EXHIBIT 10.9
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LOAN AND SECURITY AGREEMENT
by and among
WAM!NET INC.
and
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
as Borrowers,
THE LENDERS THAT ARE SIGNATORIES HERETO
as the Lenders,
and
FOOTHILL CAPITAL CORPORATION
as the Arranger and Administrative Agent
Dated as of February 13, 2001
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TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION....................................................................1
1.1 Definitions............................................................................1
1.2 Accounting Terms......................................................................17
1.3 Code..................................................................................17
1.4 Construction..........................................................................17
1.5 Schedules and Exhibits................................................................18
2. LOAN AND TERMS OF PAYMENT......................................................................18
2.1 Revolver Advances.....................................................................18
2.2 Bank Products.........................................................................19
2.3 Borrowing Procedures and Settlements..................................................19
2.4 Payments..............................................................................25
2.5 Overadvances..........................................................................27
2.6 Interest Rates, Payments, and Calculations............................................27
2.7 Cash Management.......................................................................29
2.8 Crediting Payments....................................................................30
2.9 Designated Account....................................................................30
2.10 Maintenance of Loan Account; Statements of Obligations................................30
2.11 Fees..................................................................................30
2.12 Letters of Credit.....................................................................31
2.13 Intentionally Omitted.................................................................34
2.14 Intentionally Omitted.................................................................34
2.15 Joint and Several Liability of Borrowers..............................................34
3. CONDITIONS; TERM OF AGREEMENT..................................................................37
3.1 Conditions Precedent to the Initial Extension of Credit...............................37
3.2 Conditions Subsequent to the Initial Extension of Credit..............................39
3.3 Conditions Precedent to all Extensions of Credit......................................40
3.4 Term..................................................................................40
3.5 Effect of Termination.................................................................40
3.6 Early Termination by Borrowers........................................................40
4. CREATION OF SECURITY INTEREST..................................................................41
4.1 Grant of Security Interest............................................................41
4.2 Negotiable Collateral.................................................................41
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral................41
4.4 Delivery of Additional Documentation Required.........................................41
4.5 Power of Attorney.....................................................................42
4.6 Right to Inspect......................................................................42
4.7 Control Agreements....................................................................42
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5. REPRESENTATIONS AND WARRANTIES.................................................................43
5.1 No Encumbrances.......................................................................43
5.2 Accounts..............................................................................43
5.3 Intentionally Omitted.................................................................43
5.4 Equipment.............................................................................43
5.5 Location of Inventory and Equipment...................................................43
5.6 Inventory Records.....................................................................43
5.7 Location of Chief Executive Office; FEIN..............................................43
5.8 Due Organization and Qualification; Subsidiaries......................................43
5.9 Due Authorization; No Conflict........................................................44
5.10 Litigation............................................................................45
5.11 No Material Adverse Change............................................................45
5.12 Fraudulent Transfer...................................................................45
5.13 Employee Benefits.....................................................................45
5.14 Environmental Condition...............................................................45
5.15 Brokerage Fees........................................................................46
5.16 Intellectual Property.................................................................46
5.17 Leases................................................................................46
5.18 DDAs..................................................................................46
5.19 Complete Disclosure...................................................................46
5.20 Indebtedness..........................................................................46
6. AFFIRMATIVE COVENANTS..........................................................................47
6.1 Accounting System.....................................................................47
6.2 Collateral Reporting..................................................................47
6.3 Financial Statements, Reports, Certificates...........................................48
6.4 Intentionally Omitted.................................................................49
6.5 Return................................................................................50
6.6 Maintenance of Properties.............................................................50
6.7 Taxes.................................................................................50
6.8 Insurance.............................................................................50
6.9 Location of Inventory and Equipment...................................................51
6.10 Compliance with Laws..................................................................51
6.11 Leases................................................................................51
6.12 Brokerage Commissions.................................................................51
6.13 Existence.............................................................................52
6.14 Environmental.........................................................................52
6.15 Disclosure Updates....................................................................52
7. NEGATIVE COVENANTS.............................................................................52
7.1 Indebtedness..........................................................................52
7.2 Liens.................................................................................53
7.3 Restrictions on Fundamental Changes...................................................53
7.4 Disposal of Assets....................................................................53
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7.5 Change Name...........................................................................54
7.6 Guarantee.............................................................................54
7.7 Nature of Business....................................................................54
7.8 Prepayments and Amendments............................................................54
7.9 Change of Control.....................................................................54
7.10 Consignments..........................................................................54
7.11 Distributions.........................................................................54
7.12 Accounting Methods....................................................................54
7.13 Investments...........................................................................54
7.14 Transactions with Affiliates..........................................................55
7.15 Suspension............................................................................55
7.16 Compensation..........................................................................55
7.17 Use of Proceeds.......................................................................55
7.18 Change in Location of Chief Executive Office; Inventory and Equipment with Bailees....55
7.19 Securities Accounts...................................................................55
7.20 Financial Covenants. (a) Fail to maintain:...........................................56
8. EVENTS OF DEFAULT..............................................................................58
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.........................................................59
9.1 Rights and Remedies...................................................................59
9.2 Remedies Cumulative...................................................................62
10. TAXES AND EXPENSES.............................................................................62
11. WAIVERS; INDEMNIFICATION.......................................................................62
11.1 Demand; Protest; etc..................................................................62
11.2 The Lender Group's Liability for Collateral...........................................62
11.3 Indemnification.......................................................................63
12. NOTICES........................................................................................63
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.....................................................64
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.....................................................65
14.1 Assignments and Participations........................................................65
14.2 Successors............................................................................68
15. AMENDMENTS; WAIVERS............................................................................68
15.1 Amendments and Waivers................................................................68
15.2 Replacement of Holdout Lender.........................................................69
15.3 No Waivers; Cumulative Remedies.......................................................70
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16. AGENT; THE LENDER GROUP........................................................................70
16.1 Appointment and Authorization of Agent................................................70
16.2 Delegation of Duties..................................................................71
16.3 Liability of Agent....................................................................71
16.4 Reliance by Agent.....................................................................71
16.5 Notice of Default or Event of Default.................................................71
16.6 Credit Decision.......................................................................72
16.7 Costs and Expenses; Indemnification...................................................72
16.8 Agent in Individual Capacity..........................................................73
16.9 Successor Agent.......................................................................73
16.10 Lender in Individual Capacity.........................................................74
16.11 Withholding Taxes.....................................................................74
16.12 Collateral Matters....................................................................76
16.13 Restrictions on Actions by Lenders; Sharing of Payments...............................77
16.14 Agency for Perfection.................................................................77
16.15 Payments by Agent to the Lenders......................................................78
16.16 Concerning the Collateral and Related Loan Documents..................................78
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders;
Other Reports and Information.........................................................78
16.18 Several Obligations; No Liability.....................................................79
16.19 Legal Representation of Agent.........................................................80
17. GENERAL PROVISIONS.............................................................................80
17.1 Effectiveness.........................................................................80
17.2 Section Headings......................................................................80
17.3 Interpretation........................................................................80
17.4 Severability of Provisions............................................................80
17.5 Amendments in Writing.................................................................80
17.6 Counterparts; Telefacsimile Execution.................................................80
17.7 Revival and Reinstatement of Obligations..............................................80
17.8 Integration...........................................................................81
17.9 Parent as Agent for Borrowers.........................................................81
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit B-1 Form of Borrowing Base Certificate
Exhibit C-1 Form of Compliance Certificate
Schedule C-1 Commitments
Schedule P-1 Permitted Liens
Schedule 2.7(a) Cash Management Banks
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7 Chief Executive Office; FEIN
Schedule 5.8(b) Capitalization of Borrowers
Schedule 5.8(c) Capitalization of Borrowers' Subsidiaries
Schedule 5.10 Litigation
Schedule 5.13 ERISA Benefit Plans
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
Schedule 7.14 Transactions with Affiliates
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LOAN AND SECURITY AGREEMENT
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THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is
entered into as of February 13, 2001, between and among, on the one hand, the
lenders identified on the signature pages hereof (such lenders, together with
their respective successors and assigns, are referred to hereinafter each
individually as a "Lender" and collectively as the "Lenders"), FOOTHILL CAPITAL
CORPORATION, a California corporation, as the arranger and administrative agent
for the Lenders ("Agent"), and, on the other hand, WAM!NET INC., a Minnesota
corporation ("Parent"), and each of Parent's Subsidiaries identified on the
signature pages hereof (such Subsidiaries, together with Parent, are referred to
hereinafter each individually as a "Borrower", and individually and
collectively, jointly and severally, as the "Borrowers").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms shall
have the following definitions:
"Account Debtor" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account, chattel paper,
or a General Intangible.
"Accounts" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to "accounts" (as that term is
defined in the Code), and any and all supporting obligations in respect thereof.
"Additional Documents" has the meaning set forth in Section
4.4.
"Administrative Borrower" has the meaning set forth in Section
17.9.
"Advances" has the meaning set forth in Section 2.1.
"Affiliate" means, as applied to any Person, any other Person
who, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; provided, however, that, in any event: (a) any Person which owns
directly or indirectly 10% or more of the securities having ordinary voting
power for the election of directors or other members of the governing body of a
Person or 10% or more of the partnership or other ownership interests of a
Person (other than as a limited partner of such Person) shall be deemed to
control such Person; (b) each director (or comparable manager) of a Person shall
be deemed to be an Affiliate of such Person; and (c) each partnership or joint
venture in which a Person is a partner or joint venturer shall be deemed to be
an Affiliate of such Person.
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"Agent" means Foothill, solely in its capacity as agent for
the Lenders hereunder, and any successor thereto.
"Agent's Account" means an account at a bank designated by
Agent from time to time as the account into which Borrowers shall make all
payments to Agent for the benefit of the Lender Group and into which the Lender
Group shall make all payments to Agent under this Agreement and the other Loan
Documents; unless and until Agent notifies Administrative Borrower and the
Lender Group to the contrary, Agent's Account shall be that certain deposit
account bearing account number 323-266193 and maintained by Agent with The Chase
Manhattan Bank, 4 New York Plaza, 15th Floor, New York, New York 10004, ABA
#021000021.
"Agent Advances" has the meaning set forth in Section
2.3(e)(i).
"Agent's Liens" means the Liens granted by Borrowers to Agent
for the benefit of the Lender Group under this Agreement or the other Loan
Documents.
"Agent-Related Persons" means Agent together with its
Affiliates, officers, directors, employees, and agents.
"Agreement" has the meaning set forth in the preamble hereto.
"Assignee" has the meaning set forth in Section 14.1.
"Assignment and Acceptance" means an Assignment and Acceptance
in the form of Exhibit A-1.
"Authorized Person" means any officer or other employee of
Administrative Borrower.
"Availability" means, as of any date of determination, if such
date is a Business Day, and determined at the close of business on the
immediately preceding Business Day, if such date of determination is not a
Business Day, the amount that Borrowers are entitled to borrow as Advances under
Section 2.1 (after giving effect to all then outstanding Obligations and all
reserves applicable hereunder).
"Bank Products" means any one or more types of services or
facilities extended to the Borrowers by Wells Fargo or any Affiliate of Wells
Fargo in reliance on Wells Fargo's agreement to indemnify such Affiliate.
"Bank Product Reserves" means all reserves which the Agent
from time to time establishes in its sole discretion for the Bank Products then
provided or outstanding.
"Bankruptcy Code" means the United States Bankruptcy Code, as
in effect from time to time.
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"Base Rate" means, the rate of interest announced within Wells
Fargo at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of Wells Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as Wells Fargo may designate.
"Base Rate Loan" means each Advance.
"Base Rate Margin" means 3.25 percentage points.
"Benefit Plan" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA) for which any Borrower or any Subsidiary or ERISA
Affiliate of any Borrower has been an "employer" (as defined in Section 3(5) of
ERISA) within the past six years.
"Board of Directors" means the board of directors (or
comparable managers) of Parent or any committee thereof duly authorized to act
on behalf thereof.
"Books" means all of each Borrower's now owned or hereafter
acquired books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or liabilities,
all of its Records relating to its business operations or financial condition,
and all of its goods or General Intangibles related to such information).
"Borrower" and "Borrowers" have the respective meanings set
forth in the preamble to this Agreement.
"Borrowing" means a borrowing hereunder consisting of Advances
made on the same day by the Lenders (or Agent on behalf thereof), or by Swing
Lender in the case of a Swing Loan, or by Agent in the case of an Agent Advance,
in each case, to Administrative Borrower.
"Borrowing Base" has the meaning set forth in Section 2.1.
"Borrowing Base Certificate" means a certificate in the form
of Exhibit B-1.
"Business Day" means any day that is not a Saturday, Sunday,
or other day on which national banks are authorized or required to close.
"Capital Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness
represented by obligations under a Capital Lease.
"Cash Equivalents" means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within 1 year from the date of acquisition thereof, (b)
marketable direct obligations issued by any state of the United States or
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any political subdivision of any such state or any public instrumentality
thereof maturing within 1 year from the date of acquisition thereof and, at the
time of acquisition, having the highest rating obtainable from either S&P or
Moody's, (c) commercial paper maturing no more than 1 year from the date of
acquisition thereof and, at the time of acquisition, having a rating of A-1 or
P-1, or better, from S&P or Moody's, and (d) certificates of deposit or bankers'
acceptances maturing within 1 year from the date of acquisition thereof either
(i) issued by any bank organized under the laws of the United States or any
state thereof which bank has a rating of A or A2, or better, from S&P or
Moody's, or (ii) certificates of deposit less than or equal to $100,000 in the
aggregate issued by any other bank insured by the Federal Deposit Insurance
Corporation.
"Cash Management Bank" has the meaning set forth in Section
2.7(a).
"Cash Management Account" has the meaning set forth in Section
2.7(a).
"Cash Management Agreements" means those certain cash
management service agreements, in form and substance satisfactory to Agent, each
of which is among Administrative Borrower, Agent, and one of the Cash Management
Banks.
"Cerberus Partners" means Cerberus Partners, L.P., a Delaware
limited partnership.
"Change of Control" means (a) any "person" or "group" (within
the meaning of Sections 13(d) and 14(d) of the Exchange Act), other than
Permitted Holders, becomes the beneficial owner (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of 30%, or more, of the Stock of
Parent having the right to vote for the election of members of the Board of
Directors, or (b) a majority of the members of the Board of Directors do not
constitute Continuing Directors, or (c) any Borrower ceases to directly own and
control 100% of the outstanding capital Stock of each of its Subsidiaries extant
as of the Closing Date.
"Closing Date" means the date of the making of the initial
Advance (or other extension of credit) hereunder or the date on which Agent
sends Borrower a written notice that all of the conditions precedent set forth
in Section 3.1 either have been satisfied or have been waived.
"Closing Date Business Plan" means the set of Projections of
Borrowers for the 3 year period following the Closing Date (on a year by year
basis, and for the 1 year period following the Closing Date, on a quarterly
basis), in form and substance (including as to scope and underlying assumptions)
satisfactory to Agent.
"Code" means the New York Uniform Commercial Code, as in
effect from time to time.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in the Equipment or Inventory, in each case, in form and
substance reasonably satisfactory to Agent.
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"Collections" means all cash, checks, notes, instruments, and
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds) of Borrowers except for proceeds from: (a) an
initial public offering or any other private or public sale by Parent of equity
or debt securities or private sale by a Borrower other than Parent of debt
securities, (b) Equipment financings or (c) dispositions of Excluded Assets that
are Equipment.
"Commitment" means, with respect to each Lender, its Revolver
Commitment, and, with respect to all Lenders, their Revolver Commitments, as the
context requires, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 14.1.
"Compliance Certificate" means a certificate substantially in
the form of Exhibit C-1 delivered by the chief financial officer of Parent to
Agent.
"Continuing Director" means (a) any member of the Board of
Directors who was a director (or comparable manager) of Parent on the Closing
Date, (b) any individual who becomes a member of the Board of Directors pursuant
to a right of designation of Winstar, Cerberus Partners, or Silicon Graphics,
and (c) any individual who becomes a member of the Board of Directors after the
Closing Date if such individual was appointed or nominated for election to the
Board of Directors by a majority of the Continuing Directors, but excluding any
such individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
Parent (as such terms are used in Rule 14a-11 under the Exchange Act) and whose
initial assumption of office resulted from such contest or the settlement
thereof.
"Control Agreement" means a control agreement, in form and
substance satisfactory to Agent, executed and delivered by the applicable
Borrower, Agent, and the applicable securities intermediary with respect to a
Securities Account or a bank with respect to a deposit account.
"Daily Balance" means, with respect to each day during the
term of this Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account
maintained by any Borrower.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any
Advance (or other extension of credit) that it is required to make hereunder on
the date that it is required to do so hereunder.
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"Defaulting Lender Rate" means (a) the Base Rate for the first
3 days from and after the date the relevant payment is due, and (b) thereafter,
at the interest rate then applicable to Advances that are Base Rate Loans
(inclusive of the Base Rate Margin applicable thereto).
"Designated Account" means account number 51-06036 of
Administrative Borrower maintained with the Designated Account Bank, or such
other deposit account of Administrative Borrower (located within the United
States) that has been designated as such, in writing, by Administrative Borrower
to Agent.
"Designated Account Bank" means Bank One whose office is
located at 1 Bank One Plaza, Chicago, Illinois 60670-0196 and whose ABA number
is 071-000-013.
"Disbursement Letter" means an instructional letter executed
and delivered by Administrative Borrower to Agent regarding the extensions of
credit to be made on the Closing Date, the form and substance of which is
satisfactory to Agent.
"Dollars" or "$" means United States dollars.
"Due Diligence Letter" means the due diligence letter sent by
Agent's counsel to Administrative Borrower, together with Administrative
Borrower's completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"EBITDA" means, with respect to any fiscal period, Parent's
and its Subsidiaries consolidated net earnings (or loss), minus extraordinary
gains, plus interest expense, income taxes, and depreciation and amortization
for such period, as determined in accordance with GAAP.
"EDS" means Electronic Data Systems Corporation, a Delaware
corporation.
"Eligible Collections" means (a) Collections on Accounts of
any Borrower that are received by Agent and (b) Collections on accounts of
direct or indirect foreign wholly-owned Subsidiaries of Parent in an amount not
to exceed 15% of the amount of (i) the amount of clause (a) and (ii) Collections
on accounts of direct or indirect foreign wholly-owned Subsidiaries of Parent.
"Eligible Transferee" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having total
assets in excess of $250,000,000, (b) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development or a political subdivision of any such country and
which has total assets in excess of $250,000,000, provided that such bank is
acting through a branch or agency located in the United States, (c) a finance
company, insurance company, or other financial institution or fund that is
engaged in making, purchasing, or otherwise investing in commercial loans in the
ordinary course of its business and having (together with its Affiliates) total
assets in excess of $250,000,000, (d) any Affiliate (other than individuals) of
a Lender that was party hereto as of the Closing Date, (e) so long as no Event
of Default has occurred and is continuing, any other Person approved by Agent
and Administrative
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Borrower, and (f) during the continuation of an Event of Default, any other
Person approved by Agent.
"Enterprise Value" means the value of Parent on a consolidated
and debt-free basis when sold, on a nonmarketable, controlling basis, in a less
than optimal time period. Less than optimal time period is defined as 6 to 12
months.
"Environmental Actions" means any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of any Borrower or any predecessor in interest, (b) from adjoining
properties or businesses, or (c) from or onto any facilities which received
Hazardous Materials generated by any Borrower or any predecessor in interest.
"Environmental Law" means any applicable federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline, binding and enforceable written policy or
rule of common law now or hereafter in effect and in each case as amended, or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, to the extent binding on
Borrowers, relating to the environment, employee health and safety, or Hazardous
Materials, including CERCLA; RCRA; the Federal Water Pollution Control Act, 33
USCss.1251 et seq; the Toxic Substances Control Act, 15 USC,ss. 2601 et seq; the
Clean Air Act, 42 USCss.7401 et seq.; the Safe Drinking Water Act, 42
USC.ss.3803 et seq.; the Oil Pollution Act of 1990, 33 USC.ss. 2701 et seq.; the
Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC.ss. 11001
et seq.; the Hazardous Material Transportation Act, 49 USCss. 1801 et seq.; and
the Occupational Safety and Health Act, 29 USC.ss.651 et seq. (to the extent it
regulates occupational exposure to Hazardous Materials); any state and local or
foreign counterparts or equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
"Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"Equipment" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to equipment, machinery,
machine tools, motors, furniture, furnishings, fixtures, vehicles (including
motor vehicles), tools, parts, goods (other than consumer goods, farm products,
or Inventory), wherever located, including all attachments, accessories,
accessions, replacements, substitutions, additions, and improvements to any of
the foregoing.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
a Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which a Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any Person subject to ERISA that is a party to an arrangement
with a Borrower and whose employees are aggregated with the employees of a
Borrower under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" means the amount, as of the date any
determination thereof is to be made, equal to Availability minus the aggregate
amount, if any, of all trade payables of Borrowers aged in excess of their
historical levels with respect thereto and all book overdrafts in excess of
their historical practices with respect thereto, in each case as determined by
Agent in its Permitted Discretion.
"Exchange Act" means the Securities Exchange Act of 1934, as
in effect from time to time.
"Excluded Assets" means assets of a Borrower that are: (a)
Equipment subject to Liens set forth on Schedule P-1 where the documents
respecting the Liens prohibit such Borrower from granting junior Liens in such
Equipment or (b) outstanding shares of Borrowers' foreign Subsidiaries in excess
of 66% of such outstanding shares for each Subsidiary.
"Fee Letter" means that certain fee letter, dated as of even
date herewith, between Borrowers and Agent, in form and substance satisfactory
to Agent.
"FEIN" means Federal Employer Identification Number.
"Foothill" means Foothill Capital Corporation, a California
corporation.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, consistently applied.
"General Intangibles" means all of Borrowers' now owned or
hereafter acquired right, title, and interest with respect to general
intangibles (including payment intangibles, contract rights, rights to payment,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements,
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infringement claims, computer programs, information contained on computer disks
or tapes, software, literature, reports, catalogs, money, deposit accounts,
insurance premium rebates, tax refunds, and tax refund claims), and any and all
supporting obligations in respect thereof, and any other personal property other
than goods, Accounts, Investment Property, and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or
other governmental or administrative body, instrumentality, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Indebtedness" means (a) all obligations of a Borrower for
borrowed money, (b) all obligations of a Borrower evidenced by bonds,
debentures, notes, or other similar instruments and all reimbursement or other
obligations of a Borrower in respect of letters of credit, bankers acceptances,
interest rate swaps, or other financial products, (c) all obligations of a
Borrower under Capital Leases, (d) all obligations or liabilities of others
secured by a Lien on any asset of a Borrower, irrespective of whether such
obligation or liability is assumed, (e) all obligations of a Borrower for the
deferred purchase price of assets (other than trade debt incurred in the
ordinary course of a Borrower's business and repayable in accordance with
customary trade practices), and (f) any obligation of a Borrower guaranteeing or
intended to guarantee (whether directly or indirectly guaranteed, endorsed,
co-made, discounted, or sold with recourse to a Borrower) any obligation of any
other Person.
"Indemnified Liabilities" has the meaning set forth in Section
11.3.
"Indemnified Person" has the meaning set forth in Section
11.3.
"Insolvency Proceeding" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any other
state or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal
9
moratoria, compositions, extensions generally with creditors, or proceedings
seeking reorganization, arrangement, or other similar relief.
"Intangible Assets" means, with respect to any Person, that
portion of the book value of all of such Person's assets that would be treated
as intangibles under GAAP.
"Intellectual Property Security Agreement" means an
intellectual security agreement executed and delivered by Borrowers and Agent,
the form and substance of which is satisfactory to Agent.
"Inventory" means all Borrowers' now owned or hereafter
acquired right, title, and interest with respect to inventory, including goods
held for sale or lease or to be furnished under a contract of service, goods
that are leased by a Borrower as lessor, goods that are furnished by a Borrower
under a contract of service, and raw materials, work in process, or materials
used or consumed in a Borrower's business.
"Investment" means, with respect to any Person, any investment
by such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising from the
sale of goods or rendition of services in the ordinary course of business
consistent with past practice), purchases or other acquisitions for
consideration of Indebtedness or Stock, and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
"Investment Property" means all of Borrowers' now owned or
hereafter acquired right, title, and interest with respect to "investment
property" as that term is defined in the Code, and any and all supporting
obligations in respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect
from time to time. "Issuing Lender" means Foothill or any
other Lender that, at the request of Administrative
Borrower and with the consent of Agent agrees, in such Lender's sole discretion,
to become an Issuing Lender for the purpose of issuing L/Cs or L/C Undertakings
pursuant to Section 2.12.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by the Issuing Lender
pursuant to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section
2.12(a).
"Lender" and "Lenders" have the respective meanings set forth
in the preamble to this Agreement, and shall include any other Person made a
party to this Agreement in accordance with the provisions of Section 14.1.
10
"Lender Group" means, individually and collectively, each of
the Lenders (including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses
(including taxes, and insurance premiums) required to be paid by a Borrower
under any of the Loan Documents that are paid or incurred by the Lender Group,
(b) fees or charges paid or incurred by Agent in connection with the Lender
Group's transactions with Borrowers, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien, litigation, and UCC searches and including
searches with the patent and trademark office, the copyright office, or the
department of motor vehicles), filing, recording, publication, appraisal
(including periodic Collateral appraisals or business valuations to the extent
of the fees and charges (and up to the amount of any limitation) contained in
this Agreement, (c) costs and expenses incurred by Agent in the disbursement of
funds to or for the account of Borrowers (by wire transfer or otherwise), (d)
charges paid or incurred by Agent resulting from the dishonor of checks, (e)
reasonable costs and expenses paid or incurred by the Lender Group to correct
any default or enforce any provision of the Loan Documents, or in gaining
possession of, maintaining, handling, preserving, storing, shipping, selling,
preparing for sale, or advertising to sell the Collateral, or any portion
thereof, irrespective of whether a sale is consummated, (f) audit fees and
expenses of Agent related to audit examinations of the Books to the extent of
the fees and charges (and up to the amount of any limitation) contained in this
Agreement, (g) reasonable costs and expenses of third party claims or any other
suit paid or incurred by the Lender Group in enforcing or defending the Loan
Documents or in connection with the transactions contemplated by the Loan
Documents or the Lender Group's relationship with any Borrower or any guarantor
of the Obligations, (h) Agent's and each Lender's reasonable fees and expenses
(including attorneys fees) incurred in advising, structuring, drafting,
reviewing, administering, or amending the Loan Documents, and (i) Agent's and
each Lender's reasonable fees and expenses (including attorneys fees) incurred
in terminating, enforcing (including attorneys fees and expenses incurred in
connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning any Borrower or in exercising rights or remedies under the Loan
Documents), or defending the Loan Documents, irrespective of whether suit is
brought, or in taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender,
such Lender, together with such Lender's Affiliates, and the officers,
directors, employees, and agents of such Lender.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of
determination, the aggregate undrawn amount of all outstanding Letters of Credit
plus 100% of the amount of outstanding time drafts accepted by an Underlying
Issuer as a result of drawings under Underlying Letters of Credit.
"Lien" means any interest in an asset securing an obligation
owed to, or a claim by, any Person other than the owner of the asset, whether
such interest shall be based on the common law, statute, or contract, whether
such interest shall be recorded or perfected, and
11
whether such interest shall be contingent upon the occurrence of some future
event or events or the existence of some future circumstance or circumstances,
including the lien or security interest arising from a mortgage, deed of trust,
encumbrance, pledge, hypothecation, assignment, deposit arrangement, security
agreement, conditional sale or trust receipt, or from a lease, consignment, or
bailment for security purposes and also including reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases, and other title exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Cash Management
Agreements, the Control Agreements, the Disbursement Letter, the Due Diligence
Letter, the Fee Letter, the Officers' Certificate, the Intellectual Property
Security Agreement, the Stock Pledge Agreement, any note or notes executed by a
Borrower in connection with this Agreement and payable to a member of the Lender
Group, and any other agreement entered into, now or in the future, by any
Borrower and the Lender Group in connection with this Agreement.
"Material Adverse Change" means (a) a material adverse change
in the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of Borrowers taken as a whole,
(b) a material impairment of a Borrower's ability to perform its obligations
under the Loan Documents to which it is a party or of the Lender Group's ability
to enforce the Obligations or realize upon the Collateral, or (c) a material
impairment of the enforceability or priority of the Agent's Liens with respect
to the Collateral as a result of an action or failure to act on the part of a
Borrower.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Revolver Amount" means $30,000,000.
"Negotiable Collateral" means all of Borrowers' now owned and
hereafter acquired right, title, and interest with respect to letters of credit,
letter of credit rights, instruments, promissory notes, drafts, documents, and
chattel paper (including electronic chattel paper and tangible chattel paper),
and any and all supporting obligations in respect thereof.
"Obligations" means all loans, Advances, debts, principal,
interest (including any interest that, but for the provisions of the Bankruptcy
Code, would have accrued), contingent reimbursement obligations with respect to
outstanding Letters of Credit, premiums, liabilities (including all amounts
charged to Borrowers' Loan Account pursuant hereto), obligations, fees
(including the fees provided for in the Fee Letter), charges, costs, Lender
Group Expenses (including any fees or expenses that, but for the provisions of
the Bankruptcy Code, would have accrued), lease payments, guaranties, covenants,
and duties of any kind and description owing by Borrowers to the Lender Group
pursuant to or evidenced by the Loan Documents and irrespective of whether for
the payment of money, whether direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising, and including all interest not
paid when due and all Lender Group Expenses that Borrowers are required to pay
or reimburse by the Loan Documents, by law, or otherwise, and all debts,
liabilities and obligations now or
12
hereafter arising from or in connection with Bank Products. Any reference in
this Agreement or in the Loan Documents to the Obligations shall include all
amendments, changes, extensions, modifications, renewals replacements,
substitutions, and supplements, thereto and thereof, as applicable, both prior
and subsequent to any Insolvency Proceeding.
"Officers' Certificate" means the representations and
warranties of officers form submitted by Agent to Administrative Borrower,
together with Borrowers' completed responses to the inquiries set forth therein,
the form and substance of such responses to be satisfactory to Agent.
"Originating Lender" has the meaning set forth in Section
14.1(e).
"Overadvance" has the meaning set forth in Section 2.5.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Participant" has the meaning set forth in Section 14.1(e).
"Permitted Discretion" means a determination made in good
faith and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions
by Borrowers of Equipment that is substantially worn, damaged, or obsolete in
the ordinary course of the applicable Borrower's business, (b) sales by
Borrowers of Inventory to buyers in the ordinary course of business, (c) the use
or transfer of money or Cash Equivalents by Borrowers in a manner that is not
prohibited by the terms of this Agreement or the other Loan Documents, and (d)
the licensing by Borrowers, on a non-exclusive basis, of patents, trademarks,
copyrights, and other intellectual property rights in the ordinary course of the
applicable Borrower's business.
"Permitted Holder" means the following Persons and their
Affiliates (a) MCI WorldCom, Inc., (b) Winstar, (c) Silicon Graphics, (d)
Cerberus Partners and (e) Sumitomo.
"Permitted Indebtedness" means Indebtedness set forth on
Schedule 5.20.
"Permitted Investments" means (a) investments in Cash
Equivalents, (b) investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, and (d) investments by any Borrower in any other Borrower.
"Permitted Liens" means (a) Liens held by Agent for the
benefit of Agent and the Lenders, (b) Liens for unpaid taxes that either (i) are
not yet delinquent, or (ii) do not constitute an Event of Default hereunder and
are the subject of Permitted Protests, (c) Liens set forth on Schedule P-1, (d)
the interests of lessors under operating leases, (e) Liens or the interests of
lessors under Capital Leases to the extent that such Liens or interests secure
Purchase Money Indebtedness and so long as such Lien attaches only to the asset
purchased or acquired and the proceeds thereof, (f) Liens arising by operation
of law in favor of warehousemen, landlords, carriers, mechanics, materialmen,
laborers, or suppliers, incurred in the ordinary course of
13
Borrowers' business and not in connection with the borrowing of money, and which
Liens either (i) are for sums not yet delinquent, or (ii) are the subject of
Permitted Protests, (g) Liens arising from deposits made in connection with
obtaining worker's compensation or other unemployment insurance, (h) Liens or
deposits to secure performance of bids, tenders, or leases incurred in the
ordinary course of Borrowers' business and not in connection with the borrowing
of money, (i) Liens granted as security for surety or appeal bonds in connection
with obtaining such bonds in the ordinary course of Borrowers' business, (j)
Liens resulting from any judgment or award that is not an Event of Default
hereunder, (k) Liens with respect to the Real Property or Equipment acquired by
a Borrower that are subject to such Lien prior to such acquisition, and (l) with
respect to any Real Property, easements, rights of way, and zoning restrictions
that do not materially interfere with or impair the use or operation thereof by
Borrowers.
"Permitted Protest" means the right of the applicable Borrower
to protest any Lien (other than any such Lien that secures the Obligations),
taxes (other than payroll taxes or taxes that are the subject of a United States
federal tax lien), or rental payment, provided that (a) a reserve with respect
to such obligation is established on the Books in such amount as is required
under GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by the applicable Borrower in good faith, and (c) Agent is satisfied
that, while any such protest is pending, there will be no impairment of the
enforceability, validity, or priority of any of the Agent's Liens.
"Person" means natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Personal Property Collateral" means all of each Borrower's
now owned or hereafter acquired right, title, and interest in and to each of the
following, except for Excluded Assets:
(a) Accounts,
(b) Books,
(c) Equipment,
(d) General Intangibles,
(e) Inventory,
(f) Investment Property,
(g) Negotiable Collateral,
(h) money or other assets of each such Borrower that now or
hereafter come into the possession, custody, or control of any member
of the Lender Group, and
14
(i) the proceeds and products, whether tangible or intangible,
of any of the foregoing, including proceeds of insurance covering any
or all of the foregoing, and any and all Accounts, Books, Equipment,
General Intangibles, Inventory, Investment Property, Negotiable
Collateral, Real Property, money, deposit accounts, or other tangible
or intangible property resulting from the sale, exchange, collection,
or other disposition of any of the foregoing, or any portion thereof or
interest therein, and the proceeds thereof.
"Projections" means Parent's forecasted (a) balance sheets,
(b) profit and loss statements, and (c) cash flow statements, all prepared on a
consistent basis with Parent's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" means:
(a) with respect to a Lender's obligation to make Advances and
receive payments of principal, interest, fees, costs, and expenses with
respect thereto, the percentage obtained by dividing (i) such Lender's
Revolver Commitment, by (ii) the aggregate Revolver Commitments of all
Lenders,
(b) with respect to all other matters (including the
indemnification obligations arising under Section 16.7), the percentage
obtained by dividing (i) such Lender's Revolver Commitment, by (ii) the
aggregate amount of Revolver Commitments of all Lenders; provided,
however, that, in each case, in the event all Revolver Commitments have
been terminated, Pro Rata Share shall be determined according to the
Revolver Commitments in effect immediately prior to such termination.
"Purchase Money Indebtedness" means Indebtedness (other than
the Obligations, but including Capitalized Lease Obligations), incurred at the
time of, or within 120 days after, the acquisition of any fixed assets for the
purpose of financing all or any part of the acquisition cost thereof.
"Real Property" means any estates or interests in real
property now owned or hereafter acquired by any Borrower and the improvements
thereto.
"Record" means information that is inscribed on a tangible
medium or which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Remedial Action" means all actions taken to (a) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate, or in any way
address Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC ss. 9601.
"Report" has the meaning set forth in Section 16.17.
15
"Required Availability" means Excess Availability and
unrestricted cash and Cash Equivalents in an amount of not less than
$10,000,000.
"Required Lenders" means, at any time, Lenders whose Pro Rata
Shares aggregate 66% of the Revolver Commitments, or if the Commitments have
been terminated irrevocably, 66% of the Obligations then outstanding.
"Revolver Commitment" means, with respect to each Lender, its
Revolver Commitment, and, with respect to all Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 14.1.
Revolver Usage" means, as of any date of determination, the
sum of (a) the then extant amount of outstanding Advances, plus (b) the then
extant amount of the Letter of Credit Usage.
"Risk Participation Liability" means, as to each Letter of
Credit, all reimbursement obligations of Borrowers to the Issuing Lender with
respect to an L/C Undertaking, consisting of (a) the amount available to be
drawn or which may become available to be drawn, (b) all amounts that have been
paid by the Issuing Lender to the Underlying Issuer to the extent not reimbursed
by Borrowers, whether by the making of an Advance or otherwise, and (c) all
accrued and unpaid interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange
Commission and any successor thereto.
"Securities Account" means a "securities account" as that term
is defined in the Code.
"Settlement" has the meaning set forth in Section 2.3(f)(i).
"Settlement Date" has the meaning set forth in Section
2.3(f)(i).
"Silicon Graphics" means Silicon Graphics, Inc., a Delaware
corporation.
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Stock Pledge Agreement" means a stock pledge agreement, in
form and substance satisfactory to Agent, executed and delivered by each
Borrower that owns Stock of a Subsidiary of Parent.
16
"Subsidiary" of a Person means a corporation, partnership,
limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power to
elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or other
entity.
"Swing Lender" means Foothill or any other Lender that, at the
request of Administrative Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become the Swing Lender hereunder.
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
"Taxes" has the meaning set forth in Section 2.2.
"Underlying Issuer" means a third Person which is the
beneficiary of an L/C Undertaking and which has issued a letter of credit at the
request of the Issuing Lender for the benefit of Borrowers.
"Underlying Letter of Credit" means a letter of credit that
has been issued by an Underlying Issuer.
"Voidable Transfer" has the meaning set forth in Section 17.7.
"Wells Fargo" means Wells Fargo Bank, National Association, a
national banking association.
"Winstar" means Winstar Wireless, Inc., a Delaware
corporation.
1.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrowers" or the term "Parent" is used in respect of a financial
covenant or a related definition, it shall be understood to mean Parent and its
Subsidiaries on a consolidated basis unless the context clearly requires
otherwise.
1.3 Code. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
1.4 Construction. Unless the context of this Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
17
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to any Person shall be construed to
include such Person's successors and assigns. Any requirement of a writing
contained herein or in the other Loan Documents shall be satisfied by the
transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
1.5 Schedules and Exhibits. All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolver Advances.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender with a Revolver
Commitment agrees (severally, not jointly or jointly and severally) to
make advances ("Advances") to Borrowers in an amount at any one time
outstanding not to exceed such Lender's Pro Rata Share of an amount
equal to the lesser of (i) the Maximum Revolver Amount less the Letter
of Credit Usage, or (ii) the Borrowing Base less the Letter of Credit
Usage. For purposes of this Agreement, "Borrowing Base," as of any date
of determination, shall mean the result of:
(x) the lesser of
(i) 33% of Parent's Enterprise Value minus
the amount of Parent's consolidated secured
Indebtedness other than the Obligations, and
(ii) an amount equal to the amount of
Eligible Collections for the immediately preceding 60
day period, minus
(y) the aggregate amount of reserves, if any,
established by Agent under Section 2.1(b).
(b) Anything to the contrary in this Section 2.1
notwithstanding, Agent shall have the right to establish reserves in
such amounts, and with respect to such matters, as Agent in its
Permitted Discretion shall deem necessary or appropriate, against the
Borrowing Base, including reserves with respect to (i) sums that
Borrowers are required to pay (such as taxes, assessments, insurance
premiums, or, in the case of leased assets, rents or other amounts
payable under such leases) and has failed to pay under any Section of
this Agreement or any other Loan Document, and (ii) amounts owing by
Borrowers to any Person to the extent secured by a Lien on, or trust
over, any of the Collateral (other than any existing Permitted Lien set
forth on Schedule P-1 which is specifically identified thereon as
entitled to have priority over the
18
Agent's Liens), which Lien or trust, in the Permitted Discretion of
Agent likely would have a priority superior to the Agent's Liens (such
as Liens or trusts in favor of landlords, warehousemen, carriers,
mechanics, materialmen, laborers, or suppliers, or Liens or trusts for
ad valorem, excise, sales, or other taxes where given priority under
applicable law) in and to such item of the Collateral. In addition to
the foregoing, Agent shall have the right to have the Enterprise Value
reappraised by a qualified appraisal company selected by Agent from
time to time after the Closing Date for the purpose of redetermining
the Enterprise Value and, as a result, redetermining the Borrowing
Base; provided, however, that Borrowers shall not be required to pay
for more than one appraisal of Enterprise Value in any 6 month period
prior to the occurrence and continuation of an Event of Default.
(c) Amounts borrowed pursuant to this Section may be repaid
and, subject to the terms and conditions of this Agreement, reborrowed
at any time during the term of this Agreement.
2.2 Bank Products. Borrowers may request and Wells Fargo may, in its
sole and absolute discretion, arrange for the Borrowers to obtain from Wells
Fargo or Wells Fargo's Affiliates Bank Products although the Borrowers are not
required to do so. To the extent Bank Products are provided by an Affiliate of
Wells Fargo, Borrowers agree to indemnify and hold Wells Fargo and the Lenders
harmless from any and all costs and obligations now or hereafter incurred by
Wells Fargo or any of the Lenders which arise from the indemnity given by Wells
Fargo to its Affiliates related to such Bank Products; provided, however,
nothing contained herein is intended to limit the Borrowers' rights, with
respect to Wells Fargo or its Affiliates, if any, which arise as a result of the
execution of documents by and between Borrowers and Wells Fargo which relate to
Bank Products. The agreement contained in this Section shall survive termination
of this Agreement. Borrowers acknowledge and agree that the obtaining of Bank
Products from Wells Fargo or Wells Fargo's Affiliates (a) is in the sole and
absolute discretion of Wells Fargo or Wells Fargo's Affiliates, and (b) is
subject to all rules and regulations of Wells Fargo or Wells Fargo's Affiliates.
2.3 Borrowing Procedures and Settlements.
(a) Procedure for Borrowing. Each Borrowing shall be made by
an irrevocable written request by an Authorized Person delivered to
Agent (which notice must be received by Agent no later than 10:00 a.m.
(California time) on the Business Day prior to the date that is the
requested Funding Date in the case of a request for an Advance
specifying (i) the amount of such Borrowing, and (ii) the requested
Funding Date, which shall be a Business Day; provided, however, that in
the case of a request for Swing Loan in an amount of $5,000,000, or
less, such notice will be timely received if it is received by Agent no
later than 10:00 a.m. (California time) on the Business Day that is the
requested Funding Date) specifying (i) the amount of such Borrowing,
and (ii) the requested Funding Date, which shall be a Business Day. At
Agent's election, in lieu of delivering the above-described written
request, any Authorized Person may give Agent telephonic notice of such
request by the required time, with such telephonic notice to be
confirmed in writing within 24 hours of the giving of such notice.
19
(b) Agent's Election. Promptly after receipt of a request for
a Borrowing pursuant to Section 2.3(a), Agent shall elect, in its
discretion, (i) to have the terms of Section 2.3(c) apply to such
requested Borrowing, or (ii) if the Borrowing is for an Advance, to
request Swing Lender to make a Swing Loan pursuant to the terms of
Section 2.3(d) in the amount of the requested Borrowing; provided,
however, that if Swing Lender declines in its sole discretion to make a
Swing Loan pursuant to Section 2.3(d), Agent shall elect to have the
terms of Section 2.3(c) apply to such requested Borrowing.
(c) Making of Advances.
(i) In the event that Agent shall elect to have the
terms of this Section 2.3(c) apply to a requested Borrowing as
described in Section 2.3(b), then promptly after receipt of a
request for a Borrowing pursuant to Section 2.3(a), Agent
shall notify the Lenders, not later than 1:00 p.m. (California
time) on the Business Day immediately preceding the Funding
Date applicable thereto, by telecopy, telephone, or other
similar form of transmission, of the requested Borrowing. Each
Lender shall make the amount of such Lender's Pro Rata Share
of the requested Borrowing available to Agent in immediately
available funds, to Agent's Account, not later than 10:00 a.m.
(California time) on the Funding Date applicable thereto.
After Agent's receipt of the proceeds of such Advances, upon
satisfaction of the applicable conditions precedent set forth
in Section 3 hereof, Agent shall make the proceeds thereof
available to Administrative Borrower on the applicable Funding
Date by transferring immediately available funds equal to such
proceeds received by Agent to Administrative Borrower's
Designated Account; provided, however, that Agent shall not
request any Lender to make, and no Lender shall have the
obligation to make, any Advance if Agent shall have actual
knowledge that (1) one or more of the applicable conditions
precedent set forth in Section 3 will not be satisfied on the
requested Funding Date for the applicable Borrowing unless
such condition has been waived, or (2) the requested Borrowing
would exceed the Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or
prior to the Closing Date or, with respect to any Borrowing
after the Closing Date, at least 1 Business Day prior to the
date of such Borrowing, that such Lender will not make
available as and when required hereunder to Agent for the
account of Borrowers the amount of that Lender's Pro Rata
Share of the Borrowing, Agent may assume that each Lender has
made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may
(but shall not be so required), in reliance upon such
assumption, make available to Borrowers on such date a
corresponding amount. If and to the extent any Lender shall
not have made its full amount available to Agent in
immediately available funds and Agent in such circumstances
has made available to Borrowers such amount, that Lender shall
on the Business Day following such Funding Date make such
amount available to Agent, together with interest at the
Defaulting Lender Rate for each day during such period. A
notice submitted by Agent to any Lender with respect to
amounts owing under this subsection shall be conclusive,
absent manifest error.
20
If such amount is so made available, such payment to Agent
shall constitute such Lender's Advance on the date of
Borrowing for all purposes of this Agreement. If such amount
is not made available to Agent on the Business Day following
the Funding Date, Agent will notify Administrative Borrower of
such failure to fund and, upon demand by Agent, Borrowers
shall pay such amount to Agent for Agent's account, together
with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Advances composing such
Borrowing. The failure of any Lender to make any Advance on
any Funding Date shall not relieve any other Lender of any
obligation hereunder to make an Advance on such Funding Date,
but no Lender shall be responsible for the failure of any
other Lender to make the Advance to be made by such other
Lender on any Funding Date.
(iii) Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrowers to Agent for
the Defaulting Lender's benefit, and, in the absence of such
transfer to the Defaulting Lender, Agent shall transfer any
such payments to each other non-Defaulting Lender member of
the Lender Group ratably in accordance with their Commitments
(but only to the extent that such Defaulting Lender's Advance
was funded by the other members of the Lender Group) or, if so
directed by Administrative Borrower and if no Default or Event
of Default had occurred and is continuing (and to the extent
such Defaulting Lender's Advance was not funded by the Lender
Group), retain same to be re-advanced to Borrowers as if such
Defaulting Lender had made Advances to Borrowers. Subject to
the foregoing, Agent may hold and, in its Permitted
Discretion, re-lend to Borrowers for the account of such
Defaulting Lender the amount of all such payments received and
retained by it for the account of such Defaulting Lender.
Solely for the purposes of voting or consenting to matters
with respect to the Loan Documents, such Defaulting Lender
shall be deemed not to be a "Lender" and such Lender's
Commitment shall be deemed to be zero. This Section shall
remain effective with respect to such Lender until (x) the
Obligations under this Agreement shall have been declared or
shall have become immediately due and payable, (y) the
non-Defaulting Lenders, Agent, and Administrative Borrower
shall have waived such Defaulting Lender's default in writing,
or (z) the Defaulting Lender makes its Pro Rata Share of the
applicable Advance and pays to Agent all amounts owing by
Defaulting Lender in respect thereof. The operation of this
Section shall not be construed to increase or otherwise affect
the Commitment of any Lender, to relieve or excuse the
performance by such Defaulting Lender or any other Lender of
its duties and obligations hereunder, or to relieve or excuse
the performance by Borrowers of their duties and obligations
hereunder to Agent or to the Lenders other than such
Defaulting Lender. Any such failure to fund by any Defaulting
Lender shall constitute a material breach by such Defaulting
Lender of this Agreement and shall entitle Administrative
Borrower at its option, upon written notice to Agent, to
arrange for a substitute Lender to assume the Commitment of
such Defaulting Lender, such substitute Lender to be
acceptable to Agent. In connection with the arrangement of
such a substitute Lender, the Defaulting Lender shall have no
21
right to refuse to be replaced hereunder, and agrees to
execute and deliver a completed form of Assignment and
Acceptance Agreement in favor of the substitute Lender (and
agrees that it shall be deemed to have executed and delivered
such document if it fails to do so) subject only to being
repaid its share of the outstanding Obligations (including an
assumption of its Pro Rata Share of the Risk Participation
Liability) without any premium or penalty of any kind
whatsoever; provided further, however, that any such
assumption of the Commitment of such Defaulting Lender shall
not be deemed to constitute a waiver of any of the Lender
Groups' or Borrowers' rights or remedies against any such
Defaulting Lender arising out of or in relation to such
failure to fund.
(d) Making of Swing Loans.
(i) In the event Agent shall elect, with the consent
of Swing Lender, as a Lender, to have the terms of this
Section 2.3(d) apply to a requested Borrowing as described in
Section 2.3(b), Swing Lender as a Lender shall make such
Advance in the amount of such Borrowing (any such Advance made
solely by Swing Lender as a Lender pursuant to this Section
2.3(d) being referred to as a "Swing Loan" and such Advances
being referred to collectively as "Swing Loans") available to
Borrowers on the Funding Date applicable thereto by
transferring immediately available funds to Administrative
Borrower's Designated Account. Each Swing Loan is an Advance
hereunder and shall be subject to all the terms and conditions
applicable to other Advances, and all payments on any Swing
Loan shall be payable to Swing Lender as a Lender solely for
its own account (and for the account of the holder of any
participation interest with respect to such Swing Loan).
Subject to the provisions of Section 2.3(i), Agent shall not
request Swing Lender as a Lender to make, and Swing Lender as
a Lender shall not make, any Swing Loan if Agent has actual
knowledge that (i) one or more of the applicable conditions
precedent set forth in Section 3 will not be satisfied on the
requested Funding Date for the applicable Borrowing unless
such condition has been waived, or (ii) the requested
Borrowing would exceed the Availability on such Funding Date.
Swing Lender as a Lender shall not otherwise be required to
determine whether the applicable conditions precedent set
forth in Section 3 have been satisfied on the Funding Date
applicable thereto prior to making, in its sole discretion,
any Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's
Liens, shall constitute Advances and Obligations hereunder,
and shall bear interest at the rate applicable from time to
time to Advances that are Base Rate Loans.
(e) Agent Advances.
(i) Agent hereby is authorized by Borrowers and the
Lenders, from time to time in Agent's sole discretion, (1)
after the occurrence and during the continuance of a Default
or an Event of Default, or (2) at any time that any of the
other applicable conditions precedent set forth in Section 3
have not been
22
satisfied, to make Advances to Borrowers on behalf of the
Lenders that Agent, in its Permitted Discretion deems
necessary or desirable (A) to preserve or protect the
Collateral, or any portion thereof, (B) to enhance the
likelihood of repayment of the Obligations, or (C) to pay any
other amount chargeable to Borrowers pursuant to the terms of
this Agreement, including Lender Group Expenses and the costs,
fees, and expenses described in Section 10 (any of the
Advances described in this Section 2.3(e) shall be referred to
as "Agent Advances"). Each Agent Advance is an Advance
hereunder and shall be subject to all the terms and conditions
applicable to other Advances, except that all payments thereon
shall be payable to Agent solely for its own account (and for
the account of the holder of any participation interest with
respect to such Agent Advance).
(ii) The Agent Advances shall be repayable on demand
and secured by the Agent's Liens granted to Agent under the
Loan Documents, shall constitute Advances and Obligations
hereunder, and shall bear interest at the rate applicable from
time to time to Advances that are Base Rate Loans.
(f) Settlement. It is agreed that each Lender's funded portion
of the Advances is intended by the Lenders to equal, at all times, such
Lender's Pro Rata Share of the outstanding Advances. Such agreement
notwithstanding, Agent, Swing Lender, and the other Lenders agree
(which agreement shall not be for the benefit of or enforceable by
Borrowers) that in order to facilitate the administration of this
Agreement and the other Loan Documents, settlement among them as to the
Advances, the Swing Loans, and the Agent Advances shall take place on a
periodic basis in accordance with the following provisions:
(i) Agent shall request settlement ("Settlement")
with the Lenders on a weekly basis, or on a more frequent
basis if so determined by Agent, (1) on behalf of Swing
Lender, with respect to each outstanding Swing Loan, (2) for
itself, with respect to each Agent Advance, and (3) with
respect to Collections received, as to each by notifying the
Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 2:00
p.m. (California time) on the Business Day immediately prior
to the date of such requested Settlement (the date of such
requested Settlement being the "Settlement Date"). Such notice
of a Settlement Date shall include a summary statement of the
amount of outstanding Advances, Swing Loans, and Agent
Advances for the period since the prior Settlement Date.
Subject to the terms and conditions contained herein
(including Section 2.3(c)(iii)): (y) if a Lender's balance of
the Advances, Swing Loans, and Agent Advances exceeds such
Lender's Pro Rata Share of the Advances, Swing Loans, and
Agent Advances as
23
of a Settlement Date, then Agent shall, by no later than 12:00
p.m. (California time) on the Settlement Date, transfer in
immediately available funds to the account of such Lender as
such Lender may designate, an amount such that each such
Lender shall, upon receipt of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances, Swing
Loans, and Agent Advances, and (z) if a Lender's balance of
the Advances, Swing Loans, and Agent Advances is less than
such Lender's Pro Rata Share of the Advances, Swing Loans, and
Agent Advances as of a Settlement Date, such Lender shall no
later than 12:00 p.m. (California time) on the Settlement Date
transfer in immediately available funds to the Agent's
Account, an amount such that each such Lender shall, upon
transfer of such amount, have as of the Settlement Date, its
Pro Rata Share of the Advances, Swing Loans, and Agent
Advances. Such amounts made available to Agent under clause
(z) of the immediately preceding sentence shall be applied
against the amounts of the applicable Swing Loan or Agent
Advance and, together with the portion of such Swing Loan or
Agent Advance representing Swing Lender's Pro Rata Share
thereof, shall constitute Advances of such Lenders. If any
such amount is not made available to Agent by any Lender on
the Settlement Date applicable thereto to the extent required
by the terms hereof, Agent shall be entitled to recover for
its account such amount on demand from such Lender together
with interest thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the
Advances, Swing Loans, and Agent Advances is less than, equal
to, or greater than such Lender's Pro Rata Share of the
Advances, Swing Loans, and Agent Advances as of a Settlement
Date, Agent shall, as part of the relevant Settlement, apply
to such balance the portion of payments actually received in
good funds by Agent with respect to principal, interest, fees
payable by Borrowers and allocable to the Lenders hereunder,
and proceeds of Collateral. To the extent that a net amount is
owed to any such Lender after such application, such net
amount shall be distributed by Agent to that Lender as part of
such next Settlement.
(iii) Between Settlement Dates, Agent, to the extent
no Agent Advances or Swing Loans are outstanding, may pay over
to Swing Lender any payments received by Agent, that in
accordance with the terms of this Agreement would be applied
to the reduction of the Advances, for application to Swing
Lender's Pro Rata Share of the Advances. If, as of any
Settlement Date, Collections received since the then
immediately preceding Settlement Date have been applied to
Swing Lender's Pro Rata Share of the Advances other than to
Swing Loans, as provided for in the previous sentence, Swing
Lender shall pay to Agent for the accounts of the Lenders, and
Agent shall pay to the Lenders, to be applied to the
outstanding Advances of such Lenders, an amount such that each
Lender shall, upon receipt of such amount, have, as of such
Settlement Date, its Pro Rata Share of the Advances. During
the period between Settlement Dates, Swing Lender with respect
to Swing Loans, Agent with respect to Agent Advances, and each
Lender (subject to the effect of letter agreements between
Agent and individual Lenders) with respect to the Advances
other than Swing Loans and Agent Advances, shall be entitled
to interest at the applicable rate or rates payable under this
Agreement on the daily amount of funds employed by Swing
Lender, Agent, or the Lenders, as applicable.
(g) Notation. Agent shall record on its books the principal
amount of the Advances owing to each Lender, including the Swing Loans
owing to Swing Lender, and Agent Advances owing to Agent, and the
interests therein of each Lender, from time to time. In
24
addition, each Lender is authorized, at such Lender's option, to note
the date and amount of each payment or prepayment of principal of such
Lender's Advances in its books and records, including computer records,
such books and records constituting conclusive evidence, absent
manifest error, of the accuracy of the information contained therein.
(h) Lenders' Failure to Perform. All Advances (other than
Swing Loans and Agent Advances) shall be made by the Lenders
contemporaneously and in accordance with their Pro Rata Shares. It is
understood that (i) no Lender shall be responsible for any failure by
any other Lender to perform its obligation to make any Advance (or
other extension of credit) hereunder, nor shall any Commitment of any
Lender be increased or decreased as a result of any failure by any
other Lender to perform its obligations hereunder, and (ii) no failure
by any Lender to perform its obligations hereunder shall excuse any
other Lender from its obligations hereunder.
2.4 Payments.
(a) Payments by Borrowers.
(i) Except as otherwise expressly provided herein,
all payments by Borrowers shall be made to Agent's Account for
the account of the Lender Group and shall be made in
immediately available funds, no later than 11:00 a.m.
(California time) on the date specified herein. Any payment
received by Agent later than 11:00 a.m. (California time),
shall be deemed to have been received on the following
Business Day and any applicable interest or fee shall continue
to accrue until such following Business Day.
(ii) Unless Agent receives notice from Administrative
Borrower prior to the date on which any payment is due to the
Lenders that Borrowers will not make such payment in full as
and when required, Agent may assume that Borrowers have made
(or will make) such payment in full to Agent on such date in
immediately available funds and Agent may (but shall not be so
required), in reliance upon such assumption, distribute to
each Lender on such due date an amount equal to the amount
then due such Lender. If and to the extent Borrowers do not
make such payment in full to Agent on the date when due, each
Lender severally shall repay to Agent on demand such amount
distributed to such Lender, together with interest thereon at
the Defaulting Lender Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
(b) Apportionment and Application.
(i) Except as otherwise provided with respect to
Defaulting Lenders and except as otherwise provided in the
Loan Documents (including letter agreements between Agent and
individual Lenders), aggregate principal and interest payments
shall be apportioned ratably among the Lenders (according to
the unpaid principal balance of the Obligations to which such
payments relate held by each Lender) and payments of fees and
expenses (other than fees or
25
expenses that are for Agent's separate account, after giving
effect to any letter agreements between Agent and individual
Lenders) shall be apportioned ratably among the Lenders having
a Pro Rata Share of the type of Commitment or Obligation to
which a particular fee relates. All payments shall be remitted
to Agent and all such payments (other than payments received
while no Default or Event of Default has occurred and is
continuing and which relate to the payment of principal or
interest of specific Obligations or which relate to the
payment of specific fees), and all proceeds of Accounts or
other Collateral received by Agent, shall be applied as
follows:
A. first, to pay any Lender Group Expenses
then due to Agent under the Loan Documents, until
paid in full,
B. second, to pay any Lender Group Expenses
then due to the Lenders under the Loan Documents, on
a ratable basis, until paid in full,
C. third, to pay any fees then due to Agent
(for its separate accounts, after giving effect to
any letter agreements between Agent and the
individual Lenders) under the Loan Documents until
paid in full,
D. fourth, to pay any fees then due to any
or all of the Lenders (after giving effect to any
letter agreements between Agent and individual
Lenders) under the Loan Documents, on a ratable
basis, until paid in full,
E. fifth, to pay interest due in respect of
all Agent Advances, until paid in full,
F. sixth, ratably to pay interest due in
respect of the Advances (other than Agent Advances),
and the Swing Loans,
G. seventh, to pay the principal of all
Agent Advances until paid in full,
H. eighth, to pay the principal of all Swing
Loans until paid in full,
I. ninth, to pay the principal of all
Advances until paid in full,
J. tenth, to pay any other Obligations
(other than Bank Products) until paid in full,
K. eleventh, if an Event of Default has
occurred and is continuing, to Agent, to be held by
Agent, for the ratable benefit of Issuing Lender and
those Lenders having a Revolver Commitment, as cash
collateral in an amount up to 105% of the then extant
Letter of Credit Usage until paid in full,
26
L. twelfth, to the payment of any amounts
relating to Bank Products, and
M. thirteenth, to Borrowers (to be wired to
the Designated Account) or such other Person entitled
thereto under applicable law.
(ii) Agent promptly shall distribute to each Lender,
pursuant to the applicable wire instructions received from
each Lender in writing, such funds as it may be entitled to
receive, subject to a Settlement delay as provided in Section
2.3(h).
(iii) In each instance, so long as no Default or
Event of Default has occurred and is continuing, Section
2.4(b) shall not be deemed to apply to any payment by
Borrowers specified by Borrowers to be for the payment of
specific Obligations then due and payable (or prepayable)
under any provision of this Agreement.
(iv) For purposes of the foregoing, "paid in full"
means payment of all amounts owing under the Loan Documents
according to the terms thereof, including loan fees, service
fees, professional fees, interest (and specifically including
interest accrued after the commencement of any Insolvency
Proceeding), default interest, interest on interest, and
expense reimbursements, whether or not the same would be or is
allowed or disallowed in whole or in part in any Insolvency
Proceeding.
(v) In the event of a direct conflict between the
priority provisions of this Section 2.4 and other provisions
contained in any other Loan Document, it is the intention of
the parties hereto that such priority provisions in such
documents shall be read together and construed, to the fullest
extent possible, to be in concert with each other. In the
event of any actual, irreconcilable conflict that cannot be
resolved as aforesaid, the terms and provisions of this
Section 2.4 shall control and govern.
2.5 Overadvances. If, at any time or for any reason, the amount of
Obligations owed by Borrowers to the Lender Group pursuant to Section 2.1 is
greater than either the Dollar or percentage limitations set forth in Section
2.1, (an "Overadvance"), Borrowers immediately shall pay to Agent, in cash, the
amount of such excess, which amount shall be used by Agent to reduce the
Obligations in accordance with the priorities set forth in Section 2.4(b). In
addition, Borrowers hereby promise to pay the Obligations (including principal,
interest, fees, costs, and expenses) in Dollars in full to the Lender Group as
and when due and payable under the terms of this Agreement and the other Loan
Documents.
2.6 Interest Rates, Payments, and Calculations.
(a) Interest Rates. Except as provided in clause (c) below,
all Obligations (except for undrawn Letters of Credit) that have been
charged to the Loan Account
27
pursuant to the terms hereof shall bear interest on the Daily Balance
thereof at a per annum rate equal to the Base Rate plus the Base Rate
Margin.
(b) Letter of Credit Fee. Borrowers shall pay Agent (for the
ratable benefit of the Lenders with a Revolver Commitment, subject to
any letter agreement between Agent and individual Lenders), a Letter of
Credit fee (in addition to the charges, commissions, fees, and costs
set forth in Section 2.12(e)) which shall accrue at a rate equal to
3.25% per annum times the Daily Balance of the undrawn amount of all
outstanding Letters of Credit.
(c) Default Rate. Upon the occurrence and during the
continuation of an Event of Default (and at the election of Agent or
the Required Lenders),
(i) all Obligations (except for undrawn Letters of
Credit ) that have been charged to the Loan Account pursuant
to the terms hereof shall bear interest on the Daily Balance
thereof at a per annum rate equal to 4 percentage points above
the per annum rate otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for above
shall be increased to 4 percentage points above the per annum
rate otherwise applicable hereunder.
(d) Payment. Interest, Letter of Credit fees, and all other
fees payable hereunder shall be due and payable, in arrears, on the
first day of each month at any time that Obligations or Commitments are
outstanding. Borrowers hereby authorize Agent, from time to time,
without prior notice to Borrowers, to charge such interest and fees,
all Lender Group Expenses (as and when incurred), the charges,
commissions, fees, and costs provided for in Section 2.12(e) (as and
when accrued or incurred), the fees and costs provided for in Section
2.11 (as and when accrued or incurred), and all other payments as and
when due and payable under any Loan Document to Borrowers' Loan
Account, which amounts thereafter constitute Advances hereunder and
shall accrue interest at the rate then applicable to Advances
hereunder. Any interest not paid when due shall be compounded by being
charged to Borrowers' Loan Account and shall thereafter constitute
Advances hereunder and shall accrue interest at the rate then
applicable to Advances that are Base Rate Loans hereunder.
(e) Computation. All interest and fees chargeable under the
Loan Documents shall be computed on the basis of a 360 day year for the
actual number of days elapsed. In the event the Base Rate is changed
from time to time hereafter, the rates of interest hereunder based upon
the Base Rate automatically and immediately shall be increased or
decreased by an amount equal to such change in the Base Rate.
(f) Intent to Limit Charges to Maximum Lawful Rate. In no
event shall the interest rate or rates payable under this Agreement,
plus any other amounts paid in connection herewith, exceed the highest
rate permissible under any law that a court of competent jurisdiction
shall, in a final determination, deem applicable. Borrowers and the
Lender Group, in executing and delivering this Agreement, intend
legally to agree upon the rate or rates of interest
28
and manner of payment stated within it; provided, however, that,
anything contained herein to the contrary notwithstanding, if said rate
or rates of interest or manner of payment exceeds the maximum allowable
under applicable law, then, ipso facto, as of the date of this
Agreement, Borrowers are and shall be liable only for the payment of
such maximum as allowed by law, and payment received from Borrowers in
excess of such legal maximum, whenever received, shall be applied to
reduce the principal balance of the Obligations to the extent of such
excess.
2.7 Cash Management.
(a) Borrowers shall (i) establish and maintain cash management
services of a type and on terms satisfactory to Agent at one or more of
the banks set forth on Schedule 2.7(a) (each a "Cash Management Bank"),
and shall request in writing and otherwise take such reasonable steps
to ensure that all of its Account Debtors forward payment of the
amounts owed by them directly to such Cash Management Bank, and (ii)
deposit or cause to be deposited promptly, and in any event no later
than the first Business Day after the date of receipt thereof, all
Collections (including those sent directly by Account Debtors to a Cash
Management Bank) into a bank account in Agent's name (a "Cash
Management Account") at one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and maintain
Cash Management Agreements with Agent and Borrowers, in form and
substance acceptable to Agent. Each such Cash Management Agreement
shall provide, among other things, that (i) all items of payment
deposited in such Cash Management Account and proceeds thereof are held
by such Cash Management Bank agent or bailee-in-possession for Agent,
(ii) the Cash Management Bank has no rights of setoff or recoupment or
any other claim against the applicable Cash Management Account, other
than for payment of its service fees and other charges directly related
to the administration of such Cash Management Account and for returned
checks or other items of payment, and (iii) it immediately will forward
by daily sweep all amounts in the applicable Cash Management Account to
the Agent's Account.
(c) So long as no Default or Event of Default has occurred and
is continuing, Administrative Borrower may amend Schedule 2.7(a) to add
or replace a Cash Management Account Bank or Cash Management Account;
provided, however, that (i) such prospective Cash Management Bank shall
be satisfactory to Agent and Agent shall have consented in writing in
advance to the opening of such Cash Management Account with the
prospective Cash Management Bank, and (ii) prior to the time of the
opening of such Cash Management Account, Borrowers and such prospective
Cash Management Bank shall have executed and delivered to Agent a Cash
Management Agreement. Borrowers shall close any of their Cash
Management Accounts (and establish replacement cash management accounts
in accordance with the foregoing sentence) promptly and in any event
within 30 days of notice from Agent that the creditworthiness of any
Cash Management Bank is no longer acceptable in Agent's reasonable
judgment, or as promptly as practicable and in any event within 60 days
of notice from Agent that the operating performance, funds transfer, or
availability procedures or performance of the Cash Management Bank with
respect to Cash Management Accounts or Agent's liability under any Cash
Management Agreement with such Cash Management Bank is no longer
acceptable in Agent's reasonable judgment.
29
(d) The Cash Management Accounts shall be cash collateral
accounts, with all cash, checks and similar items of payment in such
accounts securing payment of the Obligations, and in which Borrowers
are hereby deemed to have granted a Lien to Agent.
2.8 Crediting Payments. The receipt of any payment item by Agent
(whether from transfers to Agent by the Cash Management Banks pursuant to the
Cash Management Agreements or otherwise) shall not be considered a payment on
account unless such payment item is a wire transfer of immediately available
federal funds made to the Agent's Account or unless and until such payment item
is honored when presented for payment. Should any payment item not be honored
when presented for payment, then Borrowers shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Agent only if it is received into the Agent's Account on a Business Day on or
before 11:00 a.m. (California time). If any payment item is received into the
Agent's Account on a non-Business Day or after 11:00 a.m. (California time) on a
Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day.
2.9 Designated Account. Agent is authorized to make the Advances, and
Issuing Lender is authorized to issue Letters of Credit, under this Agreement
based upon telephonic or other instructions received from anyone purporting to
be an Authorized Person, or without instructions if pursuant to Section 2.6(d).
Administrative Borrower agrees to establish and maintain the Designated Account
with the Designated Account Bank for the purpose of receiving the proceeds of
the Advances requested by Borrowers and made by Agent or the Lenders hereunder.
Unless otherwise agreed by Agent and Administrative Borrower, any Advance, Agent
Advance, or Swing Loan requested by Borrowers and made by Agent or the Lenders
hereunder shall be made to the Designated Account.
2.10 Maintenance of Loan Account; Statements of Obligations. Agent
shall maintain an account on its books in the name of Borrowers (the "Loan
Account") on which Borrowers will be charged with all Advances (including Agent
Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
Borrowers or for Borrowers' account, the Letters of Credit issued by Issuing
Lender for Borrowers' account, and with all other payment Obligations hereunder
or under the other Loan Documents, including, accrued interest, fees and
expenses, and Lender Group Expenses. In accordance with Section 2.8, the Loan
Account will be credited with all payments received by Agent from Borrowers or
for Borrowers' account, including all amounts received in the Agent's Account
from any Cash Management Bank. Agent shall render statements regarding the Loan
Account to Administrative Borrower, including principal, interest, fees, and
including an itemization of all charges and expenses constituting Lender Group
Expenses owing, and such statements shall be conclusively presumed to be correct
and accurate and constitute an account stated between Borrowers and the Lender
Group unless, within 30 days after receipt thereof by Administrative Borrower,
Administrative Borrower shall deliver to Agent written objection thereto
describing the error or errors contained in any such statements.
2.11 Fees. Borrowers shall pay to Agent the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is
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terminated thereafter) and shall be apportioned among the Lenders in accordance
with the terms of letter agreements between Agent and individual Lenders:
(a) Intentionally Omitted,
(b) Fee Letter Fees. As and when due and payable under the
terms of the Fee Letter, Borrowers shall pay to Agent the fees set
forth in the Fee Letter, and
(c) Audit, Appraisal, and Valuation Charges. For the separate
account of Agent, audit, appraisal, and valuation fees and charges as
follows, (i) a fee of $750 pay day, per auditor, plus out-of-pocket
expenses for each financial audit of a Borrower performed by personnel
employed by Agent, (ii) if implemented, a one time charge of $3,000
plus out-of-pocket expenses for expenses for the establishment of
electronic collateral reporting systems, and (iii) the actual charges
paid or incurred by Agent if it elects to employ the services of one or
more third Persons to perform financial audits of Borrowers, to
appraise the Collateral, or any portion thereof, or to assess Parent's
Enterprise Value. So long as no Event of Default shall have occurred
and be continuing, Agent will require only semi-annual assessments of
Parent's Enterprise Value, and each semi-annual assessment of Parent's
Enterprise Value shall not exceed $30,000.
2.12 Letters of Credit
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of
Borrowers (each, an "L/C") or to purchase participations or execute
indemnities or reimbursement obligations (each such undertaking, an
"L/C Undertaking") with respect to letters of credit issued by an
Underlying Issuer (as of the Closing Date, the prospective Underlying
Issuer is to be Wells Fargo) for the account of Borrowers. To request
the issuance of an L/C or an L/C Undertaking (or the amendment,
renewal, or extension of an outstanding L/C or L/C Undertaking),
Administrative Borrower shall hand deliver or telecopy (or transmit by
electronic communication, if arrangements for doing so have been
approved by the Issuing Lender) to the Issuing Lender and Agent
(reasonably in advance of the requested date of issuance, amendment,
renewal, or extension) a notice requesting the issuance of an L/C or
L/C Undertaking, or identifying the L/C or L/C Undertaking to be
amended, renewed, or extended, the date of issuance, amendment,
renewal, or extension, the date on which such L/C or L/C Undertaking is
to expire, the amount of such L/C or L/C Undertaking, the name and
address of the beneficiary thereof (or of the Underlying Letter of
Credit, as applicable), and such other information as shall be
necessary to prepare, amend, renew, or extend such L/C or L/C
Undertaking. If requested by the Issuing Lender, Borrowers also shall
be an applicant under the application with respect to any Underlying
Letter of Credit that is to be the subject of an L/C Undertaking. The
Issuing Lender shall have no obligation to issue a Letter of Credit if
any of the following would result after giving effect to the requested
Letter of Credit:
(i) the Letter of Credit Usage would exceed the
Borrowing Base less the amount of outstanding Advances, or
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(ii) the Letter of Credit Usage would exceed
$5,000,000, or
(iii) the Letter of Credit Usage would exceed the
Maximum Revolver Amount less the then extant amount of
outstanding Advances.
Each Letter of Credit (and corresponding Underlying Letter of
Credit) shall have an expiry date no later than 30 days prior to the
Maturity Date and all such Letters of Credit (and corresponding
Underlying Letter of Credit) shall be in form and substance acceptable
to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be
payable in Dollars. If Issuing Lender is obligated to advance funds
under a Letter of Credit, Borrowers immediately shall reimburse such
L/C Disbursement to Issuing Lender by paying to Agent an amount equal
to such L/C Disbursement not later than 11:00 a.m., California time, on
the date that such L/C Disbursement is made, if Administrative Borrower
shall have received written or telephonic notice of such L/C
Disbursement prior to 10:00 a.m., California time, on such date, or, if
such notice has not been received by Administrative Borrower prior to
such time on such date, then not later than 11:00 a.m., California
time, on (i) the Business Day that Administrative Borrower receives
such notice, if such notice is received prior to 10:00 a.m., California
time, on the date of receipt, and, in the absence of such
reimbursement, the L/C Disbursement immediately and automatically shall
be deemed to be an Advance hereunder and, thereafter, shall bear
interest at the rate then applicable to Advances that are Base Rate
Loans under Section 2.6. To the extent an L/C Disbursement is deemed to
be an Advance hereunder, Borrowers' obligation to reimburse such L/C
Disbursement shall be discharged and replaced by the resulting Advance.
Promptly following receipt by Agent of any payment from Borrowers
pursuant to this paragraph, Agent shall distribute such payment to the
Issuing Lender or, to the extent that Lenders have made payments
pursuant to Section 2.12(c) to reimburse the Issuing Lender, then to
such Lenders and the Issuing Lender as their interest may appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender with a Revolver Commitment
agrees to fund its Pro Rata Share of any Advance deemed made pursuant
to the foregoing subsection on the same terms and conditions as if
Borrowers had requested such Advance and Agent shall promptly pay to
Issuing Lender the amounts so received by it from the Lenders. By the
issuance of a Letter of Credit (or an amendment to a Letter of Credit
increasing the amount thereof) and without any further action on the
part of the Issuing Lender or the Lenders with Revolver Commitment, the
Issuing Lender shall be deemed to have granted to each Lender with a
Revolver Commitment, and each Lender with a Revolver Commitment shall
be deemed to have purchased, a participation in each Letter of Credit,
in an amount equal to its Pro Rata Share of the Risk Participation
Liability of such Letter of Credit, and each such Lender agrees to pay
to Agent, for the account of the Issuing Lender, such Lender's Pro Rata
Share of any payments made by the Issuing Lender under such Letter of
Credit. In consideration and in furtherance of the foregoing, each
Lender with a Revolver Commitment hereby absolutely and unconditionally
agrees to pay to Agent, for the account of the Issuing Lender, such
Lender's Pro Rata Share of each L/C Disbursement made by the Issuing
Lender and not reimbursed by Borrowers on the date due as provided in
clause (a) of this Section, or of any reimbursement payment required to
be refunded to Borrowers for any reason. Each Lender with a Revolver
Commitment acknowledges and
32
agrees that its obligation to deliver to Agent, for the account of the
Issuing Lender, an amount equal to its respective Pro Rata Share
pursuant to this Section 2.12(b) shall be absolute and unconditional
and such remittance shall be made notwithstanding the occurrence or
continuation of an Event of Default or Default or the failure to
satisfy any condition set forth in Section 3. If any such Lender fails
to make available to Agent the amount of such Lender's Pro Rata Share
of any payments made by the Issuing Lender in respect of such Letter of
Credit as provided in this Section, Agent (for the account of the
Issuing Lender) shall be entitled to recover such amount on demand from
such Lender together with interest thereon at the Defaulting Lender
Rate until paid in full.
(c) Each Borrower hereby agrees to indemnify, save, defend,
and hold the Lender Group harmless from any loss, cost, expense, or
liability, and reasonable attorneys fees incurred by the Lender Group
arising out of or in connection with any Letter of Credit; provided,
however, that no Borrower shall be obligated hereunder to indemnify for
any loss, cost, expense, or liability that is caused by the gross
negligence or willful misconduct of the Issuing Lender or any other
member of the Lender Group. Each Borrower agrees to be bound by the
Underlying Issuer's regulations and interpretations of any Underlying
Letter of Credit or by Issuing Lender's interpretations of any L/C
issued by Issuing Lender to or for such Borrower's account, even though
this interpretation may be different from such Borrower's own, and each
Borrower understands and agrees that the Lender Group shall not be
liable for any error, negligence, or mistake, whether of omission or
commission, in following Borrowers' instructions or those contained in
the Letter of Credit or any modifications, amendments, or supplements
thereto. Each Borrower understands that the L/C Undertakings may
require Issuing Lender to indemnify the Underlying Issuer for certain
costs or liabilities arising out of claims by Borrowers against such
Underlying Issuer. Each Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless with respect to any loss,
cost, expense (including reasonable attorneys fees), or liability
incurred by the Lender Group under any L/C Undertaking as a result of
the Lender Group's indemnification of any Underlying Issuer; provided,
however, that no Borrower shall be obligated hereunder to indemnify for
any loss, cost, expense, or liability that is caused by the gross
negligence or willful misconduct of the Issuing Lender or any other
member of the Lender Group.
(d) Each Borrower hereby authorizes and directs any Underlying
Issuer to deliver to the Issuing Lender all instruments, documents, and
other writings and property received by such Underlying Issuer pursuant
to such Underlying Letter of Credit and to accept and rely upon the
Issuing Lender's instructions with respect to all matters arising in
connection with such Underlying Letter of Credit and the related
application.
(e) Any and all charges, commissions, fees, and costs incurred
by the Issuing Lender relating to Underlying Letters of Credit shall be
Lender Group Expenses for purposes of this Agreement and immediately
shall be reimbursable by Borrowers to Agent for the account of the
Issuing Lender; it being acknowledged and agreed by each Borrower that,
as of the Closing Date, the issuance charge imposed by the prospective
Underlying Issuer is .825% per annum times the face amount of each
Underlying Letter of Credit, that such issuance charge may be changed
from time to time, and that the Underlying Issuer also imposes a
schedule of charges for amendments, extensions, drawings, and renewals.
33
(f) If by reason of (i) any change in any applicable law,
treaty, rule, or regulation or any change in the interpretation or
application thereof by any Governmental Authority, or (ii) compliance
by the Underlying Issuer or the Lender Group with any direction,
request, or requirement (irrespective of whether having the force of
law) of any Governmental Authority or monetary authority including,
Regulation D of the Federal Reserve Board as from time to time in
effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is
or shall be imposed or modified in respect of any Letter of
Credit issued hereunder, or
(ii) there shall be imposed on the Underlying Issuer
or the Lender Group any other condition regarding any
Underlying Letter of Credit or any Letter of Credit issued
pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.
2.13 Intentionally Omitted.
2.14 Intentionally Omitted.
2.15 Joint and Several Liability of Borrowers.
(a) Each of Borrowers is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the
financial accommodations to be provided by the Agent and the Lenders
under this Agreement, for the mutual benefit, directly and indirectly,
of each of Borrowers and in consideration of the undertakings of the
other Borrowers to accept joint and several liability for the
Obligations.
(b) Each of Borrowers, jointly and severally, hereby
irrevocably and unconditionally accepts, not merely as a surety but
also as a co-debtor, joint and several liability with the other
Borrowers, with respect to the payment and performance of all of the
Obligations (including, without limitation, any Obligations arising
under this Section 2.15), it being the intention of the parties hereto
that all the Obligations shall be the joint and several obligations of
each Person composing Borrowers without preferences or distinction
among them.
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(c) If and to the extent that any of Borrowers shall fail to
make any payment with respect to any of the Obligations as and when due
or to perform any of the Obligations in accordance with the terms
thereof, then in each such event the other Persons composing Borrowers
will make such payment with respect to, or perform, such Obligation.
(d) The Obligations of each Person composing Borrowers under
the provisions of this Section 2.15 constitute the absolute and
unconditional, full recourse Obligations of each Person composing
Borrowers enforceable against each such Borrower to the full extent of
its properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement,
each Person composing Borrowers hereby waives notice of acceptance of
its joint and several liability, notice of any Advances or Letters of
Credit issued under or pursuant to this Agreement, notice of the
occurrence of any Default, Event of Default, or of any demand for any
payment under this Agreement, notice of any action at any time taken or
omitted by Agent or Lenders under or in respect of any of the
Obligations, any requirement of diligence or to mitigate damages and,
generally, to the extent permitted by applicable law, all demands,
notices and other formalities of every kind in connection with this
Agreement (except as otherwise provided in this Agreement). Each Person
composing Borrowers hereby assents to, and waives notice of, any
extension or postponement of the time for the payment of any of the
Obligations, the acceptance of any payment of any of the Obligations,
the acceptance of any partial payment thereon, any waiver, consent or
other action or acquiescence by Agent or Lenders at any time or times
in respect of any default by any Person composing Borrowers in the
performance or satisfaction of any term, covenant, condition or
provision of this Agreement, any and all other indulgences whatsoever
by Agent or Lenders in respect of any of the Obligations, and the
taking, addition, substitution or release, in whole or in part, at any
time or times, of any security for any of the Obligations or the
addition, substitution or release, in whole or in part, of any Person
composing Borrowers. Without limiting the generality of the foregoing,
each of Borrowers assents to any other action or delay in acting or
failure to act on the part of any Agent or Lender with respect to the
failure by any Person composing Borrowers to comply with any of its
respective Obligations, including, without limitation, any failure
strictly or diligently to assert any right or to pursue any remedy or
to comply fully with applicable laws or regulations thereunder, which
might, but for the provisions of this Section 2.15 afford grounds for
terminating, discharging or relieving any Person composing Borrowers,
in whole or in part, from any of its Obligations under this Section
2.15, it being the intention of each Person composing Borrowers that,
so long as any of the Obligations hereunder remain unsatisfied, the
Obligations of such Person composing Borrowers under this Section 2.15
shall not be discharged except by performance and then only to the
extent of such performance. The Obligations of each Person composing
Borrowers under this Section 2.15 shall not be diminished or rendered
unenforceable by any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect to any
Person composing Borrowers or any Agent or Lender. The joint and
several liability of the Persons composing Borrowers hereunder shall
continue in full force and effect notwithstanding any absorption,
merger, amalgamation or any other change whatsoever in the name,
constitution or place of formation of any of the Persons composing
Borrowers or any Agent or Lender.
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(f) Each Person composing Borrowers represents and warrants to
Agent and Lenders that such Borrower is currently informed of the
financial condition of Borrowers and of all other circumstances which a
diligent inquiry would reveal and which bear upon the risk of
nonpayment of the Obligations. Each Person composing Borrowers further
represents and warrants to Agent and Lenders that such Borrower has
read and understands the terms and conditions of the Loan Documents.
Each Person composing Borrowers hereby covenants that such Borrower
will continue to keep informed of Borrowers' financial condition, the
financial condition of other guarantors, if any, and of all other
circumstances which bear upon the risk of nonpayment or nonperformance
of the Obligations.
(g) The provisions of this Section 2.15 are made for the
benefit of the Agent, the Lenders and their respective successors and
assigns, and may be enforced by it or them from time to time against
any or all of the Persons composing Borrowers as often as occasion
therefor may arise and without requirement on the part of any such
Agent, Lender, successor or assign first to marshal any of its or their
claims or to exercise any of its or their rights against any of the
other Persons composing Borrowers or to exhaust any remedies available
to it or them against any of the other Persons composing Borrowers or
to resort to any other source or means of obtaining payment of any of
the Obligations hereunder or to elect any other remedy. The provisions
of this Section 2.15 shall remain in effect until all of the
Obligations shall have been paid in full or otherwise fully satisfied.
If at any time, any payment, or any part thereof, made in respect of
any of the Obligations, is rescinded or must otherwise be restored or
returned by any Agent or Lender upon the insolvency, bankruptcy or
reorganization of any of the Persons composing Borrowers, or otherwise,
the provisions of this Section 2.15 will forthwith be reinstated in
effect, as though such payment had not been made.
(h) Each of the Persons composing Borrowers hereby agrees that
it will not enforce any of its rights of contribution or subrogation
against the other Persons composing Borrowers with respect to any
liability incurred by it hereunder or under any of the other Loan
Documents, any payments made by it to the Agent or the Lenders with
respect to any of the Obligations or any collateral security therefor
until such time as all of the Obligations have been paid in full in
cash. Any claim which any Borrower may have against any other Borrower
with respect to any payments to any Agent or Lender hereunder or under
any other Loan Documents are hereby expressly made subordinate and
junior in right of payment, without limitation as to any increases in
the Obligations arising hereunder or thereunder, to the prior payment
in full in cash of the Obligations and, in the event of any insolvency,
bankruptcy, receivership, liquidation, reorganization or other similar
proceeding under the laws of any jurisdiction relating to any Borrower,
its debts or its assets, whether voluntary or involuntary, all such
Obligations shall be paid in full in cash before any payment or
distribution of any character, whether in cash, securities or other
property, shall be made to any other Borrower therefor.
(i) Each of the Persons composing Borrowers hereby agrees
that, after the occurrence and during the continuance of any Default or
Event of Default, the payment of any amounts due with respect to the
indebtedness owing by any Borrower to any other Borrower is hereby
subordinated to the prior payment in full in cash of the Obligations.
Each Borrower hereby agrees that after the occurrence and during the
continuance of any Default or Event of Default, such Borrower will not
demand, sue for or otherwise attempt to collect any indebtedness
36
of any other Borrower owing to such Borrower until the Obligations
shall have been paid in full in cash. If, notwithstanding the foregoing
sentence, such Borrower shall collect, enforce or receive any amounts
in respect of such indebtedness, such amounts shall be collected,
enforced and received by such Borrower as trustee for the Agent, and
the Agent shall deliver any such amounts to the Administrative Agent
for application to the Obligations in accordance with Section 2.4(b).
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Extension of Credit. The
obligation of the Lender Group (or any member thereof) to make the initial
Advance (or otherwise to extend any credit provided for hereunder), is subject
to the fulfillment, to the satisfaction of Agent, of each of the conditions
precedent set forth below:
(a) the Closing Date shall occur on or before February 16,
2001;
(b) Agent shall have received all financing statements
required by Agent, duly executed by the applicable Borrowers, and Agent
shall have received searches reflecting the filing of all such
financing statements;
(c) Agent shall have received each of the following documents,
in form and substance satisfactory to Agent, duly executed, and each
such document shall be in full force and effect:
(i) the Control Agreements;
(ii) the Disbursement Letter;
(iii) the Due Diligence Letter;
(iv) the Fee Letter;
(v) the Officers' Certificate;
(vi) the Intellectual Property Security Agreement;
(vii) the Stock Pledge Agreement, together with all
certificates representing the shares of Stock pledged
thereunder, as well as Stock powers with respect thereto
endorsed in blank;
(d) Agent shall have received a certificate from the Secretary
of each Borrower attesting to the resolutions of such Borrower's Board
of Directors authorizing its execution, delivery, and performance of
this Agreement and the other Loan Documents to which such Borrower is a
party and authorizing specific officers of such Borrower to execute the
same;
37
(e) Agent shall have received copies of each Borrower's
Governing Documents, as amended, modified, or supplemented to the
Closing Date, certified by the Secretary of such Borrower;
(f) Agent shall have received a certificate of status with
respect to each Borrower, dated within 10 days of the Closing Date,
such certificate to be issued by the appropriate officer of the
jurisdiction of organization of such Borrower, which certificate shall
indicate that such Borrower is in good standing in such jurisdiction;
(g) Agent shall have received certificates of status with
respect to each Borrower, each dated within 30 days of the Closing
Date, such certificates to be issued by the appropriate officer of the
jurisdictions (other than the jurisdiction of organization of such
Borrower) in which its failure to be duly qualified or licensed would
constitute a Material Adverse Change, which certificates shall indicate
that such Borrower is in good standing in such jurisdictions;
(h) Agent shall have received a certificate of insurance,
together with the endorsements thereto, as are required by Section 6.8,
the form and substance of which shall be satisfactory to Agent;
(i) Agent shall have received Collateral Access Agreements
with respect to the following locations: 655 Lone Oak Drive, Eagan,
Minnesota 55121 and 895 Blue Gentian Road, Eagan, Minnesota 55121;
(j) Agent shall have received opinions of Borrowers' counsel
in form and substance satisfactory to Agent;
(k) Agent shall have received satisfactory evidence (including
a certificate of the chief financial officer of Parent) that all tax
returns required to be filed by Borrowers have been timely filed and
all taxes upon Borrowers or their properties, assets, income, and
franchises (including Real Property taxes and payroll taxes) have been
paid prior to delinquency, except such taxes that are the subject of a
Permitted Protest;
(l) Borrowers shall have the Required Availability after
giving effect to the initial extensions of credit hereunder;
(m) Agent shall have completed its business, legal, and
collateral due diligence, including (i) a collateral audit and review
of Borrowers' books and records and verification of Borrowers'
representations and warranties to the Lender Group, the results of
which shall be satisfactory to Agent, and (ii) an inspection of each of
the locations where Inventory is located, the results of which shall be
satisfactory to Agent;
(n) Agent shall have received completed reference checks with
respect to Borrowers' senior management, the results of which are
satisfactory to Agent in its sole discretion;
38
(o) Agent shall have received the appraisal of Borrowers'
Enterprise Value, the results of which shall be satisfactory to Agent;
(p) Agent shall have received Borrowers' Closing Date Business
Plan;
(q) Borrowers shall pay all Lender Group Expenses incurred in
connection with the transactions evidenced by this Agreement;
(r) Agent shall have received satisfactory reference checks
for Borrowers' key management and stockholders;
(s) Agent shall have received an audit of Borrowers' books and
records, the results of which shall be satisfactory to Agent;
(t) Wam!Net Government Services, Inc. shall have entered into
a definitive subcontractor agreement with EDS regarding the Navy Marine
Corps Intranet (NMCI) Program and Agent shall have received an executed
copy thereof;
(u) Borrowers shall have received all licenses, approvals or
evidence of other actions required by any Governmental Authority in
connection with the execution and delivery by Borrowers of this
Agreement or any other Loan Document or with the consummation of the
transactions contemplated hereby and thereby; and
(v) all other documents and legal matters in connection with
the transactions contemplated by this Agreement shall have been
delivered, executed, or recorded and shall be in form and substance
satisfactory to Agent.
3.2 Conditions Subsequent to the Initial Extension of Credit. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrowers to so perform or cause to be performed
constituting an Event of Default):
(a) within 7 Business Days of the Closing Date, deliver to
Agent a Cash Management Agreement;
(b) within 30 days of the Closing Date, deliver to Agent
certified copies of the policies of insurance, together with the
endorsements thereto, as are required by Section 6.8, the form and
substance of which shall be satisfactory to Agent and its counsel;
(c) Borrowers shall use their best efforts to obtain a
Collateral Access Agreement for the location at 4740 Polaris Street,
Las Vegas, Nevada 89103 within 30 days of the Closing Date; and
(d) within 60 days of the Closing Date, Borrowers shall have
selected a Cash Management Bank with a financial institution acceptable
to Required Lenders.
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3.3 Conditions Precedent to all Extensions of Credit. The obligation of
the Lender Group (or any member thereof) to make all Advances shall be subject
to the following conditions precedent:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all
material respects on and as of the date of such extension of credit, as
though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either
result from the making thereof;
(c) no injunction, writ, restraining order, or other order of
any nature prohibiting, directly or indirectly, the extending of such
credit shall have been issued and remain in force by any Governmental
Authority against any Borrower, Agent, any Lender, or any of their
Affiliates; and
(d) no Material Adverse Change shall have occurred.
3.4 Term. This Agreement shall become effective upon the execution and
delivery hereof by Borrowers, Agent, and the Lenders and shall continue in full
force and effect for a term ending on January 1, 2003 (the "Maturity Date"). The
foregoing notwithstanding, the Lender Group, upon the election of the Required
Lenders, shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.5 Effect of Termination. On the date of termination of this
Agreement, all Obligations (including contingent reimbursement obligations of
Borrowers with respect to any outstanding Letters of Credit) immediately shall
become due and payable without notice or demand. No termination of this
Agreement, however, shall relieve or discharge Borrowers of their duties,
Obligations, or covenants hereunder and the Agent's Liens in the Collateral
shall remain in effect until all Obligations have been fully and finally
discharged and the Lender Group's obligations to provide additional credit
hereunder have been terminated. When this Agreement has been terminated and all
of the Obligations have been fully and finally discharged and the Lender Group's
obligations to provide additional credit under the Loan Documents have been
terminated irrevocably, Agent will, at Borrowers' sole expense, execute and
deliver any UCC termination statements, lien releases, re-assignments of
trademarks, discharges of security interests, and other similar discharge or
release documents (and, if applicable, in recordable form) as are reasonably
necessary to release, as of record, the Agent's Liens and all notices of
security interests and liens previously filed by Agent with respect to the
Obligations.
3.6 Early Termination by Borrowers. Borrowers have the option, at any
time upon 30 days prior written notice by Administrative Borrower to Agent, to
terminate this Agreement by paying to Agent, for the benefit of the Lender
Group, in cash, the Obligations (including either (i) providing cash collateral
to be held by Agent for the benefit of Lenders with a Revolver
40
Commitment in an amount equal to 105% of the then extant Letter of Credit Usage,
or (ii) causing the original Letters of Credit to be returned to the Issuing
Lender), in full). If Administrative Borrower has sent a notice of termination
pursuant to the provisions of this Section, then the Commitments shall terminate
and Borrowers shall be obligated to repay the Obligations (including either (i)
providing cash collateral to be held by Agent for the benefit of those Lenders
with a Revolver Commitment in an amount equal to 105% of the then extant Letter
of Credit Usage, or (ii) causing the original Letters of Credit to be returned
to the Issuing Lender), in full, without any premium or early termination fee.
If Administrative Borrower has sent a notice of termination pursuant to the
provisions of this Section, then the Commitments shall terminate and Borrowers
shall be obligated to repay the Obligations, in full, on the date set forth as
the date of termination of this Agreement in such notice.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Each Borrower hereby grants to Agent,
for the benefit of the Lender Group, a continuing security interest in all of
its right, title, and interest in all currently existing and hereafter acquired
or arising Personal Property Collateral in order to secure prompt repayment of
any and all of the Obligations in accordance with the terms and conditions of
the Loan Documents and in order to secure prompt performance by Borrowers of
each of their covenants and duties under the Loan Documents. The Agent's Liens
in and to the Personal Property Collateral shall attach to all Personal Property
Collateral without further act on the part of Agent or Borrowers. Anything
contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions, Borrowers have no authority,
express or implied, to dispose of any item or portion of the Collateral.
4.2 Negotiable Collateral. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that perfection or priority of Agent's security interest is dependent
on or enhanced by possession, the applicable Borrower, immediately upon the
request of Agent, shall endorse and deliver physical possession of such
Negotiable Collateral to Agent.
4.3 Collection of Accounts, General Intangibles, and Negotiable
Collateral. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Borrowers that the Accounts, chattel paper, or General Intangibles have been
assigned to Agent or that Agent has a security interest therein, or (b) collect
the Accounts, chattel paper, or General Intangibles directly and charge the
collection costs and expenses to the Loan Account. Each Borrower agrees that it
will hold in trust for the Lender Group, as the Lender Group's trustee, any
Collections that it receives and immediately will deliver said Collections to
Agent or a Cash Management Bank in their original form as received by the
applicable Borrower.
4.4 Delivery of Additional Documentation Required. At any time upon the
request of Agent, Borrowers shall execute and deliver to Agent, any and all
financing statements, original financing statements in lieu of continuation
statements, fixture filings, security agreements, pledges, assignments,
endorsements of certificates of title, and all other documents (the "Additional
Documents") that Agent may request in its Permitted Discretion, in form and
41
substance satisfactory to Agent, to perfect and continue perfected or better
perfect the Agent's Liens in the Collateral (whether now owned or hereafter
arising or acquired), and in order to fully consummate all of the transactions
contemplated hereby and under the other Loan Documents. To the maximum extent
permitted by applicable law, each Borrower authorizes Agent to execute any such
Additional Documents in the applicable Borrower's name and authorize Agent to
file such executed Additional Documents in any appropriate filing office. In
addition, on a bi-monthly basis, Borrowers shall (a) provide Agent with a report
of all new patentable or trademarkable materials acquired or generated by
Borrowers during the prior period, (b) cause all patents and trademarks acquired
or generated by Borrowers that are not already the subject of a registration
with the appropriate filing office (or an application therefor diligently
prosecuted) to be registered with such appropriate filing office in a manner
sufficient to impart constructive notice of Borrowers' ownership thereof, and
(c) cause to be prepared, executed, and delivered to Agent supplemental
schedules to the applicable Loan Documents to identify such patents and
trademarks as being subject to the security interests created thereunder.
4.5 Power of Attorney. Each Borrower hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such Borrower's true and lawful attorney, with
power to (a) if such Borrower refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of such Borrower on
any of the documents described in Section 4.4, (b) at any time that an Event of
Default has occurred and is continuing, sign such Borrower's name on any invoice
or bill of lading relating to the Collateral, drafts against Account Debtors, or
notices to Account Debtors, (c) send requests for verification of Accounts, (d)
endorse such Borrower's name on any Collection item that may come into the
Lender Group's possession, (e) at any time that an Event of Default has occurred
and is continuing, make, settle, and adjust all claims under such Borrower's
policies of insurance and make all determinations and decisions with respect to
such policies of insurance, and (f) at any time that an Event of Default has
occurred and is continuing, settle and adjust disputes and claims respecting the
Accounts, chattel paper, or General Intangibles directly with Account Debtors,
for amounts and upon terms that Agent determines to be reasonable, and Agent may
cause to be executed and delivered any documents and releases that Agent
determines to be necessary. The appointment of Agent as each Borrower's
attorney, and each and every one of its rights and powers, being coupled with an
interest, is irrevocable until all of the Obligations have been fully and
finally repaid and performed and the Lender Group's obligations to extend credit
hereunder are terminated.
4.6 Right to Inspect. Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right, from time to
time hereafter to inspect the Books and to check, test, and appraise the
Collateral in order to verify Borrowers' financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral;
provided, however, that prior to the occurrence of an Event of Default, Agent
shall not conduct more than 4 inspections in any 12 month period.
4.7 Control Agreements. Each Borrower agrees that it will not transfer
assets out of any Securities Accounts other than as permitted under Section 7.19
and, if to another securities intermediary, unless each of the applicable
Borrower, Agent, and the substitute securities intermediary have entered into a
Control Agreement. No arrangement contemplated hereby or
42
by any Control Agreement in respect of any Securities Accounts or other
Investment Property shall be modified by Borrowers without the prior written
consent of Agent. Upon the occurrence and during the continuance of a Default or
Event of Default, Agent may notify any securities intermediary to liquidate the
applicable Securities Account or any related Investment Property maintained or
held thereby and remit the proceeds thereof to the Agent's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement, each
Borrower makes the following representations and warranties to the Lender Group
which shall be true, correct, and complete, in all material respects, as of the
date hereof, and shall be true, correct, and complete, in all material respects,
as of the Closing Date, and at and as of the date of the making of each Advance
(or other extension of credit) made thereafter, as though made on and as of the
date of such Advance (or other extension of credit) (except to the extent that
such representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1 No Encumbrances. Each Borrower has good and indefeasible title to
its Collateral, free and clear of Liens except for Permitted Liens.
5.2 Accounts. The Accounts are bona fide existing payment obligations
of Account Debtors created by the sale and delivery of Inventory or the
rendition of services to such Account Debtors in the ordinary course of
Borrowers' business, owed to Borrowers without defenses, disputes, offsets,
counterclaims, or rights of return or cancellation.
5.3 Intentionally Omitted.
5.4 Equipment. All of the Equipment is used or held for use in
Borrowers' business and is fit for such purposes.
5.5 Location of Inventory and Equipment. The Inventory and Equipment
are not stored with a bailee, warehouseman, or similar party and are located
only at the locations identified on Schedule 5.5.
5.6 Inventory Records. Each Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its Inventory and
the book value thereof.
5.7 Location of Chief Executive Office; FEIN. The chief executive
office of each Borrower is located at the address indicated in Schedule 5.7 and
each Borrower's FEIN is identified in Schedule 5.7.
5.8 Due Organization and Qualification; Subsidiaries
(a) Each Borrower is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and
qualified to do business in any state where the failure to be so
qualified reasonably could be expected to have a Material Adverse
Change.
43
(b) Set forth on Schedule 5.8(b), is a complete and accurate
description of the authorized capital Stock of each Borrower, by class,
and a description of the number of shares of each such class that are
issued and outstanding. Other than as described on Schedule 5.8(b),
there are no subscriptions, options, warrants, or calls relating to any
shares of each Borrower's capital Stock, including any right of
conversion or exchange under any outstanding security or other
instrument as of the Closing Date. No Borrower is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of its capital Stock or any security convertible
into or exchangeable for any of its capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete and accurate
list of each Borrower's direct and indirect Subsidiaries showing: (i)
the jurisdiction of their organization; (ii) the number of shares of
each class of common and preferred Stock authorized for each of such
Subsidiaries; and (iii) the number and the percentage of the
outstanding shares of each such class owned directly or indirectly by
the applicable Borrower. All of the outstanding capital Stock of each
such Subsidiary has been validly issued and is fully paid and
non-assessable.
(d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of
any Borrower's Subsidiaries' capital Stock, including any right of
conversion or exchange under any outstanding security or other
instrument. No Borrower or any of its respective Subsidiaries is
subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of any Borrower's Subsidiaries'
capital Stock or any security convertible into or exchangeable for any
such capital Stock.
(e) Borrower may, from time to time, update Schedule 5.8 so
long as the change requiring the update is in compliance with this
Agreement.
5.9 Due Authorization; No Conflict.
(a) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the Loan Documents
to which it is a party have been duly authorized by all necessary
action on the part of such Borrower.
(b) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the Loan Documents
to which it is a party do not and will not (i) violate any provision of
federal, state, or local law or regulation applicable to any Borrower,
the Governing Documents of any Borrower, or any order, judgment, or
decree of any court or other Governmental Authority binding on any
Borrower, (ii) conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under any material
contractual obligation of any Borrower, (iii) result in or require the
creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of Borrower, other than Permitted Liens, or (iv)
require any approval of any Borrower's interestholders or any approval
or consent of any Person under any material contractual obligation of
any Borrower.
(c) Other than the filing of financing statements and fixture
filings, the execution, delivery, and performance by each Borrower of
this Agreement and the Loan
44
Documents to which such Borrower is a party do not and will not require
any registration with, consent, or approval of, or notice to, or other
action with or by, any Governmental Authority or other Person.
(d) As to each Borrower, this Agreement and the other Loan
Documents to which such Borrower is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by such
Borrower will be the legally valid and binding obligations of such
Borrower, enforceable against such Borrower in accordance with their
respective terms, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or
similar laws relating to or limiting creditors' rights generally.
(e) The Agent's Liens are validly created, perfected, and
first priority Liens, subject only to Permitted Liens.
5.10 Litigation. Other than those matters disclosed on Schedule 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
Borrowers, threatened against Borrowers, or any of their Subsidiaries, as
applicable, except for (a) matters that are fully covered by insurance (subject
to customary deductibles), and (b) matters arising after the Closing Date that,
if decided adversely to Borrowers, or any of their Subsidiaries, as applicable,
reasonably could not be expected to result in a Material Adverse Change.
5.11 No Material Adverse Change. All financial statements relating to
Borrowers that have been delivered by Borrowers to the Lender Group have been
prepared in accordance with GAAP (except, in the case of unaudited financial
statements, for the lack of footnotes and being subject to year-end audit
adjustments) and present fairly in all material respects, Borrowers' financial
condition as of the date thereof and results of operations for the period then
ended. There has not been a Material Adverse Change with respect to Borrowers
since the date of the latest financial statements submitted to the Lender Group
on or before the Closing Date. 5.12 Fraudulent Transfer. No transfer of property
is being made by any Borrower and no obligation is being incurred by any
Borrower in connection with the transactions contemplated by this Agreement or
the other Loan Documents with the intent to hinder, delay, or defraud either
present or future creditors of Borrowers.
5.13 Employee Benefits. Except as set forth in Schedule 5.13, none of
Borrowers, any of their Subsidiaries, or any of their ERISA Affiliates maintains
or contributes to any Benefit Plan.
5.14 Environmental Condition. Except as set forth on Schedule 5.14, (a)
to Borrowers' knowledge, none of Borrowers' properties or assets has ever been
used by Borrowers or by previous owners or operators in the disposal of, or to
produce, store, handle, treat, release, or transport, any Hazardous Materials,
where such production, storage, handling, treatment, release or transport was in
violation, in any material respect, of applicable Environmental Law, (b) to
Borrowers' knowledge, none of Borrowers' properties or assets has ever been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous
45
Materials disposal site, (c) none of Borrowers have received notice that a Lien
arising under any Environmental Law has attached to any revenues or to any Real
Property owned or operated by Borrowers, and (d) none of Borrowers have received
a summons, citation, notice, or directive from the Environmental Protection
Agency or any other federal or state governmental agency concerning any action
or omission by any Borrower resulting in the releasing or disposing of Hazardous
Materials into the environment.
5.15 Brokerage Fees. Borrowers have not utilized the services of any
broker or finder in connection with Borrowers' obtaining financing from the
Lender Group under this Agreement and no brokerage commission or finders fee is
payable by Borrowers in connection herewith.
5.16 Intellectual Property. Each Borrower owns, or holds licenses in,
all trademarks, trade names, copyrights, patents, patent rights, and licenses
that are necessary to the conduct of its business as currently conducted..
Attached hereto as Schedule 5.16 is a true, correct, and complete listing of all
material patents, patent applications, trademarks, trademark applications,
copyrights, and copyright registrations as to which each Borrower is the owner
or is an exclusive licensee.
5.17 Leases. Borrowers enjoy peaceful and undisturbed possession under
all leases material to the business of Borrowers and to which Borrowers are a
party or under which Borrowers are operating. All of such leases are valid and
subsisting and no material default by Borrowers exists under any of them.
5.18 DDAs. Set forth on Schedule 5.18, as such schedule may be modified
from time to time, are all of the DDAs of each Borrower, including, with respect
to each depository (i) the name and address of that depository, and (ii) the
account numbers of the accounts maintained with such depository.
5.19 Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of Borrowers in writing to Agent or any Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of Borrowers in writing to the Agent or any Lender will be, true and
accurate in all material respects on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading in any material respect
at such time in light of the circumstances under which such information was
provided. On the Closing Date, the Closing Date Projections represent, and as of
the date on which any other Projections are delivered to Agent, such additional
Projections represent Borrowers' good faith best estimate of their future
performance for the periods covered thereby.
5.20 Indebtedness. Set forth on Schedule 5.20 is a true and complete
list of all Indebtedness of each Borrower outstanding immediately prior to the
Closing Date that is to remain outstanding after the Closing Date and such
Schedule accurately reflects the aggregate principal amount of such Indebtedness
and the principal terms thereof.
46
6. AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrowers shall and shall cause each of their respective
Subsidiaries to do all of the following:
6.1 Accounting System. Maintain a system of accounting that enables
Borrowers to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent. Borrowers also shall keep an
inventory reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.
6.2 Collateral Reporting. Provide Agent (and if so requested by Agent,
with copies for each Lender) with the following documents at the following times
in form satisfactory to Agent:
========================== =====================================================
Weekly (a) (i) a summary aging of the Accounts and (ii) a
calculation of the Borrowing Base as of such date.
- -------------------------- -----------------------------------------------------
- -------------------------- -----------------------------------------------------
Monthly (not later than (b) a copy of each invoice provided to EDS regarding
the 10th day of each the Navy Marine Corps Intranet (NMCI) Program
month) promptly upon issuance thereof.
(c) a detailed aging, by total, of the Accounts,
together with a reconciliation to the detailed
calculation of the Borrowing Base previously provided
to Agent.
(d) a summary aging, by vendor, of Borrowers'
accounts payable and any book overdraft.
- -------------------------- -----------------------------------------------------
Quarterly (e) a detailed list of each Borrower's customers.
- -------------------------- -----------------------------------------------------
Upon request by Agent (f) copies of invoices in connection
with the Accounts, credit memos, remittance advices,
deposit slips, shipping and delivery documents in
connection with the Accounts and, for Inventory and
Equipment acquired by Borrowers, purchase orders and
invoices, and
(g) such other reports as to the Collateral, or the
financial condition of Borrowers as Agent may
request.
========================== =====================================================
In addition, each Borrower agrees to cooperate fully with Agent to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.
6.3 Financial Statements, Reports, Certificates. Deliver to Agent, with
copies to each Lender:
47
(a) as soon as available, but in any event within 30 days (45
days in the case of a month that is the end of one of the first 3
fiscal quarters in a fiscal year) after the end of each month during
each of Parent's fiscal years,
(i) a company prepared consolidated balance sheet,
income statement, and statement of cash flow covering Parent's
and its Subsidiaries' operations during such period,
(ii) a certificate signed by the chief financial
officer of Parent to the effect that:
A. the financial statements delivered
hereunder have been prepared in accordance with GAAP
(except for the lack of footnotes and being subject
to year-end audit adjustments) and fairly present in
all material respects the financial condition of
Parent and its Subsidiaries,
B. the representations and warranties of
Borrowers contained in this Agreement and the other
Loan Documents are true and correct in all material
respects on and as of the date of such certificate,
as though made on and as of such date (except to the
extent that such representations and warranties
relate solely to an earlier date), and
C. there does not exist any condition or
event that constitutes a Default or Event of Default
(or, to the extent of any non-compliance, describing
such non-compliance as to which he or she may have
knowledge and what action Borrowers have taken, are
taking, or propose to take with respect thereto), and
(iii) for each month that is the date on which a
financial covenant in Section 7.20 is to be tested, a
Compliance Certificate demonstrating, in reasonable detail,
compliance at the end of such period with the applicable
financial covenants contained in Section 7.20,
(b) as soon as available, but in any event within 90 days
after the end of each of Parent's fiscal years, financial statements of
Parent and its Subsidiaries for each such fiscal year, audited by
independent certified public accountants reasonably acceptable to Agent
and certified, without any qualifications, by such accountants to have
been prepared in accordance with GAAP (such audited financial
statements to include a balance sheet, income statement, and statement
of cash flow and, if prepared, such accountants' letter to management),
(c) as soon as available, but in any event within 30 days
prior to the start of each of Parent's fiscal years,
(i) copies of Borrowers' Projections, in form and
substance (including as to scope and underlying assumptions)
satisfactory to Agent, in its sole discretion, for the
forthcoming 3 years, year by year, and for the forthcoming
48
fiscal year, quarter by quarter, certified by the chief
financial officer of Parent as being such officer's good faith
best estimate of the financial performance of Parent and its
Subsidiaries during the period covered thereby,
(d) if and when filed by any Borrower,
(i) 10-Q quarterly reports, Form 10-K annual reports,
and Form 8-K current reports,
(ii) any other filings made by any Borrower with the
SEC,
(iii) copies of Borrowers' federal income tax
returns, and any amendments thereto, filed with the Internal
Revenue Service, and
(iv) any other information that is provided by Parent
to its shareholders generally,
(e) if and when filed by any Borrower and as requested by
Agent, satisfactory evidence of payment of applicable excise taxes in
each jurisdictions in which (i) any Borrower conducts business or is
required to pay any such excise tax, (ii) where any Borrower's failure
to pay any such applicable excise tax would result in a Lien on the
properties or assets of any Borrower, or (iii) where any Borrower's
failure to pay any such applicable excise tax reasonably could be
expected to result in a Material Adverse Change,
(f) as soon as a Borrower has knowledge of any event or
condition that constitutes a Default or an Event of Default, notice
thereof and a statement of the curative action that Borrowers propose
to take with respect thereto, and
(g) upon the request of Agent, any other report reasonably
requested relating to the financial condition of Borrowers.
In addition to the financial statements referred to above, Borrowers
agree to deliver financial statements prepared on both a consolidated and
consolidating basis for Parent and Wam!Net Government Services, Inc. and that no
Borrower, or any Subsidiary of a Borrower, will have a fiscal year different
from that of Parent. Borrowers agree that their independent certified public
accountants are authorized to communicate with Agent and to release to Agent
whatever financial information concerning Borrowers that Agent reasonably may
request. Each Borrower waives the right to assert a confidential relationship,
if any, it may have with any accounting firm or service bureau in connection
with any information requested by Agent pursuant to or in accordance with this
Agreement, and agree that Agent may contact directly any such accounting firm or
service bureau in order to obtain such information.
6.4 Intentionally Omitted.
6.5 Return. Cause returns and allowances as between Borrowers and their
Account Debtors, to be on the same basis and in accordance with the usual
customary practices of the applicable Borrower, as they exist at the time of the
execution and delivery of this Agreement.
49
If, at a time when no Event of Default has occurred and is continuing, any
Account Debtor returns any Inventory to any Borrower, the applicable Borrower
promptly shall determine the reason for such return and, if the applicable
Borrower accepts such return, issue a credit memorandum (with a copy to be sent
to Agent) in the appropriate amount to such Account Debtor. If, at a time when
an Event of Default has occurred and is continuing, any Account Debtor returns
any Inventory to any Borrower, the applicable Borrower promptly shall determine
the reason for such return and, if Agent consents (which consent shall not be
unreasonably withheld), issue a credit memorandum (with a copy to be sent to
Agent) in the appropriate amount to such Account Debtor.
6.6 Maintenance of Properties. Maintain and preserve all of its
properties which are necessary or useful in the proper conduct to its business
in good working order and condition, ordinary wear and tear excepted, and comply
at all times with the provisions of all leases to which it is a party as lessee,
so as to prevent any loss or forfeiture thereof or thereunder. Notwithstanding
the foregoing, in the event the Equipment cannot be efficiently repaired, as
determined by Borrowers in their reasonable discretion, Borrowers shall be
allowed to sell or otherwise dispose of such Equipment from time to time in the
ordinary course of their business.
6.7 Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrowers
or any of their assets to be paid in full, before delinquency or before the
expiration of any extension period, except to the extent that the validity of
such assessment or tax shall be the subject of a Permitted Protest. Borrowers
will make timely payment or deposit of all tax payments and withholding taxes
required of them by applicable laws, including those laws concerning F.I.C.A.,
F.U.T.A., state disability, and local, state, and federal income taxes, and
will, upon request, furnish Agent with proof satisfactory to Agent indicating
that the applicable Borrower has made such payments or deposits. Borrowers shall
deliver satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which any Borrower is required to pay any such excise tax.
6.8 Insurance.
(a) At Borrowers' expense, maintain insurance respecting its
property and assets wherever located, covering loss or damage by fire,
theft, explosion, and all other hazards and risks as ordinarily are
insured against by other Persons engaged in the same or similar
businesses. Borrowers also shall maintain business interruption, public
liability, and product liability insurance, as well as insurance
against larceny, embezzlement, and criminal misappropriation. All such
policies of insurance shall be in such amounts and with such insurance
companies as are reasonably satisfactory to Agent. Borrowers shall
deliver copies of all such policies to Agent with a satisfactory
lender's loss payable endorsement naming Agent as loss payee or
additional insured, as appropriate. Each policy of insurance or
endorsement shall contain a clause requiring the insurer to give not
less than 30 days prior written notice to Agent in the event of
cancellation of the policy for any reason whatsoever.
(b) Administrative Borrower shall give Agent prompt notice of
any loss covered by such insurance. Agent shall have the right to
adjust any losses payable under any such insurance policies in excess
of $1,000,000 with respect to Collateral in which Agent
50
has a first priority security interest, without any liability to
Borrowers whatsoever in respect of such adjustments. Any monies
received as payment for any loss under any insurance policy mentioned
above (other than liability insurance policies) or as payment of any
award or compensation for condemnation or taking by eminent domain,
shall be paid over to Agent to be applied at the option of the Required
Lenders either to the prepayment of the Obligations or shall be
disbursed to Administrative Borrower under staged payment terms
reasonably satisfactory to the Required Lenders for application to the
cost of repairs, replacements, or restorations. Any such repairs,
replacements, or restorations shall be effected with reasonable
promptness and shall be of a value at least equal to the value of the
items or property destroyed prior to such damage or destruction.
(c) Borrowers shall not take out separate insurance concurrent
in form or contributing in the event of loss with that required to be
maintained under this Section 6.8, unless Agent is included thereon as
named insured with the loss payable to Agent under a lender's loss
payable endorsement or its equivalent. Administrative Borrower
immediately shall notify Agent whenever such separate insurance is
taken out, specifying the insurer thereunder and full particulars as to
the policies evidencing the same, and copies of such policies promptly
shall be provided to Agent.
6.9 Location of Inventory and Equipment. Keep the Inventory and
Equipment only at the locations identified on Schedule 5.5; provided, however,
that Administrative Borrower may amend Schedule 5.5 so long as such amendment
occurs by written notice to Agent not less than 30 days prior to the date on
which the Inventory or Equipment is moved to such new location, so long as such
new location is within the continental United States, and so long as, at the
time of such written notification, the applicable Borrower provides any
financing statements or fixture filings necessary to perfect and continue
perfected the Agent's Liens on such assets and also provides to Agent a
Collateral Access Agreement.
6.10 Compliance with Laws. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
including the Fair Labor Standards Act and the Americans With Disabilities Act,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, would not result in and reasonably could not
be expected to result in a Material Adverse Change.
6.11 Leases. Pay when due all rents and other amounts payable under any
leases to which any Borrower is a party or by which any Borrower's properties
and assets are bound, unless such payments are the subject of a Permitted
Protest.
6.12 Brokerage Commissions. Pay any and all brokerage commission or
finders fees incurred in connection with or as a result of Borrowers' obtaining
financing from the Lender Group under this Agreement. Borrowers agree and
acknowledge that payment of all such brokerage commissions or finders fees shall
be the sole responsibility of Borrowers, and each Borrower agrees to indemnify,
defend, and hold Agent and the Lender Group harmless from and against any claim
of any broker or finder arising out of Borrowers' obtaining financing from the
Lender Group under this Agreement.
51
6.13 Existence. At all times preserve and keep in full force and effect
each Borrower's valid existence and good standing and any rights and franchises
material to Borrowers' businesses.
6.14 Environmental.
(a) Keep any property either owned or operated by any Borrower
free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced
by such Environmental Liens, (b) comply, in all material respects, with
Environmental Laws and provide to Agent documentation of such
compliance which Agent reasonably requests, (c) promptly notify Agent
of any release of a Hazardous Material of any reportable quantity from
or onto property owned or operated by any Borrower and take any
Remedial Actions required to abate said release or otherwise to come
into compliance with applicable Environmental Law, and (d) promptly
provide Agent with written notice within 10 days of the receipt of any
of the following: (i) notice that an Environmental Lien has been filed
against any of the real or personal property of any Borrower, (ii)
commencement of any Environmental Action or notice that an
Environmental Action will be filed against any Borrower, and (iii)
notice of a violation, citation, or other administrative order which
reasonably could be expected to result in a Material Adverse Change.
6.15 Disclosure Updates. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, (a) notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.
7. NEGATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrowers will not and will not permit any of their respective
Subsidiaries to do any of the following:
7.1 Indebtedness. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other
Loan Documents, together with Indebtedness owed to Underlying Issuers
with respect to Underlying Letters of Credit;
(b) Permitted Indebtedness set forth on Schedule 5.20;
(c) Purchase Money Indebtedness;
52
(d) Unsecured Indebtedness as provided in Parent's Projections
(as delivered to Agent from time to time) that is on terms and
conditions reasonably acceptable to Required Lenders; and
(e) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b), (c) and (d) of this Section 7.1 (and
continuance or renewal of any Permitted Liens associated therewith) so
long as: (i) the terms and conditions of such refinancings, renewals,
or extensions do not, in Agent's judgment, materially impair the
prospects of repayment of the Obligations by Borrowers or materially
impair Borrowers' creditworthiness, (ii) such refinancings, renewals,
or extensions do not result in an increase in the principal amount of,
or interest rate with respect to, the Indebtedness so refinanced,
renewed, or extended, (iii) such refinancings, renewals, or extensions
do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, nor are they on terms
or conditions, that, taken as a whole, are materially more burdensome
or restrictive to the applicable Borrower, and (iv) if the Indebtedness
that is refinanced, renewed, or extended was subordinated in right of
payment to the Obligations, then the terms and conditions of the
refinancing, renewal, or extension Indebtedness must be include
subordination terms and conditions that are at least as favorable to
the Lender Group as those that were applicable to the refinanced,
renewed, or extended Indebtedness.
(f) Indebtedness composing Permitted Indebtedness.
7.2 Liens. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 Restrictions on Fundamental Changes.
(a) Enter into any merger, consolidation, reorganization,
except among Borrowers and mergers of Subsidiaries into a Borrower.
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution).
(c) Convey, sell, lease, license, assign, transfer, or
otherwise dispose of, in one transaction or a series of transactions,
all or any substantial part of its assets.
7.4 Disposal of Assets. Other than Permitted Dispositions, convey,
sell, lease, license, assign, transfer, or otherwise dispose of any of the
assets of any Borrower.
7.5 Change Name. Change any Borrower's name, state of incorporation,
FEIN, corporate structure or identity, or add any new fictitious name; provided,
however, that a Borrower may change its name upon at least 30 days prior written
notice by Administrative
53
Borrower to Agent of such change and so long as, at the time of such written
notification, such Borrower provides any financing statements or fixture filings
necessary to perfect and continue perfected Agent's Liens.
7.6 Guarantee. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of Borrowers or which
are transmitted or turned over to Agent.
7.7 Nature of Business. Make any change in the principal nature of
Borrowers' business.
7.8 Prepayments and Amendments.
(a) Except in connection with a refinancing permitted by
Section 7.1(d), prepay, redeem, defease, purchase, or otherwise acquire
any Indebtedness of any Borrower, other than the Obligations in
accordance with this Agreement, and
(b) Except in connection with a refinancing permitted by
Section 7.1(d), directly or indirectly, amend, modify, alter, increase,
or change any of the terms or conditions of any agreement, instrument,
document, indenture, or other writing evidencing or concerning
Indebtedness permitted under Sections 7.1(b) or (c).
7.9 Change of Control. Cause, permit, or suffer, directly or
indirectly, any Change of Control.
7.10 Consignments. Consign any Inventory or sell any Inventory on bill
and hold, sale or return, sale on approval, or other conditional terms of sale.
7.11 Distributions. Other than distributions or declaration and payment
of dividends by a Borrower to another Borrower, make any distribution or declare
or pay any dividends (in cash or other property, other than common Stock) on, or
purchase, acquire, redeem, or retire any of any Borrower's Stock, of any class,
whether now or hereafter outstanding.
7.12 Accounting Methods. Modify or change its method of accounting
(other than as may be required to conform to GAAP) or enter into, modify, or
terminate any agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau for the preparation
or storage of Borrowers' accounting records without said accounting firm or
service bureau agreeing to provide Agent information regarding the Collateral or
Borrowers' financial condition.
7.13 Investments. Except for Permitted Investments and Investments of
up to $2,000,000 per month, (but not to exceed $40,000,000, in the aggregate,
from and after the Closing Date) in direct and indirect wholly-owned
Subsidiaries of Parent (other than a Borrower), directly or indirectly, make or
acquire any Investment, or incur any liabilities (including contingent
obligations) for or in connection with any Investment; provided, however, that
Borrowers shall not have Permitted Investments (other than (a) Investments by
any
54
Borrower in any other Borrower or (b) Investments in the Cash Management
Accounts) in excess of $500,000 outstanding at any one time unless the
applicable Borrower and the applicable securities intermediary or bank have
entered into Control Agreements or similar arrangements governing such Permitted
Investments, as Agent shall determine in its Permitted Discretion, to perfect
(and further establish) the Agent's Liens in such Permitted Investments.
7.14 Transactions with Affiliates. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of any Borrower except for
(a) Permitted Investments and (b) transactions that are in the ordinary course
of Borrowers' business, upon fair and reasonable terms, that are fully disclosed
to Agent, and that are no less favorable to Borrowers than would be obtained in
an arm's length transaction with a non-Affiliate.
7.15 Suspension. Suspend or go out of a substantial portion of its
business.
7.16 Compensation. Increase the annual fee or per-meeting fees paid to
the members of its Board of Directors during any year by more than 20% over the
prior year; pay or accrue total cash compensation, during any year, to its
officers and senior management employees in an aggregate amount in excess of
120% of that paid or accrued in the prior year.
7.17 Use of Proceeds. Use the proceeds of the Advances for any purpose
other than (a) on the Closing Date, to pay transactional fees, costs, and
expenses incurred in connection with this Agreement, the other Loan Documents,
and the transactions contemplated hereby and thereby, and (b) thereafter,
consistent with the terms and conditions hereof, for its lawful and permitted
purposes.
7.18 Change in Location of Chief Executive Office; Inventory and
Equipment with Bailees. Relocate its chief executive office to a new location
without Administrative Borrower providing 30 days prior written notification
thereof to Agent and so long as, at the time of such written notification, the
applicable Borrower provides any financing statements or fixture filings
necessary to perfect and continue perfected the Agent's Liens and also provides
to Agent a Collateral Access Agreement with respect to such new location. The
Inventory and Equipment shall not at any time now or hereafter be stored with a
bailee, warehouseman, or similar party without Agent's prior written consent.
7.19 Securities Accounts. Establish or maintain any Securities Account
unless Agent shall have received a Control Agreement in respect of such
Securities Account. Borrowers agree to not transfer assets out of any Securities
Account; provided, however, that, so long as no Event of Default has occurred
and is continuing or would result therefrom, Borrowers may use such assets (and
the proceeds thereof) to the extent not prohibited by this Agreement.
7.20 Financial Covenants. (a) Fail to maintain:
(i) Minimum EBITDA. EBITDA, measured on a fiscal quarter-end
basis, of not less than the required amount set forth in the following
table for the applicable period set forth opposite thereto;
55
--------------------------------------- -------------------------------------------------------------------
Applicable Amount Applicable Period
--------------------------------------- -------------------------------------------------------------------
($12,800,000) For the 3 month period
ending March 31, 2001
--------------------------------------- -------------------------------------------------------------------
($10,400,000) For the 3 month period
ending June 30, 2001
--------------------------------------- -------------------------------------------------------------------
($3,000,000) For the 3 month period
ending September 30, 2001
--------------------------------------- -------------------------------------------------------------------
$5,000,000 For the 3 month period
ending December 31, 2001
--------------------------------------- -------------------------------------------------------------------
$14,600,000 For the 3 month period
ending March 31, 2002
--------------------------------------- -------------------------------------------------------------------
$21,800,000 For the 3 month period
ending June 30, 2002
--------------------------------------- -------------------------------------------------------------------
$29,300,000 For the 3 month period
ending September 30, 2002
--------------------------------------- -------------------------------------------------------------------
$37,200,000 For the 3 month period
ending December 31, 2002
--------------------------------------- -------------------------------------------------------------------
(ii) Minimum Revenues. Net revenues of at least the
required amount set forth in the following table as of the
applicable date set forth opposite thereto:
--------------------------------------- -------------------------------------------------------------------
Applicable Amount Applicable Period
--------------------------------------- -------------------------------------------------------------------
$14,000,000 For the 3 month period
ending March 31, 2001
--------------------------------------- -------------------------------------------------------------------
$16,700,000 For the 3 month period
ending June 30, 2001
--------------------------------------- -------------------------------------------------------------------
$26,000,000 For the 3 month period
ending September 30, 2001
--------------------------------------- -------------------------------------------------------------------
$38,500,000 For the 3 month period
ending December 31, 2001
--------------------------------------- -------------------------------------------------------------------
$47,200,000 For the 3 month period
--------------------------------------- -------------------------------------------------------------------
56
--------------------------------------- -------------------------------------------------------------------
ending March 31, 2002
--------------------------------------- -------------------------------------------------------------------
$58,900,000 For the 3 month period
ending June 30, 2002
--------------------------------------- -------------------------------------------------------------------
$73,700,000 For the 3 month period
ending September 30, 2002
--------------------------------------- -------------------------------------------------------------------
$99,500,000 For the 3 month period
ending December 31, 2002
--------------------------------------- -------------------------------------------------------------------
(b) Make:
(i) Capital Expenditures. Capital expenditures in any
in any fiscal quarter in excess of the amount set forth in the
following table for the applicable period:
--------------------------------------- -------------------------------------------------------------------
Applicable Amount Applicable Period
--------------------------------------- -------------------------------------------------------------------
$14,600,000 For the 3 month period
ending March 31, 2001
--------------------------------------- -------------------------------------------------------------------
$12,700,000 For the 3 month period
ending June 30, 2001
--------------------------------------- -------------------------------------------------------------------
$21,500,000 For the 3 month period
ending September 30, 2001
--------------------------------------- -------------------------------------------------------------------
$10,900,000 For the 3 month period
ending December 31, 2001
--------------------------------------- -------------------------------------------------------------------
$25,000,000 For the 3 month period
ending March 31, 2002
--------------------------------------- -------------------------------------------------------------------
$18,000,000 For the 3 month period
ending June 30, 2002
--------------------------------------- -------------------------------------------------------------------
$18,000,000 For the 3 month period
ending September 30, 2002
--------------------------------------- -------------------------------------------------------------------
$27,000,000 For the 3 month period
ending December 31, 2002
--------------------------------------- -------------------------------------------------------------------
57
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1 If Borrowers fail to pay when due and payable or when declared due
and payable, all or any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Code, would have accrued on such amounts), fees and charges due the Lender
Group, reimbursement of Lender Group Expenses, or other amounts constituting
Obligations);
8.2 If Borrowers fail to perform, keep, or observe: (a) any term,
provision, condition, covenant, or agreement contained in Section 6.2, Section
6.3 or Section 6.7 and such failure continues for a period of 5 days after such
failure, (b) any term, provision, condition, covenant, or agreement contained in
Section 6.7, Section 6.9, or Section 6.11 and such failure continues for a
period of 10 days after such failure, or (c) any other term, provision,
covenant, or agreement contained in this Agreement, in any of the Loan
Documents, or in any other present or future agreement (including in respect to
Bank Products) between any Borrower and Agent or Lenders;
8.3 If any material portion of any Borrower's assets is attached,
seized, subjected to a writ or distress warrant, levied upon, or comes into the
possession of any third Person: (a) which involves more than $100,000, or (b) if
such attachment, seizure or levy is for $100,000 or less and it is not released
or satisfied within 15 days of its occurrence or (c) if such attachment, seizure
or levy is for $500,000, or less, and is subject of a Permitted Protest and it
is not released or satisfied within 30 days of its occurrence; provided,
however, that Agent may reserve the amount of such attachment, seizure, warrant
or levy;
8.4 If an Insolvency Proceeding is commenced by any Borrower;
8.5 If an Insolvency Proceeding is commenced against any Borrower, and
any of the following events occur: (a) the applicable Borrower consents to the
institution of the Insolvency Proceeding against it, (b) the petition commencing
the Insolvency Proceeding is not timely controverted, (c) the petition
commencing the Insolvency Proceeding is not dismissed within 45 calendar days of
the date of the filing thereof; provided, however, that, during the pendency of
such period, Agent (including any successor agent) and each other member of the
Lender Group shall be relieved of their obligation to extend credit hereunder,
(d) an interim trustee is appointed to take possession of all or any substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, any Borrower, or (e) an order for relief shall have
been entered therein;
8.6 If any Borrower is enjoined, restrained, or in any way prevented by
court order from continuing to conduct all or any material part of its business
affairs;
8.7 If a notice of Lien, levy, or assessment is filed of record with
respect to any Borrower's or any of its Subsidiaries' assets by the United
States, or any department, agency, or instrumentality thereof, or by any state,
county, municipal, or governmental agency, or if any
58
taxes or debts owing at any time hereafter to any one or more of such entities
becomes a Lien, whether choate or otherwise, upon any Borrower's or any of its
Subsidiaries' assets and the same is not paid on the payment date thereof;
8.8 If a judgment or other claim becomes a Lien or encumbrance upon any
material portion of any Borrower's properties or assets;
8.9 If there is a default in any material agreement to which any
Borrower is a party and such default (a) occurs at the final maturity of the
obligations thereunder, or (b) results in a right by the other party thereto,
irrespective of whether exercised, to accelerate the maturity of the applicable
Borrower's obligations thereunder, to terminate such agreement, or to refuse to
renew such agreement pursuant to an automatic renewal right therein;
8.10 If any Borrower makes any payment on account of Indebtedness that
has been contractually subordinated in right of payment to the payment of the
Obligations, except to the extent such payment is permitted by the terms of the
subordination provisions applicable to such Indebtedness;
8.11 If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or Record made to the
Lender Group by any Borrower, its Subsidiaries, or any officer, employee, agent,
or director of any Borrower or any of its Subsidiaries;
8.12 If this Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien on or security interest in the Collateral covered hereby or
thereby; or
8.13 Any provision of any Loan Document shall at any time for any
reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by any Borrower, or a proceeding shall be commenced
by any Borrower, or by any Governmental Authority having jurisdiction over any
Borrower, seeking to establish the invalidity or unenforceability thereof, or
any Borrower shall deny that any Borrower has any liability or obligation
purported to be created under any Loan Document.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and during the
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Agent to do any one or more of the following on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall do
the same on behalf of the Lender Group), all of which are authorized by
Borrowers:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise,
immediately due and payable;
59
(b) Cease advancing money or extending credit to or for the
benefit of Borrowers under this Agreement, under any of the Loan
Documents, or under any other agreement between Borrowers and the
Lender Group;
(c) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of the Lender Group,
but without affecting any of the Agent's Liens in the Collateral and
without affecting the Obligations;
(d) Settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which Agent considers advisable, and
in such cases, Agent will credit the Loan Account with only the net
amounts received by Agent in payment of such disputed Accounts after
deducting all Lender Group Expenses incurred or expended in connection
therewith;
(e) Cause Borrowers to hold all returned Inventory in trust
for the Lender Group, segregate all returned Inventory from all other
assets of Borrowers or in Borrowers' possession and conspicuously label
said returned Inventory as the property of the Lender Group;
(f) Without notice to or demand upon any Borrower, make such
payments and do such acts as Agent considers necessary or reasonable to
protect its security interests in the Collateral. Each Borrower agrees
to assemble the Personal Property Collateral if Agent so requires, and
to make the Personal Property Collateral available to Agent at a place
that Agent may designate which is reasonably convenient to both
parties. Each Borrower authorizes Agent to enter the premises where the
Personal Property Collateral is located, to take and maintain
possession of the Personal Property Collateral, or any part of it, and
to pay, purchase, contest, or compromise any Lien that in Agent's
determination appears to conflict with the Agent's Liens and to pay all
expenses incurred in connection therewith and to charge Borrowers' Loan
Account therefor. With respect to any of Borrowers' owned or leased
premises, each Borrower hereby grants Agent a license to enter into
possession of such premises and to occupy the same, without charge, in
order to exercise any of the Lender Group's rights or remedies provided
herein, at law, in equity, or otherwise;
(g) Without notice to any Borrower (such notice being
expressly waived), and without constituting a retention of any
collateral in satisfaction of an obligation (within the meaning of the
Code), set off and apply to the Obligations any and all (i) balances
and deposits of any Borrower held by the Lender Group (including any
amounts received in the Cash Management Accounts), or (ii) Indebtedness
at any time owing to or for the credit or the account of any Borrower
held by the Lender Group;
(h) Hold, as cash collateral, any and all balances and
deposits of any Borrower held by the Lender Group, and any amounts
received in the Cash Management Accounts, to secure the full and final
repayment of all of the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Personal Property
60
Collateral. Each Borrower hereby grants to Agent a license or other
right to use, without charge, such Borrower's labels, patents,
copyrights, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains
to the Personal Property Collateral, in completing production of,
advertising for sale, and selling any Personal Property Collateral and
such Borrower's rights under all licenses and all franchise agreements
shall inure to the Lender Group's benefit;
(j) Sell the Personal Property Collateral at either a public
or private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places
(including Borrowers' premises) as Agent determines is commercially
reasonable. It is not necessary that the Personal Property Collateral
be present at any such sale;
(k) Agent shall give notice of the disposition of the Personal
Property Collateral as follows:
(i) Agent shall give Administrative Borrower (for the
benefit of the applicable Borrower) a notice in writing of the
time and place of public sale, or, if the sale is a private
sale or some other disposition other than a public sale is to
be made of the Personal Property Collateral, the time on or
after which the private sale or other disposition is to be
made; and
(ii) The notice shall be personally delivered or
mailed, postage prepaid, to Administrative Borrower as
provided in Section 12, at least 10 days before the earliest
time of disposition set forth in the notice; no notice needs
to be given prior to the disposition of any portion of the
Personal Property Collateral that is perishable or threatens
to decline speedily in value or that is of a type customarily
sold on a recognized market;
(l) Agent, on behalf of the Lender Group may credit bid and
purchase at any public sale;
(m) Agent may seek the appointment of a receiver or keeper to
take possession of all or any portion of the Collateral or to operate
same and, to the maximum extent permitted by law, may seek the
appointment of such a receiver without the requirement of prior notice
or a hearing;
(n) The Lender Group shall have all other rights and remedies
available to it at law or in equity pursuant to any other Loan
Documents; and
(o) Any deficiency that exists after disposition of the
Personal Property Collateral as provided above will be paid immediately
by Borrowers. Any excess will be returned, without interest and subject
to the rights of third Persons, by Agent to Administrative Borrower
(for the benefit of the applicable Borrower).
9.2 Remedies Cumulative. The rights and remedies of the Lender Group
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative. The
61
Lender Group shall have all other rights and remedies not inconsistent herewith
as provided under the Code, by law, or in equity. No exercise by the Lender
Group of one right or remedy shall be deemed an election, and no waiver by the
Lender Group of any Event of Default shall be deemed a continuing waiver. No
delay by the Lender Group shall constitute a waiver, election, or acquiescence
by it.
10. TAXES AND EXPENSES.
If any Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its sole discretion
and without prior notice to any Borrower, may do any or all of the following:
(a) make payment of the same or any part thereof, (b) set up such reserves in
Borrowers' Loan Account as Agent deems necessary to protect the Lender Group
from the exposure created by such failure, or (c) in the case of the failure to
comply with Section 6.8 hereof, obtain and maintain insurance policies of the
type described in Section 6.8 and take any action with respect to such policies
as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender
Group Expenses and any such payments shall not constitute an agreement by the
Lender Group to make similar payments in the future or a waiver by the Lender
Group of any Event of Default under this Agreement. Agent need not inquire as
to, or contest the validity of, any such expense, tax, or Lien and the receipt
of the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc. Each Borrower waives demand, protest, notice
of protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which any such Borrower may in any way be liable.
11.2 The Lender Group's Liability for Collateral. Each Borrower hereby
agrees that: (a) so long as the Lender Group complies with its obligations, if
any, under the Code, Agent shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrowers.
11.3 Indemnification. Each Borrower shall pay, indemnify, defend, and
hold the Agent-Related Persons, the Lender-Related Persons with respect to each
Lender, each Participant, and each of their respective officers, directors,
employees, agents, and attorneys-in-fact (each, an "Indemnified Person")
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other costs and expenses
actually
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incurred in connection therewith (as and when they are incurred and irrespective
of whether suit is brought), at any time asserted against, imposed upon, or
incurred by any of them (a) in connection with or as a result of or related to
the execution, delivery, enforcement, performance, or administration of this
Agreement, any of the other Loan Documents, or the transactions contemplated
hereby or thereby, and (b) with respect to any investigation, litigation, or
proceeding related to this Agreement, any other Loan Document, or the use of the
proceeds of the credit provided hereunder (irrespective of whether any
Indemnified Person is a party thereto), or any act, omission, event, or
circumstance in any manner related thereto (all the foregoing, collectively, the
"Indemnified Liabilities"). The foregoing to the contrary notwithstanding,
Borrowers shall have no obligation to any Indemnified Person under this Section
11.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which Borrowers were required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrowers
with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE
OR IN PART CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
Borrowers or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Borrowers
in care of Administrative Borrower or to Agent, as the case may be, at its
address set forth below:
If to Administrative
Borrower: WAM!NET INC.
655 Lone Oak Drive
Eagan, Minnesota 55121
Attn: Chief Financial Officer
Fax No. 651.256.5176
with copies to: WAM!NET INC.
655 Lone Oak Drive
Eagan, Minnesota 55121
Attn: General Counsel
Fax No. 651.256.5176
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with copies to: LARKIN, HOFFMAN, DALY & LINDGREN, LTD.
7900 Xerxes Avenue South
1500 Wells Fargo Plaza
Bloomington, Minnesota 55431
Attn: Andrew F. Perrin, Esq.
Fax No. 952.896.1511
If to Agent: FOOTHILL CAPITAL CORPORATION
2450 Colorado Avenue
Suite 3000W
Santa Monica, California 90404
Attn: Business Finance Division Manager
Telephone No. 310.453-7300
with copies to: BUCHALTER, NEMER, FIELDS & YOUNGER
601 So. Figueroa Street, Suite 2400
Los Angeles, California 90017
Attn: Robert C. Colton, Esq.
Fax No.: 213.896.0400
Agent and Borrowers may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other party. All notices or demands sent in accordance with this Section 12,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Each Borrower acknowledges and agrees that notices sent by
the Lender Group in connection with the exercise of enforcement rights against
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN
DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF
THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING
HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE
DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE
COUNTY OF NEW YORK,
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STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING
SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
BORROWERS AND THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM
NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS
BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).
BORROWERS AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWERS AND THE LENDER GROUP REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 Assignments and Participations.
(a) Any Lender may, with the written consent of Agent
(provided that no written consent of Agent shall be required in
connection with any assignment and delegation by a Lender to an
Eligible Transferee or to an Affiliate of a Lender or to a fund or
account managed by a Lender or its Affiliates (an "Exempt
Assignment")), assign and delegate to one or more assignees (each an
"Assignee") all, or any ratable part of all, of the Obligations, the
Commitments and the other rights and obligations of such Lender
hereunder and under the other Loan Documents, in a minimum amount of
$5,000,000 (such amount being inapplicable in the case of an Exempt
Assignment); provided, however, that Borrowers and Agent may continue
to deal solely and directly with such Lender in connection with the
interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, have been given to
Administrative Borrower and Agent by such Lender and the Assignee, (ii)
such Lender and its Assignee have delivered to Administrative Borrower
and Agent an Assignment and Acceptance in form and substance
satisfactory to Agent, and (iii) the assignor Lender or Assignee has
paid to Agent for Agent's separate account a processing fee in the
amount of $5,000 (such amount being inapplicable in the case of an
Exempt Assignment). Anything contained herein to the contrary
notwithstanding, the consent of Agent shall not be required (and
payment of any fees shall not be required) if such assignment is in
connection with any merger, consolidation, sale, transfer, or other
disposition of all or any substantial portion of the business or loan
portfolio of such Lender.
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(b) From and after the date that Agent notifies the assignor
Lender (with a copy to Administrative Borrower) that it has received an
executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have
the rights and obligations of a Lender under the Loan Documents, and
(ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been
assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights (except with respect to Section 11.3 hereof) and be released
from its obligations under this Agreement (and in the case of an
Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement and the
other Loan Documents, such Lender shall cease to be a party hereto and
thereto), and such assignment shall affect a novation between Borrowers
and the Assignee.
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to
and agree with each other and the other parties hereto as follows: (1)
other than as provided in such Assignment and Acceptance, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of Borrowers or the performance or observance by Borrowers of
any of their obligations under this Agreement or any other Loan
Document furnished pursuant hereto, (3) such Assignee confirms that it
has received a copy of this Agreement, together with such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and
Acceptance, (4) such Assignee will, independently and without reliance
upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking
action under this Agreement, (5) such Assignee appoints and authorizes
Agent to take such actions and to exercise such powers under this
Agreement as are delegated to Agent, by the terms hereof, together with
such powers as are reasonably incidental thereto, and (6) such Assignee
agrees that it will perform all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance and receipt and
acknowledgment by Agent of such fully executed Assignment and
Acceptance, this Agreement shall be deemed to be amended to the extent,
but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent of
Agent, sell to one or more commercial banks, financial institutions, or
other Persons not Affiliates of such Lender (a "Participant")
participating interests in its Obligations, the Commitment, and the
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other rights and interests of that Lender (the "Originating Lender")
hereunder and under the other Loan Documents (provided that no written
consent of Agent shall be required in connection with any sale of any
such participating interests by a Lender to an Eligible Transferee);
provided, however, that (i) the Originating Lender shall remain a
"Lender" for all purposes of this Agreement and the other Loan
Documents and the Participant receiving the participating interest in
the Obligations, the Commitments, and the other rights and interests of
the Originating Lender hereunder shall not constitute a "Lender"
hereunder or under the other Loan Documents and the Originating
Lender's obligations under this Agreement shall remain unchanged, (ii)
the Originating Lender shall remain solely responsible for the
performance of such obligations, (iii) Borrowers, Agent, and the
Lenders shall continue to deal solely and directly with the Originating
Lender in connection with the Originating Lender's rights and
obligations under this Agreement and the other Loan Documents, (iv) no
Lender shall transfer or grant any participating interest under which
the Participant has the right to approve any amendment to, or any
consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment to, or consent or waiver
with respect to this Agreement or of any other Loan Document would (A)
extend the final maturity date of the Obligations hereunder in which
such Participant is participating, (B) reduce the interest rate
applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or a material portion of the Collateral
or guaranties (except to the extent expressly provided herein or in any
of the Loan Documents) supporting the Obligations hereunder in which
such Participant is participating, (D) postpone the payment of, or
reduce the amount of, the interest or fees payable to such Participant
through such Lender, or (E) change the amount or due dates of scheduled
principal repayments or prepayments or premiums; and (v) all amounts
payable by Borrowers hereunder shall be determined as if such Lender
had not sold such participation; except that, if amounts outstanding
under this Agreement are due and unpaid, or shall have been declared or
shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of set-off
in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement.
The rights of any Participant only shall be derivative through the
Originating Lender with whom such Participant participates and no
Participant shall have any rights under this Agreement or the other
Loan Documents or any direct rights as to the other Lenders, Agent,
Borrowers, the Collections, the Collateral, or otherwise in respect of
the Obligations. No Participant shall have the right to participate
directly in the making of decisions by the Lenders among themselves.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose all
documents and information which it now or hereafter may have relating
to Borrowers or Borrowers' business.
(g) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or
any portion of its rights under and interest in this Agreement in favor
of any Federal Reserve Bank in accordance with Regulation A of the
Federal Reserve Bank or U.S. Treasury Regulation 31 CFR ss.203.14, and
such Federal Reserve Bank may enforce such pledge or security interest
in any manner permitted under applicable law.
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14.2 Successors. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; provided, however,
that Borrowers may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release any Borrower from its Obligations. A Lender may assign this Agreement
and the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 14.1 hereof and, except as expressly required pursuant to
Section 14.1 hereof, no consent or approval by any Borrower is required in
connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Administrative Borrower (on behalf of all
Borrowers) and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in writing and
signed by all of the Lenders affected thereby and Administrative Borrower (on
behalf of all Borrowers) and acknowledged by Agent, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees, or
other amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any
loan or other extension of credit hereunder, or reduce any fees or
other amounts payable hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is required
to take any action hereunder,
(e) amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by Section
16.12,
(g) change the definition of "Required Lenders",
(h) contractually subordinate any of the Agent's Liens,
(i) release any Borrower from any obligation for the payment
of money, or
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(j) change the definition of Borrowing Base or the definitions
of Eligible Accounts, Eligible Inventory, Maximum Revolver Amount, or
change Section 2.1(b); or
(k) amend any of the provisions of Section 16.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, affect
the rights or duties of Agent, Issuing Lender, or Swing Lender, as applicable,
under this Agreement or any other Loan Document. The foregoing notwithstanding,
any amendment, modification, waiver, consent, termination, or release of, or
with respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of Borrowers, shall not require
consent by or the agreement of Borrowers.
15.2 Replacement of Holdout Lender If any action to be taken by the
Lender Group or Agent hereunder requires the unanimous consent, authorization,
or agreement of all Lenders, and a Lender ("Holdout Lender") fails to give its
consent, authorization, or agreement, then Agent, upon at least 5 Business Days
prior irrevocable notice to the Holdout Lender, may permanently replace the
Holdout Lender with one or more substitute Lenders (each, a "Replacement
Lender"), and the Holdout Lender shall have not right to refuse to be replaced
hereunder. Such notice to replace the Holdout Lender shall specify an effective
date for such replacement, which date shall not be later than 15 Business Days
after the date such notice is given.
Prior to the effective date of such replacement, the Holdout Lender and
each Replacement Lender shall execute and deliver an Assignment and Acceptance
Agreement, subject only to the Holdout Lender being repaid its share of the
outstanding Obligations (including an assumption of its Pro Rata Share of the
Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance Agreement prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance Agreement. The replacement of any Holdout Lender
shall be made in accordance with the terms of Section 14.1. Until such time as
the Replacement Lenders shall have acquired all of the Obligations, the
Commitments, and the other rights and obligations of the Holdout Lender
hereunder and under the other Loan Documents, the Holdout Lender shall remain
obligated to make the Holdout Lender's Pro Rata Share of Advances and to
purchase a participation in each Letter of Credit, in an amount equal to its Pro
Rata Share of the Risk Participation Liability of such Letter of Credit.
15.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender
to exercise any right, remedy, or option under this Agreement or, any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrowers of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and
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the other Loan Documents will be cumulative and not exclusive of any other right
or remedy that Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 Appointment and Authorization of Agent. Each Lender hereby
designates and appoints Foothill as its representative under this Agreement and
the other Loan Documents and each Lender hereby irrevocably authorizes Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this Section 16.
The provisions of this Section 16 are solely for the benefit of Agent, and the
Lenders, and Borrowers shall have no rights as a third party beneficiary of any
of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that Foothill
is merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections, and related matters, (b) execute or file any and all financing
or similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as
provided in the Loan Documents, (d) exclusively receive, apply, and distribute
the Collections as provided in the Loan Documents, (e) open and maintain such
bank accounts and cash management accounts as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes
with respect to the Collateral and the Collections, (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group with respect
to Borrowers, the Obligations, the Collateral, the Collections, or otherwise
related to any of same as provided in the Loan Documents, and (g) incur and pay
such Lender Group Expenses as Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Loan
Documents.
16.2 Delegation of Duties. Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be
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responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects as long as such selection was made without gross negligence or
willful misconduct.
16.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrowers or the books or
records or properties of any of Borrowers' Subsidiaries or Affiliates.
16.4 Reliance by Agent. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrowers
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
16.5 Notice of Default or Event of Default. Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest,
fees, and expenses required to be paid to Agent for the account of the Lenders,
except with respect to Events of Default of which Agent has actual knowledge,
unless Agent shall have received written notice from a Lender or Administrative
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a "notice of default." Agent promptly
will notify the Lenders of its receipt of any such notice or of any Event of
Default of which Agent has actual knowledge. If any Lender obtains actual
knowledge of any Event of Default, such Lender promptly shall notify the other
Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
Section 16.4, Agent shall take such action with
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respect to such Default or Event of Default as may be requested by the Required
Lenders in accordance with Section 9; provided, however, that unless and until
Agent has received any such request, Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable.
16.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrowers
and their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrowers. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrowers and any other
Person party to a Loan Document that may come into the possession of any of the
Agent-Related Persons.
16.7 Costs and Expenses; Indemnification. Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, reasonable
attorneys fees and expenses, costs of collection by outside collection agencies
and auctioneer fees and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrowers are obligated to reimburse
Agent or Lenders for such expenses pursuant to the Loan Agreement or otherwise.
Agent is authorized and directed to deduct and retain sufficient amounts from
Collections received by Agent to reimburse Agent for such out-of-pocket costs
and expenses prior to the distribution of any amounts to Lenders. In the event
Agent is not reimbursed for such costs and expenses from Collections received by
Agent, each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender's Pro Rata Share thereof. Whether
or not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by
or on behalf of Borrowers and without limiting the obligation of Borrowers to do
so), according to their Pro Rata Shares, from and against any and all
Indemnified Liabilities; provided, however, that no Lender shall be liable for
the payment to any Agent-Related Person of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct nor shall any Lender be liable for the obligations
72
of any Defaulting Lender in failing to make an Advance or other extension of
credit hereunder. Without limitation of the foregoing, each Lender shall
reimburse Agent upon demand for such Lender's ratable share of any costs or
out-of-pocket expenses (including attorneys fees and expenses) incurred by Agent
in connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that Agent is not
reimbursed for such expenses by or on behalf of Borrowers. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.
16.8 Agent in Individual Capacity. Foothill and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrowers and their
Subsidiaries and Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents as though Foothill were not Agent hereunder, and, in
each case, without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, Foothill or its Affiliates may receive information regarding
Borrowers or their Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents that is subject to confidentiality obligations in
favor of Borrowers or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include Foothill in its individual capacity.
16.9 Successor Agent. Agent may resign as Agent upon 45 days notice to
the Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 16 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.
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16.10 Lender in Individual Capacity. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person (other than
the Lender Group) party to any Loan Documents as though such Lender were not a
Lender hereunder without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding Borrowers or their Affiliates and any other Person (other than the
Lender Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the sub-agent of the
Agent.
16.11 Withholding Taxes.
(a) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the IRC and such Lender claims exemption
from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the IRC, such Lender agrees with and in favor of Agent and
Borrowers, to deliver to Agent and Administrative Borrower:
(i) if such Lender claims an exemption from
withholding tax pursuant to its portfolio interest exception,
(a) a statement of the Lender, signed under penalty of
perjury, that it is not a (I) a "bank" as described in Section
881(c)(3)(A) of the IRC, (II) a 10% shareholder (within the
meaning of Section 881(c)(3)(B) of the IRC), or (III) a
controlled foreign corporation described in Section
881(c)(3)(C) of the IRC, and (B) a properly completed IRS Form
W-8BEN, before the first payment of any interest under this
Agreement and at any other time reasonably requested by Agent
or Administrative Borrower;
(ii) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax
treaty, properly completed IRS Form W-8BEN before the first
payment of any interest under this Agreement and at any other
time reasonably requested by Agent or Administrative Borrower;
(iii) if such Lender claims that interest paid under
this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade
or business of such Lender, two properly completed and
executed copies of IRS Form W-8ECI before the first payment of
any interest is due under this Agreement and at any other time
reasonably requested by Agent or Administrative Borrower;
74
(iv) such other form or forms as may be required
under the IRC or other laws of the United States as a
condition to exemption from, or reduction of, United States
withholding tax.
Such Lender agrees promptly to notify Agent and Administrative Borrower of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form
W-8BEN and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of Borrowers to such
Lender, such Lender agrees to notify Agent of the percentage amount in
which it is no longer the beneficial owner of Obligations of Borrowers
to such Lender. To the extent of such percentage amount, Agent will
treat such Lender's IRS Form W-8BEN as no longer valid.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable withholding tax after
taking into account such reduction. If the forms or other documentation
required by subsection (a) of this Section are not delivered to Agent,
then Agent may withhold from any interest payment to such Lender not
providing such forms or other documentation an amount equivalent to the
applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that Agent did not
properly withhold tax from amounts paid to or for the account of any
Lender (because the appropriate form was not delivered, was not
properly executed, or because such Lender failed to notify Agent of a
change in circumstances which rendered the exemption from, or reduction
of, withholding tax ineffective, or for any other reason) such Lender
shall indemnify and hold Agent harmless for all amounts paid, directly
or indirectly, by Agent as tax or otherwise, including penalties and
interest, and including any taxes imposed by any jurisdiction on the
amounts payable to Agent under this Section, together with all costs
and expenses (including attorneys fees and expenses). The obligation of
the Lenders under this subsection shall survive the payment of all
Obligations and the resignation or replacement of Agent.
(e) All payments made by Borrowers hereunder or under any note
or other Loan Document will be made without setoff, counterclaim, or
other defense, except as required by applicable law other than for
Taxes (as defined below). All such payments will be made free and clear
of, and without deduction or withholding for, any present or future
taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction (other
than the United States) or by any political subdivision or taxing
authority thereof or therein (other than of the United States) with
respect to such payments (but excluding, any tax imposed by any
jurisdiction or by any political subdivision or taxing authority
thereof or therein (i) measured by or based on the net income or net
profits of a Lender, or (ii) to the extent that such tax results from a
change in the circumstances of the Lender, including a change in the
residence, place of organization, or principal place of business of the
Lender, or a change in the branch or lending office of the Lender
participating in the transactions
75
set forth herein) and all interest, penalties or similar liabilities
with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to
collectively as "Taxes"). If any Taxes are so levied or imposed, each
Borrower agrees to pay the full amount of such Taxes, and such
additional amounts as may be necessary so that every payment of all
amounts due under this Agreement or under any note, including any
amount paid pursuant to this Section 16.11(e) after withholding or
deduction for or on account of any Taxes, will not be less than the
amount provided for herein; provided, however, that Borrowers shall not
be required to increase any such amounts payable to Agent or any Lender
(i) that is not organized under the laws of the United States, if such
Person fails to comply with the other requirements of this Section
16.11, or (ii) if the increase in such amount payable results from
Agent's or such Lender's own willful misconduct or gross negligence.
Borrowers will furnish to Agent as promptly as possible after the date
the payment of any Taxes is due pursuant to applicable law certified
copies of tax receipts evidencing such payment by Borrowers.
16.12 Collateral Matters.
(a) The Lenders hereby irrevocably authorize Agent, at its
option and in its sole discretion, to release any Lien on any
Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by Borrowers of all Obligations, (ii) constituting
property being sold or disposed of if a release is required or
desirable in connection therewith and if Administrative Borrower
certifies to Agent that the sale or disposition is permitted under
Section 7.4 of this Agreement or the other Loan Documents (and Agent
may rely conclusively on any such certificate, without further
inquiry), (iii) constituting property in which no Borrower owned any
interest at the time the security interest was granted or at any time
thereafter, or (iv) constituting property leased to a Borrower under a
lease that has expired or is terminated in a transaction permitted
under this Agreement. Except as provided above, Agent will not execute
and deliver a release of any Lien on any Collateral without the prior
written authorization of (y) if the release is of all or substantially
all of the Collateral, all of the Lenders, or (z) otherwise, the
Required Lenders. Upon request by Agent or Administrative Borrower at
any time, the Lenders will confirm in writing Agent's authority to
release any such Liens on particular types or items of Collateral
pursuant to this Section 16.12; provided, however, that (1) Agent shall
not be required to execute any document necessary to evidence such
release on terms that, in Agent's opinion, would expose Agent to
liability or create any obligation or entail any consequence other than
the release of such Lien without recourse, representation, or warranty,
and (2) such release shall not in any manner discharge, affect, or
impair the Obligations or any Liens (other than those expressly being
released) upon (or obligations of Borrowers in respect of) all
interests retained by Borrowers, including, the proceeds of any sale,
all of which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by Borrowers
or is cared for, protected, or insured or has been encumbered, or that
the Agent's Liens have been properly or sufficiently or lawfully
created, perfected, protected, or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner
or under any duty of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or
available to Agent pursuant to any of the Loan Documents, it being
understood and agreed that in respect of the Collateral, or
76
any act, omission, or event related thereto, subject to the terms and
conditions contained herein, Agent may act in any manner it may deem
appropriate, in its sole discretion given Agent's own interest in the
Collateral in its capacity as one of the Lenders and that Agent shall
have no other duty or liability whatsoever to any Lender as to any of
the foregoing, except as otherwise provided herein.
16.13 Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of Agent, set off against
the Obligations, any amounts owing by such Lender to Borrowers or any
deposit accounts of Borrowers now or hereafter maintained with such
Lender. Each of the Lenders further agrees that it shall not, unless
specifically requested to do so by Agent, take or cause to be taken any
action, including, the commencement of any legal or equitable
proceedings, to foreclose any Lien on, or otherwise enforce any
security interest in, any of the Collateral the purpose of which is, or
could be, to give such Lender any preference or priority against the
other Lenders with respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral
or any payments with respect to the Obligations arising under, or
relating to, this Agreement or the other Loan Documents, except for any
such proceeds or payments received by such Lender from Agent pursuant
to the terms of this Agreement, or (ii) payments from Agent in excess
of such Lender's ratable portion of all such distributions by Agent,
such Lender promptly shall (1) turn the same over to Agent, in kind,
and with such endorsements as may be required to negotiate the same to
Agent, or in immediately available funds, as applicable, for the
account of all of the Lenders and for application to the Obligations in
accordance with the applicable provisions of this Agreement, or (2)
purchase, without recourse or warranty, an undivided interest and
participation in the Obligations owed to the other Lenders so that such
excess payment received shall be applied ratably as among the Lenders
in accordance with their Pro Rata Shares; provided, however, that if
all or part of such excess payment received by the purchasing party is
thereafter recovered from it, those purchases of participations shall
be rescinded in whole or in part, as applicable, and the applicable
portion of the purchase price paid therefor shall be returned to such
purchasing party, but without interest except to the extent that such
purchasing party is required to pay interest in connection with the
recovery of the excess payment.
16.14 Agency for Perfection. Agent hereby appoints each other Lender as
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the UCC can be perfected only by possession. Should any Lender obtain possession
of any such Collateral, such Lender shall notify Agent thereof, and, promptly
upon Agent's request therefor shall deliver such Collateral to Agent or in
accordance with Agent's instructions.
16.15 Payments by Agent to the Lenders. All payments to be made by
Agent to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice
77
to Agent. Concurrently with each such payment, Agent shall identify whether such
payment (or any portion thereof) represents principal, premium, or interest of
the Obligations.
16.16 Concerning the Collateral and Related Loan Documents. Each member
of the Lender Group authorizes and directs Agent to enter into this Agreement
and the other Loan Documents relating to the Collateral, for the benefit of the
Lender Group. Each member of the Lender Group agrees that any action taken by
Agent in accordance with the terms of this Agreement or the other Loan Documents
relating to the Collateral and the exercise by Agent of its powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
16.17 Field Audits and Examination Reports; Confidentiality;
Disclaimers by Lenders; Other Reports and Information. By becoming a party to
this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit
or examination report (each a "Report" and collectively, "Reports")
prepared by Agent, and Agent shall so furnish each Lender with such
Reports,
(b) expressly agrees and acknowledges that Agent does not (i)
make any representation or warranty as to the accuracy of any Report,
and (ii) shall not be liable for any information contained in any
Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party
performing any audit or examination will inspect only specific
information regarding Borrowers and will rely significantly upon the
Books, as well as on representations of Borrowers' personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Borrowers and their Subsidiaries and their
operations, assets, and existing and contemplated business plans in a
confidential manner; it being understood and agreed by Borrowers that
in any event such Lender may make disclosures (a) to counsel for and
other advisors, accountants, and auditors to such Lender, (b)
reasonably required by any bona fide potential or actual Assignee or
Participant in connection with any contemplated or actual assignment or
transfer by such Lender of an interest herein or any participation
interest in such Lender's rights hereunder, (c) of information that has
become public by disclosures made by Persons other than such Lender,
its Affiliates, assignees, transferees, or Participants, or (d) as
required or requested by any court, governmental or administrative
agency, pursuant to any subpoena or other legal process, or by any law,
statute, regulation, or court order; provided, however, that, unless
prohibited by applicable law, statute, regulation, or court order, such
Lender shall notify Administrative Borrower of any request by any
court, governmental or administrative agency, or pursuant to any
subpoena or other legal process for disclosure of any such non-public
material information concurrent with, or where practicable, prior to
the disclosure thereof, and
78
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to
hold Agent and any such other Lender preparing a Report harmless from
any action the indemnifying Lender may take or conclusion the
indemnifying Lender may reach or draw from any Report in connection
with any loans or other credit accommodations that the indemnifying
Lender has made or may make to Borrowers, or the indemnifying Lender's
participation in, or the indemnifying Lender's purchase of, a loan or
loans of Borrowers; and (ii) to pay and protect, and indemnify, defend
and hold Agent, and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs,
expenses, and other amounts (including, attorneys fees and costs)
incurred by Agent and any such other Lender preparing a Report as the
direct or indirect result of any third parties who might obtain all or
part of any Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrowers to Agent that has not been contemporaneously
provided by Borrowers to such Lender, and, upon receipt of such request, Agent
shall provide a copy of same to such Lender, (y) to the extent that Agent is
entitled, under any provision of the Loan Documents, to request additional
reports or information from Borrowers, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender's
notice to Agent, whereupon Agent promptly shall request of Administrative
Borrower the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from Administrative Borrower, Agent promptly
shall provide a copy of same to such Lender, and (z) any time that Agent renders
to Administrative Borrower a statement regarding the Loan Account, Agent shall
send a copy of such statement to each Lender.
16.18 Several Obligations; No Liability. Notwithstanding that certain
of the Loan Documents now or hereafter may have been or will be executed only by
or in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 16.7, no member of the Lender Group shall
have any liability for the acts or any other member of the Lender Group. No
Lender shall be responsible to any Borrower or any other Person for any failure
by any other Lender to fulfill its obligations to make credit available
hereunder, nor to advance for it or on its behalf in connection with its
Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.
16.19 Legal Representation of Agent. In connection with the
negotiation, drafting, and execution of this Agreement and the other Loan
Documents, or in connection with future legal representation relating to loan
administration, amendments, modifications, waivers, or
79
enforcement of remedies, Buchalter, Nemer, Fields & Younger, a Professional
Corporation ("BNFY") only has represented and only shall represent Foothill in
its capacity as Agent and as a Lender. Each other Lender hereby acknowledges
that BNFY does not represent it in connection with any such matters.
17. GENERAL PROVISIONS.
17.1 Effectiveness. This Agreement shall be binding and deemed
effective when executed by Borrowers, Agent, and each Lender whose signature is
provided for on the signature pages hereof.
17.2 Section Headings. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
17.3 Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against the Lender Group or
Borrowers, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.4 Severability of Provisions. Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5 Amendments in Writing. This Agreement only can be amended by a
writing in accordance with Section 15.1.
17.6 Counterparts; Telefacsimile Execution. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.7 Revival and Reinstatement of Obligations. If the incurrence or
payment of the Obligations by any Borrower or the transfer to the Lender Group
of any property should for any reason subsequently be declared to be void or
voidable under any state or federal law relating to creditors' rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a "Voidable Transfer"), and if the Lender Group is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable
80
advice of its counsel, then, as to any such Voidable Transfer, or the amount
thereof that the Lender Group is required or elects to repay or restore, and as
to all reasonable costs, expenses, and attorneys fees of the Lender Group
related thereto, the liability of Borrowers automatically shall be revived,
reinstated, and restored and shall exist as though such Voidable Transfer had
never been made.
17.8 Integration. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
17.9 Parent as Agent for Borrowers. Each Borrower hereby irrevocably
appoints Parent as the borrowing agent and attorney-in-fact for all Borrowers
(the "Administrative Borrower") which appointment shall remain in full force and
effect unless and until Agent shall have received prior written notice signed by
each Borrower that such appointment has been revoked and that another Borrower
has been appointed Administrative Borrower. Each Borrower hereby irrevocably
appoints and authorizes the Administrative Borrower (i) to provide Agent with
all notices with respect to Advances and Letters of Credit obtained for the
benefit of any Borrower and all other notices and instructions under this
Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Advances and Letters of Credit and to
exercise such other powers as are reasonably incidental thereto to carry out the
purposes of this Agreement. It is understood that the handling of the Loan
Account and Collateral of Borrowers in a combined fashion, as more fully set
forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that Lender Group shall not incur
liability to any Borrower as a result hereof. Each Borrower expects to derive
benefit, directly or indirectly, from the handling of the Loan Account and the
Collateral in a combined fashion since the successful operation of each Borrower
is dependent on the continued successful performance of the integrated group. To
induce the Lender Group to do so, and in consideration thereof, each Borrower
hereby jointly and severally agrees to indemnify each member of the Lender Group
and hold each member of the Lender Group harmless against any and all liability,
expense, loss or claim of damage or injury, made against the Lender Group by any
Borrower or by any third party whosoever, arising from or incurred by reason of
(a) the handling of the Loan Account and Collateral of Borrowers as herein
provided, (b) the Lender Group's relying on any instructions of the
Administrative Borrower, or (c) any other action taken by the Lender Group
hereunder or under the other Loan Documents, except that Borrowers will have no
liability to the relevant Agent-Related Person or Lender-Related Person under
this Section 17.9 with respect to any liability that has been finally determined
by a court of competent jurisdiction to have resulted solely from the gross
negligence or willful misconduct of such Agent-Related Person or Lender-Related
Person, as the case may be.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
WAM!NET INC.,
a Minnesota corporation
By:
-------------------------------------
Title:
WAM!NET GOVERNMENT SERVICES, INC.,
a Minnesota corporation
By:
-------------------------------------
Title:
KEYTECH LLC,
a Minnesota limited liability company
By:
-------------------------------------
Title:
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent and
as a Lender
By:
-------------------------------------
Title:
ABELCO FINANCE LLC,
a Delaware limited liability company
By:
-------------------------------------
Title:
82
Schedule C-1
------------
Commitments
===================================== ==========================================
Lender Revolver Commitment
===================================== ==========================================
Foothill Capital Corporation $15,000,000
===================================== ==========================================
Abelco Finance LLC $15,000,000
===================================== ==========================================
===================================== ==========================================
===================================== ==========================================
===================================== ==========================================
All Lenders $30,000,000
===================================== ==========================================