SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 20, 1998
APAC TELESERVICES, INC.
(Exact name of registrant as specified in charter)
Illinois 0-26786 36-2777140
(State or other jurisdiction (Commission (IRS Employer
of incorporation) file number) Identification No.)
One Parkway North Center, Suite 510, Deerfield, IL 60015
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code 847/374-4980
N/A
(Former name or former address, if changed since last report)
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
Registrant acquired all of the common stock of ITI Holdings, Inc., a Delaware
corporation, with its principal place of business in Omaha, Nebraska ( ITI ), on
May 20, 1998. The acquisition was effected by a merger of ITI Marketing
Acquisition Corp., a Delaware corporation, that is a wholly-owned subsidiary of
Registrant, into ITI with ITI being the surviving corporation. ITI's principal
assets are its 24 customer contact centers with their telephone and computer
equipment. ITI was owned by 53 stockholders, principally Golder, Thoma,
Cressey, Rauner Fund IV, L. P. and present and former employees.
In consideration for the common stock of ITI, Registrant paid the ITI
stockholders $79.7 million in cash. In connection with the acquisition,
Registrant assumed $79.4 million of indebtedness that was refinanced at the
closing. If the United States Postal Service awards Registrant and/or ITI
contracts to provide in-bound customer service prior to April 30, 1999,
Registrant may be obligated to pay up to an additional $12,450,000 to the
selling stockholders of ITI. The price for the ITI common stock was determined
by an arms-length negotiation between Registrant and the principal stockholders
of ITI. Registrant intends to continue to operate the business conducted by
ITI.
ITI, like APAC, provides telephone-based sales, marketing and customer
management services on an outsourced basis to corporate clients that have high
volumes of incoming and/or outgoing calls. ITI employs approximately 10,000
people in its headquarters in Omaha, Nebraska, and its 24 customer contact
centers in seven states.
APAC financed the acquisition of ITI by using a term loan procured from a group
of lenders led by Harris Trust and Savings Bank and Bank of Montreal. The term
loan is a portion of a credit agreement with the lenders entered into on May 20,
1998, that also includes a revolving credit facility.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired.
Financial statements of ITI required to be filed with this report on Form
8-K will be filed by way of an amendment to this Form 8-K within sixty (60)
days of the due date of this Report, i. e., by August 3, 1998.
(b) Pro Forma financial information
Pro forma financial information required to be filed with this report on
Form 8-K, if any, will be filed by way of an amendment to this Form 8-K
within sixty (60) days of the due date of this Report, i. e., by August 3,
1998.
(c) Exhibits
(2) Merger Agreement dated April 30, 1998, with description of omitted
schedules.
(10) Credit Agreement dated May 20, 1998.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: June 4, 1998 APAC TELESERVICES, INC.
By: /s/ John I. Abernethy
John I. Abernethy
Chief Financial Officer
EXHIBIT INDEX
EXHIBIT NUMBER PAGE NUMBER
(2) Merger Agreement dated April 30, 1998, with
description of omitted schedules.
(10) Credit Agreement dated May 20, 1998.
MERGER AGREEMENT
By and Among
ITI HOLDINGS, INC.
THE PRINCIPAL STOCKHOLDERS OF
ITI HOLDINGS, INC.
and
APAC TELESERVICES, INC.
and
ITI MARKETING ACQUISITION CORP.
dated as of
April 30, 1998
MERGER AGREEMENT
Merger Agreement (the "Agreement") entered into as of April 30, 1998, by
and among ITI Holdings, Inc., a Delaware corporation (the "Company"), each of
the individuals and entities set forth under the heading "Principal
Stockholders" on the signature pages hereto (each, a "Principal Stockholder" and
collectively, the "Principal Stockholders"), APAC TeleServices, Inc., an
Illinois corporation ("APAC"), and ITI Marketing Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of APAC ("Newco"). The Company, the
Principal Stockholders, APAC and Newco are referred to collectively herein as
the "Parties."
The Principal Stockholders own approximately 96% of the Class A Shares and
94% of the Class B Shares of the Company outstanding on the date hereof and,
simultaneously with the execution of this Agreement, those Principal
Stockholders identified on Exhibit A attached hereto have executed an amendment
to his or her employment agreement and a non-competition agreement.
This Agreement contemplates a transaction in which, through a merger of
Newco into the Company, APAC will acquire all of the outstanding capital stock
of the Company and the Stockholders will receive cash for all of such capital
stock.
Now, therefore, in consideration of the premises and the actual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
Section 1. Definitions.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, complaints, claims, demands, injunctions, judgments, orders,
decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in
settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and fees,
including court costs and reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliate Officer" has the meaning set forth in Section2(h)(ii).
"Affiliated Group" means any affiliated group within the meaning of Code
Sec. 1504.
"Aggregate Closing Merger Consideration" has the meaning set forth in
Section2(d)(v).
"Aggregate Post-Closing Merger Consideration" has the meaning set forth in
Section2(e).
"Agreement" has the meaning set forth in the preface above.
"APAC" has the meaning set forth in the preface above.
"Business" means the business of the Company and the Subsidiaries as
presently conducted and taken as a whole.
"Certificate of Merger" has the meaning set forth in Section2(c).
"Claim" has the meaning set forth in Section2(h).
"Class A Shares" means the shares of Class A Common Stock, $.01 par value
per share, of the Company.
"Class B Shares" means the shares of Class B Common Stock, $.01 par value
per share, of the Company.
"Closing" has the meaning set forth in Section2(b).
"Closing Date" has the meaning set forth in Section2(b).
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preface above.
"Company Indemnified Parties" has the meaning set forth in Section2(h).
"Controlled Group of Corporations" means a controlled group of corporations
under Code Sec. 414(b) and trades or businesses under common control under Code
Sec. 414(c).
"Deferred Intercompany Transaction" has the meaning set forth in Treas.
Reg. Section1.1502-13.
"Disclosure Schedule" has the meaning set forth in Section3.
"Effective Time" has the meaning set forth in Section2(d)(i).
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), (d) Employee Welfare Benefit Plan, or (e) any bonus,
incentive, severance, stock option, stock purchase, short-term disability plan
or other material fringe benefit plan, program or arrangement, including
policies concerning holidays, vacations and salary continuation during short
absences for illness or otherwise.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Sec.
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Sec.
3(1).
"Environmental, Health, and Safety Requirements" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, the Clean Air Act, the Federal Water
Pollution Control Act, the Safe Drinking Water Act, the Toxic Substance Control
Act, the Emergency Planning and Community Right-to-Know Act of 1986, the
Hazardous Material Transportation Act, and the Occupational Safety and Health
Act of 1970, each as amended and in effect as of the date hereof, together with
all other laws (including rules, regulations, codes, injunctions, judgments,
orders, decrees, and rulings) of federal, state and local governments (and all
agencies thereof) concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials (including
petroleum products and asbestos) or wastes into ambient air, surface water,
ground water, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes, in each case as in effect on the date hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Financial Statements" has the meaning set forth in Section3(h).
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Insurance Licenses" has the meaning set forth in Section3(k).
"Intellectual Property" means (a) all trade secrets and confidential
business information (including customer and supplier lists), (b) all
trademarks, service marks, trade dress, logos, trade names, and corporate names
and goodwill associated therewith, (c) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, (d) all
copyrightable works and all copyrights, (e) all mask works, (f) all computer
software (including data and related documentation), and (g) all other
proprietary rights, in each case, used in the Business.
"Knowledge" as it applies to the Company, means the actual knowledge of
James M. Bata, John T. Calk, Tami L. Gabrielson, Bradley T. Harslem, Daniel S.
Hicks, Raymond R. Hipp, James K. Lines, Kayle D. Neeley, Christopher C. Rehberg
and L. Clark Sisson.
"Liability" means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
"Material Adverse Effect" means an adverse effect upon the business or the
financial condition, operations and results of operations of the Company and its
Subsidiaries taken as a whole which results in at least $250,000 of Adverse
Consequences.
"Merger" has the meaning set forth in Section 2(a).
"Merger Consideration" has the meaning set forth in Section 2(d)(v).
"Most Recent Balance Sheet" means the balance sheet contained within the
Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in
Section 3(h).
"Most Recent Fiscal Month End" has the meaning set forth in Section 3(h).
"Most Recent Fiscal Year End" has the meaning set forth in Section 3(h).
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Newco" has the meaning set forth in the preface above.
"Operating Subsidiary" means ITI Marketing Services, Inc.
"Options or Warrants" means all options, warrants and other securities
exercisable or convertible into or exchangeable for Shares, together with all
other purchase rights, subscription rights, conversion rights, exchange rights
or other contracts or commitments that could require the Company to issue, sell
or otherwise cause to become outstanding any of its capital stock.
"Outstanding Indebtedness" means all indebtedness for borrowed money other
than the Payoff Indebtedness and excludes all capitalized leases.
"Party" has the meaning set forth in the preface above.
"Payoff Indebtedness" means all indebtedness for borrowed money identified
on Exhibit B which will be paid-off at the Closing
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a limited liability company or partnership, a trust, a
joint venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Principal Stockholders" has the meaning set forth in the preface above.
"Prohibited Transaction" has the meaning set forth in ERISA Sec. 406 and
Code Sec. 4975.
"Reportable Event" has the meaning set forth in ERISA Sec. 4043.
"Representative" has the meaning set forth in Section 2(g).
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any lien, encumbrance, mortgage, pledge, or other
security interest, other than (a) mechanics, materialmen's and similar liens,
(b) liens for Taxes not yet due and payable or that the taxpayer is contesting
in good faith through appropriate proceedings, (c) purchase money liens securing
rental payments under capital lease arrangements and (d) other liens arising in
the ordinary course of business and not incurred in connection with the
borrowing of money.
"Shares" means the Class A Shares and Class B Shares.
"Stockholders" means all of the holders of the Shares, Options and
Warrants.
"Stockholder Notes" means all indebtedness, including accrued interest, of
any Stockholder to the Company incurred in connection with such Stockholder's
acquisition of Class A Shares or Class B Shares.
"Subsidiary" means any corporation with respect to which a specified Person
(or a Subsidiary thereof) owns a majority of the common stock or has the power
to vote or direct the voting of sufficient securities to elect a majority of the
directors.
"Surviving Corporation" has the meaning set forth in Section 2(a).
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Sec. 59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including interest, penalty, or
additions thereto, whether disputed or not, and whether or not accrued on the
Financial Statements.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"USPS" has the meaning set forth in Section 2(e).
Section 2. Basic Transaction.
(a) The Merger. On and subject to the terms and conditions of this
Agreement, Newco will merge with and into the Company (the "Merger") at the
Effective Time. The Company shall be the corporation surviving the Merger (the
"Surviving Corporation").
(b) The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of McDermott,
Will & Emery, 227 West Monroe Street, Suite 5500, Chicago, Illinois 60606,
commencing at 9:00 a.m. local time on the second business day following the
satisfaction or waiver of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby set forth in Section6 below
(other than conditions with respect to actions the respective Parties will take
at the Closing itself) or such other date as the Parties may mutually determine
(the "Closing Date").
(c) Actions at the Closing. At the Closing, subject to and on the
terms and conditions set forth in this Agreement,
(i) the Company and Newco will file with the Secretary of State
of the State of Delaware a Certificate of Merger in the form acceptable to
the Parties (the "Certificate of Merger");
(ii) Newco will deliver to the Representative, on behalf of the
Stockholders, the Aggregate Closing Merger Consideration in the manner
provided in Section 2(f) below;
(iii) APAC and Newco will deliver to the Representative (A)
certified copies of resolutions duly adopted by the boards of directors of
each of APAC and Newco authorizing the execution, delivery and performance
of this Agreement, (B) certified copies of each of APAC's and Newco's
articles or certificate of incorporation and bylaws, (C) a short-form
certificate of good standing of each of APAC and Newco, certified by the
Secretary of State of Illinois or Delaware, respectively, as of a date not
more than three business days prior to the Closing Date, and (D) all other
certificates, instruments, and documents referred to in Section6(b) below;
(iv) The Company shall deliver or cause to be delivered to APAC
and Newco (A) certified copies of resolutions duly adopted by the board of
directors and Stockholders of the Company authorizing the execution,
delivery and performance of this Agreement, (B) certified copies of the
certificate of incorporation and by-laws of the Company and each
Subsidiary, (C) a short-form certificate of good standing of the Company
and each Subsidiary, in each case certified by the Secretary of State of
the State of such entity's incorporation as of a date not more than three
business days prior to the Closing Date, (D) certificates representing the
number of Shares, Options or Warrants set forth opposite each Principal
Stockholder's name on Section3(b) of the Disclosure Schedule together with
appropriate stock powers executed in blank, and (E) all other certificates,
instruments, and documents referred to in Section6(a) below.
(d) Effect of Merger.
(i) General. The Merger shall become effective at the time (the
"Effective Time") the Company and Newco file the Certificate of Merger with
the Secretary of State of the State of Delaware. The Merger shall have the
effect set forth in the Delaware General Corporation Law. The Surviving
Corporation may, at any time after the Effective Time, take any action
(including executing and delivering any document) in the name and on behalf
of either the Company or Newco in order to carry out and effectuate the
transactions contemplated by this Agreement.
(ii) Certificate of Incorporation. Subject to Section 2(h)(ii)
hereof, the Certificate of Incorporation of the Surviving Corporation shall
be amended and restated at and as of the Effective Time to read as did the
Certificate of Incorporation of Newco immediately prior to the Effective
Time (except that the name of the Surviving Corporation will remain
unchanged).
(iii) Bylaws. Subject to Section 2(h)(ii) hereof, the Bylaws
of the Surviving Corporation shall be amended and restated at and as of the
Effective Time to read as did the Bylaws of Newco immediately prior to the
Effective Time (except that the name of the Surviving Corporation will
remain unchanged).
(iv) Directors and Officers. The directors and officers of Newco
shall become the directors and officers of the Surviving Corporation at and
as of the Effective Time (retaining their respective positions and terms of
office) until their respective successors are duly elected and qualified.
(v) Conversion of Shares.
(A) At and as of the Effective Time, each Class A Share and
Class B Share issued and outstanding immediately prior to the Effective
Time shall be converted into the right to receive an amount in cash (the
"Merger Consideration") equal to the sum of (A) such portion of the
Aggregate Closing Merger Consideration as is allocated to such Share in
accordance with Exhibit C attached hereto, plus (B) such portion of the
Aggregate Post-Closing Merger Consideration (as determined in accordance
with Section 2(e)) as is allocated to such Share in accordance with
Exhibit C. For purposes of this Agreement, the "Aggregate Closing Merger
Consideration" shall mean an amount equal to the sum of (i) $81,232,246,
plus (ii) the Stockholder Notes, less (iii) any prepayment penalties,
breakage fees and lender's legal fees paid at or prior to the Closing with
respect to the Payoff Indebtedness, less (iv) the amount of all special
bonuses paid to the Company's employees from the date hereof until or at
the Closing, as reflected on a schedule delivered to APAC upon the signing
of this Agreement, which bonuses will not exceed $1,250,000 in the
aggregate, less (v) all legal fees and expenses of Kirkland and Ellis
incurred and/or paid by the Company in connection with the transactions
contemplated hereby.
(B) As reflected on Exhibit C the Merger Consideration
payable to any individual Stockholder at the Closing shall be reduced
by the principal of and accrued and unpaid interest on such
Stockholder's Stockholder Note, if any.
(C) No Shares shall be deemed to be outstanding or to have any
rights other than those set forth above in this Section 2(d)(v) after the
Effective Time.
(D) All Shares that immediately prior to the Effective Time are
owned by the Company or its Subsidiaries shall automatically be canceled
and retired without payment of any consideration therefor and shall cease
to exist.
(vi) Conversion of Capital Stock of Newco. At and as of the
Effective Time, each outstanding share of the capital stock of Newco shall
be converted into one share of common stock of the Surviving Corporation.
(e) Determination of Post-Closing Consideration. Prior to the date
hereof, each of the Operating Subsidiary and APAC has submitted a bid to the
United States Postal Service (the "USPS") to provide in-bound customer service
operations to the USPS at call centers dedicated to such operations. In the
event that, in connection with such bids currently identified by Solicitation
No. 102590-98-A-0059 and Request No. 98-3267, prior to the first anniversary of
the date hereof, (i) the USPS awards APAC and/or the Operating Subsidiary two or
more call centers, collectively or individually, or (ii) the USPS awards the
Operating Subsidiary at least one call center and awards no call centers to
APAC, then APAC shall be obligated to pay to the Representative, on behalf of
the Stockholders, additional Merger Consideration in an aggregate amount (the
"Aggregate Post-Closing Merger Consideration") equal to the sum of (A)
$6,225,000, which shall be paid upon the First Taking of Calls (as defined
below), plus (B) in the event that the USPS renews its contract as to the call
center(s) initially awarded for a first renewal period, $3,112,500 (the "First
Renewal Payment"), which shall be paid within 15 days after the beginning of the
first renewal period, plus (C) in the event that the USPS renews its contract as
to the call center(s) initially awarded for a second renewal period, $3,112,500
(the "Second Renewal Payment"), which shall be paid within 15 days after the
beginning of the second renewal period. For purposes of this Agreement, the
"First Taking of Calls" shall mean (i) in the event that (A) APAC is awarded two
or more call centers and the Operating Subsidiary is awarded no call centers or
(B) APAC and/or the Operating Subsidiary, collectively or individually, are
awarded two or more call centers and the entity to which such call centers are
awarded is not determinable, the first taking of calls at the second call center
awarded, (ii) in the event that the Operating Subsidiary is awarded at least one
call center and APAC is awarded fewer than two call centers, the first taking of
calls at any call center awarded to the Operating Subsidiary, or (iii) in the
event that the Operating Subsidiary is awarded at least one call center and APAC
is awarded two or more call centers, the earlier of (A) the first taking of
calls at any call center awarded to the Operating Subsidiary or (B) the first
taking of calls at the second call center awarded to APAC. Notwithstanding the
above, in the event that (i) the USPS does not renew its contract as to the call
center(s) initially awarded but APAC and/or the Operating Subsidiary continues
to operate under such contract as to such call center(s) for a period of one
year following the end of the initial term thereof, then APAC shall pay the
First Renewal Payment at the end of such one-year period and/or (ii) the USPS
does not renew its contract as to the call center(s) initially awarded or renews
such contract for one renewal period but not for a second renewal period but
APAC and/or the Operating Subsidiary continues to operate under such contract as
to such call center(s) for a period of two years following the end of the
initial term thereof or for a period of one year following the end of the first
renewal term thereof, then APAC shall pay the Second Renewal Payment at the end
of such two-year period.
(f) Payment of Merger Consideration. At the Effective Time, APAC
shall deliver to the Representative, on behalf of the Stockholders, by wire
transfer of immediately available funds, an amount equal to the Aggregate
Closing Merger Consideration, less the principal amount of and any accrued
interest on the Stockholder Notes and the Representative shall deliver a letter
of transmittal (with instructions for its use) to each record holder of
outstanding Shares (other than the Principal Stockholders who shall have
delivered to APAC and Newco at the Closing, pursuant to Section2(c)(iv), all
certificates representing the Shares owned thereby) for each such Stockholder to
use in surrendering the certificates which represented his or its Shares against
payment of the Merger Consideration. Upon receipt from a Stockholder of
properly endorsed certificates representing his or its Shares, together with
appropriate stock powers executed in blank, the Representative shall distribute
the applicable portion of the Aggregate Closing Merger Consideration to such
Stockholder in accordance with Exhibit C. At the times specified in
Section2(e), APAC shall deliver to the Representative, on behalf of the
Stockholders, by wire transfer of immediately available funds, the Aggregate
Post-Closing Merger Consideration and the Representative shall distribute the
applicable portion of the Aggregate Post-Closing Merger Consideration to the
Stockholders in accordance with Exhibit C. The Representative shall make all
distributions to Stockholders required by this Section2(f) as soon as
practicable. Notwithstanding anything to the contrary contained herein, the
Representative hereby agrees that it shall not release any funds with respect to
the Merger Consideration to a given Stockholder until the Representative has
received from such Stockholder a duly endorsed certificate representing the
Shares owned by such Stockholder, together with an appropriate stock power
executed in blank. In no event shall any Stockholder be entitled to receive
interest on any of the funds to be received in the Merger. APAC may cause the
Representative to pay over to the Surviving Corporation any portion of the
Merger Consideration (and any earnings thereon) remaining 180 days after the
later of the Effective Date or the final payment to the Representative of any
Post-Closing Merger Consideration in accordance with Section2(e), and thereafter
all former Stockholders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat, and other similar laws) as general
creditors thereof with respect to the cash payable upon surrender of their
certificates. After the close of business on the Closing Date, transfers of
Shares outstanding prior to the Effective Time shall not be made on the stock
transfer books of the Surviving Corporation.
(g) Appointment of Representative. Each Principal Stockholder (other
than Steven A. Idelman and Sheri B. Idelman) hereby appoints Golder, Thoma,
Cressey, Rauner Fund IV, L.P. (the "Representative") the attorney-in-fact of
such Principal Stockholder, with full power and authority, including power of
substitution, acting in the name of and for and on behalf of such Principal
Stockholder to amend or waive any provision of this Agreement, to terminate this
Agreement pursuant to the provisions of Section7, in its sole discretion, and to
do all other things and to take all other actions under or related to this
Agreement which, in its discretion, it may consider necessary or proper to
effectuate the transactions contemplated hereunder and to resolve any dispute
with APAC over any aspect of this Agreement and on behalf of such Stockholder,
to enter into any agreement to effectuate any of the foregoing which shall have
the effect of binding such Stockholder as if such Stockholder had personally
entered into such agreement; provided, however, that all actions taken or
decisions made by the Representative on behalf of the Stockholders shall be
taken or made in a manner which is ratably and equitably amongst all
Stockholders. This appointment and power of attorney shall be deemed as coupled
with an interest and all authority conferred hereby shall be irrevocable and
shall not be subject to termination by operation of law, whether by the death,
incapacity, liquidation, or dissolution of any Stockholder or the occurrence of
any other event or events, and the Representative may not terminate this power
of attorney with respect to any Stockholder or such Stockholder's successors or
assigns without the consent of APAC. Each Principal Stockholder (other than
Steven A. Idelman and Sheri B. Idelman) agrees to hold the Representative
harmless from any and all loss, damage, or liability and expenses (including
legal fees) which such Stockholder may sustain as a result of any action taken
in good faith by the Representative. In the event this Agreement is terminated
pursuant to Section7 prior to Closing, the appointment contemplated by this
Section2(g) shall immediately terminate and the Representative shall promptly
return such certificates and related stock powers to the Stockholders.
(h) Stockholder Consent and Release; Indemnification.
(i) In accordance with Section 251 of the Delaware General
Corporation Law each Principal Stockholder hereby consents to the Merger
and approves the execution and delivery of this Agreement and the
transactions contemplated hereby. Effective as of the Closing, each
Principal Stockholder hereby releases the Company from any and all claims
(other than employee compensation, claims under employment compensation
agreements and related benefits accrued through the Closing Date) of such
Principal Stockholder whether arising before or after the Closing against
the Company or Liabilities or obligations of the Company to the Principal
Stockholder as a result of the Principal Stockholder having served as a
stockholder, director, officer, employee, or agent of the Company prior to
the Closing.
(ii) Notwithstanding anything to the contrary in this Agreement:
(A) the Certificate of Incorporation and Bylaws of the Surviving
Corporation shall contain the provisions with respect to indemnification
and limitation of liability set forth in the Certificate of Incorporation
and Bylaws of the Company on the date of this Agreement, which provisions
shall not be amended, repealed or otherwise modified for a period of six
years after the Closing in any manner that would adversely affect the
rights thereunder of persons who were directors, or either (i) persons who
were employees, officers or directors of the Representative or any of its
Affiliates and were officers of the Company or (ii) Steven A. Idelman and
Sheri B. Idelman (collectively, the "Affiliate Officers"), and who at any
time prior to the Closing were prospective indemnitees under the
Certificate of Incorporation or Bylaws of the Company in respect of actions
or omissions occurring at or prior to the Closing (including the
transactions contemplated by this Agreement), unless such modification is
required by law; and (B) from and after the Closing, the Surviving
Corporation shall indemnify, defend and hold harmless the present and
former directors and Affiliate Officers of the Company (collectively, the
"Company Indemnified Parties") against all Adverse Consequences arising in
settlement of, or otherwise in connection with, any claim, action, suit,
proceeding or investigation (a "Claim"), based in whole or in part on the
fact that such Person is or was such a director or Affiliate Officer and
arising out of actions or omissions occurring at or prior to the Closing
(including the transactions contemplated by this Agreement), in each case
to the fullest extent permitted under Delaware law (and shall pay expenses
in advance of the final disposition of any such action or proceeding to
each Company Indemnified Party to the fullest extent permitted under
Delaware law) (it being understood that APAC guarantees the Surviving
Corporation's obligations under this Section 2(h)(ii)). This
Section 2(h)(ii) is intended to be for the benefit of, and shall be
enforceable by, Company Indemnified Parties, their heirs and personal
representatives and shall be binding on the Surviving Corporation and its
respective successors and assigns.
Section 3. Representations and Warranties Concerning the Company. Each
of the Principal Stockholders, other than Steven A. Idelman and Sheri B.
Idelman, represents and warrants (on a several and not a joint basis) to APAC
and Newco that the statements contained in this Section3 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section3, except for
representations and warranties that speak as of a specific date or time, which
need only be true and correct as of such date) except as set forth in the
Disclosure Schedule accompanying this Agreement (the "Disclosure Schedule").
Each of Steven A. Idelman and Sheri B. Idelman severally warrants (but does not
represent) to APAC and Newco that the statements contained in this Section3 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section3,
except for warranties that speak as of a specific date or time, which need only
be true and correct as of such date) except as set forth in the Disclosure
Schedule. The Disclosure Schedule will be arranged in paragraphs corresponding
to the lettered and numbered paragraphs contained in this Section3.
(a) Organization, Qualification, and Corporate Power. Each of the
Company and its Subsidiaries is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its incorporation and
in the respective jurisdictions set forth under each entity's name on
Section 3(a) of the Disclosure Schedule. Each of the Company and its
Subsidiaries has requisite power and authority and, except as set forth on
Section 3(a) of the Disclosure Schedule, all licenses, permits, and
authorizations necessary to carry on the businesses in which it is presently
engaged and to own and use the properties presently owned and used by it, other
than those licenses, permits and authorizations the lack of which, individually
or in the aggregate, would not have a Material Adverse Effect. Section 3(a) of
the Disclosure Schedule lists the directors and officers of each of the Company
and its Subsidiaries. The Company has made available to APAC correct and
complete copies of the charter and bylaws of each of the Company and its
Subsidiaries (as amended to date). Except as set forth on Section 3(a) of the
Disclosure Schedule, the minute books (containing the records of meetings of the
stockholders, the board of directors, and any committees of the board of
directors), the stock certificate books, and the stock record books of each of
the Company and its Subsidiaries are correct and complete in all material
respects. None of the Company and its Subsidiaries is in default under or in
violation of any provision of its charter or, in any material respects, its
bylaws.
(b) Capitalization. Except for Class A Shares or Class B Shares
issuable upon exercise of outstanding Options or Warrants disclosed on
Section 3(b) of the Disclosure Schedule, Section 3(b) of the Disclosure
Schedule sets forth for the Company the amount of its authorized capital stock,
the amount of its issued and outstanding capital stock and the record owners of
its outstanding capital stock. Except as set forth on Section3(b) of the
Disclosure Schedule, all of the issued and outstanding shares of capital stock
of the Company have been duly authorized, are validly issued, fully paid, and
nonassessable and are held of record by the Stockholders as set forth in
Section 3(b) of the Disclosure Schedule. Except as set forth in Section 3(b)
of the Disclosure Schedule, there are no outstanding or authorized Options or
Warrants. There are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or similar rights with respect to the Company.
Except as set forth in Section 3(b) of the Disclosure Schedule, there are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the capital stock of the Company to which the Company is a party
or, to the Company's Knowledge, to which any Stockholder, but not the Company,
is a party.
(c) Authorization. The Company has requisite power and authority
(including requisite corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. The execution, delivery and
performance of this Agreement by the Company have been duly authorized and
approved by its Board of Directors and no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement constitutes the valid and
legally binding obligation of the Company, enforceable in accordance with its
terms and conditions, except as limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect affecting
creditors' rights generally.
(d) Noncontravention. Except as set forth in Section 3(d) of the
Disclosure Schedule, neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby will (i) violate
any constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, or other restriction of any government, governmental agency, or
court to which any of the Company and its Subsidiaries is subject, or any
provision of the charter or bylaws of any of the Company and its Subsidiaries,
(ii) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement set forth on Section 3(m)(ii) or
Section 3(p) of the Disclosure Schedule (or result in the imposition of any
Security Interest upon any of the Company's or a Subsidiary's assets), or (iii)
require the Company and its Subsidiaries to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement, other than any such violations,
conflicts, breaches, defaults, accelerations, terminations, modifications,
cancellations or notices of or with respect to any of the foregoing that,
individually or in the aggregate, would not have a Material Adverse Effect, and
other than any such notices, filings, consents, authorizations or approvals
required under the Hart-Scott-Rodino Act or that may be required solely by
reason of APAC's regulatory status and participation in the transactions
contemplated hereby (other than breaches or defaults that may result solely from
a change of control of the Company).
(e) Broker's Fees. Except as set forth in Section 3(e) of the
Disclosure Schedule, none of the Company and its Subsidiaries has any Liability
or obligation to pay any fees, expenses, or commissions to any professional
representative, attorney, consultant, broker, finder, or agent with respect to
the transactions contemplated by this Agreement.
(f) Title to Assets. Except as set forth on Section 3(f) of the
Disclosure Schedule or as would not, individually or in the aggregate, have a
Material Adverse Effect, the Company and its Subsidiaries have good and
marketable title to, or a valid leasehold interest in, the tangible assets used
by them, located on their premises, or shown on the Most Recent Balance Sheet or
acquired after the date thereof, free and clear of all Security Interests
(except as set forth in Section 3(f) of the Disclosure Schedule), other than
those tangible assets disposed of in the ordinary course of business since the
date of such Most Recent Balance Sheet. This Section 3(f) does not relate to
real property or interests in real property, it being the intent of the Parties
that such items are the subject of Section 3(m).
(g) Subsidiaries. Section 3(g) of the Disclosure Schedule sets
forth for each Subsidiary of the Company (i) its name and jurisdiction of
incorporation, (ii) the number of shares of authorized capital stock of each
class of its capital stock, (iii) the number of issued and outstanding shares of
each class of its capital stock, the names of the holders thereof, and the
number of shares held by each such holder, and (iv) the number of shares of its
capital stock held in treasury. All of the issued and outstanding shares of
capital stock of each Subsidiary of the Company have been duly authorized and
are validly issued, fully paid, and nonassessable. Except as set forth on
Section 3(g) of the Disclosure Schedule, one of the Company and its
Subsidiaries holds of record and owns beneficially all of the outstanding
shares of each Subsidiary of the Company, free and clear of any restrictions
on transfer (other than restrictions under the Securities Act and state
securities laws), Taxes, Security Interests, options, warrants, purchase
rights, contracts, commitments, equities, claims, and demands. Except as set
forth on Section 3(g) of the Disclosure Schedule, there are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
any of the Company and its Subsidiaries to sell, transfer, or otherwise dispose
of any capital stock of any of its Subsidiaries or that could require any
Subsidiary of the Company to issue, sell, or otherwise cause to become
outstanding any of its own capital stock. There are no outstanding stock
appreciation, phantom stock, profit participation, or similar rights with
respect to any Subsidiary of the Company. There are no voting trusts,
proxies, or other agreements or understandings with respect to the voting
of any capital stock of any Subsidiary of the Company. Except as set forth
on Section 3(g) of the Disclosure Schedule, none of the Company and its
Subsidiaries has any direct or indirect equity participation in any corporation,
partnership, trust, or other business association which is not a Subsidiary of
the Company. The Company has made available to APAC correct and complete
copies of the formation documents of each such entity.
(h) Financial Statements. Set forth on Section 3(h) of the
Disclosure Schedule are the following financial statements (collectively,
the "Financial Statements"): (A) audited consolidated balance sheets as of
December 31, 1995, December 31, 1996 and December 31, 1997 and audited
consolidated statements of operations, stockholders' deficit, and cash flows
for the four months ended December 31, 1995 and the years ended December 31,
1996 and December 31, 1997 (the "Most Recent Fiscal Year End") for the
Company and its Subsidiaries, and (C) unaudited balance sheet and statements
of operations, stockholders' deficit, and cash flows (the "Most Recent
Financial Statements") as of and for the two months ended February 28, 1998
(the "Most Recent Fiscal Month End") for the Company and its Subsidiaries.
The Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP (except as otherwise indicated in the notes thereto)
applied on a consistent basis throughout the periods covered thereby, and
present fairly in all material respects the financial condition of the
Company and its Subsidiaries as of such dates and the results of operations
of the Company and its Subsidiaries for such periods; provided, however, that
the Most Recent Financial Statements are subject to normal year-end
adjustments and lack footnotes and other presentation items.
(i) Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any occurrence that has had or
reasonably would be expected to have a material adverse effect on the business,
financial condition, operations or results of operations of the Company and its
Subsidiaries taken as a whole. APAC acknowledges that there may be a disruption
to the Business as a result of the execution of this Agreement, the announcement
by APAC of its intention to purchase the Company or the announcement by the
Principal Stockholders or the Company of such intended sale, and the
consummation of the transactions contemplated hereby, and APAC agrees that such
disruptions do not and shall not constitute a breach of this Section 3(i) or of
Section 3(y) hereof. Without limiting the generality of the foregoing, since the
Most Recent Fiscal Year End, except as set forth on Section 3(i) of the
Disclosure Schedule or as would not, individually or in the aggregate, have a
material adverse effect upon the business, financial condition, operations and
results of operations of the Company and its Subsidiaries taken as a whole which
results in at least $500,000 of Adverse Consequences:
(i) none of the Company and its Subsidiaries has sold, leased,
transferred, or assigned any of its assets, tangible or intangible, outside
the ordinary course of business;
(ii) none of the Company and its Subsidiaries has entered into
any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) outside the ordinary course of
business;
(iii) no party (including any of the Company and its
Subsidiaries) has accelerated, terminated, modified, or canceled any
agreement, contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) which is set forth on Section 3(m)(ii) or
Section 3(p) of the Disclosure Schedule and which involves in excess of
$100,000 per annum to which any of the Company and its Subsidiaries is a
party or by which any of them is bound;
(iv) none of the Company and its Subsidiaries has imposed any
Security Interest upon any of its assets, tangible or intangible;
(v) [intentionally omitted];
(vi) none of the Company and its Subsidiaries has made any
capital investment in, any loan to, or any acquisition of the securities or
assets of, any other Person (or series of related capital investments,
loans, and acquisitions);
(vii) none of the Company and its Subsidiaries has issued any
note, bond, or other debt security or created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or capitalized lease
obligation;
(viii) none of the Company and its Subsidiaries has delayed or
postponed the payment of accounts payable and other Liabilities outside the
ordinary course of business or accelerated the collection of accounts,
notes or other receivables outside the ordinary course of business;
(ix) none of the Company and its Subsidiaries has canceled,
compromised, waived, or released any right or claim (or series of related
rights and claims) outside the ordinary course of business;
(x) none of the Company and its Subsidiaries has granted any
license or sublicense of any rights under or with respect to any
Intellectual Property outside the ordinary course of business;
(xi) there has been no change made or authorized in the charter
or bylaws of any of the Company and its Subsidiaries;
(xii) none of Company and its Subsidiaries has issued, sold,
or otherwise disposed of any of its capital stock, or granted any options
(including options granted to employees), warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any
of its capital stock;
(xiii) none of the Company and its Subsidiaries has declared,
set aside, or paid any dividend or made any distribution with respect to
its capital stock (whether in cash or in kind) or redeemed, purchased, or
otherwise acquired any of its capital stock;
(xiv) none of the Company and its Subsidiaries has
experienced any single occurrence of damage, destruction, or loss in an
amount in excess of $100,000 (whether or not covered by insurance) to its
property;
(xv) none of the Company and its Subsidiaries has made any loan
to, or entered into any other transaction with, any of its directors,
officers, and employees outside the ordinary course of business.
(xvi) none of the Company and its Subsidiaries has entered
into any employment contract or collective bargaining agreement, written or
oral, or modified the terms of any existing such contract or agreement;
(xvii) none of the Company and its Subsidiaries has granted
any increase in the base compensation of any of its directors, officers,
and employees outside the ordinary course of business;
(xviii) none of the Company and its Subsidiaries has adopted,
amended, modified, or terminated any bonus, profit-sharing, incentive,
severance, or other plan, contract, or commitment for the benefit of any of
its directors, officers, and employees (or taken any such action with
respect to any other Employee Benefit Plan);
(xix) none of the Company and its Subsidiaries has made any
other change in employment terms for any of its directors, officers, and
key employees or, outside the ordinary course of business, for any of its
other employees; and
(xx) none of the Company and its Subsidiaries had made or pledged
to make any charitable or other capital contribution outside the ordinary
course of business.
(j) Undisclosed Liabilities. Except as set forth on Section 3(j) of
the Disclosure Schedule, none of the Company and its Subsidiaries has any
Liability, except for (i) Liabilities set forth on the Most Recent Balance
Sheet, (ii) Liabilities which have arisen after the Most Recent Fiscal Month End
in the ordinary course of business (none of which results from, arises out of,
relates to, is in the nature of, or was caused by any breach of contract, breach
of warranty, tort, infringement, or violation of law), and (iii) Liabilities
which, individually or in the aggregate, would not have a Material Adverse
Effect.
(k) Legal Compliance. Except as set forth on Section 3(k) of the
Disclosure Schedule, each of the Company, its Subsidiaries and their respective
predecessors has complied with all applicable laws (including rules,
regulations, codes, injunctions, judgments, orders, decrees, and rulings of
federal, state, local, and foreign governments (and all agencies thereof)),
including but not limited to the Federal Telephone Consumer Protection Act of
1991, the Federal Telemarketing and Consumer Fraud and Abuse Protection Act of
1994 and any and all amendments thereto and rules and regulations promulgated
thereunder by the Federal Communications Commission and the Federal Trade
Commission, and no action, suit, proceeding, hearing, complaint, claim, demand,
notice or investigation has been filed or commenced, or to the Knowledge of the
Company, threatened against the Company alleging any failure so to comply,
except to the extent any instances of noncompliance would not, individually or
in the aggregate, have a Material Adverse Effect. Section 3(k) of the
Disclosure Schedule sets forth a list of all consent agreements which have
been entered into between the Company or any Subsidiary and any federal, state,
local or foreign government (or any agency thereof) and copies of each such
consent agreement has been made available to APAC. The Company, its
Subsidiaries and their respective telephone representatives who sell
insurance-related products possess such certificates, authorities, permits,
licenses, approvals, consents and other authorizations (collectively,
"Insurance Licenses") issued by the appropriate state, federal, local or
foreign regulatory agencies or bodies necessary to conduct the Business,
the Company, its Subsidiaries and their respective telephone representatives
who sell insurance-related products are in compliance with the terms and
conditions of all such Insurance Licenses, all of the Insurance Licenses are
valid and in full force and effect, and neither the Company nor any of its
Subsidiaries has received any notice of proceeding relating to the revocation
or modification of any such Insurance Licenses, except as would not,
individually or in the aggregate, have a Material Adverse Effect.
(l) Tax Matters.
(i) Each of the Company and its Subsidiaries has filed all
income Tax Returns and all other material Tax Returns it was required to
file. All such Tax Returns were correct and complete in all material
respects. All Taxes owed by any of the Company and its Subsidiaries
(whether or not shown on any Tax Return) have been paid, except where a
failure to pay such Taxes will not, individually or in the aggregate, have
a Material Adverse Effect and except with respect to Taxes being contested
in good faith by the Company and/or its Subsidiaries. Except as set forth
on Section 3(l) of the Disclosure Schedule, none of the Company and its
Subsidiaries currently is the beneficiary of any extension of time within
which to file any Tax Return. No claim is currently pending by an
authority in a jurisdiction where any of the Company and its Subsidiaries
do not file Tax Returns that any of the Company or its Subsidiaries is or
may be subject to taxation by that jurisdiction. There are no Security
Interests on any of the assets of any of the Company and its Subsidiaries
that arose in connection with any failure (or alleged failure) to pay any
Tax, except for such Security Interests which would not, individually or in
the aggregate, have a Material Adverse Effect.
(ii) Each of the Company and its subsidiaries has withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party, except where a failure to withhold or
pay such Taxes will not, individually or in the aggregate, have a Material
Adverse Effect.
(iii) To the Company's Knowledge, no applicable authority
will assess any additional Taxes against the Company or its Subsidiaries
for any period for which Tax Returns have been filed. Except as set forth
on Section3(l) of the Disclosure Schedule, there is no dispute or claim
concerning any Tax Liability of any of the Company and its Subsidiaries
either (A) claimed or raised by any authority in writing or (B) to the
Company's Knowledge. Section 3(l) of the Disclosure Schedule lists all
federal, state, local, and foreign income Tax Returns filed with respect to
any of the Company and its Subsidiaries for taxable periods ended on or
after August 31, 1995, indicates those Tax Returns that have been audited,
and indicates those Tax Returns that currently are the subject of audit.
The Company has made available to APAC correct and complete copies of all
federal income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by any of the Company and its
Subsidiaries since August 31, 1995.
(iv) Other than with respect to dispute or claims set forth in
Section 3(l) of the Disclosure Schedule, none of the Company and its
subsidiaries has waived any statute of limitations (except in connection
with disputes or claims listed in Section 3(l) of the Disclosure Schedule)
in respect of Taxes or agreed to any extension of time with respect to a
Tax assessment or deficiency.
(v) None of the Company and its Subsidiaries has made any
payments, is obligated to make any payments, or is a party to any agreement
that under certain circumstances could obligate it to make any payments
that will not be deductible under Code Sec. 280G. None of the Company and
its Subsidiaries has been a United States real property holding corporation
within the meaning of Code Sec. 897(c)(2) during the applicable period
specified in Code Sec. 897(c)(1)(A)(ii). Each of the Company and its
Subsidiaries has disclosed on its federal income Tax Returns all positions
taken therein that, to the Company's Knowledge, could give rise to a
substantial understatement of federal income Tax within the meaning of Code
Sec. 6662. None of the Company and its Subsidiaries is a party to any Tax
allocation or sharing agreement. None of the Company and its Subsidiaries
(A) has been a member of an Affiliated Group filing a consolidated federal
income Tax Return (other than a group the common parent of which was the
Company) and (B) has any Liability for the Taxes of any Person under Treas.
Reg. Section 1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.
(vi) The unpaid Taxes of the Company and its Subsidiaries (A) did
not, as of the Most Recent Fiscal Month End, exceed the reserves and
accruals for such Taxes excluding any reserve for deferred taxes and (B) to
the Company's Knowledge, do not exceed the reserves and accruals as
adjusted for the passage of time through the Closing Date in accordance
with GAAP consistent with past practice.
(m) Real Property.
(i) None of the Company and its Subsidiaries owns any real
property.
(ii) Section 3(m)(ii) of the Disclosure Schedule lists and
describes briefly all real property leased or subleased to any of the
Company and its Subsidiaries. The Company has made available to APAC
correct and complete copies of the leases and subleases listed in
Section 3(m)(ii) of the Disclosure Schedule (as amended to date). With
respect to each lease and sublease listed in Section 3(m)(ii) of the
Disclosure Schedule:
(A) except as set forth in Section 3(m) of the Disclosure
Schedule, the lease or sublease is legal, valid, binding, enforceable,
and in full force and effect, except as limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws now or
hereafter in effect affecting creditors' rights generally;
(B) except as set forth in Section 3(m) of the Disclosure
Schedule, the lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby,
except as limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect affecting
creditors' rights generally;
(C) except as set forth in Section 3(m) of the Disclosure
Schedule, none of the Company and its Subsidiaries, nor to the
Company's Knowledge any other party, is in breach or default under the
lease or sublease, and, to the Company's Knowledge, no event has
occurred which, with notice or lapse of time, would constitute a
breach or default or permit termination, modification or acceleration
thereunder, except for any such breaches or defaults which would not,
individually or in the aggregate, have a Material Adverse Effect;
(D) except as set forth in Section 3(m) of the Disclosure
Schedule, none of the Company and its Subsidiaries, nor to the
Company's Knowledge, any other party to the lease or sublease, has
repudiated any provision thereof; and
(E) to the Company's Knowledge, there are no disputes, oral
agreements, or forbearance programs in effect as to the lease or
sublease other than those which would not individually or in the
aggregate, have a Material Adverse Effect.
(n) Intellectual Property. Except as set forth on Section 3(n) of
the Disclosure Schedule, each of the Company and its Subsidiaries owns or has
the right to use pursuant to license, sublicense, agreement, or permission all
Intellectual Property except as would not, individually or in the aggregate,
have a Material Adverse Effect. Except as set forth on Section 3(n) of the
Disclosure Schedule, no licenses, sublicenses or agreements pertaining to any of
the Intellectual Property have been granted or entered into by any of the
Company and its Subsidiaries. To the Knowledge of the Company, each of the
trademarks and service marks included among the Intellectual Property are valid
and enforceable. To the Company's Knowledge and except as set forth on
Section 3(n) of the Disclosure Schedule, neither the Company nor any of its
Subsidiaries has received any notices of, nor are aware of any facts which
indicate a likelihood of, any infringement by any third party with respect to
those trademarks and service marks included among the Intellectual Property.
Except as set forth on Section 3(n) of the Disclosure Schedule, the Company and
its Subsidiaries have or will receive pursuant to the transactions contemplated
by this Agreement the right to use, without payment to any other party other
than maintenance and transfer fees, all Software currently in use by the Company
and its Subsidiaries that are material to the Business.
(o) Tangible Assets. Except as set forth on Section 3(o) of the
Disclosure Schedule and except as would not, individually or in the aggregate,
have a Material Adverse Effect, the Company and its Subsidiaries own or lease
all equipment and other tangible assets reasonably necessary for the conduct of
the Business. Except as set forth on Section 3(o) of the Disclosure Schedule
and except as would not, individually or in the aggregate, have a Material
Adverse Effect, all material tangible assets have been maintained in accordance
with normal industry practice and are in good operating condition and repair
(subject to normal wear and tear).
(p) Contracts. Section 3(p) of the Disclosure Schedule lists the
following contracts and other agreements to which the Company or any of its
Subsidiaries is a party:
(i) any agreement (or group of related agreements) for the
furnishing of inbound or outbound call center services, the performance of
which will extend over a period of more than one year, that would result in
a loss to the Company if terminated, or that involves consideration, in
excess of $500,000 per annum;
(ii) any agreement (or group of related agreements) for the lease
of personal property to or from any Person which has a future liability in
excess of $200,000 per annum;
(iii) any agreement (or group of related agreements), other
than those identified pursuant to (i) above, for the purchase or sale of
supplies, products or other personal property, or for the furnishing or
receipt of services, the performance of which will extend over a period of
more than one year, that would result in a loss to the Company if
terminated, or that involves consideration, in excess of $500,000 per
annum;
(iv) any agreement constituting a partnership or joint venture;
(v) any agreement (or group of related agreements) under which
it has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, in excess of $50,000
or under which it has expressly imposed a Security Interest on any of its
assets, tangible or intangible;
(vi) any covenant not to compete that materially impairs the
Business;
(vii) any agreement with any of the Stockholders and their
Affiliates (other than the Company and its Subsidiaries);
(viii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors, officers,
and employees;
(ix) any employee collective bargaining agreement;
(x) any written agreement for the employment of any individual
on a full-time, part-time, consulting, or other basis that has a future
liability in excess of $100,000 per annum;
(xi) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, or Stockholders, other than
advances made in the ordinary course of business; or
(xii) any written agreement with a sales broker (provided
that Section 3(p) of the Disclosure Schedule also sets forth a list of all
sales brokers who have provided services to the Company or any Subsidiary
since January 1, 1997).
The Company has made available to APAC a correct and complete copy of each
written agreement listed in Section 3(p) of the Disclosure Schedule (as amended
to date). With respect to each such agreement, except as set forth on
Section 3(p) of the Disclosure Schedule and except as would not, individually,
or in the aggregate, have a Material Adverse Effect, (A) the agreement is
legal, valid, binding, enforceable, and in full force and effect, except as
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereafter in effect affecting creditors' rights generally; (B) there
shall be no breach or other violation resulting from the consummation of the
transactions contemplated hereby; (C) none of the Company and its Subsidiaries,
nor to the Knowledge of the Company any other party, is in breach or default,
and, to the Knowledge of the Company, no event has occurred which with notice
or lapse of time would constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; and (D) none of the Company
and its Subsidiaries, nor to the Knowledge of the Company any other party, has
repudiated any provision of the agreement.
(q) Notes and Accounts Receivable. All notes and accounts receivable
of the Company and its Subsidiaries have arisen from bona fide transactions
requiring, to the Company's Knowledge, no further performance by the Company or
its Subsidiaries and, to the Company's Knowledge, subject to no setoff or
counterclaims, subject only to the reserve for bad debts set forth on the face
of the Most Recent Balance Sheet (rather than in any notes thereto) as adjusted
for the passage of time through the Closing Date in accordance with the past
custom and practice of the Company and its Subsidiaries. Set forth on
Section 3(q) of the Disclosure Schedule is the Company's accounts receivable
aging schedule as of April 20, 1998.
(r) Insurance. Each of the Company and its Subsidiaries is covered
(subject to applicable deductibles, self-insurance provisions and other
limitations on coverage) by valid insurance policies issued in favor of the
Company or its Subsidiaries. Neither the Company nor any Subsidiary has
received any notices of cancellation or non-renewal with respect to any such
policies, all premiums due thereon have been paid and the Company and its
Subsidiaries have complied with the provisions of such policies (except for
notices of cancellation or nonrenewal, failures to pay premiums and to comply
which, individually or in the aggregate, would not have a Material Adverse
Effect).
(s) Litigation. Section 3(s) of the Disclosure Schedule sets forth
each instance in which any of the Company and its Subsidiaries (except as would
not, individually or in the aggregate, have a Material Adverse Effect): (i) is
subject to any outstanding injunction, judgment, order, decree, ruling, or
charge or (ii) is a party or, to the Company's Knowledge, is threatened to be
made a party to any action, suit, proceeding, hearing, or investigation of, in,
or before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator. To the
Company's Knowledge, none of the actions, suits, proceedings, hearings, and
investigations set forth in Section 3(s) of the Disclosure Schedule is likely,
individually or in the aggregate, to result in any Material Adverse Effect.
(t) Employees.
(i) Section 3(t) of the Disclosure Schedule sets forth a list
of all employees of the Company or any of its Subsidiaries who receive
compensation in excess of $50,000 per year.
(ii) To the Knowledge of the Company, no Principal Stockholder or
any employee who reports directly to any Principal Stockholder has any
plans to terminate employment with any of the Company and its Subsidiaries.
(iii) Except as set forth on Section 3(t) of the Disclosure
Schedule, (A) none of the Company and its Subsidiaries is a party to any
collective bargaining agreement or similar agreement with respect to its
employees; (B) there is no labor strike, slowdown, work stoppage, or
lockout in effect or, to the Knowledge of the Company, threatened against
or otherwise affecting or involving the Business, nor has any such labor
strike, slowdown, work stoppage, or lockout occurred since September 1,
1995; (C) there is no current, written, unresolved grievance which,
individually or in the aggregate, is likely to have a Material Adverse
Effect and no arbitration proceeding is pending or, to the Knowledge of the
Company, threatened and no claim therefor has been asserted; (D) there is
no unfair labor practice charge or complaint pending or, to the Knowledge
of the Company, threatened relating to the Business; (E) no representation
question has been brought to the attention of the Company respecting any of
the employees of any of the Company and its Subsidiaries since September 1,
1995, nor to the Company's Knowledge, are any campaigns being conducted to
solicit cards from any of the employees of any of the Company and its
Subsidiaries to authorize representation by any labor organization; (F) no
collective bargaining agreement relating to any of the employees of any of
the Company and its Subsidiaries is being negotiated; (G) payment in full
to all of the employees of the Company and its Subsidiaries of all wages,
salaries, commissions, bonuses, benefits, and other compensation lawfully
due and owing to such employees or otherwise arising under any policy,
practice, agreement, plan, program, statute, or other law has been made,
except where a failure to make such payment will not, individually or in
the aggregate, have a Material Adverse Effect; and (H) no facility of any
of the Company and its Subsidiaries has been closed, there have not been
any layoffs of any of its employees sufficient to require notification
under the Workers Adjustment and Retraining Notification Act of 1988, as
amended, or implementations of any early retirement, separation, or window
program since September 1, 1995 with respect to any of the Company and its
Subsidiaries, nor, other than in connection with or as a result of the
transactions contemplated hereby, are there any plans or announcements of
any such action or program for the future.
(u) Employee Benefits.
(i) Section 3(u) of the Disclosure Schedule lists each Employee
Benefit Plan that any of the Company and its Subsidiaries maintains or to
which any of the Company and its Subsidiaries contributes which affects or
covers any Principal Stockholder or any ten or more employees of the
Company or any Subsidiary. Except as set forth in Section3(u) of the
Disclosure Schedule:
(A) Each such Employee Benefit Plan (and each related
trust) complies in form and in operation in all material respects with
its terms and with the applicable requirements of ERISA, the Code, and
other applicable laws, except where the failure to comply would not,
individually or in the aggregate, have a Material Adverse Effect.
(B) All contributions (including all employer contributions
and employee salary reduction contributions) which are due have been
paid with respect to each such Employee Benefit Plan which is an
Employee Pension Benefit Plan.
(C) The only Employee Benefit Plan of the Company or its
Subsidiaries which is an Employee Pension Benefit Plan is the
Company's 401(k) plan. The Company has established its 401(k) plan by
adoption of a standardized prototype plan and the sponsor of such
prototype plan has received a favorable determination or approval
letter from the Internal Revenue Service that the form of prototype
plan qualifies under Code Sec. 401(a) and the Company has taken all
steps necessary for the Company to rely on such letter.
(D) The Company has made available to APAC correct and
complete copies of the plan documents and summary plan descriptions,
the most recent determination letter received from the Internal
Revenue Service, the most recent Form 5500 Annual Report, and all
related trust agreements, insurance contracts, and other funding
agreements which implement each such Employee Benefit Plan.
(ii) Except as set forth in Section 3(u) of the Disclosure
Schedule, with respect to each Employee Benefit Plan (other than any
Multiemployer Plan) that any of the Company and its Subsidiaries and the
Controlled Group of Corporations which includes the Company maintains, ever
has maintained, or to which any of them contributes, ever has contributed,
or ever has been required to contribute:
(A) No such Employee Benefit Plan which is an Employee
Pension Benefit Plan has been completely or partially terminated or
been the subject of a Reportable Event as to which notices would be
required to be filed with the PBGC. No proceeding by the PBGC to
terminate any such Employee Pension Benefit Plan has been instituted
or, to the Company's Knowledge, threatened.
(B) To the Company's Knowledge, there have been no
Prohibited Transactions with respect to any such Employee Benefit
Plan. To the Company's Knowledge, no Fiduciary (as defined in ERISA
Section 3(21)) has any Liability for breach of fiduciary duty or any
other failure to act or comply in connection with the administration
or investment of the assets of any such Employee Benefit Plan. Except
as set forth on Section3(u) of the Disclosure Schedule, no action,
suit, proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any such Employee
Benefit Plan (other than any Multiemployer Plan), other than routine
claims for benefits, is pending or, to the Company's Knowledge,
threatened. The Company has no Knowledge of any basis for any such
action, suit, proceeding, hearing, or investigation.
(C) None of the Company and its Subsidiaries has incurred,
nor, to the Company's Knowledge, expects has any reason to expect that
any of the Company and its Subsidiaries will incur, with respect to
the period prior to the Closing, any Liability to the PBGC (other than
PBGC premium payments) or otherwise under Title IV of ERISA or under
the Code with respect to any such Employee Benefit Plan which is an
Employee Pension Benefit Plan.
(iii) None of the Company and its Subsidiaries and the other
members of the Controlled Group of Corporations that includes the Company
and its Subsidiaries contributes to, ever has contributed to, or ever has
been required to contribute to any Multiemployer Plan or has any Liability
(including withdrawal Liability) under any Multiemployer Plan.
(iv) None of the Company and its Subsidiaries maintains or
contributes to any Employee Welfare Benefit Plan providing medical, health,
or life insurance or other welfare-type benefits for current or future
retired or terminated employees, their spouses, or their dependents (other
than in accordance with Code Sec. 4980B).
(v) Guaranties. None of the Company and its Subsidiaries is a
guarantor or otherwise is liable for any Liability or obligation (including
indebtedness) of any Person (other than the Company and its Subsidiaries) which
has outstanding principal amount of future liability in excess of $150,000.
(w) Environment, Health, and Safety. Except as set forth on
Section3(w) of the Disclosure Schedule, (A) since August 31, 1995, none of the
Company and its Subsidiaries has received any written communication from a
governmental authority that alleges that any Company or any Subsidiary is not in
compliance, in all material respects, with any applicable Environmental, Health
and Safety Requirements, including the rules and regulations relating thereto,
and (B) to the Company's Knowledge, the Company and its Subsidiaries hold, and
are in compliance with, all material permits, licenses and governmental
authorizations required for the Company and its Subsidiaries to operate under
applicable Environmental, Health and Safety Requirements, and are in compliance
with all applicable Environmental, Health and Safety Requirements, except for
failures to have such permits, licenses or authorizations and instances of
noncompliance which, individually or in the aggregate, would not have a Material
Adverse Effect.
(x) Certain Business Relationships with the Company and its
Subsidiaries. Except as set forth in Section3(x) of the Disclosure Schedule and
other than ordinary course employment relationships, none of the Stockholders
and their Affiliates has been involved in any business arrangement or
relationship with the Company and its Subsidiaries within the past 12 months,
and none of the Stockholders and their Affiliates owns any material asset,
tangible or intangible, which is used in the Business.
(y) Clients. Section 3(y) of the Disclosure Schedule sets forth an
accurate, correct and complete list as of February 28, 1998 of the 10 largest
clients of the Company and its Subsidiaries, with respect to each of the inbound
and outbound call center operations performed by the Company and its
Subsidiaries, together with the revenues received from each such client for each
of the last two fiscal years and for the six months ending February 28, 1998.
The Company has no Knowledge that any specific client will cease to do business
with the Company or any Subsidiary after, or as a result of, the consummation of
any transactions contemplated hereby or that any client is threatened with
bankruptcy or insolvency.
(z) Bank Accounts. Section 3(z) of the Disclosure Schedule sets
forth all the bank accounts of any of the Company and its Subsidiaries.
(aa) Indebtedness. The Payoff Indebtedness and the Outstanding
Indebtedness set forth on Exhibit B includes, with respect to the Company and
its Subsidiaries, all outstanding indebtedness for borrowed money as of the date
hereof. All Payoff Indebtedness is identified with an asterisk ("*") on Exhibit
B.
(bb) Election under Section 341(f) of the Code. Neither the Company
nor any Subsidiary has made an election under Section 341(f) of the Code.
Section 4. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of APAC and Newco. Each of APAC
and Newco, jointly and severally, represents and warrants to the Principal
Stockholders and the Company that the statements contained in this Section 4(a)
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 4(a)), except as set forth in the Disclosure Schedule. The Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 4(a).
(i) Organization. Each of APAC and Newco is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(ii) Authorization of Transaction. Each of APAC and Newco has
requisite power and authority (including requisite corporate power and
authority) to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of each of APAC and Newco, enforceable in accordance
with its terms and conditions, except as limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect
affecting creditors' rights generally.
(iii) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, or other
restriction of any government, governmental agency, or court to which APAC
or Newco is subject or any provision of the charter or bylaws of either
APAC or Newco or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right
to accelerate, terminate, modify, or cancel, or require any notice under
any agreement, contract, lease, license, instrument, or other arrangement
to which APAC or Newco is a party or by which either is bound or to which
any of their assets is subject which conflict, breach, default,
acceleration or right would have a material adverse effect on the business,
operations or financial condition of APAC or Newco or otherwise adversely
affect APAC's or Newco's ability to consummate the transactions
contemplated hereby. Except as set forth in Section4(a)(iii) of the
Disclosure Schedule, neither APAC nor Newco needs to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(iv) Actions and Proceedings, etc. There are no outstanding
judgments, orders, writs, injunctions or decrees of any court, governmental
agency or arbitration tribunal against APAC or Newco which have or could
have a material adverse effect on the ability of APAC or Newco to
consummate the transactions contemplated hereby or actions, suits, claims
or legal, administrative or arbitration proceedings or investigations
pending or, to the knowledge of APAC or Newco, threatened against APAC or
Newco, which have or could have a material adverse effect on the ability of
APAC or Newco to consummate the transactions contemplated hereby.
(v) Availability of Funds. APAC has received, and has furnished
to the Representative copies of, a financing commitment letter from Harris
Bank dated April 30, 1998. Neither APAC nor Newco has any reason to
believe that Harris Bank will not fund pursuant to such commitment letter.
(vi) No Knowledge of Misrepresentations or Omissions. Neither
APAC nor Newco has any knowledge that the representations and warranties of
the Principal Stockholders in this Agreement and the Disclosure Schedule
are not true and correct in all material respects and neither APAC nor
Newco has any knowledge of any material errors in, or material omissions
from, the Disclosure Schedule.
(vii) Facility Closings and Mass Layoffs. APAC shall bear
all Adverse Consequences, and shall indemnify each Stockholder for any
Adverse Consequences which he or it may suffer, arising pursuant to the
Workers Adjustment and Retraining Notification Act of 1988, as amended, as
a result of any facility closings, reductions in work force or terminations
which APAC, Newco or any of their Affiliates may cause or initiate on or
after the Closing Date with respect to the Business.
(b) Representations and Warranties of the Principal Stockholders.
Each of the Principal Stockholders severally and not jointly represents and
warrants to APAC and Newco that the statements contained in this Section 4(b)
are correct and complete as to himself or itself (and, with respect to the
first sentence of Section 4(b)(iv) below only, generally) as of the date of
this Agreement and will be correct and complete as to himself or itself (and,
with respect to the first sentence of Section 4(b)(iv) below only, generally)
as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 4(b)), except
as set forth in the Disclosure Schedule. The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 4(b).
(i) Organization of Certain Stockholders. If the Principal
Stockholder is a trust, corporation, partnership, limited liability company
or other entity, the Principal Stockholder is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
formation.
(ii) Authorization of Transaction. Such Principal Stockholder has
requisite power and authority to execute and deliver this Agreement and to
perform his or its obligations hereunder. This Agreement constitutes the
valid and legally binding obligation of such Stockholder, enforceable in
accordance with its terms and conditions, except as limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect affecting creditors' rights generally.
(iii) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, or other
restriction of any government, governmental agency, or court to which such
Principal Stockholder is subject or, if the Principal Stockholder is a
trust, corporation, partnership, limited liability company or other entity,
any provision of its formation documents or arrangements or (B) except as
set forth on Section 4(b)(iii) of the Disclosure Schedule, conflict with,
result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which the Principal
Stockholder is a party or by which he or it is bound or to which any of his
or its assets is subject, other than any such violations, conflicts,
breaches, defaults, accelerations, terminations, modifications,
cancellations or notices that, individually or in the aggregate, would not
have a Material Adverse Effect or would not impair the ability of the
Principal Stockholders to consummate the transactions contemplated by this
Agreement, and other than any such notices, filings, consents,
authorizations or approvals required under the Hart-Scott-Rodino Act or
that may be required solely by reasons of APAC's regulatory status and
participation in the transactions contemplated hereby (other than breaches
or defaults that may result from a change of control of the Company).
(iv) Shares. Section 3(b) of the Disclosure Schedule sets forth
the amount of issued and outstanding capital stock, Options and Warrants
of the Company and no Person holds any shares of capital stock or any
Options or Warrants, other than as set forth in Section 3(b) of the
Disclosure Schedule. Except as set forth on Section 4(b)(iv) of the
Disclosure Schedule, each Principal Stockholder holds of record and owns
beneficially the number of Shares, Options and Warrants set forth next to
his or its name in Section 3(b) of the Disclosure Schedule, free and clear
of any restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), Taxes, Security Interests,
options, warrants, purchase rights, contracts, commitments, equities, and
claims, other than any restrictions and Security Interests imposed as a
result of the pledge of such Shares to the Company in connection with the
Stockholder Notes, which restrictions and Security Interests shall be
released at the Closing upon payment in full of the Stockholder Notes.
Except as set forth on Section 3(b) of the Disclosure Schedule, such
Principal Stockholder is not a party to any option, warrant, purchase
right, or other contract or commitment that could require such Principal
Stockholder to sell, transfer, or otherwise dispose of any capital stock of
the Company (other than this Agreement). Except as set forth on
Section3(b) of the Disclosure Schedule, such Principal Stockholder is not a
party to (x) any voting trust, proxy, or other agreement or understanding
with respect to the voting of any capital stock of the Company, or (y) any
other agreement between or among any of the other Stockholders with respect
to the Company.
(v) Tax Status. Such Principal Stockholder is not a "nonresident
alien individual" or "foreign corporation" for purposes of Code Sec.
897(a)(1).
Section 5. Pre-Closing Covenants. The Parties agree as follows with
respect to the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its reasonable best
efforts to take all action within his or its control and to do all things
necessary, proper, or advisable in order to consummate and make effective the
transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in Section6 below).
(b) Notices and Consents. Each of the Parties will give any notices
to, make any filings with, and use its reasonable efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
in connection with the matters referred to in Section3(d) above or set forth in
Section3(d) of the Disclosure Schedule. Without limiting the generality of the
foregoing, APAC, Newco and the Representative shall each file or cause to be
filed with the Federal Trade Commission and/or the United States Department of
Justice any notifications required to be filed under the Hart-Scott-Rodino Act
with respect to the transactions contemplated hereby and APAC, Newco and the
Company shall bear the costs and expenses of their respective filings and any
filings required to be made by or on behalf of the Principal Stockholders;
provided, however, that APAC shall pay the filing fee in connection therewith.
APAC, Newco and the Representative shall use their respective best efforts to
make such filings as soon as practicable following the date hereof (but in any
event no later than five business days following the execution and delivery of
this Agreement), to respond to any requests for additional information made by
either of such agencies and to cause the waiting periods under the Hart-Scott
Rodino Act to terminate or expire at the earliest possible date and to resist in
good faith, at each of their respective costs and expenses (including the
institution or defense of legal proceedings), any assertion that the
transactions contemplated hereby constitute a violation of the antitrust laws,
all to the end of expediting consummation of the transactions contemplated
hereby. Each of APAC, Newco and the Representative shall consult with the
others prior to any meetings, by telephone or in person, with the staff of the
Federal Trade Commission and the United States Department of Justice, and each
of APAC, Newco and the Representative shall have the right to have a
representative present at any such hearing.
(c) Operation of Business. Except (i) as contemplated by this
Agreement, (ii) as set forth on Section5(c) of the Disclosure Schedule, or (iii)
so long as prior written notice is provided to APAC, in respect of any actions
taken to cure any events of default under loan or other credit documents to
which the Company and/or its Subsidiaries are parties or to refinance any funded
indebtedness of the Company and/or its Subsidiaries, from the date hereof to the
Closing, the Company will not, without the prior written consent of APAC, which
shall not be unreasonably withheld, engage in any practice, take any action, or
enter into any transaction outside the ordinary course of business. Without
limiting the generality of the foregoing, except (i) as contemplated by this
Agreement, (ii) as set forth on Section 5(c) of the Disclosure Schedule, (iii)
with the prior written consent of APAC, which shall not be unreasonably
withheld, or (iv) so long as prior written notice is provided to APAC, in
respect of any actions taken to cure any events of default under loan or other
credit documents to which the Company and/or its Subsidiaries are parties or to
refinance any funded indebtedness of the Company and/or its Subsidiaries, none
of the Company and its Subsidiaries will:
(i) declare, set aside, or pay any dividend or make any
distribution with respect to its capital stock (whether in cash or in kind)
or redeem, purchase, or otherwise acquire any of its capital stock;
(ii) sell, lease, transfer, or assign any of its assets, tangible
or intangible, to any third party (including any intercompany transfer)
outside the ordinary course of business;
(iii) enter into any agreement, contract, lease, or license
(or series of related agreements, contracts, leases, and licenses) outside
the ordinary course of business;
(iv) accelerate, terminate, cancel, or, outside the ordinary
course of business, modify any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) to which the
Company is a party or by which it is bound;
(v) other than in the ordinary course of business, impose any
Security Interest upon any of its assets, tangible or intangible;
(vi) make any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person (or series of
related capital investments, loans, and acquisitions);
(vii) issue any note, bond or other debt security or incur,
assume or guarantee any indebtedness for borrowed money or capitalized
lease obligation;
(viii) delay or postpone the payment of accounts payable and
other Liabilities;
(ix) accelerate the collection of accounts, notes, or other
receivables;
(x) cancel, compromise, waive, or release any right or claim (or
series of related rights and claims) outside the ordinary course of
business;
(xi) grant any license or sublicense of any rights under or with
respect to any Intellectual Property;
(xii) change or authorize a change in the charter or bylaws
of any of the Company or its Subsidiaries;
(xiii) issue, sell or otherwise dispose of any of its capital
stock, or grant any options, warrants, or other rights to purchase or
obtain (including upon conversion, exchange, or exercise) any of its
capital stock;
(xiv) make any loan to, or enter into any other transaction
with, any of its directors, officers, and employees;
(xv) adopt, amend, modify, or terminate any Employee Benefit
Plan;
(xvi) enter into any employment contract or collective
bargaining agreement, written or oral, or modify the terms of any existing
such contract or agreement;
(xvii) grant any increase in the compensation (including base
salary and bonus) of any of its directors, officers, and employees;
(xviii) make any other change in employment terms for any of
its directors, officers, and employees;
(xix) make or pledge to make any charitable or other capital
contribution outside the ordinary course of business; and
(xx) make any payments of principal with respect to any
indebtedness for borrowed money of the Company or any Subsidiary, other
than scheduled payments as reflected on the cash flow statement of the
Company attached hereto as Exhibit D.
(d) Preservation of Business. Subject to the terms and conditions of
this Agreement, the Company will, and will cause each Subsidiary to, use
commercially reasonable efforts to keep the Business substantially intact,
including its present operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, customers, and employees.
(e) Full Access. Prior to the Closing, the Company will permit
representatives of APAC at reasonable times (during normal business hours) and
upon reasonable notice to have reasonable access to the premises, properties,
personnel, books, records (including Tax records), contracts, and documents of
or pertaining to the Company and its Subsidiaries and, only together with an
authorized representative of the Company, to the clients of the Company which
are identified on Section 3(y) of the Disclosure Schedule.
(f) Notice of Developments.
(i) The Principal Stockholders will give prompt written notice
to APAC, and APAC will give prompt written notice to the Representative, on
behalf of the Principal Stockholders, of any breach of any of their
respective representations and warranties in Section 3 and Section 4(b)
above of which they become aware. No disclosure by any Party pursuant
to this Section 5(f), however, shall be deemed to amend or supplement the
Disclosure Schedule or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant;
(ii) Prior to the Closing, APAC shall promptly notify Principal
Stockholders if APAC obtains knowledge that the representations and
warranties of Principal Stockholders in this Agreement, as modified by the
Disclosure Schedule, are not true and correct in all material respects, or
if APAC obtains knowledge of any material errors in, or omissions from, the
Disclosure Schedule.
(g) Exclusivity. The Principal Stockholders and the Company will not
(i) solicit, initiate, or encourage the submission of any proposal or offer from
any Person relating to the acquisition of any capital stock or other voting
securities, or any substantial portion of the assets, of the Company and its
Subsidiaries (including any acquisition structured as a merger, consolidation,
or share exchange), or (ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or seek
any of the foregoing. The Principal Stockholders will not vote their Shares in
favor of any such acquisition structured as a merger, consolidation, or share
exchange. The Principal Stockholders will notify APAC immediately if any Person
makes any bona fide written offer with respect to any of the foregoing.
(h) Satisfaction of All Obligations Under Payoff Indebtedness. The
Company shall have obtained from the lenders under all obligations included in
Payoff Indebtedness and delivered to APAC each of the following (all in form and
substance reasonably acceptable to APAC) effective as of the Closing: (i)
general releases of the Company and its Subsidiaries completely releasing the
Company and its Subsidiaries from any and all claims under, in connection with
the arising from such obligations, and (ii) payoff letters, UCC-3 termination
statements, mortgage releases and any other releases necessary to release any
collateral given to any lender under any such obligation as security for the
Company's or any of its Subsidiary's obligations thereunder.
(i) Repayment of All Obligations Under Payoff Indebtedness. Upon
satisfaction of all of the conditions to the obligations of APAC and Newco
provided in Section6(a) hereof, APAC shall cause all of the Payoff Indebtedness
to be repaid in full.
Section 6. Conditions to Obligation to Close.
(a) Conditions to Obligation of APAC and Newco. The obligation of
APAC and Newco to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction (or waiver by APAC) of
the following conditions:
(i) the representations and warranties set forth in Section3 and
Section4(b) above shall be true and correct in all respects at and as of
the Closing Date, except: (A) to the extent of changes resulting from
developments or occurrences relating to or affecting United States or
foreign economies in general or the industry of the Company and its
Subsidiaries generally, (B) for breaches of such representations and
warranties that are the results of the execution of this Agreement or
actions taken by APAC prior to the Closing Date or as contemplated herein,
(C) for breaches of such representations and warranties that would not in
the aggregate have an adverse effect upon the business, financial
condition, operations or results of operations of the Company and its
Subsidiaries taken as a whole which results in at least $2,500,000 of
Adverse Consequences to the Company or its Subsidiaries, and (D) for
representations and warranties that speak as of a specific date or time
(which need only be true and correct as of such date or time);
(ii) each of the Principal Stockholders and the Company shall
have performed and complied in all material respects with all of his or its
covenants hereunder through the Closing;
(iii) the Company and its Subsidiaries shall have provided
all of the third party consents marked with an asterisk (*) on Section 3(d)
of the Disclosure Schedule;
(iv) except as otherwise disclosed in the Disclosure Schedule, no
action, suit, or proceeding shall be pending before any court or quasi-
judicial or administrative agency of any federal, state, local, or foreign
jurisdiction wherein an unfavorable injunction, judgment, order, decree, or
ruling initiated by a state or federal governmental agency or authority, or
initiated by a party other than a federal or state governmental agency or
authority which would be reasonably likely to be issued, which, in any
event, would: (A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, or
(C) affect materially and adversely the right of APAC to own the Company
Shares and to control the Company, or (D) affect adversely and materially
the right of the Company to own its assets and to operate its businesses
(and no such injunction, judgment, order, decree, or ruling shall be in
effect);
(v) each officer and director of the Company and its
Subsidiaries shall have resigned; all management, consultant or advising
agreements between Golder, Thoma, Cressey, Rauner Fund IV, L.P. or any of
its Affiliates or Steven A. Idelman, Sheri B. Idelman or any of their
Affiliates and the Company and any Subsidiary shall have been terminated
and the Company and its Subsidiary shall have been released from all
obligations and Liabilities under such agreements;
(vi) all stockholder agreements among the Stockholders or between
any Stockholder and the Company and its Subsidiaries shall have been
terminated;
(vii) all of the Company's and its Subsidiaries' equity
incentive plans, and all rights thereunder, shall have been terminated;
(viii) each outstanding Option and Warrant shall have been
exercised prior to the Closing;
(ix) holders of at least 98% of the issued and outstanding Class
A Shares as of the Closing and at least 96% of the issued and outstanding
Class B Shares as of the Closing shall have consented to the Merger and the
execution, delivery and performance of this Agreement;
(x) the Representative shall have delivered to Newco a
certificate of the Company to the effect that each of the conditions
specified above in Section 6(a)(i)-(ix) is satisfied;
(xi) all applicable waiting periods under the Hart-Scott-Rodino
Act shall have expired or otherwise been terminated; and
(xii) APAC and Newco shall have received the opinions of
Blackwell Sanders Matheny Weary & Lombardi LLP and Kirkland & Ellis
addressed to APAC and Newco and dated the Closing Date in the forms
attached to this Agreement as Exhibits E-1 and E-2.
APAC and Newco shall be deemed to have waived any condition specified in this
Section6(a) if either executes a writing so stating at or prior to the Closing.
The disclosure of any matter prior to the Closing shall not be deemed to amend
or supplement the Disclosure Schedule or to have caused APAC or Newco to have
waived any condition specified in this Section 6(a) or any representation,
warranty, or covenant.
(b) Conditions to Obligation of the Principal Stockholders. The
obligation of the Principal Stockholders to consummate the transactions to be
performed by them in connection with the Closing is subject to satisfaction (or
waiver by the Representative) of the following conditions:
(i) the representations and warranties set forth in Section
4(a) above shall be true and correct in all material respects at and as
of the Closing Date, except (A) to the extent of changes or developments
contemplated by the terms of this Agreement and (B) for representations and
warranties that speak as of a specific date or time (which need only be
true and correct as of such date or time);
(ii) each of APAC and Newco shall have performed and complied
with all of its covenants hereunder in all material respects through the
Closing;
(iii) no action, suit, or proceeding shall be pending before
any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction wherein an unfavorable injunction, judgment,
order, decree, or ruling initiated by a state or federal governmental
agency or authority, or initiated by a party other than a federal or state
governmental agency or authority which would be reasonably likely to be
issued, which, in any event, would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect materially and adversely the right of APAC to
own the capital stock of, and to control, the Surviving Corporation (and no
such injunction, judgment, order, decree, or ruling shall be in effect);
(iv) APAC and Newco shall have delivered to the Representative,
on behalf of the Stockholders, a certificate to the effect that each of the
conditions specified above in Section 6(b)(i)-(iii) is satisfied; and
(v) all applicable waiting periods under the Hart-Scott-Rodino
Act shall have expired or otherwise been terminated.
The Principal Stockholders shall be deemed to have waived any condition
specified in this Section6(b) if the Representative and Steven A. Idelman each
executes a writing so stating at or prior to the Closing.
Section 7. Termination.
(a) Termination of Agreement. APAC and the Representative may
terminate this Agreement as provided below:
(i) APAC and the Representative may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) APAC may terminate this Agreement by giving written notice
to the Representative at any time prior to the Closing in the event any of
the conditions set forth in Section 6(a) shall have become incapable of
fulfillment and shall not have been waived by APAC; and
(iii) the Representative may terminate this Agreement by
giving written notice to APAC at any time prior to the Closing in the event
any of the conditions set forth in Section 6(b) shall have become
incapable of fulfillment and shall not have been waived by the
Representative.
(iv) APAC or the Representative may terminate this Agreement if
the Closing has not occurred on or prior to the thirty-second day following
the filing by APAC, Newco and the Stockholders of all notifications
required to be filed under the Hart-Scott-Rodino Act with respect to the
transactions contemplated hereby; provided, however, that if the consents
required by Section 6(a)(iii) have not been obtained on or prior to such
thirty-second day, the Company and the Principal Stockholders shall have an
additional 30 days to obtain such consents.
(b) Effect of Termination. If APAC or the Representative terminates
this Agreement pursuant to Section 7(a) above, all rights and obligations of
the Parties hereunder shall terminate without any Liability of any Party, except
for any Liability of any Party then in breach of any covenant (but not any
representation or warranty contained in this Agreement) or as provided in
Section 7(c) below.
(c) Specific Performance. Notwithstanding anything in this Agreement
to the contrary, if, prior to the termination of this Agreement, APAC (i) has
complied with all of the conditions to Closing contained in Section 6(b), (ii)
has notified the Representative of its intention to consummate the transactions
contemplated under this Agreement, and (iii) is ready and able to deliver the
Merger Consideration and furnishes evidence to that effect to the
Representative, and if the Closing does not then occur due to the refusal of any
of the Principal Stockholders to so consummate the transactions contemplated
under this Agreement, APAC will be entitled to specifically enforce the terms of
this Agreement in a court of competent jurisdiction, it being acknowledged that
monetary damages due APAC in such case cannot be adequately determined at law.
Section 8. Survival and Indemnification.
(a) Survival of Representations and Warranties. All of the
representations, warranties, covenants, and agreements contained in this
Agreement have been relied upon and shall terminate upon the Closing, provided,
that any representation and warranty contained in Section 4(b)(iv) shall
survive indefinitely.
(b) Indemnification Provisions for the Benefit of APAC and Newco. In
the event of a misrepresentation or breach (or in the event any third party
alleges facts that, if true, would mean a misrepresentation or breach) of
Section 4(b)(iv), then each Principal Stockholder (pro rata in accordance with
his or its stock ownership shown on Section 3(b) of the Disclosure Schedule and
in no event in an aggregate amount greater than the aggregate Merger
Consideration allocated to such Principal Stockholder (as calculated prior to
the deduction of any amounts relating to his or its Stockholder Note)) agrees to
indemnify APAC and Newco from and against any Adverse Consequences APAC or Newco
actually suffers through and after the date of the claim for indemnification
resulting from, arising out of, relating to, in the nature of, or caused by such
misrepresentation or breach (or alleged breach).
(c) Limitation on Liability. Notwithstanding anything to the
contrary contained herein, no Stockholder shall be liable to APAC or Newco with
respect to any Adverse Consequences suffered by APAC or Newco in connection with
this Agreement in an aggregate amount greater than the aggregate Merger
Consideration allocated to such Principal Stockholder (as calculated prior to
the deduction of any amounts relating to his or its Stockholder Note).
Section 9. Miscellaneous.
(a) Confidentiality; Publicity. Except as may be required by law or
legal or administrative process or as otherwise permitted or expressly
contemplated herein, no Party or their respective Affiliates, employees, agents
and representatives shall disclose to any third party this Agreement, the
subject matter or terms hereof or any confidential information or other
proprietary knowledge concerning the business or affairs of any other Party
which it may have acquired from such Party in the course of pursuing the
transactions contemplated by this Agreement, without the prior consent of the
other Parties; provided, however, that any information that is otherwise
publicly available, without breach of this provision, or has been obtained from
a third party without a breach of such third party's duties, shall not be deemed
confidential information. The Parties further agree that, from and the date
hereof through the Closing Date, no public release or announcement concerning
the transactions contemplated hereby shall be issued or made by any Party
without the prior consent of the other Parties (which consent shall not be
unreasonably withheld), except (i) for such releases or announcements which may
be required by law or the rules or regulations of the United States Securities
and Exchange Commission, the National Association of Securities Dealers or
NASDAQ, in which case the Party required to make the release or announcement
shall allow the other Parties reasonable time to comment on such release or
announcement in advance of its issuance, and (ii) that each of the
Representative and the Company may make such an announcement to their respective
employees and partners, provided, that the Company may make no such
announcements without the allowing APAC reasonable time to comment on such
announcement in advance of its issuance to the Company's employees.
Notwithstanding the foregoing, APAC and the Principal Stockholders shall
cooperate to prepare joint press releases to be issued (A) promptly following
the execution of this Agreement and (B) on the Closing Date.
(b) No Third-Party Beneficiaries. Except as set forth in
Section 2(h)(ii) above, this Agreement shall not confer any rights or remedies
upon any Person other than the Parties and their respective successors and
permitted assigns.
(c) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they related in any way to
the subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors, assigns, distributees, heirs, and grantors of any revocable trusts a
party hereto. No Party may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written approval of the
other Party; provided, however, that APAC may (i) assign any or all of its
rights and interests hereunder to one or more of its Affiliates and (ii)
designate one or more of its Affiliates to perform its obligations hereunder (in
any or all of which cases APAC nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
(e) Counterparts This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given upon receipt
if it is sent by facsimile, or reputable express courier, and addressed or
otherwise sent to the intended recipient as set forth below:
If to the Company, until the Closing:
Raymond R. Hipp
ITI Marketing Services, Inc.
902 North 91st Plaza
Omaha, Nebraska 68114
Facsimile: 402-392-9423
Copy to:
Gary D. Gilson
Blackwell Sanders Matheny Weary & Lombardi LLP
Suite 1100
2300 Main Street
Kansas City, Missouri 64105
Facsimile: 816-983-8080
W. Patrick Betterman
Betterman & Perry
444 Regency Parkway #302
Omaha, Nebraska 68114
Facsimile: 402-393-8645
If to the Representative:
Lee Mitchell
Golder, Thoma, Cressey, Rauner Fund IV, L.P.
6100 Sears Tower
Chicago, Illinois 60606
Facsimile: 312-382-2201
Copy to:
Kevin R. Evanich
Kirkland & Ellis
200 East Randolph Street
Chicago, Illinois 60601
Facsimile: 312-861-2200
If to APAC, and, after the Closing, the Company:
Marc S. Simon
APAC TeleServices, Inc.
One Parkway North Center, Suite 510
Deerfield, Illinois 60015
Facsimile: 847-374-3215
Copy to:
Bernard S. Kramer
McDermott, Will & Emery
227 West Monroe Street, Suite 5500
Chicago, Illinois 60606
Facsimile: 312-984-3669
email: [email protected]
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address or facsimile number set forth
above using any other means (including personal delivery, messenger service,
ordinary mail, or electronic mail), but no such notice, request, demand, claim,
or other communication shall be deemed to have been duly given unless and until
it actually is received by the intended recipient. Any party may change the
address or facsimile number to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING
EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (EITHER OF THE STATE
OF ILLINOIS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF ILLINOIS.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by APAC,
the Company, Steven A. and Sheri B. Idelman and the Representative, on behalf
of the other Stockholders. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Except as set forth herein, each party hereto will
bear its own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby. The
costs and expenses of Kirkland and Ellis incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the Company
at or prior to the Closing and shall reduce the Merger Consideration. All costs
and expenses of the Company incurred in connection with this Agreement and the
transactions contemplated hereby shall become the exclusive obligation of the
Surviving Corporation and shall in no circumstances reduce the Merger
Consideration.
(l) Construction. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Disclosure Schedule identifies
the exception with reasonable particularity.
(m) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules (including the Disclosure Schedule) identified in this Agreement are
incorporated herein by reference and made a part hereof.
(n) Cooperation. APAC and the Principal Stockholders shall cooperate
with each other and shall cause their respective officers, employees, agents and
representatives to cooperate with each other for a period of sixty (60) days
after the Closing to provide for an orderly transition of the Company and its
Subsidiaries to APAC and to minimize the disruption resulting from the
transactions contemplated hereby. Other than as specified in Section 9(k)
above, each Party shall be responsible for its own reasonable out-of-pocket
costs and expenses incurred in assisting the other pursuant to this
Section 9(n). No Party shall be required by this Section 9(n) to take any
action that would unreasonably interfere with the conduct of its business. In
addition, from time to time, as and when requested by any Party, any other Party
shall execute and deliver, or cause to be executed and delivered, all such
documents and instruments and shall take, or cause to be taken, all such further
or other actions (subject to any limitations set forth in this Agreement), as
such other Party may reasonably deem necessary or desirable to consummate the
transactions contemplated by this Agreement.
* * * * *
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.
APAC TELESERVICES, INC.
By:
Name:
Title:
ITI HOLDINGS, INC.
By:
Name:
Title:
ITI MARKETING ACQUISITION CORP.
By:
Name:
Title:
PRINCIPAL STOCKHOLDERS:
GOLDER, THOMA, CRESSEY, RAUNER FUND IV, L.P.
By: GTCR IV, L.P.
Its: General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.
Its: General Partner
By:
Name:
Title:
James M. Bata
Joseph R. Dougherty
Bradley T. Harslem
Daniel S. Hicks
Raymond R. Hipp, both individually
and as trustee of the Raymond R. Hipp
Trust dated 9/24/87
Roy E. Hunt
James K. Lines
Kayle D. Neeley
Ted J. Pfau
John T. Calk
L. Clark Sisson
Christopher R. Rehberg
Steven A. Idelman
Sheri B. Idelman
Tami L. Gabrielson
Exhibits:
Exhibit A: Agreements Executed Upon Signing of Merger Agreement
Exhibit B: ITI Marketing Services, Inc. Total Company Indebtedness
(May 31, 1998)
Exhibit C: ITI Marketing Services, Inc. Aggregate Closing Merger Consideration
Exhibit D: ITI Marketing Services, Inc. Cash Requirement
Exhibit E-1: Form of Opinion of Blackwell Sanders Matheny Weary & Lombardi LLP
Exhibit E-2: Form of Opinion of Kirkland & Ellis
Disclosure Schedules:
3(a): States Where Company and Subsidiaries are Incorporated and Authorized
to do Business
3(b): Capital Stock, Record Owners
3(d): Notices/Consents Required
3(e): Broker's Fees
3(f): Assets used by ITI Marketing Services, Inc. Which it Does Not Lease or
Own
3(g): Subsidiaries
3(h): Financial Statements
3(i): Events Since Most Recent Fiscal Year End
3(j): Undisclosed Liabilities
3(k): Compliance with Applicable Laws
3(l): Tax Issues
3(m)(ii): Leased Property
3(n): Licenses
3(o): Tangible Assets
3(p): Material Contracts
3(q): Accounts Receivable
3(s): Litigation
3(t): Employees
3(u): Employee Benefit Plans
3(w): Environmental
3(x): Business Relationship with the Company and its Subsidiaries
3(y): Clients
3(z): Bank Accounts
4(a)(iii): Consents
4(b)(iv): Capital Stock
5(c): Operation of Business
CREDIT AGREEMENT
DATED AS OF MAY 20, 1998,
AMONG
APAC TELESERVICES, INC.
THE BANKS PARTY HERETO,
AND
HARRIS TRUST AND SAVINGS BANK,
as Agent
AND
BANK OF MONTREAL,
as Syndication Agent
TABLE OF CONTENTS
SECTION DESCRIPTION PAGE
SECTION 1. THE CREDIT
FACILITIES. 1
Section 1.1. Revolving Credit
Commitments 1
Section 1.2. Letters of Credit
1
Section 1.3. Term Loan
Commitments. 4
Section 1.4. Applicable
Interest Rates on
Revolving and
Term Loans 4
Section 1.5. Minimum Borrowing
Amounts on
Revolving and
Term Loans 6
Section 1.6. Manner of
Borrowing
Revolving and
Term Loans and
Designating
Applicable
Interest Rates 6
Section 1.7. Default Rate on
Revolving and
Term Loans 8
Section 1.8. Swing Loans 8
Section 1.9. Interest Periods
for All Loans 11
Section 1.10. Maturity of All
Loans. 12
Section 1.11. Prepayments. 12
Section 1.12. The Notes. 14
Section 1.13. Funding Indemnity
15
Section 1.14. Commitment
Terminations 15
Section 1.15. Rate
Determinations 16
Section 2. Fees and
Substitution of
Banks. 16
Section 2.1. Fees. 16
Section 2.2. Substitution of
Banks. 17
Section 2.3. Defaulting Bank 17
Section 3. Place and
Application of
Payments 18
Section 4. Guaranties 19
Section 4.1. Collateral 19
Section 4.2. Guaranties 19
Section 4.3. Further
Assurances. 19
Section 5. Definitions;
Interpretation. 20
Section 5.1. Definitions. 20
Section 5.2. Interpretation. 33
Section 5.3. Change in
Accounting
Principles 33
Section 6. Representations
and Warranties. 34
Section 6.1. Organization and
Qualification 34
Section 6.2. Subsidiaries 34
Section 6.3. Authority and
Validity of
Obligations 35
Section 6.4. Use of Proceeds;
Margin Stock 35
Section 6.5. Financial Reports
35
Section 6.6. No Material
Adverse Change 36
Section 6.7. Full Disclosure 36
Section 6.8. Trademarks,
Franchises, and
Licenses 37
Section 6.9. Governmental
Authority and
Licensing 37
Section 6.10. Good Title 37
Section 6.11. Litigation and
Other
Controversies 37
Section 6.12. Taxes 37
Section 6.13. Approvals 38
Section 6.14. Affiliate
Transactions 38
Section 6.15. Investment
Company; Public
Utility Holding
Company 38
Section 6.16. ERISA 38
Section 6.17. Compliance with
Laws 38
Section 6.18. Other Agreements
39
Section 6.19. Solvency 39
Section 6.20. ITI Marketing
Acquisition 39
Section 6.21. Year 2000
Compliance 39
Section 6.22. No Default 40
Section 7. Conditions
Precedent. 40
Section 7.1. Initial Credit
Event. 40
Section 7.2. All Credit
Events. 42
Section 7.3. Existing Credit
Agreement 43
Section 8. Covenants. 43
Section 8.1. Maintenance of
Business 44
Section 8.2. Maintenance of
Properties 44
Section 8.3. Taxes and
Assessments 44
Section 8.4. Insurance 44
Section 8.5. Financial Reports
44
Section 8.6. Inspection 46
Section 8.7. Indebtedness for
Borrowed Money 47
Section 8.8. Liens 47
Section 8.9. Investments,
Acquisitions,
Loans, Advances
and Guaranties 48
Section 8.10. Mergers,
Consolidations
and Sales 50
Section 8.11. Maintenance of
Subsidiaries 51
Section 8.12. Dividends and
Certain Other
Restricted
Payments 51
Section 8.13. ERISA 52
Section 8.14. Compliance with
Laws 52
Section 8.15. Burdensome
Contracts With
Affiliates 52
Section 8.16. No Changes in
Fiscal Year 52
Section 8.17. Formation of
Subsidiaries 52
Section 8.18. Change in the
Nature of
Business 52
Section 8.19. Use of Loan
Proceeds 53
Section 8.20. No Restrictions
on Subsidiary
Distributions 53
Section 8.21. Subordinated Debt
53
Section 8.22. Total Debt Ratio
53
Section 8.23. Net Worth 54
Section 8.24. Fixed Charge
Coverage Ratio. 54
Section 8.25. Minimum Adjusted
EBITDA 54
Section 8.26. Operating Leases
54
Section 8.27. Interest Rate
Protection 55
Section 9. Events of Default and Remedies. 55
Section 9.1. Events of Default
55
Section 9.2. Non-Bankruptcy
Defaults. 57
Section 9.3. Bankruptcy
Defaults 57
Section 9.4. Collateral for
Undrawn Letters
of Credit 58
Section 9.5. Notice of Default
58
Section 9.6. Expenses 58
Section 10. Change in
Circumstances 58
Section 10.1. Change of Law 58
Section 10.2. Unavailability of
Deposits or
Inability to
Ascertain, or
Inadequacy of,
LIBOR 59
Section 10.3. Increased Cost
and Reduced
Return 59
Section 10.4. Lending Offices 61
Section 10.5. Discretion of
Bank as to Manner
of Funding 61
Section 10.6. Bank's Duty to
Mitigate 61
Section 11. The Agent and
Issuing Bank 62
Section 11.1. Appointment and
Authorization of
Agent 62
Section 11.2. Agent and its
Affiliates 62
Section 11.3. Action by Agent 62
Section 11.4. Consultation with
Experts 63
Section 11.5. Liability of
Agent; Credit
Decision 63
Section 11.6. Indemnity 63
Section 11.7. Resignation of
Agent and
Successor Agent 64
Section 11.8. Interest Rate
Hedging
Arrangements 64
Section 11.9. Issuing Bank. 64
Section 11.10. Agent's
Relationship with
Borrower 64
Section 12. Miscellaneous 65
Section 12.1. Withholding Taxes
65
Section 12.2. No Waiver,
Cumulative
Remedies. 66
Section 12.3. Non-Business
Days. 66
Section 12.4. Documentary
Taxes. 66
Section 12.5. Survival of
Representations.
66
Section 12.6. Survival of
Indemnities. 66
Section 12.7. Sharing of Set-
Off 66
Section 12.8. Notices. 67
Section 12.9. Counterparts. 67
Section 12.10. Successors and
Assigns 68
Section 12.11. Participants 68
Section 12.12. Assignment of
Commitments by
Banks 68
Section 12.13. Amendments. 69
Section 12.14. Headings. 69
Section 12.15. Costs and
Expenses. 69
Section 12.16. Set-off. 70
Section 12.17. Entire Agreement
70
Section 12.18. Governing Law 71
Section 12.19. Severability of
Provisions. 71
Section 12.20. Excess Interest 71
Section 12.21. Confidentiality 71
Section 12.22. Single Bank 72
Section 12.23. Syndication Agent
72
Section 12.24. Submission to
Jurisdiction;
Waiver of Jury
Trial 72
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Exhibit A - Notice of Payment Request
Exhibit B - Notice of Borrowing
EXHIBIT C - Notice of Continuation/Conversion
EXHIBIT D - Revolving Note
EXHIBIT E - Term Note
EXHIBIT F - Swingline Note
EXHIBIT G - Compliance Certificate
EXHIBIT H - Assignment and Acceptance
SCHEDULE 6.2 - Subsidiaries
SCHEDULE 8.7 - Other Indebtedness
SCHEDULE 8.8 - Other Liens
SCHEDULE 8.9 - Present Investments in Subsidiaries
CREDIT AGREEMENT
This Credit Agreement is entered into as of the 20th day of May, 1998, by
and between APAC TeleServices, Inc., an Illinois corporation (the "Borrower"),
Harris Trust and Savings Bank, an Illinois banking association, individually as
a Bank and as an agent (in such capacity as agent being hereinafter referred to
as the "Agent"), and the lending institutions which are or hereafter become
signatories hereto (collectively the "Banks" and individually a "Bank").
RECITALS
A. The Borrower has requested that the Banks loan monies to the Borrower.
B. The Banks, upon acceptance of this Agreement in writing, will lend
monies and/or make advances, extensions of credit or other financial
accommodations to, on behalf of or for the benefit of the Borrower pursuant
hereto.
NOW, THEREFORE, in consideration of the recitals set forth above, which by
this reference are incorporated into the Agreement set forth below, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and subject to the terms and conditions hereof and on the
basis of the representations and warranties herein set forth, the Borrower, the
Agent and the Banks hereby agree to the following:
SECTION 1. THE CREDIT FACILITIES.
Section 1.1. Revolving Credit Commitments. Subject to the terms and
conditions hereof, each Bank, by its acceptance hereof, severally agrees to make
a loan or loans (individually a "Revolving Loan" and collectively the "Revolving
Loans") to the Borrower in U.S. Dollars from time to time on a revolving basis
up to the amount of such Bank's revolving credit commitment set forth on the
applicable signature page hereof or pursuant to Section 12.12 hereof (its
"Revolving Credit Commitment" and, cumulatively for all the Banks, the
"Revolving Credit Commitments"), subject to any reductions thereof pursuant to
the terms hereof, before the Revolving Credit Termination Date. The sum of the
aggregate principal amount of Revolving Loans, Swing Loans and L/C Obligations
at any time outstanding shall not exceed the Revolving Credit Commitments in
effect at such time. Each Borrowing of Revolving Loans shall be made ratably
from the Banks in proportion to their respective Revolver Percentages. As
provided in Section 1.6(a) hereof, the Borrower may elect that each Borrowing of
Revolving Loans be either Base Rate Loans or Eurodollar Loans. Revolving Loans
may be repaid and the principal amount thereof reborrowed before the Revolving
Credit Termination Date, subject to the terms and conditions hereof.
Section 1.2. Letters of Credit. (a) General Terms. Subject to the terms
and conditions hereof, as part of the Revolving Credit, the Issuing Bank shall
issue standby and commercial letters of credit (each a "Letter of Credit") for
the Borrower's account in U.S. Dollars in an aggregate undrawn face amount up to
the amount of the L/C Commitment, provided that the aggregate L/C Obligations at
any time outstanding shall not exceed (i) $10,000,000 and (ii) the difference
between the Revolving Credit Commitments in effect at such time and the
aggregate principal amount of Revolving Loans and Swing Loans then outstanding.
Each Letter of Credit shall be issued by the Issuing Bank, but each Bank shall
be obligated to reimburse the Issuing Bank for such Bank's Revolver Percentage
of the amount of each drawing thereunder and, accordingly, each Letter of Credit
shall constitute usage of the Revolving Credit Commitment of each Bank pro rata
in accordance with its Revolver Percentage.
(b) Applications. At any time before the Revolving Credit Termination
Date, the Issuing Bank shall, at the request of the Borrower, issue one or more
Letters of Credit, in a form satisfactory to the Issuing Bank, with expiration
dates no later than the earlier of 12 months from the date of issuance (or be
cancelable not later than 12 months from the date of issuance and each renewal)
or Revolving Credit Termination Date, in an aggregate face amount as set forth
above, upon the receipt of an application duly executed by the Borrower for the
relevant Letter of Credit in the form then customarily prescribed by the Issuing
Bank for the Letter of Credit requested (each an "Application").
Notwithstanding anything contained in any Application to the contrary: (i) the
Borrower shall pay fees in connection with each Letter of Credit as set forth in
Section 2.1 hereof, (ii) except as otherwise provided in Section 1.11 hereof,
before the occurrence of a Default or an Event of Default, the Issuing Bank will
not call for the funding by the Borrower of any amount under a Letter of Credit
before being presented with a drawing thereunder, and (iii) if the Issuing Bank
is not timely reimbursed for the amount of any drawing under a Letter of Credit
on the date such drawing is paid, the Borrower's obligation to reimburse the
Issuing Bank for the amount of such drawing shall bear interest (which the
Borrower hereby promises to pay) from and after the date such drawing is paid at
a rate per annum equal to the sum of 2% plus the Applicable Margin for
Reimbursement Obligations plus the Base Rate from time to time in effect. If
the Issuing Bank issues any Letter of Credit with an expiration date that is
automatically extended unless the Issuing Bank gives notice that the expiration
date will not so extend beyond its then scheduled expiration date, the Issuing
Bank will give such notice of non-renewal before the time necessary to prevent
such automatic extension if before such required notice date: (i) the
expiration date of such Letter of Credit if so extended would be after the
Revolving Credit Termination Date, (ii) the Revolving Credit Commitments have
been terminated, or (iii) a Default or an Event of Default exists and the Agent,
at the direction of the Required Banks, has given the Issuing Bank instructions
not to so permit the extension of the expiration date of such Letter of Credit.
The Issuing Bank agrees to issue amendments to the Letter(s) of Credit
increasing the amount, or extending the expiration date, thereof at the request
of the Borrower subject to the conditions of Section 7.2 hereof and the other
terms of this Section 1.2.
(c) The Reimbursement Obligations. Subject to Section 1.2(b) hereof, the
obligation of the Borrower to reimburse the Issuing Bank for all drawings under
a Letter of Credit (a "Reimbursement Obligation") shall be governed by the
Application related to such Letter of Credit, except that reimbursement shall be
made by no later than 11:00 a.m. (Chicago time) on the date when each drawing is
paid in immediately available funds at the Issuing Bank's principal office in
Chicago, Illinois or such other office as the Issuing Bank may designate in
writing to the Borrower. If the Borrower does not make any such reimbursement
payment on the date due and the Participating Banks fund their participations
therein in the manner set forth in Section 1.2(d) below, then all payments
thereafter received by the Issuing Bank in discharge of any of the relevant
Reimbursement Obligations shall be distributed in accordance with Section 1.2(d)
below.
(d) The Participating Interests. Each Bank, by its acceptance hereof,
severally agrees to purchase from the Issuing Bank, and the Issuing Bank hereby
agrees to sell to each such Bank (a "Participating Bank"), an undivided
percentage participating interest (a "Participating Interest"), to the extent of
its Revolver Percentage, in each Letter of Credit issued by, and each
Reimbursement Obligation owed to, the Issuing Bank. Upon any failure by the
Borrower to pay any Reimbursement Obligation at the time required on the date
the related drawing is paid, as set forth in Section 1.2(c) above, or if the
Issuing Bank is required at any time to return to the Borrower or to a trustee,
receiver, liquidator, custodian, or other Person any portion of any payment of
any Reimbursement Obligation, each Participating Bank shall, not later than the
Business Day it receives a certificate in the form of Exhibit A hereto from the
Issuing Bank to such effect, if such certificate is received before 1:00 p.m.
(Chicago time), or not later than 1:00 p.m. (Chicago time) the following
Business Day, if such certificate is received after such time, pay to the
Issuing Bank an amount equal to such Participating Bank's Revolver Percentage of
such unpaid or recaptured Reimbursement Obligation together with interest on
such amount accrued from the date the related payment was made by the Issuing
Bank to the date of such payment by such Participating Bank at a rate per annum
equal to: (i) from the date the related payment was made by the Issuing Bank to
the date 2 Business Days after payment by such Participating Bank is due
hereunder, the Federal Funds Rate for each such day and (ii) from the date
2 Business Days after the date such payment is due from such Participating Bank
to the date such payment is made by such Participating Bank, the Base Rate in
effect for each such day. Each such Participating Bank shall thereafter be
entitled to receive its Revolver Percentage of each payment received in respect
of the relevant Reimbursement Obligation and of interest paid thereon, with the
Issuing Bank retaining its Revolver Percentage as a Bank hereunder.
The several obligations of the Participating Banks to the Issuing Bank
under this Section 1.2 shall be absolute, irrevocable, and unconditional under
any and all circumstances whatsoever and shall not be subject to any set-off,
counterclaim or defense to payment which any Participating Bank may have or have
had against the Borrower, the Agent, the Issuing Bank, any other Bank, or any
other Person whatsoever. Without limiting the generality of the foregoing, such
obligations shall not be affected by any Default or Event of Default or by any
reduction or termination of any Commitment of any Bank, and each payment by a
Participating Bank under this Section 1.2 shall be made without any offset,
abatement, withholding or reduction whatsoever. The Issuing Bank shall be
entitled to offset amounts received for the account of a Bank under this
Agreement against unpaid amounts due from such Bank to the Issuing Bank
hereunder (whether as fundings of participations, indemnities, or otherwise),
but shall not be entitled to offset against amounts owed to the Issuing Bank by
any Bank arising outside of this Agreement.
(e) Indemnification. The Participating Banks shall, to the extent of
their respective Revolver Percentages, indemnify the Issuing Bank (to the extent
not reimbursed by the Borrower) against any cost, expense (including reasonable
counsel fees and disbursements), claim, demand, action, loss, or liability
(except such as result from the Issuing Bank's gross negligence or willful
misconduct) that the Issuing Bank may suffer or incur in connection with any
Letter of Credit. The obligations of the Participating Banks under this
Section 1.2(e) and all other parts of this Section 1.2 shall survive termination
of this Agreement and of all Applications, Letters of Credit, and all drafts and
other documents presented in connection with drawings thereunder.
Section 1.3. Term Loan Commitments. Subject to the terms and conditions
hereof, each Bank, by its acceptance hereof, severally agrees to make a loan
(individually a "Term Loan" and collectively the "Term Loans") to the Borrower
in the amount of such Bank's term loan commitment as set forth on the applicable
signature page hereof or pursuant to Section 12.12 hereof (its "Term Loan
Commitment" and, cumulatively for all the Banks, the "Term Loan Commitments").
The Term Loans shall be made, if at all, on or before June 1, 1998, at which
time the Term Loan Commitments shall expire. The Term Loans shall be advanced
in a single Borrowing and shall be made ratably by the Banks in proportion to
their respective Term Loan Percentages. As provided in Section 1.6(a) hereof,
the Borrower may elect that the Term Loans be outstanding as Base Rate Loans or
Eurodollar Loans. No amount repaid or prepaid on any Term Loan may be borrowed
again.
Section 1.4. Applicable Interest Rates on Revolving and Term Loans.
(a) Base Rate Loans. Each Base Rate Loan made or maintained by a Bank shall
bear interest during each Interest Period it is outstanding (computed on the
basis of a year of 365 or 366 days, as the case may be, and the actual days
elapsed, except that determinations made under clause (ii) of the definition of
Base Rate set forth below shall be computed on the basis of a year of 360 days
and actual days elapsed) on the unpaid principal amount thereof from the date
such Loan is advanced, continued or created by conversion from a Eurodollar Loan
until maturity (whether by acceleration or otherwise) at a rate per annum equal
to the sum of the Applicable Margin plus the Base Rate from time to time in
effect, payable on the last day of its Interest Period and at maturity (whether
by acceleration or otherwise).
"Base Rate" means for any day, the greater of (i) the rate of interest
announced by the Agent from time to time as its prime commercial rate, as in
effect on such day (it being acknowledged and agreed that rate may not be the
Agent's best or lowest rate); and (ii) the sum of (x) the rate determined by the
Agent to be the average (rounded upwards, if necessary, to the next higher 1/100
of 1%) of the rates per annum quoted to the Agent at approximately 10:00 a.m.
(Chicago time) (or as soon thereafter as is practicable) on such day (or, if
such day is not a Business Day, on the immediately preceding Business Day) by
two or more Federal funds brokers selected by the Agent for the sale to the
Agent at face value of Federal funds in an amount equal or comparable to the
principal amount owed to the Agent for which such rate is being determined, plus
(y) 1/2 of 1% (0.5%).
(b) Eurodollar Loans. Each Eurodollar Loan made or maintained by a Bank
shall bear interest during each Interest Period it is outstanding (computed on
the basis of a year of 360 days and actual days elapsed) on the unpaid principal
amount thereof from the date such Loan is advanced, continued, or created by
conversion from a Base Rate Loan until maturity (whether by acceleration or
otherwise) at a rate per annum equal to the sum of the Applicable Margin plus
the Adjusted LIBOR applicable for such Interest Period, payable on the last day
of the Interest Period and at maturity (whether by acceleration or otherwise),
and, if the applicable Interest Period is longer than three months, on each day
occurring every three months after the commencement of such Interest Period.
"Adjusted LIBOR" means, for any Borrowing of Eurodollar Loans, a rate per
annum determined in accordance with the following formula:
Adjusted LIBOR = LIBOR
1 - Eurodollar Reserve Percentage
"LIBOR" means, for an Interest Period for a Borrowing of Eurodollar Loans,
(a) the LIBOR Index Rate for such Interest Period, if such rate is available,
and (b) if the LIBOR Index Rate cannot be determined, the arithmetic average of
the rates of interest per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) at which deposits in U.S. Dollars in immediately available funds
are offered to the Agent at 11:00 a.m. (London, England time) 2 Business Days
before the beginning of such Interest Period by major banks in the interbank
eurodollar market selected by the Agent for delivery on the first day of and for
a period equal to such Interest Period and in an amount equal or comparable to
the principal amount of the Eurodollar Loan scheduled to be made by the Agent as
part of such Borrowing.
"LIBOR Index Rate" means, for any Interest Period, the rate per annum
(rounded upwards, if necessary, to the next higher one hundred-thousandth of a
percentage point) for deposits in U.S. Dollars for a period equal to such
Interest Period, which appears on the Telerate Page 3750 as of 11:00 a.m.
(London, England time) on the day 2 Business Days before the commencement of
such Interest Period.
"Telerate Page 3750" means the display designated as "Page 3750" on the Dow
Jones Telerate Service (or such other page as may replace Page 3750 on that
service or such other service as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying British
Bankers' Association Interest Settlement Rates for U.S. Dollar deposits).
"Eurodollar Reserve Percentage" means, for any Borrowing of Eurodollar
Loans, the daily average for the applicable Interest Period of the maximum rate,
expressed as a decimal, at which reserves (including, without limitation, any
supplemental, marginal, and emergency reserves) are imposed during such Interest
Period by the Board of Governors of the Federal Reserve System (or any
successor) on "eurocurrency liabilities", as defined in such Board's
Regulation D (or in respect of any other category of liabilities that includes
deposits by reference to which the interest rate on Eurodollar Loans is
determined or any category of extensions of credit or other assets that include
loans by non-United States offices of any Bank to United States residents),
subject to any amendments of such reserve requirement by such Board or its
successor, taking into account any transitional adjustments thereto. For
purposes of this definition, the Eurodollar Loans shall be deemed to be
"eurocurrency liabilities" as defined in Regulation D without benefit or credit
for any prorations, exemptions or offsets under Regulation D.
Section 1.5. Minimum Borrowing Amounts on Revolving and Term Loans. Each
Borrowing of Base Rate Loans advanced under the Revolving Credit or Term Loan
Commitments shall be in an amount not less than $5,000,000 or such greater
amount which is an integral multiple of $1,000,000. Each Borrowing of
Eurodollar Loans advanced, continued, or converted under the Revolving Credit or
Term Loan Commitments shall be in an amount equal to $10,000,000 or such greater
amount which is an integral multiple of $1,000,000.
Section 1.6. Manner of Borrowing Revolving and Term Loans and Designating
Applicable Interest Rates. (a) Notice to the Agent. The Borrower shall give
notice to the Agent by no later than 10:00 a.m. (Chicago time): (i) at least 3
Business Days before the date on which the Borrower requests the Banks to
advance a Borrowing of Eurodollar Loans under the Revolving Credit or Term Loan
Commitments and (ii) on the date the Borrower requests the Banks to advance a
Borrowing of Base Rate Loans under the Revolving Credit or Term Loan
Commitments. The Loans included in each such Borrowing shall bear interest
initially at the type of rate specified in such notice of a new Borrowing.
Thereafter, the Borrower may from time to time elect to change or continue the
type of interest rate borne by each such Borrowing or, subject to Section 1.5's
minimum amount requirement for each outstanding Borrowing, a portion thereof, as
follows: (i) if such Borrowing is of Eurodollar Loans, on the last day of the
Interest Period applicable thereto, the Borrower may continue part or all of
such Borrowing as Eurodollar Loans or convert part or all of such Borrowing into
Base Rate Loans or (ii) if such Borrowing is of Base Rate Loans, on any Business
Day, the Borrower may convert all or part of such Borrowing into Eurodollar
Loans for an Interest Period or Interest Periods specified by the Borrower. The
Borrower shall give all such notices requesting the advance, continuation, or
conversion of a Borrowing under the Revolving Credit or Term Loan Commitments in
each case to the Agent by telephone or telecopy (which notice shall be
irrevocable once given and, if by telephone, shall be promptly confirmed in
writing) substantially in the form attached hereto as Exhibit B (Notice of
Borrowing) or Exhibit C (Notice of Continuation/Conversion), as applicable, or
in such other form acceptable to the Agent under the Revolving Credit or Term
Loan Commitments. Notices of the continuation of such a Borrowing of Eurodollar
Loans for an additional Interest Period or of the conversion of part or all of
such a Borrowing of Eurodollar Loans into Base Rate Loans or of Base Rate Loans
into Eurodollar Loans must be given by no later than 10:00 a.m. (Chicago time)
at least 3 Business Days before the date of the requested continuation or
conversion. All such notices concerning the advance, continuation, or
conversion of a Borrowing under the Revolving Credit or Term Loan Commitments
shall specify the date of the requested advance, continuation, or conversion of
a Borrowing (which shall be a Business Day), the amount of the requested
Borrowing to be advanced, continued, or converted, the type of Loans to comprise
such new, continued, or converted Borrowing and, if such Borrowing is to be
comprised of Eurodollar Loans, the Interest Period applicable thereto. The
Borrower agrees that the Agent may rely on any such telephonic or telecopy
notice given by any person the Agent in good faith believes is an Authorized
Representative without the necessity of independent investigation, and in the
event any such notice by telephone conflicts with any written confirmation, such
telephonic notice shall govern if the Agent has acted in good faith in reliance
thereon.
(b) Notice to the Banks. The Agent shall give prompt telephonic or
telecopy notice to each Bank of any notice from the Borrower received pursuant
to Section 1.6(a) above and, if such notice requests the Banks to make
Eurodollar Loans under the Revolving Credit or Term Loan Commitments, the Agent
shall give notice to the Borrower and each Bank by like means of the interest
rate applicable thereto promptly after the Agent has made such determination.
(c) Borrower's Failure to Notify; Automatic Continuations and Conversions.
Any outstanding Borrowing of Base Rate Loans under the Revolving Credit or Term
Loan Commitments shall automatically be continued for an additional Interest
Period on the last day of its then current Interest Period unless the Borrower
has notified the Agent within the period required by Section 1.6(a) that the
Borrower intends to convert such Borrowing, subject to Section 7.2 hereof, into
a Borrowing of Eurodollar Loans under the Revolving Credit or Term Loan
Commitments or such Borrowing is prepaid in accordance with Section 1.11(a). If
the Borrower fails to give notice pursuant to Section 1.6(a) above of the
continuation or conversion of any outstanding principal amount of a Borrowing of
Eurodollar Loans before the last day of its then current Interest Period within
the period required by Section 1.6(a) or, whether or not such notice has been
given, one or more of the conditions set forth in Section 7.2 for the
continuation or conversion of a Borrowing of Eurodollar Loans would not be
satisfied and such Borrowing is not prepaid in accordance with Section 1.11(a),
such Borrowing shall automatically be converted into a Borrowing of Base Rate
Loans. In the event the Borrower fails to give notice pursuant to
Section 1.6(a) above of a Borrowing equal to the amount of a Reimbursement
Obligation and has not notified the Agent by 1:00 p.m. (Chicago time) on the day
such Reimbursement Obligation becomes due that it intends to repay such
Reimbursement Obligation through funds not borrowed under this Agreement, the
Borrower shall be deemed to have requested a Borrowing of Base Rate Loans on
such day in the amount of the Reimbursement Obligation then due, subject to
Section 7 hereof, which Borrowing shall be applied to pay the Reimbursement
Obligation then due.
(d) Disbursement of Loans. Not later than 1:00 p.m. (Chicago time) on the
date of any requested advance of a new Borrowing under the Revolving Credit or
Term Loan Commitments, subject to Section 7 hereof, each Bank shall make
available its Loan comprising part of such Borrowing in funds immediately
available at the principal office of the Agent in Chicago, Illinois. The Agent
shall make the proceeds of each new Borrowing available to the Borrower at the
Agent's principal office in Chicago, Illinois (or by wire transfer of funds
pursuant to the Borrower's written instructions to the Agent).
(e) Agent Reliance on Bank Funding. Unless the Agent shall have been
notified by a Bank prior to (or, in the case of a Borrowing of Base Rate Loans,
by 1:00 p.m. (Chicago time) on) the date on which such Bank is scheduled to make
payment to the Agent of the proceeds of a Loan (which notice shall be effective
upon receipt) that such Bank does not intend to make such payment, the Agent may
assume that such Bank has made such payment when due and the Agent may in
reliance upon such assumption (but shall not be required to) make available to
the Borrower the proceeds of the Loan to be made by such Bank and, if any Bank
has not in fact made such payment to the Agent, such Bank shall, on demand, pay
to the Agent the amount made available to the Borrower attributable to such Bank
together with interest thereon in respect of each day during the period
commencing on the date such amount was made available to the Borrower and ending
on (but excluding) the date such Bank pays such amount to the Agent at a rate
per annum equal to (i) from the date the related advance was made by the Agent
to the date 2 Business Days after payment by such Bank is due hereunder, the
Federal Funds Rate for each such day and (ii) from the date 2 Business Days
after the date such payment is due from such Bank to the date such payment is
made by such Bank, the Base Rate in effect for each such day. If such amount is
not received from such Bank by the Agent immediately upon demand, the Borrower
will, on demand, repay to the Agent the proceeds of the Loan attributable to
such Bank with interest thereon at a rate per annum equal to the interest rate
applicable to the relevant Loan, but without such payment being considered a
payment or prepayment of a Loan under Section 1.13 hereof, so that the Borrower
will have no liability under such Section with respect to such payment.
Section 1.7. Default Rate on Revolving and Term Loans. Notwithstanding
anything to the contrary contained in Section 1.4 hereof, while any Event of
Default exists or after acceleration, the Borrower shall pay interest (after as
well as before entry of judgment thereon to the extent permitted by law) on the
principal amount of all Revolving Loans and Term Loans (computed on the basis of
a year of 360 days and actual days elapsed) at a rate per annum equal to:
(a) for any Base Rate Loan, the sum of 2% plus the Applicable Margin
plus the Base Rate from time to time in effect; and
(b) for any Eurodollar Loan, the sum of 2% plus the rate of interest
in effect thereon at the time of such default until the end of the Interest
Period applicable thereto and, thereafter at a rate per annum equal to the
sum of 2% plus the Applicable Margin for Base Rate Loans plus the Base Rate
from time to time in effect;
provided, however, that in the absence of acceleration, any adjustments pursuant
to this Section 1.7 shall be made at the election of the Required Banks with
written notice to the Borrower. While any Event of Default exists or after
acceleration, interest shall be paid on demand of the Agent at the request or
with the consent of the Required Banks.
Section 1.8. Swing Loans. (a) Generally. Subject to all of the terms and
conditions hereof, Agent agrees to make loans in U.S. Dollars to the Borrower
under the Swing Line ("Swing Loans") which shall not in the aggregate at any
time outstanding exceed the lesser of (i) $10,000,000 (as the same may be
reduced pursuant hereto, the "Swing Line Commitment") or (ii) the difference
between the Revolving Credit Commitments in effect at such time and the
aggregate amount of all Revolving Loans and L/C Obligations outstanding at the
time of computation. The Swing Line Commitment shall be available to the
Borrower and may be availed of by the Borrower from time to time and borrowings
thereunder may be repaid and used again during the period ending on the
Revolving Credit Termination Date; provided that each Swing Loan must be repaid
on the last day of the Interest Period applicable thereto. Each Swing Loan
shall be in a minimum amount of $250,000. Without regard to the face principal
amount of the Swing Line Note, the actual principal amount at any time
outstanding and owing by the Borrower on account of the Swing Line Note during
the period ending on the Revolving Credit Termination Date shall be the sum of
all Swing Loans then or theretofore made thereon less all payments actually
received thereon during such period. The Agent shall record on its books and
records or on a schedule to the Swing Line Note the amount of each Swing Loan
made by it, all payments of principal and interest and the principal balance
from time to time outstanding thereon, and, for any Swing Loan bearing interest
at Agents' Quoted Rate, the Interest Period and the interest rate applicable
thereto. The record thereof, whether shown on such books and records of the
Agent or on a schedule to the Swing Line Note, shall be prima facie evidence as
to all such matters; provided, however, that the Agent's failure to record any
of the foregoing or any error in any such record shall not limit or otherwise
affect the obligation of the Borrower to repay all Swing Loans made to it
hereunder together with accrued interest thereon.
(b) Interest on Swing Loans. Each Swing Loan shall bear interest until
maturity (whether by acceleration or otherwise) at a rate per annum equal to
(i) the sum of the Federal Funds Rate plus the Applicable Margin for Eurodollar
Loans as from time to time in effect or (ii) the Agent's Quoted Rate. Interest
on each Swing Loan shall be due and payable prior to such maturity on the last
day of each Interest Period applicable thereto. Notwithstanding anything to the
contrary contained in this Section 1.8(b) hereof, while any Event of Default
exists or after acceleration, the Borrower shall pay interest (after as well as
before entry of judgment thereon to the extent permitted by law) on the
principal amount of all Swing Loans (computed on the basis of a year of 365 or
366 days, as the case may be and the actual days elapsed) at a rate per annum
equal to (a) for any Swing Loan bearing interest with reference to the Federal
Funds Rate, the sum of 2% plus the Applicable Margin for Eurodollar Loans plus
the Base Rate from time to time in effect; and (b) for any Swing Loan bearing
interest with reference to the Agent's Quoted Rate, the sum of 2% plus the rate
of interest in effect thereon at the time of such default until the end of the
Interest Period applicable thereto and, thereafter, at a rate per annum equal to
the sum of 2% plus the Applicable Margin for Eurodollar Loans plus the Base Rate
from time to time in effect; provided, however, that in the absence of
acceleration, any adjustments pursuant to this Section 1.8(b) shall be made at
the election of the Required Banks with written notice to the Borrower. While
any Event of Default exists or after acceleration, interest shall be paid on
demand of the Agent at the request or with the consent of the Required Banks.
(c) Requests for Swing Loans. The Borrower shall give the Agent prior
notice (which may be written or oral) no later than 12:00 Noon (Chicago time) on
the date upon which the Borrower requests that any Swing Loan be made, of the
amount and date of such Swing Loan and the Interest Period selected therefor.
Within thirty (30) minutes after receiving such notice, Agent shall in its
discretion quote an interest rate to the Borrower at which the Agent would be
willing to make such Swing Loan available to the Borrower for a given Interest
Period (the rate so quoted for a given Interest Period being herein referred to
as "Agent's Quoted Rate"). The Borrower acknowledges and agrees that the
interest rate quote is given for immediate and irrevocable acceptance, and if
the Borrower does not so immediately accept Agent's Quoted Rate for the full
amount requested by the Borrower for such Swing Loan, the Agent's Quoted Rate
shall be deemed immediately withdrawn and such Swing Loan shall bear interest at
the rate per annum determined by adding the Applicable Margin for Eurodollar
Loans to the Federal Funds Rate as from time to time in effect. Subject to all
of the terms and conditions hereof, the proceeds of such Swing Loan shall be
made available to the Borrower on the date so requested at the offices of the
Agent in Chicago, Illinois (or by wire transfer of funds pursuant to the
Borrower's written instructions to the Agent). Anything contained in the
foregoing to the contrary notwithstanding (i) the obligation of Agent to make
Swing Loans shall be subject to all of the terms and conditions of this
Agreement and (ii) the Agent shall not be obligated to make more than one Swing
Loan during any one day.
(d) Refunding Loans. In its sole and absolute discretion, the Agent may
at any time, on behalf of the Borrower (which hereby irrevocably authorizes the
Agent to act on its behalf for such purpose) and with notice to the Borrower,
request each Bank to make a Revolving Loan in the form of a Base Rate Loan in an
amount equal to such Bank's Revolver Percentage of the amount of the Swing Loans
outstanding on the date such notice is given. Unless any of the conditions of
Section 7.2 are not fulfilled on such date, each Bank shall make the proceeds of
its requested Revolving Loan available to Agent, in immediately available funds,
at Agents' principal office in Chicago, Illinois, before 12:00 Noon (Chicago
time) on the Business Day following the day such notice is given. The proceeds
of such Revolving Loans shall be immediately applied to repay the outstanding
Swing Loans.
(e) Participations. If any Bank refuses or otherwise fails to make a
Revolving Loan when requested by the Agent pursuant to Section 1.8(d) above
(because the conditions in Section 7.2 are not satisfied or otherwise), such
Bank will, by the time and in the manner such Revolving Loan was to have been
funded to the Agent, purchase from the Agent an undivided participating interest
in the outstanding Swing Loans in an amount equal to its Revolver Percentage of
the aggregate principal amount of Swing Loans that were to have been repaid with
such Revolving Loans, provided no purchase of a participation in a Swing Loan
bearing interest at Agent's Quoted Rate need be made until after expiration of
the Interest Period applicable thereto. Each Bank that so purchases a
participation in a Swing Loan shall thereafter be entitled to receive its
Revolver Percentage of each payment of principal received on the Swing Loan and
of interest received thereon accruing from the date such Bank funded to Agent
its participation in such Loan. The several obligations of the Banks under this
Section 1.8(d) shall be absolute, irrevocable and unconditional under any and
all circumstances whatsoever and shall not be subject to any set-off,
counterclaim or defense to payment which any Bank may have or have had against
the Borrower, any other Bank or any other Person whatever. Without limiting the
generality of the foregoing, such obligations shall not be affected by any
Default or Event of Default or by any reduction or termination of the
Commitments of any Bank, and each payment made by an Bank under this Section
1.8(d) shall be made without any offset, abatement, withholding or reduction
whatsoever.
Section 1.9. Interest Periods for All Loans. As provided in Section 1.6(a)
or 1.7(c) hereof, at the time of each request to advance, continue, or create by
conversion a Borrowing of Eurodollar Loans or of a Swing Loan, the Borrower
shall select an Interest Period applicable to such Loans from among the
available options. The term "Interest Period" means the period commencing on
the date a Borrowing of Loans is advanced, continued, or created by conversion
and ending: (a) in the case of Base Rate Loans, on the last day of the calendar
month in which such Borrowing is advanced, continued, or created by conversion
(or on the last day of the following calendar month if such Loan is advanced,
continued or created by conversion on the last day of a calendar month), (b) in
the case of a Eurodollar Loan, 1, 2, 3 or 6 months thereafter, and (c) in the
case of Swing Loans, on the date one (1) to seven (7) days thereafter as
mutually agreed by the Agent and the Borrower; provided, however, that:
(a) any Interest Period for a Borrowing of Revolving Loans
consisting of Base Rate Loans that otherwise would end after the
Revolving Credit Termination Date shall end on the Revolving Credit
Termination Date, and any Interest Period for a Borrowing of Term Loans
consisting of Base Rate Loans that otherwise would end after the final
maturity date of the Term Loans shall end on the final maturity date of
the Term Loans;
(b) no Interest Period with respect to any portion of the Term
Loans shall extend beyond the final maturity date of the Term Loans,
and no Interest Period with respect to any portion of the Revolving
Loans or Swing Loans shall extend beyond the Revolving Credit
Termination Date;
(c) no Interest Period with respect to any portion of the Term
Loans consisting of Eurodollar Loans shall extend beyond a date on
which the Borrower is required to make a scheduled payment of principal
on the Term Loans, unless the sum of (a) the aggregate principal amount
of Term Loans that are Base Rate Loans plus (b) the aggregate principal
amount of Term Loans that are Eurodollar Loans with Interest Periods
expiring on or before such date equals or exceeds the principal amount
to be paid on the Term Loans on such payment date;
(d) prior to July 31, 1998, unless the Agent in its discretion
agrees otherwise, no Interest Period over one month in length shall be
selected for any Eurodollar Loan;
(e) whenever the last day of any Interest Period would otherwise
be a day that is not a Business Day, the last day of such Interest
Period shall be extended to the next succeeding Business Day, provided
that, if such extension would cause the last day of an Interest Period
for a Borrowing of Eurodollar Loans to occur in the following calendar
month, the last day of such Interest Period shall be the immediately
preceding Business Day; and
(f) for purposes of determining an Interest Period for a
Borrowing of Eurodollar Loans, a month means a period starting on one
day in a calendar month and ending on the numerically corresponding day
in the next calendar month; provided, however, that if there is no
numerically corresponding day in the month in which such an Interest
Period is to end or if such an Interest Period begins on the last
Business Day of a calendar month, then such Interest Period shall end
on the last Business Day of the calendar month in which such Interest
Period is to end.
Section 1.10. Maturity of All Loans. (a) Revolving Loans and Swing Loans.
Each Revolving Loan shall mature and become due and payable by the Borrower on
the Revolving Credit Termination Date. Each Swing Loan shall mature and become
due and payable by the Borrower on the last day of the Interest Period
applicable thereto.
(b) Scheduled Payments of Term Loans. The Borrower shall make principal
payments on the Term Loans in installments on the first day of each March, June,
September and December in each year, commencing with the calendar quarter ending
September 1, 1998 and ending on June 1, 2003, with the amount of each such
installment to aggregate as follows: $3,000,000 on September 1, 1998 and a like
sum on the first day of each calendar quarter thereafter to and including June
1, 1999; $4,000,000 on September 1, 1999 and a like sum on the first day of each
calendar quarter thereafter to and including June 1, 2001; $6,000,000 on
September 1, 2001 and a like sum on the first day of each calendar quarter
thereafter to and including June 1, 2002; $7,000,000 on September 1, 2002 and a
like sum on the first day of each calendar quarter thereafter to and including
March 1, 2003, but with the last installment on all Term Loans to aggregate all
principal of the Term Loans not sooner paid due on June 1, 2003 and with the
amount of each installment due on the Term Loans held by each Bank to be equal
to its Term Loan Percentage of each such aggregate amount.
Section 1.11. Prepayments. (a) Optional. The Borrower shall have the
privilege of prepaying in whole or in part (but, if in part, then: (i) if such
Borrowing is of Base Rate Loans, in an amount not less than $1,000,000, (ii) if
such Borrowing is of Eurodollar Loans, in an amount not less than $1,000,000,
and (iii) in each case, in an amount such that the minimum amount required for a
Borrowing pursuant to Section 1.5 hereof remains outstanding) any Borrowing of
Eurodollar Loans at any time upon 3 Business Days prior notice to the Agent or,
in the case of a Borrowing of Base Rate Loans, notice delivered to the Agent by
the Borrower no later than 10:00 a.m. (Chicago time) on the date of prepayment,
such prepayment to be made by the payment of the principal amount to be prepaid
and accrued interest thereon to the date fixed for prepayment plus any amounts
due the Banks under Section 1.13 hereof. Swing Loans bearing interest at
Agent's Quoted Rate may only be voluntarily paid on the last day of the Interest
Period then applicable to such Loans. The Agent will promptly advise each Bank
of any such prepayment notice it receives from the Borrower. Any amount of
Revolving Loans paid or prepaid before the Revolving Credit Termination Date
may, subject to the terms and conditions of this Agreement, be borrowed, repaid
and borrowed again. No amount of the Term Loans paid or prepaid may be
reborrowed. Each such prepayment of the Term Loans shall be applied to the
remaining installments of the Term Notes in the inverse order of maturity.
(b) Mandatory. (i) The Borrower shall, on each date the Revolving Credit
Commitments are reduced pursuant to Section 1.14 hereof, prepay the Revolving
Loans and, if necessary, prefund the L/C Obligations by the amount, if any,
necessary to reduce the sum of the aggregate principal amount of Revolving Loans
and Swing Loans and of L/C Obligations then outstanding to the amount to which
the Revolving Credit Commitments have been so reduced.
(ii) If the Borrower or any Subsidiary shall at any time or from time to
time make or agree to make a Disposition or shall suffer an Event of Loss
resulting in Net Cash Proceeds in excess of $25,000,000 on a cumulative basis in
any fiscal year of the Borrower, then (x) the Borrower shall promptly notify the
Agent of such proposed Disposition or Event of Loss (including the amount of the
estimated Net Cash Proceeds to be received by the Borrower or such Subsidiary in
respect thereof) and (y) promptly upon, and in no event later than the Business
Day after, receipt by the Borrower or the Subsidiary of the Net Cash Proceeds of
such Disposition or Event of Loss, the Borrower shall prepay the Term Loans in
an aggregate amount equal to 100% of the amount of such Net Cash Proceeds. Each
such prepayment shall be applied to the remaining installments of the Term Notes
in the inverse order of maturity. The Borrower acknowledges that its
performance hereunder shall not limit the rights and remedies of the Banks for
any breach of Section 8.10 hereof.
(iii) If after the date of this Agreement the Borrower or any Subsidiary
shall issue new equity securities (whether common or preferred stock or
otherwise), other than common stock issued in connection with the exercise of
employee stock options and equity securities issued as consideration for any
Acquisition permitted by Section 8.9(m) hereof, or dispose of any treasury
stock, the Borrower shall promptly notify the Agent of the estimated Net Cash
Proceeds of such issuance or disposition, as the case may be, to be received by
or for the account of the Borrower or such Subsidiary in respect thereof.
Promptly upon, and in no event later than the Business Day after, receipt by the
Borrower or such Subsidiary of Net Cash Proceeds of such issuance or
disposition, the Borrower shall prepay the Term Loans in an aggregate amount
equal to 50% of the amount of such Net Cash Proceeds. Each such prepayment
shall be applied to the remaining installments of the Term Notes in the inverse
order of maturity.
(iv) If after the date of this Agreement the Borrower or any Subsidiary
shall issue new debt securities by public offering or private placement or in
evidence of loans extended by banks or other institutional investors, the
Borrower shall promptly notify the Agent of the estimated Net Cash Proceeds of
such issuance to be received by or for the account of the Borrower or such
Subsidiary in respect thereof. Promptly upon, and in no event later than the
Business Day after, receipt by the Borrower or such Subsidiary of Net Cash
Proceeds of such issuance, the Borrower shall prepay the Term Loans in an
aggregate amount equal to 100% of the amount of such Net Cash Proceeds. Each
such prepayment shall be applied to the remaining installments of the Term Notes
in the inverse order of maturity. The Borrower acknowledges that its
performance hereunder shall not limit the rights and remedies of the Banks
arising from any breach of Section 8.7 hereof.
(v) Unless the Borrower otherwise directs, prepayments of Loans under this
Section 1.11(b) shall be applied first to Borrowings of Base Rate Loans until
payment in full thereof with any balance applied to Borrowings of Eurodollar
Loans in the order in which their Interest Periods expire. Each prepayment of
Loans under this Section 1.11(b) shall be made by the payment of the principal
amount to be prepaid and accrued interest thereon to the date of prepayment
together with any amounts due the Banks under Section 1.13 hereof. Each
prefunding of L/C Obligations shall be made in accordance with Section 9.4
hereof.
Section 1.12. The Notes. (a) The Revolving Loans made to the Borrower by a
Bank shall be evidenced by a single promissory note of the Borrower issued to
such Bank in the form of Exhibit D hereto. Each such promissory note is
hereinafter referred to as a "Revolving Note" and collectively such promissory
notes are referred to as the "Revolving Notes."
(b) The Term Loans made to the Borrower by a Bank shall be evidenced by a
single promissory note of the Borrower issued to such Bank in the form of
Exhibit E hereto. Each such promissory note is hereinafter referred to as a
"Term Note" and collectively such promissory notes are referred to as the "Term
Notes."
(c) The Swing Loans made to the Borrower by the Agent shall be evidenced
by a single promissory note of the Borrower issued to the Agent in the form of
Exhibit F hereto. This promissory note is hereinafter referred to as the "Swing
Line Note."
(d) Each Bank shall record on its books and records or on a schedule to
its appropriate Note the amount of each Loan advanced, continued or converted by
it, all payments of principal and interest and the principal balance from time
to time outstanding thereon, the type of such Loan, and, for any Eurodollar
Loan, the Interest Period and the interest rate applicable thereto. The record
thereof, whether shown on such books and records of a Bank or on a schedule to
the relevant Note, shall be prima facie evidence as to all such matters;
provided, however, that the failure of any Bank to record any of the foregoing
or any error in any such record shall not limit or otherwise affect the
obligation of the Borrower to repay all Loans made to it hereunder together with
accrued interest thereon. At the request of any Bank and upon such Bank
tendering to the Borrower the appropriate Note to be replaced, the Borrower
shall furnish a new Note to such Bank to replace any outstanding Note, and at
such time the first notation appearing on a schedule on the reverse side of, or
attached to, such Note shall set forth the aggregate unpaid principal amount of
all Loans, if any, then outstanding thereon.
(e) As soon as practicable, but in no event later than one (1) Business
Day after prior written notice from the Borrower to a Bank, such Bank shall
provide to the Borrower a written payoff letter from such Bank setting forth the
amount required to pay the Notes in full as of the date or dates requested by
the Borrower and any other amounts due by the Borrower hereunder (with a per
diem amount owing thereafter).
Section 1.13. Funding Indemnity. If any Bank (including for such purposes,
the Agent in the case of a Swing Loan which is a Fixed Rate Loan) shall incur
any loss, cost or expense (including, without limitation, any loss of profit,
and any loss, cost or expense incurred by reason of the liquidation or re-
employment of deposits or other funds acquired by such Bank to fund or maintain
any Fixed Rate Loan or the relending or reinvesting of such deposits or amounts
paid or prepaid to such Bank) as a result of:
(a) any payment, prepayment or conversion of a Fixed Rate Loan on
a date other than the last day of its Interest Period for any reason,
whether before or after default, and whether or not such payment is
required by any provisions of this Agreement (other than any such
prepayment as a result of Section 10.1 hereof),
(b) any failure (because of a failure to meet the conditions of
Section 7 or otherwise) by the Borrower to borrow a Fixed Rate Loan on
the date specified in a notice given pursuant to Section 1.6(a) or
1.15(c), as the case may be, or
(c) any failure (because of a failure to meet the conditions of
Section 7 or otherwise) by the Borrower to continue a Eurodollar Loan,
or to convert a Base Rate Loan into a Eurodollar Loan, in each case on
the date specified in a notice given pursuant to Section 1.6(a),
then, upon the demand of such Bank, the Borrower shall pay to such Bank such
amount as will reimburse such Bank for such loss, cost or expense. If any Bank
makes such a claim for compensation, it shall provide to the Borrower, with a
copy to the Agent, a certificate setting forth the amount of such loss, cost or
expense in reasonable detail (including an explanation of the basis for and the
computation of such loss, cost or expense) and the amounts shown on such
certificate shall be deemed prima facie correct if reasonably determined;
provided, however, that the Borrower shall not be obligated to pay any such
amount or amounts to the extent such loss, cost or expense was incurred by such
Bank (x) more than ninety (90) days prior to the date of the delivery of such
certificate (nothing herein to impair or otherwise affect the Borrower's
liability hereunder for any subsequent loss, cost or expense incurred by such
Bank) or (y) to the extent such loss, cost or expense was caused by such Bank's
gross negligence or willful misconduct.
Section 1.14. Commitment Terminations. (a) Optional Revolving Credit
Terminations. The Borrower shall have the right at any time and from time to
time, upon 3 Business Days prior written notice to the Agent, to terminate the
Revolving Credit Commitments without premium or penalty and in whole or in part,
any partial termination to be (i) in an amount not less than $10,000,000 and
which is an integral multiple of $5,000,000 and (ii) allocated ratably among the
Banks in proportion to their respective Revolver Percentages, provided that (x)
the Revolving Credit Commitments may not be reduced to an amount less than the
sum of the aggregate principal amount of Revolving Loans, Swing Loans and L/C
Obligations then outstanding and (y) any reduction of the Revolving Credit
Commitments to an amount less than the Swing Line Commitment or L/C Commitment
shall automatically reduce the Swing Line Commitment or L/C Commitment, as the
case may be, to such amount as well. The Agent shall give prompt notice to each
Bank of any such termination of the Revolving Credit Commitments.
(b) Mandatory Termination Upon a Change of Control. After the occurrence
of a Change of Control, the Required Banks may, by written notice to the
Borrower at any time on or before the date occurring 180 days after the date the
Borrower notifies the Banks of such Change of Control, terminate the remaining
Commitments and all other obligations of the Banks hereunder on the date stated
in such notice (which shall in no event be sooner than (i) three (3) days after
such notice is given or (ii) the day on which the Borrower repays any other
Indebtedness for Borrowed Money). On the date the Commitments are so
terminated, all outstanding Obligations (including, without limitation, all
principal of and accrued interest on the Notes) shall forthwith be due and
payable without further demand, presentment, protest, or notice of any kind and
the Borrower shall immediately pay to the Banks the full amount then available
for drawing under each Letter of Credit, such amount to be held in the Account
referred to in Section 9.4 hereof (the Borrower agreeing to immediately make
such payment on the date the Commitments are so terminated and acknowledging and
agreeing that the Banks would not have an adequate remedy at law for the failure
by the Borrower to honor any such demand and that the Banks, and the Agent on
their behalf, shall have the right to require the Borrower to specifically
perform such undertaking whether or not any drawings or other demands for
payment have been made under any of the Letters of Credit).
(c) Any termination of the Commitments pursuant to this Section 1.14 may
not be reinstated.
Section 1.15. Rate Determinations. The Agent shall determine each interest
rate applicable to the Loans and the Reimbursement Obligations hereunder in
accordance with the provisions hereof, and its determination thereof shall be
conclusive and binding except in the case of manifest error.
SECTION 2. FEES AND SUBSTITUTION OF BANKS.
Section 2.1. Fees. (a) Revolving Credit Commitment Fee. The Borrower
shall pay to the Agent for the ratable account of the Banks in accordance with
their Revolver Percentages a commitment fee at the rate per annum equal to the
Applicable Margin (computed on the basis of a year of 365 or 366 days, as the
case may be, and the actual number of days elapsed) on the average daily Unused
Revolving Credit Commitments. Such commitment fee shall be payable quarterly in
arrears on the last day of each calendar quarter in each year (commencing
June 30, 1998) and on the Revolving Credit Termination Date, unless the
Revolving Credit Commitments are terminated in whole on an earlier date, in
which event the commitment fee for the period to the date of such termination in
whole shall be paid on the date of such termination.
(b) Letter of Credit Fees. Quarterly in advance, on the first day of each
calendar quarter, the Borrower shall pay to the Issuing Bank for its own account
a facing fee equal to .25% per annum (computed on the basis of a year of
360 days and the actual number of days elapsed) applied to the daily average
face amount of standby Letters of Credit which are scheduled to be outstanding
during the calendar quarter commencing on such date. Quarterly in arrears, on
the last day of each calendar quarter in each year (commencing June 30, 1998)
and on the Revolving Credit Termination Date, unless the Revolving Credit
Commitments are terminated in whole on an earlier date, in which event the fee
for the period to the date of such termination in whole shall be paid on the
date of such termination, the Borrower shall pay to the Agent, for the ratable
benefit of the Banks in accordance with their Revolver Percentages, a letter of
credit fee at a rate per annum equal to the Applicable Margin (computed on the
basis of a year of 360 days and the actual number of days elapsed) in effect
during each day of such quarter applied to the daily average face amount of
Letters of Credit which are outstanding during such quarter. In addition, the
Borrower shall pay to the Issuing Bank for its own account the Issuing Bank's
standard drawing, negotiation, amendment, and other administrative fees for each
Letter of Credit (whether a commercial Letter of Credit or a standby Letter of
Credit). Such standard fees referred to in the preceding sentence may be
established by the Agent from time to time.
(c) Agent Fees. The Borrower shall pay to the Agent, for its own use and
benefit, the fees set forth in that certain fee letter dated April 30, 1998, by
and among the Borrower and Harris Trust and Savings Bank, or as otherwise agreed
to by the Agent and the Borrower.
Section 2.2. Substitution of Banks. Upon the receipt by the Borrower of
(a) a claim from any Bank for compensation under Section 10.3 or 12.1 hereof or
(b) notice by any Bank to the Borrower of any illegality pursuant to
Section 10.1 hereof, or in the event any Bank is a Defaulting Bank (any such
Bank referred to in clause (a) or (b) above, or any such Defaulting Bank, being
hereinafter referred to as an "Affected Bank"), the Borrower may, in addition to
any other rights the Borrower may have hereunder or under applicable law,
require, at the Affected Bank's expense, any such Affected Bank to assign, at
par plus accrued interest and fees, without recourse, all of its interest,
rights and obligations hereunder (including all of its Commitments and the
Revolving Loans and participation interests in Letters of Credit and other
amounts at any time owing to it hereunder and the other Loan Documents) to a
bank or other institutional lender specified by the Borrower, provided that
(i) such assignment shall not conflict with or violate any law, rule, or
regulation or order of any court or other governmental authority, (ii) the
Borrower shall have received the written consent of the Agent, which consent
shall not be unreasonably withheld, to such assignment, (iii) the Borrower shall
have paid to the Affected Bank all monies (together with amounts due such
Affected Bank under Section 1.13 hereof as if the Revolving Loans owing to it
were prepaid rather than assigned) other than such principal and accrued
interest and fees, and (iv) the assignment is entered into in accordance with
the other requirements of Section 12.12 hereof.
Section 2.3. Defaulting Bank. (a) Commitment. Notwithstanding anything
herein to the contrary, any commitment fee accrued with respect to the Revolving
Credit Commitment of a Defaulting Bank during the period prior to the time such
Bank became a Defaulting Bank and unpaid at such time shall not be payable by
the Borrower so long as such Bank shall be a Defaulting Bank except to the
extent that such commitment fee shall otherwise have been due and payable by the
Borrower prior to such time; provided, however, that no commitment fee shall
accrue on the Revolving Credit Commitment of a Defaulting Bank so long as such
Bank shall be a Defaulting Bank.
(b) Borrower's Remedies. The rights and remedies against a Defaulting
Bank under this Agreement, including without limitation this Section 2.3 and
Section 2.2 hereof, are in addition to other rights and remedies that the
Borrower may have against such Defaulting Bank with respect to any Loan or
unpaid Reimbursement Obligation which such Defaulting Bank has not funded, and
that the Agent or any Bank may have against such Defaulting Bank with respect to
any such Loan or Reimbursement Obligation.
SECTION 3. PLACE AND APPLICATION OF PAYMENTS.
All payments of principal of and interest on the Loans and the
Reimbursement Obligations, and of all other Obligations payable by the Borrower
under this Agreement and the other Loan Documents, shall be made by the Borrower
to the Agent by no later than 12:00 Noon (Chicago time) on the due date thereof
at the office of the Agent in Chicago, Illinois (or such other location in the
State of Illinois as the Agent may designate to the Borrower) for the benefit of
the Bank or Banks entitled thereto. Any payments received after such time shall
be deemed to have been received by the Agent on the next Business Day. All such
payments shall be made in U.S. Dollars, in immediately available funds at the
place of payment, in each case without set-off or counterclaim. The Agent will
promptly thereafter cause to be distributed like funds relating to the payment
of principal or interest on Loans and on Reimbursement Obligations in which the
Banks have purchased Participating Interests ratably to the Banks and like funds
relating to the payment of any other amount payable to any Bank to such Bank, in
each case to be applied in accordance with the terms of this Agreement.
Anything contained herein to the contrary notwithstanding, all payments and
collections received in respect of the Obligations or Hedging Liability and all
proceeds of the Collateral received, in each instance, by the Agent or any of
the Banks after the occurrence and during the continuation of an Event of
Default shall be remitted to the Agent and distributed as follows:
(a) first, to the payment of any outstanding costs and expenses
reasonably incurred by the Agent, and any security trustee therefor, in
monitoring, verifying, protecting, preserving or enforcing the Liens on the
Collateral or by the Agent, and any security trustee therefor, in
protecting, preserving or enforcing rights under the Loan Documents, and in
any event all costs and expenses of a character which the Borrower has
agreed to pay the Agent under Section 12.15 hereof (such funds to be
retained by the Agent for its own account unless it has previously been
reimbursed for such costs and expenses by the Banks, in which event such
amounts shall be remitted to the Banks to reimburse them for payments
theretofore made to the Agent);
(b) second, to the payment of any outstanding interest or other fees
or amounts due under the Notes and the other Loan Documents, in each case
other than for principal on the Loans or in reimbursement or
collateralization of L/C Obligations, pro rata as among the Agent and the
Banks in accord with the amount of such interest and other fees or amounts
owing each;
(c) third, to the payment of the principal of the Swing Line Note;
(d) fourth, to the payment of the principal of the Notes and any
unpaid Reimbursement Obligations and to the Agent to be held as collateral
security for any other L/C Obligations (until the Agent is holding an
amount of cash equal to the then outstanding amount of all such
L/C Obligations), the aggregate amount paid to or held as collateral
security for the Banks to be allocated pro rata as among the Banks in
accord with the aggregate unpaid principal balances of their Loans and
interests in the Letters of Credit;
(e) fifth, to the Agent, the Banks and their Affiliates ratably in
accordance with the Hedging Liability and any other amounts of any other
indebtedness, obligations or liabilities of the Borrower and its
Subsidiaries owing to each of them and secured by the Collateral Documents,
unless and until all such indebtedness, obligations and liabilities have
been fully paid and satisfied;
(f) sixth, to the Borrower or whoever else applicable law shall
require.
SECTION 4. GUARANTIES.
Section 4.1. Collateral. The Obligations and Hedging Liability shall be
secured by (a) valid, perfected, and enforceable Liens on all right, title, and
interest of the Borrower and each Subsidiary in all capital stock or other
equity interests held by such Person in each of its Subsidiaries, whether now
owned or hereafter formed or acquired, and all proceeds thereof. The Borrower
acknowledges and agrees that the Liens on the Collateral shall be granted to the
Agent for the benefit of itself and the Banks and the Issuing Bank and shall be
valid and perfected first priority Liens.
Section 4.2. Guaranties. The payment and performance of the Obligations and
Hedging Liability shall at all times be guaranteed by each existing or hereafter
acquired Material Subsidiary of the Borrower pursuant to one or more guaranty
agreements in form and substance acceptable to the Agent, as the same may be
amended, modified or supplemented from time to time (individually a "Guaranty"
and collectively the "Guaranties") (each Subsidiary delivering a Guaranty being
hereinafter referred to as a "Guarantor" and collectively the "Guarantors").
Section 4.3. Further Assurances. The Borrower agrees that it shall, and
shall cause each Material Subsidiary to, from time to time at the request of the
Agent or the Required Banks, execute and deliver such documents and do such acts
and things as the Agent or the Required Banks may reasonably request in order to
provide for or perfect or protect such Liens on the Collateral. In the event
the Borrower or any Subsidiary (a "Parent Subsidiary") forms or acquires any
other Subsidiary (a "New Subsidiary") after the date hereof, the Borrower shall
within 10 Business Days of such formation or acquisition cause such New
Subsidiary to execute a Guaranty if such New Subsidiary is a Material
Subsidiary, and cause such Parent Subsidiary to execute such Collateral
Documents, in each case as the Agent may then require to obtain the Guaranties
and Collateral required by this Agreement, and the Borrower shall also deliver
to the Agent, or cause such Guarantor and Parent Subsidiary to deliver to the
Agent, at the Borrower's cost and expense, such other instruments, documents,
certificates and opinions reasonably required by the Agent in connection
therewith.
SECTION 5. DEFINITIONS; INTERPRETATION.
Section 5.1. Definitions. The following terms when used herein shall have
the following meanings:
"Account" is defined in Section 9.4 hereof.
"Acquired Business" means the entity or assets acquired by the Borrower or
a Subsidiary in an Acquisition, whether before or after the date hereof.
"Acquisition " means any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of any business or
division of a Person, (b) the acquisition of in excess of 50% of the capital
stock, partnership interests, membership interests or equity of any Person, or
otherwise causing any Person to become a Subsidiary, or (c) a merger or
consolidation or any other combination with another Person (other than a Person
that is a Subsidiary) provided that the Borrower or the Subsidiary is the
surviving entity.
"Adjusted EBITDA" means, (a) with reference to any period during which the
ITI Marketing Acquisition occurred, EBITDA for such period calculated on a pro
forma basis, in accordance with the balance sheets, income statements and other
related financial statements furnished to the Agent and the Banks pursuant to
Section 8.9(j) hereof, as if the ITI Marketing Acquisition had taken place on
the first day of such period, and (b) with reference to any other period, EBITDA
for such period.
"Adjusted LIBOR" is defined in Section 1.4(b) hereof.
"Affiliate" means any Person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, another Person.
A Person shall be deemed to control another Person for the purposes of this
definition if such Person possesses, directly or indirectly, the power to
direct, or cause the direction of, the management and policies of the other
Person, whether through the ownership of voting securities, common directors,
trustees or officers, by contract or otherwise; provided that, in any event for
purposes of this definition, any Person that owns, directly or indirectly, 5% or
more of the securities having the ordinary voting power for the election of
directors or governing body of a corporation or 5% or more of the partnership or
other ownership interest of any other Person (other than as a limited partner of
such other Person) will be deemed to control such corporation or other Person.
"Agent" means Harris Trust and Savings Bank, and any successor pursuant to
Section 11.7 hereof.
"Agent's Quoted Rate" is defined in Section 1.8(c) hereof.
"Annualized Interest Expense" means, with reference to any period, Interest
Expense for such period; provided, however, that:
(a) Annualized Interest Expense for any period ending concurrent with
the close of the Borrower's fiscal quarter ended on or about June 30, 1998,
shall mean the product of (i) Interest Expense for the monthly accounting
period of the Borrower then ended and (ii) twelve;
(b) Annualized Interest Expense for any period ending concurrent with
the close of the Borrower's fiscal quarter ended on or about September 30,
1998, shall mean the product of (i) Interest Expense for the four
consecutive monthly accounting periods of the Borrower then ended, and (ii)
three;
(c) Annualized Interest Expense for any period ending concurrent with
the close of the Borrower's fiscal quarter ended on or about December 31,
1998, shall mean the product of (i) Interest Expense for the seven
consecutive monthly accounting periods of the Borrower then ended and (ii)
a fraction, the numerator of which is twelve and the denominator of which
is seven; and
(d) Annualized Interest Expense for any period ending concurrent with
the close of the Borrower's fiscal quarter ended on or about March 31,
1999, shall mean the product of (i) Interest Expense for the ten
consecutive monthly accounting periods of the Borrower then ended and (ii)
a fraction, the numerator of which is six and the denominator of which is
five.
"Applicable Margin" means, with respect to Loans, Reimbursement
Obligations, and the Revolving Credit Commitment fees and letter of credit fees
payable under Section 2.1 hereof, from the date of this Agreement through the
first Pricing Date the rate per annum specified below:
Applicable Margin for Base Rate Loans and
Reimbursement Obligations: 0.000%
Applicable Margin for Eurodollar Loans and letter
of credit fee:
1.125%
Applicable Margin for Revolving Credit Commitment 0.300%
fee:
; provided that the Applicable Margin shall be subject to quarterly adjustments
on the first Pricing Date, and thereafter from one Pricing Date to the next, so
that the Applicable Margin means a rate per annum determined in accordance with
the following schedule:
APPLICABLE APPLICABLE APPLICABLE
TOTAL DEBT RATIO MARGIN FOR BASE MARGIN FOR MARGIN FOR
FOR SUCH PRICING RATE LOANS AND EURODOLLAR LOANS REVOLVING CREDIT
DATE REIMBURSEMENT AND, LETTER OF COMMITMENT FEE
OBLIGATIONS CREDIT FEE SHALL SHALL BE:
SHALL BE: BE:
Greater than or 0.00% 1.375% 0.30%
equal to 2.5 to
1.0
Less than 2.5 to 0.00% 1.125% 0.30%
1.0, but greater
than or equal to
2.0 to 1.0
Less than 2.0 to 0.00% 0.875% 0.25%
1.0, but greater
than or equal to
1.5 to 1.0
Less than 1.5 to 0.00% 0.625% 0.25%
1.0
For purposes hereof, the term "Pricing Date" means, for any fiscal quarter of
the Borrower ending on or after September 30, 1998, the date on which the Agent
is in receipt of the Borrower's most recent financial statements for the fiscal
quarter then ended, pursuant to Section 8.5(a) or (b) hereof. The Applicable
Margin shall be established based on the Total Debt Ratio for the most recently
completed fiscal quarter and the Applicable Margin established on a Pricing Date
shall remain in effect until the next Pricing Date. If the Borrower has not
delivered its financial statements by the date such financial statements (and,
in the case of the year-end financial statements, audit report) are required to
be delivered under Section 8.5(a) or (b) hereof, until such financial statements
and audit report are delivered, the Applicable Margin shall be the highest
Applicable Margin (i.e., the Total Debt Ratio shall be deemed to be greater than
2.5 to 1.0). If the Borrower subsequently delivers such financial statements
before the next Pricing Date, the Applicable Margin established by such late
delivered financial statements shall take effect from the date of delivery until
the next Pricing Date. In all other circumstances, the Applicable Margin
established by such financial statements shall be in effect from the Pricing
Date that occurs immediately after the end of the Borrower's fiscal quarter
covered by such financial statements until the next Pricing Date. Each
determination of the Applicable Margin made by the Agent in accordance with the
foregoing shall be conclusive and binding on the Borrower and the Banks if
reasonably determined.
"Application" is defined in Section 1.2(b) hereof.
"Authorized Representative" means the Chairman of the Board, President,
Chief Executive Officer, Chief Financial Officer, Senior Vice President-Finance
and Vice President & Controller of the Borrower and those other persons (if any)
shown on the list of officers provided by the Borrower pursuant to
Section 7.1(h) hereof or on any update of any such list provided by the Borrower
to the Agent, or any further or different officer of the Borrower so named by
the Chairman of the Board, President, Chief Executive Officer, Chief Financial
Officer, Senior Vice President-Finance and Vice President & Controller of the
Borrower and of the Borrower in a written notice to the Agent.
"Bank" is defined in the introductory paragraph of this Agreement and
includes each assignee bank pursuant to Section 12.12 hereof.
"Base Rate" is defined in Section 1.4(a) hereof.
"Base Rate Loan" means a Loan bearing interest at a rate specified in
Section 1.4(a) hereof.
"Borrower" is defined in the introductory paragraph of this Agreement.
"Borrowing" means the total of Loans of a single type advanced, continued
for an additional Interest Period, or converted from a different type into such
type by the Banks under a Credit on a single date and, in the case of Eurodollar
Loans, for a single Interest Period. Borrowings of Loans are made and
maintained ratably from each of the Banks under a Credit according to their
Percentages of such Credit. A Borrowing is "advanced" on the day Banks advance
funds comprising such Borrowing to the Borrower, is "continued" on the date a
new Interest Period for the same type of Loans commences for such Borrowing, and
is "converted" when such Borrowing is changed from one type of Loans to the
other, all as requested by the Borrower pursuant to Section 1.6(a). Borrowings
of Swing Loans are made from the Agent in accordance with the procedures of
Section 1.8 hereof.
"Business Day" means any day (other than a Saturday or Sunday) on which
banks are not authorized or required to close in Chicago, Illinois and, if the
applicable Business Day relates to the advance or continuation of, or conversion
into, or payment of a Eurodollar Loan, on which banks are dealing in U.S. Dollar
deposits in the interbank eurodollar market in London, England.
"Capital Expenditures" means, with respect to any Person (a) for any period
during which the ITI Marketing Acquisition occurred, the aggregate amount of all
expenditures (whether paid in cash or accrued as a liability) by such Person
during that period which, in accordance with GAAP, are or should be included as
"additions to property, plant or equipment" or similar items reflected in the
statement of cash flows of such Person, as if the ITI Marketing Acquisition had
occurred on the first day of such period and (b) for any other period, the
aggregate amount of all expenditures (whether paid in cash or accrued as a
liability) by such Person during that period which, in accordance with GAAP, are
or should be included as "additions to property, plant or equipment" or similar
items reflected in the statement of cash flows of such Person.
"Capital Lease" means any lease of Property which in accordance with GAAP
is required to be capitalized on the balance sheet of the lessee.
"Capitalized Lease Obligation" means, for any Person, the amount of the
liability shown on the balance sheet of such Person in respect of a Capital
Lease determined in accordance with GAAP.
"Change of Control" means the occurrence of any one or more of the
following: (a) the acquisition by any "person" or "group" (as such terms are
used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended), other than the Schwartz Group, at any time of beneficial ownership of
15% or more of the Voting Stock of the Borrower on a fully-diluted basis,
(b) the failure of the Schwartz Group at any time and for any reason to own both
legally and beneficially at least 30% or more of the Voting Stock of the
Borrower on a fully-diluted basis, or (c) the failure of individuals who are
members of the board of directors of the Borrower on the date of this Agreement
(together with any new or replacement directors whose initial nomination for
election was approved by a majority of the directors who were either directors
on the date of this Agreement or previously so approved) to constitute a
majority of the board of directors of the Borrower
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto.
"Collateral" means all properties, rights, interests and privileges from
time to time subject to the Liens granted to the Agent, or any security trustee
therefor, by the Collateral Documents.
"Collateral Documents" means the Pledge Agreement, and all other security
agreements, pledge agreements, assignments, financing statements and other
documents as shall from time to time secure or relate to the Obligations or any
part thereof.
"Commitments" means the Revolving Credit Commitments, the L/C Commitment,
the Swing Line Commitment, and the Term Loan Commitments.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower or any Subsidiary, are treated as a single
employer under Section 414 of the Code.
"Credit" means any of the Revolving Credit or the Term Credit.
"Credit Event" means the advancing of any Loan, the continuation of or
conversion into a Eurodollar Loan, or the issuance of, or extension of the
expiration date or increase in the amount of, any Letter of Credit.
"Default" means any event or condition the occurrence of which would, with
the passage of time or the giving of notice, or both, constitute an Event of
Default.
"Defaulting Bank" means a Bank which has failed to fund as and when
required by the terms and conditions of this Agreement such Bank's ratable share
of any Loan or unpaid Reimbursement Obligation hereunder, if and so long as such
failure continues unremedied.
"Disposition" means the sale, lease, conveyance, or other disposition of
Property, other than sales or other dispositions expressly permitted under
Section 8.10(a) or 8.10(b) hereof.
"Domestic Subsidiary" means any Subsidiary organized under the laws of the
United States of America, any State thereof or the District of Columbia.
"EBITDA" means, with reference to any period, Net Income for such period
plus the sum (without duplication) of all amounts deducted in arriving at such
Net Income amount in respect of (w) Interest Expense for such period,
(x) federal, state and local income taxes for such period, (y) depreciation of
fixed assets and amortization of intangible assets (including, without
limitation, goodwill, deferred expenses and organization costs) for such period,
and (z) the following non-recurring, non-cash charges to the extent incurred in
the relevant period during the Borrower's fiscal year ended December 31, 1997:
(i) a write-off of in-process research and development at Paragren Technologies,
Inc. in an amount (before taxes) of approximately $19,800,000; (ii) a write-off
reflecting a revision for software impairment aggregating (before taxes)
approximately $3,238,000; and (iii) a write-off representing the cumulative
effect of an accounting change for unamortized re-engineering costs expensed by
the Borrower in such year aggregating (before taxes) approximately $3,550,000.
"Eligible Line of Business" means any one or more of the principal lines of
business in which the Borrower is engaged as of the date hereof and each line of
business related thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute thereto.
"Eurodollar Loan" means a Loan bearing interest at the rate specified in
Section 1.4(b) hereof.
"Eurodollar Reserve Percentage" is defined in Section 1.4(b) hereof.
"Event of Default" means any event or condition identified as such in
Section 9.1 hereof.
"Event of Loss" means, with respect to any Property, any of the follows:
(a) any loss, destruction or damage of such Property or (b) any condemnation,
seizure, or taking, by exercise of the power of eminent domain or otherwise, of
such Property, or confiscation of such Property or the requisition of the use of
such Property.
"Existing Credit Agreement" means (i) the Existing Harris Agreement and
(ii) the Existing ITI Credit Agreement.
"Existing Harris Agreement" means that certain Credit Agreement dated as of
June 3, 1997 by and among the Borrower, Harris Trust and Savings Bank, as Agent
and the other lenders party thereto.
"Existing ITI Credit Agreement" means that certain Note and Warrant
Purchase Agreement dated as of August 31, 1995 between ITI Holdings, Inc., ITI
Marketing, Nomura Holding America, Inc. and the other lenders party thereto.
"Federal Funds Rate" means the fluctuating interest rate per annum
described in part (x) of clause (ii) of the definition of Base Rate appearing in
Section 1.4(a) hereof.
"Fixed Charges" shall mean, with respect to any period, the sum (without
duplication) of (i) all payments of principal due under the terms of any Total
Funded Debt within twelve calendar months after the close of such period plus
(ii) Annualized Interest Expense during the same such period, all of the
foregoing as determined for the Borrower and its Subsidiaries on a consolidated
basis in accordance with GAAP.
"Fixed Rate Loan" means any Eurodollar Loan and (to the extent bearing
interest with reference to the Agent's Quoted Rate) any Swing Loan.
"Foreign Subsidiary" means any and all Subsidiaries organized under the
laws of any jurisdiction other than those of the United States of America.
"GAAP" means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable statute and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
"Guarantors" is defined in Section 4.2 hereof.
"Guaranty" is defined in Section 4.2 hereof.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Hedging Liability" means the liability of the Borrower to any of the Banks
or their Affiliates in respect of any interest rate swaps, interest rate caps,
interest rate collars, or other interest rate hedging arrangements as the
Borrower may from time to time enter into with any one or more of the Banks
party to this Agreement or their Affiliates. Unless and until the amount of the
Hedging Liability is fixed and determined, the Hedging Liability shall be deemed
to be the market value of the notional amount of the hedge from the date of
computation to the date the hedge expires.
"Hostile Acquisition" means (x) the acquisition of the capital stock or
other equity interests of a Person through a tender offer or similar
solicitation of the owners of such capital stock or other equity interests which
has not been approved (prior to such acquisition) by resolutions of the Board of
Directors of such Person or by similar action if such Person is not a
corporation, and (y) any such acquisition as to which such approval has been
withdrawn.
"ITI Marketing" means ITI Marketing Services, Inc., a Delaware corporation.
"ITI Marketing Acquisition" means the acquisition of ITI Marketing by
Borrower pursuant to the ITI Marketing Purchase Agreement.
"ITI Marketing Purchase Agreement" means that certain Merger Agreement
dated as of April 30, 1998, by and among the Borrower, ITI Holdings, Inc., a
Delaware corporation, ITI Marketing Acquisition Corp., a Delaware corporation
and the "Principal Stockholders" defined therein, all exhibits, schedules, and
attachments thereto, and all instruments and documents to be executed and
delivered in connection therewith.
"Indebtedness for Borrowed Money" means for any Person (without
duplication) (i) all indebtedness created, assumed or incurred in any manner by
such Person representing money borrowed (including by the issuance of debt
securities), (ii) all indebtedness for the deferred purchase price of property
or services (other than trade accounts payable and deferred compensation
arrangements with officers and employees, in each case arising in the ordinary
course of business), (iii) all indebtedness secured by any Lien upon Property of
such Person, whether or not such Person has assumed or become liable for the
payment of such indebtedness, (iv) all Capitalized Lease Obligations of such
Person and (v) all obligations of such Person on or with respect to letters of
credit, bankers' acceptances and other extensions of credit whether or not
representing obligations for borrowed money.
"Interest Expense" means, with reference to any period, the sum of all
interest charges (including imputed interest charges with respect to Capitalized
Lease Obligations and all amortization of debt discount and expense) of the
Borrower and its Subsidiaries for such period determined on a consolidated basis
in accordance with GAAP.
"Interest Period" is defined in Section 1.9 hereof.
"Issuing Bank" means Harris Trust and Savings Bank.
"L/C Commitment" means $10,000,000, as reduced pursuant to the terms
hereof.
"L/C Obligations" means the aggregate undrawn face amounts of all
outstanding Letters of Credit and all unpaid Reimbursement Obligations.
"Lending Office" is defined in Section 10.4 hereof.
"Letter of Credit" is defined in Section 1.2(a) hereof.
"LIBOR" is defined in Section 1.4(b) hereof.
"Lien" means any mortgage, lien, security interest, pledge, charge or
encumbrance of any kind in respect of any Property, including the interests of a
vendor or lessor under any conditional sale, Capital Lease or other title
retention arrangement.
"Loan" means and includes Revolving Loans, Term Loans, and Swing Loans, and
each of them singly, and the term "type" of Loan refers to its status as a
Revolving Loan, Term Loan or Swing Loan, or, if a Revolving Loan or Term Loan,
to its status as a Base Rate Loan or Eurocurrency Loan.
"Loan Documents" means this Agreement, the Notes, the Applications, the
Collateral Documents, the Guaranties, and each other instrument or document to
be delivered hereunder or thereunder or otherwise in connection therewith.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Borrower, or the Borrower and its
Subsidiaries taken as a whole; (b) a material impairment of the ability of the
Borrower or any Subsidiary to perform its monetary obligations under any Loan
Document; or (c) a material adverse effect upon the legality, validity, binding
effect or enforceability against the Borrower or any Subsidiary of any Loan
Document.
"Material Subsidiary" shall mean each Subsidiary other than a Non-Material
Subsidiary
"Moody's" means Moody's Investors Service, Inc.
"Net Cash Proceeds" means, as applicable, (a) with respect to any
Disposition by a Person, cash and cash equivalent proceeds received by or for
such Person's account, net of (i) reasonable direct costs relating to such
Disposition, (ii) sale, use, or other transactional taxes paid or payable by
such Person as a direct result of such Disposition, and (iii) amounts required
to be applied to repay principal of, premium, if any, and interest on any
Indebtedness for Borrowed Money secured by a Lien on the Property (or portion
thereof) sold or otherwise disposed of (other than the Obligations hereunder)
which is required to be and is repaid in connection with such Disposition;
(b) with respect to any Event of Loss of a Person, cash and cash equivalent
proceeds received by or for such Person's account (whether as a result of
payments made under any applicable insurance policy therefor or in connection
with condemnation proceedings or otherwise), net of (i) reasonable direct costs
incurred in connection with the collection of such proceeds, awards or other
payments and (ii) amounts required to be applied to repay principal of, premium,
if any, and interest on any Indebtedness for Borrowed Money secured by a Lien on
the Property (or portion thereof) so damaged or taken (other than the
Obligations hereunder) which is required to be and is repaid in connection with
such Event of Loss; and (c) with respect to any offering of equity securities of
a Person or the issuance of any Indebtedness for Borrowed Money by a Person,
cash and cash equivalent proceeds received by or for such Person's account, net
of reasonable legal, underwriting, and other fees and expenses incurred as a
direct result thereof.
"Net Income" means, with reference to any period, the net income (or net
loss) of the Borrower and its Subsidiaries for such period computed on a
consolidated basis in accordance with GAAP.
"Net Worth" means, as of any time the same is to be determined, the total
shareholders' equity (including capital stock, additional paid-in-capital and
retained earnings after deducting treasury stock, but excluding minority
interests in Subsidiaries) which would appear on the balance sheet of the
Borrower and its Subsidiaries determined on a consolidated basis in accordance
with GAAP, less the sum of (i) all notes receivable from officers and employees
of the Borrower and its Subsidiaries and (ii) the write-up of assets above cost.
"Non-Material Subsidiary" shall mean any Subsidiary (i) the revenues of
which (directly and together with its subsidiaries) for the most recently
completed fiscal year of the Borrower were less than 2% of the Borrower's
consolidated revenues for such fiscal year and (ii) the consolidated total
assets of which (directly and together with its subsidiaries) as of the date of
such financial statements were less than 2% of the Borrower's consolidated total
assets as of such date; provided, however, that each Subsidiary which would (but
for this proviso) constitute a Non-Material Subsidiary with the greatest
revenues shall constitute a Material Subsidiary if (i) the revenues of such
Subsidiary (directly and together with its subsidiaries), when together with the
revenues of Non-Material Subsidiaries (directly and together with their
respective subsidiaries), in each case for the most recently completed fiscal
year of the Borrower equal or exceed 5% of the Borrower's consolidated revenues
for such fiscal year or (ii) the consolidated total assets of such Subsidiary
(directly and together with its subsidiaries), when taken together with the
consolidated total assets of the Non-Material Subsidiaries (directly and
together with their respective subsidiaries), in each case as the date of such
financial statements equal or exceed 5% of the Borrower's consolidated total
assets as of such date.
"Notes" means and includes the Revolving Notes, Term Notes and Swing Line
Note.
"Obligations" means all fees payable hereunder, all obligations of the
Borrower to pay principal and interest on Loans and Reimbursement Obligations,
and all other payment obligations of the Borrower or any Subsidiary arising
under or in relation to any Loan Document, in each case whether now existing or
hereafter arising.
"Participating Bank" is defined in Section 1.2(d) hereof.
"Participating Interest" is defined in Section 1.2(d) hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to any or all of its functions under ERISA.
"Percentage" means for any Bank its Revolver Percentage or Term Loan
Percentage, as applicable.
"Permitted Shareholder Redemptions" means redemptions by the Borrower of
its common capital stock during the period from the date hereof through June 30,
2003 for an aggregate consideration not to exceed $10,000,000.
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision thereof.
"Plan" means any employee pension benefit plan covered by Title IV of ERISA
or subject to the minimum funding standards under Section 412 of the Code that
either (i) is maintained by a member of the Controlled Group for employees of a
member of the Controlled Group or (ii) is maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which a member of the Controlled Group is then making
or accruing an obligation to make contributions or has within the preceding five
plan years made contributions.
"Pledge Agreement" means that certain Pledge Agreement dated of even date
herewith among the Borrower, certain of its Subsidiaries, and the Agent, as the
same may be amended, modified or restated from time to time.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Reimbursement Obligation" is defined in Section 1.2(c) hereof.
"Required Banks" means, at any time, Banks whose outstanding Loans and
interests in Letters of Credit and Unused Revolving Credit Commitments
constitute more than 51% of the sum of the total outstanding Loans, interests in
Letters of Credit and Unused Revolving Credit Commitments of the Banks;
provided, however, if at such time (i) any Bank shall be a Defaulting Bank and
(ii) no Event of Default shall have occurred and be continuing, there shall be
excluded from the determination of Required Banks the outstanding Loans and
interests in Letters of Credit and Unused Revolving Credit Commitments of such
Bank at such time.
"Revolving Credit" means the credit facility for making Revolving Loans and
issuing Letters of Credit described in Sections 1.1 and 1.2 hereof.
"Revolver Percentage" means, for each Bank, the percentage of the Revolving
Credit Commitments represented by such Bank's Revolving Credit Commitment or, if
the Revolving Credit Commitments have been terminated, the percentage held by
such Bank (including through participation interests in Reimbursement
Obligations) of the aggregate principal amount of all Revolving Loans and
L/C Obligations then outstanding.
"Revolving Credit Commitment" is defined in Section 1.1 hereof.
"Revolving Credit Termination Date" means June 1, 2003, or such earlier
date on which the Revolving Credit Commitments are terminated in whole pursuant
to Section 1.14, 9.2 or 9.3 hereof.
"Revolving Loan" is defined in Section 1.1 hereof and, as so defined,
includes a Base Rate Loan or a Eurodollar Loan, each of which is a "type" of
Revolving Loan hereunder.
"Revolving Note" is defined in Section 1.12(a) hereof.
"S&P" means Standard & Poor's Ratings Services Group, a division of The
McGraw-Hill Companies, Inc.
"Schwartz Group" means Theodore G. Schwartz, members of his immediately
family and trust for the benefit of any one or more of the foregoing.
"Security Agreement" means that certain Security Agreement dated of even
date herewith among the Borrower, certain of its Subsidiaries, and the Agent, as
the same may be amended, modified or restated from time to time.
"Subordinated Debt" means Indebtedness for Borrowed Money of the Borrower
or any Subsidiary owing to any Person on terms and conditions, and in such
amounts, acceptable to the Agent and the Required Banks in their sole discretion
and which is subordinated in right of payment to the prior payment in full of
the Obligations pursuant to written subordination provisions approved in writing
by the Agent and the Required Banks.
"Subsidiary" means, as to any particular parent corporation or
organization, any other corporation or organization more than 50% of the
outstanding Voting Stock of which is at the time directly or indirectly owned by
such parent corporation or organization or by any one or more other entities
which are themselves subsidiaries of such parent corporation or organization.
The term "Subsidiary" means a subsidiary of the Borrower or of any of its direct
or indirect Subsidiaries.
"Swing Line" means the credit facility for making a Swing Line Loan
described in Section 1.8 hereof.
"Swing Line Loans" is defined in Section 1.8 hereof.
"Swing Line Note" is defined in Section 1.8 hereof.
"Swing Line Commitment" means $10,000,000, as reduced pursuant to the terms
hereof.
"Term Credit" means the credit facility for Term Loans described in
Section 1.3 hereof.
"Term Loan Commitment" is defined in Section 1.3 hereof.
"Term Loan" is defined in Section 1.3 hereof and, as so defined, includes a
Base Rate Loan or a Eurodollar Loan, each of which is a "type" of Term Loan
hereunder.
"Term Note" is defined in Section 1.12(b) hereof.
"Term Loan Percentage" means, for each Bank, the percentage of the Term
Loan Commitments represented by such Bank's Term Loan Commitment or, if the Term
Loan Commitments have been terminated or have expired, the percentage held by
such Bank of the aggregate principal amount of all Term Loans then outstanding.
"Total Assets" means, at any time the same is to be determined, total
assets computed in accordance with GAAP for the Borrower and its Subsidiaries.
"Total Consideration" means the total amount (but without duplication) of
(a) cash paid in connection with any Acquisition, plus (b) indebtedness payable
to the seller in connection with such Acquisition, plus (c) the fair market
value of any equity securities, including any warrants or options therefor,
delivered in connection with any Acquisition (other than new equity securities
issued by the Borrower), plus (d) the present value of covenants not to compete
entered into in connection with such Acquisition or other future payments which
are required to be made over a period of time and are not contingent upon the
Borrower or its Subsidiary meeting financial performance objectives (discounted
at the Base Rate), but only to the extent not included in clause (a), (b), or
(c) above, plus (e) the amount of indebtedness assumed in connection with such
Acquisition.
"Total Debt Ratio" means, as of the last day of any fiscal quarter of the
Borrower, the ratio of (a) Total Funded Debt as of the last day of such fiscal
quarter, to (b) Adjusted EBITDA for the four fiscal quarters then ended.
"Total Funded Debt" means, at any time the same is to be determined, the
aggregate of all Indebtedness for Borrowed Money of the Borrower and its
Subsidiaries at such time, including all Indebtedness for Borrowed Money of any
other Person which is directly or indirectly guaranteed by the Borrower or any
of its Subsidiaries or which the Borrower or any of its Subsidiaries has agreed
(contingently or otherwise) to purchase or otherwise acquire or in respect of
which the Borrower or any of its Subsidiaries has otherwise assured a creditor
against loss.
"Unfunded Vested Liabilities" means, for any Plan at any time, the amount
(if any) by which the present value of all vested nonforfeitable accrued
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most recent valuation
date for such Plan, but only to the extent that such excess represents a
potential liability of a member of the Controlled Group to the PBGC or the Plan
under Title IV of ERISA.
"U.S. Dollars" and "$" each means the lawful currency of the United States
of America.
"Unused Revolving Credit Commitments" means, at any time, the difference
between the Revolving Credit Commitments then in effect and the aggregate
outstanding principal amount of Revolving Loans and L/C Obligations.
"Voting Stock" of any Person means capital stock or other equity interests
of any class or classes (however designated) having ordinary power for the
election of directors or other similar governing body of such Person, other than
stock or other equity interests having such power only by reason of the
happening of a contingency.
"Welfare Plan" means a "welfare plan" as defined in Section 3(1) of ERISA.
"Wholly-owned Subsidiary" means a Subsidiary of which all of the issued and
outstanding shares of capital stock (other than directors' qualifying shares as
required by law) or other equity interests are owned by the Borrower and/or one
or more Wholly-owned Subsidiaries within the meaning of this definition.
Section 5.2. Interpretation. The foregoing definitions are equally
applicable to both the singular and plural forms of the terms defined. The
words "hereof", "herein", and "hereunder" and words of like import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All references to time of day herein
are references to Chicago, Illinois time unless otherwise specifically provided.
Where the character or amount of any asset or liability or item of income or
expense is required to be determined or any consolidation or other accounting
computation is required to be made for the purposes of this Agreement, it shall
be done in accordance with GAAP except where such principles are inconsistent
with the specific provisions of this Agreement.
Section 5.3. Change in Accounting Principles. If, after the date of this
Agreement, there shall occur any change in GAAP from those used in the
preparation of the financial statements referred to in Section 6.5 hereof and
such change shall result in a change in the method of calculation of any
financial covenant, standard or term found in this Agreement, either the
Borrower or the Required Banks may by notice to the Banks and the Borrower,
respectively, require that the Banks and the Borrower negotiate in good faith to
amend such covenants, standards, and term so as equitably to reflect such change
in accounting principles, with the desired result being that the criteria for
evaluating the financial condition of the Borrower and its Subsidiaries shall be
the same as if such change had not been made. No delay by the Borrower or the
Required Banks in requiring such negotiation shall limit their right to so
require such a negotiation at any time after such a change in accounting
principles. Until any such covenant, standard, or term is amended in accordance
with this Section 5.3, financial covenants shall be computed and determined in
accordance with GAAP in effect prior to such change in accounting principles.
Without limiting the generality of the foregoing, the Borrower shall neither be
deemed to be in compliance with any financial covenant hereunder nor out of
compliance with any financial covenant hereunder if such state of compliance or
noncompliance, as the case may be, would not exist but for the occurrence of a
change in accounting principles after the date hereof.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Agent and the Banks as follows:
Section 6.1. Organization and Qualification. The Borrower is duly
organized, validly existing and in good standing as a corporation under the laws
of the state of its incorporation, has full and adequate corporate power to own
its Property and conduct its business as now conducted, and is duly licensed or
qualified and in good standing in each jurisdiction in which the nature of the
business conducted by it or the nature of the Property owned or leased by it
requires such licensing or qualifying, except where the failure to do so would
not have a Material Adverse Effect.
Section 6.2. Subsidiaries. Each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated or organized, as the case may be, has full and adequate power to
own its Property and conduct its business as now conducted, and is duly licensed
or qualified and in good standing in each jurisdiction in which the nature of
the business conducted by it or the nature of the Property owned or leased by it
requires such licensing or qualifying, except where the failure to do so would
not have a Material Adverse Effect. Each Wholly-Owned Subsidiary that is a
Material Subsidiary is also a Guarantor. Schedule 6.2 hereto (as the same may
be deemed amended pursuant to Section 8.10(c) or 8.17 hereof) identifies each
Subsidiary, the jurisdiction of its incorporation or organization, as the case
may be, the percentage of issued and outstanding shares of each class of its
capital stock or other equity interests owned by the Borrower and the other
Subsidiaries and, if such percentage is not 100% (excluding directors'
qualifying shares as required by law), a description of each class of its
authorized capital stock and other equity interests and the number of shares of
eachclass issued and outstandingand whether such Subsidiaryis a Material or Non-
Material Subsidiary. All of the outstanding shares of capital stock and other
equity interests of each Subsidiary are validly issued and outstanding and fully
paid and nonassessable and all such shares and other equity interests indicated
on Schedule 6.2 (as the same may be deemed amended pursuant to Section 8.10(c)
or 8.17 hereof) as owned by the Borrower or a Subsidiary are owned, beneficially
and of record, by the Borrower or such Subsidiary free and clear of all Liens
other than the Liens granted in favor of the Agent pursuant to the Collateral
Documents. There are no outstanding commitments or other obligations of any
Subsidiary to issue, and no options, warrants or other rights of any Person to
acquire, any shares of any class of capital stock or other equity interests of
any Subsidiary.
Section 6.3. Authority and Validity of Obligations. The Borrower has full
right and authority to enter into this Agreement and the other Loan Documents
executed by it, to make the borrowings herein provided for, to issue its Notes
in evidence thereof, to grant to the Agent the Liens described in the Collateral
Documents executed by the Borrower, and to perform all of its obligations
hereunder and under the other Loan Documents executed by it. Each Subsidiary
has full right and authority to enter into the Loan Documents executed by it, to
guarantee the Obligations, to grant to the Agent the Liens described in the
Collateral Documents executed by such Person, and to perform all of its
obligations under the Loan Documents executed by it. The Loan Documents
delivered by the Borrower and by each Subsidiary have been duly authorized,
executed and delivered by such Person and constitute valid and binding
obligations of such Person enforceable in accordance with their terms except as
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance
or similar laws affecting creditors' rights generally and general principles of
equity (regardless of whether the application of such principles is considered
in a proceeding in equity or at law); and this Agreement and the other Loan
Documents do not, nor does the performance or observance by the Borrower or any
Subsidiary of any of the matters and things herein or therein provided for,
(a) contravene or constitute a default under any provision of law or any
judgment, injunction, order or decree binding upon the Borrower or any
Subsidiary or any provision of the charter, articles of incorporation, by-laws
or comparable constituent documents of the Borrower or any Subsidiary,
(b) contravene or constitute a default under any covenant, indenture or
agreement of or affecting the Borrower or any Subsidiary or any of its Property,
in each case where such contravention or default is reasonably likely to have a
Material Adverse Effect, or (c) result in the creation or imposition of any Lien
on any Property of the Borrower or any Subsidiary other than the Liens granted
in favor of the Agent pursuant to the Collateral Documents.
Section 6.4. Use of Proceeds; Margin Stock. The Borrower shall use the
proceeds of the Loans for the purpose of financing the ITI Marketing
Acquisition, refinancing existing indebtedness and for its general corporate
purposes. Neither the Borrower nor any Subsidiary is engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of any Loan or any other extension of
credit made hereunder will be used to purchase or carry any such margin stock or
to extend credit to others for the purpose of purchasing or carrying any such
margin stock. Margin stock (as hereinabove defined) constitutes less than 25%
of those assets of the Borrower and its Subsidiaries which are subject to any
limitation on sale, pledge, or other restriction hereunder.
Section 6.5. Financial Reports.
(a) APAC. The consolidated balance sheet of the Borrower and its
Subsidiaries as at December 28, 1997, and the related consolidated statements of
income, retained earnings and cash flows of the Borrower and its Subsidiaries
for the fiscal year then ended, and accompanying notes thereto, which financial
statements are accompanied by the audit report of Arthur Andersen LLP,
independent public accountants, and the unaudited interim consolidated balance
sheet of the Borrower and its Subsidiaries as at March 29, 1998, and the related
consolidated statements of income and retained earnings of the Borrower and its
Subsidiaries for the 3 monthly accounting periods then ended, heretofore
furnished to the Banks, fairly present in all material respects the consolidated
financial condition of the Borrower and its Subsidiaries as at said dates and
the consolidated results of their operations and cash flows for the periods then
ended in conformity with GAAP applied on a consistent basis. Neither the
Borrower nor any Subsidiary has contingent liabilities which are material to it
other than as indicated on such financial statements or, with respect to future
periods, on the financial statements furnished pursuant to Section 8.5 hereof.
(b) ITI Marketing. The consolidated balance sheet of ITI Marketing and
its subsidiaries as at December 31, 1997, and the related consolidated
statements of income, retained earnings and cash flows of ITI Marketing and its
subsidiaries for the fiscal year then ended, and accompanying notes thereto,
which financial statements are accompanied by the audit report of Arthur
Andersen LLP, independent public accountants, and the unaudited interim
consolidated balance sheet of ITI Marketing and its subsidiaries as at March 31,
1998, and the related consolidated statements of income and retained earnings of
ITI Marketing and its subsidiaries for the three months then ended, heretofore
furnished to the Banks, fairly present in all material respects the consolidated
financial condition of ITI Marketing and its subsidiaries as at said dates and
the consolidated results of their operations and cash flows for the periods then
ended in conformity in all material respects with GAAP applied on a consistent
basis. Neither ITI Marketing nor any subsidiary thereof has contingent
liabilities which are material to it other than as indicated on such financial
statements or, with respect to future periods, on the financial statements
furnished pursuant to Section 8.5 hereof.
Section 6.6. No Material Adverse Change. (a) APAC. Since December 29,
1997, except as disclosed in a Form 8-K of the Borrower filed as of the date
hereof with the Securities and Exchange Commission, there has been no change in
the condition (financial or otherwise) or business prospects of the Borrower or
any Subsidiary, none of which individually or in the aggregate have been
materially adverse.
(b) ITI Marketing. The Borrower is not aware of any change, since
December 31, 1997, in the condition (financial or otherwise) or business
prospects of ITI Marketing and its subsidiaries, none of which individually or
in the aggregate have been materially adverse.
Section 6.7. Full Disclosure. The statements and information furnished by
or on behalf of the Borrower to the Banks in connection with the negotiation of
this Agreement and the other Loan Documents and the commitments by the Banks to
provide all or part of the financing contemplated hereby do not (x) contain any
untrue statements of a fact or (y) omit a fact necessary to make the material
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading, in either case where the correct or
complete facts would, if they constituted a change from the facts as originally
disclosed or stated, have been reasonably likely to have a Material Adverse
Effect; the Banks acknowledging that, as to any projections and other
forward-looking statements regarding future expectations and the beliefs (the
"Statements") furnished by the Borrower to the Banks, the Borrower only
represents that, at the time the Statements were made by the Borrower to the
Banks the Borrower did not know of any material facts that would cause the
Statements to be untrue.
Section 6.8. Trademarks, Franchises, and Licenses. The Borrower and each of
the Subsidiaries own, possess or have the right to use all necessary patents,
licenses, franchises, trademarks, trade names, trade styles, copyrights, trade
secrets, know how and confidential commercial and proprietary information to
conduct their businesses as now conducted, without known conflict with any
patent, license, franchise, trademark, trade name, trade style, copyright or
other proprietary right of any other Person, in each case where the failure to
own, possess or have the right to use such Property is reasonably likely to have
a Material Adverse Effect.
Section 6.9. Governmental Authority and Licensing. The Borrower and each of
the Subsidiaries have received all licenses, permits, and approvals of all
Federal, state, local, and foreign governmental authorities, if any, necessary
to conduct their business, in each case where the failure to obtain or maintain
the same is reasonably likely to have a Material Adverse Effect. No
investigation or proceeding which, if adversely determined, is reasonably likely
to result in revocation or denial of any material license, permit, or approval,
is pending or, to the knowledge of the Borrower, threatened.
Section 6.10. Good Title. The Borrower and each of the Subsidiaries have
good and defensible title (or valid leasehold interests) to their assets as
reflected on the most recent consolidated balance sheet of the Borrower and its
Subsidiaries furnished to the Banks (except for sales of assets in the ordinary
course of business), subject to no Liens other than such thereof as are
permitted by Section 8.8 hereof.
Section 6.11. Litigation and Other Controversies. There is no litigation or
governmental proceeding or labor controversy pending, nor to the knowledge of
the Borrower threatened, against the Borrower or any Subsidiary which is
reasonably likely to be adversely determined and if so determined is reasonably
likely to have a Material Adverse Effect.
Section 6.12. Taxes. All tax returns required to be filed by the Borrower or
any Subsidiary in any jurisdiction have, in fact, been filed, and all taxes,
assessments, fees and other governmental charges upon the Borrower or any
Subsidiary or upon any of its respective Property, income or franchises, which
are shown to be due and payable in such returns, have been paid, except (i) such
taxes, assessments, fees and governmental charges, if any, as are being
contested in good faith and by appropriate proceedings which prevent enforcement
of the matter under contest and as to which adequate reserves established in
accordance with GAAP have been provided and (ii) those returns other than United
States federal income tax returns, the failure to file of which could not
reasonably be expected to have a Material Adverse Effect. The Borrower does not
know of any proposed additional tax assessment against the Borrower or any
Subsidiary for which adequate provisions in accordance with GAAP have not been
made on their accounts. Adequate provisions in accordance with GAAP for taxes
on the books of the Borrower and each Subsidiary have been made for all open
years, and for its current fiscal period.
Section 6.13. Approvals. No authorization, consent, license, or exemption
from, or filing or registration with, any court or governmental department,
agency or instrumentality, nor any approval or consent of the stockholders of
the Borrower or any Subsidiary, or of any other Person, is or will be necessary
to the valid execution, delivery or performance by the Borrower or any
Subsidiary of this Agreement or any other Loan Document, except for such
approvals which have been obtained prior to the date of this Agreement and
remain in full force and effect.
Section 6.14. Affiliate Transactions. Neither the Borrower nor any
Subsidiary is a party to any material contracts or agreements with any of its
Affiliates on terms and conditions which are less favorable to the Borrower or
such Subsidiary than would be usual and customary in similar contracts or
agreements between Persons not affiliated with each other.
Section 6.15. Investment Company; Public Utility Holding Company. Neither
the Borrower nor any Subsidiary is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "public utility holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 6.16. ERISA. The Borrower and each of its Subsidiaries, and each
member of its Controlled Group, have fulfilled their obligations under the
minimum funding standards of, and are in compliance in all material respects
with, ERISA and the Code to the extent applicable to any Plan maintained by any
one or more of them or for the benefit of their employees and have not incurred
any liability to the PBGC or a Plan under Title IV of ERISA other than a
liability to the PBGC for premiums under Section 4007 of ERISA. Neither the
Borrower nor any Subsidiary has any material contingent liabilities with respect
to any post-retirement benefits under a Welfare Plan, other than liability for
continuation coverage described in article 6 of Title I of ERISA.
Section 6.17. Compliance with Laws. To the best knowledge of the Borrower,
the Borrower and each of its Subsidiaries are in compliance in all material
respects with the requirements of all federal, state and local laws, rules and
regulations applicable to or pertaining to their Properties or business
operations (including, without limitation, the Occupational Safety and Health
Act of 1970, the Americans with Disabilities Act of 1990, laws and regulations
relating to the providing of health care services and products, and laws and
regulations establishing quality criteria and standards for air, water, land and
toxic or hazardous wastes and substances), where any such non-compliance,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect. Neither the Borrower nor any Subsidiary has received notice to
the effect that its operations are not in compliance with any of the
requirements of applicable federal, state or local environmental, health and
safety statutes and regulations or are the subject of any governmental
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic or hazardous waste or substance into the environment, where
any such non-compliance or remedial action, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect.
Section 6.18. Other Agreements. Neither the Borrower nor any Subsidiary is
in default under the terms of any covenant, indenture or agreement of or
affecting such Persons or any of their Properties, which default if uncured is
reasonably likely to have a Material Adverse Effect.
Section 6.19. Solvency. The Borrower and its Subsidiaries are able to pay
their debts as they become due and have sufficient capital to carry on their
businesses and all businesses in which they are about to engage in; and the
amount that will be required to pay the Borrower's and each Subsidiary's
probable liabilities as they become absolute and mature is less than the sum of
the present fair sale value of its assets as a going concern.
Section 6.20. ITI Marketing Acquisition. The Borrower has heretofore
delivered to the Agent a true and correct copy of the ITI Marketing Purchase
Agreement and, except to the extent consented to in writing by the Agent, the
ITI Marketing Purchase Agreement has not been amended or modified in any respect
and no condition to the effectiveness thereof or the obligations of the Borrower
thereunder has been waived. The Borrower and, to the best of the Borrower's
knowledge, ITI Marketing has all necessary right, power, and authority to
consummate the transactions contemplated by the ITI Marketing Purchase Agreement
and to perform all of their obligations thereunder. The ITI Marketing Purchase
Agreement has been duly authorized, executed, and delivered by the Borrower and,
to the best of the Borrower's knowledge, ITI Marketing and the ITI Marketing
Purchase Agreement constitutes the valid and binding obligation of the Borrower
and to the best of the Borrower's knowledge, ITI Marketing, enforceable against
each of them in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors' rights generally and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law); and the ITI Marketing Purchase Agreement does
not, nor does the observance or performance by the Borrower or, to the best of
the Borrower's knowledge, ITI Marketing of any of the matters and things therein
provided for, contravene or constitute a default under any provision of law or
any judgment, injunction, order, or decree binding upon such Person or any
provision of the charter, articles of incorporation, or by-laws of such Person
or any covenant, indenture, or agreement of or affecting such Person or any of
its Property, or result in the creation or imposition of any Lien on any such
Person's Property. No authorization, consent, license, or exemption from, or
filing or registration with, any court or governmental department, agency, or
instrumentality, nor any approval or consent of any other Person, is or will be
necessary to the valid execution, delivery, or performance by the Borrower, to
the best of the Borrower's knowledge, ITI Marketing of the ITI Marketing
Purchase Agreement or of any other instrument or document executed and delivered
in connection therewith, except for such thereof that have heretofore been
obtained and remain in full force and effect. Neither the Borrower nor, to the
best of the Borrower's knowledge, ITI Marketing are in default in any of their
respective obligations under the ITI Marketing Purchase Agreement.
Section 6.21. Year 2000 Compliance. The Borrower and its Subsidiaries have
conducted a comprehensive review and assessment of its computer applications,
and have made inquiry of their material suppliers, vendors and customers, with
respect to any defect in computer software, data bases, hardware, controls and
peripherals related to the occurrence of the year 2000 or the use of any date
after December 31, 1999, in connection therewith. Based on the foregoing
review, assessment and inquiry, the Borrower believes that no such defect could
reasonably be expected to have a Material Adverse Effect.
Section 6.22. No Default. No Default or Event of Default has occurred and is
continuing.
SECTION 7. CONDITIONS PRECEDENT.
The obligation of each Bank to advance, continue or convert any Loan
(whether a Revolving Loan or Swing Loan, but in any event other than the
continuation of, or conversion into, a Base Rate Loan) or of the Issuing Bank to
issue, extend the expiration date (including by not giving notice of non-
renewal) of or increase the amount of any Letter of Credit under this Agreement,
shall be subject to the following conditions precedent:
Section 7.1. Initial Credit Event. Before or concurrently with the initial
Credit Event:
(a) the Agent shall have received for each Bank this Agreement duly
executed by the Borrower and the Banks;
(b) the Agent shall have received for each Bank such Bank's duly
executed Notes of the Borrower dated the date hereof and otherwise in
compliance with the provisions of Section 1.12 hereof;
(c) the Agent shall have received the Pledge Agreement duly executed
by the Borrower and each relevant Subsidiary, and the Guaranty duly
executed by each Material Subsidiary, together with (i) original stock
certificates or other similar instruments or securities representing all of
the issued and outstanding shares of capital stock or other equity interest
of each Subsidiary as of the date of this Agreement, (ii) stock powers for
the Collateral consisting of the stock or other equity interest of each
Subsidiary each to be executed in blank and undated, and (iii) UCC
financing statements to be filed against the Borrower and each Subsidiary,
as debtor, in favor of the Agent, as secured party;
(d) the Agent shall have received for each Bank copies of the
Borrower's and each Subsidiary's articles of incorporation and bylaws (or
comparable constituent documents) and any amendments thereto, certified in
each instance by its Secretary or Assistant Secretary;
(e) the Agent shall have received for each Bank copies of resolutions
of the Borrower's and of each Subsidiary's Board of Directors (or
comparable governing body) authorizing the execution, delivery and
performance of this Agreement and the other Loan Documents to which it is a
party and the consummation of the transactions contemplated hereby and
thereby, together with specimen signatures of the persons authorized to
execute such documents on the Borrower's and such Subsidiary's behalf, all
certified in each instance by its Secretary or Assistant Secretary;
(f) the Agent shall have received for each Bank copies of the
certificates of good standing for the Borrower and for each Material
Subsidiary (dated no earlier than 30 days prior to the date hereof) from
the office of the secretary of the state of its incorporation and of each
state (other than any state in which it is not in good standing and such
failure to be in good standing would not have a Material Adverse Effect) in
which it is qualified to do business as a foreign corporation;
(g) the Agent shall have received for each Bank a list of the
Borrower's Authorized Representatives;
(h) the Agent shall have received for itself and for the Banks the
initial fees called for by Section 2.1 hereof;
(i) the Agent shall have received and approved as satisfactory to it,
(i) the audit reports and accompanying financial statements of the Borrower
and its Subsidiaries for the Borrower's five most recently completed fiscal
years, (ii) the audit reports and accompanying financial statements of ITI
Marketing and its subsidiaries for ITI Marketing's three most recently
completed fiscal years, (iii) a proforma consolidated balance sheet for the
Borrower immediately after giving effect to the ITI Marketing Acquisition
and (iv) a pro forma consolidated balance sheet of ITI Marketing
immediately after giving effect to the ITI Marketing Acquisition;
(j) the Agent shall have completed its due diligence review of the
(i) environmental liabilities of the Borrower and its Subsidiaries and (ii)
material contracts, licenses, permits and agreements to which the Borrower
and its Subsidiaries are subject and approved the results of such review as
satisfactory to it;
(k) each Bank shall have received such evaluations and certifications
as it may reasonably require (including a compliance certificate in the
form attached hereto as Exhibit G containing compliance calculations of the
financial covenants as of the date of this Agreement after giving effect to
the ITI Marketing Acquisition) in order to satisfy itself as to the value
of the Collateral, the financial condition of the Borrower and its
Subsidiaries, and the lack of material environmental and other contingent
liabilities of the Borrower and its Subsidiaries;
(l) the Agent shall have received evidence satisfactory to it that
(x) the Total Consideration payable by the Borrower with respect to the ITI
Marketing Acquisition is not more than $160,000,000 (excluding the Total
Consideration payable after closing of the ITI Marketing Acquisition
attributable to certain United States Postal Service contracts, such post-
closing Total Consideration not to exceed the amounts set forth in the ITI
Marketing Purchase Agreement, (y) all conditions precedent to the ITI
Marketing Acquisition (except for the Banks' funding of the purchase price
therefor) have been satisfied in accordance with the terms of the ITI
Marketing Purchase Agreement (without giving effect to any amendment,
modification or waiver thereto not consented to in writing by the Agent)
and its effectiveness and (z) the ITI Marketing Purchase Agreement is
effective;
(m) all legal, tax and regulatory matters incident to the Credits and
the ITI Marketing Acquisition, including without limitation all regulatory
approvals of the ITI Marketing Acquisition under the Hart-Scott-Rodino Act,
shall be satisfactory to the Agent;
(n) the Agent shall have received (i) for each Bank the favorable
written opinions of counsel to the Borrower and its Subsidiaries, in form
and substance reasonably satisfactory to the Agent and (ii) a fairness
opinion on ITI Marketing as prepared by Merrill Lynch, Pierce, Fenner &
Smith, Incorporated;
(o) the Agent shall have received and approved as to form and
substance the ITI Marketing Purchase Agreement and all other instruments
and documents applicable thereto;
(p) the Borrower shall have common and preferred stock and paid-in
equity capital of at least $125,000,000 immediately after giving effect to
the ITI Marketing Acquisition;
(q) the Agent shall have received satisfactory assurances that the
Agent will have received and approved (both as to form and substance) such
UCC financing statements and other instruments and documents as it shall
deem necessary to perfect the Liens required hereunder and satisfactory
lien searches confirming the priority of such Liens; and
(r) the Agent shall have received and approved as to form and
substance (i) an Environmental Checklist regarding environmental
liabilities and (ii) a Year 2000 Questionnaire regarding matters of the
type addressed by Section 6.21 hereof, each to be properly completed and
duly executed by the Borrower.
References in this Section to Subsidiaries shall be deemed to include ITI
Marketing and its subsidiaries prior to, as well as after, consummation of the
ITI Marketing Acquisition.
Section 7.2. All Credit Events. As of the time of each Credit Event
hereunder:
(a) in the case of a Borrowing the Agent shall have received the
notice required by Section 1.6 hereof, in the case of a Swing Loan, Agent
shall have received the notice required in Section 1.8 hereof, in the case
of the issuance of any Letter of Credit the Agent shall have received a
duly completed Application for such Letter of Credit together with any fees
called for by Section 2.1 hereof and, in the case of an extension or
increase in the amount of a Letter of Credit, a written request therefor in
a form acceptable to the Agent together with fees called for by Section 2.1
hereof;
(b) each of the representations and warranties set forth in Section 6
hereof shall be and remain true and correct as of such time, except to the
extent that any such representation or warranty relates solely to an
earlier time or that any change therein is not reasonably likely to have a
Material Adverse Effect;
(c) the Borrower shall be in compliance with all of the terms and
conditions hereof, and no Default or Event of Default shall have occurred
and be continuing hereunder or would occur as a result of such Credit
Event; and
(d) such Credit Event shall not violate any order, judgment or decree
of any court or other authority or any provision of law or regulation
applicable to any Bank (including, without limitation, Regulation U of the
Board of Governors of the Federal Reserve System).
Each request for a Borrowing hereunder and each request for the issuance
of, increase in the amount of, or extension of the expiration date of, a Letter
of Credit shall be deemed to be a representation and warranty by the Borrower on
the date on such Credit Event as to the facts specified in subsections (a)
through (c), both inclusive, this Section 7.2.
Section 7.3. Existing Credit Agreement. (a) Pay-off Letters. The Agent
shall have received a pay-off and lien release letter from (i) in the case of
the Existing Harris Agreement, the existing creditors of the Borrower and its
Subsidiaries under the Existing Harris Agreement and (ii) in the case of the
Existing ITI Credit Agreement, the existing creditors of ITI Marketing and its
subsidiaries, each such letter setting forth, among other things, the total
amount of indebtedness outstanding and owing to them (or outstanding letters of
credit issued for the account of (i) in the case of the Existing Harris
Agreement, the Borrower or any of its Subsidiaries or (ii) in the case of the
Existing ITI Credit Agreement, ITI Marketing or any of its subsidiaries) and
containing an undertaking to cause to be delivered to the Agent each UCC
termination statement and any other lien release instrument necessary to release
their respective Lien on all assets of (i) in the case of the Existing Harris
Agreement, the Borrower and its Subsidiaries or (ii) in the case of the Existing
ITI Credit Agreement, ITI Marketing or any of its subsidiaries, which pay-off
and lien release letters shall be in form and substance acceptable to the Agent.
(b) Repayments. A portion of the proceeds of the initial Credit Event
shall be used to pay in full all outstanding (i) "Obligations" under the
Existing Harris Agreement and (ii) all Indebtedness for Borrowed Money under the
Existing ITI Credit Agreement. The Banks and the Borrower agree that
concurrently with such initial Credit Event, the Existing Harris Agreement shall
terminate and all "Obligations" outstanding thereunder shall be due and payable.
SECTION 8. COVENANTS.
The Borrower agrees that, so long as any Note or any L/C Obligation is
outstanding or any Commitment is available to or in use by the Borrower
hereunder, except to the extent compliance in any case or cases is waived in
writing by the Required Banks:
Section 8.1. Maintenance of Business. The Borrower shall, and shall cause
each Subsidiary to, preserve and maintain its existence, except as otherwise
provided in Section 8.10(c) hereof; provided, however, that nothing in this
Section shall prevent the Borrower from discontinuing the corporate existence of
any Non-Material Subsidiary if discontinuance of such Non-Material Subsidiary is
desirable in the conduct of the Borrower's business or the business of any
Subsidiary and such discontinuance is not disadvantageous in any material
respect to the Banks. The Borrower shall, and shall cause each Subsidiary to,
preserve and keep in force and effect all licenses, permits, franchises,
approvals, patents, trademarks, trade names, trade styles, copyrights, and other
proprietary rights necessary to the proper conduct of its business where the
failure to do so is reasonably likely to have a Material Adverse Effect.
Section 8.2. Maintenance of Properties. The Borrower shall, and shall cause
each Subsidiary to, maintain, preserve and keep its property, plant and
equipment in good repair, working order and condition (ordinary wear and tear
excepted) and shall from time to time make all needful and proper repairs,
renewals, replacements, additions and betterments thereto so that at all times
the efficiency thereof shall be fully preserved and maintained, except to the
extent that, in the reasonable business judgment of such Person, any such
Property is no longer necessary for the proper conduct of the business of such
Person.
Section 8.3. Taxes and Assessments. The Borrower shall duly pay and
discharge, and shall cause each Subsidiary to duly pay and discharge, all taxes,
rates, assessments, fees and governmental charges upon or against it or its
Properties, in each case before the same become delinquent and before penalties
accrue thereon, unless and to the extent that the same are being contested in
good faith and by appropriate proceedings which prevent enforcement of the
matter under contest and adequate reserves are provided therefor.
Section 8.4. Insurance. The Borrower shall insure and keep insured, and
shall cause each Subsidiary to insure and keep insured, with insurance companies
with a general policyholder service rating of not less than A as rated in the
most current available Best's Insurance Report, all insurable Property owned by
it which is of a character usually insured by Persons similarly situated and
operating like Properties against loss or damage from such hazards and risks,
and in such amounts, as are insured by Persons similarly situated and operating
like Properties; and the Borrower shall insure, and shall cause each Subsidiary
to insure, such other hazards and risks (including professional liability,
employers' and public liability risks) with insurance companies with a general
policyholder service rating of not less than A as rated in the most current
available Best's Insurance Report as and to the extent usually insured by
Persons similarly situated and conducting similar businesses. The Borrower
shall in any event maintain, and cause each Subsidiary to maintain, insurance on
the Collateral to the extent required by the Collateral Documents. The Borrower
shall, upon the request of the Agent, furnish to the Agent and each Bank a
certificate setting forth in summary form the nature and extent of the insurance
maintained pursuant to this Section.
Section 8.5. Financial Reports. The Borrower shall, and shall cause each
Subsidiary to, maintain a standard system of accounting in accordance with GAAP
and shall furnish to the Agent, each Bank and each of their duly authorized
representatives such information respecting the business and financial condition
of the Borrower and each Subsidiary as the Agent or such Bank may reasonably
request; and without any request, shall furnish to the Agent and the Banks:
(a) as soon as available, and in any event within 45 days after the
close of each fiscal quarter of each fiscal year of the Borrower, a copy of
the consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as of the last day of such period and the consolidated and
consolidating statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for the fiscal quarter and for the fiscal
year-to-date period then ended, each in reasonable detail showing in
comparative form the figures for the corresponding date and period in the
previous fiscal year, prepared by the Borrower in accordance with GAAP and
certified to by the Borrower's chief financial officer, or another officer
of the Borrower reasonably acceptable to the Agent;
(b) within forty-five (45) days after the end of each of the first
three quarterly fiscal periods of the Borrower, a copy of the Borrower's
Form 10-Q Report filed with the Securities and Exchange Commission;
(c) within ninety (90) days after the end of each fiscal year of the
Borrower, a copy of the Borrower's Form 10-K Report filed with the
Securities and Exchange Commission, including a copy of the audited
financial statements of the Borrower and the Subsidiaries for such year
with the accompanying report of independent public accountants;
(d) as soon as available, and in any event within 90 days after the
close of each fiscal year of the Borrower, to the extent not contained in
the Borrower's Form 10-K Report filed with the Securities and Exchange
Commission for such year, a copy of the consolidated and consolidating
balance sheet of the Borrower and its Subsidiaries as of the last day of
the period then ended and the consolidated and consolidating statements of
income, retained earnings and cash flows of the Borrower and its
Subsidiaries for the period then ended, and accompanying notes thereto,
each in reasonable detail showing in comparative form the figures for the
previous fiscal year, accompanied in the case of the Borrower's
consolidated financial statements by an unqualified opinion of Arthur
Andersen LLP or another firm of independent public accountants of
recognized national standing, selected by the Borrower and reasonably
satisfactory to the Required Banks, to the effect that the consolidated
financial statements have been prepared in accordance with GAAP and present
fairly, in all material respects, in accordance with GAAP the consolidated
financial condition of the Borrower and its Subsidiaries as of the close of
such fiscal year and the results of their operations and cash flows for the
fiscal year then ended and that an examination of such accounts in
connection with such financial statements has been made in accordance with
generally accepted auditing standards and, accordingly, such audit provided
a reasonable basis for their opinion;
(e) promptly after the sending or filing thereof, copies of each
financial statement, report, notice or proxy statement sent by the Borrower
or any Subsidiary to its stockholders, and copies of each regular, periodic
or special report, registration statement or prospectus (including all
Form 10-K, Form 10-Q, and Form 8-K reports and proxy statements) filed by
the Borrower or any Subsidiary with any securities exchange or the
Securities and Exchange Commission or any successor agency;
(f) promptly after receipt thereof, a copy of each audit made by any
regulatory agency of the books and records of the Borrower or any
Subsidiary or of any notice of material noncompliance with any applicable
law, regulation, or guideline relating to the Borrower or any Subsidiary or
any of their respective businesses;
(g) as soon as available, and in any event within 90 days prior to
the end of each fiscal year of the Borrower, a copy of the Borrower's
consolidated and consolidating business plan for the following fiscal year,
such business plan to show the Borrower's projected consolidated and
consolidating revenues, expenses, and balance sheet on month-by-month
basis, such business plan to be in reasonable detail prepared by the
Borrower and in form reasonably satisfactory to the Agent which shall
include a summary of all assumptions made in preparing such business plan;
(h) notice of any Change of Control; and
(i) promptly after knowledge thereof shall have come to the attention
of any responsible officer of the Borrower, written notice of any
threatened or pending litigation or governmental proceeding or labor
controversy against the Borrower or any Subsidiary which, if adversely
determined, is reasonably likely to have a Material Adverse Effect or of
the occurrence of any Default or Event of Default hereunder.
Each of the financial statements furnished to the Banks pursuant to
subsections (a) and (d) of this Section 8.5 shall be accompanied by a written
certificate in the form attached hereto as Exhibit F signed by the President,
Chief Executive Officer, Chief Financial Office or Senior Vice President-Finance
of the Borrower, to the effect that to the best of such officer's knowledge and
belief no Default or Event of Default has occurred during the period covered by
such statements or, if any such Default or Event of Default has occurred during
such period, setting forth a description of such Default or Event of Default and
specifying the action, if any, taken by the Borrower or any Subsidiary to remedy
the same. Such certificate shall also set forth the calculations supporting
such statements in respect of Sections 8.22, 8.23, 8.24 and 8.25 of this
Agreement.
Section 8.6. Inspection. The Borrower shall, and shall cause each
Subsidiary to, permit the Agent, each Bank and each of their duly authorized
representatives and agents to visit and inspect any of its Properties, corporate
books and financial records, to examine and make copies of its books of accounts
and other financial records, and to discuss its affairs, finances and accounts
with, and to be advised as to the same by, its officers, employees and
independent public accountants (and by this provision the Borrower hereby
authorizes such accountants to discuss with the Agent and such Banks the
finances and affairs of the Borrower and each Subsidiary) at such reasonable
times and intervals as the Agent or any such Bank may designate.
Section 8.7. Indebtedness for Borrowed Money. The Borrower shall not, nor
shall it permit any Subsidiary to, issue, incur, assume, create or have
outstanding any Indebtedness for Borrowed Money; provided, however, that the
foregoing shall not restrict nor operate to prevent:
(a) the Obligations of the Borrower owing to the Agent and the Banks
hereunder;
(b) purchase money indebtedness and Capitalized Lease Obligations of
the Borrower and of its Subsidiaries in an aggregate amount not to exceed
$10,000,000 at any one time outstanding;
(c) obligations of the Borrower arising out of interest rate hedging
agreements entered into with financial institutions in the ordinary course
of business;
(d) guaranties expressly permitted by Section 8.9 hereof;
(e) indebtedness from time to time owing by the Borrower to any
Subsidiary or by any Subsidiary to the Borrower or any other Subsidiary, in
each case arising as a result of intercompany loans and advances permitted
by Section 8.9 hereof.
(f) indebtedness outstanding under the Existing Credit Agreement
which is paid and satisfied in full out of proceeds of the initial Credit
Event hereunder;
(g) other indebtedness existing on the date of this Agreement and
described on Schedule 8.7 attached hereto and made a part hereof, as
reduced from time to time by repayments thereof; and
(h) other indebtedness of the Borrower and its Subsidiaries not
otherwise permitted by this Section in an aggregate amount not to exceed
$1,000,000 at any one time outstanding.
Section 8.8. Liens. The Borrower shall not, nor shall it permit any other
Subsidiary to, create, incur or permit to exist any Lien of any kind on any
Property owned by any such Person; provided, however, that the foregoing shall
not apply to nor operate to prevent:
(a) Liens arising by statute in connection with worker's
compensation, unemployment insurance, old age benefits, social security
obligations, taxes, assessments, statutory obligations or other similar
charges, good faith cash deposits in connection with tenders, contracts or
leases to which the Borrower or any Subsidiary is a party or other cash
deposits required to be made in the ordinary course of business, provided
in each case that the obligation is not for borrowed money and that the
obligation secured is not overdue or, if overdue, is being contested in
good faith by appropriate proceedings which prevent enforcement of the
matter under contest and adequate reserves have been established therefor;
(b) mechanics', workmen's, materialmen's, landlords', carriers', or
other similar Liens arising in the ordinary course of business with respect
to obligations which are not due or which are being contested in good faith
by appropriate proceedings which prevent enforcement of the matter under
contest;
(c) the pledge of assets for the purpose of securing an appeal, stay
or discharge in the course of any legal proceeding, provided that the
aggregate amount of liabilities of the Borrower and its Subsidiaries
secured by a pledge of assets permitted under this subsection, including
interest and penalties thereon, if any, shall not be in excess of
$2,500,000 at any one time outstanding;
(d) the Liens granted in favor of the Agent for the benefit of the
Agent and the Banks pursuant to the Collateral Documents;
(e) Liens on property of the Borrower or any Subsidiary created
solely for the purpose of securing indebtedness permitted by Section 8.7(b)
hereof, representing or incurred to finance, refinance or refund the
purchase price of Property, provided that no such Lien shall extend to or
cover other Property of the Borrower or such Subsidiary other than the
respective Property so acquired, and the principal amount of indebtedness
secured by any such Lien shall at no time exceed the original purchase
price of such Property;
(f) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not materially
detract from the value of the Property subject thereto or materially
interfere with the ordinary conduct of the business of the Borrower or any
Subsidiary;
(g) Liens described on Schedule 8.8 hereof; and
(h) any interest or title of a lessor under any operating lease.
Section 8.9. Investments, Acquisitions, Loans, Advances and Guaranties. The
Borrower shall not, nor shall it permit any Subsidiary to, directly or
indirectly, make, retain or have outstanding any investments (whether through
purchase of stock or obligations or otherwise) in, or loans or advances (other
than for travel advances and other similar cash advances made to employees in
the ordinary course of business) to, any other Person, or acquire all or any
substantial part of the assets or business of any other Person or division
thereof, or be or become liable as endorser, guarantor, surety or otherwise for
any debt, obligation or undertaking of any other Person, or otherwise agree to
provide funds for payment of the obligations of another, or supply funds thereto
or invest therein or otherwise assure a creditor of another against loss, or
apply for or become liable to the issuer of a letter of credit which supports an
obligation of another, or subordinate any claim or demand it may have to the
claim or demand of any other Person; provided, however, that the foregoing shall
not apply to nor operate to prevent:
(a) investments in direct obligations of the United States of America
or of any agency or instrumentality thereof whose obligations constitute
full faith and credit obligations of the United States of America, provided
that any such obligations shall mature within one year of the date of
issuance thereof;
(b) investments in commercial paper rated at least P-1 by Moody's and
at least A-1 by S&P maturing within one year of the date of issuance
thereof;
(c) investments in certificates of deposit issued by any Bank or by
any United States commercial bank having capital and surplus of not less
than $100,000,000 which have a maturity of one year or less;
(d) endorsement of items for deposit or collection of commercial
paper received in the ordinary course of business;
(e) guaranties issued by the Borrower guaranteeing or otherwise
supporting the repayment of indebtedness of a Subsidiary otherwise
permitted by Section 8.7 hereof;
(f) trade receivables from time to time owing to the Borrower or any
Subsidiary created or acquired in the ordinary course of its business;
(g) guaranties by the Borrower or any Subsidiary of the obligations
of any other Subsidiary, as lessee, under any real estate leases entered
into in the ordinary course of its business;
(h) approximate present equity investments in Subsidiaries described
on Schedule 8.9 hereof;
(i) loans by the Borrower to, or other investments by the Borrower
in, any one or more Subsidiaries in the ordinary course of the Borrower's
business not otherwise permitted by this Section aggregating not more than
$25,000,000 at any one time outstanding;
(j) loans by any one or more Subsidiaries to the Borrower in the
ordinary course of such Subsidiaries' business not otherwise permitted by
this Section aggregating not more than $5,000,000 at any one time
outstanding;
(k) loans by any one or more Subsidiaries to, or other investments by
any one or more Subsidiaries in, any one or more other Subsidiaries in the
ordinary course of such lending or investing Subsidiaries' business not
otherwise permitted by this Section aggregating not more than $500,000 at
any one time outstanding;
(l) the ITI Marketing Acquisition;
(m) Acquisitions, so long as (i) no Default or Event of Default
exists or would exist after giving effect to such acquisition, (ii) the
Acquisition is not a Hostile Acquisition, (iii) the Acquired Business is in
an Eligible Line of Business, (iv) the Borrower shall have delivered to the
Banks an updated Schedule 6.2 to reflect any new Subsidiary resulting from
such Acquisition, (iv) the Total Consideration expended by the Borrower and
its Subsidiaries as consideration for such Acquisition, when taken together
with the aggregate Total Consideration expended on a cumulative basis after
the date hereof for all other Acquisitions permitted under this
Section 8.9(m) does not aggregate more than $50,000,000, (v) the Borrower
can demonstrate that on a pro forma basis (including financial projections
for the twelve months following the subject Acquisition) after giving
effect to the subject Acquisition it will continue to comply with all the
terms and conditions of the Loan Documents, and (vi) the Borrower has
provided to the Banks financial statements of the Person whose assets or
Voting Stock is being so acquired, including historical financial
statements, and a description of such Person and its business;
(n) the Guaranties; and
(o) other investments, loans, advances and guaranties not otherwise
permitted by this Section aggregating not more than $1,000,000 at any one
time outstanding.
In determining the amount of investments, acquisitions, loans, advances and
guaranties permitted under this Section, investments and acquisitions shall
always be taken at the original cost thereof (regardless of any subsequent
appreciation or depreciation therein), loans and advances shall be taken at the
principal amount thereof then remaining unpaid, and guaranties shall be taken at
the amount of the obligations guaranteed thereby.
Section 8.10. Mergers, Consolidations and Sales. The Borrower shall not, nor
shall it permit any Subsidiary to, be a party to any merger or consolidation, or
sell, transfer, lease or otherwise dispose of its Property, including any
disposition of Property as part of a sale and leaseback transaction, or in any
event sell or discount (with or without recourse) any of its notes or accounts
receivable; provided, however, that this Section shall not apply to nor operate
to prevent:
(a) the sale or lease of inventory in the ordinary course of
business;
(b) the sale, transfer, lease, or other disposition of Property of
the Borrower or any Subsidiary to one another in the ordinary course of its
business;
(c) any Subsidiary (including any corporation which immediately after
giving effect to an Acquisition permitted by Section 8.9(m) hereof becomes
a Subsidiary, but in any event excluding any Foreign Subsidiary) may merge
or consolidate with or into the Borrower or any Wholly-Owned Subsidiary;
provided that in the case of any merger or consolidation involving the
Borrower, the Borrower is the corporation surviving the merger and in the
case of any other merger involving a Wholly-owned Subsidiary, such Wholly-
owned Subsidiary is the corporation surviving such merger;
(d) the sale of delinquent notes or accounts receivable in the
ordinary course of business for purposes of collection only (and not for
the purpose of any bulk sale or securitization transaction);
(e) the sale, transfer, or other disposition of any tangible personal
property that, in the reasonable business judgment of the Borrower or its
Subsidiary, has become uneconomical, obsolete, or worn out, and which is
disposed of in the ordinary course of business; and
(f) the sale, transfer, lease, or other disposition of Property of
the Borrower or any Subsidiary aggregating for the Borrower and its
Subsidiaries during any 12-month period not more than 10% of Total Assets
as of the close of the then most recent fiscal year-end of the Borrower;
In the event of any merger permitted by Section 8.10(c) above, the Borrower
shall give the Agent and the Banks prior written notice of any such event and,
immediately after giving effect to any such merger, Schedule 6.2 of this
Agreement shall be deemed amended excluding reference to any such Subsidiary
merged out of existence. So long as no Default or Event of Default has occurred
and is continuing or would arise as a result thereof, upon the written request
of the Borrower, the Agent shall release its Lien on any Property sold pursuant
to the provisions of subsections (a), (d), (e) or (f) above.
Section 8.11. Maintenance of Subsidiaries. The Borrower shall not assign,
sell or transfer, nor shall it permit any Subsidiary to issue, assign, sell or
transfer, any shares of capital stock of a Material Subsidiary; provided,
however, that the foregoing shall not operate to prevent (i) the Lien on the
capital stock of each Subsidiary granted to the Agent pursuant to the Collateral
Documents, (ii) the issuance, sale and transfer to any person of any shares of
capital stock of a Subsidiary solely for the purpose of qualifying, and to the
extent legally necessary to qualify, such person as a director of such
Subsidiary, and (iii) any transaction permitted by Section 8.10(c) above.
Section 8.12. Dividends and Certain Other Restricted Payments. The Borrower
shall not, nor shall it permit any Subsidiary to, (i) declare or pay any
dividends on or make any other distributions in respect of any class or series
of its capital stock (other than dividends payable solely in its capital stock)
or (ii) directly or indirectly purchase, redeem or otherwise acquire or retire
any of its capital stock or (iii) prepay any Indebtedness for Borrowed Money
(other than the prepayment of the Loans and L/C Obligations in accordance with
Section 1.11 hereof and the effecting of any redemption of such Loans) (such
non-excepted dividends, distributions, purchases, redemptions, acquisitions,
prepayments and retirements being hereinafter collectively called "Restricted
Payments"); provided, however, that the foregoing shall not apply to or operate
to prevent any Restricted Payments made in any fiscal year of the Borrower if
and to the extent that at the time such Restricted Payment is made and after
giving effect thereto, (i) no Default or Event of Default shall occur or be
continuing, (ii) the aggregate amount of all Restricted Payments (other than the
Permitted Shareholder Redemptions) made during such fiscal year does not exceed
twenty percent (20%) of the Borrower's Net Income for such fiscal year to date
and (iii) the aggregate cumulative amount of all Restricted Payments made on and
after the date hereof does not exceed $25,000,000.
Section 8.13. ERISA. The Borrower shall, and shall cause each Subsidiary to,
promptly pay and discharge all obligations and liabilities arising under ERISA
pertaining to a Plan of a character which if unpaid or unperformed is reasonably
likely to result in the imposition of a Lien against any of its Properties. The
Borrower shall, and shall cause each Subsidiary to, promptly notify the Agent of
(i) the occurrence of any reportable event (as defined in ERISA) with respect to
a Plan, (ii) receipt of any notice from the PBGC of its intention to seek
termination of any Plan or appointment of a trustee therefor, (iii) its
intention to terminate or withdraw from any Plan, and (iv) the occurrence of any
event with respect to any Plan which would result in the incurrence by the
Borrower or any Subsidiary of any material liability, fine or penalty, or any
material increase in the contingent liability of the Borrower or any Subsidiary
with respect to any post-retirement Welfare Plan benefit.
Section 8.14. Compliance with Laws. The Borrower shall, and shall cause each
Subsidiary to, comply in all respects with the requirements of all federal,
state and local laws, rules, regulations, ordinances and orders applicable to or
pertaining to its Properties or business operations, where any such non-
compliance, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect or is reasonably likely to result in a Lien upon any of
their Property.
Section 8.15. Burdensome Contracts With Affiliates. The Borrower shall not,
nor shall it permit any Subsidiary to, enter into any material contract,
agreement or business arrangement with any of its Affiliates on terms and
conditions which are less favorable to the Borrower or such Subsidiary than
would be usual and customary in similar contracts, agreements or business
arrangements between Persons not affiliated with each other.
Section 8.16. No Changes in Fiscal Year. The Borrower shall not change its
fiscal year from its present basis without the prior written consent of the
Required Banks.
Section 8.17. Formation of Subsidiaries. Promptly upon the formation or
acquisition of any Subsidiary, the Borrower shall provide the Agent and the
Banks written notice thereof and shall do such acts and things as are required
of it to comply with Section 4 hereof, and then and thereafter Schedule 6.2 of
this Agreement shall be deemed amended from and after such date to include
reference to any such Subsidiary.
Section 8.18. Change in the Nature of Business. The Borrower shall not, nor
shall it permit any Subsidiary to, engage in any business or activity if as a
result the general nature of the business of the Borrower or any Subsidiary
would be changed in any material respect from the general nature of the business
engaged in by it as of the date of this Agreement or as of the date such Person
becomes a Subsidiary hereunder.
Section 8.19. Use of Loan Proceeds. The Borrower shall use the credit
extended under this Agreement solely for the purposes set forth in, or otherwise
permitted by, Section 6.4 hereof.
Section 8.20. No Restrictions on Subsidiary Distributions. Except as
provided herein, the Borrower shall not, nor shall it permit any Subsidiary to,
directly or indirectly create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of the Borrower or any Subsidiary to: (a) guarantee the Obligations and grant
Liens on its assets to the Agent for the benefit of the Banks as required by
Section 4 hereof; (b) in the case of any Subsidiary, pay dividends or make any
other distribution on any of such Subsidiary's capital stock or other equity
interests owned by the Borrower or any Subsidiary; (c) pay any indebtedness owed
to the Borrower or any Subsidiary; (d) make loans or advances to the Borrower or
any Subsidiary; or (e) transfer any of its property or assets to the Borrower or
any Subsidiary.
Section 8.21. Subordinated Debt. The Borrower shall not, nor shall it permit
any Subsidiary to, amend or modify any of the terms and conditions relating to
any Subordinated Debt or make any voluntary prepayment or acquisition thereof or
effect any voluntary redemption thereof or make any payment on account of
Subordinated Debt which is prohibited under the terms of any instrument or
agreement subordinating the same to the Obligations.
Section 8.22. Total Debt Ratio. As of the last day of each fiscal quarter of
the Borrower occurring during one of the periods specified below, the Borrower
shall not permit the Total Debt Ratio as of the last day of the relevant fiscal
quarter to be greater than or equal to the amount set forth below:
TOTAL DEBT
FROM AND INCLUDING TO AND INCLUDING RATIO SHALL NOT BE
GREATER THAN OR EQUAL TO
the date hereof 12/31/1998 3.50 to 1.0
1/1/1999 3/31/1999 3.25 to 1.0
4/1/1999 6/30/1999 3.00 to 1.0
7/1/1999 6/30/2000 2.75 to 1.0
7/1/2000 6/30/2001 2.50 to 1.0
7/1/2001 6/30/2002 2.25 to 1.0
7/1/2002 6/30/2003 2.00 to 1.0
Section 8.23. Net Worth. The Borrower shall, as of the last day of each
fiscal quarter at all times, maintain Net Worth of not less than the Minimum
Required Amount. For purposes hereof, the term "Minimum Required Amount" shall
mean $115,000,000 and shall increase (but never decrease) as of the last day of
each fiscal quarter of the Borrower thereafter by an amount (if positive) equal
to 80% of Net Income for the fiscal quarter then ended.
Section 8.24. Fixed Charge Coverage Ratio. As of the last day of each fiscal
quarter of the Borrower, the Borrower shall maintain a ratio of (a) Adjusted
EBITDA for the four fiscal quarters of the Borrower then ended less Capital
Expenditures incurred during such period to (b) Fixed Charges for the same four
fiscal quarter period then ended, of not less than 1.50 to 1.0.
Section 8.25. Minimum Adjusted EBITDA. As of the last day of each fiscal
quarter of the Borrower occurring during one of the periods below, the Borrower
shall maintain Adjusted EBITDA at not less than the amount set forth below:
ADJUSTED EBITDA SHALL NOT
FROM AND INCLUDING TO AND INCLUDING BE LESS THAN
the date hereof 6/30/1998 $65,000,000
7/1/1998 12/31/1998 $70,000,000
1/1/1999 3/31/1999 $75,000,000
4/1/1999 6/30/1999 $80,000,000
7/1/1999 9/30/1999 $85,000,000
10/1/1999 12/31/1999 $90,000,000
1/1/2000 9/30/2000 $95,000,000
10/1/2000 6/30/2003 $100,000,000
Section 8.26. Operating Leases. The Borrower shall not, nor shall it permit
any Subsidiary to, acquire the use or possession of any Property under a lease
or similar arrangement, whether or not the Borrower or any Subsidiary has the
express or implied right to acquire title to or purchase such Property, at any
time if, after giving effect thereto, the aggregate amount of fixed rentals and
other consideration payable by the Borrower and its Subsidiaries under all such
leases and similar arrangements would exceed $25,000,000 during any fiscal year
of the Borrower. Capital Leases shall not be included in computing compliance
with this Section to the extent the Borrower's and its Subsidiaries' liability
in respect of the same is permitted by this Section.
Section 8.27. Interest Rate Protection. On or before the date hereof, the
Borrower will hedge its interest rate risk on at least $100,000,000 in principal
amount of the Term Loans, or if less, the principal amount outstanding on the
Term Loans, through the use of one or more interest rate swaps, interest rate
caps, interest rate collars or other recognized interest rate hedging
arrangements (collectively, "Hedging Arrangements"), with all of the foregoing
to effectively limit the amount of interest that the Borrower must pay on
notional amounts of not less than such portion of the Term Loans to not more
than a rate acceptable to the Agent in its discretion for a period ending no
earlier than June 1, 2001 and to be with the Banks, their respective Affiliates
or with other parties reasonably acceptable to the Required Banks. If the
Borrower enters into any Hedging Arrangements with any Bank, the Borrower's
obligations to such Bank in connection with such Hedging Arrangements do not
constitute usage of the Commitments of such Bank.
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.
Section 9.1. Events of Default. Any one or more of the following shall
constitute an "Event of Default" hereunder:
(a) (i) default in the payment when due of all or any part of the
principal of any Note or Reimbursement Obligation (whether at the stated
maturity thereof or at any other time provided for in this Agreement), or
(ii) default for 3 days in the payment when due of all or any part of the
interest on any Note (whether at the stated maturity thereof or at any
other time provided for in this Agreement) of any Reimbursement Obligation
or of any fee or other Obligation payable hereunder or under any other Loan
Document;
(b) default in the observance or performance of any covenant set
forth in Sections 8.5, 8.7, 8.8, 8.9, 8.10, 8.11, 8.12, 8.19, 8.21, 8.22,
8.23, 8.24, 8.25 or 8.26 hereof or of any provision in any Loan Document
dealing with the use, disposition or remittance of the proceeds of
Collateral or requiring the maintenance of insurance thereon;
(c) default in the observance or performance of any other provision
hereof or of any other Loan Document which is not remedied within 30 days
after the earlier of (i) the date on which such failure shall first become
known to any responsible officer of the Borrower or (ii) written notice
thereof is given to the Borrower by the Agent;
(d) any representation or warranty made herein or in any other Loan
Document or in any certificate furnished to the Agent or the Banks pursuant
hereto or thereto or in connection with any transaction contemplated hereby
or thereby proves untrue in any material respect as of the date of the
issuance or making or deemed making thereof;
(e) any event occurs or condition exists (other than those described
in subsections (a) through (d) above) which is specified as an event of
default under any of the other Loan Documents, or any of the Loan Documents
shall for any reason not be or shall cease to be in full force and effect
or is declared to be null and void, or any of the Collateral Documents
shall for any reason fail to create a valid and perfected first priority
Lien in favor of the Agent in any Collateral purported to be covered
thereby (except as expressly permitted by the terms thereof or an
inadvertent failure to maintain such a Lien on Collateral aggregating less
than $500,000 in value), or any Subsidiary takes any action for the purpose
of terminating, repudiating or rescinding any Loan Document executed by it
or any of its obligations thereunder;
(f) default shall occur under any Indebtedness for Borrowed Money
aggregating in excess of $1,000,000 issued, assumed or guaranteed by the
Borrower or any Subsidiary, or under any indenture, agreement or other
instrument under which the same may be issued, and such default shall
continue for a period of time sufficient to permit the acceleration of the
maturity of any such Indebtedness for Borrowed Money (whether or not such
maturity is in fact accelerated), or any such Indebtedness for Borrowed
Money shall not be paid when due (whether by demand, lapse of time,
acceleration or otherwise);
(g) any judgment or judgments, writ or writs or warrant or warrants
of attachment, or any similar process or processes in an aggregate amount
in excess of $2,500,000 in excess of any applicable insurance coverage
shall be entered or filed against the Borrower or any Subsidiary, or
against any of its Property, and which remains undischarged, unvacated,
unbonded or unstayed for a period of 30 days;
(h) the Borrower or any Subsidiary, or any member of its Controlled
Group, shall fail to pay when due an amount or amounts aggregating in
excess of $1,000,000 which it shall have become liable to pay to the PBGC
or to a Plan under Title IV of ERISA; or notice of intent to terminate a
Plan or Plans having aggregate Unfunded Vested Liabilities in excess of
$1,000,000 (collectively, a "Material Plan") shall be filed under Title IV
of ERISA by the Borrower or any Subsidiary, or any other member of its
Controlled Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA
to terminate or to cause a trustee to be appointed to administer any
Material Plan or a proceeding shall be instituted by a fiduciary of any
Material Plan against the Borrower or any Subsidiary, or any member of its
Controlled Group, to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within 30 days thereafter; or a
condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any Material Plan must be terminated;
(i) the Borrower or any Subsidiary shall (i) have entered
involuntarily against it an order for relief under the United States
Bankruptcy Code, as amended, (ii) not pay, or admit in writing its
inability to pay, its debts generally as they become due, (iii) make an
assignment for the benefit of creditors, (iv) apply for, seek, consent to,
or acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any substantial part of
its Property, (v) institute any proceeding seeking to have entered against
it an order for relief under the United States Bankruptcy Code, as amended,
to adjudicate it insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it
or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other
pleading denying the material allegations of any such proceeding filed
against it, (vi) take any corporate action in furtherance of any matter
described in parts (i) through (v) above, or (vii) fail to contest in good
faith any appointment or proceeding described in Section 9.1(j) hereof; or
(j) a custodian, receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any Subsidiary or any
substantial part of any of its Property, or a proceeding described in
Section 9.1(i) (v) shall be instituted against the Borrower or any
Subsidiary, and such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of 30 days.
Section 9.2. Non-Bankruptcy Defaults. When any Event of Default other than
those described in subsection (i) or (j) of Section 9.1 hereof has occurred and
is continuing, the Agent shall, by written notice to the Borrower: (a) if so
directed by the Required Banks, terminate the remaining Commitments and all
other obligations of the Banks hereunder on the date stated in such notice
(which may be the date thereof); (b) if so directed by the Required Banks,
declare the principal of and the accrued interest on all outstanding Notes to be
forthwith due and payable and thereupon all outstanding Notes, including both
principal and interest thereon, shall be and become immediately due and payable
together with all other amounts payable under the Loan Documents without further
demand, presentment, protest or notice of any kind; and (c) if so directed by
the Required Banks, demand that the Borrower immediately pay to the Agent the
full amount then available for drawing under each or any Letter of Credit, and
the Borrower agrees to immediately make such payment and acknowledges and agrees
that the Banks would not have an adequate remedy at law for failure by the
Borrower to honor any such demand and that the Agent, for the benefit of the
Banks, shall have the right to require the Borrower to specifically perform such
undertaking whether or not any drawings or other demands for payment have been
made under any Letter of Credit. The Agent, after giving notice to the Borrower
pursuant to Section 9.1(c) or this Section 9.2, shall also promptly send a copy
of such notice to the other Banks, but the failure to do so shall not impair or
annul the effect of such notice.
Section 9.3. Bankruptcy Defaults. When any Event of Default described in
subsections (i) or (j) of Section 9.1 hereof has occurred and is continuing,
then all outstanding Notes shall immediately become due and payable together
with all other amounts payable under the Loan Documents without presentment,
demand, protest or notice of any kind, the obligation of the Banks to extend
further credit pursuant to any of the terms hereof shall immediately terminate
and the Borrower shall immediately pay to the Agent the full amount then
available for drawing under all outstanding Letters of Credit, the Borrower
acknowledging and agreeing that the Banks would not have an adequate remedy at
law for failure by the Borrower to honor any such demand and that the Banks, and
the Agent on their behalf, shall have the right to require the Borrower to
specifically perform such undertaking whether or not any draws or other demands
for payment have been made under any of the Letters of Credit.
Section 9.4. Collateral for Undrawn Letters of Credit. (a) If the
prepayment of the amount available for drawing under any or all outstanding
Letters of Credit is required under Section 1.11(b) or under Section 9.2 or 9.3
above, the Borrower shall forthwith pay the amount required to be so prepaid, to
be held by the Agent as provided in subsection (b) below.
(b) All amounts prepaid pursuant to subsection (a), together with amounts
deposited with the Agent pursuant to Section 1.11(b)(iii) hereof, above shall be
held by the Agent in a separate collateral account (such account, and the credit
balances, properties and any investments from time to time held therein, and any
substitutions for such account, any certificate of deposit or other instrument
evidencing any of the foregoing and all proceeds of and earnings on any of the
foregoing being collectively called the "Account") as security for, and for
application by the Agent (to the extent available) to, the reimbursement of any
payment under any Letter of Credit then or thereafter made by the Agent, and to
the payment of the unpaid balance of any Loans and all other Obligations. The
Account shall be held in the name of and subject to the exclusive dominion and
control of the Agent for the benefit of the Agent and the Banks. If and when
requested by the Borrower, the Agent shall invest funds held in the Account from
time to time in direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America with a remaining maturity of one year or less, provided that the Agent
is irrevocably authorized to sell investments held in the Account when and as
required to make payments out of the Account for application to amounts due and
owing from the Borrower to the Agent or Banks; provided, however, that if
(i) the Borrower shall have made payment of all such obligations referred to in
subsection (a) above, (ii) all relevant preference or other disgorgement periods
relating to the receipt of such payments have passed, and (iii) no Letters of
Credit, Commitments, Loans or other Obligations remain outstanding hereunder,
then the Agent shall release to the Borrower any remaining amounts held in the
Account.
Section 9.5. Notice of Default. The Agent shall give notice to the Borrower
under Section 9.1(c) hereof promptly upon being requested to do so by any Bank
and shall thereupon notify all the Banks thereof.
Section 9.6. Expenses. The Borrower agrees to pay to the Agent and each
Bank, and any other holder of any Note outstanding hereunder, all expenses
reasonably incurred or paid by the Agent and such Bank or any such holder,
including reasonable attorneys' fees and court costs, in connection with any
Default or Event of Default by the Borrower hereunder or in connection with the
enforcement of any of the Loan Documents.
SECTION 10. CHANGE IN CIRCUMSTANCES.
Section 10.1. Change of Law. Notwithstanding any other provisions of this
Agreement or any Note, if at any time any change after the date hereof in
applicable law or any change after the date hereof in the interpretation or
administration thereof of any of the foregoing by any governmental authority,
central bank or comparable agency having jurisdiction, over such Bank or its
lending branch or the Eurodollar Loans contemplated by this Agreement (whether
or not having the force of law) makes it unlawful for any Bank to make or
continue to maintain any Eurodollar Loans or to perform its obligations as
contemplated hereby, such Bank shall promptly give notice thereof to the
Borrower and such Bank's obligations to make or maintain Eurodollar Loans under
this Agreement shall be suspended until it is no longer unlawful for such Bank
to make or maintain Eurodollar Loans. The Borrower shall, within 5 days (or
sooner if applicable law so requires) after written demand from the affected
Bank or the Agent, prepay on demand the outstanding principal amount of any such
affected Eurodollar Loans, together with all interest accrued thereon and all
other amounts then due and payable to such Bank under this Agreement; provided,
however, subject to all of the terms and conditions of this Agreement, the
Borrower may then elect to borrow the principal amount of the affected
Eurodollar Loans from such Bank by means of Base Rate Loans from such Bank,
which Base Rate Loans shall not be made ratably by the Banks but only from such
affected Bank and provided, further, that the Borrower shall have no obligation
under Section 1.13 with respect to any such prepayment.
Section 10.2. Unavailability of Deposits or Inability to Ascertain, or
Inadequacy of, LIBOR. If on or prior to the first day of any Interest Period
for any Borrowing of Eurodollar Loans:
(a) the Agent determines that deposits in U.S. Dollars (in the
applicable amounts) are not being offered to it in the interbank eurodollar
market for such Interest Period, or that by reason of circumstances
affecting the interbank eurodollar market adequate and reasonable means do
not exist for ascertaining the applicable LIBOR, or
(b) the Required Banks advise the Agent that (i) LIBOR as determined
by the Agent will not adequately and fairly reflect the cost to such Banks
of funding their Eurodollar Loans for such Interest Period or (ii) that the
making or funding of Eurodollar Loans become impracticable,
then the Agent shall forthwith give notice thereof to the Borrower and the
Banks, whereupon until the Agent notifies the Borrower that the circumstances
giving rise to such suspension no longer exist, the obligations of the Banks to
make Eurodollar Loans shall be suspended.
Section 10.3. Increased Cost and Reduced Return. (a) If, on or after the
date hereof, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Lending Office) with any request or directive (whether or not having the force
of law) of any such authority, central bank or comparable agency:
(i) shall subject any Bank (or its Lending Office) to any tax, duty
or other charge with respect to its Fixed Rate Loans, its Notes, its
Letter(s) of Credit, or its participation in any thereof, any Reimbursement
Obligations owed to it or its obligation to make Fixed Rate Loans, issue a
Letter of Credit, or to participate therein, or shall change the basis of
taxation of payments to any Bank (or its Lending Office) of the principal
of or interest on its Fixed Rate Loans, Letter(s) of Credit, or
participations therein or any other amounts due under this Agreement or any
other Loan Document in respect of its Fixed Rate Loans, Letter(s) of
Credit, any participation therein, any Reimbursement Obligations owed to
it, or its obligation to make Fixed Rate Loans, or issue a Letter of
Credit, or acquire participations therein (except for changes in the rate
of tax on the overall net income of such Bank or its Lending Office imposed
by the jurisdiction in which such Bank's principal executive office or
Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve
System, but excluding with respect to any Fixed Rate Loans any such
requirement included in an applicable Eurodollar Reserve Percentage)
against assets of, deposits with or for the account of, or credit extended
by, any Bank (or its Lending Office) or shall impose on any Bank (or its
Lending Office) or on the interbank market any other condition affecting
its Fixed Rate Loans, its Notes, its Letter(s) of Credit, or its
participation in any thereof, any Reimbursement Obligation owed to it, or
its obligation to make Fixed Rate Loans, or to issue a Letter of Credit, or
to participate therein;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Fixed Rate Loan, issuing or
maintaining a Letter of Credit, or participating therein, or to reduce the
amount of any sum received or receivable by such Bank (or its Lending Office)
under this Agreement or under any other Loan Document with respect thereto, by
an amount deemed by such Bank to be material, then, within 60 days after written
demand by such Bank (with a copy to the Agent), the Borrower shall be obligated
to pay to such Bank such additional amount or amounts as will compensate such
Bank for such increased cost or reduction; provided, however, that the Borrower
shall not be obligated to pay any such amount or amounts to the extent such
additional cost or payment was incurred or paid by such Bank more than ninety
(90) days prior to the date of the delivery of the certificate referred to in
the immediately following sentence (nothing herein to impair or otherwise affect
the Borrower's liability hereunder for costs or payments subsequently incurred
or paid by such Bank). If a Bank makes such a claim for compensation, it shall
provide to the Borrower (with a copy to the Agent) substantially concurrently
with such demand a certificate setting forth the computation of the increased
cost or reduced amount as a result of any event mentioned herein in reasonable
detail and such certificate shall be conclusive if reasonably determined.
(b) If, after the date hereof, any Bank or the Agent shall have determined
that the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank (or its Lending Office) with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has had the effect of reducing the rate of
return on such Bank's capital as a consequence of its obligations hereunder to a
level below that which such Bank could have achieved but for such adoption,
change or compliance (taking into consideration such Bank's policies with
respect to capital adequacy) by an amount deemed by such Bank to be material,
then from time to time, within 30 days after written demand by such Bank (with a
copy to the Agent), the Borrower shall pay to such Bank such additional amount
or amounts as will compensate such Bank for such reduction; provided, however,
that the Borrower shall not be obligated to compensate such Bank to the extent
its rate of return was so reduced more than ninety (90) days prior to the date
of such demand (nothing herein to impair or otherwise affect the Borrower's
liability hereunder to compensate for subsequent reductions in such Bank's rate
of return).
(c) A certificate of a Bank claiming compensation under this Section 10.3
and setting forth the additional amount or amounts to be paid to it hereunder
shall be prima facie correct. In determining such amount, such Bank may use any
reasonable averaging and attribution methods.
Section 10.4. Lending Offices. Each Bank may, at its option, elect to make
its Loans hereunder at the branch, office or affiliate specified on the
appropriate signature page hereof (each a "Lending Office") for each type of
Loan available hereunder or at such other of its branches, offices or affiliates
as it may from time to time elect and designate in a written notice to the
Borrower and the Agent.
Section 10.5. Discretion of Bank as to Manner of Funding. Notwithstanding
any other provision of this Agreement, each Bank shall be entitled to fund and
maintain its funding of all or any part of its Loans in any manner it sees fit,
it being understood, however, that for the purposes of this Agreement all
determinations hereunder with respect to Eurodollar Loans shall be made as if
each Bank had actually funded and maintained each Eurodollar Loan through the
purchase of deposits in the interbank eurodollar market having a maturity
corresponding to such Loan's Interest Period and bearing an interest rate equal
to LIBOR for such Interest Period.
Section 10.6. Bank's Duty to Mitigate. Each Bank agrees that, as promptly as
practicable after it becomes aware of the occurrence of an event or the
existence of a condition that would cause it to be affected under Section 10.1,
10.2 or 10.3 hereof, such Bank will, after notice to the Borrower, to the extent
not inconsistent with such Bank's internal policies and customary business
practices, use its best efforts to make, fund or maintain the affected Fixed
Rate Loan through another lending office of such Bank if as a result thereof the
unlawfulness which would otherwise require payment of such Loan pursuant to
Section 10.1 hereof would cease to exist or the circumstances which would
otherwise terminate such Bank's obligation to make such Loan under Section 10.2
hereof would cease to exist or the increased costs which would otherwise be
required to be paid in respect of such Loan pursuant to Section 10.3 hereof
would be materially reduced, and if, as determined by such Bank, in its sole
discretion, the making, funding or maintaining of such Loan through such other
lending office would not otherwise adversely affect such Loan or such Bank. The
Borrower hereby agrees to pay all reasonable expenses incurred by each such Bank
in utilizing another lending office pursuant to this Section 10.6.
SECTION 11. THE AGENT AND ISSUING BANK.
Section 11.1. Appointment and Authorization of Agent. Each Bank hereby
appoints Harris Trust and Savings Bank as the Agent under the Loan Documents and
hereby authorizes the Agent to take such action as Agent on its behalf and to
exercise such powers under the Loan Documents as are delegated to the Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto. The Banks expressly agree that the Agent is not acting as a fiduciary
of the Banks in respect of the Loan Documents, the Borrower or otherwise, and
nothing herein or in any of the other Loan Documents shall result in any duties
or obligations on the Agent or any of the Banks except as expressly set forth
herein.
Section 11.2. Agent and its Affiliates. The Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any other Bank
and may exercise or refrain from exercising such rights and power as though it
were not the Agent, and the Agent and its affiliates may accept deposits from,
lend money to, and generally engage in any kind of business with the Borrower or
any Affiliate of the Borrower as if it were not the Agent under the Loan
Documents. The term "Bank" as used herein and in all other Loan Documents,
unless the context otherwise clearly requires, includes the Agent in its
individual capacity as a Bank. References in Section 1 hereof to the Agent's
Loans, or to the amount owing to the Agent for which an interest rate is being
determined, refer to the Agent in its individual capacity as a Bank.
Section 11.3. Action by Agent. If the Agent receives from the Borrower a
written notice of an Event of Default pursuant to Section 8.5 hereof, the Agent
shall promptly give each of the Banks written notice thereof. The obligations
of the Agent under the Loan Documents are only those expressly set forth
therein. Without limiting the generality of the foregoing, the Agent shall not
be required to take any action hereunder with respect to any Default or Event of
Default, except as expressly provided in Sections 9.2 and 9.5. Upon the
occurrence of an Event of Default, the Agent shall take such action to enforce
its Lien on the Collateral and to preserve and protect the Collateral as may be
directed by the Required Banks. Unless and until the Required Banks give such
direction, the Agent may (but shall not be obligated to) take or refrain from
taking such actions as it deems appropriate and in the best interest of all the
Banks. In no event, however, shall the Agent be required to take any action in
violation of applicable law or of any provision of any Loan Document, and the
Agent shall in all cases be fully justified in failing or refusing to act
hereunder or under any other Loan Document unless it first receives any further
assurances of its indemnification from the Banks that it may require, including
prepayment of any related expenses and any other protection it requires against
any and all costs, expense, and liability which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall be entitled to
assume that no Default or Event of Default exists unless notified in writing to
the contrary by a Bank or the Borrower. In all cases in which the Loan
Documents do not require the Agent to take specific action, the Agent shall be
fully justified in using its discretion in failing to take or in taking any
action thereunder. Any instructions of the Required Banks, or of any other
group of Banks called for under the specific provisions of the Loan Documents,
shall be binding upon all the Banks and the holders of the Obligations.
Section 11.4. Consultation with Experts. The Agent may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
Section 11.5. Liability of Agent; Credit Decision. Neither the Agent nor any
of its directors, officers, agents, or employees shall be liable for any action
taken or not taken by it in connection with the Loan Documents: (i) with the
consent or at the request of the Required Banks or (ii) in the absence of its
own gross negligence or willful misconduct. Neither the Agent nor any of its
directors, officers, agents or employees shall be responsible for or have any
duty to ascertain, inquire into or verify: (i) any statement, warranty or
representation made in connection with this Agreement, any other Loan Document
or any Credit Event; (ii) the performance or observance of any of the covenants
or agreements of the Borrower or any Subsidiary contained herein or in any other
Loan Document; (iii) the satisfaction of any condition specified in Section 7
hereof, except receipt of items required to be delivered to the Agent; or
(iv) the validity, effectiveness, genuineness, enforceability, perfection,
value, worth or collectibility hereof or of any other Loan Document or of any
other documents or writing furnished in connection with any Loan Document or of
any Collateral; and the Agent makes no representation of any kind or character
with respect to any such matter mentioned in this sentence. The Agent may
execute any of its duties under any of the Loan Documents by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Banks, the Borrower, or any other Person for the default or misconduct of any
such agents or attorneys-in-fact selected with reasonable care. The Agent shall
not incur any liability by acting in reliance upon any notice, consent,
certificate, other document or statement (whether written or oral) believed by
it to be genuine or to be sent by the proper party or parties. In particular
and without limiting any of the foregoing, the Agent shall have no
responsibility for confirming the accuracy of any compliance certificate or
other document or instrument received by it under the Loan Documents. The Agent
may treat the payee of any Note as the holder thereof until written notice of
transfer shall have been filed with the Agent signed by such payee in form
satisfactory to the Agent. Each Bank acknowledges that it has independently and
without reliance on the Agent or any other Bank, and based upon such
information, investigations and inquiries as it deems appropriate, made its own
credit analysis and decision to extend credit to the Borrower in the manner set
forth in the Loan Documents. It shall be the responsibility of each Bank to
keep itself informed as to the creditworthiness of the Borrower and its
Subsidiaries, and the Agent shall have no liability to any Bank with respect
thereto.
Section 11.6. Indemnity. The Banks shall ratably, in accordance with their
respective Percentages, indemnify and hold the Agent, and its directors,
officers, employees, agents and representatives harmless from and against any
liabilities, losses, costs or expenses suffered or incurred by it under any Loan
Document or in connection with the transactions contemplated thereby, regardless
of when asserted or arising, except to the extent they are promptly reimbursed
for the same by the Borrower and except to the extent that any event giving rise
to a claim was caused by the gross negligence or willful misconduct of the party
seeking to be indemnified. The obligations of the Banks under this Section
shall survive termination of this Agreement.
Section 11.7. Resignation of Agent and Successor Agent. The Agent may resign
at any time by giving written notice thereof to the Banks and the Borrower.
Upon any such resignation of the Agent, the Required Banks shall have the right
to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Required Banks, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving of notice of resignation then
the retiring Agent may, on behalf of the Banks, appoint a successor Agent, which
shall be any Bank hereunder or any commercial bank organized under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of its
appointment as the Agent hereunder, such successor Agent shall thereupon succeed
to and become vested with all the rights and duties of the retiring Agent under
the Loan Documents, and the retiring Agent shall be discharged from its duties
and obligations thereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Section 11 and all protective provisions of the
other Loan Documents shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent.
Section 11.8. Interest Rate Hedging Arrangements. By virtue of a Bank's
execution of this Agreement or an Assignment Agreement, as the case may be, any
Affiliate of such Bank with whom the Borrower has entered into an agreement
creating Hedging Liability shall be deemed a Bank party hereto for purpose of
any reference in a Loan Document to the parties for whom the Agent is acting, it
being understood and agreed that the rights and benefits of such Affiliate under
the Loan Documents consist exclusively of such Affiliate's right to share in
payments and collections out of the Collateral and the Guaranties as more fully
set forth in other provisions hereof.
Section 11.9. Issuing Bank. The Issuing Bank shall act on behalf of the
Banks with respect to any Letters of Credit issued by it and the documents
associated therewith. The Issuing Bank shall have all of the benefits and
immunities (i) provided to the Agent in this Section 11 with respect to any acts
taken or omissions suffered by the Issuing Bank in connection with Letters of
Credit issued by it or proposed to be issued by it and the Applications
pertaining to such Letters of Credit as fully as if the term "Agent", as used in
this Section 11, included Issuing Bank with respect to such acts or omissions
and (ii) as additionally provided in this Agreement with respect to such Issuing
Bank.
Section 11.10. Agent's Relationship with Borrower. The provisions of this
Section 11 shall be binding upon and sets forth agreements by and among each
Bank and the Agent. The provisions of this Section 11 (except as contemplated
by Section 11.7 hereof) shall in no way amend, alter, modify, restrict or
otherwise affect the agreements of the Borrower with the Agent and with the
Banks otherwise set forth in this Agreement.
SECTION 12. MISCELLANEOUS.
Section 12.1. Withholding Taxes. (a) Payments Free of Withholding. Except
as otherwise required by law and subject to Section 12.1(b) hereof, each payment
by the Borrower under this Agreement or the other Loan Documents shall be made
without withholding for or on account of any present or future taxes (other than
overall net income taxes on the recipient) imposed by or within the jurisdiction
in which the Borrower is domiciled, any jurisdiction from which the Borrower
makes any payment, or (in each case) any political subdivision or taxing
authority thereof or therein. If any such withholding is so required, the
Borrower shall make the withholding, pay the amount withheld to the appropriate
governmental authority before penalties attach thereto or interest accrues
thereon and forthwith pay such additional amount as may be necessary to ensure
that the net amount actually received by each Bank and the Agent free and clear
of such taxes (including such taxes on such additional amount) is equal to the
amount which that Bank or the Agent (as the case may be) would have received had
such withholding not been made. If the Agent or any Bank pays any amount in
respect of any such taxes, penalties or interest, the Borrower shall reimburse
the Agent or such Bank for that payment on demand in the currency in which such
payment was made. If the Borrower pays any such taxes, penalties or interest,
it shall deliver official tax receipts evidencing that payment or certified
copies thereof to the Bank or Agent on whose account such withholding was made
(with a copy to the Agent if not the recipient of the original) on or before the
thirtieth day after payment.
(b) U.S. Withholding Tax Exemptions. Each Bank that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Borrower and the Agent on or before the earlier of the date the
initial Credit Event is made hereunder and 30 days after the date hereof, two
duly completed and signed copies of either Form 1001 (relating to such Bank and
entitling it to a complete exemption from withholding under the Code on all
amounts to be received by such Bank, including fees, pursuant to the Loan
Documents and the Loans) or Form 4224 (relating to all amounts to be received by
such Bank, including fees, pursuant to the Loan Documents and the Loans) of the
United States Internal Revenue Service. Thereafter and from time to time, each
Bank shall submit to the Borrower and the Agent such additional duly completed
and signed copies of one or the other of such Forms (or such successor forms as
shall be adopted from time to time by the relevant United States taxing
authorities) as may be (i) requested by the Borrower in a written notice,
directly or through the Agent, to such Bank and (ii) required under then-current
United States law or regulations to avoid or reduce United States withholding
taxes on payments in respect of all amounts to be received by such Bank,
including fees, pursuant to the Loan Documents or the Loans.
(c) Inability of Bank to Submit Forms. If any Bank determines, as a
result of any change in applicable law, regulation or treaty, or in any official
application or interpretation thereof, that it is unable to submit to the
Borrower or the Agent any form or certificate that such Bank is obligated to
submit pursuant to subsection (b) of this Section 12.1 or that such Bank is
required to withdraw or cancel any such form or certificate previously submitted
or any such form or certificate otherwise becomes ineffective or inaccurate,
such Bank shall promptly notify the Borrower and Agent of such fact and the Bank
shall to that extent not be obligated to provide any such form or certificate
and will be entitled to withdraw or cancel any affected form or certificate, as
applicable.
Section 12.2. No Waiver, Cumulative Remedies. No delay or failure on the
part of the Agent or any Bank or on the part of the holder or holders of any of
the Obligations in the exercise of any power or right under any Loan Document
shall operate as a waiver thereof or as an acquiescence in any default, nor
shall any single or partial exercise of any power or right preclude any other or
further exercise thereof or the exercise of any other power or right. The
rights and remedies hereunder of the Agent, the Banks and of the holder or
holders of any of the Obligations are cumulative to, and not exclusive of, any
rights or remedies which any of them would otherwise have.
Section 12.3. Non-Business Days. Subject to Section 1.9(d) hereof, if any
payment hereunder becomes due and payable on a day which is not a Business Day,
the due date of such payment shall be extended to the next succeeding Business
Day on which date such payment shall be due and payable. In the case of any
payment of principal falling due on a day which is not a Business Day, interest
on such principal amount shall continue to accrue during such extension at the
rate per annum then in effect, which accrued amount shall be due and payable on
the next scheduled date for the payment of interest.
Section 12.4. Documentary Taxes. The Borrower agrees to pay on demand any
documentary, stamp or similar taxes payable in respect of this Agreement or any
other Loan Document, including interest and penalties, in the event any such
taxes are assessed, irrespective of when such assessment is made and whether or
not any credit is then in use or available hereunder.
Section 12.5. Survival of Representations. All representations and
warranties made herein or in any other Loan Document or in certificates given
pursuant hereto or thereto shall survive the execution and delivery of this
Agreement and the other Loan Documents, and shall continue in full force and
effect with respect to the date as of which they were made as long as any credit
is in use or available hereunder.
Section 12.6. Survival of Indemnities. All indemnities and other provisions
relative to reimbursement to the Banks of amounts sufficient to protect the
yield of the Banks with respect to the Loans and Letters of Credit, including,
but not limited to, Sections 1.13, 10.3 and 12.15 hereof, shall survive in
accordance with their terms the termination of this Agreement and the other Loan
Documents and the payment of the Obligations.
Section 12.7. Sharing of Set-Off. Each Bank agrees with each other Bank a
party hereto that if such Bank shall receive and retain any payment, whether by
set-off or application of deposit balances or otherwise, on any of the Loans or
Reimbursement Obligations in excess of its ratable share of payments on all such
Obligations then outstanding to the Banks, then such Bank shall purchase for
cash at face value, but without recourse, ratably from each of the other Banks
such amount of the Loans or Reimbursement Obligations, or participations
therein, held by each such other Banks (or interest therein) as shall be
necessary to cause such Bank to share such excess payment ratably with all the
other Banks; provided, however, that if any such purchase is made by any Bank,
and if such excess payment or part thereof is thereafter recovered from such
purchasing Bank, the related purchases from the other Banks shall be rescinded
ratably and the purchase price restored as to the portion of such excess payment
so recovered, but without interest. For purposes of this Section, amounts owed
to or recovered by the Issuing Bank in connection with Reimbursement Obligations
in which Banks have been required to fund their participation shall be treated
as amounts owed to or recovered by the Issuing Bank as a Bank hereunder.
Section 12.8. Notices. Except as otherwise specified herein, all notices
hereunder and under the other Loan Documents shall be in writing (including,
without limitation, notice by telecopy) and shall be given to the relevant party
at its address or telecopier number set forth below, or such other address or
telecopier number as such party may hereafter specify by notice to the Agent and
the Borrower given by courier, by United States certified or registered mail, by
telecopy or by other telecommunication device capable of creating a written
record of such notice and its receipt. Notices under the Loan Documents to the
Banks and the Agent shall be addressed to their respective addresses or
telecopier numbers set forth on the signature pages hereof, and to the Borrower
to:
APAC TeleServices, Inc.
One Parkway North
Deerfield, IL 60015
Attention: John Abernethy
Telephone: (847) 236-5452
Telecopy: (847) 374-3210
with a copy (in case of notices of default) to:
Barry J. Shkolnik
Neal Gerber & Eisenberg
Two North LaSalle, Suite 2100
Chicago, Illinois 60602
Telephone: (312) 269-8046
Telecopy: (312) 269-1747
Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section or on the signature pages hereof and a confirmation of
such telecopy has been received by the sender, (ii) if given by mail, 5 days
after such communication is deposited in the mail, certified or registered with
return receipt requested, addressed as aforesaid or (iii) if given by any other
means, when delivered at the addresses specified in this Section or on the
signature pages hereof; provided that any notice given pursuant to Section 1
hereof shall be effective only upon receipt.
Section 12.9. Counterparts. This Agreement may be executed in any number of
counterparts, and by the different parties hereto on separate counterpart
signature pages, and all such counterparts taken together shall be deemed to
constitute one and the same instrument.
Section 12.10. Successors and Assigns. This Agreement shall be binding upon
the Borrower and its successors and assigns, and shall inure to the benefit of
the Agent and each of the Banks and the benefit of their respective successors
and assigns, including any subsequent holder of any of the Obligations. The
Borrower may not assign any of its rights or obligations under any Loan Document
without the written consent of all of the Banks.
Section 12.11. Participants. Each Bank shall have the right at its own cost
to grant participations (to be evidenced by one or more agreements or
certificates of participation) in the Loans made and Reimbursement Obligations
and/or Commitments and/or participations in Swing Loans held by such Bank at any
time and from time to time to one or more other Persons; provided that no such
participation shall relieve any Bank of any of its obligations under this
Agreement, and, provided, further that no such participant shall have any rights
under this Agreement except as provided in this Section, and the Agent shall
have no obligation or responsibility to such participant. Any agreement
pursuant to which such participation is granted shall provide that the granting
Bank shall retain the sole right and responsibility to enforce the obligations
of the Borrower under this Agreement and the other Loan Documents including,
without limitation, the right to approve any amendment, modification or waiver
of any provision of the Loan Documents, except that such agreement may provide
that such Bank will not agree to any modification, amendment or waiver of the
Loan Documents that would reduce the amount of or postpone any fixed date for
payment of any Obligation in which such participant has an interest. Any party
to which such a participation has been granted shall have the benefits of
Section 1.13 and Section 10.3 hereof. The Borrower authorizes each Bank to
disclose to any participant or prospective participant under this Section any
financial or other information pertaining to the Borrower.
Section 12.12. Assignment of Commitments by Banks. Each Bank shall have the
right at any time, with the prior consent of the Agent and, so long as no Event
of Default then exists, the Borrower (which consent of the Borrower shall not be
unreasonably withheld and shall not in any event ever be required for any
assignment by Bank of Montreal) to sell, assign, transfer or negotiate all or
any part of its Commitments (including the same percentage of its Notes,
outstanding Loans and Reimbursement Obligations owed to it) to one or more
commercial banks or other financial institutions or investors, provided that
such assignment shall be of a fixed percentage (and not by its terms of varying
percentage) of the assigning Bank's Commitments; provided, however, that (other
than in the case of an assignment by Bank of Montreal) in order to make any such
assignment (i) unless the assignee Bank is assigning all of its Commitments, the
assigning Bank shall retain at least $5,000,000 in outstanding Loans, interests
in Letters of Credit and unused Commitments, (ii) the assignee bank shall have
outstanding Loans, interests in Letters of Credit and unused Commitments of at
least $5,000,000, (iii) each such assignment shall be evidenced by a written
agreement (substantially in the form attached hereto as Exhibit G or in such
other form acceptable to the Agent) executed by such assigning Bank, such
assignee bank or banks, the Agent and, if required as provided above, the
Borrower, which agreement shall specify in each instance the portion of the
Obligations which are to be assigned to the assignee bank and the portion of the
Commitments of the assigning Bank to be assumed by the assignee bank or banks,
and (iv) the assigning Bank shall pay to the Agent a processing fee of $3,500
and any out-of-pocket attorneys' fees and expenses incurred by the Agent in
connection with any such assignment agreement. Any such assignee shall become a
Bank for all purposes hereunder to the extent of the Commitments it assumes and
the assigning Bank shall be released from its obligations, and will have
released its rights, under the Loan Documents to the extent of such assignment.
The Borrower authorizes each Bank to disclose to any purchaser or prospective
purchaser of an interest in the Loans and Reimbursement Obligations owed to it
or its Commitments under this Section any financial or other information
pertaining to the Borrower. Notwithstanding anything herein to the contrary,
(i) any assigning Bank may, without obtaining the Borrower's consent, assign all
or a portion of its Commitments (and related outstanding Obligations hereunder)
to its parent entity and/or any affiliate of such Bank which is at least 80%
owned by such Bank or its parent entity or to any one or more Banks and (ii)
nothing in this Agreement shall prevent or prohibit any Bank from pledging its
Loans and Notes to a Federal Reserve Bank in support of borrowings made by such
Bank from such Federal Reserve Bank.
Section 12.13. Amendments. Any provision of this Agreement or the other Loan
Documents may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed by (a) the Borrower, (b) the Required Banks, and (c) if
the rights or duties of the Agent are affected thereby, the Agent; provided
that:
(i) no amendment or waiver pursuant to this Section 12.13 shall (A)
increase any Commitment of any Bank without the consent of such Bank or (B)
reduce the amount of or postpone the due date for any scheduled payment of
any principal of or interest on any Loan or of any Reimbursement Obligation
or of any fee payable hereunder without the consent of the Bank to which
such payment is owing or which has committed to make such Loan or Letter of
Credit (or participate therein) hereunder or (c) reduce the amount of or
postpone the due date for any prepayment required by Section 1.11(b)(iii)
or 1.11(b)(iv) hereof; and
(ii) no amendment or waiver pursuant to this Section 12.13 shall,
unless signed by each Bank, change the definitions of Revolving Credit
Termination Date, or Required Banks, change the provisions of this Section
12.13, Section 7, Section 9, release any guarantor or all or any
substantial part of the Collateral (except as otherwise provided for in the
Loan Documents), or affect the number of Banks required to take any action
hereunder or under any other Loan Document.
Section 12.14. Headings. Section headings used in this Agreement are for
reference only and shall not affect the construction of this Agreement.
Section 12.15. Costs and Expenses. The Borrower agrees to pay all reasonable
costs and expenses of the Agent in connection with the preparation, negotiation,
and administration of the Loan Documents, including, without limitation, the
reasonable fees and disbursements of counsel to the Agent, in connection with
the preparation and execution of the Loan Documents, and any amendment, waiver
or consent related thereto, whether or not the transactions contemplated herein
are consummated, together with any fees and charges suffered or incurred by the
Agent in connection with periodic environmental audits, fixed asset appraisals,
title insurance policies, collateral filing fees and lien searches; provided,
however, that the Borrower's liability as a result of the foregoing provisions
of this Section for the costs and expenses of the Agent in connection with the
preparation and negotiation of the Loan Documents delivered as a condition to,
and its due diligence review of the transactions funded by, the initial
extension of credit hereunder shall be limited to $100,000. The Borrower
further agrees to indemnify the Agent, each Bank, and their respective
directors, officers and employees, against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without limitation,
all reasonable expenses of litigation or preparation therefor, whether or not
the indemnified Person is a party thereto, or any settlement arrangement arising
from or relating to any such litigation) which any of them may pay or incur
arising out of or relating to any Loan Document or any of the transactions
contemplated thereby or the direct or indirect application or proposed
application of the proceeds of any Loan or Letter of Credit, other than those
which arise (i) from the gross negligence or willful misconduct of, or material
breach of the Loan Documents by, the party claiming indemnification or
(ii) solely in connection with litigation solely between the Banks. The
Borrower, upon demand by the Agent or a Bank at any time, shall reimburse the
Agent or such Bank for any reasonable legal or other expenses incurred in
connection with investigating or defending against any of the foregoing
(including any settlement costs relating to the foregoing) except if the same is
directly due to the gross negligence or willful misconduct of the party to be
indemnified. The obligations of the Borrower under this Section shall survive
the termination of this Agreement.
Section 12.16. Set-off. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, each Bank and each subsequent holder of any
Obligation is hereby authorized by the Borrower at any time or from time to
time, without notice to the Borrower or to any other Person, any such notice
being hereby expressly waived, to set-off and to appropriate and to apply any
and all deposits (general or special, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts, and in whatever currency denominated) and any
other indebtedness at any time held or owing by that Bank or that subsequent
holder to or for the credit or the account of the Borrower, whether or not
matured, against and on account of the Obligations of the Borrower to that Bank
or that subsequent holder under the Loan Documents, including, but not limited
to, all claims of any nature or description arising out of or connected with the
Loan Documents, irrespective of whether or not (a) that Bank or that subsequent
holder shall have made any demand hereunder or (b) the principal of or the
interest on the Loans or Notes and other amounts due hereunder shall have become
due and payable pursuant to Section 9 and although said obligations and
liabilities, or any of them, may be contingent or unmatured.
Section 12.17. Entire Agreement. The Loan Documents constitute the entire
understanding of the parties thereto with respect to the subject matter thereof
and any prior agreements, whether written or oral, with respect thereto are
superseded hereby.
Section 12.18. Governing Law. This Agreement and the other Loan Documents,
and the rights and duties of the parties hereto, shall be construed and
determined in accordance with the internal laws of the State of Illinois.
Section 12.19. Severability of Provisions. Any provision of any Loan Document
which is unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
Section 12.20. Excess Interest. Notwithstanding any provision to the contrary
contained herein or in any other Loan Document, no such provision shall require
the payment or permit the collection of any amount in excess of the maximum
amount of interest permitted by applicable law to be charged for the use or
detention, or the forbearance in the collection, of all or any portion of the
Loans or other obligations outstanding under this Agreement or any other Loan
Document ("Excess Interest"). If any Excess Interest is provided for, or is
adjudicated to be provided for, herein or in any other Loan Document, then in
such event (a) the provisions of this Section 12.20 shall govern and control;
(b) neither the Borrower nor any guarantor or endorser shall be obligated to pay
any Excess Interest; (c) any Excess Interest that the Agent or any Bank may have
received hereunder shall, at the option of the Agent, be (i) applied as a credit
against the then outstanding principal amount of Loans hereunder, accrued and
unpaid interest thereon (not to exceed the maximum amount permitted by
applicable law) and any other obligations, or all of the foregoing; (ii)
refunded to the Borrower, or (iii) any combination of the foregoing; (d) the
interest rate payable hereunder or under any other Loan Document shall be
automatically subject to reduction to the maximum lawful contract rate allowed
under applicable usury laws, and this Agreement and the other Loan Documents
shall be deemed to have been, and shall be, reformed and modified to reflect
such reduction in the relevant interest rate; and (e) neither the Borrower nor
any guarantor or endorser shall have any action against the Agent or any Bank
for any damages whatsoever arising out of the payment or collection of any
Excess Interest.
Section 12.21. Confidentiality. Any information disclosed by the Borrower or
any of its Subsidiaries to the Agent or any Bank which was designated
proprietary or confidential at the time of its receipt by the Agent or such
Bank, and which it is not otherwise in the public domain, shall not be disclosed
by the Agent or such Bank to any other Person except (i) to its independent
accountants and legal counsel (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
information and instructed to keep such information confidential), (ii) pursuant
to statutory and regulatory requirements, (iii) pursuant to any mandatory court
order, subpoena or other legal process, (iv) to the Agent or any other Bank,
(v) pursuant to any agreement heretofore or hereafter made between such Bank and
the Borrower which permits such disclosure, (vi) in connection with the exercise
of any remedy under the Loan Documents, or (vii) subject to an agreement
containing provisions substantially the same as those of this Section, to any
participant in or assignee of, or prospective participant in or assignee of, any
Obligation or Commitments.
Section 12.22. Single Bank. If and so long as Harris Trust and Savings Bank
is the only Bank hereunder, Harris Trust and Savings Bank shall have all rights,
powers and privileges afforded to the Agent, the Banks, and the Required Banks
hereunder and under the other Loan Documents.
Section 12.23. Syndication Agent. Nothing in this Agreement shall impose any
obligation on Bank of Montreal in its capacity as Syndication Agent.
Section 12.24. Submission to Jurisdiction; Waiver of Jury Trial. The Borrower
hereby submits to the nonexclusive jurisdiction of the United States District
Court for the Northern District of Illinois and of any Illinois state court
sitting in the Cook County, Illinois for purposes of all legal proceedings
arising out of or relating to this Agreement, the other Loan Documents or the
transactions contemplated hereby or thereby. The Borrower irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum. THE BORROWER, THE AGENT AND EACH BANK HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY.
[SIGNATURE PAGES TO FOLLOW]
Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall constitute a contract between us for the uses and purposes
hereinabove set forth.
Dated as of this ____________ 1998.
APAC TELESERVICES, INC.
By
Name
Title
Accepted and agreed to as of the day and year last above written.
HARRIS TRUST AND SAVINGS BANK, in its
individual capacity as a Bank and as
Agent
Address and Amount of Commitments: By . . . . . . . . . . . . . . . .
Name: Dan Sabol
Address: Title: Vice President
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
Attention: Dan Sabol
Telecopy: (312) 293-5068
Telephone: (312) 461-3766
with notices of Borrowing requests to:
Attention: Shirley Joyner
Telecopy: (312) 765-8078
Telephone: (312) 461-6768
Revolving Credit Commitment:
$12,000,000
Term Loan Commitment:
$18,000,000
Lending Offices:
111 West Monroe Street
Chicago, Illinois 60603
BANK OF MONTREAL, in its individual
capacity as a Bank and as Syndication
Agent
Address and Amount of Commitments: By . . . . . . . . . . . . . . . .
Name: Michael W. Hedrick
Address: Title: Director
Bank of Montreal
115 South LaSalle Street
Chicago, Illinois 60603
Attention: Michael W. Hedrick
Telecopy: (312) 750-3834
Telephone: (312) 750-3766
with notices of Borrowing requests to:
Attention: Terri Perez-Ford
Telecopy: (312) 750-3456
Telephone: (312) 750-3827
Revolving Credit Commitment:
$88,000,000
Term Loan Commitment:
$132,000,000
Lending Offices:
115 South LaSalle Street
Chicago, Illinois 60603
EXHIBIT A
NOTICE OF PAYMENT REQUEST
[Date]
[Name of Bank]
[Address]
Attention:
Reference is made to the Credit Agreement, dated as of May 20, 1998, among
APAC TeleServices, Inc., the Banks party thereto, and Harris Trust and Savings
Bank, as Agent (the "Credit Agreement"). Capitalized terms used herein and not
defined herein have the meanings assigned to them in the Credit Agreement. [The
Borrower has failed to pay its Reimbursement Obligation in the amount of
$_________. Your Bank's Percentage of the unpaid Reimbursement Obligation is
$_________] or [The undersigned has been required to return a payment by the
Borrower of a Reimbursement Obligation in the amount of $________. Your Bank's
Percentage of the returned Reimbursement Obligation is $_________.]
Very truly yours,
HARRIS TRUST AND SAVINGS BANK, as Issuing
Bank
By
Its
EXHIBIT B
NOTICE OF BORROWING
Date: ______________, ____
To: Harris Trust and Savings Bank, as Agent for the Banks parties to the Credit
Agreement dated as of May 20, 1998 (as extended, renewed, amended or
restated from time to time, the "Credit Agreement") among APAC
TelesServices, Inc., certain Banks which are signatories thereto and Harris
Trust and Savings Bank, as Agent
Ladies and Gentlemen:
The undersigned, APAC TeleServices, Inc. (the "Borrower"), refers to the
Credit Agreement, the terms defined therein being used herein as therein
defined, and hereby gives you notice irrevocably, pursuant to Section 1.6 of the
Credit Agreement, of the Borrowing specified below:
1. The Business Day of the proposed Borrowing is ___________, ____.
2. The aggregate amount of the proposed Borrowing is
$______________.
3. The Borrowing is being advanced under the [REVOLVING] [TERM]
Credit.
4. The Borrowing is to be comprised of $___________ of [BASE RATE]
[EURODOLLAR] Loans.
[5. THE DURATION OF THE INTEREST PERIOD FOR THE EURODOLLAR LOANS
INCLUDED IN THE BORROWING SHALL BE ____________ MONTHS.]
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the proposed Borrowing, before
and after giving effect thereto and to the application of the proceeds
therefrom:
(a) the representations and warranties of the Borrower contained in
Section 6 of the Credit Agreement are true and correct as though made on
and as of such date (except to the extent such representations and
warranties relate to an earlier date, in which case they are true and
correct as of such date); and
(b) no Default or Event of Default has occurred and is continuing or
would result from such proposed Borrowing.
APAC TELESERVICES, INC.
By
Name
Title
EXHIBIT C
NOTICE OF CONVERSION/CONTINUATION
Date: ____________, ____
To: Harris Trust and Savings Bank, as Agent for the Banks parties to the Credit
Agreement dated as of May 20, 1998 (as extended, renewed, amended or
restated from time to time, the "Credit Agreement") among APAC
TeleServices, Inc., certain Banks which are signatories thereto and Harris
Trust and Savings Bank, as Agent
Ladies and Gentlemen:
The undersigned, APAC TeleServices, Inc. (the "Borrower"), refers to the
Credit Agreement, the terms defined therein being used herein as therein
defined, and hereby gives you notice irrevocably, pursuant to Section 16 of the
Credit Agreement, of the [CONVERSION] [CONTINUATION] of the Loans specified
herein, that:
1. The conversion/continuation Date is __________, ____.
2. The aggregate amount of the [REVOLVING] [TERM] Loans to be
[CONVERTED] [CONTINUED] is $______________.
3. The Loans are to be [CONVERTED INTO] [CONTINUED AS] [EURODOLLAR]
[BASE RATE] Loans.
4. [IF APPLICABLE:] The duration of the Interest Period for the
[REVOLVING] [TERM] Loans included in the [CONVERSION] [CONTINUATION] shall
be _________ months.
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the proposed conversion/continuation date,
before and after giving effect thereto and to the application of the proceeds
therefrom:
(a) the representations and warranties of the Borrower contained in
Section 6 of the Credit Agreement are true and correct as though made on
and as of such date (except to the extent such representations and
warranties relate to an earlier date, in which case they are true and
correct as of such date); provided, however, that this condition shall not
apply to the conversion of an outstanding Eurodollar Loan to a Base Rate
Loan; and
(b) no Default or Event of Default has occurred and is continuing, or
would result from such proposed [CONVERSION] [CONTINUATION].
APAC TELESERVICES, INC.
By:
Name
Title
EXHIBIT D
REVOLVING NOTE
U.S. $_______________ __________, 19__
FOR VALUE RECEIVED, the undersigned, APAC TELESERVICES, INC., an Illinois
corporation (the "Borrower"), hereby promises to pay to the order of
______________________ (the "Bank") on the Revolving Credit Termination Date of
the hereinafter defined Credit Agreement, at the principal office of Harris
Trust and Savings Bank, as Agent, in Chicago, Illinois, in immediately available
funds, the principal sum of ___________________ Dollars ($__________) or, if
less, the aggregate unpaid principal amount of all Revolving Loans made by the
Bank to the Borrower pursuant to the Credit Agreement, together with interest on
the principal amount of each Revolving Loan from time to time outstanding
hereunder at the rates, and payable in the manner and on the dates, specified in
the Credit Agreement.
The Bank shall record on its books or records or on a schedule attached to
this Note, which is a part hereof, each Revolving Loan made by it pursuant to
the Credit Agreement, together with all payments of principal and interest and
the principal balances from time to time outstanding hereon, whether the
Revolving Loan is a Base Rate Loan or a Eurodollar Loan, the interest rate and
Interest Period applicable thereto, provided that prior to the transfer of this
Note all such amounts shall be recorded on a schedule attached to this Note.
The record thereof, whether shown on such books or records or on a schedule to
this Note, shall be prima facie evidence of the same, provided, however, that
the failure of the Bank to record any of the foregoing or any error in any such
record shall not limit or otherwise affect the obligation of the Borrower to
repay all Revolving Loans made to it pursuant to the Credit Agreement together
with accrued interest thereon.
This Note is one of the Revolving Notes referred to in the Credit Agreement
dated as of May 20, 1998, among the Borrower, Harris Trust and Savings Bank, as
Agent, and the Banks party thereto (the "Credit Agreement"), and this Note and
the holder hereof are entitled to all the benefits and security provided for
thereby or referred to therein, to which Credit Agreement reference is hereby
made for a statement thereof. All defined terms used in this Note, except terms
otherwise defined herein, shall have the same meaning as in the Credit
Agreement. This Note shall be governed by and construed in accordance with the
internal laws of the State of Illinois.
Voluntary prepayments may be made hereon, certain prepayments are required
to be made hereon, and this Note may be declared due prior to the expressed
maturity hereof, all in the events, on the terms and in the manner as provided
for in the Credit Agreement.
The Borrower hereby waives demand, presentment, protest or notice of any
kind hereunder.
APAC TELESERVICES, INC.
By
Name
Title
EXHIBIT E
TERM NOTE
U.S. $_______________ ___________, 19__
FOR VALUE RECEIVED, the undersigned, APAC TELESERVICES, INC., an Illinois
corporation (the "Borrower"), hereby promises to pay to the order of
______________________ (the "Bank") at the principal office of Harris Trust and
Savings Bank, as Agent, in Chicago, Illinois, in immediately available funds,
the principal sum of ___________________ Dollars ($__________) or, if less, the
aggregate unpaid principal amount of the Term Loan made or maintained by the
Bank to the Borrower pursuant to the Credit Agreement, in consecutive quarter-
annual principal installments in the amounts called for by Section 1.10(b) of
the Credit Agreement, commencing on ___________, 1998, and continuing on the
first day of each June, September, December and March occurring thereafter,
together with interest on the principal amount of such Term Loan from time to
time outstanding hereunder at the rates, and payable in the manner and on the
dates, specified in the Credit Agreement, except that all principal and interest
not sooner paid on the Term Loan evidenced hereby shall be due and payable on
June 1, 2003, the final maturity date hereof.
The Bank shall record on its books or records or on a schedule attached to
this Note, which is a part hereof, the Term Loan made or maintained by it
pursuant to the Credit Agreement, together with all payments of principal and
interest and the principal balances from time to time outstanding hereon,
whether the Term Loan is a Base Rate Loan or a Eurodollar Loan, the interest
rate and Interest Period applicable thereto, provided that prior to the transfer
of this Note all such amounts shall be recorded on a schedule attached to this
Note. The record thereof, whether shown on such books or records or on a
schedule to this Note, shall be prima facie evidence of the same, provided,
however, that the failure of the Bank to record any of the foregoing or any
error in any such record shall not limit or otherwise affect the obligation of
the Borrower to repay the Term Loan made to it pursuant to the Credit Agreement
together with accrued interest thereon.
This Note is one of the Term Notes referred to in the Credit Agreement
dated as of May 20, 1998, among the Borrower, Harris Trust and Savings Bank, as
Agent, and the Banks party thereto (the "Credit Agreement"), and this Note and
the holder hereof are entitled to all the benefits and security provided for
thereby or referred to therein, to which Credit Agreement reference is hereby
made for a statement thereof. All defined terms used in this Note, except terms
otherwise defined herein, shall have the same meaning as in the Credit
Agreement. This Note shall be governed by and construed in accordance with the
internal laws of the State of Illinois.
Voluntary prepayments may be made hereon, certain prepayments are required
to be made hereon, and this Note may be declared due prior to the expressed
maturity hereof, all in the events, on the terms and in the manner as provided
for in the Credit Agreement.
The Borrower hereby waives demand, presentment, protest or notice of any
kind hereunder.
APAC TELESERVICES, INC.
By
Name
Title
EXHIBIT F
SWING LINE NOTE
U.S. $______________ __________, 19__
On the Revolving Credit Termination Date, for value received, the
undersigned, APAC TELESERVICES, INC., an Illinois corporation (the "Borrower"),
promises to pay to the order of Harris Trust and Savings Bank (the "Bank"), at
the principal office of Harris Trust and Savings Bank in Chicago, Illinois, the
principal sum of (i) _________________ Dollars ($______________), or (ii) such
lesser amount as may at the time of the maturity hereof, whether by acceleration
or otherwise, be the aggregate unpaid principal amount of all Swing Loans owing
from the Borrower to the Bank under the Swing Line Commitment provided for in
the Credit Agreement hereinafter mentioned.
This Note evidences Swing Loans made and to be made to the Borrower by the
Bank under the Swing Line Commitment provided for under that certain Credit
Agreement dated as of May 20, 1998 by and between the Borrower, Harris Trust and
Savings Bank individually and as Agent and certain banks which are or may from
time to time become parties thereto (the "Credit Agreement"), and the Borrower
hereby promises to pay interest at the office specified above on each Swing Loan
evidenced hereby at the rates and times specified therefor in the Credit
Agreement.
Each Swing Loan made under the Swing Line Commitment provided for in the
Credit Agreement by the Bank to the Borrower against this Note, any repayment of
principal hereon and the interest rates applicable thereto shall be endorsed by
the holder hereof on the reverse side of this Note or recorded on the books and
records of the holder hereof (provided that such entries shall be endorsed on
the reverse side hereof prior to any negotiation hereof) and the Borrower agrees
that in any action or proceeding instituted to collect or enforce collection of
this Note, the entries so endorsed on the reverse side hereof or recorded on the
books and records of the Bank shall be prima facie evidence of the unpaid
balance of this Note and the interest rates applicable thereto.
This Note is issued by the Borrower under the terms and provisions of the
Credit Agreement, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity as specified in the
Credit Agreement, and certain prepayments are required to be made hereon, all in
the events, on the terms and with the effects provided in the Credit Agreement.
All capitalized terms used herein without definition shall have the same meaning
herein as such terms have in the Credit Agreement.
This Note shall be construed in accordance with, and governed by, the
internal laws of the State of Illinois without regard to principles of conflict
of law.
The Borrower hereby waives demand, presentment, protest or notice of any
kind hereunder.
APAC TELESERVICES, INC.
By
Its
EXHIBIT G
COMPLIANCE CERTIFICATE
FOR
APAC TELESERVICES, INC.
This Compliance Certificate is furnished to Harris Trust and Savings Bank,
as Agent (the "Agent") pursuant to that certain Credit Agreement dated as of
May 20, 1998, among APAC TeleServices, Inc. (the "Borrower"), Harris Trust and
Savings Bank, as Agent, and the Banks party thereto (the "Credit Agreement").
Unless otherwise defined herein, the terms used in this Compliance Certificate
have the meanings ascribed thereto in the Credit Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _____________________________________ of
the Borrower;
2. I have reviewed the terms of the Credit Agreement and I have
made, or have caused to be made under my supervision, a detailed review of
the transactions and conditions of the Borrower and its Subsidiaries during
the accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or the occurrence of
any event which constitutes a Default or Event of Default during or at the
end of the accounting period covered by the attached financial statements
or as of the date of this Certificate, except as set forth below; and
4. The Attachment hereto sets forth financial data and computations
evidencing the Borrower's compliance with certain covenants of the Credit
Agreement, all of which data and computations are, to the best of my
knowledge, true, complete and correct and have been made in accordance with
the relevant Sections of the Credit Agreement.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
The foregoing certifications, together with the computations set forth in
the Attachment hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this _________ day of
__________________ 19___.
APAC TELESERVICES, INC.
By
. . . . . . . ,
(Name)(Title)
ATTACHMENT TO COMPLIANCE CERTIFICATE
FOR
APAC TELESERVICES, INC.
Compliance Calculations for Credit Agreement
Dated as of May 20, 1998
Calculations as of _____________, 19___
___________________________________________________________________________
A. TOTAL DEBT RATIO (SECTION 8.22 OF THE AGREEMENT)
1. Total Funded Debt (as defined) $_______________
A1
2. Net Income (as defined $_______________
and as adjusted per the definition A2
of Adjusted EBITDA) for the four
fiscal quarters then ended
3. Interest Expense $_______________
defined and as so adjusted) for A3
the same period
4. Federal, state and local $_______________
income taxes (as so adjusted) for A4
the same period
5. Deprecation of fixed $_______________
assets (as so adjusted) for the A5
same period
6. Amortization (as so $_______________
adjusted) for the same period A6
7. Add Lines A2-A6 $_______________
(Adjusted EBITDA) A7
8. Ratio of Line A1 to A7 _____ : 1.0
9. Line A8 Ratio must be less than or equal
to:
Total Debt Ratio Shall
From and To and Including
Including Not Be Greater Than:
the date of 12/31/1998 3.50 to 1.0
Credit Agreement
1/1/1999 3/31/1999 3.25 to 1.0
4/1/1999 6/30/1999 3.00 to 1.0
7/1/1999 6/30/2000 2.75 to 1.0
7/1/2000 6/30/2001 2.50 to 1.0
7/1/2001 6/30/2002 2.25 to 1.0
7/1/2002 6/30/2003 2.00 to 1.0
10. Is Borrower in Compliance (Circle Yes or Yes / No
No)
B. NET WORTH (SECTION 8.23 OF THE AGREEMENT)
1. Shareholders' Equity $____________
minus
(i) Notes from Officers and ($____________)
Employees
(ii) Write-up of Assets ($____________)
Net Worth $____________
___
B1
2. Line B1 must be greater than or equal to:$____________
___
B2
3. Is Borrower in Compliance (Circle Yes or Yes / No
No)
C. FIXED CHARGE COVERAGE RATIO (SECTION 8.24 OF THE AGREEMENT)
1. Adjusted EBITDA (Line A7) $____________
___
C1
2. Capital Expenditures (as defined) for the $____________
same period ___
C2
3. Subtract Line C2 from C1 $____________
___
C3
4. Principal payments due in the next 12 $____________
months ___
C4
5. Annualized Interest Expense (as defined) $____________
for the same period ___
C5
6. Add Lines C4+C5 $____________
___
C6
7. Ratio of Line C3 to Line C6 _____ : 1.0
8. Line C7 ratio must be greater than or 1.50 : 1.0
equal to:
9. Is Borrower in Compliance Yes/No
D. ADJUSTED EBITDA (SECTION 8.25 OF THE AGREEMENT)
1. Adjusted EBITDA (Line A7) $____________
___
D1
2. Line D1 must be greater than or equal to:
Adjusted EBITDA Shall
From and To and Including Not Be Less
Including Than:
the date of 6/30/1998 $65,000,000
Credit Agreement
7/1/1998 12/31/1998 $70,000,000
1/1/1999 3/31/1999 $75,000,000
4/1/1999 6/30/1999 $80,000,000
7/1/1999 9/30/1999 $85,000,000
10/1/1999 12/31/1999 $90,000,000
1/1/2000 9/30/2000 $95,000,000
10/1/2000 6/30/2003 $100,000,000
3. Is Borrower in Compliance (Circle Yes or Yes / No
No)
EXHIBIT H
ASSIGNMENT AND ACCEPTANCE
Dated ______________, 19_____
Reference is made to the Credit Agreement dated as of May 20, 1998 (the
"Credit Agreement") among APAC TeleServices, Inc., an Illinois corporation, the
Banks (as defined in the Credit Agreement) and Harris Trust and Savings Bank, as
Agent for the Banks (the "Agent"). Terms defined in the Credit Agreement are
used herein with the same meaning.
_____________________________________________________ (the "Assignor") and
_________________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, a _______%
interest in and to all of the Assignor's rights and obligations under the
Credit Agreement as of the Effective Date (as defined below), including,
without limitation, such percentage interest in the Assignor's Commitments
as in effect on the Effective Date and the Loans, if any, owing to the
Assignor on the Effective Date and the Assignor's Percentage of any
outstanding L/C Obligations and Swing Loans, if any.
2. The Assignor (i) represents and warrants that as of the date
hereof (A) its Revolving Credit Commitment is $_____________ and its Term
Loan Commitment is $______________, (B) the aggregate outstanding principal
amount of Loans made by it under the Credit Agreement that have not been
repaid is $____________ ($_____________ of Revolving Loans and
$_____________ of Term Loans ) and a description of the interest rates and
interest periods of such Loans is attached as Schedule 1 hereto, (C) the
aggregate principal amount of Assignor's Percentage of outstanding L/C
Obligations is $____________, and (D) the aggregate amount of Assignor's
participations (whether or not funded) in outstanding Swing Loans is
$____________; (ii) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim, lien, or encumbrance
of any kind; (iii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other instrument or document furnished
pursuant thereto; and (iv) makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Borrower
or any Subsidiary or performance or observance by the Borrower or any
Subsidiary of any of its obligations under the Credit Agreement or any
other instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred
to in Section 8.5 thereof and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to
enter into this Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any
other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iii) appoints and
authorizes the Agent to take such action as Agent on its behalf and to
exercise such powers under the Credit Agreement and the other Loan
Documents as are delegated to the Agent by the terms thereof, together with
such powers as are reasonably incidental thereto; (iv) agrees that it will
perform in accordance with their terms all of the obligations which by the
terms of the Credit Agreement are required to be performed by it as a Bank;
and (v) specifies as its lending office (and address for notices) the
offices set forth beneath its name on the signature pages hereof.
4. As consideration for the assignment and sale contemplated in
Section 1 hereof, the Assignee shall pay to the Assignor on the Effective
Date in Federal funds an amount equal to $________________*. It is
understood that commitment and/or facility fees accrued to the Effective
Date with respect to the interest assigned hereby are for the account of
the Assignor and such fees accruing from and including the date hereof are
for the account of the Assignee. Each of the Assignor and the Assignee
hereby agrees that if it receives any amount under the Credit Agreement
which is for the account of the other party hereto, it shall receive the
same for the account of such other party to the extent of such other
party's interest therein and shall promptly pay the same to such other
party.
5. The effective date for this Assignment and Acceptance shall be
_____________, 19___ (the "Effective Date"). Following the execution of
this Assignment and Acceptance, it will be delivered to the Agent for
acceptance and recording by the Agent and, if required, the Borrower.
6. Upon such acceptance and recording, as of the Effective Date, (i)
the Assignee shall be a party to the Credit Agreement and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations
of a Bank thereunder and (ii) the Assignor shall, to the extent provided in
this Assignment and Acceptance, relinquish its rights and be released from
its obligations under the Credit Agreement.
7. Upon such acceptance and recording, from and after the Effective
Date, the Agent shall make all payments under the Credit Agreement in
respect of the interest assigned hereby (including, without limitation, all
payments of principal, interest and commitment fees with respect thereto)
to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement for periods prior to the
Effective Date directly between themselves.
8. In accordance with Section 12.12 of the Credit Agreement, the
Assignor and the Assignee request and direct that the Agent prepare and
cause the Borrower to execute and deliver to the Assignee the relevant
Notes payable to the Assignee in the amount of its Commitments and new
Notes to the Assignor in the amount of its Commitments after giving effect
to this assignment.
9. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of Illinois.
[ASSIGNOR BANK]
By
Name
Title
[ASSIGNEE BANK]
By
Name
Title
Lending office (and address for notices):
Accepted and consented this
____ day of ___________, 19__
APAC TELESERVICES, INC.
By . . . . . . . . . . . . . . .
Name . . . . . . . . . . . . .
Title . . . . . . . . . . . .
Accepted and consented to by the Agent this
_______ day of ___________, 19__
HARRIS TRUST AND SAVINGS BANK, as Agent
By . . . . . . . . . . . . . . .
Name . . . . . . . . . . . . .
Title . . . . . . . . . . . .
SCHEDULE I
PRINCIPAL AMOUNT TYPE OF LOAN INTEREST RATE MATURITY DATE
SCHEDULE 6.2
NAME JURISDICTION OF PERCENTAGE
INCORPORATION OWNERSHIP
APAC Insurance Services Illinois 100%
Agency, Inc.
APAC TeleServices General Illinois 100%
Partner, Inc.
APAC TeleServices of Illinois 100%
Illinois, Inc.
APAC TeleServices of Michigan 100%
Michigan, Inc.
APAC TeleServices of Texas 100%
Texas, L.P.
APAC TeleServices, L.L.C. Illinois 100%
Paragren Technologies, Inc. Delaware 100%
The Schechtman Group, L.L.C. Nevada 100%
ITI Holdings, Inc. Delaware 100%
ITI Marketing Services, Inc. Delaware 100%
SCHEDULE 8.7
OTHER INDEBTEDNESS
1. Obligations of the Borrower aggregating not more than $1,367,385 in
respect of (i) the City of Cedar Rapids, Iowa Industrial Development Revenue
Bonds (E & S Electrical Contractors, Inc. Project), Series 1981 and (ii) the
City of Cedar Rapids, Iowa Industrial Development Revenue Bonds (TLS Co.
Project), Series 1981.
2. Obligations of the Borrower aggregating not more than $878,617 in
respect of those certain Brown County Development Revenue Bonds.
3. Obligations of the Borrower aggregating not more than $72,000 in
respect of those certain Lawton Industrial Development Notes.
4. Obligations of the Borrower aggregating not more than $3,249,544 in
respect of various capital leases of the Borrower and ITI Marketing.
CHEDULE 8.8
OTHER LIENS
1. Liens on the Borrower's buildings and related fixtures at the so-
called Cedar Rapids Ground Transportation Center in Cedar Rapids, Iowa securing
the indebtedness described under item 1 of Schedule 8.7
SCHEDULE 8.9
PRESENT INVESTMENTS IN SUBSIDIARIES
NAME AMOUNT OF INVESTMENT
APAC Insurance Services
Agency, Inc. $25,000
APAC TeleServices General
Partner, Inc. $96,000
APAC TeleServices of
Illinois, Inc. $1,000
APAC TeleServices of
Michigan, Inc. $1,000
APAC TeleServices of
Texas, L.P. $0
APAC TeleServices, L.L.C. $8,640,000
Paragren Technologies, Inc. $13,879,000
The Schechtman Group, L.L.C. $0
ITI Holdings, Inc. $160,000,000
ITI Marketing Services, Inc. $0
* Amount should combine principal together with accrued interest and breakage
compensation, if any, to be paid by the Assignee, net of any portion of any
upfront fee to be paid by the Assignor to the Assignee. It may be preferable
in an appropriate case to specify these amounts generically or by formula
rather than as a fixed sum.
