Exhibit 10.43
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CREDIT AGREEMENT
dated as of
July 26, 2001
among
SCANSOURCE, INC., a South Carolina corporation,
The Initial Guarantors Listed Herein,
The Banks Listed Herein
and
BRANCH BANKING AND TRUST COMPANY OF SOUTH CAROLINA,
as Agent
CREDIT AGREEMENT
AGREEMENT dated as of July 26, 2001 among SCANSOURCE, INC., 4100
QUEST, LLC, CHANNELMAX, INC., the BANKS listed on the signature pages hereof and
BRANCH BANKING AND TRUST COMPANY OF SOUTH CAROLINA, as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The terms as defined in this Section 1.01
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shall, for all purposes of this Agreement and any amendment hereto (except as
otherwise expressly provided or unless the context otherwise requires), have the
meanings set forth herein:
"Account Debtor" shall mean the person who is obligated on any of the
Accounts Receivable Collateral or otherwise is obligated as a purchaser or
lessee of any of the Inventory Collateral.
"Accounts Receivable Collateral" shall mean all obligations of every
kind at any time owing to the Borrower or any Guarantor howsoever evidenced or
incurred, including, without limitation, all accounts, instruments, contract
rights, chattel paper (whether tangible or electronic) and general intangibles,
all returned or repossessed goods and all books, records, computer tapes,
programs and ledger books arising therefrom or relating thereto, whether now
owned or hereafter acquired or arising and all proceeds of the foregoing.
"ACL Agreement" means any credit line sweep services agreement now or
hereafter entered into between the Agent and Borrower and all amendments and
modifications thereto.
"Acquisition" means the acquisition of (i) a controlling equity
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 interest or upon exercise of an option or warrant for, or conversion
of securities into, such equity 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.
"Adjusted Consolidated Debt" means at any date the sum of: (1) all
Debt of the Borrower and its Consolidated Subsidiaries, and (2) all obligations
(absolute or contingent, including without limitation all accounts payable and
vendor financing arrangements) of the Borrower and its Consolidated Subsidiaries
to any Person for Debt incurred or assumed for the purpose of financing all or
any part of the cost of acquiring inventory where on such date either: (i) the
amount outstanding under such Debt is accruing interest as of such date; or (ii)
as of such date the holder of such Debt has a security interest in such
inventory acquired with the proceeds of such Debt or the accounts receivable
arising from such inventory.
"Adjusted Monthly Libor Index" has the meaning set forth in Section
2.06(c).
"Advance" shall mean an advance made to the Borrower under this
Agreement pursuant to Article II. An Advance is a "Prime Rate Advance" if such
Advance is part of a Prime Rate Loan or a "Euro-Dollar Advance" if such Advance
is part of a Euro-Dollar Loan.
"Affiliate" of any Person means (i) any other Person which directly,
or indirectly through one or more intermediaries, controls such Person, (ii) any
other Person which directly, or indirectly through one or more intermediaries,
is controlled by or is under common control with such Person, or (iii) any other
Person of which such Person owns, directly or indirectly, 20% or more of the
common stock or equivalent equity interests. As used herein, the term "control"
means possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" means Branch Banking and Trust Company of South Carolina, in
its capacity as agent for the Banks and the Issuing Bank hereunder, and its
successors and permitted assigns in such capacity.
"Agent's Letter Agreement" means that certain letter agreement, dated
as of June 12, 2001, between the Borrower and the Agent relating to the
structure of the Loan, and certain fees from time to time payable by the
Borrower to the Agent, together with all amendments and modifications thereto.
If there is any conflict between the provisions of this Agreement and the
provisions of the Agent's Letter Agreement, the provisions of this Agreement
will control.
"Agreement" means this Credit Agreement, together with all amendments
and supplements hereto.
"Anniversary Date" means July 26, 2002 and each anniversary of the
Closing Date thereafter.
"Applicable Margin" has the meaning set forth in Section 2.06(a).
"Assignee" has the meaning set forth in Section 9.07(c).
"Assignment and Acceptance" means an Assignment and Acceptance
executed in accordance with Section 9.07(c) in the form attached hereto as
Exhibit J.
"Assignment of Claims Acts" shall mean The Assignment of Claims Act of
1940, as may be amended from time to time, and any Federal, State, county or
municipal statute, regulation, ordinance, constitution or charter, now or
hereafter existing, similar in effect thereto, as determined by the Agent in its
sole discretion.
"Authority" has the meaning set forth in Section 8.02.
"Bank" means each bank listed on the signature pages hereof as having
a Commitment and the Swing Line Lender, and their respective successors and
assigns; provided, that unless the context otherwise requires, each reference
herein to the Banks shall be deemed to include any Conduit Lender.
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"BB&T" means Branch Banking and Trust Company of South Carolina, and
its successors.
"Borrower" means ScanSource, Inc., a South Carolina corporation, and
its successors and permitted assigns.
"Borrowing" means a borrowing hereunder consisting of Advances made to
the Borrower at the same time by the Banks pursuant to Article II.
"Borrowing Base" shall mean, based on the most recent Borrowing Base
Certification Report which as of the date of a determination of the Borrowing
Base has been received by the Agent, the sum of (i) an amount equal to 85% (or
such lesser percentage as shall be mutually agreed upon by the Agent and
Borrower from time to time) of the face dollar amount of Eligible Accounts as at
the date of determination; and (ii) an amount equal to the lesser of: (A) 50%
(or such lesser percentage as shall be mutually agreed upon by the Agent and
Borrower from time to time) of the dollar amount of the Eligible Inventory,
valued at the lower of its cost or market value (as determined by the Agent in
its sole discretion), as at the date of determination; or (B) the Inventory
Advance Limit, as of the date of determination. The Agent shall also be entitled
to hold and subtract any reserve against the Borrowing Base it deems reasonably
necessary as security for payment of the Notes, the obligations of the
Guarantors under Article X of this Agreement, and the obligations of the
Borrower under the Letter of Credit Agreements.
"Borrowing Base Certification Report" means a report in the form
attached hereto as Exhibit E, and otherwise satisfactory to the Agent, certified
by the chief financial officer or other authorized officer of the Borrower
regarding the Inventory Collateral and the Accounts Receivable Collateral of the
Borrower.
"Capital Expenditures" means for any period the sum of all capital
expenditures incurred during such period by the Borrower and its Consolidated
Subsidiaries, as determined in accordance with GAAP.
"Capital Stock" means any nonredeemable capital stock of the Borrower
or any Consolidated Subsidiary (to the extent issued to a Person other than the
Borrower), whether common or preferred.
"CERCLA" means the Comprehensive Environmental Response Compensation
and Liability Act, 42 U.S.C. (S)9601 et seq. and its implementing regulations
and amendments.
"CERCLIS" means the Comprehensive Environmental Response Compensation
and Liability Information System established pursuant to CERCLA.
"Change of Law" shall have the meaning set forth in Section 8.02.
"Closing Certificate" has the meaning set forth in Section 3.01(e).
"Closing Date" means July 26, 2001.
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"Code" means the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code. Any reference to any provision of the Code shall
also be deemed to be a reference to any successor provision or provisions
thereof.
"Collateral" shall have the meaning set forth in the Security
Agreement.
"Collateral Documents" means, collectively, the Pledge Agreement and
the Security Agreement.
"Collateral Locations" shall mean the Executive Offices and those
additional locations set forth and described on Schedule 1.01 - Collateral
Locations, under the heading "Collateral Locations."
"Collateral Reserve Account" shall mean a non-interest bearing, demand
deposit account which the Borrower and Guarantors may be required to open and
maintain with the Agent for the benefit of the Secured Parties pursuant to the
requirements of Section 2.14.
"Commitment" means, with respect to each Bank, (i) the amount set
forth opposite the name of such Bank on the signature pages hereof, or (ii) as
to any Bank which enters into an Assignment and Acceptance (whether as
transferor Bank or as Assignee thereunder), the amount of such Bank's Commitment
after giving effect to such Assignment and Acceptance, or (iii) as to any Bank
which agrees to increase its Commitment pursuant to Section 2.01(b) and (c), the
amount of such Bank's Commitment after giving effect to such increase, in each
case as such amount may be reduced from time to time pursuant to Sections 2.08
and 2.09.
"Compliance Certificate" has the meaning set forth in Section 5.01(c).
"Conduit Lender" shall mean any special purpose corporation organized
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and administered by any Bank for the purpose of making Advances otherwise
required to be made by such Bank and designated by such Bank in a written
instrument provided to the Agent; provided, that the designation by any Bank of
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a Conduit Lender shall not relieve the designating Bank of any of its
obligations to fund an Advance under this Agreement if, for any reason, its
Conduit Lender fails to fund any such Advance, and the designating Bank (and not
the Conduit Lender) shall have the sole right and responsibility to deliver all
consents, approvals and waivers required or requested under this Agreement with
respect to its Conduit Lender, and provided, further, that no Conduit Lender
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shall (a) be entitled to receive any greater amount pursuant to Article VIII
than the designating Bank would have been entitled to receive in respect of the
extensions of credit made by such Conduit Lender or (b) be deemed to have any
Commitment.
"Consolidated EBITDA" shall be determined as of the end of each Fiscal
Quarter and shall mean EBITDA, of the Borrower and its Consolidated
Subsidiaries, for the Fiscal Quarter then ending and the immediately preceding
three Fiscal Quarters, all as determined in accordance with GAAP.
"Consolidated Fixed Charges" for any period means the sum of (i)
Consolidated Interest Expense for such period, (ii) all payments of principal in
respect of Debt (excluding principal payments made with respect to any revolving
line of credit) of the Borrower or any of its Consolidated Subsidiaries for such
period, and (iii) all payment obligations of the Borrower
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and its Consolidated Subsidiaries for such period under all operating leases and
rental agreements.
"Consolidated Interest Expense" for any period means interest, whether
expensed or capitalized, in respect of Debt of the Borrower or any of its
Consolidated Subsidiaries outstanding during such period.
"Consolidated Net Income" means, for any period, the Net Income of the
Borrower and its Consolidated Subsidiaries determined on a consolidated basis,
but excluding (i) extraordinary items and (ii) any equity interests of the
Borrower or any Subsidiary of the Borrower in the unremitted earnings of any
Person that is not a Subsidiary of the Borrower.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which, in accordance with GAAP, would be consolidated
with those of the Borrower in its consolidated and consolidating financial
statements as of such date.
"Consolidated Tangible Net Worth" means, at any time, Stockholders'
Equity, less the sum of the value, as set forth or reflected on the most recent
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries,
prepared in accordance with GAAP, of
(A) Any surplus resulting from any write-up of assets subsequent
to March 31, 2001;
(B) All assets which would be treated as intangible assets for
balance sheet presentation purposes under GAAP, including without limitation
goodwill (whether representing the excess of cost over book value of assets
acquired, or otherwise), trademarks, tradenames, copyrights, patents and
technologies, and unamortized debt discount and expense.
(C) To the extent not included in (B) of this definition, any
amount at which shares of capital stock of the Borrower appear as an asset on
the balance sheet of the Borrower and its Consolidated Subsidiaries;
(D) Loans or advances to stockholders, directors, officers or
employees; and
(E) To the extent not included in (B) of this definition,
deferred expenses.
"Consolidated Total Assets" means, at any time, the total assets of
the Borrower and its Consolidated Subsidiaries, determined on a consolidated
basis, as set forth or reflected on the most recent consolidated balance sheet
of the Borrower and its Consolidated Subsidiaries, prepared in accordance with
GAAP.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Code.
"Cost of Acquisition" means, with respect to any Acquisition, as at
the date of entering into any agreement therefor, the sum of the following
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(without duplication): (i) the
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value of the capital stock, warrants or options to acquire capital stock of
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 Debt 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. 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 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 any other shares of capital
stock, as determined by 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 5.01(a), (B) the capital stock of any
Subsidiary shall be valued as determined by 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 5.01(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.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee under capital leases,
(v) all obligations of such Person to reimburse any bank or other Person in
respect of amounts payable under a banker's acceptance, (vi) all Redeemable
Preferred Stock of such Person (in the event such Person is a corporation),
(vii) all obligations (absolute or contingent) of such Person to reimburse any
bank or other Person in respect of amounts which are available to be drawn or
have been drawn under a letter of credit or similar instrument, (viii) all Debt
of others secured by a Lien on any asset of such Person, whether or not such
Debt is assumed by such Person, (ix) all Debt of others Guaranteed by such
Person, (x) all obligations of such Person with respect to interest rate
protection agreements, foreign currency exchange agreements or other hedging
agreements (valued as the termination value thereof computed in accordance with
a method approved by the International Swap Dealers Association and agreed to by
such Person in the applicable hedging agreement, if any); and (xi) the principal
portion of all obligations of such Person under any synthetic lease, tax
retention operating lease, off-balance sheet loan or similar
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off-balance sheet financing product where such transaction is considered
borrowed money indebtedness for tax purposes but is classified as an operating
lease under GAAP.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived in writing, become an Event of Default.
"Default Rate" means, with respect to the Loan or any Swing Line
Advance, on any day, the sum of 2% plus the then highest interest rate
(including the Applicable Margin) which may be applicable to the Loan or any
Swing Line Advance hereunder (irrespective of whether any such type of Loan is
actually outstanding hereunder).
"Depreciation and Amortization" means for any period an amount equal
to the sum of all depreciation and amortization expenses of the Borrower and its
Consolidated Subsidiaries for such period, as determined in accordance with
GAAP.
"Dividends" means for any period the sum of all dividends paid or
declared during such period in respect of any Capital Stock and Redeemable
Preferred Stock (other than dividends paid or payable in the form of additional
Capital Stock).
"Dollars" or "$" means dollars in lawful currency of the United States
of America.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in South Carolina are authorized or required
by law to close.
"Domestic Subsidiary" means any Subsidiary which is organized under
the laws of any state or territory of the United States of America.
"EBITDA" means and includes, for any Fiscal Quarter for which the
amount thereof is to be determined, the sum of (i) Consolidated Net Income for
such period; (ii) Consolidated Interest Expense for such period; (iii) franchise
taxes (if applicable), income taxes and other taxes measured by income or
profits in respect of the Borrower and its Consolidated Subsidiaries for such
period, but only to the extent such taxes were deducted in computing
Consolidated Net Income for such period; and (iv) Depreciation and Amortization
for such period, all determined on a consolidated basis in accordance with GAAP.
"Eligible Accounts" means those Receivables of the Borrower included
in the Accounts Receivable Collateral, each of which meets the following
requirements: (i) such Receivable arose in the ordinary course of such
Borrower's business; (ii) the right to payment is actually owing to a Borrower
by such Borrower's Account Debtors and has been fully earned by completed
performance and, if goods are involved, the goods have been shipped by such
Borrower; (iii) the Receivable includes only that portion thereof not subject to
any offset, defense, counterclaim, credit, allowance or adjustment; (iv) such
Borrower's title to such Receivable is absolute and is subject to no prior
assignment, claim, lien or security interest; (v) the full amount reflected on
such Borrower's books and on any invoice or statement delivered to the Agent
related to such Receivable is owing to such Borrower and no partial payment has
been made thereon; (vi) (1) such Receivable is due and payable not more than 60
days from the original invoice date; (2) no more than 90 days (or such other
period as Agent may by written
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notice to Borrower approve) have elapsed from the invoice date; and (3) the
Receivable is otherwise consistent with the standard terms offered by the
Borrower to its customers on the Closing Date; (vii) such Receivable did not
arise out of a contract or purchase order containing provisions prohibiting
assignment thereof or the creation of a security interest therein, and such
Borrower has received no note, trade acceptance, draft or other instrument with
respect to such Receivable or in payment thereof; (viii) such Borrower has
received no notice of the death of the Account Debtor or of the dissolution,
termination of existence, insolvency, bankruptcy, appointment of receiver for
any part of the property of, or assignment for the benefit of creditors made by,
the Account Debtor; (ix) such Receivable is not payable by an Account Debtor
affiliated with the Borrower or any Subsidiary of the Borrower or with any
shareholder, director, or officer of the Borrower or any Subsidiary of the
Borrower, as determined by the Agent in its sole discretion; (x) such Receivable
is not payable by any Account Debtor located outside the United States, unless
such Receivable is payable in the full amount of the face value of such
Receivable in United States dollars and is supported by an irrevocable letter of
credit in form and substance acceptable to the Agent, in its sole discretion,
and issued by a bank satisfactory to the Agent, in its sole discretion (and, if
requested by the Agent, such letter of credit or the proceeds thereof, as the
Agent in its sole discretion, shall require, have been assigned to the Agent);
(xi) such Receivable is not payable by the United States of America or any
political subdivision or agency thereof, unless the Agent, Banks and the
Borrower have complied with the Assignment of Claims Act with respect to such
Receivable (including, without limitation, the execution and delivery of a
notice of assignment); (xii) the Account Debtor for such Receivable is not
located in the State of New Jersey unless the Borrower has filed a Notice of
Business Activities Report with the New Jersey Division of Taxation for the then
current year; (xiii) such Receivable is not payable by any Account Debtor having
50% or more in face value of its then existing accounts with the Borrower
ineligible hereunder; (xiv) such Receivable is not payable by any Account Debtor
whose total accounts, in face amount, with the Borrower exceed 15% or more of
the total aggregate amount of the Eligible Receivables, but only to the extent
of such excess; (xv) the Receivable has not otherwise been excluded by the
Agent, which it reserves the right to do in its sole discretion; (xvi) such
Receivable is not, at the discretion of Agent, deemed doubtful for collection or
whatever reason; (xvii) such Receivable is not a contra account; (xviii) such
Receivable is not an account in dispute for any reason; (xix) such Receivable
does not represent a commission or expense receivable; and (xx) such Receivable
does not represent a retainage associated with a receivable. No presumption
shall exist that a Receivable once classified by the Agent as an "Eligible
Receivable" shall continue to be so classified.
"Eligible Inventory" means that portion of the Inventory Collateral
consisting of finished goods (excluding any and all raw materials and work in
process) in the possession and control of a Borrower which meets the following
requirements: (i) such Inventory Collateral is in first class order, condition
and repair and is in good and saleable condition and is subject to internal
control and management procedures conducted by Borrower and satisfactory to the
Agent in its sole discretion; (ii) such Inventory Collateral has been held by
the Borrower for sale or lease less than six (6) months without being sold
and/or leased and is otherwise not obsolete; (iii) such Inventory Collateral
does not violate any law and meets all standards imposed by any governmental
agency, or department or division thereof, having regulatory authority over such
Inventory Collateral, its use and/or sale; (iv) such Inventory Collateral has
not been consigned to any Person; (v) such Inventory Collateral is owned by the
Borrower and is subject to the Agent's perfected security interest and to no
other liens or security interests and is located at the
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Collateral Locations; (vi) such Inventory Collateral does not bear, incorporate
or is otherwise subject to any trademark, patent or copyright which is not owned
by the Borrower, unless such trademark, patent or copyright is licensed to the
Borrower on terms and conditions satisfactory to the Agent; (vii) except as
described in (viii), such Inventory Collateral is stored and/or housed at a
location owned, leased, or otherwise controlled by Borrower in the United
States; (viii) no warehouse receipt has been issued with respect to such
Inventory Collateral unless the warehouseman issuing such warehouse receipt is
satisfactory to the Agent in its sole discretion, the Agent has received and
reviewed such warehouse receipt, and such warehouse receipt has been transferred
or assigned to the Agent in a manner satisfactory to the Agent; (ix) such
Inventory Collateral does not cause and/or present unusual danger to the health
and/or safety of individuals and/or the environment; and (x) such Inventory
Collateral is otherwise deemed eligible by Agent in its sole discretion. In
furtherance and not in limitation of the foregoing, in no event shall Eligible
Inventory include: (i) inventory located in Canada, Mexico or otherwise outside
the United States of America; (ii) inventory purchased pursuant to a fulfillment
agreement; (iii) inventory in which Textron Financial Corporation, IBM Credit
Corporation or any other Person holds a security interest that is not
subordinate to the Agent's security interest; and (iv) any inventory of any
Subsidiary or Affiliate of the Borrower. No presumption shall exist that
Inventory Collateral once classified by the Agent as "Eligible Inventory" shall
continue to be so classified.
"Environmental Authority" means any foreign, federal, state, local or
regional government that exercises any form of jurisdiction or authority under
any Environmental Requirement.
"Environmental Authorizations" means all licenses, permits, orders,
approvals, notices, registrations or other legal prerequisites for conducting
the business of a Loan Party or any Subsidiary of a Loan Party required by any
Environmental Requirement.
"Environmental Judgments and Orders" means all judgments, decrees or
orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreements with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated in a judgment,
decree or order.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment, including, without limitation, ambient air, surface water,
groundwater or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"Environmental Liabilities" means any liabilities, whether accrued,
contingent or otherwise, arising from and in any way associated with any
Environmental Requirements.
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"Environmental Notices" means notice from any Environmental Authority
or by any other person or entity, of possible or alleged noncompliance with or
liability under any Environmental Requirement, including without limitation any
complaints, citations, demands or requests from any Environmental Authority or
from any other person or entity for correction of any violation of any
Environmental Requirement or any investigations concerning any violation of any
Environmental Requirement.
"Environmental Proceedings" means any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Releases" means releases as defined in CERCLA or under
any applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement relating to
health, safety or the environment and applicable to a Loan Party, any Subsidiary
of a Loan Party or the Properties, including but not limited to any such
requirement under CERCLA or similar state legislation and all federal, state and
local laws, ordinances, regulations, orders, writs, decrees and common law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor law. Any reference to any provision
of ERISA shall also be deemed to be a reference to any successor provision or
provisions thereof.
"Euro-Dollar Business Day" means any Domestic Business Day on which
dealings in Dollar deposits are carried out in the London interbank market.
"Euro-Dollar Loan" means the Loan during Interest Periods when the
Loan bears or is to bear interest at a rate based upon the London Interbank
Offered Rate.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.06.
"Event of Default" has the meaning set forth in Section 6.01.
"Executive Offices" shall mean with respect to a Borrower or a
Guarantor, the address and location corresponding to such Borrower's or
Guarantor's name set forth on Schedule 1.01 - Collateral Locations under the
heading "Executive Offices."
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the next higher 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 Domestic Business Day
next succeeding such day, provided that (i) if the day for which such rate is to
be determined is not a Domestic Business Day, the Federal Funds Rate for such
day shall be such rate on such transactions on the next preceding Domestic
Business Day as so published on the next succeeding Domestic Business Day, and
(ii) if such rate is not so published for any day, the Federal Funds Rate for
such day shall be the average rate charged to BB&T on such day on such
transactions as determined by the Agent.
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"Financing" shall mean (i) any transaction or series of transactions
for the incurrence by a Loan Party of any Debt or for the establishment of a
commitment to make advances which would constitute Debt of a Loan Party, which
Debt is not by its terms subordinate and junior to other Debt of a Loan Party,
(ii) an obligation incurred in a transaction or series of transactions in which
assets of a Loan Party are sold and leased back, or (iii) a sale of accounts or
other receivables or any interest therein, other than a sale or transfer of
accounts or receivables attendant to a sale permitted hereunder of an operating
division.
"Fiscal Month" means any fiscal month of the Borrower.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"Fixed Charge Coverage Ratio" shall be determined as of the end of
each Fiscal Quarter and shall mean the ratio of: (A)(i) Consolidated EBITDA for
the period of four consecutive Fiscal Quarters most recently ended on or prior
to such date, plus all obligations of the Borrower or any of its Consolidated
Subsidiaries as lessee under operating leases, for the period of four
consecutive Fiscal Quarters most recently ended on or prior to such date, less
(ii) the sum of the aggregate cash taxes on income (and franchise taxes, if
applicable) paid by the Borrower and its Consolidated Subsidiaries during such
period of four consecutive Fiscal Quarters most recently ended on or prior to
such date, all Dividends paid or declared by the Borrower and its Consolidated
Subsidiaries during such period, plus Capital Expenditures during such period,
to (B) Consolidated Fixed Charges for the period of four consecutive fiscal
quarters most recently ended on or prior to such date.
"Foreign Subsidiary" means any Subsidiary which is not a Domestic
Subsidiary.
"GAAP" means generally accepted accounting principles applied on a
basis consistent with those which, in accordance with Section 1.02, are to be
used in making the calculations for purposes of determining compliance with the
terms of this Agreement.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to secure, purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by virtue
of partnership arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to provide collateral security, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part), provided that the term Guarantee shall
--------
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Guaranteed Obligations" means any and all liabilities, indebtedness
and obligations of any and every kind and nature, heretofore, now or hereafter
owing, arising, due or payable from the Borrower to the Banks (including,
without limitation, the Swing Line Lender),
11
the Issuing Bank, the Agent, or any of them, arising under or evidenced by this
Agreement, the Notes, the Letter of Credit Agreements, the Collateral Documents
or any other Loan Document.
"Guarantors" shall mean collectively: (a) the Initial Guarantors; and
(b) all Material Subsidiaries acquired, formed or otherwise in existence after
the Closing Date.
"Hazardous Materials" includes, without limitation, (a) solid or
hazardous waste, as defined in the Resource Conservation and Recovery Act of
1980, 42 U.S.C. (S)6901 et seq. and its implementing regulations and amendments,
or in any applicable state or local law or regulation, (b) any "hazardous
substance", "pollutant" or "contaminant", as defined in CERCLA, or in any
applicable state or local law or regulation, (c) gasoline, or any other
petroleum product or by-product, including crude oil or any fraction thereof,
(d) toxic substances, as defined in the Toxic Substances Control Act of 1976, or
in any applicable state or local law or regulation and (e) insecticides,
fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act of 1975, or in any applicable state or local law or
regulation, as each such Act, statute or regulation may be amended from time to
time.
"IBM Intercreditor Agreement" shall mean that certain Intercreditor
Agreement dated July 26, 2001 by and between the Agent and IBM Credit
Corporation, either as originally executed or as it may be from time to time
supplemented, modified, amended, renewed or extended, as the context shall
require.
"Initial Guarantors" shall mean collectively (i) 4100 Quest, LLC, a
South Carolina limited liability company; and (ii) Channelmax, Inc., a South
Carolina corporation.
"Intercreditor Agreement" means the Intercreditor Agreement of even
date herewith by and between the Agent, the Banks, the Issuing Bank and the IR
Bank, either as originally executed or as it may be from time to time
supplemented, modified, amended, renewed or extended, as the context shall
require.
"Interest Payment Date" shall mean the first day of each month.
"Interest Period" means a calendar month; provided that: (a) the
initial Interest Period shall mean the period commencing on the Closing Date and
ending on July 31, 2001, provided that the London Interbank Offered Rate shall
be determined as if such Interest Period commenced on July 1, 2001; and (b) the
last Interest Period under this Agreement shall end on the Termination Date.
"Inventory Advance Limit" shall mean, as of any date, fifty percent
(50%) of the aggregate amount of the Commitments on such date.
"Inventory Collateral" shall mean all inventory of the Borrower and
Guarantors, or in which the Borrower or Guarantor has rights, whether now owned
or hereafter acquired, wherever located, including, without limitation, all
goods of the Borrower and Guarantors held for sale or lease or furnished or to
be furnished under contracts of service, all goods held for display or
demonstration, goods on lease or consignment, returned and repossessed goods,
all raw materials, work-in-process, finished goods and supplies used or consumed
in the business of the Borrower or any Guarantor, together with all documents,
documents of title, dock warrants,
12
dock receipts, warehouse receipts, intellectual property, bills of lading or
orders for the delivery of all, or any portion, of the foregoing.
"Investment" means any investment in any Person, whether by means of
purchase or acquisition of obligations or securities of such Person, capital
contribution to such Person, loan or advance to such Person, making of a time
deposit with such Person, Guarantee or assumption of any obligation of such
Person or otherwise.
"IR Agreement" means that certain ISDA Master Agreement dated as of
July 26, 2001, by and between the Borrower and the IR Bank, together with all
schedules thereto, as amended from time to time, and all confirmations entered
into, as amended, from time to time.
"IR Bank" means Branch Banking and Trust Company, in its capacity as a
party to the IR Agreement.
"Issuing Bank" shall mean BB&T.
"Lending Office" means, as to each Bank, its office located at its
address set forth on the signature pages hereof (or identified on the signature
pages hereof as its Lending Office) or such other office as such Bank may
hereafter designate as its Lending Office by notice to the Borrower and the
Agent.
"Letter of Credit" means the letters of credit issued by the Issuing
Bank pursuant to Section 2.03(a) and "Letter of Credit" means any one of such
Letters of Credit, as any of such letters of credit may be extended, renewed,
replaced or amended from time to time.
"Letter of Credit Advance" means an advance made by the Issuing Bank
pursuant to Section 2.03(c).
"Letter of Credit Agreement" means any agreement entered into by the
Borrower and the Issuing Bank pursuant to which a Letter of Credit is issued, as
amended, modified or restated from time to time.
"Letter of Credit Commitment" means, with respect to each Bank, (i)
the amount designated as the Letter of Credit Commitment set forth opposite the
name of such Bank on the signature pages hereof, or (ii) as to any Bank which
enters into an Assignment and Acceptance (whether as transferor Bank or as
Assignee thereunder), the amount of such Bank's Letter of Credit Commitment
after giving effect to such Assignment and Acceptance, in each case as such
amount may be reduced from time to time pursuant to Sections 2.08 and 2.09.
"Lien" means, with respect to any asset, any mortgage, deed to secure
debt, deed of trust, lien, pledge, charge, security interest, security title,
preferential arrangement which has the practical effect of constituting a
security interest or encumbrance, servitude or encumbrance of any kind in
respect of such asset to secure or assure payment of a Debt or a Guarantee,
whether by consensual agreement or by operation of statute or other law, or by
any agreement, contingent or otherwise, to provide any of the foregoing. For the
purposes of this Agreement, the Borrower or any Subsidiary shall be deemed to
own subject to a Lien any asset which it has
13
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"Loan" means the aggregate outstanding Advances made by the Banks to
the Borrower under this Agreement. The Loan shall at all times be a Euro-Dollar
Loan, unless such Loan is to be a Prime Rate Loan pursuant to Article VIII
herein.
"Loan Documents" means this Agreement, the Notes, the Collateral
Documents, the Letter of Credit Agreements, the Letters of Credit, any other
document evidencing, relating to or securing the Loan, the Swing Line Advances
or the Letters of Credit, and any other document or instrument delivered from
time to time in connection with this Agreement, the Notes, the Letter of Credit
Agreements, the Swing Line Advances, the Letters of Credit, the Collateral
Documents or the Loan, as such documents and instruments may be amended or
supplemented from time to time.
"Loan Parties" means collectively the Borrower and each Guarantor that
is now or hereafter a party to any of the Loan Documents.
"London Interbank Offered Rate" has the meaning set forth in Section
2.06(c).
"Margin Stock" means "margin stock" as defined in Regulations T, U or
X of the Board of Governors of the Federal Reserve System, as in effect from
time to time, together with all official rulings and interpretations issued
thereunder.
"Material Adverse Effect" means, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or not related, a
material adverse change in, or a material adverse effect upon, any of (a) the
financial condition, operations, business, properties or prospects of the
Borrower or any of its Consolidated Subsidiaries, (b) the rights and remedies of
the Agent or the Banks under the Loan Documents, or the ability of the Borrower
or any other Loan Party to perform its obligations under the Loan Documents to
which it is a party, as applicable, or (c) the legality, validity or
enforceability of any Loan Document.
"Material Subsidiary" means collectively: (i) each Domestic Subsidiary
which at any date accounts for (or in the case of a recently formed or acquired
Domestic Subsidiary would so account for on a pro forma historical basis) at
least: (A) 5% of Consolidated Total Assets as measured as at the end of the then
most recently ended Fiscal Year, or (B) 5% of Consolidated Net Income (before
taxes) for either of the two most recently ended Fiscal Years; and (ii) each
Domestic Subsidiary that is a member of the Material Subsidiary Group. As used
herein, "Material Subsidiary Group" as at any date means one or more Domestic
Subsidiaries (determined in accordance with this definition) which account for
(or in the case of a recently formed or acquired Domestic Subsidiary would so
account for on a pro forma historical basis), when combined with the Borrower,
at least (A) 90% of Consolidated Total Assets as measured as at the end of the
then most recently ended Fiscal Year or (B) 90% of Consolidated Net Income
(before taxes) for either of the two most recently ended Fiscal Years. A
Domestic Subsidiary shall be a "Material Subsidiary" if such Domestic Subsidiary
is included in any of the following
14
groups: (1) the Domestic Subsidiaries (determined in accordance with the terms
of the following sentence) accounting for the Consolidated Total Assets measured
under part (A) of the preceding sentence, but not the Consolidated Net Income
measured under part (B) of the preceding sentence; or (2) the Domestic
Subsidiaries (determined in accordance with the terms of the following sentence)
accounting for the Consolidated Net Income measured under part (B) of the
preceding sentence, but not the Consolidated Total Assets measured under part
(A) of the preceding sentence; or (3) the Domestic Subsidiaries (determined in
accordance with the terms of the following sentence) accounting for the
Consolidated Net Income measured under part (B) of the preceding sentence and
the Consolidated Total Assets measured under part (A) of the preceding sentence.
The determination of the Domestic Subsidiaries comprising the Material
Subsidiary Group as of any date shall be made on the basis of a group (selected
by the Borrower) consisting of the smallest number of Domestic Subsidiaries
necessary to satisfy groups (1), (2) or (3), as the case may be, above.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Net Income" means, as applied to any Person for any period, the
aggregate amount of net income of such Person, after taxes, for such period, as
determined in accordance with GAAP.
"Net Proceeds of Capital Stock/Conversion of Debt" means any and all
proceeds (whether cash or non-cash) or other consideration received by the
Borrower or a Consolidated Subsidiary in respect of the issuance of Capital
Stock (including, without limitation, the aggregate amount of any and all Debt
converted into Capital Stock), after deducting therefrom all reasonable and
customary costs and expenses incurred by the Borrower or such Consolidated
Subsidiary directly in connection with the issuance of such Capital Stock.
"Notes" means the Swing Line Note and the promissory notes of the
Borrower, substantially in the form of Exhibit A hereto, evidencing the
obligation of the Borrower to repay the Advances, together with all amendments,
consolidations, modifications, renewals and supplements thereto and "Note" means
any one of such Notes.
"Notice of Borrowing" has the meaning set forth in Section 2.02.
"Obligations" means the collective reference to all indebtedness,
obligations and liabilities to the Agent, the Issuing Bank, the Swing Line
Lender and the Banks, existing on the date of this Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise, of the Loan Parties under this
Agreement, the Letter of Credit Agreement or any other Loan Document; provided
that in no event shall term "Obligations" include (i) the loan evidenced by that
certain $7,350,000 promissory note dated July 28, 2000 made by 4100 Quest, LLC
and payable to BB&T; and (ii) the loan evidenced by that certain $506,000
promissory note dated January 8, 2001 made by ScanSource, Inc. and payable to
BB&T.
"Officer's Certificate" has the meaning set forth in Section 3.01(f).
15
"Operating Profits" means, as applied to any Person for any period,
the operating income of such Person for such period, as determined in accordance
with GAAP.
"Participant" has the meaning set forth in Section 9.07(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a limited liability
company, a partnership (including without limitation, a joint venture), an
unincorporated association, a trust or any other entity or organization,
including, but not limited to, a government or political subdivision or an
agency or instrumentality thereof.
"Pinacor Acquisition" means the purchase of substantially all the
assets of the CTI division of Pinacor, Inc., a subsidiary of MicroAge, Inc.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by a member of the
Controlled Group for employees of any member of the Controlled Group or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding 5 plan years made contributions.
"Pledge Agreement" means that certain Pledge Agreement, executed by
the Pledgors for the benefit of the Agent, as agent for the Secured Parties, in
accordance with Section 5.26.
"Pledgors" means the pledgor(s) under the Pledge Agreement, either
collectively or individually, as the context shall require.
"Prime Rate" refers to that interest rate so denominated and set by
BB&T from time to time as an interest rate basis for borrowings. The Prime Rate
is but one of several interest rate bases used by BB&T. BB&T lends at interest
rates above and below the Prime Rate.
"Prime Rate Loan" means the Loan during Interest Periods when the Loan
bears or is to bear interest at a rate based upon the Prime Rate.
"Project Sabre Acquisition" shall mean the purchase of substantially
all the assets of a company disclosed prior to the Closing Date in writing by
the Borrower to the Agent and Banks.
"Properties" means all real property owned, leased or otherwise used
or occupied by a Loan Party or any Subsidiary of a Loan Party, wherever located.
"Pro Rata Share" of any amount means, with respect to any Bank at any
time, the product of such amount times a fraction the numerator of which is the
amount of such Bank's Commitment at such time and the denominator of which is
the aggregate amount of the Commitments of all of the Banks at such time.
16
"Quarterly Payment Date" means March 31, June 30, September 30 and
December 31 of each year.
"Rate Determination Date" has the meaning set forth in Section
2.06(a).
"Receivables" shall have the meaning assigned to the term "Accounts"
in the Security Agreement.
"Redeemable Preferred Stock" of any Person means any preferred stock
issued by such Person which is at any time prior to the Termination Date either
(i) mandatorily redeemable (by sinking fund or similar payments or otherwise) or
(ii) redeemable at the option of the holder thereof.
"Reported Net Income" means, for any period, the Net Income of the
Borrower and its Consolidated Subsidiaries determined on a consolidated basis.
"Required Banks" means at any time Banks having at least 75% of the
aggregate amount of the Commitments or, if the Commitments are no longer in
effect, Banks holding at least 75% of the aggregate outstanding principal amount
of the Notes, Letter of Credit Advances and Undrawn Amounts.
"Restricted Payment" means (i) any dividend or other distribution on
any shares of the Borrower's capital stock (except dividends payable solely in
shares of its capital stock) or (ii) any payment on account of the purchase,
redemption, retirement or acquisition of (a) any shares of the Borrower's
capital stock (except shares acquired upon the conversion thereof into other
shares of its capital stock) or (b) any option, warrant or other right to
acquire shares of the Borrower's capital stock.
"Secured Parties" shall have the meaning set forth in the Security
Agreement.
"Security Agreement" means that certain General Security Agreement
dated of even date herewith, by and between the Borrower and Guarantors for the
benefit of the Agent, as agent for the Secured Parties.
"Stockholders' Equity" means, at any time, the shareholders' equity of
the Borrower and its Consolidated Subsidiaries, as set forth or reflected on the
most recent consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries prepared in accordance with GAAP, but excluding any Redeemable
--- ---------
Preferred Stock of the Borrower or any of its Consolidated Subsidiaries.
Shareholders' equity generally would include, but not be limited to (i) the par
or stated value of all outstanding Capital Stock, (ii) capital surplus, (iii)
retained earnings, and (iv) various deductions such as (A) purchases of treasury
stock, (B) valuation allowances, (C) receivables due from an employee stock
ownership plan, (D) employee stock ownership plan debt guarantees, and (E)
translation adjustments for foreign currency transactions.
"Subsidiary" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or
17
other persons performing similar functions are at the time directly or
indirectly owned by the Borrower.
"Swing Line Advance" means an advance made by the Swing Line Lender
pursuant to Section 2.15 hereof.
"Swing Line Lender" means BB&T.
"Swing Line Note" means the promissory note of the Borrower,
substantially in the form of Exhibit M hereto, evidencing the obligation of the
Borrower to repay the Swing Line Advance, together with all amendments,
consolidations, modifications, renewals and supplements thereto.
"Taxes" has the meaning set forth in Section 2.12(c).
"Termination Date" means September 30, 2003.
"Textron Intercreditor Agreement" shall mean that certain
Intercreditor Agreement dated July 26, 2001, by and between the Agent and
Textron Financial Corporation, either as originally executed or as it may be
from time to time supplemented, modified, amended, renewed or extended, as the
context shall require.
"Third Parties" means all lessees, sublessees, licensees and other
users of the Properties, excluding those users of the Properties in the ordinary
course of the Borrower's business and on a temporary basis.
"Total Unused Commitments" means at any date, an amount equal to: (A)
the aggregate amount of the Commitments of all of the Banks at such time, less
(B) the sum of: (i) the aggregate outstanding principal amount of the Advances
of all of the Banks at such time; (ii) the aggregate outstanding principal
amount of all Letter of Credit Advances; (iii) the aggregate outstanding
principal amount of all Swing Line Advances; and (iv) the aggregate Undrawn
Amounts.
"Transferee" has the meaning set forth in Section 9.07(d).
"UCC Recording Office" means those certain locations and recording
offices set forth on Schedule 1.01 - Collateral Locations, under the heading
"UCC Recording Office".
"Undrawn Amount" means, with respect to any Letter of Credit, at any
time, the maximum amount available to be drawn under such Letter of Credit at
such time and "Undrawn Amounts" means, at any time, the sum of all Undrawn
Amounts at such time.
"Unused Commitment" means at any date, with respect to any Bank, an
amount equal to its Commitment less the sum of: (i) aggregate outstanding
principal amount of its Advances (excluding Swing Line Advances); (ii) such
Bank's Pro Rata Share of the aggregate outstanding principal amount of all
Letter of Credit Advances; and (iii) such Bank's Pro Rata Share of the Undrawn
Amounts.
18
"Wholly Owned Subsidiary" means any Subsidiary all of the shares of
capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
-----------------------------------
specified herein, all terms of an accounting character used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP, applied on a basis consistent (except for changes
concurred in by the Borrower's independent public accountants or otherwise
required by a change in GAAP) with the most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered
to the Banks, unless with respect to any such change concurred in by the
Borrower's independent public accountants or required by GAAP, in determining
compliance with any of the provisions of this Agreement or any of the other Loan
Documents: (i) the Borrower shall have objected to determining such compliance
on such basis at the time of delivery of such financial statements, or (ii) the
Required Banks shall so object in writing within 30 days after the delivery of
such financial statements, in either of which events such calculations shall be
made on a basis consistent with those used in the preparation of the latest
financial statements as to which such objection shall not have been made (which,
if objection is made in respect of the first financial statements delivered
under Section 5.01 hereof, shall mean the financial statements referred to in
Section 4.04).
SECTION 1.03. Use of Defined Terms. All terms defined in this
--------------------
Agreement shall have the same meanings when used in any of the other Loan
Documents, unless otherwise defined therein or unless the context shall
otherwise require.
SECTION 1.04. Terminology. All personal pronouns used in this
-----------
Agreement, whether used in the masculine, feminine or neuter gender, shall
include all other genders; the singular shall include the plural and the plural
shall include the singular. Titles of Articles and Sections in this Agreement
are for convenience only, and neither limit nor amplify the provisions of this
Agreement.
SECTION 1.05. References. Unless otherwise indicated, references in
----------
this Agreement to "Articles", "Exhibits", "Schedules", and "Sections" are
references to articles, exhibits, schedules and sections hereof.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Make Advances. (a) Each Bank severally
----------------------------
agrees, on the terms and conditions set forth herein, to make Advances to the
Borrower from time to time before the Termination Date; provided that,
--------
immediately after each such Advance is made, the aggregate outstanding principal
amount of Advances by such Bank together with such Bank's Pro Rata Share of the
aggregate outstanding principal amount of all Letter of Credit Advances, Swing
Line Advances and Undrawn Amounts shall not exceed the amount of its Commitment,
provided further that the aggregate principal amount of all Advances, together
-------- -------
with the aggregate principal amount of all Letter of Credit Advances, Swing Line
Advances and Undrawn Amounts, shall not exceed the lesser of: (a) the aggregate
amount of the Commitments
19
of all of the Banks at such time, and (b) the Borrowing Base. Except as
otherwise provided in an ACL Agreement, each Borrowing under this Section shall
be in an aggregate principal amount of $1,000,000 or any larger multiple of
$500,000 (except that any such Borrowing may be in the aggregate amount of the
Unused Commitments less the amount of any outstanding Swing Line Advances) and
shall be made from the several Banks ratably in proportion to their respective
Commitments. Within the foregoing limits, the Borrower may borrow under this
Section, repay or, to the extent permitted by Section 2.10, prepay Advances and
reborrow under this Section at any time before the Termination Date.
(b) Subject to the terms and conditions set forth herein, the Borrower
shall have the right, at any time from the Closing Date until the Termination
Date, to increase the total Commitments by an amount up to $5,000,000 (for a
total Commitment, assuming no reductions, of $85,000,000) in the aggregate. The
following terms and conditions shall apply to any such increase: (i) any such
increase shall be obtained from existing Banks or from other banks or other
financial institutions, in each case in accordance with the terms set forth
below, (ii) the Commitment of any Bank may not be increased without the prior
written consent of such Bank, (iii) any increase in the aggregate Commitments
shall be in a minimum principal amount of $5,000,000, (iv) the Loan Parties and
Banks shall execute an acknowledgement in form and content satisfactory to the
Agent to reflect the revised Commitments, (the Banks do hereby agree to execute
such acknowledgement unless the acknowledgement purports to increase the
Commitment of a Bank without such Bank's consent), (v) the Borrower shall
execute such Notes as are necessary to reflect the increase in the Commitments,
(vi) if any Advances are outstanding at the time of any such increase, the
Borrower shall make such payments and adjustments on the Advances (including
payment of any break-funding amount owing under Section 8.05) as necessary to
give effect to the revised commitment percentages and outstandings of the Banks,
and (vii) the conditions set forth in Section 3.02 shall be true and correct.
The amount of any increase in the Commitments hereunder shall be offered first
to the existing Banks, and in the event the additional commitments which
existing Banks are willing to take shall exceed the amount requested by the
Borrower, such excess shall be allocated in proportion to the commitments of
such existing Banks willing to take additional commitments. If the amount of the
additional commitments requested by the Borrower shall exceed the additional
commitments which the existing Banks are willing to take, then the Borrower may
invite other banks and financial institutions reasonably acceptable to the Agent
to join this Agreement as Banks hereunder for the portion of commitments not
taken by existing Banks, provided that such other banks and financial
--------
institutions shall enter into such joinder agreements to give effect thereto as
the Agent and the Borrower may reasonably request.
(c) Upon written request of the Borrower, which shall be made in writing
and delivered to the Agent on a Domestic Business Day after the Borrower's
exercise of the rights provided in Section 2.01(b) and no fewer than 45 days
prior to the proposed effective date, the Banks and the Agent in their sole and
absolute discretion may (but shall not be obligated to) increase the total
Commitments in an aggregate amount not to exceed $15,000,000. The terms of any
increase in the total Commitments shall be independently negotiated among the
Borrower, the Banks and the Agent at the time of the Borrower's request,
provided that the terms of the extension may be the same as those in effect
--------
prior to any increase should the Borrower, the Banks and the Agent so agree;
provided, further, that should the terms of the increase be other than those in
-------- -------
effect prior to the increase, then the Loan Documents shall be amended to the
extent
20
necessary to incorporate any such different terms. In the event that a
Bank chooses to increase the total Commitments, notice shall be given by such
Bank to the Borrower and the Agent at least 15 days prior to the effective date
proposed by the Borrower; provided that the total Commitments shall not be
--------
increased with respect to any of the Banks (regardless of whether any relevant
Bank has delivered a favorable increase notice) unless all of the Banks have
delivered favorable increase notices and are willing to increase the total
Commitments.
SECTION 2.02. Method of Borrowing Advances. (a) Except as otherwise
----------------------------
provided in an ACL Agreement and Section 2.15 in the case of Swing Line
Advances, the Borrower shall give the Agent notice in the form attached hereto
as Exhibit B (a "Notice of Borrowing") prior to 11:00 A.M. (Greenville, South
Carolina time) on the Domestic Business Day of each Borrowing, specifying:
(i) the date of such Borrowing; and
(ii) the aggregate amount of such Borrowing.
(b) Except as provided in Section 2.02(d) of this Agreement, upon
receipt of a Notice of Borrowing, the Agent shall promptly notify each Bank of
the contents thereof and of such Bank's ratable share of such Borrowing and such
Notice of Borrowing shall not thereafter be revocable by the Borrower.
(c) Except as provided in Section 2.02(d) of this Agreement, not
later than 1:00 P.M. (Winston-Salem, North Carolina time) on the date of each
Borrowing, each Bank shall (except as provided in subsection (d) of this
Section) make available its ratable share of such Borrowing, in Federal or other
funds immediately available in Winston-Salem, North Carolina, to the Agent at
its address referred to in or specified pursuant to Section 9.01. Unless the
Agent determines that any applicable condition specified in Article III has not
been satisfied, the Agent will make the funds so received from the Banks
available to the Borrower at the Agent's address in Greenville, South Carolina
not later than 2:00 p.m. (Greenville, South Carolina time). Unless the Agent
receives notice from a Bank, at the Agent's address referred to in Section 9.01,
no later than 4:00 P.M. (local time at such address) on the Domestic Business
Day before the date of a Borrowing stating that such Bank will not make an
Advance in connection with such Borrowing, the Agent shall be entitled to assume
that such Bank will make an Advance in connection with such Borrowing and, in
reliance on such assumption, the Agent may (but shall not be obligated to) make
available such Bank's ratable share of such Borrowing to the Borrower for the
account of such Bank. If the Agent makes such Bank's ratable share available to
the Borrower and such Bank does not in fact make its ratable share of such
Borrowing available on such date, the Agent shall be entitled to recover such
Bank's ratable share from such Bank or the Borrower (and for such purpose shall
be entitled to charge such amount to any account of the Borrower maintained with
the Agent), together with interest thereon for each day during the period from
the date of such Borrowing until such sum shall be paid in full at a rate per
annum equal to the rate set forth in Section 2.06 for each such day during such
period, provided that any such payment by the Borrower of such Bank's ratable
--------
share and interest thereon shall be without prejudice to any rights that the
Borrower may have against such Bank. If such Bank shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such Bank's Advance
included in such Borrowing for purposes of this Agreement.
21
(d) At the Agent's option and to facilitate the efficient
administration of this Agreement, the Agent shall be entitled to make
settlements and adjustments on a weekly basis provided that: (1) all Borrowings,
Advances and all payments of principal with respect to such Borrowings and
Advances shall be shared by the Banks ratably in proportion to their Commitments
and in accordance with this Agreement; and (2) all funds advanced by the Agent
under this Agreement and all funds received by the Agent under this Agreement
shall be made or received, as the case may be, by the Agent, as agent on behalf
of the Banks and shall not constitute separate loans or advances made by the
Agent. Unless the Agent receives notice from a Bank, at the Agent's address
referred to in Section 9.01, no later than 4:00 P.M. (local time at such
address) on the Domestic Business Day before the date of a Borrowing stating
that such Bank will not make an Advance in connection with such Borrowing, the
Agent may assume that each Bank will make an Advance in connection with each
Borrowing and, in reliance on such assumption, the Agent may make available such
Bank's ratable share of such Borrowing to the Borrower for the account of such
Bank. No later than 11:00 A.M. (Winston-Salem, North Carolina time) on Friday of
each week the Agent shall advise each Bank of its ratable share of the
Borrowings and payments made or received by the Agent for the period ending on
the immediately preceding Wednesday. No later than 2:00 P.M. (Winston-Salem,
North Carolina time) on such Friday the Agent and Banks shall effect payments
(and credits) so that all Borrowings, Advances and payments with respect to the
Borrowings and Letters of Credit are shared by the Banks ratably; provided,
however, at any time, upon the request of the Agent, each Bank shall, make its
ratable share of any Borrowing available to the Agent on demand but in no event
later than one Domestic Business Day following the Agent's demand; and (2) the
Agent shall be entitled to recover such Bank's ratable share of each Borrowing
from such Bank, together with interest thereon for each day during the period
from the date of any such demand until such sum shall be paid in full at a rate
per annum equal to the rate set forth in Section 2.06. Each Bank's obligation
under this Section 2.02(d) shall be absolute and unconditional and shall not be
affected by any circumstance, including, without limitation: (i) any setoff,
counterclaim, recoupment, defense or other right which such Bank or any other
Person may have against the Agent requesting such adjustment or payment or any
other Person for any reason whatsoever; (ii) the occurrence or continuance of a
Default or an Event of Default or the termination of the Commitment; (iii) any
adverse change in the condition (financial or otherwise) of the Borrower, any
Guarantor or any other Person; (iv) any breach of this Agreement or any of the
other Loan Documents by the Borrower, any Guarantor or any other Bank; or (v)
any other circumstance, happening or event whatsoever whether or not similar to
any of the foregoing.
SECTION 2.03 Letters of Credit.
-----------------
(a) The Issuing Bank may, from time to time upon request of the
Borrower, in its sole discretion issue Letters of Credit for the account of the
Borrower, subject to satisfaction of the conditions referenced in Section 3.03.
(b) Each Letter of Credit shall be subject to the provisions of this
Agreement and to the provisions set forth in the Letter of Credit Agreement
executed by the Borrower in connection with the issuance of such Letter of
Credit. The Borrower agrees to promptly perform and comply with the terms and
conditions of each Letter of Credit Agreement.
22
(c) The payment by the Issuing Bank of a draft drawn under any Letter
of Credit shall constitute for all purposes of this Agreement a Letter of Credit
Advance in the amount of such draft. Upon written demand by the Issuing Bank,
with a copy to the Agent, each Bank shall purchase from the Issuing Bank, and
the Issuing Bank shall sell to each Bank, a participation interest in such
Letter of Credit Advance equal to such Bank's Pro Rata Share of such Letter of
Credit Advance as of the date of such purchase, by making available to the Agent
for the account of the Issuing Bank, in Federal or other funds immediately
available an amount equal to such Bank's Pro Rata Share of the outstanding
principal amount of such Letter of Credit Advance. Promptly after receipt
thereof, the Agent shall transfer such funds to the Issuing Bank. The Borrower
hereby agrees to each such sale and purchase of participation interests in
Letter of Credit Advances outstanding from time to time. Each Bank agrees to
purchase its participation interest in an outstanding Letter of Credit Advance
on (i) the Domestic Business Day on which demand therefor is made by the Issuing
Bank, provided notice of such demand is given not later than 1:00 P.M.
(Winston-Salem, North Carolina time) on such Domestic Business Day or (ii) the
first Domestic Business Day next succeeding the date of such demand if notice of
such demand is given after 1:00 P.M. (Winston-Salem, North Carolina time) on any
Domestic Business Day. The Issuing Bank makes no representation or warranty and
assumes no responsibility with respect to any sale and purchase of a
participation interest in any Letter of Credit Advance. If and to the extent
that any Bank shall not have so made the amount available to the Agent in
connection with its purchase of a participation interest in any Letter of Credit
Advance, such Bank agrees to pay to the Agent forthwith on demand such amount
together with interest thereon, for each day from the date of demand by the
Issuing Bank, until the date such amount is paid to the Agent, at the Federal
Funds Rate for the account of the Issuing Bank.
(d) The obligation of each Bank to purchase a participation interest
in any Letter of Credit Advance pursuant to Section 2.03(c) shall be
unconditional and shall not be affected by the existence of any Default, the
failure to satisfy any condition set forth in Section 3.1, 3.2 or 3.3 or the
termination of the Commitments (whether by the Borrower pursuant to Section 2.8
or by the Agent pursuant to Section 6.1 or otherwise).
(e) The Issuing Bank shall furnish (A) to the Agent and each Bank on
the tenth Domestic Business Day of each April, July, October and January, a
written report summarizing the issuance and expiration dates of Letters of
Credit issued during the preceding calendar quarter and (B) to the Agent and
each Bank upon request a written report setting forth the aggregate Undrawn
Amounts.
(f) The failure of any Bank to purchase a participation interest in
any Letter of Credit Advance shall not relieve any other Bank of its obligation
hereunder to purchase its participation interest in any Letter of Credit Advance
on such date, but no Bank shall be responsible for the failure of any other Bank
to so purchase a participation interest on such date.
(g) The Borrower shall pay to the Agent for the account of each Bank
that has purchased a participation interest in a Letter of Credit Advance on the
earlier of demand and the Termination Date the outstanding principal amount of
such Letter of Credit Advance. The Agent will promptly distribute to each Bank
its ratable share of any payment of principal of or interest on any Letter of
Credit Advance received by the Agent; provided, however, that in the event that
23
such payment received by the Agent is required to be returned, such Bank will
return to the Agent any portion thereof previously distributed by the Agent to
it.
(h) The Issuing Bank will notify the Borrower and the Agent promptly
of the presentment for payment of any Letter of Credit, together with notice of
the date such payment shall be made, and the Agent promptly will notify the
Banks of such matters.
SECTION 2.04. Notes. (a) The Advances of each Bank shall be evidenced
-----
by a single Note payable to the order of such Bank for the account of its
Lending Office in an amount equal to the original principal amount of such
Bank's Commitment.
(b) The Swing Line Advances made by the Swing Line Lender to the
Borrower shall be evidenced by a single Swing Line Note payable to the order of
the Swing Line Lender.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01, the
Agent shall deliver such Note to such Bank. Each Bank shall record, and prior to
any transfer of its Note shall endorse on the schedule forming a part thereof
appropriate notations to evidence, the date, amount and maturity of, and
effective interest rate for, each Advance made by it, the date and amount of
each payment of principal made by the Borrower with respect thereto and such
schedule shall constitute rebuttable presumptive evidence of the principal
amount owing and unpaid on such Bank's Note; provided that the failure of any
--------
Bank to make, or any error in making, any such recordation or endorsement shall
not affect the obligation of the Borrower hereunder or under the Note or the
ability of any Bank to assign its Note. Each Bank is hereby irrevocably
authorized by the Borrower so to endorse its Note and to attach to and make a
part of any Note a continuation of any such schedule as and when required.
SECTION 2.05. Maturity of Loans. Each Advance included in any
-----------------
Borrowing shall mature, and the principal amount thereof shall be due and
payable, subject to Section 6.01, on the Termination Date.
SECTION 2.06. Interest Rates. (a) "Applicable Margin" shall be
--------------
determined quarterly based upon the ratio of Adjusted Consolidated Debt
(calculated as of the last day of each Fiscal Quarter) to Consolidated EBITDA
(calculated as of the last day of each Fiscal Quarter for the Fiscal Quarter
then ended and the immediately preceding three Fiscal Quarters), as follows:
Ratio of Adjusted Consolidated Euro-Dollar Loans and Prime
Debt to Consolidated EBITDA Letters of Credit Rate Loans
--------------------------- ----------------- ----------
Greater than or equal to 3.75 2.50% -.25
Greater than or equal to 3.50
but less than 3.75 2.25% -.50
Greater than or equal to 3.25
but less than 3.50 2.00% -.75
24
Greater than or equal to 3.00
but less than 3.25 1.75% -1.00
Greater than or equal to 2.75
but less than 3.00 1.50% -1.25
Greater than or equal to 2.50
but less than 2.75 1.25% -1.50
Less than 2.50 1.00% -1.75
The Applicable Margin shall be effective as of the date (herein, the
"Rate Determination Date") which is the first day of the first calendar month
after the day the Agent receives the quarterly financial statements for the
Fiscal Quarter which the foregoing ratio is being determined, and the Applicable
Margin so determined shall remain effective from such Rate Determination Date
until the date which is the first day of the first calendar month after the day
the Agent receives the quarterly financial statements for the Fiscal Quarter in
which such Rate Determination Date falls (which latter date shall be a new Rate
Determination Date); provided that (i) for the period from and including the
--------
Closing Date to but excluding the Rate Determination Date next following the
Closing Date, the Applicable Margin shall be 2.00% for a Euro-Dollar Loan and
Letters of Credit, (ii) in the case of any Applicable Margin determined for the
fourth and final Fiscal Quarter of a Fiscal Year, such Applicable Margin shall
be redetermined based upon the annual audited financial statements for the
Fiscal Year ending on the last day of such final Fiscal Quarter, and if such
Applicable Margin as so redetermined shall be different from the Applicable
Margin for such date determined on the Rate Determination Date for such fourth
Fiscal Quarter, such redetermined Applicable Margin shall be effective
retroactive to the Rate Determination Date, and the Borrower, the Agent and the
Banks, as applicable, shall within 10 days of such redetermination, make a
payment (in the case of amounts owing by the Borrower to the Banks) or provide a
credit applicable to future amounts payable by the Borrower hereunder (in the
case of amounts owing by the Banks to the Borrower) equal to the difference
between the interest and letter of credit fees actually paid under this
Agreement and the interest and fees that would have been paid under this
Agreement had the Applicable Margin as originally determined been equal to the
Applicable Margin as redetermined, and (iii) if on any Rate Determination Date
the Borrower shall have failed to deliver to the Bank the financial statements
required to be delivered pursuant to Section 5.01(a) or Section 5.01(b) with
respect to the Fiscal Year or Fiscal Quarter, as the case may be, most recently
ended prior to such Rate Determination Date, then for the period beginning on
such Rate Determination Date and ending on the earlier of (A) the date on which
the Borrower shall deliver to the Bank the financial statements to be delivered
pursuant to Section 5.01(b) with respect to such Fiscal Quarter or any
subsequent Fiscal Quarter, or (B) the date on which the Borrower shall deliver
to the Bank annual financial statements required to be delivered pursuant to
Section 5.01(a) with respect to the Fiscal Year which includes such Fiscal
Quarter or any subsequent Fiscal Year, the Loan shall bear interest at a rate
per annum determined as if the ratio of Adjusted Consolidated Debt to
Consolidated EBITDA was more than 3.75 at all times during such period; provided
that at the election of the Required Banks, the principal amount of the Loans
shall bear interest at the Default Rate. Any change in the Applicable Margin on
any Rate Determination Date shall result in a corresponding change, effective on
and as of such Rate Determination Date, in the interest
25
rate applicable to the Loan and in the fees applicable to each Letter of Credit
outstanding on such Rate Determination Date; provided, that no Applicable Margin
shall be decreased pursuant to this Section 2.06 if a Default is in existence on
the Rate Determination Date.
(b) During each Interest Period in which the Loan (excluding Swing
Line Advances) is a Prime Rate Loan, such Prime Rate Loan shall bear interest on
the outstanding principal amount thereof, for each day during the applicable
Interest Period, at a rate per annum equal to the Prime Rate for such day plus
the Applicable Margin for Prime Rate Loans. Any overdue principal of and, to the
extent permitted by applicable law, overdue interest on any Prime Rate Loan
shall bear interest, payable on demand, for each day until paid in full at a
rate per annum equal to the Default Rate.
(c) During each Interest Period in which the Loan is a Euro-Dollar
Loan, such Euro-Dollar Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto, at a rate per annum
equal to the sum of: (1) the Applicable Margin for Euro-Dollar Loans, plus (2)
the applicable Adjusted Monthly Libor Index for such Interest Period. Any
overdue principal of and, to the extent permitted by applicable law, overdue
interest on any Euro-Dollar Loan shall bear interest, payable on demand, for
each day until paid in full at a rate per annum equal to the Default Rate.
The "Adjusted Monthly Libor Index" applicable to any Interest Period
means a rate per annum equal to the quotient obtained (rounded upward, if
necessary, to the next higher 1/100th of 1%) by dividing (i) the applicable
London Interbank Offered Rate for such Interest Period by (ii) 1.00 minus the
Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Euro-Dollar Loan
means for the Interest Period of such Euro-Dollar Loan the rate per annum
determined on the basis of the rate for deposits in Dollars of amounts equal or
comparable to the principal amount of such Euro-Dollar Loan offered for a term
comparable to such Interest Period, which rate appears on the display designated
as Page "3750" of the Telerate Service (or such other page as may replace page
3750 of that service or such other service or services as may be nominated by
the British Banker's Association for the purpose of displaying London Interbank
Offered Rates for U.S. dollar deposits) determined as of 11:00 a.m. London,
England time, on the first day of such Interest Period or on the immediately
preceding Euro-Dollar Business Day if the first day of such Interest Period is
not a Euro-Dollar Business Day.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in respect of "Eurocurrency liabilities" (or in respect of any
other category of liabilities which includes deposits by reference to which the
interest rate on such Euro-Dollar Loan is determined or any category of
extensions of credit or other assets which includes loans by a non-United States
office of any Bank to United States residents). The Adjusted Monthly Libor Index
shall be adjusted automatically on and as of the effective date of any change in
the Euro-Dollar Reserve Percentage.
(d) The Loan (excluding the Swing Line Advances) shall at all times
be a Euro-Dollar Loan unless the Loan is to be a Prime Rate Loan pursuant to
Article VIII herein.
26
Interest shall be payable for each Interest Period on the Interest Payment Date
immediately succeeding the last day of the Interest Period; provided that: (1)
all accrued unpaid interest on the Loan shall be paid in full on the Termination
Date; and (2) should the Commitment be terminated at any time prior to the
Termination Date for any reason, any and all accrued unpaid interest shall be
paid on the date of such termination.
(e) Each Letter of Credit Advance shall bear interest on the
outstanding principal amount thereof, payable on demand, for each day from the
date such Letter of Credit Advance is made until paid in full at a rate per
annum equal to the Default Rate.
(f) The Agent shall determine each interest rate applicable to the
Loan hereunder. The Agent shall give prompt notice to the Borrower and the Banks
by telecopy of each rate of interest so determined, and its determination
thereof shall be conclusive in the absence of manifest error.
(g) After the occurrence and during the continuance of a Default, the
principal amount of the Loans (and, to the extent permitted by applicable law,
all accrued interest thereon) may, at the election of the Required Banks, bear
interest at the Default Rate; provided, however, that automatically whether or
not the Required Banks elect to do so, any overdue principal of and, to the
extent permitted by law, overdue interest on the Loan shall bear interest
payable on demand, for each day until paid at a rate per annum equal to the
Default Rate.
(h) Each Swing Line Advance shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the sum of: (1) the Applicable Margin for Euro-Dollar Loans,
plus (2) the applicable Adjusted Monthly Libor Index for such Interest Period.
Except as otherwise agreed upon by the Swing Line Lender and the Borrower, such
interest shall be payable for each Interest Period on the Interest Payment Date
immediately succeeding the last day of the Interest Period. Any overdue
principal of and, to the extent permitted by applicable law, overdue interest on
the Swing Line Advances may, at the election of the Swing Line Lender, bear
interest, payable on demand, for each day until paid at a rate per annum equal
to the Default Rate.
SECTION 2.07. Fees. (a) The Borrower shall pay to the Agent for the
----
ratable account of each Bank a non-utilization fee equal to the product of: (i)
the aggregate of the daily average amounts of such Bank's Unused Commitment,
times (ii) a per annum percentage equal to the Applicable Non-Utilization Fee
Rate. Such non-utilization fee shall accrue from and including the Closing Date
to and including the Termination Date. Non-Utilization fees shall be payable
quarterly in arrears on the first Quarterly Payment Date following each
Non-Utilization Fee Determination Date and on the Termination Date; provided
that should the Commitments be terminated at any time prior to the Termination
Date for any reason, the entire accrued and unpaid fee shall be paid on the date
of such termination. The "Applicable Non-Utilization Fee Rate" shall be
determined quarterly based upon the ratio of Adjusted Consolidated Debt to
Consolidated EBITDA (calculated as of the last day of each Fiscal Quarter) as
follows:
27
Ratio of Adjusted Applicable
Consolidated Debt Non-Utilization
to Consolidated EBITDA Fee Rate
---------------------- ----------------
less than 2.50 .125%
Greater than or equal to 2.50 but less than 2.75 .125%
Greater than or equal to 2.75 but less than 3.00 .125%
Greater than or equal to 3.00 but less than 3.25 .250%
Greater than or equal to 3.25 but less than 3.50 .250%
Greater than or equal to 3.50 but less than 3.75 .250%
Greater than or equal to 3.75 .250%
The Applicable Non-Utilization Fee Rate shall be determined effective as of the
date (herein, the "Non-Utilization Fee Determination Date") which is the first
day of the first calendar month after the day the Agent receives the quarterly
financial statements for the Fiscal Quarter which the foregoing ratio is being
determined, and the Applicable Non-Utilization Fee Rate so determined shall
remain effective from such Non-Utilization Fee Determination Date until the date
which is the first day of the first calendar month after the day the Agent
receives the quarterly financial statements for the Fiscal Quarter in which such
Non-Utilization Fee Determination Date falls (which latter date shall be a new
Non-Utilization Fee Determination Date); provided that (i) for the period from
--------
and including the Closing Date to but excluding the Non-Utilization Fee
Determination Date next following the Closing Date, the Applicable
Non-Utilization Fee Rate shall be 0.25%; (ii) in the case of any Applicable
Non-Utilization Fee Rate determined for the fourth and final Fiscal Quarter of a
Fiscal Year, the Applicable Non-Utilization Fee Rate shall be redetermined based
upon the annual audited financial statements for the Fiscal Year ending on the
last day of such final Fiscal Quarter, and if such Applicable Non-Utilization
Fee Rate as so redetermined shall be different from the Applicable
Non-Utilization Fee Rate for such date determined on the Non-Utilization Fee
Determination Date for such fourth Fiscal Quarter, such redetermined Applicable
Non-Utilization Fee Rate shall be effective retroactive to the Non-Utilization
Fee Determination Date, and the Borrower, the Agent and the Banks, as
applicable, shall within 10 days of such redetermination, make a payment (in the
case of amounts owing by the Borrower to the Banks) or provide a credit
applicable to future amounts payable by the Borrower hereunder (in the case of
amounts owing by the Banks to the Borrower) equal to the difference between the
non-utilization fees actually paid under this Agreement and the non-utilization
fees that would have been paid under this Agreement had the Applicable
Non-Utilization Fee Rate as originally determined been equal to the Applicable
Non-Utilization Fee Rate as redetermined, and (iii) if on any Non-Utilization
Fee Determination Date the Borrower shall have failed to deliver to the Banks
the financial statements required to be delivered pursuant to Section 5.01(a) or
Section 5.01(b) with respect to the Fiscal Year or Fiscal Quarter, as the case
may be, most recently ended prior to such Non-Utilization Fee Determination
Date, then for the period beginning on such Non-Utilization Fee Determination
Date and ending on the earlier of (A) the date on which the Borrower shall
deliver to the Banks the financial statements to be delivered pursuant to
Section 5.01(b) with respect to such Fiscal Quarter or any subsequent Fiscal
Quarter, and (B) the date on which the Borrower shall deliver to the Banks
annual financial statements required to be delivered pursuant to Section 5.01(a)
with respect to the Fiscal Year which includes such Fiscal Quarter or any
subsequent Fiscal Year, the Applicable Non-Utilization Fee Rate shall be
determined as if the ratio of Adjusted Consolidated Debt to
28
Consolidated EBITDA was more than 3.75 at all times during such period. Any
change in the Applicable Non-Utilization Fee Rate on any Non-Utilization Fee
Determination Date shall result in a corresponding change, effective on and as
of such Non-Utilization Fee Determination Date, in the fees payable hereunder;
provided, that no Applicable Non-Utilization Fee Rate shall be decreased
pursuant to this Section 2.07 if a Default is in existence on the
Non-Utilization Fee Determination Date.
(b) The Borrower shall pay to the Agent for the ratable account of
each Bank, with respect to each Letter of Credit, a per annum letter of credit
fee (the "Letter of Credit Fee") equal to the product of: (i) the aggregate
average daily Undrawn Amounts, times (ii) a per annum percentage equal to the
greater of (i) 1.00% or (ii) one-half of the Applicable Margin for Letters of
Credit (determined in accordance with Section 2.13 hereof). Such Letter of
Credit Fees shall be payable in arrears for each Letter of Credit on each
Quarterly Payment Date during the term of each respective Letter of Credit and
on the termination thereof (whether at its stated expiry date or earlier). The
"Applicable Margin" for Letters of Credit shall be as determined in Section
2.06(a).
(c) The Borrower shall pay to the Agent for the account of the
Issuing Bank a facing fee (the " Facing Fee") with respect to each Letter of
Credit equal to the product of: (i) the face amount of such letter of credit,
times (ii) one-eighth (1/8th) of one percent (0.125%). Such Facing Fee shall be
due and payable on such date as may be agreed upon by the Issuing Bank and the
Borrower. The Borrower shall pay to the Issuing Bank, for its own account,
transfer fees, drawing fees, modification fees, extension fees and such other
fees and charges as may be provided for in any Letter of Credit Agreement or
otherwise charged by the Issuing Bank. No Bank shall be entitled to any portion
of the Facing Fees or any other fees payable by the Borrower to the Issuing Bank
pursuant to this Section 2.07(c).
(d) The Borrower shall pay to the Agent, for the account and sole
benefit of the Agent, such fees and other amounts at such times as set forth in
the Agent's Letter Agreement.
SECTION 2.08. Optional Termination or Reduction of Commitments. The
------------------------------------------------
Borrower may, upon at least 3 Domestic Business Days' irrevocable notice to the
Agent, terminate at any time, or proportionately reduce from time to time by an
aggregate amount of at least $1,000,000 or any larger multiple of $1,000,000,
the Commitments; provided, however: (1) each termination or reduction, as the
case may be, shall be permanent and irrevocable; (2) no such termination or
reduction shall be in an amount greater than the Total Unused Commitments on the
date of such termination or reduction; and (3) no such reduction pursuant to
this Section 2.08 shall result in the aggregate Commitments of all of the Banks
to be reduced to an amount less than $65,000,000, unless the Commitments are
terminated in their entirety, in which case: (i) all accrued fees (as provided
under Section 2.07) shall be payable on the effective date of such termination;
and (ii) if such termination occurs on or before July 26, 2002, Borrower shall
pay to the Agent for the ratable account of each Bank a termination fee equal to
the product of: (a) 0.125%, times (b) the amount of such Bank's Commitment
immediately prior to such termination; provided that the Borrower shall have no
obligation to pay a termination fee: (1) to any Bank that has requested
compensation under Section 8.03 or that has provided a notice under Section 8.02
resulting in the suspension of its obligations to make Euro-Dollar Loans; or
(ii) to
29
any Bank if the Agent has provided a notice under Section 8.01 resulting in the
suspension of the Banks' obligation to make Euro-Dollar Loans.
SECTION 2.09. Mandatory Reduction and Termination of Commitments. The
--------------------------------------------------
Commitments shall terminate on the Termination Date and any Advances, Swing Line
Advances and if demand had not been earlier made Letter of Credit Advances then
outstanding (together with accrued interest thereon) shall be due and payable on
such date.
SECTION 2.10. Optional Prepayments. (a) The Borrower may prepay the
--------------------
Loan in whole at any time, or from time to time in part in amounts aggregating
at least $1,000,000.00, or any larger multiple of $100,000, by paying the
principal amount to be prepaid together with accrued interest thereon to the
date of prepayment; provided, however, during any period that an ACL Agreement
shall be applicable, prepayments by the Borrower shall be made in accordance
with the terms of the ACL Agreement. Each such optional prepayment shall be
applied first to repay or prepay Swing Line Advances outstanding on the date of
such prepayment and then ratably to prepay ratably the Advances of the several
Banks.
(b) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share of such prepayment and such notice shall not thereafter be
revocable by the Borrower.
SECTION 2.11. Mandatory Prepayments. (a) On each date on which the
---------------------
Commitments are reduced or terminated pursuant to Section 2.08 or Section 2.09,
the Borrower shall repay or prepay such principal amount of the outstanding
Advances and Swing Line Advances, if any (together with interest accrued thereon
and any amounts due under Section 8.05(a)), as may be necessary so that after
such payment the aggregate unpaid principal amount of the Advances, together
with the aggregate principal amount of all Swing Line Advances, Letter of Credit
Advances and Undrawn Amounts does not exceed the aggregate amount of the
Commitments as then reduced. Each such payment or prepayment shall be applied to
repay or prepay first to Swing Line Advances outstanding on the date of such
prepayment and then, ratably to the Advances of the several Banks.
(b) In the event that: (1) the aggregate principal amount of all
Advances, together with the aggregate principal amount of the Swing Line
Advances, Letter of Credit Advances and Undrawn Amounts at any one time
outstanding shall at any time exceed the Borrowing Base; or (2) the aggregate
principal amount of all Advances, together with the aggregate principal amount
of the Swing Line Advances, Letter of Credit Advances and Undrawn Amounts at any
one time outstanding shall at any time exceed the aggregate amount of the
Commitments of all of the Banks at such time, the Borrowers shall immediately
repay so much of the Advances and Swing Line Advances as is necessary in order
that: (1) the aggregate principal amount of the Advances thereafter outstanding,
together with the aggregate principal amount of the Swing Line Advances, Letter
of Credit Advances and Undrawn Amounts shall not exceed the Borrowing Base; and
(2) the aggregate principal amount of the Advances thereafter outstanding,
together with the aggregate principal amount of the Swing Line Advances, Letter
of Credit Advances and Undrawn Amounts shall not exceed the aggregate amount of
the Commitments of all of the Banks at such time.
30
SECTION 2.12. General Provisions as to Payments. (a) The Borrower
---------------------------------
shall make each payment of principal of, and interest on, the Loan and of fees
hereunder, not later than 11:00 A.M. (Greenville, South Carolina time) on the
date when due, in Federal or other funds immediately available in Greenville,
South Carolina, to the Agent at its address referred to in Section 9.01. Subject
to the terms of Section 2.02(d), the Agent will promptly distribute to each Bank
its ratable share of each such payment received by the Agent for the account of
the Banks; provided that payments of interest shall be distributed by the Agent
within three Domestic Business Days of the date such payment is received by the
Agent for the account of the Banks.
(b) Whenever any payment of principal of, or interest on, the
Advances, Swing Line Advances or of fees shall be due on a day which is not a
Domestic Business Day (including, without limitation, any payments pursuant to
Sections 2.02(c) and 2.02(d)), the date for payment thereof shall be extended to
the next succeeding Domestic Business Day. If the date for any payment of
principal is extended by operation of law or otherwise, interest thereon shall
be payable for such extended time.
(c) All payments of principal, interest and fees and all other
amounts to be made by the Borrower pursuant to this Agreement with respect to
any Advance, Swing Line Advance or fee relating thereto shall be paid without
deduction for, and free from, any tax, imposts, levies, duties, deductions, or
withholdings of any nature now or at anytime hereafter imposed by any
governmental authority or by any taxing authority thereof or therein excluding
in the case of each Bank, taxes imposed on or measured by its net income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which such
Bank is organized or any political subdivision thereof and, in the case of each
Bank, taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction of such Bank's applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, imposts, levies, duties,
deductions or withholdings of any nature being "Taxes"). In the event that the
Borrower is required by applicable law to make any such withholding or deduction
of Taxes with respect to any Advance, Swing Line Advance or fee or other amount,
the Borrower shall pay such deduction or withholding to the applicable taxing
authority, shall promptly furnish to any Bank in respect of which such deduction
or withholding is made all receipts and other documents evidencing such payment
and shall pay to such Bank additional amounts as may be necessary in order that
the amount received by such Bank after the required withholding or other payment
shall equal the amount such Bank would have received had no such withholding or
other payment been made. If no withholding or deduction of Taxes are payable in
respect of any Advance, Swing Line Advance or fee relating thereto, the Borrower
shall furnish any Bank, at such Bank's request, a certificate from each
applicable taxing authority or an opinion of counsel acceptable to such Bank, in
either case stating that such payments are exempt from or not subject to
withholding or deduction of Taxes. If the Borrower fails to provide such
original or certified copy of a receipt evidencing payment of Taxes or
certificate(s) or opinion of counsel of exemption, the Borrower hereby agrees to
compensate such Bank for, and indemnify them with respect to, the tax
consequences of the Borrower's failure to provide evidence of tax payments or
tax exemption.
In the event any Bank receives a refund of any Taxes paid by the
Borrower pursuant to this Section 2.12, it will pay to the Borrower the amount
of such refund promptly upon receipt thereof; provided, however, if at any time
-------- -------
thereafter it is required to return such refund, the Borrower shall promptly
repay to it the amount of such refund.
31
Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.12 shall be applicable with respect to any Participant, Assignee
or other Transferee, and any calculations required by such provisions (i) shall
be made based upon the circumstances of such Participant, Assignee or other
Transferee, and (ii) constitute a continuing agreement and shall survive the
termination of this Agreement and the payment in full or cancellation of the
Notes.
SECTION 2.13. Computation of Interest and Fees. Interest on the Loans
--------------------------------
shall be computed on the basis of a year of 360 days and paid for the actual
number of days elapsed (including the first day but excluding the last day).
Facility fees, letter of credit fees and any other fees (excluding Facing Fees)
payable hereunder shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed (including the first day but excluding the
last day).
SECTION 2.14. Collateral Reserve Account. In accordance with and as
--------------------------
more fully set forth in the Security Agreement: (1) the Borrower shall on the
Closing Date, establish a lockbox satisfactory to Agent; and (2) the Borrower
and each Guarantor shall upon the request of the Required Banks, establish and
maintain with the Agent a Collateral Reserve Account.
SECTION 2.15. Swing Line Advances. (a) The Borrower may prior to the
-------------------
Termination Date, as set forth in this Section, request the Swing Line Lender to
make, and the Swing Line Lender may in its sole and absolute discretion prior to
the Termination Date make, Swing Line Advances to the Borrower, in an aggregate
principal amount at any one time outstanding, not exceeding $10,000,000 (the
"Swing Line Cap"), provided that: (1) the aggregate principal amount of all
Swing Line Advances, together with the aggregate principal amount of all
outstanding Advances, Undrawn Amounts and Letter of Credit Advances, at any one
time outstanding shall not exceed the aggregate amount of the Commitments of all
of the Banks at such time; and (2) the aggregate principal amount of all Swing
Line Advances and Advances of the Swing Line Lender, together with the Swing
Line Lender's Pro Rata Share of the aggregate outstanding principal amount of
all Letter of Credit Advances and Undrawn Amounts will not exceed the amount of
its Commitment.
(b) Except as may otherwise be agreed upon by the Swing Line Lender
and the Borrower, when the Borrower wishes to request a Swing Line Advance, it
shall give the Agent notice substantially in the form of Exhibit L hereto (a
"Swing Line Advance Request") so as to be received no later than 11:00 A.M.
(Greenville, South Carolina time) on or before the date of the proposed Swing
Line Advance proposed therein (or such other time and date as the Borrower and
the Swing Line Lender may agree), specifying:
(i) the proposed date of such Swing Line Advance, which shall be a
Domestic Business Day (the "Borrowing Date"); and
(ii) the aggregate amount of such Swing Line Advance, which shall be
at least $50,000 (or in larger multiples of $10,000) but shall not cause the
limits specified in Section 2.15(a) to be violated.
32
(c) The Swing Line Lender shall make the amount of such Swing Line
Advance available to the Borrower on such date by depositing the same, in
immediately available funds, in an account of the Borrower maintained with the
Swing Line Lender.
(d) Subject to the limitations contained in this Agreement, the
Borrower may borrow under this Section 2.15, prepay and reborrow under this
Section 2.15 at any time before the Termination Date.
(e) At any time, upon the request of the Swing Line Lender, each Bank
other than the Swing Line Lender shall, on the Domestic Business Day after such
request is made, purchase a participating interest in Swing Line Advances in an
amount equal to its ratable share (based upon its respective Commitment) of such
Swing Line Advances. On such Domestic Business Day, each Bank will immediately
transfer to the Swing Line Lender, in immediately available funds, the amount of
its participation. Whenever, at any time after the Swing Line Lender has
received from any such Bank its participating interest in a Swing Line Loan, the
Agent receives any payment on account thereof, the Agent will distribute to such
Bank its participating interest in such amount (appropriately adjusted, in the
case of interest payments, to reflect the period of time during which such
Bank's participating interest was outstanding and funded); provided, however,
-------- -------
that in the event that such payment received by the Agent is required to be
returned, such Bank will return to the Agent any portion thereof previously
distributed by the Agent to it. Each Bank's obligation to purchase such
participating interests shall be absolute and unconditional and shall not be
affected by any circumstance, including, without limitation: (i) any set-off,
counterclaim, recoupment, defense or other right which such Bank or any other
Person may have against the Swing Line Lender requesting such purchase or any
other Person for any reason whatsoever; (ii) the occurrence or continuance of a
Default or an Event of Default or the termination of the Commitments; (iii) any
adverse change in the condition (financial or otherwise) of the Borrower, any
Guarantor or any other Person; (iv) any breach of this Agreement or any other
Loan Documents by the Borrower, any Guarantor or any other Bank; or (v) any
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing.
(f) Notwithstanding anything contained in this Agreement to the
contrary, the Swing Line facility contained in this Section 2.15 shall terminate
immediately upon: (i) BB&T's removal or resignation as Agent; or (ii)
termination of the Commitments (whether at maturity or otherwise).
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01. Conditions to First Borrowing. The obligation of each
-----------------------------
Bank to make an Advance on the occasion of the first Borrowing is subject to the
satisfaction of the conditions set forth in Section 3.02 and the following
additional conditions:
(a) receipt by the Agent from each of the parties hereto of a duly
executed counterpart of this Agreement signed by such party;
33
(b) receipt by the Agent of a duly executed Note for the account of
each lender complying with the provisions of Section 2.04;
(c) receipt by the Agent of an opinion (together with any opinions of
local counsel relied on therein) of Nexsen Pruet Jacobs & Pollard, LLC, counsel
for the Borrower and Guarantors, dated as of the Closing Date, substantially in
the form of Exhibit C hereto and covering such additional matters relating to
the transactions contemplated hereby as the Agent or any Bank may reasonably
request;
(d) receipt by the Agent of an opinion of Womble Carlyle Sandridge &
Rice, PLLC, special counsel for the Agent, dated as of the Closing Date,
substantially in the form of Exhibit D hereto and covering such additional
matters relating to the transactions contemplated hereby as the Agent may
reasonably request;
(e) receipt by the Agent of a certificate (the "Closing
Certificate"), dated the date of the first Borrowing, substantially in the form
of Exhibit G hereto, signed by a principal financial officer of each Loan Party,
to the effect that (i) no Default has occurred and is continuing on the date of
the first Borrowing and (ii) the representations and warranties of the Loan
Parties contained in Article IV are true on and as of the date of the first
Borrowing hereunder;
(f) receipt by the Agent of all documents which the Agent or any Bank
may reasonably request relating to the existence of each Loan Party, the
authority for and the validity of this Agreement, the Notes and the other Loan
Documents, and any other matters relevant hereto, all in form and substance
satisfactory to the Agent, including without limitation a certificate of
incumbency of each Loan Party (the "Officer's Certificate"), signed by the
Secretary or an Assistant Secretary of the respective Loan Party, substantially
in the form of Exhibit H hereto, certifying as to the names, true signatures and
incumbency of the officer or officers of the respective Loan Party, authorized
to execute and deliver the Loan Documents, and certified copies of the following
items: (i) the Loan Party's Certificate of Incorporation or Articles of
Organization, as the case may be, (ii) the Loan Party's Bylaws or Operating
Agreement, as the case may be, (iii) a certificate of the Secretary of State of
such Loan Party's State of organization as to the good standing of such Loan
Party, and (iv) the action taken by the Board of Directors of the Loan Party
authorizing the Loan Party's execution, delivery and performance of this
Agreement, the Notes and the other Loan Documents to which the Loan Party is a
party;
(g) receipt by the Agent of a Notice of Borrowing;
(h) the Security Agreement shall have been duly executed by the
Borrower and Guarantors and shall have been delivered to the Agent and shall be
in full force and effect and each document (including each Uniform Commercial
Code financing statement) required by law or reasonably requested by the Agent
to be filed, registered or recorded in order to create in favor of the Agent for
the benefit of the Secured Parties a valid, legal and perfected first-priority
security interest in and lien on the Collateral described in the Security
Agreement shall have been delivered to the Agent;
(i) the Agent shall have received the results of a search of the
Uniform Commercial Code filings (or equivalent filings) made with respect to the
Borrower and
34
Guarantors in the states (or other jurisdictions) in which the chief executive
office of each such person is located, any offices of such persons in which
records have been kept relating to Accounts Receivable Collateral and the other
jurisdictions in which Uniform Commercial Code filings (or equivalent filings)
are to be made pursuant to the preceding paragraph, together with copies of the
financing statements (or similar documents) disclosed by such search, and
accompanied by evidence satisfactory to the Agent that the Liens indicated in
any such financing statement (or similar document) have been released or
subordinated to the satisfaction of Agent;
(j) receipt by the Agent of a Borrowing Base Certification Report,
dated as of the last day of the calendar month immediately preceding the Closing
Date;
(k) receipt by the Agent and approval by the Banks of the insurance
required under this Agreement;
(l) receipt by the Agent of a fully executed: (1) IBM Intercreditor
Agreement, in form and content satisfactory to the Agent; and (2) Textron
Intercreditor Agreement in form and content satisfactory to the Agent;
(m) the Intercreditor Agreement duly executed by the Borrower, the
Agent, the IR Bank, the Banks and the Issuing Bank; and
(n) such other documents or items as the Agent, the Banks or their
counsel may reasonably request.
SECTION 3.02. Conditions to All Borrowings. The obligation of each
----------------------------
Bank to make an Advance on the occasion of each Borrowing (including, without
limitation, the obligation of the Swing Line Lender to make a Swing Line
Advance) is subject to the satisfaction of the following conditions:
(a) receipt by the Agent of Notice of Borrowing as required by
Section 2.02 (or in the case of a Swing Line Advance, compliance with Section
2.15);
(b) the fact that, immediately before and after such Borrowing, no
Default shall have occurred and be continuing;
(c) the fact that the representations and warranties of the Loan
Parties contained in Article IV of this Agreement shall be true, on and as of
the date of such Borrowing; and
(d) the fact that, immediately after such Borrowing (i) the aggregate
outstanding principal amount of the Advances of each Bank together with such
Bank's Pro Rata Share of the aggregate outstanding principal amount of all Swing
Line Advances, Letter of Credit Advances and Undrawn Amounts, will not exceed
the amount of its Commitment and (ii) the aggregate outstanding principal amount
of the Advances together with the aggregate outstanding principal amount of all
Swing Line Advances, Letter of Credit Advances and Undrawn Amounts, will not
exceed the lesser of: (A) the aggregate amount of the Commitments of all of the
Banks as of such date; and (B) the Borrowing Base.
35
Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Loan Parties on the date of such Borrowing as to the truth and
accuracy of the facts specified in clauses (b), (c) and (d) of this Section.
SECTION 3.03 Conditions to Issuance of Letters of Credit. The
-------------------------------------------
issuance by the Issuing Bank of each Letter of Credit shall be subject to
satisfaction of the conditions set forth in the related Letter of Credit
Agreement and satisfaction of the following conditions:
(a) the fact that, immediately before and after the issuance of such
Letter of Credit, no Default shall have occurred and be continuing;
(b) the fact that the representations and warranties of the Loan
Parties contained in Article IV of this Agreement shall be true, on and as of
the date of issuance of such Letter of Credit;
(c) the fact that, immediately after the issuance of such Letter of
Credit: (i) the sum of (A) the entire outstanding principal amount of the
Advances, (B) the aggregate outstanding principal amount of the Letter of Credit
Advances, (C) the aggregate outstanding principal amount of Swing Line Advances,
and (D) the aggregate Undrawn Amounts, will not exceed the lesser of: (1) the
aggregate amount of the Commitments of all of the Banks at such time; and (2)
the Borrowing Base;
(d) the fact that immediately after the issuance of such Letter of
Credit the sum of: (i) the aggregate outstanding principal amount of the Letter
of Credit Advances, plus (ii) the aggregate Undrawn Amounts, will not exceed
$10,000,000; and
(e) no Letter of Credit shall have an expiry date or termination date
on or after the earlier of: (1) the date twelve months after the date of the
issuance of such Letter of Credit; or (2) the date two Domestic Business Days
prior to the Termination Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Loan Parties represent and warrant that:
SECTION 4.01. Existence and Power. Each Loan Party is a corporation
-------------------
or limited liability company duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, as the case may be, is duly qualified to transact business in
every jurisdiction where, by the nature of its business, such qualification is
necessary, and has all organizational powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted.
SECTION 4.02. Organizational and Governmental Authorization; No
-------------------------------------------------
Contravention. The execution, delivery and performance by each Loan Party of
-------------
this Agreement, the Notes, the Collateral Documents and the other Loan Documents
(i) are within each Loan Party's organizational powers, (ii) have been duly
authorized by all necessary organizational action, (iii) require no action by or
in respect of, or filing with, any governmental body, agency or
36
official, (iv) do not contravene, or constitute a default under, any provision
of applicable law or regulation or of the certificate of incorporation, articles
of organization, operating agreement or by-laws of each Loan Party or of any
agreement, judgment, injunction, order, decree or other instrument binding upon
each Loan Party or any of its Subsidiaries, and (v) do not result in the
creation or imposition of any Lien on any asset of the Loan Parties or any of
their respective Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid and
--------------
binding agreement of the Loan Parties enforceable in accordance with its terms,
and the Notes, the Collateral Documents and the other Loan Documents, when
executed and delivered in accordance with this Agreement, will constitute valid
and binding obligations of the Loan Parties enforceable in accordance with their
respective terms, provided that the enforceability hereof and thereof is subject
--------
in each case to general principles of equity and to bankruptcy, insolvency and
similar laws affecting the enforcement of creditors' rights generally.
SECTION 4.04. Financial Information. (a) The consolidated balance
---------------------
sheet of the Borrower and its Consolidated Subsidiaries as of June 30, 2000 and
the related consolidated statements of income, shareholders' equity and cash
flows for the Fiscal Year then ended, reported on by KPMG, LLP, copies of which
have been delivered to each of the Banks, and the unaudited consolidated
financial statements of the Borrower for the interim period ended March 31,
2001, copies of which have been delivered to each of the Banks, fairly present,
in conformity with GAAP, the consolidated financial position of the Borrower and
its Consolidated Subsidiaries as of such dates and their consolidated results of
operations and cash flows for such periods stated.
(b) Since March 31, 2001 there has been no event, act, condition or
occurrence having a Material Adverse Effect.
SECTION 4.05. Litigation. There is no action, suit or proceeding
----------
pending, or to the knowledge of the Loan Parties threatened, against or
affecting the Loan Parties or any of their respective Subsidiaries before any
court or arbitrator or any governmental body, agency or official which could
have a Material Adverse Effect or which in any manner draws into question the
validity or enforceability of, or could impair the ability of the Loan Parties
to perform their respective obligations under, this Agreement, the Notes, the
Collateral Documents or any of the other Loan Documents.
SECTION 4.06. Compliance with ERISA. (a) The Loan Parties and each
---------------------
member of the Controlled Group have fulfilled their obligations under the
minimum funding standards of ERISA and the Code with respect to each Plan and
are in compliance in all material respects with the presently applicable
provisions of ERISA and the Code, and have not incurred any liability to the
PBGC or a Plan under Title IV of ERISA.
(b) Neither the Loan Parties nor any member of the Controlled Group
is or ever has been obligated to contribute to any Multiemployer Plan.
SECTION 4.07. Taxes. There have been filed on behalf of the Loan
-----
Parties and their respective Subsidiaries all Federal, state and local income,
excise, property and other tax returns which are required to be filed by them
and all taxes due pursuant to such returns or
37
pursuant to any assessment received by or on behalf of the Loan Parties or any
Subsidiary have been paid. The charges, accruals and reserves on the books of
the Loan Parties and their respective Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Loan Parties, adequate. United
States income tax returns of the Loan Parties and their respective Subsidiaries
have been examined and closed through the Fiscal Year ended June 30, 2000.
SECTION 4.08. Subsidiaries. Each of the Loan Party's Subsidiaries is
------------
a corporation or limited liability company duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation or
organization, as the case may be, is duly qualified to transact business in
every jurisdiction where, by the nature of its business, such qualification is
necessary, and has all organizational powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted. No Loan Party has any Subsidiaries except those Subsidiaries listed
on Schedule 4.08, which accurately sets forth each such Subsidiary's complete
-------------
name and jurisdiction of incorporation.
SECTION 4.09. Not an Investment Company. No Loan Party nor any
-------------------------
Subsidiary of a Loan Party is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
SECTION 4.10 Public Utility Holding Company Act. No Loan Party nor
----------------------------------
any Subsidiary of a Loan Party is a "holding company", or a "subsidiary company"
of a "holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
SECTION 4.11. Ownership of Property; Liens. Each of the Loan Parties
----------------------------
and their respective Subsidiaries has title to its properties sufficient for the
conduct of its business, and none of such property is subject to any Lien except
as permitted in Section 5.11.
SECTION 4.12. No Default. No Loan Party nor any of their respective
----------
Subsidiaries is in default under or with respect to any agreement, instrument or
undertaking to which it is a party or by which it or any of its property is
bound which could have or cause a Material Adverse Effect. No Default or Event
of Default has occurred and is continuing.
SECTION 4.13. Full Disclosure. All information heretofore furnished
---------------
by any Loan Party to the Agent or any Bank for purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by any Loan Party to the Agent or any Bank will
be, true, accurate and complete in every material respect or based on reasonable
estimates on the date as of which such information is stated or certified. Each
Loan Party has disclosed to the Banks in writing any and all facts which could
have or cause a Material Adverse Effect.
SECTION 4.14. Environmental Matters. (a) No Loan Party nor any
---------------------
Subsidiary of a Loan Party is subject to any Environmental Liability and no Loan
Party nor any Subsidiary of a Loan Party has been designated as a potentially
responsible party under CERCLA. None of the Properties has been identified on
any current or proposed (i) National Priorities List under 40 C.F.R. (S)300,
(ii) CERCLIS list or (iii) any list arising from a state statute similar to
CERCLA.
38
(b) No Hazardous Materials have been or are being used, produced,
manufactured, processed, treated, recycled, generated, stored, disposed of,
managed or otherwise handled at, or shipped or transported to or from the
Properties or are otherwise present at, on, in or under the Properties, or, to
the best of the knowledge of the Loan Parties, at or from any adjacent site or
facility, except for Hazardous Materials, such as cleaning solvents, pesticides
and other materials used, produced, manufactured, processed, treated, recycled,
generated, stored, disposed of, and managed or otherwise handled in minimal
amounts in the ordinary course of business in compliance with all applicable
Environmental Requirements.
(c) The Loan Parties, and each of their respective Subsidiaries and
Affiliates, has procured all Environmental Authorizations necessary for the
conduct of its business, and is in compliance with all Environmental
Requirements in connection with the operation of the Properties and the Loan
Party's, and each of their respective Subsidiary's and Affiliate's, respective
businesses.
SECTION 4.15. Compliance with Laws. Each Loan Party and each
--------------------
Subsidiary of a Loan Party is in compliance with all applicable laws, including,
without limitation, all Environmental Laws.
SECTION 4.16. Capital Stock. All Capital Stock, debentures, bonds,
-------------
notes and all other securities of each Loan Party and their respective
Subsidiaries presently issued and outstanding are validly and properly issued in
accordance with all applicable laws, including, but not limited to, the "Blue
Sky" laws of all applicable states and the federal securities laws. The issued
shares of Capital Stock of the Loan Party's respective Wholly Owned Subsidiaries
are owned by the Loan Parties free and clear of any Lien or adverse claim. At
least a majority of the issued shares of capital stock of each of the other
Subsidiaries of the Loan Parties (other than Wholly Owned Subsidiaries) is owned
by the respective Loan Parties free and clear of any Lien or adverse claim.
SECTION 4.17. Margin Stock. No Loan Party nor any of their respective
------------
Subsidiaries is engaged principally, or as one of its important activities, in
the business of purchasing or carrying any Margin Stock, and no part of the
proceeds of any Advance or Swing Line Advance will be used to purchase or carry
any Margin Stock or to extend credit to others for the purpose of purchasing or
carrying any Margin Stock, or be used for any purpose which violates, or which
is inconsistent with, the provisions of Regulation X.
SECTION 4.18. Insolvency. After giving effect to the execution and
----------
delivery of the Loan Documents and the making of the Advances and Swing Line
Advances under this Agreement, no Loan Party will be "insolvent," within the
meaning of such term as defined in ss. 101 of Title 11 of the United States Code
or Section 2 of the Uniform Fraudulent Transfer Act, or any other applicable
state law pertaining to fraudulent transfers, as each may be amended from time
to time, or be unable to pay its debts generally as such debts become due, or
have an unreasonably small capital to engage in any business or transaction,
whether current or contemplated.
SECTION 4.19. Security Documents. (a) Upon execution by the Pledgors,
------------------
the Pledge Agreement shall be effective to create in favor of the Agent, for the
ratable benefit of the Secured Parties, a legal, valid and enforceable security
interest in the Collateral (as defined in the
39
Pledge Agreement) and, when the Collateral is delivered to the Agent, the Pledge
Agreement shall constitute a fully perfected first priority Lien on, and
security interest in, all right, title and interest of the Pledgors thereunder
in such Collateral and the proceeds thereof, in each case prior and superior in
any right to any other Person.
(b) The Security Agreement is effective to create in favor of the
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable security interest in the Collateral (as defined in the Security
Agreement) and, when financing statements in appropriate form are filed in the
UCC Recording Office, the Security Agreement shall constitute a fully perfected
Lien on, and security interest in, all right, title and interest of the Borrower
and Guarantors in such Collateral and the proceeds thereof, in each case prior
and superior in right to any other Person.
SECTION 4.20. Labor Matters. There are no significant strikes,
-------------
lockouts, slowdowns or other labor disputes against any Loan Party or any
Subsidiary of any Loan Party pending or, to the knowledge of any Loan Party,
threatened. The hours worked by and payment made to employees of the Loan
Parties and each Subsidiary of any Loan Party have not been in violation of the
Fair Labor Standards Act or any other applicable federal, state or foreign law
dealing with such matters.
SECTION 4.21. Patents, Trademarks, Etc. To the best of their
------------------------
knowledge, the Loan Parties and each Subsidiary of a Loan Party owns, or is
licensed to use, all patents, trademarks, trade names, copyrights, technology,
know-how and processes, service marks and rights with respect to the foregoing
that are (a) used in or necessary for the conduct of their respective businesses
as currently conducted and (b) material to the businesses, assets, operations,
properties, prospects or condition (financial or otherwise) of the Loan Parties
and their respective Subsidiaries taken as a whole. The use of such patents,
trademarks, trade names, copyrights, technology, know-how, processes and rights
with respect to the foregoing by the Loan Parties and their respective
Subsidiaries, does not infringe on the rights of any Person. Schedule 4.21 sets
forth all registered patents, trademarks and copyrights owned by, or licensed
to, the Loan Parties.
SECTION 4.22. Loans and Investments. No Loan Party nor any of their
---------------------
respective Subsidiaries has made a loan, advance or Investment which is
outstanding or existing on the Closing Date except as set forth on Schedule
4.22.
ARTICLE V
COVENANTS
The Loan Parties agree, jointly and severally, that, so long as any
Bank has any Commitment hereunder or any Letter of Credit is outstanding or any
amount payable under any Note or Letter of Credit Advance remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to each of the
-----------
Banks:
(a) as soon as available and in any event within 90 days after the
end of each Fiscal Year, a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of
40
the end of such Fiscal Year and the related consolidated statements of income,
shareholders' equity and cash flows for such Fiscal Year, setting forth in each
case in comparative form the figures for the previous fiscal year, all certified
by Deloitte & Touche, LLP or other independent public accountants of nationally
recognized standing, with such certification to be free of exceptions and
qualifications not acceptable to the Required Banks;
(b) as soon as available and in any event within 45 days after the
end of each of the four Fiscal Quarters of each Fiscal Year, a consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of
such Fiscal Quarter and the related statement of income and statement of cash
flows for such Fiscal Quarter and for the portion of the Fiscal Year ended at
the end of such Fiscal Quarter, setting forth in each case in comparative form
the figures for the corresponding Fiscal Quarter and the corresponding portion
of the previous Fiscal Year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, GAAP and consistency by the Chief
Financial Officer of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate,
substantially in the form of Exhibit I (a "Compliance Certificate"), of the
Chief Financial Officer of the Borrower (i) setting forth in reasonable detail
the calculations required to establish whether the Borrower was in compliance
with the requirements of Sections 5.03 through 5.11, inclusive, 5.14, 5.29 and
5.30 on the date of such financial statements, (ii) setting forth in reasonable
detail the calculations establishing the identities of the Material Subsidiaries
on the date of such financial statements, and (iii) stating whether any Default
exists on the date of such certificate and, if any Default then exists, setting
forth the details thereof and the action which the Loan Parties are taking or
propose to take with respect thereto;
(d) simultaneously with the delivery of each set of annual financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements to the effect
that nothing has come to their attention to cause them to believe that any
Default existed on the date of such financial statements;
(e) within 5 Domestic Business Days after the Borrower becomes aware
of the occurrence of any Default, a certificate of the Chief Financial Officer
of the Borrower setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and annual, quarterly or monthly reports which the
Borrower shall have filed with the Securities and Exchange Commission;
(h) if and when the Borrower or any member of the Controlled Group
(i) gives or is required to give notice to the PBGC of any "reportable event"
(as defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of ERISA, or
knows that the plan administrator of any Plan has given or is
41
required to give notice of any such reportable event, a copy of the notice of
such reportable event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA, a
copy of such notice; or (iii) receives notice from the PBGC under Title IV of
ERISA of an intent to terminate or appoint a trustee to administer any Plan, a
copy of such notice;
(i) promptly after the Borrower knows of the commencement thereof,
notice of any litigation, dispute or proceeding involving a claim against a Loan
Party and/or any Subsidiary of a Loan Party for $500,000 or more in excess of
amounts covered in full by applicable insurance; and
(j) as soon as available and in any event by the 10th Domestic
Business Day of each Fiscal Quarter, an aging of payables, showing the age of
such payables, identifying the Persons who are the creditors for such payables
(specifying the amount and age of the payables, owing to each such creditor) and
containing such other information and accompanied by such supporting documents
as the Agent, in its sole discretion may from time to time prescribe, dated as
of the last day of such period the statements in which, in each instance, shall
be certified as to truth and accuracy by the Chief Financial Officer or other
authorized officer of the Borrower and each Guarantor;
(k) as soon as available and in any event by the 10th Domestic
Business Day of each Fiscal Quarter, an aging of Receivables, showing the age of
such Receivables, identifying the Persons who are the account debtors for such
Receivables (specifying the amount and age of the Receivables owing from each
such Account Debtor) and containing such other information and accompanied by
such supporting documents as the Agent, in its sole discretion may from time to
time reasonably prescribe, dated as of the last day of such period the
statements in which, in each instance, shall be certified as to truth and
accuracy by the Chief Financial Officer or other authorized officer of the
Borrower and each Guarantor;
(l) as soon as available and in any event by the 10th Domestic
Business Day of each succeeding month, a Borrowing Base Certification Report, in
form and content reasonably satisfactory to the Agent, dated as of the last day
of the immediately preceding month, the statements which, in each instance,
shall be certified as to truth and accuracy by the Chief Financial Officer or
other authorized officer of the Borrower and each Guarantor;
(m) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as the
Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. Inspection of Property, Books and Records. The Borrower
-----------------------------------------
will (i) keep, and will cause each Subsidiary to keep, proper books of record
and account in which full, true and correct entries in conformity with GAAP
shall be made of all dealings and transactions in relation to its business and
activities; (ii) permit, and will cause each Subsidiary of the Borrower and
Guarantors to permit, with reasonable prior notice which notice shall not be
required in the case of an emergency, the Agent or its designee, at the expense
of the Borrower and Guarantors, to perform periodic field audits and
investigations of the Borrower, the Guarantors and the Collateral, from time to
time, provided that the field examinations at the Borrower's headquarters in
Greenville, South Carolina shall be no less frequent than once each
42
fiscal quarter and the field examinations at the Borrower's distribution and
warehouse facility in Memphis, Tennessee shall be no less frequent than once
each fiscal year; and (iii) permit, and will cause each Subsidiary to permit,
representatives of any Bank at such Bank's expense prior to the occurrence of an
Event of Default and at the Borrower's expense after the occurrence of an Event
of Default to visit and inspect any of their respective properties, to examine
and make abstracts from any of their respective books and records and to discuss
their respective affairs, finances and accounts with their respective officers,
employees and independent public accountants. The Borrower agrees to cooperate
and assist in such visits and inspections, in each case at such reasonable times
and as often as may reasonably be desired.
SECTION 5.03. Ratio of Adjusted Consolidated Debt to Consolidated
---------------------------------------------------
EBITDA. At the end of each Fiscal Quarter, commencing with the Fiscal Quarter
------
ending June 30, 2001, the ratio of Adjusted Consolidated Debt to Consolidated
EBITDA for the Fiscal Quarter then ending and the immediately preceding three
Fiscal Quarters will not at any time exceed 4.25 to 1.00.
SECTION 5.04. Acquisitions. No Loan Party nor any Subsidiary of a
------------
Loan Party shall 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, unless (i) the Person to be (or whose assets are to be) acquired
does not oppose such Acquisition and the line or lines of business of the Person
to be acquired are substantially the same as or related to one or more line or
lines of business conducted by the Borrower, (ii) no Default or Event of Default
shall have occurred and be continuing either immediately prior to or immediately
after giving effect to such Acquisition and the Borrower shall have furnished to
the Agent (A) pro forma historical financial statements as of the end of the
most recently completed Fiscal Year of the Borrower and most recent interim
Fiscal Quarter, if applicable giving effect to such Acquisition and (B) a
certificate in the form of Exhibit I prepared on a historical pro forma basis as
of the most recent date for which financial statements have been furnished
pursuant to Section 5.01 giving effect to such Acquisition, which certificate
shall demonstrate that no Default of Event or Default would exist immediately
after giving effect thereto, (iii) the Person acquired shall be a Subsidiary, or
be merged into the Borrower or a Wholly Owned Subsidiary, immediately upon
consummation of the Acquisition (or if assets are being acquired, the acquiror
shall be the Borrower or a Subsidiary of the Borrower), and (iv) after giving
effect to such Acquisition (excluding the Project Sabre Acquisition and the
Pinacor Acquisition): (A) the aggregate Costs of Acquisition incurred by any
Loan Party or any Subsidiary of a Loan Party in any single transaction or in a
series of related transactions shall not exceed $20,000,000; (B) the aggregate
Costs of Acquisition incurred by the Loan Parties and all Subsidiaries of the
Loan Parties shall not exceed $30,000,000 in the aggregate; and (3) the
aggregate amount (determined by using the face amount or the amount payable at
maturity, whichever is greater) of any Debt incurred, assumed or acquired by the
Loan Parties and all Subsidiaries of the Loan Parties in connection with any
Acquisition, together with the amount of any cash and the fair market value of
any other property (excluding property described in clause (i) of the definition
of Cost of Acquisition and the unpaid principal amount of any debt instrument)
given as consideration in connection with such Acquisition shall not exceed
$15,000,000 in the aggregate; provided, however, nothing contained in this
Section 5.04 shall be construed to permit any Loan Party or Subsidiary of a Loan
Party to issue, assume, create, incur or suffer to exist any Debt except as
permitted under Section 5.29.
43
SECTION 5.05. Minimum Consolidated Tangible Net Worth. Consolidated
---------------------------------------
Tangible Net Worth will at no time be less than $77,000,000 plus the sum of (i)
50% of the cumulative Reported Net Income of the Borrower and its Consolidated
Subsidiaries during any period after March 31, 2001 (taken as one accounting
period), calculated quarterly but excluding from such calculations of Reported
Net Income for purposes of this clause (i) any quarter in which the Consolidated
Net Income of the Borrower and its Consolidated Subsidiaries is negative, and
(ii) 100% of the cumulative Net Proceeds of Capital Stock/Conversion of Debt
received during any period after March 31, 2001, calculated quarterly.
SECTION 5.06. Restricted Payments. The Borrower will not declare or
-------------------
make any Restricted Payment during any Fiscal Year.
SECTION 5.07. Fixed Charge Coverage. At the end of each Fiscal
---------------------
Quarter, commencing with the Fiscal Quarter ending June 30, 2001, the Fixed
Charge Coverage Ratio shall not be less than 2.75 to 1.00:
SECTION 5.08. Capital Expenditures. Capital Expenditures will not
--------------------
exceed in the aggregate in any Fiscal Year the sum of $10,000,000; provided that
after giving effect to the incurrence of any Capital Expenditures permitted by
this Section, no Default shall have occurred and be continuing (with the effect
that amounts not incurred in any Fiscal Year may not be carried forward to a
subsequent period).
SECTION 5.09. Loans or Advances. No Loan Party nor any Subsidiary of
-----------------
a Loan Party shall make loans or advances to any Person except: (i) loans or
advances to employees of a Loan Party or an Affiliate of a Loan Party that do
not exceed Five Hundred Thousand and No/100 Dollars ($500,000) in the aggregate
outstanding made in the ordinary course of business and consistently with
practices existing on December 31, 2000; (ii) deposits required by government
agencies or public utilities; (iii) loans or advances to the Borrower or any
Guarantor that is a Consolidated Subsidiary; (iv) Loans and Advances outstanding
on the Closing Date and set forth on Schedule 4-22; and (v) loans or advances
not otherwise permitted under this Section 5.09, which when aggregated with the
total Investments made under Section 5.10(vii) do not exceed Two Million Five
Hundred Thousand Dollars ($2,500,000) in the aggregate outstanding; provided
that after giving effect to the making of any loans, advances or deposits
permitted by clause (i), (ii), (iii), (iv) or (v) of this Section, no Default
shall have occurred and be continuing.
SECTION 5.10. Investments. No Loan Party nor any Subsidiary of a Loan
-----------
Party shall make Investments in any Person except as permitted by Section 5.09
and except Investments in (i) direct obligations of the United States Government
maturing within one year, (ii) certificates of deposit issued by a commercial
bank whose credit is satisfactory to the Agent, (iii) commercial paper rated A-1
or the equivalent thereof by Standard & Poor's Corporation or P-1 or the
equivalent thereof by Moody's Investors Service, Inc. and in either case
maturing within 6 months after the date of acquisition, (iv) tender bonds the
payment of the principal of and interest on which is fully supported by a letter
of credit issued by a United States bank whose long-term certificates of deposit
are rated at least AA or the equivalent thereof by Standard & Poor's Corporation
and Aa or the equivalent thereof by Moody's Investors Service, Inc., (v)
Investments by the Borrower in a Guarantor that is a Consolidated Subsidiary
made in the ordinary course of business and consistently with practices existing
on December 31, 2000, (vi) Investments existing on the Closing Date and set
forth on Schedule 4.22; and (vii) Investments
44
not otherwise permitted under this Section 5.10, made in the ordinary course of
business and consistently with practices existing on December 31, 2000, which
when aggregated with the aggregate outstanding loans and advances made under
Section 5.09(v) do not exceed $2,500,000.
SECTION 5.11. Negative Pledge. No Loan Party nor any Subsidiary of a
---------------
Loan Party will create, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement encumbering assets
other than Collateral securing Debt outstanding on the date of this Agreement in
an aggregate principal amount not exceeding $135,000,000, all of which are set
forth on Schedule 5.11;
(b) Liens for taxes, assessments or similar charges, incurred in the
ordinary course of business that are not yet due and payable or that are being
contested in good faith and with due diligence by appropriate proceedings;
(c) any Lien on any asset (other than Collateral) securing Debt
incurred or assumed for the purpose of financing all or any part of the cost of
acquiring such asset and permitted under Section 5.29(c), provided that such
--------
Lien attaches to such asset concurrently with the acquisition thereof;
(d) pledges or deposits made in the ordinary course of business to
secure payment of workers' compensation, or to participate in any fund in
connection with workers' compensation, unemployment insurance, old-age pensions
or other social security programs;
(e) Liens of mechanics, materialmen, warehousemen, carriers or other
like liens, securing obligations incurred in the ordinary course of business
that are not yet due and payable;
(f) good faith pledges or deposits made in the ordinary course of
business to secure performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases, not in excess of twenty percent (20%) of
the aggregate amount due thereunder, or to secure statutory obligations, or
surety, appeal, indemnity, performance or other similar bonds required in the
ordinary course of business;
(g) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
clauses of this Section, provided that (i) such Debt is not secured by any
additional assets, and (ii) the amount of such Debt secured by any such Lien is
not increased;
(h) encumbrances consisting of zoning restrictions, easements or
other restrictions on the use of real property, none of which materially impairs
the use of such property by Borrower in the operation of its business, and none
of which is violated in any material respect by existing or proposed
restrictions on land use;
(i) any Lien on Margin Stock; and
45
(j) Liens securing the Agent and the Banks created or arising under
the Loan Documents. Notwithstanding anything contained in this Section 5.11 to
the contrary, no Loan Party or any Subsidiary of a Loan Party will create,
assume or suffer to exist any Lien on the Collateral.
SECTION 5.12. Maintenance of Existence. Each Loan Party shall, and
------------------------
shall cause each Subsidiary of a Loan Party to, maintain its organizational
existence and carry on its business in substantially the same manner and in
substantially the same fields as such business is now carried on and maintained;
provided that: (A) a Subsidiary of a Loan Party may be dissolved with the
Agent's prior written consent if: (1) such Subsidiary is not a Loan Party; (2)
the total assets of such Subsidiary are less than $50,000; and (3) the total
assets of all Subsidiaries dissolved after the Closing Date (excluding Lucent
Technologies Business Product Fulfillment Center LLC) are less than $100,000 in
the aggregate; and (B) the Borrower may dissolve Lucent Technologies Business
Product Fulfillment Center, LLC, on or before December 31, 2001 in accordance
with applicable law so long as such dissolution does not otherwise result in a
Default or Event of Default.
SECTION 5.13. Dissolution. No Loan Party nor any Subsidiary of a Loan
-----------
Party shall suffer or permit dissolution or liquidation either in whole or in
part or redeem or retire any shares of its own stock or that of any Subsidiary
of a Loan Party, except: (1) through corporate reorganization to the extent
permitted by Section 5.14; and (2) Restricted Payments permitted by Section
5.06.
SECTION 5.14. Consolidations, Mergers and Sales of Assets. No Loan
-------------------------------------------
Party will, nor will it permit any Subsidiary of a Loan Party to, consolidate or
merge with or into, or sell, lease or otherwise transfer all or any substantial
part of its assets to, any other Person, or discontinue or eliminate any
business line or segment, provided that (a) a Loan Party may merge with another
--------
Person if (i) such Person was organized under the laws of the United States of
America or one of its states, (ii) the Loan Party is the corporation surviving
such merger, (iii) immediately after giving effect to such merger, no Default
shall have occurred and be continuing, and (iv) if the Borrower merges with
another Loan Party, the Borrower is the corporation surviving such merger, (b)
Subsidiaries of a Loan Party (excluding Loan Parties) may merge with one
another, (c) a Loan Party may sell Inventory in the ordinary course of business
and for fair value, (d) the Borrower shall be permitted to transfer its
ownership interest in 4100 Quest, LLC to ChannelMax, Inc. on or before December
31, 2001; and (e) the foregoing limitation on the sale, lease or other transfer
of assets and on the discontinuation or elimination of a business line or
segment shall not prohibit a transfer of assets or the discontinuance or
elimination of a business line or segment (in a single transaction or in a
series of related transactions) unless the aggregate assets to be so transferred
or utilized in a business line or segment to be so discontinued, when combined
with all other assets transferred (excluding assets transferred under Section
5.14(c)), and all other assets utilized in all other business lines or segments
discontinued after the Closing Date constitute more than $2,500,000 in the
aggregate.
SECTION 5.15. Use of Proceeds. No portion of the proceeds of the Loan
---------------
will be used by the Borrower or any Subsidiary (i) in connection with, either
directly or indirectly, any tender offer for, or other acquisition of, stock of
any corporation with a view towards obtaining control of such other corporation,
(ii) directly or indirectly, for the purpose, whether immediate,
46
incidental or ultimate, of purchasing or carrying any Margin Stock, or (iii) for
any purpose in violation of any applicable law or regulation. Except as
otherwise provided herein, the proceeds of the Loan shall be used for general
corporate purposes and working capital.
SECTION 5.16. Compliance with Laws; Payment of Taxes. Each Loan Party
--------------------------------------
will, and will cause each Subsidiary of a Loan Party and each member of the
Controlled Group to, comply with applicable laws (including but not limited to
ERISA), regulations and similar requirements of governmental authorities
(including but not limited to PBGC), except where the necessity of such
compliance is being contested in good faith through appropriate proceedings
diligently pursued. Each Loan Party will, and will cause each Subsidiary of a
Loan Party to, pay promptly when due all taxes, assessments, governmental
charges, claims for labor, supplies, rent and other obligations which, if
unpaid, might become a lien against the property of a Loan Party or any
Subsidiary of a Loan Party, except liabilities being contested in good faith by
appropriate proceedings diligently pursued and against which, if requested by
the Agent, the Borrower shall have set up reserves in accordance with GAAP.
SECTION 5.17. Insurance. Each Loan Party will maintain, and will
---------
cause each Subsidiary of a Loan Party to maintain (either in the name of such
Loan Party or in such Subsidiary's own name), with financially sound and
reputable insurance companies, insurance on all its Property in at least such
amounts and against at least such risks as are usually insured against in the
same general area by companies of established repute engaged in the same or
similar business.
SECTION 5.18. Change in Fiscal Year. Each Loan Party will not change
---------------------
its Fiscal Year without the consent of the Required Banks.
SECTION 5.19. Maintenance of Property. Each Loan Party shall, and
-----------------------
shall cause each Subsidiary of a Loan Party to, maintain all of its properties
and assets in good condition, repair and working order, ordinary wear and tear
excepted.
SECTION 5.20. Environmental Notices. Each Loan Party shall furnish to
---------------------
the Banks and the Agent prompt written notice of all Environmental Liabilities,
pending, threatened or anticipated Environmental Proceedings, Environmental
Notices, Environmental Judgments and Orders, and Environmental Releases at, on,
in, under or in any way affecting the Properties or any adjacent property, and
all facts, events, or conditions that could lead to any of the foregoing.
SECTION 5.21. Environmental Matters. No Loan Party or any Subsidiary
---------------------
of a Loan Party will, nor will any Loan Party permit any Third Party to, use,
produce, manufacture, process, treat, recycle, generate, store, dispose of,
manage at, or otherwise handle or ship or transport to or from the Properties
any Hazardous Materials except for Hazardous Materials such as cleaning
solvents, pesticides and other similar materials used, produced, manufactured,
processed, treated, recycled, generated, stored, disposed, managed or otherwise
handled in minimal amounts in the ordinary course of business in compliance with
all applicable Environmental Requirements.
47
SECTION 5.22. Collateral. With respect to the Collateral, each
----------
Borrower and Guarantor hereby represents, warrants and covenants to the Agent
and each of the Banks as set forth in Section 5.22.1 through 5.22.14, inclusive.
5.22.1 Sale of Collateral. No Borrower or Guarantor will sell,
------------------
lease, exchange, or otherwise dispose of any of the Collateral without the
prior written consent of the Agent; provided, however Inventory Collateral
may be sold in the ordinary course of business for cash or on open account
or on terms of payment ordinarily extended to its customers. Upon the sale,
exchange or other disposition of the Inventory Collateral, the security
interest and lien created and provided for herein, without break in
continuity and without further formality or act, shall continue in and
attach to any proceeds thereof, including, without limitation, accounts,
contract rights, shipping documents, documents of title, bills of lading,
warehouse receipts, dock warrants, dock receipts and cash or non-cash
proceeds, and in the event of any unauthorized sale, shall continue in the
Inventory Collateral itself.
5.22.2 Accounts. All existing and future Accounts included in the
--------
Collateral are or will be bona fide existing obligations created by the
sale and delivery of merchandise or the rendering of services to customers
and arose or will arise in the ordinary course of business; and that such
Accounts are not and will not be subject to defense, set-off or
counterclaim which in the aggregate would materially impair the value of
such Accounts as collateral for the Obligations (as defined in the Security
Agreement). Neither the Borrower nor any Guarantor will, without the
Agent's prior written consent, grant any extension of the time of payment
of any of the Accounts, compromise, compound or settle the same for less
than the full amount thereof, release, wholly or partly, any person liable
for the payment thereof or allow any credit or discount whatsoever thereon,
other than extensions, credits, discounts, compromises or settlements
granted or made in the ordinary course of business or otherwise in
accordance with prudent and reasonable business practices.
5.22.3 Good Title; No Existing Encumbrances. The Borrower and
------------------------------------
Guarantors own the Collateral free and clear of any prior Lien, and no
financing statements or other evidences of the grant of a security interest
respecting the Collateral exist on the public records.
5.22.4 Right to Grant Security Interest; No Further Encumbrances.
---------------------------------------------------------
The Borrower and Guarantors have the right to grant a security interest in
the Collateral. The Borrower and Guarantors will pay all taxes and other
charges against the Collateral (including, without limitation, property,
use and sales taxes), and neither the Borrower nor any Guarantor will use
the Collateral illegally or allow the Collateral to be encumbered except
for the security interest in favor of the Agent granted herein.
5.22.5 Location of Collateral. The Borrower and Guarantors hereby
----------------------
represent and warrant to the Agent and the Banks that, as of the date
hereof, the Collateral is situated only at one or more of the Collateral
Locations and the Borrower and Guarantors covenant with the Agent not to
locate the Collateral at any location other than a Collateral Location
without at least 30 days prior written notice to the Agent. The Executive
Office of each Loan Party is such Loan Party's chief executive office (if
such Loan Party has
48
more than one place of business) or place of business (if such Loan Party
has one place of business). In addition, to the extent the Borrower or
Guarantors should warehouse any of the Inventory Collateral at any time
hereafter, the Borrower and Guarantors acknowledge and agree that such
warehousing may be conducted only by warehousemen who have been
pre-approved by the Agent and who, in any event, shall issue non-negotiable
warehouse receipts in the Agent's name to evidence any such warehousing of
goods constituting Inventory Collateral. If the Borrower or Guarantors
consign any of the Inventory Collateral, it will comply with the Uniform
Commercial Code of any state where such Inventory Collateral is located
with respect thereto, and shall file, cause the filing and does hereby
authorize the Agent to file in the appropriate public office or offices
UCC-1 financing statements showing such Borrower or Guarantor, as the case
may be, as consignor and the Agent as assignee of consignor, and will
furnish copies thereof to the Agent. If any of the Inventory Collateral or
any records concerning the Collateral are at any time to be located on
premises leased by the Borrower or a Guarantor or on premises owned by the
Borrower or a Guarantor subject to a mortgage or other lien, such Borrower
or Guarantor shall so notify the Agent and shall if requested by the Agent
obtain and deliver or cause to be delivered to the Agent, prior to delivery
of any Inventory Collateral or records concerning the Collateral to said
premises, an agreement, in form and substance satisfactory to the Agent,
waiving the landlord's or mortgagee's or lienholder's right to enforce any
claim against the Borrower or Guarantor, as the case may be, for monies due
under the landlord's lien, mortgage or other lien by levy or distraint or
other similar proceedings against the Inventory Collateral or records
concerning the Collateral and assuring the Agent's ability to have access
to the Inventory Collateral and records concerning the Collateral in order
to exercise its right hereunder to take possession thereof.
5.22.6 Collateral Status. The Borrowers and Guarantors will promptly
-----------------
notify the Agent if there is any adverse change in the status of the
Collateral that materially impairs its value or collectibility, or if any
defenses, set-offs or counterclaims are asserted by Account Debtors which
in the aggregate materially impair the value or collectibility of the
Accounts.
5.22.7 Delivery of Certain Collateral. The Borrowers and Guarantors
------------------------------
have delivered all agreements, letters of credit, promissory notes,
instruments, certificates of deposit, chattel paper or anything else, the
physical possession of which is necessary in order for the Agent, on behalf
of the Secured Parties, to perfect or preserve the priority of its security
interest therein.
5.22.8 Purchase of Collateral. Neither the Borrower nor any Guarantor
----------------------
has purchased any of the Collateral in a bulk transfer or in a transaction
which was outside the ordinary course of the business of the seller to the
Borrower or such Guarantor.
5.22.9 Possession of Franchises, Licenses, Etc. The Borrower, the
---------------------------------------
Guarantors and the Subsidiaries of the Borrower and Guarantors possess all
franchises, certificates, licenses, permits and other authorizations from
governmental political subdivisions or regulatory authorities, and all
patents, trademarks, service marks, trade names, copyrights, licenses and
other rights, free from burdensome restrictions, that are necessary for the
49
ownership, maintenance and operation of any of their respective property
and assets, and neither the Borrower, any Guarantor nor any of their
respective Subsidiaries are in violation of any term or condition thereof.
Schedule 4.21 sets forth an accurate and complete description of all
copyrights, patents, trademarks and other intellectual property of the
Borrower and Guarantors.
5.22.10 Records Respecting Collateral. The Borrower and Guarantors
-----------------------------
shall keep complete and accurate books and records and make all necessary
entries thereon to reflect the transactions and facts giving rise to the
Collateral and payments, credit and adjustments applicable thereto. All
books and records of the Borrower and Guarantors with respect to the
Collateral will be kept at the Executive Offices (as they may be changed
pursuant to Section 5.22.5) and will not be removed from such address
without the prior written consent of the Agent.
5.22.11 Further Assurances. The Borrower and each Guarantor shall duly
------------------
execute and/or deliver (or cause to be duly executed and/or delivered) to
the Agent and Secured Parties any instrument, invoice, document, document
of title, dock warrant, dock receipt, warehouse receipt, bill of lading,
order, financing statement, assignment, waiver, consent or other writing
which may be reasonably necessary to the Agent or any Secured Parties to
carry out the terms of this Agreement and any of the other Loan Documents
and to perfect its security interest in and facilitate the collection of
the Collateral, the proceeds thereof, and any other property at any time
constituting security to the Secured Parties. The Borrower and each
Guarantor shall perform or cause to be performed such acts as the Agent or
any Secured Party may request to establish and maintain for the Agent and
the Secured Parties a valid and perfected security interest in and security
title to the Collateral, free and clear of any Liens other than in favor of
the Agent and the Secured Parties.
5.22.12 Maintenance of Insurance. In addition to and cumulative with
------------------------
any other requirements herein imposed on the Borrower and Guarantors with
respect to insurance, the Borrower, Guarantors and the Subsidiaries of the
Borrower and Guarantors shall maintain insurance with insurance companies
satisfactory to the Agent on such of their respective properties and
assets, in such amounts and against such risks as is customarily maintained
by similar businesses operating in the same vicinity, but in any event to
include public liability, worker's compensation, business interruption,
malicious mischief, errors and omissions, loss, damage, flood, windstorm,
fire, theft, extended coverage and product liability insurance in amounts
satisfactory to the Agent, which insurance shall not be cancellable or
altered (or the coverage thereunder reduced or restricted) by the Borrower,
Guarantor or any Subsidiary of the Borrower and Guarantors, unless with the
prior written consent of the Agent, or by the insurer of the Borrower and
Guarantors, unless with at least 30 days advance written notice to the
Agent thereof. The Borrower and Guarantors shall deliver to the Agent on
the Closing Date and at such other times as the Agent may request, a
detailed list of such insurance then in effect stating the names of the
insurance companies, the amounts and rates of insurance, the date of
expiration thereof, the properties and risks covered thereby and the
insured with respect thereto, and, within 30 days after notice in writing
from the Agent, obtain such additional insurance as the Agent, at the
request of the Required Banks, may reasonably request.
50
The Borrower and Guarantors will pay all premiums on the insurance referred
to herein as and when they become due and shall do all things necessary to
maintain the insurance in effect. The Agent may act as the agent of the
Borrower and Guarantors in adjusting or compromising any loss under any
such insurance policy and in collecting and receiving the proceeds from any
such policy. In the event of any loss under any such policy of insurance,
the insurer named therein is hereby authorized and directed by the Borrower
and Guarantors to make payment for such loss to the Agent, for the benefit
of the Secured Parties, as their interests may appear, rather than to the
Borrower and Guarantors and the Agent jointly. If the Borrower or any
Guarantor shall default in its obligation hereunder to insure the
Collateral in a manner satisfactory to the Agent, then the Agent shall have
the right (but not the obligation) to procure such insurance and to charge
the costs of same to the Borrower and Guarantors, which costs shall be
added to and become a part of the unpaid principal amount of the
Obligations (as defined in the Security Agreement), shall bear interest at
the Default Rate or the highest contract rate permitted by applicable law
whichever is less; such interest shall be payable on demand by the Agent
and shall be secured by the Collateral. The proceeds of all such insurance,
if any loss should occur, may be applied by the Agent to the payment of the
Obligations (as defined in the Security Agreement) or to the replacement of
any of the Collateral damaged or destroyed, as the Agent may elect or
direct in its sole discretion. The Borrower and each Guarantor hereby
appoints (which appointment constitutes a power coupled with an interest
and is irrevocable as long as any of the Obligations (as defined in the
Security Agreement) remain outstanding) Agent as its lawful
attorney-in-fact with full authority to make, adjust, settle claims under
and/or cancel such insurance and to endorse the name of the Borrower or any
Guarantor on any instruments or drafts issued by or upon any insurance
companies.
5.22.13 Change of Chief Executive Office. The Borrower and Guarantors
--------------------------------
hereby understand and agree that if, at any time hereafter, the Borrower or
Guarantor elects to move its Executive Office, or if the Borrower or
Guarantor elects to change its name, identity, any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, or its structure to other than as existing on the date hereof,
the Borrower and Guarantors will notify the Agent in writing at least 30
days prior thereto.
5.22.14 Waivers. With respect to each of the Collateral Locations, the
-------
Borrower and Guarantors will obtain such waivers of lien, estoppel
certificates or subordination agreements as the Required Banks may
reasonably require to insure the priority of its security interest in that
portion of the Collateral situated at such locations.
5.22.15 Name and Jurisdiction of Organization. The exact legal name of
-------------------------------------
the Borrower and each Guarantor and the state of incorporation or
organization for the Borrower and each Guarantor is as set forth below:
ScanSource, Inc. South Carolina
4100 Quest, LLC South Carolina
Channelmax, Inc. South Carolina
SECTION 5.23. Environmental Release. Each Loan Party agrees that upon
---------------------
the occurrence of an Environmental Release at or on any of the Properties it
will act immediately to
51
investigate the extent of, and to take appropriate remedial action to eliminate,
such Environmental Release, whether or not ordered or otherwise directed to do
so by any Environmental Authority.
SECTION 5.24 Additional Covenants, Etc. In the event that at any time
--------------------------
this Agreement is in effect or any Note remains unpaid any Loan Party shall
enter into any agreement, guarantee, indenture or other instrument governing,
relating to, providing for commitments to advance or guaranteeing any Financing
or to amend any terms and conditions applicable to any Financing, which
agreement, guarantee, indenture or other instrument includes covenants,
warranties, representations, defaults or events of default (or any other type of
restriction which would have the practical effect of any of the foregoing,
including, without limitation, any "put" or mandatory prepayment of such debt)
or other terms or conditions not substantially as, or in addition to those,
provided in this Agreement or any other Loan Document, or more favorable to the
lender or other counterparty thereunder than those provided in this Agreement or
any other Loan Document, the Loan Party shall promptly so notify the Agent and
the Banks. Thereupon, if the Agent shall request by written notice to the Loan
Party (after a determination has been made by the Required Banks that any of the
above referenced documents or instruments contain any provisions which either
individually or in the aggregate are more favorable than one of the provisions
set forth herein), the Loan Parties, the Agent and the Banks shall enter into an
amendment to this Agreement providing for substantially the same such covenants,
warranties, representations, defaults or events of default or other terms or
conditions as those provided for in such agreement, guarantee, indenture or
other instrument, to the extent required and as may be selected by the Agent,
such amendment to remain in effect, unless otherwise specified in writing by the
Agent, for the entire duration of the stated term to maturity of such Financing
(to and including the date to which the same may be extended at the option of
the Loan Party), notwithstanding that such Financing might be earlier terminated
by prepayment, refinancing, acceleration or otherwise, provided that if any such
--------
agreement, guarantee, indenture or other instrument shall be modified,
supplemented, amended or restated so as to modify, amend or eliminate from such
agreement, guarantee, indenture or other instrument any such covenant, warranty,
representation, default or event of default or other term or condition so made a
part of this Agreement, then unless required by the Agent pursuant to this
Section, such modification, supplement or amendment shall not operate to modify,
amend or eliminate such covenant, warranty, representation, default or event of
default or other term or condition as so made a part of this Agreement.
SECTION 5.25. Transactions with Affiliates. No Loan Party nor any
----------------------------
Subsidiary of a Loan Party shall enter into, or be a party to, any transaction
with any Affiliate of a Loan Party or such Subsidiary (which Affiliate is not a
Loan Party or a Subsidiary of a Loan Party), except as permitted by law and in
the ordinary course of business and pursuant to reasonable terms which are fully
disclosed to the Agent and the Banks, consented to in writing by the Required
Banks, and are no less favorable to the Loan Party or such Subsidiary than would
be obtained in a comparable arm's length transaction with a Person which is not
an Affiliate.
SECTION 5.26 Material Subsidiaries. (a) The Loan Parties shall cause
---------------------
any Person which becomes a Material Subsidiary after the Closing Date to become
a party to, and agree to be bound by the terms of, this Agreement and the
Security Agreement pursuant to a Joinder Agreement, in the form attached hereto
as Exhibit F satisfactory to the Agent in all
52
respects and executed and delivered to the Agent within ten (10) Domestic
Business Days after the day on which such Person became a Material Subsidiary.
The Borrower shall also cause the items specified in Section 3.01(c), (f), (h),
(i) and (n) to be delivered to the Agent concurrently with the instrument
referred to above, modified appropriately to refer to such instrument and such
Material Subsidiary.
(b) The Borrower shall, and shall cause any Subsidiary (the "Pledgor
Subsidiary") to, pledge the lesser of 65% or the entire interest owned by the
Borrower and such Pledgor Subsidiary, of the shares of Capital Stock or
equivalent equity interests in any Person which becomes a Material Foreign
Subsidiary after the Closing Date pursuant to a pledge agreement in the form
attached hereto as Exhibit K executed and delivered by the Borrower or such
Pledgor Subsidiary to the Agent within ten (10) Domestic Business Days after the
day on which such Person became a Material Foreign Subsidiary and shall deliver
to the Agent such shares of capital stock together with stock powers executed in
blank. The Borrower shall also cause the items specified in Section 3.01(c), (f)
and (n) to be delivered to the Agent concurrently with the pledge agreement
referred to above, modified appropriately to refer to such pledge agreement,
Pledgor and such Material Foreign Subsidiary. As used herein, "Material Foreign
Subsidiary" means a Foreign Subsidiary which accounts for (or in the case of a
recently formed or acquired Foreign Subsidiary would so account for on a pro
forma historical basis) at least 2% of Consolidated Net Income or has total
assets of at least $100,000. The Borrower and the Guarantors acknowledge and
agree that the Agent and Banks may at any one time after the Closing Date
request the Borrower to obtain (and the Borrower shall deliver to the Agent
within 30 calendar days of such request) a legal opinion in form and content
reasonably satisfactory to Agent from counsel licensed in Canada and Mexico
confirming that the Pledge Agreement constitutes a valid, enforceable and
perfected first priority security interest in and lien upon the Collateral (as
defined in the Pledge Agreement) under the applicable laws of Canada and Mexico.
(c) Once any Subsidiary becomes a Material Subsidiary and therefore
becomes a party to this Agreement in accordance with Section 5.26(a) or any
shares of capital stock of a Material Foreign Subsidiary are pledged to the
Agent in accordance with Section 5.26(b), such Subsidiary (including, without
limitation, all Initial Guarantors) thereafter shall remain a party to this
Agreement and the shares of capital stock in such Material Foreign Subsidiary
(including, without limitation, all initial Material Foreign Subsidiaries) shall
remain subject to the pledge to the Agent, as the case may be, even if: (i) such
Material Subsidiary ceases to be a Material Subsidiary; or (ii) such Foreign
Subsidiary ceases to be a Material Foreign Subsidiary; provided that if a
Material Subsidiary or Material Foreign Subsidiary ceases to be a Subsidiary of
the Borrower as a result of the Borrower's transfer or sale of one hundred
percent (100%) of the capital stock of such Subsidiary in accordance with and to
the extent permitted by the terms of Section 5.14, the Agent and the Banks agree
to release such Subsidiary from the Guaranty and release the shares of capital
stock of such Subsidiary from the Pledge Agreement.
(d) The Borrower and Guarantors acknowledge that ScanSource
Properties, LLC is not an Initial Guarantor because the Borrower has advised the
Agent and Banks that ScanSource Properties, LLC is party to an agreement that
prohibits ScanSource Properties, LLC from being a Guarantor (the "Restrictive
Provision"). The Borrower and Guarantors shall immediately notify the Agent if
there is any modification, expiration or termination of the
53
Restrictive Provision. The Borrower and Guarantors shall cause ScanSource
Properties, LLC to become a party to, and agree to be bound by the terms of,
this Agreement and the Security Agreement pursuant to a Joinder Agreement, in
the form attached hereto as Exhibit F satisfactory to the Agent in all respects
and executed and delivered to the Agent within ten (10) Domestic Business Days
after the day on which there is any modification, expiration or termination of
the Restrictive Provision which would allow ScanSource Properties, LLC to
execute such documentation. The Borrower shall also cause the items specified in
Section 3.01(c), (f), (h), (i) and (n) to be delivered to the Agent concurrently
with the instruments referred to above, modified appropriately to refer to such
instrument and ScanSource Properties, LLC.
SECTION 5.27. No Restrictive Agreement. No Loan Party will, nor will
------------------------
any Loan Party permit any of its Subsidiaries to, enter into, after the date of
this Agreement, any indenture, agreement, instrument or other arrangement that,
directly or indirectly, prohibits or restrains, or has the effect of prohibiting
or restraining, or imposes materially adverse conditions upon, any of the
following by the Loan Party or any such Subsidiary: the incurrence or payment of
Debt, the granting of Liens, the declaration or payment of Restricted Payments
or other distributions in respect of Capital Stock of the Loan Party or any
Subsidiary, the making of loans, advances or Investments or the sale,
assignment, transfer or other disposition of property, real, personal or mixed,
tangible.
SECTION 5.28. Partnerships and Joint Ventures. No Loan Party shall
-------------------------------
become a general partner in any general or limited partnership or joint venture.
SECTION 5.29. Additional Debt. No Loan Party or Subsidiary of a Loan
---------------
Party shall directly or indirectly issue, assume, create, incur or suffer to
exist any Debt or the equivalent (including obligations under Capital Leases),
except for: (a) the Debt owed to the Banks, Swing Line Lender and Issuing Bank;
(b) the Debt existing and outstanding on the Closing Date described on Schedule
5.29; (c) Debt incurred and owing to Textron Financial Corporation and IBM
Credit Corporation for the purpose of financing all or any part of the cost of
acquiring inventory from such Person; and (d) Debt not otherwise permitted under
this Section 5.29, the aggregate outstanding principal amount of which shall
not, at any time, exceed $5,000,000.00.
SECTION 5.30. Operating Leases. No Loan Party nor any Subsidiary of a
----------------
Loan Party shall create, assume or suffer to exist any operating lease except
operating leases which: (1) are entered into in the ordinary course of business,
and (2) the aggregate indebtedness, liabilities and obligations of the Loan
Parties under all such operating leases during any period of four (4)
consecutive Fiscal Quarters shall at no time exceed $750,000.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following
-----------------
events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of the Loan
(including, without limitation, any Advance or Swing Line Advance) or shall fail
to pay any
54
interest on the Loan (including, without limitation, any Advance or Swing Line
Advance) within five Domestic Business Days after such interest shall become
due, or any Loan Party shall fail to pay any fee or other amount payable
hereunder within five Domestic Business Days after such fee or other amount
becomes due; or
(b) any Loan Party shall fail to observe or perform any covenant
contained in Sections 5.02(ii), 5.03 to 5.15, inclusive, or Section 5.18, 5.29
or 5.30; or
(c) any Loan Party shall fail to observe or perform any covenant or
agreement contained or incorporated by reference in this Agreement (other than
those covered by clause (a) or (b) above or clauses (n) or (o) or (p) or (q) or
(r) below) for thirty days after the earlier of (i) the first day on which any
Loan Party has knowledge of such failure or (ii) written notice thereof has been
given to the Borrower by the Agent at the request of any Bank; or
(d) any representation, warranty, certification or statement made or
deemed made by the Loan Parties in Article IV of this Agreement or in any
financial statement, material certificate or other material document delivered
pursuant to this Agreement shall prove to have been incorrect or misleading in
any material respect when made (or deemed made); or
(e) any Loan Party or any Subsidiary of a Loan Party shall fail to
make any payment in respect of Debt (other than the Notes) when due or within
any applicable grace period; or
(f) any event or condition shall occur which results in the
acceleration of the maturity of Debt outstanding of any Loan Party or any
Subsidiary of a Loan Party or the mandatory prepayment or purchase of such Debt
by any Loan Party (or its designee) or such Subsidiary of a Loan Party (or its
designee) prior to the scheduled maturity thereof, or enables (or, with the
giving of notice or lapse of time or both, would enable) the holders of such
Debt or any Person acting on such holders' behalf to accelerate the maturity
thereof or require the mandatory prepayment or purchase thereof prior to the
scheduled maturity thereof, without regard to whether such holders or other
Person shall have exercised or waived their right to do so; or
(g) any Loan Party or any Subsidiary of a Loan Party shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally, or shall admit in writing its
inability, to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing; or
(h) an involuntary case or other proceeding shall be commenced against
any Loan Party or any Subsidiary of a Loan Party seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and such
involuntary case or other
55
proceeding shall remain undismissed and unstayed for a period of 60 days; or an
order for relief shall be entered against any Loan Party or any Subsidiary of a
Loan Party under the federal bankruptcy laws as now or hereafter in effect; or
(i) any Loan Party or any member of the Controlled Group shall fail to
pay when due any material amount which it shall have become liable to pay to the
PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate a
Plan or Plans shall be filed under Title IV of ERISA by any Loan Party, any
member of the Controlled Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to
terminate or to cause a trustee to be appointed to administer any such Plan or
Plans or a proceeding shall be instituted by a fiduciary of any such Plan or
Plans to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall
not have been dismissed within 30 days thereafter; or a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree adjudicating that
any such Plan or Plans must be terminated; or
(j) one or more judgments or orders for the payment of money in an
aggregate amount in excess of $500,000 shall be rendered against any Loan Party
or any Subsidiary of a Loan Party and such judgment or order shall continue
unsatisfied and unstayed for a period of 30 days; or
(k) a federal tax lien shall be filed against any Loan Party or any
Subsidiary of a Loan Party under Section 6323 of the Code or a lien of the PBGC
shall be filed against any Loan Party or any Subsidiary of a Loan Party under
Section 4068 of ERISA and in either case such lien shall remain undischarged for
a period of 25 days after the date of filing; or
(l) (i) any Person or two or more Persons acting in concert shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934) of
20% or more of the outstanding shares of the voting stock of the Borrower; or
(ii) as of any date a majority of the Board of Directors of the Borrower
consists of individuals who were not either (A) directors of the Borrower as of
the corresponding date of the previous year, (B) selected or nominated to become
directors by the Board of Directors of the Borrower of which a majority
consisted of individuals described in clause (A), or (C) selected or nominated
to become directors by the Board of Directors of the Borrower of which a
majority consisted of individuals described in clause (A) and individuals
described in clause (B); or
(m) there shall have occurred uninsured damage to, or loss, theft or
destruction of, any part of the Collateral; or
(n) a default or event of default shall occur and be continuing under
any of the Collateral Documents or Letter of Credit Agreements or any Borrower,
Pledgor Subsidiary or Guarantor shall fail to observe or perform any obligation
to be observed or performed by it under any Collateral Document or Letter of
Credit Agreements, and such default, event of default or failure to perform or
observe any obligation continues beyond any applicable cure or grace period
provided in such Collateral Document or Letter of Credit Agreement; or
(o) a default or event of default shall occur and be continuing under
the IBM Intercreditor Agreement, or a Loan Party or any Subsidiary of a Loan
Party shall fail to observe
56
or perform any obligation to be observed or performed by it under the IBM
Intercreditor Agreement, or the IBM Intercreditor Agreement shall be terminated
without the prior written consent of the Agent; or
(p) a default or event of default shall occur and be continuing under
the Textron Intercreditor Agreement, or a Loan Party or any Subsidiary of a Loan
Party shall fail to observe or perform any obligation to be observed or
performed by it under the Textron Intercreditor Agreement, or the Textron
Intercreditor Agreement shall be terminated without the prior written consent of
the Agent; or
(q) a default or event of default shall occur and be continuing under
the IR Agreement or any Loan Party shall fail to observe or perform any
obligation to be observed or performed by it under the IR Agreement or the IR
Agreement is terminated without the prior written consent of the IR Bank; or
(r) (i) any of the Guarantors shall fail to pay when due any
Guaranteed Obligations or shall fail to pay any fee or other amount payable
hereunder when due; or (ii) any Guarantor shall disaffirm or deny its
obligations under Article X; or
(s) (i) if the Borrower at any time fails to own (directly or
indirectly, through Wholly Owned Subsidiaries) 100% of the outstanding shares of
the voting stock (in the case of a corporation ) or membership interests (in the
case of a limited liability company) (or equivalent equity interests) of each
Subsidiary of the Borrower (other than Channelmax, Inc. and 4100 Quest, LLC); or
(ii) if the Borrower at any time fails to own (directly or indirectly through
Wholly Owned Subsidiaries) 80% of the outstanding shares of voting stock of
Channelmax, Inc. or 80% of the membership interests of 4100 Quest, LLC; or
(t) the occurrence of any event, act or condition which the Required
Banks determine either does or has a reasonable probability of causing a
Material Adverse Effect.
then, and in every such event, the Agent shall (i) if requested by the Required
Banks, by notice to the Borrower terminate the Commitments and they shall
thereupon terminate, (ii) if requested by the Swing Line Lender, by notice to
the Borrower terminate the Swing Line facility set forth in Section 2.15, (iii)
if requested by the Required Banks, by notice to the Issuing Bank, instruct the
Issuing Bank to declare an Event of Default under the Letter of Credit
Agreements, and (iv) if requested by the Required Banks, by notice to the
Borrower declare the Notes (together with accrued interest thereon) and all
other amounts payable hereunder and under the other Loan Documents to be, and
the Notes (together with all accrued interest thereon) and all other amounts
payable hereunder and under the other Loan Documents shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Loan Parties; provided that
--------
if any Event of Default specified in clause (g) or (h) above occurs with respect
to any Loan Party, without any notice to any Loan Party or any other act by the
Agent or the Banks, the Commitments and the Swing Line facility set forth in
Section 2.15 shall thereupon automatically terminate and the Notes (together
with accrued interest thereon) and all other amounts payable hereunder and under
the other Loan Documents shall automatically become immediately due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Loan Parties. Notwithstanding
57
the foregoing, the Agent shall have available to it all other remedies at law or
equity, and shall exercise any one or all of them at the request of the Required
Banks. Notwithstanding the foregoing, the Agent shall have available to it all
rights and remedies provided under the Loan Documents (including, without
limitation, the Collateral Documents) and in addition thereto, all other rights
and remedies at law or equity, and the Agent shall exercise any one or all of
them at the request of the Required Banks.
SECTION 6.02. Notice of Default. The Agent shall give notice to the
-----------------
Borrower of any Default under Section 6.01(c) promptly upon being requested to
do so by any Bank and shall thereupon notify all the Banks thereof.
SECTION 6.03 Cash Cover. If any Event of Default shall have occurred
----------
and be continuing, the Borrower shall, if requested by the Agent, pay to the
Agent, for the benefit of the Banks an amount in immediately available funds
(which funds shall be held as collateral pursuant to arrangements satisfactory
to the Agent) equal to the aggregate Undrawn Amounts, provided that, if any
Event of Default specified in clause (g) or (h) above occurs, the Borrower shall
be obligated to pay such amount to the Agent forthwith without any notice to the
Borrower or any other act by the Agent.
SECTION 6.04. 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 VI 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 or any other Loan Party hereunder, shall be applied by
the Agent in the following order:
(a) the reasonable expenses incurred in connection with retaking,
holding, preserving, processing, maintaining or preparing for sale, lease or
other disposition of, any Collateral, including reasonable attorney's fees and
legal expenses pertaining thereto;
(b) amounts due to the Banks, Agent and the Issuing Bank pursuant to
Sections 2.7(a), 2.7(b), 2.7(c), 2.7(d) and 9.03(a);
(c) payments of interest on Advances, Swing Line Advances and Letter
of Credit Advances, to be applied for the ratable benefit of the Banks (with
amounts payable in respect of Swing Line Advances being included in such
calculation and paid to the Swing Line Lender);
(d) payments of principal of Advances, Swing Line Advances and Letter
of Credit Advances, to be applied for the ratable benefit of the Banks (with
amounts payable in respect of Swing Line Advances being included in such
calculation and paid to the Swing Line Lender);
(e) payments of cash amounts to the Agent in respect of outstanding
Letters of Credit pursuant to Section 6.03;
(f) amounts due to the Issuing Bank, the Agent and the Banks pursuant
to Sections 7.05 and 9.03(b) and (c);
58
(g) payments of all other amounts due under any of the Loan Documents,
if any, to be applied for the ratable benefit of the Secured Parties;
(h) any surplus remaining after application as provided for herein, to
the Borrower or otherwise as may be required by applicable law.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment, Powers and Immunities. Each Bank hereby
----------------------------------
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under the other Loan Documents (including, without limitation, the Intercreditor
Agreement) with such powers as are specifically delegated to the Agent by the
terms hereof and thereof, together with such other powers as are reasonably
incidental thereto. The Agent: (a) shall have no duties or responsibilities
except as expressly set forth in this Agreement and the other Loan Documents,
and shall not by reason of this Agreement or any other Loan Document be a
trustee for any Bank; (b) shall not be responsible to the Banks for any
recitals, statements, representations or warranties contained in this Agreement
or any other Loan Document, or in any certificate or other document referred to
or provided for in, or received by any Bank under, this Agreement or any other
Loan Document, or for the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document or any other
document referred to or provided for herein or therein or for any failure by any
Loan Party to perform any of its obligations hereunder or thereunder; (c) shall
not be required to initiate or conduct any litigation or collection proceedings
hereunder or under any other Loan Document except to the extent requested by the
Required Banks, and then only on terms and conditions satisfactory to the Agent,
and (d) shall not be responsible for any action taken or omitted to be taken by
it hereunder or under any other Loan Document or any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful
misconduct. The Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The provisions of this
Article VII are solely for the benefit of the Agent and the Banks, and no Loan
Party shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement
and under the other Loan Documents, the Agent shall act solely as agent of the
Banks and does not assume and shall not be deemed to have assumed any obligation
towards or relationship of agency or trust with or for the Loan Parties. The
duties of the Agent shall be ministerial and administrative in nature, and the
Agent shall not have by reason of this Agreement or any other Loan Document a
fiduciary relationship in respect of any Bank.
SECTION 7.02. Reliance by Agent. The Agent shall be entitled to rely
-----------------
upon any certification, notice or other communication (including any thereof by
telephone, telefax, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel, independent accountants or
other experts selected by the Agent. As to any matters not expressly provided
for by this Agreement or any other Loan Document, the Agent shall in all cases
be fully
59
protected in acting, or in refraining from acting, hereunder and thereunder in
accordance with instructions signed by the Required Banks, and such instructions
of the Required Banks in any action taken or failure to act pursuant thereto
shall be binding on all of the Banks.
SECTION 7.03. Defaults. The Agent shall not be deemed to have
--------
knowledge of the occurrence of a Default or an Event of Default (other than the
non-payment of principal of or interest on the Loans) unless the Agent has
received notice from a Bank or the Borrower specifying 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 of the occurrence of a Default or an Event of
Default, the Agent shall give prompt notice thereof to the Banks. The Agent
shall give each Bank prompt notice of each non-payment of principal of or
interest on the Loan, whether or not it has received any notice of the
occurrence of such non-payment. The Agent shall (subject to Section 9.05) take
such action with respect to such Default or Event of Default as shall be
directed by the Required Banks, 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
Default or Event of Default as it shall deem advisable in the best interests of
the Banks.
SECTION 7.04. Rights of Agent and its Affiliates as a Bank. With
--------------------------------------------
respect to any Advance made and any Letter of Credit issued by BB&T or an
Affiliate of BB&T, such Affiliate and BB&T in their capacity as a Bank hereunder
shall have the same rights and powers hereunder as any other Bank and may
exercise the same as though it were not an Affiliate of BB&T (or in BB&T's case,
acting as the Agent), and the term "Bank" or "Banks" shall, unless the context
otherwise indicates, include such Affiliate of BB&T or BB&T in its individual
capacity. Such Affiliate and BB&T may (without having to account therefor to any
Bank) accept deposits from, lend money to and generally engage in any kind of
banking, trust or other business with any Loan Party (and any of the Affiliates
of any Loan Party) as if they were not an Affiliate of the Agent or the Agent,
respectively; and such Affiliate and BB&T may accept fees and other
consideration from any Loan Party (in addition to any agency fees and
arrangement fees heretofore agreed to between the Borrower and BB&T) for
services in connection with this Agreement or any other Loan Document or
otherwise without having to account for the same to the Banks.
SECTION 7.05. Indemnification. Each Bank severally agrees to indemnify
---------------
the Agent, to the extent the Agent shall not have been reimbursed by the
Borrower, ratably in accordance with its Commitment, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including, without limitation, counsel fees and disbursements)
or disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of this Agreement or any other Loan Document or any other documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby (excluding, unless an Event of Default has occurred and is continuing,
the normal administrative costs and expenses incident to the performance of its
agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or any such other documents; provided, however, that no Bank shall be
-------- -------
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Agent. If any indemnity furnished to the
Agent for any purpose shall, in the opinion of the Agent, be insufficient or
become impaired, the Agent may call for additional indemnity and
60
cease, or not commence, to do the acts indemnified against until such additional
indemnity is furnished.
SECTION 7.06. CONSEQUENTIAL DAMAGES. THE AGENT SHALL NOT BE
---------------------
RESPONSIBLE OR LIABLE TO ANY BANK, THE BORROWER OR ANY OTHER PERSON OR ENTITY
FOR ANY PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A
RESULT OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
SECTION 7.07. Payee of Note Treated as Owner. The Agent may deem and
------------------------------
treat the payee of any Note as the owner thereof for all purposes hereof unless
and until a written notice of the assignment or transfer thereof shall have been
filed with the Agent and the provisions of Section 9.07(c) have been satisfied.
Any requests, authority or consent of any Person who at the time of making such
request or giving such authority or consent is the holder of any Note shall be
conclusive and binding on any subsequent holder, transferee or assignee of that
Note or of any Note or Notes issued in exchange therefor or replacement thereof.
SECTION 7.08. Non-Reliance on Agent and Other Banks. Each Bank agrees
-------------------------------------
that it has, independently and without reliance on the Agent or any other Bank,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis of the Loan Parties and decision to enter into this
Agreement and that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Loan
Documents. The Agent shall not be required to keep itself (or any Bank) informed
as to the performance or observance by the Loan Parties of this Agreement or any
of the other Loan Documents or any other document referred to or provided for
herein or therein or to inspect the properties or books of the Borrower or any
other Person. Except for notices, reports and other documents and information
expressly required to be furnished to the Banks by the Agent hereunder or under
the other Loan Documents, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the affairs,
financial condition or business of the Loan Parties or any other Person (or any
of their Affiliates) which may come into the possession of the Agent.
SECTION 7.09. Failure to Act. Except for action expressly required of
--------------
the Agent hereunder or under the other Loan Documents, the Agent shall in all
cases be fully justified in failing or refusing to act hereunder and thereunder
unless it shall receive further assurances to its satisfaction by the Banks of
their indemnification obligations under Section 7.05 against any and all
liability and expense which may be incurred by the Agent by reason of taking,
continuing to take, or failing to take any such action.
SECTION 7.10. Resignation or Removal of Agent. Subject to the
-------------------------------
appointment and acceptance of a successor Agent as provided below, the Agent may
resign at any time by giving notice thereof to the Banks and the Borrower and
the Agent may be removed at any time with or without cause by the Required
Banks. Upon any such resignation or removal, the Required Banks shall have the
right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Required Banks and shall have accepted such appointment within
61
30 days after the retiring Agent's notice of resignation or the Required Banks'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent. Any successor Agent shall be a bank which has
a combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article VII
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Agent hereunder.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 8.01. Basis for Determining Interest Rate Inadequate or
-------------------------------------------------
Unfair. If on or prior to the first day of any Interest Period:
------
(a) the Agent determines that deposits in Dollars (in the applicable
amounts) are not being offered in the relevant market for such Interest Period,
or
(b) the Required Banks advise the Agent that the London Interbank
Offered Rate as determined by the Agent will not adequately and fairly reflect
the cost to such Banks of funding the Advances for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, the obligations of the Banks to make
Euro-Dollar Loans shall be suspended. Unless the Borrower notifies the Agent at
least 2 Domestic Business Days before the date of any Borrowing for which a
Notice of Borrowing has previously been given that it elects not to borrow on
such date, such Borrowing shall instead be made as a Prime Rate Borrowing.
SECTION 8.02. Illegality. If, after the date hereof, the adoption of
----------
any applicable law, rule or regulation, or any change in any existing or future
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 (any such authority, bank or
agency being referred to as an "Authority" and any such event being referred to
as a "Change of Law"), or compliance by any Bank (or its Lending Office) with
any request or directive (whether or not having the force of law) of any
Authority shall make it unlawful or impossible for any Bank (or its Lending
Office) to make, maintain or fund its Euro-Dollar Loan and such Bank shall so
notify the Agent, the Agent shall forthwith give notice thereof to the other
Banks and the Borrower, whereupon until such Bank notifies the Borrower and the
Agent that the circumstances giving rise to such suspension no longer exist, the
obligation of such Bank to make its portion of the Euro-Dollar Loan shall be
suspended. Before giving any notice to the Agent pursuant to this Section, such
Bank shall designate a different Lending Office if such designation will avoid
the need for giving such notice and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank. If such Bank shall determine that it may
not lawfully continue to maintain and fund any of its portion of the outstanding
Euro-Dollar Loan to
62
maturity and shall so specify in such notice, the Borrower shall immediately
prepay in full the then outstanding principal amount of the Euro-Dollar Loan of
such Bank, together with accrued interest thereon and any amount due such Bank
pursuant to Section 8.05(a). Concurrently with prepaying such Euro-Dollar Loan,
the Borrower shall borrow a Prime Rate Loan in an equal principal amount from
such Bank (on which interest and principal shall be payable contemporaneously
with the related Euro-Dollar Loans of the other Banks), and such Bank shall make
such a Prime Rate Loan.
SECTION 8.03. Increased Cost and Reduced Return. (a) If after the date
---------------------------------
hereof, a Change of Law or compliance by any Bank (or its Lending Office) with
any request or directive (whether or not having the force of law) of any
Authority:
(i) shall subject any Bank (or its Lending Office) to any tax,
duty or other charge with respect to its Euro-Dollar Loan, its Notes
or its obligation to make a Euro-Dollar Loan, or shall change the
basis of taxation of payments to any Bank (or its Lending Office) of
the principal of or interest on its Euro-Dollar Loan or any other
amounts due under this Agreement in respect of its Euro-Dollar Loan or
its obligation to make a Euro-Dollar Loan (except for changes in the
rate of tax on the overall net income of such Bank or its Lending
Office imposed by the jurisdiction in which such Bank's principal
executive office or Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without limitation,
any such requirement imposed by the Board of Governors of the Federal
Reserve System, but excluding any such requirement included in an
applicable Euro-Dollar Reserve Percentage) against assets of, deposits
with or for the account of, or credit extended by, any Bank (or its
Lending Office); or
(iii) shall impose on any Bank (or its Lending Office) or on the
United States market for certificates of deposit or the London
interbank market any other condition affecting its Euro-Dollar Loan,
its Notes or its obligation to make a Euro-Dollar Loan;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Euro-Dollar Loan, or to reduce
the amount of any sum received or receivable by such Bank (or its Lending
Office) under this Agreement or under its Notes with respect thereto, by an
amount deemed by such Bank, in its reasonable discretion, to be material, then,
within 15 days after demand by such Bank (with a copy to the Agent), the
Borrower shall pay to such Bank such additional amount or amounts as will
reasonably compensate such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that after the date hereof
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any existing or future law, rule or regulation, or
any change in the interpretation or administration thereof, or compliance by any
Bank (or its Lending Office) with any request or directive regarding capital
adequacy (whether or not having the force of law) of any Authority, has or would
have the effect of reducing the rate of return on such Bank's capital as a
consequence of its obligations
63
hereunder to a level below that which such Bank could have achieved but for such
adoption, change or compliance (taking into consideration such Bank's policies
with respect to capital adequacy) by an amount deemed by such Bank, in its
reasonable discretion, to be material, then from time to time, within 15 days
after demand by such Bank, the Borrower shall pay to such Bank such additional
amount or amounts as will reasonably compensate such Bank for such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different 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 Bank, be
otherwise disadvantageous to such Bank. A certificate of any Bank claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
(d) The provisions of this Section 8.03 shall be applicable with
respect to any Participant, Assignee or other Transferee, and any calculations
required by such provisions shall be made based upon the circumstances of such
Participant, Assignee or other Transferee.
SECTION 8.04. Prime Rate Loans Substituted for Affected Euro-Dollar
-----------------------------------------------------
Loans. If (i) the obligation of any Bank to make or maintain a Euro-Dollar Loan
-----
has been suspended pursuant to Section 8.02 or (ii) any Bank has demanded
compensation under Section 8.03, and the Borrower shall, by at least 5
Euro-Dollar Business Days' prior notice to such Bank through the Agent, have
elected that the provisions of this Section shall apply to such Bank, then,
unless and until such Bank notifies the Borrower that the circumstances giving
rise to such suspension or demand for compensation no longer apply:
(a) all Advances which would otherwise be made by such Bank as part of
a Euro-Dollar Loan shall be made instead as a Prime Rate Loan, and
(b) after its portion of the Euro-Dollar Loan has been repaid, all
payments of principal which would otherwise be applied to repay such Euro-Dollar
Loan shall be applied to repay its Prime Rate Loan instead.
In the event that the Borrower shall elect that the provisions of this Section
shall apply to any Bank, the Borrower shall remain liable for, and shall pay to
such Bank as provided herein, all amounts due such Bank under Section 8.03 in
respect of the period preceding the date of conversion of such Bank's portion of
the Loan resulting from the Borrower's election.
SECTION 8.05. Compensation. Upon the request of any Bank, delivered to
------------
the Borrower and the Agent, the Borrower shall pay to such Bank such amount or
amounts as shall compensate such Bank for any loss, cost or expense incurred by
such Bank as a result of:
(a) any payment or prepayment (pursuant to Section 2.09, Section 2.10,
Section 8.02 or otherwise) of a Euro-Dollar Loan on a date other than the last
day of an Interest Period for such Euro-Dollar Loan;
64
(b) any failure by the Borrower to prepay a Euro-Dollar Loan on the
date for such prepayment specified in the relevant notice of prepayment
hereunder; or
(c) any failure by the Borrower to borrow a Euro-Dollar Loan on the
date for the Borrowing specified in the applicable Notice of Borrowing delivered
pursuant to Section 2.02.
such compensation to include, without limitation, an amount equal to the excess,
if any, of (x) the amount of interest which would have accrued on the amount so
paid or prepaid or not prepaid or borrowed for the period from the date of such
payment, prepayment or failure to prepay or borrow to the last day of the then
current Interest Period for such Euro-Dollar Loan (or, in the case of a failure
to prepay or borrow, the Interest Period for such Euro-Dollar Loan which would
have commenced on the date of such failure to prepay or borrow) at the
applicable rate of interest for such Euro-Dollar Loan provided for herein over
(y) the amount of interest (as reasonably determined by such Bank) such Bank
would have paid on deposits in Dollars of comparable amounts having terms
comparable to such period placed with it by leading banks in the London
interbank market.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other communications
-------
to any party hereunder shall be in writing (including facsimile transmission or
similar writing) and shall be given to such party at its address or telecopy
number set forth on the signature pages hereof or such other address or telecopy
number as such party may hereafter specify for the purpose by notice to each
other party. Each such notice, request or other communication shall be effective
(i) if given by telecopier, when such telecopy is transmitted to the telecopy
number specified in this Section and the telecopy machine used by the sender
provides a written confirmation that such telecopy has been so transmitted or
receipt of such telecopy transmission is otherwise confirmed, (ii) if given by
mail, 72 hours after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid, and (iii) if given by any other
means, when delivered at the address specified in this Section; provided that
--------
notices to the Agent under Article II or Article VIII shall not be effective
until received.
SECTION 9.02. No Waivers. No failure or delay by the Agent or any Bank
----------
in exercising any right, power or privilege hereunder or under any Note or other
Loan Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 9.03. Expenses; Documentary Taxes; Indemnification. (a) The
--------------------------------------------
Loan Parties shall, jointly and severally, pay (i) all expenses of the Agent,
including fees and disbursements of the Agent in connection with any field
audits and investigations and fees and disbursements of special counsel for the
Agent, in connection with the preparation of this Agreement and the other Loan
Documents, any waiver or consent hereunder or thereunder or any amendment hereof
or thereof or any Default or alleged Default hereunder or thereunder and (ii) if
65
a Default occurs, all out-of-pocket expenses incurred by the Agent or any Bank,
including fees and disbursements of counsel, in connection with such Default and
collection and other enforcement proceedings resulting therefrom, including
out-of-pocket expenses incurred in enforcing this Agreement and the other Loan
Documents.
(b) The Loan Parties shall, jointly and severally, indemnify the Agent
and each Bank against any transfer taxes, documentary taxes, assessments or
charges made by any Authority by reason of the execution and delivery of this
Agreement or the other Loan Documents.
(c) The Loan Parties shall, jointly and severally, indemnify the
Agent, the Banks and each Affiliate thereof and their respective directors,
officers, employees and agents from, and hold each of them harmless against, any
and all losses, liabilities, claims or damages to which any of them may become
subject, insofar as such losses, liabilities, claims or damages arise out of or
result from any actual or proposed use by the Borrower of the proceeds of any
extension of credit by any Bank hereunder or breach by any Loan Party of this
Agreement or any other Loan Document or from investigation, litigation
(including, without limitation, any actions taken by the Agent or any of the
Banks to enforce this Agreement or any of the other Loan Documents) or other
proceeding (including, without limitation, any threatened investigation or
proceeding) relating to the foregoing, and the Loan Parties shall reimburse the
Agent and each Bank, and each Affiliate thereof and their respective directors,
officers, employees and agents, upon demand for any expenses (including, without
limitation, legal fees) incurred in connection with any such investigation or
proceeding; but excluding any such losses, liabilities, claims, damages or
expenses incurred by reason of the gross negligence or willful misconduct of the
Person to be indemnified.
SECTION 9.04. Setoffs; Sharing of Set-Offs. (a) Each Loan Party hereby
----------------------------
grants to each Bank, as security for the full and punctual payment and
performance of the obligations of each Loan Party under this Agreement and the
other Loan Documents, a continuing lien on and security interest in all deposits
and other sums credited by or due from such Bank to such Loan Party or subject
to withdrawal by such Loan Party; and regardless of the adequacy of any
collateral or other means of obtaining repayment of such obligations, each Bank
may at any time upon or after the occurrence of any Event of Default, and
without notice to any Loan Party, set off the whole or any portion or portions
of any or all such deposits and other sums against such obligations, whether or
not any other Person or Persons could also withdraw money therefrom.
(b) Each Bank agrees that if it shall, by exercising any right of
set-off or counterclaim or otherwise, receive payment of a proportion of the
aggregate amount of principal and interest owing with respect to the Letter of
Credit Advances and Notes held by it which is greater than the proportion
received by any other Bank in respect of the aggregate amount of all Letter of
Credit Advances and principal and interest owing with respect to the Notes held
by such other Bank, the Bank receiving such proportionately greater payment
shall purchase such participations in the Letter of Credit Advances and Notes
held by the other Banks owing to such other Banks, and/or such other adjustments
shall be made, as may be required so that all such payments of principal and
interest with respect to the Letter of Credit Advances and Notes held by the
Banks owing to such other Banks shall be shared by the Banks pro rata; provided
--------
that (i) nothing in this Section shall impair the right of any Bank to exercise
any right of set-off or
66
counterclaim it may have and to apply the amount subject to such exercise to the
payment of indebtedness of the Loan Parties other than its indebtedness under
the Letter of Credit Advances and Notes, provided that any such rights of a Bank
are subject to the terms and conditions of the Intercreditor Agreement, and (ii)
if all or any portion of such payment received by the purchasing Bank is
thereafter recovered from such purchasing Bank, such purchase from each other
Bank shall be rescinded and such other Bank shall repay to the purchasing Bank
the purchase price of such participation to the extent of such recovery together
with an amount equal to such other Bank's ratable share (according to the
proportion of (x) the amount of such other Bank's required repayment to (y) the
total amount so recovered from the purchasing Bank) of any interest or other
amount paid or payable by the purchasing Bank in respect of the total amount so
recovered. The Loan Parties agree, to the fullest extent they may effectively do
so under applicable law, that any holder of a participation in the Letter of
Credit Advances or Notes, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of set-off or counterclaim and other rights
with respect to such participation as fully as if such holder of a participation
were a direct creditor of the Loan Parties in the amount of such participation.
SECTION 9.05. Amendments and Waivers. (a) Any provision of this
----------------------
Agreement, the Notes or any other Loan Documents (excluding the Intercreditor
Agreement which may be amended as provided therein) may be amended or waived if,
but only if, such amendment or waiver is in writing and is signed by the
Borrower and the Required Banks (and, if the rights or duties of the Agent are
affected thereby, by the Agent); provided that no such amendment or waiver
--------
shall, unless signed by all the Banks, (i) change the Commitment of any Bank or
subject any Bank to any additional obligation, (ii) change the principal of or
decrease the rate of interest on any Advance or decrease any fees (excluding
Facing Fees and other fees payable solely to the Issuing Bank for its own
account) hereunder, (iii) change the date fixed for any payment of principal of
or interest on any Advance or any fees (excluding Facing Fees and other fees
payable solely to the Issuing Bank for its own account) hereunder, (iv) change
the amount of principal, decrease the amount of interest or decrease the amount
of fees (excluding Facing Fees and other fees payable solely to the Issuing Bank
for its own account) due on any date fixed for the payment thereof, (v) except
as a result of Sections 2.01(b) or (c), change the percentage of the Commitments
or of the aggregate unpaid principal amount of the Notes, or the percentage of
Banks, which shall be required for the Banks or any of them to take any action
under this Section or any other provision of this Agreement, (vi) change the
manner of application of any payments made under this Agreement or the other
Loan Documents, (vii) release or substitute all or substantially all of the
Collateral held as security for the Obligations, (viii) increase the advance
rate set forth in the definition of "Borrowing Base", (ix) change or modify the
definition of "Required Banks," or (x) release any guaranty (other than a
release pursuant to Section 5.26(c)) given to support payment of the Guaranteed
Obligations and provided further that: (I) no amendment or waiver shall, unless
signed by the Swing Line Lender, (A) modify or amend Section 2.15; or (B) change
in any manner, any term or condition applicable to the Swing Line Advances; and
(II) no amendment or waiver shall, unless signed by the Issuing Bank, (A) modify
or amend Section 2.03; or (B) change in any manner, any term or condition
applicable to the Letters of Credit or the Letter of Credit Agreements. The
amount of Facing Fees and other fees payable solely to the Issuing Bank for its
own account may be amended, from time to time, by the Borrower and the Issuing
Bank without the approval of any of the Banks.
67
(b) No Loan Party will solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of this
Agreement unless each Bank shall be informed thereof by the Borrower and shall
be afforded an opportunity of considering the same and shall be supplied by the
Borrower with sufficient information to enable it to make an informed decision
with respect thereto. Executed or true and correct copies of any waiver or
consent effected pursuant to the provisions of this Agreement shall be delivered
by the Borrower to each Bank forthwith following the date on which the same
shall have been executed and delivered by the requisite percentage of Banks. No
Loan Party will, directly or indirectly, pay or cause to be paid any
remuneration, whether by way of supplemental or additional interest, fee or
otherwise, to any Bank (in its capacity as such) as consideration for or as an
inducement to the entering into by such Bank of any waiver or amendment of any
of the terms and provisions of this Agreement unless such remuneration is
concurrently paid, on the same terms, ratably to all such Banks.
SECTION 9.06. Margin Stock Collateral. Each of the Banks represents to
-----------------------
the Agent and each of the other Banks that it in good faith is not, directly or
indirectly (by negative pledge or otherwise), relying upon any Margin Stock as
collateral in the extension or maintenance of the credit provided for in this
Agreement.
SECTION 9.07. Successors and Assigns. (a) The provisions of this
----------------------
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that no Loan Party may
assign or otherwise transfer any of its rights under this Agreement.
(b) Any Bank, other than a Conduit Lender, may at any time sell to one
or more Persons (each a "Participant") participating interests in any Advance
owing to such Bank, any Note held by such Bank, any Commitment hereunder or any
other interest of such Bank hereunder. In the event of any such sale by a Bank
of a participating interest to a Participant, such Bank's obligations under this
Agreement shall remain unchanged, such Bank shall remain solely responsible for
the performance thereof, such Bank shall remain the holder of any such Note for
all purposes under this Agreement, and the Borrower and the Agent shall continue
to deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement. In no event shall a Bank that sells a
participation be obligated to the Participant to take or refrain from taking any
action hereunder except that such Bank may agree that it will not (except as
provided below), without the consent of the Participant, agree to (i) the change
of any date fixed for the payment of principal of or interest on the related
Advance or Advances, (ii) the change of the amount of any principal, interest or
fees due on any date fixed for the payment thereof with respect to the related
Advance or Advances, (iii) the change of the principal of the related Advance or
Advances, (iv) any change in the rate at which either interest is payable
thereon or (if the Participant is entitled to any part thereof) any fee is
payable hereunder from the rate at which the Participant is entitled to receive
interest or any fee (as the case may be) in respect of such participation, (v)
the release or substitution of all or any substantial part of the collateral (if
any) held as security for the Obligations, or (vi) the release of any guaranty
(other than a release pursuant to Section 5.26(c)) given to support payment of
the Guaranteed Obligations. Each Bank selling a participating interest in any
Advance, Note, Commitment or other interest under this Agreement shall, within
10 Domestic Business Days of such sale, provide the Borrower and the Agent with
written notification stating that such sale has
68
occurred and identifying the Participant and the interest purchased by such
Participant; provided, that a Bank shall not be required to provide written
notification of a participation sold to an Affiliate of a Bank. The Loan Parties
agree that each Participant shall be entitled to the benefits of Article VIII
with respect to its participation in Loans outstanding from time to time.
(c) Any Bank, other than a Conduit Lender, may at any time assign to
one or more banks or financial institutions (each an "Assignee") all, or a
proportionate part of all, of its rights and obligations under this Agreement,
the Notes and the other Loan Documents, and such Assignee shall assume all such
rights and obligations, pursuant to an Assignment and Acceptance in the form
attached hereto as Exhibit J, executed by such Assignee, such transferor Bank
and the Agent (and, in the case of: (i) an Assignee that is not then a Bank or
an Affiliate of a Bank; and (ii) an assignment not made during the existence of
a Default or an Event of Default, by the Borrower); provided that (i) no
interest may be sold by a Bank pursuant to this paragraph (c) unless the
Assignee shall agree to assume ratably equivalent portions of the transferor
Bank's Commitment, (ii) the amount of the Commitment of the assigning Bank being
assigned pursuant to such assignment (determined as of the effective date of the
assignment) shall be equal to $5,000,000 (or any larger multiple of $1,000,000)
(except that any such assignment may be in the full amount of the assigning
Bank's Commitment), (iii) no interest may be sold by a Bank pursuant to this
paragraph (c) to any Assignee that is not then a Bank or an Affiliate of a Bank
without the consent of the Borrower, which consent shall not be unreasonably
withheld, provided that the Borrower's consent shall not be necessary with
respect to any assignment made during the existence of a Default or an Event of
Default; (iv) a Bank may not have more than two Assignees that are not then
Banks at any one time, (v) no interest may be sold by a Bank pursuant to this
paragraph (c) to any Assignee that is not then a Bank or an Affiliate of a Bank,
without the consent of the Agent, which consent shall not be unreasonably
withheld, provided, that although the Agent's consent may not be necessary with
respect to an Assignee that is then a Bank or an Affiliate of a Bank, no such
assignment shall be effective until the conditions set forth in the following
sentence are satisfied; and (vi) no interest may be sold by a Bank to an
Assignee that is not a party to the Intercreditor Agreement; and (vii) no
interest in a Letter of Credit Commitment may be sold by a Bank pursuant to this
paragraph (c) to any Assignee that is not then a Bank or an Affiliate of a Bank,
without the consent of the Issuing Bank, which consent may be withheld by the
Issuing Bank in its sole and absolute discretion. Upon (A) execution of the
Assignment and Acceptance by such transferor Bank, such Assignee, the Agent and
(if applicable) the Borrower, (B) delivery of an executed copy of the Assignment
and Acceptance to the Borrower and the Agent, (C) payment by such Assignee to
such transferor Bank of an amount equal to the purchase price agreed between
such transferor Bank and such Assignee, (D) delivery of an executed amendment to
the Intercreditor Agreement adding the Assignee as a party thereto, and (E)
payment by the assigning Bank of a processing and recordation fee of $3,500 to
the Agent if the Assignee is not a Bank or Affiliate of a Bank and $1,000 if the
Assignee is a Bank or Affiliate of a Bank, such Assignee shall for all purposes
be a Bank party to this Agreement and shall have all the rights and obligations
of a Bank under this Agreement to the same extent as if it were an original
party hereto with a Commitment as set forth in such instrument of assumption,
and the transferor Bank shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by the Borrower, the
Banks or the Agent shall be required. Upon the consummation of any transfer to
an Assignee pursuant to this paragraph (c), the transferor Bank, the Agent and
the Borrower shall make appropriate arrangements so that, if required, a new
Note is issued to each of such Assignee and such transferor Bank.
69
Notwithstanding the foregoing, any Conduit Lender may assign at any time to its
designating Bank hereunder without the consent of the Borrower or the Agent any
or all of the Advances it may have funded hereunder and pursuant to its
designation agreement and without regard to the limitations set forth in the
first sentence of this subsection 9.07(c).
(d) Subject to the provisions of Section 9.08, the Loan Parties
authorize each Bank to disclose to any Participant, Assignee or other transferee
(each a "Transferee") and any prospective Transferee any and all financial and
other information in such Bank's possession concerning the Loan Parties which
has been delivered to such Bank by the Loan Parties pursuant to this Agreement
or which has been delivered to such Bank by the Loan Parties in connection with
such Bank's credit evaluation prior to entering into this Agreement.
(e) No Transferee shall be entitled to receive any greater payment
under Section 8.03 than the transferor Bank would have been entitled to receive
with respect to the rights transferred, unless such transfer is made with the
Borrower's prior written consent or by reason of the provisions of Section 8.02
or 8.03 requiring such Bank to designate a different Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
(f) Anything in this Section 9.07 to the contrary notwithstanding, any
Bank may assign and pledge all or any portion of the Loan and/or obligations
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and Operating Circular issued by such Federal Reserve
Bank, provided that any payment in respect of such assigned Loan and/or
obligations made by the Borrower to the assigning and/or pledging Bank in
accordance with the terms of this Agreement shall satisfy the Borrower's
obligations hereunder in respect of such assigned Loan and/or obligations to the
extent of such payment. No such assignment shall release the assigning and/or
pledging Bank from its obligations hereunder.
SECTION 9.08. Confidentiality. Each Bank agrees to exercise its best
---------------
efforts to keep any information delivered or made available by the Loan Parties
to it which is clearly indicated to be confidential information, confidential
from anyone other than persons employed or retained by such Bank who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Loan; provided, however, that nothing herein shall prevent any
-------- -------
Bank from disclosing such information (i) to any other Bank, (ii) upon the order
of any court or administrative agency, (iii) upon the request or demand of any
regulatory agency or authority having jurisdiction over such Bank, (iv) which
has been publicly disclosed, (v) to the extent reasonably required in connection
with any litigation to which the Agent, any Bank or their respective Affiliates
may be a party, (vi) to the extent reasonably required in connection with the
exercise of any remedy hereunder, (vii) to such Bank's legal counsel and
independent auditors and (viii) to any actual or proposed Participant, Assignee
or other Transferee of all or part of its rights hereunder which has agreed in
writing to be bound by the provisions of this Section 9.08.
SECTION 9.09. Representation by Banks. Each Bank hereby represents
-----------------------
that it is a commercial lender or financial institution which makes loans in the
ordinary course of its business and that it will make its Advances hereunder for
its own account in the ordinary course of such business; provided, however,
-------- -------
that, subject to Section 9.07, the disposition of the Note or Notes held by that
Bank shall at all times be within its exclusive control.
70
SECTION 9.10. Obligations Several. The obligations of each Bank
-------------------
hereunder are several, and no Bank shall be responsible for the obligations or
commitment of any other Bank hereunder. Nothing contained in this Agreement and
no action taken by the Banks pursuant hereto shall be deemed to constitute the
Banks to be a partnership, an association, a joint venture or any other kind of
entity. The amounts payable at any time hereunder to each Bank shall be a
separate and independent debt, and subject to the terms of the Intercreditor
Agreement, each Bank shall be entitled to protect and enforce its rights arising
out of this Agreement or any other Loan Document and it shall not be necessary
for any other Bank to be joined as an additional party in any proceeding for
such purpose.
SECTION 9.11. Survival of Certain Obligations. Sections 8.03(a),
-------------------------------
8.03(b), 8.05 and 9.03, and the obligations of the Loan Parties thereunder,
shall survive, and shall continue to be enforceable notwithstanding, the
termination of this Agreement, the Swing Line facility described in Section 2.15
and the Commitments and the payment in full of the principal of and interest on
all Advances and Swing Line Advances.
SECTION 9.12. South Carolina Law. This Agreement and each Note shall
------------------
be construed in accordance with and governed by the law of the State of South
Carolina.
SECTION 9.13. Severability. In case any one or more of the provisions
------------
contained in this Agreement, the Notes or any of the other Loan Documents should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby and shall be enforced to the
greatest extent permitted by law.
SECTION 9.14. Interest. In no event shall the amount of interest due
--------
or payable hereunder or under the Notes exceed the maximum rate of interest
allowed by applicable law, and in the event any such payment is inadvertently
made to any Bank by the Borrower or inadvertently received by any Bank, then
such excess sum shall be credited as a payment of principal, unless the Borrower
shall notify such Bank in writing that it elects to have such excess sum
returned forthwith. It is the express intent hereof that the Borrower not pay
and the Banks not receive, directly or indirectly in any manner whatsoever,
interest in excess of that which may legally be paid by the Borrower under
applicable law.
SECTION 9.15. Interpretation. No provision of this Agreement or any of
--------------
the other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
SECTION 9.16. Consent to Jurisdiction. The Loan Parties (a) and each
-----------------------
of the Banks and the Agent irrevocably waives, to the fullest extent permitted
by law, any and all right to trial by jury in any legal proceeding arising out
of this Agreement, any of the other Loan Documents, or any of the transactions
contemplated hereby or thereby, (b) submit to personal jurisdiction in the State
of South Carolina, the courts thereof and the United States District Courts
sitting therein, for the enforcement of this Agreement, the Notes and the other
Loan Documents, (c) waives any and all personal rights under the law of any
jurisdiction to object on any basis (including, without limitation,
inconvenience of forum) to jurisdiction or venue within the State of South
Carolina for the purpose of litigation to enforce this Agreement, the Notes or
71
the other Loan Documents, and (d) agrees that service of process may be made
upon it in the manner prescribed in Section 9.01 for the giving of notice to the
Borrower. Nothing herein contained, however, shall prevent the Agent from
bringing any action or exercising any rights against any security and against
the Loan Parties personally, and against any assets of the Loan Parties, within
any other state or jurisdiction.
SECTION 9.17. Counterparts. This Agreement may be signed in any
------------
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
SECTION 9.18. Intercreditor Agreement. The Banks, Agent, IR Bank and
-----------------------
Issuing Bank have entered into an Intercreditor Agreement dated of even date
herewith governing the rights and responsibilities of the Agent to the Banks, IR
Bank and Issuing Bank and certain obligations of the Agent. The Borrowers and
Guarantors acknowledge and agree that they are not a third-party beneficiary of
any provisions of the Intercreditor Agreement and are not entitled to rely
thereon or enforce any provisions thereof. The Borrowers and Guarantors also
acknowledge that the Intercreditor Agreement may be amended by the Banks, IR
Bank and Issuing Bank without notice to or approval by the Borrowers and
Guarantors.
ARTICLE X
GUARANTY
SECTION 10.01. Unconditional Guaranty. Each Guarantor hereby
----------------------
irrevocably, unconditionally and jointly and severally guarantees, each as a
primary obligor and not merely as a surety, to the Agent, the Issuing Bank and
the Banks (including, without limitation, the Swing Line Lender) the due and
punctual payment of the principal of and the premium, if any, and interest on
the Guaranteed Obligations and any and all other amounts due under or pursuant
to the Loan Documents, when and as the same shall become due and payable
(whether at stated maturity or by optional or mandatory prepayment or by
declaration, redemption or otherwise) in accordance with the terms of the Loan
Documents. The Guarantors' guaranty under this Section is an absolute, present
and continuing guarantee of payment and not of collectibility, and is in no way
conditional or contingent upon any attempt to collect from the Borrower, any of
the Guarantors or any other guarantor of the Guaranteed Obligations (or any
portion thereof) or upon any other action, occurrence or circumstances
whatsoever. In the event that the Borrower or any Guarantor shall fail so to pay
any such principal, premium, interest or other amount to the Agent, the Issuing
Bank or a Bank, the Guarantors will pay the same forthwith, without demand,
presentment, protest or notice of any kind (all of which are waived by the
Guarantors to the fullest extent permitted by law), in lawful money of the
United States, at the place for payment specified in Loan Documents or specified
by such Agent in writing, to such Agent. The Guarantors further agree, promptly
after demand, to pay to the Agent, the Issuing Bank and Banks the costs and
expenses incurred by such Agent, Issuing Bank or Bank in connection with
enforcing the rights of such Agent, Issuing Bank, and Banks against the Borrower
and any or all of the Guarantors (whether in a bankruptcy proceeding or
otherwise) following any default in payment of any of the Guarantied Obligations
or the obligations of the Guarantors hereunder, including, without limitation,
the fees and expenses of counsel to the Agent, Issuing Bank and such Banks.
72
SECTION 10.02. Obligations Absolute. The obligations of the Guarantors
--------------------
hereunder are and shall be absolute and unconditional, irrespective of the
validity, regularity or enforceability of this Agreement, any of the Guaranteed
Obligations or any of the Loan Documents, shall not be subject to any
counterclaim, set-off, deduction or defense based upon any claim any of the
Guarantors may have against the Borrower, any other Guarantor or the Agent,
Issuing Bank or any Bank hereunder or otherwise, and shall remain in full force
and effect without regard to, and shall not be released, discharged or in any
way affected by, to the fullest extent permitted by law, any circumstance or
condition whatsoever (whether or not any of the Guarantors shall have any
knowledge or notice thereof), including, without limitation:
(a) any amendment or modification of or supplement to any of the Loan
Documents or any other instrument referred to herein or therein, or any
assignment or transfer of any thereof or of any interest therein, or any
furnishing or acceptance of additional security for any of the Guaranteed
Obligations;
(b) any waiver, consent or extension under any Loan Document or any
such other instrument, or any indulgence or other action or inaction under or in
respect of, or any extensions or renewals of, any Loan Document, any such other
instrument or any Guaranteed Obligation;
(c) any failure, omission or delay on the part of the Agent to
enforce, assert or exercise any right, power or remedy conferred on or available
to the Agent, the Issuing Bank or any Bank against the Borrower or any
Guarantor, any Subsidiary of the Borrower or any Subsidiary of any Guarantor;
(d) any bankruptcy, insolvency, readjustment, composition, liquidation
or similar proceeding with respect to the Borrower, any Guarantor, any
Subsidiary of the Borrower or any Subsidiary of any Guarantor or any property of
the Borrower, any Guarantor or any such Subsidiary or any unavailability of
assets against which the Guaranteed Obligations, or any of them, may be
enforced;
(e) any merger or consolidation of the Borrower, any Subsidiary of the
Borrower or any Guarantor or any of the Guarantors into or with any other Person
or any sale, lease or transfer of any or all of the assets of any of the
Guarantors, the Borrower or any Subsidiary of the Borrower or any Guarantor to
any Person;
(f) any failure on the part of the Borrower, any Guarantor or any
Subsidiary of the Borrower or any Guarantor for any reason to comply with or
perform any of the terms of any agreement with any of the Guarantors;
(g) any exercise or non-exercise by the Agent, the Issuing Bank or any
Bank, of any right, remedy, power or privilege under or in respect of any of the
Loan Documents or the Guaranteed Obligations, including, without limitation,
under this Section;
(h) any default, failure or delay, willful or otherwise, in the
performance or payment of any of the Guaranteed Obligations;
(i) any furnishing or acceptance of security, or any release,
substitution or exchange thereof, for any of the Guaranteed Obligations;
73
(j) any failure to give notice to any of the Guarantors of the
occurrence of any breach or violation of, or any event of default or any default
under or with respect to, any of the Loan Documents or the Guaranteed
Obligations;
(k) any partial prepayment, or any assignment or transfer, of any of
the Guaranteed Obligations; or
(l) any other circumstance (other than indefeasible payment in full)
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor or which might in any manner or to any extent vary the risk of such
Guarantor.
The Guarantors covenant that their respective obligations hereunder
will not be discharged except by complete performance of the obligations
contained in the Loan Documents and this Agreement and the final and
indefeasible payment in full of the Guaranteed Obligations. The Guarantors
unconditionally waive, to the fullest extent permitted by law (A) notice of any
of the matters referred to in this Section, (B) any and all rights which any of
the Guarantors may now or hereafter have arising under, and any right to claim a
discharge of the Guarantor's obligations hereunder by reason of the failure or
refusal by the Agent, the Issuing Bank, or any Bank to take any action pursuant
to any statute permitting a Guarantor to request that the Agent or any Bank
attempt to collect the Guaranteed Obligations from the Borrower, any of the
Guarantors or any other guarantor, (C) all notices which may be required by
statute, rule of law or otherwise to preserve any of the rights of the Agent,
the Issuing Bank or any Bank against the Guarantors, including, without
limitation, presentment to or demand of payment from the Borrower, any of the
Subsidiaries of the Borrower or any Guarantor, or any of the other Guarantors
with respect to any Loan Document or this agreement, notice of acceptance of the
Guarantors' guarantee hereunder and/or notice to the Borrower, any of the
Subsidiaries of the Borrower or any Guarantor, or any Guarantor of default or
protest for nonpayment or dishonor, (D) any diligence in collection from or
protection of or realization upon all or any portion of the Guaranteed
Obligations or any security therefor, any liability hereunder, or any party
primarily or secondarily liable for all or any portion of the Guaranteed
Obligations, and (E) any duty or obligation of the Agent, the Issuing Bank or
any Bank to proceed to collect all or any portion of the Guaranteed Obligations
from, or to commence an action against, the Borrower, any Guarantor or any other
Person, or to resort to any security or to any balance of any deposit account or
credit on the books of the Agent, the Issuing Bank or any Bank in favor of the
Borrower, any Guarantor or any other Person, despite any notice or request of
any of the Guarantors to do so.
SECTION 10.03. Continuing Obligations; Reinstatement. The obligations
-------------------------------------
of the Guarantors under this Article X are continuing obligations and shall
---------
continue in full force and effect until such time as all of the Guaranteed
Obligations (and any renewals and extensions thereof) shall have been finally
and indefeasibly paid and satisfied in full. The obligations of the Guarantors
under this Article X shall continue to be effective or be automatically
---------
reinstated, as the case may be, if any payment made by the Borrower, any
Guarantor or any Subsidiary of the Borrower or any Guarantor on, under or in
respect of any of the Guaranteed Obligations is rescinded or must otherwise be
restored or returned by the recipient upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower, any Guarantor or any
such Subsidiary, or upon or as a result of the appointment of a custodian,
receiver, trustee or other
74
officer with similar powers with respect to the Borrower, any Guarantor or any
such Subsidiary or any substantial part of the property of the Borrower, any
Guarantor or any such Subsidiary, or otherwise, all as though such payment had
not been made. If an event permitting the acceleration of all or any portion of
the Guaranteed Obligations shall at any time have occurred and be continuing,
and such acceleration shall at such time be stayed, enjoined or otherwise
prevented for any reason, including without limitation because of the pendency
of a case or proceeding relating to the Borrower, any Guarantor or any
Subsidiary of the Borrower or any Guarantor under any bankruptcy or insolvency
law, for purposes of this Article X and the obligations of the Guarantors
hereunder, such Guaranteed Obligations shall be deemed to have been accelerated
with the same effect as if such Guaranteed Obligations had been accelerated in
accordance with the terms of the applicable Loan Documents or of this Agreement.
SECTION 10.04. Additional Security, Etc. The Guarantors authorize the
------------------------
Agent on behalf of the Issuing Bank and Banks without notice to or demand on the
Guarantors and without affecting their liability hereunder, from time to time
(a) to obtain additional or substitute endorsers or guarantors; (b) to exercise
or refrain from exercising any rights against, and grant indulgences to, the
Borrower, any Subsidiary of the Borrower or any Guarantor, any other Guarantor
or others; and (c) to apply any sums, by whomsoever paid or however realized, to
the payment of the principal of, premium, if any, and interest on, and other
obligations consisting of, the Guaranteed Obligations. The Guarantors waive any
right to require the Agent, the Issuing Bank or any Bank to proceed against any
additional or substitute endorsers or guarantors or the Borrower or any of their
Subsidiaries or any other Person or to pursue any other remedy available to the
Agent, the Issuing Bank or any such Bank.
SECTION 10.05. Information Concerning the Borrowers. The Guarantors
------------------------------------
assume all responsibility for being and keeping themselves informed of the
financial condition and assets of the Borrower, the other Guarantors and their
respective Subsidiaries, and of all other circumstances bearing upon the risk of
nonpayment of the Guaranteed Obligations and the nature, scope and extent of the
risks which the Guarantors assume and insure hereunder, and agree that neither
the Agent, the Issuing Bank nor any Bank shall have any duty to advise the
Guarantors of information known to the Agent, the Issuing Bank or any such Bank
regarding or in any manner relevant to any of such circumstances or risks.
SECTION 10.06. Guarantors' Subordination. The Guarantors hereby
-------------------------
absolutely subordinate, both in right of payment and in time of payment, any
present and future indebtedness of the Borrower or any Subsidiary of the
Borrower or any Guarantor to any or all of the Guarantors to the indebtedness of
the Borrower or any such Subsidiary to the Issuing Bank or the Banks (or any of
them), provided that the Guarantors may receive scheduled payments of principal,
premium (if any) and interest in respect of such present or future indebtedness
so long as there is no Event of Default then in existence.
SECTION 10.07. Waiver of Subrogation. Notwithstanding anything herein
---------------------
to the contrary, the Guarantors hereby waive any right of subrogation (under
contract, Section 509 of the Bankruptcy Code or otherwise) or any other right of
indemnity, reimbursement or contribution and hereby waive any right to enforce
any remedy that the Agent, the Issuing Bank or any Bank now has or may hereafter
have against the Borrower, any Guarantor or any endorser or any other guarantor
of all or any part of the Guaranteed Obligations, and the Guarantors
75
hereby waive any benefit of, and any right to participate in, any security or
collateral given to the Agent, the Issuing Bank or any Bank to secure payment or
performance of the Guaranteed Obligations or any other liability of the Borrower
to the Agent, the Issuing Bank or any Bank. The waiver contained in this Section
shall continue and survive the termination of this Agreement and the final and
indefeasible payment in full of the Guaranteed Obligations.
SECTION 10.08. Enforcement. In the event that the Guarantors shall
-----------
fail forthwith to pay upon demand of the Agent, the Issuing Bank or any Bank any
amounts due pursuant to this Article X or to perform or comply with or to cause
---------
performance or compliance with any other obligation of the Guarantors under this
Agreement, the Agent, the Issuing Bank and any Bank shall be entitled and
empowered to institute any action or proceeding at law or in equity for the
collection of the sums so due and unpaid or for the performance of or compliance
with such terms, and may prosecute any such action or proceeding to judgment or
final decree and may enforce such judgment or final decree against the
Guarantors and collect in the manner provided by law out of the property of the
Guarantors, wherever situated, any monies adjudged or decreed to be payable. The
obligations of the Guarantors under this Agreement are continuing obligations
and a fresh cause of action shall arise in respect of each default hereunder.
SECTION 10.09. Miscellaneous. Except as may otherwise be expressly
-------------
agreed upon in writing, the liability of the Guarantors under this Article X
shall neither affect nor be affected by any prior or subsequent guaranty by the
Guarantors of any other indebtedness to the Agent, the Issuing Bank or the
Banks. Notwithstanding anything in this Article X to the contrary, the maximum
liability of each Guarantor hereunder shall in no event exceed the maximum
amount which could be paid out by such Guarantor without rendering such
Guarantor's obligations under this Article X, in whole or in part, void or
voidable under applicable law, including, without limitation, (i) the Bankruptcy
Code of 1978, as amended, and (ii) any applicable state or federal law relative
to fraudulent conveyances.
[The remainder of this page intentionally left blank.]
76
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, under seal, by their respective authorized officers as of the
day and year first above written.
SCANSOURCE, INC.
By: ___________________________________(SEAL)
Title:
6 Logue Court, Suite G
Greenville, South Carolina 29615
Attention: Jeff Bryson
Telecopy number: 864-288-6193
Telephone number: 864-286-4305
4100 QUEST, LLC
By: ScanSource, Inc., its sole member
By: _______________________________(SEAL)
Title:
6 Logue Court, Suite G
Greenville, South Carolina 29615
Attention: Jeff Bryson
Telecopy number: 864-288-6193
Telephone number: 864-286-4305
CHANNELMAX, INC.
By: ___________________________________(SEAL)
Title:
6 Logue Court, Suite G
Greenville, South Carolina 29615
Attention: Jeff Bryson
Telecopy number: 864-288-6193
Telephone number: 864-286-4305
77
COMMITMENTS BRANCH BANKING AND TRUST COMPANY OF
----------- SOUTH CAROLINA, as Agent, Issuing Bank and as a Bank
$50,000,000
(Letter of Credit
Commitment: $6,250,000) By: __________________________________ (SEAL)
Title:
Lending Office
--------------
Branch Banking and Trust Company of South Carolina
P. O. Box 408
301 North Main Street (29602)
Greenville, South Carolina 29602-0408
Attention: Harry Jeffcoat
Telecopy number: (864) 282-3319
Telephone number: (864) 282-3314
with a copy to
Christopher E. Leon, Esq.
Womble Carlyle Sandridge & Rice, PLLC
P.O. Drawer 84
200 West Second Street (27101)
Winston-Salem, North Carolina 27102
Telecopy: (336) 726-6932
Telephone: (336) 721-3518
78
$10,000,000 FIFTH THIRD BANK
(Letter of Credit
Commitment: $1,250,000)
By: ___________________________ (SEAL)
Title:
Lending Office
--------------
Fifth Third Bank
38 Fountain Square Plaza
MD10904K
Cincinnati, Ohio 45263
Attention: Jennifer E. Schwartz
Telecopy number: (513) 744-5845
Telephone number: (513) 744-7167
79
$10,000,000 FIRST TENNESSEE BANK NATIONAL ASSOCIATION
(Letter of Credit
Commitment: $1,250,000)
By: ______________________________ (SEAL)
Title:
Lending Office
--------------
First Tennessee Bank National Association
Metropolitan Division
165 Madison Avenue, 10th Floor
P. O. Box 84 (38101)
Memphis, Tennessee 38103
Attention: Phillip E. Stevenson
Telecopy number: (901) 523-4235
Telephone number: (901) 523-4245
80
$10,000,000 HIBERNIA NATIONAL BANK
(Letter of Credit
Commitment: $1,250,000)
By: ___________________________ (SEAL)
Title:
Lending Office
--------------
Hibernia National Bank
U.S. Corporate Division
313 Carondelet Street, 12th Floor
New Orleans, Louisiana 70130
Attention: Matthew H. Breaux
Telecopy number: (504) 533-5344
Telephone number: (504) 533-3909
TOTAL COMMITMENTS:
$80,000,000.00
81