E-389
Exhibit No. 11
Form 8-K
Headway Corporate Resources, Inc.
SEC File No. 0-23170
CREDIT AGREEMENT
by and among
HEADWAY CORPORATE RESOURCES, INC.,
as Borrower,
NATIONSBANK, NATIONAL ASSOCIATION,
as Agent and as Lender
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
March 19, 1998
TABLE OF CONTENTS
ARTICLE IDefinitions and Terms
1.1. Definitions 2
1.2. Rules of Interpretation 27
ARTICLE IIThe Revolving Credit Facility
2.1. Revolving Loans 28
2.2. Payment of Interest 30
2.3. Payment of Principal 30
2.4. Manner of Payment 30
2.5. Notes 31
2.6. Pro Rata Payments 31
2.7. Voluntary Commitment Reductions 31
2.8. Conversions and Elections of Subsequent Interest
Periods 32
2.9. Increase and Decrease in Available Amounts 32
2.10. Unused Fee 32
2.11. Deficiency Advances 32
2.12. Use of Proceeds 33
2.13. Mandatory Reductions in Commitment 33
ARTICLE IIILetters of Credit
3.1. Letters of Credit 33
3.2. Reimbursement. 34
3.3. Letter of Credit Facility Fees 38
3.4. Administrative Fees 38
ARTICLE IVSecurity
4.1. Security 38
4.2. Guaranty 38
4.3. Information Regarding Collateral 38
4.4. Intellectual Property. 39
4.5. Pledged Stock. 39
4.6 Pledge and Subordination of Intercompany Notes 39
4.7 Further Assurances. 39
ARTICLE VChange in Circumstances
5.1 Increased Cost and Reduced Return. 40
5.2 Limitation on Types of Loans. 41
5.3 Illegality 42
5.4 Treatment of Affected Loans. 42
5.5 Compensation 42
5.6 Taxes. 43
5.7 Replacement Banks 44
ARTICLE VIConditions to Making Loans and Issuing Letters of
Credit
6.1. Conditions of Initial Advance. 45
6.2. Conditions of Loans and Letters of Credit. 49
ARTICLE VIIRepresentations and Warranties
7.1. Organization and Authority 50
7.2. Loan Documents 50
7.3. Solvency 51
7.4. Subsidiaries and Stockholders 51
7.5. Ownership Interests 51
7.6. Financial Condition 51
7.7. Title to Properties 52
7.8. Taxes 52
7.9. Other Agreements 52
7.10. Litigation 53
7.11. Margin Stock 53
7.12. Investment Company 53
7.13. Intellectual Property. 53
7.14. No Untrue Statement 53
7.15. No Consents, Etc. 54
7.16. Employee Benefit Plans 54
7.17. No Default 55
7.18. Environmental Matters 55
7.19. Employment Matters 56
7.20. RICO 56
ARTICLE VIIIAffirmative Covenants
8.1. Financial Reports, Etc. 57
8.2. Maintain Properties 59
8.3. Existence, Qualification, Etc. 59
8.4. Regulations and Taxes 59
8.5. Insurance 59
8.6. True Books 60
8.7. Right of Inspection 60
8.8. Observe all Laws 60
8.9. Governmental Licenses 60
8.10. Covenants Extending to Other Persons 60
8.11. Officer's Knowledge of Default 60
8.12. Suits or Other Proceedings 60
8.13. Notice of Environmental Complaint or Condition 61
8.14. Environmental Compliance 61
8.15. Indemnification 61
8.16. Further Assurances 62
8.17. Employee Benefit Plans 62
8.18. Continued Operations 63
8.19. New Subsidiaries 63
ARTICLE IXNegative Covenants
9.1. Financial Covenants 65
9.2. Acquisitions 66
9.3. Liens 66
9.4. Indebtedness 67
9.5. Transfer of Assets 68
9.6. Investments 68
9.7. Merger or Consolidation 69
9.8. Restricted Payments 69
9.9. Transactions with Affiliates 70
9.10. Compliance with ERISA 70
9.11. Fiscal Year 71
9.12. Dissolution, Etc. 71
9.13. Change of Control 71
9.14. Hedging Obligations 71
9.15. Negative Pledge Clauses 71
9.16. Restrict Payment of Dividends 71
9.17. Subordinated Debt and Preferred Stock 71
ARTICLE XEvents of Default and Acceleration
10.1. Events of Default 72
10.2. Agent to Act 75
10.3. Cumulative Rights 75
10.4. No Waiver 75
10.5. Allocation of Proceeds 76
ARTICLE XIThe Agent
11.1. Appointment 76
11.2. Attorneys-in-fact 77
11.3. Limitation on Liability 77
11.4. Reliance 77
11.5. Notice of Default 77
11.6. No Representations 78
11.7. Indemnification 78
11.8. Lender 78
11.9. Resignation 79
11.10. Sharing of Payments, etc. 79
11.11. Fees 80
ARTICLE XIIMiscellaneous
12.1. Assignments and Participations 80
12.2. Notices 81
12.3. Setoff 83
12.4. Survival 83
12.5. Expenses 83
12.6. Amendments 84
12.7. Counterparts 84
12.8. Termination 84
12.9. Indemnification; Limitation of Liability 85
12.10. Severability 86
12.11. Entire Agreement 86
12.12. Agreement Controls 86
12.13. Usury Savings Clause 86
12.14. Confidentiality 87
12.15. Termination of Prior Credit Facilities 87
12.16. Acknowlegements 87
12.17. Governing Law; Waiver of Jury Trial 87
EXHIBIT A Applicable Commitment Percentages A-1
EXHIBIT B Form of Assignment and Acceptance B-1
EXHIBIT C Notice of Appointment (or Revocation) of
Authorized Representative C-1
EXHIBIT D Form of Borrowing Notice D-1
EXHIBIT E Form of Interest Rate Selection Notice E-1
EXHIBIT F Form of Revolving Note F-1
EXHIBIT H Compliance Certificate H-1
EXHIBIT I Form of Guaranty I-1
EXHIBIT J Form of Security Agreement J-1
EXHIBIT K Form of Pledge Agreement K-1
EXHIBIT L Form of LC Account Agreement L-1
EXHIBIT M Form of Subordination Agreement M-1
EXHIBIT N Form of Intercompany Note Pledge N-1
EXHIBIT O Form of Intellectual Property Security
Agreement O-1
EXHIBIT P Form of Intercompany Notes P-1
Schedule 1.2 Existing Debt S-1
Schedule 4.3 Information Regarding Collateral S-2
Schedule 7.4 Subsidiaries and Investments in Other Persons S-3
Schedule 7.7 Liens S-5
Schedule 7.8 Tax Matters S-6
Schedule 7.10 Litigation S-7
Schedule 7.18 Environmental Matters S-8
Schedule 9.9 Affiliate Transactions S-9
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of March 19, 1998 (the
"Agreement"), is made by and among HEADWAY CORPORATE RESOURCES,
INC., a Delaware corporation having its principal place of
business in New York, New York (the "Borrower"), NATIONSBANK,
NATIONAL ASSOCIATION, a national banking association organized
and existing under the laws of the United States, in its capacity
as a Lender and as the Issuing Bank (each as hereinafter defined)
("NationsBank" and collectively with each other financial
institution executing and delivering a signature page hereto and
each other financial institution which may hereafter execute and
deliver an instrument of assignment with respect to this
Agreement pursuant to Section 12.1, the "Lenders"), and
NATIONSBANK, NATIONAL ASSOCIATION , a national banking
association organized and existing under the laws of the United
States, in its capacity as agent for the Lenders (in such
capacity, and together with any successor agent appointed in
accordance with the terms of Section 11.9, the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make
available to the Borrower a $75,000,000 revolving credit facility
which shall include a $5,000,000 letter of credit sublimit for
the issuance of standby letters of credit the proceeds of which
are to be used to refinance certain Existing Debt (as hereinafter
defined) of the Borrower, to redeem, repurchase or otherwise
obtain surrender of the Warrants (as hereinafter defined), to
finance general working capital needs, including the making of
Acquisitions and Capital Expenditures permitted hereunder, and to
provide for the general corporate purposes of the Borrower; and
WHEREAS, the Lenders are willing to make such revolving
credit and letter of credit facilities available to the Borrower
upon the terms and conditions set forth herein;
NOW, THEREFORE, the Borrower, the Lenders and the Agent
hereby agree as follows:
ARTICLE I
Definitions and Terms
I.1. Definitions. For the purposes of this Agreement, in
addition to the definitions set forth above, the following terms
shall have the respective meanings set forth below:
"Acquisition" means the acquisition of (i) a
controlling equity or other ownership interest in another
Person (including the purchase of an option, warrant or
convertible or similar type security to acquire such a
controlling interest at the time it becomes exercisable by
the holder thereof), whether by purchase of such equity or
other ownership interest or upon exercise of an option or
warrant for, or conversion of securities into, such equity
or other ownership interest, or (ii) assets of another
Person which constitute all or any material part of the
assets of such Person or of a line or lines of business
conducted by such Person.
"Acquisition Documents" means, collectively, (a) that
certain Asset Purchase Agreement dated as of March 31, 1997
between the Borrower, Headway Corporate Staffing Services of
North Carolina, Inc., Advanced Staffing Solutions, Inc., H.
Wade Gresham and Mark F. Herron, (b) that certain Asset
Purchase Agreement dated as of July 28, 1997 between the
Borrower, ASA Personnel Services, Inc., Administrative Sales
Associates Temporaries Inc., Administrative Sales
Associates, Inc., Richard Brody and Arnold Katz (c) that
certain Asset Purchase Agreement dated as of September 29,
1997 between the Borrower, Irene Cohen Temps, Inc., Quality
Outsourcing, Inc., George J. Burt, Richard E. Gaudi and
Peter F. Notaro (d) that certain Purchase Agreement dated
as of September 30, 1997 between the Borrower, Headway
Corporate Staffing Services of Connecticut, Inc.,
Electronic Data Resources, L.L.C., Maurice Dusel, James
Roberts and Michael Russell, (e) that certain Asset Purchase
Agreement, to be dated on or about March 23, 1998, among the
Borrower, Cheney Associates, L.L.C. and Timothy Cheney, an
individual doing business under the names Cheney Associates
and Cheney Consulting Group, (f) that certain Stock Purchase
Agreement, to be dated on or about March 23, 1998, among the
Borrower, L&M Shore Family Holdings Limited Partnership,
Elder Investments Limited Partnership, Mark Shore and Linda
Elder, (g) that certain Asset Purchase Agreement to be dated
on or about March 23, 1998, among the Borrower, Headway
Corporate Staffing Services of North Carolina, Inc., Select
Staffing Services, Inc. and Jack Powell, and (h) any other
purchase agreement entered into hereafter by the Borrower
and any Subsidiaries relating to the acquisition of any
company or any assets thereof which is permitted hereunder.
"Advance" means a borrowing under the Revolving Credit
Facility consisting of a Base Rate Loan or a Eurodollar Rate
Loan.
"Affiliate" means any Person (i) which directly or
indirectly through one or more intermediaries controls, or
is controlled by, or is under common control, with the
Borrower; or (ii) which beneficially owns or holds 10% or
more of any class of the outstanding Voting Stock (or in the
case of a Person which is not a corporation, 10% or more of
the equity or other ownership interest) of the Borrower; or
(iii) 10% or more of any class of the outstanding voting
stock (or in the case of a Person which is not a
corporation, 10% or more of the equity or other ownership
interest) of which is beneficially owned or held by the
Borrower. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction
of the management and policies of a Person, whether through
ownership of Voting Stock, by contract or otherwise.
"Applicable Commitment Percentage" means, with respect
to each Lender at any time, a fraction, the numerator of
which shall be such Lender's Revolving Credit Commitment and
the denominator of which shall be the Total Revolving Credit
Commitment, which Applicable Commitment Percentage for each
Lender as of the Closing Date is as set forth in Exhibit A;
provided that the Applicable Commitment Percentage of each
Lender shall be increased or decreased to reflect any
assignments to or by such Lender effected in accordance with
Section 12.1.
"Applicable Lending Office" means, for each Lender and
for each Type of Loan, the "Lending Office" of such Lender
(or of an affiliate of such Lender) designated for such Type
of Loan on the signature pages hereof or such other office
of such Lender (or an affiliate of such Lender) as such
Lender may from time to time specify to the Agent and the
Borrower by written notice in accordance with the terms
hereof as the office by which its Loans of such Type are to
be made and maintained.
"Applicable Margin" means for purposes of calculating
(i) the applicable interest rate for the Interest Period for
any Eurodollar Rate Loan, (ii) the applicable interest rate
for any Base Rate Loan, (iii) the applicable rate to
determine the fee for the issuance of Letters of Credit and
(iv) the applicable rate of the Unused Fee for any date for
purposes of Section 2.10 hereof, that percent per annum set
forth below, which shall be (A) determined at the end of
each Fiscal Quarter (each, a "Determination Date") based
upon the computations set forth in the compliance
certificates delivered to the Agent pursuant to Sections
8.1(a)(ii) and 8.1(b)(ii) hereof, subject to review and
approval of such computations by the Agent, and any change
in the Applicable Margin shall be effective commencing on
the fifth Business Day following the date such certificate
is actually received (or, if earlier, the date such
certificate was required to be delivered under such
sections) (the "Compliance Date") until the next following
Compliance Date; provided however, if the Borrower shall
fail to deliver any such certificate within the time period
required by Section 8.1, then the Applicable Margin for
Eurodollar Rate Loans, for Base Rate Loans, for the Letter
of Credit Fee and for the Unused Fee shall be that shown
for Pricing Level II below until the appropriate certificate
is so delivered and (B) applicable to all Eurodollar Rate
Loans and Base Rate Loans made, renewed or converted,
Letters of Credit outstanding and any Unused Fee due and
payable, on or after the most recent Compliance Date to
occur based upon the Consolidated Leverage Ratio as at the
Determination Date, as specified below:
Prici Consolidated Applica Applicab Applica Applicab
ng Leverage ble le ble le
Level Ratio Margin Margin Margin Margin
for for Base for for
Eurodol Rate Letter Unused
lar Loans of Fee
Rate Credit
Loans Fee
I. Less than 1.000% .000% 1.000% .250%
1.25 to 1.00
II. Less than 1.500% .250% 1.500% .375%
2.25 to 1.00
but greater
than or
equal to
1.25 to 1.00
III. Greater than 2.000% .750% 2.000% .500%
or equal to
2.25 to 1.00
; provided that at all times from the Closing Date up
to and including the Compliance Date immediately
following the Closing Date, the Applicable Margin for
Eurodollar Rate Loans, for Base Rate Loans, for the
Letter of Credit Fee and for the Unused Fee shall be
that shown for Pricing Level II above.
"Applications for Letters of Credit" means,
collectively, the applications for letters of credit,
or similar documentation, executed by the Borrower from
time to time and delivered to the Issuing Bank to
support the issuance of Letters of Credit.
"Assignment and Acceptance" shall mean an
Assignment and Acceptance in the form of Exhibit B
(with blanks appropriately filled in) delivered to the
Agent in connection with an assignment of a Lender's
interest under this Agreement pursuant to Section 12.1.
"Authorized Representative" means any of the Chief
Executive Officer, President and Chief Operating
Officer or any Senior Vice President of the Borrower,
or with respect to financial matters only, the Senior
Vice President and Director of Corporate Development,
Chief Financial Officer, Chief Operating Officer or
Treasurer of the Borrower, or any other person
expressly designated by the Board of Directors of the
Borrower (or the appropriate committee thereof) as an
Authorized Representative of the Borrower, as set forth
from time to time in a certificate in the form of
Exhibit C.
"Base Rate", for any day, means the per annum rate
of interest equal to the sum of (x) the greater of (i)
the Prime Rate or (ii) the Federal Funds Effective Rate
plus one-half of one percent (.50%) plus (y) the
Applicable Margin. Any change in the Base Rate
resulting from a change in the Prime Rate or the
Federal Funds Effective Rate shall become effective as
of 12:01 A.M. of the Business Day on which each such
change occurs.
"Base Rate Loan" means a Loan for which the rate
of interest is determined by reference to the Base
Rate.
"Base Rate Refunding Loan" means a Base Rate Loan
to satisfy Reimbursement Obligations arising from a
drawing under a Letter of Credit.
"Board" means the Board of Governors of the
Federal Reserve System (or any successor body).
"Borrower's Account" means a demand deposit
account number 3751024413 or any successor account with
the Agent, which may be maintained at one or more
offices of the Agent or an agent of the Agent.
"Borrowing Notice" means the notice delivered by
an Authorized Representative in connection with an
Advance under the Revolving Credit Facility, in the
form of Exhibit D.
"Business Day" means (i) with respect to any Base
Rate Loan, any day which is not a Saturday, Sunday or a
day on which banks in the States of New York and North
Carolina are authorized or obligated by law, executive
order or governmental decree to be closed, and (ii)
with respect to any Eurodollar Rate Loan, any day which
is a Business Day, as described above, and on which the
relevant international financial markets are open for
the transaction of business contemplated by this
Agreement in London, England, New York, New York and
Charlotte, North Carolina.
"Capital Expenditures" means, with respect to the
Borrower and its Subsidiaries on a consolidated basis,
for any period the sum of (without duplication) (i) all
expenditures (whether paid in cash or accrued as
liabilities) by the Borrower or any Subsidiary during
such period for items that would be classified as
"property, plant or equipment" or comparable items on
the consolidated balance sheet of the Borrower and its
Subsidiaries, including without limitation all
transactional costs incurred in connection with such
expenditures provided the same have been capitalized,
excluding, however, the amount of any Capital
Expenditures paid for with proceeds of casualty
insurance as evidenced in writing and submitted to the
Agent together with any compliance certificate
delivered pursuant to Section 8.1(a) or (b), and (ii)
for all purposes other than the determination of the
Consolidated Fixed Charge Ratio, the present value of
the lease payments due during such period under any
Capital Lease entered into by the Borrower or its
Subsidiaries over the term of such Capital Lease
applying a discount rate equal to the interest rate
provided in such lease (or in the absence of a stated
interest rate, that rate used in the preparation of the
financial statements described in Section 8.1(a)), all
the foregoing in accordance with GAAP applied on a
Consistent Basis.
"Capital Leases" means all leases which have been
or should be capitalized in accordance with GAAP as in
effect from time to time including Statement No. 13 of
the Financial Accounting Standards Board and any
successor thereof.
"Change of Control" means, at any time:
(i) any "person" or "group" (each as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange
Act), either (A) becomes the "beneficial owner"
(as defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of Voting Stock of the
Borrower (or securities convertible into or
exchangeable for such Voting Stock) representing
30% or more of the combined voting power of all
Voting 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;
(ii) during any period of up to 24
consecutive months, commencing on the Closing
Date, a majority of the individuals who at the end
of such 24-month period were Directors of the
Borrower had not been Directors of the Borrower at
the beginning of such 24-month period; or
(iii) the occurrence of a "Change of Control",
as defined or described in the Indenture referred
to in the definition of "Subordinated Debt" or in
the Certificate of Designation with respect to the
Series F Convertible Preferred Stock referred to
in the definition of "Preferred Stock;"
provided, however, that the conversion of the Series F
Convertible Preferred Stock referred to in the
definition of "Preferred Stock" shall not constitute a
Change in Control.
"Closing Date" means the date as of which this
Agreement is executed by the Borrower, the Lenders and
the Agent and on which the conditions set forth in
Section 6.1 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as
amended, and any regulations promulgated thereunder.
"Collateral" means, collectively, all property of
the Borrower, any Guarantor or any other Person in
which the Agent or any Lender is granted a Lien under
any Security Instrument as security for all or any
portion of the Obligations.
"Collateral Termination Date" means the date when
all Revolving Credit Outstandings and all Letter of
Credit Outstandings together with all accrued and
unpaid interest thereon have been paid, except for such
Letter of Credit Outstandings as have been fully cash
collateralized in accordance with Section 10.1(B), all
Revolving Credit Commitments and Letter of Credit
Commitments shall have terminated or expired, and the
Borrower shall have fully, finally and irrevocably paid
and satisfied all Obligations.
"Compliance Date" has the meaning therefor set
forth in the definition of "Applicable Margin."
"Consistent Basis" in reference to the application
of GAAP means the accounting principles observed in the
period referred to are comparable in all material
respects to those applied in the preparation of the
audited financial statements of the Borrower referred
to in Section 7.6(a).
"Consolidated EBITDA" means, with respect to the
Borrower and its Subsidiaries for any Four-Quarter
Period (or other period of Fiscal Quarters as provided
in the definitions of "Consolidated Fixed Charge Ratio"
and "Consolidated Interest Coverage Ratio") ending on
the date of computation thereof, the sum of, without
duplication, (i) Consolidated Net Income, (ii)
Consolidated Interest Expense, (iii) taxes on income,
(iv) amortization, and (v) depreciation, all determined
on a consolidated basis in accordance with GAAP applied
on a Consistent Basis; provided, however, that with
respect to an Acquisition that is accounted for as a
"purchase", for the four Four-Quarter Periods ending
next following the date of such Acquisition,
Consolidated EBITDA shall include the results of
operations of the Person or assets so acquired, which
amounts shall be determined on a historical pro forma
basis as if such Acquisition had been consummated as a
"pooling of interests"; provided, further, however,
that with respect to disposition, sale, conveyance,
transfer, liquidation or cessation of business of a
Subsidiary of the Borrower or any division, operating
unit or other business unit of the Borrower during such
measurement period, Consolidated EBITDA shall exclude
the results of operations of the Subsidiary, division,
operating unit or other business unit so disposed,
sold, conveyed, transferred, liquidated or the business
of which has ceased.
"Consolidated Fixed Charge Ratio" means, with
respect to the Borrower and its Subsidiaries for the
applicable period described below ending on the date of
computation thereof, the ratio of (i) Consolidated
EBITDA for such period less (without duplication)
Capital Expenditures for such period, to (ii)
Consolidated Fixed Charges for such period; such
computation shall be for (A) the Fiscal Quarter ending
June 30, 1998, (B) the two Fiscal Quarters ending
September 30, 1998 and (C) the three Fiscal Quarters
ending December 31, 1998 and thereafter for each Four-
Quarter Period then ended; provided, however, that for
purposes of such computation for the periods ending on
the dates set forth below, the amount of any Earnouts
paid in cash during such period shall be multiplied by
the percentage shown opposite such date:
Date
Percentage
June 30, 1998
25%
September 30, 1998 50
December 31, 1998
75
"Consolidated Fixed Charges" means, with respect
to the Borrower and its Subsidiaries for any Four-
Quarter Period (or other period of Fiscal Quarters as
provided in the definition of "Consolidated Fixed
Charge Ratio") ending on the date of computation
thereof, the sum of, without duplication, (i)
Consolidated Interest Expense incurred during such
period, (ii) scheduled principal amounts of
Consolidated Funded Indebtedness (other than Revolving
Credit Outstandings) paid during such period, (iii)
Earnouts paid in cash during such period, and (iv) all
Restricted Payments made during such period, all
determined on a consolidated basis in accordance with
GAAP applied on a Consistent Basis.
"Consolidated Funded Indebtedness" means, with
respect to the Borrower and its Subsidiaries, at any
time as of which the amount thereof is to be
determined, the sum of (i) Indebtedness for Money
Borrowed of the Borrower and its Subsidiaries at such
time and (ii) the face amount of all outstanding
Letters of Credit issued for the account of the
Borrower or any of its Subsidiaries and all obligations
(to the extent not duplicative) arising under such
Letters of Credit, all determined on a consolidated
basis in accordance with GAAP applied on a Consistent
Basis.
"Consolidated Interest Coverage Ratio" means, with
respect to the Borrower and its Subsidiaries for the
applicable period described below ending on the date of
computation thereof, the ratio of (i) Consolidated
EBITDA for such period to (ii) Consolidated Interest
Expense for such period; such computation shall be for
(A) the Fiscal Quarter ending June 30, 1998, (B) the
two Fiscal Quarters ending September 30, 1998 and (C)
the three Fiscal Quarters ending December 31, 1998 and
thereafter for each Four-Quarter Period then ended.
"Consolidated Interest Expense" means, with
respect to any period of computation thereof, the gross
interest expense of the Borrower and its Subsidiaries,
including without limitation (i) the current amortized
portion of debt discounts to the extent included in
gross interest expense, (ii) the current amortized
portion of all fees (including fees payable in respect
of any Swap Agreement) payable in connection with the
incurrence of Indebtedness to the extent included in
gross interest expense (but not including any fees
incurred in connection with the ING Facility referenced
on Schedule 1.2 or the termination thereof, this
Agreement or the Subordinated Debt) and (iii) the
portion of any payments made in connection with Capital
Leases allocable to interest expense, all determined on
a consolidated basis in accordance with GAAP applied on
a Consistent Basis.
"Consolidated Leverage Ratio" means, as of the
date of computation thereof, the ratio of (i)
Consolidated Funded Indebtedness determined as at such
date to (ii) Consolidated EBITDA for the Four-Quarter
Period ending on (or most recently ended prior to) such
date.
"Consolidated Net Income" means, for any period of
computation thereof, the gross revenues from operations
of the Borrower and its Subsidiaries (including
payments received by the Borrower and its Subsidiaries
of (i) interest income, and (ii) dividends and
distributions made in the ordinary course of their
businesses by Persons in which investment is permitted
pursuant to this Agreement and not related to an
extraordinary event), less all operating and non-
operating expenses of the Borrower and its Subsidiaries
including taxes on income, all determined on a
consolidated basis in accordance with GAAP applied on a
Consistent Basis; but excluding (for all purposes other
than compliance with Section 9.1(a) hereof) as income:
(i) net gains on the sale, conversion or other
disposition of capital assets, (ii) net gains on the
acquisition, retirement, sale or other disposition of
capital stock and other securities of the Borrower or
its Subsidiaries, (iii) net gains on the collection of
proceeds of life insurance policies, (iv) any write-up
of any asset, and (v) any other net gain or credit of
an extraordinary nature as determined in accordance
with GAAP applied on a Consistent Basis.
"Consolidated Net Worth" means, as of any date on
which the amount thereof is to be determined,
Consolidated Shareholders' Equity minus (without
duplication of deductions in respect of items already
deducted in arriving at surplus and retained earnings)
all reserves (other than contingency reserves not
allocated to any particular purpose), including without
limitation reserves for depreciation, depletion,
amortization, obsolescence, deferred income taxes,
insurance and inventory valuation all as determined on
a consolidated basis in accordance with GAAP applied on
a Consistent Basis.
"Consolidated Shareholders' Equity" means, as of
any date on which the amount thereof is to be
determined, the sum of the following in respect of the
Borrower and its Subsidiaries (determined on a
consolidated basis and excluding any upward adjustment
after the Closing Date due to revaluation of assets):
(i) the amount of issued and outstanding share capital,
plus (ii) the amount of additional paid-in capital and
retained earnings (or, in the case of a deficit, minus
the amount of such deficit), plus (iii) the amount of
any foreign currency translation adjustment (if
positive, or, if negative, minus the amount of such
translation adjustment), minus (iv) the amount of any
treasury stock, all as determined in accordance with
GAAP applied on a Consistent Basis.
"Contingent Obligation" of any Person means all
contingent liabilities required (or which, upon the
creation or incurring thereof, would be required) to be
included in the financial statements (including
footnotes) of such Person in accordance with GAAP
applied on a Consistent Basis, including Statement No.
5 of the Financial Accounting Standards Board, all
Hedging Obligations and any obligation of such Person
guaranteeing or in effect guaranteeing any
Indebtedness, dividend or other obligation of any other
Person (the "primary obligor") in any manner, whether
directly or indirectly, including obligations of such
Person however incurred:
(1) to purchase such Indebtedness or other
obligation or any property or assets
constituting security therefor;
(2) to advance or supply funds in any manner
(i) for the purchase or payment of such
Indebtedness or other obligation, or
(ii) to maintain a minimum working
capital, net worth or other balance
sheet condition or any income statement
condition of the primary obligor;
(3) to grant or convey any Lien, charge or
other encumbrance on any property or
assets of such Person to secure payment
of such Indebtedness or other
obligation;
(4) to lease property or to purchase
securities or other property or services
primarily for the purpose of assuring
the owner or holder of such Indebtedness
or obligation of the ability of the
primary obligor to make payment of such
Indebtedness or other obligation; or
(5) otherwise to assure the owner of the
Indebtedness or such obligation of the
primary obligor against loss in respect
thereof.
; provided, however, in no event shall Earnouts be a
Contingent Obligation hereunder.
"Continue", "Continuation", and "Continued" shall
refer to the continuation pursuant to Section 2.8
hereof of a Eurodollar Rate Loan of one Type as a
Eurodollar Rate Loan of the same Type from one Interest
Period to the next Interest Period.
"Convert", "Conversion", and "Converted" shall
refer to a conversion pursuant to Section 2.8 or
Article V of one Type of Loan into another Type of
Loan.
"Cost of Acquisition" means, with respect to any
Acquisition, as at the date of entering into any
agreement therefor, the sum of the following (without
duplication): (i) the value of the capital stock,
warrants or options to acquire capital stock of the
Borrower or any Subsidiary to be transferred in
connection therewith, (ii) the amount of any cash and
fair market value of other property (excluding property
described in clause (i) and the unpaid principal amount
of any debt instrument) given as consideration, (iii)
the amount (determined by using the face amount or the
amount payable at maturity, whichever is greater) of
any Indebtedness incurred, assumed or acquired by the
Borrower or any Subsidiary in connection with such
Acquisition, (iv) all additional purchase price amounts
in the form of Earnouts and other contingent
obligations that should be recorded on the financial
statements of the Borrower and its Subsidiaries in
accordance with GAAP, (v) all amounts paid in respect
of covenants not to compete, consulting agreements that
should be recorded on financial statements of the
Borrower and its Subsidiaries in accordance with GAAP,
and other affiliated contracts in connection with such
Acquisition, (vi) the aggregate fair market value of
all other consideration given by the Borrower or any
Subsidiary in connection with such Acquisition, and
(vii) out-of-pocket transaction costs for the services
and expenses of attorneys, accountants and other
consultants incurred in effecting such transaction, and
other similar transaction costs so incurred and
capitalized in accordance with GAAP. For purposes of
determining the Cost of Acquisition for any
transaction, (A) the capital stock of the Borrower
shall be valued (I) in the case of capital stock that
is then designated as a national market system security
or as a Small-Cap security by the National Association
of Securities Dealers, Inc. ("NASDAQ") or is listed on
a national securities exchange, the average of the last
reported bid and ask quotations or the last prices
reported thereon, and (II) with respect to shares that
are not freely tradeable (excluding restricted shares)
as determined by a committee composed of the members of
the Board of Directors of the Borrower and, if
requested by the Agent, determined to be a reasonable
valuation by the independent public accountants
referred to in Section 8.1(a), (B) the capital stock of
any Subsidiary shall be valued as determined by a
committee composed of the members of the Board of
Directors of such Subsidiary and, if requested by the
Agent, determined to be a reasonable valuation by the
independent public accountants referred to in Section
8.1(a), and (C) with respect to any Acquisition
accomplished pursuant to the exercise of options or
warrants or the conversion of securities, the Cost of
Acquisition shall include both the cost of acquiring
such option, warrant or convertible security as well as
the cost of exercise or conversion.
"Credit Party" means, collectively, the Borrower
and each Guarantor.
"Default" means any event, act or condition which,
with the giving or receipt of notice or lapse of time
or both, would constitute an Event of Default
hereunder.
"Default Rate" means (i) with respect to each
Eurodollar Rate Loan, until the end of the Interest
Period applicable thereto, a rate of two percent (2%)
above the Eurodollar Rate applicable to such Loan, and
thereafter at a rate of interest per annum which shall
be two percent (2%) above the Base Rate, (ii) with
respect to Base Rate Loans, at a rate of interest per
annum which shall be two percent (2%) above the Base
Rate and (iii) in any case, the maximum rate permitted
by applicable law, if lower.
"Determination Date" has the meaning therefor set
forth in the definition of "Applicable Margin."
"Direct Foreign Subsidiary" means any Foreign
Subsidiary a majority of whose outstanding Voting
Stock is owned by the Borrower or a Domestic
Subsidiary.
"Dollars" and the symbol "$" means dollars
constituting legal tender for the payment of public and
private debts in the United States of America.
"Domestic Subsidiary" means a Subsidiary which is
organized under the laws of one of the states or
territories comprising the United States of America.
"Earnouts" has the specific meaning therefor set
forth in each of the Acquisition Documents and
collectively means all such payments.
"Eligible Assignee" means (i) a Lender, (ii) an
affiliate of a Lender, and (iii) any other Person
approved by the Agent and, unless an Event of Default
has occurred and is continuing at the time any
assignment is effected in accordance with Section 12.1,
the Borrower, such approval not to be unreasonably
withheld or delayed by the Borrower; provided, however,
that neither the Borrower nor an affiliate of the
Borrower shall qualify as an Eligible Assignee.
"Eligible Securities" means the following
obligations and any other obligations previously
approved in writing by the Agent:
(a) Government Securities;
(b) obligations of any corporation organized
under the laws of any state of the United States
of America or under the laws of any other nation,
payable in Dollars in the United States of
America, expressed to mature not later than 90
days following the date of issuance thereof and
rated in an investment grade rating category by
S&P and Moody's;
(c) interest bearing demand or time deposits
issued by any Lender or certificates of deposit
maturing within one year from the date of issuance
thereof and issued by a bank or trust company
organized under the laws of the United States or
of any state thereof having capital surplus and
undivided profits aggregating at least
$400,000,000 and being rated "A-" or better by S&P
and "A-3" or better by Moody's;
(d) Municipal Obligations; and
(e) repurchase agreements entered into with
(i) any financial institution whose debt
obligations or commercial paper are rated "A" by
either of S&P or Moody's or "A-1" by S&P or "P-1"
by Moody's, or (ii) any Lender.
"Employee Benefit Plan" means any employee benefit
plan within the meaning of Section 3(3) of ERISA which
(i) is maintained for employees of the Borrower or any
of its ERISA Affiliates, (ii) is assumed by the
Borrower or any of its ERISA Affiliates in connection
with any Acquisition or (iii) has at any time been
maintained for the employees of the Borrower or any
current or former ERISA Affiliate.
"Environmental Laws" means any federal, state or
local statute, law, ordinance, code, rule, regulation,
order, or decree, regulating, relating to, or imposing
liability or standards of conduct concerning, any
environmental matters or conditions, environmental
protection or conservation, including without
limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended; the
Superfund Amendments and Reauthorization Act of 1986,
as amended; the Resource Conservation and Recovery Act,
as amended; the Toxic Substances Control Act, as
amended; the Clean Air Act, as amended; the Clean Water
Act, as amended; together with all regulations
promulgated thereunder, and any other "Superfund" or
"Superlien" law.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time, and
any successor statute and all rules and regulations
promulgated thereunder.
"ERISA Affiliate", as applied to the Borrower,
means any Person or trade or business which is a member
of a group which is under common control with the
Borrower, who together with the Borrower, is treated as
a single employer within the meaning of Section 414(b),
(c), (m) or (o) of the Code.
"Eurodollar Rate Loan" means a Loan for which the
rate of interest is determined by reference to the
Eurodollar Rate.
"Eurodollar Rate" means the interest rate per
annum calculated according to the following formula:
Eurodollar = Eurodollar Base
Rate + Applicable
Rate 1- Eurodollar Reserve Percentage Margin
"Eurodollar Base Rate" means, for any Eurodollar
Loan for any Interest Period therefor, the rate per
annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any
successor page) as the London interbank offered rate
for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such
Interest Period. If for any reason such rate is not
available, the term "Eurodollar Base Rate" shall mean,
for any Eurodollar Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on
Reuters Screen LIBO Page as the London interbank
offered rate for deposits in Dollars at approximately
11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable
to such Interest Period; provided, however, if more
than one rate is specified on Reuters Screen LIBO Page,
the applicable rate shall be the arithmetic mean of all
such rates (rounded upwards, if necessary, to the
nearest 1/100 of 1%).
"Eurodollar Reserve Percentage" means, at any
time, the maximum rate at which reserves (including,
without limitation, any marginal, special,
supplemental, or emergency reserves) are required to be
maintained under regulations issued from time to time
by the Board of Governors of the Federal Reserve System
(or any successor) by member banks of the Federal
Reserve System against "Eurocurrency liabilities" (as
such term is used in Regulation D). Without limiting
the effect of the foregoing, the Eurodollar Reserve
Percentage shall reflect any other reserves required to
be maintained by such member banks with respect to (i)
any category of liabilities which includes deposits by
reference to which the Eurodollar Rate is to be
determined, or (ii) any category of extensions of
credit or other assets which include Eurodollar Rate
Loans. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any
change in the Eurodollar Reserve Percentage.
"Event of Default" means any of the occurrences
set forth as such in Section 10.1.
"Exchange Act" means the Securities Exchange Act
of 1934, as amended, and the regulations promulgated
thereunder.
"Executive Officer" means the Chief Executive
Officer, the President and Chief Operating Officer, the
Chief Financial Officer, the Treasurer and any Senior
Vice President of the Borrower or any other person who,
by whatever title, has control over or responsibility
for the management and operations of the Borrower.
"Existing Debt" means such Consolidated Funded
Indebtedness as set forth on Schedule 1.2.
"Federal Funds Effective Rate" means, for any day,
the rate per annum (rounded upward to the nearest
1/100th 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 on the Business Day
next succeeding such day, provided that (i) if such day
is not a Business Day, the Federal Funds Effective Rate
for such day shall be such rate on such transactions on
the next preceding Business Day, and (ii) if no such
rate is so published on such next succeeding Business
Day, the Federal Funds Effective Rate for such day
shall be the average rate charged to the Agent (in its
individual capacity) on such day on such transaction as
determined by the Agent.
"Fiscal Month" means each approximately 30-day
fiscal period of the Borrower and its Subsidiaries
beginning on a Sunday and ending on the Saturday of
each calendar month closest to (whether before or
after) the last day of such calendar month.
"Fiscal Quarter" means a three-month quarter of a
Fiscal Year and when followed by reference to a year,
means the first, second, third or fourth quarter of
such Fiscal Year, as indicated.
"Fiscal Year" means the twelve month fiscal period
of the Borrower and its Subsidiaries commencing on
January 1 of each calendar year and ending on December
31 of such calendar year.
"Foreign Benefit Law" means any applicable
statute, law, ordinance, code, rule, regulation, order
or decree of any foreign nation or any province, state,
territory, protectorate or other political subdivision
thereof regulating, relating to, or imposing liability
or standards of conduct concerning, any Employee
Benefit Plan.
"Foreign Subsidiary" means any Subsidiary that is
not a Domestic Subsidiary.
"Four-Quarter Period" means a period of four full
consecutive Fiscal Quarters of the Borrower and its
Subsidiaries, taken together as one accounting period.
"GAAP" or "Generally Accepted Accounting
Principles" means generally accepted accounting
principles, being those principles of accounting set
forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified
Public Accountants or which have other substantial
authoritative support and are applicable in the
circumstances as of the date of a report.
"Government Securities" means direct obligations
of, or obligations the timely payment of principal and
interest on which are fully and unconditionally
guaranteed by, the United States of America which have
a maturity of not greater than one year.
"Governmental Authority" shall mean any Federal,
state, municipal, national or other governmental
department, commission, board, bureau, court, agency or
instrumentality or political subdivision thereof or any
entity or officer exercising executive, legislative,
judicial, regulatory or administrative functions of or
pertaining to any government or any court, in each case
whether associated with a state of the United States,
the United States, or a foreign entity or government.
"Grantor" has the meaning therefor set forth in
Section 4.3.
"Guarantor" means each Domestic Subsidiary now or
hereafter existing, which has executed a Guaranty.
"Guaranty" means, collectively (or individually as
the context may indicate) (i) the Guaranty Agreement
dated as of the date hereof between each Domestic
Subsidiary existing on the Closing Date and the Agent
for the benefit of the Lenders, in the form of Exhibit
I, and (ii) any other Guaranty Agreement in the form of
Exhibit I delivered to the Agent pursuant to Section
8.19, all as hereafter amended, supplemented or
replaced from time to time.
"Hazardous Material" means and includes any
pollutant, contaminant, or hazardous, toxic or
dangerous waste, substance or material (including
without limitation petroleum products, asbestos-
containing materials and lead), the generation,
handling, storage, transportation, disposal, treatment,
release, discharge or emission of which is subject to
any Environmental Law.
"Hedging Obligations" means any and all
obligations of the Borrower or any Subsidiary, whether
absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and
substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect
at least one of the parties thereto from the
fluctuations of interest rates, exchange rates
(including without limitation commodity exchange rates)
or forward rates applicable to such party's assets,
liabilities or exchange transactions, including, but
not limited to, Dollar-denominated or cross-currency
interest rate exchange agreements, forward currency
exchange agreements, commodity exchange agreements,
interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts,
warrants and those commonly known as interest rate
"swap" agreements; and (ii) any and all cancellations,
buybacks, reversals, terminations or assignments of any
of the foregoing.
"Indebtedness" means with respect to any Person,
without duplication, all indebtedness of such Person
relating to its Reimbursement Obligations or any other
reimbursement obligations under this Agreement, all
Indebtedness for Money Borrowed, all indebtedness of
such Person for the acquisition of property or arising
under Hedging Obligations, all indebtedness of such
Person secured by any Lien on the property of such
Person whether or not such indebtedness is assumed, all
liability of such Person by way of endorsements (other
than for collection or deposit in the ordinary course
of business), all Contingent Obligations, that portion
of obligations with respect to Capital Leases and other
items which in accordance with GAAP is required to be
classified as a liability on a balance sheet of such
Person; but excluding all accounts payable in the
ordinary course of business so long as payment therefor
is due within one year; provided that in no event shall
the term Indebtedness include surplus and retained
earnings, lease obligations (other than pursuant to
Capital Leases), reserves for deferred income taxes and
investment credits, other deferred credits or reserves,
or deferred compensation obligations.
"Indebtedness for Money Borrowed" means with
respect to any Person, without duplication, all
indebtedness in respect of money borrowed of such
Person, including without limitation all Capital Leases
and the deferred purchase price of any property or
asset, evidenced by a promissory note, bond, debenture
or similar written obligation for the payment of money
(including conditional sales or similar title retention
agreements), other than trade payables incurred in the
ordinary course of business.
"Intellectual Property Assignments" means those
certain Assignments of Patents, Trademarks, Copyrights
and Licenses in the form attached to the Intellectual
Property Security Agreement as Exhibit A, to be filed
upon acceleration of the Obligations hereunder, as from
time to time amended, supplemented or restated.
"Intellectual Property Security Agreement" means,
collectively (or individually as the context may
indicate), (i) that certain Intellectual Property
Security Agreement in the form of Exhibit O dated as of
the date hereof, and (ii) all IPSA Supplements, all
between the Borrower and certain Guarantors in favor of
the Agent for the benefit of the Lenders to
collaterally secure payment and performance of their
respective obligations hereunder and under the
Guaranty, as applicable, all as hereafter amended,
supplemented or replaced from time to time.
"Intercompany Advance" means a loan or advance
heretofore or hereafter made by an Intercompany Note
Holder to the Borrower, a Domestic Subsidiary or Direct
Foreign Subsidiary of the Borrower, which is evidenced
by an Intercompany Note in which the Agent has a valid,
duly perfected, first priority Lien under the
Intercompany Note Pledge Agreement, and the repayment
of which is subordinated to the rights of the Agent and
the Lenders under the Loan Documents in accordance to
the provisions set forth in the Intercompany Notes or
in the Subordination Agreement.
"Intercompany Notes" means, collectively, the
promissory notes heretofore issued and described on
Schedule A to the Intercompany Note Pledge Agreement
and promissory notes hereafter issued in the form
attached as Exhibit P hereto (with appropriate
insertions) outstanding from time to time evidencing
the Intercompany Advances.
"Intercompany Note Holder" means, at any date, the
Borrower and any Domestic Subsidiary of the Borrower
who has extended any Intercompany Advance that remains
outstanding at such date.
"Intercompany Note Pledge Agreement" means,
collectively (or individually as the contest may
indicate) (i) that certain Intercompany Note Pledge
Agreement of even date herewith between the Borrower,
certain Subsidiaries and the Agent, substantially in
the form of Exhibit P, and (ii) any other Intercompany
Note Pledge Agreement in the form of Exhibit P
delivered to the Agent pursuant to Section 8.19,
pursuant to which the Agent is granted a Lien in the
Intercompany Notes held by such Intercompany Note
Holder, in each case as the same may be amended,
supplemented or restated from time to time.
"Interest Period" means, for each Eurodollar Rate
Loan, a period commencing on the date such Eurodollar
Rate Loan is made, continued, or converted and ending,
at the Borrower's option, on the date one, two, three
or, if available from each Lender, six months
thereafter as notified to the Agent by the Authorized
Representative three (3) Business Days prior to the
beginning of such Interest Period; provided, that,
(i) if the Authorized Representative
fails to notify the Agent of the length of an
Interest Period three (3) Business Days prior to
the first day of such Interest Period, the Loan
for which such Interest Period was to be
determined shall be deemed to be a Base Rate Loan
as of the first day thereof;
(ii) if an Interest Period for a
Eurodollar Rate Loan would end on a day which is
not a Business Day, such Interest Period shall be
extended to the next Business Day (unless such
extension would cause the applicable Interest
Period to end in the succeeding calendar month, in
which case such Interest Period shall end on the
next preceding Business Day);
(iii) 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
end on the last Business Day of a calendar month;
(iv) no Interest Period shall extend
past the Stated Termination Date; and
(v) there shall not be more than ten
(10) Interest Periods in effect on any day.
"Interest Rate Selection Notice" means the written
notice delivered by an Authorized Representative in
connection with the election of a subsequent Interest
Period for any Eurodollar Rate Loan or the conversion
of any Eurodollar Rate Loan into a Base Rate Loan or
the conversion of any Base Rate Loan into a Eurodollar
Rate Loan, in the form of Exhibit E.
"IPSA Supplement" means any supplement to the
Intellectual Property Security Agreement in the form of
Exhibit B to Exhibit O, with appropriate revisions as
to the identity of the grantor.
"Issuing Bank" means initially NationsBank as the
issuer of Letters of Credit under Article III, and
thereafter any Lender which may succeed NationsBank as
the issuer of Letters of Credit under Article III.
"LC Account Agreement" means the LC Account
Agreement dated as of the date hereof between the
Borrower and the Issuing Bank, as amended, modified or
supplemented from time to time, in the form of Exhibit
L.
"Lending Office" means, as to each Lender, the
Lending Office of such Lender designated on the
signature pages hereof or in an Assignment and
Acceptance or such other office of such Lender (or of
an affiliate of such Lender) as such Lender may from
time to time specify to the Authorized Representative
and the Agent as the office by which its Loans are to
be made and maintained.
"Letter of Credit" means a standby letter of
credit issued by the Issuing Bank for the account of
the Borrower in favor of a Person advancing credit or
securing an obligation on behalf of the Borrower.
"Letter of Credit Commitment" means, with respect
to each Lender, the obligation of such Lender to
acquire Participations in respect of Letters of Credit
and Reimbursement Obligations up to an aggregate amount
at any one time outstanding equal to such Lender's
Applicable Commitment Percentage of the Total Letter of
Credit Commitment as the same may be increased or
decreased from time to time pursuant to this Agreement.
"Letter of Credit Facility" means the facility
described in Article III providing for the issuance by
the Issuing Bank for the account of the Borrower of
Letters of Credit in an aggregate stated amount at any
time outstanding not exceeding the Total Letter of
Credit Commitment.
"Letter of Credit Outstandings" means, as of any
date of determination, the aggregate amount remaining
undrawn under all Letters of Credit then outstanding
plus the principal amount of all Reimbursement
Obligations then outstanding.
"Lien" means any interest in property securing any
obligation owed to, or a claim by, a Person other than
the owner of the property, whether such interest is
based on the common law, statute or contract, and
including but not limited to the lien, trust or
security interest arising from a mortgage, encumbrance,
pledge, security agreement, conditional sale or trust
receipt or a lease, consignment or bailment for
security purposes. For the purposes of this Agreement,
the Borrower and any Subsidiary shall be deemed to be
the owner of any property which it has acquired or
holds subject to a conditional sale agreement,
financing lease, or other arrangement pursuant to which
title to the property has been retained by or vested in
some other Person for security purposes.
"Loan" or "Loans" means any borrowing pursuant to
an Advance under the Revolving Credit Facility.
"Loan Documents" means this Agreement, the Notes,
the Security Instruments, the Guaranties, the
Subordination Agreement, the Applications for Letters
of Credit and all other instruments and documents
heretofore or hereafter executed or delivered to or in
favor of any Lender or the Agent in connection with the
Loans made and transactions contemplated under this
Agreement, as the same may be amended, supplemented or
replaced from time to time.
"Material Adverse Effect" means a material adverse
effect on (i) the business, properties, prospects,
operations or condition, financial or otherwise, of the
Borrower and its Subsidiaries on a consolidated basis,
(ii) the ability of any Material Credit Party to pay or
perform its respective obligations, liabilities and
indebtedness under the Loan Documents as such payment
or performance becomes due in accordance with the terms
thereof, or (iii) the rights, powers and remedies of
the Agent or any Lender under any Loan Document or the
validity, legality or enforceability thereof (including
for purposes of clauses (ii) and (iii) the imposition
of burdensome conditions thereon).
"Material Credit Party" means (i) any direct or
indirect Subsidiary which has EBITDA, as defined below,
greater than 5% of Consolidated EBITDA (calculated for
the most recent period for which the Agent has received
the financial information required under Section 8.1)
and (ii) for purposes of clause (ii) of the definition
of Material Adverse Effect, all direct and indirect
Subsidiaries, including without limitation each
Material Subsidiary under (i) above, which,
collectively, have EBITDA equal to or greater than 95%
of Consolidated EBITDA (as calculated under (ii)
above). For purposes of this definition, "EBITDA"
means, with respect to any Subsidiary, Consolidated
EBITDA as calculated for such Subsidiary without regard
to the Borrower or any other Subsidiary.
"Moody's" means Moody's Investors Services, Inc.
"Multiemployer Plan" means a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA to which the
Borrower or any ERISA Affiliate is making, or is
accruing an obligation to make, contributions or has
made, or been obligated to make, contributions within
the preceding six (6) Fiscal Years.
"Municipal Obligations" means general obligations
issued by, and supported by the full taxing authority
of, any state of the United States of America or of any
municipal corporation or other public body organized
under the laws of any such state which are rated in the
highest investment rating category by both S&P and
Moody's.
"Net Proceeds" means (i) in respect of the
issuance of equity or Indebtedness or the sale, lease
or other disposition of assets, the amount of cash,
cash equivalents and the market value of marketable
securities, as and when received, net of all legal,
accounting, banking, underwriting, title and recording
fees and expenses, commissions, discounts and all other
reasonable and ordinary expenses incurred in connection
therewith and all taxes required to be paid or accrued
as a consequence of such transaction and (ii) in
respect of proceeds of insurance or resulting from the
taking of any asset by eminent domain, the amount of
cash, cash equivalents and market value of marketable
securities as and when received, net of all legal,
title and recording fees and expenses incurred in
connection therewith and all taxes required to be paid
or accrued as a consequence of such transaction.
"NMS" means NationsBanc Montgomery Securities LLC.
"Notes" means, collectively, the promissory notes
of the Borrower evidencing Loans executed and delivered
to the Lenders substantially in the form of Exhibit F.
"Obligations" means the obligations, liabilities
and Indebtedness of the Borrower with respect to (i)
the principal and interest on the Loans, (ii) the
Reimbursement Obligations and otherwise in respect of
the Letters of Credit, (iii) all liabilities of the
Borrower to any Lender or its affiliates which arise
under a Swap Agreement, and (iv) the payment and
performance of all other obligations, liabilities and
Indebtedness of the Borrower to the Lenders, the Agent,
or NMS under any one or more of the other Loan
Documents or with respect to the Loans or Letters of
Credit.
"Operating Documents" means with respect to any
corporation, limited liability company, partnership,
limited partnership, limited liability partnership or
other legally authorized incorporated or unincorporated
entity, the bylaws, operating agreement, partnership
agreement, limited partnership agreement or other
applicable documents relating to the operation,
governance or management of such entity.
"Organizational Action" means with respect to any
corporation, limited liability company, partnership,
limited partnership, limited liability partnership or
other legally authorized incorporated or unincorporated
entity, any corporate, organizational or partnership
action (including any required shareholder, member or
partner action), or other similar official action, as
applicable, taken by such entity.
"Organizational Documents" means with respect to
any corporation, limited liability company,
partnership, limited partnership, limited liability
partnership or other legally authorized incorporated or
unincorporated entity, the articles of incorporation,
certificate of incorporation, articles of
organization, certificate of limited partnership or
other applicable organizational or charter documents
relating to the creation of such entity.
"Outstandings" means, collectively, at any date,
the Letter of Credit Outstandings and Revolving Credit
Outstandings on such date.
"Participation" means, with respect to any Lender
(other than the Issuing Bank) and a Letter of Credit,
the extension of credit represented by the
participation of such Lender hereunder in the liability
of the Issuing Bank in respect of a Letter of Credit
issued by the Issuing Bank in accordance with the terms
hereof.
"PBGC" means the Pension Benefit Guaranty
Corporation and any successor thereto.
"Pension Plan" means any employee pension benefit
plan within the meaning of Section 3(2) of ERISA, other
than a Multiemployer Plan, which is subject to the
provisions of Title IV of ERISA or Section 412 of the
Code and which (i) is maintained for employees of the
Borrower or any of its ERISA Affiliates or is assumed
by the Borrower or any of its ERISA Affiliates in
connection with any Acquisition or (ii) has at any time
been maintained for the employees of the Borrower or
any current or former ERISA Affiliate.
"Permitted Acquisition" means each Acquisition
effected with the consent and approval of the board of
directors or other applicable governing body of the
Person being acquired, and with the duly obtained
approval of such shareholders or other holders of
equity or other ownership interest as such Person may
be required to obtain, so long as either (A) the prior
written consent of the Required Lenders has been
obtained or (B) (i) immediately prior to and
immediately after the consummation of such Acquisition,
no Default or Event of Default has occurred and is
continuing, (ii) substantially all of the sales and
operating profits generated by such Person (or assets)
so acquired or invested are derived from a line or
lines of business that are part of, or complimentary,
to the executive search, temporary staffing, pay-
rolling and strategic advisory services as then
conducted by the Borrower and its Subsidiaries, (iii)
an audited consolidated balance sheet and audited
statements of income, cash flow and stockholders'
equity of the Person being acquired as of its most
recent fiscal year end are delivered to the Agent not
less than five (5) Business Days prior to the
consummation of such Acquisition, (iv) pro forma
consolidated historical financial statements of the
Borrower and its Subsidiaries as of the end of the most
recent Fiscal Quarter for the four Fiscal Quarters most
recently ended giving effect to such Acquisition are
delivered to the Agent not less than five (5) Business
Days prior to the consummation of such Acquisition,
together with a certificate of an Authorized
Representative demonstrating pro forma compliance with
Section 9.1 hereof after giving effect to such
Acquisition, (v) the aggregate Cost of Acquisition
(excluding the value of any capital stock given as part
of the Cost of Acquisition) with respect to any
Acquisition consummated shall not exceed $5,000,000,
(vi) in the event the Person so acquired is not a
Subsidiary, the Borrower's strategic plan includes
additional permitted investment in such Person
sufficient for it to become a Subsidiary, (vii) any
Advance to finance such Acquisition otherwise
qualifying as a Permitted Acquisition hereunder shall
be in compliance with Section 2.12 hereof and (viii)
the pro forma Consolidated Leverage Ratio after giving
effect to such Acquisition shall not exceed 2.50 to
1.00.
"Permitted Liens" means collectively each of the
Liens set forth in Sections 9.3(a)-(h).
"Person" means an individual, partnership,
corporation, cooperative, trust, unincorporated
organization, association, joint venture or a
government or agency or political subdivision thereof.
"Pledge Agreement" means, collectively (or
individually as the context may indicate), (i) that
certain Pledge Agreement in the form of Exhibit K dated
as of the date hereof, and (ii) all Pledge Agreement
Supplements, all between the Borrower and certain
Domestic Subsidiaries, as pledgors, and the Agent for
the benefit of the Lenders, as pledgee, pledging (A)
100% of the capital stock or equity or other ownership
interest of each Domestic Subsidiary specified therein
owned by the Borrower and/or another Domestic
Subsidiary and (B) 66% of the voting share capital and
100% of the nonvoting share capital or equity or other
ownership interest and related interests and rights of
each Direct Foreign Subsidiary, and securing the
obligations of each pledgor under this Agreement and
the Notes or the Guaranty, as applicable, all as
hereafter amended, supplemented or replaced from time
to time.
"Pledge Agreement Supplement" means a supplement
to the Pledge Agreement in the for of Exhibit A to
Exhibit K, with appropriate revisions as to the
identity of the pledgor.
"Pledged Stock" has the meaning given to such term
in the Pledge Agreement.
"Preferred Stock" means, collectively, (a) the
Company's Series E Convertible Preferred Stock
containing such terms as are set forth in the
Borrower's Certificate of Designation filed with the
Secretary of State of Delaware on October 25, 1996,
none of which are issued or outstanding on the Closing
Date; and (b) the Series F Convertible Preferred Stock
which is being issued by the Borrower on the Closing
Date for a total consideration of not less than
$20,000,000 and with a maturity of not less than eight
years from the Closing Date and containing such terms
as are set forth in the Borrower's Certificate of
Designation filed with the Secretary of State of
Delaware on or before the Closing Date.
"Prime Rate" means the rate of interest per annum
announced publicly by the Agent as its prime rate from
time to time. The Prime Rate is not necessarily the
best or the lowest rate of interest offered by the
Agent.
"Principal Office" means the office of the Agent
at NationsBank, National Association, Independence
Center, 15th Floor, NC1 001-15-04, Charlotte, North
Carolina 28255, Attention: Agency Services, or such
other office and address as the Agent may from time to
time designate.
"Regulation D" means Regulation D of the Board as
the same may be amended or supplemented from time to
time.
"Regulatory Change" means any change effective
after the Closing Date in United States Federal or
state laws or regulations (including Regulation D and
capital adequacy regulations) or foreign laws or
regulations or the adoption or making after such date
of any interpretations, directives or requests applying
to a class of banks, which includes any of the Lenders,
under any United States Federal or state or foreign
laws or regulations (whether or not having the force of
law) by any court or governmental or monetary authority
charged with the interpretation or administration
thereof or compliance by any Lender with any request or
directive regarding capital adequacy, whether or not
having the force of law, and whether or not failure to
comply therewith would be unlawful and whether or not
published or proposed prior to the date hereof.
"Reimbursement Obligation" shall mean at any time,
the obligation of the Borrower with respect to any
Letter of Credit to reimburse the Issuing Bank and the
Lenders to the extent of their respective
Participations (including by the receipt by the Issuing
Bank of proceeds of Base Rate Refunding Loans pursuant
to Section 3.2) for amounts theretofore paid by the
Issuing Bank pursuant to a drawing under such Letter of
Credit.
"Required Lenders" means, as of any date, Lenders
on such date having Credit Exposures (as defined below)
aggregating at least (i) if there shall be fewer than
three (3) Lenders, 100% of the aggregate Credit
Exposures of all Lenders on such date, and (ii) if
there shall be three (3) or more Lenders, 66.67% or
more of the aggregate Credit Exposures of all the
Lenders on such date. For purposes of the preceding
sentence, the amount of the "Credit Exposure" of each
Lender shall be equal to the aggregate principal amount
of the Loans owing to such Lender plus the amount of
such Lender's Applicable Commitment Percentage of
Letter of Credit Outstandings plus the aggregate
unutilized amounts of such Lender's Revolving Credit
Commitment (after accounting for such Lender's
Applicable Commitment Percentage of any Letter of
Credit Outstandings); provided that if any Lender shall
have failed to pay to the Issuing Bank its Applicable
Commitment Percentage of any drawing under any Letter
of Credit resulting in an outstanding Reimbursement
Obligation, such Lender's Credit Exposure attributable
to Letter of Credit Outstandings shall be deemed to be
held by the Issuing Bank for purposes of this
definition.
"Replacement Bank" means (i) any Lender or Lenders
selected by the Borrower or (ii) one or a group of
banks or other financial institutions selected by the
Borrower and acceptable to and approved by the Agent
and the Required Lenders in their reasonable
discretion, any of which shall replace any then
existing Lender or Lenders pursuant to Section 4.7
hereof and have a Revolving Credit Commitment equal in
amount to the Revolving Credit Commitment of the
replaced Lender or Lenders.
"Restricted Payment" means (a) any dividend or
other distribution, direct or indirect, on account of
any shares of any class of stock of the Borrower or any
Subsidiary (other than those payable or distributable
solely to the Borrower or any Guarantor) now or
hereafter outstanding, including without limitation the
Preferred Stock, except a dividend payable solely in
shares of a class of stock to the holders of that
class; (b) any redemption, conversion, exchange,
retirement or similar payment, purchase or other
acquisition for value, direct or indirect, of any
Indebtedness, including without limitation the
Subordinated Debt, or of any shares of any class of
stock of the Borrower or any Subsidiary (other than
those payable or distributable solely to the Borrower
or any Guarantor) now or hereafter outstanding,
including without limitation the Preferred Stock other
than with respect to, and specifically excluding, its
conversion; (c) any payment (other than to the Borrower
or any Guarantor) made to redeem, repurchase or retire,
or to obtain the surrender of, any outstanding warrants
(other than payments not exceeding $3,500,000 in the
aggregate made in connection with redeeming,
repurchasing or retiring or obtaining the surrender of
the Warrants), options or other rights to acquire
shares of any class of stock of the Borrower or any
Subsidiary now or hereafter outstanding, including
without limitation the Preferred Stock; and (d) any
issuance and sale of capital stock of any Subsidiary of
the Borrower (or any option, warrant or right to
acquire such stock) other than to the Borrower or any
Guarantor.
"Revolving Credit Commitment" means, with respect
to each Lender, the obligation of such Lender to make
Loans to the Borrower up to an aggregate principal
amount at any one time outstanding equal to such
Lender's Applicable Commitment Percentage of the Total
Revolving Credit Commitment.
"Revolving Credit Facility" means the facility
described in Article II hereof providing for Loans to
the Borrower by the Lenders at any time outstanding up
to the aggregate principal amount of the Total
Revolving Credit Commitment less all Revolving Credit
Outstandings.
"Revolving Credit Outstandings" means, as of any
date of determination, the aggregate principal amount
of all Loans then outstanding.
"Revolving Credit Termination Date" means the
earlier to occur of (i) the Stated Termination Date or
(ii) such date of termination of Lenders' obligations
pursuant to Section 10.1 upon the occurrence of an
Event of Default, or (iii) such date as the Borrower
may voluntarily and permanently terminate the Revolving
Credit Facility by payment in full of all Revolving
Credit Outstandings and Letter of Credit Outstandings
together with all accrued and unpaid interest thereon,
except for such Letter of Credit Outstandings as have
been fully cash collateralized in accordance with
Section 10.1(B), all Revolving Credit Commitments and
Letter of Credit Commitments shall have terminated or
expired, and the Borrower shall have fully, finally and
irrevocably paid and satisfied all Obligations.
"S&P" means Standard & Poor's, a division of The
McGraw-Hill Companies.
"Security Agreement" means, collectively (or
individually as the context may indicate), (i) that
certain Security Agreement dated as of the date hereof
between each Credit Party and the Agent in the form of
Exhibit J, and (ii) any additional Security Agreement
in the form of Exhibit J delivered to the Agent
pursuant to Section 8.19 or Article IV all as hereafter
amended, supplemented or replaced from time to time.
"Security Instruments" means, collectively, the
Pledge Agreement, the Mortgage of Shares dated as of
the Closing Date executed by Whitney Partners, L.L.C.,
the Security Agreement, the Intellectual Property
Security Agreement, the Intellectual Property
Assignment, the LC Account Agreement, the Intercompany
Note Pledge Agreement, the Subordination Agreement,
landlord waivers and all other agreements, instruments
and other documents, whether now existing or hereafter
in effect, pursuant to which any Credit Party shall
grant or convey to the Agent or the Lenders a Lien in
property as security for all or any portion of the
Obligations, as any of them may be amended, modified or
supplemented from time to time.
"Single Employer Plan" means any employee pension
benefit plan covered by Title IV of ERISA in respect of
which the Borrower or any Subsidiary is an "employer"
as described in Section 4001(b) of ERISA and which is
not a Multiemployer Plan.
"Solvent" means, when used with respect to any
Person, that at the time of determination:
(i) the fair value of its assets (both
at fair valuation and at present fair saleable
value on an orderly basis) is in excess of the
total amount of its liabilities, including
Contingent Obligations; and
(ii) it is then able and expects to be
able to pay its debts as they mature; and
(iii) it does not have unreasonably
small capital to carry on its business as
conducted and as proposed to be conducted.
"Stated Termination Date" means March 19, 2003.
"Subordinated Debt" means the Senior Subordinated
Notes issued by the Borrower on the Closing Date in the
original principal amount of $10,000,000 with a final
maturity of not less than eight years from the Closing
Date pursuant to the terms of the Indenture of even
date herewith between the Borrower, as Issuer, and
State Street Bank and Trust Company, N.A., as Trustee.
"Subordinated Debt Documents" means, collectively,
the Securities Purchase Agreement of even date herewith
by and among the Borrower, GarMark Partners, L.P., and
Moore Global Investments, Ltd., Remington Investment
Strategies, L.P. and NationsBanc Montgomery Securities,
LLC, and the Indenture of even date, herewith between
the Borrower, as Issuer, and State Street Bank and
Trust Company, N.A., as Trustee, pursuant to the terms
of which the Subordinated Debt has been issued by the
Borrower on the Closing Date, as amended from time to
time thereof without violation of Section 9.4 hereof,
each Senior Subordinated Note issued by the Borrower
thereunder and all other agreements, instruments,
certificates and documents issued from time to time in
connection therewith.
"Subordination Agreement" means, collectively (or
individually as the context may indicate), (i) the
Subordination Agreement dated as of the date hereof
between the Credit Parties and the Agent in the form of
Exhibit O, and (ii) any additional Subordination
Agreement in the form of Exhibit O delivered to the
Agent pursuant to Section 8.19 or Article IV all as
hereafter modified, amended or supplemented from time
to time.
"Subsidiary" means any corporation or other entity
in which more than 50% of its outstanding voting stock
or more than 50% of all equity or other ownership
interests is owned directly or indirectly by the
Borrower and/or by one or more of the Subsidiaries.
"Swap Agreement" means one or more agreements
between the Borrower and any Person with respect to
Indebtedness evidenced by any or all of the Notes, on
terms mutually acceptable to the Borrower and such
Person and approved by each of the Lenders, which
agreements create Hedging Obligations; provided,
however, that no such approval of the Lenders shall be
required to the extent such agreements are entered into
between the Borrower and any Lender.
"Termination Event" means: (i) a "Reportable
Event" described in Section 4043 of ERISA and the
regulations issued thereunder (unless the notice
requirement has been waived by applicable regulation);
or (ii) the withdrawal of the Borrower or any ERISA
Affiliate from a Pension Plan during a plan year in
which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA or was deemed such under
Section 4068(f) of ERISA; or (iii) the termination of a
Pension Plan, the filing of a notice of intent to
terminate a Pension Plan or the treatment of a Pension
Plan amendment as a termination under Section 4041 of
ERISA; or (iv) the institution of proceedings to
terminate a Pension Plan by the PBGC; or (v) any other
event or condition which would constitute grounds under
Section 4042(a) of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension
Plan; or (vi) the partial or complete withdrawal of the
Borrower or any ERISA Affiliate from a Multiemployer
Plan; or (vii) the imposition of a Lien pursuant to
Section 412 of the Code or Section 302 of ERISA; or
(viii) any event or condition which results in the
reorganization or insolvency of a Multiemployer Plan
under Section 4241 or Section 4245 of ERISA,
respectively; or (ix) any event or condition which
results in the termination of a Multiemployer Plan
under Section 4041A of ERISA or the institution by the
PBGC of proceedings to terminate a Multiemployer Plan
under Section 4042 of ERISA.
"Total Letter of Credit Commitment" means an
aggregate stated amount not to exceed $5,000,000.
"Total Revolving Credit Commitment" means the
maximum aggregate principal amount at any time
outstanding equal to $75,000,000, as reduced from time
to time in accordance with Sections 2.7 and 2.13.
"Type" shall mean any type of Loan (i.e., a Base
Rate Loan or a Eurodollar Rate Loan).
"Unused Fee" has the meaning assigned to such term
in Section 2.10.
"Voting Stock" means shares of capital stock
issued by a corporation, or equivalent interests in any
other Person, the holders of which are ordinarily, in
the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar
functions) of such Person, even if the right so to vote
has been suspended by the happening of such a
contingency.
"Warrants" means the Series E Warrants issued by
the Borrower pursuant to that certain Warrant Purchase
Agreement dated as of May 31, 1996, as thereafter
amended.
I.2. Rules of Interpretation.
(a) All accounting terms not specifically defined
herein shall have the meanings assigned to such terms
and shall be interpreted in accordance with GAAP
applied on a Consistent Basis.
(b) Each term defined in Article 1 or 9 of the
New York Uniform Commercial Code shall have the meaning
given therein unless otherwise defined herein, except
to the extent that the Uniform Commercial Code of
another jurisdiction is controlling, in which case such
terms shall have the meaning given in the Uniform
Commercial Code of the applicable jurisdiction.
(c) The headings, subheadings and table of
contents used herein or in any other Loan Document are
solely for convenience of reference and shall not
constitute a part of any such document or affect the
meaning, construction or effect of any provision
thereof.
(d) Except as otherwise expressly provided,
references herein to articles, sections, paragraphs,
clauses, annexes, appendices, exhibits and schedules
are references to articles, sections, paragraphs,
clauses, annexes, appendices, exhibits and schedules in
or to this Agreement.
(e) All definitions set forth herein or in any
other Loan Document shall apply to the singular as well
as the plural form of such defined term, and all
references to the masculine gender shall include
reference to the feminine or neuter gender, and vice
versa, as the context may require.
(f) When used herein or in any other Loan
Document, words such as "hereunder", "hereto", "hereof"
and "herein" and other words of like import shall,
unless the context clearly indicates to the contrary,
refer to the whole of the applicable document and not
to any particular article, section, subsection,
paragraph or clause thereof.
(g) References to "including" means including
without limiting the generality of any description
preceding such term.
(h) All dates and times of day specified herein
shall refer to such dates and times at Charlotte, North
Carolina.
ARTICLE II
The Revolving Credit Facility
II.1. Revolving Loans.
(a) Commitment. Subject to the terms and
conditions of this Agreement, each Lender severally
agrees to make Advances to the Borrower under the
Revolving Credit Facility from time to time from the
Closing Date until the Revolving Credit Termination
Date on a pro rata basis as to the total borrowing
requested by the Borrower on any day determined by such
Lender's Applicable Commitment Percentage up to but not
exceeding the Revolving Credit Commitment of such
Lender; provided, however, that the Lenders will not be
required and shall have no obligation to make any such
Advance (i) so long as a Default or an Event of Default
has occurred and is continuing or (ii) if the Agent has
accelerated the maturity of any of the Notes as a
result of an Event of Default; provided further,
however, that immediately after giving effect to each
such Advance, the principal amount of Revolving Credit
Outstandings plus Letter of Credit Outstandings shall
not exceed the Total Revolving Credit Commitment.
Within such limits, the Borrower may borrow, repay and
reborrow under the Revolving Credit Facility on a
Business Day from the Closing Date until, but (as to
borrowings and reborrowings) not including, the
Revolving Credit Termination Date; provided; however,
that (y) no Loan that is a Eurodollar Rate Loan shall
be made which has an Interest Period that extends
beyond the Stated Termination Date and (z) each
Revolving Loan that is a Eurodollar Rate Loan may,
subject to the provisions of Sections 2.7 and 2.13, be
repaid only on the last day of the Interest Period with
respect thereto unless such payment is accompanied by
the additional payment, if any, required by Section 5.5
(b) Amounts. Except as otherwise permitted by
the Lenders from time to time, the aggregate unpaid
principal amount of the Outstandings shall not exceed
at any time the Total Revolving Credit Commitment. In
the event there shall be outstanding any such excess,
the Borrower shall immediately make such payments and
prepayments as shall be necessary to comply with this
Section 2.1(b). Each Loan hereunder, other than Base
Rate Refunding Loans, and each conversion under Section
2.8, shall be in an amount of at least (i) $1,500,000
with respect to Eurodollar Rate Loans and $500,000 with
respect to Base Rate Loans, and, (ii) if greater than
such amounts, an integral multiple of $500,000 with
respect to Eurodollar Rate Loans and $100,000 with
respect to Base Rate Loans.
(c) Advances. (i) An Authorized Representative
shall give the Agent (1) at least three Business Days'
irrevocable written notice by telefacsimile
transmission of a Borrowing Notice or Interest Rate
Selection Notice (as applicable) with appropriate
insertions, effective upon receipt, of each Loan that
is a Eurodollar Rate Loan (whether representing an
additional borrowing hereunder or the conversion of a
borrowing hereunder from Base Rate Loans to Eurodollar
Rate Loans) prior to 10:30 A.M. and (2) irrevocable
written notice by telefacsimile transmission of a
Borrowing Notice or Interest Rate Selection Notice (as
applicable) with appropriate insertions, effective upon
receipt, of each Loan (other than Base Rate Refunding
Loans to the extent the same are effected without
notice pursuant to Section 2.1(c)(iv)) that is a Base
Rate Loan (whether representing an additional borrowing
hereunder or the conversion of borrowing hereunder from
Eurodollar Rate Loans to Base Rate Loans) prior to
10:30 A.M. on the day of such proposed Loan. Each such
notice shall specify the amount of the borrowing, the
type of Loan (Base Rate or Eurodollar Rate), the date
of borrowing and, if a Eurodollar Rate Loan, the
Interest Period to be used in the computation of
interest. Notice of receipt of such Borrowing Notice
or Interest Rate Selection Notice, as the case may be,
together with the amount of each Lender's portion of an
Advance requested thereunder, shall be provided by the
Agent to each Lender by telefacsimile transmission with
reasonable promptness, but (provided the Agent shall
have received such notice by 10:30 A.M.) not later than
1:00 P.M. on the same day as the Agent's receipt of
such notice.
(ii) Not later than 2:00 P.M. on the date
specified for each borrowing under this Section 2.1,
each Lender shall, pursuant to the terms and subject to
the conditions of this Agreement, make the amount of
the Advance or Advances to be made by it on such day
available by wire transfer to the Agent in the amount
of its pro rata share, determined according to such
Lender's Applicable Commitment Percentage of the Loan
or Loans to be made on such day. Such wire transfer
shall be directed to the Agent at the Principal Office
and shall be in the form of Dollars constituting
immediately available funds. The amount so received by
the Agent shall, subject to the terms and conditions of
this Agreement, be made available to the Borrower by
delivery of the proceeds thereof to the Borrower's
Account or otherwise as shall be directed in the
applicable Borrowing Notice by the Authorized
Representative and reasonably acceptable to the Agent.
(iii) The Borrower shall have the option to
elect the duration of the initial and any subsequent
Interest Periods and to convert the Loans in accordance
with Section 2.8. Eurodollar Rate Loans and Base Rate
Loans may be outstanding at the same time, provided,
however, there shall not be outstanding at any one time
Eurodollar Rate Loans having more than ten (10)
different Interest Periods. If the Agent does not
receive a Borrowing Notice or an Interest Rate
Selection Notice giving notice of election of the
duration of an Interest Period or of conversion of any
Loan to or continuation of a Loan as a Eurodollar Rate
Loan by the time prescribed by Sections 2.1(c) or 2.8,
the Borrower shall be deemed to have elected to convert
such Loan to (or continue such Loan as) a Base Rate
Loan until the Borrower notifies the Agent in
accordance with Section 2.8.
(iv) Notwithstanding the foregoing, if a
drawing is made under any Letter of Credit, such
drawing is honored by the Issuing Bank prior to the
Stated Termination Date, and the Borrower shall not as
of the immediately following Business Day fully
reimburse the Issuing Bank in respect of such drawing,
provided that the conditions to making a Loan as herein
provided shall then be satisfied, the Reimbursement
Obligation arising from such drawing shall be paid to
the Issuing Bank by the Agent without the requirement
of notice to or from the Borrower from immediately
available funds which shall be advanced on the Business
Day immediately following the date of payment of such
draw by the Issuing Bank as a Base Rate Refunding Loan
by each Lender under the Revolving Credit Facility in
an amount equal to such Lender's Applicable Commitment
Percentage of such Reimbursement Obligation. Notices
to and payments by the Lenders with respect to any Base
Rate Refunding Loan shall be made in accordance with
Section 3.2(c). Any such Base Rate Refunding Loan shall
be advanced as, and shall continue as, a Base Rate Loan
unless and until the Borrower converts such Base Rate
Loan in accordance with the terms of Section 2.8.
II.2. Payment of Interest.
(a) The Borrower shall pay interest to the Agent
for the account of each Lender on the outstanding and
unpaid principal amount of each Loan made by such
Lender for the period commencing on the date of such
Loan until such Loan shall be paid, continued or
converted, as the case may be, at the then applicable
Base Rate for Base Rate Loans or applicable Eurodollar
Rate for Eurodollar Rate Loans, as designated by the
Authorized Representative pursuant to Section 2.1;
provided, however, that if any amount shall not be paid
when due (at maturity, by acceleration or otherwise),
all amounts outstanding hereunder shall bear interest
thereafter at the Default Rate.
(b) Interest on each Loan shall be computed on
the basis of a year of 360 days and calculated in each
case for the actual number of days elapsed. Interest
on each Loan shall be paid (i) quarterly in arrears on
the last Business Day of each March, June, September
and December commencing June, 1998 for each Base Rate
Loan, (ii) on the last day of the applicable Interest
Period for each Eurodollar Rate Loan and, if such
Interest Period extends for more than three months, at
intervals of three months after the first day of such
Interest Period, and (iii) upon payment in full of the
principal amount of such Loan and termination of this
Agreement.
II.3. Payment of Principal. The principal amount
of each Loan shall be due and payable to the Agent for the
benefit of each Lender in full on the Revolving Credit
Termination Date, or earlier as specifically provided
herein. The principal amount of any Base Rate Loan may be
prepaid in whole or in part at any time. The principal
amount of any Eurodollar Rate Loan may be prepaid only at
the end of the applicable Interest Period unless the
Borrower shall pay to the Agent for the account of the
Lenders the additional amount, if any, required under
Section 5.4. All prepayments of Loans made by the Borrower
shall be in the amount of (i) $1,500,000 with respect to
Eurodollar Rate Loans and $500,000 with respect to Base Rate
Loans or (ii) such greater amount which is an integral
multiple of $500,000 with respect to Eurodollar Rate Loans
and $100,000 with respect to Base Rate Loans or (iii) the
amount equal to all Revolving Credit Outstandings, or (iv)
such other amount as necessary to comply with Section 2.1(b)
or Section 2.7.
II.4. Manner of Payment.
(a) Each payment of principal (including any
prepayment) and payment of interest and fees, and any
other amount required to be paid to the Lenders with
respect to the Loans, shall be made to the Agent at the
Principal Office, for the account of each Lender, in
Dollars and in immediately available funds before 12:30
P.M. on the date such payment is due.
(b) The Agent shall deem any payment made by or
on behalf of the Borrower hereunder that is not made
both in Dollars and in immediately available funds and
prior to 12:30 P.M. to be a non-conforming payment.
Any such payment shall not be deemed to be received by
the Agent until the later of (i) the time such funds
become available funds and (ii) the next Business Day.
Any non-conforming payment may constitute or become a
Default or Event of Default in accordance with the
terms of Sections 10.1(a) and (b). Interest shall
continue to accrue on any principal as to which a non-
conforming payment is made until the later of (x) the
date such funds become available funds or (y) the next
Business Day at the Default Rate from the date such
amount was due and payable.
(c) In the event that any payment hereunder or
under the Notes becomes due and payable on a day other
than a Business Day, then such due date shall be
extended to the next succeeding Business Day unless
provided otherwise under clause (ii) of the definition
of "Interest Period"; provided that interest shall
continue to accrue during the period of any such
extension and provided further, that in no event shall
any such due date be extended beyond the Revolving
Credit Termination Date.
II.5. Notes. Loans made by each Lender shall be
evidenced by the Note payable to the order of such Lender in
the respective amount of its Applicable Commitment
Percentage of the Revolving Credit Commitment, which Note
shall be dated the Closing Date or a later date pursuant to
an Assignment and Acceptance and shall be duly completed,
executed and delivered by the Borrower.
II.6. Pro Rata Payments. Except as otherwise
provided herein, (a) each payment on account of the
principal of and interest on the Loans and the fees
described in Section 2.10 shall be made to the Agent for the
account of the Lenders pro rata based on their Applicable
Commitment Percentages, (b) all payments to be made by the
Borrower for the account of each of the Lenders on account
of principal, interest and fees, shall be made without
diminution, setoff, recoupment or counterclaim, and (c) the
Agent will promptly (but in any event, prior to 2:30 P.M. on
the date such payment is received or deemed to be received)
distribute to the Lenders in immediately available funds
payments received in fully collected, immediately available
funds from the Borrower.
II.7. Voluntary Commitment Reductions. The
Borrower shall, by notice from an Authorized Representative,
have the right from time to time, upon not less than three
(3) Business Days' written notice to the Agent, effective
upon receipt, to reduce the Total Revolving Credit
Commitment. The Agent shall give each Lender, within one (1)
Business Day of receipt of such notice, telefacsimile
notice, or telephonic notice (confirmed in writing), of such
reduction. Each such reduction shall be in the aggregate
amount of $5,000,000 or such greater amount which is in an
integral multiple of $1,000,000, or the entire remaining
Total Revolving Credit Commitment, and shall permanently
reduce the Total Revolving Credit Commitment. Each
reduction of the Total Revolving Credit Commitment shall be
accompanied by payment of the Loans to the extent that the
principal amount of Revolving Credit Outstandings plus
Letter of Credit Outstandings exceeds the Total Revolving
Credit Commitment after giving effect to such reduction,
together with accrued and unpaid interest on the amounts
prepaid. No such reduction shall result in the payment of
any Eurodollar Rate Loan other than on the last day of the
Interest Period of such Eurodollar Rate Loan unless such
prepayment is accompanied by amounts due, if any, under
Section 5.4.
II.8. Conversions and Elections of Subsequent
Interest Periods. Subject to the limitations set forth
below and in Article V, the Borrower may:
(a) upon delivery, effective upon receipt, of a
properly completed Interest Rate Selection Notice to
the Agent on or before 10:30 A.M. on any Business Day,
convert all or a part of Eurodollar Rate Loans to Base
Rate Loans on the last day of the Interest Period for
such Eurodollar Rate Loans; and
(b) provided that no Default or Event of Default
shall have occurred and be continuing, upon delivery,
effective upon receipt, of a properly completed
Interest Rate Selection Notice to the Agent on or
before 10:30 A.M. three Business Days' prior to the
date of such election or conversion:
(i) elect a subsequent Interest Period for
all or a portion of Eurodollar Rate Loans to begin
on the last day of the then current Interest
Period for such Eurodollar Rate Loans; and
(ii) convert Base Rate Loans to Eurodollar
Rate Loans on any Business Day.
Each election and conversion pursuant to this
Section 2.8 shall be subject to the limitations on
Eurodollar Rate Loans set forth in the definition of
"Interest Period" herein and in Sections 2.1 and 2.3
and Article V. The Agent shall give written notice to
each Lender of such notice of election or conversion
prior to 1:00 P.M. on the day such notice of election
or conversion is received. All such continuations or
conversions of Loans shall be effected pro rata based
on the Applicable Commitment Percentages of the
Lenders.
II.9. Increase and Decrease in Available Amounts.
The amount of the Total Revolving Credit Commitment which
shall be available to the Borrower as Advances shall be
reduced by the aggregate amount of Revolving Credit
Outstandings and Letter of Credit Outstandings.
II.10. Unused Fee. For the period beginning on the
Closing Date and ending on the Revolving Credit Termination
Date, the Borrower agrees to pay to the Agent, for the pro
rata benefit of the Lenders based on their Applicable
Commitment Percentages, a quarterly unused fee (the "Unused
Fee") equal in amount to the product of the Applicable
Margin for calculating the Unused Fee multiplied by the
average daily amount by which Total Revolving Credit
Commitment exceeds Outstandings. The Unused Fees shall be
due in arrears on the last Business Day of each March, June,
September and December commencing June, 1998 to and on the
Revolving Credit Termination Date. Notwithstanding the
foregoing, so long as any Lender fails to make available any
portion of its Revolving Credit Commitment when requested,
such Lender shall not be entitled to receive payment of its
pro rata share of the Unused Fee until such Lender shall
make available such portion. The Unused Fee shall be
calculated on the basis of a year of 360 days for the actual
number of days elapsed.
II.11. Deficiency Advances. No Lender shall be
responsible for any default of any other Lender in respect
to such other Lender's obligation to make any Loan or fund
its purchase of any Participation hereunder nor shall the
Revolving Credit Commitment of any Lender hereunder be
increased as a result of such default of any other Lender.
Without limiting the generality of the foregoing, in the
event any Lender shall fail to advance funds to the Borrower
under the Revolving Credit Facility as herein provided, the
Agent may in its discretion, but shall not be obligated to,
advance under the Note in its favor as a Lender all or any
portion of such amount or amounts (each, a "deficiency
advance") and shall thereafter be entitled to payments of
principal of and interest on such deficiency advance in the
same manner and at the same interest rate or rates to which
such other Lender would have been entitled had it made such
advance under its Note; provided that, upon payment to the
Agent from such other Lender of the entire outstanding
amount of each such deficiency advance, together with
accrued and unpaid interest thereon, from the most recent
date or dates interest was paid to the Agent by the Borrower
on each Loan comprising the deficiency advance at the
interest rate per annum for overnight borrowing by the Agent
from the Federal Reserve Bank, then such payment shall be
credited against the applicable Note of the Agent in full
payment of such deficiency advance and the Borrower shall be
deemed to have borrowed the amount of such deficiency
advance from such other Lender as of the most recent date or
dates, as the case may be, upon which any payments of
interest were made by the Borrower thereon.
II.12. Use of Proceeds. The proceeds of the Loans
made pursuant to the Revolving Credit Facility hereunder
shall be used by the Borrower to repay in full all Existing
Debt, to redeem, repurchase or otherwise obtain surrender of
all or portion of the Warrants, as permitted hereunder, for
general working capital needs, including the making of
Acquisitions and Capital Expenditures permitted hereunder,
and other general corporate purposes. In no event may
Borrower incur an Obligation with the intention and for the
specific purpose of using the proceeds of such Loan for
payment of any obligations of any Credit Party then or
thereafter outstanding with respect to the Subordinated Debt
or the Preferred Stock.
II.13. Mandatory Reductions in Commitment. In
addition to the required payments of principal of the Loans
set forth in Section 2.3 hereof and any optional payments of
principal of the Loans effected under Sections 2.3 and 2.7
hereof, the Total Revolving Credit Commitment shall be
reduced by $5,000,000 on the third anniversary of the
Closing Date to the maximum aggregate principal amount at
any time of $70,000,000 and by an additional $10,000,000 on
the fourth anniversary of the Closing Date to the maximum
aggregate principal amount at any time of $60,000,000. In
the event that after such reduction the amount of
Outstandings exceeds the Total Revolving Credit Commitment,
the Borrower shall make at the same time a prepayment of the
Outstandings in the amount of such excess in compliance with
Section 2.1(b).
ARTICLE III
Letters of Credit
III.1. Letters of Credit. The Issuing Bank agrees,
subject to the terms and conditions of this Agreement, upon
request of the Borrower to issue from time to time for the
account of the Borrower Letters of Credit upon delivery to
the Issuing Bank of an Application for Letter of Credit
relating thereto in form and content acceptable to the
Issuing Bank; provided, that (i) the Letter of Credit
Outstandings shall not exceed the Total Letter of Credit
Commitment and (ii) no Letter of Credit shall be issued if,
after giving effect thereto, Letter of Credit Outstandings
plus Revolving Credit Outstandings shall exceed the Total
Revolving Credit Commitment. No Letter of Credit shall have
an expiry date (including all rights of the Borrower or any
beneficiary named in such Letter of Credit to require
renewal) or payment date occurring later than the earlier to
occur of twelve months after the date of its issuance or
five Business Days prior to the Stated Termination Date.
III.2. Reimbursement.
(a) The Borrower hereby unconditionally agrees to
pay to the Issuing Bank immediately on demand at such
office as the Issuing Bank shall designate all amounts
required to pay all drafts drawn under the Letters of
Credit and all reasonable expenses incurred by the
Issuing Bank in connection with the Letters of Credit,
and in any event and without demand to place in
possession of the Issuing Bank (which shall include
Advances under the Revolving Credit Facility if
permitted by Section 2.1) sufficient funds to pay all
debts and liabilities arising under any Letter of
Credit. The Issuing Bank agrees to give the Borrower
prompt notice of any request for a draw under a Letter
of Credit. The Issuing Bank may charge any account the
Borrower may have with it for any and all amounts the
Issuing Bank pays under a Letter of Credit, plus
charges and reasonable expenses as from time to time
agreed to by the Issuing Bank and the Borrower;
provided that to the extent permitted by Section
2.1(c)(iv), such amounts shall be paid pursuant to
Advances under the Revolving Credit Facility. The
Borrower agrees to pay the Issuing Bank interest on any
Reimbursement Obligations not paid on the day on which
drawing is paid on the corresponding Letter of Credit
at the Base Rate plus the Applicable Margin for such
day, and thereafter at the Base Rate plus two percent
(2.0%), or the maximum rate permitted by applicable
law, if lower, such rates to be calculated on the basis
of a year of 360 days for actual days elapsed
commencing on the date of such drawing until such
Reimbursement Obligation is so paid by direct
reimbursement by the Borrower or by a Base Rate
Refunding Loan.
(b) In accordance with the provisions of Section
2.1(c), the Issuing Bank shall notify the Agent of any
drawing under any Letter of Credit promptly following
the receipt by the Issuing Bank of such drawing.
(c) Each Lender (other than the Issuing Bank)
shall automatically acquire on the date of issuance
thereof, a Participation in the liability of the
Issuing Bank in respect of each Letter of Credit in an
amount equal to such Lender's Applicable Commitment
Percentage of such liability, and each Lender (other
than the Issuing Bank) thereby shall absolutely,
unconditionally and irrevocably assume, and shall be
unconditionally obligated to pay to the Issuing Bank as
hereinafter described, its Applicable Commitment
Percentage of the liability of the Issuing Bank under
such Letter of Credit.
(d) If a drawing is presented under any Letter of
Credit in accordance with the terms thereof and paid by
the Issuing Bank and the Borrower shall not fully
reimburse the Issuing Bank in respect thereof as of the
immediately following Business Day, then notice of such
drawing and payment shall be provided promptly by the
Issuing Bank to the Agent and the Agent shall provide
notice to each Lender by telephone or telefacsimile
transmission.
(i) If the conditions to making a Base
Rate Refunding Loan to repay such Reimbursement
Obligations as herein provided are then satisfied,
each of the Lenders (including the Issuing Bank in
its capacity as Lender) shall advance its pro rata
share of such Base Rate Refunding Loan pursuant to
Section 2.1, except as otherwise set forth below.
If the conditions to making a Base Rate Refunding
Loan as herein provided shall not then be
satisfied, each of the Lenders (including the
Issuing Bank in its capacity as Lender) shall fund
by payment to the Agent for the account of the
Issuing Bank at the Principal Office in Dollars
and in immediately available funds the purchase
from the Issuing Bank of its respective
Participation in the related Reimbursement
Obligation in an amount equal to its respective
Applicable Commitment Percentage of such drawing
under such Letter of Credit.
(ii) If notice to the Lenders of a
drawing under any Letter of Credit is given by the
Agent at or before 12:00 noon on any Business Day,
each Lender shall, pursuant to the conditions
specified in Section 2.1(c)(iv), either make a
Base Rate Refunding Loan or fund the purchase of
its Participation in the amount of such Lender's
Applicable Commitment Percentage of such drawing
or payment and shall pay such amount to the Agent
for the account of the Issuing Bank at the
Principal Office in Dollars and in immediately
available funds before 2:30 P.M. on the same
Business Day. If notice to the Lenders of a
drawing under a Letter of Credit is given by the
Agent after 12:00 noon on any Business Day, each
Lender shall, pursuant to the conditions specified
in Section 2.1(c)(iv), either make a Base Rate
Refunding Loan or fund the purchase of its
Participation in the amount of such Lender's
Applicable Commitment Percentage of such drawing
or payment and shall pay such amount to the Agent
for the account of the Issuing Bank at the
Principal Office in Dollars and in immediately
available funds before 12:00 noon on the next
following Business Day.
(iii) Simultaneously with the making
of each payment by a Lender (other than an advance
of a Base Rate Refunding Loan) to the Issuing Bank
pursuant to clause (i), such Lender shall,
automatically and without any further action on
the part of the Issuing Bank or such Lender,
acquire a Participation in an amount equal to such
payment (excluding the portion thereof
constituting interest accrued prior to the date
the Lender made its payment) in the related
Reimbursement Obligation of the Borrower.
(iv) Each Lender's obligation to make
payment to the Agent for the account of the
Issuing Bank pursuant to this Section 3.2(d), and
the right of the Issuing Bank to receive the same,
shall be absolute and unconditional, shall not be
affected by any circumstance whatsoever and shall
be made without any offset, abatement, withholding
or reduction whatsoever. If any Lender is
obligated to pay but does not pay amounts to the
Agent for the account of the Issuing Bank in full
upon such request as required by this Section
3.2(d), such Lender shall, on demand, pay to the
Agent for the account of the Issuing Bank interest
on the unpaid amount for each day during the
period commencing on the date of notice given to
such Lender pursuant to this Section 3.2(d) until
such Lender pays such amount to the Agent for the
account of the Issuing Bank in full at the
interest rate per annum for overnight borrowing by
the Agent from the Federal Reserve Bank.
(v) In the event the Lenders have
purchased Participations in any Reimbursement
Obligation as set forth in clauses (i) and (iii)
above, then at any time payment (in fully
collected, immediately available funds) of such
Reimbursement Obligation, in whole or in part, is
received by Issuing Bank from the Borrower,
Issuing Bank shall promptly pay to the Agent which
shall forward to each Lender an amount equal to
its Applicable Commitment Percentage of such
payment from the Borrower.
(e) Not later than ten days following the end of
each calendar quarter, the Issuing Bank shall deliver
to each Lender a notice describing the aggregate
undrawn amount of all Letters of Credit at the end of
such quarter. Upon the request of any Lender from time
to time, the Issuing Bank shall deliver to the Agent,
and the Agent shall deliver to such Lender, any other
information reasonably requested by such Lender with
respect to each Letter of Credit outstanding.
(f) The issuance by the Issuing Bank of each
Letter of Credit shall, in addition to the conditions
precedent set forth in Article VI, be subject to the
conditions that such Letter of Credit be in such form
and contain such terms as shall be reasonably
satisfactory to the Issuing Bank consistent with the
then current practices and procedures of the Issuing
Bank with respect to similar letters of credit, and the
Borrower shall have executed and delivered such other
instruments and agreements relating to such Letters of
Credit as the Issuing Bank shall have reasonably
requested consistent with such practices and
procedures; provided, however, that in the event any
provisions of such Letters of Credit are in conflict
with any of the express terms herein contained, the
provisions of this Agreement shall prevail. All
Letters of Credit shall be issued pursuant to and
subject to the Uniform Customs and Practice for
Documentary Credits, 1993 revision, International
Chamber of Commerce Publication No. 500 and all
subsequent amendments and revisions thereto.
(g) The Borrower agrees that Issuing Bank may, in
its sole discretion, accept or pay, as complying with
the terms of any Letter of Credit, any drafts or other
documents otherwise in order which may be signed or
issued by an administrator, executor, trustee in
bankruptcy, debtor in possession, assignee for the
benefit of creditors, liquidator, receiver, attorney in
fact or other legal representative of a party who is
authorized under such Letter of Credit to draw or issue
any drafts or other documents.
(h) Without limiting the generality of the
provisions of Section 12.9, the Borrower hereby agrees
to indemnify and hold harmless the Issuing Bank, each
other Lender and the Agent from and against any and all
claims and damages, losses, liabilities, reasonable
costs and expenses which the Issuing Bank, such other
Lender or the Agent may incur (or which may be claimed
against the Issuing Bank, such other Lender or the
Agent) by any Person by reason of or in connection with
the issuance or transfer of or payment or failure to
pay under any Letter of Credit; provided that the
Borrower shall not be required to indemnify the Issuing
Bank, any other Lender or the Agent for any claims,
damages, losses, liabilities, costs or expenses to the
extent, but only to the extent, (i) caused by the
willful misconduct or gross negligence of the party to
be indemnified or (ii) caused by the failure of the
Issuing Bank to pay under any Letter of Credit after
the presentation to it of a request for payment
strictly complying with the terms and conditions of
such Letter of Credit, unless such payment is
prohibited by any law, regulation, court order or
decree.
(i) Without limiting the Borrower's rights as set
forth in Section 3.2(h), the obligation of the Borrower
immediately to reimburse the Issuing Bank for drawings
made under Letters of Credit and the Issuing Bank's
right to receive such payment shall be absolute,
unconditional and irrevocable, and such obligations of
the Borrower shall be performed strictly in accordance
with the terms of this Agreement and such Letters of
Credit and the related Applications for any Letter of
Credit, under all circumstances whatsoever, including
the following circumstances:
(i) any lack of validity or
enforceability of the Letter of Credit, the
obligation supported by the Letter of Credit or
any other agreement or instrument relating thereto
(collectively, the "Related LC Documents");
(ii) any amendment or waiver of or any
consent to or departure from all or any of the
Related LC Documents;
(iii) the existence of any claim,
setoff, defense (other than the defense of payment
in accordance with the terms of this Agreement) or
other rights which the Borrower may have at any
time against any beneficiary or any transferee of
a Letter of Credit (or any persons or entities for
whom any such beneficiary or any such transferee
may be acting), the Agent, the Lenders or any
other Person, whether in connection with the Loan
Documents, the Related LC Documents or any
unrelated transaction;
(iv) any breach of contract or other
dispute between the Borrower and any beneficiary
or any transferee of a Letter of Credit (or any
persons or entities for whom such beneficiary or
any such transferee may be acting), the Agent, the
Lenders or any other Person;
(v) any draft, statement or any other
document presented under the Letter of Credit
proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement
therein being untrue or inaccurate in any respect
whatsoever;
(vi) any delay, extension of time,
renewal, compromise or other indulgence or
modification granted or agreed to by the Agent,
with or without notice to or approval by the
Borrower in respect of any of the Borrower's
Obligations under this Agreement; or
(vii) any other circumstance or
happening whatsoever, whether or not similar to
any of the foregoing.
III.3. Letter of Credit Facility Fees. The Borrower
shall pay to the Agent, for the pro rata benefit of the
Lenders based on their Applicable Commitment Percentages, a
fee on the aggregate amount available to be drawn on each
outstanding Letter of Credit at a rate equal to the
Applicable Margin for Letter of Credit fees. Such fees
shall be due with respect to each Letter of Credit quarterly
in arrears on the last day of each March, June, September
and December, the first such payment to be made on the first
such date occurring after the date of issuance of a Letter
of Credit. The fees described in this Section 3.3 shall be
calculated on the basis of a year of 360 days for the actual
number of days elapsed.
III.4. Administrative Fees. The Borrower shall pay
to the Issuing Bank a fronting fee and other administrative
fees in connection with the Letters of Credit in such
amounts and at such times as the Issuing Bank and the
Borrower shall agree from time to time.
ARTICLE IV
Security
IV.1. Security. As security for the full and
timely payment and performance of all Obligations, the
Credit Parties shall on or before the Closing Date do or
cause to be done all things necessary in the opinion of the
Agent and its counsel to grant to the Agent for the benefit
of the Agent and the Lenders a duly perfected first priority
Lien in all Collateral subject to no prior Lien or other
encumbrance or restriction on transfer other than
restrictions on transfer imposed by applicable securities
laws and other than any Permitted Liens then or at any time
thereafter existing on any such Collateral.
IV.2. Guaranty.
(a) To guarantee the full and timely payment and
performance of all Obligations now existing or
hereafter arising, each Domestic Subsidiary shall cause
to be delivered to the Agent, in form and substance
reasonably acceptable to the Agent, on or before the
Closing Date, the Guaranty.
(b) As security for the full and timely payment
and performance of the Guaranty, the Guarantors shall
cause to be delivered to the Agent, in form and
substance reasonably acceptable to the Agent, on or
before the Closing Date the Security Instruments to
which they are party, and such duly executed and filed
Uniform Commercial Code financing statements sufficient
to grant to the Agent a valid, duly perfected security
interest in the Collateral described therein, subject
to no prior Liens other than Permitted Liens.
IV.3. Information Regarding Collateral. The
Borrower represents, warrants and covenants that (i) the
chief executive office of the Borrower and each other Person
providing Collateral pursuant to a Security Instrument
(each, a "Grantor") at the Closing Date is located at the
address or addresses specified on Schedule 4.3, and (ii)
Schedule 4.3 contains a true and complete list of (a) the
name and address of each Grantor and of each other Person
that has effected any merger or consolidation with a Grantor
or contributed or transferred to a Grantor any property
constituting Collateral at any time since January 1, 1998
(excluding Persons making sales in the ordinary course of
their businesses to a Grantor of property constituting
inventory in the hands of such seller), (b) each location in
which goods constituting Collateral are located (together
with the name of each owner of the property located at such
address if not the applicable Grantor, and a summary
description of the relationship between the applicable
Grantor and such Person), and (c) each trade style used by
any Grantor and the purposes for which it is used. The
Borrower shall not change, or shall permit any other Grantor
to change, the location of its chief executive office or any
location specified in clause (ii)(b) of the immediately
preceding sentence, or use or permit any other Grantor to
use, any additional trade style, except upon giving not less
than thirty (30) days' prior written notice to the Agent and
taking or causing to be taken all such action at Borrower's
or such other Grantor's expense as required under the terms
of the applicable Security Instruments and as may be
reasonably requested by the Agent to perfect or maintain the
perfection of the Lien of the Agent for the benefit of
itself and the Lenders in Collateral including but not
limited to delivering revised schedules to the Security
Agreement to the Agent.
IV.4. Intellectual Property. As security for the
full and timely payment and performance of (i) all
Obligations now existing or hereafter arising and (ii)
certain Guarantors' obligations under the Guaranty, the
Borrower shall, and shall cause each Domestic Subsidiary to,
on or before the Closing Date deliver to the Agent, in form
and substance reasonably acceptable to the Agent, the
Intellectual Property Security Agreement and the
Intellectual Property Assignment. The Borrower hereby
agrees to pledge, or cause to be pledged, all intellectual
property interests and licenses hereafter acquired or
created and owned by the Borrower and any Domestic
Subsidiary within fifteen (15) days of the acquisition or
creation of such intellectual property or license by
execution of an IPSA Supplement.
IV.5. Pledged Stock. As security for the full and
timely payment and performance of (i) all Obligations now
existing or hereafter arising and (ii) certain Guarantors'
obligations under the Guaranty, the Borrower shall, and
shall cause each Domestic Subsidiary to, on or before the
Closing Date deliver to the Agent, in form and substance
reasonably acceptable to the Agent, the Pledge Agreement.
The Borrower hereby agrees to pledge, or cause to be
pledged, (a) 100% of the capital stock or equity or other
ownership interest of each Domestic Subsidiary and (b) 66%
of the voting share capital and 100% of the nonvoting share
capital and related interests and rights of each Direct
Foreign Subsidiary as may be hereafter issued or acquired
by the Borrower or any Domestic Subsidiary within fifteen
(15) days of the acquisition or issuance of such capital
stock, equity or other ownership interest by execution of a
Pledge Agreement Supplement.
4.6 Pledge and Subordination of Intercompany Notes.
As security for the full and timely payment and performance
of (i) all Obligations now existing or hereafter arising and
(ii) each Guarantor's Obligations (as defined in the
Guaranty), the Borrower shall cause the Intercompany Note
Holders to deliver the Intercompany Note Pledge Agreement to
the Agent for the benefit of the Lenders. The Borrower
hereby agrees to cause the Intercompany Note Holders now
existing or hereafter acquired or created to pledge, grant a
Lien and collaterally assign to the Agent for the benefit of
the Lenders all Intercompany Notes now existing or hereafter
arising.
4.7 Further Assurances. At the request of the Agent,
the Borrower will or will cause its Subsidiaries, as the
case may be, to execute by its duly authorized officers,
alone or with the Agent, any certificate, instrument,
statement or document, or to procure any such certificate,
instrument, statement or document, or to take such other
action (and pay all connected costs) which the Agent
reasonably deems necessary from time to time to create,
continue or preserve the liens and security interests in
Collateral (and the perfection and priority thereof) of the
Agent contemplated hereby and by the other Loan Documents
and specifically including all Collateral acquired by any
Credit Party after the Closing Date.
ARTICLE V
Change in Circumstances
5.1 Increased Cost and Reduced Return.
(a) If, after the date hereof, any Lender shall have
determined that the adoption of any applicable law, rule, or
regulation, or any change in any applicable law, rule, or
regulation, or any change in the interpretation or
administration thereof by any governmental authority,
central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by
any Lender (or its Applicable Lending Office) with any
request or directive (whether or not having the force of
law) of any such governmental authority, central bank, or
comparable agency:
(i) shall subject such Lender (or its
Applicable Lending Office) to any tax, duty, or other
charge with respect to any Eurodollar Rate Loans, its
Note, or its obligation to make Eurodollar Rate Loans,
or change the basis of taxation of any amounts payable
to such Lender (or its Applicable Lending Office) under
this Agreement or its Note in respect of any Eurodollar
Rate Loans (other than taxes imposed on the overall net
income of such Lender by the jurisdiction in which such
Lender has its principal office or such Applicable
Lending Office);
(ii) shall impose, modify, or deem applicable
any reserve, special deposit, assessment, or similar
requirement (other than the Eurodollar Reserve
Percentage utilized in the determination of the
Eurodollar Rate) relating to any extensions of credit
or other assets of, or any deposits with or other
liabilities or commitments of, such Lender (or its
Applicable Lending Office), including the Revolving
Credit Commitment of such Lender hereunder; or
(iii) shall impose on such Lender (or its
Applicable Lending Office) or on the London interbank
market any other condition affecting this Agreement or
its Note or any of such extensions of credit or
liabilities or commitments;
and the result of any of the foregoing is to increase the
cost to such Lender (or its Applicable Lending Office) of
making, Converting into, Continuing, or maintaining any
Loans or to reduce any sum received or receivable by such
Lender (or its Applicable Lending Office) under this
Agreement or its Note with respect to any Eurodollar Rate
Loans, then the Borrower shall pay to such Lender on demand
such amount or amounts as will compensate such Lender for
such increased cost or reduction. If any Lender requests
compensation by the Borrower under this Section 5.1(a), the
Borrower may, by notice to such Lender (with a copy to the
Agent), suspend the obligation of such Lender to make or
Continue Loans of the Type with respect to which such
compensation is requested, or to Convert Loans of any other
Type into Loans of such Type, until the event or condition
giving rise to such request ceases to be in effect (in which
case the provisions of Section 5.4 shall be applicable);
provided that such suspension shall not affect the right of
such Lender to receive the compensation so requested.
(b) If, after the date hereof, any Lender shall have
determined that the adoption of any applicable law, rule, or
regulation regarding capital adequacy or any change therein
or in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency
charged with the interpretation or administration thereof,
or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such
governmental 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 any corporation controlling
such Lender as a consequence of such Lender's obligations
hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption,
change, request, or directive (taking into consideration the
policies of such Lender or such corporation with respect to
capital adequacy), then from time to time upon demand the
Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.
(c) Each Lender shall promptly notify the Borrower and
the Agent of any event of which it has knowledge, occurring
after the date hereof, which will entitle such Lender to
compensation pursuant to this Section 5.1 and will designate
a different Applicable Lending Office if such designation
will avoid the need for, or reduce the amount of, such
compensation and will not, in the judgment of such Lender,
be otherwise disadvantageous to it. Any Lender claiming
compensation under this Section 5.1 shall furnish to the
Borrower and the Agent, within 120 days of notifying the
Borrower of any event described in the proceeding sentence,
a statement setting forth the additional amount or amounts
to be paid to it hereunder which shall be conclusive in the
absence of manifest error. In determining such amount, such
Lender may use any reasonable averaging and attribution
methods.
5.2 Limitation on Types of Loans. If on or prior to
the first day of any Interest Period for any Eurodollar Rate
Loan:
(a) the Agent determines (which determination
shall be conclusive) that by reason of circumstances
affecting the relevant market, adequate and reasonable
means do not exist for ascertaining the Eurodollar Rate
for such Interest Period; or
(b) the Required Lenders determine (which
determination shall be conclusive) and notify the Agent
that the Eurodollar Rate will not adequately and fairly
reflect the cost to the Lenders of funding Eurodollar
Rate Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof
specifying the relevant Type of Loans and the relevant
amounts or periods, and so long as such condition remains in
effect, the Lenders shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type,
or to Convert Loans of any other Type into Loans of such
Type and the Borrower shall, on the last day(s) of the then
current Interest Period(s) for the outstanding Loans of the
affected Type, either prepay such Loans or Convert such
Loans into another Type of Loan in accordance with the terms
of this Agreement.
5.3 Illegality. Notwithstanding any other provision
of this Agreement, in the event that it becomes unlawful for
any Lender or its Applicable Lending Office to make,
maintain, or fund Eurodollar Rate Loans hereunder, then such
Lender shall promptly notify the Borrower thereof and such
Lender's obligation to make or Continue Eurodollar Rate
Loans and to Convert other Types of Loans into Eurodollar
Rate Loans shall be suspended until such time as such Lender
may again make, maintain, and fund Eurodollar Rate Loans (in
which case the provisions of Section 5.4 shall be
applicable).
5.4 Treatment of Affected Loans. If the obligation of
any Lender to make a Eurodollar Rate Loan or to Continue, or
to Convert Loans of any other Type into, Loans of a
particular Type shall be suspended pursuant to Section 5.1
or 5.3 hereof (Loans of such Type being herein called
"Affected Loans" and such Type being herein called the
"Affected Type"), such Lender's Affected Loans shall be
automatically Converted into Base Rate Loans on the last
day(s) of the then current Interest Period(s) for Affected
Loans (or, in the case of a Conversion required by Section
5.3 hereof, on such earlier date as such Lender may specify
to the Borrower with a copy to the Agent) and, unless and
until such Lender gives notice as provided below that the
circumstances specified in Section 5.1 or 5.3 hereof that
gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Affected
Loans have been so Converted, all payments and
prepayments of principal that would otherwise be
applied to such Lender's Affected Loans shall be
applied instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or
Continued by such Lender as Loans of the Affected Type
shall be made or Continued instead as Base Rate Loans,
and all Loans of such Lender that would otherwise be
Converted into Loans of the Affected Type shall be
Converted instead into (or shall remain as) Base Rate
Loans.
If such Lender gives notice to the Borrower (with a copy to
the Agent) that the circumstances specified in Section 5.1
or 5.3 hereof that gave rise to the Conversion of such
Lender's Affected Loans pursuant to this Section 5.4 no
longer exist (which such Lender agrees to do promptly upon
such circumstances ceasing to exist) at a time when Loans of
the Affected Type made by other Lenders are outstanding,
such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding
Interest Period(s) for such outstanding Loans of the
Affected Type, to the extent necessary so that, after giving
effect thereto, all Loans held by the Lenders holding Loans
of the Affected Type and by such Lender are held pro rata
(as to principal amounts, Types, and Interest Periods) in
accordance with their respective Revolving Credit
Commitments.
5.5 Compensation. Upon the request of any Lender, the
Borrower shall pay to such Lender such amount or amounts as
shall be sufficient (in the reasonable opinion of such
Lender) to compensate it for any loss, cost, or expense
(including loss of anticipated profits) incurred by it as a
result of:
(a) any payment, prepayment, or Conversion of a
Eurodollar Rate Loan for any reason (including, without
limitation, the acceleration of the Loans pursuant to
Section 10.1) on a date other than the last day of the
Interest Period for such Loan; or
(b) any failure by the Borrower for any reason
(including, without limitation, the failure of any
condition precedent specified in Article VI to be
satisfied) to borrow, Convert, Continue, or prepay a
Eurodollar Rate Loan on the date for such borrowing,
Conversion, Continuation, or prepayment specified in
the relevant notice of borrowing, prepayment,
Continuation, or Conversion under this Agreement.
5.6 Taxes. (a) Any and all payments by the Borrower
to or for the account of any Lender or the Agent hereunder
or under any other Loan 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 (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 Loan 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 5.6) 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 12.2, 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 Loan 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 5.6) 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 provide the
Borrower and the Agent with (i) 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) Internal Revenue Service Form W-8 or W-9, as
appropriate, or any successor form prescribed by the
Internal Revenue Service, 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 Loan 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 5.6(d) (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
5.6(a) or 5.6(b) with respect to Taxes imposed 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 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 5.6, 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.
(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 5.6
shall survive the termination of the Revolving Credit
Commitments and the payment in full of the Notes.
5.7 Replacement Banks. In the event that any
Lender (a) shall have its obligation to make or continue,
or convert other Loans into, Eurodollar Rate Loans
suspended pursuant to this Article V for a period in
excess of sixty (60) days, or (b) shall request
compensation for Additional Costs pursuant to Section 5.1
hereof, then the Borrower may terminate such Lender's
Revolving Credit Commitment by repaying in full the
amount of all principal and interest due under such
Lender's Notes and all other amounts due hereunder and
providing for a Replacement Bank.
ARTICLE VI
Conditions to Making Loans and Issuing Letters of Credit
VI.1. Conditions of Initial Advance. The
obligation of the Lenders to make the initial Advance
under the Revolving Credit Facility, and of the Issuing
Bank to issue any Letter of Credit, is subject to the
conditions precedent that:
(a) the Agent shall have received on the
Closing Date, in form and substance satisfactory to
the Agent and Lenders, the following:
(i) fully executed originals of each
of this Agreement, the Notes, the Guaranty, the
Security Instruments and the other Loan
Documents, together with all schedules and
exhibits thereto;
(ii) evidence that the Borrower has,
concurrently with the Advance to be made on the
Closing Date, issued the Subordinated Debt and
the Preferred Stock, the terms and conditions
of all of which, including the Subordinated
Debt Documents, must be satisfactory in form
and substance to the Agent and the Lenders;
(iii) the favorable written
opinion or opinions with respect to the Loan
Documents and the transactions contemplated
thereby of counsel to the Credit Parties dated
the Closing Date, including counsel in each
jurisdiction in which any Collateral may be
located, special U.S. intellectual property
counsel as to issues related to Collateral, all
addressed to the Agent and the Lenders and
satisfactory to Smith Helms Mulliss & Moore,
L.L.P., special counsel to the Agent,
substantially in the form of Exhibit G;
(iv) resolutions of the boards of
directors or other appropriate governing body
(or of the appropriate committee thereof) of
each Credit Party certified by its secretary or
assistant secretary as of the Closing Date,
approving and adopting the Loan Documents to be
executed by such Person, and authorizing the
execution and delivery thereof;
(v) specimen signatures of officers
of each Credit Party executing the Loan
Documents on behalf of such Credit Party,
certified by the secretary or assistant
secretary of such Credit Party;
(vi) the Organizational Documents of
each Credit Party certified as of a recent
date, as acceptable to the Agent, by the
Secretary of State of their respective states
of organization;
(vii) the Operating Documents of
each Credit Party certified as of the Closing
Date as true and correct by its secretary or
assistant secretary;
(viii) certificates issued as of a recent date,
as acceptable to the Agent, by the Secretary of State
of its respective state of organization of each Credit
Party as to the due existence and good standing of such
Credit Party;
(ix) appropriate certificates of good standing,
issued in respect of each Credit Party as of a recent
date by the Secretary of State or comparable official
of each jurisdiction in which the failure to be
qualified to do business or authorized so to conduct
business could have a Material Adverse Effect;
(x) notice of appointment of the initial
Authorized Representative(s);
(xi) [RESERVED]
(xii) evidence of all insurance required by
the Loan Documents;
(xiii) an initial Borrowing Notice, if any,
and, if elected by the Borrower, Interest Rate
Selection Notice;
(xiv) evidence of the filing of Uniform
Commercial Code financing statements reflecting the
filing in all places required by applicable law to
perfect the Liens of the Agent for the benefit of the
Lenders under the Security Instruments as a first
priority Lien as to items of Collateral in which a
security interest may be perfected by the filing of
financing statements, and such other documents and/or
evidence of other actions as may be necessary under
applicable law to perfect the Liens of the Agent for
the benefit of the Lenders under the Security
Instruments as a first priority Lien in and to such
other Collateral as the Agent may require;
(xv) all stock certificates or registrar's pledge
certificates evidencing all the Pledged Stock,
accompanied, as applicable, by duly executed stock
powers in blank affixed thereto;
(xvi) release and termination agreements in
form and substance acceptable to the Lenders for each
creditor of Existing Debt that is not a Lender on the
Closing Date;
(xvii) copies of all documents and certificates
evidencing or governing the Subordinated Debt and the
Preferred Stock in form and substance acceptable to the
Lenders and certified by an Authorized Representative
to be true, correct and complete;
(xviii) a report prepared by Coopers & Lybrand
on the inventory and accounts receivable (including
aging of the accounts receivable), accounts payable,
controls and systems of the Borrower and the Guarantors
in form and substance acceptable to the Agent;
(xix) (A) the audited financial statements
referred to in Section 7.6(a) in form and substance
acceptable to the Lenders, (B) consolidated financial
statements for the Borrower and its Subsidiaries for
the fiscal years ending December 31, 1996 and December
31, 1997, respectively, including balance sheets,
income, cash flow and shareholders' equity statements
audited by an independent public accountant of
recognized national standing and prepared in conformity
with GAAP, together with a quarterly budget for Fiscal
Year 1998 and the Borrower's five-year projected
operating budget and (C) a written review of the
Borrower's pro forma income statement prepared by
Coopers & Lybrand and satisfactory to the Agent;
(xx) copies of any other documents or agreements
evidencing or governing any Consolidated Funded
Indebtedness (other than any Capital Lease for which
the present value of the lease payments due thereunder
is less than $200,000, applying a discount rate equal
to the interest rate provided in such lease, all such
leases being so indicated on Schedule 1.2) of any
Credit Party to be outstanding on the Closing Date, and
after giving effect to the repayment and termination of
all Existing Debt and certified by an Authorized
Representative to be true, correct and complete;
(xxi) Intercompany Notes existing as of the
Closing Date together with endorsements or instruments
of assignment executed in blank and attached thereto;
(xxii) consent by makers of Intercompany Notes
to pledge under the Intercompany Note Pledge Agreement;
(xxiii) all fees payable by the Borrower on the
Closing Date to the Agent and the Lenders have been
paid in full;
(xxiv) Uniform Commercial Code search results
showing only Permitted Liens;
(xxv) review of information with results
satisfactory to the Agent and its counsel as to such
matters as litigation, tax, accounting, labor,
insurance, pension liabilities (actual or contingent),
real estate leases, material contracts, debt
agreements, property ownership and contingent
liabilities with respect to the Borrower and its
Subsidiaries; and
(xxvi) such other documents, instruments,
certificates and opinions as the Agent or any Lender
may reasonably request on or prior to the Closing Date
in connection with the consummation of the transactions
contemplated hereby;
(b) Each of the following shall have occurred or be
true and be so certified by the Credit Parties to the
Lenders:
(i) Except as disclosed in Schedule 7.10, there
shall not be any action, suit, investigation or
proceeding pending or threatened in any court or before
any arbitrator or governmental instrumentality that
could reasonably be expected to have a Material Adverse
Effect;
(ii) The Borrower shall be in compliance with all
existing material financial and contractual obligations
before and, on a pro forma basis, immediately after
giving effect to the financings contemplated thereby
(including the Revolving Credit Facility and the Letter
of Credit Facility) and any other transactions
contemplated hereby; and
(iii) The Borrower, its Subsidiaries and any
other Credit Party shall have received all government,
shareholder and third-party approvals, consents and
waivers, and shall have made or given all necessary
filings and notices, as shall be required to consummate
the transactions contemplated hereby without the
occurrence of any default under, conflict with or
violation of (A) any applicable law, rule, regulation,
order or decree of any court or other Governmental
Authority or arbitral authority, (B) the Organizational
Documents of any Credit Party or (C) any agreement,
document or instrument to which any of the Borrower or
any other Credit Party is a party or by which any of
them or their properties is bound, if such default,
conflict or violation could reasonably be expected to
result in a Material Adverse Effect; and all applicable
waiting periods shall have expired without any action
being taken or threatened in writing by any authority
that could restrain, prevent or impose any material
adverse conditions on the making of the Loans, or other
transactions contemplated hereby, and no law or
regulation shall be applicable which in the reasonable
judgment of the Agent could have such effect; and
(c) In the good faith judgment of the Agent and the
Lenders:
(i) There shall not have occurred a material
adverse change in the business, assets, revenues,
operations, conditions (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as
a whole since December 31, 1997 or in the assumptions,
facts or information contained in the financial
statements, budgets, projections or pro forma balance
sheets most recently delivered to the Agent by the
Borrower;
(ii) There shall not have occurred and be
continuing an adverse change in the market for
syndicated credit facilities similar in nature to the
Revolving Credit Facility and the Letter of Credit
Facility or a disruption of, or a material adverse
change in, financial, banking or capital market
conditions, in each case as determined by the Agent in
its reasonable discretion;
(iii) All financial statements, documents,
appraisals, audits and other items to be delivered
pursuant to Section 6.1(a) in form and substance
acceptable to the Lenders shall have been reviewed by
the Agent and reasonably determined thereby to be so
acceptable; and
(iv) There shall not have occurred or exist (A) an
engagement in hostilities by the United States of
America or other national or international emergency or
calamity, (B) a general suspension of or material
limitation on trading on the New York Stock Exchange or
other national securities exchange, (C) the declaration
of a general banking moratorium by any applicable
Governmental Authority or the imposition by any
applicable Governmental Authority of any material
limitation on transactions of the type contemplated by
the Loan Documents, or (D) any other material
disruption of financial or capital markets that could
reasonably be expected to adversely affect the
transactions contemplated under the Loan Documents.
VI.2. Conditions of Loans and Letters of Credit. The
obligations of the Lenders to make any Revolving Loans, and the
Issuing Bank to issue Letters of Credit, hereunder on or
subsequent to the Closing Date are subject to the satisfaction of
the following conditions:
(a) the Agent shall have received a Borrowing Notice
if required by Article II;
(b) in the case of the issuance of a Letter of Credit,
the Borrower shall have executed and delivered to the
Issuing Bank an Application for Letter of Credit in form and
content acceptable to the Issuing Bank together with such
other instruments and documents as it shall request;
(c) the representations and warranties of the Borrower
and its Subsidiaries set forth in Article VII and in each of
the other Loan Documents shall be true and correct in all
material respects on and as of the date of such Advance or
Letter of Credit issuance or renewal, with the same effect
as though such representations and warranties had been made
on and as of such date, except that the financial statements
referred to in Section 7.6(a) shall be deemed to be those
financial statements most recently delivered to the Agent
and the Lenders pursuant to Section 8.1 from the date
financial statements are delivered to the Agent and the
Lenders in accordance with such Section;
(d) at the time of each Advance or the issuance of a
Letter of Credit, no Material Adverse Effect shall have
occurred and be continuing;
(e) at the time of (and after giving effect to) each
Advance or the issuance of a Letter of Credit, no Default or
Event of Default shall have occurred and be continuing; and
(f) immediately after giving effect to:
(i) a Loan, the aggregate principal balance of
all outstanding Loans for each Lender shall not exceed
such Lender's Revolving Credit Commitment;
(ii) a Letter of Credit or renewal thereof, the
aggregate principal balance of all outstanding
Participations in Letters of Credit and Reimbursement
Obligations (or in the case of the Issuing Bank, its
remaining interest after deduction of all
Participations in Letters of Credit and Reimbursement
Obligations of other Lenders) for each Lender and in
the aggregate shall not exceed, respectively, (X) such
Lender's Letter of Credit Commitment or (Y) the Total
Letter of Credit Commitment; and
(iii) a Loan or a Letter of Credit or renewal
thereof, the sum of Letter of Credit Outstandings plus
Revolving Credit Outstandings shall not exceed the
Total Revolving Credit Commitment.
ARTICLE VII
Representations and Warranties
The Borrower represents and warrants with respect to itself
and each other Credit Party (which representations and warranties
shall survive the delivery of the documents mentioned herein and
the making of Loans), that:
VII.1. Organization and Authority.
(a) Each Credit Party is a corporation or partnership
duly organized and validly existing under the laws of the
jurisdiction of its formation;
(b) Each Credit Party (x) has the requisite power and
authority to own its properties and assets and to carry on
its business as now being conducted and as contemplated in
the Loan Documents, and (y) is qualified to do business in
every jurisdiction in which failure so to qualify would have
a Material Adverse Effect;
(c) The Borrower has the power and authority to
execute, deliver and perform this Agreement and the Notes,
and to borrow hereunder, and to execute, deliver and perform
each of the other Loan Documents to which it is a party;
(d) Each Guarantor has the power and authority to
execute, deliver and perform the Guaranty and each of the
other Loan Documents to which it is a party; and
(e) When executed and delivered, each of the Loan
Documents to which any Credit Party is a party will be the
legal, valid and binding obligation or agreement, as the
case may be, of such Credit Party, enforceable against such
Credit Party in accordance with its terms, subject to the
effect of any applicable bankruptcy, moratorium, insolvency,
reorganization or other similar law affecting the
enforceability of creditors' rights generally and to the
effect of general principles of equity (whether considered
in a proceeding at law or in equity).
VII.2. Loan Documents. The execution, delivery and
performance by each Credit Party of each of the Loan Documents to
which it is a party:
(a) have been duly authorized by all requisite
Organizational Action (including any required shareholder
approval) of each Credit Party required for the lawful
execution, delivery and performance thereof;
(b) do not violate any provisions of (i) applicable
law, rule or regulation, (ii) any judgment, writ, order,
determination, decree or arbitral award of any Governmental
Authority or arbitral authority binding on any Credit Party
or its properties, or (iii) the Organizational Documents or
Operating Documents of any Credit Party;
(c) does not and will not be in conflict with, result
in a breach of or constitute an event of default, or an
event which, with notice or lapse of time or both, would
constitute an event of default, under any contract,
indenture, agreement or other instrument or document to
which any Credit Party is a party, or by which the
properties or assets of any Credit Party are bound and such
conflict, breach or event of default could reasonably be
expected to result in a Material Adverse Effect; and
(d) does not and will not result in the creation or
imposition of any Lien upon any of the properties or assets
of any Credit Party except any Liens in favor of the Agent
and the Lenders created by the Security Instruments.
VII.3. Solvency. The Borrower and each other Credit
Party is Solvent after giving effect to the transactions
contemplated by the Loan Documents.
VII.4. Subsidiaries and Stockholders. The Borrower has
no Subsidiaries other than those Persons listed as Subsidiaries
in Schedule 7.4 and additional Subsidiaries created or acquired
after the Closing Date in compliance with Section 8.19. Schedule
7.4 states as of the date hereof the organizational form of each
entity, the authorized and issued capitalization of the Borrower
and each Subsidiary listed thereon, the number of shares or other
equity interests of each class of capital stock or interest
issued and outstanding of each such Subsidiary and the number
and/or percentage of outstanding shares or other equity interest
(including options, warrants and other rights to acquire any
interest) of each such class of capital stock or other equity
interest owned by Borrower or by any such Subsidiary. The
outstanding shares or other equity interests of each such
Subsidiary have been duly authorized and validly issued and are
fully paid and nonassessable; and Borrower and each such
Subsidiary owns beneficially and of record all the shares and
other interests it is listed as owning in Schedule 7.4, free and
clear of any Lien.
VII.5. Ownership Interests. The Borrower owns no
interest in any Person other than (i) the Persons listed in
Schedule 7.4, (ii) equity investments in Persons not constituting
Subsidiaries permitted under Section 9.7 and (iii) additional
Subsidiaries created or acquired after the Closing Date in
compliance with Section 8.19.
VII.6. Financial Condition.
(a) The Borrower has heretofore furnished to each
Lender an audited consolidated balance sheet of the
Borrower and its Subsidiaries as at December 31, 1997, and
the notes thereto and the related consolidated statements of
income, stockholders' equity and cash flows for the Fiscal
Year then ended as examined and certified by Ernst & Young
and the unaudited consolidating balance sheets of the
Borrower and its Subsidiaries as at such date and related
unaudited consolidating statements of income, stockholders'
equity and cash flows (without footnotes). Except as set
forth therein, such financial statements (including the
notes thereto with respect to audited statements) present
fairly the financial condition of the Borrower and its
Subsidiaries as of the end of such Fiscal Year and results
of their operations and the changes in stockholders' equity
for the Fiscal Year then ended, all in conformity with GAAP
applied on a Consistent Basis;
(b) Since the later of (i) the date of the audited
financial statements delivered pursuant Section 7.6(a)
hereof or (ii) the date of the audited financial statements
most recently delivered pursuant to Section 8.1(a) hereof,
there has been no Material Adverse Effect nor have the
businesses or properties of any Material Credit Party been
materially adversely affected except as set forth on
Schedule 7.6; and
(c) Except as set forth in the financial statements
referred to in Section 7.6(a) or in Schedule 7.6 or as
permitted by Section 9.4, neither the Borrower nor any
Subsidiary has incurred, other than in the ordinary course
of business, any material Indebtedness, Contingent
Obligation or other commitment or liability which remains
outstanding or unsatisfied.
VII.7. Title to Properties. The Borrower and each other
Credit Party has good and marketable title to all its real and
personal properties, subject to no transfer restrictions or Liens
of any kind, except for the transfer restrictions and Liens
described in Schedule 7.7 and Permitted Liens.
VII.8. Taxes. Except as set forth in Schedule 7.8, the
Borrower and each of its Subsidiaries has filed or caused to be
filed all Federal, state and local tax returns which are required
to be filed by it and, except for taxes and assessments being
contested in good faith by appropriate proceedings diligently
conducted and against which reserves reflected in the financial
statements described in Section 7.6(a) as required by GAAP have
been established, have paid or caused to be paid all taxes as
shown on said returns or on any assessment received by it, to the
extent that such taxes have become due.
VII.9. Other Agreements. Neither the Borrower nor any
other Credit Party is
(a) a party to or subject to any judgment, order,
decree, agreement, lease or instrument, or subject to other
restrictions, which individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect; or
(b) in default in the performance, observance or
fulfilment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which
the Borrower or any Subsidiary is a party, which default
has, or if not remedied within any applicable grace period
could reasonably be likely to have, a Material Adverse
Effect.
VII.10. Litigation. Except as set forth in Schedule 7.10,
there is no action, suit, investigation or proceeding at law or
in equity or by or before any governmental instrumentality or
agency or arbitral body pending, or, to the knowledge of the
Borrower, threatened by or against the Borrower or any other
Credit Party or affecting the Borrower or any other Credit Party
or any properties or rights of the Borrower or any other Credit
Party, which could reasonably be likely to have a Material
Adverse Effect.
VII.11. Margin Stock. The proceeds of the borrowings made
hereunder will be used by the Borrower only for the purposes
expressly authorized herein. None of such proceeds will be used,
directly or indirectly, for the purpose of purchasing or carrying
any margin stock or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which might constitute any
of the Loans under this Agreement a "purpose credit" within the
meaning of said Regulation U or Regulation X (12 C.F.R. Part 224)
of the Board. Neither the Borrower nor any agent acting in its
behalf has taken or will take any action which might cause this
Agreement or any of the documents or instruments delivered
pursuant hereto to violate any regulation of the Board or to
violate the Securities Exchange Act of 1934, as amended, or the
Securities Act of 1933, as amended, or any state securities laws,
in each case as in effect on the date hereof.
VII.12. Investment Company. Neither the Borrower nor any
other Credit Party is an "investment company," or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an
"investment company", as such terms are defined in the Investment
Company Act of 1940, as amended (15 U.S.C. 80a1, et seq.). The
application of the proceeds of the Loans and repayment thereof by
the Borrower and the performance by the Borrower and the other
Credit Parties of the transactions contemplated by the Loan
Documents will not violate any provision of said Act, or any
rule, regulation or order issued by the Securities and Exchange
Commission thereunder, in each case as in effect on the date
hereof.
VII.13. Intellectual Property. The Borrower and each
other Credit Party owns or has the right to use, under valid
license agreements or otherwise, all patents, licenses,
franchises, trademarks, trademark rights, trade names, trade name
rights, trade secrets and copyrights necessary and material to
the conduct of its businesses as now conducted and as
contemplated by the Loan Documents, without known conflict with
any patent, license, franchise, trademark, trade secret, trade
name, copyright, other proprietary right of any other Person.
VII.14. No Untrue Statement. Neither (a) this Agreement
nor any other Loan Document or certificate or document executed
and delivered by or on behalf of the Borrower or any other Credit
Party in accordance with or pursuant to any Loan Document nor (b)
any statement, representation, or warranty provided to the Agent
in connection with the negotiation or preparation of the Loan
Documents (which shall include marketing materials prepared and
distributed in connection with syndication of the Revolving
Credit Facility) contains any misrepresentation or untrue
statement of material fact or omits to state a material fact
necessary, in light of the circumstances under which it was made,
in order to make any such warranty, representation or statement
contained therein not misleading.
VII.15. No Consents, Etc. Neither the respective
businesses or properties of the Borrower or any Subsidiary, nor
any relationship between the Borrower or any Subsidiary and any
other Person, nor any circumstance in connection with the
execution, delivery and performance of the Loan Documents and the
transactions contemplated thereby, is such as to require a
consent, approval or authorization of, or filing, registration or
qualification with, any Governmental Authority or any other
Person on the part of the Borrower or any Subsidiary as a
condition to the execution, delivery and performance of, or
consummation of the transactions contemplated by the Loan
Documents, which, if not obtained or effected, could be
reasonably likely to have a Material Adverse Effect, or if so,
such consent, approval, authorization, filing, registration or
qualification has been duly obtained or effected, as the case may
be.
VII.16. Employee Benefit Plans.
(a) The Borrower and each ERISA Affiliate is in
compliance with all applicable provisions of the Code and
ERISA and the regulations and published interpretations
thereunder and in compliance with all Foreign Benefit Laws
with respect to all Employee Benefit Plans except (i) to the
extent such a failure to maintain compliance could not
reasonably be expected to result in a Material Adverse
Effect; or (ii) for any required amendments for which the
remedial amendment period as defined in Section 401(b) of
the Code has not yet expired. Each Employee Benefit Plan
that is intended to be qualified under Section 401(a) of the
Code has been determined by the Internal Revenue Service to
be so qualified, and each trust related to such plan has
been determined to be exempt under Section 501(a) of the
Code. No material liability has been incurred by the
Borrower or any ERISA Affiliate which remains unsatisfied
for any taxes or penalties with respect to any Employee
Benefit Plan or any Multiemployer Plan;
(b) Neither the Borrower nor any ERISA Affiliate has
(i) engaged in a nonexempt prohibited transaction described
in Section 4975 of the Code or Section 406 of ERISA
affecting any of the Employee Benefit Plans or the trusts
created thereunder which could subject any such Employee
Benefit Plan or trust to a material tax or penalty on
prohibited transactions imposed under Internal Revenue Code
Section 4975 or ERISA, (ii) incurred any accumulated funding
deficiency with respect to any Employee Benefit Plan,
whether or not waived, or any other liability to the PBGC
which remains outstanding other than the payment of premiums
and there are no premium payments which are due and unpaid,
(iii) failed to make a required contribution or payment to a
Multiemployer Plan, or (iv) failed to make a required
installment or other required payment under Section 412 of
the Code, Section 302 of ERISA or the terms of such Employee
Benefit Plan;
(c) No Termination Event has occurred within the last
six years or is reasonably expected to occur with respect to
any Pension Plan or Multiemployer Plan, and neither the
Borrower nor any ERISA Affiliate has incurred any unpaid
withdrawal liability with respect to any Multiemployer Plan;
(d) The present value of all vested accrued benefits
under each Employee Benefit Plan which is subject to Title
IV of ERISA, did not, as of the most recent valuation date
for each such plan, exceed the then current value of the
assets of such Employee Benefit Plan allocable to such
benefits;
(e) To the best of the Borrower's knowledge, each
Employee Benefit Plan subject to Title IV of ERISA,
maintained by the Borrower or any ERISA Affiliate, has been
administered in accordance with its terms in all material
respects and is in compliance in all material respects with
all applicable requirements of ERISA and other applicable
laws, regulations and rules except to the extent such a
failure to so administer or to maintain compliance could not
reasonably be expected to result in a Material Adverse
Effect;
(f) The consummation of the Loans and the issuance of
the Letters of Credit provided for herein will not involve
any prohibited transaction under ERISA which is not subject
to a statutory or administrative exemption; and
(g) No proceeding, claim, lawsuit and/or investigation
exists or, to the best knowledge of the Borrower after due
inquiry, is threatened concerning or involving any Employee
Benefit Plan, which, if determined adversely to the Borrower
or any ERISA Affiliate, would have a Material Adverse
Effect.
VII.17. No Default. As of the date hereof, there does not
exist any Default or Event of Default hereunder.
VII.18. Environmental Matters. Except as set forth in
Schedule 7.18:
(a) The Borrower and each Subsidiary is in compliance
with all applicable Environmental Laws in all material
respects, and has been issued and maintains all required
federal, state and local permits, licenses, certificates and
approvals pertaining to Hazardous Materials that are
necessary to the conduct of its business. Neither the
Borrower nor any Subsidiary has been notified of any pending
or threatened action, suit, proceeding or investigation, and
neither the Borrower nor any Subsidiary is aware of any
fact, which (i) calls into question, or could reasonably be
expected to call into question, material compliance by the
Borrower or any Subsidiary with any Environmental Laws, (ii)
seeks, or could reasonably be expected to form the basis of
a meritorious proceeding to seek, to suspend, revoke or
terminate any license, permit, certification or approval
necessary for the operation of the Borrower's or any
Subsidiary's facility or the generation, handling, storage,
treatment or disposal of any Hazardous Material that is
necessary to the conduct of its business, or (iii) seeks to
cause, or could reasonably be expected to form the basis of
a meritorious proceeding to cause, any property of the
Borrower or any other Credit Party to be subject to any
material restrictions on ownership, use, occupancy or
transferability under any Environmental Law, or (iv)
constitutes a reasonable basis to conclude that the Borrower
or any Subsidiary is a potentially responsible party with
regard to any release or threatened release of a Hazardous
Material; and
(b) Neither the Borrower nor any Subsidiary, nor, to
the best of the Borrower's knowledge, any previous owner or
operator of any real property owned or operated by the
Borrower or any Subsidiary or any other Person, has managed,
generated, stored, released, treated, or disposed of any
Hazardous Material on any portion of such property, or
transferred or caused to be transferred any Hazardous
Material from such property to any other location except in
material compliance with all Environmental Laws. Except for
Hazardous Materials necessary for the routine maintenance of
the properties owned or operated by the Borrower and its
Subsidiaries or as brought on to such properties in the
ordinary course of the Borrower's or any Subsidiary's
business, which Hazardous Material shall be used in material
compliance with all applicable Environmental Laws, the
Borrower covenants that it shall, and shall cause each
Subsidiary to, not permit any Hazardous Materials to be
brought on to the real property owned or operated by the
Borrower and its Subsidiaries, or if so brought or found
located thereon, shall be immediately removed, with proper
disposal, and all environmental cleanup requirements shall
be diligently undertaken pursuant to all Environmental Laws.
VII.19. Employment Matters.
(a) None of the employees of the Borrower or any
Subsidiary is subject to any collective bargaining agreement
and there are no strikes, work stoppages, election or
decertification petitions or proceedings, unfair labor
charges, equal opportunity proceedings, or other material
labor/employee related controversies or proceedings pending
or, to the best knowledge of the Borrower, threatened
against the Borrower or any Subsidiary or between the
Borrower or any Subsidiary and any of its employees, other
than employee grievances arising in the ordinary course of
business which could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect; and
(b) Except to the extent a failure to maintain
compliance would not have a Material Adverse Effect, the
Borrower and each Subsidiary is in compliance in all
respects with all applicable laws, rules and regulations
pertaining to labor or employment matters, including without
limitation those pertaining to wages, hours, occupational
safety and taxation and there is no pending or threatened
any litigation, administrative proceeding or, to the
knowledge of the Borrower, any investigation, in respect of
such matters which, if decided adversely, could reasonably
be likely, individually or in the aggregate, to have a
Material Adverse Effect.
VII.20. RICO. To the best knowledge of the Borrower or
any Subsidiary, neither the Borrower nor any Subsidiary is
engaged in or has engaged in any course of conduct that could
subject any of their respective properties to any Liens, seizure
or other forfeiture under any criminal law, racketeer influenced
and corrupt organizations law, civil or criminal, or other
similar laws.
ARTICLE VIII
Affirmative Covenants
Until the Revolving Credit Termination Date, unless the
Required Lenders shall otherwise consent in writing, the Borrower
shall, and where applicable will cause each Guarantor to:
VIII.1. Financial Reports, Etc.
(a) As soon as practical and in any event within 90
days after the end of each Fiscal Year of the Borrower,
deliver or cause to be delivered to the Agent and each
Lender (i) audited consolidated and unaudited, Borrower-
prepared consolidating balance sheets of the Borrower and
its Subsidiaries as at the end of such Fiscal Year, and the
notes thereto (with respect to audited statements only), and
the related audited consolidated and unaudited, Borrower-
prepared consolidating statements of income and
stockholders' equity and related consolidated statements of
cash flows, and the respective notes thereto (with respect
to audited statements only), for such Fiscal Year, setting
forth (other than for consolidating statements) comparative
financial statements for the preceding Fiscal Year, all
prepared in accordance with GAAP with such changes from
prior periods as required by GAAP and noted in the auditor's
opinion delivered therewith and containing, with respect to
the consolidated financial statements, opinions of Ernst &
Young, or other such "Big 6" independent certified public
accountants, which are unqualified as to the scope of the
audit performed and as to the "going concern" status of the
Borrower and without any exception not acceptable to the
Lenders, (ii) a certificate of an Authorized Representative,
which shall be in the form of Exhibit H, demonstrating
compliance with Section 9.1;
(b) as soon as practical and in any event within 45
days after the end of each Fiscal Quarter (except the last
Fiscal Quarter of the Fiscal Year) deliver to the Agent and
each Lender (i) consolidated and consolidating balance
sheets of the Borrower and its Subsidiaries as at the end of
such Fiscal Quarter, and the related consolidated and
consolidating statements of income and stockholders' equity
and related consolidated statement of cash flows for such
Fiscal Quarter in each case setting forth in comparative
form consolidated figures for the corresponding period of
the preceding Fiscal Year and accompanied by a certificate
of an Authorized Representative to the effect that such
financial statements present fairly the financial position
of the Borrower and its Subsidiaries as of the end of such
fiscal period and the results of their operations and the
changes in their financial position for such fiscal period,
in conformity with the standards set forth in GAAP with
respect to interim financial statements, and (ii) a
certificate of an Authorized Representative containing
computations for such Fiscal Quarter comparable to that
required pursuant to Section 8.1(a)(ii);
(c) together with each delivery of the financial
statements required by Section 8.1(a)(i), deliver to the
Agent and each Lender a letter from the Borrower's
accountants specified in Section 8.1(a)(i) stating that in
performing the audit necessary to render an opinion on the
financial statements delivered under Section 8.1(a)(i), they
obtained no knowledge of any Default or Event of Default by
the Borrower in the fulfillment of the terms and provisions
of this Agreement insofar as they relate to financial
matters (which at the date of such statement remains
uncured); or if the accountants have obtained knowledge of
such Default or Event of Default, a statement specifying the
nature and period of existence thereof;
(d) promptly upon their becoming available to the
Borrower, the Borrower shall deliver to the Agent and each
Lender a copy of (i) all regular or special reports or
effective registration statements which the Borrower or any
Subsidiary shall file with the Securities and Exchange
Commission (or any successor thereto) or any securities
exchange, (ii) any proxy statement distributed by the
Borrower or any Subsidiary to its shareholders, bondholders
or the financial community in general, and (iii) any
management letter or other report submitted to the Borrower
or any Subsidiary by independent accountants in connection
with any annual, interim or special audit of the Borrower or
any Subsidiary except for agreed upon procedures reports for
compliance under third-party agreements, reports on employee
benefit plan financial statements and reports with respect
to tax advisory matters;
(e) not later than the last Business Day of each
Fiscal Year, deliver to the Administrative Agent and each
Lender a capital and operating expense budget and
consolidated financial projections prepared by management
for the Borrower and its Subsidiaries for the next Fiscal
Year, prepared in accordance with GAAP applied on a
Consistent Basis including balance sheets, income statements
and statements of cash flows (to include separate forecasts
for Capital Expenditures by the Borrower and EBITDA by each
direct Subsidiary of the Borrower) and a reasonably detailed
explanation of any underlying assumptions with respect
thereto, on a quarterly basis for the current Fiscal Year
and on an annual basis for the next succeeding two years;
provided, however, that if at any time during such next
Fiscal Year, management of the Borrower determines that the
financial projections no longer accurately reflect the
projected financial results for such Fiscal Year, as soon as
practicable, provide to the Agent and each Lender revised
consolidated forecasts for such Fiscal Year;
(f) as soon as practicable and in any event within
twenty (20) days following the end of each Fiscal Month,
deliver to the Agent and each Lender an accounts receivable
aging report in form and detail substantially similar to
that furnished to the Agent prior to the Closing Date; and
(g) promptly, from time to time, deliver or cause to
be delivered to the Administrative Agent and each Lender
such other information regarding the Borrower's and any
Subsidiary's operations, business affairs and financial
condition as the Agent or such Lender may reasonably
request.
The Agent and the Lenders are hereby authorized to deliver a
copy of any such financial or other information delivered
hereunder to the Lenders (or any affiliate of any Lender) or to
the Agent, to any Governmental Authority having jurisdiction over
the Agent or any of the Lenders pursuant to any written request
therefor or in the ordinary course of examination of loan files,
to any other Person who shall acquire or consider the assignment
of, or acquisition of any participation interest in, any
Obligation permitted by this Agreement.
VIII.2. Maintain Properties. Maintain all properties
necessary to its operations in good working order and condition,
make all needed repairs, replacements and renewals to such
properties, and maintain free from Liens all trademarks, trade
names, patents, copyrights, trade secrets, know-how, and other
intellectual property and proprietary information (or adequate
licenses thereto), in each case as are reasonably necessary to
conduct its business as currently conducted or as contemplated
hereby, all in accordance with customary and prudent business
practices.
VIII.3. Existence, Qualification, Etc. Except as
otherwise expressly permitted under Section 9.8, do or cause to
be done all things necessary to preserve and keep in full force
and effect its existence and all material rights and franchises,
and maintain its license or qualification to do business as a
foreign corporation and good standing in each jurisdiction where
the failure to be so licensed or qualified would have a Material
Adverse Effect and in which its ownership or lease of property or
the nature of its business makes such license or qualification
necessary.
VIII.4. Regulations and Taxes. Comply in all material
respects with or contest in good faith by appropriate proceedings
diligently conducted all statutes and governmental regulations,
and pay all taxes, assessments, governmental charges, claims for
labor, supplies, rent and any other obligation which, if unpaid,
would become a Lien against any of its properties except
liabilities being contested in good faith by appropriate
proceedings diligently conducted and against which adequate
reserves required by GAAP have been established unless and until
any Lien resulting therefrom attaches to any of its property and
becomes enforceable against its creditors.
VIII.5. Insurance. Comply in all respects with the
requirements for insurance coverage set forth in each of the
Security Instruments and, without any limitation thereof, (a)
keep all of its insurable properties adequately insured at all
times with responsible insurance carriers against loss or damage
by fire and other hazards to the extent and in the manner as are
customarily insured against by similar businesses owning such
properties similarly situated and otherwise as required by the
Security Instruments, (b) maintain general public liability
insurance at all times with responsible insurance carriers
against liability on account of damage to persons and property
and (c) maintain insurance under all applicable workers'
compensation laws (or in the alternative, maintain required
reserves if self-insured for workers' compensation purposes) and
against loss by reason by business interruption. Each of such
policies of insurance shall have such limits, deductibles,
exclusions, co-insurance and other provisions providing no less
coverages than, to the best of the Borrower's knowledge, are
maintained by similar businesses that are similarly situated and
shall be in form reasonably satisfactory to the Agent. Each of
the policies of insurance described in this Section 8.5 shall
provide that the insurer shall give the Agent not less than 30
days' prior written notice before any such policy shall be
terminated, lapse or be altered in any manner.
VIII.6. True Books. Keep true books of record and account
in which full, true and correct entries will be made of all of
its dealings and transactions, and set up on its books such
reserves as may be required by GAAP with respect to doubtful
accounts and all taxes, assessments, charges, levies and claims
and with respect to its business in general, and include such
reserves in interim as well as year-end financial statements.
VIII.7. Right of Inspection. Permit, up to twice
annually, any Person designated by any Lender or the Agent to
visit and inspect any of the properties, corporate books and
financial reports of the Borrower or any Subsidiary and to
discuss its affairs, finances and accounts with its principal
officers and independent certified public accountants, all at
reasonable times, at reasonable intervals and with reasonable
prior notice to the Borrower and at the expense of the Borrower;
provided however, following the occurrence and during the
continuation of any Default or Event of Default, such visits or
inspections at the expense of the Borrower shall be unlimited.
VIII.8. Observe all Laws. Conform to and duly observe in
all material respects all laws, rules and regulations and all
other valid requirements of any Governmental Authority with
respect to the conduct of its business.
VIII.9. Governmental Licenses. Obtain and maintain all
licenses, permits, certifications and approvals of all applicable
Governmental Authorities as are required for the conduct of its
business as currently conducted and as contemplated by the Loan
Documents except where the failure to so obtain or maintain any
of the foregoing would not reasonably be expected to result in a
Material Adverse Effect.
VIII.10. Covenants Extending to Other Persons. Cause each
of its Guarantors (and its Subsidiaries with respect to Section
8.19) to do with respect to itself, its business and its assets,
each of the things required of the Borrower in Sections 8.2
through 8.9 and 8.19 inclusive.
VIII.11. Officer's Knowledge of Default. Upon any
Executive Officer of the Borrower obtaining knowledge of the
occurrence of any Default or Event of Default hereunder or under
any other obligation of the Borrower or any Subsidiary or other
Credit Party to any Lender, cause an Authorized Representative
promptly to notify the Agent of the nature thereof, the period of
existence thereof, and what action the Borrower or such
Subsidiary or other Credit Party proposes to take with respect
thereto.
VIII.12. Suits or Other Proceedings. Upon any Executive
Officer of the Borrower obtaining knowledge of any litigation or
other proceedings being instituted against the Borrower or any
Subsidiary or other Credit Party, or any attachment, levy,
execution or other process being instituted against any assets of
the Borrower or any Subsidiary or other Credit Party, any or all
of which make a claim or claims in an aggregate amount greater
than $500,000 not otherwise covered by insurance, cause an
Authorized Representative promptly to deliver to the Agent
written notice thereof stating the nature and status of such
litigation, dispute, proceeding, levy, execution or other
process.
VIII.13. Notice of Environmental Complaint or Condition.
Promptly provide to the Agent notice of, including true, accurate
and complete copies of, any and all notices, complaints, orders,
directives, claims, or citations received by the Borrower or any
Subsidiary relating to, any (i) violation or alleged violation by
the Borrower or any Subsidiary of any applicable Environmental
Law, (ii) release or threatened release by the Borrower or any
Subsidiary, or any Person handling, transporting, or disposing of
any Hazardous Material on behalf of the Borrower or any
Subsidiary, or at any facility or property owned or leased or
operated by the Borrower or any Subsidiary, of any Hazardous
Material, except where occurring legally, or (iii) liability or
alleged liability of the Borrower or any Subsidiary for the costs
of cleaning up, removing, remediating or responding to a release
of Hazardous Materials.
VIII.14. Environmental Compliance. If the Borrower or any
Subsidiary shall receive in writing any letter, notice,
complaint, order, directive, claim or citation alleging that the
Borrower or any Subsidiary (i) has violated any Environmental
Law, (ii) has released or is about to release any Hazardous
Material other than in compliance with all Environmental Laws (or
suffered or permitted such action by any other Person on or in
respect of property owned or operated by the Borrower or any
Subsidiary), or (iii) is liable for the costs of cleaning up,
removing, remediating or responding to a release or threatened
release of Hazardous Materials, the Borrower and any Subsidiary
shall (a) provide prompt written notice thereof to the Agent
describing in reasonable detail the nature of the matter and what
action the Borrower or the applicable Subsidiary proposes to take
with respect thereto, and (b) within the time period permitted by
the applicable Environmental Law or the Governmental Authority
responsible for enforcing such Environmental Law, remove or
remedy, or cause the applicable Subsidiary to remove or remedy,
such violation or release or satisfy such liability, unless and
only during the period that the applicability of the
Environmental Law, the fact of such violation or liability or the
action required to remove or remedy such violation is being
contested by the Borrower or the applicable Subsidiary by
appropriate proceedings diligently conducted and all reserves
with respect thereto as may be required under Generally Accepted
Accounting Principles, if any, have been made, and no Lien in
connection therewith shall have attached to any property of the
Borrower or the applicable Subsidiary which shall have become
enforceable against creditors of such Person.
VIII.15. Indemnification. Without limiting the generality
of Section 12.9, the Borrower hereby agrees to indemnify and hold
the Agent and the Lenders, and their respective officers,
directors, employees and agents, harmless from and against any
and all claims, losses, penalties, liabilities, damages and
expenses (including assessment and cleanup costs and reasonable
attorneys', consultants' and other experts' fees and
disbursements) arising directly or indirectly from, out of or by
reason of (a) the violation or alleged violation of any
Environmental Law by the Borrower or any Subsidiary or with
respect to any property owned, operated or leased by the Borrower
or any Subsidiary or (b) the use, generation, handling, storage,
transportation, treatment, emission, release, disclaim or
disposal of any Hazardous Materials by or on behalf of the
Borrower or any Subsidiary or on or with respect to property
owned or leased or operated by the Borrower or any Subsidiary.
The provisions of this Section 8.15 shall survive repayment of
the Obligations or the Facility Revolving Credit Termination Date
and expiration of termination of this Agreement.
VIII.16. Further Assurances. At the Borrower's cost and
expense, upon request of the Agent, duly execute and deliver or
cause to be duly executed and delivered, to the Agent such
further instruments, documents, certificates, financing and
continuation statements, and do and cause to be done such further
acts that may be reasonably necessary or advisable in the
reasonable opinion of the Agent to carry out more effectively the
provisions and purposes of this Agreement and the other Loan
Documents.
VIII.17. Employee Benefit Plans.
(a) With reasonable promptness, and in any event
within 30 days thereof, give notice to the Agent of (a) the
establishment of any new Employee Benefit Plan (which notice
shall include a copy of such plan), (b) the commencement of
contributions to any Employee Benefit Plan to which the
Borrower or any of its ERISA Affiliates was not previously
contributing, (c) any material increase in the benefits of
any existing Employee Benefit Plan, (d) each funding waiver
request filed with respect to any Employee Benefit Plan and
all communications received or sent by the Borrower or any
ERISA Affiliate with respect to such request and (e) the
failure of the Borrower or any ERISA Affiliate to make a
required installment or payment under Section 302 of ERISA
or Section 412 of the Code by the due date;
(b) Promptly and in any event within 15 days of
becoming aware of the occurrence or forthcoming occurrence
of any (a) Termination Event or (b) nonexempt "prohibited
transaction," as such term is defined in Section 406 of
ERISA or Section 4975 of the Code, in connection with any
Pension Plan or any trust created thereunder, deliver to the
Agent a notice specifying the nature thereof, what action
the Borrower or any ERISA Affiliate has taken, is taking or
proposes to take with respect thereto and, when known, any
action taken or threatened by the Internal Revenue Service,
the Department of Labor or the PBGC with respect thereto;
and
(c) With reasonable promptness but in any event within
15 days for purposes of clauses (a), (b) and (c), deliver to
the Agent copies of (a) any unfavorable determination letter
from the Internal Revenue Service regarding the
qualification of an Employee Benefit Plan under Section
401(a) of the Code, (b) all notices received by the Borrower
or any ERISA Affiliate of the PBGC's intent to terminate any
Pension Plan or to have a trustee appointed to administer
any Pension Plan, (c) each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) filed
by the Borrower or any ERISA Affiliate with the Internal
Revenue Service with respect to each Pension Plan and (d)
all notices received by the Borrower or any ERISA Affiliate
from a Multiemployer Plan sponsor concerning the imposition
or amount of withdrawal liability pursuant to Section 4202
of ERISA. The Borrower will notify the Agent in writing
within five Business Days of the Borrower or any ERISA
Affiliate obtaining knowledge or reason to know that the
Borrower or any ERISA Affiliate has filed or intends to file
a notice of intent to terminate any Pension Plan under a
distress termination within the meaning of Section 4041(c)
of ERISA.
VIII.18. Continued Operations. Continue at all times to
conduct its business and engage principally in the same line or
lines of business substantially as heretofore conducted.
VIII.19. New Subsidiaries. (a) Promptly, and in any event
within 15 Business Days, after the acquisition or creation of any
Domestic Subsidiary, cause to be delivered to the Agent for the
benefit of the Lenders each of the following:
(i) a Guaranty executed by such Domestic
Subsidiary substantially in the form of Exhibit I;
(ii) a Security Agreement executed by such
Domestic Subsidiary substantially in the form of
Exhibit J, together with such Uniform Commercial Code
financing statements on Form UCC-1 or otherwise duly
executed by such Subsidiary as "Debtor" and naming the
Agent for the benefit of the Lenders as "Secured
Party", in form, substance and number sufficient in the
reasonable opinion of the Agent and its special counsel
to be filed in all Uniform Commercial Code filing
offices in all jurisdictions in which filing is
necessary or advisable to perfect in favor of the Agent
for the benefit of the Lenders the Lien on Collateral
conferred by such Domestic Subsidiary under such
Security Agreement to the extent such Lien may be
perfected by Uniform Commercial Code filing;
(iii) the Pledged Interests of such Domestic
Subsidiary, which is issued or existing and
outstanding, together with duly executed stock powers
or powers of assignment in blank affixed thereto or
registrar's pledge certificate and control agreement,
as applicable, and an executed Pledge Agreement
Supplement pledging 100% of the capital stock or equity
or other ownership interest of such newly acquired or
created Domestic Subsidiary;
(iv) a supplement to the appropriate schedule
attached to the appropriate Security Instruments
listing the additional Collateral, certified as true,
correct and complete by the Authorized Representative
(provided that the failure to deliver such supplement
shall not impair the rights conferred under the
Security Instruments in after acquired Collateral);
(v) an Intercompany Note Pledge Agreement and a
Subordination Agreement executed by such Domestic
Subsidiary;
(vi) if applicable, an IPSA Supplement and an
Intellectual Property Assignment;
(vii) if requested by the Agent or the
Required Lenders, an opinion of counsel to such
Domestic Subsidiary and the Subsidiary executing the
Pledge Agreement Supplement referred to in (iii) above
dated as of the date of delivery of the Guaranty
referred to in (i) above, the Subordination Agreement
referred in (v) above, and other Loan Documents
provided for in this Section 8.19 and addressed to the
Agent and the Lenders, in form and substance reasonably
acceptable to the Agent and substantively similar to
the opinions of counsel delivered pursuant to Section
6.1(a), rendered with respect to the Subsidiaries as of
the Closing Date and the Collateral in which they grant
the Agent a Lien for the benefit of itself and the
Lenders; and
(viii) current copies of the Organizational
Documents of such Domestic Subsidiary, minutes of duly
called and conducted meetings (or duly effected consent
actions) of the Board of Directors, partners, or
appropriate committees thereof (and, if required by
such Organizational Documents or by applicable law, of
the shareholders) of such Domestic Subsidiary
authorizing the actions and the execution and delivery
of documents described in this Section 8.19;
(b) Promptly, and in any event within 30 Business
Days, after the acquisition or creation of any Foreign
Subsidiary, cause to be delivered to the Agent for the
benefit of the Lenders each of the following:
(i) the Pledged Interests of such Foreign
Subsidiary, which is issued or existing and
outstanding, together with duly executed stock powers
or powers of assignment in blank affixed thereto or
registrar's pledge certificate and control agreement,
as applicable, and an executed Pledge Agreement
Supplement pledging 66% of the voting share capital
and 100% of the nonvoting share capital or equity or
other ownership interest of such Foreign Subsidiary
substantially similar in form and content to that
executed and delivered as of the Closing Date, with
appropriate revisions as to the identity of the pledgor
and securing the obligations of such pledgor under its
Guaranty; and
(ii) if requested by the Agent or the Required
Lenders, an opinion of counsel to the Subsidiary
executing the Pledge Agreement Supplement referred to
in (i) above, dated as of the date of delivery of such
Pledge Agreement Supplement and addressed to the Agent
and the Lenders, in form and substance reasonably
acceptable to the Agent, and, if requested by the Agent
or the Required Lenders, an opinion of counsel in the
jurisdiction of incorporation of the Foreign
Subsidiary, in form and substance reasonably acceptable
to the Agent, in each case and substantively similar to
the opinions of counsel delivered pursuant to Section
6.1(a), rendered with respect to the Subsidiaries as of
the Closing Date and the Collateral in which they grant
the Agent a Lien for the benefit of itself and the
Lenders.
ARTICLE IX
Negative Covenants
Until the Revolving Credit Termination Date, unless the
Required Lenders shall otherwise consent in writing, the Borrower
will not, nor will it permit any Subsidiary to:
IX.1. Financial Covenants.
(a) Consolidated Net Worth. Permit Consolidated Net
Worth to be less than (i) 90% of Consolidated Net Worth as
of the Closing Date plus $20,000,000 and (ii) as at the last
day of each succeeding Fiscal Quarter of the Borrower and
until (but excluding) the last day of the next following
Fiscal Quarter of the Borrower, the sum of (A) the amount of
Consolidated Net Worth required to be maintained pursuant to
this Section 9.1(a) as at the end of the immediately
preceding Fiscal Quarter, plus (B) 75% of Consolidated Net
Income (with no reduction for net losses during any period)
for the Fiscal Quarter of the Borrower ending on such day
(including within "Consolidated Net Income" certain items
otherwise excluded as provided for in the definition of
"Consolidated Net Income") less dividends paid with respect
to the Preferred Stock as permitted hereunder, plus (C) 100%
of the aggregate amount of all increases in the stated
capital and additional paid-in capital accounts of the
Borrower resulting from the issuance of equity securities or
other capital investments; provided, however, in the event
all the outstanding Warrants are redeemed, purchased, put,
called, exercised or otherwise no longer outstanding as of
March 31, 1999, then in such event the minimum Consolidated
Net Worth permitted at the Closing Date under (i) above
shall be recalculated to be an amount equal to 85% of the
Consolidated Net Worth as of the Closing Date and
corresponding adjustments under (ii)(A) above shall be made
accordingly.
(b) Consolidated Leverage Ratio. Permit the
Consolidated Leverage Ratio as of the end of each Four-
Quarter Period ending during the applicable period set forth
below to be greater than that ratio set forth opposite each
such period:
Consolidated Leverage
Ratio
Period Must Not Be
Greater Than
Closing Date through and 3.25 to 1.00
including September 30,
1999
October 1, 1999 through 3.00 to 1.00
and including September
30, 2001
October 1, 2001 and 2.50 to 1.00
thereafter
(c) Consolidated Fixed Charge Ratio. Permit at any
time the Consolidated Fixed Charge Ratio to be less than
1.50 to 1.00.
(d) Consolidated Interest Coverage Ratio. Permit at
any time the Consolidated Interest Coverage Ratio to be less
than 3.50 to 1.00.
(e) First Quarter Consolidated EBITDA. Permit
Consolidated EBITDA for the Fiscal Quarter ending March 31,
1998 to be less than $2,750,000.
IX.2. Acquisitions. Enter into any agreement, contract,
binding commitment or other arrangement providing for any
Acquisition, or take any action to solicit the tender of
securities or proxies in respect thereof in order to effect any
Acquisition, other than (i) Permitted Acquisitions, (ii) that
certain acquisition pursuant to, and in accordance with the terms
of, the Asset Purchase Agreement, to be dated on or about March
23, 1998, among the Borrower, Headway Corporate Staffing Services
of North Carolina, Inc., Select Staffing Services, Inc. and Jack
Powell, (iii) that certain acquisition pursuant to, and in
accordance with the terms of, the Asset Purchase Agreement, to be
dated on or about March 23, 1998, among the Borrower, Cheney
Associates, L.L.C. and Timothy Cheney, an individual doing
business under the name Cheney Associates, Inc. and Cheney
Consulting Group, and (iv) that certain acquisition pursuant to,
and in accordance with the terms of the Stock Purchase Agreement
to be dated on or about March 23, 1998, among the Borrower, L&M
Shore Family Holdings Limited Partnership, Elder Investments
Limited Partnership Mark Shore and Linda Elder.
IX.3. Liens. Incur, create or permit to exist any Lien,
charge or other encumbrance of any nature whatsoever with respect
to any property or assets now owned or hereafter acquired by the
Borrower or any Subsidiary, other than
(a) Liens created under the Security Instruments in
favor of the Agent and the Lenders, and otherwise existing
as of the date hereof and set forth in Schedule 7.7;
(b) Liens imposed by law for taxes, assessments or
charges of any Governmental Authority for claims not yet due
or which are being contested in good faith by appropriate
proceedings diligently conducted, and with respect to which
adequate reserves or other appropriate provisions are being
maintained in accordance with GAAP and which Liens are not
yet enforceable against other creditors;
(c) statutory or contractual Liens of landlords and
Liens of carriers, warehousemen, mechanics, materialmen and
other Liens imposed by law or created in the ordinary course
of business and in existence less than 90 days from the date
of creation thereof for amounts not yet due or which are
being contested in good faith by appropriate proceedings
diligently conducted, and with respect to which adequate
reserves or other appropriate provisions are being
maintained in accordance with GAAP and which Liens are not
yet enforceable against other creditors;
(d) Liens incurred or deposits made (a) in the
ordinary course of business (including, without limitation,
performance and surety bonds) in connection with workers'
compensation, unemployment insurance and other types of
social security benefits or (b) to secure the performance of
tenders, bids, leases, contracts (other than for the
repayment of Indebtedness), statutory obligations and other
similar obligations or arising as a result of progress
payments under government contracts;
(e) easements (including reciprocal easement
agreements and utility agreements), rights-of-way,
covenants, consents, reservations, encroachments or title
defects, variations and zoning and other restrictions,
charges or encumbrances (whether or not recorded), which do
not interfere materially with the ordinary conduct of the
business of the Borrower or any Subsidiary and which do not
materially detract from the value of the property to which
they attach or materially impair the use thereof to the
Borrower or any Subsidiary;
(f) purchase money Liens to secure Indebtedness
permitted under Section 9.4(d) (as extended or renewed as
permitted under Section 9.4(h) and incurred to purchase
fixed assets, provided such Indebtedness represents not
less than 75% and not more than 100% of the purchase price
of such assets as of the date of purchase thereof and no
property other than the assets so purchased secures such
Indebtedness;
(g) Liens arising in connection with Capital Leases
(as extended or renewed as permitted under Section 9.4(h))
provided that no such Lien shall extend to or cover any
Collateral or any property or assets other than assets
subject to the Capital Leases;
(h) judgment and other similar non-consensual Liens
arising in connection with court proceedings, provided that,
and only for so long as, the execution or other enforcement
of such Liens is effectively stayed and the claims secured
thereby are being actively contested in good faith and by
appropriate proceedings and all reserves as may be required
by GAAP, if any, have been made, and in any case only if the
amounts secured thereby, if paid or payable, could not,
individually or in the aggregate, have a Material Adverse
Effect.
IX.4. Indebtedness. Incur, create, assume or permit to
exist any Indebtedness, howsoever evidenced, except:
(a) Indebtedness existing as of the Closing Date as
set forth in Schedule 1.2; provided, none of the instruments
and agreements evidencing or governing such Indebtedness,
including without limitation the Subordinated Debt, shall be
amended, modified or supplemented after the Closing Date to
change any terms of subordination, payment of principal,
interest, fees or other amounts due, or rights of
conversion, put, exchange or other similar rights or any
other covenants, terms or conditions thereof to be less
favorable to the Agent and the Lenders than such terms,
rights and conditions as in effect on the Closing Date;
(b) Indebtedness owing to the Agent or any Lender in
connection with this Agreement, any Note or other Loan
Document;
(c) the endorsement of negotiable instruments for
deposit or collection or similar transactions in the
ordinary course of business;
(d) purchase money Indebtedness described in Section
9.3(f) not to exceed an aggregate outstanding amount at any
time of $3,000,000;
(e) Indebtedness arising from Hedging Obligations
permitted under Section 9.14;
(f) Intercompany Advances;
(g) additional unsecured Indebtedness for Money
Borrowed not otherwise covered by clauses (a) through (f)
above, provided that the aggregate outstanding principal
amount of all such other Indebtedness permitted under this
clause (g) shall in no event exceed $3,000,000 at any time;
and
(h) Indebtedness extending the maturity of, or
renewing, refunding or refinancing, in whole or in part,
Indebtedness incurred under clauses (a), (d), (f) and (g)
of this Section 9.4, including without limitation the
Subordinated Debt; provided that the covenants, terms and
conditions of any such extension, renewal, refunding or
refinancing Indebtedness (and of any agreement or instrument
entered into in connection therewith) are no less favorable
to the Agent and the Lenders than the terms of the
Indebtedness as in effect prior to such action, and provided
further that (1) the aggregate principal amount of or
interest rate or rates and fees payable on such extended,
renewed, refunded or refinanced Indebtedness shall not be
increased by such action, (2) the group of direct or
contingent obligors on such Indebtedness shall not be
expanded as a result of any such action, (3) immediately
prior to and immediately after giving effect to any such
extension, renewal, refunding or refinancing, no Default or
Event of Default shall have occurred and be continuing and
(4) no such action shall serve to prepay, redeem, purchase,
defease or otherwise satisfy prior to the scheduled maturity
previously existing of such Indebtedness.
IX.5. Transfer of Assets. Sell, lease, transfer or
otherwise dispose of any assets of the Borrower or any
Subsidiary other than
(a) dispositions of equipment which, in the aggregate
during any Fiscal Year, has a fair market value or book
value, whichever is less, of $500,000 or less and is
replaced by equipment having at least equivalent value;
(b) disposition of property that is substantially
worn, damaged, obsolete or, in the judgment of the Borrower,
no longer best used or useful in its business or that of any
Subsidiary;
(c) transfers of assets necessary to give effect to
merger or consolidation transactions permitted by Section
9.7; and
(d) the disposition of Eligible Securities in the
ordinary course of management of the investment portfolio of
the Borrower and its Subsidiaries and up to 7,072,307
ordinary shares of the common stock of INCEPTA Group, plc.
IX.6. Investments. Purchase, own, invest in or
otherwise acquire, directly or indirectly, any stock or other
securities, or make or permit to exist any interest whatsoever in
any other Person or permit to exist any loans or advances to any
Person, except that Borrower may maintain investments or invest
in:
(a) securities of any Person acquired in an
Acquisition permitted hereunder;
(b) Eligible Securities;
(c) investments existing as of the date hereof and as
set forth in Schedule 7.4;
(d) accounts receivable arising and trade credit
granted in the ordinary course of business and any
securities received in satisfaction or partial satisfaction
thereof in connection with accounts of financially troubled
Persons to the extent reasonably necessary in order to
prevent or limit loss;
(e) Intercompany Advances;
(f) loans from the Borrower or any Guarantor to any
Guarantor as described in Section 9.4(f);
(g) investments in Hedging Obligations permitted under
Section 9.15;
(h) loans and advances to Subsidiaries who are not
Guarantors provided (i) the aggregate outstanding principal
amount of such loans and advances shall not at any time
exceed $1,000,000 and (ii) all evidence of such
Indebtedness, excluding any promissory notes, shall be
pledged to the Agent for the benefit of the Lenders; and
(i) loans and advances to executive officers of the
Borrower for the purpose of, and the proceeds of which are
exclusively used to, finance the acquisition of shares of
the Borrower's common stock, provided the aggregate
outstanding principal amount of such loans and advances
shall not at any time exceed $285,000.
IX.7. Merger or Consolidation. (a) Consolidate with or
merge into any other Person, or (b) permit any other Person to
merge into it, provided, however, (i) any Subsidiary may merge
into or consolidate with the Borrower and any Subsidiary may
merge into or consolidate with any other wholly owned Guarantor,
and (ii) any other Person may merge into or consolidate with the
Borrower or any wholly owned Guarantor may merge into or
consolidate with any other Person in order to consummate an
Acquisition permitted by Section 9.2, provided further, that any
resulting or surviving entity of a permitted Acquisition shall
execute and deliver such agreements and other documents,
including a Guaranty, and take such other action as the Agent may
require to evidence or confirm its express assumption of the
obligations and liabilities of its predecessor entities under the
Loan Documents.
IX.8. Restricted Payments. Make any Restricted Payment
or apply or set apart any of their assets therefor or agree to do
any of the foregoing; provided, however, the Borrower may,
if immediately prior and immediately after giving effect to any
of the following payments no Default or Event of Default shall
exist or occur and be continuing, (a) pay the dividend payable on
the Series F Preferred Stock as set forth in the Certificate of
Designation for such series; and (b) make purchases in open
market transactions of its common stock in connection with the
exercise of any warrants or options, provided the payments made
in connection with such purchases do not exceed $500,000 in the
aggregate in any Fiscal Year or $2,000,000 in the aggregate
during the term of this Agreement.
IX.9. Transactions with Affiliates. Other than
transactions permitted under Sections 9.4, 9.6 and 9.7(b)(i) or
otherwise set forth on Schedule 9.9, enter into any transaction
after the Closing Date, including, without limitation, the
purchase, sale, lease or exchange of property, real or personal,
or the rendering of any service, with any Affiliate of the
Borrower, except (a) that such Persons may render services to the
Borrower or its Subsidiaries for compensation at the same rates
generally paid by Persons engaged in the same or similar
businesses for the same or similar services, (b) that the
Borrower or any Subsidiary may render services to such Persons
for compensation at the same rates generally charged by the
Borrower or such Subsidiary, (c) in the case of either (a) or
(b), in the ordinary course of business and pursuant to the
reasonable requirements of the Borrower's (or any Subsidiary's)
business and consistent with past practice of the Borrower and
its Subsidiaries and upon fair and reasonable terms no less
favorable to the Borrower (or any Subsidiary) than would be
obtained in a comparable arm'slength transaction with a Person
not an Affiliate, and (d) that the Borrower or any Guarantor may
enter into any transaction with any other Guarantor pursuant to
the reasonable requirements of the Borrower's or Guarantor's
business and consistent with past practice of the Borrower or
Guarantor, except as may be otherwise limited or prohibited by
any provision of this Agreement.
IX.10. Compliance with ERISA. With respect to any
Pension Plan, Employee Benefit Plan or Multiemployer Plan and
except as otherwise disclosed in this Agreement:
(a) permit the occurrence of any Termination Event
which would result in a material liability on the part of
the Borrower or any ERISA Affiliate to the PBGC; or
(b) permit the present value of all benefit
liabilities under all Pension Plans to exceed the current
value of the assets of such Pension Plans allocable to such
benefit liabilities; or
(c) permit any accumulated funding deficiency (as
defined in Section 302 of ERISA and Section 412 of the Code)
with respect to any Pension Plan, whether or not waived; or
(d) fail to make any contribution or payment to any
Multiemployer Plan which the Borrower or any ERISA
Affiliate may be required to make under any agreement
relating to such Multiemployer Plan, or any law pertaining
thereto; or
(e) engage, or permit any Borrower or any ERISA
Affiliate to engage, in any prohibited transaction under
Section 406 of ERISA or Sections 4975 of the Code for which
a civil penalty pursuant to Section 502(I) of ERISA or a tax
pursuant to Section 4975 of the Code may be imposed; or
(f) permit the establishment of any additional
Employee Benefit Plan providing post-retirement welfare
benefits or establish or amend any Employee Benefit Plan
which establishment or amendment could result in liability
to the Borrower or any ERISA Affiliate or increase the
obligation of the Borrower or any ERISA Affiliate to a
Multiemployer Plan, which liability or increase,
individually or together with all similar liabilities and
increases, is in excess of $1,000,000; or
(g) fail, or permit the Borrower or any ERISA
Affiliate to fail, to establish, maintain and operate each
Employee Benefit Plan in compliance in all material respects
with the provisions of ERISA, the Code, all applicable
Foreign Benefit Laws and all other applicable laws and the
regulations and interpretations thereof.
IX.11. Fiscal Year. Change its Fiscal Year.
IX.12. Dissolution, Etc. Wind up, liquidate or dissolve
(voluntarily or involuntarily) or commence or suffer any
proceedings seeking any such winding up, liquidation or
dissolution, except in connection with a merger or consolidation
permitted pursuant to Section 9.7.
IX.13. Change of Control. Cause, suffer or permit to
exist or occur any Change of Control.
IX.14. Hedging Obligations. Incur any Hedging Obligations
or enter into any agreements, arrangements, devices or
instruments relating to Hedging Obligations, except pursuant to
Swap Agreements in an aggregate notional amount not to exceed at
any time 60% the Total Revolving Credit Commitment.
IX.15. Negative Pledge Clauses. Enter into or cause,
suffer or permit to exist any agreement with any Person other
than the Agent and the Lenders pursuant to this Agreement or any
other Loan Documents which prohibits or limits the ability of any
Borrower or any Subsidiary to create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired, provided that the
Borrower and any Guarantor may enter into such an agreement in
connection with property subject to any Lien permitted by this
Agreement and not released after the date hereof, when such
prohibition or limitation is by its terms effective only against
the assets subject to such Lien.
IX.16. Restrict Payment of Dividends. Enter into any
agreement or covenant prohibiting or limiting in any way the
Borrower's or any Subsidiary's right or power to pay any dividend
or make any other distribution, direct or indirect, on account of
any shares of any class of stock of the Borrower or any
Subsidiary, now or hereafter outstanding, to the Borrower or any
Guarantor.
IX.17. Subordinated Debt and Preferred Stock. (a) Except
as otherwise permitted in Section 9.4(h), prepay, redeem,
purchase, defease or otherwise satisfy prior to the scheduled
maturity thereof in any manner (regardless of whether such
prepayment, redemption, purchase, defeasance or satisfaction is
mandatory or optional), or make any payment in violation of any
subordination terms of, any Indebtedness, including without
limitation the Subordinated Debt, or redeem or purchase
(regardless of whether such redemption or purchase is mandatory
or optional) any of the Preferred Stock; or
(b) Amend, modify or change in any manner any term or
condition of any Subordinated Debt (including without limitation
any of the Subordinated Debt Documents) or any Preferred Stock so
that the terms and conditions thereof are less favorable to the
Agent and the Lenders than the terms thereof as of the Closing
Date.
ARTICLE X
Events of Default and Acceleration
X.1. Events of Default. If any one or more of the following
events (herein called "Events of Default") shall occur for any
reason whatsoever (and whether such occurrence shall be voluntary
or involuntary or come about or be effected by operation of law
or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any
Governmental Authority), that is to say:
(a) if default shall be made in the due and punctual
payment of the principal of any Loan or Reimbursement
Obligation, when and as the same shall be due and payable
whether pursuant to any provision of Article II or Article
III, at maturity, by acceleration or otherwise; or
(b) if default shall be made in the due and punctual
payment of any amount of interest on any Loan or
Reimbursement Obligation or in the due and punctual payment
of any other Obligation or of any fees or other amounts
payable to any of the Lenders or the Agent on the date on
which the same shall be due and payable and such default
shall continue for two (2) Business Days; or
(c) if default shall be made in the performance or
observance of any covenant set forth in Section 2.12,, 8.7,
8.11, 8.12, 8.19 or Article IX; or
(d) if a default shall be made in the performance or
observance of, or shall occur under, any covenant, agreement
or provision contained in this Agreement (other than as
described in clauses (a), (b) or (c) above) and such default
shall continue for 30 or more days after the earlier of
receipt of notice of such default by the Authorized
Representative from the Agent or an Executive Officer of the
Borrower becomes aware of such default; or if a default
shall be made in the performance or observance of, or shall
occur under, any covenant, agreement or provision contained
in any of the other Loan Documents (beyond any applicable
grace period, if any, contained therein) or in any
instrument or document evidencing or creating any
obligation, guaranty, or Lien in favor of the Agent or any
of the Lenders or delivered to the Agent or any of the
Lenders in connection with or pursuant to this Agreement or
any of the Obligations; or if any Loan Document ceases to be
in full force and effect (other than by reason of any action
by the Agent); or if without the written consent of the
Lenders, this Agreement or any other Loan Document shall be
disaffirmed or shall terminate, be terminable or be
terminated or become void or unenforceable for any reason
whatsoever (other than in accordance with its terms in the
absence of default or by reason of any action by the Lenders
or the Agent); or
(e) if there shall occur (i) a default, which is not
waived, in the payment of any principal, interest, premium
or other amount with respect to the Subordinated Debt or any
other Indebtedness (other than the Loans and other
Obligations) of the Borrower or any Subsidiary and the
amount of such Indebtedness is not less than $1,000,000 in
the aggregate outstanding, or (ii) a default, which is not
waived, in the performance, observance or fulfillment of any
term or covenant (other than as described in clause (i)
above) contained in any agreement or instrument under or
pursuant to which the Subordinated Debt or any such
Indebtedness may have been issued, created, assumed,
guaranteed or secured by the Borrower or any Subsidiary, or
any other event of default as specified in any agreement or
instrument under or pursuant to which the Subordinated Debt
or any such Indebtedness may have been issued, created,
assumed, guaranteed or secured by the Borrower or any
Subsidiary, and such default or event of default shall
continue for more than the period of grace, if any, therein
specified, or such default or event of default shall permit
(or, with the giving of notice or lapse of time or both,
would permit) the holder of the Subordinated Debt or any
such Indebtedness (or any Agent or trustee acting on behalf
of one or more holders) to accelerate the maturity thereof;
or
(f) if any representation, warranty or other statement
of fact contained in any Loan Document or in any writing,
certificate, report or statement at any time furnished to
the Agent or any Lender by or on behalf of the Borrower or
any other Credit Party pursuant to or in connection with any
Loan Document (which shall not include marketing materials
prepared and distributed in connection with syndication of
the Revolving Credit Facility), shall be false or misleading
in any material respect when given; or
(g) if the Borrower or any Subsidiary or other Credit
Party shall be unable to pay its debts generally as they
become due, admit in writing its inability to pay its debts
generally as they become due, file a petition to take
advantage of any insolvency statute, make an assignment for
the benefit of its creditors, commence a proceeding for the
appointment of a receiver, trustee, liquidator or
conservator of itself or of the whole or any substantial
part of its property, or file a petition or answer seeking
liquidation, reorganization or arrangement or similar relief
under the federal bankruptcy laws or any other applicable
law or statute; or
(h) if a court of competent jurisdiction shall enter
an order, judgment or decree appointing a custodian,
receiver, trustee, liquidator or conservator of the Borrower
or any Subsidiary or other Credit Party or of the whole or
any substantial part of its properties and such order,
judgment or decree continues unstayed and in effect for a
period of sixty (60) days, or approve a petition filed
against the Borrower or any Subsidiary or any other Credit
Party seeking liquidation, reorganization or arrangement or
similar relief under the federal bankruptcy laws or any
other applicable law or statute of the United States of
America or any state, which petition is not dismissed within
sixty (60) days; or if, under the provisions of any other
law for the relief or aid of debtors, a court of competent
jurisdiction shall assume custody or control of the Borrower
or any Subsidiary or other Credit Party or of the whole or
any substantial part of its properties, which control is not
relinquished within sixty (60) days; or if there is
commenced against the Borrower or any Subsidiary or other
Credit Party any proceeding or petition seeking
reorganization, arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or
statute of the United States of America or any state which
proceeding or petition remains undismissed for a period of
sixty (60) days; or if the Borrower or any Subsidiary or
other Credit Party takes any action to indicate its consent
to or approval of any such proceeding or petition; or
(i) if (i) one or more judgments or orders where the
amount not covered by insurance (or the amount as to which
the insurer denies liability) is in an aggregate amount in
excess of $1,000,000 is rendered against the Borrower or any
Subsidiary, or (ii) there is any attachment, injunction or
execution against any of the Borrower's or Subsidiaries'
properties for any amount in excess of $1,000,000 in the
aggregate; and such judgment, attachment, injunction or
execution remains unpaid, unstayed, undischarged, unbonded
or undismissed for a period of thirty (30) days; or
(j) if the Borrower or any Subsidiary shall, other
than in the ordinary course of business (as determined by
past practices), suspend all or any part of its operations
material to the conduct of the business of the Borrower and
its Subsidiaries, on a consolidated basis, for a period of
more than sixty (60) days; or
(k) if the Borrower or any Subsidiary shall breach any
of the material terms or conditions of any agreement under
which any Hedging Obligations permitted hereby is created
and such breach shall continue beyond any grace period, if
any, relating thereto pursuant to the terms of such
agreement, or if the Borrower or any Subsidiary shall
disaffirm or seek to disaffirm any such agreement or any of
its obligations thereunder; or
(l) if there shall occur and be continuing an Event of
Default as defined in any of the other Loan Documents; or
(m) if there shall occur and be continuing an Event of
Default as defined in the Indenture referred to in the
definition of "Subordinated Debt Documents" or a Series F
Stock Event of Default as defined in the Certificate of
Designation referred to in subpart (b) of the definition of
"Preferred Stock";
then, and in any such event and at any time thereafter, if such
Event of Default or any other Event of Default shall have not
been waived,
(A) either or both of the following actions
may be taken: (i) the Agent, with the consent of the
Required Lenders, may, and at the direction of the
Required Lenders shall, declare any obligation of the
Lenders and the Issuing Bank to make further Loans or
to issue additional Letters of Credit terminated,
whereupon the obligation of each Lender to make further
Revolving Loans, and of the Issuing Bank to issue
additional Letters of Credit, hereunder shall terminate
immediately, and (ii) the Agent shall at the direction
of the Required Lenders, at their option, declare by
notice to the Borrower any or all of the Obligations to
be immediately due and payable, and the same, including
all interest accrued thereon and all other obligations
of the Borrower to the Agent and the Lenders, shall
forthwith become immediately due and payable without
presentment, demand, protest, notice or other formality
of any kind, all of which are hereby expressly waived,
anything contained herein or in any instrument
evidencing the Obligations to the contrary
notwithstanding; provided, however, that
notwithstanding the above, if there shall occur an
Event of Default under clause (g) or (h) above, then
the obligation of the Lenders to make Revolving Loans,
and of the Issuing Bank to issue Letters of Credit
hereunder shall automatically terminate and any and all
of the Obligations shall be immediately due and payable
without the necessity of any action by the Agent or the
Required Lenders or notice to the Agent or the Lenders;
(B) The Borrower shall, upon demand of the
Agent, the Issuing Bank or the Required Lenders,
deposit cash with the Agent in an amount equal to the
amount of any Letter of Credit Outstandings, as
collateral security for the repayment of any future
drawings or payments under such Letters of Credit, and
such amounts shall be held by the Agent pursuant to the
terms of the LC Account Agreement; and
(C) The Agent and each of the Lenders shall
have all of the rights and remedies available under the
Loan Documents or under any applicable law.
X.2. Agent to Act. In case any one or more Events of
Default shall occur and not have been waived, the Agent may, and
at the direction of the Required Lenders shall, proceed to
protect and enforce their rights or remedies either by suit in
equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provision
contained herein or in any other Loan Document, or to enforce the
payment of the Obligations or any other legal or equitable right
or remedy.
X.3. Cumulative Rights. No right or remedy herein conferred
upon the Lenders or the Agent is intended to be exclusive of any
other rights or remedies contained herein or in any other Loan
Document, and every such right or remedy shall be cumulative and
shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law
or in equity or by statute, or otherwise.
X.4. No Waiver. No course of dealing between the Borrower
and any Lender, the Issuing Bank or the Agent or any failure or
delay on the part of any Lender, the Issuing Bank or the Agent
in exercising any rights or remedies under any Loan Document or
otherwise available to it shall operate as a waiver of any rights
or remedies and no single or partial exercise of any rights or
remedies shall operate as a waiver or preclude the exercise of
any other rights or remedies hereunder or of the same right or
remedy on a future occasion.
X.5. Allocation of Proceeds. If an Event of Default has
occurred and not been waived, and the maturity of the Notes has
been accelerated pursuant to Article X hereof, all payments
received by the Agent hereunder, in respect of any principal of
or interest on the Obligations or any other amounts payable by
the Borrower hereunder, shall be applied by the Agent in the
following order:
(a) amounts due to the Lenders pursuant to Sections
2.10, 3.3, 3.4 and 12.5;
(b) amounts due to the Agent pursuant to Section
11.11;
(c) payments of interest on Loans and Reimbursement
Obligations, to be applied for the ratable benefit of the
Lenders;
(d) payments of principal of Loans and Reimbursement
Obligations, to be applied for the ratable benefit of the
Lenders;
(e) payments of cash amounts to the Agent in respect
of outstanding Letters of Credit pursuant to Section
10.1(B);
(f) amounts due to the Lenders pursuant to Sections
3.2(h), 8.15 and 12.9;
(g) payments of all other amounts due under any of the
Loan Documents, if any, to be applied for the ratable
benefit of the Lenders;
(h) amounts due to any of the Lenders in respect of
Obligations consisting of liabilities under any Swap
Agreement with any of the Lenders on a pro rata basis
according to the amounts owed; and
(i) any surplus remaining after application as
provided for herein, to the Borrower or otherwise as may be
required by applicable law.
ARTICLE XI
The Agent
XI.1. Appointment. Each Lender and the Issuing Bank
hereby irrevocably designates and appoints NationsBank as the
Agent therefor under this Agreement, and each of the Lenders and
the Issuing Bank hereby irrevocably authorizes NationsBank as the
Agent, therefor, to take such action on its behalf under the
provisions of this Agreement and the other Loan Documents and to
exercise such powers as are expressly delegated to the Agent by
the terms of this Agreement and such other Loan Documents,
together with such other powers as are reasonably incidental
thereto. The Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any of the Lenders or the Issuing
Bank, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against
the Agent.
XI.2. Attorneys-in-fact. The Agent may execute any of
its duties under the Loan Documents by or through agents or
attorneysinfact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent
shall not be responsible for the negligence, gross negligence or
willful misconduct of any agents or attorneysinfact selected by
it with reasonable care.
XI.3. Limitation on Liability. Neither the Agent nor
any of its officers, directors, employees, agents or attorneys-
in-fact shall be liable to the Lenders for any action lawfully
taken or omitted to be taken by it or them under or in connection
with the Loan Documents except for its or their own gross
negligence or willful misconduct. Neither the Agent nor any of
its affiliates shall be responsible in any manner to any of the
Lenders for any recitals, statements, representations or
warranties made by the Borrower, any other Credit Party or any
officer or representative thereof contained in any Loan Document,
or in any certificate, report, statement or other document
referred to or provided for in or received by the Agent under or
in connection with any Loan Document, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of any
Loan Document, or for any failure of the Borrower or any other
Credit Party to perform its obligations under any Loan Document,
or for any recitals, statements, representations or warranties
made, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of any collateral. The Agent shall
not be under any obligation to any of the Lenders to ascertain or
to inquire as to the observance or performance of any of the
terms, covenants or conditions of any Loan Document on the part
of the Borrower or any other Credit Party or to inspect the
properties, books or records of the Borrower or any other Credit
Party.
XI.4. Reliance. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any Note, writing,
resolution, notice, consent certificate, affidavit, letter,
cablegram, telegram, telefacsimile or telex message, statement,
order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal
counsel (including, without limitation, counsel to any Credit
Party), independent accountants and other experts selected by the
Agent. The Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless an Assignment shall have
been filed with and accepted by the Agent. The Agent shall be
fully justified in failing or refusing to take any action under
the Loan Documents unless it shall first receive advice or
concurrence of the Lenders or the Required Lenders as provided in
this Agreement or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, under
the Loan Documents in accordance with a request of the Required
Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all
present and future holders of the Notes.
XI.5. Notice of Default. The Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or
Event of Default hereunder unless the Agent has received notice
from a Lender, the Authorized Representative or the Borrower
referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default".
In the event that the Agent receives such a notice, the Agent
shall promptly give notice thereof to the Lenders. The Agent
shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Lenders;
provided that, unless and until the Agent shall have received
such directions, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with
respect to such Event of Default as it shall deem advisable in
the best interests of the Lenders.
XI.6. No Representations. Each Lender expressly
acknowledges that neither the Agent nor any of its affiliates has
made any representations or warranties to it and that no act by
the Agent hereafter taken, including any review of the affairs of
the Borrower or its Subsidiaries, shall be deemed to constitute
any representation or warranty by the Agent or NMS to any Lender.
Each Lender represents to the Agent that it has, independently
and without reliance upon the Agent, NMS or any other Lender, and
based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the
financial condition, creditworthiness, affairs, status and nature
of the Borrower and each other Credit Party and made its own
decision to enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon
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 analysis, appraisals and decisions in taking
or not taking action under the Loan Documents and to make such
investigation as it deems necessary to inform itself as to the
status and affairs, financial or otherwise, of the Borrower and
any other Credit Party. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by
the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition or
business of the Borrower, its Subsidiaries and any other Credit
Party which may come into the possession of the Agent or any of
its affiliates.
XI.7. Indemnification. Each of the Lenders agrees to
indemnify the Agent in its capacity as such (to the extent not
reimbursed by the Borrower or any other Credit Party and without
limiting any obligations of the Borrower or any other Credit
Party to do so), ratably according to the respective principal
amount of the Notes held by them (or, if no Notes are
outstanding, ratably in accordance with their respective
Applicable Commitment Percentages as then in effect) from and
against any and all liabilities, obligations, losses (excluding
any losses suffered by the Agent as a result of the Borrower's
failure to pay any fee owing to the Agent), damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of
any kind or nature whatsoever which may at any time (including
without limitation at any time following the payment of the
Notes) be imposed on, incurred by or asserted against the Agent
in any way relating to or arising out of any Loan Document or any
other document contemplated by or referred to therein or the
transactions contemplated thereby or any action taken or omitted
by the Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of 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. The agreements in this subsection shall
survive the Revolving Credit Termination Date and the termination
of this Agreement.
XI.8. Lender. The Agent and their affiliates may make
loans to, accept deposits from and generally engage in any kind
of business with the Borrower and any other Credit Party as
though it were not the Agent hereunder. With respect to its
Loans made or renewed by it and any Note issued to it, the Agent
shall have the same rights and powers under this Agreement as any
Lender and may exercise the same as though it were not the Agent,
and the terms "Lender" and "Lenders" shall, unless the context
otherwise indicates, include the Agent in its individual
capacity.
XI.9. Resignation. If the Agent shall resign as Agent
under this Agreement, then the Required Lenders may appoint, with
the consent, so long as there shall not have occurred and be
continuing a Default or Event of Default, of the Borrower, which
consent shall not be unreasonably withheld, a successor Agent for
the Lenders, which successor Agent shall be a commercial bank
organized under the laws of the United States or any state
thereof, having a combined surplus and capital of not less than
$500,000,000, whereupon such successor Agent shall succeed to the
rights, powers and duties of the former Agent and the obligations
of the former Agent shall be terminated and canceled, without any
other or further act or deed on the part of such former Agent or
any of the parties to this Agreement; provided, however, that the
former Agent's resignation shall not become effective until such
successor Agent has been appointed and has succeeded of record to
all right, title and interest in any collateral held by the
Agent; provided, further, that if the Required Lenders and, if
applicable, the Borrower cannot agree as to a successor Agent
within 90 days after such resignation, the Agent shall appoint a
successor Agent which satisfies the criteria set forth above in
this Section 11.9 for a successor Agent and the parties hereto
agree to execute whatever documents are necessary to effect such
action under this Agreement or any other document executed
pursuant to this Agreement; provided, however that in such event
all provisions of the Loan Documents, shall remain in full force
and effect. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article XI shall inure to its
benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.
XI.10. Sharing of Payments, etc. Each Lender agrees that
if it shall, through the exercise of a right of banker's lien,
setoff, counterclaim or otherwise, obtain payment with respect to
its Obligations (other than pursuant to Article V) which results
in its receiving more than its pro rata share of the aggregate
payments with respect to all of the Obligations (other than any
payment expressly provided hereunder to be distributed on other
than a pro rata basis and payments pursuant to Article V), then
(a) such Lender shall be deemed to have simultaneously purchased
from the other Lenders a share in their Obligations so that the
amount of the Obligations held by each of the Lenders shall be
pro rata and (b) such other adjustments shall be made from time
to time as shall be equitable to insure that the Lenders share
such payments ratably; provided, however, that for purposes of
this Section 11.10 the term "pro rata" shall be determined with
respect to the Revolving Credit Commitment of each Lender and to
the Total Revolving Credit Commitments after subtraction of
amounts, if any, by which any such Lender has not funded its
share of the outstanding Loans and Obligations. If all or any
portion of any such excess payment is thereafter recovered from
the Lender which received the same, the purchase provided in this
Section 11.10 shall be rescinded to the extent of such recovery,
without interest. The Borrower expressly consents to the
foregoing arrangements and agrees that each Lender so purchasing
a portion of the other Lenders' Obligations may exercise all
rights of payment (including, without limitation, all rights of
setoff, banker's lien or counterclaim) with respect to such
portion as fully as if such Lender were the direct holder of such
portion.
XI.11. Fees. The Borrower agrees to pay to the Agent,
for its individual account, an annual Agent's fee as from time to
time agreed to by the Borrower and Agent in writing.
ARTICLE XII
Miscellaneous
XII.1. Assignments and Participations. (a) Each Lender
may assign to one or more Eligible Assignees all or a portion of
its rights, obligations or rights and obligations under this
Agreement (including, without limitation, all or a portion of its
Loans, its Note, and its Revolving Credit Commitment; provided,
however, that
(i) each such assignment shall be to an Eligible
Assignee;
(ii) except in the case of an assignment to another
Lender or an assignment of all of a Lender's rights and
obligations under this Agreement, any such partial
assignment shall be in an amount at least equal to
$5,000,000 or an integral multiple of $1,000,000 in excess
thereof;
(iii) each such assignment by a Lender shall be of
a constant, and not varying, percentage of all of its rights
and obligations under this Agreement and the Note; and
(iv) the parties to such assignment shall execute and
deliver to the Agent for its acceptance an Assignment and
Acceptance in the form of Exhibit B hereto, together with
any Note subject to such assignment and a processing fee of
$3,500.
Upon execution, delivery, and acceptance of such Assignment and
Acceptance, the assignee thereunder shall be a party hereto and,
to the extent of such assignment, have the obligations, rights,
and benefits of a Lender hereunder and the assigning Lender
shall, to the extent of such assignment, relinquish its rights
and be released from its obligations under this Agreement. Upon
the consummation of any assignment pursuant to this Section, the
assignor, the Agent and the Borrower shall make appropriate
arrangements so that, if required, new Notes are issued to the
assignor and the assignee. If the assignee is not incorporated
under the laws of the United States of America or a state
thereof, it shall deliver to the Borrower and the Agent
certification as to exemption from deduction or withholding of
Taxes in accordance with Section 5.6.
(b) The Agent shall maintain at its address referred to in
Section 13.2 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the
names and addresses of the Lenders and the Revolving Credit
Commitment of, and principal amount of the Loans owing to, each
Lender from time to time (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Agent and the Lenders may
treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon
reasonable prior notice.
(c) Upon its receipt of an Assignment and Acceptance
executed by the parties thereto, together with any Note subject
to such assignment and payment of the processing fee, the Agent
shall, if such Assignment and Acceptance has been completed and
is in substantially the form of Exhibit B hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to
the parties thereto.
(d) Each Lender may sell participations to one or more
Persons in all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Revolving
Credit Commitment and its Loans); provided, however, that (i)
such Lender*s obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations,
(iii) the participant shall be entitled to the benefit of the
yield protection provisions contained in Article V and the right
of set-off contained in Section 12.3, and (iv) the Borrower shall
continue to deal solely and directly with such Lender in
connection with such Lender*s rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce
the obligations of the Borrower relating to its Loans and its
Note and to approve any amendment, modification, or waiver of any
provision of this Agreement (other than amendments,
modifications, or waivers decreasing the amount of principal of
or the rate at which interest is payable on such Loans or Note,
extending any scheduled principal payment date or date fixed for
the payment of interest on such Loans or Note, or extending its
Revolving Credit Commitment).
(e) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time assign and pledge all or
any portion of its Loans and its Note to any Federal Reserve Bank
as collateral security pursuant to Regulation A and any Operating
Circular issued by such Federal Reserve Bank. No such assignment
shall release the assigning Lender from its obligations
hereunder.
(f) Any Lender may furnish any information concerning the
Borrower or any of its Subsidiaries in the possession of such
Lender from time to time to assignees and participants (including
prospective assignees and participants), subject, however, to
the provisions of Section 12.14 hereof .
(g) The Borrower may not assign, nor shall it cause, suffer
or permit any other Credit Party to assign any rights, powers,
duties or obligations under this Agreement or the other Loan
Documents without the prior written consent of all the Lenders.
XII.2. Notices. Any notice shall be conclusively deemed
to have been received by any party hereto and be effective (i) on
the day on which delivered (including hand delivery by commercial
courier service) to such party (against receipt therefor), (ii)
on the date of delivery to such telefacsimile number for such
party, and the receipt of such message is verified by the
sender's telefacsimile machine, or (iii) on the fifth Business
Day after the day on which mailed, if sent prepaid by certified
or registered mail, return receipt requested, in each case
delivered, transmitted or mailed, as the case may be, to the
address or telefacsimile number, as appropriate, set forth below
or such other address or number as such party shall specify by
notice hereunder:
(a) if to the Borrower:
Headway Corporate Resources, Inc.
850 Third Avenue
New York, New York 10022
Attention: Ms. Philicia G. Levinson, Senior Vice
President and Director of Corporate Development
Telephone: (212) 508-3487
Telefacsimile: (212) 508-3507
with a copy to:
Christy & Viener
Rockefeller Center
620 Fifth Avenue
New York, New York 10020-2457
Attention: Richard B. Salomon, Esq.
Telephone: (212) 632-5500
Telefacsimile: (212) 632-5555
(b) if to the Agent or the Issuing Bank:
NationsBank, National Association
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Dana Johnson, Agency Services
Telephone: (704) 388-3917
Telefacsimile: (704) 386-9923
with a copy to:
NationsBank, National Association
767 Fifth Avenue, Fifth Floor
New York, New York 10153-0083
Attention: Susan Timmerman, Corporate Finance
Telephone: (212) 407-5387
Telefacsimile: (212) 751-6909
(c) if to the Lenders:
At the addresses set forth on the signature pages
hereof and on the signature page of each Assignment and
Acceptance;
(d) if to any other Credit Party:
At the address set forth on the signature page of
the Guaranty or Security Instrument executed by such
Credit Party, as the case may be.
XII.3. Setoff. The Borrower agrees that the Agent and
each Lender shall have a lien for all the Obligations of the
Borrower upon all deposits or deposit accounts, of any kind, or
any interest in any deposits or deposit accounts thereof, now or
hereafter pledged, mortgaged, transferred or assigned to the
Agent or such Lender or otherwise in the possession or control of
the Agent or such Lender (other than for safekeeping) for any
purpose for the account or benefit of the Borrower and including
any balance of any deposit account or of any credit of the
Borrower with the Agent or such Lender, whether now existing or
hereafter established. The Borrower hereby authorizes the Agent
and each Lender from and after the occurrence of an Event of
Default at any time or times with or without prior notice to
apply such balances or any part thereof to such of the
Obligations of the Borrower to the Lenders then past due and in
such amounts as they may elect, and whether or not the collateral
or the responsibility of other Persons primarily, secondarily or
otherwise liable may be deemed adequate. For the purposes of
this paragraph, all remittances and property shall be deemed to
be in the possession of the Agent or such Lender as soon as the
same may be put in transit to it by mail or carrier or by other
bailee.
XII.4. Survival. All covenants, agreements,
representations and warranties made herein shall survive the
making by the Lenders of the Loans and the issuance of the
Letters of Credit and the execution and delivery to the Lenders
of this Agreement and the Notes and shall continue in full force
and effect so long as any of Obligations remain outstanding or
any Lender has any commitment hereunder or the Borrower has
continuing obligations hereunder unless otherwise provided
herein. The obligations of the Borrower under Sections 3.2(g),
8.15, 12.5 and 12.9 shall survive repayment of all Obligations,
occurrence of the Revolving Credit Termination Date and
expiration or termination of this Agreement. Whenever in this
Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and permitted
assigns of such party and all covenants, provisions and
agreements by or on behalf of the Borrower which are contained in
the Loan Documents shall inure to the benefit of the successors
and permitted assigns of the Lenders or any of them.
XII.5. Expenses. The Borrower agrees (a) to pay or
reimburse the Agent for all its reasonable out-of-pocket costs
and expenses incurred in connection with the preparation,
negotiation and execution of, and any amendment, supplement or
modification to, any of the Loan Documents (including due
diligence expenses and travel expenses relating to closing), and
the consummation of the transactions contemplated thereby,
including the reasonable fees and disbursements of counsel to the
Agent, (b) to pay or reimburse the Agent and each of the Lenders
for all their costs and expenses incurred in connection with the
enforcement, workout or preservation of any rights under the Loan
Documents, including the reasonable fees and disbursements of
their separate counsel and any payments in indemnification or
otherwise payable by the Lenders to the Agent pursuant to the
Loan Documents, and (c) to pay, indemnify and hold the Agent and
the Lenders harmless from any and all recording and filing fees
and any and all liabilities with respect to, or resulting from
any failure to pay or delay in paying, documentary, stamp, excise
and other similar taxes, if any, which may be payable or
determined to be payable in connection with the execution and
delivery of any of the Loan Documents, or consummation of any
amendment, supplement or modification of, or any waiver or
consent under or in respect of, any Loan Document.
XII.6. Amendments. No amendment, modification or waiver
of any provision of any Loan Document and no consent by the
Lenders to any departure therefrom by the Borrower or any other
Credit Party shall be effective unless such amendment,
modification or waiver shall be in writing and signed by the
Agent, shall have been approved by the Required Lenders through
their written consent, and the same shall then be effective only
for the period and on the conditions and for the specific
instances and purposes specified in such writing; provided,
however, that, no such amendment, modification or waiver
(a) which changes, extends or waives any provision of
Section 2.6, Section 11.9 or this Section 12.6 or the due
date of any scheduled payment of interest, fees or
principal, which reduces the rate of interest or amount of
fees or principal payable on any Obligation, which changes
the definition of "Required Lenders", which permits an
assignment by any Credit Party of its Obligations under any
Loan Document, which reduces the required consent of Lenders
provided hereunder, which increases or extends the
Revolving Credit Commitment or Letter of Credit Commitment
of any Lender, or which waives any condition to the making
of any Loan, shall be effective unless in writing and signed
by each of the Lenders;
(b) which releases any material amount of Collateral
or the guaranty obligation of any Guarantor under any
Guaranty (other than pursuant to the express terms hereof or
thereof) shall be effective unless with the written consent
of each of the Lenders;
No notice to or demand on the Borrower in any case shall entitle
the Borrower to any other or further notice or demand in similar
or other circumstances, except as otherwise expressly provided
herein. No delay or omission on any Lender's or the Agent's part
in exercising any right, remedy or option shall operate as a
waiver of such or any other right, remedy or option or of any
Default or Event of Default.
XII.7. Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed and
delivered shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account
for more than one such fully-executed counterpart.
XII.8. Termination. The termination of this Agreement
shall not affect any rights of the Borrower, the Lenders, the
Agent, NMS or any obligation of the Borrower, the Lenders or the
Agent, arising prior to the effective date of such termination,
and the provisions hereof shall continue to be fully operative
until all transactions entered into or rights created or
obligations incurred prior to such termination have been fully
disposed of, concluded or liquidated and the Obligations arising
prior to or after such termination have been irrevocably paid in
full. The rights granted to the Agent for the benefit of the
Lenders under the Loan Documents shall continue in full force and
effect, notwithstanding the termination of this Agreement, until
all of the Obligations have been paid in full after the
termination hereof (other than Obligations in the nature of
continuing indemnities or expense reimbursement obligations not
yet due and payable, which shall continue and expressly survive
the termination hereof). All representations, warranties,
covenants, waivers and agreements contained herein shall survive
termination hereof until payment in full of the Obligations
unless otherwise provided herein. Notwithstanding the foregoing,
if after receipt of any payment of all or any part of the
Obligations, any Lender is for any reason compelled to surrender
such payment to any Person because such payment is determined to
be void or voidable as a preference, impermissible setoff, a
diversion of trust funds or for any other reason, this Agreement
shall continue in full force and the Borrower shall be liable to,
and shall indemnify and hold the Agent or such Lender harmless
for, the amount of such payment surrendered until the Agent or
such Lender shall have been finally and irrevocably paid in full.
The provisions of the foregoing sentence shall be and remain
effective notwithstanding any contrary action which may have been
taken by the Agent or the Lenders in reliance upon such payment,
and any such contrary action so taken shall be without prejudice
to the Agent or the Lenders' rights under this Agreement and
shall be deemed to have been conditioned upon such payment having
become final and irrevocable.
XII.9. Indemnification; Limitation of Liability. In
consideration of the execution and delivery of this Agreement by
the Agent and each Lender and the extension of credit under the
Loans, the Borrower hereby indemnifies, exonerates and holds the
Agent, NMS and each Lender and each of their respective
affiliates, officers, directors, employees, agents and advisors
(collectively, the "Indemnified Parties") free and harmless from
and against any and all claims, actions, causes of action, suits,
losses, costs, liabilities and damages, and expenses incurred in
connection therewith (irrespective of whether any such
Indemnified Party is a party to the action for which
indemnification hereunder is sought), including reasonable
attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities") that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in
connection with or by reason of, or in connection with, the
execution, delivery, enforcement, performance or administration
of this Agreement and the other Loan Documents, or any
transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan or Letter
of Credit, whether or not such action is brought against the
Agent or any Lender, the shareholders or creditors of the Agent
or any Lender or an Indemnified Party or an Indemnified Party is
otherwise a party thereto and whether or not the transactions
contemplated herein are consummated, except to the extent such
claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to
have resulted from such Indemnified Party's gross negligence or
willful misconduct, and if and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower
hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. The Borrower agrees that no
Indemnified Party shall have any liability (whether direct or
indirect, in contract or tort or otherwise) to it, any of its
Subsidiaries, any Credit Party, or any security holders or
creditors thereof arising out of, related to or in connection
with the transactions contemplated herein, except to the extent
that such liability is found in a final non-appealable judgment
by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct or
failure to make an Advance in accordance with Article II hereof
following the Borrower's complete satisfaction of all applicable
conditions precedent under Article VI and compliance with all
applicable terms of Article II; provided, however, in no event
shall any Indemnified Party be liable for consequential, indirect
or special, as opposed to direct, damages.
XII.10. Severability. If any provision of this Agreement
or the other Loan Documents shall be determined to be illegal or
invalid as to one or more of the parties hereto, then such
provision shall remain in effect with respect to all parties, if
any, as to whom such provision is neither illegal nor invalid,
and in any event all other provisions hereof shall remain
effective and binding on the parties hereto.
XII.11. Entire Agreement. This Agreement, together with
the other Loan Documents, constitutes the entire agreement among
the parties with respect to the subject matter hereof and
supersedes all previous proposals, negotiations, representations,
commitments and other communications between or among the
parties, both oral and written, with respect thereto.
XII.12. Agreement Controls. In the event that any term of
any of the Loan Documents other than this Agreement conflicts
with any express term of this Agreement, the terms and provisions
of this Agreement shall control to the extent of such conflict.
XII.13. Usury Savings Clause. Notwithstanding any other
provision herein, the aggregate interest rate charged under any
of the Notes, including all charges or fees in connection
therewith deemed in the nature of interest under applicable law
shall not exceed the Highest Lawful Rate (as such term is defined
below). If the rate of interest (determined without regard to
the preceding sentence) under this Agreement at any time exceeds
the Highest Lawful Rate (as defined below), the outstanding
amount of the Loans made hereunder shall bear interest at the
Highest Lawful Rate until the total amount of interest due
hereunder equals the amount of interest which would have been due
hereunder if the stated rates of interest set forth in this
Agreement had at all times been in effect. In addition, if when
the Loans made hereunder are repaid in full the total interest
due hereunder (taking into account the increase provided for
above) is less than the total amount of interest which would have
been due hereunder if the stated rates of interest set forth in
this Agreement had at all times been in effect, then to the
extent permitted by law, the Borrower shall pay to the Agent an
amount equal to the difference between the amount of interest
paid and the amount of interest which would have been paid if the
Highest Lawful Rate had at all times been in effect.
Notwithstanding the foregoing, it is the intention of the Lenders
and the Borrower to conform strictly to any applicable usury
laws. Accordingly, if any Lender contracts for, charges, or
receives any consideration which constitutes interest in excess
of the Highest Lawful Rate, then any such excess shall be
canceled automatically and, if previously paid, shall at such
Lender's option be applied to the outstanding amount of the Loans
made hereunder or be refunded to the Borrower. As used in this
paragraph, the term "Highest Lawful Rate" means the maximum
lawful interest rate, if any, that at any time or from time to
time may be contracted for, charged, or received under the laws
applicable to such Lender which are presently in effect or, to
the extent allowed by law, under such applicable laws which may
hereafter be in effect and which allow a higher maximum
nonusurious interest rate than applicable laws now allow.
XII.14. Confidentiality. The Agent and each Lender (each,
a "Lending Party") agrees to keep confidential any information
furnished or made available to it by the Borrower pursuant to
this Agreement that is marked confidential; provided that nothing
herein shall prevent any Lending Party from disclosing such
information (a) to any other Lending Party or any Affiliate of
any Lending Party, or any officer, director, employee, agent, or
advisor of any Lending Party or Affiliate of any Lending Party,
(b) to any other Person if reasonably incidental to the
administration of the Revolving Credit Facility or Letter of
Credit Facility provided herein, (c) as required by any law,
rule, or regulation, (d) upon the order of any court or
administrative agency, (e) upon the request or demand of any
regulatory agency or authority, (f) that is or becomes available
to the public or that is or becomes available to any Lending
Party other than as a result of a disclosure by any Lending Party
prohibited by this Agreement, (g) in connection with any
litigation to which such Lending Party or any of its Affiliates
may be a party, (h) to the extent necessary in connection with
the exercise of any remedy under this Agreement or any other Loan
Document, and (i) subject to provisions substantially similar to
those contained in this Section, to any actual or proposed
participant or assignee.
XII.15. Termination of Prior Credit Facilities. The
parties hereto which are also parties to any Existing Debt
acknowledge and agree that as of the Closing Date such Existing
Debt and all commitments and obligations of each of such Lenders
party thereto and the Borrower and its Subsidiaries thereunder
are terminated, except for such terms and provisions thereof
which by their terms survive any such termination.
XII.16. Acknowlegements. The Borrower hereby
acknowledges that:
(a) it has been advised by counsel in the
negotiation, execution and delivery of this Agreement
and the other Loan Documents;
(b) neither the Agent nor any Lender has any
fiduciary relationship with or fiduciary duty to the
Borrower arising out of or in connection with this
Agreement or any of the other Loan Documents, and the
relationship between the Agent and the Lenders, on the
one hand, and the Borrower, on the other hand, in
connection herewith or therewith is solely that of
debtor and creditor; and
(c) no joint venture is created hereby or by the
other Loan Documents or otherwise exists by virtue of
the transactions contemplated hereby among the Lenders
or among the Borrower and the Lenders or among the
Borrower and the Agent.
XII.17. Governing Law; Waiver of Jury Trial.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER
THAN THOSE SECURITY INSTRUMENTS WHICH EXPRESSLY PROVIDE THAT
THEY SHALL BE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION)
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE
NOTWITHSTANDING ITS EXECUTION AND DELIVERY OUTSIDE SUCH
STATE.
(b) THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
AGREES AND CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED IN ANY
STATE OR FEDERAL COURT SITTING IN THE COUNTY OF NEW YORK,
STATE OF NEW YORK, UNITED STATES OF AMERICA AND, BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER
EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE IN, OR TO THE EXERCISE OF
JURISDICTION OVER IT AND ITS PROPERTY BY, ANY SUCH COURT IN
ANY SUCH SUIT, ACTION OR PROCEEDING, AND HEREBY IRREVOCABLY
SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION OF
ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(c) THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE
MADE BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND
COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR
PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL (POSTAGE
PREPAID) TO THE ADDRESS OF THE BORROWER PROVIDED IN SECTION
12.2 HEREIN, OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR
UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF NEW
YORK.
(d) NOTHING CONTAINED IN SUBSECTIONS (a) OR (b) HEREOF
SHALL PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY
LOAN DOCUMENT IN THE COURTS OF ANY JURISDICTION WHERE THE
BORROWER OR ANY OF THE BORROWER'S PROPERTY OR ASSETS MAY BE
FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE
LAWS OF ANY SUCH JURISDICTION, THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT
AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR
PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION OVER
IT AND ITS PROPERTY BY ANY SUCH OTHER COURT OR COURTS WHICH
NOW OR HEREAFTER MAY BE AVAILABLE UNDER APPLICABLE LAW.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
ANY RIGHTS OR REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT
OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN
CONNECTION WITH THE FOREGOING, THE BORROWER, THE AGENT AND
THE LENDERS HEREBY AGREE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY WAIVE,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH
PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION OR
PROCEEDING.
N WITNESS WHEREOF, the parties hereto have caused this
instrument to be made, executed and delivered by their duly
authorized officers as of the day and year first above written.
HEADWAY CORPORATE RESOURCES, INC.
By: (Signature)
NATIONSBANK, NATIONAL ASSOCIATION
By: (Signature)
Lending Office:
NationsBank, National Association
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Dana Johnson
Telephone: (704) 388-3917
Telefacsimile: (704) 386-9923
FLEET BANK, N.A.
By: (Signature)
Lending Office:
Fleet Bank, N.A.
1185 Avenue of the Americas, 3rd
Floor
New York, New York 10036
Attention: Maria Casullo
Telephone: 212/819-5744
Telefacsimile: 212/819-4141
BANKBOSTON, N.A.
By: (Signature)
Lending Office:
BankBoston, N.A.
100 Rustcraft Road
Dedham, Massachusetts 02026
Attention: Joan LaFleur
Telephone: (781) 467-2275
Telefacsimile: (781) 467-2167
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: (Signature)
Lending Office:
Transamerica Business Credit
Corporation
8750 W. Bryn Mawr, Suite 720
Chicago, Illinois 60631
Attention: Maria Copot
Telephone: (773) 864-3988
Telefacsimile: (773) 380-6169
NATIONSBANK, NATIONAL ASSOCIATION
as Agent for the Lenders
By: (Signature)
EXHIBIT A
Applicable Commitment Percentages
Lender Revolving Applicable
Credit Commitment
Commitment Percentage
NationsBank, National
Association $30,000,000 40.0000000000%
Fleet Bank, N.A. $15,000,000 20.0000000000%
BankBoston, N.A. $15,000,000 20.0000000000%
Transamerica Business $15,000,000
20.0000000000%
Credit Corporation
EXHIBIT F
Form of Revolving Note
Promissory Note
$______________ New York, New York
______ __, 199_
FOR VALUE RECEIVED, HEADWAY CORPORATE RESOURCES, INC., a
Delaware corporation having its principal place of business
located in New York, New York (the "Borrower"), hereby promises
to pay to the order of
_______________________________________________ (the "Lender"),
in its individual capacity, at the office of NATIONSBANK,
NATIONAL ASSOCIATION, as agent for the Lenders (the "Agent"),
located at One Independence Center, 101 North Tryon Street, NC1-
001-15-04, Charlotte, North Carolina 28255 (or at such other
place or places as the Agent may designate in writing) at the
times set forth in the Credit Agreement dated as of March 19,
1998 among the Borrower, the financial institutions party thereto
(collectively, the "Lenders") and the Agent, as amended,
supplemented or replaced from time to time, (the "Agreement" --
all capitalized terms not otherwise defined herein shall have the
respective meanings set forth in the Agreement), in lawful money
of the United States of America, in immediately available funds,
the principal amount of ___________ DOLLARS ($__________) or, if
less than such principal amount, the aggregate unpaid principal
amount of all Loans made by the Lender to the Borrower pursuant
to the Agreement on the Revolving Credit Termination Date or such
earlier date as may be required pursuant to the terms of the
Agreement, and to pay interest from the date hereof on the unpaid
principal amount hereof, in like money, at said office, on the
dates and at the rates provided in Article II of the Agreement.
All or any portion of the principal amount of Loans may be
prepaid or required to be prepaid as provided in the Agreement.
If payment of all sums due hereunder is accelerated under
the terms of the Agreement or under the terms of the other Loan
Documents executed in connection with the Agreement, the then
remaining principal amount and accrued but unpaid interest shall
bear interest which shall be payable on demand at the rates per
annum set forth in the proviso to Section 2.2 (a) of the
Agreement. Further, in the event of such acceleration, this
Revolving Note shall become immediately due and payable, without
presentation, demand, protest or notice of any kind, all of which
are hereby waived by the Borrower.
In the event any amount evidenced by this Revolving Note is
not paid when due at any stated or accelerated maturity, the
Borrower agrees to pay, in addition to the principal and
interest, all costs of collection, including reasonable
attorneys' fees, and interest due hereunder thereon at the rates
set forth above.
Interest hereunder shall be computed as provided in the
Agreement.
This Revolving Note is one of the Notes in the aggregate
principal amount of $75,000,000 referred to in the Agreement and
is issued pursuant to and entitled to the benefits and security
of the Agreement to which reference is hereby made for a more
complete statement of the terms and conditions upon which the
Revolving Loans evidenced hereby were or are made and are to be
repaid. This Revolving Note is subject to certain restrictions
on transfer or assignment as provided in the Agreement.
All Persons bound on this obligation, whether primarily or
secondarily liable as principals, sureties, guarantors, endorsers
or otherwise, hereby waive to the full extent permitted by law
the benefits of all provisions of law for stay or delay of
execution or sale of property or other satisfaction of judgment
against any of them on account of liability hereon until judgment
be obtained and execution issued against any other of them and is
returned satisfied or until it can be shown that the maker or any
other party hereto had no property available for the satisfaction
of the debt evidenced by this instrument, or until any other
proceedings can be had against any of them, also their right, if
any, to require the holder hereof to hold as security for this
Revolving Note any collateral deposited by any of said Persons as
security. Protest, notice of protest, notice of dishonor,
diligence or any other formality are hereby waived by all parties
bound hereon.
This Revolving Note shall be governed by, and construed in
accordance with, the law of the State of New York.
IN WITNESS WHEREOF, the Borrower has caused this Revolving
Note to be made, executed and delivered by its duly authorized
representative as of the date and year first above written, all
pursuant to authority duly granted.
HEADWAY CORPORATE RESOURCES, INC.
WITNESS:
By:
Name:
Title: