EXHIBIT 10
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LOAN AND SECURITY AGREEMENT
BY AND AMONG
NORSTAN COMMUNICATIONS INC.
AND
VIBES TECHNOLOGIES, INC.
AS BORROWERS,
NORSTAN, INC.
NORSTAN FINANCIAL SERVICES INC.
NORSTAN CANADA INC.
AND
NORSTAN INTERNATIONAL, INC.
AS U.S. CREDIT PARTIES
AND
NORSTAN CANADA LTD.
AS A CANADIAN CREDIT PARTY
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
WELLS FARGO FOOTHILL, INC.
AS THE ARRANGER AND ADMINISTRATIVE AGENT
DATED AS OF DECEMBER 10, 2003
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TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION........................................................................... 1
1.1. Definitions................................................................................. 1
1.2. Accounting Terms............................................................................ 27
1.3. Code........................................................................................ 27
1.4. Construction................................................................................ 28
1.5. Schedules and Exhibits...................................................................... 28
2. LOAN AND TERMS OF PAYMENT.............................................................................. 28
2.1. Revolver Advances........................................................................... 28
2.2. Term Loan................................................................................... 29
2.3. Borrowing Procedures and Settlements........................................................ 30
2.4. Payments.................................................................................... 36
2.5. Overadvances................................................................................ 39
2.6. Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations. ................ 40
2.7. Cash Management............................................................................. 41
2.8. Crediting Payments; Float Charge............................................................ 43
2.9. Designated Account.......................................................................... 44
2.10. Maintenance of Loan Account; Statements of Obligations...................................... 44
2.11. Fees........................................................................................ 44
2.12. Letters of Credit........................................................................... 45
2.13. LIBOR Option................................................................................ 48
2.14. Capital Requirements........................................................................ 51
2.15. Joint and Several Liability of Borrowers.................................................... 51
3. CONDITIONS; TERM OF AGREEMENT.......................................................................... 54
3.1. Conditions Precedent to the Initial Extension of Credit..................................... 54
3.2. Conditions Subsequent to the Initial Extension of Credit.................................... 57
3.3. Conditions Precedent to all Extensions of Credit............................................ 57
3.4. Term........................................................................................ 58
3.5. Effect of Termination....................................................................... 58
3.6. Early Termination by Borrowers.............................................................. 58
4. CREATION OF SECURITY INTEREST.......................................................................... 59
4.1. Grant of Security Interest.................................................................. 59
4.2. Negotiable Collateral....................................................................... 59
4.3. Collection of Accounts, General Intangibles, and Negotiable Collateral...................... 60
4.4. Filing of Financing Statements; Commercial Tort Claims; Delivery of Additional
Documentation Required...................................................................... 60
4.5. Power of Attorney........................................................................... 61
4.6. Right to Inspect............................................................................ 61
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4.7. Control Agreements.......................................................................... 62
5. REPRESENTATIONS AND WARRANTIES......................................................................... 62
5.1. No Encumbrances............................................................................. 62
5.2. Intentionally Omitted....................................................................... 62
5.3. Intentionally Omitted....................................................................... 62
5.4. Equipment................................................................................... 62
5.5. Location of Inventory and Equipment......................................................... 63
5.6. Inventory Records........................................................................... 63
5.7. State of Incorporation; Location of Chief Executive Office; FEIN; Organizational ID
Number; Commercial Tort Claims.............................................................. 63
5.8. Due Organization and Qualification; Subsidiaries............................................ 63
5.9. Due Authorization; No Conflict.............................................................. 64
5.10. Litigation.................................................................................. 65
5.11. No Material Adverse Change.................................................................. 65
5.12. Fraudulent Transfer......................................................................... 65
5.13. Employee Benefits........................................................................... 65
5.14. Environmental Condition..................................................................... 66
5.15. Brokerage Fees.............................................................................. 66
5.16. Intellectual Property....................................................................... 66
5.17. Leases...................................................................................... 66
5.18. DDAs........................................................................................ 67
5.19. Complete Disclosure......................................................................... 67
5.20. Indebtedness................................................................................ 67
5.21. Recurring Revenue Agreements................................................................ 67
5.22. Payments to Employees and Others............................................................ 68
5.23. Withholdings and Remittances................................................................ 68
6. AFFIRMATIVE COVENANTS.................................................................................. 68
6.1. Accounting System........................................................................... 68
6.2. Collateral Reporting........................................................................ 68
6.3. Financial Statements, Reports, Certificates................................................. 69
6.4. Failure to Renew............................................................................ 71
6.5. Returns..................................................................................... 72
6.6. Maintenance of Properties................................................................... 72
6.7. Taxes....................................................................................... 72
6.8. Insurance................................................................................... 72
6.9. Location of Inventory and Equipment......................................................... 73
6.10. Compliance with Laws........................................................................ 73
6.11. Leases...................................................................................... 74
6.12. Existence................................................................................... 74
6.13. Environmental............................................................................... 74
6.14. Disclosure Updates.......................................................................... 74
6.15. Formation of Subsidiaries................................................................... 74
6.16. Recurring Revenue Agreements................................................................ 75
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6.17. Operations of Norstan Financial............................................................. 75
6.18. Employee Benefits........................................................................... 75
7. NEGATIVE COVENANTS..................................................................................... 76
7.1. Indebtedness................................................................................ 76
7.2. Liens....................................................................................... 77
7.3. Restrictions on Fundamental Changes......................................................... 77
7.4. Disposal of Assets.......................................................................... 77
7.5. Change Name................................................................................. 77
7.6. Nature of Business.......................................................................... 78
7.7. Prepayments and Amendments.................................................................. 78
7.8. Change of Control........................................................................... 78
7.9. Consignments................................................................................ 78
7.10. Distributions............................................................................... 78
7.11. Accounting Methods.......................................................................... 78
7.12. Investments................................................................................. 79
7.13. Transactions with Affiliates................................................................ 79
7.14. Suspension.................................................................................. 79
7.15. Collateral in Quebec........................................................................ 79
7.16. Use of Proceeds............................................................................. 79
7.17. Inventory and Equipment with Bailees........................................................ 80
7.18. Financial Covenants......................................................................... 80
7.19. Subsidiaries................................................................................ 81
7.20. Copyrights.................................................................................. 81
8. EVENTS OF DEFAULT...................................................................................... 81
9. THE LENDER GROUP'S RIGHTS AND REMEDIES................................................................. 83
9.1. Rights and Remedies......................................................................... 83
9.2. Remedies Cumulative......................................................................... 85
10. TAXES AND EXPENSES..................................................................................... 86
11. WAIVERS; INDEMNIFICATION............................................................................... 86
11.1. Demand; Protest; etc........................................................................ 86
11.2. The Lender Group's Liability for Grantor Collateral......................................... 86
11.3. Indemnification............................................................................. 86
12. NOTICES................................................................................................ 87
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER............................................................. 89
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS............................................................. 89
14.1. Assignments and Participations.............................................................. 89
14.2. Successors.................................................................................. 92
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15. AMENDMENTS; WAIVERS.................................................................................... 92
15.1. Amendments and Waivers...................................................................... 92
15.2. Replacement of Holdout Lender............................................................... 93
15.3. No Waivers; Cumulative Remedies............................................................. 94
16. AGENT; THE LENDER GROUP................................................................................ 94
16.1. Appointment and Authorization of Agent...................................................... 94
16.2. Delegation of Duties........................................................................ 95
16.3. Liability of Agent.......................................................................... 95
16.4. Reliance by Agent........................................................................... 96
16.5. Notice of Default or Event of Default....................................................... 96
16.6. Credit Decision............................................................................. 97
16.7. Costs and Expenses; Indemnification......................................................... 97
16.8. Agent in Individual Capacity................................................................ 98
16.9. Successor Agent............................................................................. 98
16.10. Lender in Individual Capacity............................................................... 99
16.11. Withholding Taxes............................................................................ 99
16.12. Collateral Matters.......................................................................... 101
16.13. Restrictions on Actions by Lenders; Sharing of Payments..................................... 102
16.14. Agency for Perfection....................................................................... 103
16.15. Payments by Agent to the Lenders............................................................ 103
16.16. Concerning the Collateral and Related Loan Documents........................................ 103
16.17. Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other
Reports and Information..................................................................... 103
16.18. Several Obligations; No Liability........................................................... 104
16.19. Legal Representation of Agent............................................................... 105
17. GENERAL PROVISIONS..................................................................................... 105
17.1. Effectiveness............................................................................... 105
17.2. Section Headings............................................................................ 105
17.3. Interpretation.............................................................................. 105
17.4. Severability of Provisions.................................................................. 105
17.5. Amendments in Writing....................................................................... 105
17.6. Counterparts; Telefacsimile Execution....................................................... 106
17.7. Revival and Reinstatement of Obligations.................................................... 106
17.8. Confidentiality............................................................................. 106
17.9. Integration................................................................................. 107
17.10. Parent as Agent for Borrowers............................................................... 107
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule A-1 Agent's Accounts
Schedule C-2 Commitments
Schedule D-1 Designated Accounts
Schedule P-1 Permitted Liens
Schedule P-2 Permitted Contingent Obligations
Schedule 2.7(a) Cash Management Banks (US)
Schedule 2.7(c) Collection Account Banks (Canada)
Schedule 5.4 Owned Vehicles
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7(a) States of Organization
Schedule 5.7(b) Chief Executive Office
Schedule 5.7(c) FEINS
Schedule 5.7(d) Commercial Tort Claims
Schedule 5.8(b) Capitalization of Companies
Schedule 5.8(c) Capitalization of Parent's Subsidiaries
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Deposit Accounts and Securities Accounts
Schedule 5.20 Permitted Indebtedness
Schedule 5.21(a) Form of Recurring Revenue Agreement
Schedule 5.21(b) Agreements Financed by Third Parties
Schedule 7.1(g) Norstan Financial Financing
Schedule 7.12 Permitted Investments
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is
entered into as of December 10, 2003, by and among, on the one hand, the lenders
identified on the signature pages hereof (such lenders, together with their
respective successors and permitted assigns, are referred to hereinafter each
individually as a "Lender" and collectively as the "Lenders"), WELLS FARGO
FOOTHILL, INC., a California corporation, as the arranger and administrative
agent for the Lenders ("Agent"), and, on the other hand, NORSTAN COMMUNICATIONS
INC., a Minnesota corporation ("Communications (US)"), VIBES TECHNOLOGIES, INC.,
a Minnesota corporation ("Vibes"; Communications (US) and Vibes are referred to
hereinafter each individually as a "Borrower", and individually and
collectively, jointly and severally, as the "Borrowers"), NORSTAN, INC., a
Minnesota corporation ("Parent"), NORSTAN FINANCIAL SERVICES INC., a Minnesota
corporation ("Norstan Financial"), NORSTAN CANADA INC., a Minnesota corporation
("Canada Holdings"), NORSTAN INTERNATIONAL, INC., a Minnesota corporation ("UK
Holdings"; Parent, Norstan Financial, Canada Holdings and Norstan International
are referred to hereinafter each individually as a "U.S. Credit Party", and
individually and collectively, jointly and severally, as the "U.S. Credit
Parties") and NORSTAN CANADA LTD., an Ontario corporation ("Communications
(Canada)"; Communications (Canada) is also referred to as a "Canadian Credit
Party").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following definitions:
"Account" means an account (as that term is defined in the
Code), and any and all supporting obligations in respect thereof.
"Account Debtor" means any Person who is obligated under, with
respect to, or on account of, an Account, chattel paper, or a General
Intangible.
"ACH Transactions" means any cash management or related
services (including the Automated Clearing House processing of electronic funds
transfers through the direct Federal Reserve Fedline system) provided by a Bank
Product Provider for the account of Parent or its Subsidiaries.
"Additional Documents" has the meaning set forth in Section
4.4(c).
"Administrative Borrower" has the meaning set forth in Section
17.10.
"Advances" has the meaning set forth in Section 2.1(a).
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"Affiliate" means, as applied to any Person, any other Person
who, directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Stock, by contract, or otherwise;
provided, however, that for purposes of Section 7.13 hereof: (a) any Person
which owns directly or indirectly 10% or more of the Stock having ordinary
voting power for the election of directors or other members of the governing
body of a Person or 10% or more of the partnership or other ownership interests
of a Person (other than as a limited partner of such Person) shall be deemed an
Affiliate of such Person, (b) each director (or comparable manager) of a Person
shall be deemed to be an Affiliate of such Person, and (c) each partnership or
joint venture in which a Person is a partner or joint venturer shall be deemed
an Affiliate of such Person.
"Agent" means WFF, in its capacity as arranger and
administrative agent hereunder, and any successor thereto.
"Agent Advances" has the meaning set forth in Section
2.3(e)(i).
"Agent-Related Persons" means Agent, together with its
Affiliates, officers, directors, employees, attorneys, and agents.
"Agent's Account" means the Deposit Account of Agent
identified on Schedule A-1.
"Agent's Liens" means the Liens granted by Parent or its
Subsidiaries to Agent under this Agreement or the other Loan Documents.
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Applicable Law" means, in the context that refers to one or
more Persons, those Laws that apply to that Person or Persons or their business,
undertakings, property or securities.
"Applicable Margin" means, from the date hereof to, but not
including, the first date of adjustment provided for below, the percentages set
forth below (on a per annum basis) with respect to Advances that are LIBOR Rate
Loans and Base Rate Loans:
Base Rate Loans 1.50%
LIBOR Rate Loans 4.00%
Commencing with the delivery of the audited financial statements required to be
delivered pursuant to Section 6.3(b) for the fiscal year ending April 30, 2004,
the percentages described in this definition of "Applicable Margin" will be
adjusted (effective prospectively) on the first day of the month following
delivery to Agent of the audited financial statements
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corresponding to the end of a fiscal year required to be delivered pursuant to
Section 6.3(b) by reference to EBITDA for such fiscal year, in accordance with
the following:
APPLICABLE MARGIN APPLICABLE MARGIN FOR
EBITDA FOR BASE RATE LOANS LIBOR RATE LOANS
------ ------------------- ----------------
Greater than $13,000,000 0.50% 3.00%
Equal to or lesser than
$13,000,000 but greater than
$10,000,000 0.75% 3.25%
Equal to or lesser than
$10,000,000 but greater than
$7,500,000 1.25% 3.75%
Equal to or lesser than $7,500,000 1.50% 4.00%
provided, that if Borrowers fail to deliver the relevant financial statements
required to be delivered pursuant to Section 6.3(b) of this Agreement on or
before the due date thereof, the Applicable Margin shall be the highest
Applicable Margin set forth above until the actual delivery of such financial
statements, at which time the Applicable Margin shall adjust as set forth above
(effective prospectively).
"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to (a) during the period from and after the date
of the execution and delivery of this Agreement up to the date that is the first
anniversary of the Closing Date, 5.0% times the sum of (i) the Maximum Revolver
Amount, plus (ii) the outstanding principal balance of the Term Loan on the date
immediately prior to the date of determination, (b) during the period from and
including the date that is the first anniversary of the Closing Date up to the
date that is the second anniversary of the Closing Date, 4.0% times the sum of
(i) the Maximum Revolver Amount, plus (ii) the outstanding principal balance of
the Term Loan on the date immediately prior to the date of determination, (c)
during the period from and including the date that is the second anniversary of
the Closing Date up to the date that is the third anniversary of the Closing
Date, 3.0% times the sum of (i) the Maximum Revolver Amount, plus (ii) the
outstanding principal balance of the Term Loan on the date immediately prior to
the date of determination, (d) during the period from and including the date
that is the third anniversary of the Closing Date up to the date that is the
fourth anniversary of the Closing Date, 2.0% times the sum of (i) the Maximum
Revolver Amount, plus (ii) the outstanding principal of the Term Loan on the
date immediately prior to the date of determination, and (e) during the period
from and including the date that is the fourth anniversary of the Closing Date
up to the Maturity Date, 1.0% times the sum of (i) the Maximum Revolver Amount,
plus (ii) the outstanding principal balance of the Term Loan on the date
immediately prior to the date of determination; provided, however, that the
Applicable Prepayment Premium shall equal zero if, at any time, the Obligations
are repaid in full with the proceeds of loans made to Borrowers by an Affiliate
of Agent.
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"Applicable Recurring Revenue Amount" means, at any time, an
amount equal to the net orderly liquidation value attributable to the Recurring
Revenue Business as most recently determined by a qualified appraisal company
selected by Agent pursuant to a valuation methodology acceptable to Agent,
multiplied by 55%. The initial Applicable Recurring Revenue Amount is
$29,535,000, based on the net orderly liquidation valuation prepared by Empire
Valuations dated October 20, 2003.
"Assignee" has the meaning set forth in Section 14.1(a).
"Assignment and Acceptance" means an Assignment and Acceptance
Agreement substantially in the form of Exhibit A-1.
"Authorized Person" means any officer or employee of
Administrative Borrower.
"Availability" means, as of any date of determination, the
amount that Borrowers are entitled to borrow as Advances hereunder (after giving
effect to all then outstanding Obligations (other than Bank Product Obligations)
and all sublimits and reserves then applicable hereunder).
"Bank Product" means any financial accommodation extended to
Parent or its Subsidiaries by a Bank Product Provider (other than pursuant to
this Agreement) including: (a) credit cards, (b) credit card processing
services, (c) debit cards, (d) purchase cards, (e) ACH Transactions, (f) cash
management, including controlled disbursement, accounts or services, or (g)
transactions under Hedge Agreements.
"Bank Product Agreements" means those agreements entered into
from time to time by Parent or its Subsidiaries with a Bank Product Provider in
connection with the obtaining of any of the Bank Products.
"Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Parent or its
Subsidiaries to any Bank Product Provider pursuant to or evidenced by the Bank
Product Agreements and irrespective of whether for the payment of money, whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, and including all such amounts that Parent or its
Subsidiaries are obligated to reimburse to Agent or any member of the Lender
Group as a result of Agent or such member of the Lender Group purchasing
participations from, or executing indemnities or reimbursement obligations to, a
Bank Product Provider with respect to the Bank Products provided by such Bank
Product Provider to Parent or its Subsidiaries.
"Bank Product Provider" means Wells Fargo or any of its
Affiliates.
"Bank Product Reserve" means, as of any date of determination,
the amount of reserves that Agent has established (based upon the Bank Product
Providers' reasonable determination of the credit exposure in respect of then
extant Bank Products) in respect of Bank Products then provided or outstanding.
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"Bankruptcy Code" means (i) title 11 of the United States
Code, (ii) the Bankruptcy and Insolvency Act (Canada), or (iii) the Companies'
Creditors Arrangement Act (Canada), as applicable and as in effect from time to
time.
"Base LIBOR Rate" means the rate per annum, determined by
Agent in accordance with its customary procedures, and utilizing such electronic
or other quotation sources as it considers appropriate (rounded upwards, if
necessary, to the next 1/100%), to be the rate at which Dollar deposits (for
delivery on the first day of the requested Interest Period) are offered to major
banks in the London interbank market 2 Business Days prior to the commencement
of the requested Interest Period, for a term and in an amount comparable to the
Interest Period and the amount of the LIBOR Rate Loan requested (whether as an
initial LIBOR Rate Loan or as a continuation of an extant LIBOR Rate Loan or as
a conversion of a Base Rate Loan to a LIBOR Rate Loan) by Administrative
Borrower in accordance with this Agreement, which determination shall be
conclusive in the absence of manifest error.
"Base Rate" means, the rate of interest announced, from time
to time, within Wells Fargo at its principal office in San Francisco as its
"prime rate", with the understanding that the "prime rate" is one of Wells
Fargo's base rates (not necessarily the lowest of such rates) and serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto and is evidenced by the recording thereof after its
announcement in such internal publications as Wells Fargo may designate.
"Base Rate Loan" means the portion of the Advances or the Term
Loan that bears interest at a rate determined by reference to the Base Rate.
"Base Rate Margin" means the Applicable Margin pertaining to
Base Rate Loans as set forth in the definition of Applicable Margin.
"Base Rate Term Loan Margin" means 3.50 percentage points.
"Benefit Plan" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA or equivalent Canadian Employee Benefits Legislation) for
which any Company or ERISA Affiliate of any Company has been an "employer" (as
defined in Section 3(5) of ERISA) or has held equivalent status under Canadian
Employee Benefits Legislation within the past six years.
"Board of Directors" means the board of directors (or
comparable managers) of Parent or any committee thereof duly authorized to act
on behalf of the board of directors (or comparable managers).
"Books" means all of Parent's and its Subsidiaries' now owned
or hereafter acquired books and records (including all of their Records
indicating, summarizing, or evidencing their assets (including the Collateral)
or liabilities, all of Parent's and its Subsidiaries' Records relating to their
business operations or financial condition, and all of their goods or General
Intangibles related to such information).
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"Borrower" and "Borrowers" have the respective meanings set
forth in the preamble to this Agreement.
"Borrowing" means a borrowing hereunder consisting of Advances
(or term loans, in the case of the Term Loan) made on the same day by the
Lenders (or Agent on behalf thereof), or by Swing Lender in the case of a Swing
Loan, or by Agent in the case of an Agent Advance, in each case, to
Administrative Borrower.
"Borrowing Base" means, as of any date of determination, the
result of:
(a) the lowest of
(i) the aggregate amount of Recurring Revenue
for the most recently ended 6 calendar month period as reflected on the
reports delivered to Agent pursuant to Section 6.2(c) times the then
applicable Recurring Revenue Percentage,
(ii) the Applicable Recurring Revenue Amount, and
(iii) an amount equal to the Collections of
Companies with respect to Accounts for the immediately preceding 50 day
period, minus
(b) the sum of
(i) the Bank Product Reserve, and
(ii) the aggregate amount of reserves, including
without limitation the Rent Reserve, if any, established by Agent under
Section 2.1(b).
"Business Day" means any day that is not a Saturday, Sunday,
or other day on which banks are authorized or required to close in the state of
California or Minnesota, except that, if a determination of a Business Day shall
relate to a LIBOR Rate Loan, the term "Business Day" also shall exclude any day
on which banks are closed for dealings in Dollar deposits in the London
interbank market.
"Canadian Employee Benefits Legislation" means the Canadian
Pension Plan Act (Canada), the Pension Benefits Standards Act (Canada), the
Pension Benefits Act (Ontario), the Health Insurance Act (Ontario), the
Employment Standards Act (Ontario) and any federal, provincial or local
counterparts or equivalents, in each case, as amended from time to time.
"Canadian Income Tax Act" means the Income Tax Act (Canada),
R.S.C. 1985 C.1 (5th Supp.), as amended from time to time.
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"Canadian Guarantee" means that certain general continuing
guarantee executed and delivered by Communications (Canada) in favor of Agent,
for the benefit of the Lender Group and the Bank Product Providers, in form and
substance satisfactory to Agent.
"Canadian Security Agreement" means the security agreement
executed and delivered by Communications (Canada) in favor of Agent, in form and
substance satisfactory to Agent.
"Capital Expenditures" means, with respect to any Person for
any period, the sum of (a) the aggregate of all expenditures by such Person and
its Subsidiaries during such period that are capital expenditures as determined
in accordance with GAAP, whether such expenditures are paid in cash or financed,
and (b) to the extent not covered by clause (a), the aggregate of all
expenditures by such Person and its Subsidiaries during such period to acquire
by purchase or otherwise the business or capitalized assets of, or the Capital
Stock of, any other Person.
"Capital Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means that portion of the
obligations under a Capital Lease that is required to be capitalized in
accordance with GAAP (including Statement of Financing Accounting Standards No.
13 of the Financing Accounting Standards Board) and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP (including such Statement No. 13).
"Cash Equivalents" means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States or Canada or issued by
any agency thereof and backed by the full faith and credit of the United States
or Canada, in each case maturing within one year from the date of acquisition
thereof, (b) marketable direct obligations issued by any state of the United
States, province or territory of Canada or any political subdivision of any such
state, province, territory or any public instrumentality thereof maturing within
one year from the date of acquisition thereof and, at the time of acquisition,
having one of the two highest ratings obtainable from either Standard & Poor's
Rating Group ("S&P") or Moody's Investors Service, Inc. ("Moody's") or such
other comparable rating companies in Canada, (c) commercial paper maturing no
more than 270 days from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 from S&P or at least P-1 from
Moody's, or such other comparable rating companies in Canada, (d) certificates
of deposit or bankers' acceptances maturing within one year from the date of
acquisition thereof issued by any bank organized under the laws of the United
States or Canada or any state, province or territory thereof having at the date
of acquisition thereof combined capital and surplus of not less than
$250,000,000, (e) demand Deposit Accounts maintained with any bank organized
under the laws of the United States or any state thereof so long as the amount
maintained with any individual bank is less than or equal to $100,000 and is
insured by the Federal Deposit Insurance Corporation or the Canada Deposit
Insurance Corporation, and
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(f) Investments in money market funds substantially all of whose assets are
invested in the types of assets described in clauses (a) through (e) above.
"Cash Management Account" has the meaning set forth in Section
2.7(a).
"Cash Management Agreements" means those certain cash
management agreements, in form and substance satisfactory to Agent, each of
which is among Parent or one of its Subsidiaries, Agent, and one of the Cash
Management Banks or Collection Account Banks.
"Cash Management Bank" has the meaning set forth in Section
2.7(a).
"Change of Control" means that (a) any "person" or "group"
(within the meaning of Sections 13(d) and 14(d) of the Exchange Act) that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), of less than
5% of the Stock of Parent having the right to vote for the election of members
of the Board of Directors on the date this Agreement is executed becomes the
beneficial owner, directly or indirectly, of 15%, or more, of the Stock of
Parent having the right to vote for the election of members of the Board of
Directors, or (b) a majority of the members of the Board of Directors do not
constitute Continuing Directors, or (c) Parent ceases to own, directly or
indirectly, and control 100% of the outstanding Stock of each of its
Subsidiaries extant as of the Closing Date; provided, however, that any sales of
Stock of Parent to a Person approved by Lenders shall not constitute a Change of
Control under the provisions of clauses (a) and (b) hereof.
"Closing Date" means the date of the making of the initial
Advance (or other extension of credit) hereunder.
"Closing Date Business Plan" means the set of Projections of
Companies for the two year period following the Closing Date (on a year by year
basis, and for the one year period following the Closing Date, on a month by
month basis), in form and substance (including as to scope and underlying
assumptions) satisfactory to Agent.
"Code" means (i) the Illinois Uniform Commercial Code, and
(ii) when used in respect of a Canadian Credit Party, such reference shall
include the comparable provisions of the PPSA, where applicable, each as in
effect from time to time.
"Collateral" means all assets and interests in assets and
proceeds thereof now owned or hereafter acquired by Parent or its Subsidiaries
in or upon which a Lien is granted under any of the Loan Documents.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in Parent's or its Subsidiaries' Books, Equipment or,
Inventory, in each case, in form and substance satisfactory to Agent.
-8-
"Collateral Assignment of Leases" means, individually and
collectively, one or more collateral assignments of leases executed and
delivered by a Company in favor of Agent, in form and substance satisfactory to
Agent.
"Collection Account" has the meaning set forth in Section
2.7(c).
"Collection Account Bank" has the meaning set forth in Section
2.7(c).
"Collections" means all cash, checks, notes, instruments, and
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds).
"Commercial Tort Claim Assignments" has the meaning set forth
in Section 4.4(b).
"Commitment" means, with respect to each Lender, its Revolver
Commitment, its Term Loan Commitment, or its Total Commitment, as the context
requires, and, with respect to all Lenders, their Revolver Commitments, their
Term Loan Commitments, or their Total Commitments, as the context requires, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-2 or in the Assignment and Acceptance
pursuant to which such Lender became a Lender hereunder in accordance with the
provisions of Section 14.1.
"Communications (Canada) Lease Account" an Account arising
from a lease of Inventory by Communications (Canada).
"Company" means each Borrower, U.S. Credit Party and Canadian
Credit Party.
"Compliance Certificate" means a certificate substantially in
the form of Exhibit C-1 delivered by the chief financial officer of Parent to
Agent.
"Contingent Obligation" means, with respect to any Person at
the time of any determination, without duplication, any obligation, contingent
or otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person (the "Primary Obligor") in any
manner, whether directly or otherwise: (a) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or to purchase
(or advance or supply funds for the purchase or payment of) any direct or
indirect security thereof, (b) to purchase property, securities or services for
the purpose of assuring the owner of such Indebtedness of the payment of such
Indebtedness, (c) to maintain working capital, equity capital or other financial
statement condition of the Primary Obligor so as to enable the Primary Obligor
to pay such Indebtedness or otherwise to protect the owner thereof against loss
in respect thereof, or (d) entered into for the purpose of assuring in any
manner the owner of such Indebtedness of the payment of such Indebtedness or to
protect the owner against loss in respect thereof; provided, that the term
"Contingent Obligation" shall not include endorsements for collection or
deposit, in either case in the ordinary course of business.
-9-
"Continuing Director" means (a) any member of the Board of
Directors who was a director (or comparable manager) of Parent on the Closing
Date, and (b) any individual who becomes a member of the Board of Directors
after the Closing Date if such individual was appointed or nominated for
election to the Board of Directors by a majority of the Continuing Directors,
but excluding any such individual originally proposed for election in opposition
to the Board of Directors in office at the Closing Date in an actual or
threatened election contest relating to the election of the directors (or
comparable managers) of Parent and whose initial assumption of office resulted
from such contest or the settlement thereof.
"Control Agreement" means a control agreement, in form and
substance satisfactory to Agent, executed and delivered by the Parent or one of
its Subsidiaries, Agent, and the applicable securities intermediary (with
respect to a Securities Account) or a bank (with respect to a Deposit Account).
"Copyright Security Agreement" means a copyright security
agreement executed and delivered by each Grantor and Agent, the form and
substance of which is satisfactory to Agent.
"Daily Balance" means, as of any date of determination and
with respect to any Obligation, the amount of such Obligation owed at the end of
such day.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any
Advance (or other extension of credit) that it is required to make hereunder on
the date that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) for the first 3 days from
and after the date the relevant payment is due, the Base Rate, and (b)
thereafter, the interest rate then applicable to Advances that are Base Rate
Loans (inclusive of the Base Rate Margin applicable thereto).
"Deposit Account" means any deposit account (as that term is
defined in the Code).
"Designated Account" means the Deposit Account of
Administrative Borrower identified on Schedule D-1.
"Designated Account Bank" has the meaning ascribed thereto on
Schedule D-1.
"Disbursement Letter" means an instructional letter executed
and delivered by Administrative Borrower to Agent regarding the extensions of
credit to be made on the Closing Date, the form and substance of which is
satisfactory to Agent.
"Dollars" or "$" means United States dollars.
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"EBITDA" means, with respect to any fiscal period, Parent's
and its Subsidiaries' consolidated net earnings (or loss), minus extraordinary
gains and interest income, plus interest expense, income taxes, and depreciation
and amortization for such period, as determined in accordance with GAAP.
"Eligible Transferee" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having total
assets in excess of $250,000,000, (b) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development or a political subdivision of any such country and
which has total assets in excess of $250,000,000, provided that such bank is
acting through a branch or agency located in the United States, (c) a finance
company, insurance company, or other financial institution or fund that is
engaged in making, purchasing, or otherwise investing in commercial loans in the
ordinary course of its business and having (together with its Affiliates) total
assets in excess of $250,000,000, (d) any Affiliate (other than individuals) of
a Lender, (e) so long as no Event of Default has occurred and is continuing, any
other Person approved by Agent and Administrative Borrower (which approval of
Administrative Borrower shall not be unreasonably, withheld, delayed, or
conditioned), and (f) during the continuation of an Event of Default, any other
Person approved by Agent.
"Environmental Actions" means any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of any Company, any Subsidiary of a Company, or any of their
predecessors in interest, (b) from adjoining properties or businesses, or (c)
from or onto any facilities which received Hazardous Materials generated by any
Company, any Subsidiary of a Company, or any of their predecessors in interest.
"Environmental Law" means any applicable federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
permit binding and enforceable guideline, binding and enforceable written policy
or rule of common law now or hereafter in effect and in each case as amended, or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, to the extent binding on any
Company or any Subsidiary of a Company, relating to the environment, human
health employee health and safety, or Hazardous Materials, including CERCLA;
RCRA; the Federal Water Pollution Control Act, 33 USC Section 1251 et seq.; the
Toxic Substances Control Act, 15 USC Section 2601 et seq.; the Clean Air Act,
42 USC Section 7401 et seq.; the Safe Drinking Water Act, 42 USC Section 3803
et seq.; the Oil Pollution Act of 1990, 33 USC Section 2701 et seq.; the
Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC Section
11001 et seq.; the Hazardous Material Transportation Act, 49 USC Section 1801
et seq.; and the Occupational Safety and Health Act, 29 USC Section 651 et seq.
(to the extent it regulates occupational exposure to Hazardous Materials); the
Canadian Environmental Protection Act (Canada); the Fisheries Act (Canada); the
Environmental Protection Act (Ontario); the Transportation of Dangerous Goods
Act (Canada); the Water Resource Act (Ontario); Environmental Protection and
Enhancement Act (Alberta); Waste Management Act (British
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Columbia); the Environment Management Act (British Columbia); the Environment
Quality Act (Quebec); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
"Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"Equipment" means equipment (as that term is defined in the
Code), and includes machinery, machine tools, motors, furniture, furnishings,
fixtures, vehicles (including motor vehicles), computer hardware, tools, parts,
and goods (other than consumer goods, farm products, or Inventory), wherever
located, including all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Company or a Subsidiary of a Company under IRC Section 414(b), (b) any trade or
business subject to ERISA whose employees are treated as employed by the same
employer as the employees of a Company or a Subsidiary of a Company under IRC
Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section 412
of the IRC, any organization subject to ERISA that is a member of an affiliated
service group of which a Company or a Subsidiary of a Company is a member under
IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA and
Section 412 of the IRC, any Person subject to ERISA that is a party to an
arrangement with a Company or a Subsidiary of a Company and whose employees are
aggregated with the employees of a Company or a Subsidiary of a Company under
IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" means, as of any date of determination,
the amount equal to Availability minus the aggregate amount, if any, of all
trade payables of Companies and their Subsidiaries aged in excess of their
historical levels with respect thereto and all book overdrafts of Companies and
their Subsidiaries in excess of their historical practices with respect thereto,
in each case as determined by Agent in its Permitted Discretion.
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"Exchange Act" means the Securities Exchange Act of 1934, as
in effect from time to time.
"Existing Lender" means U.S. Bank, N.A.
"Fee Letter" means that certain fee letter, dated as of even
date herewith, between Borrowers and Agent, in form and substance satisfactory
to Agent.
"FEIN" means Federal Employer Identification Number.
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning set forth in Section
2.13(b)(ii).
"GAAP" means generally accepted accounting principles as in
effect from time to time (i) in the United States, and (ii) in respect of each
Canadian Credit Party, in Canada, each consistently applied.
"General Intangibles" means general intangibles (as that term
is defined in the Code), including payment intangibles, contract rights, rights
to payment, rights arising under common law, statutes, or regulations, choses or
things in action, goodwill, patents, trade names, trade secrets, trademarks,
servicemarks, copyrights, blueprints, drawings, purchase orders, customer lists,
monies due or recoverable from pension funds, route lists, rights to payment and
other rights under any royalty or licensing agreements, infringement claims,
computer programs, information contained on computer disks or tapes, software,
literature, reports, catalogs, insurance premium rebates, tax refunds, and tax
refund claims, and any and all supporting obligations in respect thereof, and
any other personal property other than Accounts, Deposit Accounts, goods,
Investment Property, and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal (including the
federal government of Canada), state, provincial, local, or other governmental
or administrative body, instrumentality, department, or agency or any court,
tribunal, administrative hearing body, arbitration panel, commission, or other
similar dispute-resolving panel or body.
"Grantor" means each Borrower and U.S. Credit Party.
"Grantor Collateral" means all of each Grantor's now owned or
hereafter acquired right, title, and interest in and to each of the following:
(a) all of its Accounts,
(b) all of its Books,
(c) all of its commercial tort claims,
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(d) all of its Deposit Accounts,
(e) all of its Equipment,
(f) all of its General Intangibles,
(g) all of its Inventory,
(h) all of its Investment Property (including all of its
securities and Securities Accounts),
(i) all of its Negotiable Collateral,
(j) money or other assets of such Grantor that now or
hereafter come into the possession, custody, or control of any member of the
Lender Group, and
(k) the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the foregoing, and any and all Accounts, Books, Deposit Accounts,
Equipment, General Intangibles, Inventory, Investment Property, Negotiable
Collateral, Real Property, money, or other tangible or intangible property
resulting from the sale, exchange, collection, or other disposition of any of
the foregoing, or any portion thereof or interest therein, and the proceeds
thereof.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hedge Agreement" means any and all agreements, or documents
now existing or hereafter entered into by Parent or its Subsidiaries that
provide for an interest rate, credit, commodity or equity swap, cap, floor,
collar, forward foreign exchange transaction, currency swap, cross currency rate
swap, currency option, or any combination of, or option with respect to, these
or similar transactions, for the purpose of hedging Parent's or its
Subsidiaries' exposure to fluctuations in interest or exchange rates, loan,
credit exchange, security or currency valuations or commodity prices.
"Holdout Lender" has the meaning set forth in Section 15.2(a).
"Indebtedness" means with respect to any Person at the time of
any determination, without duplication, all obligations, contingent or
otherwise, of such Person
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but in any event including: (a) all obligations of such Person for borrowed
money, (b) all obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (c) all obligations of such Person upon which
interest charges are customarily paid or accrued, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person, (e) all obligations of such Person issued or
assumed as the deferred purchase price of property or services (other than trade
payables incurred in the ordinary course of such Person's business and not more
than 90 days past due or subject to a good faith dispute), (f) all obligations
of others secured by any Lien on property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (g) all
Capitalized Lease Obligations of such Person, (h) all obligations of such Person
in respect of interest rate protection agreements, including any Hedge
Agreements, (i) all obligations of such Person, actual or contingent, as an
account party in respect of letters of credit or bankers' acceptances, (j) all
obligations of any partnership or joint venture as to which such Person is or
may become personally liable, and (k) all Contingent Obligations of such Person.
"Indemnified Liabilities" has the meaning set forth in Section
11.3.
"Indemnified Person" has the meaning set forth in Section
11.3.
"Insolvency Proceeding" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any other
state, federal or provincial bankruptcy or insolvency law, assignments for the
benefit of creditors, formal or informal moratoria, compositions, extensions
generally with creditors, or proceedings seeking reorganization, arrangement, or
other similar relief.
"Intercompany Subordination Agreement" means a subordination
agreement executed and delivered by Companies and each of their Subsidiaries and
Agent, the form and substance of which is satisfactory to Agent.
"Interest Period" means, with respect to each LIBOR Rate Loan,
a period commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 2, or 3 months thereafter; provided, however,
that (a) if any Interest Period would end on a day that is not a Business Day,
such Interest Period shall be extended (subject to clauses (c)-(e) below) to the
next succeeding Business Day, (b) interest shall accrue at the applicable rate
based upon the LIBOR Rate from and including the first day of each Interest
Period to, but excluding, the day on which any Interest Period expires, (c) any
Interest Period that would end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (d) with respect to an Interest Period that begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period), the Interest Period shall end on the last Business Day of the calendar
month that is 1, 2, or 3 months after the date on which the Interest Period
began, as applicable, and (e) Borrowers
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(or Administrative Borrower on behalf thereof) may not elect an Interest Period
which will end after the Maturity Date.
"Inventory" means inventory (as that term is defined in the
Code).
"Investment" means, with respect to any Person, the
acquisition, purchase, making or holding of any stock or other security, any
loan, guarantee, advance, contribution to capital, extension of credit (except
for trade and customer accounts receivable for inventory sold or services
rendered in the ordinary course of business and payable in accordance with
customary trade terms), any acquisitions of real or personal property (other
than personal property acquired or real property leased in the ordinary course
of business consistent with past practices) and any purchase or commitment or
option to purchase Stock or debt or any interest in another Person or any
integral part of any business or the assets comprising such business or part
thereof. The amount of any Investment shall be the original cost of such
Investment plus the cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.
"Investment Property" means investment property (as that term
is defined in the Code), and any and all supporting obligations in respect
thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect
from time to time.
"Issuing Lender" means WFF or any other Lender that, at the
request of Administrative Borrower and with the consent of Agent, agrees, in
such Lender's sole discretion, to become an Issuing Lender for the purpose of
issuing L/Cs or L/C Undertakings pursuant to Section 2.12.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by the Issuing Lender
pursuant to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section
2.12(a).
"Law" means, in respect of Canada, the United States of
America and any other country, all published laws, statutes, codes, ordinances,
decrees, rules, regulations, by-laws, judicial or arbitral or administrative or
ministerial or departmental or regulatory judgments, orders, decisions, rulings,
or awards, including general principles of common and civil law, and conditions
or any grant of approval, permission, authority or license of any court,
Governmental Authority, statutory body or self-regulatory authority.
"Lender" and "Lenders" have the respective meanings set forth
in the preamble to this Agreement, and shall include any other Person made a
party to this Agreement in accordance with the provisions of Section 14.1.
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"Lender Group" means, individually and collectively, each of
the Lenders (including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses
(including taxes, and insurance premiums) required to be paid by a Company under
any of the Loan Documents that are paid, advanced, or incurred by the Lender
Group, (b) fees or charges paid or incurred by Agent in connection with the
Lender Group's transactions with Companies, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien, litigation, and UCC and PPSA searches and
including searches with the patent and trademark office, the copyright office,
or the department of motor vehicles), filing, recording, publication, appraisal
(including periodic collateral appraisals or business valuations to the extent
of the fees and charges (and up to the amount of any limitation) contained in
this Agreement, real estate surveys, real estate title policies and
endorsements, and environmental audits, (c) costs and expenses incurred by Agent
in the disbursement of funds to or for the account of Borrowers or other members
of the Lender Group (by wire transfer or otherwise), (d) charges paid or
incurred by Agent resulting from the dishonor of checks, (e) reasonable costs
and expenses paid or incurred by the Lender Group to correct any default or
enforce any provision of the Loan Documents, or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) audit fees and expenses of
Agent related to audit examinations of the Books to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement,
(g) reasonable costs and expenses of third party claims or any other suit paid
or incurred by the Lender Group in enforcing or defending the Loan Documents or
in connection with the transactions contemplated by the Loan Documents or the
Lender Group's relationship with any Company, (h) Agent's and each Lender's
reasonable costs and expenses (including attorneys fees) incurred in advising,
structuring, drafting, reviewing, administering, syndicating, or amending the
Loan Documents, and (i) Agent's and each Lender's reasonable costs and expenses
(including attorneys, accountants, consultants, and other advisors fees and
expenses) incurred in terminating, enforcing (including attorneys, accountants,
consultants, and other advisors fees and expenses incurred in connection with a
"workout," a "restructuring," or an Insolvency Proceeding concerning any Company
or in exercising rights or remedies under the Loan Documents), or defending the
Loan Documents, irrespective of whether suit is brought, or in taking any
Remedial Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender,
such Lender, together with such Lender's Affiliates, officers, directors,
employees, attorneys, and agents.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of
determination, the aggregate undrawn amount of all outstanding Letters of
Credit.
"LIBOR Deadline" has the meaning set forth in Section
2.13(b)(i).
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"LIBOR Notice" means a written notice in the form of Exhibit
L-1.
"LIBOR Rate" means, for each Interest Period for each LIBOR
Rate Loan, the rate per annum determined by Agent (rounded upwards, if
necessary, to the next 1/100%) by dividing (a) the Base LIBOR Rate for such
Interest Period, by (b) 100% minus the Reserve Percentage. The LIBOR Rate shall
be adjusted on and as of the effective day of any change in the Reserve
Percentage.
"LIBOR Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the LIBOR Rate.
"LIBOR Rate Margin" means the Applicable Margin pertaining to
LIBOR Rate Loans as set forth in the definition of Applicable Margin.
"Lien" means any interest in an asset securing an obligation
owed to, or a claim by, any Person other than the owner of the asset,
irrespective of whether (a) such interest is based on the common law, statute,
or contract, (b) such interest is recorded or perfected, and (c) such interest
is contingent upon the occurrence of some future event or events or the
existence of some future circumstance or circumstances. Without limiting the
generality of the foregoing, the term "Lien" includes the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also includes reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Bank Product
Agreements, the Cash Management Agreements, the Control Agreements, the
Copyright Security Agreement, the Disbursement Letter, the Fee Letter, the
Canadian Security Agreement, the Canadian Guarantee, the U.S. Credit Party
Guarantee, the Intercompany Subordination Agreement, the Letters of Credit, the
Collateral Assignment of Leases, the Officers' Certificate, the Patent Security
Agreement, the Stock Pledge Agreement, the Trademark Security Agreement, any
note or notes executed by a Company in connection with this Agreement and
payable to a member of the Lender Group, and any other agreement entered into,
now or in the future, by a Company and the Lender Group in connection with this
Agreement.
"Material Adverse Change" means (a) a material adverse change
in the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of Companies, taken as a
whole, (b) a material impairment of a Company's ability to perform its
obligations under the Loan Documents to which it is a party or of the Lender
Group's ability to enforce the Obligations or realize upon the Collateral, or
(c) a material impairment of the enforceability or priority of the Agent's Liens
with respect to the Collateral as a result of an action or failure to act on the
part of a Company.
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"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Credit Amount" means $27,500,000.
"Maximum Revolver Amount" means $5,000,000.
"Negotiable Collateral" means letters of credit, letter of
credit rights, instruments, promissory notes, drafts, documents, and chattel
paper (including electronic chattel paper and tangible chattel paper), and any
and all supporting obligations in respect thereof.
"NetWolves Stock" means 300,000 shares of Stock of NetWolves
Corporation held by Parent.
"Norstan Financial Lease Account" means an Account arising
from a lease of Inventory by Norstan Financial.
"Obligations" means (a) all loans (including the Term Loan),
Advances, debts, principal, interest (including any interest that, but for the
commencement of an Insolvency Proceeding, would have accrued), contingent
reimbursement obligations with respect to outstanding Letters of Credit,
premiums, liabilities (including all amounts charged to Borrowers' Loan Account
pursuant hereto), obligations (including indemnification obligations), fees
(including the fees provided for in the Fee Letter), charges, costs, Lender
Group Expenses (including any fees or expenses that, but for the commencement of
an Insolvency Proceeding, would have accrued), lease payments, guaranties,
covenants, and duties of any kind and description owing by Companies to the
Lender Group pursuant to or evidenced by the Loan Documents and irrespective of
whether for the payment of money, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, and
including all interest not paid when due and all Lender Group Expenses that
Companies are required to pay or reimburse by the Loan Documents, by law, or
otherwise, and (b) all Bank Product Obligations. Any reference in this Agreement
or in the Loan Documents to the Obligations shall include all extensions,
modifications, renewals, or alterations thereof, both prior and subsequent to
any Insolvency Proceeding.
"Officers' Certificate" means the representations and
warranties of officers form submitted by Agent to Parent, together with
Companies' completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"Originating Lender" has the meaning set forth in Section
14.1(e).
"Overadvance" has the meaning set forth in Section 2.5.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Participant" has the meaning set forth in Section 14.1(e).
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"Patent Security Agreement" means a patent security agreement
executed and delivered by Companies and Agent, the form and substance of which
is satisfactory to Agent.
"Pay-Off Letter" means a letter, in form and substance
satisfactory to Agent, from Existing Lender to Agent respecting the amount
necessary to repay in full all of the obligations of Companies owing to Existing
Lender and obtain a release of all of the Liens existing in favor of Existing
Lender in and to the assets of Companies.
"Permitted Contingent Obligations" means (a) Contingent
Obligations (other than guaranties set forth in (b) below), existing of the date
of this Agreement and described on Schedule P-2 hereto; (b) guaranties by the
Parent existing on the date of this Agreement with respect to the Indebtedness
of any of its Subsidiaries permitted by Section 7.1 and described on Schedule
P-2 hereto; and (c) normal product warranties and indemnities in favor of
suppliers and customers entered into in the ordinary course of business and
relating to Inventory sold by any Company.
"Permitted Discretion" means a determination made in good
faith and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions
of Equipment that is substantially worn, damaged, or obsolete in the ordinary
course of business, (b) sales of Inventory to buyers in the ordinary course of
business, (c) the use or transfer of money or Cash Equivalents in a manner that
is not prohibited by the terms of this Agreement or the other Loan Documents,
(d) the licensing, on a non-exclusive basis, of patents, trademarks, copyrights,
and other intellectual property rights in the ordinary course of business, (e)
sales or transfers by any Company other than the Parent to any other Company
(other Norstan Financial and UK Holdings), (f) other sales or transfers of
assets so long as (i) such sales or transfers do not exceed $200,000 in the
aggregate in any fiscal year and (ii) no Default or Event of Default is then
continuing or would arise therefrom, (g) the sale or other disposition related
to leases by Norstan Financial including the leases or the leased equipment, and
(h) so long as no Event of Default has occurred and is continuing or would
result therefrom and such sales occur in arm's length transactions, the sale of
(i) the Vadini Properties, (ii) the NetWolves Stock, and (iii) the Sound and
Signal Division.
"Permitted Investments" means (a) Investments existing on the
date of this Agreement and listed on Schedule 7.12 hereto, but not any renewal
or extension thereof; (b) travel advances to management personnel and employees
in the ordinary course of business; (c) Investments in readily marketable direct
obligations issued or guaranteed by the United States or any agency thereof and
supported by the full faith and credit of the United States; (d) certificates of
deposit or bankers' acceptances issued by any commercial bank organized under
the laws of the United States or any State thereof which has (i) combined
capital and surplus of at least $100,000,000, and (ii) a credit rating with
respect to its unsecured indebtedness from a nationally recognized rating
service that is satisfactory to the Agent; (e) commercial paper given the
highest or next to highest rating by a nationally recognized rating service; (f)
repurchase agreements relating to securities issued or guaranteed as to
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principal and interest by the United States of America; other readily marketable
Investments in debt securities and money market funds which are acceptable to
the Agent; (g) loans and advances by the any Company to any other Company (other
than Norstan Financial (except that Companies may make loans and advances to
Norstan Financial to fund its operations in the ordinary course of business
consistent with past practices of Norstan Financial so long as on a calendar
quarter basis the net amount advanced to Norstan Financial by the other
Companies does not exceed the amount of Collections of Norstan Financial
remitted by Norstan Financial to the Designated Account during such calendar
quarter) and UK Holdings) to finance the normal operations of such Company,
provided that no Event of Default is then continuing or would result therefrom;
(h) Indebtedness of employees to the Parent arising under the Parent's employee
personal computer purchase program in the ordinary course of business, so long
as the aggregate amount of such Indebtedness outstanding at any one time does
not exceed $50,000; (i) advances in the form of progress payments, prepaid rent
or security deposits, each in the ordinary course of business; (j) other
Investments in an aggregate amount not exceeding $250,000 outstanding at any
time; provided, however, that any Investments under clauses (c), (d), (e) or (f)
above shall mature within one year of the acquisition thereof by any Company.
"Permitted Liens" means (a) Liens held by Agent, (b) Liens for
unpaid taxes that either (i) are not yet delinquent, or (ii) do not constitute
an Event of Default hereunder and are the subject of Permitted Protests, (c)
Liens set forth on Schedule P-1, (d) the interests of lessors under operating
leases, (e) purchase money Liens or the interests of lessors under Capital
Leases to the extent that such Liens or interests secure Permitted Purchase
Money Indebtedness and so long as such Lien attaches only to the asset purchased
or acquired and the proceeds thereof, (f) Liens arising by operation of law in
favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of Companies' business and not in
connection with the borrowing of money, and which Liens either (i) are for sums
not yet delinquent, or (ii) are the subject of Permitted Protests, (g) Liens
arising from deposits or pledges made in connection with obtaining or securing
worker's compensation or other unemployment insurance, old age pensions or other
social security obligations, (h) Liens or deposits to secure performance of
bids, tenders, or leases incurred in the ordinary course of business and not in
connection with the borrowing of money, (i) Liens granted as security for
surety, performance, indemnity, appeal or similar bonds in connection with
obtaining such bonds in the ordinary course of business, (j) Liens resulting
from any judgment or award that is not an Event of Default hereunder, (k) with
respect to any Real Property, easements, rights of way, and zoning restrictions
that do not materially interfere with or impair the use or operation thereof;
(l) the interest of any lessor under any Capital Lease entered into after the
Closing Date or purchase money Liens on property acquired after the Closing
Date; provided, that, (i) the Indebtedness secured thereby is otherwise
permitted by this Agreement and (ii) such Liens are limited to the property
acquired and do not secure Indebtedness other than the related Capital Lease
Obligations or the purchase price of such property; and (m) Liens against the
Norstan Financial Lease Accounts, Communications (Canada) Lease Accounts and
related leases and equipment securing any financing permitted under Section
7.1(g).
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"Permitted Protest" means the right of Parent or any of its
Subsidiaries to protest any Lien (other than any Lien that secures the
Obligations), taxes (other than payroll taxes or taxes that are the subject of a
United States or Canadian federal or provincial tax lien), or rental payment,
provided that (a) a reserve with respect to such obligation is established on
the Books in such amount as is required under GAAP, (b) any such protest is
instituted promptly and prosecuted diligently by Parent or any of its
Subsidiaries, as applicable, in good faith, and (c) Agent is satisfied that,
while any such protest is pending, there will be no impairment of the
enforceability, validity, or priority of any of the Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date
of determination, Purchase Money Indebtedness incurred after the Closing Date in
an aggregate amount outstanding at any one time not in excess of $3,000,000.
"Person" means natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"PPSA" means the Personal Property Security Act of the
applicable Canadian province or provinces in respect of a Canadian Credit Party.
"Projections" means Parent's forecasted (a) balance sheets,
(b) profit and loss statements, and (c) cash flow statements, all prepared on a
consistent basis with Parent's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" means, as of any date of determination:
(a) with respect to a Lender's obligation to make
Advances and receive payments of principal, interest, fees, costs, and expenses
with respect thereto, (i) prior to the Revolver Commitments being terminated or
reduced to zero, the percentage obtained by dividing (y) such Lender's Revolver
Commitment, by (z) the aggregate Revolver Commitments of all Lenders, and (ii)
from and after the time that the Revolver Commitments have been terminated or
reduced to zero, the percentage obtained by dividing (y) the aggregate
outstanding principal amount of such Lender's Advances by (z) the aggregate
outstanding principal amount of all Advances,
(b) with respect to a Lender's obligation to participate
in Letters of Credit, to reimburse the Issuing Lender, and to receive payments
of fees with respect thereto, (i) prior to the Revolver Commitments being
terminated or reduced to zero, the percentage obtained by dividing (y) such
Lender's Revolver Commitment, by (z) the aggregate Revolver Commitments of all
Lenders, and (ii) from and after the time that the Revolver Commitments have
been terminated or reduced to zero, the percentage obtained by dividing (y) the
aggregate outstanding principal amount of such Lender's Advances by (z) the
aggregate outstanding principal amount of all Advances,
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(c) with respect to a Lender's obligation to make the
Term Loan and receive payments of interest, fees, and principal with respect
thereto, (i) prior to the making of the Term Loan, the percentage obtained by
dividing (y) such Lender's Term Loan Commitment, by (z) the aggregate amount of
all Lenders' Term Loan Commitments, and (ii) from and after the making of the
Term Loan, the percentage obtained by dividing (y) the principal amount of such
Lender's portion of the Term Loan by (z) the principal amount of the Term Loan,
and
(d) with respect to all other matters as to a particular
Lender (including the indemnification obligations arising under Section 16.7),
the percentage obtained by dividing (i) such Lender's Revolver Commitment plus
the outstanding principal amount of such Lender's portion of the Term Loan, by
(ii) the aggregate amount of Revolver Commitments of all Lenders plus the
outstanding principal amount of the Term Loan; provided, however, that in the
event the Revolver Commitments have been terminated or reduced to zero, Pro Rata
Share under this clause shall be the percentage obtained by dividing (A) the
outstanding principal amount of such Lender's Advances plus such Lender's
ratable portion of the Risk Participation Liability with respect to outstanding
Letters of Credit plus the outstanding principal amount of such Lender's portion
of the Term Loan, by (B) the outstanding principal amount of all Advances plus
the aggregate amount of the Risk Participation Liability with respect to
outstanding Letters of Credit plus the outstanding principal amount of the Term
Loan.
"Purchase Money Indebtedness" means Indebtedness (other than
the Obligations, but including Capitalized Lease Obligations), incurred at the
time of, or within 20 days after, the acquisition of any fixed assets for the
purpose of financing all or any part of the acquisition cost thereof.
"Qualified Cash" means, as of any date of determination, the
amount of unrestricted cash and Cash Equivalents of Grantors that is in Deposit
Accounts or in Securities Accounts, or any combination thereof, and which such
Deposit Account or Securities Account is the subject of a Control Agreement and
is maintained by a branch office of the bank or securities intermediary located
within the United States; provided, that Qualified Cash shall not include any
cash of Norstan Financial remitted to the Designated Account during any month,
except to the extent that the amount of such cash so remitted during such month
exceeds the monthly obligations of Norstan Financial owing to secured parties of
Norstan Financial other than Agent and Lenders during such month.
"Real Property" means any estates or interests in real
property now owned or hereafter acquired by any Company and the improvements
thereto.
"Record" means information that is inscribed on a tangible
medium or which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Recurring Revenue" means, with respect to any period, the
maintenance and service revenue under Recurring Revenue Agreements recognized
(in accordance with GAAP) by a Recurring Revenue Service Provider during such
period.
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"Recurring Revenue Agreement" means an agreement between a
Recurring Revenue Service Provider and an Account Debtor providing for regular
monthly, quarterly or annual payments by such Account Debtor for ongoing
maintenance services for such Account Debtor's voice and data communications or
computer products. Recurring Revenue Agreements do not include (a) agreements
under which a Recurring Revenue Service Provider provides service on a time and
material basis and (b) agreements that are not renewable by their terms.
"Recurring Revenue Business" means the maintenance service
business of Communications (US) and Communications (Canada) associated with the
Recurring Revenue Agreements (and the performance of services thereunder).
"Recurring Revenue Percentage" means a percentage equal to (a)
during the period on and after the date of the execution and delivery of this
Agreement up to the date that is the first anniversary of the Closing Date, 80%,
(b) during the period from and including the first anniversary of the Closing
Date up to the second anniversary of the Closing Date, 70%, and (c) during the
period from and including the second anniversary of the Closing Date up to the
Maturity Date, 60%.
"Recurring Revenue Service Provider" means each of
Communications (US) and Communications (Canada).
"Remedial Action" means all actions taken to (a) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate, or in any way
address Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC Section 9601.
"Rent Reserve" means a reserve equal to two months rent with
respect to the premises located at 5101 Shady Oak Road, Minnetonka, Minneapolis,
or any other location that may be the chief executive office of the U.S. Credit
Parties; provided, however, that if Agent receives a fully executed Collateral
Access Agreement for such premises that is acceptable to Agent in form and
substance, such Rent Reserve shall equal $0.
"Replacement Lender" has the meaning set forth in Section
15.2(a).
"Report" has the meaning set forth in Section 16.17.
"Required Availability" means that the sum of (a) Excess
Availability, plus (b) the portion of any Qualified Cash that has been wire
transferred to Agent's Account, exceeds $5,000,000 on the Closing Date.
"Required Lenders" means, at any time, Lenders whose aggregate
Pro Rata Shares (calculated under clause (d) of the definition of Pro Rata
Shares) equal or exceed 66 2/3%.
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"Reserve Percentage" means, on any day, for any Lender, the
maximum percentage prescribed by the Board of Governors of the Federal Reserve
System (or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"Revolver Commitment" means, with respect to each Lender, its
Revolver Commitment, and, with respect to all Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-2 or in the Assignment
and Acceptance pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 14.1.
"Revolver Usage" means, as of any date of determination, the
sum of (a) the then extant amount of outstanding Advances, plus (b) the then
extant amount of the Letter of Credit Usage.
"Risk Participation Liability" means, as to each Letter of
Credit, all reimbursement obligations of Borrowers to the Issuing Lender with
respect to an L/C Undertaking, consisting of (a) the amount available to be
drawn or which may become available to be drawn, (b) all amounts that have been
paid by the Issuing Lender to the Underlying Issuer to the extent not reimbursed
by Borrowers, whether by the making of an Advance or otherwise, and (c) all
accrued and unpaid interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange
Commission and any successor thereto.
"Securities Account" means a "securities account" as that term
is defined in the Code.
"Settlement" has the meaning set forth in Section 2.3(f)(i).
"Settlement Date" has the meaning set forth in Section
2.3(f)(i).
"Siemen's Agreement" means the Rolm/Norstan Used Equipment
Services Agreement dated as of October 1, 1993, as the same has been amended,
supplemented, extended or otherwise modified through the date hereof.
"Solvent" means, with respect to any Person on a particular
date, that, at fair valuations, the sum of such Person's assets is greater than
all of such Person's debts or, with respect to a Canadian Credit Party, is not
an "insolvent person" (as such term is defined in the Bankruptcy and Insolvency
Act (Canada)).
"Sound and Signal Division" means the assets of the audio and
visual integration division of Communications (US) known as the Sound and Signal
division with a
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value not to exceed (a) $260,000 with respect to Inventory and (b) $60,000 with
respect to fixed assets, but excluding any Recurring Revenue Agreements.
"Statutory Lien Payments" has the meaning set forth in Section
5.22.
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Stock Pledge Agreement" means a stock pledge agreement, in
form and substance satisfactory to Agent, executed and delivered by each Company
(other than UK Holdings) that owns Stock of a Subsidiary of Parent.
"Subsidiary" of a Person means a corporation, partnership,
limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power to
elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or other
entity.
"Swing Lender" means WFF or any other Lender that, at the
request of Administrative Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become the Swing Lender under Section 2.3(d).
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
"Taxes" has the meaning set forth in Section 16.11.
"Term Loan" has the meaning set forth in Section 2.2.
"Term Loan Amount" means $22,500,000.
"Term Loan Commitment" means, with respect to each Lender, its
Term Loan Commitment, and, with respect to all Lenders, their Term Loan
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-2 or in the Assignment
and Acceptance pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 14.1.
"Total Commitment" means, with respect to each Lender, its
Total Commitment, and, with respect to all Lenders, their Total Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-2 attached hereto or on the signature page
of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
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"Trademark Security Agreement" means a trademark security
agreement executed and delivered by each Grantor and Agent, the form and
substance of which is satisfactory to Agent.
"UCC Filing Authorization Letter" means a letter duly executed
by each Grantor authorizing Agent to file appropriate financing statements on
Form UCC-1 without the signature of such Grantor, as applicable, in such office
or offices as may be necessary or, in the opinion of Agent, desirable to perfect
the security interests purported to be created by the Loan Documents.
"Underlying Issuer" means a third Person which is the
beneficiary of an L/C Undertaking and which has issued a letter of credit at the
request of the Issuing Lender for the benefit of Borrowers.
"Underlying Letter of Credit" means a letter of credit that
has been issued by an Underlying Issuer.
"United States" means the United States of America.
"U.S. Credit Party Guarantee" means that certain general
continuing Guarantee executed and delivered by U.S. Credit Parties in favor of
Agent, for the benefit of the Lender Group and the Bank Product Providers, in
form and substance satisfactory to Agent.
"Vadini Properties" means the real property owned by Parent
and located in Pickens County, South Carolina and Greenville County, South
Carolina.
"Voidable Transfer" has the meaning set forth in Section 17.7.
"Wells Fargo" means Wells Fargo Bank, National Association, a
national banking association.
"WFF" means Wells Fargo Foothill, Inc., a California
corporation.
1.2. ACCOUNTING TERMS.
All accounting terms not specifically defined herein shall be
construed in accordance with GAAP. When used herein, the term "financial
statements" shall include the notes and schedules thereto. Whenever the term
"Companies" or the term "Parent" is used in respect of a financial covenant or a
related definition, it shall be understood to mean Parent and its Subsidiaries
on a consolidated basis unless the context clearly requires otherwise.
1.3. CODE.
Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
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1.4. CONSTRUCTION.
Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to the repayment in full of the
Obligations shall mean the repayment in full in cash of all Obligations other
than contingent indemnification Obligations and other than any Bank Product
Obligations that, at such time, are allowed by the applicable Bank Product
Provider to remain outstanding and are not required to be repaid or cash
collateralized pursuant to the provisions of this Agreement. Any reference
herein to any Person shall be construed to include such Person's successors and
assigns. Any requirement of a writing contained herein or in the other Loan
Documents shall be satisfied by the transmission of a Record and any Record
transmitted shall constitute a representation and warranty as to the accuracy
and completeness of the information contained therein.
1.5. SCHEDULES AND EXHIBITS.
All of the schedules and exhibits attached to this Agreement
shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1. REVOLVER ADVANCES.
(a) Subject to the terms and conditions of this
Agreement, and during the term of this Agreement, each Lender with a Revolver
Commitment agrees (severally, not jointly or jointly and severally) to make
advances ("Advances") to Borrowers in an amount at any one time outstanding not
to exceed such Lender's Pro Rata Share of an amount equal to the lesser of (i)
the Maximum Revolver Amount less the Letter of Credit Usage, or (ii) the
Borrowing Base less the sum of the outstanding principal balance of the Term
Loan and the Letter of Credit Usage.
(b) Anything to the contrary in this Section 2.1
notwithstanding, Agent shall have the right to establish reserves including the
Rent Reserves in such amounts, and with respect to such matters, as Agent in its
Permitted Discretion shall deem necessary or
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appropriate, against the Borrowing Base, including reserves with respect to (i)
sums that Companies are required to pay (such as taxes, assessments, insurance
premiums, or, in the case of leased assets, rents or other amounts payable under
such leases) and has failed to pay under any Section of this Agreement or any
other Loan Document, and (ii) amounts owing by Companies to any Person to the
extent secured by a Lien on, or trust over, any of the Collateral (other than
any existing Permitted Lien set forth on Schedule P-1 which is specifically
identified thereon as entitled to have priority over the Agent's Liens), which
Lien or trust, in the Permitted Discretion of Agent likely would have a priority
superior to the Agent's Liens (such as Liens or trusts in favor of landlords,
warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens
or trusts for ad valorem, excise, sales, or other taxes where given priority
under applicable law) in and to such item of the Collateral. In addition to the
foregoing, Agent shall have the right to have the Recurring Revenue Business
reappraised by a qualified appraisal company selected by Agent from time to time
after the Closing Date for the purpose of re-determining the Applicable
Recurring Revenue Amount and, as a result, re-determining the Borrowing Base.
(c) The Lenders with Revolver Commitments shall have no
obligation to make additional Advances hereunder to the extent such additional
Advances would cause the Revolver Usage to exceed the Maximum Revolver Amount or
(ii) the sum of the Revolver Usage and outstanding principal balance of the Term
Loan to exceed the Maximum Credit Amount.
(d) Amounts borrowed pursuant to this Section 2.1 may be
repaid and, subject to the terms and conditions of this Agreement, reborrowed at
any time during the term of this Agreement.
2.2. TERM LOAN.
Subject to the terms and conditions of this Agreement, on the
Closing Date each Lender with a Term Loan Commitment agrees (severally, not
jointly or jointly and severally) to make term loans (collectively, the "Term
Loan") to Borrowers in an amount equal to such Lender's Pro Rata Share of the
Term Loan Amount. The Term Loan shall be repaid in 30 equal consecutive monthly
installments each in the amount of $333,333.33, on the first day of each
calendar month commencing February 1, 2004 and ending on July 1, 2006, with a
final installment on the Maturity Date of the then unpaid balance of the Term
Loan. Borrowers shall also make mandatory prepayments of principal of the Term
Loan (to be applied to the remaining installments in the inverse order of their
maturities) such that at no time shall the sum of the outstanding principal
balance of the Term Loan plus the Revolver Usage exceed the Borrowing Base. In
addition to the foregoing, Borrowers may make optional prepayments of the Term
Loan (to be applied to the remaining installments in the inverse order of their
maturities) without premium or penalty, except that if at any time the aggregate
of such optional prepayments exceeds 25% of the aggregate amount of the
regularly scheduled installments previously paid by Borrowers, Borrowers shall
pay to Agent a prepayment premium (to be allocated based upon letter agreements
between Agent and individual Lenders) equal to (i) 5% of such excess, if such
excess arises on or before the first anniversary of the Closing Date, (ii) 4% of
such excess, if such excess arises after the first
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anniversary of the Closing Date, but on or before the second anniversary of the
Closing Date, (iii) 3% of such excess, if such excess arises after the second
anniversary of the Closing Date, but on or before the third anniversary of the
Closing Date, (iv) 2% of such excess, if such excess arises after the third
anniversary of the Closing Date, but on or before the fourth anniversary of the
Closing Date, and (v) 1% of such excess, if such excess arises after the fourth
anniversary of the Closing Date, but before the Maturity Date.
The outstanding unpaid principal balance and all accrued and
unpaid interest under the Term Loan shall be due and payable on the date of
termination of this Agreement, whether by its terms, by prepayment, or by
acceleration. All amounts outstanding under the Term Loan shall constitute
Obligations.
2.3. BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be made
by an irrevocable written request (including a request made by electronic mail)
by an Authorized Person delivered to Agent (which notice must be received by
Agent no later than 10:00 a.m. (California time) on the Business Day prior to
the date that is the requested Funding Date specifying (i) the amount of such
Borrowing, and (ii) the requested Funding Date, which shall be a Business Day;
provided, however, that in the case of a request for Swing Loan in an amount of
$5,000,000, or less, such notice will be timely received if it is received by
Agent no later than 10:00 a.m. (California time) on the Business Day that is the
requested Funding Date). At Agent's election, in lieu of delivering the
above-described written request, any Authorized Person may give Agent telephonic
notice of such request by the required time. In such circumstances, Borrowers
agree that any such telephonic notice will be confirmed in writing within 24
hours of the giving of such notice and the failure to provide such written
confirmation shall not affect the validity of the request.
(b) AGENT'S ELECTION. Promptly after receipt of a request
for a Borrowing pursuant to Section 2.3(a), Agent shall elect, in its
discretion, (i) to have the terms of Section 2.3(c) apply to such requested
Borrowing, or (ii) if the Borrowing is for an Advance, to request Swing Lender
to make a Swing Loan pursuant to the terms of Section 2.3(d) in the amount of
the requested Borrowing; provided, however, that if Swing Lender declines in its
sole discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall
elect to have the terms of Section 2.3(c) apply to such requested Borrowing.
(c) MAKING OF LOANS.
(i) In the event that Agent shall elect to have
the terms of this Section 2.3(c) apply to a requested Borrowing as
described in Section 2.3(b), then promptly after receipt of a request
for a Borrowing pursuant to Section 2.3(a), Agent shall notify the
Lenders, not later than 1:00 p.m. (California time) on the Business Day
immediately preceding the Funding Date applicable thereto, by telecopy,
telephone, or other similar form of transmission, of the requested
Borrowing. Each Lender shall make the amount of such Lender's Pro Rata
Share of the requested Borrowing available to Agent in immediately
available funds, to Agent's Account, not
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later than 10:00 a.m. (California time) on the Funding Date applicable
thereto. After Agent's receipt of the proceeds of such Advances (or the
Term Loan, as applicable), Agent shall make the proceeds thereof
available to Administrative Borrower on the applicable Funding Date by
transferring immediately available funds equal to such proceeds
received by Agent to Administrative Borrower's Designated Account;
provided, however, that, subject to the provisions of Section 2.3(i),
Agent shall not request any Lender to make, and no Lender shall have
the obligation to make, any Advance (or its portion of the Term Loan)
if Agent shall have actual knowledge that (1) one or more of the
applicable conditions precedent set forth in Section 3 will not be
satisfied on the requested Funding Date for the applicable Borrowing
unless such condition has been waived, or (2) the requested Borrowing
would exceed the Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender
on or prior to the Closing Date or, with respect to any Borrowing after
the Closing Date, prior to 9:00 a.m. (California time) on the date of
such Borrowing, that such Lender will not make available as and when
required hereunder to Agent for the account of Borrowers the amount of
that Lender's Pro Rata Share of the Borrowing, Agent may assume that
each Lender has made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may (but
shall not be so required), in reliance upon such assumption, make
available to Borrowers on such date a corresponding amount. If and to
the extent any Lender shall not have made its full amount available to
Agent in immediately available funds and Agent in such circumstances
has made available to Borrowers such amount, that Lender shall on the
Business Day following such Funding Date make such amount available to
Agent, together with interest at the Defaulting Lender Rate for each
day during such period. A notice submitted by Agent to any Lender with
respect to amounts owing under this subsection shall be conclusive,
absent manifest error. If such amount is so made available, such
payment to Agent shall constitute such Lender's Advance (or portion of
the Term Loan, as applicable) on the date of Borrowing for all purposes
of this Agreement. If such amount is not made available to Agent on the
Business Day following the Funding Date, Agent will notify
Administrative Borrower of such failure to fund and, upon demand by
Agent, Borrowers shall pay such amount to Agent for Agent's account,
together with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Advances (or portion of the Term Loan, as
applicable) composing such Borrowing. The failure of any Lender to make
any Advance (or portion of the Term Loan, as applicable) on any Funding
Date shall not relieve any other Lender of any obligation hereunder to
make an Advance (or portion of the Term Loan, as applicable) on such
Funding Date, but no Lender shall be responsible for the failure of any
other Lender to make the Advance to be made by such other Lender on any
Funding Date.
(iii) Agent shall not be obligated to transfer to
a Defaulting Lender any payments made by Borrowers to Agent for the
Defaulting Lender's benefit, and,
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in the absence of such transfer to the Defaulting Lender, Agent shall
transfer any such payments to each other non-Defaulting Lender member
of the Lender Group ratably in accordance with their Commitments (but
only to the extent that such Defaulting Lender's Advance was funded by
the other members of the Lender Group) or, if so directed by
Administrative Borrower and if no Default or Event of Default had
occurred and is continuing (and to the extent such Defaulting Lender's
Advance was not funded by the Lender Group), retain same to be
re-advanced to Borrowers as if such Defaulting Lender had made Advances
to Borrowers. Subject to the foregoing, Agent may hold and, in its
Permitted Discretion, re-lend to Borrowers for the account of such
Defaulting Lender the amount of all such payments received and retained
by Agent for the account of such Defaulting Lender. Solely for the
purposes of voting or consenting to matters with respect to the Loan
Documents, such Defaulting Lender shall be deemed not to be a "Lender"
and such Lender's Commitment shall be deemed to be zero. This Section
shall remain effective with respect to such Lender until (x) the
Obligations under this Agreement shall have been declared or shall have
become immediately due and payable, (y) the non-Defaulting Lenders,
Agent, and Administrative Borrower shall have waived such Defaulting
Lender's default in writing, or (z) the Defaulting Lender makes its Pro
Rata Share of the applicable Advance and pays to Agent all amounts
owing by Defaulting Lender in respect thereof. The operation of this
Section shall not be construed to increase or otherwise affect the
Commitment of any Lender, to relieve or excuse the performance by such
Defaulting Lender or any other Lender of its duties and obligations
hereunder, or to relieve or excuse the performance by Borrowers of
their duties and obligations hereunder to Agent or to the Lenders other
than such Defaulting Lender. Any such failure to fund by any Defaulting
Lender shall constitute a material breach by such Defaulting Lender of
this Agreement and shall entitle Administrative Borrower at its option,
upon written notice to Agent, to arrange for a substitute Lender to
assume the Commitment of such Defaulting Lender, such substitute Lender
to be acceptable to Agent. In connection with the arrangement of such a
substitute Lender, the Defaulting Lender shall have no right to refuse
to be replaced hereunder, and agrees to execute and deliver a completed
form of Assignment and Acceptance in favor of the substitute Lender
(and agrees that it shall be deemed to have executed and delivered such
document if it fails to do so) subject only to being repaid its share
of the outstanding Obligations (other than Bank Product Obligations,
but including an assumption of its Pro Rata Share of the Risk
Participation Liability) without any premium or penalty of any kind
whatsoever; provided however, that any such assumption of the
Commitment of such Defaulting Lender shall not be deemed to constitute
a waiver of any of the Lender Groups' or Borrowers' rights or remedies
against any such Defaulting Lender arising out of or in relation to
such failure to fund.
(d) MAKING OF SWING LOANS.
(i) In the event Agent shall elect, with the
consent of Swing Lender, as a Lender, to have the terms of this Section
2.3(d) apply to a requested Borrowing as described in Section 2.3(b),
Swing Lender as a Lender shall make such
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Advance in the amount of such Borrowing (any such Advance made solely
by Swing Lender as a Lender pursuant to this Section 2.3(d) being
referred to as a "Swing Loan" and such Advances being referred to
collectively as "Swing Loans") available to Borrowers on the Funding
Date applicable thereto by transferring immediately available funds to
Administrative Borrower's Designated Account. Each Swing Loan shall be
deemed to be an Advance hereunder and shall be subject to all the terms
and conditions applicable to other Advances, except that no such Swing
Loan shall be eligible to be a LIBOR Rate Loan and all payments on any
Swing Loan shall be payable to Swing Lender as a Lender solely for its
own account (and for the account of the holder of any participation
interest with respect to such Swing Loan). Subject to the provisions of
Section 2.3(i), Agent shall not request Swing Lender as a Lender to
make, and Swing Lender as a Lender shall not make, any Swing Loan if
Agent has actual knowledge that (i) one or more of the applicable
conditions precedent set forth in Section 3 will not be satisfied on
the requested Funding Date for the applicable Borrowing unless such
condition has been waived, or (ii) the requested Borrowing would exceed
the Availability on such Funding Date. Swing Lender as a Lender shall
not otherwise be required to determine whether the applicable
conditions precedent set forth in Section 3 have been satisfied on the
Funding Date applicable thereto prior to making, in its sole
discretion, any Swing Loan.
(ii) The Swing Loans shall be secured by the
Agent's Liens, constitute Obligations hereunder, and bear interest at
the rate applicable from time to time to Advances that are Base Rate
Loans.
(e) AGENT ADVANCES.
(i) Agent hereby is authorized by Borrowers and
the Lenders, from time to time in Agent's sole discretion, (1) after
the occurrence and during the continuance of a Default or an Event of
Default, or (2) at any time that any of the other applicable conditions
precedent set forth in Section 3 have not been satisfied, to make
Advances to Borrowers on behalf of the Lenders that Agent, in its
Permitted Discretion deems necessary or desirable (A) to preserve or
protect the Collateral, or any portion thereof, (B) to enhance the
likelihood of repayment of the Obligations (other than the Bank Product
Obligations), or (C) to pay any other amount chargeable to Borrowers
pursuant to the terms of this Agreement, including Lender Group
Expenses and the costs, fees, and expenses described in Section 10 (any
of the Advances described in this Section 2.3(e) shall be referred to
as "Agent Advances"). Each Agent Advance shall be deemed to be an
Advance hereunder, except that no such Agent Advance shall be eligible
to be a LIBOR Rate Loan and all payments thereon shall be payable to
Agent solely for its own account.
(ii) The Agent Advances shall be repayable on
demand, secured by the Agent's Liens granted to Agent under the Loan
Documents, constitute Obligations hereunder, and bear interest at the
rate applicable from time to time to Advances that are Base Rate Loans.
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(f) SETTLEMENT. It is agreed that each Lender's funded
portion of the Advances is intended by the Lenders to equal, at all times, such
Lender's Pro Rata Share of the outstanding Advances. Such agreement
notwithstanding, Agent, Swing Lender, and the other Lenders agree (which
agreement shall not be for the benefit of or enforceable by Borrowers) that in
order to facilitate the administration of this Agreement and the other Loan
Documents, settlement among them as to the Advances, the Swing Loans, and the
Agent Advances shall take place on a periodic basis in accordance with the
following provisions:
(i) Agent shall request settlement
("Settlement") with the Lenders on a weekly basis, or on a more
frequent basis if so determined by Agent, (1) on behalf of Swing
Lender, with respect to each outstanding Swing Loan, (2) for itself,
with respect to each Agent Advance, and (3) with respect to Companies',
received, as to each by notifying the Lenders by telecopy, telephone,
or other similar form of transmission, of such requested Settlement, no
later than 2:00 p.m. (California time) on the Business Day immediately
prior to the date of such requested Settlement (the date of such
requested Settlement being the "Settlement Date"). Such notice of a
Settlement Date shall include a summary statement of the amount of
outstanding Advances, Swing Loans, and Agent Advances for the period
since the prior Settlement Date. Subject to the terms and conditions
contained herein (including Section 2.3(c)(iii)): (y) if a Lender's
balance of the Advances (including Swing Loans and Agent Advances)
exceeds such Lender's Pro Rata Share of the Advances (including Swing
Loans and Agent Advances) as of a Settlement Date, then Agent shall, by
no later than 12:00 p.m. (California time) on the Settlement Date,
transfer in immediately available funds to a Deposit Account of such
Lender (as such Lender may designate), an amount such that each such
Lender shall, upon receipt of such amount, have as of the Settlement
Date, its Pro Rata Share of the Advances (including Swing Loans and
Agent Advances), and (z) if a Lender's balance of the Advances
(including Swing Loans and Agent Advances) is less than such Lender's
Pro Rata Share of the Advances (including Swing Loans and Agent
Advances) as of a Settlement Date, such Lender shall no later than
12:00 p.m. (California time) on the Settlement Date transfer in
immediately available funds to the Agent's Account, an amount such that
each such Lender shall, upon transfer of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances (including Swing
Loans and Agent Advances). Such amounts made available to Agent under
clause (z) of the immediately preceding sentence shall be applied
against the amounts of the applicable Swing Loans or Agent Advances
and, together with the portion of such Swing Loans or Agent Advances
representing Swing Lender's Pro Rata Share thereof, shall constitute
Advances of such Lenders. If any such amount is not made available to
Agent by any Lender on the Settlement Date applicable thereto to the
extent required by the terms hereof, Agent shall be entitled to recover
for its account such amount on demand from such Lender together with
interest thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of
the Advances, Swing Loans, and Agent Advances is less than, equal to,
or greater than such Lender's
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Pro Rata Share of the Advances, Swing Loans, and Agent Advances as of a
Settlement Date, Agent shall, as part of the relevant Settlement, apply
to such balance the portion of payments actually received in good funds
by Agent with respect to principal, interest, fees payable by Borrowers
and allocable to the Lenders hereunder, and proceeds of Collateral. To
the extent that a net amount is owed to any such Lender after such
application, such net amount shall be distributed by Agent to that
Lender as part of such next Settlement.
(iii) Between Settlement Dates, Agent, to the
extent no Agent Advances or Swing Loans are outstanding, may pay over
to Swing Lender any payments received by Agent, that in accordance with
the terms of this Agreement would be applied to the reduction of the
Advances, for application to Swing Lender's Pro Rata Share of the
Advances. If, as of any Settlement Date, Collections of Companies
received since the then immediately preceding Settlement Date have been
applied to Swing Lender's Pro Rata Share of the Advances other than to
Swing Loans, as provided for in the previous sentence, Swing Lender
shall pay to Agent for the accounts of the Lenders, and Agent shall pay
to the Lenders, to be applied to the outstanding Advances of such
Lenders, an amount such that each Lender shall, upon receipt of such
amount, have, as of such Settlement Date, its Pro Rata Share of the
Advances. During the period between Settlement Dates, Swing Lender with
respect to Swing Loans, Agent with respect to Agent Advances, and each
Lender (subject to the effect of letter agreements between Agent and
individual Lenders) with respect to the Advances other than Swing Loans
and Agent Advances, shall be entitled to interest at the applicable
rate or rates payable under this Agreement on the daily amount of funds
employed by Swing Lender, Agent, or the Lenders, as applicable.
(g) NOTATION. Agent shall record on its books the
principal amount of the Advances (or portion of the Term Loan, as applicable)
owing to each Lender, including the Swing Loans owing to Swing Lender, and Agent
Advances owing to Agent, and the interests therein of each Lender, from time to
time and such records shall, absent manifest error, conclusively be presumed to
be correct and accurate. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment of
principal of such Lender's Advances in its books and records, including computer
records.
(h) LENDERS' FAILURE TO PERFORM. All Advances (other than
Swing Loans and Agent Advances) shall be made by the Lenders contemporaneously
and in accordance with their Pro Rata Shares. It is understood that (i) no
Lender shall be responsible for any failure by any other Lender to perform its
obligation to make any Advance (or other extension of credit) hereunder, nor
shall any Commitment of any Lender be increased or decreased as a result of any
failure by any other Lender to perform its obligations hereunder, and (ii) no
failure by any Lender to perform its obligations hereunder shall excuse any
other Lender from its obligations hereunder.
(i) OPTIONAL OVERADVANCES. Any contrary provision of this
Agreement notwithstanding, the Lenders hereby authorize Agent or Swing Lender,
as applicable, and Agent or Swing Lender, as applicable, may, but is not
obligated to, knowingly and
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intentionally, continue to make Advances (including Swing Loans) to Borrowers
notwithstanding that an Overadvance exists or thereby would be created, so long
as (i) after giving effect to such Advances, the sum of the outstanding Revolver
Usage and outstanding principal balance of the Term Loan does not exceed the
Borrowing Base by more than $5,000,000, (ii) after giving effect to such
Advances, the outstanding Revolver Usage (except for and excluding amounts
charged to the Loan Account for interest, fees, or Lender Group Expenses) does
not exceed the Maximum Revolver Amount, and (iii) at the time of the making of
any such Advance, Agent does not believe, in good faith, that the Overadvance
created by such Advance will be outstanding for more than 90 days. The foregoing
provisions are for the exclusive benefit of Agent, Swing Lender, and the Lenders
and are not intended to benefit Companies in any way. The Advances and Swing
Loans, as applicable, that are made pursuant to this Section 2.3(i) shall be
subject to the same terms and conditions as any other Advance or Swing Loan, as
applicable, except that they shall not be eligible for the LIBOR Option and the
rate of interest applicable thereto shall be the rate applicable to Advances
that are Base Rate Loans under Section 2.6(c) hereof without regard to the
presence or absence of a Default or Event of Default.
(A) In the event Agent obtains actual
knowledge that the Revolver Usage exceeds the amounts
permitted by the preceding paragraph, regardless of the amount
of, or reason for, such excess, Agent shall notify the Lenders
as soon as practicable (and prior to making any (or any
additional) intentional Overadvances (except for and excluding
amounts charged to the Loan Account for interest, fees, or
Lender Group Expenses) unless Agent determines that prior
notice would result in imminent harm to the Collateral or its
value), and the Lenders with Revolver Commitments thereupon
shall, together with Agent, jointly determine the terms of
arrangements that shall be implemented with Borrowers intended
to reduce, within a reasonable time, the outstanding principal
amount of the Advances to Borrowers to an amount permitted by
the preceding paragraph. In the event Agent or any Lender
disagrees over the terms of reduction or repayment of any
Overadvance, the terms of reduction or repayment thereof shall
be implemented according to the determination of the Required
Lenders.
(B) Each Lender with a Revolver
Commitment shall be obligated to settle with Agent as provided
in Section 2.3(f) for the amount of such Lender's Pro Rata
Share of any unintentional Overadvances by Agent reported to
such Lender, any intentional Overadvances made as permitted
under this Section 2.3(i), and any Overadvances resulting from
the charging to the Loan Account of interest, fees, or Lender
Group Expenses.
2.4. PAYMENTS.
(a) PAYMENTS BY BORROWERS.
(i) Except as otherwise expressly provided
herein, all payments by Borrowers shall be made to Agent's Account for
the account of the Lender Group and
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shall be made in immediately available funds, no later than 11:00 a.m.
(California time) on the date specified herein. Any payment received by
Agent later than 11:00 a.m. (California time), shall be deemed to have
been received on the following Business Day and any applicable interest
or fee shall continue to accrue until such following Business Day.
(ii) Unless Agent receives notice from
Administrative Borrower prior to the date on which any payment is due
to the Lenders that Borrowers will not make such payment in full as and
when required, Agent may assume that Borrowers have made (or will make)
such payment in full to Agent on such date in immediately available
funds and Agent may (but shall not be so required), in reliance upon
such assumption, distribute to each Lender on such due date an amount
equal to the amount then due such Lender. If and to the extent
Borrowers do not make such payment in full to Agent on the date when
due, each Lender severally shall repay to Agent on demand such amount
distributed to such Lender, together with interest thereon at the
Defaulting Lender Rate for each day from the date such amount is
distributed to such Lender until the date repaid.
(b) APPORTIONMENT AND APPLICATION.
(i) Except as otherwise provided with respect to
Defaulting Lenders and except as otherwise provided in the Loan
Documents (including letter agreements between Agent and individual
Lenders), aggregate principal and interest payments shall be
apportioned ratably among the Lenders (according to the unpaid
principal balance of the Obligations to which such payments relate held
by each Lender) and payments of fees and expenses (other than fees or
expenses that are for Agent's separate account, after giving effect to
any letter agreements between Agent and individual Lenders) shall be
apportioned ratably among the Lenders having a Pro Rata Share of the
type of Commitment or Obligation to which a particular fee relates.
Except as provided in Section 2.2 of this Agreement with respect to
prepayments of the Term Loan, payments shall be remitted to Agent and
all such payments, and all proceeds of Collateral received by Agent,
shall be applied as follows:
(A) first, to pay any Lender Group
Expenses then due to Agent under the Loan Documents, until
paid in full,
(B) second, to pay any Lender Group
Expenses then due to the Lenders under the Loan Documents, on
a ratable basis, until paid in full,
(C) third, to pay any fees then due to
Agent (for its separate accounts, after giving effect to any
letter agreements between Agent and the individual Lenders)
under the Loan Documents until paid in full,
(D) fourth, to pay any fees then due to
any or all of the Lenders (after giving effect to any letter
agreements between Agent and
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individual Lenders) under the Loan Documents, on a ratable
basis, until paid in full,
(E) fifth, to pay interest due in
respect of all Agent Advances, until paid in full,
(F) sixth, ratably to pay interest due
in respect of the Advances (other than Agent Advances), the
Swing Loans, and the Term Loan until paid in full,
(G) seventh, to pay the principal of
all Agent Advances until paid in full,
(H) eighth, ratably to pay all
principal amounts then due and payable (other than as a result
of an acceleration thereof) with respect to the Term Loan
until paid in full,
(I) ninth, to pay the principal of all
Swing Loans until paid in full,
(J) tenth, so long as no Event of
Default has occurred and is continuing, and at Agent's
election (which election Agent agrees will not be made if an
Overadvance would be created thereby), to pay amounts then due
and owing by Parent or its Subsidiaries in respect of Bank
Products, until paid in full,
(K) eleventh, so long as no Event of
Default has occurred and is continuing, to pay the principal
of all Advances until paid in full,
(L) twelfth, if an Event of Default has
occurred and is continuing, ratably (i) to pay the principal
of all Advances until paid in full, (ii) to Agent, to be held
by Agent, for the ratable benefit of Issuing Lender and those
Lenders having a Revolver Commitment, as cash collateral in an
amount up to 105% of the then extant Letter of Credit Usage
until paid in full, and (iii) to Agent, to be held by Agent,
for the benefit of the Bank Product Providers, as cash
collateral in an amount up to the amount of the Bank Product
Reserve established prior to the occurrence of, and not in
contemplation of, the subject Event of Default until Parent's
and its Subsidiaries' obligations in respect of the then
extant Bank Products have been paid in full or the cash
collateral amount has been exhausted,
(M) thirteenth, if an Event of Default
has occurred and is continuing, to pay the outstanding
principal balance of the Term Loan (in the inverse order of
the maturity of the installments due thereunder) until the
Term Loan is paid in full,
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(N) fourteenth, if an Event of Default
has occurred and is continuing, to pay any other Obligations
(including the provision of amounts to Agent, to be held by
Agent, for the benefit of the Bank Product Providers, as cash
collateral in an amount up to the amount determined by Agent
in its Permitted Discretion as the amount necessary to secure
Parent's and its Subsidiaries' obligations in respect of the
then extant Bank Products), and
(O) fifteenth, to Borrowers (to be
wired to the Designated Account) or such other Person entitled
thereto under applicable law.
(ii) Agent promptly shall distribute to each
Lender, pursuant to the applicable wire instructions received from each
Lender in writing, such funds as it may be entitled to receive, subject
to a Settlement delay as provided in Section 2.3(f).
(iii) In each instance, so long as no Event of
Default has occurred and is continuing, this Section 2.4(b) shall not
be deemed to apply to any payment by Borrowers specified by Borrowers
to be for the payment of specific Obligations then due and payable (or
prepayable) under any provision of this Agreement.
(iv) For purposes of the foregoing, "paid in
full" means payment of all amounts owing under the Loan Documents
according to the terms thereof, including loan fees, service fees,
professional fees, interest (and specifically including interest
accrued after the commencement of any Insolvency Proceeding), default
interest, interest on interest, and expense reimbursements, whether or
not any of the foregoing would be or is allowed or disallowed in whole
or in part in any Insolvency Proceeding.
(v) In the event of a direct conflict between
the priority provisions of this Section 2.4 and other provisions
contained in any other Loan Document, it is the intention of the
parties hereto that such priority provisions in such documents shall be
read together and construed, to the fullest extent possible, to be in
concert with each other. In the event of any actual, irreconcilable
conflict that cannot be resolved as aforesaid, the terms and provisions
of this Section 2.4 shall control and govern.
2.5. OVERADVANCES.
If, at any time or for any reason, the amount of Obligations
(other than Bank Product Obligations) owed by Borrowers to the Lender Group
pursuant to Section 2.1 or Section 2.12 is greater than either the Dollar or
percentage limitations set forth in Section 2.1 or Section 2.12, as applicable
(an "Overadvance"), Borrowers immediately shall pay to Agent, in cash, the
amount of such excess, which amount shall be used by Agent to reduce the
Obligations in accordance with the priorities set forth in Section 2.4(b). In
addition, Borrowers hereby promise to pay the Obligations (including principal,
interest, fees, costs, and expenses) in Dollars in full as and when due and
payable under the terms of this Agreement and the other Loan Documents.
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2.6. INTEREST RATES AND LETTER OF CREDIT FEE: RATES,
PAYMENTS, AND CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c)
below, all Obligations (except for undrawn Letters of Credit and except for Bank
Product Obligations) that have been charged to the Loan Account pursuant to the
terms hereof shall bear interest on the Daily Balance thereof as follows (i) if
the relevant Obligation is an Advance that is a LIBOR Rate Loan, at a per annum
rate equal to the LIBOR Rate plus the LIBOR Rate Margin, (ii) if the relevant
Obligation is a portion of the Term Loan at a per annum rate equal to the Base
Rate plus the Base Rate Term Loan Margin, and (iii) otherwise, at a per annum
rate equal to the Base Rate plus the Base Rate Margin.
The foregoing notwithstanding, at no time shall any portion of
the Obligations (other than Bank Product Obligations) bear interest on the Daily
Balance thereof at a per annum rate less than 4.50%. To the extent that interest
accrued hereunder at the rate set forth herein would be less than the foregoing
minimum daily rate, the interest rate chargeable hereunder for such day
automatically shall be deemed increased to the minimum rate.
(b) LETTER OF CREDIT FEE. Borrowers shall pay Agent (for
the ratable benefit of the Lenders with a Revolver Commitment, subject to any
letter agreement between Agent and individual Lenders), a Letter of Credit fee
(in addition to the charges, commissions, fees, and costs set forth in Section
2.12(e)) which shall accrue at a rate equal to LIBOR Rate Margin times the Daily
Balance of the undrawn amount of all outstanding Letters of Credit.
(c) DEFAULT RATE. Upon the occurrence and during the
continuation of an Event of Default (and at the election of Agent or the
Required Lenders),
(i) all Obligations (except for undrawn Letters
of Credit and except for Bank Product Obligations) that have been
charged to the Loan Account pursuant to the terms hereof shall bear
interest on the Daily Balance thereof at a per annum rate equal to 3
percentage points above the per annum rate otherwise applicable
hereunder, and
(ii) the Letter of Credit fee provided for above
shall be increased to 3 percentage points above the per annum rate
otherwise applicable hereunder.
(d) PAYMENT. Except as provided to the contrary in
Section 2.12(a), interest, Letter of Credit fees, and all other fees payable
hereunder shall be due and payable, in arrears, on the first day of each month
at any time that Obligations or Commitments are outstanding. Borrowers hereby
authorize Agent, from time to time, without prior notice to Borrowers, to charge
such interest and fees, all Lender Group Expenses (as and when incurred), the
charges, commissions, fees, and costs provided for in Section 2.12(e) (as and
when accrued or incurred), the fees and costs provided for in Section 2.11 (as
and when accrued or incurred), and all other payments as and when due and
payable under any Loan Document (including the amounts due and payable with
respect to the Term Loan and
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including any amounts due and payable to the Bank Product Providers in respect
of Bank Products up to the amount of the then extant Bank Product Reserve) to
Borrowers' Loan Account, which amounts thereafter shall constitute Advances
hereunder and shall accrue interest at the rate then applicable to Advances
hereunder. Any interest not paid when due shall be compounded by being charged
to Borrowers' Loan Account and shall thereafter constitute Advances hereunder
and shall accrue interest at the rate then applicable to Advances that are Base
Rate Loans hereunder.
(e) COMPUTATION. Subject to the Interest Act (Canada)
(but only to the extent applicable), all interest and fees chargeable under the
Loan Documents shall be computed on the basis of a 360 day year for the actual
number of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no
event shall the interest rate or rates payable under this Agreement, plus any
other amounts paid in connection herewith, exceed the highest rate permissible
under any law that a court of competent jurisdiction shall, in a final
determination, deem applicable. Borrowers and the Lender Group, in executing and
delivering this Agreement, intend legally to agree upon the rate or rates of
interest and manner of payment stated within it; provided, however, that,
anything contained herein to the contrary notwithstanding, if said rate or rates
of interest or manner of payment exceeds the maximum allowable under applicable
law, then, ipso facto, as of the date of this Agreement, Borrowers are and shall
be liable only for the payment of such maximum as allowed by law, and payment
received from Borrowers in excess of such legal maximum, whenever received,
shall be applied to reduce the principal balance of the Obligations to the
extent of such excess.
2.7. CASH MANAGEMENT.
(a) Grantors shall (i) establish and maintain cash
management services of a type and on terms satisfactory to Agent at one or more
of the banks set forth on Schedule 2.7(a) (each a "Cash Management Bank"), and
shall request in writing and otherwise take such reasonable steps to ensure that
all of their Account Debtors forward payment of the amounts owed by them
directly to such Cash Management Bank, and (ii) deposit or cause to be deposited
promptly, and in any event no later than the first Business Day after the date
of receipt thereof, all of their Collections (including those sent directly by
their Account Debtors to a Cash Management Bank) into a bank account in Agent's
name (a "Cash Management Account") at one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and
maintain Cash Management Agreements with Agent and Grantors, in form and
substance acceptable to Agent. Each such Cash Management Agreement shall
provide, among other things, that (i) all items of payment deposited in such
Cash Management Account and proceeds thereof are held by such Cash Management
Bank agent or bailee-in-possession for Agent, (ii) the Cash Management Bank has
no rights of setoff or recoupment or any other claim against the
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applicable Cash Management Account, other than for payment of its service fees
and other charges directly related to the administration of such Cash Management
Account and for returned checks or other items of payment, and (iii) it
immediately will forward by daily sweep all amounts in the applicable Cash
Management Account to the Agent's Account.
(c) Communications (Canada) shall (i) deposit or cause to
be deposited promptly, and in any event no later than the first Business Day
after the date of receipt thereof, all cash, checks, drafts and all forms of
items of payment made in respect of any and all Collateral into bank accounts in
its name (each a "Collection Account" and, collectively, the "Collection
Accounts") at one of the banks set forth on Schedule 2.7(c) (each a "Collection
Account Bank" and collectively, the "Collection Account Banks"); provided,
however, the aggregate balance maintained in all of Communications (Canada)'s
Collection Accounts shall not exceed Canadian $1,000,000 at any time. All
Collection Account Banks shall be satisfactory to Agent.
(d) Each Collection Account shall establish and maintain
Cash Management Agreements with Agent and Communications (Canada), in form and
substance acceptable to Agent. Each such Cash Management Account shall provide,
among other things, that (i) all items of payment deposited in such Cash
Management Account and proceeds thereof are held by such Collection Account Bank
agent or bailee-in-possession for Agent, (ii) the Collection Account Bank has no
rights of setoff or recoupment or any other claim against the applicable
Collection Account, other than for payment of its service fees and other charges
directly related to the administration of such Collection Account and for
returned checks or other items of payment, and (iii) it immediately will, upon
the election of Required Lenders, forward by daily sweep all amounts in the
applicable Collection Account to the Agent's Account.
(e) So long as no Default or Event of Default has
occurred and is continuing, Administrative Borrower may amend Schedule 2.7(a) or
(c) to add or replace a Cash Management Account Bank, a Collection Account Bank,
Cash Management Account or a Collection Account; provided, however, that (i)
such prospective Cash Management Bank or Collection Account Bank shall be
satisfactory to Agent and Agent shall have consented in writing in advance to
the opening of such Cash Management Account or Collection Account with the
prospective Cash Management Bank or Collection Account Bank, and (ii) prior to
the time of the opening of such Cash Management Account or Collection Account, a
Company and such prospective Cash Management Bank or Collection Account Bank
shall have executed and delivered to Agent a Cash Management Agreement. A
Company shall close any of their Cash Management Accounts or Collection Accounts
(and establish replacement cash management accounts in accordance with the
foregoing sentence) promptly and in any event within 30 days of notice from
Agent that the creditworthiness of any Cash Management Bank or Collection
Account Bank is no longer acceptable in Agent's reasonable judgment, or as
promptly as practicable and in any event within 60 days of notice from Agent
that the operating performance, funds transfer, or availability procedures or
performance of the Cash Management Bank or Collection Account Bank with respect
to Cash Management Accounts or Collection Accounts, or Agent's
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liability under any Cash Management Agreement with such Cash Management Bank or
Collection Account Bank is no longer acceptable in Agent's reasonable judgment.
(f) The Cash Management Accounts and Collection Accounts
shall be cash collateral accounts, with all cash, checks and similar items of
payment in such accounts securing payment of the Obligations, and in which each
Company hereby grants a Lien to Agent.
(g) Unless an Event of Default has occurred and is
continuing, Communications (Canada) may use the funds on deposit in a Collection
Account for its working capital purposes. From and after the occurrence of an
Event of Default and at the election of the Required Lenders, the funds on
deposit in the Collection Accounts of Communications (Canada) shall be converted
into Dollars (at Communications (Canada)'s sole expense) and wired into Agent's
Account to be applied on account of the "Guaranteed Obligations" (as that term
is defined in the Canadian Guarantee) of Communications (Canada).
2.8. CREDITING PAYMENTS; FLOAT CHARGE.
The receipt of any payment item by Agent (whether from
transfers to Agent by the Cash Management Banks pursuant to the Cash Management
Agreements or otherwise) shall not be considered a payment on account unless
such payment item is a wire transfer of immediately available federal funds made
to the Agent's Account or unless and until such payment item is honored when
presented for payment. Should any payment item not be honored when presented for
payment, then Borrowers shall be deemed not to have made such payment and
interest shall be calculated accordingly. Anything to the contrary contained
herein notwithstanding, any payment item shall be deemed received by Agent only
if it is received into the Agent's Account on a Business Day on or before 11:00
a.m. (California time). If any payment item is received into the Agent's Account
on a non-Business Day or after 11:00 a.m. (California time) on a Business Day,
it shall be deemed to have been received by Agent as of the opening of business
on the immediately following Business Day. From and after the Closing Date,
Agent shall be entitled to charge Borrowers for 1 Business Day of 'clearance' or
'float' at the rate then applicable under Section 2.6 to Advances that are Base
Rate Loans on all Collections that are received by Companies (regardless of
whether forwarded by the Cash Management Banks to Agent). This across-the-board
1 Business Day clearance or float charge on all Collections of Companies is
acknowledged by the parties to constitute an integral aspect of the pricing of
the financing of Borrowers and shall apply irrespective of whether or not there
are any outstanding monetary Obligations; the effect of such clearance or float
charge being the equivalent of charging interest on such Collections through the
completion of a period ending 1 Business Day after the receipt thereof. The
parties acknowledge and agree that the economic benefit of the foregoing
provisions of this Section 2.8 shall be for the exclusive benefit of Agent.
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2.9. DESIGNATED ACCOUNT.
Agent is authorized to make the Advances and the Term Loan,
and Issuing Lender is authorized to issue the Letters of Credit, under this
Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person, or without instructions if pursuant to
Section 2.6(d). Administrative Borrower agrees to establish and maintain the
Designated Account with the Designated Account Bank for the purpose of receiving
the proceeds of the Advances requested by Borrowers and made by Agent or the
Lenders hereunder. Unless otherwise agreed by Agent and Administrative Borrower,
any Advance, Agent Advance, or Swing Loan requested by Borrowers and made by
Agent or the Lenders hereunder shall be made to the Designated Account.
2.10. MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF
OBLIGATIONS.
Agent shall maintain an account on its books in the name of
Borrowers (the "Loan Account") on which Borrowers will be charged with the Term
Loan, all Advances (including Agent Advances and Swing Loans) made by Agent,
Swing Lender, or the Lenders to Borrowers or for Borrowers' account, the Letters
of Credit issued by Issuing Lender for Borrowers' account, and with all other
payment Obligations hereunder or under the other Loan Documents (except for Bank
Product Obligations), including, accrued interest, fees and expenses, and Lender
Group Expenses. In accordance with Section 2.8, the Loan Account will be
credited with all payments received by Agent from Borrowers or for Borrowers'
account, including all amounts received in the Agent's Account from any Cash
Management Bank. Agent shall render statements regarding the Loan Account to
Administrative Borrower, including principal, interest, fees, and including an
itemization of all charges and expenses constituting Lender Group Expenses
owing, and such statements, absent manifest error, shall be conclusively
presumed to be correct and accurate and constitute an account stated between
Borrowers and the Lender Group unless, within 30 days after receipt thereof by
Administrative Borrower, Administrative Borrower shall deliver to Agent written
objection thereto describing the error or errors contained in any such
statements.
2.11. FEES.
Borrowers shall pay to Agent the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter) and shall be apportioned among
the Lenders in accordance with the terms of letter agreements between Agent and
individual Lenders:
(a) UNUSED LINE FEE. On the first day of each month
during the term of this Agreement, an unused line fee in the amount equal to
0.50% per annum times the result of (i) the Maximum Revolver Amount, less (ii)
the sum of (A) the average Daily Balance of Advances that were outstanding
during the immediately preceding month, plus (B) the average Daily Balance of
the Letter of Credit Usage during the immediately preceding month,
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(b) FEE LETTER FEES. As and when due and payable under
the terms of the Fee Letter, the fees set forth in the Fee Letter, and
(c) AUDIT, APPRAISAL, AND VALUATION CHARGES. Audit,
appraisal, and valuation fees and charges as follows (i) a fee of $850 per day,
per auditor, plus out-of-pocket expenses for each financial audit of any Company
performed by personnel employed by Agent (provided, that so long as no Event of
Default exists, Borrowers shall not be liable for more than 5 such audits in any
calendar year), (ii) if implemented, a fee of $850 per day, per applicable
individual, plus out-of-pocket expenses for the establishment of electronic
collateral reporting systems, and (iii) the actual charges paid or incurred by
Agent if it elects to employ the services of one or more third Persons to
perform financial audits of Companies, to establish electronic collateral
reporting systems, to appraise the Collateral (including without limitation the
Recurring Revenue Business and Recurring Revenue Agreements), or any portion
thereof, or to assess any Company's business valuation.
2.12. LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this
Agreement, the Issuing Lender agrees to issue letters of credit for the account
of Borrowers (each, an "L/C") or to purchase participations or execute
indemnities or reimbursement obligations (each such undertaking, an "L/C
Undertaking") with respect to letters of credit issued by an Underlying Issuer
(as of the Closing Date, the prospective Underlying Issuer is to be Wells Fargo)
for the account of Borrowers. To request the issuance of an L/C or an L/C
Undertaking (or the amendment, renewal, or extension of an outstanding L/C or
L/C Undertaking), Administrative Borrower shall hand deliver or telecopy (or
transmit by electronic communication, if arrangements for doing so have been
approved by the Issuing Lender) to the Issuing Lender and Agent (reasonably in
advance of the requested date of issuance, amendment, renewal, or extension) a
notice requesting the issuance of an L/C or L/C Undertaking, or identifying the
L/C or L/C Undertaking to be amended, renewed, or extended, the date of
issuance, amendment, renewal, or extension, the date on which such L/C or L/C
Undertaking is to expire, the amount of such L/C or L/C Undertaking, the name
and address of the beneficiary thereof (or of the Underlying Letter of Credit,
as applicable), and such other information as shall be necessary to prepare,
amend, renew, or extend such L/C or L/C Undertaking. If requested by the Issuing
Lender, Borrowers also shall be an applicant under the application with respect
to any Underlying Letter of Credit that is to be the subject of an L/C
Undertaking. The Issuing Lender shall have no obligation to issue a Letter of
Credit if any of the following would result after giving effect to the requested
Letter of Credit:
(i) the Letter of Credit Usage would exceed the
Borrowing Base less the then extant amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed
$5,000,000, or
(iii) the Letter of Credit Usage would exceed the
Maximum Revolver Amount less the then extant amount of outstanding
Advances, or
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(iv) The Letter of Credit Usage would exceed the
Maximum Credit Amount less the sum of the extant amount of outstanding
Advances and principal amount of the Term Loan.
Borrowers and the Lender Group acknowledge and agree that
certain Underlying Letters of Credit may be issued to support letters of credit
that already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Administrative Borrower shall have received written or telephonic
notice of such L/C Disbursement prior to 10:00 a.m., California time, on such
date, or, if such notice has not been received by Administrative Borrower prior
to such time on such date, then not later than 11:00 a.m., California time, on
(i) the Business Day that Administrative Borrower receives such notice, if such
notice is received prior to 10:00 a.m., California time, on the date of receipt,
and, in the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the rate then applicable to Advances that are Base Rate Loans
under Section 2.6. To the extent an L/C Disbursement is deemed to be an Advance
hereunder, Borrowers' obligation to reimburse such L/C Disbursement shall be
discharged and replaced by the resulting Advance. Promptly following receipt by
Agent of any payment from Borrowers pursuant to this paragraph, Agent shall
distribute such payment to the Issuing Lender or, to the extent that Lenders
have made payments pursuant to Section 2.12(c) to reimburse the Issuing Lender,
then to such Lenders and the Issuing Lender as their interest may appear.
(b) Promptly following receipt of a notice of L/C
Disbursement pursuant to Section 2.12(a), each Lender with a Revolver Commitment
agrees to fund its Pro Rata Share of any Advance deemed made pursuant to the
foregoing subsection on the same terms and conditions as if Borrowers had
requested such Advance and Agent shall promptly pay to Issuing Lender the
amounts so received by it from the Lenders. By the issuance of a Letter of
Credit (or an amendment to a Letter of Credit increasing the amount thereof) and
without any further action on the part of the Issuing Lender or the Lenders with
Revolver Commitment, the Issuing Lender shall be deemed to have granted to each
Lender with a Revolver Commitment, and each Lender with a Revolver Commitment
shall be deemed to have purchased, a participation in each Letter of Credit, in
an amount equal to its Pro Rata Share of the Risk Participation Liability of
such Letter of Credit, and each such Lender agrees to pay to Agent, for the
account of the Issuing Lender, such Lender's Pro Rata Share of any payments made
by the Issuing Lender under such Letter of Credit. In consideration and in
furtherance of the foregoing, each Lender with a Revolver Commitment hereby
absolutely and unconditionally agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of each L/C Disbursement made by
the Issuing Lender and not reimbursed by Borrowers on the date due as provided
in clause (a) of this Section, or of any
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reimbursement payment required to be refunded to Borrowers for any reason. Each
Lender with a Revolver Commitment acknowledges and agrees that its obligation to
deliver to Agent, for the account of the Issuing Lender, an amount equal to its
respective Pro Rata Share of each L/C Disbursement made by the Issuing Lender
pursuant to this Section 2.12(b) shall be absolute and unconditional and such
remittance shall be made notwithstanding the occurrence or continuation of an
Event of Default or Default or the failure to satisfy any condition set forth in
Section 3 hereof. If any such Lender fails to make available to Agent the amount
of such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing
Lender in respect of such Letter of Credit as provided in this Section, such
Lender shall be deemed to be a Defaulting Lender and Agent (for the account of
the Issuing Lender) shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Defaulting Lender Rate until paid
in full.
(c) Each Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless from any loss, cost, expense, or
liability, and reasonable attorneys fees incurred by the Lender Group arising
out of or in connection with any Letter of Credit; provided, however, that no
Borrower shall be obligated hereunder to indemnify for any loss, cost, expense,
or liability to the extent that it is caused by the gross negligence or willful
misconduct of the Issuing Lender or any other member of the Lender Group. Each
Borrower agrees to be bound by the Underlying Issuer's regulations and
interpretations of any Underlying Letter of Credit or by Issuing Lender's
interpretations of any L/C issued by Issuing Lender to or for such Borrower's
account, even though this interpretation may be different from such Borrower's
own, and each Borrower understands and agrees that the Lender Group shall not be
liable for any error, negligence, or mistake, whether of omission or commission,
in following Borrowers' instructions or those contained in the Letter of Credit
or any modifications, amendments, or supplements thereto. Each Borrower
understands that the L/C Undertakings may require Issuing Lender to indemnify
the Underlying Issuer for certain costs or liabilities arising out of claims by
Borrowers against such Underlying Issuer. Each Borrower hereby agrees to
indemnify, save, defend, and hold the Lender Group harmless with respect to any
loss, cost, expense (including reasonable attorneys fees), or liability incurred
by the Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; provided, however, that no Borrower
shall be obligated hereunder to indemnify for any loss, cost, expense, or
liability to the extent that it is caused by the gross negligence or willful
misconduct of the Issuing Lender or any other member of the Lender Group.
(d) Each Borrower hereby authorizes and directs any
Underlying Issuer to deliver to the Issuing Lender all instruments, documents,
and other writings and property received by such Underlying Issuer pursuant to
such Underlying Letter of Credit and to accept and rely upon the Issuing
Lender's instructions with respect to all matters arising in connection with
such Underlying Letter of Credit and the related application.
(e) Any and all charges, commissions, fees, and costs
incurred by the Issuing Lender relating to Underlying Letters of Credit shall be
Lender Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrowers to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by each Borrower
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that, as of the Closing Date, the usage charge imposed by the prospective
Underlying Issuer is .825% per annum times the face amount of each Underlying
Letter of Credit, that such issuance charge may be changed from time to time,
and that the Underlying Issuer also imposes a schedule of charges for
amendments, extensions, drawings, and renewals.
(f) If by reason of (i) any change after the Closing Date
in any applicable law, treaty, rule, or regulation or any change in the
interpretation or application thereof by any Governmental Authority, or (ii)
compliance by the Underlying Issuer or the Lender Group with any direction,
request, or requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Federal Reserve Board as from time to time in effect (and any successor
thereto):
(i) any reserve, deposit, or similar requirement
is or shall be imposed or modified in respect of any Letter of Credit
issued hereunder, or
(ii) there shall be imposed on the Underlying
Issuer or the Lender Group any other condition regarding any Underlying
Letter of Credit or any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.
2.13. LIBOR OPTION.
(a) INTEREST AND INTEREST PAYMENT DATES. In lieu of
having interest charged at the rate based upon the Base Rate, Borrowers shall
have the option (the "LIBOR Option") to have interest on all or a portion of the
Advances or the Term Loan be charged at a rate of interest based upon the LIBOR
Rate. Interest on LIBOR Rate Loans shall be payable on the earliest of (i) the
last day of the Interest Period applicable thereto, (ii) the occurrence of an
Event of Default in consequence of which the Required Lenders or Agent on behalf
thereof have elected to accelerate the maturity of all or any portion of the
Obligations, or (iii) termination of this Agreement pursuant to the terms
hereof. On the last day of each applicable Interest Period, unless
Administrative Borrower properly has exercised the LIBOR Option with respect
thereto, the interest rate applicable to such LIBOR Rate Loan automatically
shall convert to the rate of interest then applicable to Base Rate Loans of the
same type hereunder. At any time that an Event of Default has occurred and is
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continuing, Borrowers no longer shall have the option to request that Advances
or the Term Loan bear interest at the LIBOR Rate and Agent shall have the right
to convert the interest rate on all outstanding LIBOR Rate Loans to the rate
then applicable to Base Rate Loans hereunder.
(b) LIBOR ELECTION.
(i) Administrative Borrower may, at any time and
from time to time, so long as no Event of Default has occurred and is
continuing, elect to exercise the LIBOR Option by notifying Agent prior
to 11:00 a.m. (California time) at least 3 Business Days prior to the
commencement of the proposed Interest Period (the "LIBOR Deadline").
Notice of Administrative Borrower's election of the LIBOR Option for a
permitted portion of the Advances or the Term Loan and an Interest
Period pursuant to this Section shall be made by delivery to Agent of a
LIBOR Notice received by Agent before the LIBOR Deadline, or by
telephonic notice received by Agent before the LIBOR Deadline (to be
confirmed by delivery to Agent of a LIBOR Notice received by Agent
prior to 5:00 p.m. (California time) on the same day). Promptly upon
its receipt of each such LIBOR Notice, Agent shall provide a copy
thereof to each of the Lenders having a Revolver Commitment.
(ii) Each LIBOR Notice shall be irrevocable and
binding on Borrowers. In connection with each LIBOR Rate Loan, each
Borrower shall indemnify, defend, and hold Agent and the Lenders
harmless against any loss, cost, or expense incurred by Agent or any
Lender as a result of (a) the payment of any principal of any LIBOR
Rate Loan other than on the last day of an Interest Period applicable
thereto (including as a result of an Event of Default), (b) the
conversion of any LIBOR Rate Loan other than on the last day of the
Interest Period applicable thereto, or (c) the failure to borrow,
convert, continue or prepay any LIBOR Rate Loan on the date specified
in any LIBOR Notice delivered pursuant hereto (such losses, costs, and
expenses, collectively, "Funding Losses"). Funding Losses shall, with
respect to Agent or any Lender, be deemed to equal the amount
determined by Agent or such Lender to be the excess, if any, of (i) the
amount of interest that would have accrued on the principal amount of
such LIBOR Rate Loan had such event not occurred, at the LIBOR Rate
that would have been applicable thereto, for the period from the date
of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue,
for the period that would have been the Interest Period therefor),
minus (ii) the amount of interest that would accrue on such principal
amount for such period at the interest rate which Agent or such Lender
would be offered were it to be offered, at the commencement of such
period, Dollar deposits of a comparable amount and period in the London
interbank market. A certificate of Agent or a Lender delivered to
Administrative Borrower setting forth any amount or amounts that Agent
or such Lender is entitled to receive pursuant to this Section 2.13
shall be conclusive absent manifest error.
(iii) Borrowers shall have not more than 5 LIBOR
Rate Loans in effect at any given time. Borrowers only may exercise the
LIBOR Option for LIBOR
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Rate Loans of at least $1,000,000 and integral multiples of $500,000 in
excess thereof.
(c) PREPAYMENTS. Borrowers may prepay LIBOR Rate Loans at
any time; provided, however, that in the event that LIBOR Rate Loans are prepaid
on any date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of Borrowers' and their Subsidiaries'
Collections in accordance with Section 2.4(b) or for any other reason, including
early termination of the term of this Agreement or acceleration of all or any
portion of the Obligations pursuant to the terms hereof, each Borrower shall
indemnify, defend, and hold Agent and the Lenders and their Participants
harmless against any and all Funding Losses in accordance with clause (b) above.
(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
(i) The LIBOR Rate may be adjusted by Agent with
respect to any Lender on a prospective basis to take into account any
additional or increased costs to such Lender of maintaining or
obtaining any eurodollar deposits or increased costs due to changes in
applicable law occurring subsequent to the commencement of the then
applicable Interest Period, including changes in tax laws (except
changes of general applicability in corporate income tax laws) and
changes in the reserve requirements imposed by the Board of Governors
of the Federal Reserve System (or any successor), excluding the Reserve
Percentage, which additional or increased costs would increase the cost
of funding loans bearing interest at the LIBOR Rate. In any such event,
the affected Lender shall give Administrative Borrower and Agent notice
of such a determination and adjustment and Agent promptly shall
transmit the notice to each other Lender and, upon its receipt of the
notice from the affected Lender, Administrative Borrower may, by notice
to such affected Lender (y) require such Lender to furnish to
Administrative Borrower a statement setting forth the basis for
adjusting such LIBOR Rate and the method for determining the amount of
such adjustment, or (z) repay the LIBOR Rate Loans with respect to
which such adjustment is made (together with any amounts due under
clause (b)(ii) above).
(ii) In the event that any change in market
conditions or any law, regulation, treaty, or directive, or any change
therein or in the interpretation of application thereof, shall at any
time after the date hereof, in the reasonable opinion of any Lender,
make it unlawful or impractical for such Lender to fund or maintain
LIBOR Advances or to continue such funding or maintaining, or to
determine or charge interest rates at the LIBOR Rate, such Lender shall
give notice of such changed circumstances to Agent and Administrative
Borrower and Agent promptly shall transmit the notice to each other
Lender and (y) in the case of any LIBOR Rate Loans of such Lender that
are outstanding, the date specified in such Lender's notice shall be
deemed to be the last day of the Interest Period of such LIBOR Rate
Loans, and interest upon the LIBOR Rate Loans of such Lender thereafter
shall accrue interest at the rate then applicable to Base Rate Loans,
and (z) Borrowers shall not be
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entitled to elect the LIBOR Option until such Lender determines that it
would no longer be unlawful or impractical to do so.
(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the
contrary contained herein notwithstanding, neither Agent, nor any Lender, nor
any of their Participants, is required actually to acquire eurodollar deposits
to fund or otherwise match fund any Obligation as to which interest accrues at
the LIBOR Rate. The provisions of this Section shall apply as if each Lender or
its Participants had match funded any Obligation as to which interest is
accruing at the LIBOR Rate by acquiring eurodollar deposits for each Interest
Period in the amount of the LIBOR Rate Loans.
2.14. CAPITAL REQUIREMENTS.
If, after the date hereof, any Lender determines that (i) the
adoption of or change in any law, rule, regulation or guideline regarding
capital requirements for banks or bank holding companies, or any change in the
interpretation or application thereof by any Governmental Authority charged with
the administration thereof, or (ii) compliance by such Lender or its parent bank
holding company with any guideline, request or directive of any such entity
regarding capital adequacy (whether or not having the force of law), has the
effect of reducing the return on such Lender's or such holding company's capital
as a consequence of such Lender's Commitments hereunder to a level below that
which such Lender or such holding company could have achieved but for such
adoption, change, or compliance (taking into consideration such Lender's or such
holding company's then existing policies with respect to capital adequacy and
assuming the full utilization of such entity's capital) by any amount deemed by
such Lender to be material, then such Lender may notify Administrative Borrower
and Agent thereof. Following receipt of such notice, Borrowers agree to pay such
Lender on demand the amount of such reduction of return of capital as and when
such reduction is determined, payable within 90 days after presentation by such
Lender of a statement in the amount and setting forth in reasonable detail such
Lender's calculation thereof and the assumptions upon which such calculation was
based (which statement shall be deemed true and correct absent manifest error).
In determining such amount, such Lender may use any reasonable averaging and
attribution methods.
2.15. JOINT AND SEVERAL LIABILITY OF BORROWERS.
(a) Each Borrower is accepting joint and several
liability hereunder and under the other Loan Documents in consideration of the
financial accommodations to be provided by the Agent and the Lenders under this
Agreement, for the mutual benefit, directly and indirectly, of each Borrower and
in consideration of the undertakings of the other Borrowers to accept joint and
several liability for the Obligations.
(b) Each Borrower, jointly and severally, hereby
irrevocably and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Borrowers, with respect to
the payment and performance of all of the Obligations (including, without
limitation, any Obligations arising under this Section 2.15), it being the
intention of the parties hereto that all the Obligations shall be the joint and
several
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obligations of each Person composing Borrowers without preferences or
distinction among them.
(c) If and to the extent that any of Borrowers shall fail
to make any payment with respect to any of the Obligations as and when due or to
perform any of the Obligations in accordance with the terms thereof, then in
each such event the other Persons composing Borrowers will make such payment
with respect to, or perform, such Obligation.
(d) The Obligations of each Person composing Borrowers
under the provisions of this Section 2.15 constitute the absolute and
unconditional, full recourse Obligations of each Person composing Borrowers
enforceable against each such Borrower to the full extent of its properties and
assets, irrespective of the validity, regularity or enforceability of this
Agreement or any other circumstances whatsoever.
(e) Except as otherwise expressly provided in this
Agreement, each Person composing Borrowers hereby waives notice of acceptance of
its joint and several liability, notice of any Advances or Letters of Credit
issued under or pursuant to this Agreement, notice of the occurrence of any
Default, Event of Default, or of any demand for any payment under this
Agreement, notice of any action at any time taken or omitted by Agent or Lenders
under or in respect of any of the Obligations, any requirement of diligence or
to mitigate damages and, generally, to the extent permitted by applicable law,
all demands, notices and other formalities of every kind in connection with this
Agreement (except as otherwise provided in this Agreement). Each Person
composing Borrowers hereby assents to, and waives notice of, any extension or
postponement of the time for the payment of any of the Obligations, the
acceptance of any payment of any of the Obligations, the acceptance of any
partial payment thereon, any waiver, consent or other action or acquiescence by
Agent or Lenders at any time or times in respect of any default by any Person
composing Borrowers in the performance or satisfaction of any term, covenant,
condition or provision of this Agreement, any and all other indulgences
whatsoever by Agent or Lenders in respect of any of the Obligations, and the
taking, addition, substitution or release, in whole or in part, at any time or
times, of any security for any of the Obligations or the addition, substitution
or release, in whole or in part, of any Person composing Borrowers. Without
limiting the generality of the foregoing, each Borrower assents to any other
action or delay in acting or failure to act on the part of any Agent or Lender
with respect to the failure by any Person composing Borrowers to comply with any
of its respective Obligations, including, without limitation, any failure
strictly or diligently to assert any right or to pursue any remedy or to comply
fully with applicable laws or regulations thereunder, which might, but for the
provisions of this Section 2.15 afford grounds for terminating, discharging or
relieving any Person composing Borrowers, in whole or in part, from any of its
Obligations under this Section 2.15, it being the intention of each Person
composing Borrowers that, so long as any of the Obligations hereunder remain
unsatisfied, the Obligations of such Person composing Borrowers under this
Section 2.15 shall not be discharged except by performance and then only to the
extent of such performance. The Obligations of each Person composing Borrowers
under this Section 2.15 shall not be diminished or rendered unenforceable by any
winding up, reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to any Person composing Borrowers or any Agent or
Lender. The joint and
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several liability of the Persons composing Borrowers hereunder shall continue in
full force and effect notwithstanding any absorption, merger, amalgamation or
any other change whatsoever in the name, constitution or place of formation of
any of the Persons composing Borrowers or any Agent or Lender.
(f) Each Person composing Borrowers represents and
warrants to Agent and Lenders that such Borrower is currently informed of the
financial condition of Borrowers and of all other circumstances which a diligent
inquiry would reveal and which bear upon the risk of nonpayment of the
Obligations. Each Person composing Borrowers further represents and warrants to
Agent and Lenders that such Borrower has read and understands the terms and
conditions of the Loan Documents. Each Person composing Borrowers hereby
covenants that such Borrower will continue to keep informed of Borrowers'
financial condition, the financial condition of other guarantors, if any, and of
all other circumstances which bear upon the risk of nonpayment or nonperformance
of the Obligations.
(g) The provisions of this Section 2.15 are made for the
benefit of the Agent, the Lenders and their respective successors and assigns,
and may be enforced by it or them from time to time against any or all of the
Persons composing Borrowers as often as occasion therefor may arise and without
requirement on the part of any such Agent, Lender, successor or assign first to
marshal any of its or their claims or to exercise any of its or their rights
against any of the other Persons composing Borrowers or to exhaust any remedies
available to it or them against any of the other Persons composing Borrowers or
to resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy. The provisions of this
Section 2.15 shall remain in effect until all of the Obligations shall have been
paid in full or otherwise fully satisfied. If at any time, any payment, or any
part thereof, made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by any Agent or Lender upon the insolvency,
bankruptcy or reorganization of any of the Persons composing Borrowers, or
otherwise, the provisions of this Section 2.15 will forthwith be reinstated in
effect, as though such payment had not been made.
(h) Each of the Persons composing Borrowers hereby agrees
that it will not enforce any of its rights of contribution or subrogation
against the other Persons composing Borrowers with respect to any liability
incurred by it hereunder or under any of the other Loan Documents, any payments
made by it to the Agent or the Lenders with respect to any of the Obligations or
any collateral security therefor until such time as all of the Obligations have
been paid in full in cash. Any claim which any Borrower may have against any
other Borrower with respect to any payments to any Agent or Lender hereunder or
under any other Loan Documents are hereby expressly made subordinate and junior
in right of payment, without limitation as to any increases in the Obligations
arising hereunder or thereunder, to the prior payment in full in cash of the
Obligations and, in the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to any Borrower, its debts or its assets, whether
voluntary or involuntary, all such Obligations shall be paid in full in cash
before any payment or distribution of any character, whether in cash, securities
or other property, shall be made to any other Borrower therefor.
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(i) Each of the Persons composing Borrowers hereby agrees
that, after the occurrence and during the continuance of any Default or Event of
Default, the payment of any amounts due with respect to the indebtedness owing
by any Borrower to any other Borrower is hereby subordinated to the prior
payment in full in cash of the Obligations. Each Borrower hereby agrees that
after the occurrence and during the continuance of any Default or Event of
Default, such Borrower will not demand, sue for or otherwise attempt to collect
any indebtedness of any other Borrower owing to such Borrower until the
Obligations shall have been paid in full in cash. If, notwithstanding the
foregoing sentence, such Borrower shall collect, enforce or receive any amounts
in respect of such indebtedness, such amounts shall be collected, enforced and
received by such Borrower as trustee for the Agent, and such Borrower shall
deliver any such amounts to Agent for application to the Obligations in
accordance with Section 2.4(b).
(j) Communications (Canada) has guaranteed the
Obligations of Borrowers pursuant to the Canadian Guarantee.
(k) Each U.S. Credit Party has guaranteed the Obligations
of Borrowers pursuant to the U.S. Credit Party Guarantee.
3. CONDITIONS; TERM OF AGREEMENT.
3.1. CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT.
The obligation of the Lender Group (or any member thereof) to
make the initial Advance (or otherwise to extend any credit provided for
hereunder), is subject to the fulfillment, to the satisfaction of Agent, of each
of the conditions precedent set forth below:
(a) the Closing Date shall occur on or before December
31, 2003;
(b) Agent shall have received a UCC Filing Authorization
Letter, duly executed by each Grantor, together with appropriate financing
statements on Form UCC-1 and PPSA financing statements duly filed in such office
or offices as may be necessary or, in the opinion of Agent, desirable to perfect
the Agent's Liens in and to the Collateral, and Agent shall have received
searches reflecting the filing of all such financing statements;
(c) Agent shall have received each of the following
documents, in form and substance satisfactory to Agent, duly executed, and each
such document shall be in full force and effect:
(i) the Cash Management Agreements,
(ii) the Control Agreements,
(iii) the Copyright Security Agreement,
(iv) the Disbursement Letter,
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(v) the Fee Letter,
(vi) the Canadian Security Agreement,
(vii) the Canadian Guarantee,
(viii) the U.S. Credit Party Guarantee,
(ix) the Intercompany Subordination Agreement,
(x) the Officers' Certificate,
(xi) the Patent Security Agreement,
(xii) the Pay-Off Letter, together with UCC
termination and PPSA statements and other documentation evidencing the
termination by Existing Lender of its Liens in and to the properties
and assets of Companies,
(xiii) the Stock Pledge Agreements, together with
all certificates representing the shares of Stock pledged thereunder,
as well as Stock powers with respect thereto endorsed in blank,
(xiv) the Trademark Security Agreement; and
(xv) the Subordination and Standstill Agreement.
(d) Agent shall have received a certificate from the
Secretary of each Company attesting to the resolutions of such Company's Board
of Directors authorizing its execution, delivery, and performance of this
Agreement and the other Loan Documents to which such Company is a party and
authorizing specific officers of such Company to execute the same;
(e) Agent shall have received copies of each Company's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Company;
(f) Agent shall have received a certificate of status
with respect to each Company, dated within 20 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Company, which certificate shall indicate that such Company
is in good standing in such jurisdiction;
(g) Agent shall have received certificates of status with
respect to each Company, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Company) in which such Company's
business operations generated 5% or more of the Companies' consolidate gross
revenues as of the Closing Date, which certificates shall indicate that such
Company is in good standing in such jurisdictions;
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(h) Agent shall have received evidence satisfactory to
Agent that all copyrights and works protectable by copyrights and used in the
Recurring Revenue Business have been registered with the applicable federal
filing office;
(i) Agent shall have received a certificate of insurance,
together with the endorsements thereto, as are required by Section 6.8, the form
and substance of which shall be satisfactory to Agent;
(j) Agent shall have received opinions of Companies'
counsel in form and substance satisfactory to Agent;
(k) Agent shall have received satisfactory evidence
(including a certificate of the chief financial officer of Parent) that all tax
returns required to be filed by Companies have been timely filed and all taxes
upon Companies or their properties, assets, income, and franchises (including
Real Property taxes, sales taxes, and payroll taxes) have been paid prior to
delinquency, except such taxes that are the subject of a Permitted Protest;
(l) Borrowers shall have the Required Availability after
giving effect to the initial extensions of credit hereunder and the payment of
all fees and expenses required to be paid by Borrowers on the Closing Date under
this Agreement or the other Loan Documents;
(m) Agent shall have completed its business, legal, and
collateral due diligence, including (i) a collateral audit and review of
Companies' books and records and verification of Companies' representations and
warranties to the Lender Group, the results of which shall be satisfactory to
Agent, and (ii) a legal review of all material contracts and litigation matters;
(n) Agent shall have received completed reference checks
with respect to Companies' senior management, the results of which are
satisfactory to Agent in its sole discretion;
(o) Agent shall have received a net orderly liquidation
value appraisal performed by a valuation firm selected by Agent, which appraisal
shall specifically include an analysis of the Recurring Revenue, and the results
of such appraisal shall be satisfactory to the Lender Group;
(p) Agent shall have received Companies' Closing Date
Business Plan;
(q) Borrowers shall have paid all Lender Group Expenses
incurred in connection with the transactions evidenced by this Agreement;
(r) Companies shall have received all licenses, approvals
or evidence of other actions required by any Governmental Authority in
connection with the execution and delivery by Companies of the Loan Document or
with the consummation of the transactions contemplated thereby; and
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(s) all other documents and legal matters in connection
with the transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance satisfactory to Agent.
3.2. CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF
CREDIT.
The obligation of the Lender Group (or any member thereof) to continue
to make Advances (or otherwise extend credit hereunder) is subject to the
fulfillment, on or before the date applicable thereto, of each of the conditions
subsequent set forth below (the failure by Companies to so perform or cause to
be performed constituting an Event of Default):
(a) within 30 days of the Closing Date, deliver to Agent
certified copies of the policies of insurance, together with the endorsements
thereto, as are required by Section 6.8, the form and substance of which shall
be satisfactory to Agent and its counsel; and
(b) Companies shall use their best efforts to obtain and
deliver to Agent Collateral Access Agreements with respect to the following
locations: Brecksville, Ohio, Phoenix, Arizona, Los Angeles, California,
Toronto, Ontario, West Des Moines, Iowa, Eagan, Minnesota, Waukesha, Wisconsin,
New Orleans, Louisiana, Tempe, Arizona, Cincinnati, Ohio, Brooklyn Park,
Minnesota, Minnetonka, Minnesota and Markham, Ontario; and
(c) Companies shall use their best efforts to obtain and
deliver to Agent the Collateral Assignment of Leases with respect to the
following locations: Brecksville, Ohio, Phoenix, Arizona, Los Angeles,
California, Toronto, Ontario, Montreal, Quebec and Minnetonka, Minnesota.
3.3. CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT.
The obligation of the Lender Group (or any member thereof) to
make any Advances hereunder at any time (or to extend any other credit
hereunder) shall be subject to the following conditions precedent:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);
(b) no Default or Event of Default shall have occurred
and be continuing on the date of such extension of credit, nor shall either
result from the making thereof;
(c) no injunction, writ, restraining order, or other
order of any nature restricting or prohibiting, directly or indirectly, the
extending of such credit shall have been issued and remain in force by any
Governmental Authority against any Company, Agent, any Lender, or any of their
Affiliates; and
(d) no Material Adverse Change shall have occurred.
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3.4. TERM.
This Agreement shall continue in full force and effect for a
term ending on December 10, 2008 (the "Maturity Date"). The foregoing
notwithstanding, the Lender Group, upon the election of the Required Lenders,
shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.5. EFFECT OF TERMINATION.
On the date of termination of this Agreement, all Obligations
(including contingent reimbursement obligations of Borrowers with respect to any
outstanding Letters of Credit and including all Bank Products Obligations)
immediately shall become due and payable without notice or demand (including (a)
either (i) providing cash collateral to be held by Agent for the benefit of
those Lenders with a Revolver Commitment in an amount equal to 105% of the then
extant Letter of Credit Usage, or (ii) causing the original Letters of Credit to
be returned to the Issuing Lender, and (b) providing cash collateral (in an
amount determined by Agent as sufficient to satisfy the reasonably estimated
credit exposure) to be held by Agent for the benefit of the Bank Product
Providers with respect to the then extant Bank Products Obligations). No
termination of this Agreement, however, shall relieve or discharge Companies of
their duties, Obligations, or covenants hereunder and the Agent's Liens in the
Collateral shall remain in effect until all Obligations have been paid in full
and the Lender Group's obligations to provide additional credit hereunder have
been terminated. When this Agreement has been terminated and all of the
Obligations have been paid in full and the Lender Group's obligations to provide
additional credit under the Loan Documents have been terminated irrevocably,
Agent will, at Borrowers' sole expense, execute and deliver any UCC or PPSA
termination statements, lien releases, mortgage releases, re-assignments of
trademarks, discharges of security interests, and other similar discharge or
release documents (and, if applicable, in recordable form) as are reasonably
necessary to release, as of record, the Agent's Liens and all notices of
security interests and liens previously filed by Agent with respect to the
Obligations.
3.6. EARLY TERMINATION BY BORROWERS.
Borrowers have the option, at any time upon 90 days prior
written notice by Administrative Borrower to Agent, to terminate this Agreement
by paying to Agent, in cash, the Obligations (including (a) either (i) providing
cash collateral to be held by Agent for the benefit of those Lenders with a
Revolver Commitment in an amount equal to 105% of the then extant Letter of
Credit Usage, or (ii) causing the original Letters of Credit to be returned to
the Issuing Lender, and (b) providing cash collateral (in an amount determined
by Agent as sufficient to satisfy the reasonably estimated credit exposure) to
be held by Agent for the benefit of the Bank Product Providers with respect to
the then extant Bank Products Obligations), in full, together with the
Applicable Prepayment Premium (to be allocated based upon letter agreements
between Agent and individual Lenders). If Administrative Borrower has sent a
notice of termination pursuant to the provisions of this Section, then the
Commitments shall terminate and Borrowers shall be obligated to repay the
Obligations
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(including (a) either (i) providing cash collateral to be held by Agent for the
benefit of those Lenders with a Revolver Commitment in an amount equal to 105%
of the then extant Letter of Credit Usage, or (ii) causing the original Letters
of Credit to be returned to the Issuing Lender, and (b) providing cash
collateral (in an amount determined by Agent as sufficient to satisfy the
reasonably estimated credit exposure) to be held by Agent for the benefit of the
Bank Product Providers with respect to the then extant Bank Products
Obligations), in full, together with the Applicable Prepayment Premium, on the
date set forth as the date of termination of this Agreement in such notice. In
the event of the termination of this Agreement and repayment of the Obligations
at any time prior to the Maturity Date, for any other reason, including (a)
termination upon the election of the Required Lenders to terminate after the
occurrence and during the continuation of an Event of Default, (b) foreclosure
and sale of Collateral, (c) sale of the Collateral in any Insolvency Proceeding,
or (d) restructure, reorganization or compromise of the Obligations by the
confirmation of a plan of reorganization, or any other plan of compromise,
restructure, or arrangement in any Insolvency Proceeding, then, in view of the
impracticability and extreme difficulty of ascertaining the actual amount of
damages to the Lender Group or profits lost by the Lender Group as a result of
such early termination, and by mutual agreement of the parties as to a
reasonable estimation and calculation of the lost profits or damages of the
Lender Group, Borrowers shall pay the Applicable Prepayment Premium to Agent (to
be allocated based upon letter agreements between Agent and individual Lenders),
measured as of the date of such termination. To the extent that cash collateral
has been provided to Agent pursuant to the terms of this Section 3.6, upon the
expiration or cancellation of any outstanding Letters of Credit secured by such
cash collateral, Agent shall remit to Borrowers such unapplied cash collateral
relating to such canceled or expired Letter of Credit.
4. CREATION OF SECURITY INTEREST.
4.1. GRANT OF SECURITY INTEREST.
Each Grantor hereby grants to Agent, for the benefit of the
Lender Group and the Bank Product Providers, a continuing security interest in
all of its right, title, and interest in all currently existing and hereafter
acquired or arising Grantor Collateral in order to secure prompt repayment of
any and all of the Obligations in accordance with the terms and conditions of
the Loan Documents and in order to secure prompt performance by Grantors of each
of their covenants and duties under the Loan Documents. The Agent's Liens in and
to the Grantor Collateral shall attach to all Grantor Collateral without further
act on the part of Agent or Grantors. Anything contained in this Agreement or
any other Loan Document to the contrary notwithstanding, except for Permitted
Dispositions, Companies have no authority, express or implied, to dispose of any
item or portion of the Collateral.
4.2. NEGOTIABLE COLLATERAL.
In the event that any Grantor Collateral, including proceeds,
is evidenced by or consists of Negotiable Collateral, and if and to the extent
that Agent determines that perfection or priority of Agent's security interest
is dependent on or enhanced by possession,
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the applicable Grantor, immediately upon the request of Agent, shall endorse and
deliver physical possession of such Negotiable Collateral to Agent.
4.3. COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL.
At any time after the occurrence and during the continuation
of an Event of Default, Agent or Agent's designee may (a) notify Account Debtors
of Grantors that the Grantors' Accounts, chattel paper, or General Intangibles
have been assigned to Agent or that Agent has a security interest therein, or
(b) collect the Grantors' Accounts, chattel paper, or General Intangibles
directly and charge the collection costs and expenses to the Loan Account. Each
Grantor agrees that it will hold in trust for the Lender Group, as the Lender
Group's trustee, any of its or Collections that it receives and immediately will
deliver such Collections to Agent or a Cash Management Bank in their original
form as received by such Grantor.
4.4. FILING OF FINANCING STATEMENTS; COMMERCIAL TORT CLAIMS;
DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED.
(a) Grantors authorize Agent to file any financing
statement necessary or desirable to effectuate the transactions contemplated by
the Loan Documents, and any continuation statement or amendment with respect
thereto, in any appropriate filing office without the signature of Grantors
where permitted by applicable law. Grantors hereby ratify the filing of any
financing statement filed without the signature of Grantors prior to the date
hereof.
(b) If Grantors acquire any commercial tort claims after
the date hereof, Grantors shall promptly (but in any event within 10 Business
Days) upon any Grantor's initiation of any such action or proceeding to pursue
such claim, deliver to Agent a written description of such commercial tort claim
and shall deliver a written agreement, in form and substance satisfactory to
Agent, pursuant to which the applicable Grantor shall pledge and collaterally
assign all of its right, title and interest in and to such commercial tort claim
to Agent, as security for the Obligations (a "Commercial Tort Claim
Assignment").
(c) At any time upon the request of Agent, Grantors shall
execute or deliver to Agent any and all financing statements, original financing
statements in lieu of continuation statements, fixture filings, security
agreements, pledges, assignments, Commercial Tort Claim Assignments,
endorsements of certificates of title, and all other documents (collectively,
the "Additional Documents") that Agent may request in its Permitted Discretion,
in form and substance satisfactory to Agent, to create, perfect, and continue
perfected or to better perfect the Agent's Liens in the assets of Grantors
(whether now owned or hereafter arising or acquired, tangible or intangible,
real or personal), to create and perfect Liens in favor of Agent in any Real
Property acquired after the Closing Date, and in order to fully consummate all
of the transactions contemplated hereby and under the other Loan Documents. To
the maximum extent permitted by applicable law, each Grantor authorizes Agent to
execute any such Additional Documents in the applicable Grantor's
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name and authorizes Agent to file such executed Additional Documents in any
appropriate filing office. In addition, on such periodic basis as Agent shall
require, Grantors shall (i) provide Agent with a report of all new material
patentable, copyrightable, or trademarkable materials acquired or generated by
any Grantor during the prior period, (ii) cause all material patents,
copyrights, and trademarks acquired or generated by Grantors that are not
already the subject of a registration with the appropriate filing office (or an
application therefor diligently prosecuted) to be registered with such
appropriate filing office in a manner sufficient to impart constructive notice
of a Grantor's ownership thereof, and (iii) cause to be prepared, executed, and
delivered to Agent supplemental schedules to the applicable Loan Documents to
identify such patents, copyrights, and trademarks as being subject to the
security interests created thereunder.
4.5. POWER OF ATTORNEY.
Each Grantor hereby irrevocably makes, constitutes, and
appoints Agent (and any of Agent's officers, employees, or agents designated by
Agent) as such Grantor's true and lawful attorney, with power to (a) if such
Grantor refuses to, or fails timely to execute and deliver any of the documents
described in Section 4.4, sign the name of such Grantor on any of the documents
described in Section 4.4, (b) at any time that an Event of Default has occurred
and is continuing, sign such Grantor's name on any invoice or bill of lading
relating to the Grantor Collateral, drafts against Account Debtors, or notices
to Account Debtors, (c) send requests for verification of Grantors' Accounts,
(d) endorse such Grantor's name on any of its payment items (including all of
its Collections) that may come into the Lender Group's possession, (e) at any
time that an Event of Default has occurred and is continuing, make, settle, and
adjust all claims under such Grantor's policies of insurance and make all
determinations and decisions with respect to such policies of insurance, and (f)
at any time that an Event of Default has occurred and is continuing, settle and
adjust disputes and claims respecting Grantors' Accounts, chattel paper, or
General Intangibles directly with Account Debtors, for amounts and upon terms
that Agent determines to be reasonable, and Agent may cause to be executed and
delivered any documents and releases that Agent determines to be necessary. The
appointment of Agent as each Grantor's attorney, and each and every one of its
rights and powers, being coupled with an interest, is irrevocable until all of
the Obligations have been fully and finally repaid and performed and the Lender
Group's obligations to extend credit hereunder are terminated.
4.6. RIGHT TO INSPECT.
Agent and each Lender (through any of their respective
officers, employees, or agents) shall have the right, from time to time
hereafter to inspect the Books and make copies or abstracts thereof and to
check, test, and appraise the Collateral (including, without limitation, the
Recurring Revenue Business and Recurring Revenue Agreements), or any portion
thereof, in order to verify any Company's financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral.
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4.7. CONTROL AGREEMENTS.
Grantors agree that they will not transfer assets out of any
of their Deposit Accounts or Securities Accounts; provided, however, that so
long as no Event of Default has occurred and is continuing or would result
therefrom, Grantors may use such assets (and the proceeds thereof) to the extent
not prohibited by this Agreement or the other Loan Documents and, if the
transfer is to another bank or securities intermediary, so long as the
applicable Grantor, Agent, and the substitute bank or securities intermediary
have entered into a Control Agreement. Grantors agree that they will take any or
all reasonable steps that Agent requests in order for Agent to obtain control in
accordance with Sections 9-104, 9-105, 9-106, and 9-107 of the Code with respect
to any of its or their Securities Accounts, Deposit Accounts, electronic chattel
paper, Investment Property, and letter-of-credit rights. No arrangement
contemplated hereby or by any Control Agreement in respect of any Securities
Accounts or other Investment Property shall be modified by Grantors without the
prior written consent of Agent. Upon the occurrence and during the continuance
of a Default or Event of Default, Agent may notify any bank or securities
intermediary to liquidate the applicable Deposit Account or Securities Account
or any related Investment Property maintained or held thereby and remit the
proceeds thereof to the Agent's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this
Agreement, each Company makes the following representations and warranties to
the Lender Group which shall be true, correct, and complete, in all material
respects, as of the date hereof, and shall be true, correct, and complete, in
all material respects, as of the Closing Date, and at and as of the date of the
making of each Advance (or other extension of credit) made thereafter, as though
made on and as of the date of such Advance (or other extension of credit)
(except to the extent that such representations and warranties relate solely to
an earlier date) and such representations and warranties shall survive the
execution and delivery of this Agreement:
5.1. NO ENCUMBRANCES.
Each Company has good and indefeasible title to their personal
property assets and good and marketable title to their Real Property, in each
case, free and clear of Liens except for Permitted Liens.
5.2. INTENTIONALLY OMITTED.
5.3. INTENTIONALLY OMITTED.
5.4. EQUIPMENT.
All of the Equipment of each Company is used or held for use
in their business and is fit for such purposes. Schedule 5.4 is a list of all
owned vehicles of a Company as of the Closing Date.
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5.5. LOCATION OF INVENTORY AND EQUIPMENT.
Except for Inventory and Equipment of the Companies in an
aggregate amount not to exceed $500,000, the Inventory and Equipment of
Companies are not stored with a bailee, warehouseman, or similar party and are
located only at, or in-transit between, the locations identified on Schedule 5.5
(as such Schedule may be updated pursuant to Section 6.9).
5.6. INVENTORY RECORDS.
Each Company keeps records that are correct and accurate in
all material respects, itemizing and describing the type, quality, and quantity
of its Inventory and the book value thereof.
5.7. STATE OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE
OFFICE; FEIN; ORGANIZATIONAL ID NUMBER; COMMERCIAL TORT CLAIMS.
(a) The jurisdiction of organization of each Company and
each of its Subsidiaries is set forth on Schedule 5.7(a).
(b) The chief executive office of each Company and each
of its Subsidiaries is located at the address indicated on Schedule 5.7(b) (as
such Schedule may be updated pursuant to Section 6.9).
(c) Each Company's and each of its Subsidiaries' FEIN and
organizational identification number, if any, are identified on Schedule 5.7(c).
(d) As of the Closing Date, Companies and their
Subsidiaries do not hold any commercial tort claims of which they are aware or
which they are pursuing in proceedings, except as set forth on Schedule 5.7(d).
5.8. DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each Company is duly organized and existing and in
good standing under the laws of the jurisdiction of its organization and
qualified to do business in any state, province or territory where the failure
to be so qualified reasonably could be expected to have a Material Adverse
Change.
(b) Set forth on Schedule 5.8(b), is a complete and
accurate description of the authorized capital Stock of each Company, by class,
and, as of the Closing Date, a description of the number of shares of each such
class that are issued and outstanding. Other than as described on Schedule
5.8(b), there are no subscriptions, options, warrants, or calls relating to any
shares of each Company's capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Company is
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its capital Stock or any security convertible
into or exchangeable for any of its capital Stock.
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(c) Set forth on Schedule 5.8(c), is a complete and
accurate list of each Company's direct and indirect Subsidiaries, showing: (i)
the jurisdiction of their organization; (ii) the number of shares of each class
of common and preferred Stock authorized for each of such Subsidiaries; and
(iii) the number and the percentage of the outstanding shares of each such class
owned directly or indirectly by the applicable Company. All of the outstanding
capital Stock of each such Subsidiary has been validly issued and is fully paid
and non-assessable.
(d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of any
Company's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Company or any
of its respective Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any
Borrower's Subsidiaries' capital Stock or any security convertible into or
exchangeable for any such capital Stock.
5.9. DUE AUTHORIZATION; NO CONFLICT.
(a) As to each Company, the execution, delivery, and
performance by such Company of this Agreement and the other Loan Documents to
which it is a party have been duly authorized by all necessary action on the
part of such Company.
(b) As to each Company, the execution, delivery, and
performance by such Company of this Agreement and the other Loan Documents to
which it is a party do not and will not (i) violate any provision of federal,
state, provincial or local law or regulation applicable to any Company, the
Governing Documents of any Company, or any order, judgment, or decree of any
court or other Governmental Authority binding on any Company, (ii) conflict
with, result in a breach of, or constitute (with due notice or lapse of time or
both) a default under any material contractual obligation of any Company, (iii)
result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of Company, other than Permitted Liens,
or (iv) require any approval of any Company's interestholders or any approval or
consent of any Person under any material contractual obligation of any Company,
other than consents or approvals that have been obtained and that are still in
force and effect.
(c) Other than the filing of financing statements, and
the recordation of the Mortgages and the recordation of the Copyright Security
Agreement with the United States copyright office and the Patent Security
Agreement and Trademark Security Agreements with the United States Patent and
Trademark Office, the execution, delivery, and performance by each Company of
this Agreement and the other Loan Documents to which such Company is a party do
not and will not require any registration with, consent, or approval of, or
notice to, or other action with or by, any Governmental Authority, other than
consents or approvals that have been obtained and that are still in force and
effect.
(d) As to each Company, this Agreement and the other Loan
Documents to which such Company is a party, and all other documents contemplated
hereby and thereby,
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when executed and delivered by such Company will be the legally valid and
binding obligations of such Company, enforceable against such Company in
accordance with their respective terms, except as enforcement may be limited by
equitable principles or by bankruptcy, insolvency, reorganization, moratorium,
or similar laws relating to or limiting creditors' rights generally.
(e) The Agent's Liens are validly created, perfected, and
first priority Liens, subject only to Permitted Liens.
5.10. LITIGATION.
Other than those matters disclosed on Schedule 5.10, there are
no actions, suits, or proceedings pending or, to the best knowledge of
Companies, threatened against Companies, except for (a) matters that are fully
covered by insurance (subject to customary deductibles), and (b) matters arising
after the Closing Date that, if decided adversely to Companies reasonably could
not be expected to result in a Material Adverse Change.
5.11. NO MATERIAL ADVERSE CHANGE.
All financial statements relating to Companies that have been
delivered by Companies to the Lender Group have been prepared in accordance with
GAAP (except, in the case of unaudited financial statements, for the lack of
footnotes and being subject to year-end audit adjustments) and present fairly in
all material respects, Companies' financial condition as of the date thereof and
results of operations for the period then ended. There has not been a Material
Adverse Change with respect to Companies since the date of the latest financial
statements submitted to the Lender Group on or before the Closing Date.
5.12. FRAUDULENT TRANSFER.
(a) Each Company is Solvent.
(b) No transfer of property is being made by any Company
and no obligation is being incurred by any Company in connection with the
transactions contemplated by this Agreement or the other Loan Documents with the
intent to hinder, delay, or defraud either present or future creditors of
Companies.
5.13. EMPLOYEE BENEFITS.
(i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Benefit Plan has any unfunded pension liability which has
resulted or is reasonably expected to result in a Material Adverse Change; (iii)
none of the Companies nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability under Title IV of ERISA with respect to any
Benefit Plan (other than premiums due and not delinquent under Section 4007 of
ERISA) which has resulted or is reasonably expected to result in a Material
Adverse Change; (iv) none of the Companies nor any ERISA Affiliate has incurred,
or reasonably expects to incur, any liability (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would result in such
liability) under Sections 4201 or 4243 of
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ERISA with respect to a Multiemployer Plan which has resulted or is reasonably
expected to result in a Material Adverse Change; and (v) none of the Companies
nor, to the Companies' knowledge, any ERISA Affiliate, has engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.
5.14. ENVIRONMENTAL CONDITION.
Except as set forth on Schedule 5.14, (a) to Companies
knowledge, none of Companies' properties or assets has ever been used by
Companies or by previous owners or operators in the disposal of, or to produce,
store, handle, treat, release, or transport, any Hazardous Materials, where such
production, storage, handling, treatment, release or transport was in violation,
in any material respect, of applicable Environmental Law, (b) to Companies'
knowledge, none of Companies' properties or assets has ever been designated or
identified in any manner pursuant to any environmental protection statute as a
Hazardous Materials disposal site, (c) none of Companies have received notice
that a Lien arising under any Environmental Law has attached to any revenues or
to any Real Property owned or operated by Companies, and (d) none of Companies
have received a summons, citation, notice, or directive from the Environmental
Protection Agency or any other federal or state governmental agency concerning
any material action or omission by any Company resulting in the releasing or
disposing of Hazardous Materials into the environment.
5.15. BROKERAGE FEES.
Companies have not utilized the services of any broker or
finder in connection with obtaining financing from the Lender Group under this
Agreement and no brokerage commission or finders fee is payable by Companies in
connection herewith.
5.16. INTELLECTUAL PROPERTY.
Each Company owns, or holds licenses in, all trademarks, trade
names, copyrights, patents, patent rights, and licenses that are necessary to
the conduct of its business as currently conducted. Attached hereto as Schedule
5.16 (as updated from time to time) is a true, correct, and complete listing of
all material patents, patent applications, trademarks, trademark applications,
copyrights, and copyright registrations as to which each Company is the owner or
is an exclusive licensee. Schedule 5.16 sets forth all licenses (i) to which any
Company is a party as licensee and (ii) used by any Company in connection with
providing goods and/or services to its customers. Schedule 5.16 sets forth all
software owned by any Company that is sold or licensed by such Company to its
customers or used by any Company in connection with providing goods and/or
services to its customers.
5.17. LEASES.
Companies enjoy peaceful and undisturbed possession under all
leases material to their business and to which they are parties or under which
they are operating. All of such leases are valid and subsisting and no material
default by Companies exists under any of them.
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5.18. DDAs.
Set forth on Schedule 5.18 are all of Companies' Deposit
Accounts and Securities Accounts, including, with respect to each bank or
securities intermediary (i) the name and address of such Person, and (ii) the
account numbers of the Deposit Accounts or Securities Accounts maintained with
such Person.
5.19. COMPLETE DISCLOSURE.
All factual information (taken as a whole) furnished by or on
behalf of Companies in writing to Agent or any Lender (including all information
contained in the Schedules hereto or in the other Loan Documents) for purposes
of or in connection with this Agreement, the other Loan Documents or any
transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of Companies
in writing to the Agent or any Lender will be, true and accurate in all material
respects on the date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such information
(taken as a whole) not misleading in any material respect at such time in light
of the circumstances under which such information was provided. On the Closing
Date, the Closing Date Projections represent, and as of the date on which any
other Projections are delivered to Agent, such additional Projections represent
Companies' good faith best estimate of their future performance for the periods
covered thereby.
5.20. INDEBTEDNESS.
Set forth on Schedule 5.20 is a true and complete list of all
Indebtedness of each Company outstanding immediately prior to the Closing Date
that is to remain outstanding after the Closing Date and such Schedule
accurately reflects the aggregate principal amount of such Indebtedness and the
principal terms thereof.
5.21. RECURRING REVENUE AGREEMENTS.
At least 90% of the Recurring Revenue for the most recently
ended 6 calendar month period are Qualified. For purposes hereof, "Qualified"
means that it arose under Recurring Revenue Agreements in substantially the form
of the agreement attached hereto as Schedule 5.21(a) or as such form has been
amended or modified in a manner favorable to the Recurring Revenue Service
Provider but only so long as such amendment or modification does not adversely
affect the appraised value of such agreement. None of the agreements (x) listed
on Schedule 5.21(b); or (y) acquired by Parent from NetCom Systems, Inc.
("NetCom") pursuant to the terms of that certain Asset Purchase Agreement dated
as of February 28, 2003 by and between Parent and Netcom; or (z) acquired by
Communications (US) from Dukane Corporation ("Dukane") pursuant to the terms of
that certain Asset Purchase Agreement dated as of May 17, 2002 by and between
Communication (US) and Dukane are Recurring Revenue Agreements.
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5.22. PAYMENTS TO EMPLOYEES AND OTHERS.
Communications (Canada) has paid or accrued as a liability on
the books of Communications (Canada), all material payments due from
Communications (Canada) to any employee, independent contractor, Person or
Governmental Authority on account of workers' compensation, wages or other
compensation and, as applicable, employee health and welfare insurance and
benefit.
5.23. WITHHOLDINGS AND REMITTANCES.
Communications (Canada) has withheld from each payment made to
any of its present or former employees, officers and directors, and to all
persons who are nonresidents of Canada for the purposes of the Canadian Income
Tax Act all amounts required by Law to be withheld, including all payroll
deductions required to be withheld, and furthermore, has remitted such withheld
amounts within the prescribed periods to the appropriate Governmental Authority.
Communications (Canada) has remitted all Canada Pension Plan contributions,
provincial pension plan contributions, workers compensation assessments,
employment insurance premiums, employer health taxes, municipal real estate
taxes and other taxes payable under the Applicable Law by it (the "Statutory
Lien Payments") and has remitted such amounts to the proper Governmental
Authority within the time required under the Applicable Law.
5.24. TUCKAHOE FILING.
The obligations owing to Tuckahoe Leasing Inc. that were
secured by filing number 059430609, registration number 19940414 1214 0043 7542,
filed in Ontario, Canada (the "Tuckahoe Filing") have been paid in full and the
Tuckahoe Filing is no longer in effect and does not create a Lien on any of the
assets of any Company.
6. AFFIRMATIVE COVENANTS.
Each Company covenants and agrees that, until termination of
all of the Commitments and payment in full of the Obligations, Companies shall
do all of the following:
6.1. ACCOUNTING SYSTEM.
Maintain a system of accounting that enables Companies to
produce financial statements in accordance with GAAP and maintain records
pertaining to the Collateral that contain information as from time to time
reasonably may be requested by Agent. Companies also shall keep an inventory
reporting system that shows all additions, sales, claims, returns, and
allowances with respect to their Inventory.
6.2. COLLATERAL REPORTING.
Provide Agent (and if so requested by Agent, with copies for
each Lender) with the following documents at the following times in form
satisfactory to Agent:
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Daily (a) at Agent's discretion, a sales journal, collection
journal, and credit register since the last such
schedule, a report regarding credit memoranda that
have been issued since the last such report, and a
calculation of the Borrowing Base as of such date,
and
(b) at Agent's discretion, notice of all claims, offsets,
or disputes asserted by Account Debtors with respect
to Companies' Accounts.
Monthly (not (c) a detailed calculation of the Recurring Revenue for
later than the the preceding 6 calendar month period (on a month by
20th day of each month basis),
month)
(d) a detailed calculation of the Borrowing Base,
(e) a detailed aging, by total, of the Accounts of
Companies,
(f) a summary aging, by vendor, of Companies accounts
payable and any book overdraft, and
(g) a detailed report regarding Companies' cash and Cash
Equivalents including an indication of which amounts
constitute Qualified Cash.
Quarterly (i) upon Agent's request, a detailed list of each
Company's customers, and
(j) a report regarding each Company's accrued, but
unpaid, ad valorem taxes.
Upon request by (k) copies of invoices in connection with Companies'
Agent Accounts, credit memos, remittance advices, deposit
slips, shipping and delivery documents in connection
with Companies' Accounts and, for Inventory and
Equipment acquired by Companies, purchase orders and
invoices, and
(l) such other reports as to the Collateral or the
financial condition of Companies, as Agent may
request.
In addition, each Company agrees to cooperate fully with Agent
to facilitate and implement a system of electronic collateral reporting in order
to provide electronic reporting of each of the items set forth above.
6.3. FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
Deliver to Agent, with copies to each Lender:
(a) as soon as available, but in any event within 30 days
(45 days in the case of a month that is the end of one of Parent's fiscal
quarters) after the end of each month during each of Parent's fiscal years,
(i) a company prepared consolidated balance
sheet, income statement, and statement of cash flow covering Parent's
and its Subsidiaries' operations during such period,
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(ii) a certificate signed by the chief financial
officer of Parent to the effect that:
(A) the financial statements delivered
hereunder have been prepared in accordance with GAAP (except
for the lack of footnotes and being subject to year-end audit
adjustments) and fairly present in all material respects the
financial condition of Parent and its Subsidiaries,
(B) the representations and warranties
of Companies contained in this Agreement and the other Loan
Documents are true and correct in all material respects on and
as of the date of such certificate, as though made on and as
of such date (except to the extent that such representations
and warranties relate solely to an earlier date), and
(C) there does not exist any condition
or event that constitutes a Default or Event of Default (or,
to the extent of any non-compliance, describing such
non-compliance as to which he or she may have knowledge and
what action Companies have taken, are taking, or propose to
take with respect thereto), and
(iii) for each month that is the date on which a
financial covenant in Section 7.18 is to be tested, a Compliance
Certificate demonstrating, in reasonable detail, compliance at the end
of such period with the applicable financial covenants contained in
Section 7.18,
(b) as soon as available, but in any event within 90 days
after the end of each of Parent's fiscal years,
(i) financial statements of Parent and its
Subsidiaries for each such fiscal year, audited by independent
certified public accountants reasonably acceptable to Agent
and certified, without any qualifications, by such accountants
to have been prepared in accordance with GAAP (such audited
financial statements to include a balance sheet, income
statement, and statement of cash flow and, if prepared, such
accountants' letter to management), and
(ii) a certificate of such accountants addressed
to Agent and the Lenders stating that such accountants do not
have knowledge of the existence of any Default or Event of
Default under Section 7.17,
(c) as soon as available, but in any event within 30 days
prior to the start of each of Parent's fiscal years, copies of Companies'
Projections (which shall not necessarily include the final budget), in form and
substance (including as to scope and underlying assumptions) satisfactory to
Agent, in its sole discretion, for the forthcoming two years, year by year, and
for the forthcoming fiscal year, month by month, certified by the chief
financial officer of Parent as being such officer's good faith best estimate of
the financial performance
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of Parent and its Subsidiaries during the period covered thereby; and within 30
days after end of each of Parent's fiscal years, the final budget prepared in
same manner as the Projections.
(d) if and when filed by any Company,
(i) 10-Q quarterly reports, Form 10-K annual
reports, and Form 8-K current reports,
(ii) any other filings made by any Company with
the SEC,
(iii) copies of Companies' federal income tax
returns, and any amendments thereto, filed with the Internal Revenue
Service, and
(iv) any other information that is provided by
Parent to its shareholders generally,
(e) if and when filed by any Company and as requested by
Agent, satisfactory evidence of payment of applicable excise taxes in each
jurisdiction in which (i) any Company conducts business or is required to pay
any such excise tax, (ii) where any Company's failure to pay any such applicable
excise tax would result in a Lien on the properties or assets of such Company,
or (iii) where any Company's failure to pay any such applicable excise tax
reasonably could be expected to result in a Material Adverse Change,
(f) as soon as a Company has knowledge of any event or
condition that constitutes a Default or an Event of Default, notice thereof and
a statement of the curative action that Companies propose to take with respect
thereto,
(g) promptly after the commencement thereof, but in any
event within 5 days after the service of process with respect thereto on any
Company, notice of all actions, suits, or proceedings brought by or against any
Company before any Governmental Authority which, if determined adversely to such
Company, reasonably could be expected to result in a Material Adverse Change,
and
(h) upon the request of Agent, any other report
reasonably requested relating to the financial condition of Companies.
In addition to the financial statements referred to above,
Companies agree to deliver financial statements prepared on both a consolidated
and consolidating basis and agree that no Subsidiary of Parent will have a
fiscal year different from that of Parent. Companies agree to cooperate with
Agent to allow Agent to consult with their independent certified public
accountants if Agent reasonably requests the right to do so and that, in such
connection, their independent certified public accountants are authorized to
communicate with Agent and to release to Agent whatever financial information
concerning Companies or their Subsidiaries that Agent reasonably may request.
6.4. FAILURE TO RENEW.
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Notify the Agent promptly if either Parent or Siemens
Information and Communication Networks, Inc. notifies the other party that it
does not wish to renew the Siemen's Agreement.
6.5. RETURNS.
Cause returns and allowances as between Companies and their
Account Debtors, to be on the same basis and in accordance with the usual
customary practices of Companies, as they exist at the time of the execution and
delivery of this Agreement.
6.6. MAINTENANCE OF PROPERTIES.
Maintain and preserve all of their properties which are
necessary or useful in the proper conduct to their business in good working
order and condition, ordinary wear and tear excepted, and comply at all times
with the provisions of all leases to which it is a party as lessee, so as to
prevent any loss or forfeiture thereof or thereunder.
6.7. TAXES.
Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Companies
or any of their respective assets to be paid in full, before delinquency or
before the expiration of any extension period, except to the extent that the
validity of such assessment or tax shall be the subject of a Permitted Protest.
Companies will make timely payment or deposit of all tax payments and
withholding taxes required of them by Applicable Law, including the Canadian
Income Tax Act, Statutory Lien Payments and those laws concerning F.I.C.A.,
F.U.T.A., state disability, and local, state, provincial and federal income
taxes, and will, upon request, furnish Agent with proof satisfactory to Agent
indicating that the applicable Company has made such payments or deposits.
6.8. INSURANCE.
(a) At Borrowers' expense, maintain insurance respecting
their and their Subsidiaries' assets wherever located, covering loss or damage
by fire, theft, explosion, and all other hazards and risks as ordinarily are
insured against by other Persons engaged in the same or similar businesses.
Companies also shall maintain business interruption, public liability, and
product liability insurance, as well as insurance against larceny, embezzlement,
and criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Agent. Companies shall deliver copies of all such policies to Agent with a
satisfactory lender's loss payable endorsement naming Agent as sole loss payee
or additional insured, as appropriate. Each policy of insurance or endorsement
shall contain a clause requiring the insurer to give not less than 60 days prior
written notice to Agent in the event of cancellation of the policy for any
reason whatsoever.
(b) Administrative Borrower shall give Agent prompt
notice of any loss covered by such insurance. Agent shall have the exclusive
right to adjust any losses claimed
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under any such insurance policies in excess of $200,000 (or in any amount after
the occurrence and during the continuation of an Event of Default), without any
liability to Companies whatsoever in respect of such adjustments. Any monies
received as payment for any loss under any insurance policy mentioned above
(other than liability insurance policies) or as payment of any award or
compensation for condemnation or taking by eminent domain, shall be paid over to
Agent to be applied at the option of the Required Lenders either to the
prepayment of the Obligations or shall be disbursed to Administrative Borrower
under staged payment terms reasonably satisfactory to the Required Lenders for
application to the cost of repairs, replacements, or restorations. Any such
repairs, replacements, or restorations shall be effected with reasonable
promptness and shall be of a value at least equal to the value of the items or
property destroyed prior to such damage or destruction.
(c) Companies shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained under this Section 6.8, unless Agent is included thereon as named
insured with the loss payable to Agent under a lender's loss payable endorsement
or its equivalent. Administrative Borrower immediately shall notify Agent
whenever such separate insurance is taken out, specifying the insurer thereunder
and full particulars as to the policies evidencing the same, and copies of such
policies promptly shall be provided to Agent.
6.9. LOCATION OF INVENTORY AND EQUIPMENT.
Except for Inventory and Equipment of the Companies in an
aggregate amount not to exceed $500,000, keep Companies' Inventory and Equipment
only at the locations identified on Schedule 5.5 and their chief executive
offices only at the locations identified on Schedule 5.7(b); provided, however,
that Administrative Borrower may amend Schedule 5.5 and Schedule 5.7 so long as
such amendment occurs by written notice to Agent not less than 30 days prior to
the date on which such Inventory or Equipment is moved to such new location or
such chief executive office is relocated, so long as such new location is within
the continental United States or Canada, and so long as, at the time of such
written notification, the applicable Company uses its best efforts to provide
Agent a Collateral Access Agreement with respect thereto.
6.10. COMPLIANCE WITH LAWS.
Comply with the requirements of all applicable laws, rules,
regulations, and orders of any Governmental Authority, including the Fair Labor
Standards Act and the Americans With Disabilities Act (and, in each case, any
Canadian equivalent, as the case may be, for each jurisdiction in which such
Company conducts business), other than laws, rules, regulations, and orders the
non-compliance with which, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Change.
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6.11. LEASES.
Pay when due all rents and other amounts payable under any
leases to which any Company is a party or by which any Company's properties and
assets are bound, unless such payments are the subject of a Permitted Protest.
6.12. EXISTENCE.
At all times preserve and keep in full force and effect each
Company's valid existence and good standing and any rights and franchises
material to their businesses.
6.13. ENVIRONMENTAL.
(a) Keep any property either owned or operated by any
Company free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to Agent documentation of such compliance which Agent
reasonably requests, (c) promptly notify Agent of any release of a Hazardous
Material of any reportable quantity from or onto property owned or operated by
any Company and take any Remedial Actions required to abate said release or
otherwise to come into compliance with applicable Environmental Law, and (d)
promptly, but in any event within 5 days of its receipt thereof, provide Agent
with written notice of any of the following: (i) notice that an Environmental
Lien has been filed against any of the real or personal property of any Company,
(ii) commencement of any Environmental Action or notice that an Environmental
Action will be filed against any Company, and (iii) notice of a violation,
citation, or other administrative order which reasonably could be expected to
result in a Material Adverse Change.
6.14. DISCLOSURE UPDATES.
Promptly and in no event later than 5 Business Days after
obtaining knowledge thereof, notify Agent if any written information, exhibit,
or report furnished to the Lender Group contained any untrue statement of a
material fact or omitted to state any material fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which made. The foregoing to the contrary notwithstanding, any notification
pursuant to the foregoing provision will not cure or remedy the effect of the
prior untrue statement of a material fact or omission of any material fact nor
shall any such notification have the affect of amending or modifying this
Agreement or any of the Schedules hereto.
6.15. FORMATION OF SUBSIDIARIES.
At the time that any Company forms any direct or indirect
Subsidiary or acquires any direct or indirect Subsidiary after the Closing Date,
such Company shall (a) cause such new Subsidiary to provide to Agent a joinder
to this Agreement or a Guarantee and a security agreement, together with such
other security documents (including Mortgages with respect to any Real Property
of such new Subsidiary), as well as appropriate
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UCC-1 and PPSA financing statements (and with respect to all property subject to
a mortgage, fixture filings), all in form and substance satisfactory to Agent
(including being sufficient to grant Agent a first priority Lien (subject to
Permitted Liens) in and to the assets of such newly formed or acquired
Subsidiary), (b) provide to Agent a pledge agreement and appropriate
certificates and powers or UCC-1 and PPSA financing statements, hypothecating
all of the direct or beneficial ownership interest in such new Subsidiary, in
form and substance satisfactory to Agent, and (c) provide to Agent all other
documentation, including one or more opinions of counsel satisfactory to Agent,
which in its opinion is appropriate with respect to the execution and delivery
of the applicable documentation referred to above (including policies of title
insurance or other documentation with respect to all property subject to a
mortgage). Any document, agreement, or instrument executed or issued pursuant to
this Section 6.15 shall be a Loan Document. Nothing contained in this Section
6.15 shall constitute a consent by the Lender Group to the formation or
acquisition of a Subsidiary by a Company.
6.16. RECURRING REVENUE AGREEMENTS.
Each Recurring Revenue Service Provider shall notify Agent if
it enters into a Recurring Revenue Agreement after the Closing Date that is not
Qualified pursuant to Section 5.21 if (a) the Recurring Revenue arising
thereunder will exceed $100,000 in any 6 calendar month period and (b) the
aggregate amount of Recurring Revenue arising under all such agreements entered
after the Closing Date exceeds $1,000,000 at any time.
6.17. OPERATIONS OF NORSTAN FINANCIAL.
Norstan Financial shall continue to wind down its business
operations in the same manner as it is being wound down as the date hereof.
6.18. EMPLOYEE BENEFITS.
The Parent will maintain, and cause each Subsidiary to
maintain, each Plan in compliance with all material applicable requirements of
ERISA and of the Code and with all material applicable rulings and regulations
issued under the provisions of ERISA and of the Code and will not and not permit
any of the ERISA Affiliates to (a) engage in any transaction in connection with
which the Borrower or any of the ERISA Affiliates would be subject to either a
civil penalty assessed pursuant to Section 502(i) or ERISA or a tax imposed by
Section 4975 of the Code, in either case in an amount exceeding $50,000, (b)
fail to make full payment when due of all amounts which, under the provisions of
any Plan, the Borrower or any ERISA Affiliate is required to pay as
contributions thereto, or permit to exist any accumulated funding deficiency (as
such term is defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, with respect to any Plan in an aggregate amount exceeding
$100,000 or (c) fail to make any payments in an aggregate amount exceeding
$100,000 to any Multiemployer Plan that the Borrower or any of the ERISA
Affiliates may be required to make under any agreement relating to such
Multiemployer Plan or any law pertaining thereto.
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7. NEGATIVE COVENANTS.
Each Company covenants and agrees that, until termination of
all of the Commitments and payment in full of the Obligations, Companies will
not do any of the following:
7.1. INDEBTEDNESS.
Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness (including, without limitation, Contingent Obligations), except:
(a) Indebtedness evidenced by this Agreement and the
other Loan Documents, together with Indebtedness owed to Underlying Issuers with
respect to Underlying Letters of Credit;
(b) Indebtedness set forth on Schedule 5.20;
(c) Permitted Purchase Money Indebtedness;
(d) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b) and (c) of this Section 7.1 (and continuance or
renewal of any Permitted Liens associated therewith) so long as: (i) the terms
and conditions of such refinancings, renewals, or extensions do not, in Agent's
judgment, materially impair the prospects of repayment of the Obligations by
Companies or materially impair Companies' creditworthiness, (ii) such
refinancings, renewals, or extensions do not result in an increase in the then
extant principal amount of, or interest rate with respect to, the Indebtedness
so refinanced, renewed, or extended or add one or more Companies as liable with
respect thereto if such additional Companies were not liable with respect to the
original Indebtedness, (iii) such refinancings, renewals, or extensions do not
result in a shortening of the average weighted maturity of the Indebtedness so
refinanced, renewed, or extended, nor are they on terms or conditions, that,
taken as a whole, are materially more burdensome or restrictive to the
applicable Company, (iv) if the Indebtedness that is refinanced, renewed, or
extended was subordinated in right of payment to the Obligations, then the terms
and conditions of the refinancing, renewal, or extension Indebtedness must be
include subordination terms and conditions that are at least as favorable to the
Lender Group as those that were applicable to the refinanced, renewed, or
extended Indebtedness, and (v) the Indebtedness that is refinanced, renewed, or
extended is not recourse to any Person that is liable on account of the
Obligations other than those Persons which were obligated with respect to the
Indebtedness that was refinanced, renewed, or extended;
(e) endorsement of instruments or other payment items for
deposit;
(f) Indebtedness composing Permitted Investments;
(g) Indebtedness existing on the date hereof secured by
Norstan Financial Lease Accounts or Communications (Canada) Lease Accounts and
related leases and
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equipment and disclosed on Schedule 7.1(g), but not including any extension or
refinancing thereof;
(h) Indebtedness secured by Liens permitted under Section
7.2 hereof;
(i) Indebtedness of Borrowers for wire transfers and
daylight overdrafts;
(j) Permitted Contingent Obligations; and
(k) other unsecured Indebtedness in an aggregate
principal amount not exceeding $250,000 outstanding at any time.
7.2. LIENS.
Create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3. RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation, reorganization,
or recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution).
(c) Convey, sell, lease, license, assign, transfer, or
otherwise dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets except for Permitted Dispositions.
(d) Notwithstanding the foregoing, any Subsidiary may be
merged with or liquidated into Parent or any Subsidiary so long as Parent or
such Company is the surviving corporation; provided, that Norstan Financial
shall not be merged with or liquidated into another Company.
7.4. DISPOSAL OF ASSETS.
Other than Permitted Dispositions, convey, sell, lease,
license, assign, transfer, or otherwise dispose of any of the assets of any
Company.
7.5. CHANGE NAME.
Change any Company's name, FEIN, organizational identification
number, state of organization, or organizational identity; provided, however,
that a Company may change its name upon at least 30 days prior written notice by
Administrative Borrower to
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Agent of such change and so long as, at the time of such written notification,
such Company provides any financing statements necessary to perfect and continue
perfected Agent's Liens.
7.6. NATURE OF BUSINESS.
Make any change in the principal nature of their business.
7.7. PREPAYMENTS AND AMENDMENTS.
Except in connection with a refinancing permitted by Section
7.1(d),
(a) prepay, redeem, defease, purchase, or otherwise
acquire any Indebtedness of any Company, other than the Obligations in
accordance with this Agreement, or
(b) directly or indirectly, amend, modify, alter,
increase, or change any of the terms or conditions of any agreement, instrument,
document, indenture, or other writing evidencing or concerning Indebtedness
permitted under Section 7.1(b) or (c).
7.8. CHANGE OF CONTROL.
Cause, permit, or suffer, directly or indirectly, any Change
of Control.
7.9. CONSIGNMENTS.
Consign any of their Inventory or sell any of their Inventory
on bill and hold, sale or return, sale on approval, or other conditional terms
of sale (except for lease agreements with options to buy in the ordinary course
of business).
7.10. DISTRIBUTIONS.
Other than distributions or declaration and payment of
dividends by a Company to another Company, make any distribution or declare or
pay any dividends (in cash or other property, other than common Stock) on, or
purchase, acquire, redeem, or retire any of any Company's Stock, of any class,
whether now or hereafter outstanding.
7.11. ACCOUNTING METHODS.
Modify or change their fiscal year or their method of
accounting (other than as may be required to conform to GAAP) or enter into,
modify, or terminate any agreement currently existing, or at any time hereafter
entered into with any third party accounting firm or service bureau for the
preparation or storage of Companies' accounting records without said accounting
firm or service bureau agreeing to provide Agent information regarding
Companies' financial condition.
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7.12. INVESTMENTS.
Except for Permitted Investments, directly or indirectly, make
or acquire any Investment, or incur any liabilities (including Contingent
Obligations) for or in connection with any Investment; provided, however, that a
Company shall not have Permitted Investments (other than in the Cash Management
Accounts) in Deposit Accounts or Securities Accounts in an aggregate amount in
excess of $100,000 outstanding at any one time unless such Company and the
applicable securities intermediary or bank have entered into Control Agreements
or similar arrangements governing such Permitted Investments in order to perfect
(and further establish) the Agent's Liens in such Permitted Investments. Subject
to the foregoing proviso, Companies shall not establish or maintain any Deposit
Account or Securities Account unless Agent shall have received a Control
Agreement in respect of such Deposit Account or Securities Account.
7.13. TRANSACTIONS WITH AFFILIATES.
Directly or indirectly enter into or permit to exist any
transaction with any Affiliate of any Company except for transactions that are
in the ordinary course of Companies' business, upon fair and reasonable terms,
that are fully disclosed to Agent, and that are no less favorable to Companies
than would be obtained in an arm's length transaction with a non-Affiliate;
provided, that nothing contained in this Section 7.13 shall prohibit any Company
from making (a) a disposition of the kind described in clause (e) of the
definition of Permitted Dispositions or (b) an Investment of the kind described
in clause (g) of the definition of Permitted Investments.
7.14. SUSPENSION.
Suspend or go out of a substantial portion of their business.
7.15. COLLATERAL IN QUEBEC.
At no time shall any Company have assets with a fair market
value in excess of $500,000 located in Quebec.
7.16. USE OF PROCEEDS.
Use the proceeds of the Advances and the Term Loan for any
purpose other than (a) on the Closing Date, (i) to repay in full the outstanding
principal, accrued interest, and accrued fees and expenses owing to Existing
Lender, and (ii) to pay transactional fees, costs, and expenses incurred in
connection with this Agreement, the other Loan Documents, and the transactions
contemplated hereby and thereby, and (b) thereafter, consistent with the terms
and conditions hereof, for its lawful and permitted purposes.
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7.17. INVENTORY AND EQUIPMENT WITH BAILEES.
Store any Inventory or Equipment of Companies with an
aggregate value in excess of $500,000 at any time now or hereafter with a
bailee, warehouseman, or similar party without Agent's prior written consent.
7.18. FINANCIAL COVENANTS.
(a) Fail to maintain or achieve, on a consolidated basis:
(i) MINIMUM EBITDA. EBITDA, measured on a
month-end basis, of at least the required amount set forth in the
following table for the applicable period set forth opposite thereto:
Applicable Amount Applicable Period
- ----------------- -----------------
$ 2,200,000 For the 3 month period ending January 31, 2004
$ 5,800,000 For the 6 month period ending April 30, 2004
$ 8,400,000 For the 9 month period ending July 31, 2004
$10,900,000 For the 12 month period ending October 31, 2004
$11,000,000 For the 12 month period ending January 31, 2005
$10,400,000 For the 12 month period ending April 30, 2005
$10,400,000 For the 12 month period ending each fiscal quarter
thereafter
(b) Make, on a consolidated basis:
(i) CAPITAL EXPENDITURES. Capital expenditures
in any fiscal year in excess of the amount set forth in the following
table for the applicable period:
Each Fiscal Year
Fiscal Year 2004 Fiscal Year 2005 thereafter
- ---------------- ---------------- ----------
$7,600,000 $7,200,000 $7,200,000
(c) Fail to maintain or achieve at all times the sum of
(a) Excess Availability, plus (b) Qualified Cash of at least $2,000,000.
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7.19. SUBSIDIARIES.
Establish, create or acquire any new Subsidiary without
Agent's prior written consent.
7.20. COPYRIGHTS.
Register with the applicable federal filing office (a) any
copyrights or any works protectable by copyrights (including the initial
versions thereof) or (b) any changes to copyrights that have already been
registered by such Person with the applicable federal filing office, unless, in
each case, Administrative Borrower shall provide at least 30 days prior written
notice to Agent of any such registration such that Agent may perfect its Lien on
such registration.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an
event of default (each, an "Event of Default") under this Agreement:
8.1 If Companies fail to pay when due and payable or when
declared due and payable, all or any portion of the Obligations (whether of
principal, interest (including any interest which, but for the provisions of the
Bankruptcy Code, would have accrued on such amounts), fees and charges due the
Lender Group, reimbursement of Lender Group Expenses, or other amounts
constituting Obligations);
8.2 If any Company:
(a) fails to perform, keep, or observe any term,
provision, covenant, or agreement contained in Sections 2.7, 3.2, 4.2, 4.4, 4.6,
6.4, 6.8, 6.12, 6.15, 6.16 and 7.1 through 7.19 of this Agreement;
(b) fails or neglects to perform, keep, or observe any
term, provision, covenant, or agreement contained in Sections 4.5, 6.2, 6.3,
6.5, 6.6, 6.7, 6.9, 6.10, 6.12, and 6.14 of this Agreement and such failure
continues for a period of 5 Business Days; or
(c) fails or neglects to perform, keep, or observe any
other term, provision, covenant, or agreement contained in this Agreement, or in
any of the other Loan Documents (giving effect to any grace periods, cure
periods, or required notices, if any, expressly provided for in such Loan
Documents); in each case, other than any such term, provision, covenant, or
agreement that is the subject of another provision of this Section 8 (in which
event such other provision of this Section 8 shall govern), and such failure
continues for a period of 10 Business Days;
provided that, during any period of time that any such failure or neglect
referred to in this paragraph exists, even if such failure or neglect is not yet
an Event of Default, Agent and each Lender shall be relieved of its obligation
to extend credit hereunder.
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8.3 If any material portion of any Company's assets is
attached, seized, subjected to a writ or distress warrant, levied upon, or comes
into the possession of any third Person;
8.4 If an Insolvency Proceeding is commenced by any
Company;
8.5 If an Insolvency Proceeding is commenced against any
Company, and any of the following events occur: (a) the applicable Company
consents to the institution of the Insolvency Proceeding against it, (b) the
petition commencing the Insolvency Proceeding is not timely controverted;
provided, however, that, during the pendency of such period, each member of the
Lender Group shall be relieved of its obligations to extend credit hereunder,
(c) the petition commencing the Insolvency Proceeding is not dismissed within 45
calendar days of the date of the filing thereof; provided, however, that, during
the pendency of such period, each member of the Lender Group shall be relieved
of its obligation to extend credit hereunder, (d) an interim trustee is
appointed to take possession of all or any substantial portion of the properties
or assets of, or to operate all or any substantial portion of the business of,
any Company, or (e) an order for relief shall have been entered therein;
8.6 If any Company is enjoined, restrained, or in any way
prevented by court order from continuing to conduct all or any material part of
its business affairs;
8.7 If a notice of Lien, levy, or assessment is filed of
record with respect to any Company's assets by the United States, Canada or any
department, agency, or instrumentality thereof, or by any state, province,
county, municipal, or governmental agency, or if any taxes or debts owing at any
time hereafter to any one or more of such entities becomes a Lien, whether
choate or otherwise, upon any Company's assets and the same is not paid before
such payment is delinquent;
8.8 If a judgment or other claim becomes a Lien or
encumbrance upon any material portion of any Company's properties or assets;
8.9 If there is a default in any material agreement to
which any Company is a party including, without limitation, the Siemen's
Agreement, and such default (a) occurs at the final maturity of the obligations
thereunder, or (b) results in a right by the other party thereto, irrespective
of whether exercised, to accelerate the maturity of the applicable Company's
obligations thereunder, or to terminate such agreement or if the Siemen's
Agreement is terminated;
8.10 If any Company makes any payment on account of
Indebtedness that has been contractually subordinated in right of payment to the
payment of the Obligations, except to the extent such payment is permitted by
the terms of the subordination provisions applicable to such Indebtedness;
8.11 If any material misstatement or misrepresentation
exists now or hereafter in any warranty, representation, statement, or Record
made to the Lender Group by any Company or any officer, employee, agent, or
director of any Company;
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8.12 If the obligations of Communications (Canada) under
the Canadian Guarantee are limited or terminated by operation of law or by
Communications (Canada) thereunder;
8.13 If the obligations of U.S. Credit Parties under the
U.S. Credit Party Guarantee are limited or terminated by operation of law or by
any U.S. Credit Party thereunder;
8.14 If this Agreement or any other Loan Document that
purports to create a Lien, shall, for any reason, fail or cease to create a
valid and perfected and, except to the extent permitted by the terms hereof or
thereof, first priority Lien on or security interest in the Collateral covered
hereby or thereby; or
8.15 Any material provision of any Loan Document shall at
any time for any reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by any Company, or a proceeding shall
be commenced by any Company, or by any Governmental Authority having
jurisdiction over any Company, seeking to establish the invalidity or
unenforceability thereof, or any Company shall deny that it has any liability or
obligation purported to be created under any Loan Document.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1. RIGHTS AND REMEDIES.
Upon the occurrence, and during the continuation, of an Event
of Default, the Required Lenders (at their election but without notice of their
election and without demand) may authorize and instruct Agent to do any one or
more of the following on behalf of the Lender Group (and Agent, acting upon the
instructions of the Required Lenders, shall do the same on behalf of the Lender
Group), all of which are authorized by Companies:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable;
(b) Cease advancing money or extending credit to or for
the benefit of Borrowers under this Agreement, under any of the Loan Documents,
or under any other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of the Lender Group, but
without affecting any of the Agent's Liens in the Collateral and without
affecting the Obligations;
(d) Settle or adjust disputes and claims directly with
Grantor's Account Debtors for amounts and upon terms which Agent considers
advisable, and in such cases, Agent will credit the Loan Account with only the
net amounts received by Agent in payment of such disputed Accounts after
deducting all Lender Group Expenses incurred or expended in connection
therewith;
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(e) Cause Grantors' to hold all of their returned
Inventory in trust for the Lender Group and segregate all such Inventory from
all other assets of Grantors or in Grantors' possession;
(f) Without notice to or demand upon any Grantor, make
such payments and do such acts as Agent considers necessary or reasonable to
protect its security interests in the Collateral. Each Grantor agrees to
assemble the Collateral if Agent so requires, and to make the Collateral
available to Agent at a place that Agent may designate which is reasonably
convenient to both parties. Each Grantor authorizes Agent to enter the premises
where the Collateral is located, to take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest, or compromise any
Lien that in Agent's determination appears to conflict with the Agent's Liens in
and to the Collateral and to pay all expenses incurred in connection therewith
and to charge Borrowers' Loan Account therefor. With respect to any of Grantors'
owned or leased premises, each Grantor hereby grants Agent a license to enter
into possession of such premises and to occupy the same, without charge, in
order to exercise any of the Lender Group's rights or remedies provided herein,
at law, in equity, or otherwise;
(g) Without notice to any Company (such notice being
expressly waived), and without constituting an acceptance of any collateral in
full or partial satisfaction of an obligation (within the meaning of the Code),
set off and apply to the Obligations any and all (i) balances and deposits of
any Company held by the Lender Group (including any amounts received in the Cash
Management Accounts or Collection Accounts), or (ii) Indebtedness at any time
owing to or for the credit or the account of any Company held by the Lender
Group;
(h) Hold, as cash collateral, any and all balances and
deposits of any Company held by the Lender Group, and any amounts received in
the Cash Management Accounts, to secure the full and final repayment of all of
the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Grantor Collateral. Each Grantor hereby grants to Agent a
license or other right to use, without charge, such Grantor's labels, patents,
copyrights, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to the
Grantor Collateral, in completing production of, advertising for sale, and
selling any Grantor Collateral and such Grantor's rights under all licenses and
all franchise agreements shall inure to the Lender Group's benefit;
(j) Sell the Grantor Collateral at either a public or
private sale, or both, by way of one or more contracts or transactions, for cash
or on terms, in such manner and at such places (including Grantors' premises) as
Agent determines is commercially reasonable. It is not necessary that the
Grantor Collateral be present at any such sale;
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(k) Agent shall give notice of the disposition of the
Grantor Collateral as follows:
(i) Agent shall give Administrative Borrower
(for the benefit of the applicable Grantor) a notice in writing of the
time and place of public sale, or, if the sale is a private sale or
some other disposition other than a public sale is to be made of the
Grantor Collateral, the time on or after which the private sale or
other disposition is to be made; and
(ii) The notice shall be personally delivered or
mailed, postage prepaid, to Administrative Borrower as provided in
Section 12, at least 10 days before the earliest time of disposition
set forth in the notice; no notice needs to be given prior to the
disposition of any portion of the Grantor Collateral that is perishable
or threatens to decline speedily in value or that is of a type
customarily sold on a recognized market;
(l) Agent, on behalf of the Lender Group may credit bid
and purchase at any public sale;
(m) Agent may seek the appointment of a receiver or
keeper to take possession of all or any portion of the Grantor Collateral or to
operate same and, to the maximum extent permitted by law, may seek the
appointment of such a receiver without the requirement of prior notice or a
hearing; and
(n) The Lender Group shall have all other rights and
remedies available to it at law or in equity pursuant to any other Loan
Documents; provided, however, that upon the occurrence of any Event of Default
described in Section 8.4 or Section 8.5, in addition to the remedies set forth
above, without any notice to Grantors or any other Person or any act by the
Lender Group, the Commitments shall automatically terminate and the Obligations
then outstanding, together with all accrued and unpaid interest thereon, and all
fees and all other amounts due under this Agreement and the other Loan
Documents, shall automatically and immediately become due and payable, without
presentment, demand, protest, or notice of any kind, all of which are expressly
waived by Grantors.
9.2. REMEDIES CUMULATIVE.
The rights and remedies of the Lender Group under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
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10. TAXES AND EXPENSES.
If any Company fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its sole discretion
and without prior notice to any Company, may do any or all of the following: (a)
make payment of the same or any part thereof, (b) set up such reserves in
Borrowers' Loan Account as Agent deems necessary to protect the Lender Group
from the exposure created by such failure, or (c) in the case of the failure to
comply with Section 6.8 hereof, obtain and maintain insurance policies of the
type described in Section 6.8 and take any action with respect to such policies
as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender
Group Expenses and any such payments shall not constitute an agreement by the
Lender Group to make similar payments in the future or a waiver by the Lender
Group of any Event of Default under this Agreement. Agent need not inquire as
to, or contest the validity of, any such expense, tax, or Lien and the receipt
of the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1. DEMAND; PROTEST; ETC.
Each Company waives demand, protest, notice of protest, notice
of default or dishonor, notice of payment and nonpayment, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of documents,
instruments, chattel paper, and guarantees at any time held by the Lender Group
on which any such Company may in any way be liable.
11.2. THE LENDER GROUP'S LIABILITY FOR GRANTOR COLLATERAL.
Each Grantor hereby agrees that: (a) so long as the Lender
Group complies with its obligations, if any, under the Code, Agent shall not in
any way or manner be liable or responsible for: (i) the safekeeping of the
Grantor Collateral, (ii) any loss or damage thereto occurring or arising in any
manner or fashion from any cause, (iii) any diminution in the value thereof, or
(iv) any act or default of any carrier, warehouseman, bailee, forwarding agency,
or other Person, and (b) all risk of loss, damage, or destruction of the Grantor
Collateral shall be borne by Grantors.
11.3. INDEMNIFICATION.
Each Company shall pay, indemnify, defend, and hold the
Agent-Related Persons, the Lender-Related Persons, and each Participant (each,
an "Indemnified Person") harmless (to the fullest extent permitted by law) from
and against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees and disbursements
and other costs and expenses actually incurred in connection therewith (as and
when they are incurred and irrespective of whether suit is
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brought), at any time asserted against, imposed upon, or incurred by any of them
(a) in connection with or as a result of or related to the execution, delivery,
enforcement, performance, or administration (including any restructuring or
workout with respect hereto) of this Agreement, any of the other Loan Documents,
or the transactions contemplated hereby or thereby or the monitoring of
Companies' compliance with the terms of the Loan Documents, and (b) with respect
to any investigation, litigation, or proceeding related to this Agreement, any
other Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission, event, or circumstance in any manner related thereto (all the
foregoing, collectively, the "Indemnified Liabilities"). The foregoing to the
contrary notwithstanding, Companies shall have no obligation to any Indemnified
Person under this Section 11.3 with respect to any Indemnified Liability that a
court of competent jurisdiction finally determines to have resulted from the
gross negligence or willful misconduct of such Indemnified Person. This
provision shall survive the termination of this Agreement and the repayment of
the Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which
Companies were required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Companies with respect thereto. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by Companies or Agent to the other relating to this Agreement or any
other Loan Document shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by registered or certified mail
(postage prepaid, return receipt requested), overnight courier, electronic mail
(at such email addresses as Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Companies
in care of Administrative Borrower or to Agent, as the case may be, at its
address set forth below:
If to a Company: NORSTAN, INC.
5101 Shady Oak Road
Minnetonka, Minnesota 55343
Attn: Alice Vazquez
Fax No. 952-352-4044
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with copies to: MASLON EDELMAN BORMAN &
BRAND, LLP
3300 Wells Fargo Center
90 South Seventh
Minneapolis, Minnesota 55402
Attn: Clark Whitmore, Esq.
Fax No. 612-642-8335
If to Agent: WELLS FARGO FOOTHILL, INC.
2450 Colorado Avenue
Suite 3000 West
Santa Monica, California 90404
Attn: Business Finance Manager
Fax No. 310-453-7443
WELLS FARGO FOOTHILL, INC.
One Boston Place, 18th Floor
Boston, Massachusetts 02108
Attn: Business Finance Manager
Fax No. 617-523-1697
WELLS FARGO FOOTHILL, INC.
1000 Abernathy Road, Suite 1450
Atlanta, Georgia 30328
Attn: Business Finance Manager
Fax No. 770-508-1375
with copies to: GOLDBERG, KOHN, BELL, BLACK,
ROSENBLOOM & MORITZ, LTD.
55 East Monroe Street, Suite 3700
Chicago, Illinois 60603
Attn: Gary Zussman
Fax No. 312-332-2196
Agent and Companies may change the address at which they are
to receive notices hereunder, by notice in writing in the foregoing manner given
to the other party. All notices or demands sent in accordance with this Section
12, other than notices by Agent in connection with enforcement rights against
the Grantor Collateral under the provisions of the Code, shall be deemed
received on the earlier of the date of actual receipt or 3 Business Days after
the deposit thereof in the mail. Each Grantor acknowledges and agrees that
notices sent by the Lender Group in connection with the exercise of enforcement
rights against Grantor Collateral under the provisions of the Code shall be
deemed sent when deposited in the mail or personally delivered, or, where
permitted by law, transmitted by telefacsimile or any other method set forth
above.
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13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO
WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF ILLINOIS.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS
ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY
OF COOK, STATE OF ILLINOIS, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY GRANTOR COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH
ACTION OR WHERE SUCH GRANTOR COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
COMPANIES AND THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE
LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR
TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH
THIS SECTION 13(b).
COMPANIES AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. COMPANIES AND THE LENDER GROUP REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1. ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may assign and delegate to one or more
assignees (each an "Assignee") that are Eligible Transferees all, or any ratable
part of all, of the Obligations, the
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Commitments and the other rights and obligations of such Lender hereunder and
under the other Loan Documents, in a minimum amount of $5,000,000; provided,
however, that Companies and Agent may continue to deal solely and directly with
such Lender in connection with the interest so assigned to an Assignee until (i)
written notice of such assignment, together with payment instructions,
addresses, and related information with respect to the Assignee, have been given
to Administrative Borrower and Agent by such Lender and the Assignee, (ii) such
Lender and its Assignee have delivered to Administrative Borrower and Agent an
Assignment and Acceptance, and (iii) the assignor Lender or Assignee has paid to
Agent for Agent's separate account a processing fee in the amount of $5,000.
Anything contained herein to the contrary notwithstanding, the payment of any
fees shall not be required and the Assignee need not be an Eligible Transferee
if such assignment is in connection with any merger, consolidation, sale,
transfer, or other disposition of all or any substantial portion of the business
or loan portfolio of the assigning Lender.
(b) From and after the date that Agent notifies the
assignor Lender (with a copy to Administrative Borrower) that it has received an
executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Lender under the Loan Documents, and (ii) the assignor Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights (except with respect to Section 11.3 hereof) and be released from any
future obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto), and such assignment shall effect
a novation between Companies and the Assignee; provided, however, that nothing
contained herein shall release any assigning Lender from obligations that
survive the termination of this Agreement, including such assigning Lender's
obligations under Article 16 and Section 17.8 of this Agreement.
(c) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (1) other
than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Companies or the performance or observance by Companies of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (3) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (4) such Assignee will, independently and without
reliance upon Agent, such
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assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement, (5) such
Assignee appoints and authorizes Agent to take such actions and to exercise such
powers under this Agreement as are delegated to Agent, by the terms hereof,
together with such powers as are reasonably incidental thereto, and (6) such
Assignee agrees that it will perform all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) Immediately upon Agent's receipt of the required
processing fee payment and the fully executed Assignment and Acceptance, this
Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Commitments arising therefrom. The Commitment allocated to each Assignee
shall reduce such Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent
of Agent, sell to one or more commercial banks, financial institutions, or other
Persons not Affiliates of such Lender (a "Participant") participating interests
in its Obligations, the Commitment, and the other rights and interests of that
Lender (the "Originating Lender") hereunder and under the other Loan Documents
(provided that no written consent of Agent shall be required in connection with
any sale of any such participating interests by a Lender to an Eligible
Transferee); provided, however, that (i) the Originating Lender shall remain a
"Lender" for all purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Obligations, the
Commitments, and the other rights and interests of the Originating Lender
hereunder shall not constitute a "Lender" hereunder or under the other Loan
Documents and the Originating Lender's obligations under this Agreement shall
remain unchanged, (ii) the Originating Lender shall remain solely responsible
for the performance of such obligations, (iii) Companies, Agent, and the Lenders
shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender's rights and obligations under this
Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant
any participating interest under which the Participant has the right to approve
any amendment to, or any consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such amendment to, or consent or
waiver with respect to this Agreement or of any other Loan Document would (A)
extend the final maturity date of the Obligations hereunder in which such
Participant is participating, (B) reduce the interest rate applicable to the
Obligations hereunder in which such Participant is participating, (C) release
all or substantially all of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender, or (E) change the amount or due dates of
scheduled principal repayments or prepayments or premiums; and (v) all amounts
payable by Companies hereunder shall be determined as if such Lender had not
sold such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each
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Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement. The rights of any Participant only shall be
derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any rights under this Agreement or
the other Loan Documents or any direct rights as to the other Lenders, Agent,
Companies, the Collections of Companies, the Collateral, or otherwise in respect
of the Obligations. No Participant shall have the right to participate directly
in the making of decisions by the Lenders among themselves.
(f) In connection with any such assignment or
participation or proposed assignment or participation, a Lender may, subject to
the provisions of Section 17.8, disclose all documents and information which it
now or hereafter may have relating to Companies and their respective businesses.
(g) Any other provision in this Agreement
notwithstanding, any Lender may at any time create a security interest in, or
pledge, all or any portion of its rights under and interest in this Agreement in
favor of any Federal Reserve Bank in accordance with Regulation A of the Federal
Reserve Bank or U.S. Treasury Regulation 31 CFR Section. 203.24, and such
Federal Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
14.2. SUCCESSORS.
This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that Companies may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release any Company from its Obligations. A Lender may assign this Agreement and
the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 14.1 hereof and, except as expressly required pursuant to
Section 14.1 hereof, no consent or approval by any Company is required in
connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1. AMENDMENTS AND WAIVERS.
No amendment or waiver of any provision of this Agreement or
any other Loan Document, and no consent with respect to any departure by
Companies therefrom, shall be effective unless the same shall be in writing and
signed by the Required Lenders (or by Agent at the written request of the
Required Lenders) and Administrative Borrower (on behalf of all Companies) and
then any such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that no such
waiver, amendment, or consent shall, unless in writing and signed by all of the
Lenders
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affected thereby and Administrative Borrower (on behalf of all Companies) and
acknowledged by Agent, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or
any other Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on,
any loan or other extension of credit hereunder, or reduce any fees or other
amounts payable hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is
required to take any action hereunder,
(e) amend or modify this Section or any provision of the
Agreement providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by Section
16.12,
(g) change the definition of "Required Lenders" or "Pro
Rata Share",
(h) contractually subordinate any of the Agent's Liens,
(i) release any Company from any obligation for the
payment of money, or
(j) change the definition of Borrowing Base or the
definitions of Applicable Recurring Revenue Amount, Recurring Revenue
Percentage, Maximum Revolver Amount, Term Loan Amount, or change Section 2.1(b);
or
(k) amend any of the provisions of Section 16.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, affect
the rights or duties of Agent, Issuing Lender, or Swing Lender, as applicable,
under this Agreement or any other Loan Document. The foregoing notwithstanding,
any amendment, modification, waiver, consent, termination, or release of, or
with respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of Companies, shall not require
consent by or the agreement of Companies.
15.2. REPLACEMENT OF HOLDOUT LENDER.
If any action to be taken by the Lender Group or Agent
hereunder requires the unanimous consent, authorization, or agreement of all
Lenders, and a Lender ("Holdout Lender") fails to give its consent,
authorization, or agreement, then Agent, upon at least 5
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Business Days prior irrevocable notice to the Holdout Lender, may permanently
replace the Holdout Lender with one or more substitute Lenders (each, a
"Replacement Lender"), and the Holdout Lender shall have not right to refuse to
be replaced hereunder. Such notice to replace the Holdout Lender shall specify
an effective date for such replacement, which date shall not be later than 15
Business Days after the date such notice is given.
Prior to the effective date of such replacement, the Holdout
Lender and each Replacement Lender shall execute and deliver an Assignment and
Acceptance Agreement, subject only to the Holdout Lender being repaid its share
of the outstanding Obligations (including an assumption of its Pro Rata Share of
the Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance. The replacement of any Holdout Lender shall be
made in accordance with the terms of Section 14.1. Until such time as the
Replacement Lenders shall have acquired all of the Obligations, the Commitments,
and the other rights and obligations of the Holdout Lender hereunder and under
the other Loan Documents, the Holdout Lender shall remain obligated to make the
Holdout Lender's Pro Rata Share of Advances and to purchase a participation in
each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Letter of Credit.
15.3. NO WAIVERS; CUMULATIVE REMEDIES.
No failure by Agent or any Lender to exercise any right,
remedy, or option under this Agreement or, any other Loan Document, or delay by
Agent or any Lender in exercising the same, will operate as a waiver thereof. No
waiver by Agent or any Lender will be effective unless it is in writing, and
then only to the extent specifically stated. No waiver by Agent or any Lender on
any occasion shall affect or diminish Agent's and each Lender's rights
thereafter to require strict performance by Companies of any provision of this
Agreement. Agent's and each Lender's rights under this Agreement and the other
Loan Documents will be cumulative and not exclusive of any other right or remedy
that Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
16.1. APPOINTMENT AND AUTHORIZATION OF AGENT.
Each Lender hereby designates and appoints WFF as its
representative under this Agreement and the other Loan Documents and each Lender
hereby irrevocably authorizes Agent to execute and deliver each of the other
Loan Documents on its behalf and to take such other action on its behalf under
the provisions of this Agreement and each other Loan Document and to exercise
such powers and perform such duties as are expressly delegated to Agent by the
terms of this Agreement or any other Loan Document, together with such powers as
are reasonably incidental thereto. Agent agrees to act as such on the express
conditions contained in this Section 16. The provisions of this Section 16
(other than the proviso to Section 16.11(d)) are solely for the benefit of
Agent, and the Lenders, and
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Companies shall have no rights as a third party beneficiary of any of the
provisions contained herein. Any provision to the contrary contained elsewhere
in this Agreement or in any other Loan Document notwithstanding, Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
nor shall Agent have or be deemed to have any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that WFF is
merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections of Companies, and related matters, (b) execute or file any and
all financing or similar statements or notices, amendments, renewals,
supplements, documents, instruments, proofs of claim, notices and other written
agreements with respect to the Loan Documents, (c) make Advances, for itself or
on behalf of Lenders as provided in the Loan Documents, (d) exclusively receive,
apply, and distribute the Collections of Companies as provided in the Loan
Documents, (e) open and maintain such bank accounts and cash management accounts
as Agent deems necessary and appropriate in accordance with the Loan Documents
for the foregoing purposes with respect to the Collateral and the Collections of
Companies, (f) perform, exercise, and enforce any and all other rights and
remedies of the Lender Group with respect to Companies, the Obligations, the
Collateral, the Collections of Companies, or otherwise related to any of same as
provided in the Loan Documents, and (g) incur and pay such Lender Group Expenses
as Agent may deem necessary or appropriate for the performance and fulfillment
of its functions and powers pursuant to the Loan Documents.
16.2. DELEGATION OF DUTIES.
Agent may execute any of its duties under this Agreement or
any other Loan Document by or through agents, employees or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. Agent shall not be responsible for the negligence or misconduct of any
agent or attorney-in-fact that it selects as long as such selection was made
without gross negligence or willful misconduct.
16.3. LIABILITY OF AGENT.
None of the Agent-Related Persons shall (i) be liable for any
action taken or omitted to be taken by any of them under or in connection with
this Agreement or any other Loan Document or the transactions contemplated
hereby (except for its own gross negligence or willful misconduct), or (ii) be
responsible in any manner to any of the Lenders for any recital, statement,
representation or warranty made by any Company or Affiliate of any
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Company, or any officer or director thereof, contained in this Agreement or in
any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of any Company or any other party to
any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the Books or properties of Companies or the books or records or
properties of any of Companies' Affiliates.
16.4. RELIANCE BY AGENT.
Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telegram, facsimile, telex or telephone message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent, or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to Companies or counsel to
any Lender), independent accountants and other experts selected by Agent. Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the requisite Lenders and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
16.5. NOTICE OF DEFAULT OR EVENT OF DEFAULT.
Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default, except with respect to defaults
in the payment of principal, interest, fees, and expenses required to be paid to
Agent for the account of the Lenders and, except with respect to Events of
Default of which Agent has actual knowledge, unless Agent shall have received
written notice from a Lender or Administrative Borrower referring to this
Agreement, describing such Default or Event of Default, and stating that such
notice is a "notice of default." Agent promptly will notify the Lenders of its
receipt of any such notice or of any Event of Default of which Agent has actual
knowledge. If any Lender obtains actual knowledge of any Event of Default, such
Lender promptly shall notify the other Lenders and Agent of such Event of
Default. Each Lender shall be solely responsible for giving any notices to its
Participants, if any. Subject to Section 16.4, Agent shall take such action with
respect to such Default or Event of Default as may be requested by the Required
Lenders in accordance with Section 9; provided, however, that unless and until
Agent has
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received any such request, Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable.
16.6. CREDIT DECISION.
Each Lender acknowledges that none of the Agent-Related
Persons has made any representation or warranty to it, and that no act by Agent
hereinafter taken, including any review of the affairs of Companies or
Affiliates, shall be deemed to constitute any representation or warranty by any
Agent-Related Person to any Lender. Each Lender represents to Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of Companies and
any other Person party to a Loan Document, and all applicable bank regulatory
laws relating to the transactions contemplated hereby, and made its own decision
to enter into this Agreement and to extend credit to Companies. Each Lender also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of Companies and any other Person party
to a Loan Document. Except for notices, reports, and other documents expressly
herein required to be furnished to the Lenders by Agent, Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of Companies and any other Person party
to a Loan Document that may come into the possession of any of the Agent-Related
Persons.
16.7. COSTS AND EXPENSES; INDEMNIFICATION.
Agent may incur and pay Lender Group Expenses to the extent
Agent reasonably deems necessary or appropriate for the performance and
fulfillment of its functions, powers, and obligations pursuant to the Loan
Documents, including court costs, attorneys fees and expenses, fees and expenses
of financial accountants, advisors, consultants, and appraisers, costs of
collection by outside collection agencies, auctioneer fees and expenses, and
costs of security guards or insurance premiums paid to maintain the Collateral,
whether or not Companies are obligated to reimburse Agent or Lenders for such
expenses pursuant to the Loan Agreement or otherwise. Agent is authorized and
directed to deduct and retain sufficient amounts from the Collections of
Companies received by Agent to reimburse Agent for such out-of-pocket costs and
expenses prior to the distribution of any amounts to Lenders. In the event Agent
is not reimbursed for such costs and expenses from the Collections of Companies
received by Agent, each Lender hereby agrees that it is and shall be obligated
to pay to or reimburse Agent for the amount of such Lender's Pro Rata Share
thereof. Whether or not the transactions contemplated hereby are consummated,
the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent
not
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reimbursed by or on behalf of Companies and without limiting the obligation of
Companies to do so), according to their Pro Rata Shares, from and against any
and all Indemnified Liabilities; provided, however, that no Lender shall be
liable for the payment to any Agent-Related Person of any portion of such
Indemnified Liabilities resulting solely from such Person's gross negligence or
willful misconduct nor shall any Lender be liable for the obligations of any
Defaulting Lender in failing to make an Advance or other extension of credit
hereunder. Without limitation of the foregoing, each Lender shall reimburse
Agent upon demand for such Lender's Pro Rata Share of any costs or out-of-pocket
expenses (including attorneys, accountants, advisors, and consultants fees and
expenses) incurred by Agent in connection with the preparation, execution,
delivery, administration, modification, amendment, or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent
that Agent is not reimbursed for such expenses by or on behalf of Companies. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of Agent.
16.8. AGENT IN INDIVIDUAL CAPACITY.
WFF and its Affiliates may make loans to, issue letters of
credit for the account of, accept deposits from, acquire equity interests in,
and generally engage in any kind of banking, trust, financial advisory,
underwriting, or other business with Companies and Affiliates and any other
Person party to any Loan Documents as though WFF were not Agent hereunder, and,
in each case, without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, WFF or its Affiliates may receive information regarding Companies or
their Affiliates and any other Person party to any Loan Documents that is
subject to confidentiality obligations in favor of Companies or such other
Person and that prohibit the disclosure of such information to the Lenders, and
the Lenders acknowledge that, in such circumstances (and in the absence of a
waiver of such confidentiality obligations, which waiver Agent will use its
reasonable best efforts to obtain), Agent shall not be under any obligation to
provide such information to them. The terms "Lender" and "Lenders" include WFF
in its individual capacity.
16.9. SUCCESSOR AGENT.
Agent may resign as Agent upon 45 days notice to the Lenders.
If Agent resigns under this Agreement, the Required Lenders shall appoint a
successor Agent for the Lenders. If no successor Agent is appointed prior to the
effective date of the resignation of Agent, Agent may appoint, after consulting
with the Lenders, a successor Agent. If Agent has materially breached or failed
to perform any material provision of this Agreement or of applicable law, the
Required Lenders may agree in writing to remove and replace Agent with a
successor Agent from among the Lenders. In any such event, upon the acceptance
of its appointment as successor Agent hereunder, such successor Agent shall
succeed to all the rights, powers, and duties of the retiring Agent and the term
"Agent" shall mean such successor Agent and the retiring Agent's appointment,
powers, and duties as Agent shall be
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terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 16 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement. If no
successor Agent has accepted appointment as Agent by the date which is 45 days
following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the Lenders shall
perform all of the duties of Agent hereunder until such time, if any, as the
Lenders appoint a successor Agent as provided for above.
16.10. LENDER IN INDIVIDUAL CAPACITY.
Any Lender and its respective Affiliates may make loans to,
issue letters of credit for the account of, accept deposits from, acquire equity
interests in and generally engage in any kind of banking, trust, financial
advisory, underwriting or other business with Companies and their Affiliates and
any other Person (other than the Lender Group) party to any Loan Documents as
though such Lender were not a Lender hereunder without notice to or consent of
the other members of the Lender Group. The other members of the Lender Group
acknowledge that, pursuant to such activities, such Lender and its respective
Affiliates may receive information regarding Companies or their Affiliates and
any other Person party to any Loan Documents that is subject to confidentiality
obligations in favor of Companies or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the sub-agent of the
Agent.
16.11. WITHHOLDING TAXES.
(a) If any Lender is a "foreign person" within the
meaning of the IRC and such Lender claims exemption from, or a reduction of,
U.S. withholding tax under Sections 1441 or 1442 of the IRC, such Lender agrees
with and in favor of Agent and Companies, to deliver to Agent and Administrative
Borrower:
(i) if such Lender claims an exemption from
withholding tax pursuant to its portfolio interest exception, (A) a
statement of the Lender, signed under penalty of perjury, that it is
not a (I) a "bank" as described in Section 881(c)(3)(A) of the IRC,
(II) a 10% shareholder of a Company (within the meaning of Section
871(h)(3)(B) of the IRC), or (III) a controlled foreign corporation
related to a Company within the meaning of Section 864(d)(4) of the
IRC, and (B) a properly completed and executed IRS Form W-8BEN, before
the first payment of any interest under this Agreement and at any other
time reasonably requested by Agent or Administrative Borrower;
(ii) if such Lender claims an exemption from, or
a reduction of, withholding tax under a United States tax treaty,
properly completed and executed
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IRS Form W-8BEN before the first payment of any interest under this
Agreement and at any other time reasonably requested by Agent or
Administrative Borrower;
(iii) if such Lender claims that interest paid
under this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade or
business of such Lender, two properly completed and executed copies of
IRS Form W-8ECI before the first payment of any interest is due under
this Agreement and at any other time reasonably requested by Agent or
Administrative Borrower;
(iv) such other form or forms as may be required
under the IRC or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Administrative Borrower of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-8BEN
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of Companies to such Lender, such
Lender agrees to notify Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of Companies to such Lender. To the extent
of such percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no
longer valid.
(c) If any Lender is entitled to a reduction in the
applicable withholding tax, Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable withholding tax after taking into
account such reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to Agent, then Agent may
withhold from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify and hold Agent harmless for all amounts
paid, directly or indirectly, by Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section, together with all costs and expenses
(including attorneys fees and expenses). The obligation of the Lenders under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of Agent.
(e) All payments made by Companies hereunder or under any
note or other Loan Document will be made without setoff, counterclaim, or other
defense, except as
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required by applicable law other than for Taxes (as defined below). All such
payments will be made free and clear of, and without deduction or withholding
for, any present or future taxes, levies, imposts, duties, fees, assessments or
other charges of whatever nature now or hereafter imposed by any jurisdiction
(other than the United States) or by any political subdivision or taxing
authority thereof or therein (other than of the United States) with respect to
such payments (but excluding, any tax imposed by any jurisdiction or by any
political subdivision or taxing authority thereof or therein (i) measured by or
based on the net income or net profits of a Lender, or (ii) to the extent that
such tax results from a change in the circumstances of the Lender, including a
change in the residence, place of organization, or principal place of business
of the Lender, or a change in the branch or lending office of the Lender
participating in the transactions set forth herein) and all interest, penalties
or similar liabilities with respect thereto (all such non-excluded taxes,
levies, imposts, duties, fees, assessments or other charges being referred to
collectively as "Taxes"). If any Taxes are so levied or imposed, each Company
agrees to pay the full amount of such Taxes, and such additional amounts as may
be necessary so that every payment of all amounts due under this Agreement or
under any note, including any amount paid pursuant to this Section 16.11(e)
after withholding or deduction for or on account of any Taxes, will not be less
than the amount provided for herein; provided, however, that Companies shall not
be required to increase any such amounts payable to Agent or any Lender (i) that
is not organized under the laws of the United States, if such Person fails to
comply with the other requirements of this Section 16.11, or (ii) if the
increase in such amount payable results from Agent's or such Lender's own
willful misconduct or gross negligence. Companies will furnish to Agent as
promptly as possible after the date the payment of any Taxes is due pursuant to
applicable law certified copies of tax receipts evidencing such payment by
Companies.
16.12. COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent, at
its option and in its sole discretion, to release any Lien on any Collateral (i)
upon the termination of the Commitments and payment and satisfaction in full by
Companies of all Obligations, (ii) constituting property being sold or disposed
of if a release is required or desirable in connection therewith and if
Administrative Borrower certifies to Agent that the sale or disposition is
permitted under Section 7.4 of this Agreement or the other Loan Documents (and
Agent may rely conclusively on any such certificate, without further inquiry),
(iii) constituting property in which no Company owned any interest at the time
the Agent's Lien was granted nor at any time thereafter, or (iv) constituting
property leased to a Company under a lease that has expired or is terminated in
a transaction permitted under this Agreement. Except as provided above, Agent
will not execute and deliver a release of any Lien on any Collateral without the
prior written authorization of (y) if the release is of all or substantially all
of the Collateral, all of the Lenders, or (z) otherwise, the Required Lenders.
Upon request by Agent or Administrative Borrower at any time, the Lenders will
confirm in writing Agent's authority to release any such Liens on particular
types or items of Collateral pursuant to this Section 16.12; provided, however,
that (1) Agent shall not be required to execute any document necessary to
evidence such release on terms that, in Agent's opinion, would expose Agent to
liability or create any obligation or entail any consequence other than
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the release of such Lien without recourse, representation, or warranty, and (2)
such release shall not in any manner discharge, affect, or impair the
Obligations or any Liens (other than those expressly being released) upon (or
obligations of Companies in respect of) all interests retained by Companies,
including, the proceeds of any sale, all of which shall continue to constitute
part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of
the Lenders to assure that the Collateral exists or is owned by Companies or is
cared for, protected, or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent's own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing, except as otherwise
provided herein.
16.13. RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF
PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without
the express written consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the written request of Agent, set off against
the Obligations, any amounts owing by such Lender to Companies or any deposit
accounts of Companies now or hereafter maintained with such Lender. Each of the
Lenders further agrees that it shall not, unless specifically requested to do so
in writing by Agent, take or cause to be taken any action, including, the
commencement of any legal or equitable proceedings, to foreclose any Lien on, or
otherwise enforce any security interest in, any of the Collateral.
(b) If, at any time or times any Lender shall receive (i)
by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations, except for any such proceeds or
payments received by such Lender from Agent pursuant to the terms of this
Agreement, or (ii) payments from Agent in excess of such Lender's ratable
portion of all such distributions by Agent, such Lender promptly shall (1) turn
the same over to Agent, in kind, and with such endorsements as may be required
to negotiate the same to Agent, or in immediately available funds, as
applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable provisions of this Agreement, or
(2) purchase, without recourse or warranty, an undivided interest and
participation in the Obligations owed to the other Lenders so that such excess
payment received shall be applied ratably as among the Lenders in accordance
with their Pro Rata Shares; provided, however, that to the extent that such
excess payment received by the purchasing party is thereafter recovered from it,
those purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor shall
be returned to such purchasing party, but without interest except to the
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extent that such purchasing party is required to pay interest in connection with
the recovery of the excess payment.
16.14. AGENCY FOR PERFECTION.
Agent hereby appoints each other Lender as its agent (and each
Lender hereby accepts such appointment) for the purpose of perfecting the
Agent's Liens in assets which, in accordance with Article 9 of the Code can be
perfected only by possession or control. Should any Lender obtain possession or
control of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent's request therefor shall deliver possession or control of
such Collateral to Agent or in accordance with Agent's instructions.
16.15. PAYMENTS BY AGENT TO THE LENDERS.
All payments to be made by Agent to the Lenders shall be made by bank
wire transfer of immediately available funds pursuant to such wire transfer
instructions as each party may designate for itself by written notice to Agent.
Concurrently with each such payment, Agent shall identify whether such payment
(or any portion thereof) represents principal, premium, or interest of the
Obligations.
16.16. CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS.
Each member of the Lender Group authorizes and directs Agent
to enter into this Agreement and the other Loan Documents. Each member of the
Lender Group agrees that any action taken by Agent in accordance with the terms
of this Agreement or the other Loan Documents relating to the Collateral and the
exercise by Agent of its powers set forth therein or herein, together with such
other powers that are reasonably incidental thereto, shall be binding upon all
of the Lenders.
16.17. FIELD AUDITS AND EXAMINATION REPORTS;
CONFIDENTIALITY; DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION.
By becoming a party to this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by
Agent, and Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not
(i) make any representation or warranty as to the accuracy of any Report, and
(ii) shall not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports
are not comprehensive audits or examinations, that Agent or other party
performing any audit or examination will inspect only specific information
regarding Companies and will rely significantly upon the Books, as well as on
representations of Companies' personnel,
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(d) agrees to keep all Reports and other material,
non-public information regarding Companies and their operations, assets, and
existing and contemplated business plans in a confidential manner in accordance
with Section 17.8, and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold Agent
and any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or fail to take or any conclusion the indemnifying
Lender may reach or draw from any Report in connection with any loans or other
credit accommodations that the indemnifying Lender has made or may make to
Borrowers, or the indemnifying Lender's participation in, or the indemnifying
Lender's purchase of, a loan or loans of Borrowers; and (ii) to pay and protect,
and indemnify, defend and hold Agent, and any such other Lender preparing a
Report harmless from and against, the claims, actions, proceedings, damages,
costs, expenses, and other amounts (including, attorneys fees and costs)
incurred by Agent and any such other Lender preparing a Report as the direct or
indirect result of any third parties who might obtain all or part of any Report
through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Companies to Agent that has not been contemporaneously
provided by Companies to such Lender, and, upon receipt of such request, Agent
shall provide a copy of same to such Lender, (y) to the extent that Agent is
entitled, under any provision of the Loan Documents, to request additional
reports or information from Companies, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender's
notice to Agent, whereupon Agent promptly shall request of Administrative
Borrower the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from Administrative Borrower, Agent promptly
shall provide a copy of same to such Lender, and (z) any time that Agent renders
to Administrative Borrower a statement regarding the Loan Account, Agent shall
send a copy of such statement to each Lender.
16.18. SEVERAL OBLIGATIONS; NO LIABILITY.
Notwithstanding that certain of the Loan Documents now or
hereafter may have been or will be executed only by or in favor of Agent in its
capacity as such, and not by or in favor of the Lenders, any and all obligations
on the part of Agent (if any) to make any credit available hereunder shall
constitute the several (and not joint) obligations of the respective Lenders on
a ratable basis, according to their respective Commitments, to make an amount of
such credit not to exceed, in principal amount, at any one time outstanding, the
amount of their respective Commitments. Nothing contained herein shall confer
upon any Lender any interest in, or subject any Lender to any liability for, or
in respect of, the business, assets, profits, losses, or liabilities of any
other Lender. Each Lender shall be solely responsible for notifying its
Participants of any matters relating to the Loan Documents to the extent any
such notice may be required, and no Lender shall have any obligation, duty, or
liability to any Participant of any other Lender. Except as provided in Section
16.7, no member of the Lender Group shall have any liability for the acts or any
other member of the Lender Group. No Lender shall be responsible to any Company
or any
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other Person for any failure by any other Lender to fulfill its obligations to
make credit available hereunder, nor to advance for it or on its behalf in
connection with its Commitment, nor to take any other action on its behalf
hereunder or in connection with the financing contemplated herein.
16.19. LEGAL REPRESENTATION OF AGENT.
In connection with the negotiation, drafting, and execution of
this Agreement and the other Loan Documents, or in connection with future legal
representation relating to loan administration, amendments, modifications,
waivers, or enforcement of remedies, Goldberg, Kohn, Bell, Black, Rosenbloom &
Moritz, Ltd. ("GK") only has represented and only shall represent WFF in its
capacity as Agent and as a Lender. Each other Lender hereby acknowledges that GK
does not represent it in connection with any such matters.
17. GENERAL PROVISIONS.
17.1. EFFECTIVENESS.
This Agreement shall be binding and deemed effective when
executed by Companies, Agent, and each Lender whose signature is provided for on
the signature pages hereof.
17.2. SECTION HEADINGS.
Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
17.3. INTERPRETATION.
Neither this Agreement nor any uncertainty or ambiguity herein
shall be construed or resolved against the Lender Group or Companies, whether
under any rule of construction or otherwise. On the contrary, this Agreement has
been reviewed by all parties and shall be construed and interpreted according to
the ordinary meaning of the words used so as to accomplish fairly the purposes
and intentions of all parties hereto.
17.4. SEVERABILITY OF PROVISIONS.
Each provision of this Agreement shall be severable from every
other provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.
17.5. AMENDMENTS IN WRITING.
This Agreement only can be amended by a writing in accordance
with Section 15.1.
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17.6. COUNTERPARTS; TELEFACSIMILE EXECUTION.
This Agreement may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement. Delivery of an
executed counterpart of this Agreement by telefacsimile shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile also
shall deliver an original executed counterpart of this Agreement but the failure
to deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement. The foregoing shall apply
to each other Loan Document mutatis mutandis.
17.7. REVIVAL AND REINSTATEMENT OF OBLIGATIONS.
If the incurrence or payment of the Obligations by any Company
or the transfer to the Lender Group of any property should for any reason
subsequently be declared to be void or voidable under any state or federal law
relating to creditors' rights, including provisions of the Bankruptcy Code
relating to fraudulent conveyances, preferences, or other voidable or
recoverable payments of money or transfers of property (collectively, a
"Voidable Transfer"), and if the Lender Group is required to repay or restore,
in whole or in part, any such Voidable Transfer, or elects to do so upon the
reasonable advice of its counsel, then, as to any such Voidable Transfer, or the
amount thereof that the Lender Group is required or elects to repay or restore,
and as to all reasonable costs, expenses, and attorneys fees of the Lender Group
related thereto, the liability of Companies automatically shall be revived,
reinstated, and restored and shall exist as though such Voidable Transfer had
never been made.
17.8. CONFIDENTIALITY.
The Agent and the Lenders each individually (and not jointly
or jointly and severally) agree that material, non-public information regarding
Companies, their operations, assets, and existing and contemplated business
plans shall be treated by Agent and the Lenders in a confidential manner, and
shall not be disclosed by Agent and the Lenders to Persons who are not parties
to this Agreement, except: (a) to attorneys for and other advisors, accountants,
auditors, and consultants to any member of the Lender Group, (b) to Subsidiaries
and Affiliates of any member of the Lender Group (including the Bank Product
Providers), provided that any such Subsidiary or Affiliate shall have agreed to
receive such information hereunder subject to the terms of this Section 17.8,
(c) as may be required by statute, decision, or judicial or administrative
order, rule, or regulation, (d) as may be agreed to in advance by Parent or its
Subsidiaries or as requested or required by any Governmental Authority pursuant
to any subpoena or other legal process, (e) as to any such information that is
or becomes generally available to the public (other than as a result of
prohibited disclosure by Agent or the Lenders), (f) in connection with any
assignment, prospective assignment, sale, prospective sale, participation or
prospective participations, or pledge or prospective pledge of any Lender's
interest under this Agreement, provided that any such assignee,
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prospective assignee, purchaser, prospective purchaser, participant, prospective
participant, pledgee, or prospective pledgee shall have agreed in writing to
receive such information hereunder subject to the terms of this Section, and (g)
in connection with any litigation or other adversary proceeding involving
parties hereto which such litigation or adversary proceeding involves claims
related to the rights or duties of such parties under this Agreement or the
other Loan Documents. The provisions of this Section 17.8 shall survive for two
years after the payment in full of the Obligations. Anything contained herein or
in any other Loan Document to the contrary notwithstanding, the obligations of
confidentiality contained herein and therein, as they relate to the transactions
contemplated hereby, shall not apply to the federal tax structure or federal tax
treatment of such transactions, and each party hereto (and any employee,
representative, or agent of any party hereto) may disclose to any and all
Persons, without limitation of any kind, the federal tax structure and federal
tax treatment of such transactions (including all written materials related to
such tax structure and tax treatment). The preceding sentence is intended to
cause the transactions contemplated hereby to not be treated as having been
offered under conditions of confidentiality for purposes of Section
1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations
promulgated under Section 6011 of the IRC, and shall be construed in a manner
consistent with such purpose. In addition, each party hereto acknowledges that
it has no proprietary or exclusive rights to the tax structure of the
transactions contemplated hereby or any tax matter or tax idea related thereto.
17.9. INTEGRATION.
This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
17.10. PARENT AS AGENT FOR BORROWERS.
Each Borrower hereby irrevocably appoints Communications (US)
as the borrowing agent and attorney-in-fact for all Borrowers (the
"Administrative Borrower") which appointment shall remain in full force and
effect unless and until Agent shall have received prior written notice signed by
each Borrower that such appointment has been revoked and that another Borrower
has been appointed Administrative Borrower. Each Borrower hereby irrevocably
appoints and authorizes the Administrative Borrower (i) to provide Agent with
all notices with respect to Advances and Letters of Credit obtained for the
benefit of any Borrower and all other notices and instructions under this
Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Advances and Letters of Credit and to
exercise such other powers as are reasonably incidental thereto to carry out the
purposes of this Agreement. It is understood that the handling of the Loan
Account and Collateral of Borrowers in a combined fashion, as more fully set
forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that Lender Group shall not incur
liability to any Borrower as a result hereof. Each Borrower expects to derive
benefit, directly or indirectly, from the handling of
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the Loan Account and the Collateral in a combined fashion since the successful
operation of each Borrower is dependent on the continued successful performance
of the integrated group. To induce the Lender Group to do so, and in
consideration thereof, each Borrower hereby jointly and severally agrees to
indemnify each member of the Lender Group and hold each member of the Lender
Group harmless against any and all liability, expense, loss or claim of damage
or injury, made against the Lender Group by any Borrower or by any third party
whosoever, arising from or incurred by reason of (a) the handling of the Loan
Account and Collateral of Borrowers as herein provided, (b) the Lender Group's
relying on any instructions of the Administrative Borrower, or (c) any other
action taken by the Lender Group hereunder or under the other Loan Documents,
except that Borrowers will have no liability to the relevant Agent-Related
Person or Lender-Related Person under this Section 17.9 with respect to any
liability that has been finally determined by a court of competent jurisdiction
to have resulted solely from the gross negligence or willful misconduct of such
Agent-Related Person or Lender-Related Person, as the case may be.
[SIGNATURE PAGES FOLLOW]
-108-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
NORSTAN COMMUNICATIONS INC.,
a Minnesota corporation
By /s/ Alice Vazquez
-----------------------------------------
Name: Alice Vazquez
Title: Vice President and Treasurer
VIBES TECHNOLOGIES, INC.,
a Minnesota corporation
By /s/ Alice Vazquez
-----------------------------------------
Name: Alice Vazquez
Title: Vice President and Treasurer
NORSTAN, INC.,
a Minnesota corporation
By /s/ Alice Vazquez
-----------------------------------------
Name: Alice Vazquez
Title: Vice President and Treasurer
NORSTAN FINANCIAL SERVICES INC.,
a Minnesota corporation
By /s/ Alice Vazquez
-----------------------------------------
Name: Alice Vazquez
Title: Vice President and Treasurer
Loan and Security Agreement - Signature Page
NORSTAN CANADA INC.,
a Minnesota corporation
By /s/ Alice Vazquez
-----------------------------------------
Name: Alice Vazquez
Title: Vice President and Treasurer
NORSTAN INTERNATIONAL, INC.,
a Minnesota corporation
By /s/ Alice Vazquez
-----------------------------------------
Name: Alice Vazquez
Title: Vice President and Treasurer
NORSTAN CANADA LTD.,
an Ontario corporation
By /s/ Alice Vazquez
-----------------------------------------
Name: Alice Vazquez
Title: Vice President and Treasurer
WELLS FARGO FOOTHILL, INC.,
a California corporation, as Agent and as
a Lender
By /s/ Garrick Tan
-----------------------------------------
Title Vice President
Loan and Security Agreement - Signature Page(continued)
SCHEDULE A-1
AGENT'S ACCOUNTS
An account at a bank designated by Agent from time to time as
the account into which Borrowers shall make all payments to Agent for the
benefit of the Lender Group and into which the Lender Group shall make all
payments to Agent under this Agreement and the other Loan Documents; unless and
until Agent notifies Administrative Borrower and the Lender Group to the
contrary, Agent's Account shall be that certain deposit account bearing account
number 323-266193 and maintained by Agent with JP Morgan Chase Bank, 4 New York
Plaza, 15th Floor, New York, New York 10004, ABA #021000021.
SCHEDULE C-2
COMMITMENTS
REVOLVER TERM LOAN
LENDER COMMITMENT COMMITMENT TOTAL COMMITMENT
------ ---------- ---------- ----------------
Wells Fargo Foothill, Inc. $5,000,000 $22,500,000 $27,500,000
All Lenders $5,000,000 $22,500,000 $27,500,000
SCHEDULE D-1
DESIGNATED ACCOUNT
Account number _________ of Administrative Borrower maintained
with Administrative Borrower's Designated Account Bank, or such other deposit
account of Administrative Borrower (located within the United States) that has
been designed as such, in writing, by Administrative Borrower to Agent.
"Designated Account Bank" means ____________, whose office is
located at _________, and whose ABA number is _____________.