EXECUTION
VERSION
CREDIT AGREEMENT
among
PRG-SCHULTZ USA, INC.,
as Borrower,
PRG-SCHULTZ INTERNATIONAL, INC.,
as Parent,
CERTAIN SUBSIDIARIES OF THE PARENT
FROM TIME TO TIME PARTY HERETO,
as Guarantors,
AND
THE LENDERS IDENTIFIED ON THE SIGNATURE PAGES HERETO,
as Lenders
AND
BLUM STRATEGIC PARTNERS II, L.P.,
as the Collateral Agent
DATED AS OF DECEMBER 23, 2005
TABLE OF CONTENTS
Page
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SECTION 1 DEFINITIONS.................................................... 1
1.1 Definitions..................................................... 1
1.2 Computation of Time Periods..................................... 17
1.3 Accounting Terms................................................ 17
SECTION 2 CREDIT FACILITIES.............................................. 18
2.1 Term Loan....................................................... 18
2.2 [Intentionally Omitted]......................................... 19
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES................. 19
3.1 Default Rate.................................................... 19
3.2 [Intentionally Omitted]......................................... 19
3.3 Prepayments..................................................... 19
3.4 Termination the Commitment...................................... 20
3.5 Fees............................................................ 20
3.6 [Intentionally Omitted]......................................... 20
3.7 [Intentionally Omitted]......................................... 20
3.8 [Intentionally Omitted]......................................... 20
3.9 Taxes........................................................... 20
3.10 [Intentionally Omitted]......................................... 21
3.11 Payments Computations, Etc...................................... 21
3.12 Evidence of Debt................................................ 22
SECTION 4 GUARANTY....................................................... 22
4.1 The Guaranty.................................................... 22
4.2 Obligations Unconditional....................................... 22
4.3 Reinstatement................................................... 23
4.4 Certain Additional Waivers...................................... 24
4.5 Remedies........................................................ 24
4.6 Rights of Contribution.......................................... 24
4.7 Guarantee of Payment; Continuing Guarantee...................... 24
SECTION 5 CONDITIONS..................................................... 25
5.1 Closing Conditions.............................................. 25
SECTION 6 REPRESENTATIONS AND WARRANTIES................................. 28
6.1 Financial Condition............................................. 28
6.2 No Material Change.............................................. 29
6.3 Organization and Good Standing.................................. 29
6.4 Power; Authorization; Enforceable Obligations................... 29
6.5 No Conflicts.................................................... 30
6.6 No Default...................................................... 30
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6.7 Ownership....................................................... 30
6.8 Indebtedness.................................................... 30
6.9 Litigation...................................................... 30
6.10 Taxes........................................................... 30
6.11 Compliance with Law............................................. 31
6.12 ERISA........................................................... 31
6.13 Subsidiaries.................................................... 32
6.14 Governmental Regulations, Etc................................... 33
6.15 Purpose of Loans and Letters of Credit.......................... 34
6.16 Environmental Matters........................................... 34
6.17 Intellectual Property........................................... 35
6.18 Solvency........................................................ 35
6.19 Investments..................................................... 35
6.20 Location of Collateral.......................................... 35
6.21 Disclosure...................................................... 35
6.22 Brokers' Fees................................................... 36
6.23 Labor Matters................................................... 36
SECTION 7 AFFIRMATIVE COVENANTS.......................................... 36
7.1 Information Covenants........................................... 36
7.2 Preservation of Existence and Franchises........................ 39
7.3 Books and Records............................................... 40
7.4 Compliance with Law............................................. 40
7.5 Payment of Taxes and Other Indebtedness......................... 40
7.6 Insurance....................................................... 40
7.7 Maintenance of Property......................................... 41
7.8 Performance of Obligations...................................... 41
7.9 Use of Proceeds................................................. 41
7.10 Audits/Inspections.............................................. 41
7.11 [Intentionally Omitted]......................................... 42
7.12 Additional Credit Parties....................................... 42
7.13 Environmental Laws.............................................. 43
7.14 Collateral...................................................... 43
7.15 Working Capital Borrowing Base.................................. 44
7.16 Post-Closing Deliveries......................................... 44
SECTION 8 NEGATIVE COVENANTS............................................. 44
8.1 Indebtedness.................................................... 44
8.2 Liens........................................................... 45
8.3 Nature of Business.............................................. 45
8.4 Consolidation, Merger, Dissolution, etc......................... 45
8.5 Asset Dispositions.............................................. 46
8.6 Investments..................................................... 47
8.7 Restricted Payments............................................. 47
8.8 Transactions with Affiliates.................................... 47
8.9 Fiscal Year; Organizational Documents........................... 47
8.10 Limitation on Restricted Actions................................ 47
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8.11 Ownership of Subsidiaries....................................... 48
8.12 Sale Leasebacks................................................. 48
8.13 Capital Expenditures............................................ 48
8.14 No Further Negative Pledges..................................... 48
8.15 Limitation on Foreign EBITDA.................................... 49
8.16 Subordinated Debt............................................... 49
8.17 Notice under the Indenture...................................... 49
8.18 Working Capital Loan Documents.................................. 49
SECTION 9 EVENTS OF DEFAULT.............................................. 49
9.1 Events of Default............................................... 49
9.2 Acceleration; Remedies.......................................... 52
9.3 Application of Funds............................................ 52
SECTION 10 MISCELLANEOUS................................................. 53
10.1 Notices......................................................... 53
10.2 Right of Set-Off; Adjustments................................... 55
10.3 Successors and Assigns.......................................... 55
10.4 Expenses; Indemnification....................................... 56
10.5 Amendments, Waivers and Consents................................ 57
10.6 Counterparts.................................................... 58
10.7 Headings........................................................ 58
10.8 Survival........................................................ 58
10.9 Governing Law; Submission to Jurisdiction; Venue................ 58
10.10 Waiver of Jury Trial............................................ 59
10.11 Survival of Representations and Warranties...................... 59
10.12 Severability.................................................... 59
10.13 Entirety........................................................ 59
10.14 Binding Effect; Termination..................................... 59
10.15 Confidentiality................................................. 60
10.16 Conflict........................................................ 61
10.17 USA Patriot Act Notice.......................................... 61
SECTION 11 COLLATERAL AGENT.............................................. 61
11.1 Appointment..................................................... 61
11.2 Nature of Duties................................................ 62
11.3 Rights, Exculpation, Etc........................................ 62
11.4 Reliance........................................................ 63
11.5 Indemnification................................................. 63
11.6 Collateral Agent Individually................................... 63
11.7 Successor Collateral Agent...................................... 64
11.8 Collateral Matters.............................................. 64
11.9 Agency for Perfection........................................... 65
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SCHEDULES
Schedule 1.1(a) Commitments
Schedule 1.1(b) Investments
Schedule 1.1(c) Liens
Schedule 6.9 Litigation
Schedule 6.10 Tax Returns
Schedule 6.13 Subsidiaries
Schedule 6.17 Intellectual Property
Schedule 6.20 Chief Executive Office/Exact Legal Name/State of Incorporation
Schedule 6.22 Broker's Fees
Schedule 7.6 Insurance
Schedule 8.1 Indebtedness
EXHIBITS
Exhibit A Form of Borrowing Notice
Exhibit B Form of Note
Exhibit C Form of Officer's Compliance Certificate
Exhibit D [Intentionally Omitted]
Exhibit E Form of Joinder Agreement
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Credit Agreement"), dated as of December 23,
2005, is by and among PRG-SCHULTZ USA, INC., a Georgia corporation (the
"Borrower"), PRG-SCHULTZ INTERNATIONAL, INC., a Georgia corporation (the
"Parent"), each of the Domestic Subsidiaries of the Parent (such Domestic
Subsidiaries, together with the Parent, individually a "Guarantor" and
collectively the "Guarantors") and each of the Lenders identified on the
signature pages hereto (each a "Lender" and collectively, the "Lenders") and
Blum Strategic Partners II, L.P., as the collateral agent for the Lenders (in
such capacity, the "Collateral Agent").
W1TNESSETH:
The Borrower has asked the Lenders to extend credit to the Borrower
consisting of a term loan in the aggregate principal amount of $10,000,000, the
proceeds of which shall be used (i) to fund certain of the Borrower's working
capital needs, provided, that in no event shall the proceeds of the Term Loan be
used to make any severance payments or other similar payments to John Cook or
Jack Toma and (ii) to pay transaction fees and expenses related to this Credit
Agreement and the other transactions contemplated hereby. The Lenders are
severally, and not jointly, willing to extend such credit to the Borrower
subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
1.1 DEFINITIONS.
As used in this Credit Agreement, the following terms shall have the
meanings specified below unless the context otherwise requires:
"Additional Credit Party" means each Person that becomes a Guarantor
after the Closing Date by execution of a Joinder Agreement.
"Affiliate" means, with respect to any Person, any other Person (i)
directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person or (ii) directly or indirectly
owning or holding five percent (5%) or more of the Capital Stock in such
Person. For purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. Notwithstanding
the foregoing, in no event shall any Lender or any Affiliate of a Lender be
deemed an Affiliate of any Consolidated Party.
"Asset Disposition" means the disposition of any or all of the assets
(including without limitation the Capital Stock of a Subsidiary) of any
Consolidated Party whether by sale, lease, transfer or otherwise (including
pursuant to any casualty or condemnation event).
"Attorney Costs" means and includes all reasonable and documented
fees, expenses and disbursements of any law firm or other external counsel.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United
States Code, as amended, modified, succeeded or replaced from time to time.
"Bankruptcy Event" means, with respect to any Person, the occurrence
of any of the following with respect to such Person: (i) a court or
governmental agency having jurisdiction in the premises shall enter a
decree or order for relief in respect of such Person in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such Person or
for any substantial part of its Property or ordering the winding up or
liquidation of its affairs; or (ii) there shall be commenced against such
Person an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or any case, proceeding or
other action for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such Person or
for any substantial part of its Property or for the winding up or
liquidation of its affairs, and such involuntary case or other case,
proceeding or other action shall remain undismissed, undischarged or
unbonded for a period of sixty (60) consecutive days; or (iii) such Person
shall commence a voluntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or consent to the entry of
an order for relief in an involuntary case under any such law, or consent
to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of such
Person or for any substantial part of its Property or make any general
assignment for the benefit of creditors; or (iv) such Person shall be
unable to, or shall admit in writing its inability to, pay its debts
generally as they become due.
"Borrower" means the Person identified as such in the Preamble,
together with any permitted successors and assigns.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required
by law to close.
"Capital Lease" means, as applied to any Person, any lease of any
Property (whether real, personal or mixed) by that Person as lessee which,
in accordance with GAAP, is or should be accounted for as a capital lease
on the balance sheet of that Person.
"Capital Stock" means (i) in the case of a corporation, capital stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated)
of capital stock, (iii) in the case of a
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partnership, partnership interests (whether general or limited), (iv) in
the case of a limited liability company, membership interests and (v) any
other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets
of, the issuing Person.
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof) having maturities
of not more than twelve months from the date of acquisition, (b) U.S.
dollar denominated time deposits and certificates of deposit of (i) any
Lender, (ii) any domestic commercial bank of recognized standing having
capital and surplus in excess of $500,000,000 or (iii) any bank whose
short-term commercial paper rating from S&P is at least A-1 or the
equivalent thereof or from Moody's is at least P-1 or the equivalent
thereof (any such bank being an "Approved Bank"), in each case with
maturities of not more than 270 days from the date of acquisition, (c)
commercial paper and variable or fixed rate notes issued by any Approved
Bank (or by the parent company thereof) or any variable rate notes issued
by, or guaranteed by, any domestic corporation rated A-1 (or the equivalent
thereof) or better by S&P or P-1 (or the equivalent thereof) or better by
Moody's and maturing within six months of the date of acquisition, (d)
repurchase agreements entered into by any Person with a bank or trust
company or recognized securities dealer having capital and surplus in
excess of $500,000,000 for direct obligations issued by or fully guaranteed
by the United States of America in which such Person shall have a perfected
first priority security interest (subject to no other Liens) and having, on
the date of purchase thereof, a fair market value of at least 100% of the
amount of the repurchase obligations and (e) Investments, classified in
accordance with GAAP as current assets, in money market investment programs
registered under the Investment Company Act of 1940, as amended, which are
administered by reputable financial institutions having capital of at least
$500,000,000 and the portfolios of which are limited to Investments of the
character described in the foregoing subdivisions (a) through (d).
"Change of Control" means the occurrence of any of the following
events: (i) any Person or two or more Persons acting in concert shall have
acquired "beneficial ownership," directly or indirectly, of, or shall have
acquired by contract or otherwise, or shall have entered into a contract or
arrangement that, upon consummation, will result in its or their
acquisition of, control over, Voting Stock of the Parent (or other
securities convertible into such Voting Stock) representing 35% or more of
the combined voting power of all Voting Stock of the Parent, (ii) during
any period of up to 24 consecutive months, commencing after the Closing
Date, individuals who at the beginning of such 24 month period were
directors of the Parent (together with any new director whose election by
the Parent's Board of Directors or whose nomination for election by the
Parent's shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning
of such period or whose election or nomination for election was previously
so approved) cease for any reason to constitute a majority of the directors
of the Parent then in office, or (iii) the Parent shall fail to own
directly 100% of the outstanding Capital Stock of the Borrower. As used
herein,
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"beneficial ownership" shall have the meaning provided in Rule 13d-3 of the
Securities and Exchange Commission under the Securities Act of 1934.
"Closing Date" means the date hereof.
"Closing Fee" shall have the meaning assigned to such term in Section
3.5.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto, as interpreted by the rules and regulations
issued thereunder, in each case as in effect from time to time. References
to sections of the Code shall be construed also to refer to any successor
sections.
"Collateral" means a collective reference to the collateral which is
identified in, and at any time will be covered by, the Collateral
Documents.
"Collateral Agent" shall have the meaning assigned to such term in the
Preamble.
"Collateral Documents" means a collective reference to the Security
Agreement, the Pledge Agreement, the Foreign Pledge Agreements and such
other documents executed and delivered in connection with the attachment
and perfection of the Lenders' security interests and liens arising
thereunder, including without limitation, UCC financing statements and
patent and trademark filings.
"Commitment" means, with respect to each Lender, the commitment of
such Lender to make a portion of the Term Loan to the Borrower in the
amount set forth in Schedule 1.1(a) hereto, as the same may be terminated
or reduced from time to time in accordance with the terms of this Credit
Agreement.
"Compliance Certificate" means a certificate substantially in the form
of Exhibit C.
"Consolidated Capital Expenditures" means, for any period, all capital
expenditures of the Consolidated Parties on a consolidated basis for such
period, as determined in accordance with GAAP.
"Consolidated EBITDA" shall have the meaning specified therefor in the
Working Capital Loan Agreement.
"Consolidated Parties" means a collective reference to the Parent and
its Subsidiaries, and "Consolidated Party" means any one of them.
"Credit Agreement" shall have the meaning assigned to such term in the
Preamble.
"Credit Documents" means a collective reference to this Credit
Agreement, any Notes, each Joinder Agreement, the Collateral Documents and
all other related agreements and documents issued or delivered hereunder or
thereunder or pursuant hereto or thereto (in each ease as the same may be
amended, modified, restated,
4
supplemented, extended, renewed or replaced from time to time), and "Credit
Document" means any one of them.
"Credit Parties" means a collective reference to the Borrower and the
Guarantors, and "Credit Party" means any one of them.
"Credit Party Obligations" means, without duplication, all of the
obligations of the Credit Parties to the Lenders and the Collateral Agent,
the Notes, the Collateral Documents or any of the other Credit Documents
(including, but not limited to, any interest accruing after the
commencement by or against any Credit Party or any Affiliate thereof of any
proceeding under any Debtor Relief Laws naming such Person as the debtor in
such proceeding, regardless of whether such interest and fees are allowed
claims in such proceeding).
"Debt Issuance" means the issuance of any Indebtedness for borrowed
money by any Consolidated Party other than Indebtedness permitted by
Section 8.1.
"Debtor Relief Laws" means the Bankruptcy Code of the United States,
and all other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the
rights of creditors generally.
"Default" means any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"Disclosure Document" means the quarterly report of the Parent on Form
10-Q filed with the Securities and Exchange Commission for the quarterly
period ended September 30, 2005.
"Dollars" and "$" means dollars in lawful currency of the United
States of America.
"Domestic Subsidiary" means, with respect to any Person, any
Subsidiary of such Person which is incorporated or organized under the laws
of any State of the United States or the District of Columbia.
"Environmental Laws" means any and all lawful and applicable Federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants, franchises,
licenses, agreements or other governmental restrictions relating to the
environment or to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment including, without limitation,
ambient air, surface water, ground water, or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes.
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"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation,
fines, penalties or indemnities), of the Borrower or any Subsidiary of the
Parent directly or indirectly resulting from or based upon (a) violation of
any Environmental Law, (b) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials, (c) exposure to
any Hazardous Materials, (d) the release or threatened release of any
Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or
imposed with respect to any of the foregoing.
"Equity Issuance" means any issuance by any Consolidated Party to any
Person which is not a Credit Party of (a) shares of its Capital Stock, (b)
any shares of its Capital Stock pursuant to the exercise of options or
warrants or (c) any shares of its Capital Stock pursuant to the conversion
of any debt securities to equity.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto, as interpreted by the rules and
regulations thereunder, all as the same may be in effect from time to time.
References to sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA Affiliate" means an entity which is under common control with
any Consolidated Party within the meaning of Section 4001(a)(14) of ERISA,
or is a member of a group which includes any Consolidated Party and which
is treated as a single employer under Sections 414(b) or (c) of the Code.
"ERISA Event" means (i) with respect to any Plan, the occurrence of a
Reportable Event or the substantial cessation of operations (within the
meaning of Section 4062(e) of ERISA); (ii) the withdrawal by any
Consolidated Party or any ERISA Affiliate from a Multiple Employer Plan
during a plan year in which it was a substantial employer (as such term is
defined in Section 4001(a)(2) of ERISA), or the termination of a Multiple
Employer Plan; (iii) the distribution of a notice of intent to terminate or
the actual termination of a Plan pursuant to Section 4041(a)(2) or 4041A of
ERISA; (iv) the institution of proceedings to terminate or the actual
termination of a Plan by the PBGC under Section 4042 of ERISA; (v) any
event or condition which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; (vi) the complete or partial withdrawal of any
Consolidated Party or any ERISA Affiliate from a Multiemployer Plan; (vii)
the conditions for imposition of a lien under Section 302(f) of ERISA exist
with respect to any Plan; or (viii) the adoption of an amendment to any
Plan requiring the provision of security to such Plan pursuant to Section
307 of ERISA.
"Event of Default" shall have the meaning as defined in Section 9.1.
"Executive Officer" of any Person means any of the chief executive
officer, chief operating officer, president, senior vice president, chief
financial officer or treasurer of such Person.
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"Extraordinary Receipts" means any cash received by the Parent or any
of its Subsidiaries not in the ordinary course of business (and not
consisting of proceeds described in Sections 3.3(b)(ii) and (iii) hereof),
including, without limitation, (i) foreign, United States, state or local
tax refunds, (ii) pension plan reversions, (iii) proceeds of insurance,
(iv) judgments, proceeds of settlements or other consideration of any kind
in connection with any cause of action, (v) condemnation awards (and
payments in lieu thereof), (vi) indemnity payments and (vii) any purchase
price adjustment received in connection with any purchase agreement.
"Facilities" shall have the meaning assigned to such term in Section
6.16.
"First Tier Foreign Subsidiary" means each Foreign Subsidiary which is
owned directly by a Credit Party.
"Financial Statements" means the unaudited consolidated balance sheet
of the Parent and its Subsidiaries as at September 30, 2005.
"Foreign Pledge Agreement" means any pledge agreement or similar
document governed by laws other than the laws of the state of New York
entered into by any Credit Party in favor of the Lenders, in accordance
with the terms hereof, as amended, modified, restated or supplemented from
time to time.
"Foreign Subsidiary" means, with respect to any Person, any Subsidiary
of such Person which is not a Domestic Subsidiary of such Person.
"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis and subject to the terms of Section
1.3.
"Governmental Authority" means the government of the United States or
any other nation, or of any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining
to government (including any supra-national bodies such as the European
Union or the European Central Bank).
"Guarantors" means the Parent, each of the Domestic Subsidiaries of
the Parent (other than the Borrower), each of the Domestic Subsidiaries of
the Borrower, each Additional Credit Party which has executed a Joinder
Agreement, and any other Person who becomes a Guarantor, together with
their successors and permitted assigns, and "Guarantor" means any one of
them.
"Guaranty Obligations" means, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or
collection) guaranteeing or intended to guarantee any Indebtedness of any
other Person in any manner, whether direct or indirect, and including
without limitation any obligation, whether or not contingent, (i) to
purchase any such Indebtedness or any Property constituting security
therefor, (ii) to advance or provide funds or other support for the payment
or purchase of any such indebtedness or
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to maintain working capital, solvency or other balance sheet condition of
such other Person (including without limitation keep well agreements,
maintenance agreements, comfort letters or similar agreements or
arrangements) for the benefit of any holder of Indebtedness of such other
Person, (iii) to lease or purchase Property, securities or services
primarily for the purpose of assuring the holder of such Indebtedness, or
(iv) to otherwise assure or hold harmless the holder of such Indebtedness
against loss in respect thereof. The amount of any Guaranty Obligation
hereunder shall (subject to any limitations set forth therein) be deemed to
be an amount equal to the outstanding principal amount (or maximum
principal amount, if larger) of the Indebtedness in respect of which such
Guaranty Obligation is made.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or
asbestos-containing materials, polychlorinated biphenyls, radon gas,
infectious or medical wastes and all other substances or wastes of any
nature regulated pursuant to any Environmental Law.
"Hedging Agreements" means any interest rate protection agreement or
foreign currency exchange agreement.
"Immaterial Foreign Subsidiary" means, at any time, any First Tier
Foreign Subsidiary (i) for which the portion of Consolidated EBITDA
attributable to such First Tier Foreign Subsidiary does not exceed 5% of
Consolidated EBITDA for the most recently ended four fiscal quarter period
and (ii) for which the portion of Consolidated EBITDA attributable to such
First Tier Foreign Subsidiary, together with the portion of Consolidated
EBITDA attributable to all other First Tier Foreign Subsidiaries with
respect to which the Collateral Agent has not received a pledge of 66% of
Capital Stock of such First Tier Foreign Subsidiaries, does not exceed 10%
of Consolidated EBITDA for the most recently ended four fiscal quarter
period.
"Indebtedness" means, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations
of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to Property purchased by such Person (other than
customary reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business), (d) all
obligations of such Person issued or assumed as the deferred purchase price
of Property or services purchased by such Person (other than trade debt
incurred in the ordinary course of business and due within six months of
the incurrence thereof) which would appear as liabilities on a balance
sheet of such Person, (e) all obligations of such Person under take-or-pay
or similar arrangements or under commodities agreements, (f) all
Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on, or payable out of the proceeds of production from,
Property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (g) all Guaranty Obligations of such
Person, (h) the principal portion of all obligations of such Person under
Capital Leases, (i) all obligations of such Person under
8
Hedging Agreements, (j) commercial letters of credit and the maximum amount
of all standby letters of credit issued or bankers' acceptances facilities
created for the account of such Person and, without duplication, all drafts
drawn thereunder (to the extent unreimbursed), (k) the principal portion of
all obligations of such Person under Synthetic Leases, (l) all preferred
Capital Stock issued by such Person and which by the terms thereof could be
(at the request of the holders thereof or otherwise) be subject to
mandatory sinking fund payments, redemption or other acceleration by a
fixed date, (m) all obligations of such Person to repurchase any securities
issued by such Person at any time on or prior to the Maturity Date which
repurchase obligations are related to the issuance thereof, including,
without limitation, obligations commonly known as residual equity
appreciation potential shares, (n) the Indebtedness of any partnership or
unincorporated joint venture in which such Person is a general partner or a
joint venturer to the extent such Indebtedness is recourse to such Person
and (o) the aggregate amount of uncollected accounts receivable of such
Person subject at such time to a sale of receivables (or similar
transaction) to the extent such transaction is effected with recourse to
such Person (whether or not such transaction would be reflected on the
balance sheet of such Person in accordance with GAAP).
"Indenture" means that certain Indenture, dated as of November 26,
2001, between the Parent and SunTrust Bank, as trustee, as amended or
modified in accordance with the terms hereof and thereof.
"Intercreditor Agreement" means the Intercreditor and Subordination
Agreement dated as of the date hereof, by and among the Lenders, and the
Working Capital Lender in form and substance satisfactory to the Lenders,
as amended, restated, supplemented, modified or otherwise changed from time
to time in accordance with the terms thereof.
"Investment" means (a) the acquisition (whether for cash, property,
services, assumption of indebtedness, securities or otherwise) of assets,
Capital Stock, bonds, notes, debentures, partnership, joint ventures or
other ownership interests or other securities of any Person or (b) any
deposit with, or advance, loan or other extension of credit to, any Person
(other than deposits made in connection with the purchase or lease of
equipment or other assets in the ordinary course of business or the leasing
of real property in the ordinary course of business) or (c) any other
capital contribution to or investment in any Person, including, without
limitation, any Guaranty Obligations (including any support for a letter of
credit issued on behalf of such Person) incurred for the benefit of such
Person.
"Joinder Agreement" means a Joinder Agreement substantially in the
form of Exhibit E hereto, executed and delivered by an Additional Credit
Party in accordance with the provisions of Section 7.12.
"Laws" means, collectively, all international, foreign, Federal, state
and local statutes, treaties, rules, guidelines, regulations, ordinances,
codes and administrative or judicial precedents or authorities, including
the interpretation or administration thereof by any Governmental Authority
charged with the enforcement, interpretation or administration thereof, and
all applicable administrative orders, directed duties, requests,
9
licenses, authorizations and permits of, and agreements with, any
Governmental Authority.
"Lender" or "Lenders" shall have the meanings assigned to such terms
in the Preamble.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind (including any agreement to give
any of the foregoing, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the
Uniform Commercial Code as adopted and in effect in the relevant
jurisdiction or other similar recording or notice statute, and any lease in
the nature thereof).
"Loan" or "Loans" means the Term Loan or any portion thereof made by
the Lenders to the Borrower pursuant to this Credit Agreement.
"Material Adverse Effect" means, other than the Working Capital
Acknowledged Defaults and matters disclosed in the Disclosure Document, a
material adverse effect on (i) the condition (financial or otherwise),
operations, business, assets, liabilities or prospects of the Parent and
its Subsidiaries taken as a whole, (ii) the ability of any Credit Party to
perform any material obligation under the Credit Documents to which it is a
party or (iii) the material rights and remedies of the Collateral Agent or
any Lender under the Credit Documents.
"Material Foreign Subsidiary" means, at any time, any First Tier
Foreign Subsidiary of a Credit Party that is not an Immaterial Foreign
Subsidiary.
"Maturity Date" means the earlier of (i) August 15, 2006, and (ii) the
date on which the "Transactions" as defined in the Restructuring Term Sheet
shall have been substantially consummated.
"Meridian" means Meridian Corporation Limited (formerly known as
Meridian VAT Corporation Limited), a company incorporated in Jersey.
"Meridian International" means Meridian VAT Processing (International)
Limited, a company incorporated in Jersey.
"Meridian Loan" means the loan by Meridian International to Meridian
in an aggregate amount not to exceed approximately 12,700,000 Euros.
"Moody's" means Moody's Investors Service, Inc., or any successor or
assignee of the business of such company in the business of rating
securities.
"Multiemployer Plan" means a Plan which is a multiemployer plan as
defined in Sections 3(37) or 4001(a)(3) of ERISA
10
"Multiple Employer Plan" means a Plan which any Consolidated Party or
any ERISA Affiliate and at least one employer other than the Consolidated
Parties or any ERISA Affiliate are contributing sponsors.
"Net Cash Proceeds" means the aggregate cash proceeds received by the
Consolidated Parties in respect of any Asset Disposition, Equity Issuance
or Debt Issuance, net of (a) direct costs (including, without limitation,
legal, accounting and investment banking fees, sales commissions and
compensation related expenses) and (b) taxes paid or payable as a result
thereof; it being understood that "Net Cash Proceeds" shall include,
without limitation, cash received upon the sale or other disposition of any
non-cash consideration received by the Consolidated Parties in any Asset
Disposition, Equity Issuance or Debt Issuance.
"Note" shall have the meaning specified therefor in Section 3.12.
"Notice of Borrowing" shall have the meaning specified therefor in
Section 2.1(b).
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property (whether real, personal or mixed) which
is not a Capital Lease other than any such lease in which that Person is
the lessor.
"Other Taxes" shall have the meaning assigned to such term in Section
3.9.
"Parent" means PRG-Schultz International, Inc., a Georgia corporation,
together with any successors and permitted assigns.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA and any successor thereof.
"Permitted Investments" means Investments which are either (i) cash
and Cash Equivalents; (ii) accounts receivable created, acquired or made by
any Consolidated Party in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; (iii) Investments
consisting of Capital Stock, obligations, securities or other property
received by any Consolidated Party in settlement of accounts receivable
(created in the ordinary course of business) from bankrupt obligors; (iv)
Investments existing as of the Closing Date and set forth in Schedule
1.1(b); (v) Guaranty Obligations permitted by Section 8.1; (vi) advances or
loans to directors, officers, employees, agents, customers or suppliers
that do not exceed $500,000 in the aggregate at any one time outstanding
for all of the Consolidated Parties; (vii) Investments by one Credit Party
in another Credit Party (other than the Parent); (viii) Investments by the
Borrower in the Parent in an amount necessary to allow the Parent to pay
regularly scheduled interest payments on the Subordinated Debt; (ix)
Investments in Foreign Subsidiaries of the Parent in an amount not to
exceed $4,000,000 in the aggregate during the term of this Credit
Agreement; provided, however, that for purposes of calculating Investments
in Foreign Subsidiaries for purposes of this clause (ix), the actual
aggregate Investments in Foreign Subsidiaries
11
shall be reduced by an amount equal to cash repatriated to the United
States from Meridian; (x) compensation advances to commissioned auditors
made in the ordinary course of business; (xi) Investment by Meridian
International in Meridian in the form of the Meridian Loan; and (xii) other
loans, advances and Investments of a nature not contemplated in the
foregoing subsections in an amount not to exceed $1,000,000 in the
aggregate at any time outstanding.
"Permitted Liens" means:
(i) Liens in favor of the Lender to secure the Credit Party
Obligations;
(ii) Liens (other than Liens created or imposed under ERISA) for
taxes, assessments or governmental charges or levies not yet due or Liens
for taxes being contested in good faith by appropriate proceedings for
which adequate reserves determined in accordance with GAAP have been
established (and as to which the Property subject to any such Lien is not
yet subject to foreclosure, sale or loss on account thereof);
(iii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and suppliers and other Liens imposed
by law or pursuant to customary reservations or retentions of title arising
in the ordinary course of business, provided that such Liens secure only
amounts not yet due and payable or, if due and payable, are unfiled and no
other action has been taken to enforce the same or are being contested in
good faith by appropriate proceedings for which adequate reserves
determined in accordance with GAAP have been established (and as to which
the Property subject to any such Lien is not yet subject to foreclosure,
sale or loss on account thereof);
(iv) Liens (other than Liens created or imposed under ERISA) incurred
or deposits made by any Consolidated Party in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(v) Liens in connection with attachments or judgments (including
judgment or appeal bonds) provided that the judgments secured shall, within
30 days after the entry thereof, have been discharged or execution thereof
stayed pending appeal, or shall have been discharged within 30 days after
the expiration of any such stay;
(vi) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title and other similar
charges or encumbrances not, in any material respect, impairing the use of
the encumbered Property for its intended purposes;
(vii) Liens on Property of any Person securing purchase money
Indebtedness (including Capital Leases and Synthetic Leases) of such Person
to the extent permitted
12
under Section 8.1(c), provided that any such Lien attaches to such Property
concurrently with or within 90 days after the acquisition thereof;
(viii) leases or subleases granted to others not interfering in any
material respect with the business of any Consolidated Party;
(ix) normal and customary rights of setoff upon deposits of cash in
favor of banks or other depository institutions;
(x) Liens existing as of the Closing Date and set forth on Schedule
1.1(c); provided that (a) no such Lien shall at any time be extended to or
cover any Property other than the Property subject thereto on the Closing
Date and (b) the principal amount of the Indebtedness secured by such Liens
shall not be extended, renewed, refunded or refinanced;
(xi) Lien in favor of Meridian International on the Capital Stock of
PRG-Schultz UK Ltd. owned by Tamebond which Lien secures the Meridian Loan;
(xii) Liens on Property of Meridian or any of its Subsidiaries
securing those obligations of Meridian or any of its Subsidiaries permitted
under Section 8.1(h); and
(xiii) Liens granted in favor of the Working Capital Lender to secure
the obligations of the Credit Parties under the Working Capital Loan
Documents, provided that such Liens are subject to the terms of
Intercreditor Agreement or a replacement intercreditor agreement in form
and substance acceptable to the Lenders.
"Person" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any Governmental Authority.
"Plan" means any employee benefit plan (as defined in Section 3(3) of
ERISA) which is covered by ERISA and with respect to which any Consolidated
Party or any ERISA Affiliate is (or, if such plan were terminated at such
time would under Section 4069 of ERISA be deemed to be) an "employer"
within the meaning of Section 3(5) of ERISA.
"Pledge Agreement" means the pledge agreement dated as of the Closing
Date executed in favor of the Collateral Agent by each of the Credit
Parties, as amended, modified, restated or supplemented from time to time.
"Property" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Pro Rata Share" means with respect to all matters (including, without
limitation, the indemnification obligations arising under Section 10.5),
including a Lender's obligation to make a Loan constituting a portion of
the Term Loan and receive payments of interest, fees, and principal with
respect thereto, the percentage obtained by dividing (i) such Lender's
Commitment, by (ii) the Total Commitment, provided that if the Total
13
Commitment has been reduced to zero, the numerator shall be the aggregate
unpaid principal amount of such Lender's portion of the Term Loan and the
denominator shall be the aggregate unpaid principal amount of the Term
Loan.
"Regulation T, U, or X" means Regulation T, U or X, respectively, of
the Board of Governors of the Federal Reserve System as from time to time
in effect and any successor to all or a portion thereof.
"Related Parties" means, with respect to any Person, such Person's
Affiliates and the partners, directors, officers, employees, agents and
advisors of such Person and of such Person's Affiliates.
"Reportable Event" means any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the notice
requirement has been waived by regulation.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its material property
is subject.
"Required Lenders" means Lenders whose Pro Rata Share of the Term Loan
aggregate at least 65% of the aggregate outstanding principal amount of the
Term Loan.
"Restricted Payment" means (i) any dividend or other payment or
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of any Consolidated Party, now or hereafter outstanding
(including without limitation any payment in connection with any merger or
consolidation involving any Consolidated Party), or to the direct or
indirect holders of any shares of any class of Capital Stock of any
Consolidated Party, now or hereafter outstanding, in their capacity as such
(other than dividends or distributions payable in the same class of Capital
Stock of the applicable Person to any Credit Party (directly or indirectly
through Subsidiaries), (ii) any redemption, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct or
indirect, of any shares of any class of Capital Stock of any Consolidated
Party, now or hereafter outstanding and (iii) any payment made to retire,
or to obtain the surrender of, any outstanding warrants, options or other
rights to acquire shares of any class of Capital Stock of any Consolidated
Party, now or hereafter outstanding.
"Restructuring Term Sheet" means the Summary of Financial
Restructuring Term Sheet, dated December 23, 2005, describing an agreement
in principal between the Credit Parties and a committee of holders of the
notes issued by the Parent under the Indenture.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc., or any successor or assignee of the business of such division
in the business of rating securities.
14
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party,
providing for the leasing to any Consolidated Party of any Property,
whether owned by such Consolidated Party as of the Closing Date or later
acquired, which has been or is to be sold or transferred by such
Consolidated Party to such Person or to any other Person from whom funds
have been, or are to be, advanced by such Person on the security of such
Property.
"Security Agreement" means the security agreement dated as of the
Closing Date executed in favor of the Collateral Agent by each of the
Credit Parties, as amended, modified, restated or supplemented from time to
time.
"Ship & Debit Division" means the discrete unit within the Borrower
responsible for providing revenue recovery services to electronic
manufacturers and similar businesses.
"Single Employer Plan" means any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan or a Multiple Employer Plan.
"Solvent" means, with respect to the Parent and its Subsidiaries on a
consolidated basis as of a particular date, that on such date the Parent
and its Subsidiaries have on a consolidated basis an enterprise value (as a
going concern) in excess of their consolidated liabilities.
"Subordinated Debt" means the Indebtedness of the Parent evidenced by
the Indenture in an aggregate principal amount not to exceed $125,000,000.
"Subsidiary" means, as to any Person at any time, (a) any corporation
more than 50% of whose Capital Stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at such time, any class or
classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at such time owned by such Person
directly or indirectly through Subsidiaries, and (b) any partnership,
association, joint venture or other entity of which such Person directly or
indirectly through Subsidiaries owns at such time more than 50% of the
Capital Stock.
"Synthetic Lease" means any synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet financing
product where such transaction is considered borrowed money indebtedness
for tax purposes but is classified as an Operating Lease.
"Tamebond" means Tamebond Limited, a U.K. corporation.
"Taxes" shall have the meaning assigned to such term in Section 3.9.
"Term Loan" means, collectively, the term loans made by the Lenders to
the Borrower on the Closing Date pursuant to Section 2.1. The aggregate
principal amount of the Term Loan as of the Closing Date is $10,000,000.
15
"Total Commitment" means the sum of the Commitments of all the
Lenders.
"Voting Stock" means, with respect to any Person, Capital Stock issued
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to
vote has been suspended by the happening of such a contingency.
"Wholly Owned Subsidiary" of any Person means any Subsidiary 100% of
whose Voting Stock is at the time owned by such Person directly or
indirectly through other Wholly Owned Subsidiaries.
"Working Capital Acknowledged Defaults" means "Acknowledged Events of
Defaults", as such term is defined in the Working Capital Forbearance
Agreement, amended by the Working Capital Amendment, solely to the extent
such defaults are not cured or waived or the applicable provisions are not
amended or otherwise changed.
"Working Capital Amendment" shall have the meaning assigned to such
term in Section 5.1(m).
"Working Capital Borrowing Base" means the "Borrowing Base", as such
term is defined in and calculated under the Working Capital Loan Agreement
as in effect on the date hereof, including the applicable percentage (as in
effect on the Closing Date) of "Eligible Receivables" and "Eligible
Backlog" (as such terms are defined in the Working Capital Loan Agreement
as in effect on the Closing Date) set forth in such definition of
"Borrowing Base", and giving effect to any reserves (including, without
limitation, the reserve for Working Capital LC Obligations) from time to
time established by the Working Capital Lender against such Borrowing Base
in accordance with the Working Capital Loan Agreement.
"Working Capital Commitment" means the aggregate "Commitments", as
such term is defined in the Working Capital Loan Agreement.
"Working Capital Event of Default" means an "Event of Default", as
such term is defined in the Working Capital Loan Agreement.
"Working Capital Facility" means the credit facility provided to the
Borrower by the Working Capital Lender pursuant to the Working Capital Loan
Documents consisting of the Working Capital Revolving Loans and the Working
Capital LCs.
"Working Capital Forbearance Agreement" means the Forbearance
Agreement, dated as of November 8, 2005, by and among the Borrower, the
Parent and the Working Capital Lender, as amended by the Working Capital
Amendment.
"Working Capital LC Obligations" means, at any time and without
duplication, the sum of (i) the aggregate stated amount of all issued and
outstanding Working Capital LCs plus (ii) the aggregate amount of any
drawing under the Working Capital LCs for which the Working Capital Lender
has not been reimbursed.
16
"Working Capital LCs" means the letters of credit, or guaranties by
the Working Capital Lender in respect of letters of credit, issuable under
the Working Capital Loan Agreement in a maximum aggregate stated amount of
$10,000,000.
"Working Capital Lender" means Bank of America, N.A. and/or any other
lender from time to time party to the Working Capital Loan Agreement.
"Working Capital Loan Agreement" means the Amended and Restated Credit
Agreement, dated as of November 30, 2004, as supplemented by the Working
Capital Forbearance Agreement, and as amended by the Working Capital
Amendment, by and among the Credit Parties and the Working Capital Lender,
as amended, restated, modified, supplemented, renewed, replaced or
otherwise changed from time to time.
"Working Capital Loan Documents" means the "Credit Documents", as such
term is defined in the Working Capital Loan Agreement, as amended,
restated, modified, supplemented, renewed, replaced or otherwise changed
from time to time pursuant to the terms of this Credit Agreement.
"Working Capital Loans" means the revolving credit loans made or to be
made to the Borrower by the Working Capital Lender pursuant to the Working
Capital Loan Agreement.
"Working Capital Revolving Commitment" means the commitment of certain
Working Capital Lender to make Working Capital Loans to the Borrower and
assist the Borrower with the issuance of Working Capital LCs pursuant to
the Working Capital Loan Agreement in the aggregate principal amount of
$30,000,000, as the same may be reduced or terminated pursuant to the
Working Capital Loan Agreement.
1.2 COMPUTATION OF TIME PERIODS.
For purposes of computation of periods of time hereunder, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding."
1.3 ACCOUNTING TERMS.
Except as otherwise expressly provided herein, all accounting terms used
herein shall be interpreted, and all financial statements and certificates and
reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 7.1;
provided, however, if (a) the Credit Parties shall object to determining such
compliance on such basis at the time of delivery of such financial statements
due to any change in GAAP or the rules promulgated with respect thereto or (b)
the Required Lenders shall so object in writing within 60 days after delivery of
such financial statements, then such calculations shall be made on a basis
consistent with the most recent financial statements delivered by the Credit
Parties to the Lenders as to which no such objection shall have been made.
17
SECTION 2
CREDIT FACILITIES
2.1 TERM LOAN.
(a) Term Loan. Subject to the terms and conditions hereof and in
reliance upon the representations and warranties set forth herein, each Lender
severally agrees to make such Lender's Pro Rata Share of the Term Loan to the
Borrower on the Closing Date, in an aggregate principal amount not to exceed the
amount of such Lender's Commitment. The aggregate principal amount of the Term
Loan made by all Lenders on the Closing Date shall not exceed the Total
Commitment. Any principal amount of the Term Loan which is repaid or prepaid may
not be reborrowed.
(b) TErm Loan Borrowing. (i) The Borrower shall give the Lenders prior
telephonic notice (immediately confirmed in writing, in substantially the form
of Exhibit A hereto (the "Notice of Borrowing")), not later than 1:00 p.m. (New
York City time) on the date which is three (3) Business Days prior to the date
of the proposed Term Loan (or such shorter period to the extent agreed to by all
of the Lenders). The Notice of Borrowing shall be irrevocable and shall specify
(i) the principal amount of the proposed Term Loan, and (ii) the proposed
borrowing date, which must be a Business Day, and must be the Closing Date. The
Lenders may act without liability upon the basis of written, telecopied or
telephonic notice believed by the Lenders in good faith to be from the Borrower
(or from any Executive Officer thereof designated in writing purportedly from
the Borrower to the Lenders). The Borrower hereby waives the right to dispute
the Lenders' record of the terms of any such telephonic Notice of Borrowing.
Each Lender shall be entitled to rely conclusively on any Executive Officer's
authority to request the Term Loan on behalf of the Borrower until the Lenders
receive written notice to the contrary. The Lenders shall have no duty to verify
the authenticity of the signature appearing on any written Notice of Borrowing.
(ii) The Notice of Borrowing pursuant to this Section 2.1(b) shall be
irrevocable and the Borrower shall be bound to make a borrowing in
accordance therewith.
(iii) All Loans under this Credit Agreement shall be made by the
Lenders simultaneously and proportionately to their Pro Rata Shares of the
Total Commitment, it being understood that no Lender shall be responsible
for any default by any other Lender in that other Lender's obligations to
make a Loan requested hereunder, nor shall the Commitment of any Lender be
increased or decreased as a result of the default by any other Lender in
that other Lender's obligation to make any Loan requested hereunder, and
each Lender shall be obligated to make the Loans required to be made by it
by the terms of this Credit Agreement regardless of the failure by any
other Lender.
(c) Repayment. The principal amount of the Term Loan shall be due and
payable in full on the Maturity Date, unless accelerated sooner pursuant to
Section 9.2.
18
(d) Interest. Subject to the provisions of Section 3.1, the Term Loan
shall bear interest at a per annum rate equal to twelve percent (12%). Interest
on the Term Loan shall be payable monthly in arrears on the last Business Day of
each calendar month (or at such other times as may be specified herein).
2.2 [INTENTIONALLY OMITTED]
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 DEFAULT RATE.
Upon the occurrence, and during the continuance, of an Event of Default,
the principal of and, to the extent permitted by law, interest on the Loans and
any other amounts owing hereunder or under the other Credit Documents shall bear
interest, payable on demand, at a per annum rate equal to 14%.
3.2 [INTENTIONALLY OMITTED]
3.3 PREPAYMENTS.
(a) Voluntary Prepayments. Subject to the terms of the Intercreditor
Agreement, the Borrower shall have the right to prepay the Term Loan in whole or
in part from time to time; provided, that (i) the Term Loan may be prepaid by
the Borrower giving notice to the Lender (which may be given by telephone) no
later than 11:00 a.m. (New York City time) on the date of the requested
prepayment and (ii) each partial prepayment of the Term Loan shall be in a
minimum principal amount of $1,000,000 and integral multiples of $1,000,000
(unless the amount of Term Loan outstanding immediately prior to such prepayment
is less than $1,000,000). All prepayments under this Section 3.3(a), shall be
made without premium or penalty and shall be applied to the Term Loan ratably.
(b) Mandatory Prepayments.
(i) Extraordinary Receipts. Subject to the terms of Intercreditor
Agreement, upon the receipt by any Credit Party or any of its
Subsidiaries of any Extraordinary Receipts, the Borrower shall prepay
the outstanding principal of the Term Loan in an amount equal to 100%
of such Extraordinary Receipts, net of any reasonable expenses
incurred in collecting such Extraordinary Receipts.
(ii) Asset Disposition. Subject to the terms of the Intercreditor
Agreement, the Borrower shall immediately prepay the Term Loan in an
aggregate amount equal to one hundred percent (100%) of the Net Cash
Proceeds of any Asset Disposition (other than any Asset Disposition
permitted by Section 8.5(i), (ii), (iii), (iv) or (v)) (to be applied
as set forth in Section 3.3(c) below).
(iii) Equity Issuance. Subject to the terms of the Intercreditor
Agreement, immediately upon receipt by a Credit Party or any of its
Subsidiaries
19
(other than the Parent) of proceeds from any Equity Issuance, the
Borrower shall prepay the Term Loan in an aggregate amount equal to
100% of the Net Cash Proceeds of such Equity Issuance to the Lenders
(such prepayment to be applied as set forth in Section 3.3(c) below).
(iv) Debt Issuance. Subject to the terms of the Intercreditor
Agreement, immediately upon receipt by a Credit Party or any of its
Subsidiaries of proceeds from any Debt Issuance, the Borrower shall
prepay the Term Loan in an aggregate amount equal to 100% of the Net
Cash Proceeds of such Debt Issuance to the Lenders (such prepayment to
be applied as set forth in Section 3.3(c) below).
(v) Working Capital Acceleration. The Borrower will immediately
prepay the outstanding principal amount of the Term Loan in the event
that the Working Capital Commitment or the Working Capital Loan
Documents are terminated as a result of an acceleration of the
indebtedness thereunder (it being agreed that the maturity of the
Working Capital Facility solely in accordance with its terms and
without further action by the Working Capital Lender (e.g., upon its
scheduled maturity date) shall not constitute an acceleration).
(c) Application of Mandatory Prepayments. All amounts required to be
paid pursuant to Section 3.3(b) shall be applied to repay the Term Loan ratably.
All prepayments under this Section 3.3(c) shall be subject to Section 3.11.
3.4 TERMINATION THE COMMITMENT. The Total Commitment shall terminate at
5:00 p.m. (New York City time) on the Closing Date.
3.5 FEES. On or prior to the Closing Date, the Borrower shall pay to the
Lenders, in accordance with their respective Pro Rata Shares, a non-refundable
closing fee (the "Closing Fee") equal to $225,000, which shall be deemed fully
earned when paid.
3.6 [INTENTIONALLY OMITTED]
3.7 [INTENTIONALLY OMITTED]
3.8 [INTENTIONALLY OMITTED]
3.9 TAXES.
(a) Any and all payments by any Credit Party to or for the account of
any Lender hereunder or under any other Credit Document shall be made free and
clear of and without deduction for any and all present or future taxes, duties,
levies, imposts, deductions, assessments, fees, withholdings or similar charges,
and all liabilities with respect thereto, excluding taxes imposed on or measured
by such Lender's overall net income, and franchise or similar taxes imposed on
such Lender (in lieu of, or in addition to, net income taxes), by the
jurisdiction (or any political subdivision thereof) under the Laws of which such
Lender is organized or maintains a lending office (all such non-excluded taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and liabilities being hereinafter
20
referred to as "Taxes"). If any Credit Party shall be required by any Laws to
deduct any Taxes from or in respect of any sum payable under any Credit Document
to any Lender, (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section), such Lender receives an amount equal to the
sum it would have received had no such deductions been made, (ii) such Credit
Party shall make such deductions, (iii) such Credit Party shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable Laws, and (iv) within thirty days after the date of
such payment, such Credit Party shall finish to such Lender the original or a
certified copy of a receipt evidencing payment thereof or, if no such receipt is
available, other evidence of payment reasonably satisfactory to such Lender.
(b) In addition, the Borrower agrees to pay any and all present or
future stamp, count or documentary taxes and any other excise or property taxes
or charges or similar levies which arise from any payment made under any Credit
Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Credit Document (hereinafter
referred to as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender for (i) the full
amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or
asserted by any jurisdiction on amounts payable under this Section) paid by such
Lender, and (ii) any liability (including additions to tax, penalties, interest
and expenses) arising therefrom or with respect thereto, in each ease whether or
not such Taxes or Other Taxes were correctly or legally imposed or asserted by
the relevant Governmental Authority. Payment under this subsection (c) shall be
made within thirty days after the date such Lender makes a demand therefor.
3.10 [INTENTIONALLY OMITTED]
3.11 PAYMENTS COMPUTATIONS, ETC.
Except as otherwise specifically provided herein, all payments hereunder
shall be made to the Lenders in Dollars in immediately available funds, without
condition or deduction for any counterclaim, defense, recoupment or setoff not
later than 2:00 p.m. (New York City time) on the date when due. Payments
received after such time shall be deemed to have been received on the next
succeeding Business Day. Each Lender may (but shall not be obligated to) debit
the amount of any such payment which is not made by such time to any ordinary
deposit account of the Borrower or any other Credit Party maintained with such
Lender (with notice to the Borrower or such other Credit Party). The Borrower
shall, at the time it makes any payment under this Credit Agreement, specify to
the Lenders the Loans, the Closing Fee, interest or other amounts payable by the
Borrower hereunder to which such payment is to be applied. Whenever any payment
hereunder shall be stated to be due on a day which is not a Business Day, the
due date thereof shall be extended to the next succeeding Business Day (subject
to accrual of interest and the Closing Fee for the period of such extension).
All computations of interest and fees shall be made on the basis of actual
number of days elapsed over a year of 360 days. Interest shall accrue from and
include the date of borrowing, but exclude the date of payment.
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3.12 EVIDENCE OF DEBT.
The Loans made by each Lender shall be evidenced by one or more accounts or
records maintained by such Lender in the ordinary course of business. The
accounts or records maintained by such Lender shall be prima fade evidence of
the existence of the amount of the Loans made by such Lender to the Borrower and
the interest and payments thereon. Any failure to so record or any error in
doing so shall not, however, limit or otherwise affect the obligation of the
Borrower hereunder to pay any amount owing with respect to the Credit Party
Obligations. The Borrower shall execute and deliver to such Lender a promissory
note, which shall evidence such Lender's Pro Rata Share of the Term Loan in
addition to such accounts or records. Each promissory note shall be in the form
of Exhibit B (each a "Note" and, collectively, the "Notes"). The Lenders may
attach schedules to the Note and endorse thereon the date, amount and maturity
of its Loans and payments with respect thereto.
SECTION 4
GUARANTY
4.1 THE GUARANTY.
Each of the Guarantors hereby jointly and severally guarantees to each
Lender, as primary obligor and not as surety, the prompt payment of the Credit
Party Obligations in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration, as a mandatory cash collateralization or otherwise)
strictly in accordance with the terms thereof. The Guarantors hereby further
agree that if any of the Credit Party Obligations are not paid in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration, as a
mandatory cash collateralization or otherwise), the Guarantors will, jointly and
severally, promptly pay the same, without any demand or notice whatsoever, and
that in the case of any extension of time of payment or renewal of any of the
Credit Party Obligations, the same will be promptly paid in full when due
(whether at extended maturity, as a mandatory prepayment, by acceleration, as a
mandatory cash collateralization or otherwise) in accordance with the terms of
such extension or renewal.
Notwithstanding any provision to the contrary contained herein or in any
other Credit Documents, the obligations of each Guarantor under this Credit
Agreement and the other Credit Documents shall be limited to an aggregate amount
equal to the largest amount that would not render such obligations subject to
avoidance under the Debtor Relief Laws or any comparable provisions of any
applicable state law.
4.2 OBLIGATIONS UNCONDITIONAL.
The obligations of the Guarantors under Section 4.1 are joint and several,
absolute and unconditional, irrespective of the value, genuineness, validity,
regularity or enforceability of any of the Credit Documents or any other
agreement or instrument referred to therein, or any substitution, release,
impairment or exchange of any other guarantee of or security for any of the
Credit Party Obligations, and, to the fullest extent permitted by applicable
law, irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable
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discharge or defense of a surety or guarantor, it being the intent of this
Section 4.2 that the obligations of the Guarantors hereunder shall be absolute
and unconditional under any and all circumstances. Each Guarantor agrees that
such Guarantor shall have no right of subrogation, indemnity, reimbursement or
contribution against the Borrower or any other Guarantor for amounts paid under
this Section 4 until such time as all Lenders have been paid in full and the
Credit Agreement shall have been terminated and no Person or Governmental
Authority shall have any right to request any return or reimbursement of funds
from the Lenders in connection with monies received under the Credit Documents.
Without limiting the generality of the foregoing, it is agreed that, to the
fullest extent permitted by law, the occurrence of any one or more of the
following shall not alter or impair the liability of any Guarantor hereunder
which shall remain absolute and unconditional as described above:
(a) at any time or from time to time without notice to any Guarantor,
the time for any performance of or compliance with any of the Credit Party
Obligations shall be extended, or such performance or compliance shall be
waived;
(b) any of the acts mentioned in any of the provisions of any of the
Credit Documents or any other agreement or instrument referred to in the Credit
Documents shall be done or omitted;
(c) the maturity of any of the Credit Party Obligations shall be
accelerated, or any of the Credit Party Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the Credit
Documents or any other agreement or instrument referred to in the Credit
Documents shall be waived or any other guarantee of any of the Credit Party
Obligations or any security therefor shall be released, impaired or exchanged in
whole or in part or otherwise dealt with;
(d) any Lien granted to, or in favor of, the Lenders as security for
any of the Credit Party Obligations shall fail to attach or be perfected; or
(e) any of the Credit Party Obligations shall be determined to be void
or voidable (including, without limitation, for the benefit of any creditor of
any Guarantor) or shall be subordinated to the claims of any Person (including,
without limitation, any creditor of any Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Lenders exhaust any right, power or
remedy or proceed against any Person under any of the Credit Documents or any
other agreement or instrument referred to in the Credit Documents, or against
any other Person under any other guarantee of, or security for, any of the
Credit Party Obligations.
4.3 REINSTATEMENT.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Credit Party Obligations is
rescinded or must be otherwise restored by any holder of any of the Credit Party
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization
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or otherwise, and each Guarantor agrees that it will indemnify each Lender and
the Collateral Agent on demand for all reasonable costs and expenses (including,
without limitation, reasonable fees and expenses of counsel) incurred by such
Lender and the Collateral Agent in connection with such rescission or
restoration, including any such reasonable costs and expenses incurred in
defending against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.
4.4 CERTAIN ADDITIONAL WAIVERS.
Each Guarantor agrees that such Guarantor shall have no right of recourse
to security for the Credit Party Obligations, except through the exercise of
rights of subrogation pursuant to Section 4.2 and through the exercise of rights
of contribution pursuant to Section 4.6.
4.5 REMEDIES.
The Guarantors agree that, to the fullest extent permitted by law, as
between the Guarantors, on the one hand, and the Lenders, on the other hand, the
Credit Party Obligations may be declared to be forthwith due and payable as
provided in Section 9.2 (and shall be deemed to have become automatically due
and payable in the circumstances provided in said Section 9.2) for purposes of
Section 4.1 notwithstanding any stay, injunction or other prohibition preventing
such declaration (or preventing the Credit Party Obligations from becoming
automatically due and payable) as against any other Person and that, in the
event of such declaration (or the Credit Party Obligations being deemed to have
become automatically due and payable), the Credit Party Obligations (whether or
not due and payable by any other Person) shall forthwith become due and payable
by the Guarantors for purposes of Section 4.1. The Guarantors acknowledge and
agree that their obligations hereunder are secured in accordance with the terms
of the Security Agreement, the Pledge Agreement and the other Collateral
Documents and that each Lender may exercise its remedies thereunder in
accordance with the terms thereof.
4.6 RIGHTS OF CONTRIBUTION.
The Guarantors hereby agree as among themselves that, in connection with
payments made hereunder, each Guarantor shall have a right of contribution from
each other Guarantor in accordance with applicable Law. Such contribution rights
shall be subordinate and subject in right of payment to the Credit Party
Obligations until such time as the Credit Party Obligations have been
irrevocably paid in full and the commitments relating thereto shall have expired
or been terminated, and none of the Guarantors shall exercise any such
contribution rights until the Credit Party Obligations have been irrevocably
paid in full and the commitments relating thereto shall have expired or been
terminated.
4.7 GUARANTEE OF PAYMENT; CONTINUING GUARANTEE.
The guarantee in this Section 4 is a guaranty of payment and not of
collection, is a continuing guarantee, and shall apply to all Credit Party
Obligations whenever arising.
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SECTION 5
CONDITIONS
5.1 CLOSING CONDITIONS.
The obligation of each Lender to enter into this Credit Agreement and to
make its Pro Rata Share of the Term Loan, shall be subject to satisfaction or
waiver of the following conditions (in form and substance acceptable to such
Lender in its reasonable discretion):
(a) Executed Credit Documents. Receipt by the Lenders of duly executed
copies of: (i) this Credit Agreement, (ii) the Notes, (iii) the Collateral
Documents (other than the Foreign Pledge Agreements), (iv) the Intercreditor
Agreement and (v) all other Credit Documents, each in form and substance
acceptable to each Lender in its reasonable discretion.
(b) Corporate Documents. Receipt by the Lenders of the following:
(i) Charter Documents. Copies of the articles or certificates of
incorporation or other charter documents (collectively,
"Organizational Documents") of the Borrower and the Parent certified
to be true and complete as of a recent date by the appropriate
Governmental Authority of the state or other jurisdiction of its
incorporation and copies of all Organizational Documents of all Credit
Parties certified by a secretary or assistant secretary of such Credit
Party to be true and correct as of the Closing Date.
(ii) Bylaws. A copy of the bylaws of each Credit Party certified
by a secretary or assistant secretary of such Credit Party to be true
and correct as of the Closing Date.
(iii) Resolutions. Copies of resolutions of the Board of
Directors of each Credit Party approving and adopting the Credit
Documents to which it is a party, the transactions contemplated
therein and authorizing execution and delivery thereof, certified by a
secretary or assistant secretary of such Credit Party to be true and
correct and in force and effect as of the Closing Date.
(iv) Good Standing. Copies of certificates of good standing,
existence or its equivalent with respect to the Borrower and the
Parent certified as of a recent date by the appropriate Governmental
Authorities of the state or other jurisdiction of incorporation.
(v) Incumbency. An incumbency certificate of each Credit Party
certified by a secretary or assistant secretary to be true and correct
as of the Closing Date.
(c) [Intentionally Omitted]
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(d) Opinions of Counsel. The Lenders shall have received a legal
opinion in form and substance reasonably satisfactory to the Lenders dated as of
the Closing Date from counsel to the Credit Parties.
(e) Personal Property Collateral. The Lenders shall have received:
(i) searches of Uniform Commercial Code filings in the
jurisdiction of the chief executive office of each Credit Party and,
if requested, each jurisdiction where any Collateral is located or
where a filing would need to be made in order to perfect the Lenders'
security interest in the Collateral (it being understood and agreed
that liens are not to be perfected with respect to personal property
located in certain field offices), copies of the financing statements
on file in such jurisdictions and evidence that no Liens exist other
than Permitted Liens;
(ii) duly authorized UCC financing statements for each
appropriate jurisdiction as is necessary, in the Lenders' reasonable
discretion, to perfect the Collateral Agent's security interest in the
Collateral;
(iii) searches of ownership of intellectual property in the
appropriate governmental offices and such patent/trademark/copyright
filings as requested by the Lenders in order to perfect the Collateral
Agent's security interest in the Collateral;
(iv) copies of all stock certificates evidencing the Capital
Stock pledged to the Collateral Agent pursuant to the Pledge
Agreement, together with copies of the duly executed in blank, undated
stock powers and other instruments of transfer attached thereto
(unless, with respect to the pledged Capital Stock of any Foreign
Subsidiary, such stock powers are deemed unnecessary by the Lenders in
their reasonable discretion under the law of the jurisdiction of
incorporation of such Person), provided that the originals of such
promissory notes, stock certificates, stock powers and other
instruments of transfer shall have been delivered to the Working
Capital Lender and held by it as bailee for the Lenders, subject to
the terms of Intercreditor Agreement;
(v) such patent/trademark/copyright filings as requested by the
Lenders in order to perfect the Collateral Agent's security interest
in the Collateral; and
(vi) duly executed consents as are necessary, in the Lenders'
sole discretion, to perfect the Collateral Agent's security interest
in the Collateral.
(f) Priority of Liens. The Lenders shall have received satisfactory
evidence that (i) the Collateral Agent holds a perfected, first priority Lien on
all Collateral (subject in priority solely to the Liens in favor of the Working
Capital Lender) and (ii) none of the Collateral is subject to any other Liens
other than Permitted Liens.
(g) [Intentionally Omitted]
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(h) Material Adverse Effect. Except for the Working Capital
Acknowledged Defaults and as otherwise disclosed in the Disclosure Documents, no
material adverse change shall have occurred since September 30, 2005 in the
condition (financial or otherwise), business, assets, operations, management or
prospects of the Consolidated Parties taken as a whole.
(i) Litigation. There shall not exist any pending or threatened
action, suit, investigation or proceeding against a Consolidated Party that
could reasonably be expected to have a Material Adverse Effect.
(j) Officer's Certificates. The Lenders shall have received a
certificate or certificates executed by an Executive Officer of the Borrower as
of the Closing Date stating that (A) each Credit Party is in compliance with all
existing financial obligations (other than the Working Capital Acknowledged
Events of Default), (B) all material governmental, shareholder and third party
consents and approvals, if any, necessary in connection with respect to the
Credit Documents and the transactions contemplated thereby have been obtained,
(C) no action, suit, investigation or proceeding is pending or, to the knowledge
of such Executive Officer, threatened in any court or before any arbitrator or
governmental instrumentality that purports to affect any Credit Party or any
transaction contemplated by the Credit Documents, if such action, suit,
investigation or proceeding could reasonably be expected to have a Material
Adverse Effect, and (D) immediately after giving effect to this Credit
Agreement, the other Credit Documents and all the transactions contemplated
therein to occur on such date, (1) the Parent and its Subsidiaries, taken as a
whole, are Solvent, (2) no Default or Event of Default exists, (3) all
representations and warranties contained herein and in the other Credit
Documents are true and correct in all material respects (unless such
representation or warranty was made as of a specified date, in which case such
representation or warranty shall be true and correct only as of such specified
date), (4) the Credit Parties are in compliance with each of the financial
covenants set forth in Section 7.11 of the Working Capital Loan Agreement, and
(5) except for the Working Capital Acknowledged Defaults, no Working Capital
Event of Default exists.
(k) Fees and Expenses. Payment by the Credit Parties of all fees and
expenses owed by them to the Lenders.
(l) Representations and Warranties; No Event of Default. The following
statements shall be true and correct: (i) the representations and warranties
contained in Section 6 and in each other Credit Document, certificate or other
writing delivered to the Collateral Agent and the Lenders or pursuant hereto or
thereto on or prior to the Closing Date are true and correct on and as of the
Closing Date as though made on and as of such date (unless such representation
or warranty was made as of a specified date, in which case such representation
or warranty shall be true and correct only as of such specified date), (ii) no
Default or Event of Default shall have occurred and be continuing on the Closing
Date or would result from this Credit Agreement or the other Credit Documents
becoming effective in accordance with its or their respective terms and (iii)
except for the Working Capital Acknowledged Defaults, no "default", "event of
default' or similar event shall have occurred and be continuing, and no
forbearance from exercising remedies in respect thereof shall exist, on the
Closing Date under any Working Capital Loan Document or the Indenture or would
result from this Credit Agreement or the other Credit Documents becoming
effective in accordance with its or their respective terms.
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(m) Amendment to Working Capital Loan Agreement. The Lenders shall
have been satisfied with the amendment to Working Capital Loan Agreement and the
Working Capital Forbearance Agreement permitting the transactions contemplated
under this Credit Agreement and a copy of such amendment shall be certified on
behalf of the Borrower by an Executive Officer (the "Working Capital
Amendment").
(n) Working Capital Loan Documents; Indenture. The Lenders shall have
received copies of the Working Capital Loan Documents, the Indenture and the
other documents related thereto, in each case, as in effect on the Closing Date,
certified as true, complete and correct copies thereof by an Executive Officer
of the Borrower, together with a certificate of an Executive Officer of the
Borrower stating that such agreements remain in full force and effect.
(o) Due Diligence. Each Lender shall have completed its legal due
diligence with respect to each Credit Party and the Collateral and the results
thereof shall be reasonably acceptable to each Lender in its sole discretion.
Without limiting the foregoing, each Lender and its counsel shall have (i)
completed a review of all ERISA, environmental, tax, regulatory, material
permits, accounting, litigation, material contracts and labor matters, (ii)
completed a review of all Working Capital Loan Documents, in each case of
clauses (i) and (ii) above, the results of which shall be reasonably
satisfactory to such Lender.
(p) Restructuring Term Sheet. The Lenders shall been satisfied in
their sole reasonable discretion with the terms of the Restructuring Term Sheet.
(q) Interest Payment under the Indenture. The Lenders shall have
received satisfactory evidence that the interest payment due under the Indenture
shall have been made.
(r) Other. Receipt by the Lenders of such other documents,
instruments, agreements or information as reasonably requested by the Lenders,
including, but not limited to, information regarding litigation, tax,
accounting, labor, insurance, pension liabilities (actual or contingent), real
estate leases, material contracts, debt agreements, property ownership and
contingent liabilities of the Consolidated Parties.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Lenders that:
6.1 FINANCIAL CONDITION.
The Financial Statements delivered to the Lenders (i) have been prepared in
accordance with GAAP and (ii) present fairly (on the basis disclosed in the
footnotes to such financial statements) the consolidated financial condition,
results of operations and cash flows of the Consolidated Parties as of such date
and for such periods.
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6.2 NO MATERIAL CHANGE.
Since September 30, 2005 (a) there has been no development or event
relating to or affecting a Consolidated Party which has had or could reasonably
be expected to have a Material Adverse Effect and (b) except as otherwise
permitted under this Credit Agreement, no dividends or other distributions have
been declared, paid or made upon the Capital Stock in a Consolidated Party nor
has any of the Capital Stock in a Consolidated Party been redeemed, retired,
purchased or otherwise acquired for value.
6.3 ORGANIZATION AND GOOD STANDING.
Each of the Consolidated Parties (a) is duly organized, validly existing
and is in good standing under the Laws of the jurisdiction of its incorporation
or organization, (b) has the corporate or other necessary power and authority,
and the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged
and (c) is duly qualified as a foreign entity and in good standing under the
Laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification, other than in the case
of clauses (a) (other than with respect to the Borrower) (b) and (c) where such
failures could not be reasonably expected to have a Material Adverse Effect.
6.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
Each of the Credit Parties has the corporate or other necessary power and
authority, and the legal right, to make, deliver and perform the Credit
Documents to which it is a party, and in the case of the Borrower, to obtain
extensions of credit hereunder, and has taken all necessary corporate action to
authorize the borrowings and other extensions of credit on the terms and
conditions of this Credit Agreement and to authorize the execution, delivery and
performance of the Credit Documents to which it is a party. No consent or
authorization of, filing with, notice to or other similar act by or in respect
of, any Governmental Authority or any other Person is required to be obtained or
made by or on behalf of any Credit Party in connection with the borrowings or
other extensions of credit hereunder or with the execution, delivery,
performance, validity or enforceability of the Credit Documents to which such
Credit Party is a party, except (i) for filings to perfect the Liens created by
the Collateral Documents, (ii) for consents, authorizations, notices or similar
acts which will be obtained on or before, and are in full force and effect as
of, the Closing Date or (iii) where the failure to obtain such consents,
authorizations or notices or make such similar acts is immaterial. This Credit
Agreement has been, and each other Credit Document to which any Credit Party is
a party will be, duly executed and delivered on behalf of the Credit Parties.
This Credit Agreement constitutes, and each other Credit Document to which any
Credit Party is a party when executed and delivered will constitute, a legal,
valid and binding obligation of such Credit Party enforceable against such party
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
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6.5 NO CONFLICTS.
Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and provisions thereof by such Credit Party will (a)
violate or conflict with any provision of its articles or certificate of
incorporation or bylaws or other organizational or governing documents of such
Person, (b) violate, contravene or materially conflict with any Requirement of
Law or any other law, regulation (including, without limitation, Regulation U or
Regulation X), order, writ, judgment, injunction, decree or permit applicable to
it, (c) violate, contravene or conflict with contractual provisions of, or cause
an event of default under, any Working Capital Loan Documents, any indenture
(including, to the extent applicable, the Indenture), loan agreement, mortgage,
deed of trust, contract or other agreement or instrument to which it is a party
or by which it may be bound, the violation of which could reasonably be expected
to have a Material Adverse Effect, or (d) result in or require the creation of
any Lien (other than those contemplated in or created in connection with the
Credit Documents) upon or with respect to its properties.
6.6 NO DEFAULT.
No Consolidated Party is in default in any respect under any contract,
lease, loan agreement, indenture (including, to the extent applicable, the
Indenture after giving effect to the interest payment with the proceeds of the
Term Loan), mortgage, security agreement, Working Capital Loan Document (other
than the Working Capital Acknowledged Defaults) or other agreement or obligation
to which it is a party or by which any of its properties is bound which default
could have a Material Adverse Effect. No Default or Event of Default has
occurred or exists except as previously disclosed in writing to the Lenders.
6.7 OWNERSHIP.
Each Consolidated Party is the owner of, and has good and marketable title
to, all of its respective assets material to the conduct of its business and
none of such assets is subject to any Lien other than Permitted Liens.
6.8 INDEBTEDNESS.
Except as otherwise permitted under Section 8.1, the Consolidated Parties
have no Indebtedness.
6.9 LITIGATION.
Except as provided on Schedule 6.9, there are no actions, suits or legal,
equitable, arbitration or administrative proceedings, pending or, to the
knowledge of any Credit Party, threatened against any Consolidated Party which
could reasonably be expected to have a Material Adverse Effect.
6.10 TAXES.
Each Consolidated Party has filed, or caused to be filed (except for those
tax returns identified on Schedule 6.10), all tax returns (federal, state, local
and foreign) required to be filed
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and paid (a) all amounts of taxes shown thereon to be due (including interest
and penalties) and (b) all other taxes, fees, assessments and other governmental
charges (including mortgage recording taxes, documentary stamp taxes and
intangibles taxes) owing by it, except for such taxes (i) which are not yet
delinquent or (ii) that are being contested in good faith and by proper
proceedings, and against which adequate reserves are being maintained in
accordance with GAAP. No Credit Party is aware as of the Closing Date of any
proposed tax assessments against it or any other Consolidated Party.
6.11 COMPLIANCE WITH LAW.
Each Consolidated Party is in compliance with all Requirements of Law and
all other laws, rules, regulations, orders and decrees (including without
limitation Environmental Laws) applicable to it, or to its properties, unless
such failure to comply could reasonably be expected to have a Material Adverse
Effect.
6.12 ERISA.
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no ERISA Event has occurred, and, to
the best knowledge of the Credit Parties, no event or condition has occurred or
exists as a result of which any ERISA Event could reasonably be expected to
occur, with respect to any Plan; (ii) no "accumulated funding deficiency," as
such term is defined in Section 302 of ERISA and Section 412 of the Code,
whether or not waived, has occurred with respect to any Plan; (iii) each Plan
has been maintained, operated, and funded in material compliance with its own
terms and in material compliance with the provisions of ERISA, the Code, and any
other applicable federal or state laws; and (iv) no Lien in favor of the PBGC or
a Plan has arisen or is reasonably likely to arise on account of any Plan.
(b) The actuarial present value of all "benefit liabilities" (as
defined in Section 4001(a)(16) of ERISA), whether or not vested, under each
Single Employer Plan, as of the last annual valuation date prior to the date on
which this representation is made or deemed made (determined, in each case, in
accordance with Financial Accounting Standards Board Statement 87, utilizing the
actuarial assumptions used in such Plan's most recent actuarial valuation
report), did not exceed as of such valuation date the fair market value of the
assets of such Plan.
(c) Neither any Consolidated Party nor any ERISA Affiliate has
incurred, or, to the best knowledge of the Credit Parties, could be reasonably
expected to incur, any withdrawal liability under ERISA to any Multiemployer
Plan or Multiple Employer Plan. Neither any Consolidated Party nor any ERISA
Affiliate would become subject to any withdrawal liability under ERISA if any
Consolidated Party or any ERISA Affiliate were to withdraw completely from all
Multiemployer Plans and Multiple Employer Plans as of the valuation date most
closely preceding the date on which this representation is made or deemed made.
Neither any Consolidated Party nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization (within the
meaning of Section 4241 of ERISA), is insolvent (within the meaning of Section
4245 of ERISA), or has been terminated (within the meaning of Title IV of
ERISA), and no Multiemployer Plan is, to the best knowledge of the Credit
Parties, reasonably expected to be in reorganization, insolvent, or terminated.
31
(d) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary responsibility has
occurred with respect to a Plan which has subjected or may subject any
Consolidated Party or any ERISA Affiliate to any material liability under
Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or
under any agreement or other instrument pursuant to which any Consolidated Party
or any ERISA Affiliate has agreed or is required to indemnify any Person against
any such material liability.
(e) Neither any Consolidated Party nor any ERISA Affiliates has any
material liability with respect to "expected post-retirement benefit
obligations" within the meaning of the Financial Accounting Standards Board
Statement 106. Each Plan which is a welfare plan (as defined in Section 3(1) of
ERISA) to which Sections 601-609 of ERISA and Section 4980B of the Code apply
has been administered in compliance in all material respects of such sections.
(f) Neither the execution and delivery of this Credit Agreement nor
the consummation of the financing transactions contemplated thereunder will
involve any transaction which is subject to the prohibitions of Sections 404,
406 or 407 of ERISA or in connection with which a tax could be imposed pursuant
to Section 4975 of the Code. The representation by the Credit Parties in the
preceding sentence is made in reliance upon and subject to the accuracy of the
Lenders' representation in Section 10.16 with respect to its source of funds and
is subject, in the event that the source of the funds used by the Lenders in
connection with this transaction is an insurance company's general asset
account, to the application of Prohibited Transaction Class Exemption 95-60, 60
Fed. Reg. 35,925 (1995), compliance with the regulations issued under Section
401(c)(1)(A) of ERISA, or the issuance of any other prohibited transaction
exemption or similar relief, to the effect that assets in an insurance company's
general asset account do not constitute assets of an "employee benefit plan"
within the meaning of Section 3(3) of ERISA of a "plan" within the meaning of
Section 4975(e)(1) of the Code.
6.13 SUBSIDIARIES.
Set forth on Schedule 6.13 is a complete and accurate list of all
Subsidiaries of each Consolidated Party. Information on Schedule 6.13 includes
jurisdiction of incorporation or organization, the number of shares of each
class of Capital Stock outstanding, the number and percentage of outstanding
shares of each class owned (directly or indirectly) by such Consolidated Party;
and the number and effect, if exercised, of all outstanding options, warrants,
rights of conversion or purchase and all other similar rights with respect
thereto. The outstanding Capital Stock of all such Subsidiaries is validly
issued, fully paid and non-assessable and is owned by each such Consolidated
Party, directly or indirectly, free and clear of all Liens (other than those
arising under or contemplated in connection with the Credit Documents). Other
than as set forth in Schedule 6.13, no Consolidated Party has outstanding any
securities convertible into or exchangeable for its Capital Stock nor does any
such Person have outstanding any rights to subscribe for or to purchase or any
options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to its Capital Stock. Schedule 6.13 may be updated from time
to time by the Borrower by giving written notice thereof to the Lenders as to
any changes after the Closing Date.
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6.14 GOVERNMENTAL REGULATIONS, ETC.
(a) No proceeds of the Loans will be used, directly or indirectly, in
any manner that would constitute a violation of Regulation T, Regulation U or
Regulation X. "Margin stock" within the meaning of Regulation U does not
constitute more than 25% of the value of the consolidated assets of the
Consolidated Parties. None of the transactions contemplated by this Credit
Agreement (including, without limitation, the direct or indirect use of the
proceeds of the Loans) will violate or result in a violation of the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, or
regulations issued pursuant thereto, or Regulation T, U or X. If requested by a
Lender, the Borrower will furnish to such Lender a statement to the effect of
the foregoing sentences in conformity with the requirements of FR Form U-1
referred to in Regulation U or any other comparable form.
(b) No Consolidated Party is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act or the Investment
Company Act of 1940, each as amended. In addition, no Consolidated Party is (i)
an "investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended, or controlled by such a company, or
(ii) a "holding company", or a "subsidiary company" of a "holding company", or
an "affiliate" of a "holding company" or of a "subsidiary" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
(c) No director, executive officer or principal shareholder of any
Consolidated Party is a director, executive officer or principal shareholder of
any Lender. For the purposes hereof the terms "director", "executive officer"
and "principal shareholder" (when used with reference to a Lender) have the
respective meanings assigned thereto in Regulation O issued by the Board of
Governors of the Federal Reserve System.
(d) Except where the failure to have or hold any such item would not
have a Material Adverse Effect, each Consolidated Party has obtained and holds
in full force and effect, all franchises, licenses, permits, certificates,
authorizations, qualifications, accreditations, easements, rights of way and
other rights, consents and approvals which are necessary for the ownership of
its respective Property and to the conduct of its respective businesses as
presently conducted.
(e) No Consolidated Party is in violation of any applicable statute,
regulation or ordinance of the United States of America, or of any state, city,
town, municipality, county or any other jurisdiction, or of any agency thereof
(including without limitation, environmental laws and regulations), which
violation could reasonably be expected to have a Material Adverse Effect.
(f) Each Consolidated Party is current with all material reports and
documents, if any, required to be filed with any state or federal securities
commission or similar agency and is in full compliance in all material respects
with all applicable rules and regulations of such commissions.
33
6.15 PURPOSE OF LOANS AND LETTERS OF CREDIT.
The proceeds of the Loans hereunder shall be used solely by the Borrower
(i) to fund certain of the Borrower's working capital needs, provided, that in
no event shall the proceeds of the Term Loan be used to make any severance
payments or other similar payments to John Cook or Jack Toma and (ii) to pay
transaction fees and expenses related to the Credit Agreement and other
transactions contemplated hereby, including the proposed recapitalization of its
outstanding debt.
6.16 ENVIRONMENTAL MATTERS.
Except where failure to comply could not reasonably be expected to have a
Material Adverse Effect;
(a) Each of the facilities and properties owned, leased or operated by
the Consolidated Parties (the "Facilities") and all operations at the Facilities
are in compliance with all applicable Environmental Laws, and there is no
violation of any Environmental Law with respect to the Facilities or the
businesses operated by the Consolidated Parties (the "Businesses"), and there
are no conditions relating to the Businesses or Facilities that would be
reasonably likely to give rise to liability under any applicable Environmental
Laws.
(b) None of the Facilities contains, or has previously contained, any
Hazardous Materials at, on or under the Facilities in amounts or concentrations
that constitute or constituted a violation of, or would be reasonably likely to
give rise to liability under, Environmental Laws.
(c) No Consolidated Party has received any written or verbal notice
of, or inquiry from any Governmental Authority regarding, any violation, alleged
violation, non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard to any
of the Facilities or the Businesses, nor does any Consolidated Party have
knowledge or reason to believe that any such notice will be received or is being
threatened.
(d) Hazardous Materials have not been transported or disposed of from
the Facilities, or generated, treated, stored or disposed of at, on or under any
of the Facilities or any other location, in each case by or on behalf of the
Borrower or any Subsidiary of the Parent in violation of, or in a manner that
would be reasonably likely to give rise to liability under, any applicable
Environmental Law.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the best knowledge of any Credit Party, threatened, under any
Environmental Law to which any Consolidated Party is or will be named as a
party, nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to the
Consolidated Parties, the Facilities or the Businesses.
(f) There has been no release or, threat of release of Hazardous
Materials by the Borrower or its Subsidiaries at or from the Facilities, or
arising from or related to the
34
operations (including, without limitation, disposal) of the Borrower or any
Subsidiary of the Parent in connection with the Facilities or otherwise in
connection with the Businesses, in violation of or in amounts or in a manner
that would be reasonably likely to give rise to liability under Environmental
Laws.
6.17 INTELLECTUAL PROPERTY.
Each Consolidated Party owns, or has the legal right to use, all
trademarks, tradenames, copyrights, technology, know-how and processes (the
"Intellectual Property") necessary for each of them to conduct its business as
currently conducted except for those the failure to own or have such legal right
to use could not reasonably be expected to result in a Material Adverse Effect.
Set forth on Schedule 6.17 is a list of all Intellectual Property owned by each
Consolidated Party or that any Consolidated Party has the right to use. Except
as provided on Schedule 6.17, no claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor does any
Credit Party know of any such claim, and to the Credit Parties' knowledge the
use of such Intellectual Property by any Consolidated Party does not infringe on
the rights of any Person, except for such claims and infringements that, in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. Schedule 6.17 may be updated from time to time by the Borrower by giving
written notice to the Lenders as to any changes after the Closing Date.
6.18 SOLVENCY.
The Parent and its Subsidiaries, taken as a whole, are and, after
consummation of the transactions contemplated by this Credit Agreement, will be
Solvent.
6.19 INVESTMENTS.
All Investments of each Consolidated Party are Permitted Investments.
6.20 LOCATION OF COLLATERAL.
Set forth on Schedule 6.20 is the exact legal name, jurisdiction of
incorporation or organization and chief executive office of each Credit Party.
Schedule 6.20 may be updated from time to time by the Borrower by written notice
to the Lenders.
6.21 DISCLOSURE.
Neither this Credit Agreement nor any financial statements delivered to the
Lenders nor any other document, certificate or statement furnished to the
Collateral Agent or the Lenders by or on behalf of any Consolidated Party in
connection with the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained therein or herein not misleading.
35
6.22 BROKERS' FEES.
Except as disclosed on Schedule 6.22, Consolidated Party has any obligation
to any Person in respect of any finder's, broker's, investment banking or other
similar fee in connection with any of the transactions contemplated under the
Credit Documents.
6.23 LABOR MATTERS.
There are no collective bargaining agreements or Multiemployer Plans
covering the employees of a Consolidated Party as of the Closing Date and none
of the Consolidated Parties has suffered any strikes, walkouts, work stoppages
or other material labor difficulty within the last five years.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that, so long as this Credit
Agreement is in effect or any amounts payable hereunder or under any other
Credit Document (other than indemnification claims not yet asserted) shall
remain outstanding and until all the Credit Documents shall have terminated:
7.1 INFORMATION COVENANTS.
The Credit Parties will furnish, or cause to be furnished, to each Lender:
(a) Annual Financial Statements. As soon as available, and in any
event within 90 days after the close of each fiscal year of the Consolidated
Parties, a consolidated balance sheet and income statement of the Consolidated
Parties, as of the end of such fiscal year, together with related consolidated
statements of operations and retained earnings and of cash flows for such fiscal
year, setting forth in comparative form consolidated figures for the preceding
fiscal year, all such financial information described above to be in reasonable
form and detail and audited by independent certified public accountants of
recognized national standing reasonably acceptable to the Required Lenders and
whose opinion shall be to the effect that such financial statements have been
prepared in accordance with GAAP (except for changes with which such accountants
concur) and shall not be limited as to the scope of the audit or qualified as to
the status of the Consolidated Parties as a going concern.
(b) Quarterly Financial Statements. As soon as available, and in any
event within 45 days after the close of each of the three fiscal quarters of the
Consolidated Parties (other than the fourth fiscal quarter, in which case 90
days after the end thereof) a consolidated balance sheet and income statement of
the Consolidated Parties, as of the end of such fiscal quarter, together with
related consolidated statements of operations for such fiscal quarter and cash
flows for such year to date, in each case setting forth in comparative form
consolidated figures for the corresponding period of the preceding fiscal year,
all such financial information described above to be in a form satisfying the
Securities and Exchange Commission requirements for a 10-Q filing or otherwise
in reasonable form and detail and reasonably acceptable to the Required Lenders,
and accompanied by a certificate of the chief financial
36
officer of the Borrower to the effect that such quarterly financial statements
fairly present in all material respects the financial condition of the
Consolidated Parties and have been prepared in accordance with GAAP, subject to
changes resulting from audit and normal year-end audit adjustments.
(c) Monthly Financial Statements. As soon as available, and in any
event within 30 days after the end of each fiscal month of the Consolidated
Parties commencing with the first fiscal month of the Consolidated Parties
ending after the Closing Date, an internally prepared consolidated balance
sheets and income statements of the various geographic segments of the
Consolidated Parties, as at the end of such fiscal month, and for the period
commencing at the end of the immediately preceding fiscal year and ending with
the end of such fiscal month, together with related consolidated statements of
cash flows for such month, all in reasonable detail and certified by the chief
financial officer of the Borrower to the effect that such financial statements
fairly present in all material respects the financial condition of the
Consolidated Parties and have been prepared in accordance with GAAP, subject to
changes resulting from audit and normal year-end adjustments.
(d) Officer's Certificate. At the time of delivery of the financial
statements provided for in Sections 7.1(a), 7.1(b) and 7.1(c) above, a
certificate of the chief financial officer of the Borrower substantially in the
form of Exhibit C, stating that no Default or Event of Default exists, or if any
Default or Event of Default does exist, specifying the nature and extent thereof
and what action the Credit Parties propose to take with respect thereto.
(e) Accountant's Certificate. Within the period for delivery of the
annual financial statements provided in Section 7.1(a), a certificate of the
accountants conducting the annual audit stating that they have reviewed this
Credit Agreement and stating further whether, in the course of their audit, they
have become aware of any Default or Event of Default and, if any such Default or
Event of Default exists, specifying the nature and extent thereof.
(f) Auditor's Reports. Promptly upon receipt thereof, a copy of any
other report or "management letter" submitted by independent accountants to any
Consolidated Party in connection with any annual, interim or special audit of
the books of such Person.
(g) Reports. Promptly upon transmission or receipt thereof, (i) copies
of any filings and registrations with, and reports to or from, the Securities
and Exchange Commission, or any successor agency, and copies of all financial
statements, proxy statements, notices and reports as any Consolidated Party
shall send to its shareholders or to a holder of any Indebtedness owed by any
Consolidated Party in its capacity as such a holder and (ii) upon the request of
any Lender, all reports and written information to and from the United States
Environmental Protection Agency, or any state or local agency responsible for
environmental matters, the United States Occupational Health and Safety
Administration, or any state or local agency responsible for health and safety
matters, or any successor agencies or authorities concerning environmental,
health or safety matters.
(h) Notices. Upon obtaining knowledge thereof, the Credit Parties will
give written notice to each Lender promptly of (i) the occurrence of an event or
condition consisting of a Default or Event of Default, specifying the nature and
existence thereof and what action the
37
Credit Parties propose to take with respect thereto, and (ii) the occurrence of
any of the following with respect to any Consolidated Party (A) the pendency or
commencement of any litigation, arbitral or governmental proceeding against such
Person which if adversely determined is likely to have a Material Adverse
Effect, (B) the institution of any proceedings against such Person with respect
to, or the receipt of notice by such Person of potential liability or
responsibility for violation, or alleged violation of any federal, state or
local law, rule or regulation, including but not limited to, Environmental Laws,
the violation of which could be reasonably expected to have a Material Adverse
Effect, or (C) any notice or determination concerning the imposition of any
withdrawal liability by a Multiemployer Plan against such Person or any ERISA
Affiliate, the determination that a Multiemployer Plan is, or is expected to be,
in reorganization within the meaning of Title IV of ERISA or the termination of
any Plan.
(i) ERISA. Upon obtaining knowledge thereof, the Credit Parties will
give written notice to each Lender promptly (and in any event within five
business days) of: (i) of any event or condition, including, but not limited to,
any Reportable Event, that constitutes, or might reasonably lead to, an ERISA
Event; (ii) with respect to any Multiemployer Plan, the receipt of notice as
prescribed in ERISA or otherwise of any withdrawal liability assessed against
the Credit Parties or any ERISA Affiliates, or of a determination that any
Multiemployer Plan is in reorganization or insolvent (both within the meaning of
Title IV of ERISA); (iii) the failures to make full payment on or before the due
date (including extensions) thereof of all amounts which any Consolidated Party
or any ERISA Affiliate is required to contribute to each Plan pursuant to its
terms and as required to meet the minimum funding standard set forth in ERISA
and the Code with respect thereto; or (iv) any change in the funding status of
any Plan that could have a Material Adverse Effect, together with a description
of any such event or condition or a copy of any such notice and a statement by
the chief financial officer of the Borrower briefly setting forth the details
regarding such event, condition, or notice, and the action, if any, which has
been or is being taken or is proposed to be taken by the Credit Parties with
respect thereto. Promptly upon request, the Credit Parties shall furnish each
Lender with such additional information concerning any Plan as may be reasonably
requested, including, but not limited to, copies of each annual report/return
(Form 5500 series), as well as all schedules and attachments thereto required to
be filed with the Department of Labor and/or the Internal Revenue Service
pursuant to ERISA and the Code, respectively, for each "plan year" (within the
meaning of Section 3(39) of ERISA).
(j) Environmental.
(i) Upon the reasonable written request of any Lender, the Credit
Parties will furnish or cause to be furnished to each Lender, at the
Credit Parties' expense, a report of an environmental assessment of
reasonable scope, form and depth, (including, where appropriate,
invasive soil or groundwater sampling) by a consultant reasonably
acceptable to the Lenders as to the nature and extent of the presence
of any Hazardous Materials on any Facilities that are either owned by
a Credit Party or for which the Credit Party is the tenant for a
majority of the usable space, and as to the compliance by any
Consolidated Party with Environmental Laws at such Facilities. If the
Credit Parties fail to deliver such an environmental report within
seventy-five (75) days after receipt of such written request then the
Lender may arrange for same, and the Consolidated Parties hereby grant
to the Lender and their representatives access to the Facilities to
reasonably undertake
38
such an assessment (including, where appropriate, invasive soil or
groundwater sampling). The reasonable cost of any assessment arranged
for by the Lender pursuant to this provision will be payable by the
Credit Parties on demand and added to the obligations secured by the
Collateral Documents.
(ii) The Consolidated Parties will conduct and complete all
investigations, studies, sampling, and testing and all remedial,
removal, and other actions necessary to address all Hazardous
Materials on, from or affecting any of the Facilities referred to in
the preceding clause (i) to the extent necessary to be in compliance
with all Environmental Laws and with the validly issued orders and
directives of all Governmental Authorities with jurisdiction over such
Facilities to the extent any failure could have a Material Adverse
Effect.
(k) Additional Patents and Trademarks. At the time of delivery of the
financial statements and reports provided for in Section 7.1(a), a report signed
by the chief financial officer or treasurer of the Borrower setting forth (i) a
list of registration numbers for all patents and copyrights awarded to any
Consolidated Party since the last day of the immediately preceding fiscal year
and (ii) a list of all patent applications and copyright applications submitted
by any Consolidated Party since the last day of the immediately preceding fiscal
year and the status of each such application, all in such form as shall be
reasonably satisfactory to the Lenders.
(l) Working Capital Loan Documents. As soon as possible and in any
event within three (3) Business Days after execution, receipt or delivery
thereof, copies of any material formal notices, statements, reports or other
information that any Credit Party executes or receives from the Working Capital
Lender in connection with any Working Capital Loan Documents. For the avoidance
of doubt, this Section 7.1(l) shall not require delivery of any notice,
statement, report or other information executed by the Credit Parties or
received from the Working Capital Lender that is executed or received in the
ordinary course of business and that are immaterial, but shall include the
Borrowing Base Certificate.
(m) Other Information. With reasonable promptness upon any such
request, such other information regarding the business, properties or financial
condition of any Consolidated Party as any Lender may reasonably request.
(n) Indenture. As soon as possible and in any event within three (3)
Business Days after execution, receipt or delivery thereof, copies of any
material notices, statements, reports or other information that any Credit Party
executes or receives from the Trustee (as defined in the Indenture) in
connection with the Indenture. For the avoidance of doubt, this Section 7.1(n)
shall not require delivery of any notice, statement, report or other information
executed by the Credit Parties or received from the Trustee (as defined in the
Indenture) that is executed or received in the ordinary course of business and
that are immaterial.
7.2 PRESERVATION OF EXISTENCE AND FRANCHISES.
Except as a result of or in connection with a merger of a Subsidiary
permitted under Section 8.4, each Credit Party will, and will cause each of its
Subsidiaries to, do all things
39
necessary to preserve and keep in full force and effect its existence, rights,
franchises and authority.
7.3 BOOKS AND RECORDS.
Each Credit Party will, and will cause each of its Subsidiaries to, keep
complete and accurate books and records of its transactions in accordance with
good accounting practices on the basis of GAAP (including the establishment and
maintenance of appropriate reserves).
7.4 COMPLIANCE WITH LAW.
Each Credit Party will, and will cause each of its Subsidiaries to, comply
with all Laws and all orders, writs, injunctions and decrees applicable to it
and its Property if noncompliance with any such law, rule, regulation, order or
restriction could be reasonably expected to have a Material Adverse Effect.
7.5 PAYMENT OF TAXES AND OTHER INDEBTEDNESS.
Each Credit Party will, and will cause each of its Subsidiaries to, pay and
discharge (a) all taxes, assessments and governmental charges or levies imposed
upon it, or upon its income or profits, or upon any of its properties, before
they shall become delinquent, (b) all lawful claims (including claims for labor,
materials and supplies) which, if unpaid, might give rise to a Lien upon any of
its properties, and (c) except as prohibited hereunder, all of its other
Indebtedness as it shall become due; provided, however, that no Consolidated
Party shall be required to pay any such tax, assessment, charge, levy, claim or
Indebtedness which is being contested in good faith by appropriate proceedings
and as to which adequate reserves therefor have been established in accordance
with GAAP, unless the failure to make any such payment (i) could give rise to an
immediate right to foreclose on a Lien securing such amounts or (ii) could be
reasonably expected to have a Material Adverse Effect.
7.6 INSURANCE.
(a) Each Credit Party will, and will cause each of its Subsidiaries
to, at all times maintain in full force and effect insurance (including worker's
compensation insurance, liability insurance, casualty insurance and business
interruption insurance) in such amounts, covering such risks and liabilities and
with such deductibles or self-insurance retentions as are in accordance with
normal industry practice (or as otherwise required by the Collateral Documents).
The Collateral Agent shall be named as loss payee or mortgagee, as its interest
may appear, and/or additional insured with respect to any such insurance
providing coverage in respect of any Collateral, and each provider of any such
insurance shall agree, by endorsement upon the policy or policies issued by it
or by independent instruments furnished to the Collateral Agent, that it will
give the Collateral Agent thirty (30) days prior written notice before any such
policy or policies shall be altered or canceled, and that no act or default of
any Consolidated Party or any other Person shall affect the rights of the
Collateral Agent under such policy or policies. The present insurance coverage
of the Consolidated Parties is outlined as to carrier, policy number, expiration
date, type and amount on Schedule 7.6.
40
(b) In case of any material loss, damage to or destruction of the
Collateral of any Credit Party or any part thereof, such Credit Party shall
promptly give written notice thereof to the Lenders generally describing the
nature and extent of such damage or destruction. In case of any loss, damage to
or destruction of the Collateral of any Credit Party or any part thereof, such
Credit Party, whether or not the insurance proceeds, if any, received on account
of such damage or destruction shall be sufficient for that purpose, at such
Credit Party's cost and expense, will promptly repair or replace the Collateral
of such Credit Party so lost, damaged or destroyed; provided, however, that such
Credit Party need not repair or replace the Collateral of such Credit Party so
lost, damaged or destroyed to the extent the failure to make such repair or
replacement (i) is desirable to the proper conduct of the business of such
Credit Party in the ordinary course and otherwise in the best interest of such
Credit Party; and (ii) would not materially impair the rights and benefits of
the Lenders under the Collateral Documents or any other Credit Document. In the
event a Credit Party shall receive any proceeds of such insurance in a net
amount in excess of $100,000, such Credit Party will immediately pay over such
proceeds to the Lenders, for payment on the Credit Party Obligations; provided,
however, that the Lenders agree to release such insurance proceeds to such
Credit Party for replacement or restoration of the portion of the Collateral of
such Credit Party lost damaged or destroyed if, but only if, (A) no Default or
Event of Default shall have occurred and be continuing at the time of release,
(B) written application for such release is received by the Lenders from such
Credit Party within 30 days of receipt of such proceeds, and (C) the Lenders
have received evidence reasonably satisfactory to them that the Collateral lost,
damaged or destroyed has been or will be replaced or restored to its condition
immediately prior to the loss, destruction or other event giving rise to the
payment of such insurance proceeds.
7.7 MAINTENANCE OF PROPERTY.
Each Credit Party will, and will cause each of its Subsidiaries to,
maintain and preserve its properties and equipment material to the conduct of
its business in good repair, working order and condition, normal wear and tear
and casualty and condemnation excepted, and will make, or cause to be made, in
such properties and equipment from time to time all repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto as may
be needed or proper, to the extent and in the manner customary for companies in
similar businesses.
7.8 PERFORMANCE OF OBLIGATIONS.
Each Credit Party will, and will cause each of its Subsidiaries to, perform
in all material respects all of its obligations under the terms of all material
agreements, indentures, mortgages, security agreements or other debt instruments
to which it is a party or by which it is bound.
7.9 USE OF PROCEEDS.
The Borrower will use the proceeds of the Loans solely for the purposes set
forth in Section 6.15.
7.10 AUDITS/INSPECTIONS.
Upon reasonable notice and during normal business hours, each Credit Party
will, and will cause each of its Subsidiaries to, permit representatives
appointed by the Required Lenders,
41
including, without limitation, independent accountants, agents, attorneys, and
appraisers to visit and inspect its property, including its books and records,
its accounts receivable and inventory, its facilities and its other business
assets, and to make photocopies or photographs thereof and to write down and
record any information such representative obtains and shall permit any Lender
or its representatives to investigate and verify the accuracy of information and
to discuss all such matters with the officers, employees and representatives of
such Person.
7.11 [INTENTIONALLY OMITTED]
7.12 ADDITIONAL CREDIT PARTIES.
(a) As soon as practicable and in any event within 45 days after any
Person becomes a Domestic Subsidiary of any Credit Party, the Borrower shall
provide the Lenders with written notice thereof setting forth information in
reasonable detail describing all of the assets of such Person and shall cause
such Person to execute a Joinder Agreement in substantially the same form as
Exhibit E, (b) subject to the terms of the Intercreditor Agreement, cause 100%
of the Capital Stock of such Person to be delivered to the Collateral Agent
(together with undated stock powers or copies thereof, as applicable, signed in
blank) and pledged to the Collateral Agent pursuant to an appropriate pledge
agreement(s) in form acceptable to the Collateral Agent in its reasonable
discretion and cause such Person to deliver such other documentation as the
Collateral Agent may reasonably request in connection with the foregoing,
including, without limitation, appropriate UCC-1 financing statements, real
estate title insurance policies, environmental reports, landlord's waivers,
certified resolutions and other organizational and authorizing documents of such
Person, and favorable opinions of counsel to such Person all in form, content
and scope reasonably satisfactory to the Collateral Agent.
(b) As soon as practicable and in any event within 180 days after any
Person becomes a Material Foreign Subsidiary of any Credit Party, the Borrower
shall provide the Lenders with written notice thereof setting forth information
in reasonable detail describing all of the assets of such Person and shall,
subject to the terms of the Intercreditor Agreement, cause 66% of the Capital
Stock of such Person to be delivered to the Collateral Agent (together with
undated stock powers or copies thereof, as applicable, signed in blank (unless,
such stock powers are deemed unnecessary by the Collateral Agent in its
reasonable discretion under the law of the jurisdiction of incorporation of such
Person)) and pledged to the Collateral Agent pursuant to an appropriate pledge
agreement(s) in form acceptable to the Collateral Agent in its reasonable
discretion and cause such Person to deliver such other documentation as the
Collateral Agent may reasonably request in connection with the foregoing,
including, without limitation, appropriate UCC-1 financing statements, certified
resolutions and other organizational and authorizing documents of such Person,
and favorable opinions of counsel to such Person all in form, content and scope
reasonably satisfactory to the Collateral Agent. It is specifically understood
and agreed that no Material Foreign Subsidiary shall be required to pledge any
of the Capital Stock of any Foreign Subsidiary owned by such Material Foreign
Subsidiary.
(c) (A) If the Working Capital Lender is granted a Lien in any
property of any Credit Party or any guarantor or any other person or entity as
security for the Working Capital Facility, as in effect from time to time, the
Lenders, shall also promptly receive a Lien in such property, subject to the
terms of Intercreditor Agreement, pursuant to documentation reasonably
42
satisfactory to the Required Lenders and the Collateral Agent (including,
without limitation, the additional collateral required by the Working Capital
Lender pursuant to the Working Capital Amendment) and (B) if any Person
guarantees, or otherwise becomes an obligor on, all or any portion of the
Working Capital Facility, as in effect from time to time, a comparable guaranty
or other instruments is promptly obtained in favor of the Lenders in connection
with the obligations hereunder, pursuant to documentation reasonably
satisfactory to the Lenders.
7.13 ENVIRONMENTAL LAWS.
(a) The Consolidated Parties shall comply in all material respects
with, and take reasonable actions to ensure compliance in all material respects
by all tenants and subtenants, if any, with, all applicable Environmental Laws
and obtain and comply in all material respects with and maintain, and take
reasonable actions to ensure that all tenants and subtenants obtain and comply
in all material respects with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws except to the extent that failure to do so would not reasonably be expected
to have a Material Adverse Effect;
(b) The Consolidated Parties shall conduct and complete all
investigations, studies, sampling and testing, and all remedial, removal and
other actions required under Environmental Laws and promptly comply in all
material respects with all lawful orders and directives of all Governmental
Authorities regarding Environmental Laws except to the extent that the same are
being contested in good faith by appropriate proceedings and the failure to do
or the pendency of such proceedings would not reasonably be expected to have a
Material Adverse Effect; and
(c) The Consolidated Parties shall defend, indemnify and hold harmless
the Lender, and its employees, agents, officers and directors, from and against
any and all claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature known or unknown,
contingent or otherwise, arising out of, or in any way relating to the violation
of, noncompliance with or liability under, any Environmental Law applicable to
the operations of the Borrower or any of its Subsidiaries or the Facilities, or
any orders, requirements or demands of Governmental Authorities related thereto,
including, without limitation, reasonable attorney's and consultant's fees,
investigation and laboratory fees, response costs, court costs and litigation
expenses, except to the extent that any of the foregoing arise out of the gross
negligence or willful misconduct of the party seeking indemnification therefor.
The agreements in this paragraph shall survive repayment of the Loans and all
other amounts payable hereunder, and termination of the Commitments.
7.14 COLLATERAL.
If, subsequent to the Closing Date, a Credit Party shall acquire any real
property, intellectual property, securities instruments, chattel paper or other
personal property required to be delivered to the Collateral Agent as Collateral
hereunder or under any of the Collateral Documents, the Borrower shall notify
the Lenders of same in each case as soon as practicable after the acquisition
thereof or execution of such lease agreement, as appropriate. Each Credit Party
shall take such action as reasonably requested by the Lenders or the Collateral
Agent and at its own expense, to ensure that the Collateral Agent shall have a
first priority perfected Lien in
43
all real property and personal property of the Credit Parties (whether now owned
or hereafter acquired), subject only to Permitted Liens. To the extent
reasonably requested by the Collateral Agent, the Credit Parties shall execute
an intercompany note and pledge and deliver such intercompany note to the
Collateral Agent (or its designee) to be held (or delivered to the Working
Capital Lender) subject to the terms of the Intercreditor Agreement.
7.15 WORKING CAPITAL BORROWING BASE.
The Credit Parties shall maintain all Working Capital Loans and Working
Capital LC Obligations (i) so as not to incur obligations in excess of the
amount of the Senior Debt (as defined in the Intercreditor Agreement) and (ii)
in compliance with the Intercreditor Agreement.
7.16 POST-CLOSING DELIVERIES.
(a) On or prior to December 31, 2005, deliver to the Lenders copies of
certificates of insurance of the Consolidated Parties evidencing liability and
casualty insurance meeting the requirements set forth in the Credit Documents.
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that, so long as this Credit
Agreement is in effect or any amounts payable hereunder or under any other
Credit Document shall remain outstanding (other than indemnification claims not
yet asserted), and until all of the Credit Document shall have terminated:
8.1 INDEBTEDNESS.
The Credit Parties will not permit any Consolidated Party to contract,
create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement and the other
Credit Documents;
(b) Indebtedness of the Consolidated Parties set forth in Schedule 8.1
(and renewals, refinancings and extensions thereof);
(c) purchase money Indebtedness (including obligations in respect of
Capital Leases or Synthetic Leases) hereafter incurred by any Consolidated Party
to finance the purchase of fixed assets provided that (i) the total of all such
purchase money Indebtedness (including any such purchase money Indebtedness
referred to in subsection (b) above) shall not exceed an aggregate principal
amount of $10,000,000 at any one time outstanding; (ii) such purchase money
Indebtedness when incurred shall not exceed the purchase price of the asset(s)
financed; and (iii) no such purchase money Indebtedness shall be refinanced for
a principal amount in excess of the principal balance outstanding thereon at the
time of such refinancing;
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(d) obligations of the Consolidated Parties in respect of Hedging
Agreements entered into in order to manage existing or anticipated interest rate
or exchange rate risks and not for speculative purposes;
(e) other unsecured Indebtedness of the Consolidated Parties in an
amount not to exceed $5,000,000 in the aggregate at any one time;
(f) the Subordinated Debt;
(g) unsecured intercompany Indebtedness owing by a Consolidated Party
to a Credit Party (permitted under Section 8.6);
(h) obligations of Meridian or any of its Subsidiaries with respect to
any letter of credit, bond or other surety provided for the account of Meridian
or any of its Subsidiaries to support Meridian's or any of its Subsidiaries'
obligations to the French VAT authorities; provided, that (i) the aggregate
amount of such obligations shall not exceed $6,000,000 in the aggregate and (ii)
such Indebtedness shall not have a cross-default to the Indebtedness arising
under this Credit Agreement and the other Credit Documents;
(i) the Meridian Loan; and
(j) Indebtedness owing to the Working Capital Lender under the Working
Capital Loan Documents in an aggregate principal amount not to exceed the amount
of Senior Debt (as defined in the Intercreditor Agreement) permitted under the
Intercreditor Agreement, less the amount of each principal payment made in
respect of the Working Capital Loans but only to the extent that the Working
Capital Revolving Commitment is permanently reduced by the amount of such
payment.
8.2 LIENS.
The Credit Parties will not permit any Consolidated Party to contract,
create, incur, assume or permit to exist any Lien with respect to any of its
Property (other than any "margin stock" within the meaning of Regulation U),
whether now owned or after acquired, except for Permitted Liens.
8.3 NATURE OF BUSINESS.
The Credit Parties will not permit any Consolidated Party to materially
alter the nature of the business conducted by such Person as of the Closing
Date.
8.4 CONSOLIDATION, MERGER, DISSOLUTION, ETC.
The Credit Parties will not permit any Consolidated Party to enter into any
transaction of merger or consolidation or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution); provided that, notwithstanding the
foregoing provisions of this Section 8.4, (a) the Parent or the Borrower may
merge or consolidate with any of its Subsidiaries provided that (i) the Parent
or the Borrower shall be the continuing or surviving corporation, (ii) the
Parent shall not merge or consolidate with the Borrower, (iii) the Credit
Parties shall cause to be
45
executed and delivered such documents, instruments and certificates as the
Required Lenders or the Collateral Agent may reasonably request in order to
maintain the perfection and priority of the Collateral Agent's liens on the
assets of the Credit Parties as required by Section 7.14 after giving effect to
such transaction and (iv) after giving effect to such transaction, no Default or
Event of Default exists, (b) any Credit Party other than the Borrower and the
Parent may merge or consolidate with any other Credit Party other than the
Borrower or the Parent; provided that (i) the Credit Parties shall cause to be
executed and delivered such documents, instruments and certificates as the
Required Lenders or the Collateral Agent may reasonably request in order to
maintain the perfection and priority of the Collateral Agent's liens on the
assets of the Credit Parties as required by Section 7.14 after giving effect to
such transaction and (ii) after giving effect to such transaction, no Default or
Event of Default exists, (c) any Consolidated Party which is not a Credit Party
may be merged or consolidated with or into any Credit Party; provided that (i)
such Credit Party shall be the continuing or surviving corporation, (ii) the
Credit Parties shall cause to be executed and delivered such documents,
instruments and certificates as the Required Lenders or the Collateral Agent may
reasonably request in order to maintain the perfection and priority of the
Collateral Agent's liens on the assets of the Credit Parties as required by
Section 7.14 after giving effect to such transaction and (iii) after giving
effect to such transaction, no Default or Event of Default exists, and (d) any
Consolidated Party which is not a Credit Party may be merged or consolidated
with or into any other Consolidated Party which is not a Credit Party; provided
that, after giving effect to such transaction, no Default or Event of Default
exists.
8.5 ASSET DISPOSITIONS.
The Credit Parties will not permit any Consolidated Party to make any Asset
Disposition (including, without limitation, any Sale and Leaseback Transaction)
other than:
(i) the sale of inventory in the ordinary course of business for fair
consideration;
(ii) the sale or disposition of machinery and equipment no longer used
or useful in the conduct of such Person's business;
(iii) the sale, transfer or other disposition of "margin stock" within
the meaning of Regulation U;
(iv) other sales of assets in an aggregate amount not to exceed
$1,000,000 in any fiscal year; and
(v) the sale of the Ship & Debit Division; provided that (A) the
Borrower receives at least $1,000,000 in Net Cash Proceeds from the sale of
such division and (B) the Borrower immediately prepays the Loans with such
Net Cash Proceeds in accordance with the terms of Section 3.3(b)(ii) and
the Intercreditor Agreement.
Upon a sale of assets permitted by this Section 8.5, the Lenders and/or the
Collateral Agent shall deliver to the Borrower, upon the Borrower's request and
at the Borrower's expense, such documentation as is reasonably necessary to
evidence the release of the Collateral Agent's security interest in such assets.
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8.6 INVESTMENTS.
The Credit Parties will not permit any Consolidated Party to make
Investments in or to any Person, except for Permitted Investments.
8.7 RESTRICTED PAYMENTS.
The Credit Parties will not permit any Consolidated Party to, directly or
indirectly, declare, order, make or set apart any sum for or pay any Restricted
Payment, except (a) to make dividends payable solely in the same class of
Capital Stock of such Person, (b) to make dividends or other distributions
payable to the Borrower (directly or indirectly through Subsidiaries) and (c)
the Borrower may make distributions to the Parent in an amount necessary to pay
interest on the Subordinated Debt.
8.8 TRANSACTIONS WITH AFFILIATES.
The Credit Parties will not permit any Consolidated Party to enter into or
permit to exist any transaction or series of transactions with any officer,
director, shareholder, Subsidiary or Affiliate of such Consolidated Party other
than (a) normal compensation and reimbursement of expenses of officers and
directors and (b) except as otherwise specifically limited in this Credit
Agreement, other transactions which are entered into in the ordinary course of
such Person's business on terms and conditions substantially as favorable to
such Person as would be obtainable by it in a comparable arms-length transaction
with a Person other than an officer, director, shareholder, Subsidiary or
Affiliate of such Consolidated Party. Notwithstanding the foregoing, Meridian
International is permitted to make the Meridian Loan.
8.9 FISCAL YEAR; ORGANIZATIONAL DOCUMENTS.
The Credit Parties will not permit any Consolidated Party to (a) amend,
modify or change its articles of incorporation (or corporate charter or other
similar organizational document) or bylaws (or other similar document) in a
manner materially adverse to the Lenders or (b) change its fiscal year; it being
understood and agreed that any amendment to the articles of incorporation of
PRGRS, Inc. that provides the books and records of such Credit Party will be
maintained in the Cayman Islands or Bermuda shall not be deemed to be materially
adverse to the Lenders. The Credit Parties will promptly deliver to the Lenders
copies of any amendments, modifications and changes to the articles of
incorporation (or corporate charter or other similar organizational document) or
bylaws (or other similar document) of any Consolidated Party.
8.10 LIMITATION ON RESTRICTED ACTIONS.
The Credit Parties will not permit any Consolidated Party to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Person to (a) pay
dividends or make any other distributions to any Credit Party on its Capital
Stock or with respect to any other interest or participation in, or measured by,
its profits, (b) pay any Indebtedness or other obligation owed to any Credit
Party, (c) make loans or advances to any Credit Party, (d) sell, lease or
transfer any of its properties or assets to any Credit Party, or (e) act as a
Guarantor and pledge its assets pursuant to the Credit Documents or any
renewals, refinancings, exchanges, refundings or extension thereof, except (in
respect of any
47
of the matters referred to in clauses (a)-(d) above) for such encumbrances or
restrictions existing under or by reason of (i) this Credit Agreement and the
other Credit Documents, (ii) the Working Capital Loan Documents, (iii)
applicable law, (iv) the Indenture or (v) any document or instrument governing
Indebtedness incurred pursuant to Section 8.1(c), provided that any such
restriction contained therein relates only to the asset or assets constructed or
acquired in connection therewith.
8.11 OWNERSHIP OF SUBSIDIARIES.
Notwithstanding any other provisions of this Credit Agreement to the
contrary, the Credit Parties will not permit any Consolidated Party to (i)
permit any Person (other than the Parent or any Wholly-Owned Subsidiary of the
Parent) to own any Capital Stock of any Subsidiary of the Parent, (ii) permit
any Subsidiary of the Parent to issue Capital Stock (except to the Parent or to
a Wholly-Owned Subsidiary of the Parent), (iii) permit, create, incur, assume or
suffer to exist any Lien thereon, in each case except (A) to qualify directors
where required by applicable law or to satisfy other requirements of applicable
law with respect to the ownership of Capital Stock of Foreign Subsidiaries or
(B) for Permitted Liens and (iv) notwithstanding anything to the contrary
contained in clause (ii) above, permit any Subsidiary of the Parent to issue any
shares of preferred Capital Stock.
8.12 SALE LEASEBACKS.
Except for transactions permitted by Section 8.1(c) hereof, the Credit
Parties will not permit any Consolidated Party to, directly or indirectly,
become or remain liable as lessee or as guarantor or other surety with respect
to any lease, whether an Operating Lease or a Capital Lease, of any Property
(whether real, personal or mixed), whether now owned or hereafter acquired, (a)
which such Consolidated Party has sold or transferred or is to sell or transfer
to a Person which is not a Consolidated Party or (b) which such Consolidated
Party intends to use for substantially the same purpose as any other Property
which has been sold or is to be sold or transferred by such Consolidated Party
to another Person which is not a Consolidated Party in connection with such
lease.
8.13 CAPITAL EXPENDITURES.
The Credit Parties will not permit aggregate Consolidated Capital
Expenditures to exceed $6,000,000 at any time during the term of this Credit
Agreement.
8.14 NO FURTHER NEGATIVE PLEDGES.
The Credit Parties will not permit any Consolidated Party to enter into,
assume or become subject to any agreement prohibiting or otherwise restricting
the creation or assumption of any Lien upon its properties or assets, whether
now owned or hereafter acquired, or requiring the grant of any security for such
obligation if security is given for some other obligation, except (a) pursuant
to this Credit Agreement and the other Credit Documents, (b) pursuant to the
Indenture, (c) pursuant to the Working Capital Loan Documents or (d) pursuant to
any document or instrument governing Indebtedness incurred pursuant to Section
8.1(c), provided that any such restriction contained therein relates only to the
asset or assets constructed or acquired in connection therewith.
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8.15 LIMITATION ON FOREIGN EBITDA.
The Credit Parties will not permit the aggregate portion of Consolidated
EBITDA for any period attributable to First Tier Foreign Subsidiaries which are
not Material Foreign Subsidiaries to exceed 10% of Consolidated EBITDA for such
period.
8.16 SUBORDINATED DEBT.
No Credit Party will, nor will it permit any of its Subsidiaries to (a)
make or offer to make any principal payments with respect to the Subordinated
Debt, (b) redeem or offer to redeem any of the Subordinated Debt, (c) deposit
any funds intended to discharge the Subordinated Debt or (d) amend, restate,
supplement, modify or otherwise change the Subordinated Debt in any manner that
would adversely affect the Lenders without the prior written consent of the
Required Lenders.
8.17 NOTICE UNDER THE INDENTURE.
The Parent covenants and agrees that it will give the written notice
pursuant to Section 11.11 of the Indenture to the Trustee (as defined in the
Indenture) immediately upon the request of the Required Lenders.
8.18 WORKING CAPITAL LOAN DOCUMENTS.
No Credit Party will, nor will it permit any of its Subsidiaries to amend,
restate, supplement, modify or otherwise change the Working Capital Loan
Agreement or any other Working Capital Loan Documents except as otherwise
permitted under the terms of the Intercreditor Agreement.
SECTION 9
EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT.
An Event of Default shall exist upon the occurrence and during the
continuance of any of the following specified events other than any Event of
Default arising solely as a result of a Working Capital Acknowledged Event of
Default (except with respect to clauses (h) and (l) below) (each an "Event of
Default"):
(a) Payment. Any Credit Party shall default, and such default shall
continue for five (5) or more Business Days, in the payment when due of any
principal of or interest on the Loans, or of any fees or other amounts owing
hereunder, under any of the other Credit Documents or in connection herewith or
therewith; or
(b) Representations. Any representation, warranty or statement made or
deemed to be made by any Credit Party herein, in any of the other Credit
Documents, or in any
49
statement or certificate delivered or required to be delivered pursuant hereto
or thereto shall prove untrue in any material respect on the date as of which it
was deemed to have been made; or
(c) Covenants. Any Credit Party shall
(i) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.2, 7.4, 7.9, 7.12 or
7.14 or Section 8;
(ii) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.1(a), (b), (c), (d), (e)
or (f) and such default shall continue unremedied for a period of at
least 5 days after the earlier of a responsible officer of a Credit
Party becoming aware of such default or notice thereof by the Lender;
or
(iii) default in the due performance or observance by it of any
term, covenant or agreement (other than those referred to in
subsections (a), (b), (c)(i) or (c)(ii) of this Section 9.1) contained
in this Credit Agreement and such default shall continue unremedied
for a period of at least 30 days after the earlier of a responsible
officer of a Credit Party becoming aware of such default or notice
thereof by the Lenders; or
(d) Credit Documents. (i) Any Credit Party shall default in the due
performance or observance of any term, covenant or agreement in any of the other
Credit Documents (subject to applicable grace or cure periods, if any) or (ii)
except as a result of or in connection with a merger of a Subsidiary permitted
under Section 8.4, any Credit Document shall fail to be in full force and effect
or to give the Collateral Agent the Liens, rights, powers and privileges
purported to be created thereby, or any Credit Party shall so state in writing;
or
(e) Guaranties. Except as the result of or in connection with a merger
of a Subsidiary permitted under Section 8.4, the guaranty given by any Guarantor
hereunder (including any Additional Credit Party) or any provision thereof shall
cease to be in full force and effect, or any Guarantor (including any Additional
Credit Party) hereunder or any Person acting by or on behalf of such Guarantor
shall deny or disaffirm such Guarantor's obligations under such guaranty, or any
Guarantor shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed pursuant to any
guaranty (subject to applicable grace and cure periods, if any); or
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur with respect to
any Consolidated Party; or
(g) Defaults under Other Agreements.
(i) Any Consolidated Party shall default in the performance or
observance (beyond the applicable grace period with respect thereto,
if any) of any material obligation or condition of any contract or
lease material to the Consolidated Parties, taken as a whole, other
than any defaults under the Working Capital Loan Documents; or
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(ii) With respect to any Indebtedness (other than Indebtedness
outstanding under this Credit Agreement or under the Working Capital
Loan Documents) in excess of $1,000,000 in the aggregate for the
Consolidated Parties taken as a whole, (A) any Consolidated Party
shall (1) default in any payment (beyond the applicable grace period
with respect thereto, if any) with respect to any such Indebtedness,
or (2) the occurrence and continuance of a default in the observance
or performance relating to such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or
any other event or condition shall occur or condition exist, the
effect of which default or other event or condition is to cause, or
permit, the holder or holders of such Indebtedness (or trustee or
agent on behalf of such holders) to cause (determined without regard
to whether any notice or lapse of time is required), any such
Indebtedness to become due prior to its stated maturity, or (B) any
such Indebtedness shall be declared due and payable, or required to be
prepaid other than by a regularly scheduled required prepayment, prior
to the stated maturity thereof; or
(h) Judgments. One or more judgments or decrees shall be entered
against one or more of the Consolidated Parties involving a liability of
$1,000,000 or more in the aggregate (to the extent not paid or fully covered by
insurance provided by a carrier who has acknowledged coverage and has the
ability to perform) and any such judgments or decrees shall not have been
vacated, discharged or stayed or bonded pending appeal within 30 days from the
entry thereof; or
(i) ERISA. Any of the following events or conditions, if such event or
condition could have a Material Adverse Effect: (i) any "accumulated funding
deficiency," as such term is defined in Section 302 of ERISA and Section 412 of
the Code, whether or not waived, shall exist with respect to any Plan, or any
lien shall arise on the assets of any Consolidated Party or any ERISA Affiliate
in favor of the PBGC or a Plan; (ii) an ERISA Event shall occur with respect to
a Single Employer Plan, which is, in the reasonable opinion of the Lender,
likely to result in the termination of such Plan for purposes of Title IV of
ERISA; (iii) an ERISA Event shall occur with respect to a Multiemployer Plan or
Multiple Employer Plan, which is, in the reasonable opinion of the Required
Lenders, likely to result in (A) the termination of such Plan for purposes of
Title IV of ERISA, or (B) any Consolidated Party or any ERISA Affiliate
incurring any liability in connection with a withdrawal from, reorganization of
(within the meaning of Section 4241 of ERISA), or insolvency or (within the
meaning of Section 4245 of ERISA) such Plan; or (iv) any prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) or
breach of fiduciary responsibility shall occur which may subject any
Consolidated Party or any ERISA Affiliate to any liability under Sections 406,
409, 502(i), or 502(1) of ERISA or Section 4975 of the Code, or under any
agreement or other instrument pursuant to which any Consolidated Party or any
ERISA Affiliate has agreed or is required to indemnify any person against any
such liability; or
(j) Ownership. There shall occur a Change of Control; or
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(k) Subordinated Debt. There shall occur (a) an "Event of Default"
under, and as defined in, the Indenture or (b) a "Change in Control" (or any
comparable term) under and as defined in the Indenture; or
(l) Working Capital Facility. There shall occur a Working Capital
Event of Default under any Working Capital Loan Document and the Working Capital
Lender shall have accelerated the indebtedness thereunder (whether as a result
of the Working Capital Acknowledged Events of Default or otherwise), it being
agreed that the maturity of the Working Capital Facility solely in accordance
with its terms and without further action by the Working Capital Lender (e.g.,
upon its scheduled maturity date) shall not constitute an acceleration.
9.2 ACCELERATION; REMEDIES.
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived by the Required Lenders
or cured to the satisfaction of the Lenders in their reasonable discretion, the
Required Lenders shall, by written notice to the Credit Parties, take any of the
following actions:
(a) [Intentionally Omitted]
(b) Acceleration. Declare the unpaid principal of and any accrued
interest in respect of all Loans and any and all other indebtedness or
obligations of any and every kind owing by the Credit Parties to the Lenders and
the Collateral Agent hereunder to be due whereupon the same shall be immediately
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Credit Parties.
(c) [Intentionally Omitted]
(d) Enforcement of Right. Enforce any and all rights and interests
created and existing under the Credit Documents including, without limitation,
all rights and remedies existing under the Collateral Documents, all rights and
remedies against a Guarantor and all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur with respect to the Borrower, then all Loans, all accrued
interest in respect thereof, all accrued and unpaid fees and other indebtedness
or obligations owing to the Lenders and the Collateral Agent hereunder
automatically shall immediately become due and payable without the giving of any
notice or other action by the Lenders or the Collateral Agent.
9.3 APPLICATION OF FUNDS.
After the exercise of remedies provided for in Section 9.2 (or after the
Loans have automatically become immediately due and payable as set forth in the
proviso to Section 9.2), any amounts received on account of the Credit Party
Obligations shall be applied, first, to pay any fees, expenses or indemnities of
the Collateral Agent, and, second, by the Lenders in the manner determined by
the Lenders in their sole discretion. Any surplus remaining after payment in
full of the Credit Party Obligations shall be returned to the Borrower or
whomsoever a court of competent jurisdiction shall determine to be entitled
thereto.
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SECTION 10
MISCELLANEOUS
10.1 NOTICES.
(a) Notices Generally. Except as otherwise expressly provided herein,
all notices and other communications shall have been duly given and shall be
effective (i) when delivered, (ii) when transmitted via telecopy (or other
facsimile device) to the number set out below, (iii) the Business Day following
the day on which the same has been delivered prepaid to a reputable national
overnight air courier service, or (iv) the third Business Day following the day
on which the same is sent by certified or registered mail, postage prepaid, in
each case to the respective parties at the address, in the case of the Credit
Parties and the Lender, set forth below, or at such other address as such party
may specify by written notice to the other parties hereto:
if to any Credit Party:
PRG-Schultz USA, Inc.
600 Galleria Parkway, Suite 100
Atlanta, Georgia 30339
Attn: Chief Financial Officer
Telephone: (770) 779-3230
Telecopy: (770) 779-3042
with a copy to:
PRG-Schultz USA, Inc.
600 Galleria Parkway, Suite 100
Atlanta, Georgia 30339
Attn: General Counsel
Telephone: (770) 779-3051
Telecopy: (770) 779-3034
if to any Lender:
to its address set forth on its signature page,
with a copy to:
Schulte Roth & Zabel LLP
919 Third Avenue
New York, NY 10022
Attn: Jeffrey S. Sabin
Telephone: (212) 756-2000
Telecopy: (212) 593-5955
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if to the Collateral Agent:
Blum Strategic Partners II, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133:
Attn: Jose S. Medeiros
Telephone: 415-288-7201
Telecopy: 415-283-0601
with a copy to:
Schulte Roth & Zabel LLP
919 Third Avenue
New York, NY 10022
Attn: Jeffrey S. Sabin
Telephone: (212) 756-2000
Telecopy: (212) 593-5955
Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient). Notices delivered through electronic communications to the extent
provided in subsection (b) below, shall be effective as provided in such
subsection (b).
(b) Electronic Communications. Notices and other communications to a
Lender hereunder may be delivered or furnished by electronic communication
(including e-mail and Internet or intranet websites) pursuant to procedures
approved by such Lender. Any Lender or the Borrower may, in its discretion,
agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it, provided that approval of
such procedures may be limited to particular notices or communications.
Unless the Required Lenders otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender's receipt of an acknowledgement from the intended recipient (such as by
the "return receipt requested" function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.
(c) Change of Address, Etc. Each of the Borrower, each Lender and the
Collateral Agent may change its address, telecopier or telephone number for
notices and other communications hereunder by notice to the other parties
hereto.
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(d) Reliance by Lender. Each Lender and the Collateral Agent shall be
entitled to rely and act upon any notices (including telephonic Notice of
Borrowing) purportedly given by an executive officer of the Borrower on behalf
of the Borrower even if (i) such notices were not made in a manner specified
herein, were incomplete or were not preceded or followed by any other form of
notice specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any confirmation thereof. The Borrower shall indemnify
each Lender, the Collateral Agent and its Related Parties from all losses,
costs, expenses and liabilities resulting from the reliance by such Person on
each notice purportedly given by or on behalf of the Borrower. All telephonic
notices to and other telephonic communications with each Lender or the
Collateral Agent may be recorded by such Lender or the Collateral Agent, and
each of the parties hereto hereby consents to such recording.
10.2 RIGHT OF SET-OFF; ADJUSTMENTS.
Upon the occurrence and during the continuance of any Event of Default,
each of the Lenders and the Collateral Agent (and each of its Affiliates) is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Lender (or any of its Affiliates) to or for the credit or
the account of any Credit Party against any and all of the obligations of such
Person now or hereafter existing under this Credit Agreement, under the Notes,
under any other Credit Document or otherwise, irrespective of whether such
Lender or Collateral Agent shall have made any demand under hereunder or
thereunder and although such obligations may be unmatured. Each of the Lenders
and the Collateral Agent agrees promptly to notify any affected Credit Party
after any such set-off and application made by such Lender or the Collateral
Agent; provided, however, that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of each of the Lenders
and the Collateral Agent under this Section 10.2 are in addition to other rights
and remedies (including, without limitation, other rights of set-off) that such
Lender or the Collateral Agent may have.
10.3 SUCCESSORS AND ASSIGNS.
(a) The provisions of this Credit Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that the Credit Parties may not assign or
otherwise transfer any of their rights or obligations hereunder without the
prior written consent of each Lender (and any attempted assignment or transfer
by any Credit Party without such consent shall be null and void). Nothing in
this Credit Agreement, expressed or implied, shall be construed to confer upon
any Person (other than the parties hereto, their respective successors and
assigns permitted hereby and, to the extent expressly contemplated hereby, the
Indemnitees) any legal or equitable right, remedy or claim under or by reason of
this Credit Agreement.
(b) Each Lender may assign all or a portion of its rights and
obligations under this Credit Agreement (including all or any portion of the
Loans). From and after the effective date of such assignment, the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such assignment, have the rights and obligations of the assigning Lender
under this Credit Agreement, and the assigning Lender thereunder shall, to the
extent of the
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interest assigned by such assignment, be released from its obligations under
this Credit Agreement (and, in the case of an assignment covering all of the
assigning Lender's rights and obligations under this Credit Agreement, the
assigning Lender shall cease to be a party hereto but shall continue to be
entitled to the benefits of Sections 10.4, 10.8 and 10.12). Upon request by the
assigning Lender and/or the assignee Lender, the Borrower shall execute and
deliver new or replacement Note to the assigning Lender and the assignee Lender.
(c) Notwithstanding anything herein to the contrary, each Lender may
at any time, without the consent of the Borrower, pledge or assign a security
interest in all or any portion of its rights under this Credit Agreement
(including under each Note) to secure obligations of such Lender, including any
pledge or assignment to secure obligations to a Federal Reserve Bank; provided
that no such pledge or assignment shall release such Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
10.4 EXPENSES; INDEMNIFICATION.
(a) The Credit Parties jointly and severally agree to pay on demand
all reasonable costs and expenses of each Lender in connection with the
preparation, execution, delivery, administration, modification, and amendment of
this Credit Agreement, the other Credit Documents, and the other documents to be
delivered hereunder, including, without limitation, the reasonable fees and
expenses of counsel for the Lenders and the Collateral Agent with respect
thereto and with respect to advising such Lender and the Collateral Agent as to
their rights and responsibilities under the Credit Documents. The Credit Parties
further jointly and severally agree to pay on demand all reasonable costs and
expenses of the Lenders and the Collateral Agent, if any (including, without
limitation, reasonable attorneys' fees and expenses), in connection with the
enforcement (whether through negotiations, legal proceedings, or otherwise) of
the Credit Documents and the other documents to be delivered hereunder.
(b) Whether or not the transactions contemplated hereby are
consummated, the Borrower agrees to indemnify, save and hold harmless each
Lender, the Collateral Agent and its respective Affiliates, directors, officers,
employees, counsel, agents and attorneys-in-fact (collectively the
"Indemnitees") from and against: (a) any and all claims, demands, actions or
causes of action that are asserted against any Indemnitee by any Person (other
than such Lender or the Collateral Agent) relating directly or indirectly to a
claim, demand, action or cause of action that such Person asserts or may assert
against any Credit Party, any Affiliate of any Credit Party or any of their
respective officers or directors; (b) any and all claims, demands, actions or
causes of action that may at any time (including at any time following repayment
of the Credit Party Obligations) be asserted or imposed against any Indemnitee,
arising out of or relating to, the Credit Documents, any predecessor Credit
Documents, the Commitments, the use or contemplated use of the proceeds of any
extension of credit, or the relationship of any Credit Party and such Lender or
the Collateral Agent under this Credit Agreement or any other Credit Document;
(c) any actual or alleged presence or release of Hazardous Materials on or from
any property currently or formerly owned or operated by the Borrower or any
Subsidiary of the Parent, or any Environmental Liability related in any way to
the Borrower or any Subsidiary of the Parent; (d) any administrative or
investigative proceeding by any Governmental Authority arising out of or related
to a claim, demand, action or cause of action described in subsection (a)
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or (b) above; and (e) any and all liabilities (including liabilities under
indemnities), losses, costs or expenses (including reasonable fees and costs of
counsel) that any Indemnitee suffers or incurs as a result of the assertion of
any foregoing claim, demand, action, cause of action or proceeding, or as a
result of the preparation of any defense in connection with any foregoing claim,
demand, action, cause of action or proceeding, in all cases, whether or not
arising out of the negligence of an Indemnitee, and whether or not an Indemnitee
is a party to such claim, demand, action, cause of action or proceeding (all the
foregoing, collectively, the "Indemnified Liabilities"); provided that no
Indemnitee shall be entitled to indemnification for any claim caused by its own
gross negligence or willful misconduct or for any loss asserted against it by
another Indemnitee. The agreements in this Section shall survive the termination
of the Commitments and repayment of all the other Credit Party Obligations.
(c) Without prejudice to the survival of any other agreement of the
Credit Parties hereunder, the agreements and obligations of the Credit Parties
contained in this Section 10.4 shall survive the repayment of the Loans and
other obligations under the Credit Documents and the termination of the
Commitments hereunder.
10.5 AMENDMENTS, WAIVERS AND CONSENTS.
Except for actions expressly permitted to be taken by the Collateral Agent,
neither this Credit Agreement nor any other Credit Document nor any of the terms
hereof or thereof may be amended, changed, waived, discharged or terminated
unless such amendment, change, waiver, discharge or termination is in writing
entered into by, or approved in writing by, the Borrower and the Required
Lenders or by the Collateral Agent with the consent of the Required Lenders, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given, provided, however, that no amendment,
change, waiver, discharge, termination or consent shall (i) increase the
Commitment of any Lender, reduce the principal of, or interest on, the Loans
payable to any Lender, reduce the amount of any fee payable for the account of
any Lender, or postpone or extend any date fixed for any payment of principal
of, or interest or, fees on, the Loans payable to any Lender, in each case
without the written consent of each Lender affected thereby, (ii) increase the
Total Commitment without the written consent of each Lender affected thereby,
(iii) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans that is required for the Lenders or any of them to
take any action hereunder without the written consent of each Lender affected
thereby, (iv) amend the definition of "Required Lenders" or "Pro Rata Share"
without the written consent of each Lender or (v) release all or a substantial
portion of the Collateral (except as otherwise provided in this Credit Agreement
and the other Credit Documents), subordinate any Lien granted in favor of the
Collateral Agent for the benefit of the Lenders, or release any Credit Party
without the written consent of each Lender, (vi) amend, change or waive this
Section 10.5 without the written consent of each Lender. Notwithstanding the
foregoing, no amendment, change, waiver, discharge, termination or consent
shall, unless in writing and signed by the Collateral Agent, affect the rights
or duties of the Collateral Agent (but not in its capacity as a Lender) under
this Credit Agreement or the other Credit Documents.
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10.6 COUNTERPARTS.
This Credit Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to produce or account for more than one
such counterpart for each of the parties hereto. Delivery by facsimile by any of
the parties hereto of an executed counterpart of this Credit Agreement shall be
as effective as an original executed counterpart hereof and shall be deemed a
representation that an original executed counterpart hereof will be delivered.
10.7 HEADINGS.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
10.8 SURVIVAL.
All indemnities set forth herein, including, without limitation, in Section
3.11, 3.12 or 10.5 shall survive the execution and delivery of this Credit
Agreement, the making of the Loans, the repayment of the Loans and other
obligations under the Credit Documents and the termination of the Commitments
hereunder, and all representations and warranties made by the Credit Parties
herein shall survive delivery of the Notes and the making of the Loans
hereunder.
10.9 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.
(a) THIS CREDIT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE LENDERS AND
THE COLLATERAL AGENT SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS CREDIT
AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF NEW YORK SITTING IN THE COUNTY OF NEW YORK OR OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF
THIS CREDIT AGREEMENT, EACH CREDIT PARTY, EACH LENDER AND THE COLLATERAL AGENT
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH CREDIT PARTY, EACH LENDER AND THE COLLATERAL
AGENT IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF ANY CREDIT DOCUMENT OR OTHER DOCUMENT RELATED THERETO. EACH CREDIT
PARTY, EACH LENDER AND THE COLLATERAL AGENT WAIVES PERSONAL SERVICE OF ANY
SUMMONS,
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COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
THE LAW OF SUCH STATE.
10.10 WAIVER OF JURY TRIAL.
EACH PARTY TO THIS CREDIT AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY
CREDIT DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY CREDIT
DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND
EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS CREDIT AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
10.11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties made hereunder and in any other Credit
Document or other document delivered pursuant hereto or thereto or in connection
herewith or therewith shall survive the execution and delivery hereof and
thereof. Such representations and warranties have been or will be relied upon by
the Lenders and the Collateral Agent, regardless of any investigation made by
the Lenders, the Collateral Agent or on its behalf and notwithstanding that the
Lender or the Collateral Agent may have had notice or knowledge of any Default
at the time of any Loans, and shall continue in full force and effect as long as
any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied.
10.12 SEVERABILITY.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
10.13 ENTIRETY.
This Credit Agreement together with the other Credit Documents represent
the entire agreement of the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Credit Documents or the transactions
contemplated herein and therein.
10.14 BINDING EFFECT; TERMINATION.
(a) This Credit Agreement shall become effective at such time when all
of the conditions set forth in Section 5.1 have been satisfied or waived by the
Lenders and it shall have
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been executed by each Credit Party and each Lender and the Collateral Agent, and
thereafter this Credit Agreement shall be binding upon and inure to the benefit
of each Credit Party, each Lender, the Collateral Agent and its respective
successors and assigns.
(b) The term of this Credit Agreement shall be until no Loans, or any
other amounts payable hereunder or under any of the other Credit Documents shall
remain outstanding, all of the Credit Party Obligations (other than
indemnification claims not yet asserted) have been irrevocably satisfied in full
and this Credit Agreement and the other Credit Documents shall have been
terminated.
10.15 CONFIDENTIALITY.
Each of the Lenders and the Collateral Agent agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates' directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and must agree to keep such
Information confidential); (b) to the extent requested by any regulatory
authority; (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process (each of the Lenders and the Collateral
Agent agrees to provide notice of any such requirement to the Borrower and, to
the extent reasonably requested by the Borrower, cooperate with the Borrower and
its Subsidiaries if the Borrower or any of its Subsidiaries seeks to have such
Information subject to a protective order); (d) to any other party to this
Credit Agreement; (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Credit Agreement or the
enforcement of rights hereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to (i) any assignee
of or participant in, or any prospective assignee of or participant in, any of
its rights or obligations under this Credit Agreement, provided that such
assignee or participant or prospective assignee or participant agrees to keep
the Information confidential or (ii) any direct or indirect contractual
counterparty or prospective counterparty (or such contractual counterparty's or
prospective counterparty's professional advisor) to any credit derivative
transaction relating to obligations of the Credit Parties, provided that such
contractual counterparty or prospective counterparty agrees to keep the
Information confidential; (g) with the consent of the Borrower; (h) to the
extent such Information (i) becomes publicly available other than as a result of
a breach of this Section or (ii) becomes available to such Lender or the
Collateral Agent on a non-confidential basis from a source other than the Credit
Parties; or (i) to the National Association of Insurance Commissioners or any
other similar organization or any nationally recognized rating agency that
requires access to information about such Lender's or its Affiliates' investment
portfolio in connection with ratings issued with respect to such Lender or its
Affiliates. In addition, each of the Lenders and the Collateral Agent may
disclose the existence of this Credit Agreement and information about this
Credit Agreement to market data collectors, similar service providers to the
lending industry, and service providers to such Lender or the Collateral Agent
in connection with the administration and management of this Credit Agreement,
the other Credit Documents, the Commitment, and the Loans. For the purposes of
this Section, "Information" means all information received from any Credit Party
or any Subsidiary of the Parent relating to any Credit Party or any Subsidiary
of the Parent or its business, other than any such information that is available
to any Lender or the Collateral Agent on a non-confidential basis prior to
disclosure by
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any Credit Party or any Subsidiary of the Parent. Any Person required to
maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
Each of the Lenders and the Collateral Agent acknowledges that it is aware that
the Borrower is a public company with securities that are publicly traded and
that the Information includes material non-public Information.
10.16 CONFLICT.
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document, on
the other hand, this Credit Agreement shall control.
10.17 USA PATRIOT ACT NOTICE.
Each Lender and the Collateral Agent hereby notifies the Borrower that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the "Act"), it may be required to obtain,
verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will
allow such Lender to identify the Borrower in accordance with the Act.
SECTION 11
COLLATERAL AGENT
11.1 APPOINTMENT.
Each Lender hereby irrevocably appoints and authorizes the Collateral Agent
to perform the duties of the Collateral Agent as set forth in this Credit
Agreement and the other Credit Documents including: (i) to 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 this Credit Agreement or any other Credit Document;
(ii) to perform, exercise, and enforce any and all other rights and remedies of
the Lenders with respect to the Credit Parties, the Credit Party Obligations, or
otherwise related to any of same to the extent reasonably incidental to the
exercise by the Collateral Agent of the rights and remedies specifically
authorized to be exercised by the Collateral Agent by the terms of this Credit
Agreement or any other Credit Document; (iii) to incur and pay such fees
necessary or appropriate for the performance and fulfillment of its functions
and powers pursuant to this Credit Agreement or any other Credit Document; and
(iv) subject to Section 11.3 of this Credit Agreement, to take such action as
the Collateral Agent deems appropriate on its behalf to exercise the powers
delegated to the Collateral Agent by the terms hereof or the other Credit
Documents together with such powers as are reasonably incidental thereto to
carry out the purposes hereof and thereof. As to any matters not expressly
provided for by this Credit Agreement and the other Credit Documents (including,
without limitation, enforcement or collection of the Loans), the Collateral
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
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in so acting or refraining from acting) upon the instructions of the Required
Lenders, and such instructions of the Lenders shall be binding upon all Lenders
and all makers of Loans.
11.2 NATURE OF DUTIES.
The Collateral Agent shall have no duties or responsibilities except those
expressly set forth in this Credit Agreement or in the other Credit Documents.
The duties of the Collateral Agent shall be mechanical and administrative in
nature. The Collateral Agent shall not have by reason of this Credit Agreement
or any other Credit Document a fiduciary relationship in respect of any Lender.
Nothing in this Credit Agreement or any other Credit Document, express or
implied, is intended to or shall be construed to impose upon the Collateral
Agent any obligations in respect of this Credit Agreement or any other Credit
Document except as expressly set forth herein or therein. Each Lender shall make
its own independent investigation of the financial condition and affairs of the
Credit Parties in connection with the making and the continuance of the Loans
hereunder and shall make its own appraisal of the creditworthiness of the Credit
Parties and the value of the Collateral, and the Collateral Agent shall have no
duty or responsibility, either initially or on a continuing basis, to provide
any Lender with any credit or other information with respect thereto, whether
coming into its possession before the initial Loan hereunder or at any time or
times thereafter, provided that, upon the reasonable request of a Lender, the
Collateral Agent shall provide to such Lender any documents or reports delivered
to the Collateral Agent by the Credit Parties pursuant to the terms of this
Credit Agreement or any other Credit Document. If the Collateral Agent seeks the
consent or approval of the Required Lenders to the taking or refraining from
taking any action hereunder, the Collateral Agent shall send notice thereof to
each Lender.
11.3 RIGHTS, EXCULPATION, ETC.
The Collateral Agent and its directors, officers, agents or employees shall
not be liable for any action taken or omitted to be taken by them under or in
connection with this Credit Agreement or the other Credit Documents, except for
their own gross negligence or willful misconduct as determined by a final
judgment of a court of competent jurisdiction. Without limiting the generality
of the foregoing, the Collateral Agent (i) may treat the payee of any Loan as
the owner thereof until the Collateral Agent receives written notice of the
assignment or transfer thereof, pursuant to Section 10.3 hereof, signed by such
payee and in form satisfactory to the Collateral Agent; (ii) may consult with
legal counsel (including, without limitation, counsel to the Collateral Agent or
counsel to the Credit Parties), independent public accountants, and other
experts selected by any of them and shall not be liable for any action taken or
omitted to be taken in good faith by any of them in accordance with the advice
of such counsel or experts; (iii) makes no warranty or representation to any
Lender and shall not be responsible to any Lender for any statements,
certificates, warranties or representations made in or in connection with this
Credit Agreement or the other Credit Documents; (iv) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Credit Agreement or the other Credit Documents
on the part of any Person, the existence or possible existence of any Default or
Event of Default, or to inspect the Collateral or other property (including,
without limitation, the books and records) of any Person; (v) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Credit Agreement or
the other Credit Documents or any
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other instrument or document furnished pursuant hereto or thereto; and (vi)
shall not be deemed to have made any representation or warranty regarding the
existence, value or collectibility of the Collateral, the existence, priority or
perfection of the Collateral Agent's Lien thereon, or any certificate prepared
by any Credit Party in connection therewith, nor shall the Collateral Agent be
responsible or liable to the Lenders for any failure to monitor or maintain any
portion of the Collateral. The Collateral Agent may at any time request
instructions from the Lenders with respect to any actions or approvals which by
the terms of this Credit Agreement or of any of the other Credit Documents the
Collateral Agent is permitted or required to take or to grant, and if such
instructions are promptly requested, the Collateral Agent shall be absolutely
entitled to refrain from taking any action or to withhold any approval under any
of the Credit Documents until it shall have received such instructions from the
Lenders. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against the Collateral Agent as a result of the Collateral
Agent acting or refraining from acting under this Credit Agreement or any of the
other Credit Documents in accordance with the instructions of the Required
Lenders.
11.4 RELIANCE.
The Collateral Agent shall be entitled to rely upon any written notices,
statements, certificates, orders or other documents or any telephone message
believed by it in good faith to be genuine and correct and to have been signed,
sent or made by the proper Person, and with respect to all matters pertaining to
this Credit Agreement or any of the other Credit Documents and its duties
hereunder or thereunder, upon advice of counsel selected by it.
11.5 INDEMNIFICATION.
To the extent that the Collateral Agent is not reimbursed and indemnified
by any Credit Party, the Lenders will reimburse and indemnify the Collateral
Agent from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, advances or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Collateral Agent in any way relating to or arising out of
this Credit Agreement or any of the other Credit Documents or any action taken
or omitted by the Collateral Agent under this Credit Agreement or any of the
other Credit Documents, in proportion to each Lender's Pro Rata Share,
including, without limitation, advances and disbursements made pursuant to
Section 11.5; provided, however, that no Lender shall be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses, advances or disbursements for which there has
been a final judicial determination that such liability resulted from the
Collateral Agent's gross negligence or willful misconduct. The obligations of
the Lenders under this Section 11.5 shall survive the payment in full of the
Loans and the termination of this Credit Agreement and of the other Credit
Documents.
11.6 COLLATERAL AGENT INDIVIDUALLY.
With respect to its Pro Rata Share of the Total Commitment hereunder and
the Loans made by it, the Collateral Agent shall have and may exercise the same
rights and powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein for any other Lender or maker
of a Loan. The terms "Lenders" or "Required Lenders" any similar terms shall,
unless the context clearly otherwise indicates, include the Collateral Agent in
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its individual capacity as a Lender or one of the "Required Lenders." The
Collateral Agent and its Affiliates may accept deposits from, lend money to, and
generally engage in any kind of banking, trust or other business with the
Borrower as if it were not acting as the Collateral Agent pursuant hereto
without any duty to account to the other Lenders.
11.7 SUCCESSOR COLLATERAL AGENT.
(a) The Collateral Agent may resign from the performance of all its
functions and duties hereunder and under the other Credit Documents at any time
by giving at least thirty (30) Business Days' prior written notice to the
Borrower and each Lender. Such resignation shall take effect upon the acceptance
by a successor Collateral Agent of appointment pursuant to clauses (b) and (c)
below or as otherwise provided below.
(b) Upon any such notice of resignation, the Required Lenders shall
appoint a successor Collateral Agent. Upon the acceptance of any appointment as
Collateral Agent hereunder by a successor Collateral Agent, such successor
Collateral Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the Collateral Agent, and the
Collateral Agent shall be discharged from its duties and obligations under this
Credit Agreement and the other Credit Documents. After the Collateral Agent's
resignation hereunder as the Collateral Agent, the provisions of this Section 11
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was the Collateral Agent under this Credit Agreement and the other
Credit Documents.
(c) If a successor Collateral Agent shall not have been so appointed
within said thirty (30) Business Day period, the Collateral Agent shall then
appoint a successor Collateral Agent who shall serve as the Collateral Agent
until such time, if any, as the Required Lenders appoint a successor Collateral
Agent as provided above.
11.8 COLLATERAL MATTERS.
(a) [intentionally omitted]
(b) The Lenders hereby irrevocably authorize the Collateral Agent, at
its option and in its discretion, to release any Lien granted to or held by the
Collateral Agent upon any Collateral upon termination of the Total Commitment
and payment and satisfaction of all Loans and all other Credit Party Obligations
in accordance with the terms hereof; or constituting property being sold or
disposed of in compliance with the terms of this Credit Agreement and the other
Credit Documents; or constituting property in which the Credit Parties owned no
interest at the time the Lien was granted or at any time thereafter; or if
approved, authorized or ratified in writing by the requisite Lenders. Upon
request by the Collateral Agent at any time, the Lenders will confirm in writing
the Collateral Agent's authority to release particular types or items of
Collateral pursuant to this Section 11.8(b).
(c) Without in any manner limiting the Collateral Agent's authority to
act without any specific or further authorization or consent by the Lenders (as
set forth in Section 11.8(b), each Lender agrees to confirm in writing, upon
request by the Collateral Agent, the authority to release Collateral conferred
upon the Collateral Agent under Section 11.8. Upon receipt by the Collateral
Agent of confirmation from the requisite Lenders of its authority to
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release any particular item or types of Collateral, and upon prior written
request by any Credit Party, the Collateral Agent shall (and is hereby
irrevocably authorized by the Lenders to) execute such documents as may be
necessary to evidence the release of the Liens granted to the Collateral Agent
for the benefit of the Lenders upon such Collateral; provided, however, that (i)
the Collateral Agent shall not be required to execute any such document on terms
which, in the Collateral Agent's opinion, would expose the Collateral Agent to
liability or create any obligations or entail any consequence other than the
release of such Liens without recourse or warranty, and (ii) such release shall
not in any manner discharge, affect or impair the Credit Party Obligations or
any Lien upon (or obligations of any Credit Party in respect of) all interests
in the Collateral retained by any Credit Party.
(d) The Collateral Agent shall have no obligation whatsoever to any
Lender to assure that the Collateral exists or is owned by the Credit Parties or
is cared for, protected or insured or has been encumbered or that the Lien
granted to the Collateral Agent pursuant to this Credit Agreement or any other
Credit Document has been properly or sufficiently or lawfully created,
perfected, protected or enforced or is entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to the Collateral Agent in this 11.8
or in any other Credit Document, it being understood and agreed that in respect
of the Collateral, or any act, omission or event related thereto, the Collateral
Agent may act in any manner it may deem appropriate, in its sole discretion,
given the Collateral Agent's own interest in the Collateral as one of the
Lenders and that the Collateral Agent shall have no duty or liability whatsoever
to any other Lender, except as otherwise provided herein.
11.9 AGENCY FOR PERFECTION. Each Lender hereby appoints the Collateral
Agent and each other Lender as agent and bailee for the purpose of perfecting
the security interests in and liens upon the Collateral in assets which, in
accordance with Article 9 of the Uniform Commercial Code, can be perfected only
by possession or control (or where the security interest of a secured party with
possession or control has priority over the security interest of another secured
party) and the Collateral Agent and each Lender hereby acknowledges that it
holds possession of or otherwise controls any such Collateral for the benefit of
the Collateral Agent and the Lenders as secured party. Should any Lender obtain
possession or control of any such Collateral, such Lender shall notify the
Collateral Agent thereof, and, promptly upon the Collateral Agent's request
therefor shall deliver such Collateral to the Collateral Agent or in accordance
with the Collateral Agent's instructions. In addition, the Collateral Agent
shall also have the power and authority hereunder to appoint such other
sub-agents as may be necessary or required under applicable state law or
otherwise to perform its duties and enforce its rights with respect to the
Collateral and under the Credit Documents. Each Credit Party by its execution
and delivery of this Credit Agreement hereby consents to the foregoing.
[Signature Pages to Follow]
65
Each of the parties hereto has caused a counterpart of this Credit
Agreement to be duly executed and delivered as of the date first above written.
BORROWER: PRG-SCHULTZ USA, INC.,
a Georgia corporation
By: s/
------------------------------------
Name: James E. Moylan, Jr.
Title: Executive Vice President -
Finance, Chief Financial Officer
and Treasurer
GUARANTORS: PRG-SCHULTZ INTERNATIONAL, INC.,
a Georgia corporation
By: s/
------------------------------------
Name: James E. Moylan, Jr.
Title: Executive Vice President -
Finance, Chief Financial Officer
and Treasurer
PRGFS, INC.,
PRGLS, INC.,
each a Delaware corporation
By: s/
------------------------------------
Name: James E. Moylan, Jr.
Title: Executive Vice President -
Finance
PRGRS, INC., a Delaware corporation
By: s/
------------------------------------
Name: James B. McCurry
Title: President
66
GUARANTORS: THE PROFIT RECOVERY GROUP ASIA, INC.,
PRG-SCHULTZ CANADA, INC.,
THE PROFIT RECOVERY GROUP NEW ZEALAND,
INC.,
THE PROFIT RECOVERY GROUP NETHERLANDS,
INC.,
THE PROFIT RECOVERY GROUP MEXICO, INC.
PRG-SCHULTZ FRANCE, INC.,
PRG-SCHULTZ AUSTRALIA, INC.,
PRG-SCHULTZ BELGIUM, INC.,
PRG-SCHULTZ CHILE, INC.,
THE PROFIT RECOVERY GROUP GERMANY, INC.,
PRG INTERNATIONAL, INC.,
PRG-SCHULTZ SWITZERLAND, INC.,
THE PROFIT RECOVERY GROUP SOUTH AFRICA,
INC.,
THE PROFIT RECOVERY GROUP SPAIN, INC.,
THE PROFIT RECOVERY GROUP ITALY, INC.,
PRG-SCHULTZ SCANDINAVIA, INC.,
PRG-SCHULTZ PORTUGAL, INC.,
PRG-SCHULTZ JAPAN, INC.,
THE PROFIT RECOVERY GROUP COSTA RICA,
INC.,
PRG-SCHULTZ PUERTO RICO, INC.,
PRG USA, INC.,
PRG-SCHULTZ EUROPE, INC.,
EACH A GEORGIA CORPORATION
By: s/
------------------------------------
Name: James E. Moylan, Jr.
Title: Executive Vice President -
Finance, Chief Financial Officer
and Treasurer
HS&A ACQUISITION - UK, INC.,
a Texas corporation
By: s/
------------------------------------
Name: James E. Moylan, Jr.
Title: Executive Vice President -
Finance, Chief Financial Officer
and Treasurer
67
LENDERS: BLUM STRATEGIC PARTNERS II, L.P.
By: s/
------------------------------------
Name: Jose Medeiros
Title: Partner
909 Montgomery Street, Suite 400
San Francisco, CA 94133
Attention: Jose S. Medeiros
Telephone: 415-288-7201
Facsimile: 415-283-0601
68
LENDERS: BLUM STRATEGIC PARTNERS II
GMBH & CO. KG.
By: s/
------------------------------------
Name: Jose Medeiros
Title: Partner
909 Montgomery Street, Suite 400
San Francisco, CA 94133
Attention: Jose S. Medeiros
Telephone: 415-288-7201
Facsimile: 415-283-0601
69
LENDERS: PARKCENTRAL GLOBAL HUB LIMITED
By: s/
------------------------------------
Name: Steven Balsnik
Title: President
2300 West Plano Parkway
Plano, TX 75075
Attention: Steve Blasnik
Telephone: 972-535-1919
Facsimile: 972-535-1997
70
LENDERS: PETRUS SECURITIES L.P.
By: s/
------------------------------------
Name: Steven Blasnik
Title: President of General Partner
2300 West Plano Parkway
Plano, TX 75075
Attention: Steve Blasnik
Telephone: 972-535-1919
Facsimile: 972-535-1997
71
COLLATERAL AGENT: BLUM STRATEGIC PARTNERS II, L.P.
By: s/
------------------------------------
Name: Jose Medeiros
Title: Partner
72