EXHIBIT 10.5
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LOAN AGREEMENT
BY AND BETWEEN
SOMERA COMMUNICATIONS, L.L.C.
AND
FLEET NATIONAL BANK, AS AGENT AND A LENDER
AND
UNION BANK OF CALIFORNIA, N.A.,
AS DOCUMENTATION AGENT AND A LENDER
AND
BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE, INC.,
AS A CO-AGENT AND A LENDER
AND
SANWA BANK CALIFORNIA,
AS A CO-AGENT AND A LENDER
AND
THE OTHER FINANCIAL INSTITUTIONS
HEREAFTER PARTIES HERETO
$50,000,000 SECURED TERM LOAN
AND
$15,000,000 SECURED REVOLVING CREDIT LOAN
AUGUST 31, 1999
INDEX TO
LOAN AGREEMENT
Page
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ARTICLE 1. DEFINITIONS AND ACCOUNTING AND OTHER TERMS................................................. 1
SECTION 1.1. CERTAIN DEFINED TERMS................................................................. 1
SECTION 1.2. ACCOUNTING TERMS...................................................................... 17
SECTION 1.3. OTHER TERMS........................................................................... 17
ARTICLE 2. AMOUNT AND TERMS OF THE LOANS.............................................................. 17
SECTION 2.1. THE LOANS............................................................................. 18
Section 2.1.0. The Revolving Credit Loans........................................................ 18
Section 2.1.1. Term Loans........................................................................ 19
SECTION 2.2. INTEREST AND FEES ON THE LOANS........................................................ 20
Section 2.2.1. Interest.......................................................................... 20
Section 2.2.2. Fees.............................................................................. 21
Section 2.2.3. Increased Costs - Capital......................................................... 21
SECTION 2.3. NOTATIONS............................................................................. 22
SECTION 2.4. COMPUTATION OF INTEREST............................................................... 23
SECTION 2.5. TIME OF PAYMENTS AND PREPAYMENTS IN IMMEDIATELY AVAILABLE FUNDS....................... 23
Section 2.5.1. Time.............................................................................. 23
Section 2.5.2. Setoff, etc....................................................................... 24
Section 2.5.3. Unconditional Obligations and No Deductions....................................... 25
SECTION 2.6. PREPAYMENT AND CERTAIN PAYMENTS....................................................... 27
Section 2.6.1. Mandatory Payments................................................................ 27
Section 2.6.2. Voluntary Prepayments............................................................. 29
Section 2.6.3. Prepayment of Libor Loans......................................................... 29
Section 2.6.4. Permanent Reduction of Commitment................................................. 29
SECTION 2.7. PAYMENT ON NON-BUSINESS DAYS.......................................................... 29
SECTION 2.8. USE OF PROCEEDS....................................................................... 30
SECTION 2.9. SPECIAL LIBOR LOAN PROVISIONS......................................................... 30
Section 2.9.1. Requests.......................................................................... 30
Section 2.9.2. Libor Loans Unavailable........................................................... 30
Section 2.9.3. Libor Lending Unlawful............................................................ 31
Section 2.9.4. Additional Costs on Libor Loans................................................... 32
Section 2.9.5. Libor Funding Losses.............................................................. 33
Section 2.9.6. Banking Practices................................................................. 34
Section 2.9.7. Borrower's Options on Unavailability or Increased Cost of Libor Loans............ 34
Section 2.9.8. Assumptions Concerning Funding of Libor Loans..................................... 35
SECTION 2.10. INTEREST RATE PROTECTION.............................................................. 35
ARTICLE 3. CONDITIONS OF LENDING...................................................................... 35
SECTION 3.1. CONDITIONS PRECEDENT TO THE COMMITMENT AND TO ALL LOANS............................... 35
Section 3.1.1. The Commitment and Initial Loans.................................................. 35
Section 3.1.2. The Commitment and the Loans...................................................... 38
ARTICLE 4. REPRESENTATIONS AND WARRANTIES............................................................ 39
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE BORROWER........................................ 39
Section 4.1.1. Organization and Existence........................................................ 39
Section 4.1.2. Authorization and Absence of Defaults............................................. 39
Section 4.1.3. Acquisition of Consents........................................................... 40
Section 4.1.4. Validity and Enforceability....................................................... 40
i
Section 4.1.5. Financial Information............................................................. 40
Section 4.1.6. No Litigation..................................................................... 41
Section 4.1.7. Regulation U...................................................................... 41
Section 4.1.8. Absence of Adverse Agreements..................................................... 41
Section 4.1.9. Taxes............................................................................. 42
Section 4.1.10. ERISA............................................................................. 42
Section 4.1.11. Ownership of Properties........................................................... 42
Section 4.1.12. Accuracy of Representations and Warranties........................................ 43
Section 4.1.13. No Investment Company............................................................. 43
Section 4.1.14. Solvency, etc..................................................................... 43
Section 4.1.15. Approvals......................................................................... 43
Section 4.1.16. Ownership Interests............................................................... 44
Section 4.1.17. Licenses, Registrations, Compliance with Laws, etc................................ 44
Section 4.1.18. Principal Place of Business; Books and Records.................................... 44
Section 4.1.19. Subsidiaries...................................................................... 44
Section 4.1.20. Copyright......................................................................... 44
Section 4.1.21. Environmental Compliance.......................................................... 44
Section 4.1.22. Material Agreements, etc.......................................................... 45
Section 4.1.23. Patents, Trademarks and Other Property Rights..................................... 45
Section 4.1.24. Related Transaction Documents..................................................... 45
Section 4.1.25. Material Adverse Effect........................................................... 46
Section 4.1.26. Year 2000......................................................................... 46
Section 4.1.27. Security Interests................................................................ 46
ARTICLE 5. COVENANTS OF THE BORROWER.................................................................. 46
SECTION 5.1. AFFIRMATIVE COVENANTS OF THE BORROWER OTHER THAN REPORTING REQUIREMENTS................ 46
Section 5.1.1. Payment of Taxes, etc............................................................. 46
Section 5.1.2. Maintenance of Insurance.......................................................... 46
Section 5.1.3. Preservation of Existence, etc.................................................... 47
Section 5.1.4. Compliance with Laws, etc......................................................... 47
Section 5.1.5. Visitation Rights................................................................. 48
Section 5.1.6. Keeping of Records and Books of Account........................................... 48
Section 5.1.7. Maintenance of Properties, etc.................................................... 48
Section 5.1.8. Post-Closing Items................................................................ 48
Section 5.1.9. Other Documents, etc.............................................................. 48
Section 5.1.10(A). Minimum EBITDA................................................................. 48
Section 5.1.11. Minimum Fixed Charge Coverage Ratio............................................... 49
Section 5.1.12. Maximum Leverage Ratio............................................................ 49
Section 5.1.13. Officer's Certificates and Requests............................................... 49
Section 5.1.14. Depository........................................................................ 49
Section 5.1.15. Chief Executive Officer........................................................... 49
Section 5.1.16. Notice of Purchase of Real Estate and Leases...................................... 49
Section 5.1.17. Additional Assurances............................................................. 49
Section 5.1.18. Appraisals........................................................................ 50
Section 5.1.19. Environmental Compliance.......................................................... 50
Section 5.1.20. Remediation....................................................................... 50
Section 5.1.21. Site Assessments.................................................................. 50
Section 5.1.22. Indemnity......................................................................... 50
Section 5.1.23. Trademarks, Copyrights, etc....................................................... 51
Section 5.1.24. Key-Man Insurance................................................................. 51
SECTION 5.2. NEGATIVE COVENANTS OF THE BORROWER..................................................... 51
Section 5.2.1. Liens, etc........................................................................ 51
Section 5.2.2. Assumptions, Guaranties, etc. of Indebtedness of Other Persons.................... 52
Section 5.2.3. Acquisitions, Dissolution, etc.................................................... 53
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Section 5.2.4. Change in Nature of Business...................................................... 54
Section 5.2.5. Ownership......................................................................... 54
Section 5.2.6. Sale and Leaseback; Synthetic Leases.............................................. 54
Section 5.2.7. Sale of Accounts, etc............................................................. 54
Section 5.2.8. Indebtedness...................................................................... 54
Section 5.2.9. Other Agreements.................................................................. 55
Section 5.2.10. Payment or Prepayment of Equity or Subordinated Debt.............................. 55
Section 5.2.11. Dividends, Payments and Distributions............................................. 55
Section 5.2.12. Investments in or to Other Persons................................................ 55
Section 5.2.13. Transactions with Affiliates...................................................... 56
Section 5.2.14. Change of Fiscal Year............................................................. 56
Section 5.2.15. Subordination of Claims........................................................... 56
Section 5.2.16. Compliance with ERISA............................................................. 56
Section 5.2.17. Capital Expenditures.............................................................. 56
Section 5.2.18. Hazardous Material................................................................ 57
Section 5.2.19 Other Restrictions on Liens or Dividends.......................................... 57
Section 5.2.20 Limitation on Creation of Subsidiaries, etc....................................... 57
SECTION 5.3. REPORTING REQUIREMENTS................................................................ 57
ARTICLE 6. EVENTS OF DEFAULT.......................................................................... 59
SECTION 6.1. EVENTS OF DEFAULT..................................................................... 59
ARTICLE 7. REMEDIES OF LENDERS........................................................................ 61
ARTICLE 8. AGENT...................................................................................... 62
SECTION 8.1. APPOINTMENT........................................................................... 62
SECTION 8.2. POWERS; GENERAL IMMUNITY.............................................................. 62
Section 8.2.1. Duties Specified.................................................................. 62
Section 8.2.2. No Responsibility For Certain Matters............................................. 62
Section 8.2.3. Exculpatory Provisions............................................................ 63
Section 8.2.4. Agent Entitled to Act as Lender................................................... 63
SECTION 8.3. REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF CREDITWORTHINESS... 63
SECTION 8.4. RIGHT TO INDEMNITY.................................................................... 64
SECTION 8.5. PAYEE OF NOTE TREATED AS OWNER........................................................ 64
SECTION 8.6. RESIGNATION BY AGENT.................................................................. 64
SECTION 8.7. SUCCESSOR AGENT....................................................................... 65
SECTION 8.8. CO-AGENTS, ETC........................................................................ 65
ARTICLE 9. MISCELLANEOUS.............................................................................. 65
SECTION 9.1. CONSENT TO JURISDICTION AND SERVICE OF PROCESS........................................ 65
SECTION 9.2. RIGHTS AND REMEDIES CUMULATIVE........................................................ 66
SECTION 9.3. DELAY OR OMISSION NOT WAIVER.......................................................... 66
SECTION 9.4. WAIVER OF STAY OR EXTENSION LAWS...................................................... 67
SECTION 9.5. AMENDMENTS, ETC....................................................................... 67
SECTION 9.6. ADDRESSES FOR NOTICES, ETC............................................................ 67
SECTION 9.7. COSTS, EXPENSES AND TAXES............................................................. 68
SECTION 9.8. PARTICIPATIONS........................................................................ 69
SECTION 9.9. BINDING EFFECT; ASSIGNMENT............................................................ 69
SECTION 9.10. ACTUAL KNOWLEDGE...................................................................... 69
SECTION 9.11. SUBSTITUTIONS AND ASSIGNMENTS......................................................... 70
SECTION 9.12. PAYMENTS PRO RATA..................................................................... 72
SECTION 9.13. INDEMNIFICATION....................................................................... 72
SECTION 9.14 CONFIDENTIAL INFORMATION.............................................................. 74
SECTION 9.15. GOVERNING LAW......................................................................... 75
iii
SECTION 9.16. SEVERABILITY OF PROVISIONS............................................................ 75
SECTION 9.17. HEADINGS.............................................................................. 75
SECTION 9.18. COUNTERPARTS.......................................................................... 75
iv
SCHEDULE OF EXHIBITS
EXHIBIT 1.4 FORM OF INTEREST RATE ELECTION
EXHIBIT 1.5 FORM OF REVOLVING CREDIT NOTE
EXHIBIT 1.6 FORM OF TERM NOTE
EXHIBIT 1.9 PRO RATA SHARES, AGENT'S AND LENDERS' NOTICE
ADDRESSES AND WIRE TRANSFER INSTRUCTIONS
EXHIBIT 1.10 FORM OF REQUEST
EXHIBIT 2.1.0 FORM OF BORROWING BASE CERTIFICATE
EXHIBIT 3.1.1.10 FORM OF COMPLIANCE CERTIFICATE
EXHIBIT 9.11.1 FORM OF ASSIGNMENT AND ACCEPTANCE
v
LOAN AGREEMENT
SOMERA COMMUNICATIONS, L.L.C., a California limited liability company with
a principal place of business at 5383 Hollister Avenue, Suite 100, Santa
Barbara, California 93111 (hereinafter the "Borrower"), FLEET NATIONAL BANK, a
national banking association organized under the laws of the United States and
having an office at One Federal Street, Boston, Massachusetts 02110 (hereinafter
sometimes the "Agent" as Agent for itself and each of the other Lenders who now
are and/or hereafter become parties to this Agreement pursuant to the terms of
Section 9.11 hereof (the "Lenders"), sometimes in each of its capacities "Fleet"
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and sometimes in its capacity as a Lender, "Lender", and Union Bank of
California, N.A., as Documentation Agent and a Lender, Bank Austria
Creditanstalt Corporate Finance, Inc., as a Co-Agent and a Lender and Sanwa Bank
California, as Co-Agent and a Lender, such Lenders, hereby agree as follows:
ARTICLE 1.
DEFINITIONS AND ACCOUNTING AND OTHER TERMS
Section 1.1. Certain Defined Terms. As used in this Agreement, the
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following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Adjusted Libor Rate" means, with respect to any Libor Loan to be made by
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the Lenders for the Interest Period applicable to such Libor Loan, the interest
rate per annum determined by the Agent (fixed throughout such Interest Period
(subject to adjustments for the Libor Rate Reserve Percentage)) and rounded
upwards, if necessary, to the next 1/16 of 1%) which is equal to the quotient of
(i) the rate of interest determined by the Agent to be the average of the
interest rates per annum at which Dollar deposits in immediately available funds
are offered to each Reference Lender by first-class banks in the London
interbank market at approximately 11:00 a.m., London time, two Business Days
prior to the Business Day on which such Interest Period begins, in an amount
approximately equal to the principal amount of such Libor Loan, for a period of
time equal to such Interest Period and (ii) a number equal to the number one
minus the Libor Rate Reserve Percentage. The "Libor Rate Reserve Percentage"
applicable to any Interest Period means the average of the maximum effective
rates (expressed as a decimal) of the statutory reserve requirements (without
duplication, but including, without limitation, basic, supplemental, marginal
and emergency reserves) applicable to each Reference Lender during such Interest
Period under regulations of the Board of Governors of the Federal Reserve
System (or any successor), including without limitation Regulation D or any
other regulation dealing with maximum reserve requirements which are applicable
to each Reference Lender with respect to its "Eurocurrency Liabilities", as that
term may be defined from time to time by the Board of Governors of the Federal
Reserve System (or any successor) or are otherwise imposed by the Board of
Governors of the Federal Reserve System (or any successor) and which in any
other respect relate directly to the funding of loans bearing interest at rates
based on the interest rates at which Dollar deposits in immediately available
funds are offered to banks by first-class banks in the London interbank market.
If any Reference Lender fails to provide its offered quotation to the Agent, the
Adjusted Libor Rate shall be determined on the basis of the offered quotation of
the other Reference Lender. The Adjusted Libor Rate shall be adjusted
automatically on and as of the effective date of any change in the Libor Rate
Reserve Percentage.
"Advance" and "Advances" means the funding by any Lender of all or a
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portion of the Loans in accordance with this Agreement.
"Affiliate" means singly and collectively any Person (other than a
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Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, the Borrower. For purposes of this definition,
a Person shall be deemed to be "controlled by" another Person and "control"
shall be deemed to exist if the latter Person possesses, directly or indirectly,
power either to (i) vote 10% or more of the securities having ordinary voting
power for the election of directors of such Person or (ii) direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise, and the legal representative, successor or assign of any such Person.
"Agent" means Fleet or any other Person which is at the time in question
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serving as the agent under the terms of Article 8 hereof and the other Financing
Documents.
"Agreement" means this loan agreement, as the same may from time to time be
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amended.
"A.M." means a time from and including 12 o'clock midnight to and excluding
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12 o'clock noon on any Business Day using Eastern Standard (Daylight Savings)
time.
"Applicable Margin" means for the period commencing on the Closing Date and
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ending on the fifth Business Day after the Agent's receipt of the quarterly
financial statements for the Borrower's September 30, 1999 fiscal quarter
pursuant to Section 5.3.3, a per annum percentage equal to the percentages
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specified for Level V below, and thereafter as of any date, so long as no
Default or Event of Default exists and subject to the next-to-last sentence of
this definition, the applicable per annum percentage set forth below; provided
that if any Default or Event of Default exists the applicable per annum
percentage shall be that specified for Level V.
Level Leverage Ratio LIBOR Unused Fees
Prime Loans
Rate
Loans
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I less than 1.0 25 b.p. 175 b.p. 37.5 b.p.
II greater than or equal to 1.0 & less than 1.5 50 b.p. 200 b.p. 50.0 b.p.
III greater than or equal to 1.5 & less than 2.0 75 b.p. 225 b.p. 50.0 b.p.
IV greater than or equal to 2.0 & less than 2.5 100 b.p. 250 b.p. 50.0 b.p.
V greater than or equal to 2.5 125 b.p. 275 b.p. 50.0 b.p.
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Any change in the Applicable Margin required pursuant to the foregoing
shall become effective on the fifth Business Day after the Agent receives the
Borrower's financial statement for the Borrower's fiscal quarter or year-end, as
the case may be, in question; provided, however, that each of the above-
referenced interest rates or Unused Fees shall remain in effect only so long as
Borrower qualifies therefor and provided further, however, that interest rate
and Unused Fee
2
reductions shall become final only on the basis of Borrower's annual audited
financial statements and in the event that such annual audited financial
statements establish that the Borrower was not entitled to a rate reduction at a
fiscal quarter ending which was previously granted, the Borrower shall, upon
written demand by the Agent, repay to the Agent for the account of each Lender
an amount equal to the excess of interest or Unused Fee at the rate which should
have been charged based on such annual audited financial statements and the rate
actually charged on the basis of Borrower's quarterly financial statement(s)
(provided that in the event of a dispute as to the appropriate fiscal quarter as
to which any adjustment should be allocated, the decision of the independent
accountants of the Borrower shall be made in accordance with GAAP and shall be
binding upon the Agent, the Lenders and the Borrower absent manifest error); and
provided further, however, that in the event that Borrower fails to provide any
financial statement on a timely basis in accordance with Section 5.3.2 or 5.3.3,
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any interest rate increase payable as a result thereof shall be retroactively
effective to the date on which the financial statement in question should have
been received by the Agent in accordance with Section 5.3.2 or 5.3.3, and the
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Borrower shall pay any amount due as a result thereof upon written demand from
the Agent. The Agent shall send the Borrower written acknowledgment of each
change in the Applicable Margin in accordance with the Agent's customary
procedures as in effect from time to time, but the failure to send such
acknowledgment shall have no effect on the effectiveness or applicability of the
foregoing provisions of this definition or Borrower's obligations with respect
to payment and calculation of interest on Libor Loans.
"Authorized Representative" means such senior personnel of the Borrower as
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shall be duly authorized and designated in writing by the Borrower to execute
documents, instruments and agreements on its behalf and to perform the functions
of Authorized Representative under any of the Financing Documents.
"Borrowed Money" means any obligation to repay funded Indebtedness, any
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Indebtedness evidenced by notes, bonds, debentures, guaranties or similar
obligations including without limitation the Loans and any obligation to pay
money under a conditional sale or other title retention agreement, the net
aggregate rentals payable under any Capitalized Lease Obligation, any
reimbursement obligation for any letter of credit and any obligations in respect
of banker's and other acceptances or similar obligations.
"Borrower" has the meaning assigned in the first paragraph of this
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Agreement.
"Borrowing Base" means an amount equal to the sum of (i) eighty percent
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(80%) of the Net Outstanding Amount of Eligible Receivables and (ii) the lesser
of (a) $5,000,000 and (b) fifty percent (50%) of Eligible Inventory.
"Budget" has the meaning assigned to such term in Section 5.3.7.
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"Business Condition" means the financial condition, business, assets,
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liabilities and operations of a Person.
"Business Day" means (i) for all purposes other than as covered by clause
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(ii) below, any day on which banks in Boston, Massachusetts or New York, New
York are not authorized or required by applicable law to close; and (ii) with
respect to all notices and determinations in
3
connection with, and payments of principal and interest on, Libor Loans, any day
which is a Business Day described in clause (i) and which is also a day for
trading by and between banks in Dollar deposits in the London interbank market.
"Capital Expenditures" means all expenditures paid or incurred by the
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Borrower or any Subsidiary in respect of (i) the acquisition, construction,
improvement or replacement of land, buildings, machinery, equipment, any other
fixed assets or leaseholds and (ii) to the extent related to and not included in
(i) above, materials, contract labor and direct labor, which expenditures have
been or should be, in accordance with GAAP, capitalized on the books of the
Borrower or such Subsidiary.
"Capitalized Lease Obligations" means all lease obligations which have been
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or should be, in accordance with GAAP, capitalized on the books of the lessee.
"Cash Equivalent Investments" means (a) prior to repayment of the Term
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Loans in full, any Investment in (i) direct obligations of the United States or
any agency, authority or instrumentality thereof, or obligations guaranteed by
the United States or any agency, authority or instrumentality thereof, whether
or not supported by the full faith and credit of, a right to borrow from or the
ability to be purchased by the United States; (ii) commercial paper rated in the
highest grade by a nationally recognized statistical rating agency or which, if
not rated, is issued or guaranteed by any issuer with outstanding long-term debt
rated A or better by any nationally recognized statistical rating agency; (iii)
demand and time deposits with, and certificates of deposit and bankers
acceptances issued by, any office of the Agent, any Lender or any other bank or
trust company which is organized under the laws of the United States or any
state thereof or, if such bank or trust company is a Lender, organized under the
laws of another nation in which the Borrower or a Subsidiary has a business
location, and in all such cases, which has capital, surplus and undivided
profits aggregating at least $500,000,000 and the outstanding long-term debt of
which or of the holding company of which it is a subsidiary is rated A or better
by any nationally recognized statistical rating agency; (iv) any short-term note
which has a rating of MIG-2 or better by Moody's Investors Service Inc. or a
comparable rating from any other nationally recognized statistical rating
agency; (v) any municipal bond or other governmental obligation (including
without limitation any industrial revenue bond or project note) which is rated A
or better by any nationally recognized statistical rating agency; (vi) any other
obligation of any issuer, the outstanding long-term debt of which is rated A or
better by any nationally recognized statistical rating agency; (vii) any
repurchase agreement with any financial institution described in clause (iii)
above, relating to any of the foregoing instruments and fully collateralized by
such instruments; (viii) shares of any open-end diversified investment company
that has its assets invested only in investments of the types described in
clause (i) through (vii) above at the time of purchase and which maintains a
constant net asset value per share; and (ix) shares of any open-end diversified
investment company registered under the Investment Company Act of 1940, as
amended, which maintains a constant net asset value per share in accordance with
regulations of the Securities & Exchange Commission, has aggregate net assets of
not less than $50,000,000 on the date of purchase and either derives at least
80% of its gross income from interest on or gains from the sale of investments
of the type described in clauses (i) through (vii), above or has at least 75% of
the weighted average value of its assets invested in investments of such types;
provided that the purchase of any shares in any particular investment company
shall be limited to an aggregate amount owned at any one time of $500,000. Each
4
Cash Equivalent Investment shall have a maturity of less than one year at the
time of purchase; provided that the maturity of any repurchase agreement shall
be deemed to be the repurchase date and not the maturity of the subject security
and that the maturity of any variable or floating rate note subject to
prepayment at the option of the holder shall be the period remaining (including
any notice period remaining) before the holder is entitled to prepayment and (b)
thereafter, any Investment classified as cash or cash equivalents in accordance
with GAAP and in accordance with any written investment policy duly adopted by
Borrower's board of directors.
"Change of Control" means, at any time prior to the completion of a
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Qualified Initial Public Offering, any one of the following events: (i) any
change in the ownership of the Borrower such that the Summit Investors and
Daniel A. Firestone in the aggregate own less than 51% of the equity interests
in the Borrower or (ii) any decrease in any of the voting rights in the Borrower
now held by the Summit Investors and Daniel A. Firestone such that they cease to
collectively hold 51% or more of the voting rights in the Borrower and (ii) at
any time after completion of a Qualified Initial Public offering, any one of the
following events:
(i) any "person" or "group" (each as used in Sections 13(d)(3) and
14(d)(2) of the Securities Exchange Act of 1934, as amended from time to time)
(other than a group controlled by the Summit Investors and/or Daniel A.
Firestone) either (A) becomes the "beneficial owner" (as defined in Rule 13d-3
of the Exchange Act), directly or indirectly, of voting capital stock of the
Borrower (or securities convertible into or exchangeable for such voting capital
stock) representing 30% or more of the combined voting power of all voting
capital stock of the Borrower (on a fully diluted basis) or (B) otherwise has
the ability, directly or indirectly, to elect a majority of the board of
directors of the Borrower; or
(ii) during any period of up to 24 consecutive months, commencing on the
Closing Date, individuals who at the beginning of such 24-month period were
directors of the Borrower shall cease for any reason (other than (A) the death,
disability or retirement of a director or (B) the death, disability, resignation
or retirement of an officer of the Borrower that is serving as a director at
such time so long as another officer of the Borrower or any other person
selected by a majority of the board of directors replaces such Person as a
director) to constitute a majority of the board of directors of the Borrower; or
(iii) any Person or two or more Persons acting in concert shall have
acquired by contract or otherwise, or shall have entered into a contract or
arrangement that, upon consummation thereof, will result in its or their
acquisition of the power to exercise, directly or indirectly, a controlling
influence on the management or policies of the Borrower.
"Closing Date" means the date on which all of the conditions precedent set
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forth in Section 3.1 of this Agreement have been satisfied and the Term Loan is
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funded in accordance with this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
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time.
"Commitment" means the Lenders' several commitments to make or maintain the
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Loans as set forth in Section 2.1 hereof in the maximum outstanding amount of
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each Lender's Pro Rata Share of $65,000,000 less the reductions set forth in
Section 2.1 and less any reductions of the
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5
Commitment pursuant to Section 2.6.4 and prepayments or repayments of the
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Term Loan as set forth in Section 2.6.
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"Commonly Controlled Entity" means a Person, whether or not incorporated,
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which is under common control with the Borrower within the meaning of section
414(b) or (c) of the Code.
"Default" means an event or condition which with the giving of notice or
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lapse of time or both would become an Event of Default.
"Discharged Rights and Obligations" shall have the meaning assigned to such
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term in Section 9.11.4.
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"Disclosure Letter" means the letter identified as such, dated as of the
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date hereof, delivered by Borrower to Agent and by this reference fully
incorporated herein.
"Dollars" and the sign "$" mean lawful money of the United States of
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America.
"EBITDA" means, for any fiscal period, Net Income plus, to the extent
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deducted in determining Net Income, (a) Interest Expense, taxes, depreciation,
amortization, other noncash charges and (b) non-recurring extraordinary costs
incurred by the Borrower and any Subsidiaries prior to September 30, 1999 in
connection with closing of the Loans and the Related Transactions, for such
period determined on an accrual and consolidated basis in accordance with GAAP.
"Effective Prime" means the Prime Rate plus the Applicable Margin for Prime
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Rate Loans.
"Eligible Inventory" means value, i.e., the lower of cost or book value
------------------
determined in accordance with GAAP, of the inventory of the Borrower and any
Subsidiaries as to which all manufacturing and assembly processes have been
completed and which is (a) ready for sale and delivery to a customer, (b) raw
materials inventory and (c) work-in-process inventory, in all such cases to the
extent that such inventory is (a) in the Borrower's or Subsidiary's possession
or is in transit to the Borrower or any Subsidiary and covered by a letter of
credit or acceptance issued by a financial institution acceptable to the Agent
in its commercial reasonable discretion or for which other protective steps
deemed satisfactory by the Agent in a commercially reasonable manner have been
taken, (b) owned entirely by the Borrower or any Subsidiary, (c) not evidenced
by any document or instrument, (d) not obsolete, damaged, unfit for use or
unsaleable and (e) not in inventory for more than 90 days. By way of example
only, the Agent may consider the following inventory not eligible: (v)
inventory as to which any Borrower or any Subsidiary, as the case may be, do not
have valid and marketable title, (w) packaging and supplies, (x) inventory
subject to a Lien other than those granted to the Agent, (y) inventory for which
there does not exist a first priority perfected security interest in favor of
the Agent and (z) work-in-process inventory. All determinations by the Agent
---
concerning Eligible Inventory, shall be made by the Agent in a commercially
reasonable manner. The criteria for eligibility may be revised in a
commercially reasonable manner by the Agent from time to time.
6
"Eligible Receivables" means accounts receivable of the Borrower and any
--------------------
Subsidiaries evidencing Indebtedness of Persons to the Borrower for goods
actually sold and delivered or services actually performed in the ordinary
course of business by the Borrower to or for such Person, as to which goods or
services no written notice has been received by Borrower from such Person that
alleges a breach by the Borrower of its obligation to deliver such goods and/or
services and which accounts receivable have been outstanding for less than
ninety (90) days since their respective invoicing dates, but excluding, however,
(i) accounts receivable owing by officers, directors, shareholders or employees
of Borrower, (ii) accounts receivable with respect to which goods are placed on
consignment, guaranteed sale, "bill and hold" or other terms by reason of which
the payment by the account debtor may be conditional, (iii) accounts receivable
owing by the United States or any agency, department or instrumentality thereof
unless such accounts are freely assignable to the Agent under the United States
Assignment of Claims Act and the Borrower has separately assigned each such
account to the Agent in compliance with such Act, (iv) accounts receivable owing
by any Subsidiary or Affiliate of Borrower, (v) accounts receivable with respect
to which Borrower or any Subsidiary or Affiliate is liable to the account debtor
for goods sold or services provided to Borrower or any Subsidiary or Affiliate
by such account debtor to the extent of Borrower's or any Subsidiary's or
Affiliate's liability to such account debtor, (vi) accounts receivable which are
due and payable to Borrower from an account debtor located outside the United
States of America unless the Agent shall have, in its sole discretion,
specifically approved such receivable or such receivable is covered by credit
insurance or a letter of credit in all respects satisfactory to the Agent, (vii)
any accounts receivable as to which the account debtor has claimed in writing
any setoff or any dispute as to the amount owing by the account debtor to the
extent of the amount in dispute, (viii) any accounts receivable subject to any
Lien other than pursuant to the Security Documents, (ix) any accounts receivable
owing by any Person which is insolvent and/or the subject of any bankruptcy,
receivership or other insolvency proceeding, and (x) any accounts receivable
deemed by the Agent in the Agent's sole discretion exercised in good faith or
uncollectible.
"Environmental Law" shall mean any statute, ordinance, code, law, or
-----------------
regulation or any other requirement enacted or adopted by any Governmental
Authority relating to pollution or protection of public health, safety or
welfare or the environment, including without limitation (i) those relating to
emissions, discharges, releases or threatened releases of Hazardous Materials
into the environment (including ambient air, surface water, ground water or
land), or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials, (ii)
the Clean Air Act, 42 U.S.C. Section 2001, et seq., the Federal Water Pollution
-- ----
Control Act, 33 U.S.C. Section 1247, et seq., the Resource Conservation and
-- ---
Recovery Act, 42 U.S.C. Section 6901, et seq., the Comprehensive Environmental
-- ---
Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601, et
--
seq., the Toxic Substance Control Act, 42 U.S.C. Section 2501, et seq., and any
- --- -- ---
state law counterparts, including the law of nuisance and strict liability.
"Equity" means the ownership interests in the Borrower held by the Members
------
as set forth in Exhibit 1.1.
-----------
"Equity Documents" means, collectively, all documents entered into by the
----------------
Borrower and any of the Members in connection with their Equity as listed on
Exhibit 1.2 to the Disclosure Letter.
- -----------
7
"ERISA" means the Employee Retirement Income Security Act of 1974 as
-----
amended from time to time.
"Events of Default" has the meaning assigned to that term in Section 6.1 of
----------------- -----------
this Agreement.
"Excess Cash Flow" means, for any fiscal year of the Borrower, on a
----------------
consolidated basis, the sum of EBITDA for each Borrower fiscal quarter in such
fiscal year plus decreases in working capital and minus the sum of (i) an amount
-----
equal to the sum of payments included in Total Debt Service paid during each
fiscal quarter in such fiscal year, (ii) to the extent not included in Total
Debt Service, all Capital Expenditures permitted under Section 5.2.17 and paid
--------------
during each Borrower fiscal quarter in such fiscal year,(iii) taxes payable
during each Borrower fiscal quarter in such fiscal year, including without
duplication quarterly distributions to Borrower's Members in amounts necessary
to pay federal and state income tax on account of Borrower's taxable income and
(iv) increases in working capital.
"Exhibit" means, when followed by a letter, the exhibit attached to this
-------
Agreement bearing that letter and by such reference fully incorporated in this
Agreement.
"Facility Fee" means, the facility fee payable by the Borrower in
------------
accordance with Section 2.2.2 and the Fee Letter.
-------------
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upward, if necessary, to the nearest 1/16th of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York, provided that (i) if such day is not a
--------
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next succeeding Business Day as so published, and (ii) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate quoted to the Agent on such
day on such transactions as determined by the Agent in its discretion exercised
in good faith.
"Fee Letter" means that certain side letter of even date with this
----------
Agreement between the Borrower and the Agent regarding certain fees payable by
the Borrower.
"Financing Documents" means, collectively, this Agreement, each Note, the
-------------------
Security Documents, the Fee Letter, the Post-Closing Letter, any Letter of
Credit, any Letter of Credit Agreement, any agreement with any Lender providing
any interest rate protection arrangement and each other agreement, instrument or
document now or hereafter executed in connection herewith or therewith.
"Fixed Charge Coverage Ratio" means the ratio of (i) EBITDA minus all
--------------------------- -----
Capital Expenditures permitted under Section 5.2.17 and paid during each
--------------
Borrower fiscal quarter during the period in question, and taxes payable during
each Borrower fiscal quarter during the period in question, including without
duplication distributions to Borrower's Members in amounts
8
necessary to pay federal and state income tax on account of Borrower's taxable
income to (ii) Total Debt Service.
"GAAP" means generally accepted accounting principles in effect from time
----
to time in the United States of America.
"Governmental Authority" means the United States of America, any state,
----------------------
commonwealth, territory, or possession thereof, and any political subdivision or
quasigovernmental authority of any of the same, including any court, tribunal,
department, bureau, commission or board.
"Hazardous Material" shall mean any substance or material defined or
------------------
designated as a hazardous or toxic waste, hazardous or toxic material, hazardous
or toxic substance, or other similar term, by any Environmental Law.
"Indebtedness" means, as to any Person and whether recourse is secured by
------------
or is otherwise available against all or only a portion of the assets of such
Person and whether or not contingent, but without duplication:
(i) every obligation of such Person for Borrowed Money.
(ii) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (including without
limitation securities repurchase agreements and any earn-outs or similar
obligations with respect to Permitted Acquisitions, but excluding trade
accounts payable or accrued liabilities arising in the ordinary course of
business which are not overdue or which are being contested in good faith);
(iii) every obligation of such Person under any lease (a "synthetic
lease") treated as an operating lease under GAAP and as a loan or financing
for United States income tax purposes;
(iv) all sales by such Person of (A) accounts or general intangibles
for money due or to become due, (B) chattel paper, instruments or documents
creating or evidencing a right to payment of money or (C) other receivables
(collectively "receivables"), whether pursuant to a purchase facility or
otherwise, other than in connection with the disposition of the business
operations of such Person relating thereto or a disposition of defaulted
receivables for collection and not as a financing arrangement, and together
with any obligation of such Person to pay any discount, interest, fees,
indemnities, penalties, recourse, expenses or other amounts in connection
therewith;
(v) every matured obligation of such Person (an "equity related
purchase obligation") to purchase, redeem, retire or otherwise acquire for
value any shares of capital stock of any class issued by such Person, any
warrants, options or other rights to acquire any such shares, or any rights
measured by the value of such shares, warrants, options or other rights;
9
(vi) every obligation of such Person under any forward contract,
futures contract, swap, option or other financing agreement or arrangement
(including, without limitation, caps, floors, collars and similar
agreements), the value of which is dependent upon interest rates, currency
exchange rates, commodities or other indices (a "derivative contract");
(vii) every obligation in respect of Indebtedness of any other
entity (including any partnership in which such Person is a general
partner) to the extent that such Person is liable therefor as a result of
such Person's ownership interest in or other relationship with such
entity, except to the extent that the terms of such Indebtedness provide
that such Person is not liable therefor; and
(viii) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guarantying or otherwise
acting as surety for, any obligation of a type described in any of clauses
(i) through (vii) (the "primary obligation") of another Person (the
"primary obligor"), in any manner, whether directly or indirectly, and
including, without limitation, any obligation of such Person (A) to
purchase or pay (or advance or supply funds for the purchase of) any
security for the payment of such primary obligation, or (B) to purchase
property, securities or services for the purpose of assuring the payment
of such primary obligation, or (C) to maintain working capital, equity
capital or other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such primary
obligation.
The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (u) any Indebtedness, issued at a price that
is less than the principal amount at maturity thereof, shall be the amount
of the liability in respect thereof determined in accordance with GAAP,
(v) any Capitalized Lease shall be determined in accordance with GAAP, (w)
any sale of receivables shall be the amount of unrecovered capital or
principal investment of the purchaser (other than the Borrower or any of
its wholly-owned Subsidiaries) thereof, excluding amounts representative
of yield or interest earned on such investment, (x) any synthetic lease
shall be the stipulated loss value, termination value or other equivalent
amount, (y) any derivative contract shall be the maximum amount of any
termination or loss payment required to be paid by such Person if such
derivative contract were, at the time of determination, to be terminated
by reason of any event of default or early termination event thereunder,
whether or not such event of default or early termination event has in
fact occurred and (z) any equity related purchase obligation shall be the
maximum fixed redemption or purchase price thereof inclusive of any
accrued and unpaid dividends to be comprised in such redemption or
purchase price.
"Ineligible Securities" means Securities which may not be underwritten or
---------------------
dealt in by member banks of the Federal Reserve System under Section 16 of the
Banking Act of 1993 (12 U.S.C. (S)24, Seventh), as amended.
"Interest Adjustment Date" means (i) as to any Prime Rate Loan to be
------------------------
converted to a Libor Loan the Business Day elected by the Borrower in its
applicable Interest Rate Election, but being not less than three (3) Business
Days after the receipt by the Agent before 12:00 o'clock
10
P.M. on a Business Day of an Interest Rate Election electing the Libor Rate as
the interest rate on such Loan; and (ii) as to any Libor Loan, the last Business
Day of the Interest Period pertaining to such Libor Loan.
"Interest Expense" means, with respect to any fiscal quarter, the aggregate
----------------
amount required to be accrued by the Borrower and any Subsidiaries in such
fiscal quarter for interest, fees (excluding, however, the Facility Fee being
paid to the Agent for the accounts of the Lenders on the Closing Date), charges
and expenses, however characterized, on its Indebtedness, including, without
limitation, all such interest, fees, charges and expenses required to be accrued
with respect to Indebtedness under the Financing Documents, all determined in
accordance with GAAP.
"Interest Period" means:
---------------
With respect to each Libor Loan:
(i) initially, the period commencing on the date of such Libor Loan
and ending one, two, three, six or such greater number of months
thereafter as may be acceptable to all of the Lenders and as the Borrower
may elect in the applicable Interest Rate Election and subject to Section
-------
2.9; and
---
(ii) thereafter, each period commencing on the last day of the
immediately preceding Interest Period applicable to such Libor Loan and
ending one, two, three, six or such greater number of months thereafter as
may be acceptable to all of the Lenders and as the Borrower may elect in
the applicable Interest Rate Election and subject to Section 2.9;
-----------
provided that clauses (i) and (ii) of this definition are subject to the
-------- ----
following:
(A) any Interest Period (other than an Interest Period determined pursuant
to clause (C) below) which would otherwise end on a day which is not a Business
Day shall be extended to the next succeeding Business Day unless such Business
Day falls in another calendar month, in which case such Interest Period shall
end on the immediately preceding Business Day;
(B) any Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall, subject to
clause (C) below, end on the last Business Day of a calendar month; and
(C) for the Term Loan, no Interest Period shall end after the Term Loan
Repayment Date and for the Revolving Credit Loan, no Interest Period shall end
after the Revolving Credit Repayment Date; and
(D) with respect to all Libor Loans, no more than eight Interest Periods
may be in effect at any time.
11
"Interest Rate Election" means the Borrower's irrevocable telecopied or
----------------------
telephonic notice of election, which shall be promptly confirmed by a written
notice of election that Effective Prime or the Libor Rate shall apply to all or
any portion of the Loans, which shall, subject to this Agreement, be effective
on the next Interest Adjustment Date, such telecopied or telephonic notice and
written confirmation thereof to be in the form of Exhibit 1.4 and to be received
-----------
by the Agent prior to 12:00 o'clock P.M. on a Business Day and at least three
(3) Business Days prior to an Interest Adjustment Date in the case of a Libor
Loan, and by 12:00 p.m. on an Interest Adjustment Date in the case of a Prime
Rate Loan (or four (4) Business Days in the case of an Interest Rate Election as
to which the consent of the Lenders is required), each such Interest Rate
Election, subject to the terms of this Agreement, to apply to the Advance or the
Loan referred to in such Interest Rate Election or to effect a change in the
interest rate on the applicable portion of the Loans then outstanding, as
applicable, with respect to which such Interest Rate Election was made, such
change to occur on the Interest Adjustment Date next succeeding receipt of such
Interest Rate Election by the Agent. Any Interest Rate Election received by the
Agent after 12 o'clock P.M. on a Business Day shall be deemed, for all purposes
of this Agreement, to have been received prior to 12 o'clock P.M. on the next
succeeding Business Day.
"Investment" means any investment in any Person whether by means of a
----------
purchase of capital stock, notes, bonds, debentures or other evidences of
Indebtedness and/or by means of a capital or partnership contribution, loan,
deposit, advance or other means,
"Lender" means Fleet, or any financial institution which hereafter becomes
------
a party hereto pursuant to the terms of Section 9.11, each in their individual
------------
capacity, and "Lenders" means Fleet and each of such financial institutions.
"Letter of Credit" means an irrevocable stand-by or commercial letter of
----------------
credit issued by the Agent for the account of the Borrower pursuant to a Letter
of Credit Agreement subject to and in accordance with this Agreement.
"Letter of Credit Agreement" means an application and agreement for stand-
--------------------------
by or commercial letter of credit in such form as may at any time be customarily
required by the Agent for its issuance of stand-by or commercial letters of
credit.
"Leverage Ratio" means the ratio of total Indebtedness for Borrowed Money
--------------
of the Borrower and its Subsidiaries on a consolidated basis as of the last day
of the most recently ended fiscal quarter of the Borrower to EBITDA for such
Borrower fiscal quarter and the three immediately preceding Borrower fiscal
quarters calculated in accordance with GAAP.
"Libor Loan" means any portion of any Loan bearing interest at the Libor
----------
Rate.
"Libor Rate" means, for any Interest Period, the Adjusted Libor Rate in
----------
effect on the first day of such Interest Period (subject to adjustment as
provided in the definition of Adjusted Libor Rate) plus the Applicable Margin
for Libor Loans from time to time in effect.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other) or other security agreement
or preferential arrangement of any kind or nature whatsoever (including without
limitation any conditional sale or other title
12
retention agreement and any Capitalized Lease Obligation) having substantially
the same economic effect as any of the foregoing and the filing of any financing
statement under the applicable Uniform Commercial Code or comparable law of any
jurisdiction in respect of any of the foregoing.
"Loans" and "Loan" means at any time the outstanding principal amount of
----- ----
Indebtedness owed to the Lenders or to any Lender, as the context may require
pursuant to this Agreement.
"Majority Lenders" means Lenders holding an aggregate Pro Rata Share of the
----------------
outstanding principal balance of the Loans in an amount equal to or in excess of
50.1% of the total outstanding principal balance of the Loans and if there is no
outstanding principal balance of the Loans, Lenders having at least 50.1% of the
Commitment.
"Material Adverse Effect" means material adverse effect on (i) the ability
-----------------------
of the Borrower or any Subsidiary to fulfill its obligations under any of the
Financing Documents or (ii) the Business Condition of the Borrower and its
Subsidiaries taken as a whole.
"Members" means the Summit Investors and the other Persons listed on
-------
Exhibit 1.1 as Members.
- -----------
"Multiemployer Plan" means a multiemployer plan as defined in Section
------------------
4001(a)(3) of ERISA.
"Net Income" means, for any fiscal period, the net after tax income (loss)
----------
of the Borrower and any Subsidiaries for such period determined on an accrual
and consolidated basis in accordance with GAAP.
"Net Outstanding Amount of Eligible Receivables" means the net amount of
----------------------------------------------
Eligible Receivables outstanding after eliminating from the aggregate amount of
outstanding Eligible Receivables all payments, adjustments and credits
applicable thereto.
"Note" means any promissory note of the Borrower payable to the order of a
----
Lender and substantially in the form of Exhibit 1.5 or Exhibit 1.6 and
------- --- -----------
evidencing all or a portion of the Loan and "Notes" means all of the Notes,
collectively.
"Obligations" mean any and all Indebtedness, obligations and liabilities of
-----------
Borrower and/or any Subsidiaries under any of the Financing Documents to any one
or more of the Lenders and/or the Agent of every kind and description, absolute
or contingent, due or to become due, whether for payment or performance, now
existing or hereafter arising, including, without limitation, all Loans,
interest, taxes, fees, charges, and expenses under the Financing Documents and
attorneys' fees chargeable to the Borrower and/or any Subsidiaries or incurred
by any of the Lenders and/or the Agent under any of the Financing Documents.
"Officer's Certificate" means a certificate signed by an Authorized
---------------------
Representative and delivered to the Agent on behalf of the Lenders.
13
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant
----
to subtitle A of Title IV of ERISA.
"P.M." means a time from and including 12 o'clock noon on any Business Day
----
to the end of such Business Day using Eastern Standard (Daylight Savings) time.
"Permitted Encumbrances" means each Lien granted pursuant to any of the
----------------------
Security Documents, those Liens, security interests and defects in title
permitted under Section 5.2.1 and those Liens listed on Exhibit 1.8.
------------- -----------
"Person" means an individual, corporation, partnership, limited liability
------
company, joint venture, trust, or unincorporated organization, or a government
or any agency or political subdivision thereof.
"Plan" means an employee benefit plan as defined in Section 3(3) of ERISA
----
maintained for employees of the Borrower or any Commonly Controlled Entity.
"Post-Closing Letter" means that certain letter agreement between the
-------------------
Borrower and the Agent dated the Closing Date and listing certain post-closing
actions to be completed by the Borrower.
"Premises" has the meaning assigned to such term in Section 4.1.21.1.
-------- ----------------
"Prime Rate" means the higher of (i) the floating rate of interest per
----------
annum designated from time to time by the Agent as being its "prime rate" of
interest, such interest rate to be adjusted on the effective date of any change
thereof by the Agent, it being understood that such rate of interest may not be
the lowest rate of interest from time to time charged by the Agent and (ii) the
Federal Funds Rate plus one-half percent (.50%), such interest rate to be
adjusted on the effective date of any change thereof by the Federal Reserve Bank
of New York.
"Prime Rate Loan(s)" means any portion of the Loans bearing interest at
------------------
Effective Prime.
"Projections" means the Borrower's written projections of Borrower's five-
-----------
year future performance on a consolidated basis delivered to the Agent prior to
the Closing Date and attached to the Disclosure Letter.
"Pro Rata Share" means (i) with respect to the Commitment, each Lender's
--------------
percentage share of the Commitment as set forth immediately opposite such
Lender's name on Exhibit 1.9, and (ii) with respect to the Loans, each Lender's
-----------
percentage share of the aggregate outstanding principal balance of the Loans and
"Pro Rata Shares" means such percentage shares of the Lenders.
"Qualified Initial Public Offering" means the Borrower and/or any
---------------------------------
Subsidiary conducting an initial public offering of any class of the
Borrower's or any Subsidiary's securities following the effectiveness of a filed
Form S-1 or any other form of registration statement then available for
registration with the Securities and Exchange Commission, which such offering
generates $30,000,000 or more in gross proceeds.
14
"Reference Lender(s)" means the Agent unless the Agent resigns said
-------------------
responsibility, at which time and thereafter such term means one or two Lenders
selected by the Agent in its discretion from time to time as a reference lender
for purposes of determining the Adjusted Libor Rate.
"Related Funds" means, with respect to any Lender which is a fund that
-------------
invests in loans, any other fund that invests in loans and is managed by the
same investment advisor as such Lender or by an affiliate of such Lender.
"Related Transactions" means the Borrower's payment of up to a $50,000,000
--------------------
dividend to the Stockholders and refinancing of certain Indebtedness for
Borrowed Money.
"Reportable Event" shall have the meaning assigned to that term in Section
----------------
4043 of ERISA for which the requirement of 30 days' notice to the PBGC has not
been waived by the PBGC.
"Request" means a written request for the Loans in the form of Exhibit
------- -------
1.10, received by the Agent on behalf of the Lenders from the Borrower in
accordance with this Agreement, specifying the date on which the Borrower
desires such Loans and the disbursement instructions of the Borrower with
respect thereto.
"Revolving Credit Loans" means the revolving credit loans to be made by the
----------------------
Lenders to the Borrower from time to time in the maximum outstanding principal
amount of the Revolving Credit Loan Commitment, all subject and pursuant to
Section 2.1.0.
- -------------
"Revolving Credit Loan Commitment" means the Lenders' several commitments
--------------------------------
to make Revolving Credit Loans to the Borrower in accordance with Section 2.1.0
-------------
and this Agreement and in the maximum outstanding amount of each Lender's Pro
Rata Share of the lesser of (i) the Borrowing Base and (ii) $15,000,000, as such
amount may be reduced pursuant to Section 2.6.4.
-------------
"Revolving Credit Note" means each revolving credit note of the Borrower,
---------------------
payable to the order of a Lender in the form of Exhibit 1.5 hereto evidencing
-----------
the Indebtedness of the Borrower to such Lender with respect to the Revolving
Credit Loan.
"Revolving Credit Repayment Date" means the earlier to occur of (i) August
-------------------------------
31, 2004 and (ii) such earlier date on which the Revolving Credit Loan becomes
due and payable pursuant to the terms hereof.
"Section" means, when followed by a number, the section or subsection of
-------
this Agreement bearing that number.
"Section 20 Subsidiary" means a subsidiary of the bank holding company
---------------------
controlling any Lender, which subsidiary has been granted authority by the
Federal Reserve Board to underwrite and deal in certain Ineligible Securities.
15
"Security Documents" means any and all documents, instruments and
------------------
agreements now or hereafter providing security for the Loans and any other
Indebtedness of the Borrower or any Subsidiary to any of the Lenders and/or the
Agent incurred (a) in connection with this Agreement and/or any of the other
Financing Documents, and/or (b) referred to in Section 5.2.2 or 5.2.8, including
------------ ----
without limitation the following documents, instruments and agreements between
the Agent and the Borrower or any Subsidiary: any mortgages on and collateral
assignments of real property interests (fee, leasehold and easement) of the
Borrower and any Subsidiary granting Liens thereon; landlord lien waivers and
consents as may be reasonably requested by the Agent; security agreements
granting Liens on all Borrower's and any Subsidiary's fixtures and tangible and
intangible personal property including without limitation any copyrights,
trademarks, servicemarks, patents and any applications therefor; collateral
assignments of Borrower's and any Subsidiary's contracts, licenses, permits,
easements and leases; any guaranty by a Subsidiary; any pledge of the capital
stock of any Subsidiary; casualty and liability insurance policies providing
coverage to the Agent for the benefit of the Lenders; collateral assignment of
keyman life insurance on Borrower's chief executive officer; UCC-1 financing
statements or similar filings perfecting the above-referenced security
interests, pledges and assignments, all as executed, delivered to and accepted
by the Agent on or prior to the Closing Date or subsequent to the Closing Date
as may be required by this Agreement, as any of the foregoing may be amended in
writing by the Agent and any other party or parties thereto.
"Selling Lender" shall have the meaning assigned to such term in Section
-------------- -------
9.11.1.
- ------
"Single Employer Plan" means any Plan as defined in Section 4001(a)(15) of
--------------------
ERISA.
"Subsidiary" means any corporation or entity other than the Borrower of
----------
which more than 50% of the outstanding capital stock or voting interests or
rights having ordinary voting power to elect a majority of the board of
directors or other managers of such entity (irrespective of whether or not at
the time capital stock or voting interests or rights of any other class or
classes of such Person shall or might have voting power upon the occurrence of
any contingency) is at the time directly or indirectly owned by the Borrower or
by the Borrower and/or one or more Subsidiaries or the management of which
corporation or entity is under control of the Borrower and/or any other
Subsidiary, directly or indirectly through one or more Persons and any other
Person which, under GAAP, should at any time for financial reporting purposes be
consolidated or combined with the Borrower and/or any other Subsidiary.
"Substituted Lender" has the meaning set forth in Section 9.11 hereof.
------------------ ------ ----
"Substitution Agreement" has the meaning assigned to such term in Section
---------------------- -------
9.11.1.
- ------
"Summit Investors" means the Person listed under the heading "Summit
----------------
Investors" on Exhibit 1.1 to the Disclosure Letter.
------------------------------------
"Term Loan" means the term loan in the aggregate principal amount of
---------
$50,000,000 to be made or maintained by the Lenders pursuant to Section 2.1.1
-------------
hereof.
16
"Term Note" means a term note of the Borrower payable to the order of a
---------
Lender in the form of Exhibit 1.6 hereto evidencing the Indebtedness of the
-----------
Borrower to such Lender with respect to the Term Loan.
"Term Loan Repayment Date" means the earlier to occur of (i) August 31,
------------------------
2004 and (ii) such earlier date on which the Term Loan becomes due and payable
pursuant to the terms hereof.
"Total Debt Service" means, at any date of determination, the sum of (i)
------------------
Interest Expense and (ii) scheduled and mandatory principal payments for the
fiscal period in question due on account of any Indebtedness of the Borrower and
of any Subsidiary, but excluding any mandatory payments of principal required
pursuant to Sections 2.6.1.2, 2.6.1.3, 2.6.1.4, 2.6.1.5 and 2.6.1.6.
---------------- ------- ------- ------- -------
"Unused Amount" has the meaning assigned to such term in Section 2.2.2.
------------- -------------
"Unused Fees" has the meaning assigned to such term in Section 2.2.2.
----------- -------------
Section 1.2. Accounting Terms. All accounting terms not specifically
----------- ----------------
defined herein shall be construed in accordance with GAAP, calculations of
amounts for the purposes of calculating any financial covenants or ratios
hereunder shall be made in accordance with GAAP applied on a basis consistent
with those used in the Borrower's financial statements referred to in Section
-------
4.1.5 (other than departures therefrom not material in their impact), and all
- -----
financial data submitted pursuant to this Agreement shall be prepared in
accordance with GAAP (except, in the case of unaudited financial statements, the
absence of footnotes and that such statements are subject to changes resulting
from year-end adjustments made in accordance with GAAP).
Section 1.3. Other Terms. References to "Articles", "Sections",
----------- -----------
"subsections" and "Exhibits" shall be to Sections, subsections and Exhibits and
of this Agreement unless otherwise specifically provided. In this Agreement,
"hereof," "herein," "hereto," "hereunder" and the like mean and refer to this
Agreement as a whole and not merely to the specific section, paragraph or clause
in which the respective word appears; words importing any gender include the
other genders; references to "writing" include printing, typing, lithography and
other means of reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be followed by the
words "without limitation"; references to agreements and other contractual
instruments shall be deemed to include subsequent amendments, assignments, and
other modifications thereto, but only to the extent such amendments, assignments
and other modifications are not prohibited by the terms of this Agreement or any
other Financing Document; references to Persons include their respective
permitted successors and assigns or, in the case of governmental Persons,
Persons succeeding to the relevant functions of such Persons; and all references
to statutes and related regulations shall include any amendments of same and any
successor statutes and regulations.
ARTICLE 2.
AMOUNT AND TERMS OF THE LOANS
17
Section 2.1. The Loans.
----------- ---------
Section 2.1.0. The Revolving Credit Loans. Each of the Lenders
------------- --------------------------
severally agrees, subject to the terms and conditions of this Agreement, to make
Advances of Revolving Credit Loans to the Borrower from time to time after
receipt by the Agent from time to time before the Revolving Credit Repayment
Date of, and at the times provided for in, a Request and an Interest Rate
Election from the Borrower in accordance with this Agreement, during the period
commencing on the Closing Date and ending on the Business Day immediately
preceding the Revolving Credit Repayment Date, in an aggregate principal amount
at any one time outstanding not to exceed (i) such Lender's Pro Rata Share of
the Revolving Credit Loan Commitment less (ii) in each case, such Lender's Pro
Rata Share of the aggregate outstanding stated amount of any Letters of Credit
and, without duplication, Letter of Credit Agreements and any unreimbursed
amounts drawn thereunder. Each Advance shall be in a principal amount of at
least $500,000 or an integral multiple of $100,000 in excess thereof or, if
less, the amount of the Revolving Credit Loan Commitment.
Promptly after receipt of a Request and Interest Rate Election, Agent shall
notify each Lender by telephone, telex or telecopy of the proposed borrowing.
Subject to the immediately preceding paragraph, each Lender agrees that after
its receipt of notification from Agent of Agent's receipt of a Request and
Interest Rate Election, such Lender shall send its Pro Rata Share (or such
portion thereof as may be necessary to provide Agent with such Pro Rata Share in
Dollars and in immediately available funds, without consideration or use of any
contra accounts of any Lender) of the requested Loan by wire transfer to Agent
so that Agent receives such Pro Rata Share in Dollars and in immediately
available funds not later than 12:00 P.M. (Boston, Massachusetts time) on the
first day of the Interest Period for any such requested Libor Loan and on the
Business Day for such Advance set forth in Borrower's Request for any such
requested Prime Rate Loan, and Agent shall advance funds to the Borrower by
depositing such funds in Borrower's account with the Agent upon Agent's receipt
of such Pro Rata Shares in the amount of the Pro Rata Shares of such Loan in
Agent's possession. Unless Agent shall have been notified by any Lender (which
notice may be telephonic if confirmed promptly in writing) prior to the first
day of the Interest Period in respect of any Loan which such Lender is obligated
to make under this Agreement, that such Lender does not intend to make available
to Agent such Lender's Pro Rata Share of such Loan on such date, Agent may
assume that such Lender has made such amount available to Agent on such date and
Agent in its sole discretion may, but shall not be obligated to, make available
to the Borrower a corresponding amount on such date. If such corresponding
amount is not in fact made available to Agent by such Lender, Agent shall be
entitled to recover such corresponding amount from such Lender promptly upon
demand by Agent together with interest thereon, for each day from such date
until the date such amount is paid to Agent, at the Federal Funds Rate for three
(3) Business Days and thereafter at the interest rate on the Loan in question.
If such Lender does not pay such corresponding amount forthwith upon Agent's
demand therefor, Agent shall promptly notify the Borrower and the Borrower shall
promptly pay such corresponding amount to Agent. Nothing contained in this
Section shall be deemed to relieve any Lender from its obligation to fulfill its
obligations hereunder or to prejudice any rights which the Borrower may have
against any Lender as a result of any default by such Lender hereunder.
18
Throughout the term of the Revolving Credit Loans, $5,000,000 of the
Revolving Credit Loan Commitment and principal amount of the Revolving Credit
Loans may, at the Borrower's request and so long as no Default or Event of
Default exists or would exist after issuance of any Letter of Credit be made
available to the Borrower prior to the Revolving Credit Repayment Date by
issuance of Letters of Credit having an expiration date prior to the earlier to
occur of (a) the first anniversary date of the date of issuance of any such
Letter of Credit or (b) three (3) Business Days prior to the Revolving Credit
Repayment Date, reasonably promptly after submission by the Borrower to the
Agent of a Letter of Credit Agreement, duly completed and executed by the
Borrower and otherwise in form and substance satisfactory to the Agent. The
Borrower shall pay upon demand by the Agent such fees and costs as the Agent may
from time to time establish for issuance, transfer, amendment and negotiation of
each Letter of Credit and shall pay to the Agent for the Agent's account upon
issuance of any Letter of Credit an annual Letter of Credit fee in an amount
equal to the product of (i) the stated amount of each Letter of Credit
multiplied by (ii) the Applicable Margin then in effect with respect to any
Revolving Credit Loan which is a Libor Loan. In the event that the Borrower
shall fail to reimburse the Agent under any Letter of Credit or Letter of Credit
Agreement, and any outstanding Indebtedness of the Borrower relating thereto,
the Agent shall promptly notify each Lender of the unreimbursed amount together
with accrued interest thereon, and each Lender agrees to purchase, and it shall
be deemed to have purchased, a participation in such Letter of Credit or Letter
of Credit Agreement and such Indebtedness in an amount equal to its Pro Rata
Share of the unpaid amount together with unpaid interest thereon. Upon one (1)
Business Day's notice from the Agent, each Lender shall deliver to the Agent an
amount equal to its respective participation in same day funds, at the place and
on the date and by the time notified by the Agent. The obligation of each Lender
to deliver to the Agent an amount equal to its respective participation pursuant
to the foregoing sentence shall be absolute and unconditional and such
remittance shall be made notwithstanding the occurrence or continuation of an
Event of Default or the failure to satisfy any condition set forth in Article
III of this Agreement.
As soon as is practicable following the close of each month after the
Closing Date and in any event within twenty (20) days thereafter, the Borrower
will submit to the Agent a borrowing base certificate in the form of Exhibit
-------
2.1.0 or on such other form as the Agent may from time to time prescribe, which
- -----
certificate shall contain information adequate to identify accounts receivable
which the Borrower wishes to include in Eligible Receivables. During the
continuance of a Default or Event of Default, the Borrower shall also, if the
Lender so requests, accompany such information with assignments of accounts in
form and substance satisfactory to the Lender which assignments shall give the
Lender full power to collect, compromise or otherwise deal with the assigned
accounts as the sole owner thereof. Concurrently with each of such reports, and
immediately if material in amount, the Borrower shall notify the Lender of each
return or adjustment, rejection, repossession or loss, theft or damage of or to
merchandise represented by Eligible Receivables or any other collateral for any
Indebtedness of the Borrower to the Lender and of any credit, adjustment or
dispute arising in connection with the goods or services represented by Eligible
Receivables. All payments on Eligible Receivables and all adjustments and
credits with respect thereto, whether unilateral, negotiated or otherwise, shall
be immediately reflected in the Net Outstanding Amount of Eligible Receivables.
Section 2.1.1. Term Loans. Each of the Lenders severally agrees,
------------- ----------
subject to the terms and conditions of this Agreement, to make a Term Loan to
the Borrower in the amount of
19
its respective Pro Rata Share of $50,000,000. Borrower shall pay on the last day
of each Borrower fiscal quarter set forth below the amount of the Term Loans set
forth immediately opposite such fiscal quarter:
Borrower Quarterly
Fiscal Quarter Payment Amounts
-------------------------- ---------------
4/th/ fiscal quarter, 1999 $ 1,580,000
1/st/ fiscal quarter, 2000 $ 1,580,000
2/nd/ fiscal quarter, 2000 $ 1,580,000
3/rd/ fiscal quarter, 2000 $ 1,580,000
4/th/ fiscal quarter, 2000 $ 1,580,000
1/st/ fiscal quarter, 2001 $ 2,000,000
2/nd/ fiscal quarter, 2001 $ 2,000,000
3/rd/ fiscal quarter, 2001 $ 2,000,000
4/th/ fiscal quarter, 2001 $ 2,000,000
1/st/ fiscal quarter, 2002 $ 2,600,000
2/nd/ fiscal quarter, 2002 $ 2,600,000
3/rd/ fiscal quarter, 2002 $ 2,600,000
4/th/ fiscal quarter, 2002 $ 2,600,000
1/st/ fiscal quarter, 2003 $ 3,300,000
2/nd/ fiscal quarter, 2003 $ 3,300,000
3/rd/ fiscal quarter, 2003 $ 3,300,000
4/th/ fiscal quarter, 2003 $ 3,300,000
1/st/ fiscal quarter, 2004 $ 3,500,000
2/nd/ fiscal quarter, 2004 $ 3,500,000
In addition, Borrower shall pay the entire outstanding principal balance of
the Term Loans in the amount of $3,500,000 on August 31, 2004.
Section 2.2. Interest and Fees on the Loans.
----------- ------------------------------
Section 2.2.1. Interest. Interest shall accrue and be paid currently
------------- --------
on the Loans at Effective Prime or the Libor Rate for each of the Loans'
Interest Periods in accordance with the Borrower's Interest Rate Elections for
the Loans subject to and in accordance with the terms and conditions of this
Agreement and the Note(s); provided that if a Default or an Event of Default
exists and is continuing, no Interest Rate Election electing the Libor Rate
shall be effective and any Prime Rate Loan shall bear interest, payable on
demand, at Effective Prime plus, so long as an Event of Default exists and is
continuing, four percent (4.0%) and each Libor Loan shall bear interest, payable
on demand, at the Libor Rate plus four percent (4.0%); all of the foregoing
being applicable until such Default or Event of Default is cured or waived and
an Interest Rate Election electing the Libor Rate for such Loan or portion
thereof which is effective in accordance with this Agreement is submitted to the
Agent; and provided further that the Borrower shall submit Interest Rate
Elections so that on any date on which under Section 2.1.1 a regularly scheduled
-------------
payment of principal of the Term Loans is to be made, at least the amount of the
Term Loans to be so repaid is bearing interest at Effective Prime and/or such
payment date is an
20
Interest Adjustment Date for outstanding Libor Loans in such amount of the Term
Loans. The Borrower shall pay such interest to the Agent for the pro rata
account of each Lender in arrears on the Loans (including without limitation
Libor Loans) outstanding from time to time after the Closing Date, such payments
to be made, with respect to Libor Loans with Interest Periods of three months or
less on each Interest Adjustment Date for such Loans, and with respect to Libor
Loans with Interest Periods of more than three months and with respect to Prime
Rate Loans, quarterly on the last Business Day of each calendar quarter of each
year after the first day of such Interest Period and on the Interest Adjustment
Date for each of such Libor Loans commencing September 30, 1999. In the event no
Interest Rate Election has been made by the Borrower with respect to any Loan or
Advance (or an Interest Rate Election shall have expired without an effective
substitute Interest Rate Election), Effective Prime shall be the rate applicable
to such Loan or Advance. All provisions of each Note and any other agreements
between the Borrower and the Lenders are expressly subject to the condition that
in no event, whether by reason of acceleration of maturity of the Indebtedness
evidenced by any Note or otherwise, shall the amount paid or agreed to be paid
to the Lenders which is deemed interest under applicable law exceed the maximum
permitted rate of interest under applicable law (the "Maximum Permitted Rate"),
which shall mean the law in effect on the date of this Agreement, except that if
there is a change in such law which results in a higher Maximum Permitted Rate,
then each Note shall be governed by such amended law from and after its
effective date. In the event that fulfillment of any provision of any Note, or
this Agreement or any document, instrument or agreement providing security for
any Note results in the rate of interest charged under any Note being in excess
of the Maximum Permitted Rate, the obligation to be fulfilled shall
automatically be reduced to eliminate such excess. If, notwithstanding the
foregoing, any Lender receives an amount which under applicable law would cause
the interest rate under any Note to exceed the Maximum Permitted Rate, the
portion thereof which would be excessive shall automatically be deemed a
prepayment of and be applied to the unpaid principal balance of such Note to the
extent of then outstanding Prime Rate Loans and not a payment of interest and to
the extent said excessive portion exceeds the outstanding principal amount of
Prime Rate Loans, said excessive portion shall be repaid to the Borrower.
Section 2.2.2. Fees. On the Closing Date the Borrower shall pay the
------------- ----
Facility Fee to the Agent for the accounts of the Lenders and then and
thereafter shall pay certain other fees to the Agent for the Agent's account all
in accordance with the Fee Letter. In addition, on the last Business Day of each
March, June, September and December commencing September 30, 1999 and continuing
through the Revolving Credit Repayment Date, the Borrower shall pay to the Agent
for the pro rata account of each Lender, a fee ("Unused Fees") in an amount
equal to the Applicable Margin times the amount, if any, by which the average
actual daily amount of the Revolving Credit Loan Commitment for the quarterly
period just ended (or in the case of the first such payment, the period from the
Closing Date to the date such payment is due) exceeds (a) the average of the
actual daily outstanding principal balances of the Revolving Credit Loans plus
----
(b) the average of the actual daily aggregate outstanding stated amounts of any
Letters of Credit and, without duplication, Letter of Credit Agreements, and any
unreimbursed amounts thereunder (the "Unused Amount").
Section 2.2.3. Increased Costs - Capital. If, after the date hereof,
------------- -------------------------
any Lender shall have reasonably determined that the adoption after the date
hereof of any applicable law, governmental rule, regulation or order regarding
capital adequacy of banks or bank holding
21
companies, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by such Lender or such Lender's holding company with any policy, guideline,
directive or request regarding capital adequacy (whether or not having the force
of law and whether or not failure to comply therewith would be unlawful) of any
such authority, central bank or comparable agency, has or would have the effect
of reducing the rate of return on the capital of such Lender or such Lender's
holding company as a consequence of the obligations hereunder of such Lender to
a level below that which such Lender could have achieved but for such adoption,
change or compliance (taking into consideration the policies of such Lender or
such Lender's holding company with respect to capital adequacy immediately
before such adoption, change or compliance and assuming that the capital of such
Lender or such Lender's holding company was fully utilized prior to such
adoption, change or compliance) by an amount reasonably deemed by such Lender to
be material, then such Lender shall notify the Agent and the Borrower thereof
and the Borrower shall pay to the Agent for the account of such Lender from time
to time as specified by such Lender such additional amounts as shall be
sufficient to compensate such Lender for such reduced return, each such payment
to be made by the Borrower within ten (10) Business Days after each demand by
such Lender; provided that the liability of the Borrower to pay such costs shall
only accrue with respect to costs accruing from and after the 180th day prior to
the date of each such demand. A certificate in reasonable detail of one of the
officers of such Lender describing the event giving rise to such reduction and
setting forth the amount to be paid to such Lender hereunder and a computation
of such amount shall accompany any such demand and shall, in the absence of
manifest error, be conclusive. In determining such amount, such Lender shall act
reasonably and will use any reasonable averaging and attribution methods. If the
Borrower shall, as a result of the requirements of this Section 2.2.3 above, be
-------------
required to pay any Lender the additional costs referred to above and the
Borrower, in its sole discretion, shall deem such additional amounts to be
material, the Borrower shall have the right to substitute another financial
institution satisfactory to the Agent for such Lender which has certified the
additional costs to the Borrower, and the Agent shall use reasonable efforts at
no cost to the Agent to assist the Borrower to locate such substitute financial
institution. Any such substitution shall take place in accordance with Section
-------
9.11 and shall otherwise be on terms and conditions reasonably satisfactory to
- ----
the Agent, and until such time as such substitution shall be consummated, the
Borrower shall continue to pay such additional costs. Upon any such
substitution, the Borrower shall pay or cause to be paid to the Lender that is
being replaced, all principal, interest (to the date of such substitution) and
other amounts owing hereunder to such Lender and such Lender will be released
from liability hereunder.
Section 2.3. Notations. At the time of (i) the making of each Advance
----------- ---------
evidenced by any Note, (ii) each change in the interest rate under any Note
effected as a result of an Interest Rate Election; and (iii) each payment or
prepayment of any Note, each Lender may enter upon its records an appropriate
notation evidencing (a) such Lender's Pro Rata Share of the Loans and (b) the
interest rate and Interest Adjustment Date applicable thereto or (c) such
payment or prepayment (voluntary or involuntary) of principal and (d) in the
case of payments or prepayments (voluntary or involuntary) of principal, the
portion of the applicable Loan which was paid or prepaid. No failure to make any
such notation shall affect the Borrower's unconditional obligations to repay the
Loans and all interest, fees and other sums due in connection with this
Agreement and/or any Note in full, nor shall any such failure, standing
22
alone, constitute grounds for disproving a payment of principal by the Borrower.
However, in the absence of manifest error, such notations and each Lender's
records containing such notations shall constitute presumptive evidence of the
facts stated therein, including, without limitation, the outstanding amount of
such Lender's Pro Rata Share of the Loans and all amounts due and owing to such
Lender at any time. Any such notations and such Lender's records containing such
notations may be introduced in evidence in any judicial or administrative
proceeding relating to this Agreement, the Loans or any Note.
Section 2.4. Computation of Interest. Interest due under this Agreement
----------- -----------------------
and any Note shall be computed on the basis of a year of 360 days for the actual
number of days elapsed.
Section 2.5. Time of Payments and Prepayments in Immediately Available
----------- ---------------------------------------------------------
Funds.
- -----
Section 2.5.1. Time. All payments and prepayments of principal,
------------- ----
fees, interest and any other amounts owed from time to time under this Agreement
and/or under each Note shall be made to the Agent for the pro rata account of
each Lender at the address referred to in Section 9.6 in Dollars and in
-----------
immediately available funds prior to 12:00 o'clock P.M. on the Business Day that
such payment is due, provided that the Borrower hereby authorizes and instructs
the Agent to charge against the Borrower's accounts with the Agent on each date
on which a payment is due hereunder and/or under any Note and on any subsequent
date if and to the extent any such payment is not made when due an amount up to
the principal, interest and fees due and payable to the Lenders, the Agent or
any Lender hereunder and/or under any Note and such charge shall be deemed
payment hereunder and under the Note(s) in question to the extent that
immediately available funds are then in such accounts. The Agent shall use
reasonable efforts in accordance with the Agent's customary procedures to give
subsequent notice of any such charge to the Borrower, but the failure to give
such notice shall not affect the validity of any such charge. To the extent that
immediately available funds are then in such accounts, the failure of the Agent
to charge any such account or the failure of the Agent to charge any such
account prior to 12 o'clock P.M. shall not be basis for an Event of Default
under Section 6.1.1 and any amount due on the Loans on such date shall be deemed
-------------
paid; provided that the Agent shall have the right to charge any such account on
any subsequent date for such unpaid payment and an Event of Default shall exist
if sufficient immediately available funds are not in such accounts on the date
the Agent so charges such account after the expiration of any applicable cure
period. In the event of any charge against the Borrower's accounts by the Agent
pursuant to the immediately preceding sentence, the Agent shall use reasonable
efforts to provide notice to the Borrower of such charge in accordance with the
Agent's customary procedures, but the failure to provide such notice shall not
in any way be a basis for any liability of the Agent nor shall such failure
adversely affect the validity and effectiveness of any such action by the Agent.
Any such payment or prepayment which is received by the Agent in Dollars and in
immediately available funds after 12 o'clock P.M. on a Business Day shall be
deemed received for all purposes of this Agreement on the next succeeding
Business Day unless the failure by Agent to receive such funds prior to 12
o'clock P.M. is due to Agent's failure to charge the account of Borrower prior
to 12 o'clock P.M., except that solely for the purpose of determining whether a
Default or Event of Default has occurred under Section 6.1.1, any such payment
-------------
or prepayment, if received by the Agent prior to the close of the Agent's
business on a Business Day, shall be deemed received on such Business Day. All
payments of principal, interest, fees and any other amounts which are owing to
any or all of the Lenders or the Agent hereunder and/or under any of
23
the Notes that are received by the Agent in immediately available Dollars prior
to 12:00 o'clock P.M. on any Business Day shall, to the extent owing to the
Lenders other than the Agent, be sent by wire transfer by the Agent to any such
other Lenders (in each case, without deduction for any claim, defense or offset
of any type) before 3:00 o'clock P.M. on the same Business Day. Each such wire
transfer shall be addressed to each Lender in accordance with the wire
instructions set forth in Exhibit 1.9 hereto. The amount of each payment wired
-----------
by the Agent to each such Lender shall be such amount as shall be necessary to
provide such Lender with its Pro Rata Share of such payment (without
consideration or use of any contra accounts of any Lender), or with such other
amount as may be owing to such Lender in accordance with this Agreement (in each
case, without deduction for any claim, defense or offset of any type). Each such
wire transfer shall be sent by the Agent only after the Agent has received
immediately available Dollars from or on behalf of the Borrower and each such
wire transfer shall provide each Lender receiving same with immediately
available Dollars on receipt by such Lender. Any such payments of immediately
available Dollars received by the Agent after 12:00 o'clock P.M. and before 3:00
o'clock P.M. on any Business Day shall be forwarded in the same manner by the
Agent to such Lender(s) as soon as practicable on said Business Day, and if any
such payments of immediately available Dollars are received by the Agent after
3:00 o'clock P.M. on a Business Day, the Agent shall so forward same to such
Lender(s) before 10:00 o'clock A.M. on the immediately succeeding Business Day.
Section 2.5.2. Setoff, etc. Borrower hereby grants and upon creation
------------- -----------
of each Subsidiary, shall cause such Subsidiary to grant to the Agent and each
Lender a Lien, security interest and right of setoff as security for all
Obligations to the Agent and such Lender whether now existing or hereafter
arising. Regardless of the adequacy of any collateral for any of the
Obligations, and subject to the provisions of Article 7.1 upon the occurrence
-----------
and during the continuance of any Event of Default, each Lender is hereby
authorized at any time and from time to time, without notice to the Borrower
(any such notice being expressly waived by the Borrower), to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
credits, collateral and property at any time in the possession , custody,
safekeeping or control of such Lender or any entity under the control of any
Lender's holding company or in transit to any of them and any other Indebtedness
at any time owing by such Lender to or for the credit or the account of the
Borrower against any and all of the Obligations of the Borrower irrespective of
whether or not such Lender shall have made any demand under this Agreement or
any Note and although such obligations may be unmatured. Each such Lender agrees
to promptly notify the Borrower and the Agent after any such setoff and
application; provided that the failure to give such notice shall not affect the
validity of such setoff and application. Promptly following any notice of setoff
received by the Agent from a Lender pursuant to the foregoing, the Agent shall
notify each other Lender thereof. The rights of each Lender under this Section
-------
2.5.2 are in addition to all other rights and remedies (including, without
- -----
limitation, other rights of setoff) which such Lender may have and are subject
to Section 9.12. ANY AND ALL RIGHTS TO REQUIRE THE AGENT OR ANY LENDER TO
------------
EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH
SECURES THE LOANS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH
DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER OR ANY GUARANTOR, ARE HEREBY
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
24
Section 2.5.3. Unconditional Obligations and No Deductions.
------------- -------------------------------------------
Section 2.5.3.1. The Borrower's obligation to make all payments
---------------
provided for in this Agreement and the other Financing Documents shall be
unconditional. Each such payment shall be made without deduction for any claim,
defense or offset of any type, including without limitation any withholdings and
other deductions on account of income or other taxes (except to the extent
provided in Section 2.5.3.2) and regardless of whether any claims, defenses or
---------------
offsets of any type exist.
Section 2.5.3.2. (a) Any and all payments by the Borrower to or
---------------
for the account of any Lender or the Agent hereunder or under any other
Financing Document shall be made free and clear of and without deduction for any
and all present or future taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Lender and the Agent, taxes imposed on its income, and franchise taxes
imposed on it, by the jurisdiction under the laws of which such Lender (or its
applicable lending office) or the Agent (as the case may be) is organized or any
political subdivision thereof, other than to the extent such income or franchise
tax is imposed solely as a result of the activities of the Agent or a Lender
pursuant to or in respect of this Agreement or any of the other Financing
Documents (all such non-excluded taxes, duties, levies, imposts, deductions,
charges, withholdings, and liabilities being hereinafter referred to as
"Taxes"). If the Borrower shall be required by law to deduct any Taxes from or
in respect of any sum payable under this Agreement or any other Financing
Document to any Lender or the Agent,(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 2.5.3.2) such Lender or
---------------
the Agent receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law, and (iv) the Borrower
shall furnish to the Agent, at its address referred to in Section 9.6 hereof,
-----------
the original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or future
stamp or documentary taxes and any other excise or property taxes or charges or
similar levies which arise from any payment made under this Agreement or any
other Financing Document or from the execution or delivery of, or otherwise with
respect to, this Agreement or any other Loan Document (hereinafter referred to
as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and the Agent for the
full amount of Taxes and Other Taxes (including, without limitation, any Taxes
or Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 2.5.3.2) paid by such Lender or the Agent (as the case may be) and
---------------
any liability (including penalties, interest, and expenses) arising therefrom or
with respect thereto.
(d) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the Borrower
or the Agent (but only so long as such Lender remains lawfully able to do so),
shall
25
provide the Borrower and the Agent with (i) a properly completed Internal
Revenue Service Form 1001 or 4224, as appropriate, or any successor form
prescribed by the Internal Revenue Service, certifying that such Lender is
entitled to benefits under an income tax treaty to which the United States is a
party which reduces the rate of withholding tax on payments of interest or
certifying that the income receivable pursuant to this Agreement is effectively
connected with the conduct of a trade or business in the United States, (ii) a
properly completed Internal Revenue Service Form W-8 or W-9, as appropriate, or
any successor form prescribed by the Internal Revenue Service, certifying that
such Lender is exempt from United States backup withholding, and (iii) any other
form or certificate required by any taxing authority (including any certificate
required by Sections 871(h) and 881(c) of the Internal Revenue Code), certifying
that such Lender is entitled to an exemption from or a reduced rate of tax on
payments pursuant to this Agreement or any of the other Financing Documents.
(e) For any period with respect to which a Lender has failed to provide
the Borrower and the Agent with the appropriate form pursuant to Section
2.5.3.2(d) hereof (unless such failure is due to a change in treaty, law, or
regulation occurring subsequent to the date on which a form originally was
required to be provided), such Lender shall not be entitled to indemnification
under Section 2.5.3.2(a) or 2.5.3.2(b) hereof with respect to Taxes imposed by
--------------------------------
by the United States; provided, however, that should a Lender, which is
otherwise exempt from or subject to a reduced rate of withholding tax, become
subject to Taxes because of its failure to deliver a form required hereunder,
the Borrower shall take such steps as such Lender shall reasonably request and
at such Lender's cost to assist such Lender to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Lender pursuant to this Section 2.5.3.2, then such Lender will
agree to use reasonable efforts to change the jurisdiction of its applicable
lending office so as to eliminate or reduce any such additional payment which
may thereafter accrue if such change, in the judgment of such Lender, is not
otherwise disadvantageous to such Lender. Alternatively, in the event of such an
additional cost, the Borrower shall have the right to substitute another bank
satisfactory to the Agent, and the Agent and such Lender shall use reasonable
efforts at no cost to the Agent and such Lender to assist the Borrower to locate
and effect the substitution in favor of such substitute bank. Any such
substitution shall take place in accordance with Section 9.11 and shall
------------
otherwise be on terms and conditions reasonably satisfactory to the Agent, and
until such time as such substitution shall be consummated, the Borrower shall
continue to pay such additional costs. Upon any such substitution, the Borrower
shall pay or cause to be paid to the Lender that is being replaced, all
principal, interest (to the date of such substitution) and other amounts owing
hereunder to such Lender and such Lender will be released from liability
hereunder.
(g) Within thirty (30) days after the date of any payment of Taxes, the
Borrower shall furnish to the Agent the original or a certified copy of a
receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.5.3.2 shall survive until the first anniversary of the Repayment
---------------
Date.
(i) If the Borrower makes any additional payment to any Lender pursuant to
this Section 2.5.3.2 in respect of any Taxes, and such Lender determines that it
---------------
has received (i) a
26
refund of such Taxes, or (ii) a credit against, relief or remission for, or a
reduction in the amount of, any tax or other governmental charge as a result of
any deduction or credit for any Taxes with respect to which it has received
payments under this Section 2.5.3.2, such Lender shall, to the extent that it
---------------
can do so without prejudice to the retention of such refund, credit, relief,
remission or reduction, pay to the Borrower such amount as shall be reasonably
determined by such Lender to be solely attributable to the deduction or
withholding of such Taxes. If such Lender later determines that it was not
entitled to such refund, credit, relief, remission or reduction to the full
extent of any payment made pursuant to the first sentence of this Section
-------
2.5.3.2(i), the Borrower shall upon demand of such Lender promptly repay the
- ----------
amount of such overpayment. Nothing in this Section 2.5.3.2(i) shall be
------------------
construed as requiring such Lender to conduct its business or to arrange or
alter in any respect its tax or financial affairs so that it is entitled to
receive such a refund, credit or reduction or as allowing any Person to inspect
any records, including tax returns, of such Lender.
Section 2.6. Prepayment and Certain Payments.
----------- -------------------------------
Section 2.6.1. Mandatory Payments.
------------- ------------------
Section 2.6.1.1. In addition to each other principal payment
---------------
required hereunder, the outstanding principal balances of the Term Loans shall
be repaid on the Term Loan Repayment Date and the outstanding principal balances
of the Revolving Credit Loans shall be repaid on the Revolving Credit Repayment
Date.
Section 2.6.1.2. On or before the 120th day after the end of each
---------------
fiscal year of the Borrower commencing with the fiscal year ending December 31,
2000, the Borrower shall prepay to the Agent for the accounts of the Lenders in
accordance with their Pro Rata Shares an amount of the outstanding principal
balances of the Term Loans equal to (i) (a) if the Borrower's Leverage Ratio at
the end of such fiscal year is Level V, 75%, (b) if the Borrower's Leverage
Ratio at the end of such fiscal year is at Level III or IV and no Default or
Event of Default exists, 50% and (c) otherwise, if no Default or Event of
Default exists, 0% of the amount, if any, of Excess Cash Flow for such fiscal
year less (ii) voluntary prepayments of the Term Loan made during such fiscal
----
year until the final eight regularly scheduled installments of principal of the
Term Loan have been paid in full. Such prepayments shall be in addition to any
and all other mandatory and voluntary prepayments required or permitted
hereunder and shall be applied to the principal installments of the Term Loans
in accordance with Section 2.6.1.7. For purposes of this Section the Leverage
---------------
Ratio shall be determined on the basis of the Borrower's audited financial
statements for the Borrower fiscal year in question.
Section 2.6.1.3. In the event that the Borrower or any
----------------
Subsidiary is entitled to receive, collectively, proceeds from any casualty
insurance policies maintained by any of them on account of any interest of the
Borrower and/or any Subsidiary in any property, which proceeds are in an
aggregate amount in excess of $500,000 with respect to any occurrence or related
series of occurrences during the term of this Agreement, such proceeds shall be
received by the Agent and, to the extent that such proceeds result from a
casualty to property of the Borrower and/or any Subsidiary, so long as no
Default or Event of Default exists and is continuing and the Borrower elects to
repair, replace or restore such property, such proceeds shall be released to the
Borrower subject to reasonable procedures and conditions established by
27
the Agent to the extent necessary to so repair, replace or restore such property
within 3 months (or as soon as reasonably practicable if such restoration,
replacement or repair is not reasonably susceptible to being completed within 3
months) from the date of receipt of such proceeds by the Agent and to the extent
such proceeds are not so used or do not result from such a casualty, the
Borrower shall make a prepayment of the Term Loans for the accounts of the
Lenders in accordance with their Pro Rata Shares upon written notice from the
Agent. All such payments shall be applied to the principal installments of the
Term Loans in accordance with Section 2.6.1.7.
----------------
Section 2.6.1.4. In the event that the Borrower and/or any
---------------
Subsidiary sells, assigns or otherwise transfers title to any asset other than
in the ordinary course of its business for net cash proceeds in the aggregate
since the Closing Date in excess of $250,000, the Borrower and/or such
Subsidiary shall remit 100% of the net cash proceeds of such sale, assignment or
other transfer to the Agent for the accounts of the Lenders in accordance with
their Pro Rata Shares to be applied to the principal installments of the Term
Loans in accordance with Section 2.6.1.7 within 10 Business Days of the date of
---------------
Borrower's or any Subsidiary's receipt of such net cash proceeds; provided,
however, that Borrower may sell any of its equipment which is obsolete, worn-out
or no longer used or useful in Borrower's business and Borrower may use the
proceeds of such sale to purchase other equipment which is useful or necessary
in the operation of Borrower's business.
Section 2.6.1.5. In the event that the Borrower and/or any
---------------
Subsidiary conducts a Qualified Initial Public Offering of any class of the
Borrower's or any Subsidiary's securities or issues subordinated indebtedness
(other than intercompany Indebtedness permitted under Section 5.2.8.6) or issues
---------------
any additional equity, the Borrower and/or such Subsidiary, upon receipt of the
net aggregate cash consideration from the sale of any such shares of its capital
stock or the issuance of subordinated indebtedness shall prepay to the Agent for
the accounts of the Lenders in accordance with their Pro Rata Shares an amount
of the outstanding principal balances of the Term Loans equal to the lesser of
(a) the full amount of such net consideration and (b) that amount necessary to
reduce the Borrower's ratio of total Indebtedness for Borrowed Money to EBITDA
to less than 1.0:1.0, and the Commitment shall be permanently reduced to an
amount which, if fully outstanding as Loans and Letters of Credit and, without
duplication, Letter of Credit Agreements or unreimbursed amounts drawn
thereunder would result in such ratio being less than 1.0:1.0. The amount of
such prepayment shall be applied to the installments of the Term Loans in
accordance with Section 2.6.1.7.
---------------
Section 2.6.1.6. If at any time the aggregate principal amount
---------------
of the Revolving Credit Loans plus the aggregate outstanding stated amounts of
any Letters of Credit and, without duplication, Letter of Credit Agreements and
any unreimbursed amounts drawn thereunder shall exceed the Revolving Credit Loan
Commitment, the Borrower shall immediately pay to the Agent in immediately
available Dollars the amount of such excess.
Section 2.6.1.7. Any amounts repaid by the Borrower and/or any
---------------
Subsidiary under this Section 2.6.1 (other than pursuant to Section 2.6.1.6)
------------- ---------------
shall be paid without premium or penalty and shall be applied to the principal
installments of the Term Loans under Section 2.1.1 in accordance with the
-------------
following: the first $26,300,000 shall be applied to reduce on a pro rata basis
each of the final eight quarterly installments and thereafter, such amounts
28
shall be applied on a pro-rata basis to the respective amounts of the remaining
payments to reduce such remaining quarterly payments; provided, however, that
after prepayment of said final eight quarterly installments no further
prepayments under Section 2.6.1.2 shall be required. In the event that any
---------------
payment or prepayment of a Libor Loan under this Section 2.6.1 (other than
-------------
pursuant to Section 2.6.1.6) is received on a date other than the last day of
---------------
an Interest Period, such payment or prepayment shall be held by the Agent in a
separate account and be pledged to the Agent as collateral for the Obligations
of the Borrower arising in connection with the Financing Documents until the
last day of the then current Interest Period, at which time the Agent shall
apply such payment or prepayment, for the account of the Lenders in accordance
with their Pro Rata Shares, to the outstanding Libor Loans, for which such day
is an Interest Adjustment Date.
Section 2.6.1.8. The Borrower shall take such action as may be
---------------
necessary to cause the prepayment provisions of Section 5.1.24 to be fulfilled.
--------------
Section 2.6.2. Voluntary Prepayments. All or any portion of the
------------- ---------------------
unpaid principal balance of the Loans (other than portions of any Loans
constituting Libor Loans) may be prepaid at any time, without premium or
penalty, by giving the Agent at least 3 days' prior written notice of such
prepayment and by a payment to the Agent for the accounts of the Lenders in
accordance with their Pro Rata Shares of such prepayment in immediately
available Dollars by the Borrower; provided that each such partial payment or
prepayment of principal of the Loans shall be in a principal amount of at least
$1,000,000 or an integral multiple of $100,000 in excess thereof and provided
further that each such prepayment of the Term Loans shall be applied to the
principal installments of the Term Loans in the inverse order of their
maturities.
Section 2.6.3. Prepayment of Libor Loans. Notwithstanding anything to
------------- -------------------------
the contrary contained in any Note or in any other agreement executed in
connection herewith or therewith, the Borrower shall be permitted to prepay any
portion of the Loans constituting Libor Loans only in accordance with Section
-------
2.9 hereof.
- ---
Section 2.6.4. Permanent Reduction of Commitment. At the Borrower's
------------- ---------------------------------
option the Commitment and the Revolving Credit Loan Commitment may be
permanently and irrevocably reduced in whole or in part by an amount of at least
$1,000,000 and to the extent in excess thereof in integral multiples of $100,000
at any time; provided that (i) the Borrower gives the Agent written notice of
the exercise of such option at least three (3) Business Days prior to the
effective date thereof, (ii) the aggregate outstanding balance of the Loans, if
any, does not exceed the Commitment and the aggregate outstanding balance of the
Revolving Credit Loans, plus the aggregate outstanding amount of any Letters of
Credit or Letter of Credit Agreement and any unreimbursed drawn amounts
thereunder, if any, does not exceed the Revolving Credit Loan Commitment, both
as so reduced in any such case on the effective date of such reduction and (iii)
the Borrower is not, and after giving effect to such reduction, would not be in
violation of Section 2.6.3. Any such reduction shall concurrently reduce the
-------------
Dollar amount of each Lender's Pro Rata Share of the Commitment and the
Revolving Credit Loan Commitment.
Section 2.7. Payment on Non-Business Days. Whenever any payment to be
----------- ----------------------------
made hereunder or under any Note shall be stated to be due on a day other than a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in
29
such case be included in the computation of payment of fees, if any, and
interest under this Agreement and under such Note.
Section 2.8. Use of Proceeds. (a) The Borrower shall use the proceeds of
----------- ---------------
the Term Loans to pay a distribution to the Members and shall use the proceeds
of the Revolving Credit Loans to pay costs incurred by the Borrower in
connection with the closing of the Loans, for Borrower's working capital needs,
capital expenditures and for Investments permitted by Section 5.2.12. The
--------------
Borrower shall obtain any Letters of Credit solely for working capital and
general corporate purposes.
(b) No portion of the proceeds of any Loans is to be used,
and no portion of any Letter of Credit is to be obtained, for the purpose of (a)
knowingly purchasing, or providing credit support for the purchase of,
Ineligible Securities from a Section 20 Subsidiary during any period in which
such Section 20 Subsidiary makes a market in such Ineligible Securities or (b)
knowingly purchasing, or providing credit support for the purchase of, during
the underwriting or placement period, any Ineligible Securities being
underwritten or privately placed by a Section 20 Subsidiary,
Section 2.9. Special Libor Loan Provisions. The Libor Loans shall be
----------- -----------------------------
subject to and governed by the following terms and conditions:
Section 2.9.1. Requests. Each Request accompanied by an Interest Rate
------------- --------
Election selecting the Libor Rate must be received by the Agent in accordance
with the definition of Interest Rate Election.
Section 2.9.2. Libor Loans Unavailable. Notwithstanding any other
------------- -----------------------
provision of this Agreement, if, prior to or on the date on which all or any
portion of the Loans is to be made as or converted into a Libor Loan, any of the
Lenders (or the Agent with respect to (ii) below) shall reasonably determine
(which determination shall be conclusive and binding on the Borrower), that
(i) Dollar deposits in the relevant amounts and for the relevant
Interest Period are not offered to such Lender in the London interbank
market,
(ii) by reason of circumstances affecting the London interbank
market, adequate and reasonable means do not exist for ascertaining the
Adjusted Libor Rate, or
(iii) the Adjusted Libor Rate shall no longer represent the effective
cost to such Lender for Dollar deposits in the London interbank market for
reasons other than the fact, standing alone, that the Adjusted Libor Rate
is based on an averaging of rates determined by the Agent and that such
Lender's rate may exceed such average,
such Lender may elect not to accept any Interest Rate Election electing a Libor
Loan and such Lender shall notify the Agent by telephone or telex thereof,
stating the reasons therefor, not later than the close of business on the second
Business Day prior to the date on which such Libor Loan is to be made. The Agent
shall promptly give notice of such determination and the reason therefor to the
Borrower, and all or such portion of the Loans, as the case may be, which are
30
subject to any of Section 2.9.2 (i), (ii) through (iii) as a result of such
-------------
Lender's determination shall be made as or converted into, as the case may be,
Prime Rate Loans and such Lender shall have no further obligation to make Libor
Loans, until further written notice to the contrary is given by the Agent to the
Borrower. If such circumstances subsequently change so that such Lender shall no
longer be so affected, such Lender's obligation to make or maintain its Pro Rata
Share of all or any portion of the Loans as Libor Loans shall be reinstated when
such Lender obtains actual knowledge of such change of circumstances and
promptly after obtaining such actual knowledge such Lender shall forward written
notice thereof to the Agent. After receipt of such notice, the Agent shall
promptly forward written notice thereof to the Borrower. Upon or after receipt
by the Borrower of such written notice, the Borrower may submit an Interest Rate
Election in accordance with this Agreement electing an Interest Period ending no
later than the Interest Adjustment Date for the then current Interest Period for
the other Lenders' Pro Rata Shares of Libor Loans and electing the Libor Rate
for such Lenders' or Lender's Pro Rata Share(s) of the Loans as to which such
Lender's or Lenders' obligation(s) to make or maintain its or their Pro Rata
Share(s) of the Loans as Libor Loans was suspended and such Pro Rata Share(s)
shall be converted to Libor Loans in accordance with this Agreement. During any
period throughout which any of the Lenders has or have no obligation to make or
maintain its or their Pro Rata Share(s) of the Loans as Libor Loans, no Interest
Rate Elections electing the Libor Rate shall be effective with regard to the
Loans to the extent of the Pro Rata Share(s) of such Lender(s), but shall be
effective as to the other Lenders.
Section 2.9.3. Libor Lending Unlawful. In the event that after the
------------- ----------------------
date of this Agreement any change in applicable laws or regulations (including
the introduction of any new applicable law or regulation) or in the
interpretation thereof (whether or not having the force of law) by any
governmental or other regulatory authority charged with the administration
thereof, shall make it unlawful for any of the Lenders to make or continue to
maintain its Pro Rata Share of all or any portion of the Loans as Libor Loans,
each such Lender shall promptly notify the Agent by telephone or telex thereof,
and of the reasons therefor, and the obligation of such Lender to make or
maintain its Pro Rata Share of the Loans or such portion thereof as Libor Loans
shall, upon the happening of such event, terminate and the Agent shall, by
telephonic notice to the Borrower, declare that such obligation has so
terminated with respect to such Lender, and such Pro Rata Share of the Loans or
any portion thereof to the extent then maintained as Libor Loans, shall, on the
last day on which such Lender can lawfully continue to maintain such Pro Rata
Share of the Loans or any portion thereof as Libor Loans, automatically convert
into Prime Rate Loans without additional cost to the Borrower. If circumstances
subsequently change so that such Lender shall no longer be so affected, such
Lender's obligation to make or maintain its Pro Rata Share of all or any portion
of the Loans as Libor Loans shall be reinstated when such Lender obtains actual
knowledge of such change of circumstances, and promptly after obtaining such
actual knowledge such Lender shall forward written notice thereof to the Agent.
After receipt of such notice, the Agent shall promptly forward written notice
thereof the Borrower. Upon or after receipt by the Borrower of such written
notice, the Borrower may submit an Interest Rate Election in accordance with
this Agreement electing an Interest Period ending no later than the Interest
Adjustment Date for the then current Interest Period for the other Lenders' Pro
Rata Shares of Libor Loans and electing the Libor Rate for such Lenders' or
Lender's Pro Rata Share(s) of the Loans as to which such Lender's or Lenders'
obligation(s) to make or maintain its or their Pro Rata Share(s) of the Loans as
Libor Loans was suspended and such Pro Rata Share(s) shall be converted to Libor
Loans in accordance with this Agreement.
31
During any period throughout which any of the Lenders has or have no obligation
to make or maintain its or their Pro Rata Share(s) of the Loans as Libor Loans,
no Interest Rate Elections electing the Libor Rate shall be effective with
regard to the Loans to the extent of the Pro Rata Share(s) of such Lender(s),
but shall be effective as to the other Lenders.
Section 2.9.4. Additional Costs on Libor Loans. The Borrower further
------------- -------------------------------
agrees to pay to the Agent for the account of the applicable Lender or Lenders
such amounts as will compensate any of the Lenders for any increase in the cost
to such Lender of making or maintaining (or of its obligation to make or
maintain) all or any portion of its Pro Rata Share of the Loans as Libor Loans
and for any reduction in the amount of any sum receivable by such Lender under
this Agreement in respect of making or maintaining all or any portion of such
Lender's Pro Rata Share of the Loans as Libor Loans, in either case, from time
to time by reason of:
(i) any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, such
Lender, under or pursuant to any law, treaty, rule, regulation (including,
without limitation, any Regulations of the Board of Governors of the
Federal Reserve System) or requirement in effect on or after the date
hereof, any interpretation thereof by any governmental authority charged
with administration thereof or by any central bank or other fiscal or
monetary authority or other authority, or any requirement imposed by any
central bank or such other authority whether or not having the force of
law; or
(ii) any change after the date hereof in (including the introduction
of any new) applicable law, treaty, rule, regulation or requirement or in
the interpretation thereof by any official authority, or the imposition of
any requirement of any central bank, whether or not having the force of
law, which shall subject such Lender to any tax (other than taxes on net
income imposed on such Lender), levy, impost, charge, fee, duty, deduction
or withholding of any kind whatsoever or change the taxation of such Lender
with respect to making or maintaining all or any portion of its Pro Rata
Share of the Loans as Libor Loans and the interest thereon (other than any
change which affects, and to the extent that it affects, the taxation of
net income of such Lender); provided, that with respect to any withholding
the foregoing shall not apply to any withholding tax described in sections
1441, 1442 or 3406 of the Code, or any succeeding provision of any
legislation that amends, supplements or replaces any such section, or to
any tax, levy, impost, duty, charge, fee, deduction or withholding that
results from any noncompliance by a Lender with any federal, state or
foreign law or from any failure by a Lender to file or furnish any report,
return, statement or form the filing or furnishing of which would not have
an adverse effect on such Lender and would eliminate such tax, impost,
duty, deduction or withholding;
In any such event, such Lender shall promptly notify the Agent thereof, and of
the reasons therefor, and the Agent shall promptly notify the Borrower thereof
in writing stating the reasons provided to the Agent by such Lender therefor and
the additional amounts required to fully compensate such Lender for such
increased or new cost or reduced amount as reasonably determined by such Lender.
Such additional amounts shall be payable on each date on which interest is to be
paid hereunder or, if there is no outstanding principal amount under any of the
Notes, within 10 Business Days after the Borrower's receipt of said notice. Such
Lender's
32
certificate as to any such increased or new cost or reduced amount (including
calculations, in reasonable detail, showing how such Lender computed such cost
or reduction) shall be submitted by the Agent to the Borrower and shall, in the
absence of manifest error, be conclusive. In determining any such amount, the
Lender(s) may use any reasonable averaging and attribution methods.
Notwithstanding anything to the contrary set forth above, the Borrower shall not
be obligated to pay any amounts pursuant to this Section 2.9.4 as a result of
-------------
any requirement or change referenced above with respect to any period prior to
the one hundred and eightieth (180th) day prior to the date on which the
Borrower is first notified thereof (other than any amounts which relate to any
such requirement or change which is adopted with retroactive effect in which
case the Borrower shall be obligated to pay all such amounts accrued from the
date as of which such requirement or change is retroactively effective) unless
the failure to give such notice within such one hundred and eighty (180) day
period resulted from reasonable circumstances beyond such Lender's reasonable
control.
Section 2.9.5. Libor Funding Losses. In the event that any payment
------------- --------------------
or prepayment of a Libor Loan is received on a date other than the last day of
an Interest Period, unless such payment is pursuant to Section 2.6.1.6 or a
---------------
Default or Event of Default has occurred and is continuing, such payment or
prepayment shall be held by the Agent in a separate account and be pledged to
the Agent as collateral for the obligations of the Borrower arising in
connection with this Agreement, the Notes and the other Financing Documents
until the end of the then current Interest Period, at which time the Agent shall
apply such payment or prepayment, for the accounts of the Lenders in accordance
with their Pro Rata Shares, to the outstanding Libor Loans. Notwithstanding the
foregoing, in the event any of the Lenders shall incur any actual loss or
expense (including, without limitation, any loss or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund or maintain all or any portion of the Loans as Libor Loans) as a
result of:
(i) payment or prepayment by the Borrower of all or any portion of
any Libor Loan on a date other than the Interest Adjustment Date for such
Libor Loan, for any reason; provided, however that this clause shall not be
deemed to grant the Borrower any right to convert a Libor Loan to a Prime
Rate Loan prior to the end of any Interest Period or to imply such right;
(ii) conversion of all or any portion of any Libor Loan on a day
other than the last day of an Interest Period applicable to such Loan to a
Prime Rate Loan for any reason including, without limitation, acceleration
of the Loans upon or after an Event of Default, any Interest Rate Election
or any other cause whether voluntary or involuntary and whether or not
referred to or described in this Agreement, other than any such conversion
resulting solely from application of Sections 2.9.2 or 2.9.3 by any Lender;
-------------- -----
or
(iii) any failure by the Borrower to borrow the Loans as Libor Loans
on the date specified in any Interest Rate Election selecting the Libor
Rate, other than any such failure resulting solely from application of
Sections 2.9.2 or 2.9.3 by any Lender;
-------------- -----
such Lender shall promptly notify the Agent thereof, and of the reasons
therefor. Upon the request of the Agent, the Borrower shall pay directly to the
Agent for the account of such Lender such amount as will (in the reasonable
determination of such Lender, which shall be conclusive
33
in the absence of manifest error) reimburse such Lender for such actual loss or
expense. Each Lender shall furnish to the Borrower, upon written request from
the Borrower received by the Agent, a written statement setting forth the
computation of any such amounts payable to such Lender under this Section 2.9.5.
-------------
Section 2.9.6. Banking Practices. Each Lender agrees that upon the
------------- -----------------
occurrence of any of the events described in Sections 2.2.3 and/or 2.9.2, 2.9.4
-------------- ----- -----
or 2.9.5, such Lender will exercise all reasonable efforts to take such
-----
reasonable actions at no expense to such Lender (other than reasonable expenses
which are covered by the Borrower's advance deposit of funds with such Lender
for such purpose, or if such Lender agrees, which the Borrower has agreed to pay
or reimburse to such Lender in full upon demand), in accordance with such
Lender's usual banking practices in such situations and subject to any statutory
or regulatory requirements applicable to such Lender, as such Lender may take
without the consent or participation of any other Person to, in the case of an
event described in Sections 2.2.3 and/or 2.9.4 or 2.9.5, mitigate the cost of
-------------- ----- -----
such events to the Borrower and, in the case of an event described in Sections
--------
2.9.2(i), (ii) or (iii), to seek Dollar deposits in any other interbank Libor
- -------- ---- -----
market in which such Lender regularly participates and in which the applicable
determination(s) described in Sections 2.9.2(i), (ii) or (iii), as the case may
----------------- ---- -----
be, does not apply.
Section 2.9.7. Borrower's Options on Unavailability or Increased Cost
------------- ------------------------------------------------------
of Libor Loans. In the event of any conversion of all or any portion of any
- --------------
Lender's Pro Rata Share of any Libor Loans to a Prime Rate Loan for reasons
beyond the Borrower's control or in the event that any Lender's Pro Rata Share
of all or any portion of the Libor Loans becomes subject, under Sections 2.9.4
--------------
or 2.9.5, to additional costs, the Borrower shall have the option, subject to
-----
the other terms and conditions of this Agreement, to convert such Lender's Pro
Rata Share to a Prime Rate Loan by making Interest Rate Elections for Interest
Periods which (i) end on the Interest Adjustment Date for such Libor Loan or
(ii) end on Business Days occurring prior to such Interest Adjustment Date, in
which case, at the end of the last of such Interest Periods any such Libor Rate
Loan shall automatically convert to a Prime Rate Loan and the Borrower shall
have no further right to make an Interest Rate Election with respect to such
Prime Rate Loan other than an Interest Rate Election which is effective on the
Interest Adjustment Date for such Libor Loan. The Borrower's options set forth
in this Section 2.9.7 may be exercised, if and only if the Borrower pays,
-------------
concurrently with delivery to the Agent of each such Interest Rate Election and
thereafter in accordance with Sections 2.9.4, 2.9.5 and 2.9.6 all amounts
-------------- ----- -----
provided for therein to the Agent in accordance with this Agreement.
If the Borrower shall, as a result of the requirements of Section
-------
2.9.4 above, be required to pay any Lender the additional costs referred to
- -----
therein, but not be required to pay such additional costs to the other Lender or
Lenders and the Borrower, in its sole discretion, shall deem such additional
amounts to be material or in the event that Libor Loans from a Lender are
unavailable to the Borrower as a result solely of the provisions of Sections
--------
2.9.2, 2.9.3 or 2.9.4, but are available from the other Lender or Lenders, the
- ----- ----- -----
Borrower shall have the right to substitute another financial institution
satisfactory to the Agent for such Lender which is entitled to such additional
costs or which is relieved from making Libor Loans and the Agent shall use
reasonable efforts (with all reasonable costs of such efforts by the Agent to be
borne by the Borrower) to assist the Borrower to locate such substitute
financial institution. Any such substitution shall take place in accordance
with Section 9.11 and otherwise be on terms and
------------
34
conditions reasonably satisfactory to the Agent, and until such time as such
substitution shall be consummated, the Borrower shall continue to pay such
additional costs and comply with the above-referenced Sections. Upon any such
substitution, the Borrower shall pay or cause to be paid to the Lender that is
being replaced, all principal, interest (to the date of such substitution) and
other amounts owing hereunder to such Lender and such Lender will be released
from liability hereunder.
Section 2.9.8. Assumptions Concerning Funding of Libor Loans. The
------------- ---------------------------------------------
calculation of all amounts payable to the Lenders under this Section 2.9 shall
-----------
be made as though each Lender actually funded its relevant Libor Loans through
the purchase of a deposit in the London interbank market bearing interest at the
Libor Rate in an amount equal to that Libor Loan and having a maturity
comparable to the relevant Interest Period and through the transfer of such
deposit from an offshore office of such Lender to a domestic office of such
Lender in the United States of America; provided, however, that each Lender may
fund each of its Libor Loans in any manner it sees fit and the foregoing
assumption shall be utilized solely for the calculation of amounts payable under
this Section 2.9.
-----------
Section 2.10. Interest Rate Protection. On or before March 31, 2000, the
------------ ------------------------
Borrower shall enter into an interest rate protection arrangement covering not
less than $25,000,000 of the then outstanding Term Loans . Such interest rate
protection arrangement may consist of any one or a combination of the following:
(i) the purchase of an interest rate swap arrangement from a financial
institution reasonably acceptable to the Agent covering such Loans effectively
converting the Borrower's interest payment obligations with respect to such
portion of the Term Loans to a fixed rate per annum of not more than ten percent
(10%) for a term expiring not earlier than December 31, 2002 or (ii) the
purchase of an interest rate cap from a financial institution reasonably
acceptable to the Agent covering such Loans at a cap rate per annum equal to not
more than ten percent (10%)for a term expiring not earlier than December 31,
2002. The other terms and conditions of any such interest rate swap or interest
rate cap shall be reasonably satisfactory to the Majority Lenders.
ARTICLE 3.
CONDITIONS OF LENDING
Section 3.1. Conditions Precedent to the Commitment and to all Loans.
----------- -------------------------------------------------------
Section 3.1.1. The Commitment and Initial Loans. The Commitment and
------------- --------------------------------
the obligation of the Lenders to make the initial Advances of the Loans and/or
to issue any Letter of Credit or Letter of Credit Agreement are subject to
performance by the Borrower of all of its obligations under this Agreement and
to the satisfaction of the conditions precedent that all legal matters incident
to the transactions contemplated hereby or incidental to the Loans shall be
reasonably satisfactory to counsel for the Agent and that the Lenders shall have
received on or before the Closing Date all of the following, each dated the
Closing Date or another date acceptable to the Lenders and each to be in form
and substance reasonably satisfactory to the Agent or if any of the following is
not a deliverable, the satisfaction of such condition in form and substance
reasonably satisfactory to the Agent:
35
Section 3.1.1.1. The Financing Documents, including, without
---------------
limitation, those hereinafter set forth and the Borrower's and any Subsidiary's
certificate of incorporation or other organizational documents, by-laws and each
agreement or instrument relating thereto.
Section 3.1.1.2. Certificate of the secretary, clerk or similar
---------------
officer of the Borrower and each Subsidiary certifying as to the resolutions of
the shareholders or board of directors of the Borrower and each Subsidiary
authorizing and approving each of the Financing Documents to which the Borrower
and each Subsidiary is a party and other matters contemplated hereby and
certifying as to the names and signatures of the Authorized Representative(s) of
the Borrower and each Subsidiary authorized to sign each Financing Document to
be executed and delivered by or on behalf of the Borrower and each Subsidiary.
The Agent and the Lenders may conclusively rely on each such certificate until
the Agent shall receive a further certificate canceling or amending the prior
certificate and submitting the signatures of the Authorized Representative(s)
named in such further certificate.
Section 3.1.1.3. Favorable opinions of Wilson Sonsini Goodrich &
---------------
Rosati, counsel for the Borrower, in form and substance reasonably satisfactory
to the Agent.
Section 3.1.1.4. An Officer's Certificate stating that:
---------------
Section 3.1.1.4.1. The representations and warranties contained
-----------------
in Section 4.1 and/or contained in any of the other Financing Documents are
-----------
correct on and as of the Closing Date as though made on and as of such date; and
Section 3.1.1.4.2. No Default or Event of Default has occurred
-----------------
and is continuing, or would result from the making of the Loans.
Section 3.1.1.5. Certificates of good standing or legal existence of
---------------
the secretaries of state (or equivalent officials) of the states (or
jurisdictions) of organization and qualification of and covering the Borrower
and any Subsidiaries dated reasonably near the Closing Date.
Section 3.1.1.6. Evidence that the ownership interests in the
---------------
Borrower are as set forth in Exhibit 1.1 of the Disclosure Letter.
-----------
Section 3.1.1.7. A Request and an Interest Rate Election.
---------------
Section 3.1.1.8. All documents, instruments and agreements necessary
---------------
to terminate, cancel and discharge the documents, instruments and agreements
evidencing or securing any and all existing Indebtedness of the Borrower and any
Subsidiary and Liens securing such Indebtedness other than those listed in
Exhibit 3.1.1.8 to the Disclosure Letter.
- ---------------
Section 3.1.1.9. Payment to the Agent and the Lenders of the fees
---------------
specified in this Agreement or in the Fee Letter as being payable on the Closing
Date and all reasonable out-of-pocket costs and expenses incurred by the Agent
and Fleet in connection with the transactions contemplated hereby, including,
but not limited to, reasonable outside legal
36
expenses and any accounting fees, auditing fees, appraisal fees, and other fees
associated with any independent analyses of the Borrower and any Subsidiary and
evidence that all other reasonable fees and costs payable by the Borrower in
connection with the transactions contemplated by the Financing Documents and
completed on the Closing Date have been paid in full.
Section 3.1.1.10. An Officer's Certificate in the form of Exhibit
---------------- -------
3.1.1.10, duly completed and reflecting, inter alia, compliance by the Borrower
- -------- ----- ----
as of the opening of business on the first Business Day after the Closing Date
but based on the Borrower's financial information as of the last day of the
Borrower's most recent fiscal quarter, adjusted to give effect to the Loans made
on the Closing Date and completion of the Related Transactions to be completed
on or prior to the Closing Date, with the financial covenants provided for
herein.
Section 3.1.1.11. Such other information about the Borrower, any
----------------
Subsidiaries and/or their Business Condition as the Lenders may reasonably
request.
Section 3.1.1.12. True copies of, and/or true copies of any revisions
----------------
to, the financial statements, the Projections, the pro forma Closing Date
financial statements giving effect to the Loans, the Equity to be received on or
prior to the Closing Date and completion of the other Related Transactions to be
completed on or prior to the Closing Date, and other information provided
pursuant to Section 4.1.5 and certification by the Borrower of the Projections.
-------------
Section 3.1.1.13. Certificates of fire, business interruption,
----------------
liability and extended coverage insurance policies, each such policy to name the
Agent as mortgagee and loss payee and, on all liability policies, as additional
insured.
Section 3.1.1.14. True descriptions of any pending or threatened
----------------
litigation against or by Borrower or any Subsidiary.
Section 3.1.1.15. Evidence that all necessary material third party
----------------
consents to the Related Transactions and the Loans have been obtained and remain
in effect without the imposition of any terms or condition not reasonably
acceptable to the Lenders and all required filings with any governmental
authority have been duly completed.
Section 3.1.1.16. The financial statements described in Section 4.1.5
---------------- -------------
together with the Borrower's pro forma Closing Date balance sheet. Such
financial statements shall be accompanied by an Officer's Certificate of the
chief financial officer of the Borrower to the effect that (i) the
representations of the Borrower set forth in Section 4.1.14 are accurate as of
--------------
the Closing Date and (ii) that no Material Adverse Effect has occurred since the
date of the Borrower's most recent audited financial statements delivered to the
Lenders except as set forth or reflected in the financial statements described
in Section 4.1.5 or otherwise disclosed in writing and acceptable to the Agent.
-------------
Section 3.1.1.17. True copies of (i) the Equity Documents, (ii) all
----------------
other documents, instruments and agreements relating to the Borrower's capital
structure.
37
Section 3.1.1.18. The fact that the representations and
----------------
warranties of the Borrower contained in Article 4, infra, and in each of the
-----
other Financing Documents are true and correct in all material respects on and
as of the Closing Date except as altered hereafter by actions not prohibited
hereunder. The Borrower's delivery of each Note and Letter of Credit Agreement
to the Lenders and of each Request to the Agent shall be deemed to be a
representation and warranty by the Borrower as of the date thereof to such
effect.
Section 3.1.1.19. That there has been no enactment of any law or
----------------
regulation by any Governmental Authority which would make it (i) unlawful, or
(ii) prevent, restrain or impose conditions which the Lenders determine to be
adverse, in any respect as to the foregoing, to the making of the Loans and/or
the completion of the Related Transactions.
Section 3.1.1.20. A completed Year 2000 questionnaire covering
----------------
the Borrower and any Subsidiaries.
Section 3.1.1.21. The Security Documents, after the completion
----------------
of any required filings or recordations, will grant to the Agent perfected,
first priority security interests or mortgages, as the case may be, subject to
Permitted Encumbrances with respect to the collateral identified therein and the
Agent shall received the favorable opinions of counsel referred to in Section
-------
3.1.1.3 above with respect to such perfection. The Agent shall also have
- -------
received such searches, landlord consents, access agreements and/or title
insurance commitments as reasonably requested by the Agent, all in form and
substance reasonably satisfactory to the Agent and/or its counsel. Without
limiting the generality of the foregoing, the Agent shall be reasonably
satisfied with the terms and conditions of all real property leases in which the
Borrower and any Subsidiary has a leasehold interest, including the terms of
such leaseholds and the assumability of the lessee's obligations thereunder upon
the transfer of or foreclosure upon of the Borrower's or any Subsidiary's
leasehold interest.
Section 3.1.1.22. No Material Adverse Effect has occurred and
----------------
there shall exist no action, suit, investigation, litigation or proceeding
pending or threatened in any court or before any arbitrator or Governmental
Authority that could reasonably be expected to result in a Material Adverse
Effect.
Section 3.1.1.23. All information and materials supplied by the
----------------
Borrower to the Agent prior to the date hereof including, without limitation,
the Disclosure Letter shall be true and correct in all material aspects (except
that the Projections shall be as described in Section 4.1.5.4); and no
---------------
additional information shall have come to the attention of the Agent or the
Lenders that is inconsistent in any material respect with the information and
materials supplied to the Agent prior to the date hereof or that could
reasonably be expected to have a Material Adverse Effect.
Section 3.1.2. The Commitment and the Loans. The Commitment and the
------------- ----------------------------
obligation of each Lender to make or maintain its Pro Rata Share of any Advance
or Loan and/or to issue any Letter of Credit or Letter of Credit Agreement are
subject to performance by the Borrower of all its obligations under this
Agreement and to the satisfaction of the following further conditions precedent:
38
(a) The fact that, immediately prior to and upon the making of each
Loan, no Event of Default or Default shall have occurred and be continuing;
(b) The fact that the representations and warranties of the Borrower
contained in Article 4, infra and in each of the other Financing Documents, are
-----
true and correct in all material respects on and as of the date of each Advance
or Loan except as altered hereafter by actions consented to or not prohibited
hereunder. The Borrower's delivery of the Notes to the Lenders and of each
Request to the Agent shall be deemed to be a representation and warranty by the
Borrower as of the date of such Advance or Loan as to the facts specified in
Sections 3.1.2(a) and (b);
- ----------------- ---
(c) Receipt by Agent on or prior to the Business Day specified in the
definition of Interest Rate Election of a written Request stating the amount
requested for the Loan or Advance in question and an Interest Rate Election for
such Loan or Advance, all signed by a duly authorized officer of the Borrower on
behalf of the Borrower;
(d) That there exists no law or regulation by any governmental
authority having jurisdiction over the Agent or any of the Lenders which would
make it unlawful in any respect for such Lender to make its Pro Rata Share of
the Loan or Advance, including, without limitation, Regulations U, T and X of
the Board of Governors of the Federal Reserve System; and
(e) No Material Adverse Effect has occurred.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of the Borrower. The Borrower
----------- ----------------------------------------------
represents and warrants to the Agent and the Lenders that, after giving effect
to the Loans and the application of the proceeds thereof (which representations
and warranties shall survive the making of the Loans) as follows:
Section 4.1.1. Organization and Existence. The Borrower and any
------------- --------------------------
Subsidiary is a limited liability company or corporation, duly organized,
validly existing and in good standing under the laws of the state (or applicable
jurisdiction) of its incorporation or organization and is duly qualified to do
business in all jurisdictions in which such qualification is required, all as
noted on Exhibit 4.1.1 to the Disclosure Letter, except where failure to so
-------------
qualify could not reasonably be expected to have a Material Adverse Effect, and
has all requisite power and authority to conduct its business, to own its
properties and to execute and deliver, and to perform all of its obligations
under the Financing Documents.
Section 4.1.2. Authorization and Absence of Defaults. Except as
------------- -------------------------------------
described on Exhibit 4.1.2 to the Disclosure Letter, the execution, delivery to
-------------
the Agent and/or the Lenders and performance by the Borrower and any Subsidiary
of the Financing Documents and Related Transaction Documents have been duly
authorized by all necessary corporate and governmental
39
action and do not and will not (i) require any consent or approval of the
shareholders or board of directors of the Borrower or any Subsidiary which has
not been obtained, (ii) violate any provision of any law, rule, regulation
(including, without limitation, Regulations U and X of the board of governors of
the federal reserve system), order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to the Borrower
and/or any Subsidiary and/or the articles of organization or by-laws, as
applicable, of the Borrower and/or any Subsidiary, (iii) result in a material
breach of or constitute a material default under any material indenture or loan
or credit agreement or any other agreement, lease or instrument to which the
Borrower and/or any Subsidiary is or are a party or parties or by which it or
they or its or their properties may be bound or affected; or (iv) result in, or
require, the creation or imposition of any Lien on any of the Borrower's and/or
any Subsidiary's respective properties or revenues other than Liens granted to
the Agent by any of the Financing Documents securing the Obligations. The
Borrower and any Subsidiary are in compliance with any such applicable law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award or any such indenture, other agreement, lease or instrument, except where
the failure to be in compliance could not reasonably be expected to have a
Material Adverse Effect.
Section 4.1.3. Acquisition of Consents. Except as noted on Exhibit
------------- ----------------------- -------
4.1.3 to the Disclosure Letter, no authorization, consent, approval, license,
- -----
exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, other than those which have been obtained, is or will be necessary to
the valid execution and delivery to the Agent and/or the Lenders or performance
by the Borrower or any Subsidiary of any Financing Documents and each of the
foregoing which has been obtained is in full force and effect.
Section 4.1.4. Validity and Enforceability. Each of the Financing
------------- ---------------------------
Documents when delivered hereunder will constitute the legal, valid and binding
obligations of each of the Borrower and any Subsidiary which is or are a party
thereto enforceable against the Borrower, and any Subsidiary which is or are a
party thereto in accordance with their respective terms except as the
enforceability thereof may be limited by the effect of general principles of
equity and bankruptcy and similar laws affecting the rights and remedies of
creditors generally.
Section 4.1.5. Financial Information. The following information with
------------- ---------------------
respect to the Borrower has heretofore been furnished to the Agent:
Section 4.1.5.1. Audited annual financial statements of the
---------------
Borrower for the periods ended December 31, 1997 and December 31, 1998; and
Section 4.1.5.2. Interim, consolidated balance sheets of the
---------------
Borrower and any Subsidiaries as of the end of the most recent fiscal quarter
prior to the Closing for which such statements are available and the related
statements of income and cash flows and shareholders' equity, such balance
sheets and statements to be prepared and certified by an Authorized
Representative in an Officer's Certificate as having been prepared in accordance
with GAAP except for footnotes and year-end adjustments, and to be in form
reasonably satisfactory to the Agent;
Section 4.1.5.3. The Projections.
---------------
40
Section 4.1.5.4. The pro forma financial statements of the
---------------
Borrower as of the Closing Date provided pursuant to Section 3.1.1.12.
----------------
Each of the financial statements referred to above in Section
-------
4.1.5.1 and 4.1.5.2 was prepared in accordance with GAAP (subject, in the case
- ------- -------
of interim statements, to the absence of footnotes and normal year-end
adjustments) applied on a consistent basis, except as stated therein. To the
best of the Borrower's knowledge, each of the financial statements referred to
above in Sections 4.1.5.1, 4.1.5.2 and 4.1.5.4 fairly presents the financial
------------------------- -------
condition or pro forma financial condition, as the case may be, of the Person
being reported on at such dates and is complete and correct in all material
respects and no Material Adverse Effect has occurred since the date thereof. The
Projections were prepared by the Borrower in good faith, it being recognized
that projections as to future results are not assertions of fact and that actual
results for the periods cited therein may differ from the results projected
therein.
Section 4.1.6. No Litigation. There are no actions, suits or
------------- -------------
proceedings pending or, to the knowledge of the Borrower, threatened against or
affecting the Borrower and/or any Subsidiary or any of their properties before
any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which if determined adversely to the
Borrower and/or any Subsidiary would draw into question the legal existence of
the Borrower and/or any such Subsidiary and/or the validity, authorization
and/or enforceability of any of the Financing Documents and/or any provision
thereof and/or could not reasonably be expected to have a Material Adverse
Effect except those matters, if any, described on Exhibit 4.1.6 to the
------- -----
Disclosure Letter none of which, in Borrower's good faith opinion, will (i) have
such Material Adverse Effect or (ii) draw into question (a) the legal existence
of the Borrower and/or any such Subsidiary or (b) the validity, authorization
and/or enforceability of any of the Financing Documents and/or any provision
thereof.
Section 4.1.7. Regulation U. The Borrower is not engaged in the
------------- ------------
business of extending credit for the purpose of purchasing or carrying "margin
stock" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR Part 221), does not own and has no present
intention of acquiring any such margin stock or a "margin security" within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
(12 CFR, Part 207). None of the proceeds of the Loans will be used directly or
indirectly by the Borrower for the purpose of purchasing or carrying, or for the
purpose of reducing or retiring any Indebtedness which was originally incurred
to purchase or carry, any such margin security or margin stock or for any other
purpose which might constitute the transaction contemplated hereby a "purpose
credit" within the meaning of said Regulation U, or cause this Agreement to
violate any other regulation of the Board of Governors of the Federal Reserve
System or the Securities and Exchange Act of 1934, as amended, or any rules or
regulations promulgated under either said statute.
Section 4.1.8. Absence of Adverse Agreements. Neither the Borrower
------------- -----------------------------
nor any Subsidiary is a party to any indenture, loan or credit agreement or any
lease or other agreement or instrument or subject to any corporate or
partnership restriction which could reasonably be expected to have a Material
Adverse Effect.
41
Section 4.1.9. Taxes. The Borrower and each Subsidiary has filed all
------------- -----
tax returns (federal, state and local) required to be filed and paid all taxes
shown thereon to be due, including interest and penalties, except for those
taxes, if any, which are being contested in good faith and by appropriate
proceedings, and for which proper reserve or other provision has been made in
accordance with GAAP and except where any failure to file or pay could not
reasonably be expected to have a Material Adverse Effect on the Borrower or any
Subsidiary and except as described in Exhibit 4.1.9 to the Disclosure Letter.
-------------
Section 4.1.10. ERISA. Borrower and any Commonly Controlled Entity
-------------- -----
do not maintain or contribute to any Plan which is not in substantial
compliance with ERISA, or any Single Employer Plan which has incurred any
accumulated funding deficiency within the meaning of sections 412 and 418 of
the Code or which has applied for or obtained a waiver from the Internal
Revenue Service of any minimum funding requirement under section 412 of the
Code. Borrower and any Commonly Controlled Entity have not incurred any
liability to the PBGC in connection with any Plan covering any employees of
Borrower or any Commonly Controlled Entity in amount exceeding Fifty Thousand
Dollars ($50,000) in the aggregate or ceased operations at any facility or
withdrawn from any Plan in a manner which could subject any of them to liability
under sections 4062(e), 4063 or 4064 of ERISA in amount exceeding Fifty
Thousand Dollars ($50,000) in the aggregate, and know of no facts or
circumstance which might give rise to any liability of Borrower or any Commonly
Controlled Entity to the PBGC under Title IV of ERISA in amount exceeding Fifty
Thousand Dollars ($50,000) in the aggregate. Borrower and any Commonly
Controlled Entity have not incurred any withdrawal liability in amount exceeding
Fifty Thousand Dollars ($50,000) in the aggregate (including but not limited to
any contingent or secondary withdrawal liability) within the meaning of sections
4201 and 4202 of ERISA, to any Multiemployer Plan, and no event has occurred,
and there exists no condition or set of circumstances known to the Borrower,
which presents a risk of the occurrence of any withdrawal from or the
partition, termination, reorganization or insolvency of any Multiemployer Plan
which could result in any liability to a Multiemployer Plan in amount exceeding
Fifty Thousand Dollars ($50,000) in the aggregate.
Except for payments for which the minimum funding requirement has
been waived under section 412 of the Code, full payment has been made of all
amounts which Borrower and any Commonly Controlled Entity are required to have
paid as contributions to any Plan under applicable law or under any plan or any
agreement relating to any Plan to which Borrower or any Commonly Controlled
Entity is a party. Borrower and each Commonly Controlled Entity have made
adequate provision for reserves to meet contributions that have not been made
because they are not yet due under the terms of any Plan or related agreements.
Neither Borrower nor any Commonly Controlled Entity has any knowledge,
nor do any of them have any reason to believe, that any Reportable Event which
could result in a liability or liabilities of Fifty Thousand Dollars ($50,000)
or more in the aggregate has occurred with respect to any Plan.
Section 4.1.11. Ownership of Properties.
-------------- -----------------------
Section 4.1.11.1. Except for Permitted Encumbrances, Borrower
----------------
and any Subsidiary has good title to all of its properties and assets free and
clear of all restrictions and
42
Liens of any kind other than those which could not reasonably be expected to
have a Material Adverse Effect or a material adverse effect on the validity,
authorization and/or enforceability of the Financing Documents and/or any
provision thereof.
Section 4.1.11.2. Exhibit 4.1.11 to the Disclosure Letter
---------------- --------------
accurately and completely lists the location of all real property owned or
leased by Borrower or any Subsidiary as of the date hereof. Borrower and each
Subsidiary enjoys quiet possession under all material leases of real property to
which it is a party as a lessee, and all of such leases are valid, subsisting
and, to Borrower's knowledge, in full force and effect.
Section 4.1.11.3. To Borrower's knowledge, except as specified
----------------
in Exhibit 4.1.11, none of the real property occupied by Borrower or any
--------------
Subsidiary is located within any federal, state or municipal flood plain zone.
Section 4.1.11.4. Except as set forth in Exhibit 4.1.11 to the
---------------- --------------
Disclosure Letter, all of the material properties used in the conduct of the
Borrower's and each Subsidiary's business (i) are in good repair, working order
and condition (reasonable wear and tear and obsolescence excepted) and
reasonably suitable for use in the operation of Borrower's, and each
Subsidiary's business; and (ii) to Borrower's knowledge are currently operated
and maintained, in all material respects, in accordance with the requirements of
applicable governmental authorities.
Section 4.1.12. Accuracy of Representations and Warranties. None of
-------------- ------------------------------------------
Borrower's representations or warranties set forth in this Agreement, the
Disclosure Letter or in any document or certificate furnished pursuant to this
Agreement or in connection with the transactions contemplated hereby contains
any untrue statement of a material fact or omits to state a material fact
necessary to make any statement of fact contained herein or therein, in light of
the circumstances under which it was made, not misleading; except that unless
provided otherwise any such document or certificate which is dated speaks as of
the date stated and not the present.
Section 4.1.13. No Investment Company. Neither the Borrower nor any
-------------- ---------------------
Subsidiary is an "investment company" or a company "controlled" by an
"investment company" as such terms are defined in the Investment Company Act of
1940, as amended, which is required to register thereunder.
Section 4.1.14. Solvency, etc. After giving effect to the
-------------- -------------
consummation of each Loan outstanding and to be made under this Agreement as of
the time this representation and warranty is given, the Borrower (a) will be
able to pay its debts as they become due and (b) will have funds and capital
sufficient to carry on its business and all businesses in which it is about to
engage. The Borrower will not be rendered insolvent by the execution and
delivery of this Agreement and the consummation of any transactions contemplated
herein.
Section 4.1.15. Approvals. Except as set forth in Exhibit 4.1.3 to
-------------- --------- -------------
the Disclosure Letter, all approvals required from all Persons including without
limitation all governmental authorities with respect to the Financing Documents
have been obtained.
43
Section 4.1.16. Ownership Interests. The schedule of ownership
-------------- -------------------
interests in the Borrower and any Subsidiaries set forth in Exhibit 1.1 to the
-----------
Disclosure Letter is true, accurate and complete as of the date hereof and the
Investments to be made for all ownership interests disclosed therein have in
fact been fully paid in immediately available Dollars after giving effect to the
closing of the Related Transactions.
Section 4.1.17. Licenses, Registrations, Compliance with Laws, etc.
-------------- --------------------------------------------------
Exhibit 4.1.17 to the Disclosure Letter accurately and completely describes all
- --------------
permits, governmental licenses, registrations and approvals, material to
carrying out of Borrower's and each of the Subsidiaries' businesses as presently
conducted and as required by law or the rules and regulations of any
Governmental Authority or foreign governmental agency, body, instrumentality or
commission having jurisdiction over the Borrower or any of the Subsidiaries. All
such existing authorizations, licenses and permits are in full force and effect,
are duly issued in the name of, or validly assigned to the Borrower or a
Subsidiary and the Borrower or a Subsidiary has full power and authority to
operate thereunder. There is no material violation or material failure of
compliance or, to Borrower's knowledge, allegation of such violation or failure
of compliance on the part of the Borrower or any Subsidiary with any of the
foregoing permits, licenses, registrations, approvals, rules or regulations and
there is no action, proceeding or investigation pending or to the knowledge of
the Borrower threatened nor has the Borrower or any Subsidiary received any
notice of such which might result in the termination or suspension of any such
permit, license, registration or approval which in any case could be reasonably
expected to have a Material Adverse Effect.
Section 4.1.18. Principal Place of Business; Books and Records. The
-------------- ----------------------------------------------
Borrower's chief executive offices are located at Borrower's addresses set forth
in Section 9.6 or at such other address with respect to which Borrower has given
-----------
the Agent written notice at least 20 days prior to the location of Borrower's
records of accounts receivable or chief executive office at any such other
address. All of the Borrower's books and records are kept at one or more of its
addresses set forth in Section 9.6.
-----------
Section 4.1.19. Subsidiaries. As of the date hereof, the Borrower
-------------- ------------
has no Subsidiaries.
Section 4.1.20. Copyright. Except as set forth in Exhibit 4.1.23 to
-------------- --------- --------------
the Disclosure Letter the Borrower has not violated in any material respect any
of the provisions of the Copyright Revision Act of 1976, 17 U.S.C. 101, et seq.
-- ---
The Borrower has filed all material registration statements, notices and
statements of account and all necessary supplements and adjustment schedules
thereto with the United States Copyright Office and has made all payments to the
United States Copyright Office that are required. To Borrower's knowledge, no
claim of infringement of a copyright by the Borrower or any Subsidiary has been
made or threatened by any other Person . The Borrower has not allocated
revenues in any manner inconsistent with the rules and regulations of the
Copyright Office.
Section 4.1.21. Environmental Compliance. Neither the Borrower nor,
-------------- ------------------------
to the knowledge of the Borrower, any other Person:
44
Section 4.1.21.1. has ever caused, permitted, or suffered to
----------------
exist any Hazardous Material to be spilled, placed, held, located or disposed of
on, under, or about, any of the facilities owned, leased or used by the Borrower
(the "Premises"), or from the Premises into the atmosphere, any body of water,
any wetlands, or on any other real property, nor to Borrower's knowledge does
any Hazardous Material exist on, under or about the Premises other than as
disclosed on Exhibit 4.1.21 to the Disclosure Letter, or in respect of Hazardous
--------------
Material used or disposed of in compliance with law;
Section 4.1.21.2. has any knowledge that any of the Premises has
----------------
ever been used (whether by the Borrower or, to the knowledge of the Borrower, by
any other Person) as a treatment, storage or disposal (whether permanent or
temporary) site for any Hazardous Material as defined in 42 U.S.C.A. 6901, et
--
seq. (the Resource Recovery and Conservation Act); and
- ---
Section 4.1.21.3. has any knowledge of any notice of violation,
----------------
Lien or other notice issued by any Governmental Authority with respect to the
environmental condition of the Premises or any other property occupied by the
Borrower, or any other property which was included in the property description
of the Premises or such other real property within the preceding three years
except as disclosed to the Agent.
Section 4.1.22. Material Agreements, etc. Exhibit 4.1.22 to the
-------------- ------------------------ --------------
Disclosure Letter attached hereto accurately and completely lists all material
agreements to which the Borrower or any of the Subsidiaries are a party and that
would be required to be listed in a registration statement on Form S-1 All of
such material agreements to which Borrower or any Subsidiary is a party, are
legally valid, binding, and, to Borrower's knowledge, in full force and effect
and neither the Borrower, any of the Subsidiaries nor, to Borrower's knowledge,
any other parties thereto are in material default thereunder.
Section 4.1.23. Patents, Trademarks and Other Property Rights.
-------------- ---------------------------------------------
Exhibit 4.1.23 to the Disclosure Letter contains a complete and accurate
- --------------
schedule of all registered trademarks, registered copyrights and patents of the
Borrower and/or any of the Subsidiaries, and pending applications therefor, and
all other intellectual property in which the Borrower and/or any of the
Subsidiaries has any rights other than "off-the shelf" software which is
generally available to the general public at retail. Except as set forth in
Exhibit 4.1.23 to the Disclosure Letter, the Borrower and any Subsidiaries own,
- --------------
possess, or have licenses to use all the patents, trademarks, service marks,
trade names, copyrights and non-governmental licenses, and all rights with
respect to the foregoing, necessary for the conduct of their respective
businesses as now conducted, without, to the Borrower's knowledge, any conflict
with the rights of others with respect thereto.
Section 4.1.24. Equity Documents. The Borrower has, prior to the
-------------- ----------------
date hereof, delivered to the Lenders true copies of the Equity Documents, and
each and every amendment or modification thereto and, except for receipt and
application of certain proceeds of the Loans, the Related Transactions have been
completed in accordance with the Equity Documents, without any waiver or
amendment of any term or condition contained therein without the prior written
approval of the Lenders, and in compliance with any applicable laws and
necessary governmental authority approvals.
45
Section 4.1.25. Material Adverse Effect. No Material Adverse Effect
-------------- -----------------------
has occurred and there exists no action, suit, investigation, litigation or
proceeding pending or threatened in any court or before any arbitrator or
governmental or regulatory agency or authority that could reasonably be expected
to result in a Material Adverse Effect.
Section 4.1.26. Year 2000. On the basis of review and assessment
-------------- ---------
undertaken by the Borrower of the Borrowers' and its Subsidiaries' computer
applications the Borrower reasonably believes that the "Year 2000 Problem" (that
is, the risk that computer applications used by any person may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999) will not result in a Material
Adverse Effect.
Section 4.1.27. Security Interests. All of the Borrower's assets are
-------------- ------------------
and will remain encumbered by first priority Liens granted to the Agent subject
only to Permitted Encumbrances.
ARTICLE 5.
COVENANTS OF THE BORROWER
Section 5.1. Affirmative Covenants of the Borrower Other than Reporting
----------- ----------------------------------------------------------
Requirements. From the date hereof and thereafter for so long as there is
- ------------
Indebtedness of the Borrower to any Lender and/or the Agent under any of the
Financing Documents or any part of the Commitment is in effect, the Borrower
will, with respect to itself and, unless noted otherwise below, with respect to
each of its Subsidiaries, ensure that each Subsidiary will, unless the Majority
Lenders shall otherwise consent in writing:
Section 5.1.1. Payment of Taxes, etc. Pay and discharge all taxes
------------- ---------------------
and assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims for the same which, if
unpaid, might become a Lien upon any of its properties, provided that (unless
and until foreclosure, restraint, sale or any similar proceeding is pending and
is not stayed, discharged or bonded within 30 days after commencement) the
Borrower shall not be required to pay any such tax, assessment, charge, levy or
claim which is being contested in good faith and by proper proceedings and for
which proper reserve or other provision has been made in accordance with GAAP,
unless failure to pay could not reasonably be expected to result in a Material
Adverse Effect.
Section 5.1.2. Maintenance of Insurance. Maintain on the collateral
------------- ------------------------
under any of the Security Documents insurance against loss by fire, hazards
included within the term "extended coverage", and such other hazards, casualties
and contingencies as the Agent may from time to time require, in an amount equal
to the greater of (i) $6,000,000 or (ii) one hundred percent (100%) of the
--
replacement cost of the collateral under any of the Security Documents and
business interruption insurance in the amount of at least $600,000. All policies
of such insurance and all renewals thereof shall be in form and substance
acceptable to Agent, shall be
46
made payable in case of loss to the Agent as loss payee and mortgagee and shall
contain an endorsement endeavoring to provide thirty (30) days prior written
notice to the Agent prior to cancellation or change in the coverage, scope or
amount of any such policies. Borrower shall also keep in full force and effect a
policy of general liability insurance against claims of bodily injury, death or
property damage occurring in any building in which the limits of liability shall
not be less than One Million Dollars ($1,000,000) per occurrence and Two Million
Dollars ($2,000,000) in the aggregate per year, together with an excess
liability policy in the amount of Five Million Dollars ($5,000,000) which shall
be in addition to the limits above set forth. Borrower shall increase the limits
of such liability insurance to such higher amounts as the Agent may from time to
time reasonably require. Certificates of all such insurance shall be delivered
to the Agent concurrently with the execution and delivery of this Agreement, and
thereafter all renewal or replacement certificates shall be delivered to the
Agent not less than thirty (30) days after the expiration date of the policy to
be renewed or replaced, accompanied by evidence satisfactory to the Agent that
all premiums payable with respect to such policies have been paid by Borrower.
Borrower shall have the right of free choice in the selection of the agent or
the insurer through or by which the insurance required hereunder is to be
placed; provided, however, said insurer has at all times a general
policyholders' rating of A or A+ in Best's latest rating guide. Furthermore, the
Agent shall have the right and is hereby constituted and appointed the true and
lawful attorney irrevocable of Borrower, in the name and stead of Borrower, but
in the uncontrolled discretion of said attorney, and in any case, only during
the occurrence and continuance of a Default or an Event of Default, (i) to
adjust, sue for, compromise and collect any amounts due under such insurance
policies in the event of loss and (ii) to give releases for any and all amounts
received in settlement of losses under such policies; and the same shall,
subject to Section 2.6.1.3 of this Agreement, at the option of the Agent, be
---------------
applied, after first deducting the costs of collection, on account of any
Indebtedness the payment of which is secured by any of the Financing Documents,
whether or not then due, or, notwithstanding the claims of any subsequent
lienor, be used or paid over to Borrower in accordance with reasonable
procedures established by the Agent for use in repairing or replacing any
damaged or destroyed collateral under any of the Security Documents.
Section 5.1.3. Preservation of Existence, etc. Preserve and maintain
------------- ------------------------------
in full force and effect its legal existence, and all material rights,
franchises and privileges in the jurisdiction of its organization except as
permitted by Section 5.2.3, preserve and maintain (except for sales licenses or
-------------
other scopes of use granted in the ordinary course of Borrower's business
consistent with past practice) all material licenses, governmental approvals,
trademarks, patents, trade secrets, copyrights and trade names owned or
possessed by it and which are necessary or, in the reasonable business judgment
of the Borrower, desirable in view of its business and operations or the
ownership of its properties and qualify or remain qualified as a foreign
corporation in each jurisdiction in which such qualification is necessary or, in
its reasonable business judgment, desirable in view of its business and
operations and ownership of its properties except where the failure to so
qualify could reasonably be expected to have a Material Adverse Effect.
Section 5.1.4. Compliance with Laws, etc. Comply with the
------------- -------------------------
requirements of all present and future applicable laws, rules, regulations and
orders of any governmental authority having jurisdiction over it and/or its
business including, without limitation, regulations of the United States
Copyright Office and the Copyright Royalty Tribunal, except where the failure to
comply could not be reasonably expected to have a Material Adverse Effect.
47
Section 5.1.5. Visitation Rights. Permit, during normal business
------------- -----------------
hours and upon the giving of reasonable notice, the Agent, the Lenders and any
agents or representatives thereof, to examine and make copies of (at Borrower's
cost and expense) and abstracts from the records and books of account of, and
visit the properties of the Borrower and any Subsidiary to discuss the affairs,
finances and accounts of the Borrower or any Subsidiary with any of their
partners, officers or management level employees and/or any independent
certified public accountant of the Borrower and/or any Subsidiary.
Section 5.1.6. Keeping of Records and Books of Account. Keep
------------- ---------------------------------------
adequate records and books of account, in which complete entries will be made in
accordance with GAAP and with applicable requirements of any governmental
authority having jurisdiction over the Borrower and/or any Subsidiary in
question, reflecting all financial transactions in accordance with GAAP.
Section 5.1.7. Maintenance of Properties, etc. Maintain and preserve
------------- ------------------------------
all of its properties necessary or useful in the proper conduct of its business,
in good working order and condition, ordinary wear and tear and obsolescence
excepted, and in accordance with each of the Security Documents.
Section 5.1.8. Post-Closing Items. Complete in a timely fashion all
------------- ------------------
actions required in the Post-Closing Letter.
Section 5.1.9. Other Documents, etc. Except as otherwise required by
------------- --------------------
this Agreement, pay, perform and fulfill all of its material obligations and
covenants under each material document, instrument or agreement to which it is
a party; provided that so long as the Borrower or any Subsidiary is contesting
any claimed default by it or them under any of the foregoing by proper
proceedings conducted in good faith and for which any proper reserve or other
provision in accordance with and to the extent required by GAAP has been made,
such default shall not be deemed a violation of this covenant.
Section 5.1.10. Minimum EBITDA. Have positive EBITDA at each
-------------- --------------
Borrower fiscal quarter ending set forth below of at least the amount set forth
below opposite the Borrower fiscal quarter in question, for each period
consisting of Borrower's most recent fiscal quarter and immediately preceding
three fiscal quarters:
Ending of Borrower Fiscal Quarter Minimum EBITDA
==========================================================================================
3/rd/ and 4/th/ fiscal quarters, 1999 $19,000,000
1/st/ through 4/th/ fiscal quarters, 2000 $20,000,000
1/st/ through 4/th/ fiscal quarters, 2001 $22,000,000
1/st/ through 4/th/ fiscal quarters, 2002 $25,000,000
1/st/ through 4/th/ fiscal quarters, 2003 $29,000,000
1/st/ fiscal quarter, 2004 and thereafter $33,000,000
48
Section 5.1.11. Minimum Fixed Charge Coverage Ratio. Maintain a
-------------- -----------------------------------
Fixed Charge Coverage Ratio of not less than 1.15:1.00 for Borrower fiscal
quarters ending on or prior to December 31, 2001 and 1.20:1.00 at each Borrower
fiscal quarter end thereafter, such ratio to be measured at each Borrower fiscal
quarter end for the rolling four Borrower fiscal quarter period consisting of
the Borrower fiscal quarter then ending and the three immediately preceding
Borrower fiscal quarters.
Section 5.1.12. Maximum Leverage Ratio. Maintain at the end of each
-------------- ----------------------
fiscal quarter of the Borrower in each period set forth below a Leverage Ratio
of not greater than the ratio set forth below opposite such period:
Endings of Borrower Fiscal Quarters Ratio
=====================================================================
3/rd/ fiscal quarter, 1999 through 3:00:1.00
4/th/ fiscal quarter, 2000
1/st/ through 4/th/ fiscal quarters, 2001 2.50:1.00
1/st/ through 4/th/ fiscal quarters, 2002 2:00:1.00
1/st/ fiscal quarter, 2003 and thereafter 1.50:1.00
Section 5.1.13. Officer's Certificates and Requests. Provide each
-------------- -----------------------------------
Officer's Certificate required under this Agreement and each Request so that the
Officer's statements contained therein are accurate and complete in all material
respects. Certificates and Requests.
Section 5.1.14. Depository. Use the Agent as a depository of
-------------- ----------
Borrower's funds.
Section 5.1.15. Chief Executive Officer. Maintain Daniel A.
-------------- -----------------------
Firestone as chief executive officer of the Borrower and as the Person with
principal executive, operating and management responsibility for the Borrower's
business or obtain a replacement of comparable experience and training in the
Borrower's industry within 180 days of his ceasing to act in such capacity.
Section 5.1.16. Notice of Purchase of Real Estate and Leases.
-------------- --------------------------------------------
Promptly notify the Agent in the event that the Borrower shall purchase any real
estate or enter into any lease of real estate or of equipment material to the
operation of the Borrower's business, supply the Agent with a copy of the
related purchase agreement or of such lease, as the case may be, and if
requested by the Agent, execute and deliver, or cause to be executed and
delivered, to the Agent for the benefit of the Lenders a deed of trust,
mortgage, assignment or other document, together with landlord consents, in the
case of leased property, reasonably satisfactory in form and substance to the
Agent, granting a valid first Lien (subject to any Liens permitted under Section
-------
5.2.1 hereof) on such real property or leasehold as security for the Financing
- -----
Documents, all subject to the limitations of Section 5.2.17.
--------------
Section 5.1.17. Additional Assurances. From time to time hereafter,
-------------- ---------------------
execute and deliver or cause to be executed and delivered, such additional
instruments, certificates and documents, and take all such actions, as the Agent
shall reasonably request for the purpose of implementing or effectuating the
provisions of the Financing Documents, and upon the exercise
49
by the Agent of any power, right, privilege or remedy pursuant to the Financing
Documents which requires any consent, approval, registration, qualification or
authorization of any governmental authority or instrumentality, exercise and
deliver all applications, certifications, instruments and other documents and
papers that the Agent may be so required to obtain. In addition, upon receipt of
an affidavit of an officer of any Lender as to the loss, theft, destruction or
mutilation of any of such Lender's Notes or any Security Document which is not
of public record, and, in the case of any such loss, theft, destruction or
mutilation, upon cancellation of any such Note or Security Document, Borrower
will issue, in lieu thereof, a replacement Note or Security Document in the same
principal amount thereof and otherwise of like tenor.
Section 5.1.18. Appraisals. Permit the Agent and its agents, at any
-------------- ----------
time and in the sole discretion of the Agent or at the request of the Majority
Lenders, to conduct one appraisal of the Borrower's business, the reasonable
cost of which (not to exceed $5,000) shall be borne by the Borrower so long as
no Default or Event of Default exists and while a Default or Event of Default
exists to conduct appraisals of such business without limit, the cost of which
shall be borne by the Borrower.
Section 5.1.19. Environmental Compliance. Comply strictly and in all
-------------- ------------------------
material respects with the requirements of all federal, state, and local
environmental laws; notify the Lenders promptly in the event of any spill of
Hazardous Material materially affecting the Premises occupied by the Borrower
from time to time; forward to the Lenders promptly any written notices relating
to such matters received from any governmental agency; and pay promptly when due
any uncontested fine or assessment against the Premises.
Section 5.1.20. Remediation. Immediately contain and remove any
-------------- -----------
Hazardous Material found on the Premises in compliance with applicable laws and
at the Borrower's expense.
Section 5.1.21. Site Assessments. Promptly upon the request of the
-------------- ----------------
Agent, based upon the Agent's reasonable belief that a material Hazardous Waste
or other environmental problem exists with respect to any Premises, provide the
Agent with a Phase I environmental site assessment report and, if Agent finds a
reasonable basis for further assessment in such Phase I assessment, a Phase II
environmental site assessment report, or an update of any existing report, all
in scope, form and content and performed by such company as may be reasonably
satisfactory to the Agent.
Section 5.1.22. Indemnity. Indemnify, defend, and hold the Agent and
-------------- ---------
the Lenders harmless from and against any claim, cost, damage (including without
limitation consequential damages), expense (including without limitation
reasonable attorneys' fees and expenses), loss, liability, or judgment now or
hereafter arising as a result of any claim for environmental cleanup costs, any
resulting damage to the environment and any other environmental claims against
the Borrower, any Subsidiary, the Lenders and/or the Agent arising out of the
transactions contemplated by this Agreement, or any of the Premises. The
provisions of this Section shall continue in effect and shall survive (among
other events), until the applicable statute of limitations has expired, any
termination of this Agreement, foreclosure, a deed in lieu transaction, payment
and satisfaction of the Obligations of Borrower, and release of any collateral
for the Loans.
50
Section 5.1.23. Trademarks, Copyrights, etc. Concurrently with the
-------------- ---------------------------
acquisition of any federally registered trademark, copyright patent or
application therefor grant a first priority perfected Lien thereon to the Agent
pursuant to documents in form and substance reasonably satisfactory to the
Agent.
Section 5.1.24. Key-Man Insurance__Borrower shall maintain in force,
--------------
until canceled or modified with the written consent of the Majority Lenders, an
insurance policy on the life of Daniel A. Firestone in the amount of $5,000,000
naming the Borrower as owner and beneficiary and collaterally assigned to the
Agent. Up to $2,000,000 of the proceeds of such policy shall be used to pay the
costs of replacement of the deceased insured and to the extent not so used
within one (1) year of his death, such portion of the proceeds shall be paid to
the Agent for the accounts of the Lenders in accordance with their Pro Rata
Shares to be applied to payment of the principal of the Term Loans in accordance
with Section 2.6.1.7. The balance of the proceeds of such life insurance shall
---------------
be paid to the Agent and so applied to the Term Loans.
Section 5.2. Negative Covenants of the Borrower. From the date hereof and
----------- ----------------------------------
thereafter for so long as there is Indebtedness of the Borrower to any Lender
and/or the Agent under any of the Financing Documents or any part of the
Commitment is in effect, the Borrower will not, with respect to itself and,
unless noted otherwise below, with respect to each of the Subsidiaries, will
ensure that each such Subsidiary will not, without the prior written consent of
the Majority Lenders:
Section 5.2.1. Liens, etc. Create, incur, assume or suffer to exist
------------- ----------
any Lien of any nature, upon or with respect to any of its properties, now owned
or hereafter acquired, or assign as collateral or otherwise convey as
collateral, any right to receive income, except that the foregoing restrictions
shall not apply to any Liens:
Section 5.2.1.1. For taxes, assessments or governmental charges or
---------------
levies on property if the same shall not at the time be delinquent or thereafter
can be paid without penalty or interest, or (if foreclosure, distraint, sale or
other similar proceedings shall not have been commenced or if commenced not
stayed, bonded or discharged within 30 days after commencement) are being
contested in good faith and by appropriate proceedings diligently conducted and
for which proper reserve or other provision has been made in accordance with and
to the extent required by GAAP;
Section 5.2.1.2. Imposed by law, such as landlords', carriers',
---------------
warehousemen's and mechanics' liens, bankers' set off rights and other similar
Liens arising in the ordinary course of business for sums not yet due or being
contested in good faith and by appropriate proceedings diligently conducted and
for which proper reserve or other provision has been made in accordance with and
to the extent required by GAAP;
Section 5.2.1.3. Arising in the ordinary course of business out of
---------------
pledges or deposits under worker's compensation laws, unemployment insurance,
old age pensions, or other social security or retirement benefits, or similar
legislation;
51
Section 5.2.1.4. Arising from or upon any judgment or award,
---------------
provided that such judgment or award is being contested in good faith by proper
appeal proceedings and only so long as execution thereon shall be stayed;
Section 5.2.1.5. Those set forth on Exhibit 1.8 to the
--------------- -----------
Disclosure Letter, and renewals, extensions and refundings thereof (so long as
the Lien is not extended to other property);
Section 5.2.1.6. Those now or hereafter granted pursuant to the
---------------
Security Documents or otherwise now or hereafter granted to the Agent for the
benefit of the Lenders as collateral for the Loans and/or Borrower's other
Obligations arising in connection with or under any of the Financing Documents;
Section 5.2.1.7. Deposits to secure the performance of bids,
---------------
trade contracts (other than for Borrowed Money), leases, statutory obligations,
surety bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of the Borrower's or any Subsidiary's business;
Section 5.2.1.8. Easements, rights of way, restrictions and
---------------
other similar encumbrances incurred in the ordinary course of business which, in
the aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of business by any Borrower or any
Subsidiary;
Section 5.2.1.9. Liens securing Indebtedness permitted to exist
---------------
under Section 5.2.8.3; provided that the Lien securing any such Indebtedness is
---------------
limited to the item of property purchased or leased in each case;
Section 5.2.1.10. UCC-1 financing statements filed solely for
----------------
notice or precautionary purposes by lessors under operating leases which do not
secure Indebtedness and which are limited to the items of equipment leased
pursuant to the lease in question; and
Section 5.2.1.11. Liens existing on property at the time it is
----------------
acquired by the Borrower or any Subsidiary in a permitted Acquisition so long as
the Indebtedness secured thereby or such Lien was not created in anticipation of
such Permitted Acquisition and so long as such Lien does not attach to or
encumber any other property of the Borrower or any Subsidiary.
Section 5.2.2. Assumptions, Guaranties, etc. of Indebtedness of Other
------------- ------------------------------------------------------
Persons. Assume, guarantee, endorse or otherwise become directly or
- -------
contingently liable in connection with any obligation or Indebtedness of any
other Person, except:
Section 5.2.2.1. Guaranties by endorsement of negotiable
---------------
instruments for deposit or collection or similar transactions in the ordinary
course of business;
Section 5.2.2.2. Assumptions, guaranties, endorsements and
---------------
contingent liabilities within the definition of Indebtedness and permitted by
Section 5.2.8; and
- -------------
52
Section 5.2.2.3. Those set forth on Exhibit 5.2.2.
--------------- -------------
Section 5.2.3. Acquisitions, Dissolution, etc. Acquire, in one or a
------------- ------------------------------
series of transactions, all or any substantial portion of the assets or
ownership interests in another Person, or dissolve, liquidate, wind up, merge or
consolidate or combine with another Person or sell, assign, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) any
material assets (other than as part of the ordinary course conduct of its
business), whether now owned or hereafter acquired, or any of the Borrower's or
any Subsidiary's interests in real property other than assets which are replaced
within 60 days of any asset sale, assignment, lease or disposition with assets
of like kind, usefulness and value; provided, however, that so long as no
Default or Event of Default exists or would exist immediately after any such
acquisition, Borrower and any Subsidiary shall be permitted to acquire all or
any portion of the assets of or ownership interests in another Person (by
merger, consolidation or otherwise so long as the Borrower or such Subsidiary,
as the case may be, survives; provided that the acquired Person may be the
survivor if such Person will be a Subsidiary) having aggregate (for all such
acquisitions since the Closing Date) consideration not to exceed $1,000,000
including, without limitation, Indebtedness assumed and, without duplication,
the value of any Lien described in Section 5.2.1.11. At the time of any such
----------------
acquisition the Borrower or the acquiring Subsidiary, as the case may be, shall
provide or grant or cause to be provided or granted to the Agent a first
priority perfected Lien (subject to Permitted Encumbrances) on the assets or
ownership interests acquired and the ownership interests in any Subsidiary
making such acquisition, including without limitation the assets owned by any
Subsidiary, to the extent that the Agent does not already have such a Lien
except that if such Subsidiary is not organized in the United States, the Agent
shall be granted such a Lien only on 65% of the issued and outstanding ownership
interests in such Subsidiary and shall not be entitled to any Lien on such
Subsidiary's assets. Prior to the consummation of any such permitted
transaction, Borrower shall submit to the Agent a pro-forma Compliance
Certificate on a consolidated basis (including the to-be-acquired assets and any
assumed liabilities or if ownership interests are acquired, the to-be-acquired
Person if such Person is to be a Subsidiary and if not, the to-be-acquired
ownership interests, all measured as set forth below in this Section 5.2.3),
-------------
which such pro-forma Compliance Certificate shall indicate that no Default or
Event of Default exists or would exist following consummation of the permitted
transaction and that the Borrower would be in compliance with (on a consolidated
basis including the to-be-acquired assets and any assumed liabilities or if
ownership interests are acquired, the to-be-acquired Person if such Person is to
be a Subsidiary and if not, the to-be-acquired ownership interests), Sections
--------
5.1.10, 5.1.11 and 5.1.12 following consummation of the permitted transaction,
- ------ ------ ------
including the to-be-acquired assets, Person or ownership interests and the
operating results thereof on the same basis and for the same periods as the
Borrower is measured for each such covenant, respectively (each a "Permitted
Acquisition"). Notwithstanding the foregoing prior to any public offering of
any of Borrower's capital stock, including without limitation a Qualified
Initial Public Offering, the Borrower may merge into another Person or transfer
all or substantially all of Borrower's assets to another Person solely to change
the Borrower into a corporation and/or to change the Borrower's state of
organization; provided that the Borrower may only undertake any such transaction
if the Agent obtains first priority perfected Liens (subject only to Permitted
Encumbrances) on all of the Borrower's assets and such assumptions of liability
and other agreements as the Agent may request, all in form and substance
satisfactory to the Majority Lenders.
53
Section 5.2.4. Change in Nature of Business. Make any material
------------- ----------------------------
change in the nature of its business.
Section 5.2.5. Ownership. Cause or permit the occurrence of any
------------- ---------
Change of Control.
Section 5.2.6. Sale and Leaseback; Synthetic Leases. Enter into any
------------- ------------------------------------
sale and leaseback arrangement with any lender or investor enter into any lease
treated as an operating lease under GAAP and as a loan or financing for United
States income tax purposes, or enter into any leases except in the normal course
of business at reasonable rents comparable to those paid for similar leasehold
interests in the area.
Section 5.2.7. Sale of Accounts, etc. Sell, assign, discount or
------------- ---------------------
dispose in any way of any accounts receivable, promissory notes or trade
acceptances held by the Borrower or any Subsidiary, with or without recourse,
except in the ordinary course of the Borrower's or any Subsidiary's business.
Section 5.2.8. Indebtedness. Incur, create, become or be liable
------------- ------------
directly or indirectly in any manner with respect to or permit to exist any
Indebtedness except:
Section 5.2.8.1. Indebtedness under the Financing Documents;
---------------
Section 5.2.8.2. Indebtedness with respect to trade payable
---------------
obligations and other normal accruals and customer deposits in the ordinary
course of business not yet due and payable in accordance with customary trade
terms or with respect to which the Borrower or any Subsidiary is contesting in
good faith the amount or validity thereof by appropriate proceedings and then
only to the extent such person has set aside on its books adequate reserves
therefor in accordance with and to the extent required by GAAP;
Section 5.2.8.3. Indebtedness with respect to Capitalized Lease
---------------
Obligations and purchase money Indebtedness with respect to real or personal
property in an aggregate amount outstanding at any time not to exceed
$2,000,000; provided that the amount of any purchase money Indebtedness does not
exceed 100% of the lesser of the cost or fair market value of the asset
purchased with the proceeds of such Indebtedness;
Section 5.2.8.4. Unsecured Indebtedness in an aggregate amount
---------------
outstanding at any time not to exceed $1,000,000;
Section 5.2.8.5. Indebtedness listed on Exhibit 3.1.1.8 to the
--------------- ----------------------
Disclosure Letter;
- -----------------
Section 5.2.8.6. Indebtedness owing by the Borrower to any
---------------
Subsidiary or by any Subsidiary to the Borrower or any other Subsidiary;
provided, however, that any Indebtedness owing by the Borrower or any Subsidiary
to an Affiliate shall be subordinated to the Obligations on terms and conditions
satisfactory to the Majority Lenders.
54
Section 5.2.8.7. Indebtedness permitted by Sections 2.10,
--------------- --------------
5.2.1.11, or 5.2.2.
- ------ -----
Section 5.2.8.8. Indebtedness outstanding as a refinancing of
---------------
Indebtedness permitted under another clause of this Section 5.2.8 other than
-------------
Sections 5.2.8.2 or 5.2.8.8; provided that such Indebtedness as refinanced
- ---------------- -------
continues to qualify as permitted Indebtedness under the clause of this Section
-------
5.2.8 under which the refinanced Indebtedness was permitted under this Section
- ----- -------
5.2.8.
- -----
Section 5.2.9. Other Agreements. Amend any of the terms or
------------- ----------------
conditions of any of the Related Transaction Documents, its certificate of
incorporation, bylaws (or comparable applicable charter or governance document),
any subordination agreement or any material indenture, agreement, document, note
or other instrument evidencing, securing or relating to any other Indebtedness
permitted under Section 5.2.8, in each case in a manner materially adverse to
----------------------------
the Agent or any of the Lenders.
Section 5.2.10. Payment or Prepayment of Equity or Subordinated Debt.
-------------- ----------------------------------------------------
Make any payment or prepayment of any principal of or interest on or any
payment, prepayment, redemption, defeasance, sinking fund payment, other
repayment of principal or capital or deposit for the purpose of any of the
foregoing on or in connection with any subordinated debt, the Equity or any
other equity or ownership interests in the Borrower, except as described in the
definition of Related Transactions.
Section 5.2.11. Dividends, Payments and Distributions. Except as
-------------- -------------------------------------
described in the definition of Related Transactions, declare or pay any
dividends, management fees or like fees or make any other distribution of cash
or property or both to any of the Members other than reasonable compensation for
services rendered to the Borrower and/or any Subsidiary or use any of its assets
for payment, purchase, conversion, redemption, retention, acquisition or
retirement of any beneficial interest in the Borrower or set aside or reserve
assets for sinking or like funds for any of the foregoing purposes, make any
other distribution by reduction of capital or otherwise in respect of any
beneficial interest in the Borrower or permit any Subsidiary which is not a
wholly-owned Subsidiary so to do provided that Borrower may make quarterly
distributions to the Members not to exceed the amounts necessary to pay federal
and state income taxes payable by the Members on account of the taxable income
of the Borrower; provided however, that in the event of a Qualified Initial
Public Offering, and subject at all times to the Borrower's compliance with the
provisions of Section 2.6.1.5, the Borrower shall be permitted to redeem or
---------------
convert shares of the Borrower's class B membership interests. Notwithstanding
anything to the contrary set forth in this Agreement, the Members may at any
time convert their shares of the Borrower's class B membership interests in
accordance with the provisions of the Borrower's Members Agreement as in effect
from time to time.
Section 5.2.12. Investments in or to Other Persons. Make or commit
-------------- ----------------------------------
to make any Investment in or to any other Person (including, without limitation,
any Subsidiary) other than (i) advances to employees for business expenses not
to exceed $25,000 in the aggregate outstanding for any one employee and not to
exceed $100,000 in the aggregate outstanding at any one time to all such
employees, (ii) other employee loans not to exceed $500,000 in the aggregate
outstanding at any one time to all such employees, (iii) Cash Equivalent
Investments, (iv),
55
Investments in accounts, contract rights and chattel paper (as defined in the
Uniform Commercial Code) and notes receivable, arising or acquired in the
ordinary course of business, (v) Investments described on Exhibit 5.2.2 to the
-------------
Disclosure Letter, and (vi) Permitted Acquisitions.
Section 5.2.13. Transactions with Affiliates. Except as contemplated
-------------- ----------------------------
by the Equity Documents, engage in any transaction or enter into any agreement
with an Affiliate, or in the case of Affiliates, with the Borrower or another
Affiliate, except in the ordinary course of business, as permitted by any other
provision of this Agreement and then only on an arm's length basis except as set
forth on Exhibit 5.2.13 to the Disclosure Letter.
---------------------------------------
Section 5.2.14. Change of Fiscal Year. Change its accounting
-------------- ---------------------
policies, reporting practices or its fiscal year from those in effect on the
Closing Date except that Borrower may change its current 52 - 53 week fiscal
year to a fiscal year ending December 31.
Section 5.2.15. Subordination of Claims. Subordinate any present or
-------------- -----------------------
future claim against or obligation of another Person, except as ordered in a
bankruptcy or similar creditors' remedy proceeding of such other Person.
Section 5.2.16. Compliance with ERISA. With respect to Borrower and
-------------- ---------------------
any Commonly Controlled Entity (a) withdraw from or cease to have an obligation
to contribute to, any Multiemployer Plan so as to result in any material
liability of the Borrower or any Commonly Controlled Entity to PBGC or to any
Multiemployer Plan, (b) engage in any "prohibited transaction" (as defined in
Section 4975 of the Code) involving any Plan which would result in a material
liability of the Borrower or any Commonly Controlled Entity for an excise tax or
civil penalty in connection therewith, (c) except for any deficiency caused by a
waiver of the minimum funding requirement under sections 412 and/or 418 of the
Code, as described above, incur or suffer to exist any material "accumulated
funding deficiency" (as defined in section 302 of ERISA and section 412 of the
Code) of the Borrower or any Commonly Controlled Entity, whether or not waived,
involving any Single Employer Plan, (d) incur or suffer to exist any Reportable
Event or the appointment of a trustee or institution of proceedings for
appointment of a trustee for any Single Employer Plan if, in the case of a
Reportable Event, such event continues unremedied for ten (10) days after notice
of such Reportable Event pursuant to sections 4043(a), (c) or (d) of ERISA is
given, if in the reasonable opinion of the Majority Lenders any of the foregoing
is likely to result in a material liability of the Borrower or any Commonly
Controlled Entity, (e) permit the assets held under any Plan to be insufficient
to protect all accrued benefits, (f) allow or suffer to exist any event or
condition, which presents a material risk of incurring a material liability of
the Borrower or any Commonly Controlled Entity to PBGC by reason of termination
of any such Plan or (g) cause or permit any Plan maintained by Borrower and/or
any Commonly Controlled Entity to be out of compliance with ERISA. For purposes
of this Section 5.2.16 "material liability" shall be deemed to mean any
--------------
liability of Fifty Thousand Dollars ($50,000) or more in the aggregate.
Section 5.2.17. Capital Expenditures. Incur Capital Expenditures (i)
-------------- --------------------
during any Borrower fiscal year in excess of $2,500,000; provided, that to the
extent that the maximum permitted amount of Capital Expenditures for any
Borrower fiscal year is greater than the actual Capital Expenditures for such
year, and so long as no Default or Event of Default exists or would exist after
any excess Capital Expenditures are expended in the immediately succeeding
56
Borrower fiscal year, such excess may be expended solely during the immediately
succeeding Borrower fiscal year in addition to the Capital Expenditures
otherwise permitted in such immediately succeeding fiscal year.
Section 5.2.18. Hazardous Material. Become involved, or permit, to
-------------- ------------------
the extent reasonably possible after the exercise by the Borrower of reasonable
due diligence and preventive efforts, any tenant of its real property to become
involved, in any operations at such real property generating, storing,
disposing, or handling Hazardous Material or any other activity that could lead
to the imposition on the Borrower or the Agent or any Lender, or any such real
property of any material liability or Lien under any environmental laws.
Section 5.2.19. Other Restrictions on Liens or Dividends. Enter into
-------------- ----------------------------------------
any agreement or otherwise agree to or grant any restriction substantially
similar to the provisions of Section 5.2.1 hereof or which would otherwise have
-------------
the effect of prohibiting, restricting, impeding or interfering with the
creation subsequent to the Closing Date of additional Liens to secure the
Obligations, except in the case of (a) any Capitalized Lease (so long as such
restriction relates solely to the property subject to such Capitalized Lease)
and (b) license agreements entered into on customary terms in the ordinary
course of business (so long as such restriction relates solely to the property
licensed pursuant thereto).
Section 5.2.20. Limitation on Creation of Subsidiaries, etc..
-------------- --------------------------------------------
Establish, create or acquire any Subsidiary other than as a result of a
Permitted Acquisition or become the general partner in any general partnership.
Section 5.3. Reporting Requirements. From the date hereof and thereafter
----------- ----------------------
for so long as the Borrower is indebted to any Lender and/or the Agent under any
of the Financing Documents, the Borrower will, unless the Majority Lenders shall
otherwise consent in writing, furnish or cause to be furnished to the Agent for
distribution to the Lenders:
Section 5.3.1. As soon as possible and in any event upon acquiring
-------------
knowledge of an Event of Default or Default, continuing on the date of such
statement, the written statement of an Authorized Representative setting forth
details of such Event of Default or Default and the actions which the Borrower
has taken and proposes to take with respect thereto;
Section 5.3.2. As soon as practicable after the end of each Borrower
-------------
fiscal year and in any event within 120 days after the end of each such fiscal
year, consolidated and consolidating balance sheets of the Borrower and any
Subsidiaries as at the end of such year, and the related statements of income
and cash flows or shareholders' equity of the Borrower and any Subsidiaries
setting forth in each case the corresponding figures for the preceding fiscal
year, such consolidated statements to be certified by a firm of independent
certified public accountants of nationally recognized standing selected by
Borrower, to be accompanied by a true copy of said auditors' final management
letter, if one was provided to the Borrower and is in final form, and to
contain a statement to the effect that such accountants have examined Sections
--------
5.1.10 through 5.1.13 and 5.2.17 and that no Default or Event of Default exists
- ------ ------ ------
on account of Borrower's failure to have been in compliance therewith on the
date of such statement;
57
Section 5.3.3. As soon as is practicable after the end of each fiscal
-------------
quarter of each Borrower fiscal year and in any event within 45 days thereafter,
consolidated balance sheets of the Borrower and any Subsidiaries as of the end
of such period and the related statements of income and cash flows and
shareholders' equity of the Borrower and any Subsidiaries, subject to changes
resulting from year-end adjustments, together, subject to Section 5.3.7, with a
-------------
comparison to the Budget for the applicable period, such balance sheets and
statements to be prepared and certified by an Authorized Representative in an
Officer's Certificate as having been prepared in accordance with GAAP except for
footnotes and year-end adjustments, and to be in form reasonably satisfactory to
the Agent;
Section 5.3.4. Simultaneously with the furnishing of each of the
-------------
year-end consolidated and consolidating financial statements of the Borrower and
any Subsidiaries to be delivered pursuant to Section 5.3.2 and each of the
-------------
consolidated quarterly statements of the Borrower and the Subsidiaries to be
delivered pursuant to Section 5.3.3 an Officer's Certificate of an Authorized
-------------
Representative which shall contain a statement in the form of Exhibit 3.1.1.10
----------------
to the effect that no Event of Default or Default has occurred, without having
been waived in writing, or if there shall have been an Event of Default not
previously waived in writing pursuant to the provisions hereof, or a Default,
such Officer's Certificate shall disclose the nature thereof and the actions the
Borrower has taken and prepare to take with respect thereto. Each such
Officer's Certificate shall also contain a calculation of and certify to the
accuracy of the amounts required to be calculated in the financial covenants of
the Borrower contained in this Agreement and described in Exhibit 3.1.1.10;
----------------
Section 5.3.5. Promptly after the commencement thereof, notice of all
-------------
material actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Borrower and/or any Subsidiary;
Section 5.3.6. The borrowing base certificates required pursuant to
-------------
Section 2.1 hereof;
- -----------
Section 5.3.7. On or before January 31 of each fiscal year of the
-------------
Borrower, an updated proposed budget, prepared on a quarterly basis, and updated
financial projections for the Borrower and any Subsidiaries on a consolidated
basis (together, the "Budget") for such fiscal year, setting forth in detail
reasonably satisfactory to the Agent the projected results of operations of the
Borrower and any Subsidiaries on a consolidated quarterly basis, detailed
Capital Expenditures plan and stating underlying assumptions and accompanied by
a written statement of an Authorized Representative certifying as to the
approval of such Budget by Borrower's board of directors.
Section 5.3.8. Such other information respecting the Business
-------------
Condition of the Borrower or any Subsidiaries as the Agent or any Lender may
from time to time reasonably request;
Section 5.3.9. Written notice of the fact and of the details of any
-------------
sale or transfer of any ownership interest in the Borrower that would cause a
Change of Control or any Subsidiary given promptly after the Borrower acquires
knowledge thereof; provided, however,
58
that this clause shall not be deemed to constitute or imply any consent to any
such sale or transfer;
Section 5.3.10. Prompt written notice of loss of the chief executive
--------------
officer, chief financial officer or any chief operating officer of the Borrower
or any Subsidiary or any Material Adverse Effect and an explanation thereof and
of the actions the Borrower and/or such Subsidiary propose to take with respect
thereto; and
Section 5.3.11. Written notice of the following events, as soon as
--------------
possible and in any event within 15 days after the Borrower knows or has reason
to know thereof: (i) the occurrence or expected occurrence of any Reportable
Event with respect to any Plan, or (ii) the institution of proceedings or the
taking or expected taking of any other action by PBGC or the Borrower or any
Commonly Controlled Entity to terminate, withdraw or partially withdraw from
any Plan and, with respect to any Multiemployer Plan, the Reorganization (as
defined in Section 4241 of ERISA) or Insolvency (as defined in Section 4245 of
ERISA) of such Multiemployer Plan and in addition to such notice, deliver to the
Agent whichever of the following may be applicable: (a) an Officer's
Certificate setting forth details as to such Reportable Event and the action
that the Borrower or Commonly Controlled Entity proposes to take with respect
thereto, together with a copy of any notice of such Reportable Event that may be
required to be filed with PBGC, or b) any notice delivered by PBGC evidencing
its intent to institute such proceedings or any notice to PBGC that such Plan is
to be terminated, as the case may be.
ARTICLE 6.
EVENTS OF DEFAULT
Section 6.1. Events of Default. The Borrower shall be in default under
----------- -----------------
each of the Financing Documents, upon the occurrence of any one or more of the
following events ("Events of Default"):
Section 6.1.1. If the Borrower shall fail to make due and punctual
-------------
payment of any principal, fees, interest and/or other amounts payable under this
Agreement as provided in any Note and/or in this Agreement when the same is due
and payable except that it shall not be an Event of Default if any interest,
fees and/or other amounts (excluding principal) is paid within 5 days after it
is due and payable, whether at the due date thereof or at a date fixed for
prepayment or if the Borrower shall fail to make any such payment of fees,
interest, principal and/or any other amount under this Agreement and/or under
any Note on the date when such payment becomes due and payable by acceleration;
Section 6.1.2. If the Borrower or any Subsidiary shall make an
-------------
assignment for the benefit of creditors, or shall fail generally to pay its
debts as they become due, or shall admit in writing its inability to pay its
debts as they become due or shall file a voluntary petition in bankruptcy, or
shall file any petition or answer seeking any reorganization, arrangement,
composition, adjustment, liquidation, dissolution or similar relief under the
present or any future federal bankruptcy laws or other applicable federal, state
or other statute, law or regulation, or
59
shall seek or consent to or acquiesce in the appointment of any trustee,
receiver or liquidator of it or of all or any substantial part of its
properties, or if partnership or corporate action shall be taken for the purpose
of effecting any of the foregoing; or
Section 6.1.3. To the extent not described in Section 6.1.2, (i) if
------------- -------------
the Borrower or any Subsidiary shall be the subject of a bankruptcy proceeding,
or (ii) if any proceeding against any of them seeking any reorganization,
arrangement, composition, adjustment, liquidation, dissolution, or similar
relief under the present or any future federal bankruptcy law or other
applicable federal, foreign, state or other statute, law or regulation shall be
commenced, or (iii) if any trustee, receiver or liquidator of any of them or of
all or any substantial part of any or all of their properties shall be appointed
without their consent or acquiescence; provided that in any of the cases
described above in this Section 6.1.3, such proceeding or appointment shall not
-------------
be an Event of Default if the Borrower or the Subsidiary in question shall cause
such proceeding or appointment to be discharged, vacated, dismissed or stayed
within sixty (60) days after commencement thereof; or
Section 6.1.4. If final judgment or judgments aggregating more than
-------------
$1,000,000 shall be rendered against the Borrower or any Subsidiary and shall
remain undischarged, unstayed or unpaid for an aggregate of thirty (30) days
(whether or not consecutive) after entry thereof; or
Section 6.1.5. If the Borrower or any Subsidiary shall default (after
-------------
giving effect to any applicable grace period) in the due and punctual payment of
the principal of or interest on any Indebtedness exceeding in the aggregate
$1,000,000 (other than the Loans), or if any default shall have occurred and be
continuing after any applicable grace period under any mortgage, note or other
agreement evidencing, securing or providing for the creation of such
Indebtedness, which results in the acceleration of such Indebtedness or which
permits, or with the giving of notice would permit, any holder or holders of any
such Indebtedness to accelerate the stated maturity thereof; or
Section 6.1.6. If there shall be a default in the performance of the
-------------
Borrower's obligations under Section 5.1.3 (insofar as such Section requires the
-------------
preservation of the corporate existence of the Borrower or any Subsidiary), any
of Sections 5.1.2, 5.1.10 through 5.1.13 or Section 5.2 of this Agreement or
-------------- ------ ------ -----------
under any covenant, representation or warranty contained in any of the Security
Documents for which no cure period is provided in such Security Document; or
Section 6.1.7. If there shall be any Default in the performance of
-------------
any covenant or condition contained in this Agreement or in any of the other
Financing Documents to be observed or performed pursuant to the terms hereof or
any Financing Document, as the case may be, or to the extent such Default would
have a Material Adverse Effect, by the Borrower under any of the Equity
Documents, other than a covenant or condition referred to in any other
subsection of this Section 6.1 and such Default shall continue unremedied or
-----------
unwaived, (i) in the case of any covenant or condition contained in Section 5.3,
-----------
for fifteen (15) Business Days, or (ii) in the case of any other covenant or
condition for which no other grace period is provided, for thirty (30) days, or
(iii) in the case of any other covenant or condition for which another grace
period is provided, for such grace period, or (iv) if any of the representations
and warranties made or deemed made by the Borrower to the Agent and/or any
Lender pursuant to any of the
60
Financing Documents proves to have been false or misleading in any material
respect when made and such falseness or misleading representation or warranty
would be reasonably likely to have a material adverse effect on the Agent or any
Lender or their rights and remedies or a Material Adverse Effect; or
Section 6.1.8. If there shall be any attachment of any deposits or
-------------
other property of the Borrower and/or any Subsidiary in the possession of any
Lender or any attachment of any other property of the Borrower and/or any
Subsidiary in an amount exceeding $1,000,000, which shall not be discharged,
vacated or stayed within thirty (30) days of the date of such attachment; or
Section 6.1.9. Any certification of the financial statements,
-------------
furnished to the Agent pursuant to Section 5.3.2, shall contain any
-------------
qualification; provided, however, that such qualifications will not be deemed an
Event of Default if in each case (i) such certification shall state that the
examination of the financial statements covered thereby was conducted in
accordance with generally accepted auditing standards, including but not limited
to all such tests of the accounting records as are considered necessary in the
circumstances by the independent certified public accountants preparing such
statements, (ii) such financial statements were prepared in accordance with GAAP
and (iii) such qualification does not involve the "going concern" status of the
entity being reported upon.
ARTICLE 7.
REMEDIES OF LENDERS
Upon the occurrence and during the continuance of any one or more of the
Events of Default, the Agent, at the request of the Majority Lenders, shall, by
written notice to the Borrower, declare the obligation of the Lenders to make or
maintain the Loans to be terminated, whereupon the same and the Commitment shall
forthwith terminate, and the Agent, at the request of the Majority Lenders,
shall, by notice to the Borrower, declare the entire unpaid principal amount of
each Note and all fees and interest accrued and unpaid thereon and/or under this
Agreement, and/or any of the other Financing Documents and any and all other
Indebtedness under this Agreement, each Note and/or any of the other Financing
Documents to the Agent and/or any of the Lenders and/or to any holder of all or
any portion of each Note to be forthwith due and payable, whereupon each Note,
and all such accrued fees and interest and other such Indebtedness shall become
and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that upon the occurrence of an Event of Default
under Sections 6.1.2 or 6.1.3, all of the unpaid principal amount of each Note,
-------------- -----
all fees and interest accrued and unpaid thereon and/or under this Agreement
and/or under any of the other Financing Documents and any and all other such
Indebtedness of the Borrower to any of the Lenders and/or to any such holder
shall thereupon be due and payable in full without any need for the Agent and/or
any Lender to make any such declaration or take any action and the Lenders'
obligations to make the Loans shall simultaneously terminate. The Agent shall,
in accordance with the votes of the Majority Lenders, exercise all remedies on
behalf of and for the account of each Lender and on behalf of its respective Pro
Rata Share of the Loans, its Note and Indebtedness of the Borrower owing to it
61
or any of the foregoing, including, without limitation, all remedies available
under or as a result of this Agreement, the Notes or any of the other Financing
Documents or any other document, instrument or agreement now or hereafter
securing any Note without any such exercise being deemed to modify in any way
the fact that each Lender shall be deemed a separate creditor of the Borrower to
the extent of its Note and Pro Rata Share of the Loans and any other amounts
payable to such Lender under this Agreement and/or any of the other Financing
Documents and the Agent shall be deemed a separate creditor of the Borrower to
the extent of any amounts owed by the Borrower to the Agent.
ARTICLE 8.
AGENT
Section 8.1. Appointment. The Agent is hereby appointed as administrative
----------- -----------
and collateral agent, hereunder and each Lender hereby authorizes the Agent to
act under the Financing Documents as its Agent hereunder and thereunder,
respectively. The Agent agrees to act as such upon the express conditions
contained in this Article 8. The provisions of this Article 8 are solely for
the benefit of the Agent, and, except as expressly provided in Section 8.6,
-----------
neither the Borrower nor any third party shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement and the other Financing Documents to which the Agent
is a party, the Agent shall act solely as Agent of the Lenders and does not
assume nor shall the Agent be deemed to have assumed any obligation towards or
relationship of agency or trust with or for the Borrower, any of the
Stockholders, any Affiliate or any Subsidiary.
Section 8.2. Powers; General Immunity.
----------- ------------------------
Section 8.2.1. Duties Specified. Each Lender irrevocably authorizes
------------- ----------------
the Agent to take such action on such Lender's behalf, including, without
limitation, to execute and deliver the Financing Documents to which the Agent is
a party and to exercise such powers hereunder and under the Financing Documents
and other instruments and agreements referred to herein as are specifically
delegated to the Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto. The Agent shall have only those
duties and responsibilities which are expressly specified in this Agreement or
in any of the Financing Documents and may perform such duties by or through its
agents or employees. The duties of the Agent shall be mechanical and
administrative in nature; and the Agent shall not have by reason of this
Agreement or any of the Financing Documents a fiduciary relationship in respect
of any Lender; and nothing in this Agreement or any of the Security Documents,
expressed or implied, is intended to or shall be so construed as to impose upon
the Agent any obligations in respect of this Agreement or any of the Financing
Documents or the other instruments and agreements referred to herein except as
expressly set forth herein or therein.
Section 8.2.2. No Responsibility For Certain Matters. The Agent
------------- -------------------------------------
shall not be responsible to any Lender for the execution, effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of any of
the Financing Documents or any other document, instrument or agreement now or
hereafter executed in connection herewith or therewith, or for
62
any representations, warranties, recitals or statements made herein or therein
or made in any written or oral statement or in any financial or other
statements, instruments, reports, certificates or any other documents in
connection herewith or therewith by or on behalf of the Borrower, any of the
Affiliates, and/or any Subsidiary to the Agent or any Lender, or be required to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained herein or therein or
as to the use of the proceeds of the Loans or of the existence or possible
existence of any Default or Event of Default.
Section 8.2.3. Exculpatory Provisions. Neither the Agent nor any of
------------- ----------------------
its officers, directors, employees or agents shall be liable to any Lender for
any action taken or omitted hereunder or under any of the Financing Documents,
or in connection herewith or therewith unless caused by its or their gross
negligence or willful misconduct. If the Agent shall request instructions from
Lenders with respect to any action (including the failure to take an action) in
connection with any of the Financing Documents, the Agent shall be entitled to
refrain from taking such action unless and until the Agent, shall have received
instructions from the Majority Lenders (or all of the Lenders if the action
requires their consent). Without prejudice to the generality of the foregoing,
(i) the Agent shall be entitled to rely, and shall be fully protected in
relying, upon any communication, instrument or document believed by it to be
genuine and correct and to have been signed or sent by the proper person or
persons, and shall be entitled to rely and shall be protected in relying on
opinions and judgments of attorneys (who may be attorneys for the Borrower, any
of the Affiliates, and/or any Subsidiary), accountants, experts and other
professional advisors selected by it; and (ii) no Lender shall have any right of
action whatsoever against the Agent as a result of the Agent acting or (where so
instructed) refraining from acting under any of the Financing Documents or the
other instruments and agreements referred to herein in accordance with the
instructions of the Majority Lenders (or all of the Lenders if the action
requires their consent). The Agent shall be entitled to refrain from exercising
any power, discretion or authority vested in it under any of the Financing
Documents or the other instruments and agreements referred to herein unless and
until it has obtained the instructions of the Majority Lenders (or all of the
Lenders if the action requires their consent).
Section 8.2.4. Agent Entitled to Act as Lender. The agency hereby
------------- -------------------------------
created shall in no way impair or affect any of the rights and powers of, or
impose any duties or obligations upon, Fleet in its individual capacity as a
Lender hereunder. With respect to its participation in the Loans and the
Commitment, Fleet shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not performing the duties
and functions delegated to it hereunder, and the term "Lender" or "Lenders" or
any similar term shall, unless the context clearly otherwise indicates, include
Fleet in its individual capacity. The Agent and its affiliates may accept
deposits from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with the Borrower, any of the Members, or
any Affiliate or Subsidiary as if it were not performing the duties specified
herein, and may accept fees and other consideration from the Borrower and/or any
of such other Persons for services in connection with this Agreement and
otherwise without having to account for the same to Lenders.
Section 8.3. Representations and Warranties; No Responsibility for
----------- -----------------------------------------------------
Appraisal of Creditworthiness. Each Lender represents and warrants that it has
- -----------------------------
made its own independent investigation of the financial condition and affairs of
the Borrower, the Members and any
63
Subsidiaries of any of them in connection with the making of the Loans hereunder
and has made and shall continue to make its own appraisal of the
creditworthiness of the Borrower, the Members and the Subsidiaries. The Agent
shall not have any duty or responsibility, either initially or on a continuing
basis, to make any such investigation or any such appraisal on behalf of Lenders
or to provide any Lender with any credit or other information with respect
thereto whether coming into its possession before the making of any Loan or any
time or times thereafter (except for information received by the Agent under
Section 5.3 hereof which the Agent will promptly forward to the Lenders), and
- -----------
the Agent shall further not have any responsibility with respect to the accuracy
of or the completeness of the information provided to any of the Lenders.
Section 8.4. Right to Indemnity. Each Lender severally agrees to
----------- ------------------
indemnify the Agent proportionately to its Pro Rata Share of the Loans, to the
extent the Agent shall not have been reimbursed by or on behalf of the Borrower,
for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including, without
limitation, counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in performing its duties hereunder or in any way relating to or arising
out of this Agreement and/or any of the other Financing Documents; provided that
--------
no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or willful misconduct.
If any indemnity furnished to the Agent for any purpose shall, in the opinion of
the Agent, be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished.
Section 8.5. Payee of Note Treated as Owner. The Agent may deem and treat
----------- ------------------------------
the payee of any Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment or transfer thereof shall have been
filed with the Agent. Any request, authority or consent of any person or entity
who, at the time of making such request or giving such authority or consent, is
the holder of any Note shall be conclusive and binding on any subsequent holder,
transferee or assignee of that Note or of any Note or Notes issued in exchange
for such Note.
Section 8.6. Resignation by Agent.
----------- --------------------
Section 8.6.1. The Agent may resign from the performance of all its
-------------
functions and duties under the Financing Documents at any time by giving 30
days' prior written notice to the Borrower and each of the Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent, of
appointment pursuant to Sections 8.6.2 and 8.6.3 below or as otherwise provided
-------------- -----
below.
Section 8.6.2. Upon any such notice of resignation, the Majority
-------------
Lenders shall appoint a successor Agent, who shall be a Lender and, so long as
no Default or Event of Default exists and is continuing, who shall be reasonably
satisfactory to the Borrower and in any event shall be an incorporated bank or
trust company with a combined surplus and undivided capital of at least Five
Hundred Million Dollars ($500,000,000).
Section 8.6.3. If a successor Agent shall not have been so appointed
-------------
within said 30 day period, the resigning Agent, with the consent of the
Borrower, which shall not be
64
unreasonably withheld or delayed, shall then appoint a successor Agent, who
shall be a Lender and who shall serve as the Agent, until such time, if any, as
the Majority Lenders, and so long as no Default or Event of Default exists and
is continuing, with the consent of the Borrower, which shall not be unreasonably
withheld or delayed, appoint a successor Agent as provided above.
Section 8.6.4. If no successor Agent has been appointed pursuant to
-------------
Sections 8.6.2 or 8.6.3 by the 40th day after the date such notice of
- -------------- -----
resignation was given by the resigning Agent, the resigning Agent's resignation
shall become effective and the Majority Lenders shall thereafter perform all the
duties of the resigning Agent under the Financing Documents including without
limitation directing the Borrower on how to submit Requests and Interest Rate
Elections and otherwise on administration of the Agent's duties under the
Financing Documents and the Borrower shall comply therewith so long as such
directions do not have a Material Adverse Effect on the Borrower or any
Subsidiary until such time, if any, as the Majority Lenders, and so long as no
Default or Event of Default exists and is continuing, with the consent of the
Borrower, which shall not be unreasonably withheld or delayed, appoint a
successor Agent, as provided above.
Section 8.7. Successor Agent. Upon the acceptance of any appointment as
----------- ---------------
the Agent hereunder by a successor Agent, that successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent and the retiring Agent, shall be discharged from its
duties and obligations as the Agent under the Financing Documents. After any
retiring Agent's resignation hereunder as the Agent the provisions of this
Article 8 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was the Agent under the Financing Documents.
Section 8.8. Co-Agents, etc. None of the Lenders identified on the facing
----------- -------------- ----------------------------------------------
page or elsewhere in this Agreement as a "Documentation Agent" or a "Co-agent"
- ------------------------------------------------------------------------------
shall have any right, power, obligation, liability, responsibility or duty under
- --------------------------------------------------------------------------------
this Agreement other than those applicable to all Lenders as such. Each Lender
- -------------------------------------------------------------------------------
acknowledges that it has not relied, and will not rely, on any of the Lenders so
- --------------------------------------------------------------------------------
identified in deciding to enter into this Agreement or in taking or not taking
- ------------------------------------------------------------------------------
action hereunder.
- -----------------
ARTICLE 9.
MISCELLANEOUS
Section 9.1. Consent to Jurisdiction and Service of Process.
----------- ----------------------------------------------
Section 9.1.1. Except to the extent prohibited by applicable law, the
-------------
Borrower irrevocably:
Section 9.1.1.1. agrees that any suit, action, or other legal
---------------
proceeding arising out of any of the Financing Documents or any of the Loans may
be brought in the courts of record of The Commonwealth of Massachusetts, the
State of California or any other state(s) in which any of the Borrower's or any
Subsidiary's assets are located or the courts of the United
65
States located in The Commonwealth of Massachusetts, the State of California or
any other state(s) in which any of the Borrower's or any Subsidiary's assets are
located;
Section 9.1.1.2. consents to the jurisdiction of each such court
---------------
in any such suit, action or proceeding; and
Section 9.1.1.3. waives any objection which it may have to the
---------------
laying of venue of such suit, action or proceeding in any of such courts.
For such time as any of the Indebtedness of the Borrower to any Lender
and/or the Agent shall be unpaid in whole or in part and/or the Commitment is in
effect, the Borrower irrevocably designates the registered agent or agent for
service of process of the Borrower as reflected in the records of the Secretary
of State of California as its registered agent, and, in the absence thereof, the
Secretary of State of California as its agent to accept and acknowledge on its
behalf service of any and all process in any such suit, action or proceeding
brought in any such court and agrees and consents that any such service of
process upon such agent and written notice of such service to the Borrower by
registered or certified mail shall be taken and held to be valid personal
service upon the Borrower regardless of where the Borrower shall then be doing
business and that any such service of process shall be of the same force and
validity as if service were made upon it according to the laws governing the
validity and requirements of such service in each such state and waives any
claim of lack of personal service or other error by reason of any such service.
Any notice, process, pleadings or other papers served upon the aforesaid
designated agent shall, within three (3) Business Days after such service, be
sent by the method provided therefor under Section 9.6 to the Borrower at its
-----------
address set forth in this Agreement. BORROWER, AGENT AND LENDERS MUTUALLY
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY
JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, ANY NOTE OR ANY OTHER FINANCING DOCUMENTS OR ANY
COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR LENDERS
TO ACCEPT THIS AGREEMENT AND THE NOTES] AND TO MAKE THE LOANS.
Section 9.2. Rights and Remedies Cumulative. No right or remedy conferred
----------- ------------------------------
upon or reserved to the Agent and/or the Lenders in any of the Financing
Documents is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given under any of the Financing
Documents or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy under any of the Financing
Documents, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 9.3. Delay or Omission not Waiver. No delay in exercising or
----------- ----------------------------
failure to exercise by the Agent and/or the Lenders of any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by any of the Financing
Documents or by law to the Agent and/or any of the Lenders may be exercised from
time to time, and as often as may be deemed expedient, by the Agent and/or any
of the Lenders.
66
Section 9.4. Waiver of Stay or Extension Laws. The Borrower covenants (to
----------- --------------------------------
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of any of the Financing
Documents; and the Borrower (to the extent that it may lawfully do so) hereby
expressly waives all benefit and advantage of any such law and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Agent and/or any of the Lenders, but will suffer and permit the execution of
every such power as though no such law had been enacted, except to the extent
the Agent or any Lender is guilty of willful misconduct or gross negligence.
Section 9.5. Amendments, etc. No amendment, modification, termination, or
----------- ---------------
waiver of any provision of any of the Financing Documents nor consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be in a written notice given to the Borrower by the Agent and
consented to in writing by the Majority Lenders (or by the Agent acting alone if
any specific provision of this Agreement provides that the Agent, acting alone,
may grant such amendment, modification, termination, waiver or departure) and
the Agent shall give any such notice if the Majority Lenders so consent or
direct the Agent to do so; provided, however, that any such amendment,
modification, termination, waiver or consent shall require a written notice
given to the Borrower by the Agent and consented to in writing by all of the
Lenders if the effect thereof is to (i) change any of the provisions affecting
the interest rate or fees on the Loans so as to reduce said interest rate or
fees, (ii) extend or increase the Commitment, including without limitation to
waive, defer or reduce any mandatory prepayment under Section 2.6, (iii)
-----------
discharge or release the Borrower from its obligation to repay all principal due
under the Loans or release any collateral or guaranty for the Loans, (iv) change
any Lender's Pro Rata Share of the Commitment or the Loans, (v) modify this
Section 9.5, (vi) change the definition of Majority Lenders, (vii) extend any
- -----------
scheduled due date for payment of principal, interest or fees, (viii) permit the
Borrower to assign any of its rights under or interest in this Agreement or (ix)
change the definition of the Borrowing Base, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. Any amendment or modification of this Agreement must be signed
by the Borrower, the Agent and at least all of the Lenders consenting thereto
who shall then hold the Pro Rata Shares of the Loans required for such amendment
or modification under this Section 9.5 and the Agent shall sign any such
-----------
amendment if such Lenders so consent or direct the Agent to do so provided that
any Lender dissenting therefrom shall be given an opportunity to sign any such
amendment or modification. Any amendment of any of the Security Documents must
be signed by each of the parties thereto. No notice to or demand on the Borrower
and no consent, waiver or departure from the terms of this Agreement granted by
the Agent and/or the Lenders in any case shall entitle the Borrower to any other
or further notice or demand in similar or other circumstances.
Section 9.6. Addresses for Notices, etc. All notices, requests, demands
----------- --------------------------
and other communications provided for hereunder (other than those which, under
the terms of this Agreement, may be given by telephone, which shall be effective
when received verbally) shall be in writing (including telecopied communication)
and mailed (provided that in the case of items referred to in the next-to-last
sentence of Section 9.1 and the items set forth below as requiring a copy to
-----------
legal counsel for the Borrower, the Agent or a Lender, such items shall be
mailed by
67
overnight courier for delivery the next Business Day), telecopied or delivered
to the applicable party at the addresses indicated below:
If to the Borrower:
Somera Communications, L.L.C.
5383 Hollister Avenue, Suite 100
Santa Barbara, CA 93111
Attention: Daniel A. Firestone, Chief Executive Officer
Telecopy: (805) 681-3325
With a copy to (if given pursuant to any of Sections 5.3.1, 5.3.5, 5.3.9,
-------------- ----- -----
5.3.10 and 5.3.11):
- ------ ------
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Kathleen B. Bloch, Esq.
Telecopy: (650) 493-6811
If to Fleet as the Agent and/or a Lender:
Fleet National Bank
Mailstop: MAOFDO7A
One Federal Street
Boston, MA 02110
Attention: Matthew M. Glauninger, Senior Vice President
Telecopy: (617) 346-0151
With a copy to (if given pursuant to any of Sections 5.3.1, 5.3.5, 5.3.9,
-------------- ----- -----
5.3.10 and 5.3.11)
- ------ ------
Hinckley, Allen & Snyder LLP
28 State Street
Boston, MA 02109
Attention: Malcolm Farmer, III, Esq.
Telecopy: (617) 345-9020
If to any other Lender, to the address set forth on Exhibit 1.9.
-----------
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party complying as to the delivery with the
terms of this Section. All such notices, requests, demands and other
communications shall be effective when received. Requests, certificates, other
items provided pursuant to Section 5.3 and other routine mailings or notices
-----------
need not be accompanied by a copy to legal counsel for the Lenders or the
Borrower.
Section 9.7. Costs, Expenses and Taxes. The Borrower agrees to pay in
----------- -------------------------
accordance with Section 3.1.1.9 and thereafter within 30 days after receipt of
---------------
an invoice the reasonable fees and out-of-pocket expenses of Messrs. Hinckley,
Allen & Snyder, counsel for the Agent and of any
68
local counsel retained by the Agent in connection with the preparation,
execution, delivery, syndication and administration of the Financing Documents
and the Loans. The Borrower agrees to pay on demand all reasonable costs and
expenses (including without limitation reasonable attorneys' fees) incurred by
the Agent and/or any Lender, upon or after the occurrence and during the
continuance of any Default or Event of Default, if any, in connection with the
enforcement of any of the Financing Documents and any amendments, waivers or
consents with respect thereto. In addition, the Borrower shall pay in accordance
with Section 3.1.1.9 and thereafter within 30 days after receipt of an invoice
---------------
any and all stamp and other taxes and fees payable or determined to be payable
in connection with the execution and delivery of the Financing Documents, and
agrees to save the Lenders and the Agent harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes or fees, except those resulting from the Lenders' or Agent's
gross negligence or willful misconduct.
Section 9.8. Participations. Subject to compliance with the proviso in
----------- --------------
the first sentence of Section 9.11, any Lender may sell participations in all or
------------
part of the Loans made by it and/or its Pro Rata Share of the Commitment or any
other interest herein to a financial institution having at least $500,000,000 of
assets, in which event the participant shall not have any rights under any of
the Financing Documents (the participant's rights against such Lender in respect
of that participation to be those set forth in the Agreement executed by such
Lender in favor of the participant relating thereto) and all amounts payable by
the Borrower hereunder or thereunder shall be determined as if such Lender had
not sold such participation. Such Lender may furnish any information concerning
the Borrower and any Subsidiary in the possession of such Lender from time to
time to participants (including prospective participants); provided that such
Lender and any participant comply with the proviso in Section 9.11.7 as if any
--------------
such participant was a Substituted Lender.
Section 9.9. Binding Effect; Assignment. This Agreement shall be binding
----------- --------------------------
upon and inure to the benefit of the Borrower, the Agent and the Lenders and
their respective successors and assigns, except that the Borrower shall not have
the right to assign its rights hereunder or any interest herein without the
prior written consent of the Agent and the Lenders. This Agreement and all
covenants, representations and warranties made herein and/or in any of the other
Financing Documents shall survive the making of the Loans, the execution and
delivery of the Financing Documents and shall continue in effect so long as any
amounts payable under or in connection with any of the Financing Documents or
any other Indebtedness of the Borrower to the Agent and/or any Lender remains
unpaid or the Commitment remains outstanding; provided, however, that Sections
--------
2.2.3 and 9.7 shall, except to the extent agreed to in a pay-off letter by the
- ----- ---
Agent and the Lenders in their complete discretion, survive and remain in full
force and effect for 90 days following repayment in full of all amounts payable
under or in connection with all of the Financing Documents and any other such
Indebtedness.
Section 9.10. Actual Knowledge. For purposes of this Agreement, neither
------------ ----------------
the Agent nor any Lender shall be deemed to have actual knowledge of any fact or
state of facts unless the senior loan officer or any other officer responsible
for the Borrower's account established pursuant to this Agreement at the Agent
or such Lender, shall, in fact, have actual knowledge of such fact or state of
facts or unless written notice of such fact shall have been received by the
Agent or such Lender in accordance with Section 9.6.
-----------
69
Section 9.11. Substitutions and Assignments. Upon the request of any
------------ -----------------------------
Lender, the Agent and such Lender may assign or pledge all or any portion of
such Lender's Pro Rata Share of the Commitment and the Loans to an affiliate or
Related Fund of a Lender (so long as such affiliate or Related Fund is at least
adequately capitalized under any applicable federal regulations) or to another
Lender and may, subject to the terms and conditions hereinafter set forth and
with the prior written consent of the Agent and so long as no Default or Event
of Default is in existence, the Borrower which shall not be unreasonably
withheld or delayed, take the actions set forth below to substitute one or more
other funds or financial institutions having at least $250,000,000 in assets and
being at least adequately capitalized under applicable federal regulations (all
of the foregoing assignees other than a Federal Reserve Bank being hereinafter
called a "Substituted Lender") as a Lender or Lenders hereunder having an amount
------------------
of the Loans as specified in the relevant Assignment and Acceptance executed in
connection therewith; provided that no Lender, together with any affiliate or
Related Fund of such Lender, shall have or shall assign a Pro Rata Share of the
Commitment and the Loans in the aggregate of less than []% and Fleet and/or its
affiliates shall retain for their own account at least []% of the Term Loan and
[]% of the Revolving Credit Loan Commitment.
Section 9.11.1. In connection with any such substitution the
--------------
Substituted Lender and the Agent shall enter into a Substitution Agreement in
the form of Exhibit 9.11.1 hereto (a "Substitution Agreement") pursuant to which
--------------
such Substituted Lender shall be substituted for the Lender requesting the
substitution in question (any such Lender being hereinafter referred to as a
"Selling Lender") to the extent of the reduction in the Selling Lender's portion
of the Loans specified therein. In addition, such Substituted Lender shall
assume such of the obligations of each Selling Lender under the Financing
Documents as may be specified in such Substitution Agreement and this Agreement
shall be amended by execution and delivery of each Substitution Agreement to
include such Substituted Lender as a Lender for all purposes under the Financing
Documents and to substitute for the then existing Exhibit 1.9 to this Agreement
-----------
a new Exhibit 1.9 in the form of Schedule A to such Substitution Agreement
-----------
setting forth the portion of the Loans belonging to each Lender following
execution thereof. The Agent, [and] each Selling Lender and, if Borrower has
the right to consent to the substitution, the Borrower shall countersign and
accept delivery of each Substitution Agreement.
Section 9.11.2. Without prejudice to any other provision of this
--------------
Agreement, each Substituted Lender shall, by its execution of a Substitution
Agreement, agree that neither the Agent nor any Lender is any way responsible
for or makes any representation or warranty as to: (a) the accuracy and/or
completeness of any information supplied to such Substituted Lender in
connection therewith, (b) the financial condition, creditworthiness, affairs,
status or nature of the Borrower, any of the Affiliates and/or any of the
Subsidiaries or the observance by the Borrower, or any other party of any of its
obligations under this Agreement or any of the other Financing Documents or (c)
the legality, validity, effectiveness, adequacy or enforceability of any of the
Financing Documents.
Section 9.11.3. The Agent shall be entitled to rely on any
--------------
Substitution Agreement delivered to it pursuant to this Section 9.11 which is
------------
complete and regular on its face as to its contents and appears to be signed on
behalf of the Substituted Lender which is a party thereto, and the Agent shall
have no liability or responsibility to any party as a consequence of relying
thereon and acting in accordance with and countersigning any such Substitution
Agreement. The
70
effective date of each Substitution Agreement shall be the date specified as
such therein and each Lender prior to such effective date shall, for all
purposes hereunder, be deemed to have and possess all of their respective rights
and obligations hereunder up to 12:00 o'clock Noon on the effective date
thereof.
Section 9.11.4. Upon delivery to the Agent of any Substitution
--------------
Agreement pursuant to and in accordance with this Section 9.11 and acceptance
------------
thereof by the Agent (which delivery shall be evidenced and accepted exclusively
and conclusively by the Agent's countersignature thereon pursuant to the terms
hereof without which such Substitution Agreement shall be ineffective): (i)
except as provided hereunder and in Section 9.11.5, the respective rights of
--------------
each Selling Lender and the Borrower against each other under the Financing
Documents with respect to the portion of the Loans being assigned or delegated
shall be terminated and each Selling Lender and the Borrower shall each be
released from all further obligations to the other hereunder with respect
thereto (all such rights and obligations to be so terminated or released being
referred to in this Section 9.11 as "Discharged Rights and Obligations"); and
------------
(ii) the Borrower and the Substituted Lender shall each acquire rights against
each other and assume obligations towards each other which differ from the
Discharged Rights and Obligations only in so far as the Borrower and the
Substituted Lender have assumed and/or acquired the same in place of the Selling
Lender in question; and (iii) the Agent, the Substituted Lender and the other
Lenders shall acquire the same rights and assume the same obligations between
themselves as they would have acquired and assumed had such Substituted Lender
been an original party to this Agreement as a Lender possessing the Discharged
Rights and Obligations acquired and/or assumed by it in consequence of the
delivery of such Substitution Agreement to the Agent.
Section 9.11.5. Discharged Rights and Obligations shall not include,
--------------
and there shall be no termination or release pursuant to this Section 9.11 of
------------
(i) any rights or obligations arising pursuant to any of the Financing Documents
in respect of the period or in respect of payments hereunder made during the
period prior to the effective date of the relevant Substitution Agreement or,
(ii) any rights or obligations relating to the payment of any amount which has
fallen due and not been paid hereunder prior to such effective date or rights or
obligations for the payment of interest, damages or other amounts becoming due
hereunder as a result of such nonpayment.
Section 9.11.6. With respect to any substitution of a Substituted
--------------
Lender taking place after the Closing Date, the Borrower shall issue to such
Substituted Lender and to such Selling Lender, new Notes reflecting the
inclusion of such Substituted Lender as a Lender and the reduction in the
respective Loans of such Selling Lender, such new Notes to be issued against
receipt by the Borrower of the existing Notes of such Lender. The Selling
Lender or the Substituted Lender shall pay to the Agent for its own account an
assignment fee in the amount of $3,000 for each assignment hereunder, which
shall be payable at or before the effective date of the assignment.
Section 9.11.7. Each Lender may furnish to any financial institution
--------------
having at least $250,000,000 in assets which such Lender proposes to make a
Substituted Lender or to a Substituted Lender any information concerning such
Lender, the Borrower, Stockholders and any Subsidiary in the possession of that
Lender from time to time; provided that any Lender
71
providing any confidential information about the Borrower, any of the
Stockholders and/or any Subsidiary to any such financial institution shall first
obtain such financial institution's agreement to keep confidential any such
confidential information in accordance with Section 9.14.
------------
Section 9.11.8. In addition to the foregoing, the Agent and each
--------------
Lender may at any time pledge all or any portion of its rights to or under the
Financing Documents, including any portion of the Notes, to any of the twelve
Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12
U.S.C. Section 341. No such pledge or the enforcement thereof shall release the
Agent or such Lender from its obligations hereunder or under any of the other
Financing Documents.
Section 9.12. Payments Pro Rata. The Agent agrees that promptly after its
------------ -----------------
receipt of each payment from or on behalf of the Borrower in respect of any
obligations of the Borrower hereunder it shall distribute such payment to the
Lenders pro rata based upon their respective Pro Rata Shares, if any, of the
obligations with respect to which such payment was received. Each of the Lenders
agrees that, if it should receive any amount hereunder (whether by voluntary
payment, by realization upon security, by the exercise of the right of setoff
under Section 2.5.2 or otherwise or banker's lien, by counterclaim or
-------------
cross action, by the enforcement of any right under the Financing Documents, or
otherwise), which is applicable to the payment of the Obligations of a sum which
with respect to the related sum or sums received by other Lenders is in a
greater proportion than the total amount of such Obligation then owed and due to
such Lender bears to the total amount of such Obligation then owed and due to
all of the Lenders immediately prior to such receipt, except for any amounts
received pursuant to Section 2.2.3, then such Lender receiving such excess
-------------
payment shall purchase for cash without recourse or warranty from the other
Lenders an interest in the Obligations of the Borrower to such Lenders in such
amount as shall result in a proportional participation by all the Lenders in
such amount; provided further, however, that if all or any portion of such
excess amount is thereafter recovered from such Lender, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
Section 9.13. Indemnification. The Borrower irrevocably agrees to and does
------------ ---------------
hereby indemnify and hold harmless Agent and each of the Lenders, their agents
or employees and each Person, if any, who controls any of the Agent and the
Lenders within the meaning of Section 15 of the Securities Act of 1933, as
amended, and each and all and any of them (the "Indemnified Parties"), against
any and all losses, claims, actions, causes of action, damages or liabilities
(including any amount paid in settlement of any action, commenced or threatened
and any amount described in Section 8.4) (collectively, the "Damages"), joint or
-----------
several, to which they, or any of them, may become subject under statutory law
or at common law, and to reimburse the Indemnified Parties for any reasonable
legal or other reasonable out-of-pocket expenses incurred by it or them in
connection with investigating, preparing for or defending against any of the
Indemnified Parties, insofar as such losses, claims, damages, liabilities or
actions arise out of or are related to any act or omission of the Borrower
and/or any Subsidiary with respect to any of (i) the Related Transactions, (ii)
any of the Financing Documents, (iii) any of Loans, (iv) any use made or
proposed to be made with the proceeds of the Loans, (v) any acquisition or
proposed acquisition or any other similar business combination or proposed
business combination by the Borrower and/or any of its Subsidiaries and/or its
Affiliates (whether by acquisition or exchange of capital stock or other
securities or by acquisition of all or substantially all of the assets of any
72
Person), (vi) any offering of securities by the Borrower and/or any Subsidiary
after the date hereof and/or in connection with the Securities and Exchange Act
of 1933 and/or (vii) any failure to comply with any applicable federal, state or
foreign governmental law, rule, regulation, order or decree, including without
limitation, any Damages which arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact with respect to matters
relative to any of the foregoing contained in any document distributed in
connection therewith, or the omission or alleged omission to state in any of the
foregoing a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, but excluding
any Damages to the extent arising from or due to, as determined in a final
nonappealable judgment by a court of competent jurisdiction, the gross
negligence or willful misconduct of any of the Indemnified Parties; provided,
however, that notwithstanding the foregoing, no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort of otherwise) to the
Borrower, any Affiliates or any Subsidiaries or to their respective security
holders or creditors except for direct (as opposed to consequential) damages
determined in a final nonappealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence or
willful misconduct. In the case of an investigation, litigation or proceeding to
which the indemnity described in this paragraph applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is brought
by the Borrower, any Affiliates or any Subsidiary or to their respective
security holders or creditors or an Indemnified Party or an Indemnified Party is
otherwise a party thereto and whether or not the Related Transaction and the
transactions contemplated by the Financing Documents are consummated.
Promptly upon receipt of notice of the commencement of any action, or
information as to any threatened action against any of the Indemnified Parties
in respect of which indemnity or reimbursement may be sought from the Borrower
on account of the agreement contained in this Section 9.13, notice shall be
------------
given to the Borrower in writing of the commencement or threatening thereof,
together with a copy of all papers served, but the omission so to notify the
Borrower of any such action shall not release the Borrower from any liability
which it may have to such Indemnified Parties unless, and only to the extent
that, such omission materially prejudiced Borrower's ability to defend against
such action.
In case any such action shall be brought against any of the Indemnified
Parties, the Borrower shall be entitled to participate in (and, to the extent
that it shall wish, to select counsel and to direct) the defense thereof at its
own expense. Any of the Indemnified Parties shall have the right to employ its
or their own counsel in any case, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless the employment of such
counsel shall have been authorized in writing by the Borrower in connection with
the defense of such action or the Borrower shall not have employed counsel to
have charge of the defense of such action or such Indemnified Party shall have
received an opinion from an independent counsel that there may be defenses
available to it which are different from or additional to those available to the
Borrower (in which case the Borrower shall not have the right to direct the
defense of such action on behalf of such Indemnified Party), in any of which
events the same shall be borne by the Borrower. If any Indemnified Party settles
any claim or action with respect to which the Borrower has agreed to indemnify
such Indemnified Party pursuant to the terms hereof, the Borrower shall have no
liability pursuant to this Section 9.13 to such Indemnified Party with
------------
73
respect to such claim or action unless the Borrower shall have consented in
writing to the terms of such settlement.
The provisions of Section 9.13 shall be effective only to the fullest
------------
extent permitted by law. The provisions of this Section 9.13 shall continue in
------------
effect and shall survive (among other events), until the applicable statute of
limitations has expired, any termination of this Agreement, foreclosure, a deed
in lieu transaction, payment and satisfaction of the Obligations of Borrower,
and release of any collateral for the Loans.
Section 9.14. Confidential Information. The Lenders and the Agent shall,
------------ ------------------------
with respect to any and all financial statements or other reports or documents
delivered by or on behalf of the Borrower or any related parties to the Lenders
or the Agent pursuant to Section 5.3 and any other information provided to any
Lender or the Agent (other than in a public forum, including an analyst's
meeting and other than any such information which is publicly available other
than solely as a result of disclosure by the Agent or any of the Lenders) and to
the extent that such information therein contained or provided has not
theretofore otherwise been disclosed in such a manner as to render such
information no longer confidential (other than as a result of disclosure by the
Agent or a Lender in violation of its obligation hereunder), employ reasonable
procedures designed to maintain the confidential nature of the information
therein contained; provided, however, that any Lender or the Agent may disclose
or disseminate such information to: (a) such Lender's or the Agent's respective
employees, agents, attorneys and accountants who would ordinarily have access to
such information in the normal course of the performance of their duties in
connection with the administration of the Loans; (b) such third parties as such
Lender or the Agent may deem reasonably necessary (and provided that such Lender
or the Agent shall use reasonable efforts to give the Borrower prior notice of
such disclosure) in connection with or in response to (i) compliance with any
law, ordinance or governmental order, regulation, rule, subpoena, or
investigation, or (ii) any order, decree, judgment, subpoena, notice of
discovery or similar ruling or pleading issued, filed, served or purported on
its face to be issued, filed or served (x) by or under authority of any court,
tribunal, arbitration board or any governmental agency, commission, authority
board or similar entity or (y) in connection with any proceeding, case or matter
pending (or on its face purported to be pending) before any court, tribunal,
arbitration board or any governmental agency, commission, authority, board or
similar entity; provided that without notice to the Borrower, the Agent and any
Lender may disclose such information to bank examiners of governmental agencies
having regulatory authority over the Agent or such Lender in question in
connection with such examiner's examinations of Agent or such Lender's books and
records, or (iii) collection by judicial proceeding of any of the Indebtedness
now or hereafter owing by the Borrower and/or any Subsidiary to the Agent and/or
any of the Lenders or enforcement of any rights or remedies now or hereafter
possessed by Agent and/or any of the Lenders pursuant to this Agreement, any of
the Notes or any of the other Financing Documents; (c) subject to Section 9.11,
------------
any prospective purchaser (including an affiliate of any Lender), in connection
with the resale or proposed resale by it of any portion of its Notes or other
participation in its Pro Rata Share of the Loans; provided that the prospective
participant has signed an agreement binding such participant under this Section
-------
9.14 as if it were a Lender; and (d) any entity utilizing such information to
- ----
rate or classify any Lender's or the Agent's debt or equity securities for sale
to the public; provided that such rating agency has agreed to keep such
information confidential pursuant to an agreement reasonably satisfactory to the
Borrower.
74
Section 9.15. Governing Law. This Agreement and each Note shall be governed
------------ -------------
by, and construed in accordance with, the laws of The Commonwealth of
Massachusetts without regard to such state's conflict of laws rules.
Section 9.16. Severability of Provisions. Any provision of this Agreement
------------ --------------------------
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 9.17. Headings. Article and Section headings in this Agreement
------------ --------
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
Section 9.18. Counterparts. This Agreement may be executed and delivered in
------------ ------------
any number of counterparts each of which shall be deemed an original, and this
Agreement shall be effective when at least one counterpart hereof has been
executed by each of the parties hereto.
75
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument by their respective officers thereunto duly
authorized, as of August 31, 1999.
SOMERA COMMUNICATIONS, L.L.C.
/s/ Dan Firestone
By:______________________________
Name: Daniel A. Firestone
Title: Chief Executive Officer
FLEET NATIONAL BANK, as Agent for the
Lenders and as a Lender
/s/ Mathew M. Glauninger
By:______________________________
Name: Mathew M. Glauninger
Title: Senior Vice President
The balance of this page is intentionally left blank.
76
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument by their respective officers thereunto duly
authorized, as of August 31, 1999.
BANK AUSTRIA CREDITANSTALT CORPORATE
FINANCE, INC.
/s/
By:______________________________
Name:
Title:
/s/
By:______________________________
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
/s/
By:______________________________
Name:
Title:
SANWA BANK CALIFORNIA
/s/
By:______________________________
Name:
Title:
77
EXHIBIT 1.4 - FORM OF INTEREST RATE ELECTION
--------------------------------------------
Fleet National Bank Date:
One Federal Street
Boston, MA 02110
Attn: Karen Melanson
Telecopy: (617) 346-0151
Re: Interest Rate Election
Gentlemen:
Reference is made to that certain Loan Agreement, dated as of August ___,
1999 by and among the undersigned, you, and the Lenders, (the "Loan Agreement").
Capitalized terms used herein shall have the same meaning as in the Loan
Agreement.
The undersigned hereby elects, pursuant to the Loan Agreement, that the
[Libor Rate or Effective Prime] shall be the interest rate applicable to that
certain [outstanding] Loan [requested pursuant to the Request attached hereto]
in the principal amount of and no/100 Dollars ($ ). [The
Interest Adjustment Date for said Loan is .]
The undersigned hereby elects an Interest Period for such Loan of [_]
months. [Complete only if electing Adjusted Libor Rate].
The undersigned hereby certifies to the Lenders that as of the date hereof:
A. No Event of Default and no Default has occurred and is continuing; and
B. The representations and warranties of the Borrower contained in
Article 4 of the Loan Agreement and/or in any of the other Financing Documents
are true and correct in all material respects except as altered by actions
permitted under the Loan Agreement.
SOMERA COMMUNICATIONS, L.L.C.
By:________________________________
Name: [_]
Title: [_]
cc: Fleet National Bank
Mailstop MA OF D07A
One Federal Street
Boston, MA 02110
Attn: Matthew M. Glauninger, Senior Vice President
Telecopy: (617) 346-0151
1
EXHIBIT 1.5 - FORM OF REVOLVING CREDIT NOTE
-------------------------------------------
REVOLVING CREDIT NOTE
---------------------
[Insert Maximum Amount of _________, 19__
Lender's Pro Rata Share of
Revolving Credit Loan
Commitment]
FOR VALUE RECEIVED, SOMERA COMMUNICATIONS, L.L.C., a __________________
limited liability company with a business address of 5383 Hollister Avenue,
Suite 100, Santa Barbara, California 93111 (hereinafter referred to as the
"Borrower"), promises to pay to the order of [insert name of Lender], [a
national banking association organized and existing under the laws of the United
States of America] [a _________ banking corporation _____________] (the
"Lender"), at the office of Fleet National Bank or any successor agent under the
Loan Agreement (defined below) (the "Agent") in accordance with the Loan
Agreement (defined below), the lesser of (i) the principal sum of [insert
Lender's Pro Rata Share of the Revolving Credit Loan Commitment]
($__________.00), or (ii) the aggregate unpaid principal amount of all advances
of funds under the Revolving Credit Loan made by the Lender to the Borrower or
by the Lender through the Agent to the Borrower pursuant to that certain Loan
Agreement dated as of the date hereof by and among the Borrower, the Agent, the
other Lenders party thereto and the Lender, as the same may be amended (the
"Loan Agreement").
The Borrower shall pay in full all unpaid principal, interest, fees and
other amounts due under this Note on the Revolving Credit Repayment Date.
The Borrower promises to pay to the order of the Lender interest before and
after maturity on the principal amount of this Note outstanding from time to
time from the date hereof until payment in full of all principal, interest, fees
and other sums due under this Note in accordance with the Loan Agreement.
Upon the occurrence and during the continuance of any Event of Default each
Prime Rate Loan evidenced by this Note, shall bear interest, payable on demand,
at a floating interest rate per annum equal to four percent (4.0%) above
Effective Prime and each Libor Loan evidenced by this Note shall bear interest
at the Libor Rate plus four percent (4.0%). In addition, in the event that the
Borrower fails to pay any amount of principal or interest hereof within ten (10)
days after such payment is due, the Borrower shall pay to the Lender upon demand
by the Agent or the Lender, a late charge in an amount equal to five percent
(5%) of such amount of principal or interest.
Principal, interest, fees and other sums are payable in immediately
available Dollars to the Agent at its address set forth in the Loan Agreement or
as otherwise directed in writing from the Agent to the Borrower.
1
This Note is one of the Revolving Credit Notes referred to in, and is
entitled to the benefits of, the Loan Agreement. The applicable terms and
provisions of the Loan Agreement are incorporated herein by reference as if
fully set forth herein. In the event of any conflict between any provision of
this Note and any provision(s) of the Loan Agreement, such provision(s) of the
Loan Agreement shall control. Each capitalized term used in this Note and not
expressly defined in this Note shall have the meaning ascribed to such term in
the Loan Agreement. The Loan Agreement, among other things, contains provisions
for acceleration of the maturity of this Note upon the happening of certain
stated events and also for prepayments on account of principal of this Note
prior to the maturity of this Note upon the terms and conditions specified in
the Loan Agreement.
This Note is secured by the Security Documents.
If this Note shall not be paid when due and shall be placed by the holder
hereof in the hands of an attorney for collection, through legal proceedings or
otherwise, the Borrower will pay reasonable attorneys' fees to the holder hereof
together with reasonable costs and expenses of collection.
All provisions of this Note and any other agreements between the Borrower
and the Lender are expressly subject to the condition that in no event, whether
by reason of acceleration of maturity of the Indebtedness evidenced by this Note
or otherwise, shall the amount paid or agreed to be paid to the Lender which is
deemed interest under applicable law exceed the maximum permitted rate of
interest under applicable law (the "Maximum Permitted Rate"), which shall mean
the law in effect on the date of this Note, except that if there is a change in
such law which results in a higher Maximum Permitted Rate, then this Note shall
be governed by such amended law from and after its effective date. In the event
that fulfillment of any provision of this Note, or the Loan Agreement or any
document, instrument or agreement providing security for this Note results in
the rate of interest charged hereunder being in excess of the Maximum Permitted
Rate, the obligation to be fulfilled shall automatically be reduced to eliminate
such excess. If, notwithstanding the foregoing, the Lender receives an amount
which under applicable law would cause the interest rate hereunder to exceed the
Maximum Permitted Rate, the portion thereof which would be excessive shall
automatically be deemed a prepayment of and be applied to the unpaid principal
balance of this Note to the extent of then outstanding Prime Rate Loans and not
a payment of interest and to the extent said excessive portion exceeds the
outstanding principal amount of Prime Rate Loans, said excessive portion shall
be repaid to the Borrower.
The Borrower expressly waives presentment, notice of acceleration and
intent to accelerate, demand for payment and protest and notice of protest and
nonpayment.
This Note shall for all purposes be governed by and construed in accordance
with the laws of The Commonwealth of Massachusetts without regard to such
state's conflict of laws rules.
Executed as a sealed instrument as of the date first above written.
2
In the presence of: SOMERA COMMUNICATIONS, L.L.C.
_________________________ By:_____________________________
Name: [_]
Title: [_]
3
EXHIBIT 1.6 - FORM OF TERM NOTE
-------------------------------
TERM NOTE
---------
[Insert Amount of __________, 19__
Lender's Pro Rata Share of Term
Loan Commitment]
FOR VALUE RECEIVED, SOMERA COMMUNICATIONS, L.L.C., a _______________
limited liability company, with a principal business address at 5383 Hollister
Avenue, Suite 100, Santa Barbara, California 93111 (hereinafter referred to as
the "Borrower") promises to pay the principal sum of [insert Lender's Pro Rata
Share of the Term Loan] ($ .00) to the order of [insert name of Lender], [a
national banking association organized and existing under the laws of the United
States of America] [a [] corporation] (the "Lender"), at the office of Fleet
National Bank or any successor Agent under the Loan Agreement (defined below),
as Agent for the Lender (the "Agent"), in accordance with that certain Loan
Agreement dated as of the date hereof by and among the Borrower, the Agent, the
other Lenders party thereto and the Lender, as amended from time to time (the
"Loan Agreement").
The Borrower promises to pay to the order of the Lender interest before and
after maturity on the principal amount of this Note outstanding from time to
time from the date hereof until payment in full of all principal, interest, fees
and other sums due under this Note in accordance with the terms of the Loan
Agreement.
The Borrower shall make payments of principal, interest, fees and other
amounts in accordance with the Loan Agreement and shall pay in full all unpaid
principal, interest, fees and other amounts due under this Note on the Term Loan
Repayment Date.
This Note is secured by the Security Documents.
Upon the occurrence and during the continuance of any Event of Default each
Prime Rate Loan evidenced by this Note shall bear interest, payable on demand,
at a floating interest rate per annum equal to four percent (4.0%) above
Effective Prime and each Libor Loan evidenced by this Note shall bear interest
at the Libor Rate plus four percent (4.0%). In addition, in the event that the
Borrower fails to pay any amount of principal or interest hereof within ten (10)
days after such payment is due, the Borrower shall pay to the Lender upon demand
by the Agent or the Lender, a late charge in an amount equal to five percent
(5%) of such amount of principal or interest.
Principal, interest, fees and other sums are payable in immediately
available Dollars to the Agent at its address set forth in the Loan Agreement or
as otherwise directed in writing from the Agent to the Borrower.
1
This Note is one of the Term Notes referred to in, and is entitled to the
benefits of, the Loan Agreement. The applicable terms and provisions of the Loan
Agreement are incorporated herein by reference as if fully set forth herein. In
the event of any conflict between any provisions of this Note and any
provision(s) of the Loan Agreement, such provision(s) of the Loan Agreement
shall control. Each capitalized term used in this Note and not expressly defined
in this Note shall have the meaning ascribed to such term in the Loan Agreement.
The Loan Agreement, among other things, contains provisions for acceleration of
the maturity of this Note upon the happening of certain stated events and also
for prepayments on account of principal of this Note prior to the maturity of
this Note upon the terms and conditions specified in the Loan Agreement.
If this Note shall not be paid when due and shall be placed by the holder
hereof in the hands of an attorney for collection, through legal proceedings or
otherwise, the Borrower will pay reasonable attorneys' fees to the holder hereof
together with reasonable costs and expenses of collection.
All provisions of this Note and any other agreements between the Borrower
and the Lender are expressly subject to the condition that in no event, whether
by reason of acceleration of maturity of the Indebtedness evidenced by this Note
or otherwise, shall the amount paid or agreed to be paid to the Lender which is
deemed interest under applicable law exceed the maximum permitted rate of
interest under applicable law (the "Maximum Permitted Rate"), which shall mean
the law in effect on the date of this Note, except that if there is a change in
such law which results in a higher Maximum Permitted Rate, then this Note shall
be governed by such amended law from and after its effective date. In the event
that fulfillment of any provision of this Note, or the Loan Agreement or any
document, instrument or agreement providing security for this Note results in
the rate of interest charged hereunder being in excess of the Maximum Permitted
Rate, the obligation to be fulfilled shall automatically be reduced to eliminate
such excess. If, notwithstanding the foregoing, the Lender receives an amount
which under applicable law would cause the interest rate under this Note to
exceed the Maximum Permitted Rate, the portion thereof which would be excessive
shall automatically be deemed a prepayment of and be applied to the unpaid
principal balance of this Note to the extent of then outstanding Prime Rate
Loans and not a payment of interest and to the extent said excessive portion
exceeds the outstanding principal amount of Prime Rate Loans, said excessive
portion shall be repaid to the Borrower.
The Borrower expressly waives presentment, notice of acceleration and
intent to accelerate, demand for payment and protest and notice of protest and
nonpayment.
This Note shall for all purposes be governed by and construed in accordance
with the laws of The Commonwealth of Massachusetts without regard to such
state's conflict of laws rules.
Executed as a sealed instrument as of the date first above written.
In the presence of: SOMERA COMMUNICATIONS, L.L.C.
2
_________________________ By:_____________________________
Name: [_]
Title: [_]
3
EXHIBIT 1.9 - PRO RATA SHARES
-----------------------------
AGENT'S AND LENDERS'
--------------------
NOTICE ADDRESSES AND WIRE TRANSFER INSTRUCTIONS
-----------------------------------------------
Name of AGENT, address for notices
- ----------------------------------
and wire transfer instructions:
- ------------------------------
Fleet National Bank
Mailstop MA OF D07A
One Federal Street
Boston, Massachusetts 02110
Attn: High Tech Group
Matthew M. Glauninger, Senior Vice
President
Wire Transfer Instructions:
--------------------------
Fleet National Bank
Boston, Massachusetts
ABA #: 011000138 (FNB-MA)
Account: Commercial Loan Services
Attn: Agent Bank MA
Account #: 1510351 G/L
Re: Somera Communications, L.L.C.
Name of LENDER, address for notices
- -----------------------------------
and wire transfer instructions: Pro Rata Share
- ------------------------------ --------------
Fleet National Bank 27.7%
Mailstop MA OF D07A
One Federal Street
Boston, Massachusetts 02110
Attn: High Tech Group
Matthew M. Glauninger, Senior Vice
President
Wire Transfer Instructions:
--------------------------
Fleet National Bank
Boston, Massachusetts
ABA #: 011000138 (FNB-MA)
Account: Commercial Loan Services
Attn: Agent Bank MA
Account #: 1510351 G/L
Re: Somera Communications, L.L.C.
1
Name of LENDER, address for notices and
- ---------------------------------------
wire transfer instructions:
- --------------------------
For Credit Matters: Pro Rata Share
--------------
Union Bank of California, N.A
----------------------------- 26.2%
445 S. Figueroa Street, 15/th/ Floor
------------------------------------
Los Angeles, CA 90071
---------------------
Attn: Bryan Bowles
------------------
Tel: (213) 236-6087
Fax: (213) 236-6089
For Administrative/Operations Matters:
Union Bank of California, N.A.
------------------------------
445 S. Figueroa Street, 15/th/ Floor
------------------------------------
Los Angeles, CA 90071
---------------------
Attn: Karen Hicks, Vice President
---------------------------------
Tel: (213) 236-6088
Fax: (213) 236-6073
Wire Transfer Instructions:
--------------------------
Union Bank of California, N.A.
------------------------------
Los Angeles, CA 90071
---------------------
ABA #: 122000496
Account Name: Commercial Finance
Attn: RC #95300 GL #196431
Re: Somera
Name of LENDER, address for notices and
- ---------------------------------------
wire transfer instructions:
- --------------------------
For Credit Matters: Pro Rata Share
--------------
Bank Austria Creditanstalt Corporate
------------------------------------ 23.1%
Finance, Inc.
-------------
4 Embarcadero Center, Suite 630
-------------------------------
San Francisco, CA 94111
-----------------------
Attn: Mr. Geoff Headington
--------------------------
Tel: (415) 788-1371 Ext. 222
Fax: (415) 781-0622
2
For Administrative/Operations Matters:
Bank Austria Creditanstalt Corporate
------------------------------------
Finance, Inc.
-------------
2 Greenwich Plaza, 2/nd/ Floor
------------------------------
Greenwich, CT 06830
-------------------
Attn: Ms. Karen Marcella
------------------------
Tel: (203) 861-6423
Fax: (203) 861-1498
Wire Transfer Instructions:
--------------------------
The Chase Manhattan Bank
------------------------
New York, New York
------------------
ABA #: 021 000 021
Favor to: Bank Austria AG
Account #: 400921944
Re: Somera Communications, L.L.C.
Name of LENDER, address for notices and
- ---------------------------------------
wire transfer instructions:
- --------------------------
For Credit Matters: Pro Rata Share
--------------
Sanwa Bank California
---------------------
15165 Ventura Blvd., Suite 445 23.1%
------------------------------
Sherman Oaks, CA 91403
----------------------
Attn: Chuck Weerasooriya
------------------------
Tel: (818) 905-0918
Fax: (818) 905-1002
For Administrative/Operations Matters:
Sanwa Bank California
---------------------
15165 Ventura Blvd., Suite 445
------------------------------
Sherman Oaks, CA 91403
----------------------
Attn: Barbara Arguijo
---------------------
Tel: (818) 905-0910
Fax: (818) 905-1002
3
Wire Transfer Instructions:
--------------------------
Sanwa Bank California
---------------------
Sherman Oaks, CA 91403
----------------------
ABA #: 122003516
Account Name:
Attn:
Re:
4
EXHIBIT 1.10 - FORM OF REQUEST
------------------------------
Date:
Fleet National Bank
One Federal Street
Boston, Massachusetts 02110
Attn: Karen Melanson
Telecopy: (617) 346-0151
RE: Request for Loan
Gentlemen:
Reference is made to that certain Loan Agreement dated as of August __,
1999 by and among the undersigned, you and the Lenders (the "Loan Agreement").
Capitalized terms used herein shall have the same meaning as in the Loan
Agreement.
The undersigned hereby requests a [Term] [Revolving Credit] Loan from the
Lenders pursuant to the Loan Agreement in the amount of and no/100
Dollars ($ .00) at the interest rate set forth in the Interest Rate Election
pertaining to such Loan.
The undersigned requests that each Lender fund its Pro Rata Share of such
Loan on , 19 and such date is in accordance with the terms and
conditions of the Loan Agreement.
The undersigned hereby certifies to the Lenders that as of the date hereof:
(a) no Event of Default and no Default has occurred and is continuing; and
(b) the representations and warranties of the Borrower contained in
Article 4 of the Loan Agreement and/or contained in any of the other Financing
Documents are true and correct in all material respects except as altered by
actions not prohibited under the Loan Agreement.
SOMERA COMMUNICATIONS, L.L.C
By:___________________________
Name: [_]
Title: [_]
cc: Fleet National Bank
Mailstop MA OF D07A
One Federal Street
Boston, MA 02110
Attn: Matthew M. Glauninger, Senior Vice President
Telecopy: (617) 346-0151
1
EXHIBIT 2.1.0 - FORM OF BORROWING BASE CERTIFICATE
--------------------------------------------------
Fleet National Bank
Mailstop MA OF D07A
One Federal Street
Boston, Massachusetts 02110
Attn: Matthew M. Glauninger, Senior Vice President
Re: Borrowing Base Certificate Required by Section 2.1.0 of the Loan
-------------
Agreement dated as of August __, 1999 by and among you as Agent, the
undersigned and certain Lenders, as same may have been amended (the
"Loan Agreement")
Gentlemen:
This certificate is submitted by the undersigned (hereinafter the
"Borrower") pursuant to Section 2.1.0 of the Loan Agreement. Capitalized terms
-------------
used herein have the same meaning as in the Loan Agreement.
The Borrower hereby certifies to the Agent and the Lenders that the
following information is true, accurate and complete as of , 19 .
I. Loan Formula Amount
(a) Net Outstanding Amount of Eligible Receivables $________
(b) Net Outstanding Amount of Eligible Inventory $________
(c) Revolving Credit Loan Commitment $[_]
(d) Availability equal to lesser of (i) the sum of (x)
eighty percent (80%) of (a) and (y) fifty percent (50%)
of (b) up to $5,000,000 or (ii) the Revolving Credit Loan
Commitment $_________
The Borrower further certifies to the Lenders that as of the date hereof no
Event of Default or Default has occurred without having been waived in writing.
SOMERA COMMUNICATIONS, L.L.C.
By:___________________________
Name: [_]
Title: [_]
1
EXHIBIT 3.1.1.10 - FORM OF COMPLIANCE CERTIFICATE
-------------------------------------------------
Fleet National Bank
Mailstop MA OF D07A
One Federal Street
Boston, MA 02110
Attn: Matthew M. Glauninger, Senior Vice President
Re: Compliance Certificate Required by Sections 3.1.1.10 or 5.3.4 of
----------------- -----
the Loan Agreement dated as of August __, 1999 by and among you as
Agent, the undersigned and certain Lenders, as same may have been
amended (the "Loan Agreement")
Gentlemen:
This certificate is submitted by the undersigned (hereinafter the
"Borrower") pursuant to Sections 3.1.1.10 or 5.3.4 of the Loan Agreement.
----------------- -----
Capitalized terms used herein have the same meaning as in the Loan Agreement.
The Borrower hereby certifies to the Agent and the Lenders that the
following information is true, accurate and complete as of , 19 .
I. Definitions.
1.1 Interest Expense
----------------
(a) Interest on Indebtedness under $
Financing Documents
(b) Other fees, charges and expenses on
Indebtedness under Financing Documents $
Documents (not including Facility Fees)
(c) Interest, fees and other charges on other $______
Indebtedness
(d) (a)+(b)+(c) = total Interest Expense $
1.2 EBITDA (all for a Borrower fiscal quarter)
------------------------------------------
(a) Net Income (loss) on GAAP basis $
(b) plus Interest Expense $
1
(c) plus taxes $
(d) plus depreciation $
(e) plus amortization $
(f) plus other non-cash charges $
(g) plus extraordinary pre 9/30/99 transaction $
costs, if applicable
(h) less Capitalized Software Development costs $
(i) sum of (a) through (g) less (h) = EBITDA $_____
1.3 EBITDA for covenants
--------------------
(a) EBITDA for most recent Borrower fiscal quarter $
(b) EBITDA for immediately preceding Borrower fiscal $
quarter
(c) EBITDA for second immediately preceding Borrower $
fiscal quarter
(d) EBITDA for third immediately preceding Borrower $
fiscal quarter
(e) Sum of (a) through (d) equals $______
1.4 Total Debt Service (for Borrower fiscal quarter
------------------
ending on date of determination and three Borrower
fiscal quarters next preceding such Borrower fiscal
quarter)
(a) Interest Expense $
(b) plus scheduled and mandatory principal $
amortization on Loans
(c) less any Sections 2.6.1.2, 2.6.1.3, 2.6.1.4 and $
---------------- ------- -------
2.6.1.5 mandatory payments required
-------
2
(d) plus scheduled and mandatory payments on other $
Indebtedness and Capitalized Lease Obligations
(e) (a)+(b)-(c)+(d) = Total Debt Service $______
1.6 Excess Cash Flow (all for Borrower fiscal year)
-----------------------------------------------
(a) EBITDA $
less the sum of:
----
(b) Total Debt Service $
(c) permitted Capital Expenditures paid and not $
included in Total Debt Service
(d) taxes payable $
(e) extraordinary 9/30/99 transaction costs if
applicable
(f) Total (b)+(c)+(d)+(e) = $
(g) (a)-(f) = Excess Cash Flow $
(h) (g) X [_]% = $______
less
----
(i) voluntary prepayments of the Term Loan $
(j) (h) - (i) = Amount payable to Lenders $______
II. Minimum EBITDA
--------------
(a) EBITDA $______
(b) Minimum EBITDA permitted $______
III. Section 5.1.11. Minimum Fixed Charge Coverage
--------------- -----------------------------
Ratio.
-----
(a) EBITDA $
3
less the sum of:
----
(b) taxes paid or payable $
(c) Capital Expenditures $
(d) (b)+(c) = $
(e) (a)-(d) = $
(f) Total Debt Service $
(g) Ratio of (e) to (f) ___:1.0
(h) Minimum Ratio permitted ___:1.0
IV. Section 5.1.12. Maximum Leverage Ratio.
--------------- ----------------------
(a) Total Indebtedness for Borrowed Money $
(b) EBITDA $
(c) Ratio of (a) to (b) ___:1.0
(d) Maximum permitted ___:1.0
V. Section 5.2.17. Capital Expenditures.
--------------- --------------------
(a) Capital Expenditures $
(b) Maximum permitted $
The Borrower further certifies to the Lenders that as of the date hereof no
Event of Default or Default has occurred without having been waived in writing.
SOMERA COMMUNICATIONS, L.L.C.
By:_______________________________
Name: [_]
Title: [_]
4
EXHIBIT 9.11.1 - FORM OF ASSIGNMENT AND ACCEPTANCE
--------------------------------------------------
Form of Assignment and Acceptance
Assignment and Acceptance made and entered into as of _____ day of
___________, 19__ by and between ______________________, a ___________ having a
principal place of business at _______________________ (the "Substituted
-----------
Lender"), _________________, a _________________ having a place of business at
_____________ (the "Selling Lender"), SOMERA COMMUNICATIONS, L.L.C., a limited
liability company (the "Borrower") and FLEET NATIONAL BANK, acting as Agent for
the Lenders which are parties to the Loan Agreement (defined below) (the
"Agent").
-----
1. This Agreement relates to a Loan Agreement (the "Loan Agreement")
--------------
dated August, 1999, as same may have been or be amended, made between
the Borrower, the Lenders and the Agent, upon and subject to the terms
of which the Lenders agreed to make available to the Borrower the
Loans in an aggregate principal amount up to $65,000,000. Terms
defined in the Loan Agreement shall, unless otherwise defined herein,
have the same meanings herein.
2. The Selling Lender hereby irrevocably sells and assigns to the
Substituted Lender without recourse to the Selling Lender, and the
Substituted Lender hereby irrevocably purchases and assumes from the
Selling Lender without recourse to the Selling Lender, as of
___________, _____ (the "Effective Date") the interest described in
Schedule A hereto (the "Assigned Interest") in and to the Selling
----------
Lender's rights and obligations under the Loan Agreement as set forth
on Schedule A hereto (the "Assigned Facility").
----------
3. The Selling Lender (i) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or
representations made in or in connection with the Loan Agreement or
with respect to the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Agreement, any other
Financing Document or any other instrument or document furnished
pursuant thereto, other than that the Selling Lender has not created
any adverse claim upon the Assigned Interest, has full right, power
and authority to sell and assign the Assigned Interest and that the
Assigned Interest is free and clear of any such adverse claim; (ii)
makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or any Subsidiary
or any other obligor or the performance or observance by the Borrower,
any of its Subsidiaries or any other obligor of any of their
respective obligations under the Loan Agreement or any other Financing
Document or any other instrument or document furnished pursuant hereto
or thereto; and (iii) attaches any Notes held by it evidencing the
Assigned Facility and (a) requests that the Agent, upon request by the
Substituted Lender, exchange the attached Notes for a new Note or
Notes payable to the Substituted Lender and (b) if the Selling Lender
has retained any interest in the Loans, requests that the Agent
1
exchange the attached Notes for a new Note or Notes payable to the
Selling Lender, in each case in amounts which reflect the assignment
being made hereby (and after giving effect to any other assignments
which have become effective on the Effective Date).
4. The Substituted Lender (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (ii) confirms
that it has received a copy of the Loan Agreement, together with
copies of the financial statements delivered pursuant to Section 5.3
thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (iii) agrees that it will,
independently and without reliance upon the Selling Lender, the Agent
or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Loan Agreement, the
other Financing Documents or any other instrument or document
furnished pursuant hereto or thereto; (iv) appoints and authorizes the
Agent to take such action as Agent on its behalf and to exercise such
powers and discretion under the Loan Agreement, the other Financing
Documents or any other instrument or document furnished pursuant
hereto or thereto as are delegated to the Agent by the terms thereof,
together with such powers as are incidental thereto; and (v) agrees
that it will be bound by the provisions of the Loan Agreement and will
perform in accordance with its terms all the obligations which by the
terms of the Loan Agreement are required to be performed by it as a
Lender including, if it is organized under the laws of a jurisdiction
outside the United States, its obligation pursuant to Section 2.5.3.2
of the Loan Agreement.
5. The Substituted Lender hereby agrees to become a [] Lender pursuant to
the terms of Section 9.11 of the Loan Agreement having a Pro Rata
------------
Share of the Loans and the Commitment in the amount set forth opposite
the Substituted Lender's name on Schedule A hereto and to fund its Pro
----------
Rata Share of any outstanding Loans in which it is purchasing a Pro
Rata Share by wire transfer to the Selling Lender in accordance with
Schedule A hereto on the Effective Date.
6. The Selling Lender hereby agrees that, effective as of the Effective
Date, its Pro Rata Share of the Loans and the Commitment shall be
reduced to the Pro Rata Share set forth opposite its name on Schedule
--------
A hereto.
-
7. The Substituted Lender hereby agrees (i) that its address for notices
for the purposes of Section 9.6 of the Loan Agreement shall be the
-----------
address set forth opposite its name on Schedule A hereto and (ii) that
----------
the instructions for wire transfers of funds to the Agent and for wire
transfers of funds to the Substituted Lender are as set forth on
Schedule A hereto.
8. The Substituted Lender hereby requests the Agent to accept, on behalf
of the Borrower and the Lenders, this Agreement as an Assignment and
Acceptance
2
delivered to the Agent pursuant to and for the purposes of Section
-------
9.11 of the Loan Agreement so as to take effect in accordance with the
----
terms hereof and thereof on Effective Date.
9. The Substituted Lender hereby acknowledges the correctness of the
details specified in Schedule A hereto.
----------
10. This Agreement and the rights and obligations of the parties hereunder
shall be governed by, and construed in accordance with the laws of The
Commonwealth of Massachusetts without regard to such state's conflict
of laws rules.
Selling Lender:
[ ]
By:____________________
Name:
Title:
Agent:
Fleet National Bank
, as Agent for itself in its individual
capacity and as agent for the Lenders
By:____________________
Name:
Title:
Borrower:
Somera Communications, L.L.C.
By:____________________
Name:
Title:
Substituted Lender:
[ ]
By:____________________
Name:
Title:
3
SCHEDULE A
----------
AGENT'S AND LENDERS'
--------------------
NOTICE ADDRESSES AND WIRE TRANSFER INSTRUCTIONS
-----------------------------------------------
Name of AGENT, address for notices
- ----------------------------------
and wire transfer instructions:
- ------------------------------
Fleet National Bank
Mailstop MA OF D07A
One Federal Street
Boston, Massachusetts 02110
Attn: High Tech Group
Matthew M. Glauninger, Senior Vice President
Wire Transfer Instructions:
--------------------------
Fleet National Bank
Boston, Massachusetts
ABA #: 011000138 (FNB-MA)
Account: Commercial Loan Services
Attn: Agent Bank MA
Account #: 1510351 G/L
Re: Somera Communications, L.L.C.
Name of LENDER, address for notices
- -----------------------------------
and wire transfer instructions: Pro Rata Share
- ------------------------------ --------------
Fleet National Bank 27.7%
Mailstop MA OF D07A
One Federal Street
Boston, Massachusetts 02110
Attn: High Tech Group
Matthew M. Glauninger, Senior Vice President
Wire Transfer Instructions:
--------------------------
Fleet National Bank
Boston, Massachusetts
ABA #: 011000138 (FNB-MA)
Account: Commercial Loan Services
Attn: Agent Bank MA
Account #: 1510351 G/L
Re: Somera Communications, L.L.C.
Name of LENDER, address for notices and
- ---------------------------------------
wire transfer instructions:
- --------------------------
For Credit Matters: Pro Rata Share
--------------
Union Bank of California, N.A
----------------------------- 26.2%
445 S. Figueroa Street, 15/th/ Floor
------------------------------------
Los Angeles, CA 90071
---------------------
Attn: Bryan Bowles
------------------
Tel: (213) 236-6087
Fax: (213) 236-6089
For Administrative/Operations Matters:
Union Bank of California, N.A.
------------------------------
445 S. Figueroa Street, 15/th/ Floor
------------------------------------
Los Angeles, CA 90071
---------------------
Attn: Karen Hicks, Vice President
---------------------------------
Tel: (213) 236-6088
Fax: (213) 236-6073
Wire Transfer Instructions:
--------------------------
Union Bank of California, N.A.
------------------------------
Los Angeles, CA 90071
---------------------
ABA #: 122000496
Account Name: Commercial Finance
Attn: RC #95300 GL #196431
Re: Somera
Name of LENDER, address for notices and
- ---------------------------------------
wire transfer instructions:
- --------------------------
For Credit Matters: Pro Rata Share
--------------
Bank Austria Creditanstalt Corporate 23.1%
------------------------------------
Finance, Inc.
-------------
4 Embarcadero Center, Suite 630
-------------------------------
San Francisco, CA 94111
-----------------------
Attn: Mr. Geoff Headington
--------------------------
Tel: (415) 788-1371 Ext. 222
Fax: (415) 781-0622
2
For Administrative/Operations Matters:
Bank Austria Creditanstalt Corporate
------------------------------------
Finance, Inc.
-------------
2 Greenwich Plaza, 2/nd/ Floor
------------------------------
Greenwich, CT 06830
-------------------
Attn: Ms. Karen Marcella
------------------------
Tel: (203) 861-6423
Fax: (203) 861-1498
Wire Transfer Instructions:
--------------------------
The Chase Manhattan Bank
------------------------
New York, New York
------------------
ABA #: 021 000 021
Favor to: Bank Austria AG
Account #: 400921944
Re: Somera Communications, L.L.C.
Name of LENDER, address for notices and
- ---------------------------------------
wire transfer instructions:
- --------------------------
For Credit Matters: Pro Rata Share
--------------
Sanwa Bank California 23.1%
---------------------
15165 Ventura Blvd., Suite 445
------------------------------
Sherman Oaks, CA 91403
----------------------
Attn: Chuck Weerasooriya
------------------------
Tel: (818) 905-0918
Fax: (818) 905-1002
For Administrative/Operations Matters:
Sanwa Bank California
---------------------
15165 Ventura Blvd., Suite 445
------------------------------
Sherman Oaks, CA 91403
----------------------
Attn: Barbara Arguijo
---------------------
Tel: (818) 905-0910
Fax: (818) 905-1002
3
Wire Transfer Instructions:
--------------------------
Sanwa Bank California
---------------------
Sherman Oaks, CA 91403
----------------------
ABA #: 122003516
Account Name:
Attn:
Re:
4