EXHIBIT 10.13
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF JULY 22, 2004
BY AND AMONG
COACTIVE MARKETING GROUP, INC.,
INMARK SERVICES LLC,
U.S. CONCEPTS LLC,
OPTIMUM GROUP LLC,
GRUPO HACERLO LLC,
AND
SIGNATURE BANK
AMENDED AND RESTATED CREDIT AGREEMENT dated as of July 22, 2004, by and
among CoActive Marketing Group, Inc., a Delaware corporation (the "Company" or a
"Borrower"), Inmark Services LLC, a Delaware limited liability company (f/k/a
Inmark Services, Inc.) (a "Borrower"), U.S. Concepts LLC, a Delaware limited
liability company (f/k/a U.S. Concepts, Inc.) (a "Borrower"), Grupo Hacerlo LLC,
a New York limited liability company (a "Borrower"), Optimum Group LLC, a
Delaware limited liability company (f/k/a Optimum Group, Inc.) (a "Borrower";
and together with the Company and each other Borrower heretofore referenced,
individually and collectively, jointly and severally, the "Borrowers"), and
Signature Bank (the "Lender").
The Lender and the Borrowers entered into a certain Credit Agreement
dated as of October 31, 2002, which agreement has been amended from time to time
from and after such date (the "Credit Agreement").
The Borrowers and the Lender have agreed that such Credit Agreement
will be amended and restated in the manner provided for in this Agreement.
Accordingly, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Definitions.
As used herein, the following terms shall have the following meanings:
"Adjusted Aggregate Outstandings" shall mean, on a date of
determination, the sum of (a) the Aggregate Letter of Credit Outstandings at
such time, (b) the aggregate outstanding principal amount of all Revolving
Credit Loans at such time, and (c) the aggregate outstanding principal amount of
the Term Loan at such time.
"Adjusted Total Commitment" shall mean $4,100,000.
"Affiliate" shall mean with respect to a specified Person, another
Person which, directly or indirectly, controls or is controlled by or is under
common control with such specified Person. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, either to (a)
vote 10% or more of the securities having ordinary voting power for the election
of directors of (or persons performing similar functions for) such Person or (b)
direct or cause the direction of the management and policies of such Person,
whether by contract or otherwise.
"Aggregate Letter of Credit Outstandings" shall mean, on the date of
determination, the sum of (a) the aggregate maximum stated amount at such time
which is available to be drawn under outstanding Letters of Credit and (b) the
aggregate amount of all payments on account of drawings under outstanding
Letters of Credit that has not been reimbursed by the Company.
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"Aggregate Outstandings" shall mean, on the date of determination, the
sum of (a) the Aggregate Letter of Credit Outstandings at such time, (b) the
aggregate outstanding principal amount of all Revolving Credit Loans at such
time, (c) the aggregate outstanding principal amount of the Term Loan at such
time, and (d) the aggregate outstanding principal amount of the Second Term Loan
at such time.
"Aggregate Revolving Credit Outstandings" shall mean, on the date of
determination, the sum of (a) the Aggregate Letter of Credit Outstandings at
such time and (b) the aggregate outstanding principal amount of all Revolving
Credit Loans at such time.
"Agreement" shall mean this Amended and Restated Credit Agreement dated
as of July 22, 2004, as it may hereafter be amended, restated, supplemented or
otherwise modified from time to time.
"Amended and Restated Revolving Credit Note" shall have the meaning set
forth in Section 2.01.
"Auditor" shall have the meaning specified in Section 6.03(a) hereof.
"Borrowing Base" shall mean, at a particular date (except as otherwise
provided below), an amount equal to the sum of 80% of the Eligible Receivables
of the Borrowers, provided, however, that notwithstanding the foregoing to the
contrary, at any particular date of determination occurring from and after
November 24, 2003 to but not including January 31, 2004, "Borrowing Base" shall
mean an amount equal to the sum of (a) 80% of the Eligible Receivables of the
Borrowers and (b) $500,000.
"Borrowing Base Certificate" shall mean a certificate duly executed by
the Chief Financial Officer or Controller of the Company, appropriately
completed and in the form attached to the Credit Agreement as Exhibit A, to be
delivered by the Company to the Lender from time to time during the Commitment
Period in accordance with the provisions hereof.
"Borrowing Date" shall mean, with respect to any Revolving Credit Loan,
the date specified in any notice given pursuant to Section 2.01 on which such
Loan is requested by the Company (on its own behalf or on behalf of any other
Borrower).
"Business Day" shall mean any day not a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to close.
"Capital Expenditures" shall mean, for any period, expenditures
(including the aggregate amount of Capital Lease obligations incurred during
such period) made by the Borrowers or any of its Subsidiaries to acquire or
construct fixed assets, plant and equipment (including renewals, improvements
and replacements, but excluding repairs) during such period computed in
accordance with GAAP.
"Capital Lease" shall mean with respect to any Person, as of the date
of determination, any lease the obligations of which are required to be
capitalized on the balance sheet of such Person in accordance with Generally
Accepted Accounting Principles applied on a consistent basis.
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"Cash Collateral" shall mean a deposit by the Borrowers made in
immediately available funds to a cash collateral account at the Lender and the
taking of all action required to provide the Lender a first priority perfected
security interest in such deposit.
"Change of Control" shall mean any event which results in (i) any
Person, or two or more Persons acting in concert, acquiring beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934), directly or indirectly, of
securities of the Company (or other securities convertible into such securities)
representing 40% or more of the combined voting power of all securities of the
Company entitled to vote in the election of directors; or (ii) during any period
of up to 12 consecutive months, individuals who at the beginning of such
12-month period were directors of the Company ceasing for any reasons to
constitute a majority of the Board of Directors of the Company; or (iii) any
Person, or two or more Persons acting in concert, acquiring by contract or
otherwise, or entering into a contract or arrangement which upon consummation
will result in its or their acquisition of, or control over, securities of the
Company (or securities convertible into such securities) representing 40% or
more of the combined voting power of all securities of the Company entitled to
vote in the election of directors.
"Chief Financial Officer" shall mean the Chief Financial Officer of the
Company, or in the event no such officership exists, the President of the
Company.
"Closing Date" shall mean October 31, 2002.
"Code" shall mean the Internal Revenue Code of 1986, and the
regulations promulgated thereunder, each as amended from time to time.
"Commitment" shall mean the Revolving Credit Commitment or the Term
Loan Commitment, as applicable.
"Commitment Period" shall mean the period from and including the
Closing Date to, but not including, the Termination Date, or such earlier date
as the Revolving Credit Commitment or the Term Loan Commitment, as the case may
be, shall terminate as provided herein.
"Company" shall have the meaning set forth in the preamble hereto.
"Consolidated EBITDA" shall mean, for the Company and its Subsidiaries,
on a consolidated basis, for any period (without duplication), the Consolidated
Net Income (Net Loss) of the Company and its Subsidiaries for such period
(excluding extraordinary gains), plus the sum, without duplication, of (a)
Consolidated Interest Expense, (b) depreciation and amortization expenses or
charges, (c) income taxes to any government or governmental instrumentality
expensed on the Company's or any of its Subsidiaries' books (whether paid or
accrued) and (d) non-cash, non-recurring charges or losses, if any, minus the
sum of (i) non-cash, non-recurring gains and (ii) interest income, determined in
accordance with Generally Accepted Accounting Principles applied on a consistent
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basis. All of the foregoing categories shall be calculated with respect to the
Company and its Subsidiaries (without duplication) over the four fiscal quarters
next preceding the date of calculation thereof.
"Consolidated Senior Funded Debt" shall mean, on the date of
determination, the sum of all Indebtedness of the Company and its Subsidiaries,
on a consolidated basis, for borrowed money having an original maturity of one
year or more, including the current portion thereof and including obligations
with respect to Capital Leases and Subordinated Indebtedness, determined in
accordance with Generally Accepted Accounting Principles applied on a consistent
basis.
"Consolidated Interest Expense" shall mean, on the date of
determination, without duplication, the sum of all interest expense on
Indebtedness of the Company and its Subsidiaries determined in accordance with
Generally Accepted Accounting Principles applied on a consistent basis.
Consolidated Interest Expense shall be calculated with respect to the Company
and its Subsidiaries on a consolidated basis.
"Consolidated Interest Income" shall mean, on the date of
determination, without duplication, the sum of all interest income from
investments by the Company and its Subsidiaries in Persons other than
Subsidiaries of the Company determined in accordance with Generally Accepted
Accounting Principles applied on a consistent basis. Consolidated Interest
Income shall be calculated with respect to the Company and its Subsidiaries on a
consolidated basis.
"Consolidated Net Income (Net Loss)" shall mean, for any period, the
net income (or net loss) of the Company and its Subsidiaries on a consolidated
basis for such period determined in accordance with Generally Accepted
Accounting Principles applied on a consistent basis.
"Customer" shall mean and include the account debtor with respect to
any Receivable and/or the purchaser of goods, services or both with respect to
any contract or contract right, and/or any party who enters into any contract or
other arrangement with the relevant Person, pursuant to which such Person is to
deliver any personal property or perform any services.
"Debt Service Coverage Ratio" shall mean, at any date of determination,
the ratio of (a) Consolidated EBITDA for the twelve-calendar month period ending
on such date, less (i) the aggregate amount of cash income taxes actually paid
by the Company to any government or governmental instrumentality during such
period, (ii) the aggregate amount of cash Capital Expenditures actually paid by
the Company and its Subsidiaries during such period and (iii) the aggregate
amount of cash Dividends actually paid by the Company during such period, to (b)
the sum of (i) Interest Expense for the twelve-calendar month period ending on
such date, plus (ii) with respect to Indebtedness (including Capital Leases) of
the Company and its Subsidiaries having a final maturity of one year or more
from the date of incurrence thereof (including the current portion thereof), the
aggregate principal amount of all installments of such Indebtedness scheduled
(in accordance with the terms of the same) to be paid during such period.
"Default" shall mean any condition or event which upon notice, lapse of
time or both would constitute an Event of Default.
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"Dividends" shall mean, for any period, the sum of all dividends and
distributions made by a Person determined in accordance with Generally Accepted
Accounting Principles applied on a consistent basis.
"Dollar" and the symbol "$" shall mean lawful currency of the United
States of America.
"Domestic Subsidiary" shall mean any Subsidiary of the Company
organized under the laws of any state of the United States of America.
"Effective Date" shall mean July 22, 2004.
"Eligible Investments" shall mean (a) direct obligations of the United
States of America or any governmental agency thereof which are fully guaranteed
or insured by the United States of America, provided that such obligations
mature within one year from the date of acquisition thereof; or (b) dollar
denominated certificates of time deposit maturing within one year issued by any
bank organized and existing under the laws of the United States or any state
thereof and having aggregate capital and surplus in excess of $1,000,000,000; or
(c) money market mutual funds having assets in excess of $1,000,000,000; or (d)
commercial paper rated not less than P-1 or A-1 or their equivalent by ▇▇▇▇▇'▇
Investors Service, Inc. or Standard & Poor's Ratings Group, respectively; or (e)
tax exempt securities of a U.S. issuer rated A or better by Standard & Poor's
Ratings Group or ▇▇▇▇▇'▇ Investors Service, Inc.; or (f) repurchase agreements
entered into with any bank, trust company or financial institution organized
under the laws of the United States of America or any state thereof, having
capital and surplus in an aggregate amount not less than $1,000,000,000 and
relating to any of the obligations referred to in clause (a) above.
"Eligible Receivables" shall mean, at a particular date of
determination, Receivables created by any of the Borrowers in the ordinary
course of business arising out of the sale or lease of goods or rendition of
services by any of such Borrowers (including any deposits awaiting bank
collections), which are and at all times shall continue to be acceptable to the
Lender in all respects; provided that standards of eligibility may be fixed and
revised from time to time solely by the Lender in the Lender's commercially
reasonable judgment. In general, without limiting the foregoing, a Receivable
shall in no event be deemed to be an Eligible Receivable unless: (a) all
payments due on the Receivable have been invoiced and the underlying goods have
been shipped or the underlying services have been performed, as the case may be
(e.g., items that may be characterized or that are reflected on any of the
financial statements or books and records of any of the Borrowers as pre-billed
or pre-billing, billed before trafficking/did not follow contract billing
schedule, billed without the contract signed or events progress billing although
abiding by contract terms shall in no event be deemed Eligible Receivables); (b)
no more than ninety (90) days have elapsed from the invoice date or from the
invoice due date; (c) the payments due on more than 25% of all Receivables from
the same Customer are not more than ninety (90) days past the invoice date or
the invoice due date; (d) the Receivable arose from a completed and bona fide
transaction (and with respect to a sale of goods, a transaction in which title
has passed to the Customer) which requires no further act under any
circumstances on the part of the applicable Borrower in order to cause such
Receivable to be payable in full by the Customer; (e) the Receivable is in full
conformity with the representations and warranties made to the Lender with
respect thereto and is free and clear of all security interests and Liens of any
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nature whatsoever other than any security interest deemed to be held by any of
the Borrowers or any security interest created pursuant to the Security
Documents or permitted by Section 7.02 hereof; (f) the Receivable constitutes an
"account" or "chattel paper" within the meaning of the Uniform Commercial Code
of the state in which the Receivable is located; (g) the Customer has not
asserted that the Receivable, and none of the Borrowers are aware that the
Receivable, arises out of a ▇▇▇▇ and hold or consignment arrangement or is
subject to any setoff, contest, net-out contract, offset, deduction, dispute,
credit, counterclaim or other defense arising out of the transactions
represented by the Receivables or independently thereof and, to the extent the
Receivable arises out of the sale of goods, the Customer has finally accepted
the goods from the sale out of which the Receivable arose and has not objected
to its liability thereon or returned, rejected or repossessed any of such goods,
except for complaints made or goods returned in the ordinary course of business
for which, in the case of goods returned, goods of equal or greater value have
been shipped in return; (h) the Receivable arose in the ordinary course of
business of the applicable Borrower; (i) the Customer is not (x) the United
States government or the government of any state or political subdivision
thereof or therein, or any agency or department of any thereof or any foreign
government unless there has been compliance to the satisfaction of the Lender
with the Federal Assignment of Claims Act or similar state or foreign statutes
or (y) another Borrower or any Guarantor or any Subsidiary or Affiliate of any
Borrower or Guarantor; (j) such Receivable is from a Customer which is (i) a
United States person, or (ii) an obligor in the United States, unless such
Receivable is supported to the satisfaction of the Lender by a letter of credit,
insurance or other acceptable form of guarantee; (k) the Receivable complies
with all material requirements of all applicable laws and regulations, whether
federal, state or local (including, without limitation, usury laws and laws,
rules and regulations relating to truth in lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection practices and
privacy); (1) the Receivable is in full force and effect and constitutes a
legal, valid and binding obligation of the Customer enforceable in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and by general equity principles; (m)
the Receivable is denominated in and provides for payment by the Customer in
Dollars; (n) the Receivable has not been and is not required to be charged off
or written off as uncollectible in accordance with Generally Accepted Accounting
Principles or the customary business practices of any of the Borrowers; (o) the
Lender possesses a valid, perfected first priority security interest in such
Receivable as security for payment of the Obligations; and (p) the Lender is
satisfied with the credit standing of the Customer in relation to the amount of
credit extended.
"Environmental Law" shall mean any applicable law, ordinance, rule,
regulation, or policy having the force of law of any Governmental Authority
relating to pollution or protection of the environment or to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Materials, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections
9601, et seq.), the Hazardous Materials Transportation Act, as amended (49
U.S.C. Sections 1801, et seq.) the Resource Conservation and Recovery Act, as
amended (42 U.S.C. Sections 6901, et seq.) and the rules and regulations
promulgated pursuant thereto.
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"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9) of
ERISA) which together with the Company or any Affiliate of the Company would be
deemed to be a member of the same "controlled group" within the meaning of
Section 414(b), (c), (m) or (o) of the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Company or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Company or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Company or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Company or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Company or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
"Event of Default" shall have the meaning set forth in Article VIII.
"Facility Fee" shall mean the facility fee payable pursuant to Section
3.04 (a).
"Fiscal Quarter" shall mean a three-month period ending on March 31,
June 30, September 30 or December 31, as applicable.
"Generally Accepted Accounting Principles" shall mean those generally
accepted accounting principles in the United States of America, as in effect
from time to time.
"Governmental Authority" shall mean any nation or government, any
state, province, city or municipal entity or other political subdivision
thereof, and any governmental, executive, legislative, judicial, administrative
or regulatory agency, department, authority, instrumentality, commission, board
or similar body, whether federal, state, provincial, territorial, local or
foreign.
"Guarantors" shall mean, collectively, (a) all Subsidiaries (other than
Subsidiaries that are Borrowers) and each other Subsidiary that, from time to
time hereafter, shall be required to execute a Guaranty in accordance with
Section 6.12 hereof; and (b) other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc., all Affiliates
(that are not Subsidiaries) and each other Affiliate (that is not a Subsidiary)
that, from time to time hereafter, shall be required to execute a Guaranty in
accordance with Section 6.12 hereof.
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"Guaranty" shall mean a guaranty in the form attached to the Credit
Agreement as Exhibit B, to be executed and delivered by each Guarantor on the
Closing Date, and thereafter, by any Person required to deliver a Guaranty
pursuant to Section 6.12 hereof.
"Hazardous Materials" shall mean any explosives, radioactive materials,
or other materials, wastes, substances, or chemicals regulated as toxic
hazardous or as a pollutant, contaminant or waste under any applicable
Environmental Law.
"Hedging Agreement" shall mean, without duplication, as to any Person
or Persons, any interest rate swap, collar, cap, floor or forward rate agreement
or other agreement regarding the hedging of interest rate risk exposure executed
in connection with hedging the interest rate exposure of such Person(s) and any
confirming letter executed pursuant to such agreement, all as amended,
supplemented, restated or otherwise modified from time to time.
"Indebtedness" shall mean, without duplication, as to any Person or
Persons (a) indebtedness for borrowed money; (b) indebtedness for the deferred
purchase price of property or services; (c) indebtedness evidenced by bonds,
debentures, notes or other similar instruments; (d) obligations and liabilities
secured by a Lien upon property owned by such Person, whether or not owing by
such Person and even though such Person has not assumed or become liable for the
payment thereof; (e) obligations and liabilities of the types described in
clause (a) through (d) above, directly or indirectly, guaranteed by such Person;
(f) obligations or liabilities created or arising under any conditional sales
contract or other title retention agreement with respect to property used and/or
acquired by such Person; (g) the capitalized portion of obligations of such
Person as lessee under Capital Leases; (h) net liabilities of such Person under
Hedging Agreements and foreign currency exchange agreements, as calculated in
accordance with accepted practice; and (i) all obligations, contingent or
otherwise of such Person as an account party or applicant in respect of letters
of credit created for the account of such Person.
"Interest Payment Date" shall mean the first day of each calendar month
during the term hereof other than November 1, 2002, and the Termination Date.
"Interest Rate Margin" shall mean, from and after the Effective Date,
(a) with respect to each Revolving Credit Loan, .50% per annum, and (b) with
respect to each of the Term Loan and the Second Term Loan, 1.00% per annum.
"LC Fee" shall mean 2% per annum on the face amount of any Letter of
Credit hereunder.
"Lending Office" shall mean, for the Lender, the office specified under
the Lender's name on the signature pages hereof with respect to each Type of
Loan, or such other office as the Lender may designate in writing from time to
time to the applicable Borrower with respect to such Type of Loan.
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"Lender" shall have the meaning set forth in the preamble hereto, and
any other Person that shall have become a party hereto pursuant to the
applicable provisions hereof, other than any Person that ceases to be a party
hereto pursuant to the applicable provisions hereof.
"Letter of Credit" shall mean a standby letter of credit, as defined in
the International Chamber of Commerce Uniform Customs and Practice for
Documentary Credit Publication No. 500 (or any successor publication thereof),
issued by the Lender for the account of the Borrowers (or any of them) pursuant
to a Letter of Credit Agreement and the terms of this Agreement as such terms
may be amended from time to time. The rules of the "International Standby
Practices 1998" published by the Institute of International Lendering Law &
Practice (or such later version thereof as may be in effect at the time of
issuance) shall apply to all Letters of Credit. All Letters of Credit shall be
denominated in Dollars.
"Letter of Credit Agreement" shall mean the Lender's then effective
form of application for letters of credit, as such form may be amended from time
to time. If there are any conflicts between the provisions of any Letter of
Credit Agreement and this Agreement, the provisions of this Agreement shall
govern.
"Lien" shall mean any mortgage, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any conditional sale or other
title retention agreement, any Capital Lease and any financing lease having
substantially the same economic effect as any of the foregoing).
"Loan Documents" shall mean, collectively, this Agreement, the Notes,
the Guaranties, the Pledge Agreements, the Security Agreements and each other
agreement executed in connection with the transactions contemplated hereby or
thereby, as each of the same may hereafter be amended, restated, supplemented or
otherwise modified from time to time.
"Loans" shall mean Revolving Credit Loans, the Term Loan and the Second
Term Loan.
"Material Adverse Effect" shall mean a material adverse effect upon (a)
the business, operations, property, condition or prospects (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole, (b) the
ability of any Borrower or any Guarantor to perform in any material respect any
of its obligations under any Loan Document to which it is a party, (c) the value
of the collateral which is the subject of any of the Loan Documents, or the
Liens on any such collateral or the priority of any such Liens, or (d) the
Lender's rights and remedies under any of the Loan Documents.
"Minimum Effective Net Worth" shall mean, on the date of determination,
without duplication, (a) total assets of the Company and its Subsidiaries less
(b) total liabilities of the Company and its Subsidiaries (including, without
limitation, Subordinated Indebtedness of the Company and its Subsidiaries), in
each case determined in accordance with Generally Accepted Accounting Principles
applied on a consistent basis. Minimum Effective Net Worth shall be calculated
with respect to the Company and its Subsidiaries on a consolidated basis.
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"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA).
"Non-Excluded Taxes" shall have the meaning set forth in Section 3.05
hereof.
"Notes" shall mean, collectively, the Amended and Restated Revolving
Credit Note, the Term Note and the Second Term Note.
"Obligations" shall mean all obligations, liabilities and indebtedness
of the Company and any of its Subsidiaries to the Lender, whether now existing
or hereafter created, absolute or contingent, direct or indirect, due or not,
whether created directly or acquired by assignment or otherwise, arising under
this Agreement or any other Loan Document including, without limitation, all
obligations, liabilities and indebtedness of the Borrowers with respect to the
principal of and interest on the Loans, reimbursement of Letters of Credit and
all fees, costs, expenses and indemnity obligations of the Company or any of its
Subsidiaries hereunder or under any other Loan Document.
"Participant" shall have the meaning set forth in Section 9.05 (b)
hereof.
"Payment Office" shall mean the Lender's office located at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other office as the Lender may
designate from time to time in writing.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Liens" shall mean the Liens specified in clauses (a) through
(h) of Section 7.02 hereof.
"Person" shall mean any natural person, corporation, limited liability
company, limited liability partnership, business trust, joint venture,
association, company, partnership, unincorporated trade or business enterprise
or Governmental Authority.
"Plan" shall mean any single-employer plan defined in and subject to
Section 4001 of ERISA, which covers, or at any time during the five calendar
years preceding the date of this Agreement covered, employees of the Company,
any other Borrower, any Guarantor or an ERISA Affiliate on account of such
employees' employment by any such Persons.
"Pledge Agreements" shall mean such pledge agreements or other
documents as may be required in order to grant to the Lender a security interest
in the issued and outstanding shares of stock or other ownership interest of any
Subsidiary or Affiliate of any of the Borrowers, in the form attached to the
Credit Agreement as Exhibit C, to be executed and delivered by the Company to
the Lender on the Closing Date.
"Prime Rate" shall mean the rate per annum announced by the Lender from
time to time as its prime rate in effect at its principal office. The Prime Rate
is a reference rate and does not necessarily represent the lowest or best rate
being charged by the Lender to any customer. Changes in the rate of interest
resulting from changes in the Prime Rate shall take place immediately without
notice or demand of any kind.
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"Purchasing Lender" shall have the meaning set forth in Section 9.05(c)
hereof.
"Receivables" means all of the accounts receivable (determined in
accordance with Generally Accepted Accounting Principles) of the Borrowers.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan as to which the 30-day notice requirement has not
been waived under PBGC Regulation Section 4043.
"Revolving Credit Commitment" shall mean, the obligation of the Lender
to make Revolving Credit Loans to, and issue Letters of Credit (subject to the
sublimit with respect to the same set forth in Section 2.03 hereof) for the
benefit of, the Borrowers, in the amount of $1,100,000.
"Revolving Credit Commitment Termination Date" shall mean July 22,
2006.
"Revolving Credit Loan Outstandings" shall mean, on the date of
determination, the aggregate outstanding principal amount of all Revolving
Credit Loans at such time.
"Revolving Credit Loans" shall mean the Loans made available to the
Borrowers pursuant to Section 2.01 hereof.
"Second Term Loan" shall have the meaning set forth in Section 2.02(b).
"Second Term Loan Maturity Date" shall mean July 22, 2006.
"Second Term Note" shall have the meaning set forth in Section 2.02(b).
"Security Agreement" shall mean a security agreement in the form
attached to the Credit Agreement as Exhibit D, to be executed and delivered by
each of the Borrowers and Guarantors to the Lender on the Closing Date, and
thereafter, when required pursuant to the provisions of Section 6.12 hereof.
"Solvent" shall mean with respect to any Person as of the date of
determination thereof that (a) the amount of the "present fair saleable value"
of the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise," as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required on its debts as such debts become absolute
and matured, (c) such Person will not have as of such date, an unreasonably
11
small amount of capital with which to conduct its business, and (d) such Person
will be able to pay its debts as they mature in each case after giving effect to
any right of indemnification and contribution of such Person from or to any
Affiliate.
"Subordinated Debt" or "Subordinated Indebtedness" shall mean all debt
which is subordinated in right of payment to the prior final payment in full of
the obligations of the Borrowers and the Guarantors to the Lender hereunder and
under any other Loan Document on subordination terms satisfactory to and
approved in writing by the Lender (not to be unreasonably withheld or delayed).
"Subsidiaries" shall mean, as to any Person ("parent"), a corporation,
partnership or other entity (a) other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc. (but only for so
long as such Person does not fall within the criteria set forth in clause (b)
below), the accounts of which would be consolidated with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared in accordance with Generally Accepted Accounting Principles as of such
date or (b) more than 50% of the voting stock or other ownership interests
(including, without limitation, membership interests in a limited liability
company) of which is at the time owned or controlled, directly or indirectly, by
such Person or one or more of its Subsidiaries or a combination thereof. Unless
otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in
this Agreement shall refer to a direct or indirect Subsidiary or Subsidiaries of
the Company.
"Termination Date" shall mean, in the case of Loans or extensions of
credit under Section 2.01 or Section 2.03, the Revolving Credit Commitment
Termination Date, in the case of Loans under Section 2.02(a), the Term Loan
Maturity Date and in the case of Loans under Section 2.02(b) the Second Term
Loan Maturity Date, or such earlier date as the Obligations hereunder or under
any of the Loan Documents shall have become due pursuant to the provisions of
Section 8.01.
"Term Loan" shall have the meaning set forth in Section 2.02(a).
"Term Loan Commitment" shall mean the obligation of the Lender (a) to
make the Term Loan to the Borrowers on the Closing Date in the principal amount
of $3,000,000 in accordance with the provisions of Section 2.02(a), and (b) to
permit the conversion of a portion of the "Revolving Credit Commitment" (as such
term was defined in the Credit Agreement immediately prior to the Effective
Date) in the principal amount of $2,400,000 into the Second Term Loan to the
Borrowers on the Effective Date in accordance with the provisions of Section
2.02(b).
"Term Loan Maturity Date" shall mean October 30, 2006.
"Term Note" shall have the meaning set forth in Section 2.02(a).
"Total Commitment" shall mean $6,500,000.
12
"UCP" shall mean the International Chamber of Commerce Uniform Customs
and Practice for Documentary Credits, 1993 Revision, ICC Publication No. 500 or
any successor publication thereof.
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Plan pursuant to Section 412 of the Code for the applicable plan year.
"Voting Shares" means equity securities or similar interests, of any
class or classes (however designated), the holders of which are at the time
entitled, as such holders, to vote for the election of a majority of the
directors (or persons performing similar functions) of the company, corporation
or other business entity involved, whether or not the right so to vote exists by
reason of the happening of a contingency.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
Section 1.02. Terms Generally.
The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, pronouns
stated in the masculine, feminine or neuter gender shall include the masculine,
feminine and the neuter. The term "including" shall not be limited or exclusive,
unless specifically indicated to the contrary. The word "will" shall be
construed to have the same meaning in effect as the word "shall". The words
"herein", "hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole, including the exhibits and schedules hereto and any
amendments thereof, all of which are by this reference incorporated into this
Agreement. Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with Generally
Accepted Accounting Principles, as in effect from time to time; provided that,
if the Company notifies the Lender that the Company requests an amendment to any
provision hereof to eliminate the effect of any change occurring after the
Closing Date in Generally Accepted Accounting Principles or in the application
thereof on the operation of such provision (or if the Lender notifies the
Company that it requests an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in
Generally Accepted Accounting Principles or in the application thereof, then
such provision shall be interpreted on the basis of Generally Accepted
Accounting Principles as in effect and applied immediately before such change
shall have become effective until such notice shall have been withdrawn or such
provision amended in accordance herewith. To enable the ready and consistent
determination of compliance with the covenants set forth in Article VII, the
Company will not change the last day of its fiscal year from March 31, or the
last days of the first three fiscal quarters in each of its fiscal years from
June 30, September 30 and December 31, respectively.
13
ARTICLE II.
LOANS
Section 2.01. Revolving Credit Loans.
(a) Subject to the terms and conditions, and relying upon
the representations and warranties, set forth herein,
the Lender agrees to make loans (individually a
"Revolving Credit Loan", and collectively, the
"Revolving Credit Loans") to the Borrowers from time
to time during the Commitment Period up to, but not
exceeding, at any one time outstanding the amount of
the Revolving Credit Commitment; provided, however,
that no Revolving Credit Loan shall be made if, after
giving effect to such Loan, (A) Aggregate Revolving
Credit Outstandings would exceed the lesser of (i)
the Borrowing Base in effect on the date of such
borrowing and (ii) the Revolving Credit Commitment,
or (B) Adjusted Aggregate Outstandings would exceed
the lesser of (i) the Borrowing Base in effect on the
date of such borrowing and (ii) the Adjusted Total
Commitment. During the Commitment Period, the
Borrowers may from time to time borrow, repay and
reborrow Revolving Credit Loans on or after the
Closing Date and prior to the Termination Date,
subject to the terms, provisions and limitations set
forth herein.
(b) The Company (on its own behalf or on behalf of
another Borrower) shall give the Lender irrevocable
written notice (or telephonic notice promptly
confirmed in writing) not later than 1:00 p.m. New
York, New York time, on the date of each proposed
Revolving Credit Loan under this Section 2.01. Such
notice shall be irrevocable and shall specify the
amount of the proposed borrowing and the proposed
Borrowing Date. Except for borrowings which utilize
the full remaining amount of the Revolving Credit
Commitment, each borrowing of a Revolving Credit Loan
shall be in an amount not less than $100,000 or, if
greater, in whole multiples of $100,000 in excess
thereof. Funding of all Loans shall be made in
accordance with Section 3.07 of this Agreement.
(c) The Company shall have the right, upon not less than
three Business Days' prior written notice to the
Lender, to terminate the Revolving Credit Commitment
or from time to time to permanently terminate or
reduce the amount of the Revolving Credit Commitment;
provided, however, that no such termination or
reduction shall be permitted if, after giving effect
thereto and to any payments of such Loans made on the
effective date thereof, Aggregate Revolving Credit
Outstandings would exceed the lesser of the Borrowing
Base in effect on the date of such termination or
reduction and the Revolving Credit Commitment as then
terminated/reduced. Any such reduction shall be in
the amount of $100,000 or in whole multiples of
$100,000 in excess thereof, and shall reduce
permanently the amount of the Revolving Credit
Commitment then in effect.
14
(d) The agreement of the Lender to make Loans pursuant to
this Section 2.01 shall automatically terminate on
the Termination Date. Upon such termination, the
Borrowers shall immediately repay in full the
principal amount of its Revolving Credit Loans then
outstanding, together with all accrued interest
thereon and all other amounts due and payable by it
hereunder.
(e) On the Effective Date, a portion of the "Revolving
Credit Commitment" (as such term was defined in the
Credit Agreement immediately prior to the Effective
Date) in the principal amount of $2,400,000 shall be
converted into the Second Term Loan which is the
subject of Section 2.02(b) hereof. Notwithstanding
anything contained in this Agreement to the contrary,
unpaid interest accrued on Revolving Credit Loans
outstanding immediately prior to the Effective Date
shall have accrued at the rates applicable thereto
(including the applicable "Interest Rate Margin," as
such term was defined in the Credit Agreement
immediately prior to the Effective Date) immediately
prior to (but not including) the Effective Date. From
and after the Effective Date, the Revolving Credit
Loans made by the Lender shall be evidenced by the
promissory note of the Borrowers (the "Amended and
Restated Revolving Credit Note"), substantially in
the form attached hereto as Exhibit H, appropriately
completed, duly executed and delivered on behalf of
the Borrowers, and payable to the order of the Lender
in a principal amount equal to the Revolving Credit
Commitment. Such Note shall (a) be dated the
Effective Date, (b) be stated to mature on the
Revolving Credit Commitment Termination Date, and (c)
bear interest from the date thereof until paid in
full on the unpaid principal amount thereof from time
to time outstanding as provided in Section 3.01
hereof. The Lender is authorized to record the date,
amount of each Revolving Credit Loan and the date and
amount of each payment or prepayment of principal of
each Revolving Credit Loan in the Lender's records or
on a grid schedule which may be annexed to the
Amended and Restated Revolving Credit Note; provided,
however, that the failure of the Lender to set forth
each such Loan, payment and other information shall
not in any manner affect the obligation of the
Borrowers to repay each Loan made by the Lender in
accordance with the terms of the Amended and Restated
Revolving Credit Note and this Agreement. The Amended
and Restated Revolving Credit Note, any annexed grid
schedule and the books and records of the Lender
shall constitute presumptive evidence of the
information so recorded absent demonstrable error.
15
Section 2.02. Term Loan; Second Term Loan.
(a) The Term Loan.
(i) Subject to the terms and conditions, and
relying upon the representations and
warranties, set forth herein, the Lender
agrees to make a Term Loan (the "Term Loan")
to the Borrowers on the Closing Date in an
amount not to exceed the Term Loan
Commitment. The portion of the Term Loan
Commitment which is the subject of clause
(a) as a definition of such term (i.e.,
"Term Loan Commitment") terminated upon the
funding of the Term Loan on the Closing
Date.
(ii) The Term Loan made by the Lender is
evidenced by the promissory note of the
Borrowers (the "Term Note"), substantially
in the form attached to the Credit Agreement
as Exhibit F, appropriately completed, duly
executed and delivered on behalf of the
Borrowers, and payable to the order of the
Lender in a principal amount equal to the
Term Loan Commitment. The Term Note shall
(a) be dated the Closing Date, (b) be stated
to mature on the Term Loan Maturity Date,
(c) be payable as to principal in 48
consecutive monthly installments, with the
first 47 installments payable on the first
day of each calendar month commencing on
December 1, 2002 and the last installment
payable on the Term Loan Maturity Date, and
(d) bear interest on the unpaid principal
amount thereof from time to time outstanding
from the date thereof until paid in full as
provided in Section 3.01 hereof. The
principal amount of such payments received
by the Lender on each of the installment
dates preceding the last installment date
(i.e., the first 47 installments) shall be
in the amount of $62,500, and the last
installment received by the Lender shall be
in the amount of the remaining principal
amount outstanding of the Term Loan. The
Lender is authorized to record the date and
amount of each payment or prepayment of
principal of the Term Loan in the Lender's
records or on a grid schedule which may be
annexed to the Term Note; provided, however,
that the failure of the Lender to set forth
each such payment and other information
shall not in any manner affect the
obligation of the Borrowers to repay the
Term Loan made by the Lender in accordance
with the terms of the Term Note and this
Agreement. The Term Note, any annexed grid
schedule and the books and records of the
Lender shall constitute presumptive evidence
of the information so recorded absent
demonstrable error.
16
(b) The Second Term Loan.
(i) Subject to the terms and conditions, and
relying upon the representations and
warranties, set forth herein, on the
Effective Date, a portion of the "Revolving
Credit Commitment" (as such term was defined
in the Credit Agreement immediately prior to
the Effective Date) in the principal amount
equal to $2,400,000 (which amount is
outstanding as of the Effective Date) shall
be converted into the Second Term Loan (the
"Second Term Loan") to the Borrowers on the
Effective Date, in an amount equal to
$2,400,000. The portion of the Term Loan
Commitment which is the subject of clause
(b) of the definition of such term (i.e.,
"Term Loan Commitment") shall terminate upon
the conversion of the aforesaid portion of
the "Revolving Credit Commitment" (as
referenced above) on the Effective Date.
(ii) The Second Term Loan made by the Lender as
aforesaid shall be evidenced by the
promissory note of the Borrowers (the
"Second Term Note"), substantially in the
form attached hereto as Exhibit I,
appropriately completed, duly executed and
delivered on behalf of the Borrowers, and
payable to the order of the Lender in a
principal amount equal to $2,400,000. The
Second Term Note shall (a) be dated the
Effective Date, (b) be stated to mature on
the Second Term Loan Maturity Date, (c) be
payable as to principal in 24 consecutive
monthly installments, with the first 23
installments payable on the first day of
each calendar month commencing on September
1, 2004 and the last installment payable on
the Second Term Loan Maturity Date, and (d)
bear interest on the unpaid principal amount
thereof from time to time outstanding from
the date thereof until paid in full as
provided in Section 3.01 hereof. The
principal amount of such payments received
by the Lender on each of the installment
dates preceding the last installment date
(i.e., the first 23 installments) shall be
in the amount of $100,000, and the last
installment received by the Lender shall be
in the amount of the remaining principal
amount outstanding of the Second Term Loan.
The Lender is authorized to record the date
and amount of each payment or prepayment of
principal of the Second Term Loan in the
Lender's records or on a grid schedule which
may be annexed to the Second Term Note;
provided, however, that the failure of the
Lender to set forth each such payment and
other information shall not in any manner
affect the obligation of the Borrowers to
repay the Second Term Loan made by the
Lender in accordance with the terms of the
Second Term Note and this Agreement. The
Second Term Note, any annexed grid schedule
and the books and records of the Lender
shall constitute presumptive evidence of the
information so recorded absent demonstrable
error.
17
Section 2.03. Letters of Credit
(a) Generally. Subject to the terms and conditions set
forth in this Agreement, upon the written request of
the Company (on its own behalf or on behalf of
another Borrower in accordance herewith), the Lender
shall issue Letters of Credit from time to time
during the Commitment Period relating to Revolving
Credit Loans in accordance herewith. Notwithstanding
the foregoing, at no time shall there be more than
one Letter of Credit outstanding hereunder or shall
the Aggregate Letters of Credit Outstandings exceed
$500,000. Furthermore, notwithstanding anything
contained herein to the contrary, no Letter of Credit
shall be issued if, after giving effect to the same,
(A) Aggregate Revolving Credit Outstandings would
exceed the lesser of (i) the Borrowing Base in effect
on the date of such extension of credit and (ii) the
Revolving Credit Commitment or (B) Adjusted Aggregate
Outstandings would exceed the lesser of (i) the
Borrowing Base in effect on the date of such
extension of credit and (ii) the Adjusted Total
Commitment. Furthermore, no Letter of Credit shall be
issued without the consent of the Lender during the
occurrence and continuance of an Event of Default. An
initial Letter of Credit (the "Initial Letter of
Credit") shall be issued by the Lender on the Closing
Date in connection with the lease by U.S. Concepts,
Inc. of certain premises located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ (the "US Concepts Lease"); it
shall expire on the date which is 365 days
thereafter, provided that such Letter of Credit shall
automatically renew for two additional, consecutive
365 day periods thereafter unless at the date of any
such renewal, the Commitment Period relating to
Revolving Credit Loans shall have expired or the
Revolving Credit Commitment shall have terminated;
the amount of such Initial Letter of Credit (and any
renewals thereof) shall be $500,000, but in no event
shall exceed $500,000; and the beneficiary of such
Letter of Credit (and any renewals thereof) shall be
AMB Property, L.P. Each Letter of Credit issued by
the Lender hereunder shall identify the drafts and
other documents necessary to be presented to the
Lender upon drawing thereunder. In no event shall any
Letter of Credit expire (or by its terms be required
to be borrowed) after the Termination Date. The
Lender will not be required to issue a Letter of
Credit hereunder with a maturity or expiry date (i)
other than as expressly set forth above with respect
to the Initial Letter of Credit, more than three
hundred sixty five (365) days from the date of
issuance of such Letter of Credit, or (ii) on or
after the Revolving Credit Commitment Termination
Date. The Borrowers agree to execute and deliver to
the Lender such further documents and instruments in
connection with any Letter of Credit issued hereunder
(including without limitation, applications therefor)
as the Lender in accordance with its customary
practices may reasonably request; provided that if
there shall be any conflicts between the provisions
of any such documents or instruments and the
provisions of this Agreement, the provisions hereof
will govern.
18
(b) Drawings Under Letters of Credit. The Borrowers
hereby absolutely and unconditionally, jointly and
severally, promise to pay the Lender not later than
4:00 p.m. (New York, New York time) the amount of
each drawing under a Letter of Credit issued
hereunder if the Company receives notice of such
drawing (with respect to its account or with respect
to the accounts of any or all of the Borrowers) prior
to 10:00 a.m., New York, New York time, on the date
of such drawing, or if such notice has not been
received by the Company (with respect to its account
or with respect to the accounts of any or all of the
Borrowers) prior to such time on such date, then not
later than 4:00 p.m. (New York, New York time) on the
Business Day immediately following the day that the
Company receives such notice; provided, however, if
any drawing is in an amount equal to or greater than
$100,000, the Company (on its own behalf or on behalf
of any or all of the Borrowers) may, subject to the
conditions to borrowing set forth herein, request in
accordance with Section 2.01 hereof that such payment
be financed with a Revolving Credit Loan in an
equivalent amount, and, to the extent so financed,
the Borrowers' obligation to make such payment shall
be discharged and replaced by such a Revolving Credit
Loan. Such request shall be made by the Company (on
its own behalf or on behalf of any or all of the
Borrowers) on the date of receipt of notice from the
Lender of a drawing under a Letter of Credit as
applicable. Each drawing under a Letter of Credit
which is not paid on the date such drawing is made
shall accrue interest, for each day from and
including the date of such drawing to but excluding
the date that the Borrowers reimburse the Lender in
full for such drawing at the rate per annum then
applicable to Loans which are Revolving Credit Loans;
provided, however, that if the Borrowers fail to
reimburse such drawing when due pursuant to this
paragraph (b), then the Borrowers shall pay to the
Lender interest on the amount of such drawing at the
rate per annum set forth in Section 3.01(c) hereof.
(c) Letter of Credit Obligations Absolute.
(i) The obligation of the Borrowers to reimburse
the Lender as provided hereunder in respect
of drawings under Letters of Credit issued
hereunder shall be absolute and
unconditional under any and all
circumstances subject to subsection (ii)
below. Without limiting the generality of
the foregoing, the obligation of the
Borrowers to reimburse the Lender in respect
of drawings under Letters of Credit shall
not be subject to any defense based on the
non-application or misapplication by the
beneficiary of the proceeds of any such
drawing or the legality, validity,
regularity or enforceability of the Letters
19
of Credit or any related document, even
though such document shall in fact prove to
be invalid, fraudulent or forged, or any
dispute between or among any of the
Borrowers, the beneficiary of any Letter of
Credit, or any financial institution or
other party to which any Letter of Credit
may be transferred. The Lender may accept or
pay any draft presented to it under any
Letter of Credit regardless of when drawn or
made and whether or not negotiated, if such
draft, accompanying certificate or documents
and any transmittal advice are presented or
negotiated on or before the expiry date of
such Letter of Credit or any renewal or
extension thereof then in effect, and is in
substantial compliance with the terms and
conditions of such Letter of Credit.
Furthermore, neither the Lender nor any of
its correspondents shall be responsible, as
to any document presented under a Letter of
Credit which appears to be regular on its
face, and appears on its face to be in
substantial compliance with the terms of the
Letter of Credit, for the validity or
sufficiency of any signature or endorsement,
for delay in giving any notice or failure of
any instrument to bear adequate reference to
the Letter of Credit, or for failure of any
Person to note the amount of any draft on
the reverse of the Letter of Credit. The
Lender shall have the right, in its sole
discretion, to decline to accept any
documents and to decline to make payment
under any Letter of Credit if the documents
presented are not in strict compliance with
the terms of such Letter of Credit.
(ii) Any action, inaction or omission on the part
of the Lender or any of its correspondents
under or in connection with any Letter of
Credit or the related instruments, documents
or property, if in good faith and in
conformity with such laws, regulations or
customs as are applicable, shall be binding
upon the Borrowers and shall not place the
Lender or any of its correspondents under
any liability to the Borrowers in the
absence of (x) gross negligence or willful
misconduct by the Lender or its
correspondents or (y) the failure by the
Lender to pay under a Letter of Credit after
presentation of a draft and documents
strictly complying with such Letter of
Credit unless the Lender is prohibited from
making such payment pursuant to a court
order. The Lender's rights, powers,
privileges and immunities specified in or
arising under this Agreement are in addition
to any heretofore or at any time hereafter
otherwise created or arising, whether by
statute or rule of law or contract. All
Letters of Credit issued hereunder will,
except to the extent otherwise expressly
provided hereunder, be governed by the UCP
to the extent applicable and not
inconsistent with the laws of the State of
New York.
20
ARTICLE III.
PROVISIONS RELATING TO ALL EXTENSIONS OF CREDIT;
FEES AND PAYMENTS
Section 3.01. Interest Rate.
(a) Each Revolving Credit Loan shall bear interest for
the period from and after the date thereof on the
unpaid principal amount thereof at a fluctuating rate
per annum equal to the Prime Rate plus the applicable
Interest Rate Margin.
(b) (i) The Term Loan shall bear interest for the period
from and after the Closing Date on the unpaid
principal amount thereof at a fluctuating rate per
annum equal to the Prime Rate plus the applicable
Interest Rate Margin, and (ii) the Second Term Loan
shall bear interest for the period from and after the
Effective Date on the unpaid principal amount thereof
at a fluctuating rate of interest per annum equal to
the Prime Rate plus the applicable Interest Rate
Margin.
(c) If the entire amount of any required principal and/or
interest is not paid in full within ten (10) days
after the same is due, the Borrowers shall pay to the
Lender a late fee equal to five percent (5%) of the
required payment. Upon the occurrence and during the
continuance of an Event of Default the outstanding
principal amount of the Loans shall, at the option of
the Lender, bear interest payable on demand at a rate
of interest of four percent (4%) per annum in excess
of the interest rate otherwise then in effect.
(d) Anything in this Agreement or in either of the Notes
to the contrary notwithstanding, all agreements
between the Borrowers, the Guarantor(s) and the
Lender are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of
acceleration of maturity of the indebtedness
evidenced hereby or otherwise, shall the amount paid
or agreed to be paid to the Lender for the use or the
forbearance of the indebtedness evidenced hereby
exceed the maximum permissible under applicable law.
As used herein, the term "applicable law" shall mean
the law in effect as of the Closing Date; provided,
however, that in the event there is a change in the
law which results in a higher permissible rate of
interest, then this Agreement shall be governed by
such new law as of its effective date. In this
regard, it is expressly agreed that it is the intent
of the Borrowers and the Lender in the execution,
delivery and acceptance of this Agreement to contract
in strict compliance with the laws of the State of
New York from time to time in effect. If, under or
from any circumstances whatsoever, fulfillment of any
provision hereof or of any of the Loan Documents at
the time of performance of such provision shall be
21
due, shall involve transcending the limit of such
validity prescribed by applicable law, then the
obligation to be fulfilled shall automatically be
reduced to the limits of such validity, and if under
or from any circumstances whatsoever the Lender
should ever receive as interest an amount which would
exceed the highest lawful rate, such amount which
would be excessive interest shall be applied to the
reduction of the principal balance evidenced hereby
and not to the payment of interest. This provision
shall control every other provision of all agreements
between any or all of the Borrowers, the Guarantor(s)
and the Lender.
(e) Interest on each Loan shall be payable in arrears on
each Interest Payment Date and shall be calculated on
the basis of a year of 360 days and shall be payable
for the actual days elapsed. Any rate of interest on
the Loans or other Obligations which is computed on
the basis of the Prime Rate shall change when and as
the Prime Rate changes in accordance with the
definition thereof. Each determination by the Lender
of an interest rate or fee hereunder shall, absent
demonstrable error, be conclusive and binding for all
purposes.
(f) Notwithstanding anything contained herein to the
contrary, the principal amount of Loans outstanding
prior to the Effective Date shall bear interest, for
the period preceding the Effective Date, at the
interest rates applicable thereto (including the
applicable "Interest Rate Margin," as such term was
defined in the Credit Agreement immediately prior to
the Effective Date) under and in accordance with the
Credit Agreement immediately prior to the Effective
Date; and from and after the Effective Date, the
principal amount of Loans outstanding shall bear
interest at the applicable rates set forth in this
Agreement (including the applicable Interest Rate
Margin as defined in this Agreement).
Section 3.02. Use of Proceeds.
The proceeds of the Revolving Credit Loans were used to repay
Indebtedness of the Borrowers existing immediately prior to the closing of the
transactions contemplated hereby on the Closing Date, and were and shall be used
for general working capital purposes. The proceeds of the Term Loan were used to
repay Indebtedness of the Borrowers existing immediately prior to the closing of
the transactions contemplated hereby on the Closing Date and for general working
capital purposes. In accordance with the applicable provisions of Sections 2.01
and 2.02(b), a portion of the "Revolving Credit Commitment" (as such term was
defined in the Credit Agreement immediately prior to the Effective Date) in the
principal amount of $2,400,000 (which amount is outstanding as of the Effective
Date) shall, upon the Effective Date, be converted into the Second Term Loan.
The Initial Letter of Credit was used by the Borrowers to serve as rent security
or a security deposit with respect to the leased office facility located at ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, as required under the lease for such premises.
22
Section 3.03. Prepayments.
(a) Voluntary. The Borrowers may, at any time and from
time to time, prepay the then outstanding Loans, in
whole or in part, without premium or penalty, upon
written notice to the Lender (or telephonic notice
promptly confirmed in writing) not later than 11:00
a.m. New York, New York time, one Business Day before
the date of prepayment. Each notice shall be
irrevocable and shall specify the date and amount of
prepayment. If such notice is given, the Borrowers
shall make such prepayment, and the amount specified
in such notice shall be due and payable, on the date
specified therein. Each partial prepayment pursuant
to this Section 3.03 hereof shall be in a principal
amount of (i) $100,000 or in whole multiples of
$100,000 in excess thereof.
(b) Mandatory. (i) To the extent that Adjusted Aggregate
Outstandings at any time exceed the lesser of (A) the
Borrowing Base or (B) the Adjusted Total Commitment,
then the Borrowers shall immediately prepay the Loans
in the amount of such excess. To the extent that the
Borrowers are unable to make such payment, the
Borrowers shall pledge to the Lender Cash Collateral
in an amount equal to the amount of such short-fall,
which Cash Collateral shall secure the reimbursement
obligations to the Lender with respect to such
Letters of Credit.
(ii) To the extent that Aggregate Revolving Credit
Outstandings at any time exceed the lesser of (A) the
Borrowing Base or the (B) Revolving Credit
Commitment, then the Borrowers shall immediately
prepay the Revolving Credit Loans in the amount of
such excess. To the extent that the Borrowers are
unable to make such payment, the Borrowers shall
pledge to the Lender Cash Collateral in an amount
equal to the amount of such short-fall, which Cash
Collateral shall secure the reimbursement obligations
to the Lender with respect to such Letters of Credit.
All prepayments shall be accompanied by accrued interest on the
principal amount being prepaid to the date of prepayment.
Section 3.04. Fees.
(a) The Borrowers paid to the Lender on the Closing Date
a facility fee equal to $60,000.
(b) The Borrowers shall pay (or has previously paid, as
applicable) to the Lender (with respect to the
Letters of Credit) an amount equal to the product of
the LC Fee multiplied by the face amount of each
Letter of Credit issued hereunder. Such fees with
respect to Letters of Credit shall be payable in
advance at the time of issuance thereof.
Notwithstanding any other provision in this
Agreement, upon the occurrence and during the
continuance of an Event of Default, the LC Fee shall
be increased by two percentage points (2%) per annum.
23
(c) In addition, the Borrowers shall pay to the Lender
upon issuance of any Letter of Credit for its account
hereunder, the reasonable and customary fees charged
by the Lender with respect to the processing and
administration of letters of credit including,
without limitation, amendments to letters of credit.
(d) If, for any Fiscal Quarter prior to the Revolving
Credit Commitment Termination Date, the average daily
unpaid balance of Aggregate Revolving Credit
Outstandings for each day of such quarter does not
equal the Revolving Credit Commitment, then the
Borrowers shall pay to the Lender a fee at a per
annum rate equal to one-quarter of one percent (.25%)
on the amount by which the Revolving Credit
Commitment exceeds such average daily unpaid balance.
Such fee shall be payable for each Fiscal Quarter or
fraction thereof in the period from and including the
date of this Agreement to and including the earlier
of (i) the last day of Commitment Period and (ii) the
Revolving Credit Commitment Termination Date, shall
be due and payable in arrears on the last day of each
Fiscal Quarter beginning on December 31, 2002 and on
the earlier of (i) the last day of Commitment Period
and (ii) the Revolving Credit Commitment Termination
Date, and shall be computed on the basis of a 360-day
year for the actual number of days elapsed.
(e) The Borrowers agree to pay to the Lender an amendment
and waiver fee equal to $25,000, payable on the
Effective Date.
Section 3.05. Taxes.
Except as required by law, all payments made by the Borrowers
under this Agreement shall be made free and clear of, and without reduction for
or on account of, any present or future taxes, levies, imposts, duties, charges,
fees, deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, excluding income and
franchise taxes (imposed in lieu of income taxes) imposed on the Lender or on a
participant or an assignee of all or a portion of Lender's interest herein as a
result of a present, former or future connection between the jurisdiction of the
government or the taxing authority imposing such tax and the Lender, participant
or assignee or the lending office of the Lender, participant or assignee
(excluding a connection arising solely from the Lender, participant or assignee
having executed this Agreement, the Notes or the Loan Documents or having
entered into such participation or assignment) or any political subdivision or
taxing authority thereof or therein (such non-excluded taxes being called
"Non-Excluded Taxes"). If any Non-Excluded Taxes are required to be withheld
from any amounts payable to the Lender hereunder, or under the Notes, the amount
so payable to the Lender shall be increased to the extent necessary to yield to
the Lender (after payment of all Non-Excluded Taxes and free and clear of all
liability in respect of such Non-Excluded Taxes) interest or any such other
24
amounts payable hereunder at the rates or in the amounts specified in this
Agreement and the Notes; provided, however, that the Borrowers shall not be
required to increase any such amounts payable to the Lender with respect to any
Non-Excluded Taxes (i) that are United States withholding taxes imposed (or
branch profits taxes imposed in lieu thereof) on amounts payable to the Lender
at the time the Lender or such participant or assignee becomes a party to this
Agreement or enters into such participation or assignment, except to the extent
that the Lender's assignor (if any) was entitled, at the time of assignment, to
receive additional amounts from the Borrowers with respect to such Non-Excluded
Taxes pursuant to this Section 3.05, (ii) that are imposed as a result of any
event occurring after the Lender becomes the Lender (or other participant or
assignee becomes a participant or assignee) other than a change in law or
regulation or the introduction of any law or regulation or a change in
interpretation or administration of any law or (iii) that are imposed as a
result of a failure of a lender, participant or assignee of all or a portion of
a Lender's interest hereunder, or any person in the chain of payment between
such a person and the Borrowers, to deliver to the Borrowers any form or
document that may be reasonably requested in order to allow the Borrowers to
make payments hereunder without any deduction or withholding for or on account
of any tax or with such deduction or withholding at a reduced rate. Whenever any
Non-Excluded Taxes are payable by the Borrowers, as promptly as possible
thereafter, the Borrowers shall send to the Lender a certified copy of an
original official receipt showing payment thereof. If the Borrowers fail to pay
Non-Excluded Taxes when due to the appropriate taxing authority or fail to remit
to the Lender the required receipts or other required documentary evidence, the
Borrowers shall indemnify the Lender for any incremental taxes, interest or
penalties that may become payable by the Lender as a result of any such failure
together with any expenses payable by the Lender in connection therewith;
provided that the Lender has provided the Borrowers with notice thereof as
required by Section 9.01, accompanied by a demand for payment. Notwithstanding
anything contained in this Agreement to the contrary, if the Lender is entitled
to an exemption from or reduction of non-U.S. withholding tax under the law of
the jurisdiction in which the Borrowers are located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement, it shall
deliver to the Borrowers, such properly completed and executed documentation
prescribed by applicable law at the time or times reasonably requested in
writing, in a sufficiently detailed request (as to requisite documentation), by
the Borrowers, as will permit such payments to be made without withholding or at
a reduced rate, provided that the Lender is legally entitled to complete,
execute and deliver such documentation and in the Lender's reasonable judgment
such completion, execution or submission would not materially prejudice the
legal position of the Lender. The agreements in this subsection shall survive
the termination of this Agreement and each other Loan Document and the payment
of the Loans and all other amounts payable hereunder and thereunder.
Section 3.06. Payments.
Except as otherwise provided in Section 3.05, all payments
(including prepayments) to be made by the Borrowers on account of principal,
interest, fees and reimbursement obligations shall be made without counterclaim
or setoff and free and clear of, and without any deduction or withholding for,
any taxes or other payments and, with respect to payments of the Loans shall be
made to the Lender at the Payment Office of the Lender in Dollars in immediately
available funds. The Lender may, in its sole discretion, directly charge
25
principal and interest payments due in respect of the Loans and reimbursement
obligations with respect to Letters of Credit to the Borrowers' account at the
Payment Office or other office of the Lender. All payments shall be applied
first to the payment of all fees, expenses and other amounts due to the Lender
(excluding principal and interest), then to accrued interest, and the balance on
account of outstanding principal; provided, however, that after the occurrence
and during the continuance of an Event of Default, payments will be applied to
the obligations of the Borrowers to Lender as Lender determines in its sole
discretion. If any payment hereunder becomes due and payable on a day other than
a Business Day, such payment shall be extended to the next succeeding Business
Day, and, with respect to payments of principal, interest thereon shall be
payable at the then applicable rate during such extension.
Section 3.07. Funding and Disbursement of Loans.
Unless any applicable condition specified in Article V has not been
satisfied, the Lender shall make each Loan to be made by it hereunder available
to the Borrowers at the Payment Office by 1:00 p.m. New York, New York time, on
the Borrowing Date in Dollars in immediately available funds, by crediting the
account of one or more of the Borrowers designated by the Company (in its Loan
request pursuant to the provisions of the Section 2.01 hereto) at the Lender's
Lending Office or other office of the Lender at which the Borrowers maintain an
account with such amount and in like funds; provided, however, that if the
proceeds of any Loan or any portion thereof are to be used to prepay outstanding
Loans, or Letter of Credit obligations, then the Lender shall apply such
proceeds for such purpose to the extent necessary and credit the balance, if
any, to the Borrowers' account; and further provided, however, that one of the
Loans to be made by the Lender to the Borrowers on the Closing Date may be made
available to the Borrowers at an account maintained by one or more of the
Borrowers at a financial institution other than the Lender, as designated by the
Borrowers on such date.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to make
the Loans and issue the Letters of Credit herein provided for, the Borrowers
represent and warrant to the Lender that:
Section 4.01. Organization, Powers.
Each of the Borrowers and each Guarantor (a) is a corporation, limited
liability company, partnership or other legal entity duly organized or formed,
as applicable, validly existing and, to the extent relevant under applicable
law, in good standing under the laws of the jurisdiction of its formation, (b)
has the corporate, limited partnership, limited liability company or other legal
power and authority to own or lease its properties and to carry on its business
as being conducted on the Closing Date and, (c) is duly qualified to do business
in every jurisdiction wherein the conduct of its business or the ownership of
its properties are such as to require such qualification except in those
jurisdictions where the failure to be so qualified could not reasonably be
expected to have a Material Adverse Effect, and (d) has the corporate or other
entity power to execute, deliver and perform each of the Loan Documents to which
it is a party, including, without limitation, the power to obtain extensions of
credit hereunder and to execute and deliver the Notes.
26
Section 4.02. Authorization of Borrowing, Enforceable
Obligations.
The execution, delivery and performance by each of the Borrowers of
this Agreement and the other Loan Documents to which it is a party, and the
borrowings and the other extensions of credit to the Borrowers hereunder, and
the execution, delivery and performance by each Guarantor of the Loan Documents
to which such Guarantor is a party, (a) have been duly authorized by all
requisite corporate, limited partnership, limited liability company or other
entity action, (b) will not violate or require any consent (other than consents
as have been made or obtained and which are in full force and effect) under (i)
any provision of law applicable to any Borrower or any Guarantor, any applicable
rule or regulation of any Governmental Authority, or the Certificate of
Incorporation or By-laws of any Borrower or the Certificate of Incorporation,
By-Laws, or other organizational documents, as applicable, of any Guarantor or
(ii) any order of any court or other Governmental Authority binding on any
Borrower or any Guarantor or any indenture, agreement or other instrument to
which any Borrower or any Guarantor is a party, or by which any Borrower or any
Guarantor or any of its property is bound and (c) will not be in conflict with,
result in a breach of or constitute (with due notice and/or lapse of time) a
default under, any indenture, agreement or other instrument, which conflict,
breach or default could reasonably be expected to have a Material Adverse Effect
or result in the creation or imposition of any Lien, of any nature whatsoever,
upon any of the property or assets of any Borrower or any Guarantor other than
as contemplated by this Agreement or the other Loan Documents. This Agreement
and each other Loan Document to which any Borrower or any Guarantor is a party
constitutes a legal, valid and binding obligation of each such Borrower and each
such Guarantor, as the case may be, enforceable against each such Borrower and
each such Guarantor, as the case may be, in accordance with its terms except to
the extent that enforcement may be limited by applicable bankruptcy,
reorganization, moratorium, insolvency and similar laws affecting creditors'
rights generally or by equitable principles of general application, regardless
of whether considered in a proceeding in equity or at law.
Section 4.03. Financial Condition.
(a) The Company has heretofore furnished to the Lender
(i) the audited consolidated balance sheet of the
Company and its Subsidiaries and the related
consolidated statements of earnings, shareholders'
equity and cash flows, audited by BDO ▇▇▇▇▇▇▇ LLP,
independent certified public accountants, as of and
for the fiscal year ended March 31, 2002 and (ii) the
unaudited consolidated balance sheet of the Company
and its Subsidiaries as of June 30, 2002 and the
related consolidated statements of earnings of the
Company and its Subsidiaries for the three month
period ended June 30, 2002 and cash flows for three
month period ended June 30, 2002. Such financial
statements were prepared in conformity with Generally
Accepted Accounting Principles, applied on a
consistent basis, and fairly present the consolidated
financial condition and consolidated results of
operations of the Company and its Subsidiaries as of
the date of such financial statements and for the
27
periods to which they relate. Since June 30, 2002,
other than as previously disclosed to the Lender in
writing, no Material Adverse Effect has occurred. As
of the Closing Date, other than obligations and
liabilities arising in the ordinary course of
business and a certain "earnout" payment in an amount
not to exceed $1,500,000 payable to ▇▇▇▇▇ ▇▇▇▇▇▇ on
or prior to March 31, 2003 since June 30, 2002, there
were no material obligations or liabilities,
contingent or otherwise, of the Company or any of its
Subsidiaries which are not reflected or disclosed on
such unaudited statements or Schedules to this
Agreement.
(b) Each of the Borrowers and each of the Guarantors is
Solvent.
Section 4.04. Taxes.
The Company and each Subsidiary of the Company has filed or has caused
to be filed all tax returns (foreign, federal, state and local) required to be
filed (including, without limitation, with respect to payroll and sales taxes)
and the Company and each Subsidiary of the Company has paid all taxes
(including, without limitation, all payroll and sales taxes), assessments and
governmental charges and levies shown thereon to be due, including interest and
penalties, except (a) where the failure to file such tax returns or pay such
taxes, charges or levies could not reasonably be expected to have a Material
Adverse Effect and (b) taxes, assessments and governmental charges and levies
being contested in good faith by appropriate proceedings and with respect to
which adequate reserves in conformity with Generally Accepted Accounting
Principles consistently applied shall have been provided on the books of the
Company and its Subsidiaries.
Section 4.05. Title to Properties.
(a) The Company and each Subsidiary of the Company has
good title to its respective properties and assets
reflected on the financial statements referred to in
Section 4.03 hereof, except for such properties and
assets as have been disposed of since the date of
such financial statements as no longer used or useful
in the conduct of their respective businesses or as
have been disposed of in the ordinary course of
business, and all such properties and assets are free
and clear of all Liens other than Permitted Liens.
(b) The Company and each of its Subsidiaries owns, or is
licensed to use, all trademarks, tradenames,
copyrights, patents and other intellectual property
material to its business or reflected on the
financial statements referred to in Section 4.03
hereof, and to the best of the Company's knowledge,
the use thereof by the Company and its Subsidiaries,
as the case may be, does not infringe upon the rights
of any other Person, except for any such
infringements that could not reasonably be expected
to result in a Material Adverse Effect.
28
Section 4.06. Litigation.
There are no actions, suits or proceedings pending or, to the knowledge
of any of the Borrowers, threatened, against or affecting the Company or any
Subsidiary of the Company at law or in equity or before or by any Governmental
Authority, which involve any of the transactions contemplated herein or which
could reasonably be expected to result in a Material Adverse Effect; and (b)
neither the Company nor any Subsidiary of the Company is in default with respect
to any judgment, writ, injunction, decree, rule or regulation of any
Governmental Authority which could reasonably be expected to result in a
Material Adverse Effect.
Section 4.07. Agreements.
Neither the Company nor any Subsidiary is a party to any agreement,
indenture, loan or credit agreement or any lease or other agreement or
instrument or subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree or regulation which could reasonably
be expected to have a Material Adverse Effect. Neither the Company nor any
Subsidiary is in default in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any agreement or
instrument to which it is a party, which default could reasonably be expected to
have a Material Adverse Effect.
Section 4.08. Compliance with ERISA.
No ERISA Event has occurred or is reasonably expected to occur that,
when taken together with all other such ERISA Events for which liability is
reasonably expected to occur, could reasonably be expected to result in a
Material Adverse Effect. The present value of all accumulated benefit
obligations under each Plan (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the date of
the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Plan.
Section 4.09. Federal Reserve Regulations; Use of
Proceeds.
(a) Neither the Company nor any Subsidiary of the Company
is engaged principally in the business of extending,
maintaining or arranging credit for the purpose of
purchasing or carrying any "margin stock" (within the
meaning of Regulation U of the Board of Governors of
the Federal Reserve System of the United States, as
amended from time to time).
(b) No part of the proceeds of any Loan and no other
extension of credit hereunder will be used, whether
directly or indirectly, and whether immediately,
incidentally or ultimately, (i) to purchase or to
carry margin stock or to extend credit to others for
the purpose of purchasing or carrying margin stock,
or to refund indebtedness originally incurred for
such purposes, or (ii) for any purpose which violates
or is inconsistent with the provisions of Regulation
T, U, or X of the Board of Governors of the Federal
Reserve System.
29
(c) The proceeds of each Loan, and each other extension
of credit hereunder shall be used solely for the
purposes permitted under Section 3.02 hereof.
Section 4.10. Approvals.
No registration with or consent or approval of, or other action by, any
Governmental Authority or any other Person is required in connection with the
execution, delivery and performance of this Agreement by any Borrower or any
Guarantor, or with the execution and delivery of other Loan Documents to which
it is a party or, with respect to any Borrower, the borrowings and each other
extension of credit hereunder other than registrations, consents and approvals
received prior to the Closing Date and disclosed to the Lender and which are in
full force and effect or such registrations, consents and approvals required
pursuant to Section 5.01 hereof.
Section 4.11. Subsidiaries and Affiliates.
Attached to the Credit Agreement as Schedule 4.11 is a correct and
complete list of each of the Company's Subsidiaries and Affiliates as of the
Closing Date, showing as to each (a) Subsidiary, its name, the jurisdiction of
its incorporation, its shareholders or other owners of an interest in each
Subsidiary and the number of outstanding shares or other ownership interest
owned by each shareholder or other owner of an interest, and (b) Affiliate
(other than Subsidiaries of the Company) in which the Company or any of its
Subsidiaries owns an interest, the number of shares or other ownership interests
of such Affiliate owned directly or indirectly by the Company.
Section 4.12. Hazardous Materials.
The Company and each Subsidiary are in compliance in all material
respects with all applicable Environmental Laws and neither the Company nor any
Subsidiary has used Hazardous Materials on, from, or affecting any property now
owned or occupied or hereafter owned or occupied by the Company or any such
Subsidiary in any manner which violates any applicable Environmental Law. To the
best actual knowledge of any officer of any of the Borrowers, no prior owner of
any such property or any tenant, subtenant, prior tenant or prior subtenant have
used Hazardous Materials on, from, or affecting such property in any manner
which violates any applicable Environmental Law.
Section 4.13. Investment Company Act.
Neither the Company nor any Subsidiary of the Company is an "investment
company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
Section 4.14. No Default.
No Default or Event of Default has occurred and is continuing.
30
Section 4.15. Credit Arrangements.
Schedule 4.15 to the Credit Agreement is a complete and correct list of
all credit agreements, indentures, purchase agreements (other than purchase
orders), guaranties, Capital Leases and other investments, agreements and
arrangements in effect on the Closing Date providing for or relating to
extensions of credit to the Company and/or any Subsidiaries of the Company
(including agreements and arrangements for the issuance of letters of credit or
for acceptance financing) in respect of which the Company and/or any
Subsidiaries of the Company are in any manner directly or contingently obligated
to make aggregate payments of $100,000 or more; and the maximum principal or
face amounts of the credit in question, outstanding and which can be
outstanding, are correctly stated, and all Liens of any nature given or agreed
to be given as security therefor are correctly described or indicated in such
Schedule.
Section 4.16. Permits and Licenses.
Each of the Company and each Subsidiary of the Company possesses all
permits, licenses, certifications, authorizations and approvals required for it
lawfully to own and operate their respective businesses except those the failure
of which to possess could not reasonably be expected to have a Material Adverse
Effect.
Section 4.17. Compliance with Law.
Each Company and each Subsidiary of the Company are in compliance, with
all laws, rules, regulations, orders and decrees which are applicable to the
Company or any such Subsidiary, or to any of their respective properties, which
the failure to comply with could reasonably be expected to have a Material
Adverse Effect.
Section 4.18. Disclosure.
Neither this Agreement, nor any other Loan Document, or any other
document, certificate or written statement furnished to the Lender by or on
behalf of the Company or any of its Subsidiaries for use in connection with the
transactions contemplated by this Agreement, contains any untrue statement of
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances in which they were made.
Section 4.19. Labor Disputes and Acts of God.
Neither the business nor the properties of the Company or any
Subsidiary of the Company are affected by any fire, explosion, accident, strike,
lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act
of God or of the public enemy or other casualty (whether or not covered by
insurance), which could reasonably be expected to have a Material Adverse
Effect.
31
ARTICLE V.
CONDITIONS OF LENDING
Section 5.01. Conditions to Initial Extension of Credit.
The obligation of the Lender to make the initial Revolving Credit Loan
and the Term Loan hereunder, and the obligation of the Lender to issue the
Initial Letter of Credit, was subject to the following conditions precedent:
(a) Notes. On or prior to the Closing Date, the Lender
shall have received the "Revolving Credit Note" (as
defined in the Credit Agreement) and the Term Note,
duly executed by each of the Borrowers.
(b) Guaranties. On or prior to the Closing Date, the
Lender shall have received a Guaranty, duly executed
by each Guarantor (if any).
(c) Opinion of Counsel. On or prior to the Closing Date,
the Lender shall have received a written opinion of
Kronish ▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, legal counsel to
the Borrowers and the Guarantors (if any),
substantially in the form of Exhibit G attached to
the Credit Agreement.
(d) Supporting Documents. On or prior to the Closing
Date, the Lender shall have received, (i) a
certificate of good standing for each Borrower and
each Guarantor from the secretary of state of the
states of their organizational jurisdiction dated as
of a recent date; (ii) certified copies of the
Certificate of Incorporation and By-laws or other
organizational documents, as applicable, of each
Borrower and each Guarantor; and (iii) a certificate
of the Secretary or an Assistant Secretary of each
Borrower and each Guarantor dated the Closing Date
and certifying: (x) that neither the Certificates of
Incorporation nor the By-laws or other organizational
documents of such Borrower or such Guarantor has been
amended since the date of their certification (or if
there has been any such amendment, attaching a
certified copy thereof); (y) that attached thereto is
a true and complete copy of resolutions adopted by
the Boards of Directors of such Borrower, and by the
board of directors or other governing body or Persons
of such Guarantor, authorizing the execution,
delivery and performance of each Loan Document to
which it is a party and, with respect to such
Borrower, the borrowings and other extensions of
credit hereunder; and (z) the incumbency and specimen
signature of each officer of such Borrower, and of
each officer or other authorized Person of each
Guarantor executing each Loan Document to which any
Borrower or any Guarantor (as the case may be) is a
party (including any certificates or instruments
furnished pursuant hereto or thereto), and a
certification by another officer of each Borrower and
each Guarantor as to the incumbency and signature of
the Secretary or Assistant Secretary of the each
Borrower and each Guarantor.
32
(e) Insurance. On or prior to the Closing Date, the
Lender shall have received a certificate or
certificates of insurance from an independent
insurance broker or brokers or other evidence
confirming the insurance required to be maintained by
the Company and its Subsidiaries pursuant to Section
6.01 hereof.
(f) Fees and Expenses. On or prior to the Closing Date,
the Lender shall have received all fees then payable
to it pursuant to this Agreement and reimbursement of
expenses in accordance with Section 9.03(b) hereof.
(g) No Litigation. There shall exist no action, suit,
investigation, litigation or proceeding affecting the
Company or any of its Subsidiaries pending or, to the
knowledge of any of the Borrowers, threatened before
any court, governmental agency or arbiter that could
reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
(h) Consents and Approvals. All governmental and third
party consents and approvals necessary in connection
with the transactions contemplated by this Agreement
and the other Loan Documents shall have been obtained
(without the imposition of any conditions that are
not reasonably acceptable to the Lender) and shall
remain in effect, and no law or regulation shall be
applicable in the reasonable judgment of the Lender
that imposes materially adverse conditions upon the
transactions contemplated hereby.
(i) No Material Adverse Changes. There shall not have
occurred any material adverse change in the business,
operations, properties, prospects or condition
(financial or otherwise) of the Company and its
Subsidiaries, taken as a whole, or the Company and
the Guarantors (if any), taken as a whole, since June
30, 2002.
(j) Security Agreements, etc. On or prior to the Closing
Date, the Lender shall have received the Pledge
Agreement, duly executed by the Company, and the
Security Agreement, duly executed by each of the
Borrowers and each of the Guarantors (if any).
(k) Borrowing Base Certificate. On or prior to the
Closing Date, the Lender shall have received the
Borrowing Base Certificate applicable to any Loans or
extensions of credit hereunder to be made on the
Closing Date in accordance with the applicable
provisions hereof.
(l) Completion of Proceedings. All corporate and other
proceedings, and all documents, instruments and other
legal matters in connection with the transactions
contemplated by the Loan Documents, shall be
reasonably satisfactory in form and substance to the
Lender and its counsel.
33
(m) Other Information, Documentation. The Lender shall
have received such other and further information and
documentation as it may reasonably require.
Section 5.02. Conditions to Extensions of Credit, Second
Term Loan, etc.
The obligation of the Lender to permit the conversion of a portion of
the "Revolving Credit Commitment" (as such term was defined in the Credit
Agreement immediately prior to the Effective Date) into the Second Term Loan, to
make each Loan hereunder and the obligation of the Lender to issue, amend, renew
or extend any Letter of Credit (including, without limitation, the initial
Revolving Credit Loan, the Term Loan and Initial Letter of Credit), are further
subject to the following conditions precedent (clauses (a)-(d) below) and
subsequent (clause (e) below):
(a) Representations and Warranties. The representations
and warranties by the Borrowers on the Closing Date
pursuant to the Credit Agreement and/or the other
Loan Documents to which each is a party shall be true
and correct in all material respects on and as of the
Effective Date, the Borrowing Date or the date of
issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, with the same effect
as though such representations and warranties had
been made on and as of such date unless such
representation or warranty is as of a specific date,
in which case, as of such date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on the Effective Date, the
Borrowing Date or on the date of issuance, amendment,
renewal or extension of a Letter of Credit, as
applicable, or will result after giving effect to the
Second Term Loan, the Loan requested or the requested
issuance, amendment, renewal or extension of a Letter
of Credit, as applicable.
(c) Letter of Credit Documentation. With respect to the
issuance, amendment, renewal or extension of any
Letter of Credit, the Lender shall have received the
documents and instruments requested by the Lender in
accordance with the last sentence of Section 2.03(a)
hereof.
(d) Borrowing Base Certificate. The Lender shall have
received the then most recent Borrowing Base
Certificate in accordance with Section 6.03 (d)
hereof.
(e) Within five Business Days after the Effective Date,
the Lender shall have received (i) a written opinion
of Kronish ▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, in form and
substance reasonably satisfactory to the Lender, and
(ii) a certificate of the Secretary or an Assistant
Secretary of each Borrower and each Guarantor dated
such date certifying as to the matters referenced in
Section 5.01(d)(iii) hereof (dated the date of such
certificate rather than the Closing Date), in
connection with (in the case of each of clauses (i)
and (ii) above) the transactions contemplated by this
Agreement.
34
The conversion which is the subject of the Second Term Loan on the Effective
Date in accordance with the applicable provisions hereof, each borrowing
hereunder and each issuance, amendment, renewal or extension of a Letter of
Credit shall constitute a representation and warranty of the Company that the
statements contained in clauses (a), (b), (c) and (d) of this Section 5.02
hereof are true and correct on and as of the Effective Date, the Borrowing Date
or as of the date of issuance, amendment, renewal or extension of a Letter of
Credit, as applicable, as though such representation and warranty had been made
on and as of such date.
ARTICLE VI.
AFFIRMATIVE COVENANTS
Each of the Borrowers covenants and agrees with the Lender that so long
as either the Revolving Credit Commitment or the Term Loan Commitment remains in
effect, or any of the principal of or interest on either of the Notes or any
other Obligations hereunder shall be unpaid it will, and it will cause each of
their respective Subsidiaries, to:
Section 6.01. Existence; Properties; Licenses; and
Insurance.
Do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate, partnership or limited liability company,
as applicable, existence, rights and franchises (other than as expressly
permitted herein) and comply in all material respects with all laws applicable
to it; at all times maintain, preserve, protect or renew all trade names,
patents, trademarks and service marks, the non-preservation of which could
reasonably be expected to have a Material Adverse Effect and preserve all of its
property, in each case, material to its business and keep the same in good
repair, working order and condition (normal wear and tear excepted) and from
time to time make, or cause to be made, all needful and proper repairs,
renewals, replacements, betterments and improvements thereto so that the
business carried on in connection therewith may be properly and advantageously
conducted in the ordinary course at all times in the manner and custom of
similar businesses; at all times, preserve and maintain in full force and effect
all governmental rights, privileges, qualifications, permits, licenses and
franchises necessary for the normal conduct of its business; and at all times
maintain insurance, either with financially sound and reputable insurers or
through self insurance, if adequate reserves are maintained with respect
thereto, covering its assets and its businesses in such amounts (including
deductibles and co-insurance, if adequate reserves are maintained with respect
thereto) and against such risks (including, without limitation, hazard, business
interruption, public liability and product liability) as are usually carried by
companies engaged in the same or similar business.
Section 6.02. Payment of Indebtedness, Taxes, etc.
(a) Pay all material indebtedness and obligations, now
existing or hereafter arising, as and when due and
payable except where (i) the validity or amount
thereof is being contested in good faith and by
35
appropriate proceedings, which proceedings shall
include good faith negotiations, and (ii) the Company
or any Subsidiary of the Company has set aside on its
books adequate reserves with respect thereto in
accordance with Generally Accepted Accounting
Principles, and (iii) the failure to make such
payment pending such contest could not reasonably be
expected to have a Material Adverse Effect.
(b) Pay and discharge or cause to be paid and discharged
promptly all taxes, assessments and government
charges or levies imposed upon it or upon its income
and profits, or upon any of its property, real,
personal or mixed, or upon any part thereof, as and
when due and payable, as well as all lawful claims
for labor, materials and supplies or otherwise which,
if unpaid, might become a lien or charge upon such
properties or any part thereof or except where the
failure to make such payment could not reasonably be
expected to have a Material Adverse Effect; provided,
however, that neither the Company nor any Subsidiary
of the Company shall be required to pay and discharge
or cause to be paid and discharged any such tax,
assessment, charge, levy or claim so long as the
validity thereof shall be contested in good faith by
appropriate proceedings, and the Company or such
Subsidiary, as the case may be, shall have set aside
on its books adequate reserves determined in
accordance with Generally Accepted Accounting
Principles with respect to any such tax, assessment,
charge, levy or claim so contested; further, provided
that, subject to the foregoing proviso, the Company
and each Subsidiary of the Company will pay or cause
to be paid all such taxes, assessments, charges,
levies or claims upon the commencement of proceedings
to foreclose any lien which has attached as security
therefor.
Section 6.03. Financial Statements, Reports, etc.
Furnish to the Lender:
(a) as soon as available and in any event within one
hundred and twenty (120) days after the end of the
fiscal year of the Company, copies of (i) a
consolidated balance sheet of the Company and its
Subsidiaries as at the end of such year and (ii)
consolidated statements of earnings, shareholders'
equity and cash flows of the Company and its
Subsidiaries for such year, setting forth in each
case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in
accordance with Generally Accepted Accounting
Principles consistently applied, and accompanied by
an opinion thereon of BDO ▇▇▇▇▇▇▇ LLP or other
independent certified public accountants of
recognized standing reasonably acceptable to the
Lender (the "Auditor"), which opinion shall state
that such financial statements present fairly, in all
material respects, the financial position of the
Company and its Subsidiaries and their results of
operations and cash flows and have been prepared in
conformity with Generally Accepted Accounting
36
Principles, and that the examination of the Auditor
in connection with such financial statements has been
made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable
basis for such opinion in the circumstances; provided
that such opinion shall not include a "going concern"
or like qualification or exception or qualification
or exception as to the scope of the audit.
(b) as soon as available and in any event within sixty
(60) days after the end of each of the first, second
and third fiscal quarters of the Company, copies of
(i) a consolidated balance sheet of the Company and
its Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of earnings of the
Company and its Subsidiaries, for such quarter and
(in the case of the second and third quarters) for
the portion of the fiscal year ending with such
quarter, and a statement of cash flows for the
portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the
figures for the corresponding periods in the previous
fiscal year, all in reasonable detail, reviewed by
the Auditor and prepared and certified by the Chief
Financial Officer of the Company as fairly
presenting, in all material respects, the financial
position of the Company and its Subsidiaries and
their results of operations and cash flows in
accordance with Generally Accepted Accounting
Principles consistently applied, subject to normal
year-end audit adjustments and the absence of
footnotes;
(c) a certificate prepared and signed by the Chief
Financial Officer with each delivery required by
clause (b), stating whether the Chief Financial
Officer shall have obtained knowledge of any Default
or Event of Default hereunder, together with a
certificate of the Chief Financial Officer of the
Company demonstrating that as of the last day of the
relevant fiscal year or quarter, as applicable, the
Company, was in compliance with the financial
condition covenants set forth in Section 7.13 hereof;
(d) on or before the 15th day of each calendar month, a
Borrowing Base Certificate as at such last day of
such immediately preceding calendar month, prepared
and certified by the Chief Financial Officer of the
Company as true and correct in all material respects;
(e) On or before the 15th day of each calendar month, for
each Borrower, a monthly Receivables aging as at and
for the last day of the immediately preceding
calendar month, in form reasonably satisfactory to
the Lender, prepared and certified by the Chief
Financial Officer of the Company as true and correct
in all material respects;
(f) as soon as available and in any event within 120 days
after the end of each fiscal year of the Company
during the Commitment Period, an annual financial
statement of all corporate Guarantors (if any), in a
37
form reasonably satisfactory to the Lender, prepared
and certified by an Auditor as true and correct in
all material respects for the then immediately
preceding calendar year (unless the results of the
operations of such Guarantor are consolidated with
the financial statements furnished to Lender under
(a) above);
(g) on or before the 15th day of each calendar month, for
the Borrowers, (i) a cash flow forecast for such
calendar month and for the two succeeding consecutive
calendar months in the form attached hereto as
Exhibit J, along with a reconciliation of the actual
cash flow report results for the immediately
preceding calendar month with the projected cash flow
results for such month as reflected in the cash flow
report required to be furnished in such month, and
(ii) an anticipated business analysis in the form
attached hereto as Exhibit K, for the Borrowers,
setting forth the information and results which are
the subject of such form (both on a prospective basis
as well as reconciled as to actual results); and
(h) promptly, from time to time, such other information
regarding the operations, business affairs and
condition (financial or otherwise) of the Company or
any Subsidiary of the Company as Lender may
reasonably request.
Section 6.04. Books and Records; Access to Premises; Field
Audits.
(a) Maintain adequate records and proper books of record
and account in which full, true and correct entries
will be made in a manner to enable the preparation of
financial statements in accordance with Generally
Accepted Accounting Principles, and which shall
reflect all financial transactions of the Company and
each of its Subsidiaries and matters involving the
assets and business of the Company and such
Subsidiaries.
(b) At any time during normal business hours and upon
reasonable advance notice, permit the Lender or any
agents or representatives thereof to examine and make
copies of and abstracts from the books and records of
such information which the Lender reasonably deems
necessary or desirable (including, without
limitation, the financial records of the Company and
its Subsidiaries) and to visit the properties of the
Company or any of its Subsidiaries and to discuss the
affairs, finances and accounts of the Company or any
of its Subsidiaries with any of their respective
executive officers or the Company's independent
accountants.
(c) At any reasonable time upon reasonable notice during
normal business hours, the Lender or any of its
agents or representatives (i) may conduct an annual
audit/field examination with respect to the assets
and properties of the Borrowers (the "Collateral")
and the procedures and policies of the Borrowers
related thereto (i.e., one per each fiscal year of
38
the Borrowers, beginning with the 2005 fiscal year),
at the sole cost and expense of the Borrowers, and
(ii) may conduct additional collateral audits with
respect to the Collateral (in addition to the audits
referenced in (i) above), at the sole cost and
expense of the Lender, provided, however, that upon
the occurrence and during the continuance of any
Event of Default, the Lender or any of its agents or
representatives shall be permitted to conduct any
such additional collateral audits with respect to the
Collateral from time to time in its sole discretion,
at the sole cost and expense of the Borrowers.
Section 6.05. Notice of Adverse Change.
Promptly notify the Lender in writing of (a) any change in the business
or the operations of the Company or its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect, and (b) any information which
indicates that any financial statements which are the subject of any
representation contained in this Agreement, or which are furnished to the Lender
or the Lender pursuant to this Agreement, fail to present fairly, as of the date
thereof and for the period covered thereby, the financial condition and results
of operations purported to be presented therein, disclosing the nature thereof.
Section 6.06. Notice of Default.
Promptly notify the Lender of any Default or Event of Default which
shall have occurred or the occurrence or existence of any event or circumstance
that in the reasonable judgment of the Company is likely to become a Default or
Event of Default, which notice shall include a written statement as to such
occurrence, specifying the nature thereof and the action (if any) which is
proposed to be taken with respect thereto.
Section 6.07. Notice of Litigation and Investigations.
Promptly notify the Lender of any action, suit, investigation or
proceeding at law or in equity or by or before any governmental instrumentality
or other agency which could reasonably be expected to have a Material Adverse
Effect.
Section 6.08. Notice of Default in Other Agreements.
Promptly notify the Lender of any default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which the Company or any Subsidiary
of the Company is a party which default could reasonably be expected to have a
Material Adverse Effect.
Section 6.09. Notice of ERISA Events, etc.
Promptly, and in any event within ten (10) days after any Borrower
knows any of the following, deliver to the Lender a certificate of the Chief
Financial Officer setting forth details as to the occurrence and the action, if
any, which the Company or any ERISA Affiliate is required or proposes to take
with respect to any of the following:
39
(a) any ERISA Event; or
(b) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of,
proceedings under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to
administer, any Plan; or
(c) any event, transaction or condition that could result
in the incurrence of any liability by the Company or
any ERISA Affiliate pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the
Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or such
penalty or excise tax provisions, if such liability
or Lien, taken together with any other such
liabilities or Liens then existing, would reasonably
be expected to have a Material Adverse Effect.
Section 6.10. Notice of Environmental Law Violations.
Promptly notify the Lender of the receipt of any notice of an action,
suit, and proceeding before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, pending against
the Company or any Subsidiary of the Company relating to any alleged violation
of any Environmental Law which could reasonably be expected to have a Material
Adverse Effect.
Section 6.11. Compliance with Applicable Laws.
Comply with the requirements of all applicable laws, rules, regulations
and orders of any Governmental Authority, the breach, failure or violation of
which could reasonably be expected to have a Material Adverse Effect, including,
without limitation, the rules and regulations of the Board of Governors of the
Federal Reserve System and the Federal Deposit Insurance Corporation.
Section 6.12. Subsidiaries.
The Borrowers shall, concurrently with the creation, establishment or
acquisition of any Subsidiary, (a) cause such Subsidiary to execute and deliver
to the Lender a Guaranty and a Security Agreement, (ii) deliver a favorable
written opinion of counsel addressed to the Lender, with respect to such
Subsidiary and with respect to the documents required to be executed by such
Subsidiary pursuant to this Section 6.12, and otherwise substantially in the
form attached to the Credit Agreement as Exhibit G, and (iii) provide to the
Lender such supporting documents (e.g., certificates of encumbancy, corporate
resolutions, etc.) as the Lender may reasonably request, each in form and
substance satisfactory to the Lender.
40
Section 6.13. Environmental Laws.
Comply in all material respects with the requirements of all applicable
Environmental Laws, provide to the Lender all documentation in connection with
such compliance that the Lender may reasonably request, and defend, indemnify,
and hold harmless the Lender and their respective employees, agents, officers,
and directors, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs, or expenses of whatever kind or
nature, known or unknown, contingent or otherwise, arising out of, or in any way
related to, (a) the presence, disposal, or release of any Hazardous Materials on
any property at any time owned or occupied by the Company or any Subsidiary of
the Company; (b) any personal injury (including wrongful death) or property
damage (real or personal) arising out of or related to such Hazardous Materials;
(c) any lawsuit brought or threatened, settlement reached, or government order
relating to such Hazardous Materials, and/or (d) any violation of applicable
Environmental Laws, including, without limitation, reasonable attorney and
consultant fees, investigation and laboratory fees, court costs, and litigation
expenses.
Section 6.14. Maintenance of Accounts with Lender.
The Borrowers shall maintain all of their respective deposit accounts
with the Lender within sixty (60) days subsequent to the Closing Date.
ARTICLE VII.
NEGATIVE COVENANTS
The Borrowers covenant and agree with the Lender that so long as either
the Revolving Credit Commitment or the Term Loan Commitment remains in effect or
any of the principal of or interest on the Notes or any other Obligations
hereunder shall be unpaid, they will not, and they will cause or permit any of
their respective Subsidiaries, directly or indirectly, not to:
Section 7.01. Indebtedness.
Incur, create, assume or suffer to exist or otherwise become liable in
respect of any Indebtedness, other than the following (unless a Default or an
Event Default shall have occurred and be continuing at the time of occurrence of
such Indebtedness or would occur after giving effect to the occurrence of such
Indebtedness):
(a) Indebtedness incurred prior to the Closing Date
(which is not described in Section 7.01(b) through
7.01(h) hereof) as described in Schedule 7.01
attached to the Credit Agreement, provided that the
aggregate principal amount of such Indebtedness is
not increased;
(b) Indebtedness to the Lender under this Agreement, the
Notes or any other Loan Document;
(c) Indebtedness for trade payables incurred in the
ordinary course of business; provided that except for
any such trade payables which are being contested in
41
good faith by appropriate proceedings that are not
reasonably likely to result in a Material Adverse
Effect and with respect to which adequate reserves
are maintained on the books of the Company or any
Subsidiary of the Company (as the case may be) in
accordance with Generally Accepted Accounting
Principles, such payables shall be paid or discharged
when due;
(d) Indebtedness consisting of guarantees permitted
pursuant to Section 7.03 hereof;
(e) Subordinated Indebtedness;
(f) Indebtedness for taxes, assessments or other
governmental charges or levies not yet delinquent or
which are being contested in good faith by
appropriate proceedings, provided however, that
adequate reserves with respect thereto are maintained
on the books of the Company or any Subsidiary of the
Company in accordance with Generally Accepted
Accounting Principles;
(g) Indebtedness owing by any Borrower or any Subsidiary
of the Company to any other Borrower; and
(h) Indebtedness arising under Capital Leases; provided
that the aggregate amount of such Indebtedness shall
not exceed $50,000 at any time outstanding.
Section 7.02. Liens.
Incur, create, make, assume or suffer to exist any Lien on any of their
respective properties or assets, now or hereafter owned, other than the
following (unless a Default or an Event Default shall have occurred and be
continuing at the time of occurrence/existence of such Lien or would occur after
giving effect to the occurrence/existence of such Lien):
(a) Liens for taxes, assessments or other governmental
charges or levies which are not yet due and payable
or the payment of which is not at the time required
or which are being contested in good faith by
appropriate proceedings that are not reasonably
likely to result in a Material Adverse Effect and
with respect to which adequate reserves are
maintained on the books of the Company or any
Subsidiary of the Company (as the case may be) in
accordance with Generally Accepted Accounting
Principles;
(b) any attachment or judgment Lien, unless the judgment
it secures shall not, within 30 days after the entry
thereof, have been discharged or execution thereof
stayed pending appeal, or shall not have been
discharged within 30 days after the expiration of any
stay;
42
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other
similar Liens, in each case, incurred in the ordinary
course of business for sums not yet due and payable
or the payment of which is not at the time required
or which are being contested in good faith by
appropriate proceedings that are not reasonably
likely to result in a Material Adverse Effect and
with respect to which adequate reserves are
maintained on the books of the Company or any
Subsidiary of the Company (as the case may be) in
accordance with Generally Accepted Accounting
Principles;
(d) Liens (other than any Lien imposed by ERISA) incurred
or deposits made in the ordinary course of business
(i) in connection with workers' compensation,
unemployment insurance and other types of social
security or retirement benefits, or (ii) to secure
(or obtain letters of credit that secure) the
performance of tenders, statutory obligations, surety
bonds, appeal bonds, bids, leases (other than Capital
Leases), performance bonds, purchase, construction or
sales contracts and other similar obligations, in
each case not incurred or made in connection with the
borrowing of money, the obtaining of advances or
credit or the payment of the deferred purchase price
of property;
(e) leases or subleases granted to others, easements,
rights-of-way, reservations, survey exceptions,
restrictions (including zoning restrictions) and
other similar charges of encumbrances on real
property, in each case incidental to, and not
interfering with, the ordinary conduct of the
business of the Company or any of its Subsidiaries,
provided that such Liens do not, in the aggregate,
materially detract from the value of such property;
(f) Liens securing the Indebtedness to the Lender
hereunder;
(g) the Lien of AMB Property, L.P. on a $500,000 security
deposit made by one or more of the Borrowers in
connection with the U.S. Concepts Lease, provided
that such Lien shall be released and shall cease to
exist contemporaneously with the delivery of the
Initial Letter of Credit to AMB Property, L.P., but
in no event later than three Business Days subsequent
to the Closing Date;
(h) any Lien created to secure all or any part of the
Indebtedness permitted pursuant to Section 7.01(h)
hereof, provided that
(i) any such Lien shall extend solely to the
item or items of such fixed assets or
(improvements thereon) so acquired or
constructed and, if required by the terms of
the instrument originally creating such
Lien, other fixed assets (or improvements
thereon) which is (A) an improvement to, or
43
is acquired for specific use in connection
with, such acquired or constructed fixed
assets (or improvement thereon) or (b) real
property being improved by such acquired or
constructed fixed assets (or improvement
thereon),
(ii) the principal amount of the Indebtedness
secured by any such Lien shall at no time
exceed an amount equal to 100% of the cost
to the Company or such Subsidiary of the
fixed assets (or improvements thereon) so
acquired or constructed, and
(iii) such Lien does not secure any Indebtedness
other than in respect of the purchase price
of the fixed assets (or improvements
thereof) so acquired; and
(iv) any such Lien shall be either (A) created
contemporaneously with the acquisition or
construction of such fixed assets or (B) in
respect of land on which such fixed assets
or improvements are located.
Section 7.03. Guaranties.
Guarantee, endorse, become surety for, or otherwise in any way become
or be responsible for the Indebtedness or obligations of any Person, whether by
agreement to maintain working capital or equity capital or otherwise maintain
the net worth or solvency of any Person or by agreement to purchase the
Indebtedness of any other Person, or agreement for the furnishing of funds,
directly or indirectly, through the purchase of goods, supplies or services for
the purpose of discharging the Indebtedness of any other Person or otherwise, or
enter into or be a party to any contract for the purchase of merchandise,
materials, supplies or other property if such contract provides that payment for
such merchandise, materials, supplies or other property shall be made regardless
of whether delivery of such merchandise, supplies or other property is ever made
or tendered, other than the following (unless a Default or an Event Default
shall have occurred and be continuing at the time of occurrence of such
Indebtedness or would occur after giving effect to the occurrence of such
Indebtedness):
(a) guaranties executed or committed prior to the Closing
Date (which are not described in Sections 7.03(b)
through 7.03(e) hereof) as described on Schedule 7.03
attached to the Credit Agreement, and any renewals or
extension thereof provided that such renewals or
extension do not increase the maximum exposure
pursuant to the guaranty;
(b) endorsements of negotiable instruments for collection
or deposit in the ordinary course of business;
(c) guaranties of any Indebtedness under this Agreement
or any other Loan Document;
(d) guaranties of Subordinated Indebtedness, provided
that the guaranty obligations are subordinated to the
obligations of the Company and its Subsidiaries on
subordination terms and conditions satisfactory to
the Lender; and
44
(e) guaranties by the Company of any Indebtedness
permitted pursuant to Section 7.01 of any Subsidiary
of the Company or guaranties by any Subsidiary of the
Company of such Indebtedness of the Company.
Section 7.04. Sale of Assets.
Sell, lease, transfer or otherwise dispose of their respective
properties and assets, other than the following (unless a Default or an Event
Default shall have occurred and be continuing at the time of occurrence of such
transaction or would occur after giving effect to the occurrence of such
transaction): (a) any such transfers which are between any of the Borrowers, (b)
the sale or other disposition of properties or assets no longer used or useful
in the conduct of their respective businesses, (c) sales in the ordinary course
of business, and (d) the sale of the ▇▇▇▇▇▇▇.▇▇▇ and ▇▇▇▇▇▇▇.▇▇▇ domain names.
Section 7.05. Sales of Receivables.
Sell, transfer, discount or otherwise dispose of notes, accounts
receivable or other obligations owing to the Company or any Subsidiary of the
Company, with or without recourse, except for collection in the ordinary course
of business.
Section 7.06. Loans and Investments.
Make or commit to make any advance, loan, extension of credit or
capital contribution to, or purchase or hold beneficially any stock or other
securities, or evidence of Indebtedness of, purchase or acquire all or
substantially all of the assets of, make or permit to exist any interest
whatsoever in, any other Person, other than (without duplication) the following
(unless a Default or an Event Default shall have occurred and be continuing at
the time of occurrence of such transaction or would occur after giving effect to
the occurrence of such transaction): (a) Eligible Investments; (b) loans and
advances by any Borrower to another Borrower or to any Subsidiary Guarantor, and
loans and advances by any Subsidiary of the Company to the Company; (c) loans
and advances to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc. in an amount not to exceed $700,000 in the
aggregate at any time outstanding, provided, however, that notwithstanding the
foregoing to the contrary, $766,000 in the aggregate may be outstanding at
September 30, 2003 and an aggregate amount not in excess of $850,000 may be
outstanding at any time subsequent to September 30, 2003 through and including
November 15, 2003; (d) loans and advances to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ in an aggregate
principal amount not to exceed $550,000 at any time outstanding; and (e) the
equity interests held by the Company or any of the other Borrowers at the
Closing Date in ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc. or any Subsidiary of the Company and,
subject to compliance by the Borrowers with the provisions of Section 6.12,
ownership of an equity interest in any Subsidiary created, established or
acquired from and after the Closing Date.
45
Section 7.07. Nature of Business.
Fail to carry on its business in substantially the same manner and in
substantially the same fields as such business is carried on and maintained as
of the Closing Date.
Section 7.08. Sale and Leaseback.
Enter into any arrangement, directly or indirectly, with any Person
whereby it shall sell or transfer any property, whether real or personal, used
or useful in its business, whether now owned or hereafter acquired, if at the
time of such sale or disposition it intends to lease or otherwise acquire the
right to use or possess (except by purchase) such property or like property for
a substantially similar purpose.
Section 7.09. Federal Reserve Regulations; Use of Proceeds
Permit any Loan or the proceeds of any Loan to be used for any purpose
(a) which violates or is inconsistent with the provisions of Regulation T, U or
X of the Board of Governors of the Federal Reserve System or (b) other than as
permitted under Section 3.02 hereof.
Section 7.10. Accounting Policies and Procedures.
Permit any change in the accounting policies and procedures of the
Company or any of its Subsidiaries, including a change in fiscal year, provided,
however, that any policy or procedure required to be changed in order to comply
with Generally Accepted Accounting Principles or any rule or regulation of the
Securities and Exchange Commission may be so changed.
Section 7.11. Hazardous Materials.
Cause or permit any of its properties or assets to be used to generate,
manufacture, refine, transport, treat, store, handle, dispose of, transfer,
produce or process Hazardous Materials, except in compliance with all applicable
federal, state and local laws or regulations, or cause or permit, a release of
Hazardous Materials onto such property or asset or onto any other property,
except in compliance with such laws and regulations.
Section 7.12. Limitations on Fundamental Changes,
Limitations on Consideration.
Except as permitted by Section 7.04 hereof, merge or consolidate with,
or sell, assign, lease or otherwise dispose of (whether in one transaction or in
a series of transactions) all or substantially all of its assets (whether now or
hereafter acquired) to, any Person, or, acquire all or substantially all of the
stock or all or substantially all of the assets or the business of any Person or
liquidate, wind up or dissolve or suffer any liquidation or dissolution.
Notwithstanding the foregoing, any Borrower (other than the Company) or
Subsidiary of the Company may merge with and into the Company or any other
Borrower.
46
Section 7.13. Financial Condition Covenants.
(a) Consolidated Senior Funded Debt to Consolidated
EBITDA. Permit, at the last day of each fiscal
quarter from and after June 30, 2005, the ratio of
Consolidated Senior Funded Debt to Consolidated
EBITDA, calculated (without duplication) for the
period of four consecutive fiscal quarters ending on
such date, to be greater than 1.50:1.00.
(b) Minimum Effective Net Worth. Permit Minimum Effective
Net Worth, at any date of determination set forth
below, to be less that the amount set forth below
opposite the applicable determination date:
Date Amount
---- ------
March 31, 2003 $14,500,000
March 31, 2004 $15,000,000
March 31, 2005 $15,500,000
March 31, 2006 $15,500,000
(c) Debt Service Coverage Ratio. Permit the Debt Service
Coverage Ratio, at the last day of each fiscal
quarter from and after June 30, 2005, to be less than
2.00:1.00.
(d) Consolidated Net Loss. Permit the Consolidated Net
Income of the Company and its Subsidiaries (excluding
extraordinary gains) for any fiscal quarter, plus the
income taxes to any government or governmental
instrumentality expensed on the Company's or any of
its Subsidiary's books (whether paid or accrued) for
such period, to be less than $250,000 for the fiscal
quarter ended June 30, 2004 or $1,000,000 for any
fiscal quarter thereafter.
Section 7.14. Subordinated Debt.
(i) Directly or indirectly prepay, defease, purchase, redeem, or
otherwise acquire any Subordinated Debt or (ii) amend, supplement or otherwise
modify any of the subordinated terms thereof in any way, without the prior
written consent of the Lender.
Section 7.15. Dividends.
Declare any dividend on, or make any payment or account of, or set
apart assets for a sinking or other analogous fund for the purchase, redemption,
defeasance, retirement or other acquisition of, any shares of any class of stock
of the Company whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash,
securities or property or in obligations of the Company or in any combination
thereof other than with respect to dividends payable by any Borrower or any
Subsidiary to any other Borrower.
47
Section 7.16. Transactions with Affiliates.
Enter into any transaction, including, without limitation, the
purchase, sale, or exchange of property or the rendering of any service, with
any Affiliate (other than a Borrower), except as permitted by Section 7.06(c) or
(d) or in the ordinary course of and pursuant to the reasonable requirements of
the Company's or any of its Subsidiaries' business and upon fair and reasonable
terms no less favorable to the Company or such Subsidiary than they would obtain
in a comparable arms-length transaction with a Person not an Affiliate.
Section 7.17. Negative Pledge.
Enter into any agreement with any Person other than the Lender pursuant
to this Agreement or any of the other Loan Documents which prohibits or limits
the ability of the Company or any of its Subsidiaries to create, incur, assume
or suffer to exist any Lien upon its property, assets or revenues, whether now
owned or hereafter acquired.
Section 7.18. Minimum Deposits.
Maintain demand deposits (in immediately available funds) with the
Lender (which deposits are the subject of Section 6.14 hereof) in an amount less
than $3,000,000 at any time from and after the Effective Date.
ARTICLE VIII.
EVENTS OF DEFAULT
Section 8.01. Events of Default.
In the case of the happening of any of the following events (each an
"Event of Default"):
(a) failure to pay (i) the principal of any Loan or any
reimbursement obligations with respect to a drawing
under any Letter of Credit, as and when due and
payable or (ii) interest on any Loan or any fees
under this Agreement, as and when due and payable;
(b) any representation or warranty made or deemed made in
this Agreement or any other Loan Document shall prove
to be false or misleading in any material respect
when made or given or when deemed made or given;
(c) any report, certificate, financial statement or other
instrument furnished in connection with this
Agreement or any other Loan Document or the
borrowings hereunder, shall prove to be false or
misleading in any material respect when made or given
or when deemed made or given;
(d) default shall be made in the due observance or
performance of any covenant, condition or agreement
of the Company or any Subsidiary to be performed (i)
48
pursuant to Article 6 of this Agreement (other than
Section 6.03, Section 6.04(b), and 6.05-6.10 thereof)
and, in the case of this subclause (i) only, such
default shall continue unremedied for a period of
fifteen (15) consecutive days or (ii) pursuant to any
other provision of this Agreement or any other Loan
Document that is not specifically addressed in
Sections 8.01(a), (b), (c) or (d)(i) hereof and such
default, if capable of being cured, shall continue
unremedied for a period of five consecutive days.
(e) default in the performance or compliance in respect
of any agreement or condition relating to any
Indebtedness (other than under the Notes) of any of
the Borrowers, Guarantors or Subsidiaries of the
Company, individually or in the aggregate, in excess
of $100,000, if the effect of such default is to
accelerate the maturity of such Indebtedness or to
permit the holder or obligee thereof (or a trustee on
behalf of such holder or obligee) to cause such
Indebtedness to become due prior to the stated
maturity thereof, or, any such Indebtedness shall not
be paid when due (beyond any applicable grace
period);
(f) any of the Borrowers, Guarantors or Subsidiaries of
the Company, shall (i) voluntarily commence any
proceeding or file any petition seeking relief under
Title 11 of the United States Code or any other
federal or state bankruptcy, insolvency or similar
law, (ii) consent to the institution of, or fail to
controvert in a timely and appropriate manner, any
such proceeding or the filing of any such petition,
(iii) apply for or consent to the employment of a
receiver, trustee, custodian, sequestrator or similar
official for any such Person or for a substantial
part of its property; (iv) file an answer admitting
the material allegations of a petition filed against
it in such proceeding, (v) make a general assignment
for the benefit of creditors, or (vi) take corporate
action for the purpose of effecting any of the
foregoing; or any such Person becomes unable or
admits in writing its inability or fails generally to
pay its debts as they become due;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of
competent jurisdiction seeking (i) relief in respect
of any of the Borrowers, Guarantors or Subsidiaries
of the Company, or of a substantial part of their
respective property, under Title 11 of the United
States Code or any other federal or state bankruptcy
insolvency or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator or similar
official for any such Person or for a substantial art
of their property, or (iii) the winding-up or
liquidation of any such Person and in each such case,
such proceeding or petition shall continue
undismissed for 30 days or an order or decree
approving or ordering any of the foregoing shall
continue unstayed and in effect for 30 days;
49
(h) One or more orders, judgments or decrees for the
payment of money in excess of $100,000 in the
aggregate shall be rendered against the Borrowers,
Guarantors or Subsidiaries of the Company (or any of
them), which is not covered by insurance and the same
shall not have been paid in accordance with such
judgment, order or decree or settlement, or one or
more non-monetary judgments or decrees shall be
entered against any of the Borrowers, Guarantors or
Subsidiaries of the Company, that have, or could
reasonably be expected to have, a Material Adverse
Effect, and either (i) an enforcement proceeding
shall have been commenced by any creditor upon such
judgment, order or decree, or (ii) there shall have
been a period of thirty (30) days during which a stay
of enforcement of such judgment, order or decree, by
reason of pending appeal or otherwise, was not in
effect;
(i) any Plan shall fail to maintain the minimum funding
standard required under Section 412 of the Code for
any Plan year or part thereof or a waiver of such
standard or extension of any amortization period is
applied for or granted under Section 412 of the Code,
any Plan is terminated by the Company, any Subsidiary
of the Company, any Guarantor or any ERISA Affiliate
or is the subject of termination proceedings under
ERISA, any Plan shall have an Unfunded Pension
Liability, a Reportable Event shall have occurred
with respect to a Plan or the Company, any Subsidiary
of the Company, any Guarantor or any ERISA Affiliate
shall have incurred a liability to or on account of a
Plan under Section 515, 4062 or 4063 of ERISA, and
there shall result from any such event or events the
imposition of a Lien upon the assets of the Company
or any Subsidiary of the Company or any Guarantor,
the granting of a security interest on such assets, a
liability to the PBGC or a Plan or a trustee
appointed under ERISA or a penalty under Section 4971
of the Code, or an ERISA Event shall have occurred,
and in each case, such event or condition, together
with all such events or conditions, if any, would
reasonably be expected to result in liability of the
Company, the Subsidiaries of the Company and/or the
Guarantors in an aggregate amount exceeding $50,000;
(j) any Loan Document, at any time after its execution
and delivery and for any reason other than the
agreement of the Lender or satisfaction in full of
all the Obligations, ceases to be in full force and
effect, or is declared by a court of competent
jurisdiction to be null and void, invalid or
unenforceable in any respect; or any Borrower or any
Guarantor denies that it has any or further liability
or obligation under any Loan Document, or purports to
revoke, terminate or rescind any Loan Document; or
(k) a Change of Control shall have occurred or ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
shall at any time beneficially own, in the aggregate,
less than 15% of the issued and outstanding shares of
common stock of the Company on a fully-diluted basis,
50
then, at any time thereafter during the continuance of any such event, the
Lender may, by written or telephonic notice to the Company, take either or both
of the following actions, at the same or different times, (a) terminate the
Commitment and (b) declare (i) the Notes, both as to principal and interest,
(ii) an amount equal to the Aggregate Letters of Credit Outstandings and (iii)
all other Obligations, to be forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the Notes to the contrary
notwithstanding; provided, however, that if an event specified in Section
8.01(f), (g) or (j) hereof shall have occurred, the Revolving Credit Commitment
and the Term Loan Commitment shall automatically terminate and interest,
principal and amounts referred to in the preceding clauses (i), (ii) and (iii)
shall be immediately due and payable without presentment, demand, protest, or
other notice of any kind, all of which are expressly waived, anything contained
herein or in the Notes to the contrary notwithstanding. With respect to Letters
of Credit that shall not have matured or presentment for honor shall not have
occurred, the Borrowers shall provide the Lender with Cash Collateral in an
amount equal to the aggregate undrawn amount of such Letters of Credit. Such
Cash Collateral shall be applied by the Lender to reimburse the Lender for
drawings under Letters of Credit for which the Lender has not been reimbursed
and, to the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrowers at such time or, if the maturity of
the Loans has been accelerated, be applied to satisfy other Obligations, with
any amount remaining after such satisfactions to be returned to the Borrowers or
paid to such other party as may legally be entitled to the same.
ARTICLE IX.
MISCELLANEOUS
Section 9.01. Notices.
All notices, requests and demands to or upon, the respective parties
hereto to be effective shall be in writing (including telecopy) and unless
otherwise expressly provided herein, shall be conclusively deemed to have been
received by a party hereto and to be effective on the day on which delivered by
hand to such party or one Business Day after being sent by overnight mail to the
address set forth below, or, in the case of telecopy notice, when acknowledged
as received, or if sent by registered or certified mail, three (3) Business Days
after the day on which mailed in the United States, addressed to such party at
such address:
(a) to the Lender, at:
Signature Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
51
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) to the Company or any of the other Borrowers, at:
CoActive Marketing Group, Inc.
(or c/o CoActive Marketing Group, Inc., as applicable)
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Kronish ▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.02. Effectiveness; Survival.
This Agreement shall become effective on the date on which all parties
hereto shall have signed a counterpart copy hereof and shall have delivered the
same to the Lender. All representations and warranties made herein and in the
other Loan Documents and in the certificates delivered pursuant hereto or
thereto shall survive the making by the Lender of the Loans and the issuance by
the Lender of Letters of Credit, in each case, as herein contemplated and the
execution and delivery to the Lender of the Notes evidencing the Loans and shall
continue in full force and effect so long as the Obligations hereunder are
outstanding and unpaid and the Commitment is in effect.
Section 9.03. Expenses.
The Borrowers agree (a) to indemnify, defend and hold harmless the
Lender and its officers, directors, employees, and affiliates (each, an
"indemnified person") from and against any and all losses, claims, damages,
liabilities or judgments to which any such indemnified person may be subject and
arising out of or in connection with the Loan Documents, the financings
contemplated hereby, the use of any proceeds of such financings or any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any of such indemnified persons is a party thereto, and to
reimburse each of such indemnified persons upon demand for any reasonable legal
52
or other expenses incurred in connection with the investigation or defending any
of the foregoing; provided that the foregoing indemnity will not, as to any
indemnified person, apply to losses, claims, damages, liabilities, judgments or
related expenses to the extent arising from the willful misconduct or gross
negligence of such indemnified person, (b) to pay or reimburse the Lender for
all its out-of-pocket costs and reasonable expenses incurred in connection with
the preparation and execution of and any amendment, supplement or modification
to this Agreement, the Notes, any other Loan Documents, and any other documents
prepared in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including without limitation, the
reasonable fees and disbursements of ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, counsel to the Lender,
and (c) to pay or reimburse and the Lender for all of its costs and expenses
incurred in connection with the enforcement and preservation of any rights under
this Agreement, the Notes, the other Loan Documents, and any other documents
prepared in connection herewith or therewith, including, without limitation, the
reasonable fees and disbursements of counsel (including, without limitation,
in-house counsel) to the Lender, including all such out-of-pocket expenses
incurred during any work-out, restructuring or negotiations in respect of the
Obligations. The obligations of the Borrowers pursuant to this Section 9.03
shall survive termination of this Agreement and payment of the Obligations.
Section 9.04. Amendments and Waivers.
The Lender and the Borrowers may, from time to time, enter into written
amendments, supplements or modifications hereto for the purpose of adding any
provisions to this Agreement or the Notes or any of the other Loan Documents or
changing in any manner the rights of the Lender or of the Borrowers hereunder or
thereunder, provided that the foregoing may only be effected by a written
agreement or instrument duly executed by the Lender and the Borrowers. The
Lender, in its sole discretion, may execute and deliver to the Borrowers a
written instrument waiving, on such terms and conditions as the Lender may
specify in such instrument, any of the requirements of this Agreement or the
Note or any of the other Loan Documents or any Default or Event of Default. Any
such waiver and any such amendment, supplement or modification shall be binding
upon the Borrowers, the Lender and all future holders of the Note.
Section 9.05. Successors and Assigns; Participations.
(a) This Agreement shall be binding upon and inure to the
benefit of the Borrowers, the Lender, all future
holders of the Note and their respective successors
and assigns, except that the Borrowers may not assign
or transfer any of its rights or obligations under
this Agreement without the prior written consent of
the Lender.
(b) The Lender may, in the ordinary course of its
commercial banking business and in accordance with
applicable law, at any time sell to one or more banks
or other financial institutions ("Participants")
participating interests in any Loan owing to the
Lender, the Notes held by the Lender, any Commitment
of the Lender or any other interest of the Lender
hereunder. In the event of any such sale by the
Lender of participating interests to a Participant,
53
the Lender's obligations under this Agreement to the
other parties under this Agreement shall remain
unchanged, the Lender shall remain solely responsible
for the performance thereof, the Lender shall remain
the holder of any the Note for all purposes under
this Agreement, and the Borrowers shall continue to
deal solely and directly with the Lender in
connection with the Lender's rights and obligations
under this Agreement. The Borrowers agree that each
Participant shall be entitled to the benefits of
Section 3.05, with respect to its participation in
the Commitment and in the Loans and Letter of Credit
outstanding from time to time; provided, however,
that no Participant shall be entitled to receive any
greater amount pursuant to such Sections than the
transferor Lender would have been entitled to receive
in respect of the amount of the participation
transferred by such transferor lender to such
Participant had no such transfer occurred.
(c) The Lender may, in the ordinary course of its
commercial banking business and in accordance with
applicable law, at any time sell or assign to one or
more additional banks or financial institutions
("Purchasing Lender") all or any part of its rights
and obligations under this Agreement and the Notes
with the prior consent of the Borrowers (which
consent may not be unreasonably withheld or delayed
by the Borrowers), provided that the Borrowers'
consent shall not be required as aforesaid if an
Event of Default shall have occurred and is
continuing. The Borrowers agrees that it shall
execute or cause to be executed, such documents,
including, without limitation, amendments to this
Agreement and to any other documents, instruments and
agreements executed in connection herewith as the
Lender shall deem necessary to effect the foregoing.
In addition, at the request of the Lender and any
such Purchasing Lender, the Borrowers shall issue one
or more new promissory notes, as applicable, to any
such Purchasing Lender and, if the Lender has
retained any of its rights and obligations hereunder
following such assignment, to the Lender, which new
promissory notes shall be issued in replacement of,
but not in discharge of, the liability evidenced by
the Notes and shall reflect the amount of the
respective commitments and Loans held by such
Purchasing Lender and the Lender after giving effect
to such assignment. Upon the execution and delivery
of appropriate assignment documentation, amendments
and any other documentation required by the Lender in
connection with such assignment, and the payment by
the Purchasing Lender of the purchase price agreed to
by the Lender and such Purchasing Lender, such
Purchasing Lender shall be a party to this Agreement
and shall have all of the rights and obligations of
the Lender hereunder (and under any and all other
guaranties (including the Guaranty), documents,
instruments and agreements executed in connection
herewith (including the Security Agreements and the
Pledge Agreements) to the extent that such rights and
obligations have been assigned to the Lender pursuant
to the assignment documentation between the Lender
54
and such Purchasing Lender, and the Lender shall be
released from its obligations hereunder and
thereunder to a corresponding extent (except as to
Sections 3.05 and 9.03 for the period prior to the
effective date of such assignment).
(d) The Lender shall maintain at its address referred to
in Section 9.01 a copy of each assignment and
acceptance agreement delivered to it and a register
(the "Register") for the recordation of the names and
addresses of the lenders from time to time hereunder
and the commitments of, and principal amount of the
Loans owing to, each such lender from time to time.
The entries in the Register shall be conclusive, in
the absence of demonstrable error and the Borrowers,
the Lender and such lenders may treat each Person
whose name is recorded in the Register as the owner
of such Loans recorded therein for all purposes of
this Agreement. The Register shall be available for
inspection by the Borrowers or any such lender at any
reasonable time and from time to time upon reasonable
prior notice.
(e) The Borrowers authorizes the Lender to disclose to
any Participant or Purchasing Lender (each, a
"Transferee") and any prospective Transferee any and
all financial information in the Lender's possession
concerning the Borrowers and their Affiliates which
has been delivered to the Lender by or on behalf of
the Borrowers pursuant to this Agreement or which has
been delivered to the Lender by the Borrowers in
connection with the Lender's credit evaluation of the
Borrowers and their Subsidiaries prior to entering
into this Agreement.
(f) If, pursuant to this Section 9.05, any interest in
this Agreement, a participation agreement, or the
Notes are transferred to any Transferee which is
organized under the laws of any jurisdiction other
than the United States or any State thereof, the
transferor lender shall cause such Transferee,
concurrently with the effectiveness of such transfer,
(i) to represent to the transferor lender (for the
benefit of the transferor lender, the Lender and the
Borrowers) that under applicable law and treaties no
taxes will be required to be withheld by the Lender,
the Borrowers, or the transferor lender with respect
to any payments to be made to such Transferee in
respect of the Loans, (ii) to furnish to the Lender,
the transferor lender and the Borrowers either U.S.
Internal Revenue Service Form W-8EC1 or U.S. Internal
Revenue Service Form W-8BEN (wherein such Transferee
claims entitlement to complete exemption from U.S.
federal withholding tax on all interest payments
hereunder) and (iii) to agree (for the benefit of the
Lender, the transferor lender and the Borrowers) to
provide the Lender, the transferor lender and the
Borrowers a new Form W-8EC1 or Form W-8BEN upon the
expiration or obsolescence of any previously
delivered form and comparable statements in
accordance with applicable U.S. laws and regulations
and amendments duly executed and completed by such
Transferee, and to comply from time to time with all
applicable U.S. laws and regulations with regard to
such withholding tax exemption.
55
(g) The Lender may at any time pledge or assign or grant
a security interest in all or any part of its rights
under this Agreement and the other Loan Documents,
including any portion of its Notes, to any of the
Federal Reserve Lenders organized under Section 4 of
the Federal Reserve Act, 12 U.S.C. Section 341,
provided that no such assignment shall release the
transferor Lender from its Commitment or its
obligations hereunder or substitute any such pledgee
or assignee for the Lender as a party to this
Agreement.
Section 9.06. No Waiver; Cumulative Remedies.
Neither any failure nor any delay on the part of the Lender in
exercising any right, power or privilege hereunder or under the Note or any
other Loan Document shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any other
right, power or privilege. The rights, remedies, powers and privileges herein
provided or provided in the other Loan Documents are cumulative and not
exclusive of any rights, remedies powers and privileges provided by law.
Section 9.07. APPLICABLE LAW.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OR CHOICE OF LAW.
Section 9.08. SUBMISSION TO JURISDICTION; JURY WAIVER.
EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
FEDERAL OR STATE COURT IN THE ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ OF
NASSAU OR COUNTY OF SUFFOLK IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT
AND RELATED TO OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AND TO THE EXTENT
PERMITTED BY APPLICABLE LAW, EACH BORROWER HEREBY WAIVES AND AGREES NOT TO
ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR
PROCEEDING ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF
SUCH FEDERAL OR STATE COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN
AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS
IMPROPER, OR THAT THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OTHER
DOCUMENT OR INSTRUMENT REFERRED TO HEREIN OR THEREIN OR THE SUBJECT MATTER
HEREOF THEREOF MAY NOT BE LITIGATED IN OR BY SUCH FEDERAL OR STATE COURTS. TO
THE EXTENT PERMITTED BY APPLICABLE LAW, EACH BORROWER AGREES NOT TO ASSERT ANY
COUNTERCLAIM IN ANY SUCH SUIT, ACTION OR PROCEEDING UNLESS SUCH COUNTERCLAIM IS
56
A COMPULSORY OR MANDATORY COUNTERCLAIM UNDER APPLICABLE LAWS GOVERNING CIVIL
PROCEDURE. EXCEPT AS PROHIBITED BY LAW, EACH BORROWER HEREBY WAIVES ANY RIGHT IT
MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE
OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. EACH BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
THE LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDER WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR BANK TO ACCEPT THIS AGREEMENT AND MAKE THE
LOANS AND OTHER EXTENSION OF CREDIT HEREUNDER." EACH BORROWER AGREES THAT
SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE
ADDRESS FOR NOTICES SET FORTH IN THIS AGREEMENT OR ANY METHOD AUTHORIZED BY THE
LAWS OF NEW YORK. EACH PARTY HERETO KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON,
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY
OTHER LOAN DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY RELATING THERETO, AND AGREES
THAT IT WILL NOT SEEK TO CONSOLIDATE ANY SUCH CLAIM/ACTION WITH ANY OTHER
CLAIM/ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THIS WAIVER
CONSTITUTES A MATERIAL INDUCEMENTS FOR THE LENDERS TO ENTER INTO THIS AGREEMENT
AND TO MAKE THE LOANS.
Section 9.09. Severability.
In case any one or more of the provisions contained in this Agreement,
the Notes or any other Loan Document should be invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby.
Section 9.10. Right of Setoff.
The Borrowers hereby grant to the Lender, a continuing lien, security
interest and right of setoff as security for all liabilities and obligations to
the Lender, whether now existing or hereafter arising, upon and against all
deposits, credits, collateral and property, now or hereafter in the possession,
custody, safekeeping or control of the Lender or any entity under the control of
Signature Bank and its successors and assigns or in transit to any of them. At
any time, without demand or notice (any such notice being expressly waived by
the Borrowers), the Lender may setoff the same or any part thereof and apply the
same to any liability or obligation of any Borrowers and any Guarantor even
though unmatured and regardless of the adequacy of any other collateral securing
the Loan. ANY AND ALL RIGHTS TO REQUIRE THE LENDER TO EXERCISE ITS RIGHTS OR
REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOANS OR OTHER
57
EXTENSIONS OF CREDIT HEREUNDER, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH
RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE COMPANY OR ANY
GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED." The rights
of the Lender and each Affiliate of the Lender under this Section 9.10 are in
addition to other rights and remedies (including, without limitation, other
rights of setoff) which they may have.
Section 9.11. Confidentiality.
The Lender agrees to keep confidential all non-public information,
materials and documents furnished by the Borrowers to the Lender pursuant to
this Agreement (the "Confidential Information"). Notwithstanding the foregoing,
such party shall be permitted to disclose Confidential Information (a) to such
of its officers, directors, employees, agents, representatives and professional
advisors in any of the transactions contemplated by, or the administration of,
this Agreement; (b) to the extent required by applicable laws and regulations or
by any subpoena or similar legal process, or requested by any governmental
agency or authority; (c) to the extent such Confidential Information (i) becomes
publicly available other than as a result of a breach of this Section 9.11 by
the disclosing party, or (ii) becomes available to such party on a
non-confidential basis from a source other than the Company or its Subsidiaries
which to such party's knowledge is not prohibited from disclosing such
Confidential Information to such party by a contractual or other legal
obligation; (d) to the extent the Company or any of its Subsidiaries shall have
consented to such disclosure in writing; or (e) to any Purchasing Lender or
Participant or to any prospective transferee or participant in connection with
any contemplated transfer of the Notes or any interest therein provided such
transferee or participant agrees to treat the Confidential Information in a
manner consistent with this Section 9.11. Nothing herein shall prohibit the
disclosure of Confidential Information in connection with any litigation or
where such disclosure is pursuant to applicable laws, regulations, court order
or similar legal process; provided, however, in the event that such party is
requested or required by law to disclose any of the Confidential Information,
such party shall provide the Borrowers with written notice, unless notice is
prohibited by law, of any such request or requirement so that the Borrowers may
seek a protective order or other appropriate remedy; provided that no such
notification shall be required in respect of any disclosure to regulatory
authorities having jurisdiction over such party.
Section 9.12. Headings.
Section headings used herein are for convenience of reference only and
are not to affect the construction of or be taken into consideration in
interpreting this Agreement.
Section 9.13. Construction.
This Agreement is the result of negotiations between, and has been
reviewed by, each of the Borrowers, the Lender and their respective counsel.
Accordingly, this Agreement shall be deemed to be the product of each party
hereto, and no ambiguity shall be construed in favor of or against either the
Borrowers or the Lender.
58
Section 9.14. Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall constitute an original, but all of which, taken together, shall
constitute one and the same instrument. The parties to this Agreement agree
that, for purposes of the execution of this Agreement, facsimile signatures will
constitute original signatures.
Section 9.15. Integration; Lost Note, etc.
This Agreement and the other Loan Documents are intended by the parties
as the final, complete and exclusive statement of the transactions evidenced
hereby and thereby. All prior or contemporaneous promises, agreements and
understandings, whether oral or written, are deemed to be superceded by the Loan
Documents, and no party is relying on any promise, agreement or understanding
not set forth in such Loan Documents. Upon receipt of an affidavit of an officer
of the Lender as to the loss, theft, destruction or mutilation of any of the
Loan Documents which are not of public record, and, in the case of any such
loss, theft, destruction or mutilation, upon cancellation of any such Loan
Documents, the Borrowers will issue, in lieu thereof, the applicable Loan
Documents of like tenor.
Section 9.16. Joint and Several Obligations.
This Agreement and the Obligations are the joint and several
obligations of each Borrower. This Agreement and the Obligations may be enforced
against each Borrower separately, whether or not enforcement of any right or
remedy hereunder has been sought against any other Borrower. Each Borrower
acknowledges that its obligations hereunder will not be released or affected by
the failure of the other Borrowers to execute this Agreement or by a
determination that all or a part of this Agreement (or any Obligation) with
respect to any other Borrower is invalid or unenforceable. In any action or
proceeding involving any state corporate law, or any state or Federal
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Borrower hereunder would
otherwise be held or determined to be void, invalid or unenforceable, or
subordinated to the claims of any other creditors, on account for the amount of
its liability hereunder, then, notwithstanding any other provision hereof to the
contrary, the amount of such liability shall, without any further action by such
Borrower, the Lender or any other Person, be automatically limited and reduced
to the highest amount that is valid and enforceable and not subordinated to the
claims of other creditors as determined in such action or proceeding.
59
IN WITNESS WHEREOF, the Borrowers, the Guarantor and the Lender have
caused this Agreement to be duly executed by their duly authorized officers, as
of the day and year first above written.
COACTIVE MARKETING GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President and Chief
Financial Officer
INMARK SERVICES LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President and Chief
Financial Officer
U.S. CONCEPTS LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President and Chief
Financial Officer
GRUPO HACERLO LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President and Chief
Financial Officer
OPTIMUM GROUP LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President and Chief
Financial Officer
60
SIGNATURE BANK
By:
--------------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Lending Office for Revolving Credit Loans and Letters
of Credit:
Signature Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
THE FOLLOWING GUARANTOR HEREBY REAFFIRMS ITS OBLIGATIONS UNDER THE LOAN
DOCUMENTS TO WHICH IT IS A PARTY AFTER GIVING EFFECT TO THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT:
TRIK MEDIA LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President and Chief
Financial Officer
61