties, there are no facts,
circumstances or conditions that may result in any Credit Party being identified
as a "potentially responsible party" under CERCLA or analogous state statutes;
and (viii) the Credit Parties have provided to Agents copies of all existing
environmental reports, reviews and audits and all written information pertaining
to actual or potential Environmental Liabilities, in each case relating to any
Credit Party.
(b) Each Credit Party hereby acknowledges and agrees that no
Agent nor any Lender (i) is now, or has ever been, in control of any of the Real
Estate or any Credit Party's affairs, nor (ii) has the capacity through the
provisions of the Loan Documents or otherwise to influence any Credit Party's
conduct with respect to the ownership, operation or management of any of its
Real Estate or compliance with Environmental Laws or Environmental Permits.
3.18 Insurance. Disclosure Schedule (3.18) lists all insurance policies
of any nature maintained, as of the Closing Date, for current occurrences by
each Credit Party, as well as a summary of the terms of each such policy.
3.19 Deposit and Disbursement Accounts. Disclosure Schedule (3.19)
lists all banks and other financial institutions at which any Credit Party
maintains deposits or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number.
3.20 Government Contracts. Except as set forth in Disclosure Schedule
(3.20), as of the Closing Date, no Credit Party is a party to any contract or
agreement with any Governmental Authority and no Credit Party's Accounts are
subject to the Federal Assignment of Claims Act, as amended (31 U.S.C. Section
3727) or any similar state or local laws.
3.21 Customer and Trade Relations. As of the Closing Date, there exists
no actual or, to the best knowledge of any Credit Party, threatened termination
or cancellation of, or any material adverse modification or change in (a) the
business relationship of any Credit Party with any customer or group of
customers whose purchases (or revenues derived by such Credit Party from such
customer or group of customers) during the preceding 12-month period caused them
to be ranked among the ten largest customers of such Credit Party; or (b) the
business relationship of any Credit Party with any supplier material to its
operations.
3.22 Agreements and Other Documents. As of the Closing Date, each
Credit Party has provided to Agents or their respective counsel accurate and
complete copies (or summaries) of all of the following agreements or documents
to which such Credit Party is subject and each of which are listed on Disclosure
Schedule (3.22): (a) supply agreements and purchase agreements not terminable by
such Credit Party within 60 days following written notice issued by such Credit
Party and involving transactions in excess of $1,000,000 per annum, (b) any
lease of Equipment having a remaining term of one year or longer and requiring
aggregate rental and other payments in excess of $25,000 per annum, (c) licenses
and permits held by the Credit Parties, the absence of which could be reasonably
likely to have a Material Adverse Effect, (d) instruments or documents
evidencing Indebtedness of such Credit Party and any security interest granted
by such Credit Party with respect thereto, and (e) instruments and agreements
evidencing the issuance of any equity securities, warrants, rights or options to
purchase equity securities of such Credit Party.
3.23 Solvency. Both before and after giving effect to (a) the Loans and
Letter of Credit Obligations to be made or extended on the Closing Date or such
other date as Loans and Letter of Credit Obligations requested hereunder are
made, (b) the disbursement of the proceeds of such Loans pursuant to the
instructions of Borrower Representative, (c) the Refinancing and the
consummation of the other Related Transactions and (d) the payment and accrual
of all transaction costs in connection with the foregoing, each Credit Party is
Solvent and shall be Solvent through the Termination Date.
3.24 Year 2000 Representations. No Credit Party has any Year 2000
Problems.
3.25 Subordinated Debt. As of the Closing Date, Borrowers have
delivered to Agents and Lenders a complete and correct copy of the Subordinated
Notes (including all schedules, exhibits, amendments, supplements,
modifications, assignments and all other documents delivered pursuant thereto or
in connection therewith). The applicable Borrowers have the corporate power and
authority to incur the Indebtedness evidenced by the Subordinated Notes. The
subordination provisions of the Subordinated Notes are enforceable against the
holders of the Subordinated Notes by each Agent and each Lender. All
Obligations, including the Obligations to pay principal of and interest on the
Loans and the Letter of Credit Obligations, constitute Senior Indebtedness
entitled to the benefits of the subordination provisions contained in the
Subordinated Notes. The principal of and interest on the Notes, all Letter of
Credit Obligations and all other Obligations will constitute "senior debt" as
that or any similar term is or may be used in any other instrument evidencing or
applicable to any other Subordinated Debt. Each Borrower acknowledges that each
Lender is entering into this Agreement and is extending the Commitments in
reliance upon the subordination provisions of the Subordinated Notes and this
Section 3.25.
3.26 FCC Compliance.
(a) Each of the Borrowers, as applicable, are in compliance
in all material respects with the Communications Act.
(b) No Borrower has any knowledge of any investigation, notice
of apparent liability, violation, forfeiture or other order or complaint issued
by or before the FCC, or of any other proceedings (other than proceedings
relating to the wireless communications industries generally) of or before the
FCC, which could reasonably be expected to have a Material Adverse Effect.
(c) No event has occurred which (i) results in, or after
notice or lapse of time or both would result in, revocation, suspension, adverse
modifications, non-renewal, impairment, restriction or termination of, or order
of forfeiture with respect to, any FCC License in any respect which could
reasonably be expected to have a Material Adverse Effect or (ii) affects or
could reasonably be expected in the future to affect any of the rights of any
applicable Borrower under any FCC License held by such Borrower in any respect
which could reasonably be expected to have a Material Adverse Effect.
(d) Each applicable Borrower has duly filed in a timely manner
all material filings reports, applications, documents, instruments and
information required to be filed by it under the Communications Act, and all
such filings were when made true, correct and complete in all material respects.
(e) None of the Borrowers has any reason to believe that each
FCC License of the Borrowers, as applicable, or any Subsidiary will not be
renewed in the ordinary course.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices.
(a) Each Credit Party executing this Agreement hereby agrees
that from and after the Closing Date and until the Termination Date it shall
deliver to Agents and each Lender the Financial Statements, notices, Projections
and other information at the times, to the Persons and in the manner set forth
in Annex E.
(b) Each Credit Party executing this Agreement hereby agrees
that from and after the Closing Date and until the Termination Date, it shall
deliver to Agents and each Lender the Collateral Reports at the times, to the
Persons and in the manner set forth in Annex F.
4.2 Communication with Accountants. Each Credit Party executing this
Agreement authorizes Agents and Lenders to communicate directly with its
independent certified public accountants, including Ernst & Young LLP, and
authorizes and shall instruct those accountants and advisors to disclose and
make available to Agents and Lenders any and all Financial Statements and other
supporting financial documents, schedules and information relating to such
Credit Party (including copies of any issued management letters) with respect to
the business, financial condition and other affairs of such Credit Party.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees
as to all Credit Parties that from and after the date hereof and until the
Termination Date:
5.1 Maintenance of Existence and Conduct of Business. Each Credit Party
shall (a) do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and its rights (including, without
limitation, any rights under or pursuant to licenses issued to any Credit Party
by the FCC) and franchises, other than any rights or franchises no longer used
or useful in connection with any Credit Party's business and having no monetary
value as Collateral, upon reasonable prior written notice to the Agent, (b)
obtain all necessary and appropriate third party and Governmental Authority
waivers and consents, (c) continue to conduct its business substantially as now
conducted or as otherwise permitted hereunder, (d) at all times maintain,
preserve and protect all of its assets and properties used or useful in the
conduct of its business, and keep the same in good repair, working order and
condition in all material respects (taking into consideration ordinary wear and
tear) and from time to time make, or cause to be made, all necessary or
appropriate repairs, replacements and improvements thereto consistent with
industry practices and (e) transact business only in such corporate and trade
names as are set forth in Disclosure Schedule (5.1), or as permitted by Section
6.15.
5.2 Payment of Obligations.
(a) Subject to Section 5.2(b), each Credit Party shall pay and
discharge or cause to be paid and discharged when due all Charges payable by it,
including (i) Charges imposed upon it, its income and profits, or any of its
property (real, personal or mixed) and all Charges with respect to tax, social
security and unemployment withholding with respect to its employees, and (ii)
lawful claims for labor, materials, supplies and services or otherwise, before
any thereof shall become past due.
(b) Each Credit Party may in good faith contest, by
appropriate proceedings, the validity or amount of any Charges described in
Section 5.2(a); provided, however, that (i) adequate reserves with respect to
such contest are maintained on the books of such Credit Party, in accordance
with GAAP, (ii) no Lien shall be imposed to secure payment of such Charges that
is superior to any of the Liens securing the Obligations and such contest is
maintained and prosecuted continuously and with diligence and operates to
suspend collection or enforcement of such Charges, (iii) none of the Collateral
becomes subject to forfeiture or loss as a result of such contest, (iv) such
Credit Party shall promptly pay or discharge such contested Charges or claims
and all additional charges, interest, penalties and expenses, if any, and shall
deliver to Agents evidence acceptable to Agents of such compliance, payment or
discharge, if such contest is terminated or discontinued adversely to such
Credit Party or the conditions set forth in this Section 5.2(b) are no longer
met, and (v) no Agent has advised Borrowers in writing that such Agent
reasonably believes that nonpayment or nondischarge thereof could have or result
in a Material Adverse Effect.
5.3 Books and Records. Each Credit Party shall keep adequate books and
records with respect to its business activities in which proper entries,
reflecting all financial transactions, are made in accordance with GAAP and on a
basis consistent with the Financial Statements attached as Disclosure Schedule
(3.4(a)).
5.4 Insurance; Damage to or Destruction of Collateral.
(a) The Credit Parties shall, at their sole cost and expense,
maintain the insurance policies described on Disclosure Schedule (3.18) as in
effect on the date hereof or otherwise in form and in amounts and with insurers
acceptable to Term Agent, and the Credit Parties shall require that each such
insurer provide Term Agent with at least 30 days prior written notice of the
termination or cancellation of any such insurance policy or replacement
therefor. If any Credit Party at any time or times hereafter shall fail to
obtain or maintain any of the insurance policies required above or to pay all
premiums relating thereto, Term Agent may at any time or times thereafter obtain
and maintain such insurance policies and pay such premiums and take any other
action with respect thereto which Term Agent deems advisable; provided, however,
that Term Agent shall have no obligation to obtain or maintain insurance for any
Credit Party or pay any premiums therefor; provided, further, however, that if
Term Agent does obtain or maintain any such insurance, neither any Agent nor any
Lender shall be deemed to have waived any Default or Event of Default arising
from any Credit Party's failure to obtain or maintain such insurance or pay any
premiums therefor. Any and all sums so disbursed, including attorneys' fees,
court costs and other charges related thereto, shall be payable on demand by
Borrowers to Term Agent and shall be additional Obligations hereunder secured by
the Collateral.
(b) Term Agent reserves the right at any time upon any change
in any Credit Party's risk profile (including any change in the type of business
or product mix maintained by any Credit Party or any laws affecting the
potential liability of such Credit Party) to require additional forms and limits
of insurance to, in Term Agent's opinion, adequately protect Term Agent's
interest for the benefit of Lender Group in all or any portion of the Collateral
and to ensure that each Credit Party is protected by insurance in amounts and
with coverage customary for its industry. If requested by Term Agent, each
Credit Party shall deliver to Term Agent from time to time a report of a
reputable insurance broker, satisfactory to Term Agent, with respect to its
insurance policies.
(c) Each Credit Party shall deliver to Term Agent, in form and
substance satisfactory to Term Agent, endorsements to (i) all "All Risk" and
business interruption insurance naming Term Agent as sole loss payee and
additional insured, and (ii) all general liability and other liability policies
naming Term Agent as additional insured. Each Credit Party irrevocably makes,
constitutes and appoints Term Agent (and all officers, employees or agents
designated by Term Agent), so long as any Default or Event of Default shall have
occurred and be continuing or the anticipated insurance proceeds exceed $25,000,
as such Credit Party's true and lawful agent and attorney-in-fact for the
purpose of making, settling and adjusting claims under such "All Risk" insurance
policies, endorsing the name of such Credit Party on any check or other item of
payment for the proceeds of such "All Risk" insurance policies and for making
all determinations and decisions with respect to such "All Risk" insurance
policies. Term Agent shall have no duty to exercise any rights or powers granted
to it pursuant to the foregoing power-of-attorney. Borrower Representative shall
promptly notify Term Agent of any loss, damage, or destruction to the Collateral
in the amount of $150,000 or more, whether or not covered by insurance. After
deducting from such proceeds the expenses, if any, incurred by Term Agent in the
collection or handling thereof, Term Agent may, at its option, apply such
proceeds to the reduction of the Obligations in accordance with Section 1.3(d);
provided, however, that in the case of insurance proceeds pertaining to any
Credit Party that is not a Borrower, such insurance proceeds shall be applied
ratably to all of the Loans owing by each Borrower; or Term Agent may, at its
option, permit or require the applicable Credit Party to use such money, or any
part thereof, to replace, repair, restore or rebuild the Collateral in a
diligent and expeditious manner with materials and workmanship of substantially
the same quality as existed before the loss, damage or destruction. If and so
long as no Default or Event of Default shall have then occurred and be
continuing, notwithstanding the foregoing, if the casualty giving rise to such
insurance proceeds would not reasonably be expected to have a Material Adverse
Effect and such insurance proceeds do not exceed $250,000 in the aggregate, Term
Agent and Lenders shall permit the applicable Credit Party to replace, restore,
repair or rebuild the property; provided, however, that if such Credit Party
shall not have completed or entered into binding agreements to complete such
replacement, restoration, repair or rebuilding within 180 days of such casualty,
Term Agent and Lenders may apply such insurance proceeds to the Obligations in
accordance with Section 1.3(d); provided, further, however, that in the case of
insurance proceeds pertaining to any Credit Party that is not a Borrower, such
insurance proceeds shall be applied ratably to all of the Loans owing by each
Borrower. All insurance proceeds which are to be made available to any Borrower
to replace, repair, restore or rebuild the Collateral shall be applied by
Revolver Agent and Lenders to reduce the outstanding principal balance of the
Revolving Loan of such Borrower (which application shall not result in a
permanent reduction of the Revolving Loan Commitments) and upon such
application, Revolver Agent shall establish a reserve in the amount of such
proceeds so applied. All insurance proceeds made available to any Credit Party
(that is not a Borrower) to replace, repair, restore or rebuild Collateral shall
be deposited in a cash collateral account under the control of Term Agent for
the benefit of the Lender Group. Thereafter, such funds shall be made available
to that Credit Party to provide funds to replace, repair, restore or rebuild the
Collateral as follows: (A) Borrower Representative shall request a Revolving
Credit Advance or a release from the cash collateral account be made to the
applicable Credit Party in the amount requested to be released; (B) so long as
the conditions set forth in Section 2.2 have been met, the applicable Lenders
shall make such Revolving Credit Advance or the applicable Lenders shall release
such funds from the cash collateral account; and (C) in the case of insurance
proceeds applied against the Revolving Loan, the reserve established with
respect to such insurance proceeds shall be reduced by the amount of such
Revolving Credit Advance. To the extent not used to replace, repair, restore or
rebuild the Collateral, such insurance proceeds shall be applied in accordance
with Section 1.3(d); provided, however, that in the case of insurance proceeds
pertaining to any Credit Party that is not a Borrower, such insurance proceeds
shall be applied ratably to all of the Loans owing by each Borrower.
5.5 Compliance with Laws. Each Credit Party shall comply with all
federal, state, local and foreign laws and regulations applicable to it,
including those relating to patent, copyright, trademark, licensing, ERISA and
labor matters and Environmental Laws and Environmental Permits, except to the
extent that the failure to comply, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
5.6 Supplemental Disclosure. From time to time as may be requested by
Term Agent (which request will not be made more frequently than once each year
absent the occurrence and continuance of a Default or an Event of Default), the
Credit Parties shall supplement each Disclosure Schedule hereto, or any
representation herein or in any other Loan Document, with respect to any matter
hereafter arising which, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described in such Disclosure
Schedule or as an exception to such representation or which is necessary to
correct any information in such Disclosure Schedule or representation which has
been rendered inaccurate thereby (and, in the case of any supplements to any
Disclosure Schedule, such Disclosure Schedule shall be appropriately marked to
show the changes made therein); provided, however, that (a) no such supplement
to any such Disclosure Schedule or representation shall be or be deemed a waiver
of any Default or Event of Default resulting from the matters disclosed therein,
except as consented to by Applicable Agent in writing; and (b) no supplement
shall be required as to representations and warranties that relate solely to the
Closing Date.
5.7 Intellectual Property. Each Credit Party will conduct its
business and affairs without infringement of or interference with any
Intellectual Property of any other Person in any material respect.
5.8 Environmental Matters. Each Credit Party shall and shall cause each
Person within its control to: (a) conduct its operations and keep and maintain
its Real Estate in compliance with all Environmental Laws and Environmental
Permits other than noncompliance which could not reasonably be expected to have
a Material Adverse Effect; (b) implement any and all investigation, remediation,
removal and response actions which are appropriate or necessary to maintain the
value and marketability of the Real Estate or to otherwise comply with
Environmental Laws and Environmental Permits pertaining to the presence,
generation, treatment, storage, use, disposal, transportation or Release of any
Hazardous Material on, at, in, under, above, to, from or about any of its Real
Estate; (c) notify Term Agent and Lenders promptly after such Credit Party
becomes aware of any violation of Environmental Laws or Environmental Permits or
any Release on, at, in, under, above, to, from or about any Real Estate which is
reasonably likely to result in Environmental Liabilities in excess of $25,000;
and (d) promptly forward to Term Agent and Lenders a copy of any order, notice,
request for information or any communication or report received by such Credit
Party in connection with any such violation or Release or any other matter
relating to any Environmental Laws or Environmental Permits that could
reasonably be expected to result in Environmental Liabilities in excess of
$25,000, in each case whether or not the Environmental Protection Agency or any
Governmental Authority has taken or threatened to take any action in connection
with any such violation, Release or other matter. If Term Agent at any time has
a reasonable basis to believe that there may be a violation of any Environmental
Laws or Environmental Permits by any Credit Party or any Environmental Liability
arising thereunder, or a Release of Hazardous Materials on, at, in, under,
above, to, from or about any of its Real Estate, which, in each case, could
reasonably be expected to have a Material Adverse Effect, then each Credit Party
shall, upon Term Agent's written request (i) cause the performance of such
environmental audits including subsurface sampling of soil and groundwater, and
preparation of such environmental reports, in each case at Borrowers' expense,
as Term Agent may from time to time reasonably request, which audits and reports
shall be conducted by reputable environmental consulting firms acceptable to
Lender and shall be in form and substance reasonably acceptable to Term Agent,
and (ii) permit Term Agent or its representatives to have access to all Real
Estate for the purpose of conducting such environmental audits and testing as
Term Agent deems appropriate, including subsurface sampling of soil and
groundwater. Borrowers shall reimburse Term Agent for the costs of such audits
and tests and the same will constitute a part of the Obligations secured
hereunder.
5.9 Landlords' Agreements, Mortgagee Agreements and Bailee Letters.
Each Credit Party shall obtain a landlord's agreement, mortgagee agreement or
bailee letter, as applicable, from the lessor of each leased property or
mortgagee of owned property or with respect to any warehouse or other location
where Collateral is located, which letter or agreement shall contain a waiver or
subordination of all Liens or claims that the landlord, mortgagee or bailee may
assert against the Inventory or Collateral at that location and which letter or
agreement shall otherwise be satisfactory in form and substance to Term Agent.
After the Closing Date, no real property or warehouse space shall be leased or
acquired by any Credit Party and no Inventory shall be shipped to any Person
under arrangements established after the Closing Date without the prior written
consent of Term Agent, or unless and until a satisfactory landlord or mortgagee
agreement or bailee letter, as appropriate, shall first have been obtained with
respect to such location. Each Credit Party shall (i) timely and fully pay and
perform its obligations under all leases and other agreements with respect to
each leased location or public warehouse where any Collateral is or may be
located, and (ii) provide Term Agent with a copy of any notice, including,
without limitation, any notice of a default, in respect of any such lease or
other agreement, it may receive from time to time, immediately upon its receipt
of any such notice.
5.10 Interest Rate/Currency Fluctuations Protection. On December 1,
2000, and at all times thereafter through the Commitment Termination Date,
Borrowers shall enter into and maintain interest rate cap, swap or collar
agreements, or other agreements or arrangements designed to provide protection
against fluctuations in interest rates or fluctuations in foreign currencies,
which shall be on terms, for periods and with counter parties acceptable to Term
Agent, and by which Borrowers are protected against increases in interest rates
or fluctuations in foreign currencies from and after the date of such contracts
as to a notional amount of not less than 50% of the total aggregate amount of
the Loans that are LIBOR Loans.
5.11 Further Assurances. Each Credit Party executing this Agreement
agrees that it shall and shall cause each other Credit Party to, at such Credit
Party's expense and upon request of Applicable Agent, duly execute and deliver,
or cause to be duly executed and delivered, to Applicable Agent such further
instruments and do and cause to be done such further acts as may be necessary or
proper in the reasonable opinion of Applicable Agent to carry out more
effectively the provisions and purposes of this Agreement or any other Loan
Document.
5.12 Agreements With Management. Each Credit Party will obtain
employment agreements, confidentiality agreements, stock repurchase agreements,
and non-compete agreements reasonably satisfactory to Term Agent from each of
its officers and from other members of senior management which are identified
from time to time by Term Agent; Agents acknowledge that the agreements
heretofore received by them in respect of the existing senior management of the
Borrowers are reasonably satisfactory to the Agents.
6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees
as to all Credit Parties that from and after the date hereof until the
Termination Date:
6.1 Mergers, Subsidiaries, Etc. No Credit Party shall directly or
indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, or (b) merge with, consolidate with, acquire all or substantially
all of the assets or capital stock of, or otherwise combine with or acquire, any
Person.
6.2 Investments; Loans and Advances. Except as otherwise expressly
permitted by this Section 6, or if set forth as a Permitted Investment on
Schedule (6.2) (but without any renewal, modification extension or increase at
any time hereafter) no Credit Party shall make or permit to exist any investment
in, or make, accrue or permit to exist loans or advances of money to, any
Person, through the direct or indirect lending of money, holding of securities
or otherwise, except that (a) Borrowers may hold investments comprised of notes
payable, or stock or other securities issued by Account Debtors to any Borrower
pursuant to negotiated agreements with respect to settlement of such Account
Debtor's Accounts in the ordinary course of business, so long as the aggregate
amount of such Accounts so settled by Borrowers does not exceed $100,000; (b)
each Credit Party may maintain its existing investments in its Subsidiaries as
of the Closing Date; and (c) so long as Term Agent has not delivered an
Activation Notice and no Default or Event of Default shall have occurred and be
continuing and there is no outstanding Revolving Loan balance and subject to the
receipt of applicable Control Letters in the form of Exhibit 6.2 in favor of
Term Agent for the benefit of Lender Group, Term Agent's satisfaction therewith
or otherwise subject to a perfected first priority security interest in favor of
Term Agent for the benefit of Lender Group, and so long as Borrower is
maintaining adequate cash on hand in its reasonable business judgment, Borrowers
may make investments in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency thereof
maturing within one year from the date of acquisition thereof, (ii) commercial
paper maturing no more than one year from the date of creation thereof and
currently having the highest rating obtainable from either Standard & Poor's
Ratings Group or Moody's Investors Service, Inc., (iii) certificates of deposit,
maturing no more than one year from the date of creation thereof, issued by
commercial banks incorporated under the laws of the United States of America,
each having combined capital, surplus and undivided profits of not less than
$300,000,000 and having a senior unsecured rating of "A" or better by a
nationally recognized rating agency (an "A Rated Bank"), (iv) time deposits,
maturing no more than 30 days from the date of creation thereof with A Rated
Banks and (v) mutual funds that invest solely in one or more of the investments
described in clauses (i) through (iv) above; and (e) other investments not
exceeding $100,000 in the aggregate at any time outstanding.
6.3 Indebtedness.
(a) Except for the existing intercompany Indebtedness among
the Borrowers described in Disclosure Schedule 6.3 (which Indebtedness shall not
be renewed, extended, or modified at any time hereafter), no Credit Party shall
create, incur, assume or permit to exist any Indebtedness, except (without
duplication) (i) Indebtedness secured by purchase money security interests and
Capital Leases permitted in clause (c) of Section 6.7, (ii) the Loans and the
other Obligations, (iii) unfunded pension fund and other employee benefit plan
obligations and liabilities to the extent they are permitted to remain unfunded
under applicable law, (iv) existing Indebtedness described in Disclosure
Schedule (6.3) and refinancings thereof or amendments or modifications thereof
which do not have the effect of increasing the principal amount thereof or
changing the amortization thereof (other than to extend the same) and which are
otherwise on terms and conditions no less favorable to any Credit Party or
Lenders, as determined by Term Agent, than the terms of the Indebtedness being
refinanced, amended or modified, (v) Indebtedness specifically permitted under
Section 6.1, and (vi) Indebtedness consisting of intercompany loans and advances
made by VSC to any other Borrower or made by any other Borrower to VSC;
provided, however, that (A) each Borrower shall have executed and delivered to
VSC and VSC shall have executed and delivered to each other Borrower, on the
Closing Date, a demand note (collectively, the "Intercompany Notes") to evidence
any such intercompany Indebtedness owing at any time by or from VSC from or to
such other Borrowers, which Intercompany Notes shall be in form and substance
satisfactory to Term Agent and, together with the notes evidencing the
intercompany Indebtedness described in Disclosure Schedule 6.3, shall be pledged
and delivered to Term Agent for the benefit of Lender Group pursuant to the
applicable Pledge Agreement or Security Agreement as additional collateral
security for the Obligations; (B) each applicable Borrower shall record all
intercompany transactions on its books and records in a manner satisfactory to
Term Agent; (C) the obligations of each Borrower under any such Intercompany
Notes shall be subordinated to the Obligations of such Borrower hereunder in a
manner satisfactory to Term Agent; (D) at the time any such intercompany loan or
advance is made by any Borrower to any other Borrower and after giving effect
thereto, each such Borrower shall be Solvent; (E) no Default or Event of Default
would occur and be continuing after giving effect to any such proposed
intercompany loan or advance; (F) in the case of any intercompany Indebtedness,
such indebtedness to any Borrower shall not exceed the respective amount set
forth in the applicable Intercompany Note of such Borrower, and (iii) the
aggregate amount of all outstanding intercompany advances from VSC to all
Borrowers outstanding at any time shall not exceed the Revolving Credit
Commitment; and (G) the recipient of such intercompany loans or advances shall
be creditworthy, as determined by Term Agent in its sole discretion.
(b) No Credit Party shall, directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, premium, if any, interest
or other amount payable in respect of any Indebtedness, other than (i) the
Obligations, (ii) Indebtedness secured by a Permitted Encumbrance if the asset
securing such Indebtedness has been sold or otherwise disposed of in accordance
with Sections 6.8(b) or (c), (iii) Indebtedness incurred in connection with
intercompany loans or advances permitted under Section 6.3(a) above, and (iv)
other Indebtedness (excluding Subordinated Debt) not in excess of $100,000.
(c) No Credit Party shall, directly or indirectly, (i) issue
any preferred equity securities or (ii) be or become liable in respect of any
obligation (contingent or otherwise) to purchase, redeem, retire, acquire or
make any other payment in respect of any shares of equity securities of any
Credit Party or any option, warrant or other right to acquire any such shares of
equity securities, except as permitted under Section 6.14.
6.4 Employee Loans and Affiliate Transactions.
(a) Except as otherwise expressly permitted in this Section 6
with respect to Affiliates, no Credit Party shall enter into or be a party to
any transaction with any other Credit Party or any Affiliate, officer, director
or employee thereof, except in the ordinary course of and pursuant to the
reasonable requirements of such Credit Party's business and upon fair and
reasonable terms that are no less favorable to such Credit Party than would be
obtained in a comparable arm's length transaction with a Person not an
Affiliate, officer, director or employee of such Credit Party. In addition, if
any such transaction or series of related transactions involves payments in
excess of $100,000 in the aggregate, the terms of these transactions must be
disclosed in advance to Term Agent. All such transactions existing as of the
date hereof are described on Disclosure Schedule (6.4(a)).
(b) No Credit Party shall enter into any lending or borrowing
transaction with any employees of any Credit Party, except loans to their
respective employees on an arm's-length basis in the ordinary course of business
consistent with past practices for travel expenses, relocation costs and similar
purposes up to a maximum of $50,000 to any employee and up to a maximum of
$100,000 in the aggregate at any one time outstanding.
(c) No Credit Party shall increase the direct or indirect
aggregate compensation (excluding stock options) of persons constituting the
executive officers of the Borrowers, taken as a whole, by more than 5% per annum
in excess of the current compensation level for those employees, expressed as an
aggregate dollar amount, and set forth in Disclosure Schedule (6.4(c)).
6.5 Capital Structure and Business. No Credit Party shall (a) make any
changes in any of its business objectives, purposes or operations which could in
any way adversely affect the repayment of the Loans or any of the other
Obligations or could reasonably be expected to have or result in a Material
Adverse Effect, (b) make any change in its capital structure as described on
Disclosure Schedule (3.8), including the issuance of any shares of Stock,
warrants or other securities convertible into Stock or any revision of the terms
of its outstanding Stock (other than pursuant to a public offering of common
stock by VSC in which the proceeds of such sale of Stock are applied as set
forth in Section 1.3(b)(iii), or in the respect of the exercise of stock options
issued to employees and officers of VSC in the ordinary course of VSC's
business) or (c) amend its charter or bylaws (or, in the case of a limited
liability company, its operating agreement) in a manner which would adversely
affect any Agent or any Lender or such Credit Party's duty or ability to repay
the Obligations. No Credit Party shall engage in any business other than the
businesses currently engaged in by it or businesses reasonably related thereto.
6.6 Guaranteed Indebtedness. No Credit Party shall create, incur,
assume or permit to exist any Guaranteed Indebtedness except (a) by endorsement
of instruments or items of payment for deposit to the general account of any
Credit Party, and (b) for Guaranteed Indebtedness incurred for the benefit of
any other Credit Party if the primary obligation is expressly permitted by this
Agreement.
6.7 Liens. No Credit Party shall create, incur, assume or permit to
exist any Lien on or with respect to its Accounts or any of its other properties
or assets (whether now owned or hereafter acquired) except for (a) Permitted
Encumbrances, (b) Liens in existence on the date hereof and summarized on
Disclosure Schedule (6.7), (c) Liens created after the date hereof by
conditional sale or other title retention agreements (including Capital Leases)
or in connection with purchase money Indebtedness with respect to Equipment and
Fixtures acquired by any Credit Party in the ordinary course of business,
involving the incurrence of an aggregate amount of purchase money Indebtedness
and Capital Lease Obligations of not more than $15,000,000 outstanding at any
one time for all such Liens (provided, however, that such Liens attach only to
the assets subject to such purchase money debt and such Indebtedness is incurred
within six months following such purchase and does not exceed 100% of the
purchase price plus any associated installation costs of the subject assets),
and (d) other Liens securing Indebtedness not exceeding $100,000 in the
aggregate at any time outstanding, so long as such Liens do not attach to any
Accounts or Inventory. In addition, no Credit Party shall become a party to any
agreement, note, indenture or instrument, or take any other action, which would
prohibit the creation of a Lien on any of its properties or other assets in
favor of Term Agent for the benefit of Lender Group as additional collateral for
the Obligations, except operating leases, Capital Leases (including any
promissory notes and security agreements specifically relating to such Capital
Leases or Licenses which prohibit Liens upon the assets that are subject
thereto.
6.8 Sale of Stock and Assets. Except as set forth in Disclosure
Schedule (6.8), other than the Allowed Sale, no Credit Party shall sell,
transfer, convey, assign or otherwise dispose of any of its properties or other
assets, including the capital Stock of any of its Subsidiaries (whether in a
public or a private offering or otherwise) or any of their Accounts, other than
(a) the sale or lease of Inventory in the ordinary course of business, and (b)
the sale, transfer, conveyance or other disposition by a Credit Party of
Equipment, Fixtures or Real Estate that are obsolete or no longer used or useful
in such Credit Party's business and having a value not exceeding $500,000 in any
single transaction or $1,000,000 in the aggregate in any Fiscal Year and (c)
other Equipment and Fixtures having a value not exceeding $200,000 in any single
transaction or $500,000 in the aggregate in any Fiscal Year. With respect to any
disposition of assets or other properties permitted pursuant to clause (b) and
clause (c) above, Term Agent agrees on reasonable prior written notice to
release its Liens for the benefit of Lender Group on such assets or other
properties in order to permit the applicable Credit Party to effect such
disposition and shall execute and deliver to Borrower Representative, at
Borrowers' expense, appropriate UCC-3 termination statements and other releases
as reasonably requested by Borrower Representative.
6.9 ERISA. No Credit Party shall, or shall cause or permit any ERISA
Affiliate to, cause or permit to occur an event which could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or cause or permit to occur an ERISA Event to the extent such ERISA Event
could reasonably be expected to have a Material Adverse Effect.
6.10 Financial Covenants. Borrowers shall not breach or fail to
comply with any of the Financial Covenants (the "Financial Covenants") set forth
in Annex G.
6.11 Hazardous Materials. No Credit Party shall cause or permit a
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of the Real Estate where such Release would (a) violate in any respect, or
form the basis for any Environmental Liabilities under, any Environmental Laws
or Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral, other than
such violations or Environmental Liabilities which could not reasonably be
expected to have a Material Adverse Effect.
6.12 Sale-Leasebacks. No Credit Party shall engage in any sale-
leaseback, synthetic lease or similar transaction involving any of its assets.
6.13 Cancellation of Indebtedness. No Credit Party shall cancel any
claim or debt owing to it, except for reasonable consideration negotiated on an
arm's-length basis and in the ordinary course of its business consistent with
past practices.
6.14 Restricted Payments. No Credit Party shall make any Restricted
Payment, except (a) intercompany loans and advances between Borrowers to the
extent permitted by Section 6.3 above, (b) dividends and distributions by
Subsidiaries of any Borrower paid to such Borrower, (c) employee loans permitted
under Section 6.4(b) above, and (d) regularly scheduled payments of principal
and interest and any prepayments with respect to the Subordinated Debt to the
extent permitted hereunder; provided, however, that (i) no Default or Event of
Default shall have occurred and be continuing or would result after giving
effect to any payment pursuant to clause (d) above, (ii) Borrowers collectively
shall have Net Borrowing Availability of at least $2,000,000 after giving effect
to any payment pursuant to clause (d) above; and (iii) the timing of the
payments referred to in clause (d) above shall be set at dates which permit the
delivery of Financial Statements necessary to determine current compliance with
the financial covenants set forth in Annex G prior to each payment.
6.15 Change of Corporate Name or Location; Change of Fiscal Year. No
Credit Party shall (a) change its corporate name, transact business in any trade
name or (b) change its chief executive office, principal place of business,
corporate offices or warehouses or locations at which Collateral is held or
stored, or the location of its records concerning the Collateral, in any case
without at least 30 days prior written notice to Term Agent and after Term
Agent's written acknowledgment that any reasonable action requested by Term
Agent in connection therewith, including to continue the perfection of any Liens
in favor of Term Agent for the benefit of Lender Group in any Collateral, has
been completed or taken; provided, however, that any such new location shall be
in the continental United States. Without limiting the foregoing, no Credit
Party shall change its name, identity or corporate structure in any manner which
might make any financing or continuation statement filed in connection herewith
seriously misleading within the meaning of Section 9-402(7) of the Code or any
other then applicable provision of the Code, except upon prior written notice to
Term Agent and after Term Agent's written acknowledgment that any reasonable
action requested by Term Agent in connection therewith, including to continue
the perfection of any Liens in favor of Term Agent for the benefit of Lender
Group in any Collateral, has been completed or taken. No Credit Party shall
change its Fiscal Year.
6.16 No Impairment of Intercompany Transfers. No Credit Party shall
directly or indirectly enter into or be or become bound by any agreement,
instrument, indenture or other obligation (other than this Agreement and the
other Loan Documents) which could directly or indirectly restrict, prohibit or
require the consent of any Person with respect to the payment of dividends or
distributions or the making or repayment of intercompany loans by a Subsidiary
of any Borrower to any Borrower, from VSC to any other Borrower, or to VSC from
any other Borrower.
6.17 No Speculative Transactions. No Credit Party shall engage in any
transaction involving commodity options, futures contracts or similar
transactions, except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars; provided,
however, that Borrowers may undertake the transactions described in Section
5.10.
6.18 Leases. Except as set forth on Schedule 6.18, no Credit Party
shall enter into any operating lease for Equipment or Real Estate, if the
aggregate of all such operating lease payments payable in any year for Borrowers
and their Subsidiaries on a consolidated basis would exceed $500,000.
6.19 Changes Relating to Subordinated Debt. No Credit Party shall
change or amend the terms of any Subordinated Debt (or any indenture or
agreement in connection therewith) if the effect of such amendment is to: (a)
increase the interest rate on such Subordinated Debt; (b) change the dates upon
which payments of principal or interest are due on such Subordinated Debt other
than to extend such dates; (c) change any default or event of default other than
to delete or make less restrictive any default provision therein, or add any
covenant with respect to such Subordinated Debt; (d) change the redemption or
prepayment provisions of such Subordinated Debt other than to extend the dates
therefor or to reduce the premiums payable in connection therewith; (e) grant
any security or collateral to secure payment of such Subordinated Debt; or (f)
change or amend any other term if such change or amendment would materially
increase the obligations of the obligor or confer additional material rights to
the holder of such Subordinated Debt in a manner adverse to any Credit Party or
any Agent or any Lender.
6.20 Credit Parties Other Than Borrowers. None of the Credit Parties
other than Borrowers and the Persons set forth on Disclosure Schedule 6.20 shall
engage in any trade or business, or own any assets (other than Stock of their
Subsidiaries) or incur any Indebtedness or Guaranteed Indebtedness (other than
the Obligations).
6.21 Limitation On Capital Expenditures. Credit Parties, in the
aggregate, shall not utilize more than $6,000,000 during any Fiscal Year for
Capital Expenditures.
7. TERM
7.1 Termination. Notwithstanding anything to the contrary herein, the
financing arrangements contemplated hereby shall be in effect until the
applicable Commitment Termination Date, upon which date the Loans and all other
Obligations shall be automatically due and payable in full.
7.2 Survival of Obligations Upon Termination of Financing Arrangements.
Except as otherwise expressly provided for in the Loan Documents, no termination
or cancellation (regardless of cause or procedure) of any Commitments under this
Agreement shall in any way affect or impair the obligations, duties and
liabilities of the Credit Parties or the rights of any Agent or any Lender
relating to any unpaid portion of the Loans or any other Obligations, due or not
due, liquidated, contingent or unliquidated or any transaction or event
occurring prior to such termination, or any transaction or event, the
performance of which is required after the applicable Commitment Termination
Date. Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of any
Agent or any Lender, all as contained in the Loan Documents, shall not terminate
or expire, but rather shall survive any such termination or cancellation and
shall continue in full force and effect until the Termination Date; provided,
however, that in all events the provisions of Section 11, the payment
obligations under Section 1.13 and Section 1.14, and the indemnities contained
in the Loan Documents shall survive the Termination Date.
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) Any Borrower (i) fails to make any payment of principal
of, or interest on, or Fees owing in respect of, the Loans or any of the other
Obligations when due and payable, or (ii) fails to pay or reimburse any Agent or
any Lender for any amount reimbursable hereunder or under any other Loan
Document within ten days following Applicable Agent's demand for such
reimbursement or payment of such amounts.
(b) Any Credit Party shall fail or neglect to perform, keep or
observe any of the provisions of Sections 1.4, 1.6, 5.4 or 6, or any of the
provisions set forth in Annexes C or G, respectively.
(c) Any Credit Party shall fail or neglect to perform, keep or
observe any of the provisions of Section 4 or any provisions set forth in Annex
E or Annex F, respectively, and the same shall remain unremedied for three days
or more.
(d) Any Credit Party shall fail or neglect to perform, keep or
observe any other provision of this Agreement or of any of the other Loan
Documents (other than any provision embodied in or covered by any other clause
of this Section 8.1) and the same shall remain unremedied for 20 days or more.
(e) A default or breach shall occur under any other agreement,
document or instrument to which any Credit Party is a party which is not cured
within any applicable grace period, and such default or breach (i) involves the
failure to make any payment when due in respect of any Indebtedness (other than
the Obligations) of any Credit Party in excess of $250,000 in the aggregate, or
(ii) causes, or permits any holder of such Indebtedness or a trustee to cause,
Indebtedness or a portion thereof in excess of $250,000 in the aggregate to
become due prior to its stated maturity or prior to its regularly scheduled
dates of payment, regardless of whether such default is waived, or such right is
exercised, by such holder or trustee.
(f) Any representation or warranty herein or in any Loan
Document or in any written statement, report, financial statement or certificate
made or delivered to any Agent or any Lender by any Credit Party or by Liberty
Livewire is untrue, incomplete or incorrect in any material respect as of the
date when made or deemed made.
(g) Assets of any Credit Party with a fair market value of
$100,000 or more shall be attached, seized, levied upon or subjected to a writ
or distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of any Credit Party and such
condition continues for 30 days or more.
(h) A case or proceeding shall have been commenced against any
Credit Party seeking a decree or order in respect of any Credit Party (i) under
Title 11 of the United States Code, as now constituted or hereafter amended, or
any other applicable federal, state or foreign bankruptcy or other similar law,
(ii) appointing a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) for any Credit Party or of any substantial
part of any such Person's assets, or (iii) ordering the winding-up or
liquidation of the affairs of any Credit Party, and such case or proceeding
shall remain undismissed or unstayed for 60 days or more or such court shall
enter a decree or order granting the relief sought in such case or proceeding.
(i) Any Credit Party (i) shall file a petition seeking relief
under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other applicable federal, state or foreign bankruptcy or other
similar law, (ii) shall fail to contest in a timely and appropriate manner or
shall consent to the institution of proceedings thereunder or to the filing of
any such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official) of
any Credit Party or of any substantial part of any such Person's assets, (iii)
shall make an assignment for the benefit of creditors, (iv) shall take any
corporate action in furtherance of any of the foregoing, or (v) shall admit in
writing its inability to, or shall be generally unable to, pay its debts as such
debts become due.
(j) A final judgment or judgments for the payment of money in
excess of $250,000 in the aggregate at any time outstanding shall be rendered
against any Credit Party and the same shall not, within 30 days after the entry
thereof, have been discharged or execution thereof stayed or bonded pending
appeal, or shall not have been discharged prior to the expiration of any such
stay.
(k) Any material provision of any Loan Document shall for any
reason cease to be valid, binding and enforceable in accordance with its terms
(or any Credit Party shall challenge the enforceability of any Loan Document or
shall assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its terms),
or any security interest created under any Loan Document shall cease to be a
valid and perfected first priority security interest or Lien (except as
otherwise permitted herein or therein) in any of the Collateral purported to be
covered thereby.
(l) Any Change of Control shall occur.
(m) Any event shall occur, whether or not insured or
insurable, as a result of which revenue-producing activities cease or are
substantially curtailed at any facility of Borrowers generating more than 5% of
Borrowers' consolidated revenues for the Fiscal Year preceding such event, and
such cessation or curtailment continues for more than 30 days.
(n) Any default or breach by any Borrower shall occur and be
continuing under or with respect to any Subordinated Note or the relevant
landlord or other applicable Person shall declare a default or breach, which
could have the effect of terminating the applicable Borrower's right to
possession of the premises subject of (i) the lease of real property located at
1111 Lincoln Road, Miami Beach, Florida, by and between The Post Edge, Inc., dba
Manhattan Transfer-Miami, as lessee and Uccello Immobilien GMBH, as lessor, or
(ii) any of all of: the leases of real property located at 535 Fifth Avenue, New
York, New York, by and between Manhattan Transfer/Edit, Inc., as lessee and 535
Owners LLC, as landlord, and Cabana Corp. and Video Services Corporation, as
lessees, and 535 Owners LLC, as lessor, respectively, or (iii) any or all of the
leases for real property located at 545 Fifth Avenue, New York, New York, by and
between Waterfront Communications Corporation, as lessee, and 545 Owners LLC, as
lessor, and Manhattan Transfer/Edit, Inc., as lessee, and 545 Owners LLC, as
lessor, respectively.
(o) The Intercreditor Agreement shall (except in accordance
with its terms), in whole or in part, terminate, cease to be effective or cease
to be the legally valid, binding and enforceable obligation of the parties
sought to be charged, or any Person fails to comply with (or takes any action
inconsistent with) any term of the Intercreditor Agreement shall fail to be
enforceable by the Term Agent or any applicable Lender purported to be benefited
thereby; or any other Person shall, directly or indirectly, disavow or contest
in any respect (i) the effectiveness, validity, binding nature and
enforceability of the Intercreditor Agreement or (ii) that any of the terms
contained in the Intercreditor Agreement exist for the benefit of the Term Agent
and the Lenders, to the extent entitled to enforce such terms.
(p) the subordination provisions contained in the Subordinated
Notes, or any of them, or in respect of any other Subordinated Debt
(collectively, the "Subordination Provisions"), shall fail to be enforceable by
the Agents, or either of them, or any Lender which has not effectively waived
the benefits thereof, or the principal of, and accrued interest owing on, the
Loans or any of the other Obligations shall fail to constitute "Senior Debt" or
other similar designation (as defined or so designated in the Subordinated
Notes, or any of them, or any other applicable document, instrument, or
agreement evidencing the Subordinated Debt); or the Borrower or any of its
Subsidiaries, or any other Person shall, directly or indirectly, disavow or
contest in any manner (i) the effectiveness, validity or enforceability of any
of the Subordination Provisions, (ii) that any of such Subordination Provisions
exist for the benefit of each of the Agents and the Lenders, or (iii) that all
payments of principal or interest with respect to the Subordinated Debt or
realized from the liquidation of any property of the Borrowers shall be subject
to any of such Subordination Provisions; or any of the Subordination Provisions
shall, in whole or in part, terminate, cease to be effective or cease to be
legally valid, binding and enforceable obligations of any subordinated lender or
any subordinated lender fails to comply with (or takes any action inconsistent
with) any term of the Subordination Provisions.
8.2 Remedies.
(a) If any Default or Event of Default shall have occurred and
be continuing, Applicable Agent may, and shall upon written request of Required
Lenders, without notice, (i) suspend the Revolving Loan facility with respect to
further Revolving Credit Advances and/or the incurrence of further Letter of
Credit Obligations, and/or suspend the SCIL Loan facility with respect to
further SCIL Loan Advances, whereupon any further Revolving Credit Advances,
Letter of Credit Obligations and/or SCIL Loan Advances, as the case may be,
shall be made or extended in the applicable Lenders' sole discretion so long as
such Default or Event of Default is continuing; provided, however, that all Fees
shall remain due and payable and (ii) increase the rate of interest applicable
to the Loans and Letter of Credit Fees to the Default Rate.
(b) If any Event of Default shall have occurred and be
continuing, Term Agent may, and shall upon written request of Required Lenders,
without notice, (i) terminate the Revolving Loan facility with respect to
further Revolving Credit Advances or Letter of Credit Obligations and/or
terminate the SCIL Loan facility with respect to further SCIL Loan Advances,
(ii) declare all or any portion of the Obligations, including all or any portion
of any Loan to be forthwith due and payable, and require that the Letter of
Credit Obligations be cash collateralized as in the manner set forth in Annex B,
all without presentment, demand, protest or further notice of any kind, all of
which are expressly waived by each Borrower and each other Credit Party; and
(iii) exercise any rights and remedies provided to any Agent and any Lender
under the Loan Documents and/or at law or in equity, including all remedies
provided under the Code; provided, however, that without the prior consent of
the Required Lenders, Term Agent shall neither accelerate the maturity of any
portion of the Obligations unless it is concurrently accelerating the maturities
of all of the other Obligations, nor terminate either of the Revolving Loan
facility or the SCIL Loan facility with respect to further Revolving Credit
Advances or SCIL Loan Advances, as applicable, unless the other facility is
concurrently terminated as to further advances; provided, further, upon the
occurrence of an Event of Default specified in Sections 8.1(g), (h) or (i), the
Revolving Loan facility and SCIL Loan facility shall be immediately terminated
and all of the Obligations, including the aggregate Revolving Loan, Term Loans
and SCIL Loan, respectively, shall become immediately due and payable without
declaration, presentment, notice or demand by any Person. Notwithstanding
anything to the contrary contained in this Agreement, the termination in
accordance with this Agreement of the Revolving Loan facility or the SCIL Loan
facility in advance of the acceleration of the maturities of any or all of the
Obligations shall be with reservation of the right at any time thereafter to
accelerate such maturities in accordance with the terms of this Agreement.
8.3 Waivers by Credit Parties. Except as otherwise provided for in this
Agreement or by applicable law, each Credit Party irrevocably waives (including
for purposes of Section 13): (a) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of acceleration,
protest, default, nonpayment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by any
Agent or any Lender on which any Credit Party may in any way be liable, and
hereby ratifies and confirms whatever any such Agent or Lender may do in this
regard, (b) all rights to notice and a hearing prior to any Agent's or any
Lender's taking possession or control of, or to any Agent's or any Lender's
replevy, attachment or levy upon, the Collateral or any bond or security which
might be required by any court prior to allowing any Agent or any Lender to
exercise any of its remedies, and (c) the benefit of all valuation, appraisal,
marshaling and exemption laws.
9. ASSIGNMENTS AND PARTICIPATIONS
9.1 Assignments And Participations.
(a) Each Lender may resell (through syndication, assignment or
a participation) all or a portion of its rights and obligations under this
Agreement (including all or a portion of any of its Commitments under the Loans)
to any Person; provided, however, that any such resale must be in minimum
amounts of $4,000,000 and $1,000,000 increments in excess of such minimum;
provided, further, however, that if the applicable Lender's Commitment is less
than $4,000,000, such Commitment may be sold, but only if and to the extent that
such sale is for the full amount of such Commitment.
(b) In the case of an assignment by any Lender under this
Section 9.1, the purchaser shall have, to the extent of such assignment, the
same rights, benefits and obligations as it would have had if it were a "Lender"
hereunder. Upon execution by the assignor and the assignee of an Assignment
Agreement in substantially the form of Exhibit 9.1(b), payment by such assignee
to such assignor of an amount equal to the purchase price agreed between such
assignor and assignee and delivery to Applicable Agent and Borrower
Representative of an executed copy of such Assignment Agreement together with
payment to Applicable Agent of a processing fee of $4,000, such assignee shall
have, to the extent of such assignment (unless otherwise provided for therein),
the same rights and benefits as it would have if it were a "Lender" hereunder
and the assignor shall be, to the extent of such assignment (unless otherwise
provided therein) released from its obligations under this Agreement. Each
Borrower hereby acknowledges and agrees that any such assignment will give rise
to a direct obligation of such Borrower to the assignee and that the assignee
shall be considered to be a "Lender" hereunder and under the other Loan
Documents. In all instances, each Lender's liability to make any of the Advances
shall be several and not joint and shall be limited to such Lender's pro rata
share thereof. Upon any such assignment, each Borrower, at such Borrower's own
expense, shall execute and deliver to Applicable Agent, in exchange for the
surrendered Note of assignor Lender, a new Note to the order of assignee Lender
in an amount equal to the Commitment assumed by such assignee Lender, and, if
assignor Lender has retained a portion of such Commitment hereunder, a new Note
to the order of assignor Lender in an amount equal to such retained Commitment.
Such Notes shall be dated the Closing Date and shall otherwise be in the form of
the Notes replaced thereby. The Notes surrendered to Applicable Agent shall be
returned by Applicable Agent to Borrower Representative marked "canceled."
(c) Each Lender may sell participations in all or any part of
any of its Revolving Credit Advances, SCIL Loan Advances or the Term Loans or
any portion of any Commitment to any other Person; provided, however, that (i)
all amounts payable by any Borrower hereunder shall be determined as if such
Lender had not sold such participation and such Lender shall remain a "Lender"
for all purposes under this Agreement, (ii) any such grant of a participation
will be made in compliance with all applicable state or Federal laws, rules and
regulations, (iii) any such participation shall be divided pro rata among the
participating Lender's share of the applicable Loan, and (iv) such Lender shall
not grant any participation under which the participant shall have rights to
approve any amendment to or waiver of this Agreement or the Loan Documents,
except to the extent such amendment or waiver would (A) extend the final
maturity date for payment of the Loan in which such participant is
participating, (B) reduce the interest rate or the amount of principal or Fees
applicable to the Loan in which such participant is participating, or (C)
release all or substantially all of the Collateral related therewith, except as
expressly provided herein. In those cases in which a Lender grants rights to its
participants to approve any amendment to or waiver of this Agreement or the
other Loan Documents respecting the matters described in the foregoing clauses
(A) through (C) of this Section 9.1(c), the relevant participation agreements
shall provide for a voting mechanism whereby holders of a majority of the amount
of the participating Lender's portion of the Loan, as the case may be
(irrespective of whether held by such Lender or participated), shall control the
vote for all of such participating Lender's portion of the Loan. In the case of
any participation, the participant shall not have any rights under this
Agreement or any of the other Loan Documents entered into in connection herewith
(the participant's rights against such Lender in respect of such participation
to be those set forth in the participation or other agreement executed by such
Lender and the participant relating thereto) and all amounts payable to any
Lender hereunder shall be determined as if such Lender had not sold such
participation.
(d) Except as otherwise provided in this Section 9.1, no
Lender shall, as between any Borrower and any such Lender, be relieved of any of
its obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of a participation in, all or any part of any Loan
or other Obligations owed to such Lender. Any Lender permitted to sell
assignments and participations under this Section 9.1 may, subject to this
Section 9.1, furnish any information concerning any Credit Party in the
possession of that Lender from time to time to assignees and participants
(including prospective assignees and participants). Unless and until Borrower
Representative receives written notice of the assignment of any interest in the
Loans, the applicable Borrower may treat the Lenders theretofore acting as such
as "Lenders" hereunder and shall be protected in making any payment hereunder in
reliance on the absence of such notice.
(e) Each Borrower shall assist any Lender permitted to sell
assignments or participations under this Section 9.1 in whatever manner
reasonably necessary in order to enable or effect any such assignment or
participation, including the execution and delivery of any and all agreements,
notes and other documents and instruments as shall be reasonably requested and
the preparation and delivery of informational materials, appraisals or other
documents for, and the participation of relevant management in meetings with,
potential assignees or participants. Each Borrower (or Borrower Representative,
on behalf of such Borrower) shall certify the correctness, completeness and
accuracy of all descriptions of such Borrower and its affairs contained in any
selling materials and all information provided by it and included in such
materials or shall provide all necessary additions and corrections thereto.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the other Loan
Documents shall be binding on and shall inure to the benefit of each Credit
Party, each Agent, each Lender and each of their respective successors and
assigns (including, in the case of any Credit Party, a debtor-in-possession on
behalf of such Credit Party), except as otherwise provided herein or therein. No
Credit Party may assign, transfer, hypothecate or otherwise convey its rights,
benefits, obligations or duties hereunder or under any of the other Loan
Documents without the prior express written consent of Applicable Agent and the
Required Lenders. Any such purported assignment, transfer, hypothecation or
other conveyance by any Credit Party without the prior express written consent
of Applicable Agent shall be null and void ab initio. The terms and provisions
of this Agreement are for the purpose of defining the relative rights and
obligations of each Credit Party, each Agent and each Lender with respect to the
transactions contemplated hereby, and no Person shall be a third party
beneficiary of any of the terms and provisions of this Agreement or any of the
other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. The Loan Documents
constitute the complete agreement among the parties with respect to the subject
matter hereof and thereof and may not be modified, altered or amended, except as
set forth in Section 11.2 below. Any letter of interest, proposal letter,
commitment letter or fee letter between or among any Credit Party, either Agent
and any Lender or any of their respective affiliates predating this Agreement
and relating to a financing of substantially similar form, purpose or effect
shall be superseded by this Agreement.
11.2 Amendments and Waivers. Neither this Agreement nor any other Loan
Document nor any of the terms or provisions hereof or thereof may be changed,
waived, discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by Required Lenders; provided, however, that no
such change, waiver, discharge or termination shall, without the consent of each
affected Lender and Applicable Agent, (a) extend the scheduled final maturity of
any Loan, or any portion thereof or any scheduled installment thereof, or reduce
the rate or amount, or extend the time of payment of, any interest (other than
as a result of waiving the applicability of any post-Default increase in
interest rates) or Fees payable under the Loan Documents, or reduce the
principal amount of any Loan or reimbursement obligation, or increase any
Commitment of such Lender over the amount thereof then in effect (it being
understood that a waiver of any Default shall not constitute a change in the
terms of any Revolving Loan Commitment of any applicable Lender), (b) release
Collateral or the liability of any Borrower or any Guarantor under the Loan
Documents (except as expressly permitted by the Loan Documents), (c) change any
provision of the Loan Documents that would have the effect of altering (i) the
several nature of the Lenders' obligations thereunder, (ii) the pro rata sharing
and allocation of advances and payments set forth in the Loan Documents, (d)
amend, modify or waive any provision of this Section 11.2, or Sections 1.3, 1.5,
1.9, 1.13, 1.14, 10.1 11.3 or 12.5, (e) reduce any percentage specified in, or
otherwise modify, the definition of Required Lenders, or (f) consent to the
assignment or transfer by any Credit Party of any of its rights or obligations
under this Agreement, or (g) waive any requirement set forth in Section 2.1,
provided further that no such agreement shall amend, modify or otherwise affect
the rights or duties of any Agent hereunder without the prior written consent of
such Agent.
Upon indefeasible payment in full in cash and performance of
all of the Obligations (other than indemnification Obligations under Section
1.13), termination of the Commitments and a release of all claims against each
Agent and each Lender, and so long as no suits, actions proceedings, or claims
are pending or threatened against any Indemnified Person asserting any damages,
losses or liabilities that are Indemnified Liabilities, Term Agent shall deliver
to Borrower Representative termination statements, mortgage releases and other
documents necessary or appropriate to evidence the termination of the Liens in
favor of Term Agent for the benefit of Lender Group securing payment of the
Obligations.
11.3 Fees and Expenses. Borrowers shall, on the date of this Agreement,
reimburse each Agent for all out-of-pocket expenses incurred in connection with
the preparation, review and negotiation of the Loan Documents (including the
reasonable fees and expenses of their respective special loan counsel, advisors,
consultants and auditors retained in connection with the Loan Documents and the
Related Transactions and advice in connection therewith) and shall reimburse
each Agent for all such expenses hereafter arising. Borrowers shall, no later
than five Business Days after written notice thereof, reimburse each Agent and
each Lender for all fees, costs and expenses, including the reasonable fees,
costs and expenses of counsel or other advisors (including environmental and
management consultants and appraisers) for advice, assistance, or other
representation in connection with:
(a) the forwarding to Borrowers or any other Person on behalf
of Borrowers of the proceeds of the Loans;
(b) any amendment, modification or waiver of, or consent with
respect to, any of the Loan Documents or Related Transactions Documents or
advice in connection with the administration of the credit provided hereunder or
its rights hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by any Agent, any Lender, any Borrower or any other
Person) in any way relating to the Collateral, any of the Loan Documents or any
other agreement to be executed or delivered in connection therewith or herewith,
whether as a party, witness, or otherwise, including any litigation, contest,
dispute, suit, case, proceeding or action, and any appeal or review thereof, in
connection with a case commenced by or against any or all of the Borrowers or
any other Person that may be obligated to any Agent or any Lender by virtue of
the Loan Documents; including any such litigation, contest, dispute, suit,
proceeding or action arising in connection with any work-out or restructuring of
the Loans during the pendency of one or more Events of Default;
(d) any attempt to enforce any remedies of any Agent or any
Lender against any or all of the Credit Parties or any other Person that may be
obligated to any Agent or any Lender by virtue of any of the Loan Documents,
including any such attempt to enforce any such remedies in the course of any
work-out or restructuring of the Loans during the pendency of one or more Events
of Default;
(e) any work-out or restructuring of the Loans during the
pendency of one or more Events of Default;
(f) efforts to (i) monitor the Loans or any of the other
Obligations, (ii) evaluate, observe or assess any of the Credit Parties or their
respective affairs, and (iii) verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral;
including, as to each of clauses (a) through (f) of this Section 11.3, all
reasonable attorneys' and other professional and service providers' fees arising
from such services, including those in connection with any appellate
proceedings, and all expenses, costs, charges and other fees incurred by such
counsel and others in any way or respect arising in connection with or relating
to any of the events or actions described in this Section 11.3 shall be payable,
on demand, by Borrowers to Agents. Without limiting the generality of the
foregoing, such expenses, costs, charges and fees may include: fees, costs and
expenses of accountants, attorneys, environmental advisors, appraisers,
investment bankers, management and other consultants and paralegals; court costs
and expenses; photocopying and duplication expenses; court reporter fees, costs
and expenses; long distance telephone charges; air express charges; telegram or
telecopy charges; secretarial overtime charges; and expenses for travel, lodging
and food paid or incurred in connection with the performance of such legal or
other advisory services.
11.4 No Waiver. Any failure by any Agent or any Lender, at any time or
times, to require strict performance by the Credit Parties of any provision of
this Agreement and any of the other Loan Documents shall not waive, affect or
diminish any right of any Agent or any Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default, whether
the same is prior or subsequent thereto and whether the same or of a different
type. None of the undertakings, agreements, warranties, covenants and
representations of any Credit Party contained in this Agreement or any of the
other Loan Documents and no Default or Event of Default by any Credit Party
shall be deemed to have been suspended or waived by any Agent or any Lender,
unless such waiver or suspension is by a written instrument signed by an officer
or other authorized employee of applicable Agent or applicable Lender, as the
case may be, and directed to Borrower Representative specifying such suspension
or waiver.
11.5 Remedies. Each Agent's and each Lender's rights and remedies under
this Agreement shall be cumulative and nonexclusive of any other rights and
remedies which applicable Agent or applicable Lender may have under any other
agreement, including the other Loan Documents, by operation of law or otherwise.
Recourse to the Collateral shall not be required.
11.6 Severability. Wherever possible, each provision of this Agreement
and the other Loan Documents shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
11.7 Conflict of Terms. Except as otherwise provided in this Agreement
or any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.
11.8 Confidentiality. Each Agent and each Lender agrees to use
commercially reasonable efforts (equivalent to the efforts such Agent or such
Lender applies to maintaining the confidentiality of its own confidential
information) to maintain as confidential all confidential information provided
to it by the Credit Parties and designated as confidential for a period of two
years following receipt thereof, except that any Agent or any Lender may
disclose such information (a) to Persons employed or engaged by such Agent or
such Lender in evaluating, approving, structuring or administering the Loans and
the Commitments, (b) to any bona fide assignee or participant or potential
assignee or participant that has agreed to comply with the covenant contained in
this Section 11.8 (and any such bona fide assignee or participant or potential
assignee or participant may disclose such information to Persons employed or
engaged by them as described in clause (a) above), (c) as required or requested
by any Governmental Authority or reasonably believed by the applicable Agent or
Lender, as the case may be, to be compelled by any court decree, subpoena or
legal or administrative order or process, (d) as, on the advice (which need not
be in writing) of applicable Agent's or applicable Lender's counsel, required by
law, (e) in connection with the exercise of any right or remedy under the Loan
Documents or in connection with any Litigation to which applicable Agent or
applicable Lender is a party, or (f) which ceases to be confidential through no
fault of applicable Agent or applicable Lender.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS (AND IN ANY SUCH CASE, STRICTLY LIMITED TO THE EXTENT
PROVIDED), IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAW
OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY HEREBY CONSENTS AND AGREES
THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK,
NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN OR AMONG ANY OF THE PARTIES TO THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, HOWEVER, THAT EACH OF
THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO
BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY, CITY OF NEW YORK, NEW
YORK; PROVIDED, FURTHER, HOWEVER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED
OR OPERATE TO PRECLUDE ANY AGENT OR ANY LENDER FROM BRINGING SUIT OR TAKING
OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY
OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF ANY AGENT OR ANY LENDER. EACH CREDIT PARTY EXPRESSLY SUBMITS
AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY SUCH COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION WHICH SUCH
CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE
OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN ANNEX H OF THIS
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF
SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF OR THREE DAYS AFTER DEPOSIT IN THE
U.S. MAILS, PROPER POSTAGE PREPAID.
11.10 Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this Section
11.10), (c) one Business Day after deposit with a reputable overnight courier
with all charges prepaid or (d) when delivered, if hand-delivered by messenger,
all of which communications shall be addressed to the party to be notified and
sent to the address or facsimile number indicated on Annex H or to such other
address (or facsimile number) as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Failure or delay in delivering
copies of any notice, demand, request, consent, approval, declaration or other
communication to any Person (other than Borrower Representative, any Agent or
any Lender) designated on Annex H to receive copies shall in no way adversely
affect the effectiveness of such notice, demand, request, consent, approval,
declaration or other communication.
11.11 Section Titles. The Section titles and Table of Contents and
Index of Appendices contained in this Agreement are and shall be without
substantive meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto.
11.12 Counterparts. This Agreement may be transmitted by telecopier and
executed in any number of separate counterparts, each of which shall
collectively and separately constitute one agreement. This Agreement may be
executed by facsimile signature.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, EACH OF THE PARTIES HERETO WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, BETWEEN OR AMONG ANY AGENT, ANY LENDER AND ANY
CREDIT PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO.
11.14 Press Releases. Each Credit Party executing this Agreement agrees
that neither it nor its Affiliates will in the future issue any press releases
or other public disclosure using the name of GE Capital or its Affiliates or
referring to this Agreement, the other Loan Documents or the Related
Transactions Documents without at least two Business Days' prior notice to GE
Capital and without the prior written consent of GE Capital unless (and only to
the extent that) such Credit Party or Affiliate is required to do so under law
and then, in any event, such Credit Party or Affiliate will consult with GE
Capital before issuing such press release or other public disclosure. Each
Credit Party consents to the publication by Agents of a tombstone or similar
advertising material relating to the financing transactions contemplated by this
Agreement. Agents reserve the right to provide to industry trade organizations
information necessary and customary for inclusion in league table measurements
with Borrowers' consent which shall not be unreasonably withheld or delayed.
11.15 Reinstatement. This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
any Borrower for liquidation or reorganization, should any Borrower become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of any
Borrower's assets, and shall continue to be effective or to be reinstated, as
the case may be, if at any time payment and performance of the Obligations, or
any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the
Obligations, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
11.16 Advice of Counsel. Each of the parties hereto represents to each
other party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 11.9 and 11.13, with its counsel.
11.17 No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
12. AGENTS
12.1 Appointment, Powers And Immunities. Each Lender hereby irrevocably
appoints and authorizes GE Capital to act as its administrative and term agent,
which duties shall include acting as the collateral agent in respect of the
Revolving Loan, the Term Loans, SCIL Loan, and all other Obligations, on behalf
of the Lender Group, and each applicable Lender hereby irrevocably appoints and
authorizes KeyBank to act as its revolver agent, under the Loan Documents with
such powers as are specifically delegated to each such Agent by the terms of the
Loan Documents, together with such other powers as are reasonably incidental
thereto. Each Agent (which term as used in this sentence and in Section 12.5 and
the first sentence of Section 12.6 hereof shall include reference to each
Agent's respective affiliates and their own and each of their respective
Affiliates' officers, directors, employees and agents) (a) shall have no duties
or responsibilities except those expressly set forth in this Agreement and in
the other Loan Documents, nor shall any Agent, by reason of any Loan Document or
otherwise, be a trustee or fiduciary for any Lender, (b) shall not be
responsible to any Lender for any recitals, statements, representations or
warranties contained in this Agreement or in any other Loan Document, or in any
certificate or other document referred to or provided for in, or received by any
of them under, any Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of any Loan Document or any other
document referred to or provided for herein or therein or for any failure by any
Credit Party or any other Person to perform any of its obligations under any of
the Loan Documents, (c) shall not be required to initiate or conduct any
litigation or collection proceedings under any of the Loan Documents, (d) shall
not be responsible to any Lender for any action taken or omitted to be taken by
it under any Loan Document or under any other document or instrument referred to
or provided for herein or therein or in connection herewith or therewith, except
for its own gross negligence or willful misconduct, as determined by a final
judgment of a court of competent jurisdiction. Each Agent may employ agents and
attorneys-in-fact, and neither Agent shall be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good faith.
Each Agent may deem and treat the payee of any applicable Note as the holder
thereof for all purposes hereof, unless and until a notice of the assignment or
transfer thereof shall have been filed with such Agent.
12.2 Reliance By Agents. Each Agent shall be entitled to rely upon any
certification, notice or other communication (including any communication by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by such Agent. As to any matters not
expressly provided for by any Loan Document, each Agent shall in all cases be
fully protected in acting, or in refraining from acting, under any Loan Document
in accordance with instructions given by Required Lenders or all Lenders, as is
required in such circumstance, and such instruction of such Lenders and any
action taken or failure to act pursuant thereto shall be binding on all Lenders.
12.3 Defaults. No Agent shall be deemed to have knowledge or notice of
the occurrence of a Default (other than the non-payment of principal of or
interest on the Revolving Loan or Fees) or Event of Default unless such Agent
has received notice from a Lender or Borrower Representative specifying such
Default which states that such notice is a "Notice of Default." In the event
that any Agent receives such a notice of the occurrence of a Default, such Agent
shall give prompt notice thereof to Lenders (and shall give each Lender prompt
notice of each such non-payment). Applicable Agent shall (subject to Section
12.7) take such action with respect to such Default or Event of Default as
shall, consistent with the terms of the Agreement, be directed by Required
Lenders; provided, however, that unless and until such Agent shall have received
such directions, such Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interest of Lenders,
except to the extent that this Agreement expressly requires that such action be
taken, or not be taken, only with the consent or upon the authorization of
Required Lenders or all Lenders, as is required in such circumstance.
12.4 Rights As A Lender. In the event that GE Capital (or any successor
acting as Term Agent and/or Administrative Agent) or KeyBank (or any successor
acting as Revolver Agent) shall become a Lender hereunder, with respect to any
Commitment, any Revolving Credit Advance, the SCIL Loan or any SCIL Loan Advance
or any Term Loan, it (or such successor) shall have the same rights and powers
hereunder as any other Lender and may exercise such rights and powers as though
it were not acting as an Agent, and the term "Lender" or "Lenders" shall, unless
the context otherwise indicates, include each Agent in its individual capacity.
GE Capital (and any successor acting as Term Agent and/or Administrative Agent)
or KeyBank (or any successor acting as Revolver Agent) and their respective
affiliates may (without having to account therefor to any Lender) lend money to,
make investments in and generally engage in any kind of business with the Credit
Parties (and any of their Subsidiaries or Affiliates) as if it were not acting
as an Agent, and GE Capital and KeyBank and their respective Affiliates may
accept fees and other consideration from the Credit Parties for services in
connection with this Agreement or otherwise without having to account for the
same to any Lender.
12.5 Indemnification. Each Lender agrees to indemnify and hold harmless
each Agent (to the extent not reimbursed by Borrowers hereunder, and without
limiting the obligations of Borrowers hereunder) ratably in accordance with the
aggregate principal amount of the Loans held by Lenders (or, if no amounts
thereof are at the time outstanding, ratably in accordance with their respective
Commitments), from and against any and all claims, causes of action, costs,
expenses or liabilities of any kind and nature whatsoever that may be imposed
on, incurred by or asserted against each or either Agent (including by any
Lender) arising out of or by reason of any investigation in or in any way
relating to or arising out of any Loan Document or any other documents or
instruments contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses that Borrowers
are obligated to pay hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents; provided, however, that no Lender shall
be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the party to be indemnified, as determined
by a final judgment of a court of competent jurisdiction.
12.6 Non-Reliance On Agents And Other Lenders. Each Lender agrees that
it has, independently and without reliance on any Agent or any other Lender, and
based on such documents and information as such Lender has deemed appropriate,
made its own credit analysis of the Credit Parties and independently decided to
enter into this Agreement and that it will, independently and without reliance
upon any Agent or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any of the
other Loan Documents. No Agent shall be required to keep itself informed as to
the performance or observance by any Credit Party of this Agreement or any of
the other Loan Documents or any other document referred to or provided for
herein or therein or to inspect the properties or books of the Credit Parties.
Each Agent will use its respective reasonable efforts to provide Lenders with
any information received by it from Borrowers which is required to be provided
to Lenders hereunder, and with any notice of a Default received by such Agent
from Borrowers and any notice of a Default delivered by such Agent to Borrowers;
provided, however, that no Agent shall be liable to any Lender for any failure
to do so, except to the extent that such failure is attributable to such Agent's
gross negligence or willful misconduct, as determined by a final judgment of a
court of competent jurisdiction, and the party to whom such notice was to be
provided demonstrates actual damages resulting from such failure. No Agent shall
have any duty or responsibility to provide any Lender with any other credit or
other information concerning the affairs, financial condition or business of the
Credit Parties (or any of their affiliates) that may come into the possession of
such Agent or of any of its affiliates, nor to update or correct any information
previously given which becomes incorrect or which such Agent learns is
incorrect.
12.7 Failure To Act. Except for actions expressly required of Agents
hereunder and under the other Loan Documents, each Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless
the applicable Agent shall receive further assurances to their respective
satisfaction from Lenders of their indemnification obligations under Section
12.5 hereof against any and all liability and expense that may be incurred by it
by reason of taking or continuing to take any such action.
12.8 Resignation Of Agents. Subject to the appointment and acceptance
of successor Agents as provided below, any Agent may resign at any time by
giving notice thereof to each other Agent, Lenders and Borrower Representative.
Upon any such resignation, Required Lenders shall have the right to appoint its
successor Agent. If no successor Agent shall have been so appointed by Required
Lenders nor shall any Person have accepted such appointment within 30 days after
the retiring Agent gives notice of resignation, then the retiring Agent may, on
behalf of Lenders, appoint a successor Agent that shall be a financial
institution with a combined capital and surplus or net worth of at least
$100,000,000. Upon the acceptance of any appointment as an Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation hereunder as an Agent, the
provisions of this Section 12 shall continue in effect for such retiring Agent's
benefit in respect of any actions taken or omitted to be taken by it while such
retiring Agent was acting as an Agent.
12.9 Consents Under Loan Documents. Except as otherwise provided in
Section 11.1 and Section 11.2 with respect to this Agreement, Applicable Agent
may, with the prior consent of Required Lenders (but not otherwise), consent to
any modification, supplement or waiver under any of the Loan Documents;
provided, however, that without the prior consent of each Lender, no Agent shall
(except as provided herein or in the Collateral Documents) release any material
portion of the Collateral or otherwise terminate any Lien under any Collateral
Document with respect to any material portion of the Collateral, or agree to
additional obligations being secured by such Collateral, except that no such
consent shall be required, and Term Agent is hereby authorized and instructed to
release any Lien in favor of itself for the benefit of Lender Group covering
Collateral (a) which is the subject of a disposition permitted hereunder
(including the Allowed Sale), (b) which secures Indebtedness to the extent
permitted under Section 6.3, or (c) the value of which does not exceed $50,000
in any Fiscal Year.
12.10 Collateral Matters.
(a) Except as otherwise expressly provided for in this
Agreement, no Agent shall have any obligation whatsoever to any Lender or any
other Person to investigate, confirm or assure that the Collateral exists or is
owned by any Credit Party or is cared for, protected or insured or has been
encumbered, or whether any particular reserves are appropriate, or that the
Liens granted to Term Agent for the benefit of Lender Group herein or pursuant
hereto have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights authorities and powers
granted or available to the applicable Agent in any of the Loan Documents, it
being understood and agreed that (i) in respect of the Collateral, or any act,
omission or event related thereto, each Agent may act in any manner deemed
appropriate, in its respective sole discretion, given such Agent's own interest
in the Collateral as a Lender and (ii) that no Agent shall have any duty or
liability whatsoever to any other Lender, other than liability for its own gross
negligence or willful misconduct as determined by a final judgment of a court of
competent jurisdiction.
(b) Each Lender hereby appoints each other Lender as its agent
for the purpose of perfecting Term Agent's Lien for the benefit of Lender Group
in assets which, in accordance with Article 9 of the Code, can be perfected only
by possession. Should any Lender (other than an Agent) obtain possession of any
such Collateral, such Lender shall notify Applicable Agent thereof and, promptly
upon Applicable Agent's request therefor, shall deliver such Collateral to
Applicable Agent or in accordance with Applicable Agent's instructions.
13. CROSS-GUARANTY
13.1 Cross-Guaranty. Each Borrower hereby agrees that such Borrower is
jointly and severally liable for, and hereby absolutely, irrevocably and
unconditionally guarantees to each Agent and each Lender and their respective
successors and assigns, the full and prompt payment (whether at stated maturity,
by acceleration or otherwise) and performance of, all Obligations owed or
hereafter owing to any Agent or any Lender by each other Borrower, regardless of
whether, pursuant to the Loan Documents, such Borrower is a "borrower" under the
Obligation in question. Each Borrower agrees that its guaranty obligation
hereunder is a continuing guaranty of payment and performance and not of
collection, that its obligations under this Section 13 shall not be discharged
until payment and performance in full of the Obligations has occurred, and that
its obligations under this Section 13 shall be absolute and unconditional,
irrespective of, and unaffected by:
(a) the genuineness, validity, regularity, enforceability or
any future amendment of, or change in, this Agreement, any other Loan
Document or any other agreement, document or instrument to which any
Borrower is or may become a party;
(b) the absence of any action to enforce this Agreement
(including this Section 13) or any other Loan Document or the waiver or
consent by any Agent or any Lender with respect to any of the
provisions thereof;
(c) the existence, value or condition of, or failure to
perfect its Lien against, any security for the Obligations or any
action, or the absence of any action, by any Agent or any Lender in
respect thereof (including the release of any such security);
(d) the insolvency of any Credit Party; or
(e) any other action or circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or
guarantor, including, without limitation, any impairment of the
Collateral, or any part thereof.
Each Borrower shall be regarded, and shall be in the same position, as principal
debtor with respect to the Obligations guaranteed hereunder.
13.2 Waivers by Borrowers. Each Borrower expressly waives all rights it
may have now or in the future under any statute, or at common law, or at law or
in equity, or otherwise, to compel any Agent or any Lender to marshal assets or
to proceed in respect of the Obligations guaranteed hereunder against any other
Credit Party, any other party or against any security for the payment and
performance of the Obligations before proceeding against, or as a condition to
proceeding against, such Borrower. It is agreed between and among each Borrower,
each Agent and each Lender that the foregoing waivers are of the essence of the
transaction contemplated by this Agreement and the other Loan Documents and
that, but for the provisions of this Section 13 and such waivers, each Agent and
each Lender would decline to enter into this Agreement.
13.3 Benefit of Guaranty. Each Borrower agrees that the provisions of
this Section 13 are for the benefit of each Agent and each Lender and each of
their respective successors, transferees, endorsees and assigns, and nothing
herein contained shall impair, as between or among any other Borrower and any
Agent and any Lender, the obligations of such other Borrower under the Loan
Documents.
13.4 Subordination of Subrogation, Etc. Notwithstanding anything to the
contrary in this Agreement or in any other Loan Document, and except as set
forth in Section 13.7, each Borrower hereby expressly and irrevocably
subordinates to payment of the Obligations any and all rights at law or in
equity to subrogation, reimbursement, exoneration, contribution, indemnification
or set off and any and all defenses available to a surety, guarantor or
accommodation co-obligor until the Obligations are indefeasibly paid in full in
cash. Each Borrower acknowledges and agrees that this subordination is intended
to benefit each Agent and each Lender and shall not limit or otherwise affect
such Borrower's liability hereunder or the enforceability of this Section 13,
and that each Agent and each Lender and each of their successors and assigns are
intended third party beneficiaries of the waivers and agreements set forth in
this Section 13.4.
13.5 Election of Remedies. If any Agent or any Lender may, under
applicable law, proceed to realize its benefits under any of the Loan Documents
giving any Agent or any Lender a Lien upon any Collateral, whether owned by any
Borrower or by any other Person, either by judicial foreclosure or by
non-judicial sale or enforcement, any such Agent or any such Lender may, at its
sole option, determine which of its remedies or rights it may pursue without
affecting any of its rights and remedies under this Section 13. If, in the
exercise of any of its rights and remedies, any Agent or any Lender shall
forfeit any of its rights or remedies, including its right to enter a deficiency
judgment against any Borrower or any other Person, whether because of any
applicable laws pertaining to "election of remedies" or the like, each Borrower
hereby consents to such action by any such Agent or any such Lender and waives
any claim based upon such action, even if such action by such Agent or Lender
shall result in a full or partial loss of any rights of subrogation which each
Borrower might otherwise have had but for such action by such Agent or such
Lender. Any election of remedies which results in the denial or impairment of
the right of any Agent or any Lender to seek a deficiency judgment against any
Borrower shall not impair any other Borrower's obligation to pay the full amount
of the Obligations. In the event any Agent or any Lender shall bid at any
foreclosure or trustee's sale or at any private sale permitted by law or the
Loan Documents, such Agent or Lender may bid all or less than the amount of the
Obligations and the amount of such bid need not be paid by such Agent or Lender
but shall be credited against the Obligations. The amount of the successful bid
at any such sale, whether any Agent or any Lender or any other party is the
successful bidder, shall be conclusively deemed to be the fair market value of
the Collateral, and the difference between such bid amount and the remaining
balance of the Obligations shall be conclusively deemed to be the amount of the
Obligations guaranteed under this Section 13, notwithstanding that any present
or future law or court decision or ruling may have the effect of reducing the
amount of any deficiency claim to which any Agent or any Lender might otherwise
be entitled but for such bidding at any such sale.
13.6 Limitation. Notwithstanding any provision to the contrary
contained herein, each Borrower's liability under this Section 13 (which
liability is in any event in addition to amounts for which such Borrower is
liable under Section 1) shall be limited to a maximum aggregate amount equal to
the greatest amount that would not render such Borrower's obligations hereunder
subject to avoidance as a fraudulent transfer or conveyance any provisions of
applicable state law, in each case after giving effect to all other liabilities
of such Borrower, contingent or otherwise, that are relevant under the Section
548 of Title 11 of the United States Code or any provisions of any applicable
state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or
similar statute or common law. (specifically excluding, however, any liabilities
of such Borrower (a) in respect of intercompany debt owed or owing to any other
Borrower or Affiliates of any other Borrower to the extent that such debt would
be discharged in an amount equal to the amount paid by such Borrower under this
Section 13 and (b) under any guarantee of senior unsecured debt or Indebtedness
subordinated in right of payment to the Obligations, which guarantee contains a
limitation as to maximum amount similar to that set forth in this Section 13,
pursuant to which the liability of such Borrower under this Section 13 is
included in the liabilities taken into account in determining such maximum
amount) and after giving effect as assets to the value (as determined under the
applicable provisions of Section 548 of Title 11 of the United States Code or
any provisions of any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law) of any rights to
subrogation, contribution, reimbursement, indemnity or similar rights of such
Borrower pursuant to applicable law or any agreement providing for an equitable
allocation among such Borrower and other Affiliates of any other Borrower of
obligations arising under guarantees by such parties.
13.7 Contribution with Respect to Guaranty Obligations.
(a) To the extent that any Borrower shall make a payment under
this Section 13 (a "Guarantor Payment") of all or any of the Obligations (other
than Loans made to that Borrower for which it is primarily liable) which, taking
into account all other Guarantor Payments then previously or concurrently made
by any other Borrower, exceeds the amount which such Borrower would otherwise
have paid if each Borrower had paid the aggregate Obligations satisfied by such
Guarantor Payment in the same proportion that such Borrower's "Allocable Amount"
(as defined below), as determined immediately prior to such Guarantor Payment,
bore to the aggregate Allocable Amounts of each of the Borrowers as determined
immediately prior to the making of such Guarantor Payment, then, following
indefeasible payment in full in cash of the Obligations and termination of the
Commitments, such Borrower shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Borrower for the
amount of such excess, pro rata based upon their respective Allocable Amounts in
effect immediately prior to such Guarantor Payment.
(b) As of any date of determination, the "Allocable Amount" of
any Borrower shall be equal to the maximum amount of the claim which could then
be recovered from such Borrower under this Section 13 without rendering such
claim voidable or avoidable under Section 548 of Title 11 of the United States
Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law.
(c) This Section 13.7 is intended only to define the relative
rights of Borrowers and nothing set forth in this Section 13.7 is intended to
nor shall impair the obligations of Borrowers, jointly and severally, to pay any
amounts as and when the same shall become due and payable in accordance with the
terms of this Agreement, including Section 13.1. Nothing contained in this
Section 13.7 shall limit the liability of any Borrower to pay the Loans made
directly or indirectly to that Borrower and accrued interest, Fees and expenses
with respect thereto for which such Borrower shall be primarily liable.
(d) The parties hereto acknowledge that the rights of
contribution and indemnification hereunder shall constitute assets of the
Borrower to which such contribution and indemnification is owing.
(e) The rights of the indemnifying Borrowers against other
Credit Parties under this Section 13.7 shall be exercisable upon the full and
indefeasible payment of the Obligations and the termination of the Commitments.
13.8 Liability Cumulative. The liability of Borrowers under this
Section 13 is in addition to and shall be cumulative with all liabilities of
each Borrower to any Agent and any Lender under this Agreement and the other
Loan Documents to which such Borrower is a party or in respect of any
Obligations or obligation of any other Borrower, without any limitation as to
amount, unless the instrument or agreement evidencing or creating such other
liability specifically provides to the contrary.
[signature page follows]
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
BORROWERS:
VIDEO SERVICES CORPORATION
as Borrower, Borrower Representative and
Credit Party
/s/ Michael E. Faribourne Video Services Corporation
Michael E. Fairbourne Senior Vice President - Administration
/s/ Michael E. Fairbourne AF Associates Inc.
Michael E. Fairbourne Vice President - Administration
/s/ Michael E. Fairbourne AFA Products Group, Inc.
Michael E. Fairbourne Vice President - Administration
/s/ Michael E. Fairbourne Audio Plus Video International, Inc.
Michael E. Fairbourne Vice President - Administration
/s/ Michael E. Fairbourne Atlantic Satellite Communications, Inc.
Michael E. Fairbourne Vice President - Administration
/s/ Michael E. Fairbourne Cabana Corp.
Michael E. Fairbourne Vice President - Administration
/s/ Michael E. Fairbourne International Post Finance Limited
Michael E. Fairbourne President
/s/ Michael E. Fairbourne International Post Leasing Limited
Michael E. Fairbourne Vice President - Administration
/s/ Michael E. Fairbourne Manhattan Transfer/Edit, Inc.
Michael E. Fairbourne Vice President - Administration
/s/ Michael E. Fairbourne The Post Edge, Inc.
Michael E. Fairbourne Vice President - Administration
/s/ Michael E. Faribourne Video Rentals, Inc.
Michael E. Fairbourne Vice President - Administration
CREDIT PARTIES:
/s/ Michael E. Fairbourne IPL 235 Corp.
Michael E. Fairbourne President
/s/ Michael E. Fairbourne VSC EXPRESS COURIER, INC.
Michael E. Fairbourne Vice President - Administration
/s/ Michael E. Fairbourne VSC CORPORATION
Michael E. Fairbourne Vice President - Administration
GENERAL ELECTRIC CAPITAL CORPORATION, as Term Agent
/s/ Ann Naegele Vice President - Risk Manager
Ann Naegele
KEYBANK NATIONAL ASSOCIATION, as Revolver Agent
/s/ Craig Kineade Vice President
Craig Kineade
Term Loan A Commitment: $5,000,000 GENERAL ELECTRIC CAPITAL CORPORATION,
Term Loan B Commitment: $15,000,000 as Lender
Revolving Loan Commitment $5,000,000
SCIL Loan Commitment: $10,000,000
/s/ Ann Naegele Vice President - Risk Manager
Ann Naegele
Term Loan A Commitment: $6,000,000 KEYBANK NATIONAL ASSOCIATION,
Revolving Loan Commitment: $6,000,000 as Lender
/s/ Craig Kineade Vice President
Craig Kineade
Term Loan A Commitment: $4,000,000 SUMMIT BANK,
Revolving Loan Commitment: $4,000,000 as Lender
/s/ Andrew DeTullio Vice President
Andrew DeTullio
<PAGE>
ANNEX A (Recitals)
to
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have (unless
otherwise provided elsewhere in the Loan Documents) the following respective
meanings and all Section references in the following definitions shall refer to
Sections of the Agreement:
"A Rated Bank" shall have the meaning set forth in Section 6.2.
"Account Debtor" shall mean any Person who may become obligated to any
Credit Party under, with respect to, or on account of, an Account.
"Accounts" shall mean all "accounts," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party and, in any event,
including (a) all accounts receivable, other receivables, book debts and other
forms of obligations (other than forms of obligations evidenced by Chattel
Paper, Documents or Instruments) now owned or hereafter received or acquired by
or belonging or owing to any Credit Party, whether arising out of goods sold or
services rendered by it or from any other transaction (including any such
obligations which may be characterized as an account or contract right under the
Code), (b) all of each Credit Party's rights in, to and under all purchase
orders or receipts now owned or hereafter acquired by it for goods or services,
(c) all of each Credit Party's rights to any goods represented by any of the
foregoing (including unpaid sellers' rights of rescission, replevin, reclamation
and stoppage in transit and rights to returned, reclaimed or repossessed goods),
(d) all monies due or to become due to any Credit Party under all purchase
orders and contracts for the sale of goods or the performance of services or
both by such Credit Party or in connection with any other transaction (whether
or not yet earned by performance on the part of such Credit Party) now or
hereafter in existence, including the right to receive the proceeds of said
purchase orders and contracts, and (e) all collateral security and guarantees of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing.
"Activation Event" and "Activation Notice" shall have the meanings set
forth in Annex C.
"Advance Date" shall have the meaning set forth in Section 1.17.
"Advances" shall mean Revolving Credit Advances or SCIL Loan Advances,
as the context requires.
"Affiliate" shall mean, with respect to any Person, (a) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, 10% or more of the Stock having ordinary
voting power in the election of directors of such Persons, (b) each Person that
controls, is controlled by or is under common control with such Person, and (c)
each of such Person's officers, directors, joint venturers and partners. For the
purposes of this definition, "control" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise; provided, however, that the term "Affiliate" shall
specifically exclude Lenders.
"Agent" and "Agents" shall have the meanings set forth in the
introductory paragraph of this Agreement.
"Agreement" shall mean the Credit Agreement dated as of April [__],
2000 by and among Borrowers, the other Credit Parties named therein, Lenders and
Agents, as amended from time to time, together with all Annexes, Disclosure
Schedules, Exhibits and other attachments thereto, each as amended from time to
time.
"Allocable Amount" shall have the meaning assigned to it in Section
13.7(b).
"Allowed Sale" shall have the meaning assigned to it in Section 1.5(a).
"Annexes" shall mean the annexes denominated as Annexes A through H in
the Index of Appendices.
"Appendices" shall have the meaning assigned to it in the Recitals to
the Agreement.
"Applicable Agent" shall mean Term Agent, except in matters related to
the administration of or specifically arising out of the Revolving Loan, in
which case it shall mean Revolver Agent.
"Applicable L/C Margin" shall mean the per annum fee, from time to time
in effect, payable with respect to outstanding Letter of Credit Obligations as
determined by reference to Section 1.5(a).
"Applicable Margins" means, collectively, the applicable L/C Margin,
the Applicable Unused Line Fee Margin, the Applicable Revolver LIBOR Margin, the
Applicable Revolver Index Margin, the Applicable Term Loan A LIBOR Margin, the
Applicable Term Loan A Index Margin, the Applicable Term Loan B LIBOR Margin,
the Applicable Term Loan B Index Margin, the Applicable SCIL Loan LIBOR Margin
and the Applicable SCIL Loan Index Margin.
"Applicable Revolver Index Margin" shall mean the per annum interest
rate margin from time to time in effect and payable in addition to the Index
Rate applicable to the Revolving Loan, as determined by reference to Section
1.5(a) of the Agreement.
"Applicable Revolver LIBOR Margin" shall mean the per annum interest
rate from time to time in effect and payable in addition to the LIBOR Rate
applicable to the Revolving Loan, as determined by reference to Section 1.5(a)
of the Agreement.
"Applicable SCIL Loan Index Margin" shall mean the per annum interest
rate from time to time in effect and payable in addition to the Index Rate
applicable to the SCIL Loan, as determined by reference to Section 1.5(a) of the
Agreement.
"Applicable SCIL Loan LIBOR Margin" shall mean the per annum interest
rate from time to time in effect and payable in addition to the LIBOR Rate
applicable to the SCIL Loan, as determined by reference to Section 1.5(a) of the
Agreement.
"Applicable Term Loan A Index Margin" shall mean the per annum interest
rate from time to time in effect and payable in addition to the Index Rate
applicable to Term Loan A, as determined by reference to Section 1.5(a) of the
Agreement.
"Applicable Term Loan A LIBOR Margin" shall mean the per annum interest
rate from time to time in effect and payable in addition to the LIBOR Rate
applicable to Term Loan A, as determined by reference to Section 1.5(a) of the
Agreement.
"Applicable Term Loan B Index Margin" shall mean the per annum interest
rate from time to time in effect and payable in addition to the Index Rate
applicable to Term Loan B, as determined by reference to Section 1.5(a) of the
Agreement.
"Applicable Term Loan B LIBOR Margin" shall mean the per annum interest
rate from time to time in effect and payable in addition to the LIBOR Rate
applicable to Term Loan B, as determined by reference to Section 1.5(a) of the
Agreement.
"Applicable Unused Line Fee Margin" shall mean the per annum fee, from
time to time in effect, payable in respect of Borrowers' non-use of committed
funds pursuant to Section 1.6(b), which fee is determined by reference to
Section 1.5(a).
"Borrower Accounts" shall have the meaning assigned to it in Annex C.
"Borrower Representative" shall mean VSC in its capacity as Borrower
Representative pursuant to the provisions of Section 1.1(d).
"Borrowers" and "Borrower" shall have the respective meanings assigned
thereto in the Recitals to the Agreement.
"Business Day" shall mean any day that is not a Saturday, a Sunday or a
day on which banks are required or permitted to be closed in the State of New
York and, in reference to LIBOR Loans, shall mean any such day that is also a
LIBOR Business Day.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for any fixed assets or improvements or
for replacements, substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of
any property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease of any Person, the amount of the obligation of the lessee thereunder that,
in accordance with GAAP, would appear on a balance sheet of such lessee in
respect of such Capital Lease.
"Cash Management Systems" shall have the meaning assigned to it in
Section 1.6.
"Change of Control" shall mean (a) the acquisition of ownership,
directory or indirectly, beneficially or of record, by any Person or group
(within the meaning of the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder), of equity interests in VSC
representing more than 40% of either the aggregate ordinary voting power or the
aggregate equity value represented by the issued and outstanding equity
interests in VSC; (b) the occupation of a majority of the seats (other than
vacant seats) on the board of directors of VSC by Persons who were neither (i)
nominated by the board of directors of VSC nor (ii) appointed by directors so
nominated, on the effective date of this Agreement; or (c) the failure of Louis
H. Siracusano to remain employed as Chief Executive Officer of VSC, and with
substantially the same responsibilities as those existing on the date of this
Agreement.
"Charges" shall mean all federal, state, county, city, municipal,
local, foreign or other governmental taxes (including taxes owed to the PBGC at
the time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.
"Chattel Paper" shall mean any "chattel paper," as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party, wherever
located.
"Closing Date" shall mean June 7, 2000.
"Closing Checklist" shall mean the schedule, including all appendices,
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Agreement, the other Loan Documents and the
transactions contemplated hereunder and thereunder, substantially in the form
attached hereto as Annex D.
"Code" shall mean the Uniform Commercial Code as the same may, from
time to time, be enacted and in effect in the State of New York; provided,
however, in the event that, by reason of mandatory provisions of law, any or all
of the attachment, perfection or priority of Term Agent's Lien for the benefit
of Lender Group in any Collateral is governed by the Uniform Commercial Code as
enacted and in effect in a jurisdiction other than the State of New York, the
term "Code" shall mean the Uniform Commercial Code as enacted and in effect in
such other jurisdiction solely for purposes of the provisions hereof relating to
such attachment, perfection or priority and for purposes of definitions related
to such provisions.
"Collateral" shall mean the property covered by the Security Agreement,
the Mortgages and the other Collateral Documents and any other property, real or
personal, tangible or intangible, now existing or hereafter acquired, that may
at any time be or become subject to a security interest or Lien in favor of Term
Agent for the benefit of Lender Group to secure the Obligations.
"Collateral Documents" shall mean the Security Agreement, the Pledge
Agreements, the Guaranties, the Mortgages, the Patent Security Agreement, the
Trademark Security Agreement, the Copyright Security Agreement and all similar
agreements entered into guaranteeing payment of, or granting a Lien upon
property as security for payment of, the Obligations.
"Collateral Reports" shall mean the reports with respect to the
Collateral referred to in Annex F.
"Collection Account" shall mean that certain account of Term Agent,
account number 502-328-54 in the name of Term Agent at Bankers Trust Company in
New York, New York, or such other account as Term Agent shall specify.
"Commitment" shall mean, as to each Lender, the sum of each of such
Lender's Revolving Loan Commitment, Term Loan Commitment and SCIL Loan
Commitment, and "Commitments" shall mean the sum of all such Commitments of all
Lenders which shall, in the aggregate, be $55,000,000 on the Closing Date, as
such amounts may be reduced, amortized or adjusted from time to time in
accordance with the Agreement.
"Commitment Termination Date" shall mean (i) in the case of the
Revolving Loan, the earliest of (A) 39 months after the Closing Date, (B) the
date of termination of Lenders' obligations to make Revolving Credit Advances
and/or incur Letter of Credit Obligations or permit existing Revolving Loans to
remain outstanding pursuant to Section 8.2(b) and (C) the date of indefeasible
payment in full by Borrowers of all Revolving Credit Advances and the
cancellation and return (or stand-by guarantee) of all Letters of Credit or the
cash collateralization of all Letters of Credit Obligations pursuant to Annex B,
and the permanent reduction of the Revolving Loan Commitment to zero Dollars
($0), (ii) in the case of Term Loan A, the earliest of (A) 39 months after the
Closing Date, (B) the date of termination of Lenders' obligations to permit the
existing Term Loan A to remain outstanding pursuant to Section 8.2(b), and (C)
the date of indefeasible payment in full by Borrowers of Term Loan A, (iii) in
the case of Term Loan B, the earliest of (A) 63 months after the Closing Date,
(B) the date of termination of Lenders' obligations to permit the existing Term
Loan B to remain outstanding pursuant to Section 8.2(b), (C) the date of
indefeasible payment in full by Borrowers of Term Loan B, and (D) the Working
Capital Termination Date, and (iv) in the case of the SCIL Loan, the earliest of
(A) 84 months after the Closing Date, (B) the date of termination of Lenders'
obligations to permit the existing SCIL Loans to remain outstanding pursuant to
Section 8.2(b), and (C) the Working Capital Termination Date.
"Communications Act" means the Communications Act of 1934, and any
similar or successor Federal statute, and the rules and regulations and
published policies of the FCC thereunder, all as amended and as the same may be
in effect from time to time.
"Compliance Certificate" shall have the meaning assigned to it in Annex
E.
"Concentration Accounts" shall have the meaning assigned to it in Annex
C.
"Contracts" shall mean all "contracts," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of
any Account.
"Control Letter" means a letter agreement between Agents and (i) the
issuer of uncertificated securities with respect to uncertificated securities in
the name of any Credit Party, (ii) a securities intermediary with respect to
securities, whether certificated or uncertificated, securities entitlements and
other financial assets held in a securities account in the name of any Credit
Party, (iii) a futures commission merchant or clearing house with respect to
commodity accounts and commodity contracts held by any Credit Party, whereby,
among other things, the issuer, securities intermediary or futures commission
merchant disclaims any security interest in the applicable financial assets,
acknowledges the Liens of Term Agent for the benefit of Lender Group on such
financial assets, and agrees to follow the instructions or entitlement orders of
Term Agent without further consent by the affected Credit Party.
"Copyright License" shall mean any and all rights now owned or
hereafter acquired by any Credit Party under any written agreement granting any
right to use any Copyright or Copyright registration.
"Copyright Security Agreements" shall mean the Copyright Security
Agreements made in favor of Term Agent for the benefit of Lender Group by each
applicable Credit Party.
"Copyright" or "Copyrights" shall mean all of the following now owned
or hereafter acquired by any Credit Party: (a) all copyrights and General
Intangibles of like nature (whether registered or unregistered), now owned or
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof, and (b) all
reissues, extensions or renewals thereof.
"Credit Parties" shall mean VSC, each other Borrower, and each of their
respective Subsidiaries.
"Current Assets" shall mean, with respect to any Person, all current
assets of such Person as of any date of determination calculated in accordance
with GAAP, but excluding cash, cash equivalents and debts due from Affiliates.
"Current Liabilities" shall mean, with respect to any Person, all
liabilities which should, in accordance with GAAP, be classified as current
liabilities, and in any event shall include all Indebtedness payable on demand
or within one year from any date of determination without any option on the part
of the obligor to extend or renew beyond such year, all accruals for federal or
other taxes based on or measured by income and payable within such year, and the
current portion of long-term debt required to be paid within one year, but
excluding, in the case of Borrowers, the outstanding principal balance of the
Revolving Loan.
"Default" shall mean any event which, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.
"Default Rate" shall have the meaning assigned to it in Section 1.5(d).
"Disbursement Accounts" shall have the meaning assigned to it on Annex
C.
"Disclosure Schedules" shall mean the Schedules prepared by Borrowers
and denominated as Disclosure Schedules 1.4 through 6.7 in the Index of
Appendices.
"Documents" shall mean any "documents," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Dollars" or "$" shall mean lawful currency of the United States of
America.
"EBITDA" shall mean, with respect to any Person for any fiscal period,
an amount equal to (a) consolidated net income of such Person for such period,
minus (b) the sum of (i) income tax credits, (ii) interest income, (iii) gain
from extraordinary items for such period, (iv) any aggregate net gain (but not
any aggregate net loss) during such period arising from the sale, exchange or
other disposition of capital assets by such Person (including any fixed assets,
whether tangible or intangible, all inventory sold in conjunction with the
disposition of fixed assets and all securities), and (v) any other non-cash
gains which have been added in determining consolidated net income, in each case
to the extent included in the calculation of consolidated net income of such
Person for such period in accordance with GAAP, but without duplication, plus
(c) the sum of (i) any provision for income taxes, (ii) Interest Expense, (iii)
loss from extraordinary items for such period, (iv) the amount of non-cash
charges (including depreciation and amortization) for such period, (v) amortized
debt discount for such period, and (vi) the amount of any deduction to
consolidated net income as the result of any grant to any members of the
management or the board of directors of such Person of any Stock, in each case
to the extent included in the calculation of consolidated net income of such
Person for such period in accordance with GAAP, but without duplication. For
purposes of this definition, the following items shall be excluded in
determining consolidated net income of a Person: (A) the income (or deficit) of
any other Person accrued prior to the date it became a Subsidiary of, or was
merged with or consolidated into, such Person or any of such Person's
Subsidiaries; (B) the income (or deficit) of any other Person (other than a
Subsidiary) in which such Person has an ownership interest, except to the extent
any such income has actually been received by such Person in the form of cash
dividends or distributions; (C) the undistributed earnings of any Subsidiary of
such Person to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time permitted by the
terms of any contractual obligation or requirement of law applicable to such
Subsidiary; (D) any restoration to income of any contingency reserve, except to
the extent that provision for such reserve was made out of income accrued during
such period; (E) any write-up of any asset; (F) any net gain from the collection
of the proceeds of life insurance policies; (G) any net gain arising from the
acquisition of any securities, or the extinguishment, under GAAP, of any
Indebtedness, of such Person, (H) in the case of a successor to such Person by
consolidation or merger or as a transferee of its assets, any earnings of such
successor prior to such consolidation, merger or transfer of assets, and (I) any
deferred credit representing the excess of equity in any Subsidiary of such
Person at the date of acquisition of such Subsidiary over the cost to such
Person of the investment in such Subsidiary. For purposes of this definition,
items not included in calculating consolidated net income with respect to any
Person shall not be subtracted in determining EBITDA for such Person and items
not excluded in calculating consolidated net income with respect to any Person
shall not be added in determining EBITDA for such Person. For purposes of
calculating the Leverage Ratio, EBITDA shall be adjusted on a consistent basis
to give effect to all sales, transfers and other dispositions made by the Credit
Parties during the relevant measurement period as if such sales, transfers, or
dispositions had occurred on the first day of such period.
"Environmental Laws" shall mean all applicable federal, state, local
and foreign laws, statutes, ordinances, codes, rules, standards and regulations,
now or hereafter in effect, and in each case as amended or supplemented from
time to time, and any applicable judicial or administrative interpretation
thereof, including any applicable judicial or administrative order, consent
decree, order or judgment, imposing liability or standards of conduct for or
relating to the regulation and protection of human health, safety, the
environment and natural resources (including ambient air, surface water,
groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic
species and vegetation). Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42
U.S.C.ss.ss.9601 et seq.) ("CERCLA"); the Hazardous Materials Transportation
Authorization Act of 1994 (49 U.S.C.ss.ss.5101 et seq.); the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.ss.ss.136 et seq.);
the Solid Waste Disposal Act (42 U.S.C.ss.ss. 6901 et seq.); the
Toxic Substance Control Act (15 U.S.C.ss.ss.2601 et seq.); the Clean Air Act (42
U.S.C.ss.ss.7401 et seq.); the Federal Water Pollution Control
Act (33 U.S.C.ss.ss.1251 et seq.); the Occupational Safety and Health Act
(29 U.S.C.ss.ss.651 et seq.); and the Safe Drinking Water Act
(42 U.S.C.ss.ss. 300(f) et seq.), each as from time to time amended, and any
and all regulations promulgated thereunder, and all analogous
state, local and foreign counterparts or equivalents and any transfer of
ownership notification or approval statutes.
"Environmental Liabilities" shall mean, with respect to any Person, all
liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all fees, disbursements and expenses of counsel, experts and
consultants), fines, penalties, sanctions and interest incurred as a result of
or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.
"Environmental Permits" shall mean all permits, licenses,
authorizations, certificates, approvals or registrations required by any
Governmental Authority under any Environmental Laws.
"Equipment" shall mean all "equipment," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located and,
in any event, including all such Credit Party's machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and
computer equipment with software and peripheral equipment (other than software
constituting part of the Accounts), and all engineering, processing and
manufacturing equipment, office machinery, furniture, materials handling
equipment, tools, attachments, accessories, automotive equipment, trailers,
trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock and other
equipment of every kind and nature, trade fixtures and fixtures not forming a
part of real property, all whether now owned or hereafter acquired, and wherever
situated, together with all additions and accessions thereto, replacements
therefor, all parts therefor, all substitutes for any of the foregoing, fuel
therefor, and all manuals, drawings, instructions, warranties and rights with
respect thereto, and all products and proceeds thereof and condemnation awards
and insurance proceeds with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974
(or any successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Credit Party, any
trade or business (whether or not incorporated) which, together with such Credit
Party, are treated as a single employer within the meaning of Sections 414(b),
(c), (m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to any Credit Party or any ERISA
Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to a
Title IV Plan; (b) the withdrawal of any Credit Party or ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any Credit Party or any ERISA Affiliate from
any Multiemployer Plan; (d) the filing of a notice of intent to terminate a
Title IV Plan or the treatment of a plan amendment as a termination under
Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title
IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit Party
or ERISA Affiliate to make when due required contributions to a Multiemployer
Plan or Title IV Plan unless such failure is cured within 30 days; (g) any other
event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Title IV Plan or Multiemployer Plan or for the
imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 of
ERISA; (i) the loss of a Qualified Plan's qualification or tax exempt status; or
(j) the termination of a Plan described in Section 4064 of ERISA.
"ESOP" shall mean a Plan which is intended to satisfy the requirements
of Section 4975(e)(7) of the IRC.
"Event of Default" shall have the meaning assigned to it in Section
8.1.
"Excess Cash Flow" shall mean, without duplication, with respect to any
Fiscal Year of Borrowers and their Subsidiaries, consolidated net income plus
(a) depreciation, amortization and Interest Expense to the extent deducted in
determining consolidated net income, plus decreases or minus increases (as the
case may be) (b) in Working Capital, minus (c) Capital Expenditures during such
Fiscal Year (excluding the financed portion thereof and excluding any Capital
Expenditures in such Fiscal Year to the extent in excess of the amount permitted
to be made in such Fiscal Year pursuant to clause (a) of Annex G), minus (d)
Interest Expense paid or accrued (excluding any original issue discount,
interest paid in kind or amortized debt discount, to the extent included in
determining Interest Expense) and scheduled principal payments paid or payable
in respect of Funded Debt, plus or minus (as the case may be), (e) extraordinary
gains or losses which are cash items not included in the calculation of net
income, minus (f) mandatory prepayments paid in cash pursuant to Section 1.3,
other than mandatory prepayments made pursuant to Sections 1.3(b)(i), 1.3(b)(iv)
or 1.3(d), plus (g) taxes deducted in determining consolidated net income to the
extent not paid for in cash. For purposes of this definition, "Working Capital"
means Current Assets less Current Liabilities.
"Exhibits" shall mean the Exhibits denominated as Exhibit 1.1(a)(i)
through 9.1(b) in the Index to Appendices.
"Existing Letters of Credit" shall mean the letters of credit issued by
KeyBank in favor of the Borrowers listed, in the amounts specified, in Schedule
A-1.
"FCC" means the Federal Communications Commission, or any other similar
or successor agency of the Federal government administering the Communications
Act.
"FCC License" means any license operating permit or other grant of
authority issued by the FCC in connection with the operation of the business of
any Borrower, now held or hereafter acquired by any Borrowers.
"Fair Salable Balance Sheet" shall mean a balance sheet of Borrowers
prepared in accordance with Section 3.4(d).
"Federal Funds Rate" shall mean, for any day, a floating rate equal to
the weighted average of the rates on overnight Federal funds transactions among
members of the Federal Reserve System, as determined by Term Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any successor thereto.
"Fee Agreement" shall mean the fee agreement between the Credit Parties
and GE Capital dated as of the Closing Date.
"Fees" shall mean any and all fees payable to Agents or Lenders, as the
context requires, pursuant to the Agreement, the Fee Agreement, or any of the
other Loan Documents.
"Financial Covenants" shall have the meaning set forth in Section 6.10
and are as set forth in Annex G.
"Financial Statements" shall mean the consolidated and consolidating
income statements, statements of cash flows and balance sheets of the Credit
Parties delivered in accordance with Section 3.4 of the Agreement and Annex E to
the Agreement.
"Fiscal Month" shall mean any of the monthly accounting periods of
Borrowers.
"Fiscal Quarter" shall mean any of the quarterly accounting periods of
Borrowers, ending on September 30, December 31, March 31 and June 30 of each
year.
"Fiscal Year" shall mean any of the annual accounting periods of
Borrowers ending on June 30 of each year.
"Fixed Charges" shall mean, with respect to any Person for any fiscal
period, (a) the aggregate of all Interest Expense paid or accrued during such
period other than in respect of the SCIL Note and accrued interest on the
Subordinated Notes, plus (b) scheduled payments of principal with respect to
Indebtedness during such period (other than payments with respect to the
Subordinated Notes, to the extent funded with SCIL Loan Advances), plus (c)
Capital Expenditures during such period, plus (d) cash Taxes.
"Fixed Charge Coverage Ratio" shall mean, with respect to any Person
for any fiscal period, the ratio of EBITDA to Fixed Charges.
"Fixtures" shall mean any "fixtures" as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party.
"Funded Debt" shall mean, with respect to any Person, all Indebtedness
for borrowed money evidenced by notes, bonds, debentures, or similar evidences
of Indebtedness and which by its terms matures more than one year from, or is
directly or indirectly renewable or extendible at such Person's option under a
revolving credit or similar agreement obligating the lender or lenders to extend
credit over a period of more than one year from the date of creation thereof,
and specifically including Capital Lease Obligations, synthetic lease
obligations, current maturities of long-term debt, revolving credit and
short-term debt extendible beyond one year at the option of the debtor, and also
including, in the case of Borrowers, the Obligations and, without duplication,
Guaranteed Indebtedness consisting of guaranties of Indebtedness of other
Persons.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect on the Closing Date, consistently applied,
as such term is further defined in Annex G to the Agreement.
"General Intangibles" shall mean any "general intangibles," as such
term is defined in the Code, now owned or hereafter acquired by any Credit
Party, and, in any event, including all right, title and interest which such
Credit Party may now or hereafter have in or under any Contract, all customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights of
indemnification, all books and records, correspondence, credit files, invoices
and other papers, including, without limitation, all tapes, cards, computer runs
and other papers and documents in the possession or under the control of such
Credit Party or any computer bureau or service company from time to time acting
for such Credit Party.
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof, and any agency, department or other
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation
of such Person guaranteeing any indebtedness, lease, dividend, or other
obligation ("primary obligations") of any other Person (the "primary obligor")
in any manner, including any obligation or arrangement of such Person (a) to
purchase or repurchase any such primary obligation, (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or (ii) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency or any balance sheet condition of the
primary obligor, (c) 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 (d) to
indemnify the owner of such primary obligation against loss in respect thereof.
The amount of any Guaranteed Indebtedness at any time shall be deemed to be an
amount equal to the lesser at such time of (x) the stated or determinable amount
of the primary obligation in respect of which such Guaranteed Indebtedness is
made and (y) the maximum amount for which such Person may be liable pursuant to
the terms of the instrument embodying such Guaranteed Indebtedness; or, if not
stated or determinable, the maximum reasonably anticipated liability (assuming
full performance) in respect thereof.
"Guaranties" shall mean, collectively, each Subsidiary Guaranty and any
other guaranty executed by any Guarantor in favor of Term Agent for the benefit
of Lender Group in respect of the Obligations.
"Guarantor Payment" shall have the meaning assigned to it in Section
13.7(a).
"Guarantors" shall mean each Subsidiary of each Borrower, and each
other Person, if any, which executes a guarantee or other similar agreement in
favor of Term Agent for the benefit of Lender Group in connection with the
transactions contemplated by the Agreement and the other Loan Documents.
"Hazardous Material" shall mean any substance, material or waste which
is regulated by or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance which is (a) defined as
a "solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, (b) petroleum or any
fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's), or
any radioactive substance.
"Indebtedness" of any Person shall mean without duplication (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property the payment for which is deferred six months or more, but
excluding obligations to trade creditors incurred in the ordinary course of
business that are not overdue by more than six months unless being contested in
good faith, (b) all reimbursement and other obligations with respect to Letters
of Credit (or other letters of credit, bankers' acceptances and surety bonds
(but without implying such other letters or credit or bankers' acceptances are
permitted under this Agreement)), whether or not matured, (c) all obligations
evidenced by notes, bonds, debentures or similar instruments, (d) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e)
all Capital Lease Obligations and the present value (discounted at the Index
Rate as in effect on the Closing Date) of future rental payments under all
synthetic leases, (f) all obligations of such Person under commodity purchase or
option agreements or other commodity price hedging arrangements, in each case
whether contingent or matured, (g) all obligations of such Person under any
foreign exchange contract, currency swap agreement, interest rate swap, cap or
collar agreement or other similar agreement or arrangement designed to alter the
risks of that Person arising from fluctuations in currency values or interest
rates, in each case whether contingent or matured, (h) all Indebtedness referred
to above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon or in
property or other assets (including accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness, and (i) the Obligations.
"Indemnified Liabilities" shall have the meaning assigned to it in
Section 1.10.
"Indemnified Person" shall have the meaning set forth in Section 1.10.
"Index Rate" shall mean, for any day, a floating rate equal to the
higher of (a) the rate publicly quoted from time to time by The Wall Street
Journal as the "base rate on corporate loans at large U.S. money center
commercial banks" (or, if The Wall Street Journal ceases quoting a base rate of
the type described, the highest per annum rate of interest published by the
Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected Interest Rates" as the Bank prime loan rate or its equivalent), and
(b) the Federal Funds Rate plus 50 basis points per annum. Each change in any
interest rate provided for in the Agreement based upon the Index Rate shall take
effect at the time of such change in the Index Rate.
"Index Rate Loan" shall mean any Loan bearing interest by reference to
the Index Rate.
"Instruments" shall mean any "instrument," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located,
and, in any event, including all certificated securities, all certificates of
deposit, and all notes and other, without limitation, evidences of indebtedness,
other than instruments that constitute, or are a part of a group of writings
that constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses, Patents,
Copyrights, Trademarks, trade secrets and customer lists.
"Intercompany Notes" shall have the meaning assigned to it in Section
6.3.
"Intercreditor Agreement" shall mean that certain Intercreditor
Agreement dated on or about the date of this Agreement, by and between the Term
Agent and People's Capital and Leasing Corp., as amended, modified or
supplemented from time to time.
"Interest Coverage Ratio" shall mean, with respect to any Person for
any period, the ratio of EBITDA to Interest Expense.
"Interest Determination Date" shall mean the last Business Day
immediately prior to the effectiveness of a conversion election whereby the
Loans are converted from LIBOR Loans to Index Rate Loans in accordance with
Section 1.4(e).
"Interest Expense" shall mean, with respect to any Person for any
fiscal period, interest expense (whether cash or non-cash) of such Person
determined in accordance with GAAP for the relevant period ended on such date,
including, in any event, (a) interest expense with respect to any Funded Debt of
such Person and interest expense for the relevant period that has been
capitalized on the balance sheet of such Person, and (b) imputed interest
expense with respect to any synthetic leases referred to in clause (e) of the
defined term "Indebtedness.".
"Interest Payment Date" means (a) as to any Index Rate Loan, July 1,
2000 and the first Business Day of each three month period thereafter, (b) as to
any LIBOR Loan, the last day of the applicable LIBOR Period; provided, however,
if applicable, that in the case of any LIBOR Period greater than three months in
duration, interest shall be payable at three month intervals and on the last day
of such LIBOR Period; and provided, further, however, that, in addition to the
foregoing, each of (x) the date upon which all of the Commitments have been
terminated and the Loans have been paid in full and (y) the applicable
Commitment Termination Date shall be deemed to be an "Interest Payment Date"
with respect to any interest which is then accrued under the Agreement.
"Inventory" shall mean any "inventory," as such term is defined in the
Code, now or hereafter owned or acquired by any Credit Party, wherever located,
and in any event including inventory, merchandise, goods and other personal
property which are held by or on behalf of any Credit Party for sale or lease or
are furnished or are to be furnished under a contract of service, or which
constitute raw materials, work in process or materials used or consumed or to be
used or consumed in such Credit Party's business or in the processing,
production, packaging, promotion, delivery or shipping of the same, including
other supplies.
"Investment Property" shall have the meaning ascribed thereto in
Section 9-115 of the Code in those jurisdictions in which such definition has
been adopted and shall include (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of any Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts held by any Credit
Party; (iv) all commodity contracts held by any Credit Party; and (v) all
commodity accounts held by any Credit Party.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and any
successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor
thereto.
"KeyBank" shall mean KeyBank National Association.
"L/C Issuer" shall mean KeyBank, its successors and assigns.
"Lender" and "Lenders" shall have the meanings set forth in the
introductory paragraph of this Agreement and Section 12.4.
"Lender Group" shall mean, collectively, Term Agent, Administrative
Agent, Revolver Agent, each Lender, and their respective successors and
permitted assigns.
"Letter of Credit Fee" shall have the meaning assigned to such term in
Annex B.
"Letter of Credit Obligations" shall mean all outstanding obligations
incurred by the L/C Issuer at the request of Borrower Representative, whether
direct or indirect, contingent or otherwise, due or not due, in connection with
the issuance of a reimbursement agreement or guaranty by L/C Issuer with respect
to any Letter of Credit. The amount of such Letter of Credit Obligations shall
equal the maximum amount which may be payable by L/C Issuer thereupon or
pursuant thereto.
"Letters of Credit" shall mean standby letters of credit issued for the
account of any Borrower by any L/C Issuer, and bankers' acceptances issued by
any Borrower, for which the L/C Issuer and the applicable Lenders have incurred
Letter of Credit Obligations, and shall include, without limitation the Existing
Letters of Credit.
"Leverage Ratio" shall mean, with respect to Borrowers, on a
consolidated basis, the ratio of (a) Funded Debt as of any date of
determination, to (b) EBITDA for the 12-month period ending on that date of
determination.
"LIBOR Business Day" shall mean a Business Day on which banks in the
city of London are generally open for interbank or foreign exchange
transactions.
"LIBOR Loan" shall mean a Loan or any portion thereof bearing interest
by reference to the LIBOR Rate.
"LIBOR Period" shall mean, with respect to any LIBOR Loan, each period
commencing on a LIBOR Business Day selected by Borrower Representative pursuant
to the Agreement and ending one, two or three months thereafter, as selected by
Borrower Representative's irrevocable notice to Agents as set forth in Section
1.4(e); provided, however, that the foregoing provision relating to LIBOR
Periods is subject to the following:
(e) if any LIBOR Period would otherwise end on a day that is
not a LIBOR Business Day, such LIBOR Period shall be extended to the
next succeeding LIBOR Business Day unless the result of such extension
would be to carry such LIBOR Period into another calendar month in
which event such LIBOR Period shall end on the immediately preceding
LIBOR Business Day;
(f) any LIBOR Period that would otherwise extend beyond the
Commitment Termination Date shall end two LIBOR Business Days prior to
such date;
(g) any LIBOR Period pertaining to a LIBOR Loan that begins on
the last LIBOR Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the
end of such LIBOR Period) shall end on the last LIBOR Business Day of a
calendar month;
(h) Borrower Representative shall select LIBOR Periods so as
not to require a payment or prepayment of any LIBOR Loan during a
LIBOR Period for such Loan; and
(i) Borrower Representative shall select LIBOR Periods so that
there shall be no more than five separate LIBOR Loans in existence at
any one time.
"LIBOR Rate" shall mean for each LIBOR Period, a rate of interest
determined by Term Agent equal to:
(a) the offered rate for deposits in United States Dollars for
the applicable LIBOR Period which appears on Telerate Page 3750 as of
11:00 a.m., London time, on the second full LIBOR Business Day next
preceding the first day of each such LIBOR Period (unless such date is
not a Business Day, in which event the next succeeding Business Day
will be used); divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two LIBOR Business Days
prior to the beginning of such LIBOR Period (including basic,
supplemental, marginal and emergency reserves under any regulations of
the Board of Governors of the Federal Reserve system or other
governmental authority having jurisdiction with respect thereto, as now
and from time to time in effect) for Eurocurrency funding (currently
referred to as "Eurocurrency liabilities" in Regulation D of such
Board) which are required to be maintained by a member bank of the
Federal Reserve System.
If such interest rates shall cease to be available from
Telerate News Service, the LIBOR Rate shall be determined from such
financial reporting service or other information as shall be mutually
acceptable to Term Agent and Borrower Representative.
"License" shall mean any Copyright License, Patent License, Trademark
License, FCC License, or other license operating permit, or other grant of
authority of rights or interests now held or hereafter acquired by any Credit
Party.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the Code or
comparable law of any jurisdiction).
"Litigation" shall have the meaning assigned to it in Section 3.13.
"Liberty Livewire" shall mean Liberty Livewire Corporation, a Delaware
corporation.
"Liberty Livewire Guaranty" shall mean the guaranty of Liberty Livewire
in favor of the Term Agent, for the benefit of the Lenders, of the Obligations,
delivered to the Term Agent when and as contemplated in that certain letter
agreement dated the date of this Agreement, by and among the Lender Group and
the Credit Parties, which guaranty is the form of the Guaranty annexed to the
letter agreement, with appropriate insertions therein.
"Loan Account" means each loan account authorized by Section 1.10.
"Loan Documents" shall mean the Agreement, the Notes, the Collateral
Documents, the Liberty Livewire Guaranty, and all other agreements, instruments,
documents and certificates identified in the Closing Checklist executed and
delivered to, or in favor of, any Agent or any Lender and including all other
pledges, powers of attorney, consents, assignments, contracts, notices, and all
other written matter whether heretofore, now or hereafter executed by or on
behalf of any Credit Party, or any employee of any Credit Party, and delivered
to any Agent or any Lender in connection with the Agreement or the transactions
contemplated hereby. Any reference in the Agreement or any other Loan Document
to a "Loan Document" shall include all appendices, exhibits or schedules
thereto, and all amendments, restatements, supplements or other modifications
thereto, and shall refer to such Agreement as the same may be in effect at any
and all times such reference becomes operative.
"Loans" shall mean, collectively, the Revolving Loan, the Term Loans
and the SCIL Loans, and including, for the avoidance of doubt, any Advances
relating thereto, and "Loan" shall mean any of the foregoing, as the context
requires.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, assets, operations, prospects or financial or other condition of
(i) any Borrower or (ii) the Credit Parties taken as a whole, (b) any Borrower's
ability to pay any of the Loans or any of the other Obligations in accordance
with the terms of the Agreement or the other Loan Documents, (c) the Collateral
or Term Agent's Liens for the benefit of Lender Group on the Collateral or the
priority of such Liens, or (d) any Agent's or any Lender's rights and remedies
under the Agreement and the other Loan Documents. Without limiting the
foregoing, any event or occurrence adverse to one or more Credit Parties which
results or could reasonably be expected to result in costs or liabilities or
loss of revenues, individually or in the aggregate, to any Credit Party in any
30-day period in excess of $750,000 as of any date of determination shall be
deemed to have had Material Adverse Effect.
"Mortgaged Properties" shall have the meaning assigned to it in Annex
D.
"Mortgages" shall mean each of the mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, collateral assignments of leases or other
real estate security documents delivered by any Credit Party to Term Agent for
the benefit of Lender Group with respect to the Mortgaged Properties, all in
form and substance satisfactory to Term Agent.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is
making, is obligated to make, has made or been obligated to make, contributions
on behalf of participants who are or were employed by any of them.
"Net Borrowing Availability" shall mean as of any date of determination
(a) as to all Borrowers, the aggregate Revolving Loan Commitments less the sum
of (x) the Letter of Credit Obligations and (y) the aggregate Revolving Loan
then outstanding to all Borrowers.
"Non-Funding Lender" shall have the meaning set forth in Section
1.1(e).
"Notes" shall mean the Revolving Notes, the Term Notes and the SCIL
Notes, collectively.
"Notice of Conversion" shall have the meaning assigned to it in Section
1.5(e).
"Notice of Default" shall have the meaning assigned to it in Section
12.3.
"Notice of Revolving Credit Advance" shall have the meaning assigned to
it in Section 1.1(a)(i).
"Notice of Revolving Credit Advance Conversion" shall have the meaning
assigned to it in Section 1.5(e)(ii).
"Notice of SCIL Loan Advance" shall have the meaning assigned to it in
Section 1.1(c)(i).
"Obligations" shall mean all loans, advances, debts, liabilities and
obligations, for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to any Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under the Agreement or any of
the other Loan Documents. This term includes all principal, interest (including
all interest which accrues after the commencement of any case or proceeding in
bankruptcy after the insolvency of, or for the reorganization of any Credit
Party, whether or not allowed in such proceeding), Fees, Charges, expenses,
attorneys' fees and any other sum chargeable to any Credit Party under the
Agreement or any of the other Loan Documents.
"Other Lender" shall have the meaning set forth in Section 1.1(e).
"Patent License" shall mean rights under any written agreement now
owned or hereafter acquired by any Credit Party granting any right with respect
to any invention on which a Patent is in existence.
"Patent Security Agreements" shall mean the Patent Security Agreements
made in favor of Term Agent for the benefit of Lender Group by each applicable
Credit Party.
"Patents" shall mean all of the following in which any Credit Party now
holds or hereafter acquires any interest: (a) all letters patent of the United
States or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or Territory thereof, or any other country, and (b) all reissues,
continuations, continuations-in-part or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Permitted Encumbrances" shall mean the following encumbrances: (a)
Liens for taxes or assessments or other governmental Charges not yet due and
payable or being contested pursuant to Section 5.2(b) but only to the extent and
for so long as such Charges are not required to be paid or satisfied as set
forth therein; (b) pledges or deposits of money securing statutory obligations
under workmen's compensation, unemployment insurance, social security or public
liability laws or similar legislation (excluding Liens under ERISA); (c) pledges
or deposits of money securing bids, tenders, contracts (other than contracts for
the payment of money) or leases to which any Credit Party is a party as lessee
made in the ordinary course of business; (d) inchoate and unperfected workers',
mechanics' or similar liens arising in the ordinary course of business, so long
as such Liens attach only to Equipment, Fixtures or Real Estate; (e) carriers',
warehousemen's, suppliers' or other similar possessory liens arising in the
ordinary course of business and securing liabilities in an outstanding aggregate
amount not in excess of $50,000 at any time, so long as such Liens attach only
to Inventory; (f) deposits securing, or in lieu of, surety, appeal or customs
bonds in proceedings to which any Credit Party is a party; (g) any attachment or
judgment lien not constituting an Event of Default under Section 8.1(j); (h)
zoning restrictions, easements, licenses, or other restrictions on the use of
any Real Estate or other minor irregularities in title (including leasehold
title) thereto, so long as the same do not materially impair the use, value, or
marketability of such Real Estate; (i) presently existing or hereinafter created
Liens in favor of Term Agent for the benefit of Lender Group.; and (j) Liens
expressly permitted under clauses (b) and (c) of Section 6.7 of the Agreement.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, other entity
or government (whether federal, state, county, city, municipal, local, foreign,
or otherwise, including any instrumentality, division, agency, body or
department thereof).
"Plan" shall mean, at any time, an employee benefit plan, as defined in
Section 3(3) of ERISA, which any Credit Party maintains, contributes to or has
an obligation to contribute to on behalf of participants who are or were
employed by any Credit Party.
"Pledge Agreement" shall mean each Pledge Agreement of even date
herewith executed by the applicable Credit Party in favor of Term Agent for the
benefit of Lender Group, pledging all Stock of its Subsidiaries, if any, and all
Intercompany Notes owing to or held by it.
"Prior Lender" shall mean, collectively, KeyBank National Association
and Summit Bank.
"Prior Lender Obligations" shall mean those obligations set forth on
Disclosure Schedule (1.3).
"Proceeds" shall mean "proceeds," as such term is defined in the Code
and, in any event, shall include (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to any Credit Party from time to time
with respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to any Credit Party from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of governmental authority), (c) any claim of
any Credit Party against third parties (i) for past, present or future
infringement of any Patent or Patent License, or (ii) for past, present or
future infringement or dilution of any Copyright, Copyright License, Trademark
or Trademark License, or for injury to the goodwill associated with any
Trademark or Trademark License, (d) any recoveries by any Credit Party against
third parties with respect to any litigation or dispute concerning any of the
Collateral, and (e) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral, upon disposition or
otherwise.
"Pro Forma" means the unaudited consolidated and consolidating balance
sheet of Borrowers and their Subsidiaries as of March 31, 1999 after giving pro
forma effect to the Related Transactions.
"Projections" means Borrowers' and their Subsidiaries' forecasted
consolidated and consolidating (a) balance sheets; (b) profit and loss
statements; (c) cash flow statements; and (d) capitalization statements, all
prepared on a Subsidiary by Subsidiary or division by division basis, if
applicable, and otherwise consistent with the historical Financial Statements of
Borrowers and their Subsidiaries, together with appropriate supporting details
and a statement of underlying assumptions.
"Public Offering" shall mean a firm underwritten public offering of
common stock registered on form S-1, S-2 or S-3 under the Securities Act of
1933, as amended, by a nationally recognized investment banking firm, and after
giving effect to which the issuer shall be qualified for listing on the NASDAQ
National Market, the American Stock Exchange or the New York Stock Exchange.
"Qualified Plan" shall mean a Plan which is intended to be
tax-qualified under Section 401(a) of the IRC.
"Real Estate" shall have the meaning assigned to it in Section 3.6.
"Refinancing" shall mean the repayment in full by Borrowers of the
Prior Lender Obligations on the Closing Date.
"Related Transactions" means each borrowing under the Revolving Loan,
the Term Loans and the SCIL Loan, the Refinancing, the Allowed Sale, the payment
of all fees, costs and expenses associated with all of the foregoing and the
execution and delivery of all of the Related Transactions Documents.
"Related Transactions Documents" shall mean the Loan Documents, the
Subordinated Notes, and any documents or instruments executed in connection with
the Allowed Sale.
"Release" shall mean any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection, deposit,
disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Material in the indoor or outdoor environment, including the movement of
Hazardous Material through or in the air, soil, surface water, ground water or
property.
"Required Lenders" shall mean, at any time, (i) all of the Lenders or
(ii) no less than two unaffiliated Lenders holding more than 66 2/3% of the
aggregate Commitments of all Lenders at such time.
"Restricted Payment" shall mean (a) the declaration or payment of any
dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of a Person's Stock,
(b) any payment on account of the purchase, redemption, defeasance, sinking fund
or other retirement of a Person's Stock or any other payment or distribution
made in respect thereof, either directly or indirectly, (c) any payment or
prepayment of principal of, premium, if any, or interest, fees or other charges
on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to,
any Subordinated Debt; (d) any payment made to redeem, purchase, repurchase or
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire Stock of such Person now or hereafter outstanding; (e)
any payment of a claim for the rescission of the purchase or sale of, or for
material damages arising from the purchase or sale of, any shares of such
Person's Stock or of a claim for reimbursement, indemnification or contribution
arising out of or related to any such claim for damages or rescission; (f) any
payment, loan, contribution, or other transfer of funds or other property to any
Stockholder of such Person other than payment of compensation in the ordinary
course of business to stockholders who are employees of such Person; and (g) any
payment of management fees (or other fees of a similar nature) by such Person to
any Stockholder of such Person or their Affiliates.
"Retiree Welfare Plan" shall mean, at any time, a Plan that is a
"welfare plan" as defined in Section 3(2) of ERISA, that provides for continuing
coverage or benefits for any participant or any beneficiary of a participant
after such participant's termination of employment, other than continuation
coverage provided pursuant to Section 4980B of the IRC and at the sole expense
of the participant or the beneficiary of the participant.
"Revolver Agent" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"Revolving Credit Advance" shall have the meaning assigned to it in
Section 1.1(a)(i).
"Revolving Loan" shall mean, as the context may require, at any time,
the sum of (i) the aggregate amount of Revolving Credit Advances outstanding to
any Borrower or to all Borrowers plus (ii) the aggregate Letter of Credit
Obligations incurred on behalf of any Borrower or all Borrowers.
"Revolving Loan Commitment" shall mean, as to each applicable Lender,
the Commitment of such Lender to make Revolving Credit Advances to Borrowers
and/or incur Letter of Credit Obligations pursuant to Section 1.1(a) in the
aggregate principal amount outstanding not to exceed the amount set forth
opposite such Lender's name on the signature page of this Agreement, which
Commitments, in the aggregate, shall be $15,000,000 on the Closing Date, as such
amount may be adjusted, if at all, from time to time in accordance with the
Agreement.
"Revolving Note" shall have the meaning assigned to it in Section
1.1(a)(ii).
"SCIL Loan" shall mean, as the context may require, at any time, the
aggregate amount of SCIL Loan Advances outstanding to any Borrower or to all
Borrowers.
"SCIL Loan Advance" shall have the meaning assigned to it in Section
1.1(c)(i).
"SCIL Loan Commitment" shall mean as to each SCIL Lender, the
commitment of such SCIL Lender to make the SCIL Loan to Borrowers pursuant to
Section 1.1(c) in a principal amount equal to the amount set forth opposite such
Lender's name on the signature page of this Agreement, which commitments shall
be $10,000,000 in the aggregate on the Closing Date.
"SCIL Note" shall have the meaning assigned to it in Section
1.1(c)(ii).
"Security Agreement" shall mean the Security Agreement of even date
herewith entered into among Term Agent and each Credit Party that is a signatory
thereto.
"Solvent" shall mean, with respect to any Person on a particular date,
that on such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including contingent liabilities, of such
Person; (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probably liability of such
Person on its debts as they become absolute and matured; (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature; and
(d) such Person is not engaged in a business or transaction, and is not about to
engage in a business or transaction, for which such Person's property would
constitute an unreasonably small capital. The amount of contingent liabilities
(such as litigation, guarantees and pension plan liabilities) at any time shall
be computed as the amount which, in light of all the facts and circumstances
existing at the time, represents the amount which can be reasonably be expected
to become an actual or matured liability.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests or other equivalents (regardless of how designated) of or
in a corporation, partnership or equivalent entity whether voting or nonvoting,
including common stock, preferred stock or any other "equity security" (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended).
"Subordinated Debt" shall mean the Indebtedness of VSC evidenced by the
Subordinated Notes.
"Subordinated Notes" shall mean those certain 4.00% Convertible
Subordinated Notes dated May 4, 1995 and due May 4, 2003, issued by
International Post Limited in an aggregate original principal amount of
$5,778,500, including such obligations subject of that certain Settlement
Agreement and Release between Barbara D'Ambrogio, David D'Ambrogio, and VSC
(f/k/a International Post Limited), dated as of December 9, 1999, which
Settlement Agreement supersedes the obligations set forth in the $2,540,000 ET
Partnership 4% Convertible Subordinated Note dated May 4, 1995 and due May 4,
2003.
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other 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, directly or indirectly,
owned legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person or one or more Subsidiaries of such Person shall
have an interest (whether in the form of voting or participation in profits or
capital contribution) of more than 50% or of which any such Person is a general
partner or may exercise the powers of a general partner.
"Subsidiary Guaranty" shall mean the Subsidiary Guaranty of even date
herewith executed by each Subsidiary of each Borrower in favor of Term Agent for
the benefit of Lender Group.
"Taxes" shall mean taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of GE Capital by the State of New York or the
State of Connecticut or, in the case of any other Lender, by the jurisdiction
under the law of which such Lender is organized or any political subdivision
thereof, and, as to each of the foregoing, by the United States federal
government.
"Term Agent" shall have the meaning set forth in the introductory
paragraph to this Agreement.
"Term Loan" shall have the meaning assigned to it in Section 1.1(b)(i).
"Term Loan A Commitment" shall mean, as to each Lender, the commitment
of such Lender to make Term Loan A to Borrowers pursuant to Section 1.1(b) in a
principal amount equal to the amount set forth opposite such Lender's name on
the signature page of this Agreement, which commitments shall be $15,000,000 in
the aggregate on the Closing Date.
"Term Loan B Commitment" shall mean, as to each Lender, the commitment
of such Lender to make Term Loan B to Borrowers pursuant to Section 1.1(b) in a
principal amount equal to the amount set forth opposite such Lender's name on
the signature page of this Agreement, which commitments shall be $15,000,000 in
the aggregate on the Closing Date.
"Term Note" shall have the meaning assigned to it in Section 1.1(b)(i).
"Termination Date" shall mean the date on which the Loans have been
indefeasibly repaid in full and all other Obligations under the Agreement and
the other Loan Documents have been completely discharged and any remaining
Letter of Credit Obligations have been cash collateralized, canceled or backed
by stand-by Letters of Credit in accordance with Annex B, and none of Borrowers
shall have any further right (whether or not any conditions therefor have been
satisfied) to borrow any monies, or cause any Letters of Credit to be issued,
under the Agreement.
"Third Party Interactives" shall mean any suppliers of material
services upon which the Credit Parties rely to conduct their respective
operations, including, but not limited to, contract central monitoring stations
and contract invoice printers.
"Title IV Plan" shall mean an employee pension benefit plan, as defined
in Section 3 (2) of ERISA (other than a Multiemployer Plan), which is covered by
Title IV of ERISA, and which any Credit Party or ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.
"Trademark License" shall mean rights under any written agreement now
owned or hereafter acquired by any Credit Party granting any right to use any
Trademark.
"Trademark Security Agreements" shall mean the Trademark Security
Agreements made in favor of Lender by each applicable Credit Party.
"Trademarks" shall mean all of the following now owned or hereafter
acquired by any Credit Party: (a) all trademarks, trade names, corporate names,
business names, trade styles, service marks, logos, other source or business
identifiers, prints and labels on which any of the foregoing have appeared or
appear, designs and general intangibles of like nature (whether registered or
unregistered), now owned or existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any state or territory thereof, or any other country or any
political subdivision thereof; (b) all reissues, extensions or renewals thereof;
and (c) all goodwill associated with or symbolized by any of the foregoing.
"Unfunded Pension Liability" shall mean, at any time, the aggregate
amount, if any, of the sum of (a) the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with Title
IV of ERISA, all determined as of the most recent valuation date for each such
Title IV Plan using the actuarial assumptions for funding purposes in effect
under such Title IV Plan, and (b) for a period of five years following a
transaction which might reasonably be expected to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by any
Credit Party or any ERISA Affiliate as a result of such transaction.
"Weekly Settlement Date" shall have the meaning set forth in Section
1.18(c).
"Working Capital Termination Date" means the date, if any, 39 or more
months after the Closing Date upon which the Borrowers shall fail to have a
committed working capital line of credit (including, without limitation, the
Revolving Loan Commitment) in an amount equal to not less than $15,000,000 from
a nationally recognized bank, financial institution or finance company on terms
and conditions either (i) substantially no less favorable to the Borrowers than
the terms and conditions applicable to the Revolving Loan Commitment, or (ii)
reasonably acceptable to the Term Agent.
"Year 2000 Assessment" shall mean a comprehensive written assessment of
the nature and extent of each Credit Party's Year 2000 Problems and Year 2000
Date-Sensitive Systems/Components, including, without limitation, Year 2000
Problems regarding data exchanges with Third Party Interactives.
"Year 2000 Corrective Actions" shall mean, as to each Credit Party, all
actions necessary to eliminate such Person's Year 2000 Problems, including,
without limitation, computer code enhancements and revisions, upgrades and
replacements of Year 2000 Date-Sensitive Systems/Components, and coordination of
such enhancements, revisions, upgrades and replacements with Third Party
Interactives.
"Year 2000 Corrective Plan" shall mean, with respect to each Credit
Party, a comprehensive plan to eliminate all of its Year 2000 Problems
including, without limitation (i) computer code enhancements or revisions, (ii)
upgrades or replacements of Year 2000 Date-Sensitive Systems/Components, (iii)
test and validation procedures, (iv) an implementation time line and budget and
(v) designation of specific employees who will be responsible for planning,
coordinating and implementing each phase or subpart of the Year 2000 Corrective
Plan.
"Year 2000 Date-Sensitive System/Component" shall mean, as to any
Person, any system software, network software, applications software, data base,
computer file, embedded microchip, firmware or hardware that accepts, creates,
manipulates, sorts, sequences, calculates, compares or outputs calendar-related
data accurately; such systems and components shall include, without limitation,
mainframe computers, file server/client systems, computer workstations, routers,
hubs, other network-related hardware, and other computer-related software,
firmware or hardware and information processing and delivery systems of any kind
and telecommunications systems and other communications processors, security
systems, alarms, elevators and HVAC systems.
"Year 2000 Implementation Testing" shall mean, as to each Credit Party,
(i) the performance of test and validation procedures regarding Year 2000
Corrective Actions on a unit basis and on a system-wide basis; (ii) the
performance of test and validation procedures regarding data exchanges among the
Credit Parties' Year 2000 Date-Sensitive Systems/Components and data exchanges
with Third Party Interactives, and (iii) the design and implementation of
additional Corrective Actions, the need for which has been demonstrated by test
and validation procedures.
"Year 2000 Problems" shall mean, with respect to each Credit Party,
limitations on the capacity or readiness of any such Credit Party's Year 2000
Date-Sensitive Systems/Components to accurately accept, create, manipulate,
sort, sequence, calculate, compare or output calendar date information with
respect to calendar year 1999 or any subsequent calendar year beginning on or
after January 1, 2000 (including leap year computations), including, without
limitation, exchanges of information among Year 2000 Date-Sensitive
Systems/Components of the Credit Parties and exchanges of information among the
Credit Parties and Year 2000 Date-Sensitive Systems/Components of Third Party
Interactives and functionality of peripheral interfaces, firmware and embedded
microchips.
All other undefined terms contained in any of the Loan Documents shall,
unless the context indicates otherwise, have the meanings provided for by the
Code as in effect in the State of New York to the extent the same are used or
defined therein. Unless otherwise specified, references in the Agreement or any
of the Appendices to a Section, subsection or clause refer to such Section,
subsection or clause as contained in the Agreement. The words "herein," "hereof"
and "hereunder" and other words of similar import refer to the Agreement as a
whole, including all Annexes, Exhibits and Schedules, as the same may from time
to time be amended, restated, modified or supplemented, and not to any
particular Section, subsection or clause contained in the Agreement or any such
Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to Persons include their respective successors and assigns (to the
extent and only to the extent permitted by the Loan Documents) or, in the case
of governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include
any amendments of the same and any successor statutes and regulations. Whenever
any provision in any Loan Document refers to the knowledge (or an analogous
phrase) of any Credit Party, such words are intended to signify that such Credit
Party has actual knowledge or awareness of a particular fact or circumstance or
that such Credit Party, if it had exercised reasonable diligence, would have
known or been aware of such fact or circumstance.
B-6
<PAGE>
ANNEX B (Section 1.2)
to
CREDIT AGREEMENT
(a) Issuance. Subject to the terms and conditions of the
Agreement, upon the request by Borrower Representative on behalf of the
applicable Borrower and for such Borrower's account of the Revolver Agent and
the L/C Issuer, the L/C Issuer agrees to issue Letters of Credit from time to
time prior to the Commitment Termination Date with respect to the Revolving Loan
for such Borrower's account; provided, however, that the aggregate amount of all
such Letter of Credit Obligations outstanding at any one time shall not at any
time exceed the lesser of (i) One Million Dollars ($1,000,000) (the "L/C
Sublimit"), or (ii) the Revolving Loan Commitment less the aggregate principal
balance of the Revolving Credit Advances then outstanding. No such Letter of
Credit shall have an expiry date which is more than one year following the date
of issuance thereof, and L/C Issuer shall be under no obligation to incur Letter
of Credit Obligations in respect of any Letter of Credit having an expiry date
which is later than the Commitment Termination Date.
(b) Revolving Credit Advances Automatic. In the event that the
L/C Issuer shall make any payment on or pursuant to any Letter of Credit
Obligation, such payment shall then be deemed automatically to constitute a
Revolving Credit Advance to the applicable Borrower under Section 1.1(a) of the
Agreement regardless of whether a Default or Event of Default shall have
occurred and be continuing any representation or warranty set forth in any Loan
Document is false or misleading, any conditions precedent therefor are satisfied
of any other reason whatsoever (but subject to any then applicable payment
obligations under this Agreement and the other Loan Documents).
(c) Participation by Applicable Lenders.
(i) Each applicable Lender hereby unconditionally and
irrevocably, severally (and not jointly) takes an undivided
participating interest in the obligations of the L/C Issuer under and
in connection with each Letter of Credit in an amount equal to the
percentage of such Lender's Revolving Loan Commitment to the aggregate
Revolving Loan Commitment (the "Revolver Commitment Percentage") of
the amount of such Letter of Credit. In the event that the Revolving
Loan Commitment has been reduced to zero or been terminated, the
Revolver Commitment Percentage shall be based on the Revolving Loan
Commitment immediately prior to such reduction or termination as the
case may be. Each applicable Lender shall be liable to the Issuer for
its Revolver Commitment Percentage of the unreimbursed amount of each
draft drawn and honored under each Letter of Credit. Each applicable
Lender shall also be liable for an amount equal to the product of its
Revolver Commitment Percentage and any amounts paid by the Borrower
pursuant to this Agreement and Annex B that are subsequently rescinded
or avoided, or must otherwise be restored or returned. Such
liabilities shall be unconditional and without regard to the
occurrence of any Default or Event of Default or the compliance by the
Borrowers, or any of them, with any of their obligations under the
Loan Documents or any other reason whatsoever.
(ii) The L/C Issuer shall promptly notify the Revolver
Agent, and the Revolver Agent will promptly notify each applicable
Lender (which notice shall be promptly confirmed in writing), of the
date and the amount of each draft paid under each Letter of Credit
with respect to which a Revolving Advance is being made pursuant to
part (b) of this Annex B, and forthwith upon receipt of such notice,
each such Lender shall make available to the Revolver Agent for the
account of the L/C Issuer its Revolver Commitment Percentage of the
amount of such Revolving Advance at the office of the Revolver Agent
specified in Section 11.10, in lawful money of the United States and
in immediately available funds, before 4:00 p.m., on the day such
notice was given by the Revolver Agent, if such notice was given by
the Agent at or prior to 12:00 noon, on such day, and before 12:00
noon, on the next Domestic Business Day, if such notice was given by
the Revolver Agent after 12:00 noon, on such day. The Revolver Agent
shall deliver the payment made by each applicable Lender pursuant to
the immediately preceding sentence to the L/C Issuer promptly upon
receipt thereof in like funds as received. Each applicable Lender
shall indemnify and hold harmless the Revolver Agent and the L/C
Issuer from and against any and all losses, liabilities (including
liabilities for penalties), actions, suits, judgments, demands, costs
and expenses (including reasonable attorneys' fees and expenses
payable to the L/C Issuer as the issuer of the relevant Letter of
Credit) resulting from any failure on the part of such Lender to pay,
or from any delay in paying the Revolver Agent any amount such Lender
is required to pay in accordance with this Annex B (except in respect
of losses, liabilities or other obligations suffered by the L/C Issuer
to the extent resulting from the gross negligence or willful
misconduct of the L/C Issuer).
(iii) Whenever the Revolver Agent is reimbursed by the
Borrowers, for the account of the L/C Issuer, for any payment under a
Letter of Credit and such payment relates to an amount previously paid
by a Lender in respect of its Revolver Commitment Percentage of the
amount of such payment under such Letter of Credit, the Revolver Agent
will pay over such payment to such Lender (i) before 4:00 p.m. on the
day such payment from the applicable Borrower is received, if such
payment is received at or prior to 12:00 noon on such day, or (ii)
before 12:00 noon on the next succeeding Domestic Business Day, if
such payment from such Borrower is received after 12:00 noon on such
day.
(d)......Cash Collateral. If Borrowers are required to provide
cash collateral for any Letter of Credit Obligations pursuant to the Agreement
prior to the relevant Commitment Termination Date, each Borrower will pay to the
Revolver Agent cash or cash equivalents acceptable to Lender ("Cash
Equivalents") in an amount equal to 105% of the maximum amount then available to
be drawn under each applicable Letter of Credit outstanding for the benefit of
such Borrower. Such amounts or Cash Equivalents shall be held by the Revolver
Agent in a cash collateral account (the "Cash Collateral Account") maintained at
a bank or financial institution acceptable to the Revolver Agent (which may be
the Revolver Agent). The Cash Collateral Account shall be in the name of the
applicable Borrower and shall be pledged to, and subject to the control of, the
Revolver Agent, in a manner satisfactory to the Revolver Agent. Each Borrower
hereby pledges and grants to the Revolver Agent, for the benefit of the Lenders,
a security interest in all such funds and Cash Equivalents held in the Cash
Collateral Account from time to time and all proceeds thereof, as security for
the payment of all amounts due in respect of the Letter of Credit Obligations
and other Obligations, whether or not then due. The Agreement, including this
Annex B, shall constitute a security agreement under applicable law.
If any Letter of Credit Obligations, whether or not then due
and payable, shall for any reason be outstanding on the Commitment Termination
Date, Borrowers shall either (i) provide to Revolver Agent cash collateral
therefor in the manner described above, or (ii) cause all such Letters of Credit
and guaranties thereof to be canceled and returned, or (iii) deliver to Revolver
Agent a stand-by letter (or letters) of credit in guaranty of such Letter of
Credit Obligations, which stand-by letter (or letters) of credit shall be of
like tenor and duration as, and in an amount equal to 105% of the aggregate
maximum amount then available to be drawn under, the Letters of Credit to which
such outstanding Letter of Credit Obligations relate and shall be issued by a
Person, and shall be subject to such terms and conditions, as are satisfactory
to the Revolver Agent in its sole discretion.
From time to time after funds or Cash Equivalents are
deposited in the Cash Collateral Account by any Borrower, whether before or
after the Commitment Termination Date, Revolver Agent may apply such funds or
Cash Equivalents then held in the Cash Collateral Account to the payment of any
amounts, in such order as Revolver Agent may elect, as shall be or shall become
due and payable by such Borrower to Revolver Agent with respect to such Letter
of Credit Obligations of such Borrower and, upon the satisfaction in full of all
Letter of Credit Obligations of such Borrower, to any other Obligations of any
Borrower then due and payable.
No Borrower nor any Person claiming on behalf of or through
any Borrower shall have any right to withdraw any of the funds or Cash
Equivalents held in the Cash Collateral Account, except that upon the
termination of all Letter of Credit Obligations and the payment of all amounts
payable by Borrowers to Lender in respect thereof, any funds remaining in the
Cash Collateral Account shall be applied to other Obligations when due and owing
and upon payment in full of such Obligations, any remaining amount shall be paid
to Borrowers or as otherwise required by law.
(e) Fees and Expenses. Borrowers agree to pay (i) to Revolver
Agent, as compensation to Lenders for Letter of Credit Obligations incurred
hereunder, (x) all costs and expenses incurred by Lender on account of such
Letter of Credit Obligations, and (y) for each month during which any Letter of
Credit Obligation shall remain outstanding, a fee (the "Letter of Credit Fee")
in an amount equal to the Applicable L/C Margin from time to time in effect
multiplied by the maximum amount available from time to time to be drawn under
the applicable Letter of Credit. Such fee shall be paid to Revolver Agent in
arrears on the first day of each month. In addition, Borrower shall pay to any
L/C Issuer, on demand, such fees (including all per annum fees), charges and
expenses of such L/C Issuer in respect of the issuance, negotiation, acceptance,
amendment, transfer and payment of such Letter of Credit or otherwise payable
pursuant to the application and related documentation under which such Letter of
Credit is issued.
(f)......Request for Incurrence of Letter of Credit
Obligations. Borrower Representative shall give the Revolver Agent and the L/C
Issuer at least three (3) Business Days prior written notice requesting the
incurrence of any Letter of Credit Obligation, specifying the date such Letter
of Credit Obligation is to be incurred, identifying the beneficiary and the
Borrower to which such Letter of Credit Obligation relates and describing the
nature of the transactions proposed to be supported thereby. The notice shall be
accompanied by the form of the Letter of Credit (which shall be acceptable to
the L/C Issuer) to be guarantied and, to the extent not previously delivered to
Lender, copies of all agreements between any Borrower and the L/C issuer
pertaining to the issuance of Letters of Credit. Notwithstanding anything
contained herein to the contrary, Letter of Credit applications by Borrower
Representative and approvals by Lender and the L/C Issuer may be made and
transmitted pursuant to electronic codes and security measures mutually agreed
upon and established by and among Borrower Representative, the Revolver Agent
and the L/C Issuer.
(g)......Obligation Absolute. The obligation of Borrowers to
reimburse the L/C Issuer for payments made with respect to any Letter of Credit
Obligation shall be absolute, unconditional and irrevocable, without necessity
of presentment, demand, protest or other formalities. Such obligations of
Borrowers shall be paid strictly in accordance with the terms hereof under all
circumstances, including the following circumstances:
(i) any lack of validity or enforceability of any
Letter of Credit or the Agreement or the other Loan Documents or any
other agreement;
(ii) the existence of any claim, set-off, defense or
other right which any Borrower or any of their respective Affiliates
may at any time have against a beneficiary or any transferee of any
Letter of Credit (or any Persons or entities for whom any such
transferee may be acting), Letter of Credit Issuer, Revolver Agent, or
any other Person, whether in connection with the Agreement, the Letter
of Credit, the transactions contemplated herein or therein or any
unrelated transaction (including any underlying transaction between
any Borrower or any of their respective Affiliates and the beneficiary
for which the Letter of Credit was procured);
(iii) any draft, demand, 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) payment by Revolver Agent (except as otherwise
expressly provided in paragraph (g)(ii)(C) below) or any L/C Issuer
under any Letter of Credit or guaranty thereof against presentation of
a demand, draft or certificate or other document which does not comply
with the terms of such Letter of Credit or such guaranty;
(v) any other circumstance or happening whatsoever,
which is similar to any of the foregoing; or
(vi) the fact that a Default or an Event of Default
shall have occurred and be continuing.
(h)......Indemnification; Nature of Revolver Agent's Duties.
(i) In addition to amounts payable as elsewhere
provided in the Agreement, Borrowers hereby agree to pay and to
protect, indemnify, and save Revolver Agent, Letter of Credit Issuer,
and the Lenders harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including
attorneys' fees and allocated costs of internal counsel) which
Revolver Agent, Letter of Credit Issuer, and/or the Lenders may incur
or be subject to as a consequence, direct or indirect, of the (A)
issuance of any Letter of Credit or guaranty thereof, or (B) the
failure of Revolver Agent or any L/C Issuer to honor a demand for
payment under any Letter of Credit or guaranty thereof as a result of
any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto government or Governmental Authority, in
each case other than to the extent solely as a result of the gross
negligence or willful misconduct of Revolver Agent, Letter of Credit
Issuer, and/or the Lenders, or any of them (as finally determined by a
court of competent jurisdiction).
(ii) As between the Revolver Agent, Lenders and
Borrowers, Borrowers assume all risks of the acts and omissions of, or
misuse of any Letter of Credit by beneficiaries of any Letter of
Credit. In furtherance and not in limitation of the foregoing, to the
fullest extent permitted by law, neither Revolver Agent nor any Lender
shall be responsible: (A) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document issued by any
party in connection with the application for and issuance of any
Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (B)
for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit or
the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (C)
for failure of the beneficiary of any Letter of Credit to comply fully
with conditions required in order to demand payment under such Letter
of Credit; provided that, in the case of any payment by L/C Issuer
under any Letter of Credit or guaranty thereof, L/C Issuer shall be
liable to the extent such payment was made solely as a result of its
gross negligence or willful misconduct (as finally determined by a
court of competent jurisdiction) in determining that the demand for
payment under such Letter of Credit or guaranty thereof complies on
its face with any applicable requirements for a demand for payment
under such Letter of Credit or guaranty thereof; (D) for errors,
omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or
not they be in cipher; (E) for errors in interpretation of technical
terms; (F) for any loss or delay in the transmission or otherwise of
any document required in order to make a payment under any Letter of
Credit or guaranty thereof or of the proceeds thereof; (G) for the
credit of the proceeds of any drawing under any Letter of Credit or
guaranty thereof; and (H) for any consequences arising from causes
beyond the control of Revolver Agent, Letter of Credit Issuer, or any
Lender. None of the above shall affect, impair, or prevent the vesting
of any of Lender's rights or powers hereunder or under the Agreement.
(iii) Nothing contained herein shall be deemed to limit
or to expand any waivers, covenants or indemnities made by Borrowers
in favor of any L/C Issuer in any letter of credit application,
reimbursement agreement or similar document, instrument or agreement
between or among Borrowers and such L/C Issuer.
C-3
<PAGE>
ANNEX C (Section 1.5)
to
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEMS
Each Borrower shall, and shall cause its Subsidiaries to,
establish and maintain the Cash Management Systems described below:
(a)......On or before the Closing Date and until the
Termination Date, each Borrower shall (i) establish lock boxes ("Lock Boxes") at
one or more of the banks set forth on Disclosure Schedule (3.19), and shall
request in writing and otherwise take such reasonable steps to ensure that all
Account Debtors forward payment directly to such Lock Boxes, and (ii) deposit
and cause its Subsidiaries to deposit or cause to be deposited promptly, and in
any event no later than the first Business Day after the date of receipt
thereof, all cash, checks, drafts or other similar items of payment relating to
or constituting payments made in respect of any and all Collateral (whether or
not otherwise delivered to a Lock Box) into bank accounts in such Borrower's
name or any such Subsidiary's name (collectively, the "Borrower Accounts") at
banks set forth on Disclosure Schedule (3.19) (each, a "Relationship Bank"). On
or before the Closing Date, each Borrower shall have established a concentration
account in its name (each a "Concentration Account" and collectively, the
"Concentration Accounts") at the bank or banks which shall be designated as the
Concentration Account bank for each such Borrower on Disclosure Schedule (3.19)
(each a "Concentration Account Bank" and collectively, the "Concentration
Account Banks"), which banks shall be satisfactory to Agents.
(b)......On or before the Closing Date (or such later date as
Agents shall consent to in writing), each Concentration Account Bank, each bank
where a Disbursement Account is located and all other Relationship Banks, shall
have entered into blocked account agreements with Agents and Borrowers and
Subsidiaries thereof, as applicable, in form and substance acceptable to Agents,
which shall become operative on or prior to the Closing Date. Each such blocked
account agreement shall provide, among other things, that (i) all items of
payment deposited in such account and proceeds thereof deposited in the
applicable Concentration Account are held by such bank as agent or
bailee-in-possession for Agents as their respective interests appear, (ii) the
bank executing such agreement has no rights of setoff or recoupment or any other
claim against such account, as the case may be, other than for payment of its
service fees and other charges directly related to the administration of such
account and for returned checks or other items of payment, and (iii) from and
after the Closing Date (A) with respect to banks at which a Borrower Account is
located, such bank agrees, from and after the receipt of a notice (an
"Activation Notice") from Agents (which Activation Notice may be given by Agents
at any time at which (1) a Default or Event of Default shall have occurred and
be continuing, (2) Agents reasonably believe based upon information available to
them that a Default or an Event of Default is likely to occur; (3) Agents
reasonably believe that an event or circumstance which is likely to have a
Material Adverse Effect has occurred, or (4) Agents have reasonable grounds to
question the integrity of any Borrower's Cash Management Systems or any
Borrower's compliance with the provisions of this Annex C or any other
provisions of the Loan Documents to the extent related to such Cash Management
Systems (any of the foregoing being referred to herein as an "Activation
Event")), to forward immediately all amounts in each Borrower Account to such
Borrower's Concentration Account Bank and to commence the process of daily
sweeps from such Borrower Account into the applicable Concentration Account and
(B) with respect to each Concentration Account Bank, such bank agrees from and
after the receipt of an Activation Notice from Agents upon the occurrence of an
Activation Event, to immediately forward all amounts received in the applicable
Concentration Account to the Collection Account through daily sweeps from such
Concentration Account into the Collection Account. From and after the date
Agents have delivered an Activation Notice to any bank with respect to any
Borrower Account(s), no Borrower shall, or shall cause or permit any Subsidiary
thereof to, accumulate or maintain cash in disbursement or payroll accounts as
of any date of determination in excess of checks outstanding against such
accounts as of that date and amounts necessary to meet minimum balance
requirements.
(c)......So long as no Default or Event of Default has
occurred and is continuing, Borrowers may amend Disclosure Schedule (3.19) to
add or replace a Relationship Bank, Lock Box or Borrower Account or to replace
any Concentration Account or any Disbursement Account; provided, however, that
(i) Agents shall have consented in writing in advance to the opening of such
account or Lock Box with the relevant bank and (ii) prior to the time of the
opening of such account or Lock Box, the applicable Borrower or the Subsidiaries
thereof, as applicable, and such bank shall have executed and delivered to
Agents a blocked account agreement among Agents and Borrowers and Subsidiaries
thereof, in form and substance satisfactory to Agents. Borrowers shall close any
of their accounts (and establish replacement accounts in accordance with the
foregoing sentence) promptly and in any event within 30 days of notice from
Agents that the creditworthiness of any bank holding an account is no longer
acceptable in Agents' reasonable judgment, or as promptly as practicable and in
any event within 60 days of notice from Agents that the operating performance,
funds transfer or availability procedures or performance with respect to
accounts or lockboxes of the bank holding such accounts or Agents' liability
under any blocked account agreement with such bank is no longer acceptable in
Agents' reasonable judgment.
(d)......The Lock Boxes, Borrower Accounts, Disbursement
Accounts and the Concentration Accounts shall be cash collateral accounts, with
all cash, checks and other similar items of payment in such accounts securing
payment of the Loans and all other Obligations, and in which each Borrower and
each Subsidiary thereof shall have granted a Lien to Term Agent for the benefit
of Lender Group pursuant to the Security Agreement.
(e)......All amounts deposited in the Collection Account shall
be deemed received by Term Agent in accordance with Section 1.8 of the Agreement
and shall be applied (and allocated) by Applicable Agent in accordance with
Section 1.9 of the Agreement. In no event shall any amount be so applied unless
and until such amount shall have been credited in immediately available funds to
the Collection Account.
Each Borrower may maintain, in its name, an account (each a
"Disbursement Account" and collectively, the "Disbursement Accounts") at a bank
acceptable to Revolver Agent into which applicable Lender shall, from time to
time, deposit proceeds of Revolving Credit Advances made to such Borrower
pursuant to Section 1.1 for use by such Borrower solely in accordance with the
provisions of Section 1.4.
(g)......Borrowers shall and shall cause its Affiliates,
officers, employees, agents, directors or other Persons acting for or in concert
with such Borrower (each a "Related Person") to (i) hold in trust for Term Agent
for the benefit of Lender Group all checks, cash and other items of payment
received by Borrowers or any such Related Person, and (ii) within one Business
Day after receipt by Borrowers or any such Related Person of any checks, cash or
other items or payment, deposit the same into a Borrower Account of Borrowers.
Borrowers and each Related Person thereof acknowledges and agrees that all cash,
checks or items of payment constituting proceeds of Collateral are the property
of Term Agent for the benefit of Lender Group. All proceeds of the sale or other
disposition of any Collateral, shall be deposited directly into the applicable
Borrower Accounts.
D-5
<PAGE>
ANNEX D (Section 2.1(a))
to
CREDIT AGREEMENT
SCHEDULE OF ADDITIONAL CLOSING DOCUMENTS
In addition to, and not in limitation of, the conditions described in Section
2.1 of the Agreement, pursuant to Section 2.1(a), the following items must be
received by Term Agent in form and substance satisfactory to Term Agent on or
prior to the Closing Date (each capitalized term used but not otherwise defined
herein shall have the meaning ascribed thereto in Annex A to the Agreement):
A. Appendices. All Appendices to the Agreement, in form and substance
satisfactory to Term Agent.
B. Revolving Notes, Term Notes and SCIL Notes. Duly executed originals
of the Revolving Notes, Term Notes and SCIL Notes, each dated the Closing Date.
C. Security Agreement. Duly executed originals of the Security
Agreement, dated the Closing Date, and all instruments, documents and agreements
executed pursuant thereto.
D. Insurance. Satisfactory evidence that the insurance policies
required by Section 5.4 are in full force and effect, together with appropriate
evidence showing loss payable or additional insured clauses or endorsements, as
requested by Term Agent, in favor of Term Agent for the benefit of Lender Group.
E. Security Interests and Code Filings.
(a)......Evidence satisfactory to Term Agent that Term Agent
for the benefit of Lender Group has a valid and perfected first priority
security interest in the Collateral, including (i) such documents duly executed
by each Credit Party (including financing statements under the Code and other
applicable documents under the laws of any jurisdiction with respect to the
perfection of Liens) as Term Agent may request in order to perfect its security
interests for the benefit of Lender Group in the Collateral and (ii) copies of
Code search reports listing all effective financing statements that name any
Credit Party as debtor, together with copies of such financing statements, none
of which shall cover the Collateral, except for those relating to the Prior
Lender Obligations (all of which shall be terminated on the Closing Date).
(b)......Evidence satisfactory to Term Agent, including
copies, of all UCC-1 and other financing statements filed in favor of any Credit
Party with respect to each location, if any, at which Inventory may be
consigned.
(c)......Control Letters from (i) all issuers of
uncertificated securities and financial assets held by each Borrower, (ii) all
securities intermediaries with respect to all securities accounts and securities
entitlements of each Borrower, and (iii) all futures commission agents and
clearing houses with respect to all commodities contracts and commodities
accounts held by any Borrower.
F. Payoff Letter; Termination Statements. Copies of a duly executed
payoff letter, in form and substance satisfactory to Term Agent, by and between
all parties to the Prior Lender loan documents evidencing repayment in full of
all Prior Lender Obligations, together with (a) UCC-3 or other appropriate
termination statements, in form and substance satisfactory to Term Agent,
manually signed by each Prior Lender releasing all liens of Prior Lender upon
any of the personal property of each Credit Party, and (b) termination of all
blocked account agreements, bank agency agreements or other similar agreements
or arrangements or arrangements in favor of any Prior Lender or relating to the
Prior Lender Obligations.
G. Intellectual Property Security Agreements. Duly executed originals
of Trademark Security Agreements, Copyright Security Agreements and Patent
Security Agreements, each dated the Closing Date and signed by each Credit Party
which owns Trademarks, Copyrights or Patents, as applicable, all in form and
substance satisfactory to Term Agent, together with all instruments, documents
and agreements executed pursuant thereto.
H. Subsidiary Guaranties. Guaranties executed by and each direct and
indirect Subsidiary of VSC that is not a Borrower in favor of Term Agent for the
benefit of Lender Group.
I. Initial Notices of Revolving Credit Advance and SCIL Loan Advance.
Duly executed originals of a Notice of Revolving Credit Advance and Notice of
SCIL Loan Advance, dated the Closing Date, with respect to the initial Revolving
Credit Advance and the initial SCIL Loan Advance to be requested by Borrower
Representative on the Closing Date.
J. Letter of Direction. Duly executed originals of a letter of
direction from Borrower Representative addressed to Term Agent with respect to
the disbursement on the Closing Date of the proceeds of the Term Loan and the
initial Revolving Credit Advance and the initial SCIL Loan Advance.
K. Cash Management System; Blocked Account Agreements. Evidence
satisfactory to Term Agent that, as of the Closing Date, Cash Management Systems
complying with Annex C to the Agreement have been established and are currently
being maintained in the manner set forth in such Annex C, together with copies
of duly executed blocked account and lock box agreements, satisfactory to Term
Agent, with the banks as required by Annex C.
L. Charter and Good Standing. For each Credit Party, such Person's (a)
charter and all amendments thereto, (b) good standing certificates (including
verification of tax status) in its state of incorporation and (c) good standing
certificates (including verification of tax status) and certificates of
qualification to conduct business in each jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification,
each dated a recent date prior to the Closing Date and certified by the
applicable Secretary of State or other authorized Governmental Authority.
M. Bylaws and Resolutions. For each Credit Party, (a) such Person's
bylaws, together with all amendments thereto and (b) resolutions of such
Person's Board of Directors and stockholders, approving and authorizing the
execution, delivery and performance of the Loan Documents to which such Person
is a party and the transactions to be consummated in connection therewith, each
certified as of the Closing Date by such Person's corporate secretary or an
assistant secretary or equivalent Person as being in full force and effect
without any modification or amendment.
N. Incumbency Certificates. For each Credit Party, signature and
incumbency certificates of the officers of each such Person executing any of the
Loan Documents, certified as of the Closing Date by such Person's corporate
secretary or an assistant secretary or equivalent Person as being true,
accurate, correct and complete.
O. Opinions of Counsel. Duly executed originals of opinions of Piper
Marbury Rudnick & Wolfe LLP, counsel for the Credit Parties, together with any
local counsel opinions requested by Term Agent, each in form and substance
satisfactory to Lender and its counsel, dated the Closing Date, and each
accompanied by a letter addressed to such counsel from the Credit Parties,
authorizing and directing such counsel to address its opinion to each Agent and
each Lender and to include in such opinion an express statement to the effect
that Lender is authorized to rely on such opinion.
P. Pledge Agreements. Duly executed originals of each of the Pledge
Agreements accompanied by (as applicable) (a) share certificates representing
all of the outstanding Stock being pledged pursuant to such Pledge Agreement and
stock powers for such share certificates executed in blank and (b) the original
Intercompany Notes and other instruments evidencing Indebtedness being pledged
pursuant to such Pledge Agreement, duly endorsed in blank.
Q. Accountants' Letters. A letter from the Credit Parties to their
independent auditors authorizing the independent certified public accountants of
the Credit Parties to communicate with Agents and Lenders in accordance with
Section 4.2, and a letter from such auditors acknowledging each Agent's and each
Lender's reliance on the auditor's certification of past Financial Statements.
R. Appointment of Agent for Service. An appointment of Corporation
Service Company as each Credit Party's agent for service of process.
S. Officer's Certificate. Term Agent shall have received duly executed
originals of a certificate of the Chief Executive Officer and Chief Accounting
Officer of Borrower Representative, dated the Closing Date, stating that, since
June 30, 1999 (a) no event or condition has occurred or is existing which could
reasonably be expected to have a Material Adverse Effect; (b) there has been no
material adverse change in the industry in which any Borrower operates; (c) no
Litigation has been commenced which, if successful, would have a Material
Adverse Effect or could challenge any of the transactions contemplated by the
Agreement and the other Loan Documents; (d) there have been no Restricted
Payments made by any Credit Party; and (e) there has been no material increase
in liabilities, liquidated or contingent, and no material decrease in assets of
any Borrower or any of its Subsidiaries.
T. Waivers. Term Agent shall have received landlord waivers and
consents, bailee letters and mortgagee agreements in form and substance
satisfactory to Term Agent, in each case as required pursuant to Section 5.9.
U. Mortgages. Mortgages covering all of the Real Estate (the "Mortgage
Properties") together with: (a) title insurance policies, current as-built
surveys, zoning letters and certificates of occupancy, in each case satisfactory
in form and substance to Term Agent, in its sole discretion; (b) evidence that
counterparts of the Mortgages have been recorded in all places to the extent
necessary or desirable, in the judgment of Term Agent, to create a valid and
enforceable first priority lien (subject to Permitted Encumbrances) on each
Mortgaged Property in favor Term Agent for the benefit of Lender Group (or in
favor of such other trustee as may be required or desired under local law); and
(c) an opinion of counsel in each state in which any Mortgaged Property is
located in form and substance and from counsel satisfactory to Term Agent. V.
Subordination and Intercreditor Agreements. Term Agent shall have received any
and all subordination or intercreditor agreements, all in form and substance
reasonably satisfactory to Term Agent, in its sole discretion, as Term Agent
shall have deemed necessary or appropriate with respect to any Indebtedness of
any Credit Party, including, without limitation, the Subordinated Notes.
W. Environmental Reports. Term Agent shall have received Phase I
Environmental Site Assessment Reports, consistent with American Society for
Testing and Materials (ASCM) Standard E 1527-94 and applicable state
requirements, on all of the Real Estate, dated no more than 6 months prior to
the Closing Date, prepared by environmental engineers satisfactory to Lender,
all in form and substance satisfactory to Term Agent, in its sole discretion;
and Term Agent shall have further received such environmental review and audit
reports, including Phase II reports, with respect to the Real Estate of any
Credit Party as Term Agent shall have requested, and Term Agent shall be
satisfied, in its sole discretion, with the contents of all such environmental
reports. Term Agent shall have received letters executed by the environmental
firms preparing such environmental reports, in form and substance satisfactory
to Term Agent, authorizing Agents and Lender to rely on such reports.
X. Appraisals. Term Agent shall have received appraisals as to all
Equipment, each of which shall be in form and substance satisfactory to Term
Agent.
Y. Audited Financials; Financial Condition. Term Agent shall have
received Borrowers' final audited Financial Statements for the Fiscal Year ended
June 30, 1999, audited by Ernst & Young LLP, and Borrowers unaudited Financial
Statements for the Fiscal Quarter ended December 31, 1999. Each Borrower shall
have provided Term Agent with its current operating statements, a consolidated
and consolidating balance sheet and statement of cash flows, the Pro Forma,
Projections and Fair Salable Balance Sheet with respect to such Borrower
certified by the Chief Financial Officer of Borrower Representative, in each
case in form and substance satisfactory to Term Agent, and Term Agent shall be
satisfied, in its sole discretion, with all of the foregoing. Term Agent shall
have further received a certificate of the Chief Executive Officer or the Chief
Financial Officer of Borrower Representative, based on such Pro Forma and
Projections, to the effect that (a) each Borrower will be Solvent upon the
consummation of the transactions contemplated herein; (b) the Pro Forma fairly
presents the financial condition of each such Borrower as of the date thereof
after giving effect to the transactions contemplated by the Loan Documents; (c)
the Projections are based upon estimates and assumptions stated therein, all of
which Borrower Representative believes to be reasonable and fair in light of
current conditions and current facts known to Borrower Representative and, as of
the Closing Date, reflect Borrower Representative's good faith and reasonable
estimates of it the future financial performance and of the other information
projected therein for the period set forth therein; (d) the Fair Salable Balance
Sheet was prepared on the same basis as the Pro Forma, except that each
Borrowers' assets are set forth therein at their fair salable values on a going
concern basis and the liabilities set forth therein include all contingent
liabilities of Borrowers stated at the reasonably estimated present values
thereof; and (e) containing such other statements with respect to the solvency
of each such Borrower and matters related thereto as Term Agent shall request.
Z. Other Documents. Such other certificates, documents and agreements
respecting any Credit Party as Term Agent may, in its sole discretion, request.
E-3
<PAGE>
ANNEX E (Section 4.1(a))
to
CREDIT AGREEMENT
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
Borrowers shall deliver or cause to be delivered to Term Agent
the following:
(a)......Monthly Financials. Within 30 days after the end of
each Fiscal Month, financial information regarding Borrowers and their
Subsidiaries, certified by the Chief Accounting Officer of Borrower
Representative, consisting of consolidated and consolidating (i) unaudited
statements of income for such Fiscal Month, setting forth in comparative form
the figures for the corresponding period in the prior year and the figures
contained in the Projections for such Fiscal Year, all prepared in accordance
with GAAP (subject to normal year-end adjustments); and (ii) a summary of the
outstanding balance of all Intercompany Notes as of the last day of that Fiscal
Month. The certification of the Chief Accounting Officer of Borrower
Representative shall be that (i) such financial information presents fairly in
accordance with GAAP (subject to normal year-end adjustments); and (ii) any
other information presented is true, correct and complete in all material
respects, and that there was no Default or Event of Default in existence as of
such time or, if a Default or Event of Default shall have occurred and be
continuing, describing the nature thereof and all efforts undertaken to cure
such Default or Event of Default;
(b)......Quarterly Financials. Within 45 days after the end of
each Fiscal Quarter, consolidated and consolidating financial information
regarding Borrowers and their Subsidiaries, certified by the Chief Accounting
Officer of Borrower Representative, including (i) unaudited balance sheets as of
the close of such Fiscal Quarter and the related statements of income and cash
flow for that portion of the Fiscal Year ending as of the close of such Fiscal
Quarter and (ii) unaudited statements of income and cash flows for such Fiscal
Quarter, in each case setting forth in comparative form the figures for the
corresponding period in the prior year and the figures contained in the
Projections for such Fiscal Year, all prepared in accordance with GAAP (subject
to normal year-end adjustments). Such financial information shall be accompanied
by (A) a Compliance Certificate in respect of each of the financial covenants
set forth on Annex G which is tested on a quarterly basis and (B) the
certification of the Chief Accounting Officer of Borrower Representative that
(i) such financial information presents fairly in accordance with GAAP (subject
to normal year-end adjustments) the financial position, results of operations
and statements of cash flows of Borrowers and their Subsidiaries, on both a
consolidated and consolidating basis, as at the end of such Fiscal Quarter and
for the period then ended, (ii) any other information presented is true, correct
and complete in all material respects and that there was no Default or Event of
Default in existence as of such time or, if a Default or Event of Default shall
have occurred and be continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default. In addition, Borrowers
shall deliver to Lender, within 45 days after the end of each Fiscal Quarter, a
management discussion and analysis which includes a comparison of performance
for that Fiscal Quarter to the corresponding period in the prior year;
(c)......Operating Plan. As soon as available, but not later
than 30 days after the end of each Fiscal Year, an annual operating plan for
each Borrower, approved by the Board of Directors of such Borrower, for the
following year, which will include a statement of all of the material
assumptions on which such plan is based, will include quarterly balance sheets
and a monthly budget for the following year and will integrate sales, gross
profits, operating expenses, operating profit, cash flow projections and Net
Borrowing Availability projections ,all prepared on the same basis and in
similar detail as that on which operating results are reported (and in the case
of cash flow projections, representing management's good faith estimates of
future financial performance based on historical performance), and including
plans for personnel, Capital Expenditures and facilities;
(d)......Annual Audited Financials. Within 120 days after the
end of each Fiscal Year, audited Financial Statements for Borrowers and their
Subsidiaries on a consolidated and (unaudited) consolidating basis, consisting
of balance sheets and statements of income and retained earnings and cash flows,
setting forth in comparative form in each case the figures for the previous
Fiscal Year, which Financial Statements shall be prepared in accordance with
GAAP, certified without qualification, by an independent certified public
accounting firm of national standing or otherwise acceptable to Lender. Such
Financial Statements shall be accompanied by (i) a statement prepared in
reasonable detail showing the calculations used in determining compliance with
each of the financial covenants set forth on Annex G, (ii) a report from such
accounting firm to the effect that, in connection with their audit examination,
nothing has come to their attention to cause them to believe that a Default or
Event of Default has occurred (or specifying those Defaults and Events of
Default that they became aware of), it being understood that such audit
examination extended only to accounting matters and that no special
investigation was made with respect to the existence of Defaults or Events of
Default, (iii) the annual letters to such accountants in connection with their
audit examination detailing contingent liabilities and material litigation
matters, and (iv) the certification of the Chief Executive Officer or Chief
Accounting Officer of Borrowers that all such Financial Statements present
fairly in accordance with GAAP the financial position, results of operations and
statements of cash flows of Borrowers and their Subsidiaries on a consolidated
and consolidating basis, as at the end of such year and for the period then
ended, and that there was no Default or Event of Default in existence as of such
time or, if a Default or Event of Default shall have occurred and be continuing,
describing the nature thereof and all efforts undertaken to cure such Default or
Event of Default;
(e)......Management Letters. Within five Business Days after
receipt thereof by any Credit Party, copies of all management letters, exception
reports or similar letters or reports received by such Credit Party from its
independent certified public accountants;
(f)......Default Notices. As soon as practicable, and in any
event within five Business Days after an executive officer of any Borrower has
actual knowledge of the existence of any Default, Event of Default or other
event which has had a Material Adverse Effect, telephonic or telecopied notice
specifying the nature of such Default or Event of Default or other event,
including the anticipated effect thereof, which notice, if given telephonically,
shall be promptly confirmed in writing on the next Business Day;
(g)......SEC Filings and Press Releases. Promptly upon their
becoming available, copies of: (i) all Financial Statements, reports, notices
and proxy statements made publicly available by any Credit Party to its security
holders; (ii) all regular and periodic reports and all registration statements
and prospectuses, if any, filed by any Credit Party with any securities exchange
or with the Securities and Exchange Commission or any governmental or private
regulatory authority; and (iii) all press releases and other statements made
available by any Credit Party to the public concerning material changes or
developments in the business of any such Person;
(h)......Subordinated Debt and Equity Notices. As soon as
practicable, copies of all material written notices given or received by any
Credit Party with respect to any Subordinated Debt or Stock of such Person, and,
within two Business Days after any Credit Party obtains knowledge of any matured
or unmatured event of default with respect to any Subordinated Debt, notice of
such event of default;
(i)......Supplemental Schedules. Supplemental disclosures, if
any, required by Section 5.6 of the Agreement;
(j)......Litigation. Promptly upon learning thereof, written
notice of any Litigation commenced or threatened against any Credit Party that
(i) seeks damages in excess of $100,000, (ii) seeks injunctive relief, (iii) is
asserted or instituted against any Plan, its fiduciaries or its assets or
against any Credit Party or ERISA Affiliate in connection with any Plan, (iv)
alleges criminal misconduct by any Credit Party, (v) alleges the violation of
any law regarding, or seeks remedies in connection with, any Environmental
Liabilities or (vi) involves any product recall;
(k)......Insurance Notices. Disclosure of losses or casualties
required by Section 5.4 of the Agreement;
(l)......Lease Default Notices. Copies of (i) any and all
default notices received under or with respect to any leased location or public
warehouse where Collateral is located, and (ii) such other notices or documents
relating to such leased locations or public warehouses or otherwise in respect
of the Collateral as Term Agent may request in its reasonable discretion; and
(m)......Lease Amendments. To Term Agent, copies of all
material amendments to real estate leases specify real estate leases of
particular concern.
(n)......Other Documents. Such other financial and other
information respecting any Credit Party's business or financial condition as
Term Agent shall, from time to time, request.
F-1
<PAGE>
ANNEX F (Section 4.1(b))
to
CREDIT AGREEMENT
COLLATERAL REPORTS
Borrowers shall deliver or cause to be delivered to Applicable
Agent the following:
(a)......Upon either Term Agent's request, and in no event
less frequently than five Business Days after the end of each Fiscal Month with
respect to each Borrower, a monthly trial balance showing Accounts outstanding
aged from invoice due date as follows: 1 to 30 days, 31 to 60 days, 61 to 90
days and 91 days or more, accompanied by such supporting detail and
documentation as shall be requested by either Agent in its reasonable
discretion.
(b)......At the time of delivery of each of the monthly
Financial Statements delivered pursuant to Annex E, a reconciliation of the
Accounts trial balance of each Borrower to such Borrower's general ledger and
monthly Financial Statements delivered pursuant to such Annex E, in each case
accompanied by such supporting detail and documentation as shall be requested by
Lender in its reasonable discretion;
(c)......At the time of delivery of each of the quarterly or
annual Financial Statements delivered pursuant to Annex E, (i) a listing of
government contracts of each Borrower subject to the Federal Assignment of
Claims Act of 1940; and (ii) a list of any applications for the registration of
any Patent, Trademark or Copyright with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency which
any Credit Party thereof has filed in the prior Fiscal Quarter;
(d)......Each Borrower, at its own expense, shall deliver to
Revolver Agent the results of each physical verification, if any, which such
Borrower or any of its Subsidiaries may in their discretion have made, or caused
any other Person to have made on their behalf, of all or any portion of their
Inventory (and, if a Default or an Event of Default shall have occurred and be
continuing, each Borrower shall, upon the request of Revolver Agent, conduct,
and deliver the results of, such physical verifications as Revolver Agent may
require);
(e)......Each Borrower, at its own expense, shall deliver to
either Agent such appraisals of its assets as either Agent may request at any
time after the occurrence and during the continuance of a Default or an Event of
Default, such appraisals to be conducted by an appraiser, and in form and
substance, satisfactory to either Agent; and
(f)......Such other reports, statements and reconciliations
with respect to the Collateral of any or all Credit Parties as either Agent
shall from time to time request in its reasonable discretion.
G-4
ANNEX G (Section 6.10)
to
CREDIT AGREEMENT
FINANCIAL COVENANTS
Borrowers shall not breach or fail to comply with any of the
following financial covenants, each of which shall be calculated in accordance
with GAAP consistently applied:
(a)......Maximum Capital Expenditures. Borrowers and their
Subsidiaries on a consolidated basis shall not make Capital Expenditures during
the following periods that exceed in the aggregate the amounts set forth
opposite each of such periods:
Period Maximum Capital Expenditures per Period Each Fiscal Year commencing with
the Fiscal Year ending $6,000,000 March 31, 2000.
(b)......Minimum Fixed Charge Coverage Ratio. Borrowers and
their Subsidiaries shall have on a consolidated basis at the end of each Fiscal
Quarter set forth below, a Fixed Charge Coverage Ratio for (i) the Fiscal
Quarter ended June 30, 2000, the 3 month period then ended; (ii) the Fiscal
Quarter ended September 30, 2000, the 6 month period then ended; (iii) the
Fiscal Quarter ended December 31, 2000, the 9 month period then ended; and (iv)
each fiscal Quarter thereafter, the 12-month period then ended, in each case of
not less than 1.00 to 1.00.
(c)......Minimum EBITDA. Borrowers and their Subsidiaries on a
consolidated basis shall have, at the end of each Fiscal Quarter set forth
below, EBITDA for the 12-month period then ended of not less than the following:
Measurement Period Ending EBITDA
------------------------- ------
June 30, 2000 $13,693,000
September 30, 2000 $14,131,000
December 31, 2000 $14,238,000
March 31, 2001 $14,344,000
June 30, 2001 $14,450,000
September 30, 2001 $14,556,000
December 31, 2001 $14,663,000
June 30, 2002 $14,875,000
September 30, 2002 $14,981,000
December 31, 2002 $15,088,000
March 31, 2003 $15,194,000
June 30, 2003 $15,300,000
September 30, 2003 $15,529,000
December 31, 2003 $15,762,500
June 30, 2004 $16,000,000
<PAGE>
The last day of each successive Fiscal Quarter $16,000,000, plus the cumulative
sum of $250,000 commencing September 30, 2004, for each Fiscal Quarter that
elapsed on the relevant date of determination since June 30, 2004.
(d)......Maximum Leverage Ratio. Borrowers and their
Subsidiaries on a consolidated basis shall have, at the end of each Fiscal
Quarter set forth below, a Leverage Ratio as of the last day of such Fiscal
Quarter and for the 12-month period then ended of not more than the following:
Measurement Period Ratio
------------------ -----
June 30, 2000 4.0 to 1.0
September 30, 2000 3.7 to 1.0
December 31, 2000 3.6 to 1.0
March 31, 2001 3.7 to 1.0
June 30, 2001 3.5 to 1.0
September 30, 2001 3.4 to 1.0
December 31, 2001 3.2 to 1.0
June 30, 2002 3.1 to 1.0
September 30, 2002 3.0 to 1.0
December 31, 2002 2.8 to 1.0
March 31, 2003 2.9 to 1.0
June 30, 2003 2.6 to 1.0
September 30, 2003 and on the last day of 2.5 to 1.0
each Fiscal Quarter thereafter
(f).......Minimum Interest Coverage Ratio. Borrowers and their
Subsidiaries on a consolidated basis shall have at the end of each Fiscal
Quarter set forth below, an Interest Coverage Ratio for the 12-month period then
ended of not less than the following:
June 30, 2000 2.9 to 1.0
September 30, 2000 2.9 to 1.0
December 31, 2000 2.9 to 1.0
March 31, 2001 3.0 to 1.0
June 30, 2001 3.0 to 1.0
September 30, 2001 3.1 to 1.0
December 31, 2001 3.1 to 1.0
March 31, 2002 3.2 to 1.0
June 30, 2002 3.3 to 1.0
September 30, 2002 3.3 to 1.0
December 31, 2002 3.4 to 1.0
March 31, 2003 3.5 to 1.0
June 30, 2003 3.6 to 1.0
September 30, 2003 3.7 to 1.0
December 31, 2003 3.8 to 1.0
March 31, 2004, 4.0 to 1.0
And on the last day of each Fiscal Quarter thereafter unless otherwise
specifically provided herein, any accounting term used in the Agreement shall
have the meaning customarily given such term in accordance with GAAP, and all
financial computations hereunder shall be computed in accordance with GAAP
consistently applied. That certain items or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing. If any "Accounting Changes" (as defined below) occur and such
changes result in a change in the calculation of the financial covenants,
standards or terms used in the Agreement or any other Loan Document, then
Borrowers and Lender agree to enter into negotiations in order to amend such
provisions of the Agreement so as to equitably reflect such Accounting Changes
with the desired result that the criteria for evaluating the Borrowers' and
their Subsidiaries' financial condition shall be the same after such Accounting
Changes as if such Accounting Changes had not been made. "Accounting Changes"
means (a) changes in accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants (or successor
thereto or any agency with similar functions), (b) changes in accounting
principles concurred in by any Borrower's certified public accountants; (c)
purchase accounting adjustments under A.P.B. 16 or 17 and EITF 88-16, and the
application of the accounting principles set forth in FASB 109, including the
establishment of reserves pursuant thereto and any subsequent reversal (in whole
or in part) of such reserves; and (d) the reversal of any reserves established
as a result of purchase accounting adjustments. All such adjustments resulting
from expenditures made subsequent to the Closing Date (including capitalization
of costs and expenses or payment of pre-Closing Date liabilities) shall be
treated as expenses in the period the expenditures are made and deducted as part
of the calculation of EBITDA in such period. If Lender and Borrowers agree upon
the required amendments, then after appropriate amendments have been executed
and the underlying Accounting Change with respect thereto has been implemented,
any reference to GAAP contained in the Agreement or in any other Loan Document
shall, only to the extent of such Accounting Change, refer to GAAP, consistently
applied after giving effect to the implementation of such Accounting Change. If
Lender and Borrowers cannot agree upon the required amendments within 30 days
following the date of implementation of any Accounting Change, then all
Financial Statements delivered and all calculations of financial covenants and
other standards and terms in accordance with the Agreement and the other Loan
Documents shall be prepared, delivered and made without regard to the underlying
Accounting Change.
H-2
<PAGE>
ANNEX H (Section 11.10)
to
CREDIT AGREEMENT
NOTICE ADDRESSES
(A) If to Term Agent, at
General Electric Capital Corporation
10 S. LaSalle, Suite 2800
Chicago, Illinois 60603
Attention: Ann E. Naegele,
Assistant Vice President-Risk Manager
Telecopier: (312) 419-4600
Telephone: (312) 419-4604
and
General Electric Capital Corporation
401 Merritt Seven, 2nd Floor
Norwalk, Connecticut 06856
Attention: Counsel/Capital Funding, Inc.
Attention: David R. Huet, Esquire
Telecopier: (203) 703-1777
Telephone: (203) 357-3159
with a copy to
Stroock & Stroock & Lavan LLP
2029 Century Park East, 16th Floor
Los Angeles, California 90067-3086
Attention: Gregory A. Bray, Esquire
Telecopier : (310) 556-5959
Telephone : (310) 556-5831
(B) If to Revolver Agent, at
KeyBank National Association
Attention: ----------------
Telecopier ----------------
Telephone: ----------------
(C) If to any Borrower, to Borrower Representative at
Video Services Corporation
240 Pegasus Avenue
Northvale, New Jersey 07647-1904
Attention: Louis H. Siracusano
Telecopier: (201) 784-9779
Telephone: (201) 767-1000
With a copy to:
Piper Marbury Rudnick & Wolfe LLP
1251 Avenue of the Americas
New York, New York 10020
Attention: James T. Seery, Esq.
Telecopier: (212) 835-6001
Telephone: (212) 835-6030
