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AMENDED AND RESTATED
SECURED CREDIT AGREEMENT
DATED AS OF FEBRUARY 28, 1997
AMONG
SYSTEM SOFTWARE ASSOCIATES, INC.,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
AS AGENT,
BANK OF AMERICA ILLINOIS,
AS ISSUING BANK
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
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TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS.............................. 1
1.1 Certain Defined Terms............................................... 1
1.2 Other Interpretive Provisions....................................... 20
1.3 Accounting Principles............................................... 21
ARTICLE II
THE CREDITS.............................. 22
2.1 Amounts and Terms of Commitments.................................... 22
2.2 Loan Accounts....................................................... 22
2.3 Procedure for Borrowing............................................. 23
2.4 Conversion and Continuation Elections............................... 24
2.5 Voluntary Termination or Reduction of Commitments................... 25
2.6 Mandatory Prepayments............................................... 26
2.7 Optional Prepayments................................................ 26
2.8 Make Whole Fee...................................................... 26
2.9 Repayment........................................................... 27
2.10 Interest Rates...................................................... 27
2.11 Commitment Fees..................................................... 28
2.12 Computation of Fees and Interest.................................... 28
2.13 Payments by the Borrower............................................ 28
2.14 Payments by the Banks to the Agent.................................. 29
2.15 Sharing of Payments, Etc............................................ 30
2.16 Security and Guaranty............................................... 30
ARTICLE III
THE LETTERS OF CREDIT.......................... 31
3.1 The Letter of Credit Subfacility.................................... 31
3.2 Issuance, Amendment and Renewal of Letters of
Credit............................................................. 32
3.3 Risk Participations, Drawings and Reimbursements.................... 34
3.4 Repayment of Participations......................................... 36
3.5 Role of the Issuing Bank............................................ 36
3.6 Obligations Absolute................................................ 37
3.7 [RESERVED].......................................................... 38
3.8 Letter of Credit Fees............................................... 38
3.9 Uniform Customs and Practice........................................ 39
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY.................. 39
4.1 Taxes............................................................... 39
4.2 Illegality.......................................................... 40
4.3 Increased Costs and Reduction of Return............................. 41
4.4 Funding Losses...................................................... 42
4.5 Inability to Determine Rates........................................ 42
4.6 Certificates of Banks............................................... 43
4.7 Substitution of Banks............................................... 43
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Section Page
4.8 Survival............................................................ 43
ARTICLE V
CONDITIONS PRECEDENT........................... 43
5.1 Conditions of Initial Loans......................................... 43
(a) Credit Agreement............................................ 43
(b) Notes....................................................... 43
(c) Warrants.................................................... 44
(d) Resolutions; Incumbency..................................... 44
(e) Organization Documents; Good Standing....................... 44
(f) Legal Opinion............................................... 44
(g) Payment of Fees............................................. 44
(h) Collateral Documents........................................ 44
(i) Certificate................................................. 46
(j) Note Agreement Amendment.................................... 46
(k) Other Documents............................................. 46
5.2 Conditions to All Borrowings and Letters of Credit.................. 46
(a) Notice of Transaction....................................... 47
(b) Continuation of Representations and
Warranties.................................................. 47
(c) No Existing Default......................................... 47
ARTICLE VI
REPRESENTATIONS AND WARRANTIES...................... 47
6.1 Corporate Existence and Power....................................... 47
6.2 Corporate Authorization; No Contravention........................... 48
6.3 Governmental Authorization.......................................... 48
6.4 Binding Effect...................................................... 48
6.5 Litigation.......................................................... 48
6.6 No Default.......................................................... 49
6.7 ERISA Compliance.................................................... 49
6.8 Use of Proceeds; Margin Regulations................................. 50
6.9 Properties.......................................................... 50
6.10 Taxes............................................................... 50
6.11 Financial Condition................................................. 50
6.12 Environmental Matters............................................... 51
6.13 Regulated Entities.................................................. 51
6.14 No Burdensome Restrictions.......................................... 51
6.15 Copyrights, Patents, Trademarks and Licenses, etc................... 51
6.16 Subsidiaries........................................................ 52
6.17 Insurance........................................................... 52
6.18 Deposit Accounts, Etc............................................... 52
6.19 Collateral Documents................................................ 52
6.20 Solvency............................................................ 52
6.21 Full Disclosure..................................................... 53
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Section Page
ARTICLE VII
AFFIRMATIVE COVENANTS.......................... 53
7.1 Financial Statements................................................ 53
7.2 Certificates; Other Information..................................... 55
7.3 Notices............................................................. 56
7.4 Preservation of Corporate Existence, Etc............................ 57
7.5 Maintenance of Property............................................. 57
7.6 Insurance........................................................... 57
7.7 Payment of Obligations.............................................. 57
7.8 Compliance with Laws................................................ 58
7.9 Compliance with ERISA............................................... 58
7.10 Inspection of Property and Books and Records........................ 58
7.11 Environmental Laws.................................................. 59
7.12 Use of Proceeds..................................................... 59
7.13 Further Assurances.................................................. 59
7.14 Most Favored Lender Provision....................................... 59
ARTICLE VIII
NEGATIVE COVENANTS.......................... 60
8.1 Limitation on Liens................................................. 60
8.2 Disposition of Assets............................................... 61
8.3 Consolidations and Mergers.......................................... 62
8.4 Loans and Investments............................................... 62
8.5 Limitation on Indebtedness.......................................... 64
8.6 Transactions with Affiliates........................................ 64
8.7 Use of Proceeds..................................................... 64
8.8 Contingent Obligations.............................................. 65
8.9 Lease Obligations................................................... 65
8.10 Restricted Payments................................................. 65
8.11 Asset Acquisitions.................................................. 65
8.12 Deposit Accounts.................................................... 66
8.13 ERISA............................................................... 66
8.14 Change in Business.................................................. 66
8.15 Accounting Changes.................................................. 66
ARTICLE IX
FINANCIAL COVENANTS........................... 66
9.1 Consolidated Net Worth............................................. 67
9.2 Cash Balances....................................................... 67
9.3 Capital Expenditures................................................ 67
ARTICLE X
EVENTS OF DEFAULT............................ 67
10.1 Event of Default................................................... 67
(a) Non-Payment................................................. 67
(b) Representation or Warranty.................................. 67
(c) Specific Defaults........................................... 67
(d) Other Defaults.............................................. 67
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Section Page
(e) Cross-Default................................................... 67
(f) Insolvency; Voluntary Proceedings............................... 68
(g) Involuntary Proceedings......................................... 68
(h) ERISA........................................................... 68
(i) Monetary Judgments.............................................. 69
(j) Non-Monetary Judgments.......................................... 69
(k) Change of Control............................................... 69
(l) Collateral...................................................... 69
10.2 Remedies............................................................ 69
10.3 Rights Not Exclusive................................................ 70
ARTICLE XI
THE AGENT............................ 70
11.1 Appointment and Authorization...................................... 70
11.2 Delegation of Duties............................................... 71
11.3 Liability of Agent................................................. 71
11.4 Reliance by Agent.................................................. 71
11.5 Notice of Default.................................................. 72
11.6 Credit Decision.................................................... 72
11.7 Indemnification of Agent........................................... 73
11.8 Agent in Individual Capacity....................................... 73
11.9 Successor Agent.................................................... 74
11.10 Withholding Tax.................................................... 74
ARTICLE XII
MISCELLANEOUS.......................... 76
12.1 Amendments and Waivers............................................. 76
12.2 Notices............................................................ 77
12.3 No Waiver; Cumulative Remedies..................................... 78
12.4 Costs and Expenses................................................. 78
12.5 Borrower Indemnification........................................... 79
12.6 Marshalling Payments Set Aside..................................... 79
12.7 Successors and Assigns............................................. 80
12.8 Assignments, Participations, etc................................... 80
12.9 Confidentiality.................................................... 82
12.10 Set-off............................................................ 82
12.11 Automatic Debits of Fees........................................... 83
12.12 Notification of Addresses, Lending Offices, Etc.................... 83
12.13 Counterparts....................................................... 83
12.14 Severability....................................................... 83
12.15 No Third Parties Benefited......................................... 83
12.16 Governing Law and Jurisdiction..................................... 84
12.17 Entire Agreement................................................... 84
12.18 Reaffirmation and Restatement...................................... 84
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SCHEDULES
Schedule 1.1 Original Financial Covenants
Schedule 2.1 Commitments
Schedule 3.3 Existing BAI Letters of Credit
Schedule 6.5 Litigation
Schedule 6.7 ERISA
Schedule 6.9 Real Property
Schedule 6.11 Permitted Liabilities
Schedule 6.12 Environmental Matters
Schedule 6.16 Subsidiaries and Minority Interests
Schedule 6.17 Insurance Matters
Schedule 6.18 Deposit Accounts etc.
Schedule 8.1 Permitted Liens
Schedule 8.5 Permitted Indebtedness
Schedule 8.8 Contingent Obligations
Schedule 12.2 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Legal Opinion of Borrower's Counsel
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Promissory Note
Exhibit G Collateral Agency Agreement
Exhibit H Format for Management Reports
Exhibit I Form of Warrant
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AMENDED AND RESTATED
SECURED CREDIT AGREEMENT
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This CREDIT AGREEMENT is entered into as of February 28, 1997, among System
Software Associates, Inc., a Delaware corporation (the "Borrower"), the several
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financial institutions from time to time party to this Agreement (collectively,
the "Banks," and individually, a "Bank"), and Bank of America National Trust and
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Savings Association, as agent for the Banks, and Bank of America Illinois, as
letter of credit issuing bank.
WHEREAS, the Banks have agreed to make available to the Borrower a
revolving credit facility with letter of credit subfacility upon the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
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1.1 Certain Defined Terms. The following terms have the following
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meanings:
"Affiliate" means, as to any Person, any other Person which, directly
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or indirectly, is in control of, is controlled by, or is under common
control with, such Person, other than a Subsidiary of such Person. A
Person shall be deemed to control another Person if the controlling Person
possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract, or otherwise.
Without limitation, any director, executive officer or beneficial owner of
10% or more of the equity of a Person shall for the purposes of this
Agreement, be deemed to control such Person.
"Agent" means BofA in its capacity as agent for the Banks hereunder,
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and any successor agent arising under Section 11.9.
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"Agent-Related Persons" means BofA and any successor agent arising
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under Section 11.9 and BAI and any successor letter of credit issuing bank
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hereunder, together with their respective Affiliates, and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
"Agent's Payment Office" means the address for payments set forth on
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Schedule 12.2 or such other address as the Agent may from time to time
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specify.
"Agreement" means this Credit Agreement.
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"ANB" means American National Bank and Trust Company of Chicago, a
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national banking association, and its successors and assigns.
"Applicable Margin" or "Applicable Fee," as the case may be, shall
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mean a margin or fee as follows: the Applicable Margin for purposes of
Base Rate Loans is 1.00%; subject to the proviso set forth in subsection
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2.3(a), the Applicable Margin for purposes of Offshore Rate Loans is 2.50%;
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and pursuant to Section 2.11, after the Revolver Date the Applicable Fee
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for purposes of the Commitment is 0.40%; and the Applicable Fee for
purposes of Letters of Credit is 2.00%.
"Assignee" has the meaning specified in subsection 12.8(a).
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"Attorney Costs" means and includes all fees and disbursements of any
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law firm or other external counsel and, without duplication, the allocated
cost of internal legal services and all disbursements of internal counsel.
"BAI" means Bank of America Illinois, an Illinois state banking
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association, and its successors and assigns.
"Bank" has the meaning specified in the introductory clause hereto.
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References to the "Banks" shall include BAI, in its capacity as Issuing
Bank; for purposes of clarification only, to the extent that BAI may have
any rights or obligations in addition to those of the Banks due to its
status as Issuing Bank, its status as such will be specifically referenced.
"Bankruptcy Code" means title 11 of the United States Code.
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"Base Rate" means, for any day, the higher of: (a) 0.50% per annum
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above the latest Federal Funds Rate; and (b) the rate of interest in
effect for such day as publicly announced from time to time by BofA in San
Francisco, California, as its "reference rate." (The "reference rate" is a
rate set by BofA based upon various factors including BofA's costs and
desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at, above,
or below such announced rate.)
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Any change in the reference rate announced by BofA shall take effect
at the opening of business on the day specified in the public announcement
of such change.
"Base Rate Loan" means a Loan or an L/C Advance that bears interest
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based on the Base Rate.
"BofA" means Bank of America National Trust and Savings Association, a
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national banking association, and its successors and assigns.
"Borrowing" means a borrowing hereunder consisting of Loans of the
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same Type made to the Borrower on the same day by the Banks under Article
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II, and, other than in the case of Base Rate Loans, having the same
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Interest Period.
"Borrowing Date" means any date on which a Borrowing occurs under
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Section 2.3.
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"Borrower" has the meaning specified in the introductory clause.
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"Business Day" means any day other than a Saturday, Sunday or other
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day on which commercial banks in Chicago or San Francisco are authorized or
required by law to close and, if the applicable Business Day relates to any
Offshore Rate Loan, means such a day on which dealings are carried on in
the applicable offshore dollar interbank market.
"Capital Adequacy Regulation" means any guideline, request or
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directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each
case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"Capital Expenditure" means, for any period, the capital expenditures
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(which shall include all capitalized software expenditures) of the Borrower
and its Subsidiaries for such period, as the same are (or would in
accordance with GAAP be) set forth in the consolidated statement of cash
flows of the Borrower and its Subsidiaries for such period.
"Cash Collateralize" means to pledge and deposit with or deliver to
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the Agent, for the benefit of the Agent, the Issuing Bank and the Banks, as
collateral for the L/C Obligations, cash or deposit account balances
pursuant to documentation in form and substance satisfactory to the Agent
and the Issuing Bank (which documents are hereby consented to by the
Banks). Derivatives of such term shall have corresponding meaning. Cash
collateral shall be maintained in blocked, non-interest bearing deposit
accounts at BofA.
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"Change of Control" shall be deemed to have occurred at such time
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after the date hereof as (i) any person or group of persons (within the
meaning of Section 13 or 14 of the Exchange Act) shall acquire at any time
beneficial ownership of more than 25% of the fully diluted common stock of
the Borrower or (ii) individuals who as of the date hereof constitute the
Borrower's Board of Directors (together with any new director whose
election by the Borrower's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors
at the beginning of such period or whose election or nomination for
election was previously so approved), for any reason, cease to constitute a
majority of the directors at any time then in office.
"Closing Date" means the date on which all conditions precedent set
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forth in Section 5.1 are satisfied or waived by all Banks (or, in the case
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of subsection 5.1(g), waived by the Person entitled to receive such
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payment).
"Code" means the Internal Revenue Code of 1986 as amended from time to
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time, and regulations promulgated thereunder.
"Collateral" has the meaning specified in the Collateral Agency
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Agreement.
"Collateral Agency Agreement" shall mean that certain Collateral
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Agency Agreement attached hereto as Exhibit G, as the same may from time to
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time be amended, modified or supplemented.
"Collateral Agent" means BofA when acting in its capacity as
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Collateral Agent under any of the Collateral Documents, and any successor
Collateral Agent appointed pursuant to the terms of the Collateral Agency
Agreement.
"Collateral Documents" has the meaning specified in the Collateral
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Agency Agreement.
"Commitment", as to each Bank, has the meaning specified in Section
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2.1.
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"Commitment Fee" has the meaning specified in Section 2.11.
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"Compliance Certificate" means a certificate substantially in the form
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of Exhibit C.
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"Computation Date" has the meaning specified in subsection 2.5(a).
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"Consolidated Cash Balances" means the consolidated cash balances of
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the Borrower and its Subsidiaries.
"Consolidated Liabilities" means all consolidated liabilities of the
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Borrower and its Subsidiaries.
"Consolidated Net Worth" means the consolidated shareholders' equity
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of the Borrower and its Subsidiaries.
"Contingent Obligation" means, as to any Person, any direct or
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indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease, dividend,
letter of credit or other obligation (the "primary obligations") of another
Person (the "primary obligor"), including any obligation of that Person (i)
to purchase, repurchase or otherwise acquire such primary obligations or
any security therefor, (ii) to advance or provide funds for the payment or
discharge of any such primary obligation, or to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net
worth or solvency or any balance sheet item, level of income or financial
condition of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make payment of
such primary obligation, or (iv) otherwise to assure or hold harmless the
holder of any such primary obligation against loss in respect thereof
(each, a "Guaranty Obligation"); (b) with respect to any Surety Instrument
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(other than any Letter of Credit) issued for the account of that Person or
as to which that Person is otherwise liable for reimbursement of drawings
or payments; (c) to purchase any materials, supplies or other property
from, or to obtain the services of, another Person if the relevant contract
or other related document or obligation requires that payment for such
materials, supplies or other property, or for such services, shall be made
regardless of whether delivery of such materials, supplies or other
property is ever made or tendered, or such services are ever performed or
tendered, or (d) in respect of any Swap Contract. The amount of any
Contingent Obligation shall, in the case of Guaranty Obligations, be deemed
equal to the stated or determinable amount of the primary obligation in
respect of which such Guaranty Obligation is made or, if not stated or if
indeterminable, the maximum reasonably anticipated liability in respect
thereof, and in the case of other Contingent Obligations, shall be equal to
the maximum reasonably anticipated liability in respect thereof.
"Contractual Obligation" means, as to any Person, any provision of any
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security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or
agreement to which such
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Person is a party or by which it or any of its property is bound.
"Conversion/Continuation Date" means any date on which, under Section
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2.4, the Borrower (a) converts Loans of one Type to another Type, or (b)
---
continues as Loans of the same Type, but with a new Interest Period, Loans
having Interest Periods expiring on such date.
"Default" means any event or circumstance which, with the giving of
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notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Disposition" means the sale, assignment, lease, transfer,
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contribution, conveyance, issuance or other disposition of, or granting of
options, warrants or other rights with respect to, any assets of the
Borrower or any Subsidiary; provided, that the term "Disposition" shall not
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include (i) the first $100,000 of Net Proceeds received with respect to any
sale, assignment, lease, transfer, contribution, conveyance, issuance or
other disposition during any fiscal year of the Borrower and thereafter any
individual sale, assignment, lease, transfer, contribution, conveyance,
issuance or other disposition the Net Proceeds from which do not exceed
$1,000, (ii) the sale or lease of that certain condominium unit owned by
the Borrower the address of which is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, (iii) the sale of the sales and customer service assets
of the Borrower's Barcelona office, the net proceeds of which shall range
from U.S. 1,000,000 to 1,750,000 (such net proceeds to be payable in two or
three annual installments) or (iv) the licensing and sale of software in
the ordinary course of business.
"Dollar Equivalent" means, at any time: (a) as to any amount
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denominated in Dollars, the amount thereof at such time; and (b) as to any
amount denominated in an Offshore Currency, the equivalent amount in
Dollars as determined by the Agent on the last Business Day of the
immediately preceding calendar month on the basis of the Spot Rate on such
day for the purchase of Dollars with such Offshore Currency, provided, that
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prior to the Revolver Date, the Dollar Equivalent Amount of the Existing
BAI Letters of Credit denominated in an Offshore Currency shall be
determined as of the Business Day immediately preceding the Closing Date.
"Dollars", "dollars" and "$" each mean lawful money of the United
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States and "Dollar" means one of such Dollars.
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"Domestic Subsidiary" means any Subsidiary which is organized under
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the laws of the United States of America or under the laws of any state
therein.
"Eligible Assignee" means (a) a commercial bank organized under the
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laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (b) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having a combined capital
and surplus of at least $100,000,000, provided that such bank is acting
through a branch or agency located in the United States or (c) a Person
that is primarily engaged in the business of commercial banking and that is
(i) a Subsidiary of a Bank, (ii) a Subsidiary of a Person of which a Bank
is a Subsidiary, or (iii) a Person of which a Bank is a Subsidiary.
"Environmental Claims" means all claims, however asserted, by any
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Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment.
"Environmental Laws" means all federal, state or local laws, statutes,
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common law duties, rules, regulations, ordinances and codes, together with
all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and
land use matters.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
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regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
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incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension
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Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial employer (as defined in Section 4001(a)(2) of ERISA)
or a cessation of operations which is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the
Borrower or any ERISA Affiliate from a Multiemployer Plan or notification
that a Multiemployer Plan is in reorganization; (d) the filing of a notice
of intent to
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terminate, the treatment of a Plan amendment as a termination under Section
4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to
terminate a Pension Plan or Multiemployer Plan; (e) an event or condition
which might reasonably be expected to constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan or Multiemployer Plan; or (f) the imposition
of any liability under Title IV of ERISA, other than PBGC premiums due but
not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA
Affiliate.
"Eurodollar Reserve Percentage" has the meaning specified in the
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definition of "Offshore Rate".
"Event of Default" means any of the events or circumstances specified
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in Section 10.1.
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"Event of Loss" means, with respect to any property, any of the
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following: : (a) any loss, destruction or damage of such property; or (b)
any actual condemnation, seizure or taking, by exercise of the power of
eminent domain or otherwise, of such property, or confiscation of such
property or the requisition of the use of such property.
"Exchange Act" means the Securities and Exchange Act of 1934, as
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amended from time to time, and regulations promulgated thereunder.
"Existing BAI Letters of Credit" means the letters of credit described
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in Schedule 3.3, the form and content of which the Banks hereby acknowledge
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to be acceptable.
"Existing Credit Agreement" means that certain Credit Agreement dated
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as of June 19, 1995 among the Borrower, certain of its Subsidiaries, the
Agent, the Issuing Bank and the Banks.
"Existing Loans" means any "Loan" (as such term is defined in the
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Existing Credit Agreement) outstanding under the Existing Credit Agreement
on the Closing Date.
"FDIC" means the Federal Deposit Insurance Corporation, and any
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Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the
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weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Business Day opposite the
caption "Federal Funds (Effective)"; or, if for any
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relevant day such rate is not so published on any such preceding Business
Day, the rate for such day will be the arithmetic mean as determined by the
Agent of the rates for the last transaction in overnight Federal funds
arranged prior to 9:00 a.m. (New York City time) on that day by each of
three leading brokers of Federal funds transactions in New York City
selected by the Agent.
"FRB" means the Board of Governors of the Federal Reserve System, and
---
any Governmental Authority succeeding to any of its principal functions.
"GAAP" means generally accepted accounting principles set forth from
----
time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of comparable stature and
authority within the U.S. accounting profession), which are applicable to
the circumstances as of the Closing Date.
"Governmental Authority" means any nation or government, any state or
----------------------
other political subdivision thereof, any central bank (or similar monetary
or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Grantor" has the meaning specified in the Collateral Agency
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Agreement.
"Guarantor" means any Person who executes and delivers to the
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Collateral Agent a Guaranty.
"Guaranty" has the meaning specified in the Collateral Agency
--------
Agreement.
"Guaranty Obligation" has the meaning specified in the definition of
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"Contingent Obligation."
"Honor Date" has the meaning specified in subsection 3.3(b).
---------- -----------------
"Inactive Subsidiaries" means those Subsidiaries of the Borrower
---------------------
which do not own or lease any assets in excess of $10,000 or conduct any
business.
"Indebtedness" of any Person means, without duplication, (a) all
------------
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price
-9-
of property or services (other than trade payables entered into in the
ordinary course of business on ordinary terms); (c) all non-contingent
reimbursement or payment obligations with respect to Surety Instruments;
(d) all obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection with
the acquisition of property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to
property acquired by the Person (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property); (f) all obligations with respect to
capital leases; (g) all Swap Contracts; (h) all indebtedness referred to in
clauses (a) through (g) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien upon or in property (including accounts and contracts rights)
owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness; and (i) all Guaranty
Obligations in respect of indebtedness or obligations of others of the
kinds referred to in clauses (a) through (g) above. The amount of any
Indebtedness arising under clause (g) above shall be deemed to equal 10% of
the notional amount of all Swap Contracts.
"Indemnified Liabilities" has the meaning specified in Section 12.5.
----------------------- ------------
"Indemnified Person" has the meaning specified in Section 12.5.
------------------ ------------
"Independent Auditor" has the meaning specified in subsection 7.1(a).
------------------- -----------------
"Insolvency Proceeding" means (a) any case, action or proceeding
---------------------
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of assets for creditors, or
other, similar arrangement in respect of its creditors generally or any
substantial portion of its creditors; in each case (a) and (b) undertaken
under U.S. Federal, State or foreign law, including the Bankruptcy Code.
"Intercompany Revolving Demand Note" has the meaning specified in the
----------------------------------
Collateral Agency Agreement.
"Interest Payment Date" means, as to any Offshore Rate Loan, the
---------------------
last day of each Interest Period applicable to such Loan and, as to any
Base Rate Loan, the last Business Day of
-10-
each calendar month and each date such Loan is converted into another Type
of Loan or prepaid pursuant to Section 2.6(b), provided, however, that if
-------------- -------- -------
any Interest Period for an Offshore Rate Loan exceeds one month, the date
that falls one month after the beginning of such Interest Period and after
each Interest Payment Date thereafter is also an Interest Payment Date.
"Interest Period" means, as to any Offshore Rate Loan, the period
---------------
commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as an Offshore Rate Loan, and ending on the date one, two, three
or six months thereafter as selected by the Borrower in its Notice of
Borrowing or Notice of Conversion/Continuation;
provided that:
--------
(a) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the
following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the preceding Business Day;
(b) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at
the end of such Interest Period; and
(c) no Interest Period for any Loan shall extend beyond the
Termination Date.
"IRS" means the Internal Revenue Service, and any Governmental
---
Authority succeeding to any of its principal functions under the Code.
"Issuance Date" has the meaning specified in subsection 3.1(a).
------------- -----------------
"Issue" means, with respect to any Letter of Credit, (a) to
-----
incorporate the Existing BAI Letters of Credit into this Agreement, or (b)
to issue or to extend the expiry of, or to renew or increase the amount of,
such Letter of Credit; and the terms "Issued," "Issuing" and "Issuance"
have corresponding meanings.
"Issuing Bank" means BAI in its capacity as issuer of one or more
------------
Letters of Credit hereunder, together with any
-11-
replacement letter of credit issuer arising under subsection 11.1(b) or
------------------
Section 11.9.
------------
"L/C Advance" means each Bank's participation in any L/C Borrowing in
-----------
accordance with its Pro Rata Share.
"L/C Amendment Application" means an application form for amendment of
-------------------------
outstanding standby or commercial documentary letters of credit as shall at
any time be in use at the Issuing Bank, as the Issuing Bank shall request.
"L/C Application" means an application form for issuances of standby
---------------
or commercial documentary letters of credit as shall at any time be in use
at the Issuing Bank, as the Issuing Bank shall request.
"L/C Borrowing" means an extension of credit resulting from a drawing
-------------
under any Letter of Credit which shall not have been reimbursed on the date
when made nor converted into a Borrowing of Loans under subsection 3.3(c).
-----------------
"L/C Commitment" means the commitment of the Issuing Bank to Issue,
--------------
and the commitment of the Banks severally to participate, in Letters of
Credit (including the Existing BAI Letters of Credit) from time to time
Issued or outstanding under Article III; provided, however, that (i) the
----------- -------- -------
aggregate amount of L/C Obligations at any one time outstanding shall at no
time exceed the lesser of the combined Commitments or $5,000,000; (ii) the
L/C Commitment is a part of the combined Commitments, rather than a
separate, independent commitment; (iii) in no event prior to the Revolver
Date shall the L/C Commitment exceed the Dollar Equivalent amount of the
Existing BAI Letters of Credit; and (iv) in no event shall any Letter of
Credit be Issued during the period from the Closing Date to the Revolver
Date.
"L/C Obligations" means at any time the sum of (a) the aggregate
---------------
undrawn Dollar Equivalent amount of all Letters of Credit then outstanding,
plus (b) the Dollar Equivalent amount of all unreimbursed drawings under
all Letters of Credit, including all outstanding L/C Borrowings.
"L/C-Related Documents" means the Letters of Credit, the L/C
---------------------
Applications, the L/C Amendment Applications and any other document
relating to any Letter of Credit, including any of the Issuing Bank's
standard form documents for letter of credit issuances.
"Lending Office" means, as to any Bank, the office or offices of such
--------------
Bank specified as its "Lending Office" or "Domestic Lending Office" or
"Offshore Lending Office", as the case may be, on Schedule 12.2, or such
-------------
other office or offices
-12-
as such Bank may from time to time notify the Borrower and the Agent.
"Letter Agreement" has the meaning specified in Section 6.11(b).
---------------- ----------------
"Letters of Credit" means the Existing BAI Letters of Credit and any
-----------------
letters of credit (whether standby letters of credit or commercial
documentary letters of credit) Issued by the Issuing Bank pursuant to
Article III.
-----------
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
----
assignment, charge or deposit arrangement, encumbrance, lien (statutory or
other) or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever (including those created by,
arising under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a capital lease, any financing
lease having substantially the same economic effect as any of the
foregoing, or the filing of any financing statement naming the owner of the
asset to which such lien relates as debtor, under the UCC or any comparable
law) and any contingent or other agreement to provide any of the foregoing,
but not including the interest of a lessor under an operating lease.
"Loan" means the Existing Loans and an extension of credit by a Bank
----
to the Borrower under Article II and Article III, in the form of a
---------- -----------
Revolving Loan or L/C Advance and may be a Base Rate Loan or an Offshore
Rate Loan (each, a "Type" of Loan).
----
"Loan Documents" means this Agreement, any Notes, the L/C-Related
--------------
Documents, the Collateral Documents, the Warrants, the Letter Agreement and
all other agreements, instruments and documents required by the terms of
any such agreement to be delivered to the Agent, any Bank or the Collateral
Agent in connection therewith.
"Majority Banks" means at any time of determination Banks holding at
--------------
least 66-2/3% of the then aggregate unpaid Obligations, or, if no such
Obligations are then outstanding, Banks then having at least 66-2/3% of the
Commitments, provided, however, where (i) there is more than one Bank, and
-------- -------
(ii) if one Bank holds at least 66 2/3% of the then outstanding Obligations
(or if not Obligations are then outstanding, if one Bank holds at least 66
2/3% of the Commitments), then "Majority Banks" shall mean that Bank and at
least one other Bank.
"Margin Stock" means "margin stock" as such term is defined in
------------
Regulation G, T, U or X of the FRB.
-13-
"Material Adverse Effect" means (a) a material adverse change in, or a
-----------------------
material adverse effect upon, the current or future operations, business,
properties or condition (financial or otherwise) of the Borrower and its
Subsidiaries on a consolidated basis; (b) a material impairment of the
ability of any Obligor to perform any of its material obligations under any
Loan Document and to avoid any Event of Default; or (c) a material adverse
effect upon (i) the legality, validity, binding effect or enforceability
against any Obligor of any Loan Document or (ii) the perfection or priority
of any Lien granted under any of the Collateral Documents.
"Minimum Tranche" means, in respect of Loans comprising part of the
---------------
same Borrowing, or to be converted or continued under Section 2.4, (a) in
-----------
the case of Base Rate Loans, $500,000 or any multiple of $100,000 in excess
thereof, and (b) in the case of Offshore Rate Loans, $1,000,000 or any
multiple of $100,000.
"Mortgage" means any Leasehold Mortgage/Deed of Trust delivered to the
--------
Collateral Agent pursuant to Section 5.1(g).
--------------
"Multiemployer Plan" means a "multiemployer plan", within the meaning
------------------
of Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA
Affiliate makes, is making, or is obligated to make contributions or,
during the preceding three calendar years, has made, or been obligated to
make, contributions.
"Net Proceeds" shall mean, (a) with respect to any Disposition or
------------
Sale, the aggregate amount of cash and readily marketable cash equivalents
received by the Borrower or any Subsidiary in connection with a Disposition
or Sale minus the sum of (i) reasonable costs and expenses (including costs
of taxes other than income taxes) incurred in connection with such
Disposition or Sale and required to be paid in cash, and (ii) the estimated
income tax to be paid by the Borrower or any Subsidiary in connection with
such Disposition or Sale and (b) with respect to any Event of Loss,
proceeds paid on account of such Event of Loss, net of (i) all money
actually applied to repair or reconstruct the damaged property or property
affected by the condemnation or taking, (ii) all of the costs and expenses
reasonably incurred in connection with the collection of such proceeds,
award or other payments, and (iii) any amounts retained by or paid to
parties having superior rights to such proceeds, awards or other payments.
"Note" means any promissory note executed by the Borrower in favor of
----
a Bank pursuant to subsection 2.2(b), in substantially the form of Exhibit
----------------- -------
F.
-
-14-
"Note Agreement" means that certain Note Agreement dated as of August
--------------
15, 1993 among the Borrower and certain financial institutions party
thereto, as the same may be amended, modified or supplemented from time to
time.
"Noteholders" has the meaning specified in the Collateral Agency
-----------
Agreement.
"Notice of Borrowing" means a notice in substantially the form of
-------------------
Exhibit A.
---------
"Notice of Conversion/Continuation" means a notice in substantially
---------------------------------
the form of Exhibit B.
---------
"Obligations" means all advances, debts, liabilities, obligations,
-----------
covenants and duties arising under any Loan Document owing by the Borrower
to any Bank, the Agent, or any Indemnified Person, whether direct or
indirect (including those acquired by assignment), absolute or contingent,
due or to become due, now existing or hereafter arising.
"Obligor" has the meaning specified in the Collateral Agency
-------
Agreement.
"Offshore Currency" means at any time English pounds sterling, Dutch
-----------------
guilders, French francs, Italian liras, German deutsche marks, Japanese
yen, Australian dollars.
"Offshore Lending Office" means, with respect to each Bank, the office
-----------------------
of such Bank designated as such on Schedule 12.2 hereto.
-------------
"Offshore Rate" means, for any Interest Period, with respect to
-------------
Offshore Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward to the next 1/16th of 1%) determined by
the Agent as follows:
Offshore Rate = LIBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any
-----------------------------
Interest Period the maximum reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1%) in effect on such
day (whether or not applicable to any Bank) under regulations issued
from time to time by the FRB for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"); and
-15-
"LIBOR" means the rate of interest per annum (rounded upward to
-----
the next 1/16th of 1%) notified to the Agent by the Reference Bank as
the rate of interest per annum at which dollar deposits in the
approximate amount of the amount of the Loan to be made or continued
as, or converted into, an Offshore Rate Loan by such Reference Bank and
having a maturity comparable to such Interest Period would be offered
to major banks in the London interbank market at their request at
approximately 11:00 a.m. (London time) two Business Days prior to the
commencement of such Interest Period.
The Offshore Rate shall be adjusted automatically as to all
Offshore Rate Loans then outstanding as of the effective date of any
change in the Eurodollar Reserve Percentage.
"Offshore Rate Loan" means a Loan that bears interest based on the
------------------
Offshore Rate.
"Organization Documents" means, for any corporation, the certificate
----------------------
or articles of incorporation, the bylaws, any certificate of determination
or instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation.
"Original Financial Covenants" means the financial covenants set forth
----------------------------
on Schedule 1.1 hereto.
------------
"Other Taxes" means any present or future stamp or documentary taxes
-----------
or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other
Loan Documents.
"Participant" has the meaning specified in subsection 12.8(d).
----------- ------------------
"PBGC" means the Pension Benefit Guaranty Corporation, or any
----
Governmental Authority succeeding to any of its principal functions under
ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
------------
ERISA) subject to Title IV of ERISA which the Borrower sponsors, maintains,
or to which it makes, is making, or is obligated to make contributions, or
in the case of a multiple employer plan (as described in Section 4064(a) of
ERISA) has made contributions at any time during the immediately preceding
five (5) plan years.
-16-
"Permitted Liens" has the meaning specified in Section 8.1.
--------------- -----------
"Person" means an individual, partnership, corporation, business
------
trust, joint stock company, trust, unincorporated association, joint
venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
----
ERISA) which the Borrower sponsors or maintains or to which the Borrower
makes, is making, or is obligated to make contributions and includes any
Pension Plan.
"Pledge Agreement (Stock and Intercompany Notes)" has the meaning
-----------------------------------------------
specified in the Collateral Agency Agreement.
"Premium" has the meaning specified in Section 2.8.
------- -----------
"Pro Rata Share" means, as to any Bank at any time, the percentage
--------------
equivalent (expressed as a decimal, rounded to the ninth decimal place) at
such time of such Bank's Commitment divided by the combined Commitments of
all Banks.
"Reference Bank" means BofA or such other Bank as may be elected by
--------------
the Majority Banks.
"Rentals" means as of the date of any determination thereof, all fixed
-------
payments (including all payments which the lessee is obligated to make to
the lessor on termination of the lease or surrender of the property)
payable by the Borrower or a Subsidiary, as lessee or sublessee under a
lease of real or personal property (whether capital or operating) but
exclusive of any amounts required to be paid by the Borrower or a
Subsidiary (whether or not designated as rents or additional rents) on
account of maintenance, repairs, insurance, taxes, assessments,
amortization and similar charges. Fixed rents under any so-called
"percentage leases" shall be computed on the basis of the minimum rents, if
any, required to be paid by the lessee, regardless of sales volume or gross
revenues.
"Replacement Bank" has the meaning specified in Section 4.7.
---------------- -----------
"Reportable Event" means, any of the events set forth in Section
----------------
4043(b) of ERISA or the regulations thereunder, other than any such event
for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory or
------------------
common), treaty, rule or regulation of a Governmental Authority, in each
case applicable to or binding
-17-
upon the Person or any of its property or to which the Person or any of its
property is subject.
"Responsible Officer" means the chief executive officer or the
-------------------
president of the Borrower, or any other officer having substantially the
same authority and responsibility; or, with respect to compliance with
financial covenants, the chief financial officer or the treasurer of the
Borrower, or any other officer having substantially the same authority and
responsibility.
"Revolver Date" means the earlier to occur of the date upon which all
-------------
liabilities of the Borrower outstanding under the Note Agreement are paid
in full and the Note Agreement is terminated and the Majority Banks and the
Borrower consent in writing to the making of additional Loans hereunder.
"Sale" means a sale or issuance by the Borrower or any Subsidiary of
----
any equity securities, Subordinated Indebtedness or other Indebtedness of a
type not permitted by Section 8.5 or any sale, issuance or granting by the
-----------
Borrower or any Subsidiary of options, contingent interest rights, warrants
or other rights relating to any such equity securities or Subordinated
Indebtedness or otherwise related in any way to its earnings or performance
(other than pursuant to a Plan of the Borrower or such Subsidiary for the
benefit of its employees).
"SEC" means the Securities and Exchange Commission, or any
---
Governmental Authority succeeding to any of its principal functions.
"Security Agreement" has the meaning specified in the Collateral
------------------
Agency Agreement.
"Senior Notes" means those certain promissory notes issued in
------------
accordance with the Note Agreement.
"Significant Subsidiary" means any Subsidiary which would be a
----------------------
"significant subsidiary" under either clause (a) or clause (b) of the
definition of Significant Subsidiary in Rule 1-02 of Regulation S-X under
the Securities Act of 1933 and the Securities Exchange Act of 1934, as
amended, as such Regulation is in effect on the date hereof.
"Solvent" means, as to any Person at any time, that (a) the fair value
-------
of the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities)
as such value is established and liabilities evaluated for purposes of
Section 101(31) of the Bankruptcy Code and, in the alternative, for
purposes of the Uniform Fraudulent Transfer
-18-
Act; (b) the present fair saleable value of the property of such Person is
not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and matured;
(c) such Person is able to realize upon its property and pay its debts and
other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business; (d) such
Person does not intend to, and does not believe that it will, incur debts
or liabilities beyond such Person's ability to pay as such debts and
liabilities mature; and (e) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute unreasonably small capital.
"Spot Rate" for a currency means the rate quoted by BofA as the spot
---------
rate for the purchase by BofA of such currency with another currency
through its Foreign Exchange Trading Center #5193, San Francisco,
California (or such other of BofA's offices as BofA may designate from time
to time) at approximately 8:00 a.m. (San Francisco time) on the date two
Business Days prior to the date as of which the foreign exchange
computation is made.
"Subordinated Indebtedness" means Indebtedness of the Borrower the
-------------------------
terms and conditions of which are acceptable to the Majority Banks.
"Subsidiary" of a Person means any corporation, association,
----------
partnership, limited liability company, joint venture or other business
entity of which 50% or more of the voting stock or other equity interests,
is owned or controlled directly or indirectly by the Person, or one or more
of the Subsidiaries of the Person, or a combination thereof. Unless the
context otherwise clearly requires, references herein to a "Subsidiary"
refer to a Subsidiary of the Borrower.
"Surety Instruments" means all letters of credit (including standby
------------------
and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
"Swap Contract" means any agreement (including any master agreement
-------------
and any agreement, whether or not in writing, relating to any single
transaction) that is an interest rate swap agreement, basis swap, forward
rate agreement, commodity swap, commodity option, equity or equity index
swap or option, bond option, interest rate option, forward foreign exchange
agreement, rate cap, collar or floor agreement, currency swap agreement,
cross-currency rate swap agreement, swap option, currency option or any
other, similar agreement (including any option to enter into any of the
foregoing).
-19-
"Taxes" means any and all present or future taxes, levies, imposts,
-----
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Bank and the Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured
by each Bank's net income by the jurisdiction (or any political subdivision
thereof) under the laws of which such Bank or the Agent, as the case may
be, is organized or maintains a lending office.
"Termination Date" means the earlier to occur of:
----------------
(a) November 1, 1997; or
(b) the date on which the Commitments otherwise terminate in
accordance with the provisions of Sections 2.5 or 10.2 of this
------------ ----
Agreement.
"Type" has the meaning specified in the definition of "Loan."
----
"UCC" means the Uniform Commercial Code, as in effect from time to
---
time in the State of Illinois.
"UCP" has the meaning specified in Section 3.9.
--- -----------
"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 Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
"United States" and "U.S." each means the United States of America.
------------- ----
"Warrants" means the Warrants issued by the Borrower to a Bank, in
--------
substantially the form of Exhibit I.
---------
"Wholly-Owned Subsidiary" means any corporation, association,
-----------------------
partnership, limited liability company, joint venture or other business
entity of which (other than directors' qualifying shares required by law)
100% of the voting stock or other equity interest of each class having
ordinary voting power, and 100% of the voting stock or other equity
interest of every other class, in each case, at the time as of which any
determination is being made, is owned, beneficially and of record, by the
Borrower, or by one or more of the other Wholly-Owned Subsidiaries, or
both.
-20-
1.2 Other Interpretive Provisions. (a) The meanings of defined terms are
-----------------------------
equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including";
the words "to" and "until" each mean "to but excluding", and the word
"through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Borrower
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Banks or the Agent merely because of the
Agent's or Banks' involvement in their preparation.
1.3 Accounting Principles. (a) Unless the context otherwise clearly
---------------------
requires, all accounting terms not expressly defined herein
-21-
shall be construed, and all financial computations required under this Agreement
shall be made, in accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Borrower.
ARTICLE II
THE CREDITS
-----------
2.1 Amounts and Terms of Commitments. (a) Each Bank severally agrees, on
--------------------------------
the terms and conditions set forth herein, to maintain the Existing Loans during
the period from the Closing Date to the earlier to occur of the Revolver Date or
the Termination Date. The Borrower acknowledges that the principal amount of
the Existing Loans is $46,400,000.
(b) Each Bank severally agrees, on the terms and conditions set forth
herein, to make loans to the Borrower from time to time on any Business Day
during the period from the Revolver Date to the Termination Date, in an
aggregate principal amount not to exceed at any time outstanding the amount set
forth on Schedule 2.1 (such amount as the same may be reduced under Sections 2.5
------------ ------------
or 2.6, or as a result of one or more assignments under Section 12.8, the Bank's
--- ------------
"Commitment"); provided, however, that, after giving effect to any Borrowing (i)
---------- -------- -------
the aggregate principal amount of all outstanding Loans shall not exceed
$46,400,000, (ii) the aggregate principal amount of all outstanding Loans plus
the aggregate amount of all L/C Obligations shall not at any time exceed the
combined Commitments of all Banks. Within the limits of each Bank's Commitment,
and subject to the other terms and conditions hereof, the Borrower may borrow
under this Section 2.1, prepay under Section 2.6 and reborrow under this Section
----------- ----------- -------
2.1.
---
2.2 Loan Accounts. (a) The Loans made by each Bank and the Letters of
-------------
Credit Issued by the Issuing Bank shall be evidenced by one or more loan
accounts or records maintained by such Bank or Issuing Bank in the ordinary
course of business. The loan accounts or records maintained by the Agent, the
Issuing Bank and each Bank shall be conclusive absent manifest error of the
amount of the Loans made by the Banks to the Borrower and the Letters of Credit
Issued for the account of the Borrower and the interest and principal payments
thereon. Any failure so to record or any error in doing so shall not, however,
limit or otherwise affect the obligation of the Borrower hereunder to pay any
amount owing with respect to the Loans or any Letter of Credit.
(b) Upon the request of any Bank made through the Agent, the Loans
made by such Bank may be evidenced by Notes, as a
-22-
supplement to loan accounts. Each such Bank may endorse on the schedules annexed
to its Note the date, amount and maturity of each Loan made by it and the amount
of each payment of interest and principal made by the Borrower with respect
thereto. Each such Bank is irrevocably authorized by the Borrower to endorse its
Note(s) and each Bank's record shall be conclusive absent manifest error;
provided, however, that the failure of a Bank to make, or an error in making, a
-------- -------
notation thereon with respect to any Loan shall not limit or otherwise affect
the obligations of the Borrower hereunder or under any such Note to such Bank.
2.3 Procedure for Borrowing. (a) Each Borrowing of Loans made on and
-----------------------
after the Revolver Date shall be made upon the irrevocable written notice of the
Borrower delivered to the Agent in the form of a Notice of Borrowing (which
notice must be received by the Agent prior to (i) 9:00 a.m. (San Francisco time)
three Business Days prior to the requested Borrowing Date, in the case of
Offshore Rate Loans; and (ii) 8:00 a.m. (San Francisco time) on such Borrowing
Date, in the case of Base Rate Loans, specifying:
(A) the amount of the Borrowing, which shall be in an
aggregate amount not less than the Minimum Tranche;
(B) the requested Borrowing Date, which shall be a Business
Day;
(C) the Type of Loans comprising the Borrowing;
(D) in the case of Offshore Rate Loans, the duration of the
Interest Period applicable to such Loans included in such notice. If
the Notice of Borrowing fails to specify the duration of the Interest
Period, such Interest Period shall be one month;
(E) the account into which the proceeds of the Borrowing are
to be deposited; and
(F) the specific use to which the proceeds of such Loans
shall be applied (e.g. payroll, operating lease payment, interest
payment);
provided, that, unless the Majority Banks otherwise agree, at such times as the
--------
Borrower shall fail to comply with any of the Original Financial Covenants (and
it is acknowledged that as of the date hereof the Borrower is not in compliance
with one or more of the Original Financial Covenants) the Borrower may not
request, and the Banks shall be under no obligation to make, Offshore Rate
Loans.
(b) Upon receipt of the Notice of Borrowing, the Agent will promptly
notify each Bank of the information set forth therein
-23-
and of the amount of such Bank's Pro Rata Share of the Borrowing. The Agent
shall be under no duty to interpret the specific use to which the proceeds of
such Loan are to be applied.
(c) Each Bank will make the amount of its Pro Rata Share of each
Borrowing available to the Agent for the account of the Borrower at the Agent's
Payment Office by 11:00 a.m. (San Francisco time) on the Borrowing Date
requested by the Borrower in funds immediately available to the Agent. The
proceeds of all such Loans will then be made available to the Borrower by the
Agent at such office by crediting the account of the Borrower specified in the
Notice of Borrowing with the aggregate of the amounts made available to the
Agent by the Banks and in like funds as received by the Agent.
(d) After giving effect to any Borrowing, there may not be more than
six (6) different Interest Periods in effect.
2.4 Conversion and Continuation Elections. (a) After the Revolver Date,
-------------------------------------
the Borrower may, upon irrevocable written notice to the Agent in accordance
with subsection 2.4(b):
-----------------
(i) elect, as of any Business Day, in the case of its Base Rate
Loans, or as of the last day of the applicable Interest Period, in the case
of its Offshore Rate Loans, to convert any such Loans (or any part thereof
in an amount not less than the Minimum Tranche) into Loans of any other
Type; or
(ii) elect, as of the last day of the applicable Interest
Period, to continue any of its Loans having Interest Periods expiring on
such day (or any part thereof in an amount not less than the Minimum
Tranche);
provided, that if at any time the aggregate amount of Offshore Rate Loans in
--------
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $1,000,000, such Offshore Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the right
of the Borrower to continue such Loans as, and convert such Loans into, Offshore
Rate Loans shall terminate.
(b) The Borrower shall deliver a Notice of Conversion/Continuation to
be received by the Agent prior to (i) 9:00 a.m. (San Francisco time) at least
three Business Days in advance of the Conversion/Continuation Date, if the Loans
are to be converted into or continued as Offshore Rate Loans; and (ii) 8:00 a.m.
(San Francisco time) on the Conversion/Continuation Date, if the Loans are to be
converted into Base Rate Loans, specifying:
(A) the proposed Conversion/Continuation Date;
-24-
(B) the aggregate amount of Loans to be converted or
continued;
(C) the Type of Loans resulting from the proposed
conversion or continuation; and
(D) other than in the case of conversions into Base Rate
Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the Borrower has failed to select timely a new Interest
Period to be applicable to such Offshore Rate Loans, or if any Default or Event
of Default then exists, or if the Borrower shall fail to be in Compliance with
any of the Original Financial Covenants (and it is acknowledged that as of the
Closing Date the Borrower is not in compliance with one or more of the Original
Financial Covenants), the Borrower shall be deemed to have elected to convert
such Offshore Rate Loans into Base Rate Loans effective as of the expiration
date of such Interest Period.
(d) The Agent will promptly notify each Bank of its receipt of a
Notice of Conversion/Continuation, or, if no timely notice is provided by the
Borrower, the Agent will promptly notify each Bank of the details of any
automatic conversion. All conversions and continuations shall be made ratably
according to the respective outstanding principal amounts of the Loans with
respect to which the notice was given held by each Bank.
(e) Unless the Majority Banks otherwise agree, if any Default or Event
of Default then exists, or if the Borrower shall fail to be in compliance with
any of the Original Financial Covenants (and it is acknowledged that as of the
Closing Date the Borrower is not in compliance with one or more of the Original
Financial Covenants), the Borrower may not elect to have a Loan converted into
or continued as an Offshore Rate Loan.
(f) After giving effect to any conversion or continuation of Loans,
there may not be more than six (6) different Interest Periods in effect.
2.5 Voluntary Termination or Reduction of Commitments. After the Revolver
-------------------------------------------------
Date the Borrower may, upon not less than five Business Days' prior notice to
the Agent, terminate the Commitments, or permanently reduce the Commitments by
an aggregate minimum amount of $1,000,000 or any multiple of $1,000,000 in
excess thereof; unless, after giving effect thereto and to any prepayments of
------
Loans made on the effective date thereof, the then-outstanding principal amount
of the Loans plus the then-outstanding aggregate amount of the L/C Obligations
would exceed the amount of the combined Commitments then in effect. Once
reduced in
-25-
accordance with this Section, the Commitments may not be increased.
Any reduction of the Commitments shall be applied to each Bank according to its
Pro Rata Share. All accrued commitment fees to, but not including the effective
date of any reduction or termination of Commitments, shall be paid on the
effective date of such reduction or termination.
2.6 Mandatory Prepayments. If, on any date after the Closing Date, the
---------------------
Borrower or any Subsidiary shall receive any Net Proceeds, the Borrower shall
promptly (i) notify the Collateral Agent thereof, including the amount of Net
Proceeds received by the Borrower or such Subsidiary in respect thereof (and the
amount and other type of consideration so received) and (ii) transfer to the
Collateral Agent such Net Proceeds for distribution by the Collateral Agent in
accordance with Section 4 of the Collateral Agency Agreement. Upon the making
---------
of any mandatory prepayment under this Section 2.6, the Commitment of each Bank
-----------
shall automatically be reduced by an amount equal to such Bank's ratable share
of the aggregate amount of principal repaid, effective as of the earlier of the
date that such prepayment is made or the date by which such prepayment is due
and payable hereunder. All accrued Commitment Fees to, but not including the
effective date of any reduction or termination of Commitments, shall be paid on
the effective date of such reduction or termination.
2.7 Optional Prepayments. Subject to Section 4.4, the Borrower may, at
-------------------- -----------
any time or from time to time, upon irrevocable notice to the Agent, ratably
among the Banks prepay Loans in whole or in part, in minimum amounts of $100,000
or any multiple of $100,000 in excess thereof. The Borrower shall deliver a
notice of prepayment in accordance with Section 12.2 (to be received by the
------------
Agent not later than 9:00 a.m. (San Francisco time) in the case of clause (i)
and 8:00 a.m. (San Francisco time) in the case of clause (ii)) (i) at least
three Business Days in advance of the prepayment date if the Loans to be prepaid
are Offshore Rate Loans in Dollars, and (ii) on the prepayment date if the Loans
to be prepaid are Base Rate Loans. Such notice of prepayment shall specify the
date and amount of such prepayment and whether such prepayment is of Base Rate
Loans, Offshore Rate Loans, or any combination thereof. Such notice shall not
thereafter be revocable by the Borrower and the Agent will promptly notify each
Bank thereof and of such Bank's Pro Rata Share of such prepayment. The Borrower
shall make such prepayment and the payment amount specified in such notice shall
be due and payable on the date specified therein, together with accrued interest
to each such date on the amount prepaid and any amounts required pursuant to
Section 4.4.
-----------
2.8 Make Whole Fee. If at the time the Borrower repays any principal
--------------
amount outstanding under the Note Agreement, the Borrower pays to the
Noteholders any make-whole payment or other type of premium in addition to such
principal amount (any such payment being referred to as a "Premium"),
concurrently with such payment
-26-
to the Noteholders the Borrower shall pay to the Agent, for the ratable benefit
of the Banks, an amount equal to the product of (a) the Premium and (b) a ratio
---------- --- -------
of (i) the sum of the aggregate outstanding principal amount of all Loans plus
-- ----
the aggregate amount of all L/C Obligations to (ii) the aggregate principal
--
amount outstanding under the Note Agreement immediately prior to such repayment.
Concurrently with the payment to the Agent of the amount set forth in the
immediately preceding sentence, the Borrower shall deliver to the Agent a
certificate detailing the calculation of such amount.
2.9 Repayment. The Borrower shall repay to the Agent for the account of
---------
the Banks on the Termination Date the aggregate principal amount of Loans
outstanding on such date and shall Cash Collateralize all L/C Obligations, if
any, outstanding on such date.
2.10 Interest Rates. (a) With respect to each Loan, the Borrower hereby
--------------
promises to pay interest on the unpaid principal amount thereof for the period
commencing on the date of such Loan until such Loan is paid in full, as follows:
(i) While such Loan is a Base Rate Loan, at a rate per annum
equal to the Base Rate from time to time in effect plus the Applicable
Margin for Base Rate Loans then in effect; and
(ii) After the Revolver Date while such Loan is an Offshore Rate
Loan, at a rate per annum equal to the Offshore Rate applicable to such
Interest Period plus the Applicable Margin for Offshore Rate Loans then in
effect.
(b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of
Loans under Section 2.6 or 2.7 for the portion of the Loans so prepaid and upon
----------- ---
payment (including prepayment) in full thereof and, during the existence of any
Event of Default, interest shall be paid on demand of the Agent at the request
or with the consent of the Majority Banks.
(c) Notwithstanding subsection (a) of this Section, while any Default
exists and at all times after acceleration, the Borrower shall pay interest
(after as well as before entry of judgment thereon to the extent permitted by
law) on the principal amount of all of its outstanding Loans, at a rate per
annum which is determined by adding 2% per annum to the rate otherwise in effect
hereunder for such Loans.
(d) Anything herein to the contrary notwithstanding, the obligations
of the Borrower to any Bank hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the
-27-
extent (but only to the extent) that contracting for or receiving such payment
by such Bank would be contrary to the provisions of any law applicable to such
Bank limiting the highest rate of interest that may be lawfully contracted for,
charged or received by such Bank; in lieu thereof, during any such period, the
Borrower shall pay such Bank interest at the highest rate permitted by
applicable law.
2.11 Commitment Fees. At all times after the Revolver Date, the Borrower
---------------
shall pay to the Agent for the account of each Bank a commitment fee (the
"Commitment Fee") on the average daily unused portion of such Bank's Commitment,
computed on a monthly basis in arrears on the last Business Day of each calendar
month based upon the daily utilization (including utilization of the L/C
Commitment) for that month as calculated by the Agent, equal to the Applicable
Fee with respect to Commitments per annum. Such commitment fee shall accrue
from the Revolver Date to the Termination Date and shall be due and payable
monthly in arrears on the last Business Day of each calendar month, with the
final payment, if any, to be made on the Termination Date; provided that, in
--------
connection with any reduction or termination of Commitments under Section 2.5
-----------
and 2.6, the accrued commitment fee calculated for the period ending on such
---
date shall also be paid on the date of such reduction or termination, with the
following monthly payment being calculated on the basis of the period from such
reduction or termination date to such monthly payment date. The commitment fees
provided in this subsection shall accrue at all times after the above-mentioned
commencement date, including at any time during which one or more conditions in
Article V are not met.
---------
2.12 Computation of Fees and Interest. (a) All computations of interest
--------------------------------
and fees hereunder shall be made on the basis of a 360-day year and actual days
elapsed (which results in more interest being paid than if computed on the basis
of a 365-day year). Interest and fees shall accrue during each period during
which interest or such fees are computed from the first day thereof to the last
day thereof.
(b) Each determination of an interest rate or a Dollar Equivalent
amount by the Agent shall be conclusive and binding on the Borrowers and the
Banks in the absence of manifest error. The Agent will deliver to the Borrower
and the Banks a statement showing the quotations used by the Agent in
determining any interest rate.
2.13 Payments by the Borrower. (a) All payments to be made by the
------------------------
Borrower shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Borrower shall be made
to the Agent for the account of the Banks at the Agent's Payment Office, and,
shall be made in dollars and in immediately available funds, no later than 10:00
a.m. (San Francisco time) on the date specified herein. The Agent
-28-
will promptly distribute to each Bank its Pro Rata Share (or other applicable
share as expressly provided herein) of such principal, interest, fees or other
amounts, in like funds as received. Any payment received by the Agent later than
10:00 a.m. (San Francisco time) shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall continue to
accrue.
(b) Subject to the provisions set forth in the definition of "Interest
Period" herein, whenever any payment is due on a day other than a Business Day,
such payment shall be made on the following Business Day, and such extension of
time shall in such case be included in the computation of interest or fees, as
the case may be.
(c) Unless the Agent receives notice from the Borrower prior to the
date on which any payment is due to the Banks that the Borrower will not make
such payment in full as and when required, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date in immediately
available funds and the Agent may (but shall not be so required), in reliance
upon such assumption, distribute to each Bank on such due date an amount equal
to the amount then due such Bank. If and to the extent the Borrower has not
made such payment in full to the Agent, each Bank shall repay to the Agent on
demand such amount distributed to such Bank, together with interest thereon at
the Federal Funds Rate for each day from the date such amount is distributed to
such Bank until the date repaid.
2.14 Payments by the Banks to the Agent. (a) Unless the Agent receives
----------------------------------
notice from a Bank on or prior to the Closing Date or, with respect to any
Borrowing after the Revolver Date, at least one Business Day prior to the date
of such Borrowing, in the case of Offshore Rate Loans, or 9:00 a.m. (San
Francisco time) on the date of such Borrowing, in the case of Base Rate Loans,
that such Bank will not make available as and when required hereunder to the
Agent for the account of the Borrower the amount of that Bank's Pro Rata Share
of the Borrowing, the Agent may assume that each Bank has made such amount
available to the Agent in immediately available funds on the Borrowing Date and
the Agent may (but shall not be so required), in reliance upon such assumption,
make available to the Borrower on such date a corresponding amount. If and to
the extent any Bank shall not have made its full amount available to the Agent
in immediately available funds and the Agent in such circumstances has made
available to the Borrower such amount, that Bank shall on the Business Day
following such Borrowing Date make such amount available to the Agent, together
with interest at the Federal Funds Rate for each day during such period. A
notice of the Agent submitted to any Bank with respect to amounts owing under
this subsection 2.14(a) shall be conclusive, absent manifest error. If such
------------------
amount is so made available, such payment to the Agent shall constitute such
Bank's Loan on the date
-29-
of Borrowing for all purposes of this Agreement. If such amount is not made
available to the Agent on the Business Day following the Borrowing Date, the
Agent will notify the Borrower of such failure to fund and, upon demand by the
Agent, the Borrower shall pay such amount to the Agent for the Agent's account,
together with interest thereon for each day elapsed since the date of such
Borrowing, at a rate per annum equal to the interest rate applicable at the time
to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing Date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.
2.15 Sharing of Payments, Etc. If, other than as expressly provided
-------------------------
elsewhere herein, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its Pro Rata Share, such Bank shall
immediately (a) notify the Agent of such fact, and (b) purchase from the other
Banks such participations in the Loans made by them as shall be necessary to
cause such purchasing Bank to share the excess payment pro rata with each of
them; provided, however, that if all or any portion of such excess payment is
-------- -------
thereafter recovered from the purchasing Bank, such purchase shall to that
extent be rescinded and each other Bank shall repay to the purchasing Bank the
purchase price paid therefor, together with an amount equal to such paying
Bank's ratable share (according to the proportion of (i) the amount of such
paying Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Borrower
agrees that any Bank so purchasing a participation from another Bank may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off, but subject to Section 12.9) with respect to such
------------
participation as fully as if such Bank were the direct creditor of the Borrower
in the amount of such participation. The Agent will keep records (which shall
be conclusive and binding in the absence of manifest error) of participations
purchased under this Section and will in each case notify the Banks and the
Borrower following any such purchases or repayments.
2.16 Security and Guaranty. (a) All obligations of the Borrower under
---------------------
this Agreement, each of the Notes and all other Loan Documents shall be secured
in accordance with the Collateral Documents.
(b) All obligations of the Borrower under this Agreement, each of the Notes
and all other Loan Documents shall be
-30-
unconditionally guaranteed by the Guarantors pursuant to the Guaranties.
ARTICLE III
-----------
THE LETTERS OF CREDIT
---------------------
3.1 The Letter of Credit Subfacility. (a) On the terms and conditions set
--------------------------------
forth herein (i) the Issuing Bank agrees to maintain outstanding each of the
Existing BAI Letters of Credit during the period from the Closing Date to the
earlier to occur of the expiry date of such Letter of Credit or the Termination
Date and (ii) the Banks severally agree to participate in the Existing BAI
Letters of Credit; provided, however, that (a) in no event shall the aggregate
-------- -------
amount of the L/C Obligations exceed the Dollar Equivalent amount of the
Existing BAI Letters of Credit as of the Business Day immediately preceding the
Closing Date; and (b) in no event shall any Letter of Credit be Issued during
the period from the Closing Date to the Revolver Date.
(b) On the terms and conditions set forth herein (i) the Issuing Bank
agrees, (A) from time to time on any Business Day during the period from the
Revolver Date to the Termination Date to issue Letters of Credit for the
accounts of the Borrower, and to amend or renew Letters of Credit previously
issued by it, in accordance with subsection 3.2(c) and 3.2(d), and (B) to honor
----------------- ------
drafts under the Letters of Credit; and (ii) the Banks severally agree to
participate in Letters of Credit Issued for the accounts of the Borrower;
provided, that the Issuing Bank shall not be obligated to Issue, and no Bank
--------
shall be obligated to participate in, any Letter of Credit if as of the date of
Issuance of such Letter of Credit (the "Issuance Date") (1) the aggregate amount
-------------
of all L/C Obligations plus the aggregate principal amount of all Loans exceed
the combined Commitments of all Banks, (2) the participation of any Bank in the
aggregate amount of all L/C Obligations plus the aggregate principal amount of
all Loans of such Bank exceeds such Bank's Commitment, or (3) the aggregate
principal amount of L/C Obligations exceeds the L/C Commitment. Within the
foregoing limits, and subject to the other terms and conditions hereof, the
Borrower's ability to obtain Letters of Credit shall be fully revolving, and,
accordingly, the Borrower may, during the foregoing period, obtain Letters of
Credit to replace Letters of Credit which have expired or which have been drawn
upon and reimbursed.
(c) The Issuing Bank is under no obligation to Issue any Letter of
Credit if:
(i) any order, judgment or decree of any Governmental Authority
or arbitrator shall by
-31-
its terms purport to enjoin or restrain the Issuing Bank from
Issuing such Letter of Credit or any Requirement of Law
applicable to the Issuing Bank or any request or directive
(whether or not having the force of law) from any Governmental
Authority with jurisdiction over the
Issuing Bank shall prohibit, or request that the Issuing Bank
refrain from, the Issuance of letters of credit generally or such
Letter of Credit in particular or shall impose upon the Issuing
Bank with respect to such Letter of Credit any restriction,
reserve or capital requirement (for which the Issuing Bank is not
otherwise compensated hereunder) not in effect on the Closing
Date, or shall impose upon the Issuing Bank any unreimbursed
loss, cost or expense which was not applicable on the Closing
Date and which the Issuing Bank in good ▇▇▇▇▇ ▇▇▇▇▇ material to
it;
(ii) the Issuing Bank has received written notice
from any Bank, the Agent or the Borrower, on or prior to the
Business Day prior to the requested date of Issuance of such
Letter of Credit, that one or more of the applicable conditions
contained in Article V is not then satisfied;
---------
(iii) the expiry date of any requested Letter of
Credit is, or any automatic extension date could be, after the
Termination Date, unless all of the Banks have approved such
expiry date in writing;
(iv) any requested Letter of Credit does not provide
for drafts, or is not otherwise in form and substance acceptable
to the Issuing Bank, or the Issuance of a Letter of Credit shall
violate any applicable policies of the Issuing Bank; or
(v) such Letter of Credit would be issued for the
purpose of supporting the issuance of any letter of credit by any
other Person.
3.2 Issuance, Amendment and Renewal of Letters of Credit. (a) Each Letter
----------------------------------------------------
of Credit issued after the Revolver Date shall be issued upon the irrevocable
written request of the Borrower received by the Issuing Bank (with a copy sent
to the Agent) at least four Business Days prior to the proposed date of issuance
(or such shorter time as the Issuing Bank may agree to in its sole discretion).
Each such request for issuance of a Letter of Credit
-32-
shall be by facsimile, confirmed immediately in an original writing, in the form
of an L/C Application, and shall specify in form and detail satisfactory to the
Issuing Bank: (i) the face amount of the Letter of Credit; (ii) the expiry date
of the Letter of Credit; (iii) the name and address of the beneficiary thereof;
(iv) the documents to be presented by the beneficiary of the Letter of Credit in
case of any drawing thereunder; (v) the full text of any certificate to be
presented by the beneficiary in case of any drawing thereunder; and (vi) such
other matters as the Issuing Bank may require.
(b) Promptly following receipt of an L/C Application or L/C Amendment,
the Issuing Bank will confirm with the Agent (by telephone or in writing) that
the Agent has received a copy of such L/C Application or L/C Amendment
Application from the Borrower and, if not, the Issuing Bank will provide the
Agent with a copy thereof. Unless the Issuing Bank has received notice on or
before the Business Day immediately preceding the date the Issuing Bank is to
issue a requested Letter of Credit (A) from the Agent directing the Issuing Bank
not to issue such Letter of Credit because such issuance is not then permitted
under subsection 3.1(a) as a result of the limitations set forth in clauses (1)
-----------------
through (3) thereof or (B) pursuant to subsection 3.1(b); then, subject to the
-----------------
terms and conditions hereof, the Issuing Bank shall, on the requested date,
issue a Letter of Credit for the account of the Borrower in accordance with the
Issuing Bank's usual and customary business practices.
(c) From time to time while a Letter of Credit is outstanding and
after the Revolver Date but prior to the Termination Date, the Issuing Bank
will, upon the written request of the Borrower received by the Issuing Bank
(with a copy sent by the Borrower to the Agent) at least four days prior to the
proposed date of amendment (or such shorter time as the Issuing Bank may agree
to in its sole discretion), amend any Letter of Credit issued by it. Each such
request for amendment of a Letter of Credit shall be made by facsimile,
confirmed immediately in an original writing, made in the form of an L/C
Amendment Application and shall specify in form and detail satisfactory to the
Issuing Bank: (i) the Letter of Credit to be amended; (ii) the nature of the
proposed amendment; and (iii) such other matters as the Issuing Bank may
require. The Issuing Bank shall be under no obligation to amend any Letter of
Credit if: (A) the Issuing Bank would have no obligation at such time to issue
such Letter of Credit in its amended form under the terms of this Agreement; or
(B) the beneficiary of any such Letter of Credit does not accept the proposed
amendment to the Letter of Credit.
(d) The Issuing Bank and the Banks agree that, while a Letter of
Credit is outstanding and after the Revolver Date but prior to the Termination
Date, at the option of, and upon the written request of, the Borrower received
by the Issuing Bank (with
-33-
a copy sent by the Borrower to the Agent) at least four days prior to the
proposed date of notification of renewal (or such shorter time as the Issuing
Bank may agree to in its sole discretion), the Issuing Bank shall be entitled
(with the written consent of the Majority Banks) to authorize the automatic
renewal of any Letter of Credit issued by it. Each such request for renewal of a
Letter of Credit shall be made by facsimile, confirmed immediately in an
original writing, in the form of an L/C Amendment Application, and shall specify
in form and detail satisfactory to the Issuing Bank: (i) the Letter of Credit to
be renewed; (ii) the revised expiry date of the Letter of Credit; and (iii) such
other matters as the Issuing Bank may require. The Issuing Bank shall be under
no obligation so to renew any Letter of Credit if: (A) the Issuing Bank would
have no obligation at such time to issue or amend such Letter of Credit in its
renewed form under the terms of this Agreement; or (B) the beneficiary of any
such Letter of Credit does not accept the proposed renewal of the Letter of
Credit.
(e) The Issuing Bank may, at its election (or as required by the Agent
at the direction of the Majority Banks), deliver any notices of termination or
other communications to any Letter of Credit beneficiary or transferee, and take
any other action as necessary or appropriate, at any time and from time to time,
in order to cause the expiry date of such Letter of Credit to be a date not
later than the Termination Date.
(f) This Agreement shall control in the event of any conflict with any
L/C-Related Document (other than any Letter of Credit).
(g) The Issuing Bank will also deliver to the Agent, concurrently or
promptly following its delivery of a Letter of Credit, or amendment to or
renewal of a Letter of Credit, to an advising bank or a beneficiary, a true and
complete copy of each such Letter of Credit or amendment to or renewal of a
Letter of Credit. The Agent will promptly notify the Banks of the Issuance by
the Issuing Bank of any Letter of Credit or any amendment to or renewal of a
Letter of Credit.
3.3 Risk Participations, Drawings and Reimbursements.
------------------------------------------------
(a) Each Bank hereby irrevocably and unconditionally purchases from
the Issuing Bank a participation in the Existing BAI Letters of Credit and each
drawing thereunder and immediately upon the Issuance on or after the date hereof
of each Letter of Credit, each Bank shall be deemed to, and hereby irrevocably
and unconditionally agrees to, purchase from the Issuing Bank a participation in
such Letter of Credit and each drawing thereunder, in each case, in an amount
equal to the product of (i) the Pro Rata Share of such Bank, times (ii) the
maximum amount available to be drawn under such Letter of Credit and the amount
of such drawing, respectively.
-34-
(b) In the event of any request for a drawing under a Letter of Credit
by the beneficiary or transferee thereof, the Issuing Bank will promptly notify
the Borrower. The Borrower shall reimburse the Issuing Bank prior to 10:00 a.m.
(San Francisco time), on each date that any amount is paid by the Issuing Bank
under any Letter of Credit (each such date, an "Honor Date"), in an amount equal
----------
to the amount so paid by the Issuing Bank. In the event the Borrower fails to
reimburse the Issuing Bank for the full amount of any drawing under any Letter
of Credit by 10:00 a.m. (San Francisco time) on the Honor Date, the Issuing Bank
will promptlY notify the Agent and the Agent will promptly notify each Bank
thereof, and the Borrower shall be deemed to have requested that Base Rate Loans
in the Dollar Equivalent amount of such draw be made by the Banks to be
disbursed on the Honor Date under such Letter of Credit, subject to the amount
of the unutilized portion of the Commitments and subject to the conditions set
forth in Section 5.2. Any notice given by the Issuing Bank or the Agent pursuant
------------
to this subsection 3.3(b) may be oral if immediately confirmed in writing
-----------------
(including by facsimile); provided that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding effect of such
notice.
(c) Each Bank shall upon any notice pursuant to subsection 3.3(b)
-----------------
make available to the Agent for the account of the Issuing Bank an amount in
immediately available funds equal to its Pro Rata Share of the Dollar Equivalent
amount of the drawing, whereupon the participating Banks shall (subject to
subsection 3.3(d)) each be deemed to have made a Loan consisting of a Base Rate
-----------------
Loan to the Borrower in that amount. If any Bank so notified fails to make
available to the Agent for the account of the Issuing Bank the amount of such
Bank's Pro Rata Share of the amount of the drawing by no later than 12:00 noon
(San Francisco time) on the Honor Date, then interest shall accrue on such
Bank's obligation to make such payment, from the Honor Date to the date such
Bank makes such payment, at a rate per annum equal to the Federal Funds Rate in
effect from time to time during such period. The Agent will promptly give
written notice of the occurrence of the Honor Date, but failure of the Agent to
give any such notice on the Honor Date or in sufficient time to enable any Bank
to effect such payment on such date shall not relieve such Bank from its
obligations under this Section 3.3.
-----------
(d) With respect to any unreimbursed drawing that is not converted
into Loans consisting of Base Rate Loans to the Borrower in whole or in part,
because of the Borrower's failure to satisfy the conditions set forth in Section
-------
5.2 or for any other reason, the Borrower shall be deemed to have incurred from
---
the Issuing Bank a borrowing in the amount of such drawing, which L/C Borrowing
shall be due and payable on demand (together with interest) and shall bear
interest at a rate per annum equal to the rate then applicable to Base Rate
Loans plus 2% per annum, and each Bank's payment to the Issuing Bank pursuant to
subsection 3.3(d) shall be
------------------
-35-
deemed payment in respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Bank in satisfaction of its participation
obligation under this Section 3.3.
-------------
(e) Each Bank's obligation in accordance with this Agreement to make
the Loans or L/C Advances, as contemplated by this Section 3.3, as a result of a
-----------
drawing under a Letter of Credit, shall be absolute and unconditional and
without recourse to the Issuing Bank and shall not be affected by any
circumstance, including (i) any set-off, counterclaim, recoupment, defense or
other right which such Bank may have against the Issuing Bank, the Borrower or
any other Person for any reason whatsoever; (ii) the occurrence or continuance
of a Default or an Event of Default; or (iii) any other circumstance, happening
or event whatsoever, whether or not similar to any of the foregoing; provided,
---------
however, that each Bank's obligation to make Loans under this Section 3.3 is
-------------
subject to the conditions set forth in Section 5.2.
------------
3.4 Repayment of Participations.
---------------------------
(a) Upon (and only upon) receipt by the Agent for the account of the
Issuing Bank of immediately available funds from the Borrower (i) in
reimbursement of any payment made by the Issuing Bank under the Letter of Credit
with respect to which any Bank has paid the Agent for the account of the Issuing
Bank for such Bank's participation in the Letter of Credit pursuant to Section
-------
3.3 or (ii) in payment of interest thereon, the Agent will pay to each Bank, in
---
the same funds as those received by the Agent for the account of the Issuing
Bank, the amount of such Bank's Pro Rata Share of such funds, and the Issuing
Bank shall receive the amount of the Pro Rata Share of such funds of any Bank
that did not so pay the Agent for the account of the Issuing Bank.
(b) If the Agent or the Issuing Bank is required at any time to return
to the Borrower, or to a trustee, receiver, liquidator, custodian, or any
official in any Insolvency Proceeding, any portion of the payments made by the
Borrower to the Agent for the account of the Issuing Bank pursuant to subsection
----------
3.4(a) in reimbursement of a payment made under the Letter of Credit or interest
------
or fee thereon, each Bank shall, on demand of the Agent, forthwith return to the
Agent or the Issuing Bank the amount of its Pro Rata Share of any amounts so
returned by the Agent or the Issuing Bank plus interest thereon from the date
such demand is made to the date such amounts are returned by such Bank to the
Agent or the Issuing Bank, at a rate per annum equal to the Federal Funds Rate
in effect from time to time.
-36-
3.5 Role of the Issuing Bank.
------------------------
(a) Each Bank and the Borrower agrees that, in paying any drawing
under a Letter of Credit, the Issuing Bank shall not have any responsibility to
obtain any document (other than any sight draft and certificates expressly
required by the Letter of Credit) or to ascertain or inquire as to the validity
or accuracy of any such document or the authority of the Person executing or
delivering any such document.
(b) No Agent-Related Person nor any of the respective correspondents,
participants or assignees of the Issuing Bank shall be liable to any Bank for:
(i) any action taken or omitted in connection herewith at the request or with
the approval of the Banks (including the Majority Banks, as applicable); (ii)
any action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
(c) The Borrower hereby assumes all risks of the acts or omissions of
any beneficiary or transferee with respect to its use of any Letter of Credit;
provided, however, that this assumption is not intended to, and shall not,
--------
preclude the Borrower's pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement. No Agent-
Related Person, nor any of the respective correspondents, participants or
assignees of the Issuing Bank, shall be liable or responsible for any of the
matters described in clauses (i) through (vi) of Section 3.6; provided, however,
----------- --------
anything in such clauses to the contrary notwithstanding, that the Borrower may
have a claim against the Issuing Bank, and the Issuing Bank may be liable to the
Borrower, to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by the Borrower which the Borrower
proves were caused by the Issuing Bank's willful misconduct or gross negligence
or the Issuing Bank's willful failure to pay under any Letter of Credit after
the presentation to it by the beneficiary of a sight draft and certificate(s)
strictly complying with the terms and conditions of a Letter of Credit. In
furtherance and not in limitation of the foregoing: (i) the Issuing Bank may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary; and (ii) the Issuing Bank shall not be responsible
for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.
3.6 Obligations Absolute. The obligations of the Borrower under this
--------------------
Agreement and any L/C-Related Document to reimburse the Issuing Bank for a
drawing under a Letter of Credit, and to repay any L/C Borrowing and any drawing
under a Letter of Credit
-37-
converted into Loans, shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement and each such other L/C-
Related Document under all circumstances, including the following:
(i) any lack of validity or enforceability of this Agreement or
any L/C-Related Document;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations of the Borrower in
respect of any Letter of Credit or any other amendment or waiver of or any
consent to departure from all or any of the L/C-Related Documents;
(iii) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary or any
transferee of any Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank or any
other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by the L/C-Related Documents or any unrelated
transaction;
(iv) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any
Letter of Credit;
(v) any payment by the Issuing Bank who is a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any
beneficiary or any transferee of any Letter of Credit, including any
arising in connection with any Insolvency Proceeding; or
(vi) any exchange, release or non-perfection of any collateral,
or any release or amendment or waiver of or consent to departure from any
other guarantee, for all or any of the obligations of the Borrower in
respect of any Letter of Credit.
3.7 [RESERVED]
----------
3.8 Letter of Credit Fees.
---------------------
(a) The Borrower shall pay to the Agent for the account of each of
the Banks a letter of credit fee with respect to the Letters of Credit equal to
the Applicable Fee then in effect with respect to Letters of Credit per annum of
the average daily maximum
-38-
Dollar Equivalent amount available to be drawn of the outstanding Letters of
Credit, computed on a quarterly basis in arrears on the last Business Day of
each calendar quarter based upon Letters of Credit outstanding for that quarter
as calculated by the Agent. Such letter of credit fees shall be due and payable
quarterly in arrears on the last Business Day of each calendar quarter during
which Letters of Credit are outstanding, commencing on the first such quarterly
date to occur after the Closing Date, through the Termination Date (or such
later date upon which the outstanding Letters of Credit shall expire), with the
final payment to be made on the Termination Date (or such later expiration
date).
(b) The Borrower shall pay to the Issuing Bank a letter of credit
issuance fee for each Letter of Credit Issued by the Issuing Bank thereafter
during such calendar year at a rate equal to the rate then customarily charged
by the Issuing Bank, of which rate the Issuing Bank shall notify the Borrower in
writing with a copy to the Agent. Such Letter of Credit issuance fee shall be
due and payable on each date of Issuance of a Letter of Credit.
(c) Notwithstanding subsection (a) of this Section, while any Default
exists and at all times after acceleration, the Borrower shall pay a letter of
credit fee (after as well as before entry of judgment thereon to the extent
permitted by law) on the average daily maximum amount available to be drawn of
the outstanding Letters of Credit, at a rate per annum which is determined by
adding 2% per annum to the rate otherwise in effect hereunder for such Letters
of Credit.
3.9 Uniform Customs and Practice. The Uniform Customs and Practice for
----------------------------
Documentary Credits as published by the International Chamber of Commerce
("UCP") most recently at the time of issuance of any Letter of Credit shall
---
(unless otherwise expressly provided in the Letters of Credit) apply to the
Letters of Credit.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
--------------------------------------
4.1 Taxes. (a) With the sole exception of withholding taxes withheld from
-----
interest payments paid to the Banks pursuant to Section 11.10, any and all
-------------
payments by the Borrower to each Bank or the Agent under this Agreement and any
other Loan Document shall be made free and clear of, and without deduction or
withholding for any Taxes. In addition, the Borrower shall pay all Other Taxes.
(b) The Borrower agrees to indemnify and hold harmless each Bank, the
Issuing Bank and the Agent for the full amount of Taxes or Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section) arising in
-39-
connection with this Agreement or any other Loan Document paid by the Bank, the
Issuing Bank or the Agent and any liability (including penalties, interest,
additions to tax and expenses) arising therefrom or with respect thereto.
Payment under this indemnification shall be made within 30 days after the date
the Bank, the Issuing Bank or the Agent makes written demand therefor.
(c) With the sole exception of withholding taxes withheld from
interest payments paid to the Banks pursuant to Section 11.10, if the Borrower
-------------
shall be required by law to deduct or withhold any Taxes or Other Taxes from or
in respect of any sum payable hereunder to any Bank, the Issuing Bank or the
Agent, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including deductions
and withholdings applicable to additional sums payable under this Section)
such Bank, the Issuing Bank or the Agent, as the case may be, receives an
amount equal to the sum it would have received had no such deductions or
withholdings been made;
(ii) the Borrower shall make such deductions and withholdings;
(iii) the Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance
with applicable law; and
(iv) the Borrower shall also pay to each Bank or the Agent for
the account of such Bank, at the time interest is paid, all additional
amounts which the respective Bank specifies in a written invoice delivered
to the Borrower as necessary to preserve the gross revenue the Bank would
have received if such Taxes or Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment by the Borrower of
Taxes or Other Taxes, the Borrower shall furnish the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Agent.
(e) If the Borrower is required to pay additional amounts to any Bank
or the Agent pursuant to subsection (c) of this Section, then such Bank shall
use reasonable efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Borrower which may thereafter accrue, if such change
in the judgment of such Bank is not otherwise disadvantageous to such Bank.
-40-
4.2 Illegality. (a) If any Bank determines that the introduction of any
----------
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Bank or its applicable Lending Office to make
Offshore Rate Loans, then, on notice thereof by the Bank to the Borrower through
the Agent, any obligation of that Bank to make Offshore Rate Loans shall be
suspended until the Bank notifies the Agent and the Borrower that the
circumstances giving rise to such determination no longer exist.
(b) If a Bank determines that it is unlawful to maintain any Offshore
Rate Loan, the Borrower shall, upon receipt of notice of such fact and demand
from such Bank (with a copy to the Agent), prepay in full such Offshore Rate
Loans of that Bank then outstanding, together with interest accrued thereon and
amounts required under Section 4.4, either on the last day of the Interest
------------
Period thereof, if the Bank may lawfully continue to maintain such Offshore Rate
Loans to such day, or within five (5) Business Days after receipt of such
notice, if the Bank may not lawfully continue to maintain such Offshore Rate
Loan.
(c) If the obligation of any Bank to make or maintain Offshore Rate
Loans has been so terminated or suspended, the Borrower may elect, by giving
notice to the Bank through the Agent that all Loans which would otherwise be
made by the Bank as Offshore Rate Loans shall be instead Base Rate Loans.
(d) Before giving any notice to the Agent under this Section, the
affected Bank shall designate a different Lending Office with respect to its
Offshore Rate Loans if such designation will avoid the need for giving such
notice or making such demand and will not, in the judgment of the Bank, be
illegal or otherwise disadvantageous to the Bank.
4.3 Increased Costs and Reduction of Return. (a) If any Bank determines
----------------------------------------
that, due to either (i) the introduction of or any change (other than any change
by way of imposition of or increase in reserve requirements included in the
calculation of the Offshore Rate or in respect of the assessment rate payable by
any Bank to the FDIC for insuring U.S. deposits) in or in the interpretation of
any law or regulation or (ii) the compliance by that Bank with any guideline or
request from any central bank or other Governmental Authority (whether or not
having the force of law), there shall be any increase in the cost to such Bank
of agreeing to make or making, funding or maintaining any Offshore Rate Loans or
participating in Letters of Credit, or, in the case of the Issuing Bank, any
increase in the cost to the Issuing Bank of agreeing to issue, issuing or
maintaining any Letter of Credit or of agreeing to make or making, funding or
maintaining any unpaid drawing under any Letter of Credit, then the Borrower
shall be liable for, and
-41-
shall from time to time, upon demand (with a copy of such demand to be sent to
the Agent), pay to the Agent for the account of such Bank, additional amounts as
are sufficient to compensate such Bank for such increased costs.
(b) If any Bank shall have determined that (i) the introduction of any
Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by the Bank (or its
Lending Office) or any corporation controlling the Bank with any Capital
Adequacy Regulation, affects or would affect the amount of capital required or
expected to be maintained by the Bank or any corporation controlling the Bank
and (taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy and such Bank's desired return on capital)
determines that the amount of such capital is increased as a consequence of its
Commitment, loans, credits or obligations under this Agreement, then, upon
demand of such Bank to the Borrower through the Agent, the Borrower shall pay to
the Bank, from time to time as specified by the Bank, additional amounts
sufficient to compensate the Bank for such increase.
4.4 Funding Losses. The Borrower shall reimburse each Bank and hold each
--------------
Bank harmless from any reasonable, direct and supportable loss or expense which
the Bank has sustained or incurred as a consequence of:
(a) the failure of the Borrower to make on a timely basis any payment
of principal of any Offshore Rate Loan;
(b) the failure of the Borrower to borrow, continue or convert a Loan
after the Borrower has given (or is deemed to have given) a Notice of Borrowing
or a Notice of Conversion/ Continuation;
(c) the failure of the Borrower to make any prepayment in accordance
with any notice delivered under Section 2.5;
-----------
(d) the prepayment or other payment (including after acceleration
thereof) of an Offshore Rate Loan on a day that is not the last day of the
relevant Interest Period; or
(e) the automatic conversion under Section 2.4 of any Offshore Rate
-----------
Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period;
including any actual, supportable loss or expense arising from the liquidation
or reemployment of funds obtained by it to maintain its Offshore Rate Loans or
from fees payable to terminate the deposits from which such funds were obtained.
For purposes of calculating
-42-
amounts payable by the Borrower to the Banks under this Section and under
subsection 4.3(a), each Offshore Rate Loan made by a Bank (and each related
------------------
reserve, special deposit or similar requirement) shall be funded at the LIBOR
used in determining the Offshore Rate for such Offshore Rate Loan by a matching
deposit or other borrowing in the interbank eurodollar market for a comparable
amount and for a comparable period, whether or not such Offshore Rate Loan is in
fact so funded.
4.5 Inability to Determine Rates. If the Agent reasonably determines that
----------------------------
adequate and reasonable means do not exist for determining the Offshore Rate for
any requested Interest Period with respect to a proposed Offshore Rate Loan, or
that the Offshore Rate applicable pursuant to subsection 2.10(a) for any
------------------
requested Interest Period with respect to a proposed Offshore Rate Loan does not
adequately and fairly reflect the cost to the Banks of funding such Loan due to
costs or other charges of the nature described in Section 4.3, the Agent will
------------
promptly so notify the Borrower and each Bank. Thereafter, the obligation of the
Banks to make or maintain Offshore Rate Loans hereunder shall be suspended until
the Agent revokes such notice in writing. Upon receipt of such notice, the
Borrower may revoke any Notice of Borrowing or Notice of Conversion/Continuation
then submitted by them. If the Borrower does not revoke such Notice, the Banks
shall make, convert or continue the Loans, as proposed by the Borrower, in the
amount specified in the applicable notice submitted by the Borrower, but such
Loans shall be made, converted or continued as Base Rate Loans instead of
Offshore Rate Loans.
4.6 Certificates of Banks. Any Bank claiming reimbursement or
---------------------
compensation under this Article IV shall deliver to the Borrower (with a copy to
----------
the Agent) written notice thereof setting forth in reasonable detail the amount
payable to the Bank hereunder and such certified invoice shall be conclusive and
binding on the Borrower in the absence of manifest error.
4.7 Substitution of Banks. Upon the receipt by the Borrower from any Bank
---------------------
(an "Affected Bank") of a claim for compensation under Section 4.3, the Borrower
------------- -----------
may: (i) request the Agent to use its best efforts to obtain a replacement bank
or financial institution satisfactory to the Borrower to acquire and assume all
or a ratable part of all of such Affected Bank's Loans and Commitment (a
"Replacement Bank"); (ii) request one more of the other Banks to acquire and
-----------------
assume all or part of such Affected Bank's Loans and Commitment; or (iii)
designate a Replacement Bank. Any such designation of a Replacement Bank under
clause (i) or (iii) shall be subject to the prior written consent of the Agent
(which consent shall not be unreasonably withheld).
4.8 Survival. The agreements and obligations of the Borrower in this
--------
Article IV shall survive the payment of all other Obligations.
----------
-43-
ARTICLE V
CONDITIONS PRECEDENT
--------------------
5.1 Conditions of Initial Loans. The effectiveness of this Agreement and
---------------------------
obligation of each Bank to make Loans hereunder is subject to the condition that
the Agent have received each of the following, in form and substance
satisfactory to the Agent and each Bank, and in sufficient copies for each Bank:
(a) Credit Agreement. This Agreement executed by each party thereto;
----------------
(b) Notes. The Notes executed by the Borrower;
------
(c) Warrants. The Warrants issued by the Borrower;
--------
(d) Resolutions; Incumbency.
-----------------------
(i) Copies of the resolutions of the board of directors of the
Borrower authorizing the transactions contemplated hereby, certified as of
the Closing Date by the Secretary or an Assistant Secretary of the
Borrower; and
(ii) A certificate of the Secretary or Assistant Secretary of
the Borrower certifying the names and true signatures of the officers of
the Borrower authorized to execute, deliver and perform, as applicable,
this Agreement, and all other Loan Documents (including notices of the
Borrower pursuant to Section 2.3) to be delivered by it hereunder;
-----------
(e) Organization Documents; Good Standing. Each of the following
-------------------------------------
documents:
(i) the articles or certificate of incorporation and the bylaws
of the Borrower as in effect on the Closing Date, certified by the
Secretary or Assistant Secretary of the Borrower as of the Closing Date;
and
(ii) a good standing certificate and, if applicable, tax good
standing certificate for the Borrower from the Secretary of State (or
similar, applicable Governmental Authority) of its jurisdiction of
incorporation and each jurisdiction where the Borrower is qualified to do
business as a foreign corporation, each dated as of a recent date;
-44-
(f) Legal Opinion. An opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LTD, counsel to
-------------
the Borrower, as to certain legal matters, substantially in the form of Exhibit
-------
D;
-
(g) Payment of Fees. Evidence of payment by the Borrower of all
---------------
accrued and unpaid fees, costs and expenses to the extent then due and payable
on the Closing Date, together with Attorney Costs of BofA to the extent invoiced
prior to or on the Closing Date;
(h) Collateral Documents. Executed copies of each of the following
--------------------
Collateral Documents (each capitalized term used in this Section 5.1(h) and not
--------------
otherwise defined in this Agreement shall have the meaning set forth in the
Collateral Agency Agreement):
(i) the Collateral Agency Agreement, executed by each of the
Grantors, together with such amendments thereto to reflect the agreements
of the parties hereto regarding "Obligations" hereunder as may be
reasonably requested by the Agent and each Bank;
(ii) the Pledge Agreement (Stock and Intercompany Notes),
executed by the Borrower and certain Grantors, together with the following:
(A) each of the Intercompany Revolving Demand Notes,
endorsed in blank, identified on Attachment 2 to the Pledge Agreement
(Stock and Intercompany Notes); and
(B) each of the certificates evidencing the Pledged Shares,
together with undated stock powers executed in blank, identified on
Attachment 2 to the Pledge Agreement (Stock and Intercompany Notes);
(iii) separate Pledge Agreements (Deposit Accounts) for each of
the Borrower and certain Grantors with respect to certain bank accounts
maintained by such parties;
(iv) the Security Agreement, executed by each of the Borrower
and certain Grantors, together with U.C.C. Financing Statements, as defined
in and required under the Security Agreement;
(v) the Guaranty, executed by certain Grantors;
(vi) except to the extent otherwise consented to by the Banks in
a letter dated as of February 28, 1997, Foreign Pledge Agreements with
respect to the stock or other evidence of beneficial ownership interest of
each Subsidiary (other than a Domestic Subsidiary) required by the Majority
Banks, together in each instance, with opinions of foreign counsel to
-45-
the Grantors, in form and substance reasonably acceptable to the Collateral
Agent and each Bank, addressing the enforceability and, if applicable,
perfection of such pledges;
(vii) UCC, tax lien and judgment searches with respect to the
Borrower and certain Grantors for the locations of their respective chief
executive office and where inventory, equipment or books and records are
kept;
(viii) a certified copy of the Borrower's credit and collection
policy and procedures;
(ix) except to the extent otherwise consented to by the Banks in
a letter dated as of February 28, 1997, consents to assignments for
security purposes of certain material contracts including, without
limitation, the following:
(A) Master Agreement of Lease, between the Borrower and
M&SD Financial Services, a Division of Electronic Data Systems
Corporation, dated June 27, 1996;
(B) International Business Machines Corp. Customer
Agreement; and
(C) Lease line commitment letter made by the Borrower and
▇▇▇▇▇▇▇▇/▇▇▇▇▇▇▇▇ Associates, Inc. dated January 2, 1996, as amended;
(x) certified copies of each of the real property leases of the
Borrower and its Domestic Subsidiaries;
(xi) except to the extent otherwise consented to by the Banks in a
letter dated as of February 28, 1997, with respect to each of the leased
real properties of the Borrower and its Domestic Subsidiaries, a Statement
and Consent of Landlord, in form and substance acceptable to the Agent and
the Banks;
(xii) certificates of insurance as required pursuant to the Security
Agreement, with the endorsements called for therein; and
(xiii) Such other approvals, opinions, documents or materials as the
Agent may request in respect of the Collateral Documents;
(i) Certificate. A certificate signed by a Responsible Officer, dated
-----------
as of the Closing Date, stating that:
(i) the representations and warranties contained in Article VI
----------
are true and correct on and as of such date, as though made on and as of
such date; and
-46-
(ii) no Default or Event of Default then exists;
(j) Note Agreement Amendment. A copy of a duly executed and delivered
------------------------
amendment to the Note Agreement, in form and substance acceptable to the Agent
and each Bank, certified by the Secretary or Assistant Secretary of the
Borrower; and
(k) Other Documents. Such other approvals, opinions, documents or
---------------
materials as the Agent or any Bank may reasonably request.
5.2 Conditions to All Borrowings and Letters of Credit. On or after the
--------------------------------------------------
Revolver Date, the obligation of each Bank to make any Loan to be made by it or
to continue or convert any Loan under Section 2.4 or of the Issuing Bank to
-----------
issue any Letters of Credit or amend an outstanding Letter of Credit so as to
extend its expiry date is subject to the satisfaction of the following
conditions precedent on the relevant Borrowing Date or Conversion/Continuation
Date:
(a) Notice of Transaction. The Agent shall have received a Notice of
---------------------
Borrowing or a Notice of Conversion/ Continuation or the Issuing Bank shall have
received the L/C Application or the L/C Amendment Application, as applicable;
(b) Continuation of Representations and Warranties. The
----------------------------------------------
representations and warranties in Article VI hereof and in each other Loan
----------
Document shall be true and correct on and as of such Borrowing Date,
Conversion/Continuation Date, Issuance Date or date of extension, as the case
may be, with the same effect as if made on and as of such date (except to the
extent such representations and warranties expressly refer to an earlier date,
in which case they shall be true and correct as of such earlier date); and
(c) No Existing Default. No Default or Event of Default shall exist
-------------------
or shall result from such Borrowing, continuation or conversion, Issuance or
extension.
Each Notice of Borrowing and Notice of Conversion/Continuation and L/C
Application or L/C Amendment Application submitted by the Borrower hereunder
shall constitute a representation and warranty by it hereunder, as of the date
of each such notice or application and as of each Borrowing Date,
Conversion/Continuation Date or Issuance Date or date of extension, as
applicable, that the conditions in this Section 5.2 are satisfied.
-----------
-47-
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower represents and warrants to the Agent and each Bank that:
6.1 Corporate Existence and Power. Each of the Borrower and each of its
-----------------------------
Subsidiaries:
(a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and to execute, deliver, and perform its obligations under the Loan Documents;
(c) is duly qualified as a foreign corporation and is licensed and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
or license; and
(d) is in compliance with all Requirements of Law; except, in each
case referred to in clause (c) or clause (d), to the extent that the failure to
do so could not reasonably be expected to have a Material Adverse Effect.
6.2 Corporate Authorization; No Contravention. The execution, delivery
-----------------------------------------
and performance by the Borrower of this Agreement and each other Loan Document
to which it is party, have been duly authorized by all necessary corporate
action, and do not and will not:
(a) contravene the terms of any of the Borrower's Organization
Documents;
(b) conflict in any material respect with or result in any breach or
contravention of, or the creation of any Lien under, any document evidencing any
Contractual Obligation to which the Borrower is a party or any order,
injunction, writ or decree of any Governmental Authority to which the Borrower
or its property is subject; or
(c) violate any Requirement of Law.
6.3 Governmental Authorization. To the best of its knowledge, no
--------------------------
approval, consent, exemption, authorization, or other
-48-
action by, or notice to, or filing with, any Governmental Authority is necessary
or required in connection with the execution, delivery or performance by, or
enforcement against, the Borrower of the Agreement or any other Loan Document.
6.4 Binding Effect. This Agreement and each other Loan Document to which
--------------
the Borrower is a party constitute the legal, valid and binding obligations of
the Borrower to the extent it is a party thereto, enforceable against the
Borrower in accordance with their respective terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally or by equitable principles relating
to enforceability.
6.5 Litigation. Except as specifically disclosed in Schedule 6.5, there
---------- ------------
are no actions, suits, proceedings, claims or disputes pending, or to the best
knowledge of the Borrower, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against the Borrower, or its
Subsidiaries or any of their respective properties which:
(a) purport to affect or pertain to this Agreement or any other Loan
Document, or any of the transactions contemplated hereby or thereby; or
(b) if determined adversely to the Borrower or its Subsidiaries, would
reasonably be expected to have a Material Adverse Effect.
No injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any other
Loan Document, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided.
6.6 No Default. No Default or Event of Default exists or would result
----------
from the incurring of any Obligations by the Borrower or from the grant or
perfection of the Liens of the Collateral Agent on the Collateral. As of the
Closing Date, neither the Borrower nor any Subsidiary is in default under or
with respect to any Contractual Obligation in any respect which, individually or
together with all such defaults, could reasonably be expected to have a Material
Adverse Effect, or that would, if such default had occurred after the Closing
Date, create an Event of Default under subsection 10.1(e).
------------------
6.7 ERISA Compliance. Except as specifically disclosed in Schedule 6.7:
---------------- ------------
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal
-49-
or state law. Each Plan which is intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the IRS and to the best
knowledge of the Borrower, nothing has occurred which would cause the loss of
such qualification. The Borrower and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction
or violation of the fiduciary responsibility rules with respect to any Plan
which has resulted or could reasonably be expected to result in a Material
Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v)
neither the Borrower nor any ERISA Affiliate has engaged in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
6.8 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to
-----------------------------------
be used solely for the purposes set forth in and permitted by Section 7.12 and
------------
Section 8.7. Neither the Borrower nor any Subsidiary is generally engaged in
-----------
the business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
6.9 Properties. The Borrower and each Subsidiary have good record and
----------
marketable title in fee simple to, or valid leasehold interests in, all real
property necessary or used in the ordinary conduct of their respective
businesses, except for such defects in title as could not, individually or in
the aggregate, have a Material Adverse Effect. As of the Closing Date, (i) the
property of the Borrower and its Subsidiaries is subject to no Liens, other than
Permitted Liens and (ii) the postal address of each parcel of real property
owned or leased by the Borrower or its Subsidiaries which is located within the
United States of America is listed on Schedule 6.9 hereto.
------------
-50-
6.10 Taxes. The Borrower and its Subsidiaries have filed all Federal and
-----
other material tax returns and reports required to be filed, and have paid all
Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP. There is no proposed tax assessment against the Borrower
or any Subsidiary that would, if made, have a Material Adverse Effect.
6.11 Financial Condition. (a) The audited consolidated financial
-------------------
statements of the Borrower and its Subsidiaries for the fiscal years ending
October 31, 1996 and October 31, 1995 delivered to the Agent and the Banks as of
January 29, 1997, and the unaudited consolidated financial statements of the
Borrower and its Subsidiaries for the fiscal quarters ending January 31, 1996,
April 30, 1996 and July 31, 1996 (as restated in Borrower's press release dated
January 7, 1997), together in each case with the related consolidated statements
of income or operations, shareholders' equity and cash flows for the fiscal year
ended on that date:
(i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein;
(ii) fairly present the financial condition of the Borrower and
its Subsidiaries as of the date thereof and results of operations for the
period covered thereby; and
(iii) except as specifically disclosed in Schedule 6.11, show
-------------
all material indebtedness and other liabilities, direct or contingent, of
the Borrower and its consolidated Subsidiaries as of the Closing Date,
including liabilities for taxes, material commitments and Contingent
Obligations.
(b) Since October 31, 1996, except to the extent disclosed in the
Waiver and Amendment dated September 16, 1996, the Waiver and Amendment dated
January 7, 1997 and the Letter dated January 29, 1997 between the Borrower and
the Banks (the "Letter Agreement") (and if extended, any extensions thereof)
----------------
there has been no Material Adverse Effect.
6.12 Environmental Matters. The Borrower conducts in the ordinary course
---------------------
of business a review of the effect of existing Environmental Laws and existing
Environmental Claims on its business, operations and properties, and as a result
thereof the Borrower has reasonably concluded that, except as specifically
disclosed in Schedule 6.12, such Environmental Laws and Environmental Claims
-------------
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
-51-
6.13 Regulated Entities. None of the Borrower, any Person controlling the
------------------
Borrower, or any Subsidiary, is an "Investment Company" within the meaning of
the Investment Company Act of 1940. The Borrower is not subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal
or state statute or regulation limiting its ability to incur Indebtedness.
6.14 No Burdensome Restrictions. Neither the Borrower nor any Subsidiary
--------------------------
is a party to or bound by any Contractual Obligation, or subject to any
restriction in any Organization Document, or any Requirement of Law, which could
reasonably be expected to have a Material Adverse Effect.
6.15 Copyrights, Patents, Trademarks and Licenses, etc. The Borrower or
-------------------------------------------------
its Subsidiaries own or are licensed or otherwise have the right to use all of
the patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict with the rights
of any other Person. To the best knowledge of the Borrower, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by the Borrower or any
Subsidiary infringes upon any rights held by any other Person. Except as
specifically disclosed in Schedule 6.5, no claim or litigation regarding any of
------------
the foregoing is pending or threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending or, to the knowledge of the Borrower, proposed, which, in either
case, could reasonably be expected to have a Material Adverse Effect.
6.16 Subsidiaries. The Borrower has no Subsidiaries other than those
------------
specifically disclosed in part (a) of Schedule 6.16 hereto and has no equity
-------------
investments in any other corporation or entity other than those specifically
disclosed in part (b) of Schedule 6.16. All Inactive Subsidiaries are
-------------
designated as "Inactive" on Schedule 6.16. Each Subsidiary which is organized
-------------
under the laws of the United States of America or the laws of any State therein
and which is not an Inactive Subsidiary has duly executed and delivered to the
Collateral Agent a Guaranty.
6.17 Insurance. Except as specifically disclosed in Schedule 6.17, the
--------- -------------
properties of the Borrower and its Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Borrower, in such
amounts, with such deductibles and covering such risks as are required by the
Collateral Documents or otherwise customarily carried by companies engaged in
similar businesses and owning similar properties in localities where the
Borrower or such Subsidiary operates.
-52-
6.18 Deposit Accounts, Etc. As of the Closing Date, Schedule 6.18 sets
--------------------- -------------
forth a complete list of all deposit accounts, bank accounts, brokerage accounts
and other investment accounts for the account of the Borrower and its Domestic
Subsidiaries (whether held in the name of the Borrower or such Subsidiary or
through a designee) which are in the United States.
6.19 Collateral Documents. (a) The provisions of each of the Collateral
--------------------
Documents are effective to create in favor of the Collateral Agent, a legal,
valid and enforceable first priority security interest in all right, title and
interest of the Borrower and its Subsidiaries in the collateral described
therein; and financing statements have been filed in the offices in all of the
jurisdictions listed in the schedule to the Security Agreement.
(b) All representations and warranties of the Borrower and any of its
Subsidiaries party thereto contained in the Collateral Documents are true and
correct in all material respect.
6.20 Solvency. As of the Closing Date and as of any date prior to the
--------
Closing Date on which the Borrower or any Guarantor granted any Lien or
otherwise delivered any Collateral to the Collateral Agent, each of the Borrower
and each such Guarantor is and was Solvent.
6.21 Full Disclosure. None of the representations or warranties made by
---------------
the Borrower or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Borrower or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the Borrower to the Banks prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.
ARTICLE VII
AFFIRMATIVE COVENANTS
---------------------
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Majority Banks waive compliance in writing:
7.1 Financial Statements. The Borrower shall deliver to the Agent, in
--------------------
form and detail satisfactory to the Agent and the
-53-
Majority Banks, with sufficient copies for each Bank (and the Agent, in turn,
shall promptly deliver to the Banks):
(a) as soon as available, but not later than ninety days after the
end of each fiscal year, a copy of the audited consolidated, and unaudited
consolidating, balance sheet of the Borrower and its Subsidiaries as at the end
of such fiscal year and the related consolidated and consolidating statements of
income or operations, shareholders' equity and cash flows for such year, setting
forth in each case in comparative form the figures for the previous fiscal year,
and accompanied in the case of the consolidated financial statements by the
opinion of KPMG Peat Marwick or another nationally-recognized independent public
accounting firm ("Independent Auditor") which report shall state that such
-------------------
consolidated financial statements present fairly the financial position for the
periods indicated in conformity with GAAP applied on a basis consistent with
prior years. Such opinion shall not be qualified or limited because of a
restricted or limited examination by the Independent Auditor of any material
portion of the Borrower's or any Subsidiary's records and shall be delivered to
the Agent pursuant to a reliance agreement between the Agent and Banks and such
Independent Auditor in form and substance satisfactory to the Agent;
(b) as soon as available, but not later than forty-five days after
the end of each fiscal quarter of each fiscal year (commencing with the fiscal
quarter ended January 31, 1997), a copy of the unaudited consolidated and
consolidating balance sheet of the Borrower and its Subsidiaries as of the end
of such quarter and the related consolidated and consolidating statements of
income, shareholders' equity and cash flows for the period commencing on the
first day and ending on the last day of such quarter, and certified by a
Responsible Officer as fairly presenting, in accordance with GAAP (subject to
ordinary, good faith year-end audit adjustments), the financial position and the
results of operations of the Borrower and the Subsidiaries;
(c) As soon as available, but in any event within ninety (90) days
after the beginning of each fiscal year of the Borrower, a copy of the plan
(including a projected closing consolidated balance sheet, income statement and
funds flow statements) of the Borrower for each quarter of such fiscal year;
(d) Concurrent with the delivery to the Agent of the financial
statements pursuant to the foregoing clauses (a) and (b), (i) a management
----------- ---
report, in the format of Exhibit H or such other form as shall be acceptable to
---------
the borrower and the Majority Banks and (ii) a detailed listing of all
intercompany loans then outstanding between the Borrower and its Subsidiaries;
(e) By the close of business on Tuesday of each calendar week of each
fiscal quarter (or, in the case of any fiscal quarter
-54-
which ends on a day other than Friday, Saturday or Sunday, by the close of
business on the second Business Day after the end of such fiscal quarter), a
report, in the format reasonably acceptable to the Banks, showing as of the end
of the immediately preceding calendar week (or portion thereof occurring during
such fiscal quarter), total cash receipts, total cash disbursements and
Consolidated Cash Balances of the Borrower and its Subsidiaries on a
consolidated basis for the portion of such calendar week which falls within such
fiscal quarter.
(f) By the close of business on Tuesday of each week, a report
setting forth, in form and detail reasonably acceptable to the Agent and the
Banks, the status of the Borrower's efforts to obtain equity and/or debt
refinancing for the Obligations ;
(g) As soon as available, but in any event within twenty days after
the end of each calendar month, a report setting forth, in form and detail
acceptable to the Agent and the Banks, the aggregate of domestic and foreign
receivables of the Borrower and its Subsidiaries, net of the following:
(i) all receivables more than 90 days past due;
(ii) all receivables (x) owing by an account debtor who shall
have failed to pay 50% or more of the aggregate amount then owed by such
account debtor under all accounts receivable owed to the Borrower or any
Subsidiary within 90 days after the respective due date thereof, or (y) is
an affiliate of the Borrower or, (z) is subject to any bankruptcy,
insolvency or similar proceeding;
(iii) all future dated receivables owing more than zero days but
less than 90 days after the sale of the goods or performance of the
services giving rise to such receivables; and
(iv) all future dated receivables owing more than 90 days after
the sale of the goods or performance of the services giving rise to such
receivables; and
(h) Concurrently with the delivery to the Agent of the report
pursuant to the foregoing clause (g), a report setting forth, in form and detail
---------
acceptable to the Agent and the Banks, the status of the Borrower's deliveries
pursuant to Section 5.1 which the Agent and the Banks have agreed may be
-----------
delivered after the Closing Date.
7.2 Certificates; Other Information. The Borrower shall furnish to the
-------------------------------
Agent, with sufficient copies for each Bank (and the Agent, in turn, shall
promptly deliver to the Banks):
-55-
(a) concurrently with the delivery of the financial statements
referred to in subsection 7.1(a), a certificate of the Independent Auditor
-----------------
stating that in making the examination necessary therefor no knowledge was
obtained of any Default or Event of Default, except as specified in such
certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 7.1(a) and (b), a Compliance Certificate executed by
------------------ ---
a Responsible Officer;
(c) promptly, but in any event within 10 days of the filing thereof
with the SEC, copies of all financial statements and reports that the Borrower
sends to its shareholders, and copies of all financial statements and regular,
periodical or special reports (including Forms 10K, 10Q, 8K, S-1 and S-3) that
the Borrower or any Subsidiary may make to, or file with, the SEC;
(d) concurrently with the delivery of any reports, documents, or
other information furnished to the Noteholders which is otherwise not furnished
to the Banks pursuant to this Agreement, a copy of all such reports, documents
and other information so furnished to the Noteholders; and
(e) promptly, such additional information regarding the business,
financial or corporate affairs of the Borrower or any Subsidiary as the Agent,
at the reasonable request of any Bank, may from time to time request.
7.3 Notices. The Borrower shall promptly notify the Agent (who shall, in
-------
turn, promptly notify the Banks):
(a) of the occurrence of any Default or Event of Default, and of the
occurrence or existence of any event or circumstance that foreseeably will
become a Default or Event of Default;
(b) of any matter that has resulted or is likely to result in a
Material Adverse Effect, including (i) breach or non-performance of, or any
default under, a Contractual Obligation of the Borrower or any Subsidiary; (ii)
any dispute, litigation, investigation, proceeding or suspension between the
Borrower or any Subsidiary and any Governmental Authority; or (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting the Borrower or any Subsidiary, including pursuant to any applicable
Environmental Laws;
(c) of the occurrence of any of the following events affecting the
Borrower or any ERISA Affiliate (but in no event more than 10 days after such
event), and deliver to the Agent (who shall, in turn, promptly notify the Banks)
a copy of any notice with respect to such event that is filed with a
Governmental
-56-
Authority and any notice delivered by a Governmental Authority to the Borrower
or any ERISA Affiliate with respect to such event:
(i) an ERISA Event;
(ii) a material increase in the Unfunded Pension Liability of
any Pension Plan;
(iii) the adoption of, or the commencement of contributions to,
any Plan subject to Section 412 of the Code by the Borrower or any ERISA
Affiliate; or
(iv) the adoption of any amendment to a Plan subject to Section
412 of the Code, if such amendment results in a material increase in
contributions or Unfunded Pension Liability; and
(d) of any material change in accounting policies or financial
reporting practices by the Borrower or any of its consolidated Subsidiaries.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the Borrower or any affected
Subsidiary proposes to take with respect thereto and at what time. Each notice
under subsection 7.3(a) shall describe with particularity any and all clauses or
----------------
provisions of this Agreement or other Loan Document that have been (or
foreseeably will be) breached or violated.
7.4 Preservation of Corporate Existence, Etc. The Borrower shall, and
----------------------------------------
shall cause each Subsidiary to:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction of
incorporation;
(b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises necessary
or desirable in the normal conduct of its business except in connection with
transactions permitted by Section 8.3 and sales of assets permitted by Section
----------- -------
8.2;
---
(c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.
-57-
7.5 Maintenance of Property. The Borrower shall maintain, and shall cause
-----------------------
each Subsidiary to maintain, and preserve all its property which is used or
useful in its business in good working order and condition, ordinary wear and
tear excepted, except as permitted by Section 8.2. The Borrower and each
-----------
Subsidiary shall use the standard of care typical in the industry in the
operation and maintenance of its facilities.
7.6 Insurance. In addition to insurance requirements set forth in the
---------
Collateral Documents, the Borrower shall maintain, and shall cause each
Subsidiary to maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons.
7.7 Payment of Obligations. The Borrower shall, and shall cause each
----------------------
Subsidiary to, pay and discharge as the same shall become due and payable, all
their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by the Borrower or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien
upon its property; and
(c) all Indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.
7.8 Compliance with Laws. The Borrower shall comply, and shall cause each
--------------------
Subsidiary to comply, in all material respects with all Requirements of Law of
any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act), except such as may be
contested in good faith or as to which a bona fide dispute may exist.
7.9 Compliance with ERISA. The Borrower shall, and shall cause each of
---------------------
its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; and (c) make all required contributions to
any Plan subject to Section 412 of the Code.
-58-
7.10 Inspection of Property and Books and Records. The Borrower shall
--------------------------------------------
maintain and shall cause each Subsidiary to maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the assets and business of the Borrower and such Subsidiary. The
Borrower shall permit, and shall cause each Subsidiary to permit,
representatives and independent contractors of the Agent or any Bank to visit
and inspect any of their respective properties, to examine their respective
corporate, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective directors, officers, and independent public accountants, at
such reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to the Borrower; provided,
--------
however, when an Event of Default exists the Agent or any Bank may do any of the
-------
foregoing at the expense of the Borrower at any time during normal business
hours and without advance notice. Representatives and independent contractors
of the Agent and the Banks shall be bound by the provisions of Section 12.9. If
------------
the Agent or any Bank has a duty or obligation under applicable laws,
regulations or legal requirements to disclose any report or findings made as a
result of, or in connection with, any such inspection, the Agent or such Bank
may make such a disclosure to the Borrower or any other party. The Borrower
also understands and agrees that the Agent and each Bank makes no representation
or warranty to the Borrower or any other party regarding the truth, accuracy or
completeness of any such report or findings that may be disclosed. The Borrower
also understands that depending on the results of any inspection by the Agent or
any Bank and disclosed to the Borrower, the Borrower may have a legal obligation
to notify one or more environmental agencies of the results, that such reporting
requirements are site-specific, and are to be evaluated by the Borrower without
advice or assistance from the Agent or such Bank.
7.11 Environmental Laws. The Borrower shall, and shall cause each
------------------
Subsidiary to, conduct its operations and keep and maintain its property in
compliance with all Environmental Laws.
7.12 Use of Proceeds. The Borrower shall use the proceeds of the Loans for
---------------
working capital and other general corporate purposes not in contravention of any
Requirement of Law or of any Loan Document.
7.13 Further Assurances. (a) The Borrower shall ensure that all written
------------------
information, exhibits and reports furnished to the Agent do not and will not
contain any untrue statement of a material fact and do not and will not omit to
state any material fact or any fact necessary to make the statements contained
therein not misleading in light of the circumstances in which made, and will
promptly disclose to the Agent and correct any defect or error
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that may be discovered therein or in any Loan Document or in the execution,
acknowledgement or recordation thereof.
(b) Promptly upon request by the Agent, the Borrower shall (and
shall cause any of its Subsidiaries to) do, execute, acknowledge, deliver,
record, re-record, file, re-file, register and re-register, any and all such
further acts, deeds, conveyances, security agreements, mortgages, assignments,
estoppel certificates, financing statements and continuations thereof,
termination statements, notices of assignment, transfers, certificates,
assurances and other instruments the Agent may reasonably require from time to
time in order (i) to carry out more effectively the purposes of this Agreement
or any other Loan Document, (ii) to subject to the Liens created by any of the
Collateral Documents any of the properties, rights or interests covered by any
of the Collateral Documents, (iii) to perfect and maintain the validity,
effectiveness and priority of any of the Collateral Documents and the Liens
intended to be created thereby, and (iv) to better assure, convey, grant,
assign, transfer, preserve, protect and confirm to the Agent, the rights granted
or now or hereafter intended to be granted to the Banks under any Loan Document
or under any other document executed in connection therewith.
7.14 Most Favored Lender Provision. Concurrently with the furnishing to
-----------------------------
the Noteholders of any additional benefit (whether in the form of compensation,
enhancement, collateral security, covenant, default, or other benefit) not
provided to the Banks (in any capacity including, without limitation, as lenders
hereunder or as holders of warrants for equity in the Borrower) as at the date
of this Agreement, the Borrower shall furnish to the Banks any and all such
additional proportionate benefits pursuant to documentation reasonably
acceptable to the Banks.
ARTICLE VIII
NEGATIVE COVENANTS
------------------
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Majority Banks waive compliance in writing:
8.1 Limitation on Liens. The Borrower shall not, and shall not suffer or
-------------------
permit any Subsidiary to, directly or indirectly, make, create, incur, assume or
suffer to exist any Lien upon or with respect to any part of its property,
whether now owned or hereafter acquired, other than the following ("Permitted
---------
Liens"):
-----
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(a) any Lien existing on property of the Borrower or any Subsidiary
on the Closing Date and set forth in Schedule 8.1 securing Indebtedness
------------
outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or to the extent
that non-payment thereof is permitted by Section 7.7, provided that no notice of
-----------
lien has been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which are not delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property subject thereto;
(e) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other social security
legislation;
(f) Liens on the property of the Borrower or its Subsidiary securing
(i) the non-delinquent performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, (ii) contingent obligations on
surety and appeal bonds, and (iii) other non-delinquent obligations of a like
nature; in each case, incurred in the ordinary course of business;
(g) Liens consisting of judgment or judicial attachment liens,
provided that the enforcement of such Liens is effectively stayed and all such
liens in the aggregate at any time outstanding for the Borrower and its
Subsidiaries do not exceed $500,000;
(h) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of the Borrower and its
Subsidiaries;
(i) Liens securing obligations in respect of capital leases on assets
subject to such leases, provided that such capital leases are otherwise
permitted hereunder;
(j) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided
--------
-61-
that, except as is otherwise contemplated by the Collateral Documents, (i) such
----
deposit account is not a dedicated cash collateral account and is not subject to
restrictions against access by the Borrower or any Subsidiary in excess of those
set forth by regulations promulgated by the FRB, and (ii) such deposit account
is not intended by the Borrower or any Subsidiary to provide collateral to the
depository institution; and
(k) Liens (i) existing on property at the time of its acquisition by
the Borrower or a Subsidiary and not created in contemplation thereof, whether
or not the Indebtedness secured by such Lien is assumed by the Borrower or such
Subsidiary or (ii) existing on property of a corporation at the time such
corporation is merged into or consolidated with or is acquired by, or
substantially all of its assets are acquired by, the Borrower or a Subsidiary
and not created in contemplation thereof; provided, that such Liens do not
--------
extend to other property of the Borrower or any Subsidiary and that the
aggregate principal amount of Indebtedness secured by each such Lien does not
exceed 100% of the lesser of the cost or fair market value (at the time of
acquisition or completion of construction) of the property subject thereto; and
provided further, that after giving effect to the acquisition of the assets
-------- -------
subject to such Liens, no Default or Event of Default would exist.
8.2 Disposition of Assets. The Borrower shall not, and shall not suffer
---------------------
or permit any Subsidiary to, directly or indirectly, sell, assign, lease,
convey, transfer or otherwise dispose of (whether in one or a series of
transactions) any property (including accounts and notes receivable, with or
without recourse) or enter into any agreement to do any of the foregoing,
except:
(a) dispositions of inventory (including the sale or licensing of
computer software products of the Borrower or any Subsidiary), or used, worn-out
or surplus equipment, all in the ordinary course of business;
(b) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly applied to the
purchase price of such replacement equipment; and
(c) dispositions not otherwise permitted hereunder which are made for
fair market value; provided, that (i) after giving effect to any such
--------
disposition, no Default or Event of Default would exist, (ii) the assets which
are subject to such disposition do not include accounts or notes receivable and
(iii) the Net Proceeds of such disposition are applied to the extent required in
accordance with Section 2.6.
-----------
8.3 Consolidations and Mergers. The Borrower shall not, and shall not
--------------------------
suffer or permit any Subsidiary to, merge, consolidate
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with or into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any Person,
except:
(a) any Subsidiary may merge with the Borrower, provided that the
Borrower shall be the continuing or surviving corporation, or with any one or
more Subsidiaries, provided that if any transaction shall be between a
Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be
the continuing or surviving corporation;
(b) any Subsidiary may convey all or substantially all of its assets
(upon voluntary liquidation or otherwise), to the Borrower or another Wholly-
Owned Subsidiary; provided, that no consideration is paid by the Borrower in
--------
exchange for such conveyance; and
(c) in connection with any investment permitted by subsection 8.4(d).
-----------------
8.4 Loans and Investments. The Borrower shall not purchase or acquire, or
---------------------
suffer or permit any Subsidiary to purchase or acquire, or make any commitment
therefor, any capital stock, equity interest, or any obligations or other
securities of, or any interest in, any Person (including, without limitation,
Subsidiaries), or create any Subsidiaries not in existence on the Closing Date,
or make or commit to make any advance, loan, extension of credit or capital
contribution to or any other investment in, any Person including any Affiliate
of the Borrower, except for:
(a) investments in cash equivalents, short term marketable securities
and such other securities as may be consented to in writing by the Majority
Banks;
(b) extensions of credit in the nature of accounts receivable or
notes receivable arising from the sale, license or lease of goods or services in
the ordinary course of business;
(c) extensions of credit by the Borrower to any of its Wholly-Owned
Subsidiaries existing on the Closing Date or by any of its Wholly-Owned
Subsidiaries to another of its Wholly-Owned Subsidiaries existing on the Closing
Date; provided, that (i) all such extensions of credit are evidenced by
--------
Intercompany Revolving Demand Notes duly executed by the respective Wholly-Owned
Subsidiary, (ii) such Intercompany Notes are delivered to the Agent in
accordance with the Pledge Agreement (Stock and Intercompany Notes) and (iii)
the aggregate principal Dollar Equivalent amount of such extensions of credit to
all Wholly-Owned Subsidiaries shall not exceed at any time $67,000,000;
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(d) at any time following delivery by the Borrower of the financial
statements required pursuant to subsection 7.1(b) with respect to the Borrower's
-----------------
fiscal quarter ending January 31, 1997, investments in the equity of any Person
organized under the laws of the United States or the laws of any State therein;
provided, that (i) all of the consideration for such investments shall consist
--------
of equity securities of the Borrower, (ii) no Default or Event of Default shall
have occurred and be continuing or shall result therefrom and (iii) the Borrower
shall deliver to the Agent a pro forma Compliance Certificate dated as of the
last day of the most recent fiscal quarter for which the Borrower has delivered
to the Agent the financial statements pursuant to subsection 7.1(b) showing that
-----------------
if such investment had occurred on the last day of such fiscal quarter no
Default or Event of Default would have resulted therefrom;
(e) capital contributions by the Borrower in any of its Subsidiaries
consisting of the reclassification of amounts owed by any such Subsidiary to the
Borrower to the extent necessary to maintain such Subsidiary in compliance with
all minimum capitalization requirements under the laws of the jurisdiction where
such Subsidiary is incorporated or is qualified to do business; and
(f) the creation of Subsidiaries organized under the laws of the
United States or the laws of any State therein to undertake acquisitions
permitted by Section 8.11 and subsection 8.4(d); provided, that the net capital
------------ ---------------- --------
investment by the Borrower in any such Subsidiary shall not exceed $25,000.
8.5 Limitation on Indebtedness. (a) The Borrower shall not, and shall not
--------------------------
suffer or permit any Subsidiary to, create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement;
(ii) Indebtedness consisting of Contingent Obligations permitted
pursuant to Section 8.8;
-----------
(iii) Indebtedness existing on the Closing Date and set forth in
Schedule 8.5;
------------
(iv) Indebtedness incurred in connection with leases permitted
pursuant to Section 8.9;
-----------
(v) Indebtedness permitted by subsection 8.4(c); and
-----------------
(vi) Subordinated Indebtedness.
(b) Except as otherwise provided for herein, the Borrower shall not,
and shall not suffer or permit any Subsidiary
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to, directly or indirectly, declare, order, pay, make or set apart any sum for
(by way of defeasance or otherwise) any payment or prepayment of principal of,
or premium, if any, on, any Subordinated Indebtedness, the Senior Notes or any
other Indebtedness; provided, that the Borrower may continue to make regularly
--------
scheduled principal and interest payments on the Senior Notes and the other
Indebtedness.
8.6 Transactions with Affiliates. The Borrower shall not, and shall not
----------------------------
suffer or permit any Subsidiary to, enter into any transaction with any
Affiliate of the Borrower, except upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary than would be obtained in a
comparable arm's-length transaction with a Person not an Affiliate of the
Borrower or such Subsidiary.
8.7 Use of Proceeds. The Borrower shall not, and shall not suffer or
---------------
permit any Subsidiary to, use any portion of the Loan proceeds or any Letter of
Credit, directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to
repay or otherwise refinance indebtedness of the Borrower or others incurred to
purchase or carry Margin Stock, (iii) to extend credit for the purpose of
purchasing or carrying any Margin Stock, (iv) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange Act or (v) for
any other purpose prohibited by the Loan Agreements.
8.8 Contingent Obligations. The Borrower shall not, and shall not suffer
----------------------
or permit any Subsidiary to, create, incur, assume or suffer to exist any
Contingent Obligations except:
(a) endorsements for collection or deposit in the ordinary course of
business;
(b) Swap Contracts entered into in the ordinary course of business as
bona fide hedging transactions, involving an aggregate notional Dollar
Equivalent amount not exceeding $35,000,000 at any one time outstanding.
(c) Contingent Obligations existing as of the Closing Date and listed
in Schedule 8.8.
------------
8.9 Lease Obligations. The Borrower shall not, and shall not suffer or
-----------------
permit any Subsidiary to, create or suffer to exist any obligations for the
payment of rent for any property under lease or agreement to lease, except for:
(a) leases of the Borrower and of Subsidiaries in existence on the
Closing Date and any renewal, extension or refinancing thereof; and
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(b) operating leases entered into by the Borrower or any Subsidiary
after the Closing Date in the ordinary course of business; provided, that on the
--------
date upon which such operating lease is entered into and after giving effect
thereto the aggregate Rentals for all operating leases of the Borrower and its
Subsidiaries due within any twelve month period succeeding such date shall not
exceed at any time $26,400,000.
8.10 Restricted Payments. The Borrower shall not, and shall not suffer or
-------------------
permit any Subsidiary to, declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities on
account of any shares of any class of its capital stock, or purchase, redeem or
otherwise acquire for value any shares of its capital stock or any warrants,
rights or options to acquire such shares, now or hereafter outstanding; except
to:
(a) declare and make dividend payments or other distributions
payable solely in its common stock; and
(b) in the case of any Subsidiary, declare and make divided payments
or other distributions to the Borrower or any other Subsidiary.
8.11 Asset Acquisitions. The Borrower shall not, and shall not suffer or
------------------
permit any Subsidiary to, purchase or otherwise acquire assets except in the
ordinary course of business; provided, that at any time following delivery by
--------
the Borrower of the financial statements required pursuant to subsection 7.1(b)
-----------------
with respect to the Borrower's fiscal quarter ending January 31, 1997, the
Borrower or Subsidiary may purchase or acquire assets subject to compliance with
each of the following conditions: (i) all of the consideration for such
acquisition shall consist of equity securities of the Borrower, (ii) no Default
or Event of Default shall have occurred and be continuing or shall result
therefrom and (iii) the Borrower shall have delivered to the Agent a pro forma
Compliance Certificate dated as of the most recent fiscal quarter for which the
Borrower has delivered to the Agent the financial statements pursuant to
subsection 7.1(b) showing that if such acquisition had occurred on the last day
-----------------
of such fiscal quarter no Default or Event of Default would have resulted
therefrom.
8.12 Deposit Accounts. The Borrower shall not, and shall not permit any
----------------
Domestic Subsidiary to, create, establish or maintain for its account (whether
held in the name of the Borrower or through its designee) any deposit accounts,
bank accounts, brokerage accounts or other investment accounts in the United
States except for those accounts set forth on Schedule 6.18.
-------------
8.13 ERISA. The Borrower shall not, and shall not suffer or permit any of
-----
its ERISA Affiliates to: (a) engage in a prohibited transaction or violation of
the fiduciary responsibility rules with
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respect to any Plan which has resulted or could reasonably be expected to result
in liability of the Borrower; or (b) engage in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA.
8.14 Change in Business. The Borrower shall not, and shall not suffer or
------------------
permit any Subsidiary to, engage in any material line of business substantially
different from those lines of business carried on by the Borrower and its
Subsidiaries on the date hereof.
8.15 Accounting Changes. The Borrower shall not, and shall not suffer or
------------------
permit any Subsidiary to, make any significant change in accounting treatment or
reporting practices, except as required by GAAP, or change the fiscal year of
the Borrower or of any Subsidiary.
ARTICLE IX
FINANCIAL COVENANTS
-------------------
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Majority Banks waive compliance in writing:
9.1 Consolidated Net Worth. The Borrower shall not permit its
----------------------
Consolidated Net Worth as of the last day of any fiscal quarter of the Borrower
to be less than $103,000,000.
9.2 Cash Balances. The Borrower shall not permit its Consolidated Cash
-------------
Balances as of the last Business Day of any calendar week and as of the last day
of each fiscal quarter to be less than $6,000,000.
9.3 Capital Expenditures. The Borrower shall not permit its Capital
--------------------
Expenditures during any fiscal quarter of the Borrower to exceed $16,000,000.
ARTICLE X
EVENTS OF DEFAULT
-----------------
10.1 Event of Default. Any of the following shall constitute an "Event of
---------------- --------
Default":
-------
(a) Non-Payment. The Borrower fails to pay, (i) when and as
-----------
required to be paid herein, any amount of principal of any Loan or of any L/C
Obligation, or (ii) within five (5) days after
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the same becomes due, any interest, fee or any other amount payable hereunder or
under any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty by
--------------------------
the Borrower or any Subsidiary made herein, in any other Loan Document, or which
is contained in any certificate, document or financial or other statement by the
Borrower, any Subsidiary, or any Responsible Officer, furnished at any time
under this Agreement, or in or under any other Loan Document, is incorrect in
any material respect on or as of the date made or deemed made; or
(c) Specific Defaults. The Borrower fails to perform or observe any
-----------------
term, covenant or agreement contained in any of Section 7.1, 7.2, 7.3 or 7.10 or
----------- --- --- ----
in Articles VIII or IX; or
------------- --
(d) Other Defaults. The Borrower fails to perform or observe any
--------------
other term or covenant contained in this Agreement or any other Loan Document,
and such default shall continue unremedied for a period of 20 days after the
earlier of (i) the date upon which a Responsible Officer knew or reasonably
should have known of such failure or (ii) the date upon which written notice
thereof is given to the Borrower by the Agent or any Bank; or
(e) Cross-Default. The Borrower or any Subsidiary (i) fails to make
-------------
any payment in respect of any Indebtedness or Contingent Obligation having an
aggregate principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $1,000,000 when due (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise) and such failure
continues after the applicable grace or notice period, if any, specified in the
relevant document on the date of such failure; or (ii) fails to perform or
observe any other condition or covenant, or any other event shall occur or
condition exist, under any agreement or instrument relating to any such
Indebtedness or Contingent Obligation, and such failure continues after the
applicable grace or notice period, if any, specified in the relevant document on
the date of such failure if the effect of such failure, event or condition is to
cause, or to permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to
be declared to be due and payable prior to its stated maturity, or such
Contingent Obligation to become payable or cash collateral in respect thereof to
be demanded; or
(f) Insolvency; Voluntary Proceedings. The Borrower or any
---------------------------------
Significant Subsidiary (i) admits in writing its inability to pay its debts as
they become due, subject to applicable grace periods, if any, whether at stated
maturity or otherwise; (ii) voluntarily ceases to conduct its business in the
ordinary course;
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(iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes
any action to effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
-----------------------
Proceeding is commenced or filed against the Borrower or any Significant
Subsidiary, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of the Borrower's or any
Significant Subsidiary's properties, and any such proceeding or petition shall
not be dismissed, or such writ, judgment, warrant of attachment, execution or
similar process shall not be released, vacated or fully bonded within 60 days
after commencement, filing or levy; (ii) the Borrower or any Significant
Subsidiary admits the material allegations of a petition against it in any
Insolvency Proceeding, or an order for relief (or similar order under non-U.S.
law) is ordered in any Insolvency Proceeding; or (iii) the Borrower or any
Significant Subsidiary acquiesces in the appointment of a receiver, trustee,
custodian, conservator, liquidator, mortgagee in possession (or agent therefor),
or other similar Person for itself or a substantial portion of its property or
business; or
(h) ERISA. (i) An ERISA Event shall occur with respect to a Pension
-----
Plan or Multiemployer Plan which has resulted or could reasonably be expected to
result in liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $250,000;
(ii) the aggregate amount of Unfunded Pension Liability among all Pension Plans
at any time exceeds $250,000; or (iii) the Borrower or any ERISA Affiliate shall
fail to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan in an aggregate amount in excess of
$250,000; or
(i) Monetary Judgments. One or more non-interlocutory judgments,
------------------
non-interlocutory orders, decrees or arbitration awards is entered against the
Borrower or any Subsidiary involving in the aggregate a liability (to the extent
not covered by independent third-party insurance as to which the insurer does
not dispute coverage) as to any single or related series of transactions,
incidents or conditions, of $250,000 or more, and the same shall remain
unsatisfied, unvacated and without application to stay pending appeal for a
period of 15 Business Days after the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or
----------------------
decree is entered against the Borrower or any Subsidiary which does or would
reasonably be expected to have a Material Adverse Effect, and the same shall
remain unsatisfied, unvacated and without application to stay pending appeal for
a period of 15 Business Days after the entry thereof; or
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(k) Change of Control. There occurs any Change of Control; or
-----------------
(l) Collateral.
----------
(i) any material provision of any Collateral Document shall for
any reason cease to be valid and binding on or enforceable against the
Borrower or any Subsidiary party thereto or the Borrower or any Subsidiary
shall so state in writing or bring an action to limit its obligations or
liabilities thereunder; or
(ii) any Collateral Document shall for any reason (other than
pursuant to the terms thereof) cease to create a valid security interest in
any material item of Collateral purported to be covered thereby or such
security interest shall for any reason cease to be a perfected and first
priority security interest subject only to Permitted Liens.
10.2 Remedies. If any Event of Default occurs, the Agent shall, at the
--------
request of, or may, with the consent of, the Majority Banks,
(a) declare the commitment of each Bank to make Loans and any
obligation of the Issuing Bank to issue Letters of Credit to be terminated,
whereupon such commitments and obligation shall be terminated;
(b) require the maximum aggregate amount that is or at any time
thereafter may become available for drawing under any outstanding Letters of
Credit to be Cash Collateralized, and declare the unpaid principal amount of all
outstanding Loans, all interest accrued and unpaid thereon, and all other
amounts owing or payable hereunder or under any other Loan Document to be
immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Borrower;
and
(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents (including the
Collateral Documents) or applicable law;
provided, however, that upon the occurrence of any event specified in subsection
-------- -------
(f) or (g) of Section 10.1 (in the case of clause (i) of subsection (g) upon the
------------
expiration of the 60-day period mentioned therein), the obligation of each Bank
to make Loans and any obligation of the Issuing Bank to Issue Letters of Credit
shall automatically terminate and the unpaid principal amount of all outstanding
Loans and all interest and other amounts as aforesaid
-70-
shall automatically become due and payable without further act of the Agent, the
Issuing Bank or any Bank.
10.3 Rights Not Exclusive. The rights provided for in this Agreement and
--------------------
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE XI
THE AGENT
---------
11.1 Appointment and Authorization. (a) Each Bank hereby irrevocably
-----------------------------
(subject to Section 11.9) appoints, designates and authorizes the Agent to take
------------
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties or
responsibilities (it being acknowledged that additional duties and obligations
of the Collateral Agent are set forth in the Collateral Agency Agreement),
except those expressly set forth herein, nor shall the Agent have or be deemed
to have any fiduciary relationship with any Bank, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Agent.
(b) The Issuing Bank shall act on behalf of the Banks with respect
to any Letters of Credit Issued by it and the documents associated therewith
until such time and except for so long as the Agent may agree at the request of
the Majority Lenders to act for such Issuing Bank with respect thereto;
provided, however, that the Issuing Bank shall have all of the benefits and
-------- -------
immunities (i) provided to the Agent in this Article XI with respect to any acts
----------
taken or omissions suffered by the Issuing Bank in connection with Letters of
Credit Issued by it or proposed to be Issued by it and the application and
agreements for letters of credit pertaining to the Letters of Credit as fully as
if the term "Agent", as used in this Article XI, included the Issuing Bank with
----------
respect to such acts or omissions, and (ii) as additionally provided in this
Agreement with respect to the Issuing Bank.
11.2 Delegation of Duties. The Agent may execute any of its duties under
--------------------
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be
-71-
entitled to advice of counsel concerning all matters pertaining to such duties.
11.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
------------------
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Banks for any recital,
statement, representation or warranty made by the Borrower or any Subsidiary or
Affiliate of the Borrower, or any officer thereof, contained in this Agreement
or in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan Document, or for the value of
or title to any Collateral or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of the Borrower or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Bank to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Borrower or any of the Borrower's Subsidiaries or
Affiliates.
11.4 Reliance by Agent. (a) The Agent shall be entitled to rely, and
-----------------
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Borrower), independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Majority Banks as it deems appropriate
and, if it so requests, it shall first be indemnified to its satisfaction by the
Banks against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Majority Banks and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 5.1, each Bank that has executed this Agreement shall be
-----------
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Bank for consent,
approval,
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acceptance or satisfaction, or required thereunder to be consented to or
approved by or acceptable or satisfactory to the Bank.
11.5 Notice of Default. The Agent shall not be deemed to have knowledge
-----------------
or notice of the occurrence of any Default or Event of Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Agent for the account of the Banks, unless the Agent shall have
received written notice from a Bank or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". The Agent will inform the Banks and the Borrower of its
receipt of any such notice. The Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Majority Banks in
accordance with Article X; provided, however, that unless and until the Agent
--------- -------- -------
has received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the best interest
of the Banks.
11.6 Credit Decision. Each Bank acknowledges that none of the Agent-
---------------
Related Persons has made any representation or warranty to it, and that no act
by the Agent hereinafter taken, including any review of the affairs of the
Borrower and its Subsidiaries, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Bank. Each Bank represents to
the Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Borrower and its Subsidiaries, the value of and title to any Collateral and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to the Borrower hereunder. Each Bank also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and its Subsidiaries. Except for notices,
reports and other documents expressly herein required to be furnished to the
Banks by the Agent, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of the Borrower and its Subsidiaries which may come into the
possession of any of the Agent-Related Persons.
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11.7 Indemnification of Agent. Whether or not the transactions
------------------------
contemplated hereby are consummated, the Banks shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrower and without limiting the obligation of the Borrower to do so), pro
rata, from and against any and all Indemnified Liabilities; provided, however,
-------- -------
that no Bank shall be liable for the payment to the Agent-Related Persons of any
portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Bank shall reimburse the Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including Attorney Costs) incurred by the Agent
in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Borrower. The undertaking
in this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
11.8 Agent in Individual Capacity. BofA and its Affiliates may make loans
----------------------------
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Borrower and its
Subsidiaries and Affiliates as though BofA were not the Agent hereunder and
without notice to or consent of the Banks. The Banks acknowledge that, pursuant
to such activities, BofA or its Affiliates may receive information regarding the
Borrower or its Affiliates (including information that may be subject to
confidentiality obligations in favor of the Borrower or such Subsidiary) and
acknowledge that the Agent shall be under no obligation to provide such
information to them. With respect to its Loans, if any, BofA shall have the same
rights and powers under this Agreement as any other Bank and may exercise the
same as though it were not the Agent, and the terms "Bank" and "Banks" include
BAI in its individual capacity.
11.9 Successor Agent. The Agent may, and at the request of the Majority
---------------
Banks shall, resign as Agent upon 30 days' notice to the Banks and the Borrower.
If the Agent resigns under this Agreement, the Majority Banks shall appoint from
among the Banks a successor agent for the Banks subject, at such times as no
Default or Event of Default shall be continuing, to the Borrower's reasonable
consent. If no successor agent is appointed prior to the effective date of the
resignation of the Agent, the Agent may appoint, after consulting with the Banks
and the Borrower, at such times as no Default or Event of Default shall be
continuing, a successor agent from among the Banks. Upon the acceptance of its
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appointment as successor agent hereunder, such successor agent shall succeed to
all the rights, powers and duties of the retiring Agent and the term "Agent"
shall mean such successor agent and the retiring Agent's appointment, powers and
duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article XI and Sections 12.4 and 12.5
---------- ------------- ----
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement. If no successor agent has accepted
appointment as Agent by the date which is 30 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Banks shall perform all of the duties of the
Agent hereunder until such time, if any, as the Majority Banks appoint a
successor agent as provided for above. Notwithstanding the foregoing, however,
BofA may not be removed as the Agent at the request of the Majority Banks unless
BAI shall also simultaneously be replaced as "Issuing Bank" hereunder pursuant
to documentation in form and substance reasonably satisfactory to BofA.
11.10 Withholding Tax. (a) If any Bank is a "foreign corporation,
---------------
partnership or trust" within the meaning of the Code and such Bank claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Bank agrees with and in favor of the Agent, to deliver to
the Agent:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed IRS
Forms 1001 and W-8 before the payment of any interest in the first calendar
year and before the payment of any interest in each third succeeding
calendar year during which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this Agreement
is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Bank, two properly
completed and executed copies of IRS Form 4224 before the payment of any
interest is due in the first taxable year of such Bank and in each
succeeding taxable year of such Bank during which interest may be paid
under this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under the Code
or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS
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Form 1001 and such Bank sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of the Borrower to such Bank, such Bank
agrees to notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Borrower to such Bank. To the extent of
such percentage amount, the Agent will treat such Bank's IRS Form 1001 as no
longer valid.
(c) If any Bank claiming exemption from United States withholding tax
by filing IRS Form 4224 with the Agent sells, assigns, grants a participation
in, or otherwise transfers all or part of the Obligations of the Borrower to
such Bank, such Bank agrees to undertake sole responsibility for complying with
the withholding tax requirements imposed by Sections 1441 and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Bank
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Bank not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Bank (because the
appropriate form was not delivered, was not properly executed, or because such
Bank failed to notify the Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Bank shall indemnify the Agent fully for all amounts paid, directly
or indirectly, by the Agent as tax or otherwise, including penalties and
interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Agent under this Section, together with all costs and expenses
(including Attorney Costs). The obligation of the Banks under this subsection
shall survive the payment of all Obligations and the resignation or replacement
of the Agent.
ARTICLE XII
MISCELLANEOUS
-------------
12.1 Amendments and Waivers. (a) No amendment or waiver of any provision
----------------------
of this Agreement or any other Loan Document, and no consent with respect to any
departure by the Borrower therefrom, shall be effective unless the same shall be
in writing and signed
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by the Majority Banks (or by the Agent at the written request of the Majority
Banks) and the Borrower and acknowledged by the Agent, and then any such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that such waiver, amendment, or
-------- -------
consent shall, unless in writing and signed by all the Banks and the Borrower
and acknowledged by the Agent, do any of the following:
(i) increase or extend the Commitment of any Bank (or reinstate any
Commitment terminated pursuant to Section 10.2);
------------
(ii) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts due
to the Banks (or any of them) hereunder or under any other Loan Document;
(iii) reduce the principal of, or the rate of interest specified
herein on any Loan, or (subject to clause (z) below) any fees or other amounts
payable hereunder or under any other Loan Document;
(iv) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Banks or any of
them to take any action hereunder; or
(v) amend this Section, or Section 2.15, or any provision herein
------------
providing for consent or other action by all Banks;
and, provided further, that (x) no amendment, waiver or consent shall, unless in
-------- -------
writing and signed by the Issuing Bank in addition to the Majority Banks or all
the Banks, as the case may be, affect the rights or duties of the Issuing Bank
under this Agreement or any L/C-Related Document relating to any Letter of
Credit Issued or to be Issued by it, (y) no amendment, waiver or consent shall,
unless in writing and signed by the Agent in addition to the Majority Banks or
all the Banks, as the case may be, affect the rights or duties of the Agent
under this Agreement or any other Loan Document, and (z) the Fee Letters may be
amended, or rights or privileges thereunder waived, in a writing executed by the
parties thereto.
(b) In the event that any Person to whom the Borrower or any Subsidiary is
indebted has previously or shall hereafter impose upon the Borrower or any
Subsidiary any additional or more restrictive covenant or obligation than is
imposed upon the Borrower or any Subsidiary by this Agreement, or the Borrower
or any Subsidiary has granted or hereafter grants any such Person an additional
or more favorable covenant or right than exists under this Agreement, this
Agreement shall be deemed to be amended automatically to incorporate such
additional or more restrictive right, obligation or covenant, and the Borrower
shall promptly so
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notify the Agent, the Issuing Bank and each Bank and provide a copy thereof to
the Agent, the Issuing Bank and each Bank.
12.2 Notices. (a) All notices, requests and other communications shall
-------
be in writing (including, unless the context expressly otherwise provides, by
facsimile transmission, provided that any matter transmitted by the Borrower by
facsimile (i) shall be immediately confirmed by a telephone call and (ii) shall
be followed promptly by delivery of a hard copy original thereof) and mailed,
faxed or delivered, in the case of the Borrower, to the address or facsimile
number set forth on its signature page hereto and, in the case of the Agent and
the Banks, to the address or facsimile number specified for notices on Schedule
--------
12.2; or, as directed to the Borrower or the Agent, to such other address as
----
shall be designated by such party in a written notice to the other parties, and
as directed to any other party, at such other address as shall be designated by
such party in a written notice to the Borrower and the Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II, III or XI shall not be effective until actually
--------------- --
received by the Agent, and notices pursuant to Article III to the Issuing Bank
-----------
shall not be effective until actually received by the Issuing Bank at the
address specified for the "Issuing Bank" on Schedule 11.2.
-------------
(c) Any agreement of the Agent and the Banks herein to receive
certain notices by telephone or facsimile is solely for the convenience and at
the request of the Borrower. The Agent and the Banks shall be entitled to rely
on the authority of any Person purporting to be a Person previously authorized
by the Borrower to give such notice and the Agent and the Banks shall not have
any liability to the Borrower or other Person on account of any action taken or
not taken by the Agent or the Banks in reliance upon such telephonic or
facsimile notice. The obligation of the Borrower to repay the Loans and L/C
Obligations shall not be affected in any way or to any extent by any failure by
the Agent and the Banks to receive written confirmation of any telephonic or
facsimile notice or the receipt by the Agent and the Banks of a confirmation
which is at variance with the terms understood by the Agent and the Banks to be
contained in the telephonic or facsimile notice.
12.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay
------------------------------
in exercising, on the part of the Agent or any Bank, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or
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further exercise thereof or the exercise of any other right, remedy, power or
privilege.
12.4 Costs and Expenses. The Borrower shall:
------------------
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as Agent) within
five Business Days after demand (subject to subsection 5.1(g)) for all
-----------------
supportable and direct costs and expenses incurred by BofA (including in its
capacity as Agent) in connection with the development, preparation, delivery,
administration (including, without limitation, monitoring the Collateral) and
execution of, and any amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Agreement, any Loan Document and any
other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including
Attorney Costs incurred by BofA (including in its capacity as Agent) with
respect thereto;
(b) pay or reimburse the Agent and each Bank within five Business Day
after demand (subject to subsection 5.1(g)) for all direct costs and expenses
-----------------
(including Attorney Costs) incurred by them in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies under this
Agreement or any other Loan Document during the existence of an Event of Default
or after acceleration of the Loans (including in connection with any "workout"
or restructuring regarding the Loans, and including in any Insolvency Proceeding
or appellate proceeding); and
(c) pay or reimburse BofA (including in its capacity as Agent) within
five Business Days after demand (subject to subsection 5.1(g)) for all appraisal
-----------------
(including the allocated cost of internal appraisal services), audit,
environmental inspection and review (including the allocated cost of such
internal services), search and filing costs, fees and expenses, incurred or
sustained by BofA (including in its capacity as Agent) in connection with the
matters referred to under subsections (a) and (b) of this Section.
----------- --- ---
12.5 Borrower Indemnification. Whether or not the transactions
------------------------
contemplated hereby are consummated, the Borrower shall indemnify and hold the
Agent-Related Persons, and each Bank and each of its respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all direct liabilities,
-------------------
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Loans, the termination of the Letters of Credit and the
termination, resignation or replacement of the Agent or replacement of any Bank)
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be imposed on, incurred by or asserted against any such Person in any way
relating to or arising out of this Agreement or any document contemplated by or
referred to herein, or the transactions contemplated hereby, or any action taken
or omitted by any such Person under or in connection with any of the foregoing,
including with respect to any investigation, litigation or proceeding (including
any Insolvency Proceeding or appellate proceeding) related to or arising out of
this Agreement or the Loans or Letters of Credit or the use of the proceeds
thereof, whether or not any Indemnified Person is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"); provided, that the
----------------------- --------
Borrower shall have no obligation hereunder to any Indemnified Person with
respect to liabilities resulting solely from the gross negligence or willful
misfeasance or nonfeasance of such Indemnified Person. The agreements in this
Section shall survive payment of all other Obligations.
12.6 Marshalling Payments Set Aside. Neither the Agent nor the Banks
------------------------------
shall be under any obligation to ▇▇▇▇▇▇▇▇ any assets in favor of the Borrower or
any other Person or against or in payment of any or all of the Obligations. To
the extent that any Borrower makes a payment to the Agent or the Banks, or the
Agent or the Banks exercise their right of set-off, and such payment or the
proceeds of such set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Agent or such Bank in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the extent
of such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred, and (b) each Bank
severally agrees to pay to the Agent upon demand its pro rata share of any
amount so recovered from or repaid by the Agent.
12.7 Successors and Assigns. The provisions of this Agreement shall be
----------------------
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that (a) the Borrower may not assign or transfer
any of its rights or obligations under this Agreement without the prior written
consent of the Agent and each Bank, (b) the Agent may only assign or transfer
its rights and obligations under this Agreement in accordance with Section 11.9
------------
and (c) the Banks may only assign or transfer their respective rights and
obligations under this Agreement in accordance with Section 12.8.
------------
12.8 Assignments, Participations, etc. (a) Any Bank may, with the
---------------------------------
written consent of the Agent, the Issuing Bank and, at such times as no Default
or Event of Default shall be continuing, the Borrower, which consent shall not
be unreasonably withheld, at any time assign and delegate to one or more
Eligible Assignees
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(provided that no written consent of the Agent or the Issuing Bank shall be
required in connection with any assignment and delegation by a Bank to an
Eligible Assignee that is an Affiliate of such Bank) (each an "Assignee") all,
--------
any ratable part of all, of the Loans, the Commitments, the L/C Obligations and
the other rights and obligations of such Bank hereunder, in a minimum amount of
$10,000,000; provided, however, that the Borrower and the Agent may continue to
-------- -------
deal solely and directly with such Bank in connection with the interest so
assigned to an Assignee until (i) written notice of such assignment, together
with payment instructions, addresses and related information with respect to the
Assignee, shall have been given to the Borrower and the Agent by such Bank and
the Assignee; (ii) such Bank and its Assignee shall have delivered to the
Borrower and the Agent an Assignment and Acceptance in the form of Exhibit E
---------
("Assignment and Acceptance") together with any Note or Notes subject to such
-------------------------
assignment and (iii) the assignor Bank or Assignee has paid to the Agent a
processing fee in the amount of $3,500.
(b) From and after the date that the Agent receives the Borrower's
consent (if so required), and notifies the assignor Bank that it has received
(and provided its consent with respect to) an executed Assignment and Acceptance
and payment of the above-referenced processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, shall have
the rights and obligations of a Bank under the Loan Documents, and (ii) the
assignor Bank shall, to the extent that rights and obligations hereunder and
under the other Loan Documents have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Loan Documents.
(c) After receiving the Borrower's consent (if so required), and
within five Business Days after its receipt of notice by the Agent that it has
received an executed Assignment and Acceptance and payment of the processing
fee, (and provided that it consents to such assignment in accordance with
subsection 12.8(a)), the Borrower shall execute and deliver to the Agent, new
------------------
Notes evidencing such Assignee's assigned Loans and Commitment and, if the
assignor Bank has retained a portion of its Loans and its Commitment,
replacement Notes in the principal amount of the Commitment retained by the
assignor Bank (such Notes to be in exchange for, but not in payment of, the
Notes held by such Bank). Immediately upon each Assignee's making its
processing fee payment under the Assignment and Acceptance, this Agreement shall
be deemed to be amended to the extent, but only to the extent, necessary to
reflect the addition of the Assignee and the resulting adjustment of the
Commitments arising therefrom. The Commitment allocated to each Assignee shall
reduce such Commitments of the assigning Bank pro tanto.
--- -----
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(d) Any Bank may at any time sell to one or more commercial banks or
other Persons not Affiliates of the Borrower (a "Participant") participating
-----------
interests in any Loans, the Commitment of that Bank and the other interests of
that Bank (the "originating Bank") hereunder and under the other Loan Documents;
provided, however, that (i) the originating Bank's obligations under this
-------- -------
Agreement shall remain unchanged, (ii) the originating Bank shall remain solely
responsible for the performance of such obligations, (iii) the Borrower, the
Agent and the Issuing Bank shall continue to deal solely and directly with the
originating Bank in connection with the originating Bank's rights and
obligations under this Agreement and the other Loan Documents, and (iv) no Bank
shall transfer or grant any participating interest under which the Participant
has rights to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document. In the case of any such
participation, the Participant shall not have any rights under this Agreement,
or any of the other Loan Documents, and all amounts payable by the Borrower
hereunder shall be determined as if such Bank had not sold such participation;
except that, if amounts outstanding under this Agreement are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating interest
were owing directly to it as a Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any Bank
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement and the Note held by it in favor
of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR (S)203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.
12.9 Confidentiality. The Agent, the Issuing Bank and each Bank agree to
---------------
take and to cause its Affiliates to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information identified
in writing as "confidential" or "secret" by the Borrower and provided to it by
the Borrower or any Subsidiary, or by the Agent on such Borrower's or
Subsidiary's behalf, under this Agreement or any other Loan Document, and
neither it nor any of its Affiliates shall use any such information other than
in connection with or in enforcement of this Agreement and the other Loan
Documents; except to the extent such information (i) was or becomes generally
available to the public other than as a result of disclosure by a Bank, or (ii)
was or becomes available on a non-confidential basis from a source other than
the Borrower or any Subsidiary, provided that such source is not bound by a
confidentiality agreement with the
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Borrower known to the Bank; provided, that any Bank may disclose such
--------
information (A) at the request or pursuant to any requirement of any
Governmental Authority to which the Bank is subject or in connection with an
examination of such Bank by any such authority; (B) pursuant to subpoena or
other court process; (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which the Agent, any
Bank or their respective Affiliates may be party; (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Loan Document; (F) to such Bank's independent auditors and other
professional advisors; (G) to any Participant or Assignee, actual or potential,
provided that such Person agrees in writing to keep such information
confidential to the same extent required of the Banks hereunder; (H) as to any
Bank or its Affiliate, as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Borrower or any
Subsidiary is party or is deemed party with such Bank or such Affiliate; and (I)
to its Affiliates provided that such Affiliates agree in writing to keep such
information confidential to the same extent required by the Banks hereunder;
provided further, that with respect to the foregoing clauses (B), (C), (D) and
-------- -------
(E), the respective Bank shall give prompt notice of such disclosure to the
Borrower.
12.10 Set-off. In addition to any rights and remedies of the Banks
-------
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without
prior notice to the Borrower, any such notice being waived by the Borrower to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Bank to or for the credit or
the account of the Borrower against any and all Obligations owing to such Bank,
now or hereafter existing, irrespective of whether or not the Agent or such Bank
shall have made demand under this Agreement or any Loan Document and although
such Obligations may be contingent or unmatured. Each Bank shall upon exercising
its set-off rights to notify the Borrower and the Agent after any such set-off
and application made by such Bank; provided, however, that the failure to give
-------- -------
such notice shall not affect the validity of such set-off and application.
12.11 Automatic Debits of Fees. With respect to any fee, or any other
------------------------
cost or expense (excluding Attorney Costs) due and payable to the Agent, the
Issuing Bank or BofA under the Loan Documents, the Borrower hereby authorizes
BofA to debit with timely notice to the Borrower a prearranged deposit account
of the Borrower with BofA or any Affiliate of BofA in an amount such that the
aggregate amount debited from all such deposit accounts does not exceed such fee
or other cost or expense. If there are insufficient funds in such deposit
accounts to cover the amount of
-83-
the fee or other cost or expense then due, such debits will be reversed (in
whole or in part, in BofA's sole discretion) and such amount not debited shall
be deemed to be unpaid. No such debit under this Section shall be deemed a set-
off.
12.12 Notification of Addresses, Lending Offices, Etc. Each Bank shall
------------------------------------------------
notify the Agent and the Borrower in writing of any changes in the address to
which notices to the Bank should be directed, of addresses of any Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Agent shall
reasonably request.
12.13 Counterparts. This Agreement may be executed in any number of
------------
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
12.14 Severability. The illegality or unenforceability of any provision
------------
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
12.15 No Third Parties Benefited. This Agreement is made and entered into
--------------------------
for the sole protection and legal benefit of the Borrower, the Banks, the Agent
and the Agent-Related Persons, and their permitted successors and assigns, and
no other Person shall be a direct or indirect legal beneficiary of, or have any
direct or indirect cause of action or claim in connection with, this Agreement
or any of the other Loan Documents.
12.16 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND OTHER LOAN
------------------------------
DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF ILLINOIS; PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS OR
OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWER, THE AGENT AND THE BANKS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE BORROWER, THE AGENT AND THE BANKS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
--------------------
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE BORROWER, THE AGENT AND
THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT
-84-
OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY ILLINOIS.
12.17 Entire Agreement. This Agreement, together with the other Loan
----------------
Documents, embodies the entire agreement and understanding among the Borrower,
the Banks and the Agent, and supersedes all prior or contemporaneous agreements
and understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof (including, without limitation, the Existing Credit
Agreement, the Waiver and Amendment dated September 16, 1996, and the Waiver and
Amendment dated January 7, 1997); it being understood that all waivers granted
in such prior agreements shall continue in full force and effect for the period
specified in such waivers.
12.18 Reaffirmation and Restatement. This Agreement constitutes an
-----------------------------
amendment and restatement of the Existing Credit Agreement and the Indebtedness
evidenced by the Existing Credit Agreement, is continuing Indebtedness, and
nothing herein shall be deemed to constitute a payment, settlement or novation
of the Indebtedness evidenced by the Existing Credit Agreement, or to release or
otherwise adversely affect any Lien, mortgage or security interest securing such
Indebtedness or any rights the Agent or the Banks against any guarantor, surety
or other party primarily or secondarily liable for such Indebtedness.
-85-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Chicago, Illinois by their proper and duly
authorized officers as of the day and year first above written.
SYSTEM SOFTWARE ASSOCIATES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Title: Chief Financial Officer
-------------------------
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Title: Vice President
-------------------------
BANK OF AMERICA ILLINOIS,
as Issuing Bank
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Title: Attorney-in-Fact
-------------------------
BANK OF AMERICA ILLINOIS,
as a Bank
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Title: Attorney-in-Fact
-------------------------
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Title: Assistant Vice President
-------------------------
Amended and Restated
Secured Credit Agreement - Signature Page
SCHEDULE 1.1
------------
Original Financial Covenants
A. Net Worth. The Borrower shall not permit at any time its Consolidated
---------
Net Worth to be less than $143,000,000 plus the sum of 50% of its Consolidated
----
Net Income (without reduction for any losses) as of the end of each fiscal
quarter ending after July 31, 1996.
B. Fixed Charge Ratio. The Borrower shall not permit at any time the
------------------
ratio of Consolidated Income Available for Fixed Charges to Fixed Charges for
the most recently completed four fiscal quarters to be less than 3.5 to 1.0.
C. Indebtedness Ratio. The Borrower shall not permit at any time the
------------------
ratio of (a) Consolidated Indebtedness (but excluding any sums which arise under
clause (g) of the definition of "Indebtedness") to (b) Consolidated Total
Capitalization as in effect at the end of the fiscal quarter then most recently
ended to be more than .60 to 1.00.
D. Senior Indebtedness Ratio. The Borrower shall not permit at any time
-------------------------
the ratio of (a) Consolidated Senior Indebtedness (but excluding any sums which
arise under clause (g) of the definition of "Indebtedness") to (b) Consolidated
Total Capitalization as in effect at the end of the fiscal quarter then most
recently ended to be more than .40 to 1.00.
E. Quick Ratio. The Borrower shall not permit its Quick Ratio at any
-----------
time to be less than 1.0:1.0. For purposes hereof, "Quick Ratio" means, at any
time, the ratio of (a) the sum of (i) (x) cash balances maintained by the
Borrower and its Subsidiaries minus (y) any proceeds of Loans which are
-----
maintained in deposit accounts with the Agent or any Agent-Related Person, plus
----
(ii) the lesser of (x) the Dollar Equivalent amount of all accounts receivables
of the Borrower and its Subsidiaries less any write-offs in accordance with GAAP
or (y) the product of nine and the amount of cash balances referenced in clause
(a)(i) above to (b) the sum of (i) consolidated current liabilities of the
Borrower and its Subsidiaries plus (ii) without double counting, the aggregate
----
principal Dollar Equivalent amount of all Loans outstanding hereunder other than
proceeds of Loans which are maintained in deposit accounts with the Agent or any
Agent-Related Person.
For purposes of this schedule the following terms shall have the following
definitions:
"Consolidated Indebtedness" means the total consolidated Indebtedness
-------------------------
of the Borrower and the Subsidiaries plus (without duplication) the undrawn
face amount of all outstanding letters of credit issued for the account of
the Borrower or any Subsidiary.
"Consolidated Income Available for Fixed Charges" means, for any
-----------------------------------------------
period, the sum of (i) Consolidated Net Income, plus (to the extent
deducted in determining Consolidated Net Income), (ii) all provisions for
any Federal, state, or other income taxes made by the Borrower and its
Subsidiaries during such period and (iii) Fixed Charges.
"Consolidated Net Income" means, for any period, the consolidated net
-----------------------
income (or deficit) of the Borrower and its Subsidiaries after deducting,
without duplication, all operating expenses, provisions for all taxes and
reserves (including reserves for deferred income taxes) and all other
proper deductions, all determined in accordance with GAAP and after
deducting portions of income properly attributable to outstanding minority
interests, if any, in Subsidiaries; provided, however, that there shall be
excluded (i) any income (or deficit) of any Person accrued prior to the
date it becomes a Subsidiary or merges into or consolidates with the
Borrower or a Subsidiary, (ii) the income (or deficit) of any Person (other
than a Subsidiary) in which the Borrower or any Subsidiary has any
ownership interest (except that any such income actually received by the
Borrower or such Subsidiary in the form of cash dividends or similar
distributions shall be included without limitation), (iii) any gains or
losses, or other income, properly classified as extraordinary in accordance
with GAAP, (iv) any gains or losses, or other income, characterized as non-
recurring in the financial statements delivered pursuant to Section 7.1 of
-----------
the Agreement, (v) any gain resulting from the sale of fixed or capital
assets other than in the ordinary course of business, (vi) any portion of
the net income of a Subsidiary which for any reason cannot be distributed
as a cash dividend, and (vi) any gains resulting from the reappraisal,
revaluation or write-up of assets.
"Consolidated Net Worth" means the sum of consolidated stockholders'
----------------------
equity of the Borrower and its Subsidiaries determined in accordance with
GAAP, less, the sum of all goodwill, trade names, trademarks, patents,
organization expense, unamortized debt discount and expense and other
similar intangibles properly classified as such in accordance with GAAP,
which are incurred subsequent to August 15, 1993 and for which the Borrower
would not be entitled to a deduction for federal income tax purposes.
"Consolidated Senior Indebtedness" means Consolidated Indebtedness
--------------------------------
less Subordinated Indebtedness.
"Consolidated Total Capitalization" means the sum of Consolidated Net
---------------------------------
Worth and Consolidated Indebtedness.
"Fixed Charges" means, for any period, the sum of (i) interest expense
-------------
(including the interest component of Rentals under capital leases),
amortization of debt discount and expense on Indebtedness of the Borrower
and its Subsidiaries during such period plus (ii) one-third of Rentals
under operating leases.
"Spot Rate" for a currency means the rate quoted by BofA as the spot
---------
for the purchase by BofA of such currency with another currency through its
Foreign Exchange Trading Center #5193, San Francisco, California (or such
other of BofA's offices as BofA may designate from time to time) at
approximately 8:00 a.m. (San Francisco time) on the date two Business Days
prior to the date as of which the foreign exchange computation is made.
SCHEDULE 2.1
------------
COMMITMENTS
-----------
AND PRO RATA SHARES
-------------------
Bank Commitment Pro Rata Share
------------------- ----------------- ---------------
Bank of America Illinois 50% of the sum of 50%
$46,400,000 (as to
Loans) and the Dollar
Equivalent amount of
the Existing BAI
Letters of Credit
American National Bank 50% of the sum of
and Trust Company of $46,400,000 (as to 50%
Chicago Loans) and the Dollar
Equivalent amount of
the Existing BAI
Letters of Credit
TOTAL The sum of $46,400,000 100%
(as to Loans) and the
Dollar Equivalent
amount of the Existing
BAI Letters of Credit
SCHEDULE 12.2
-------------
OFFSHORE AND DOMESTIC LENDING OFFICES,
--------------------------------------
ADDRESSES FOR NOTICES
---------------------
BANK OF AMERICA NATIONAL TRUST
------------------------------
AND SAVINGS ASSOCIATION,
-----------------------
as Agent
For Borrowing notices and
Notices of Conversion/Continuation
Agency Administrative Services #5596
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Notices (other than Borrowing notices and Notices of
Conversion/Continuation):
Bank of America National Trust
and Savings Association
Agency Management #10831
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
BANK OF AMERICA ILLINOIS,
------------------------
as Issuing Bank and as a Bank
Domestic and Offshore Lending Office:
Bank of America Illinois
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Notices (other than Borrowing notices and Notices of
Conversion/Continuation):
Bank of America NT&SA
The Mid-Cap Technology Div. #5974
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ Person
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Bank of America NT&SA
Special Assets Group 4346
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇; 9th Floor
Los Angeles, California 90017
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
AMERICAN NATIONAL BANK AND
--------------------------
TRUST COMPANY OF CHICAGO
------------------------
as a bank
Domestic and Offshore Lending Office:
American National Bank and
Trust Company of Chicago
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Notices (other than Borrowing notices and Notices of
Conversion/Continuation):
American National Bank and
Trust Company of Chicago
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT A
FORM OF NOTICE OF BORROWING
---------------------------
Date: ________________, 199__
To: Bank of America National Trust and Savings Association as Agent for the
Banks parties to the Credit Agreement dated as of February 28, 1997 (as
extended, renewed, amended or restated from time to time, the "Credit
------
Agreement") among System Software Associates, Inc., Bank of America
---------
Illinois, as Issuing Lender, certain Banks which are signatories thereto
and Bank of America National Trust and Savings Association, as Agent.
Ladies and Gentlemen:
The undersigned, System Software Associates, Inc., refers to the Credit
Agreement, the terms defined therein being used herein as therein defined, and
hereby gives you notice irrevocably, pursuant to Section 2.3 of the Credit
-----------
Agreement, of the Borrowing specified below:
1. The aggregate amount of the proposed Borrowing is
$ _____________________.
2. The Business Day of the proposed Borrowing is
_____________________, 19___.
3. The Borrowing is to be comprised of $___________ of [Base Rate]
[Offshore Rate] Loans.
4. In the case of an Offshore Rate Loan, the duration of the Interest
Period shall be [_____ months].
5. The account into which the proceeds of the Borrowing are to be
deposited is: _________. */-
6. The proceeds of the Borrowing will be used for the following
purpose:_________________________________________.
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the
__________________
*/- To the extent the account is not maintained with the Agent appropriate wire
transfer information needs to be included.
proposed Borrowing, before and after giving effect thereto and to the
application of the proceeds therefrom:
(a) the Revolver Date has occurred;
(b) the representations and warranties contained in Article VI of the
Credit Agreement and in each other Loan Document are true and correct as
though made on and as of such date (except to the extent such
representations and warranties relate to an earlier date, in which case
they are true and correct as of such date);
(c) no Default or Event of Default has occurred and is continuing, or
would result from such proposed Borrowing; and
(d) The proposed Borrowing will not cause the aggregate principal
amount of all outstanding Loans to exceed the combined Commitments of the
Banks.
SYSTEM SOFTWARE ASSOCIATES, INC.
By: __________________________________
Title: _______________________________
-2-
EXHIBIT B
FORM OF NOTICE OF CONVERSION/CONTINUATION
-----------------------------------------
Date:________________, 199__
To: Bank of America National Trust and Savings Association, as Agent for the
Banks parties to the Credit Agreement dated as of February 28, 1997 (as
extended, renewed, amended or restated from time to time, the "Credit
------
Agreement") among System Software Associates, Inc., Bank of America
---------
Illinois, as Issuing Lender, certain Banks which are signatories thereto
and Bank of America National Trust and Savings Association, as Agent
Ladies and Gentlemen:
The undersigned, System Software Associates, Inc., refers to the Credit
Agreement, the terms defined therein being used herein as therein defined, and
hereby gives you notice irrevocably, pursuant to Section 2.4 of the Credit
-----------
Agreement, of the [conversion] [continuation] of the Loans specified herein,
that:
1. The Conversion/Continuation Date is ____________, 19__.
2. The aggregate amount of the Loans to be [converted] [continued] is
$______________.
3. The Loans are to be [converted into] [continued as] [Offshore
Rate] [Base Rate] Loans.
4. In the case of an Offshore Rate Loan, the duration of the Interest
Period for the Loans included in the [conversion] [continuation] shall be
[____ months].
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the proposed Conversion/Continuation Date,
before and after giving effect thereto and to the application of the proceeds
therefrom:
(a) the Revolver Date has occurred;
(b) the representations and warranties contained in Article VI of the
Credit Agreement and in each other Loan Document are true and correct as
though made on and as of such date (except to the extent such
representations and
warranties relate to an earlier date, in which case they are true and
correct as of such date);
(c) no Default or Event of Default has occurred and is continuing, or
would result from such proposed [conversion] [continuation]; and
(d) the proposed [conversion][continuation] will not cause the
aggregate principal amount of all outstanding Loans to exceed the combined
Commitments of the Banks.
SYSTEM SOFTWARE ASSOCIATES,INC.
By: __________________________
Title: _______________________
-2-
EXHIBIT C
SYSTEM SOFTWARE ASSOCIATES, INC.
FORM OF COMPLIANCE CERTIFICATE
------------------------------
Financial
Statement Date: ____________, 199_
Reference is made to that certain Credit Agreement dated as of February 28,
1996 (as extended, renewed, amended or restated from time to time, the "Credit
------
Agreement") among System Software Associates, Inc., a Delaware corporation (the
---------
"Company"), Bank of America Illinois, as issuing lender (the "Issuing Lender"),
-------
the financial institutions from time to time parties to this Credit Agreement
(the "Banks") and Bank of America National Trust and Savings Association, as
-----
agent for the Banks (in such capacity, the "Agent"). Unless otherwise defined
-----
herein, capitalized terms used herein have the respective meanings assigned to
them in the Credit Agreement.
The undersigned Responsible Officer of the Company, hereby certifies as of
the date hereof that he/she is the __________________ of the Company, and that,
as such, he/she is authorized to execute and deliver this Certificate to the
Banks and the Agent on the behalf of the Company and its Subsidiaries, and that:
[1. Attached as Schedule 1 hereto are (a) a true and correct copy of the
----------
audited consolidated balance sheet of the Company as at the end of the fiscal
year ended _______________, 199_ and (b) the related consolidated statements of
income or operations, shareholders' equity and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the previous
fiscal year and accompanied by the opinion of Price Waterhouse or another
nationally-recognized certified independent public accounting firm (the
"Independent Auditor") which report states that such consolidated financial
-------------------
statements are complete and correct and have been prepared in accordance with
GAAP, and fairly present, in all material respects, the financial position of
the Company and its consolidated Subsidiaries for the periods indicated and on a
basis consistent with prior periods.]
[1. Attached as Schedule 1 hereto are (a) a true and correct copy of the
----------
unaudited consolidated balance sheet of the Company and its consolidated
Subsidiaries as of the end of the fiscal quarter ended __________, 199__, and
(b) the related unaudited consolidated statements of income, shareholders'
equity, and cash flows for the
period commencing on the first day and ending on the last day of such quarter,
and certified by a Responsible Officer that such financial statements were
prepared in accordance with GAAP (subject only to ordinary, good faith year-end
audit adjustments and the absence of footnotes) and fairly present, in all
material respects, the financial position and the results of operations of the
Company and its Subsidiaries.]
2. The undersigned has reviewed and is familiar with the terms of the
Credit Agreement and has made, or has caused to be made under his/her
supervision, a detailed review of the transactions and conditions (financial or
otherwise) of the Company during the accounting period covered by the attached
financial statements.
3. To the best of the undersigned's knowledge:
(a) the representations and warranties contained in Article VI of the
Credit Agreement and in each other Loan Document are true and correct as
though made on and as of such date (except to the extent such
representations and warranties relate to an earlier date, in which case
they are true and correct as of such date);
(b) no Default or Event of Default has occurred and is continuing, or
would result from such proposed Borrowing; and
4. The financial covenant analyses and information set forth on Schedule
--------
2 attached hereto are true and accurate on and as of the date of this
-
Certificate (the "Computation Date").
----------------
[5. The financial covenant analyses and information set forth on Schedule
--------
3 attached hereto are true and accurate on and as of the date of this
-
Certificate (the "Computation Date").]/1/-
----------------
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
___________________, 199__.
SYSTEM SOFTWARE ASSOCIATES, INC.
By: ______________________________
Title: ___________________________
___________________
/1/- To be included only when in compliance with all Original Financial
Covenants.
-2-
SCHEDULE 1
----------
SCHEDULE 2
----------
8.4 Loans and Investments.
---------------------
(d) Aggregate principal Dollar Equivalent
amount of extensions of credit to
Wholly-Owned Subsidiaries (not to
exceed $67,000,000) $__________
(f) Aggregate net capital investment
to Subsidiaries which acquire equity
or assets of a third party after the
delivery of the 1/31/97 financial
statements (not to exceed $15,000) $__________
8.8 Contingent Obligations
----------------------
(b) Aggregate notional Dollar Equivalent
amount of Swap Contracts (not to
exceed $35,000,000) $__________
8.9 Lease Obligations
-----------------
(b) Aggregate Rentals for all operating
leases due within twelve month period
succeeding Computation Date (not to
exceed $26,400,000) $__________
9.1 Consolidated Net Worth
----------------------
. Consolidated Net Worth (not less
than $103,000,000) $__________
9.2 Cash Balances
-------------
. Consolidated Cash Balances (not
less than $6,000,000) $__________
9.3 Capital Expenditures
--------------------
. Capital Expenditures incurred during
the fiscal quarter ending on the
Computation Date (not to exceed
$16,000,000) $__________
-4-
SCHEDULE 3
----------
1. Net Worth.
---------
This test shall apply at all times and shall be measured at the end of
each fiscal quarter.
(a) $73,000,000 : $73,000,000
-----------
(b) sum of Consolidated Net Income for
each fiscal quarter ending after
July 31, 1993 (but without reduction
for any net losses occurring during
such quarters): $ _________
(c) 50% of Item 1(b) : $ _________
(d) The sum of Items 1(a) and 1(c) : $ _________
(e) Consolidated Net Worth as of the
Computation Date : $ _________
(f) The amount in Item 1(e) may not be
less than the amount in Item 1(d).
2. Fixed Charge Ratio.
------------------
This ratio shall be measured at the end of each fiscal quarter for the
most recently completed four fiscal quarters then ended.
(a) Consolidated Income Available for
Fixed Charges : $ _________
(b) Fixed Charges : $ _________
(c) The ratio of Item 2(a) to Item 2(b) : :
---- ----
(d) The ratio in Item 2(c) may not be less
than 3.50:1.00.
3. Indebtedness Ratio.
-------------------
This ratio shall be measured at the end of each fiscal quarter for the
fiscal quarter then ended.
(a) Consolidated Indebtedness : $ _________
(b) Consolidated Total Capitalization : $ _________
(c) The ratio of Item 3(a) to Item 3(b) : :
----- ---
-1-
(d) The ratio in Item 3(c) may not be
greater than .60:1.00.
4. Senior Indebtedness Ratio.
-------------------------
This ratio shall be measured at the end of each fiscal quarter for the
fiscal quarter then ended.
(a) Consolidated Senior Indebtedness : $ _________
(b) Consolidated Total Capitalization : $ _________
(c) The ratio of Item 4(a) to Item 4(b) : :
----- ---
(d) The ratio in Item 4(c) may not be
greater than .40:1.00.
5. Quick Ratio.
-----------
This ratio shall be measured at the end of each fiscal quarter for the
fiscal quarter then ended .
(a) Cash balances maintained by the
Company and its Subsidiaries : $ _________
(b) any proceeds of Loans which are
maintained in deposit accounts with the
Agent or any Agent-Related Person : $ _________
(c) Item 5(a) less Item 5(b) : $ _________
(d) the Dollar Equivalent amount of all
accounts receivables of the Company
and its Subsidiaries : $ _________
(e) any write-offs in accordance with
GAAP : $ _________
(f) Item 5(d) less Item 5(e) : $ _________
(g) The product of 9 and Item 5(c) : $ _________
(h) The lesser of Item 5(f) and Item 5(g) : $ _________
(i) The sum of Items 5(c) and 5(h) : $ _________
(j) consolidated current liabilities of
the Company and its Subsidiaries : $ _________
(k) without double counting, the aggregate
principal Dollar Equivalent amount of
all Loans outstanding : $ _________
-2-
(l) Item 5(k) less Item 5(b) $ _________
(m) The sum of Items 5(j) and 5(l) : $ _________
(n) The ratio of Item 5(i) to Item 5(m) : :
----- ---
(o) The ratio in Item 5(n) may not be less
than 1.00:1.00.
6. Leverage Ratio
---------------
This ratio shall be measured at the end of each fiscal quarter for the
fiscal quarter then ended for the purpose of calculating interest rates pursuant
to Section 2.10(a)(iii) of the Credit Agreement and letter of credit fees
pursuant to Section 3.8 of the Credit Agreement.
(a) Consolidated Indebtedness : $ _________
(b) the aggregate principal Dollar
Equivalent amount of all Offshore
Currency Loans to the Subsidiary
Borrowers outstanding, the
proceeds of which are maintained
in a deposit account with the Agent
or one of its Affiliates : $ _________
(c) Item 6(a) less Item 6(b) : $ _________
(d) Consolidated Tangible Net Worth : $ _________
(e) The ratio of Item 6(c) to Item 6(d) : $ _________
-3-
EXHIBIT E
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
-------------------------------------------
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
--------------
Acceptance") dated as of __________, 199__ is made between
----------
___________________________ (the "Assignor") and __________________________
--------
(the "Assignee").
--------
RECITALS
--------
WHEREAS, the Assignor is party to that certain Credit Agreement, dated
as of February 28, 1997 (as amended, amended and restated, modified,
supplemented or renewed, the "Credit Agreement") among System Software
----------------
Associates, Inc., a Delaware corporation (the "Company"), Bank of America
-------
Illinois, as issuing lender (the "Issuing Lender"), the several financial
institutions from time to time party thereto (including the Assignor, the
"Banks"), and Bank of America National Trust and Savings Association, as agent
-----
for the Banks (the "Agent"). Any terms defined in the Credit Agreement and not
-----
defined in this Assignment and Acceptance are used herein as defined in the
Credit Agreement;
WHEREAS, as provided under the Credit Agreement, the Assignor has
committed to making Loans (the "Committed Loans") to the Borrowers in an
---------------
aggregate amount not to exceed $__________ (the "Commitment");
----------
WHEREAS, as of the date hereof [the Assignor has Committed Loans
outstanding to the Borrowers in the aggregate principal Dollar Equivalent amount
of $__________] [no Committed Loans are outstanding under the Credit Agreement];
WHEREAS, the Assignor wishes to assign to the Assignee [part of the]
[all] rights and obligations of the Assignor under the Credit Agreement in
respect of its Commitment, [together with a corresponding portion of each of its
outstanding Committed Loans] in an amount equal to $__________ (the "Assigned
--------
Amount") on the terms and subject to the conditions set forth herein and the
------
Assignee wishes to accept assignment of such rights and to assume such
obligations from the Assignor on such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
-------------------------
(a) Subject to the terms and conditions of this Assignment and
Acceptance, (i) the Assignor hereby sells, transfers and assigns to the
Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from
the Assignor, without recourse and without representation or warranty (except as
provided in this Assignment and Acceptance) __% (the "Assignee's Percentage
---------------------
Share") of (A) the Commitment [and the Committed Loans] of the Assignor and (B)
-----
all related rights, benefits, obligations, liabilities and indemnities of the
Assignor under and in connection with the Credit Agreement and the Loan
Documents.
[If appropriate, add paragraph specifying payment to Assignor by
Assignee of outstanding principal of, accrued interest on, and fees with respect
to, Committed Loans assigned, including any special payment provisions for
Offshore Currency Loans.]
(b) With effect on and after the Effective Date (as defined in Section
5 hereof), the Assignee shall be a party to the Credit Agreement and succeed to
all of the rights and be obligated to perform all of the obligations of a Bank
under the Credit Agreement, including the requirements concerning
confidentiality and the payment of indemnification, with a Commitment in an
amount equal to the Assigned Amount. The Assignee agrees that it will perform
in accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank. It is the intent
of the parties hereto that the Commitment of the Assignor shall, as of the
Effective Date, be reduced by an amount equal to the Assigned Amount and the
Assignor shall relinquish its rights and be released from its obligations under
the Credit Agreement to the extent such obligations have been assumed by the
Assignee; provided, however, the Assignor shall not relinquish its rights under
Sections 12.4 and 12.5 of the Credit Agreement to the extent such rights relate
to the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set forth
herein, on the Effective Date the Assignee's Commitment will be [$__________].
(d) After giving effect to the assignment and assumption set forth
herein, on the Effective Date the Assignor's Commitment will be [$__________].
-2-
2. Payments.
--------
(a) As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, the Assignee shall pay to the Assignor on the
Effective Date in immediately available funds an amount equal to [$__________]
[plus], representing the Assignee's Pro Rata Share of the principal amount of
all Committed Loans.
(b) The [Assignor] [Assignee] further agrees to pay to the Agent a
processing fee in the amount specified in Section 12.8(a) of the Credit
---------------
Agreement.
3. Reallocation of Payments.
------------------------
Any interest, fees and other payments accrued to the Effective Date with
respect to the Commitment and Committed Loans shall be for the account of the
Assignor. Any interest, fees and other payments accrued on and after the
Effective Date with respect to the Assigned Amount shall be for the account of
the Assignee. Each of the Assignor and the Assignee agrees that it will hold in
trust for the other party any interest, fees and other amounts which it may
receive to which the other party is entitled pursuant to the preceding sentence
and pay to the other party any such amounts which it may receive promptly upon
receipt.
4. Independent Credit Decision.
---------------------------
The Assignee (a) acknowledges that it has received a copy of the Credit
Agreement and the Schedules and Exhibits thereto, together with copies of the
most recent financial statements referred to in Section 6.1(a) and (b) of the
Credit Agreement, and such other documents and information as it has deemed
appropriate to make its own credit and legal analysis and decision to enter into
this Assignment and Acceptance; and (b) agrees that it will, independently and
without reliance upon the Assignor, the Agent or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit and legal decisions in taking or not taking
action under the Credit Agreement.
5. Effective Date; Notices.
-----------------------
(a) As between the Assignor and the Assignee, the effective date for
this Assignment and Acceptance shall be __________, 199__ (the "Effective
---------
Date"); provided that the following conditions precedent have been satisfied on
--------
or before the Effective Date:
-3-
(i) this Assignment and Acceptance shall be executed and
delivered by the Assignor and the Assignee;
(ii) the consent of the Company and the Agent required for an
effective assignment of the Assigned Amount by the Assignor to the Assignee
under Section 12.8(a) of the Credit Agreement shall have been duly obtained and
---------------
shall be in full force and effect as of the Effective Date;
(iii) the Assignee shall pay to the Assignor all amounts due to
the Assignor under this Assignment and Acceptance;
(iv) the Assignee shall have complied with all provisions of
Section 12.8(a) of the Credit Agreement;
---------------
(v) the processing fee referred to in Section 2(b) hereof and
in Section 12.8(a) of the Credit Agreement shall have been paid to the Agent;
---------------
and
(vi) the Assignor shall have assigned and the Assignee shall
have assumed a percentage equal to the Assignee's Percentage Share of the rights
and obligations of the Assignor under the Credit Agreement (if such agreement
exists).
(b) Promptly following the execution of this Assignment and
Acceptance, the Assignor shall deliver to the Company and the Agent for
acknowledgement by the Agent, a Notice of Assignment substantially in the form
attached hereto as Schedule 1.
----------
[6. Agent. [INCLUDE ONLY IF ASSIGNOR IS AGENT]
-----
(a) The Assignee hereby appoints and authorizes the Assignor to take
such action as agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Agent by the Banks pursuant to the terms of
the Credit Agreement.
(b) The Assignee shall assume no duties or obligations held by the
Assignor in its capacity as Agent under the Credit Agreement.]
7. Withholding Tax.
---------------
The Assignee (a) represents and warrants to the Bank, the Agent and the
Company that under applicable law and treaties no tax will be required to be
withheld by the Bank with respect to any payments to be made to the Assignee
hereunder, (b) agrees to furnish (if it is organized under the laws of any
jurisdiction other than the United States or any State thereof) to the Agent and
-4-
the Company prior to the time that the Agent or Company is required to make any
payment of principal, interest or fees hereunder, duplicate executed originals
of either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue
Service Form 1001 (wherein the Assignee claims entitlement to the benefits of a
tax treaty that provides for a complete exemption from U.S. federal income
withholding tax on all payments hereunder) and agrees to provide new Forms 4224
or 1001 upon the expiration of any previously delivered form or comparable
statements in accordance with applicable U.S. law and regulations and amendments
thereto, duly executed and completed by the Assignee, and (c) agrees to comply
with all applicable U.S. laws and regulations with regard to such withholding
tax exemption.
8. Representations and Warranties.
------------------------------
(a) The Assignor represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any Lien or other adverse claim; (ii) it is duly
organized and existing and it has the full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or obtained)
for its due execution, delivery and performance of this Assignment and
Acceptance, and apart from any agreements or undertakings or filings required by
the Credit Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; and (iv)
this Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor, enforceable
against the Assignor in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles.
(b) The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto. The
Assignor makes no representation or warranty in connection with, and assumes no
responsibility with respect to, the solvency, financial condition or statements
of the Company, or the performance or observance by the Company, of any of its
respective
-5-
obligations under the Credit Agreement or any other instrument or document
furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly organized
and existing and it has full power and authority to take, and has taken, all
action necessary to execute and deliver this Assignment and Acceptance and any
other documents required or permitted to be executed or delivered by it in
connection with this Assignment and Acceptance, and to fulfill its obligations
hereunder; (ii) no notices to, or consents, authorizations or approvals of, any
Person are required (other than any already given or obtained) for its due
execution, delivery and performance of this Assignment and Acceptance; and apart
from any agreements or undertakings or filings required by the Credit Agreement,
no further action by, or notice to, or filing with, any Person is required of it
for such execution, delivery or performance; (iii) this Assignment and
Acceptance has been duly executed and delivered by it and constitutes the legal,
valid and binding obligation of the Assignee, enforceable against the Assignee
in accordance with the terms hereof, subject, as to enforcement, to bankruptcy,
insolvency, moratorium, reorganization and other laws of general application
relating to or affecting creditors' rights and to general equitable principles;
and (iv) it is an Eligible Assignee.
9. Further Assurances.
------------------
The Assignor and the Assignee each hereby agree to execute and deliver such
other instruments, and take such other action, as either party may reasonably
request in connection with the transactions contemplated by this Assignment and
Acceptance, including the delivery of any notices or other documents or
instruments to the Company or the Agent, which may be required in connection
with the assignment and assumption contemplated hereby.
10. Miscellaneous.
-------------
(a) Any amendment or waiver of any provision of this Assignment and
Acceptance shall be in writing and signed by the parties hereto. No failure or
delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment and Acceptance shall be without prejudice to any
rights with respect to any other or further breach thereof.
(b) All payments made hereunder shall be made without any set-off or
counterclaim.
-6-
(c) The Assignor and the Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution and
performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF ILLINOIS. The Assignor and the
Assignee each irrevocably submits to the non-exclusive jurisdiction of any State
or Federal court sitting in Illinois over any suit, action or proceeding arising
out of or relating to this Assignment and Acceptance and irrevocably agrees that
all claims in respect of such action or proceeding may be heard and determined
in such Illinois State or Federal court. Each party to this Assignment and
Acceptance hereby irrevocably waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of such action or
proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY RELATED DOCUMENTS AND
AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER
ORAL OR WRITTEN).
[Other provisions to be added as may be negotiated between the
Assignor and the Assignee, provided that such provisions are not inconsistent
with the Credit Agreement.]
-7-
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By:__________________________________________
Title:_______________________________________
By:__________________________________________
Title:_______________________________________
Address:
[ASSIGNEE]
By:__________________________________________
Title:_______________________________________
By:__________________________________________
Title:_______________________________________
Address:
-8-
SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
-----------------------------------
_______________, 19__
Bank of America National Trust
and Savings Association, as Agent
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Agency Management Services #5596
System Software Associates, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ___________________________
Ladies and Gentlemen:
We refer to the Credit Agreement dated as of February 28, 1997 (as amended,
amended and restated, modified, supplemented or renewed from time to time the
"Credit Agreement") among System Software Associates, Inc. (the "Company"), Bank
----------------- -------
of America Illinois, as issuing lender (the "Issuing Lender"), the Banks
referred to therein and Bank of America National Trust and Savings Association,
as agent for the Banks (the "Agent"). Terms defined in the Credit Agreement are
-----
used herein as therein defined.
1. We hereby give you notice of, and request your consent to, the
assignment by __________________ (the "Assignor") to _______________ (the
--------
"Assignee") of _____% of the right, title and interest of the Assignor in and to
---------
the Credit Agreement (including, without limitation, the right, title and
interest of the Assignor in and to the Commitments of the Assignor [and all
outstanding Loans made by the Assignor]) pursuant to the Assignment and
Acceptance Agreement attached hereto (the "Assignment and Acceptance"). Before
-------------------------
giving effect to such assignment the Assignor's Commitment is $ ___________ [and
the aggregate Dollar Equivalent amount of its outstanding Loans is
$_____________].
2. The Assignee agrees that, upon receiving the consent of the Agent and
the Company to such assignment, the Assignee will be bound by the terms of the
Credit Agreement as fully and to the same extent as if the Assignee were the
Bank originally holding such interest in the Credit Agreement.
-1-
3. The following administrative details apply to the Assignee:
(A) Notice Address:
Assignee name: __________________________
Address: _______________________________
_______________________________
_______________________________
Attention: _____________________________
Telephone: (___) _______________________
Telecopier: (___) ______________________
Telex (Answerback): ____________________
(B) Payment Instructions:
Account No.: ___________________________
At: ___________________________
___________________________
___________________________
Reference: ___________________________
Attention: ___________________________
4. You are entitled to rely upon the representations, warranties and
covenants of each of the Assignor and Assignee contained in the Assignment and
Acceptance.
-2-
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice
of Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:_____________________________________________
Title:________________________________
By:_____________________________________________
Title:________________________________
[NAME OF ASSIGNEE]
By:______________________________________________
Title:__________________________________
By:______________________________________________
Title:__________________________________
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By: __________________________
Its: _________________________
-3-
EXHIBIT F
---------
FORM OF AMENDED AND RESTATED PROMISSORY NOTE
--------------------------------------------
$_______________________ February 28, 1997
FOR VALUE RECEIVED, the undersigned, System Software Associates, Inc.,
a Delaware corporation (the "Company"), hereby promises to pay to the order of
-------
___________________ (the "Bank") the principal sum of ____________ Dollars
----
($___________) or, if less, the aggregate unpaid principal amount of all Loans
made by the Bank to the Company pursuant to the Credit Agreement, dated as of
February 28, 1997 (such Credit Agreement, as it may be amended, restated,
supplemented or otherwise modified from time to time, being hereinafter called
the "Credit Agreement"), among the Company, System Software Associates, Inc.,
----------------
the Bank, the other banks parties thereto, Bank of America National Trust and
Savings Association, as Agent for the Banks, and Bank of America Illinois, as
issuing lender (the "Issuing Lender"), on the dates and in the amounts provided
in the Credit Agreement. The Company further promises to pay interest on the
unpaid principal amount of the Loans evidenced hereby from time to time at the
rates, on the dates, and otherwise as provided in the Credit Agreement.
The Bank is authorized to endorse the amount and the date on which
each Loan is made, the maturity date therefor and each payment of principal with
respect thereto on the schedules annexed hereto and made a part hereof, or on
continuations thereof which shall be attached hereto and made a part hereof;
provided, that any failure to endorse such information on such schedule or
continuation thereof shall not in any manner affect any obligation of the
Company under the Credit Agreement and this Promissory Note (the "Note").
----
This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Credit Agreement, which Credit Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal hereof
prior to the maturity hereof upon the terms and conditions therein specified.
Terms defined in the Credit Agreement are used herein with their
defined meanings therein unless otherwise defined herein. This Note shall be
governed by, and construed and interpreted in accordance with, the internal laws
of the State of Illinois applicable to contracts made and to be performed
entirely within such State.
This Amended and Restated Revolving Note constitutes a renewal and
restatement of, and a replacement and substitute for, the Revolving Note dated
June 19, 1995 of the undersigned, payable to the order of the Bank in the
original principal amount of Twenty-Five Million and No/100 Dollars
($25,000,000.00) (the "Existing Note"). The indebtedness evidenced by the
Existing Note is continuing indebtedness, and nothing herein shall be deemed to
constitute a payment, settlement or novation of the Existing Note, or to release
or otherwise adversely affect any lien, mortgage, or security interest securing
such indebtedness or any rights of the Bank against any guarantor, surety or
other party primarily or secondarily liable for such indebtedness.
SYSTEM SOFTWARE ASSOCIATES, INC.
By:___________________________
Title: _______________________
By:___________________________
Title: _______________________
-2-
Schedule A to Note
BASE RATE LOANS AND REPAYMENT OF BASE RATE LOANS
------------------------------------------------
(2) (3) (4)
Amount Maturity Amount of
of Date of Base (5)
(1) Base Base Rate Loan Notation
Date Rate Loan Rate Loan Repaid Made By
--------- --------- --------- --------- ---------
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
Schedule B to Note
OFFSHORE RATE LOANS AND REPAYMENT OF OFFSHORE RATE LOANS
--------------------------------------------------------
(2)
Currency
and (3) (4)
Amount Maturity Amount of
of Date of Offshore (5)
(1) Offshore Offshore Rate Notation
Date Rate Loan Rate Loan Loan Repaid Made By
---------- --------- --------- ----------- ---------
__________ _________ _________ ___________ _________
__________ _________ _________ ___________ _________
__________ _________ _________ ___________ _________
__________ _________ _________ ___________ _________
__________ _________ _________ ___________ _________
__________ _________ _________ ___________ _________
__________ _________ _________ ___________ _________
__________ _________ _________ ___________ _________
__________ _________ _________ ___________ _________
__________ _________ _________ ___________ _________
__________ _________ _________ ___________ _________
__________ _________ _________ ___________ _________
__________ _________ _________ ___________ _________
__________ _________ _________ ___________ _________
__________ _________ _________ ___________ _________
__________ _________ _________ ___________ _________
__________ _________ _________ ___________ _________
__________ _________ _________ ___________ _________
================================================================================
COLLATERAL AGENCY AGREEMENT
by and among
SYSTEM SOFTWARE ASSOCIATES, INC.,
AND VARIOUS OF ITS SUBSIDIARIES
AS GRANTORS
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Collateral Agent
Dated as of January 15, 1997
================================================================================
TABLE OF CONTENTS
RECITALS....................................................................... -1-
SECTION I
COMMON TERMS AND INTERPRETATION......................... -1-
SECTION 1.1 Definitions and Usage........................................ -1-
SECTION II
CERTAIN OBLIGATIONS AND DUTIES
OF THE COLLATERAL AGENT AND THE COMPANY..................... -3-
Section 2.1 Appointment as Collateral Agent.............................. -3-
Section 2.2 Actions...................................................... -3-
Section 2.3 Additional Collateral Documents.............................. -5-
SECTION III
ACTIONABLE DEFAULTS; REMEDIES......................... -6-
Section 3.1 Actionable Default........................................... -6-
Section 3.2 Remedies..................................................... -7-
Section 3.3 Right to Initiate Judicial Proceedings, etc.................. -8-
Section 3.4 Appointment of a Receiver.................................... -8-
Section 3.5 Exercise of Powers........................................... -8-
Section 3.6 Control by the Majority Holders.............................. -9-
Section 3.7 Remedies Not Exclusive....................................... -9-
Section 3.8 Waiver of Certain Rights..................................... -10-
Section 3.9 Limitation on Collateral Agent's Duties in Respect of
Collateral................................................... -11-
Section 3.10 Limitation by Law............................................ -11-
Section 3.11 Absolute Rights of Holders................................... -11-
Section 3.12 Priority of Security......................................... -12-
SECTION IV
COLLATERAL ACCOUNT;
CONTROLLED CASH ACCOUNT; APPLICATION OF MONEYS................ -12-
Section 4.1 The Collateral Account....................................... -12-
Section 4.2 Grant of Security Interest; Control of Collateral
Account................................................... -13-
Section 4.3 Investment of Funds Deposited in Collateral
Account................................................... -14-
Section 4.4 Application of Moneys In Collateral Account.................. -14-
Section 4.5 Application of Net Proceeds.................................. -16-
(i)
SECTION V
AGREEMENTS WITH COLLATERAL AGENT...................... -17-
Section 5.1 Delivery of Debt Agreements.................................. -17-
Section 5.2 Information as to Holders.................................... -17-
Section 5.3 Expenses..................................................... -17-
Section 5.4 Stamp and Other Similar Taxes................................ -19-
Section 5.5 Filing Fees, Excise Taxes etc................................ -19-
Section 5.6 Indemnification.............................................. -19-
Section 5.7 Further Assurances........................................... -21-
Section 5.8 Information Sharing.......................................... -22-
Section 5.9 Dispute Resolution Mechanism for Certain Matters............. -23-
SECTION VI
THE COLLATERAL AGENT.............................. -23-
Section 6.1 Exculpatory Provisions....................................... -23-
Section 6.2 Delegation of Duties......................................... -25-
Section 6.3 Reliance by Collateral Agent................................. -25-
Section 6.4 Limitations on Duties of Collateral Agent.................... -26-
Section 6.5 Moneys To Be Held in Trust................................... -27-
Section 6.6 Resignation and Removal of the Collateral Agent.............. -27-
Section 6.7 Secured Parties in Individual Capacities..................... -28-
SECTION VII
RELEASE OF COLLATERAL............................. -28-
Section 7.1 Conditions to Release........................................ -28-
Section 7.2 Procedure for Release........................................ -29-
Section 7.3 Effective Time of Release.................................... -29-
Section 7.4 Release of Certain Collateral................................ -30-
SECTION VIII
MISCELLANEOUS................................. -31-
Section 8.1 Amendments, Supplements, and Waivers......................... -31-
Section 8.2 Notices...................................................... -33-
Section 8.3 Headings..................................................... -34-
Section 8.4 Severability................................................. -34-
Section 8.5 Intentionally Omitted........................................ -34-
Section 8.6 Dealings With the Company.................................... -34-
Section 8.7 Claims against the Collateral Agent.......................... -35-
Section 8.8 Binding Effect............................................... -35-
Section 8.9 Governing Law and Jurisdiction............................... -35-
Section 8.10 Waiver of Jury Trial........................................ -36-
Section 8.11 Counterparts................................................ -36-
Section 8.12 The Company as Agent for Grantors........................... -36-
Section 8.13 Interest.................................................... -36-
(ii)
Schedules
I Glossary
II Noteholder Addresses
III Bank Addresses
Exhibits
A Form of Guaranty
(iii)
COLLATERAL AGENCY AGREEMENT
---------------------------
COLLATERAL AGENCY AGREEMENT ("Agreement") dated as of January 15, 1997 by
---------
and among SYSTEM SOFTWARE ASSOCIATES, INC, a Delaware corporation ("Company"),
-------
SSA JAPAN CORP., a Delaware corporation ("SSJC"), SSA PACIFIC RIM CORP., a
----
Delaware corporation ("SSPRC"), SYSTEM SOFTWARE ASSOCIATES JAPAN LIMITED
-----
LIABILITY COMPANY, a Delaware limited liability company ("SSAJLLC"), SSA
-------
CARIBBEAN, INC., a Delaware corporation ("SSAC"), and SSA NORTH CENTRAL, INC., a
----
Delaware corporation ("SSANCI") (together with the Company, collectively
------
referred to herein as the "Grantors" and individually as a "Grantor"), the Agent
-------- -------
(such capitalized term and other capitalized terms not otherwise defined herein
have the meanings provided in the "Glossary" as defined below), the Banks, the
Noteholders (as defined in the Glossary) and BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, not in its individual capacity but solely as collateral
agent (in such capacity together with its successors and assigns, being herein
referred to as the "Collateral Agent") under this Agreement for the ratable
----------------
benefit of the Secured Parties.
RECITALS
--------
A. The Company is a party to the Finance Agreements pursuant to which the
Company has incurred Obligations.
B. Defaults have occurred under the Finance Agreements and, in connection
with amendments and waivers with respect thereto, the Company has agreed to
furnish and cause Subsidiaries to furnish Collateral to the Collateral Agent for
the benefit of the Secured Parties.
AGREEMENT
---------
NOW, THEREFORE, and for other good and valuable consideration, the receipt
and adequacy of which hereby is acknowledged, the parties hereto agree as
follows:
SECTION I
COMMON TERMS AND INTERPRETATION
-------------------------------
SECTION 1.1 Definitions and Usage.
---------------------
(a) Defined Terms. ALL CAPITALIZED WORDS AND PHRASES, UNLESS DEFINED
-------------
HEREIN, SHALL HAVE THE MEANINGS SPECIFIED IN
-1-
GLOSSARY OF DEFINITIONS ATTACHED AS SCHEDULE I (THE "GLOSSARY"). Unless
--------
otherwise defined herein or therein, all terms defined in this Agreement shall
have the defined meanings when used in any certificate or other document made or
delivered pursuant hereto. Terms (including uncapitalized terms) not otherwise
defined herein that are defined in the U.C.C. shall have the meanings therein
described.
(b) The Agreement. The words "hereof", "herein", "thereunder" and words
-------------
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; and Subsection,
Section, Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(c) Certain Common Terms.
--------------------
(i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(d) Performance; Time. Whenever any performance obligation hereunder
-----------------
(other than a payment obligation) shall be stated to be due or required to be
satisfied on a day other than a Business Day, such performance shall be made or
satisfied on the next succeeding Business Day. Whenever any payment obligation
hereunder shall be stated to be due or required to be satisfied on a day other
than a Business Day, such performance shall, unless otherwise expressly provided
herein, be made or satisfied on the next succeeding Business Day. In the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including"; the words "to" and "until" each mean
"to but excluding," and the word "through" means "to and including." If any
provision of this Agreement refers to any action taken or to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
interpreted to encompass any and all means, direct or indirect, of taking, or
not taking, such action.
(e) Contracts. Unless otherwise expressly provided herein, references to
---------
agreements and other contractual instruments shall be deemed to include all
subsequent amendments and other modifications thereto, but only to the extent
such amendments and other modifications are not prohibited by the terms of any
Debt Agreement.
(f) Laws. References to any statute or regulation are to be construed as
----
including all statutory and regulatory provisions
-2-
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(g) Captions. The captions and headings of this Agreement are for
--------
convenience of reference only and shall not affect the interpretation of this
Agreement.
(h) Singular and Plural. Words in the singular include the plural and
-------------------
words in the plural include the singular, except as expressly set forth herein.
(i) Controlling Documents. The Credit Agreement and the Note Agreement
---------------------
(the "Finance Agreements") set forth specific duties and obligations and
------------------
respective rights and remedies of the parties thereto. In the event of any
inconsistency between or among this Agreement and any of the Collateral
Documents or the Finance Agreements, this Agreement shall control.
SECTION II
CERTAIN OBLIGATIONS AND DUTIES
OF THE COLLATERAL AGENT AND THE COMPANY
---------------------------------------
Section 2.1 Appointment as Collateral Agent. Each of the Secured Parties
-------------------------------
hereby appoints the Collateral Agent and hereby authorizes the Collateral Agent
to act as agent for the Secured Parties for the purposes of executing and
delivering on their behalf the Collateral Documents, for purposes of perfecting,
enforcing and releasing the Secured Parties' Lien and other rights in respect of
the Collateral, subject, however, to the provisions of this Agreement and the
Collateral Documents.
Section 2.2 Actions.
-------
(a) The Collateral Agent shall take any action permitted or required
hereby, or permitted or otherwise required by the terms of the Finance
Agreements with respect to the Collateral and the Collateral Documents, as
follows:
(i) Authorized Actions.
------------------
(1) The Collateral Agent is authorized and directed on behalf of
all the Secured Parties, without the necessity of any notice to or
further consent from the Secured Parties, from time to time to take
any action with respect to any Collateral or the Collateral Documents
which may be necessary to perfect and maintain perfected the security
interest in and Liens
-3-
upon the Collateral granted pursuant to the
Collateral Documents.
(2) The Secured Parties authorize the Collateral Agent, in
accordance with Section 7.4, to release any Lien granted to or held by
-----------
the Collateral Agent upon any Collateral (A) upon the occurrence of
the Collateral Agency Agreement Termination Date; (B) constituting
Property sold or to be sold or disposed of as part of or in connection
with any Disposition permitted under both of the Finance Agreements,
as confirmed by the Agent and the Required Noteholders, for their
respective Finance Agreements; (C) constituting Property in which the
Company or any Grantor owned no interest at the time the Lien was
granted or at any time thereafter; (D) constituting Property leased to
the Company or a Grantor under a lease which has expired or been
terminated in a transaction permitted under both of the Finance
Agreements or is about to expire and which has not been, and is not
intended by the Company or such Grantor to be, renewed or extended; or
(E) consisting of an instrument evidencing indebtedness or other debt
instrument, if the indebtedness evidenced thereby has been paid in
full.
(ii) Actions Requiring Prior Approval. Other than as set forth in
--------------------------------
Section 2.2(a)(i) above, the Collateral Agent is not required to take any
-----------------
other actions with respect to the Collateral unless authorized in writing
by the Majority Holders or the Holders, as the case may be, in accordance
with the terms of this Agreement. Upon request by the Collateral Agent at
any time, the Majority Holders will confirm in writing, pursuant to this
Section 2.2(a)(ii), the Collateral Agent's authority to release particular
------------------
types or items of Collateral. Upon the request of all of the Holders, the
Collateral Agent shall release all or any portion of the Collateral from
the Liens created under the Collateral Documents. Notwithstanding the
foregoing, the Collateral Agent shall not take any action which is in
conflict with the provisions of law, this Agreement or the Collateral
Documents or with respect to which the Collateral Agent has not received
adequate security or indemnity as provided in Section 6.3(c). With respect
--------------
to actions taken by the Collateral Agent pursuant to this Section
-------
2.2(a)(ii), the Collateral Agent may at any time request from the Holders
----------
and receive directions from the Majority Holders as to any course of action
with respect to the Collateral Documents or matter relating thereto. Each
of the Secured Parties hereby agrees that the Collateral Agent may act as
the Majority Holders may request or direct and that the
-4-
Collateral Agent shall have no liability for acting in accordance with such
request or direction (provided such action does not conflict with the
express terms of this Agreement). The Collateral Agent shall give prompt
notice to each of the Holders (and, if no Event of Default has occurred and
is continuing, to the Company) of actions taken pursuant to the
instructions of the Majority Holders; provided, however, that the failure
-------- -------
to give any such notice shall not create any liability on the part of the
Collateral Agent or impair the right of the Collateral Agent to take any
such action or the validity or enforceability under this Agreement of the
action so taken. Except as otherwise provided in this Agreement, directions
given by Majority Holders to the Collateral Agent hereunder shall be
binding on each Secured Party for all purposes.
(b) None of the Secured Parties, other than the Collateral Agent acting at
the direction of the Majority Holders, shall independently enforce any of the
rights and remedies against the Collateral provided under the Collateral
Documents, provided, however, that (1) each Secured Party shall have the right,
under the Collateral Documents, to receive a share of the proceeds of the
Collateral, if any, to the extent and at the time provided in Section 4 hereof
---------
and (2) nothing in this Section 2.2 shall be deemed to impair or impede any
-----------
rights of the Grantors in and to the Collateral as provided herein or in the
other Collateral Documents.
Section 2.3 Additional Collateral Documents. The Company shall with
-------------------------------
reasonable promptness notify the Collateral Agent in the event that any of the
Grantors acquires any interest in any Property in which any of the Grantors is
obligated to ▇▇▇▇▇ ▇ ▇▇▇▇ to the Collateral Agent under the terms of any Debt
Agreement but which is not covered by a Collateral Document in a manner which
will perfect the Collateral Agent's lien on such Collateral without further act
or deed of the Collateral Agent and, to the extent that such security interest
may be perfected by the execution and/or filing of Collateral Documents, at the
relevant Grantor's sole expense, the Collateral Agent shall immediately prepare
and the relevant Grantor shall execute and deliver to the Collateral Agent, such
Collateral Documents, in form and substance reasonably satisfactory to the
Collateral Agent, as are necessary to perfect the Collateral Agent's lien upon
and security interest in such Collateral. If the signature of the Collateral
Agent is required on any such Collateral Document, the applicable Grantor shall
present such Collateral Document to the Collateral Agent for signature and the
Collateral Agent shall execute such Collateral Document and shall file such
Collateral Document with appropriate public filing and/or recording offices if
such filing and/or recording is required or advisable to perfect or protect the
Collateral Agent's lien upon
-5-
and security interest in the Collateral subject to such Collateral Document. The
applicable Grantor shall supply the Collateral Agent with an executed copy of
each such Collateral Document and the Collateral Agent shall obtain at Grantor's
expense satisfactory evidence that each such Collateral Document has been
properly filed or recorded, if filing or recording is required under this
Section 2.3.
-----------
SECTION III
ACTIONABLE DEFAULTS; REMEDIES
-----------------------------
Section 3.1 Actionable Default.
------------------
(a) Upon receipt of a Notice of Actionable Default, the Collateral Agent
shall, within one (1) Business Day thereafter, notify each Holder and the
Grantors in the manner provided in Section 8.2 of this Agreement that an
-----------
Actionable Default exists. Upon receipt of any written directions pursuant to
Section 3.6(a) of this Agreement, the Collateral Agent shall, within one (1)
--------------
Business Day thereafter, send a copy thereof to each Holder and each Grantor.
(b) The party or parties giving a Notice of Actionable Default (or
successors in interest thereto) or the Majority Holders shall be entitled to
withdraw it by delivering written notice of withdrawal to the Collateral Agent
with a copy to each Grantor (i) before the Collateral Agent takes any action to
exercise any remedy with respect to the Collateral, or (ii) thereafter, if (A)
the Company indemnifies the Secured Parties (in a manner reasonably satisfactory
to the Collateral Agent and the Majority Holders in their sole discretion) with
respect to all reasonable costs and expenses incurred by the Secured Parties in
connection with withdrawing all actions the Collateral Agent has taken to
exercise any remedy or remedies with respect to the Collateral, and (B) the
Majority Holders shall have consented in writing to such withdrawal.
(c) Upon the withdrawal of a Notice of Actionable Default pursuant to the
terms and provisions of Section 3.1(b) of this Agreement, to the extent that
--------------
such Notice of Actionable Default shall have resulted in the exercise of the
rights and remedies provided in this Section 3 or any rights and remedies
---------
provided in any of the Collateral Documents or shall prohibit the Company or any
Grantor from taking certain actions as specified herein, such rights and
remedies shall be suspended, and any exercise thereof by the Collateral Agent
shall cease, and such prohibitions on the Company or Grantor shall not remain in
effect provided that such
-------- ----
-6-
rights and remedies, and such prohibitions, shall be reinstated upon the giving
of any later Notice of Actionable Default.
(d) If a Notice of Actionable Default has been received, and after such
Notice of Actionable Default has been withdrawn pursuant to the terms of this
Agreement, the Collateral Agent shall with reasonable promptness give notice to
the Grantors of any such notice of withdrawal received from the Majority
Holders, Holder or the Holders, as the case may be.
Section 3.2 Remedies. If and only if the Collateral Agent shall have
--------
received a Notice of Actionable Default and until any such Notice of Actionable
Default shall be withdrawn pursuant to the terms of this Agreement:
(a) upon the direction of the Majority Holders, the Collateral Agent shall
exercise the rights and remedies provided in this Section 3 and the rights and
---------
remedies provided in any of the Collateral Documents; and
(b) the Grantors hereby irrevocably constitute and appoint the Collateral
Agent and any officer or agent thereof, with full power of substitution, as
their true and lawful attorney-in-fact with full power and authority in the name
of the Grantors, or either of them, or in its own name, from time to time in the
Collateral Agent's discretion, upon the Collateral Agent's receipt of a Notice
of Actionable Default, for the purpose of carrying out the terms of this
Agreement and any of the Collateral Documents, to take any and all appropriate
action and to execute any and all documents and instruments which may be
necessary to accomplish the purposes hereof and thereof and, without limiting
the generality of the foregoing, hereby grant the Collateral Agent the power and
right on behalf of the Grantors, or any of them, without notice to or assent by
any of the Grantors, to the extent permitted by applicable law, to do the
following:
(i) to ask for, demand, ▇▇▇ for, collect, receive and give
acquittance of any and all moneys due or to become due with respect to the
Collateral,
(ii) to receive, take, endorse, complete, assign and deliver any and
all checks, notes, drafts, acceptances, stock transfer forms, documents and
other negotiable and nonnegotiable instruments, documents and chattel paper
taken or received by the Collateral Agent in connection with this Agreement
or any of the Collateral Documents,
(iii) to commence, file, prosecute, defend, settle, compromise or
adjust any claim, suit, action or proceeding with respect to the
Collateral,
-7-
(iv) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof pursuant to the terms and conditions of this
Agreement and the Collateral Documents, and
(v) to do, at its option and at the expense and for the account of
any of the Grantors, at any time or from time to time, all acts and things
which the Collateral Agent deems reasonably necessary to protect or
preserve the Collateral or to realize upon the Collateral.
Notwithstanding anything contained in this Section 3.2 to the contrary, the
Collateral Agent shall be entitled to exercise such rights and remedies in
respect of the Collateral Documents as specifically provided therein during the
occurrence and continuation of the events specified therefor even if no
unwithdrawn Notice of Actionable Default is then in existence.
Section 3.3 Right to Initiate Judicial Proceedings, etc. If and only if
-------------------------------------------
the Collateral Agent shall have received a Notice of Actionable Default and
during such time as such Notice of Actionable Default shall not have been
withdrawn in accordance with the provisions of Section 3.1(b) hereof, (i) the
--------------
Collateral Agent shall have the right and power to institute and maintain such
suits and proceedings as it may deem appropriate to protect and enforce the
rights vested in it by this Agreement and the Collateral Documents, and (ii) the
Collateral Agent may, either after entry or without entry, proceed by suit or
suits at law or in equity to enforce such rights and to foreclose upon the
Collateral, either judicially or non-judicially, and to sell all or, from time
to time, any of the Collateral under the judgment or decree of a court of
competent jurisdiction.
Section 3.4 Appointment of a Receiver. If and only if the Collateral
-------------------------
Agent shall have received a Notice of Actionable Default and during such time as
such Notice of Actionable Default shall not have been withdrawn in accordance
with the provisions of Section 3.1(b) hereof,and if a receiver of the Collateral
--------------
shall be appointed in a judicial proceeding, Bank of America National Trust and
Savings Association or any Affiliate thereof may be appointed as such receiver,
so long as such appointment does not conflict with, and is subject to, its
obligations under this Agreement. Notwithstanding the appointment of a
receiver, the Collateral Agent shall, to the extent permitted by law, be
entitled to retain possession and control of all cash held by or deposited with
it or its agents or co-trustees pursuant to any provision of this Agreement or
any Collateral Document and such cash shall be applied pursuant to Section 4.4
hereof.
Section 3.5 Exercise of Powers. All of the powers, remedies and rights of
------------------
the Collateral Agent as set forth in this
-8-
Agreement may be exercised by the Collateral Agent in respect of any Collateral
Document as though set forth at length therein and all the powers, remedies and
rights of the Collateral Agent as set forth in any Collateral Document may be
exercised from time to time as herein and therein provided.
Section 3.6 Control by the Majority Holders.
-------------------------------
(a) Subject to Section 3.6(b) of this Agreement, if the Collateral Agent
--------------
shall have received a Notice of Actionable Default and during the period from
such receipt until such Notice of Actionable Default is withdrawn in accordance
with the provisions of Section 3.1(b) hereof, the Majority Holders shall have
--------------
the right, by an instrument in writing executed and delivered to the Collateral
Agent, to direct the Collateral Agent to exercise, or to refrain from
exercising, any right, remedy or power available to or conferred upon the
Collateral Agent hereunder, and in connection therewith, to direct the time,
method and place of conducting any proceeding for any right or remedy available
to the Collateral Agent, or of exercising any trust or power conferred on the
Collateral Agent, or for the appointment of a receiver, or for the taking of any
other action authorized by this Section 3, provided that the Collateral Agent
---------
shall have received adequate security or indemnity as provided in Section 6.3(c)
--------------
of this Agreement.
(b) The Collateral Agent shall not be obligated to follow any written
directions received pursuant to Section 3.6(a) or Section 3.1(b) of this
-------------- --------------
Agreement to the extent the Collateral Agent has received a written opinion of
its counsel, which counsel shall be chosen by the Collateral Agent in its sole
discretion and which counsel may be an employee of the Collateral Agent, to the
effect that such written directions are in conflict with any provisions of law
or this Agreement; provided, however, under no circumstances shall the
-------- -------
Collateral Agent be liable to any Secured Party or any Grantor for following the
written instructions of the Majority Holders pursuant to Section 2.2(a)(ii) or
------------------
3.6(a) herein.
------
(c) Nothing in this Section 3.6 shall impair the right of the Collateral
-----------
Agent in its discretion to take or omit to take any action which is deemed
proper by the Collateral Agent and which is consistent with this Agreement and
not inconsistent with any direction of the Majority Holders; provided, however,
-------- -------
the Collateral Agent shall not be under any obligation, as a result of this
Section 3.6, to take any action which is discretionary with the Collateral Agent
-----------
under the provisions hereof or under any Collateral Document unless so directed
by the Majority Holders.
Section 3.7 Remedies Not Exclusive.
----------------------
-9-
(a) No remedy conferred upon or reserved to the Collateral Agent herein or
in the Collateral Documents is intended to be exclusive of any other remedy or
remedies, but every such remedy shall be cumulative and shall be in addition to
every other remedy conferred herein or in any of the Collateral Documents or now
or hereafter existing at law or in equity or by statute.
(b) No delay or omission by the Collateral Agent in the exercise of any
right, remedy or power accruing upon any Actionable Default shall impair any
such right, remedy or power or shall be construed to be a waiver of any such
Actionable Default or an acquiescence therein; and every right, power and remedy
given by this Agreement or any Collateral Document to the Collateral Agent may
be exercised from time to time in accordance herewith or therewith and as often
as may be deemed expedient by the Collateral Agent.
(c) In case the Collateral Agent shall have proceeded to enforce any
right, remedy or power under this Agreement or any Collateral Document and the
proceeding for the enforcement thereof shall have been discontinued or abandoned
for any reason or shall have been determined adversely to the Collateral Agent,
then and in every such case the Grantors, the Collateral Agent and the Holders
shall, subject to any effect of or determination in such proceeding, severally
and respectively be restored to their former positions and rights hereunder and
under such Collateral Document with respect to the Collateral and in all other
respects, and thereafter all rights, remedies and powers of the Collateral Agent
shall continue as though no such proceeding had been taken.
(d) All rights of action and rights to assert claims upon or under this
Agreement and the Collateral Documents may be enforced by the Collateral Agent
without the possession of any Debt Agreement or the production thereof in any
trial or other proceeding relative thereto, and any such suit or proceeding
instituted by the Collateral Agent shall be brought in its name as Collateral
Agent and any recovery of judgment shall be held as part of the Collateral.
Section 3.8 Waiver of Certain Rights. If and only if the Collateral Agent
------------------------
shall have received a Notice of Actionable Default and during such time as such
Notice of Actionable Default shall not have been withdrawn in accordance with
the provisions of Section 3.1(b) hereof, the Grantors, to the extent they may
--------------
lawfully do so, on behalf of themselves and all who may claim through or under
them, including, without limitation, any and all subsequent creditors, vendees,
assignees and lienors, expressly waive and release any, every and all rights to
demand or to have any marshalling of the Collateral upon any sale, whether made
under any power of sale granted under the Collateral Documents,
-10-
pursuant to judicial proceedings, or upon any foreclosure or any enforcement of
this Agreement or the Collateral Documents, and consents and agrees that the
Collateral may at any sale be offered and sold as an entirety or otherwise;
provided such sale is conducted in a commercially reasonable manner. To the
--------
extent permitted by applicable law and except as otherwise expressly provided in
this Agreement or the Finance Agreements, the Grantors hereby waive presentment,
demand, protest or any notice of any kind in connection with this Agreement, any
Collateral or any Collateral Document.
Section 3.9 Limitation on Collateral Agent's Duties in Respect of
-----------------------------------------------------
Collateral. The Collateral Agent shall not have any duty to the Grantors or the
----------
Holders with respect to any Collateral in its possession or control or in the
possession or control of its agent or nominee, any income thereon, or the
preservation of rights against prior parties or any other rights pertaining
thereto, beyond its duties set forth in this Agreement and the Collateral
Documents as to the custody and release of the Collateral and the accounting to
the Grantors and the Holders for moneys received by it hereunder. To the
extent, however, that the Collateral Agent or an agent or nominee of the
Collateral Agent maintains possession or control of any of the Collateral or the
Collateral Documents at any office of any of the Grantors, the Collateral Agent
shall, or shall instruct such agent or nominee to, grant the Grantors the access
to such Collateral or Collateral Documents which the Grantors may require for
the conduct of their respective businesses, as permitted by the Finance
Agreements, so long as the Collateral Agent shall not have received a Notice of
Actionable Default which has not been withdrawn in accordance with Section
-------
3.1(b) of this Agreement.
------
Section 3.10 Limitation by Law. All the provisions of this Section 3 are
----------------- ---------
intended to be subject to all applicable mandatory provisions of law which may
be controlling and to be limited to the extent necessary so that they will not
render this Agreement invalid or unenforceable in whole or in part.
Section 3.11 Absolute Rights of Holders. Notwithstanding any other
--------------------------
provision of this Agreement or any provision of any Collateral Document, but
subject in all cases to the Finance Agreements, the rights of the Majority
Holders under Section 3.6 hereof and the rights of all parties hereto under the
-----------
Bankruptcy Code, neither the right of each Holder, which is absolute and
unconditional, to receive payments of the Obligations held by such Holder on or
after the due date thereof as therein expressed, to institute suit for the
enforcement of such payment on or after such due date, or to assert its position
and views as a secured creditor in, and to otherwise exercise any right (other
than the right to enforce any Lien on the Collateral, which shall in all
circumstances be exercisable only by the Collateral Agent
-11-
at the direction of the Majority Holders) it may have in connection with a case
under the Bankruptcy Code in which any of the Grantors is a debtor, nor the
obligation of any of the Grantors, which is also absolute and unconditional, to
pay the Obligations owing by the Company to each Holder at the time and place
expressed in the Debt Agreements shall be impaired or affected without the
consent of such Holder.
Section 3.12 Priority of Security. This Agreement and the Collateral
--------------------
Documents are intended to secure the Obligations as provided herein and therein.
SECTION IV
COLLATERAL ACCOUNT;
-------------------
CONTROLLED CASH ACCOUNT; APPLICATION OF MONEYS
----------------------------------------------
Section 4.1 The Collateral Account; Controlled Cash Account. Upon receipt
-----------------------------------------------
of a Notice of Actionable Default (but not before such time as the first such
notice is received) and at all times thereafter until (i) all Notices of
Actionable Default have been withdrawn in accordance with Section 3.1(b) hereof
--------------
or (ii) this Agreement shall have terminated, there shall be established and
maintained with the Collateral Agent an account which shall be entitled the
"Collateral Account" (herein called the "Collateral Account"); it being
------------------ -- -----
understood (A) that such account may, at the election of the Collateral Agent,
----------
consist of the lockbox account established and maintained at ANB pursuant to the
Credit Agreement and (B) that automatically on the giving of a Notice of
Actionable Default, Bank of America National Trust and Savings Association, qua
Collateral Agent, shall have exclusive dominion and control of such lockbox
account for the benefit of the Secured Parties and all amounts therein shall be
applied in accordance with this Agreement. All moneys which are received by the
Collateral Agent with respect to the Collateral after the Collateral Agent shall
have received a Notice of Actionable Default which has not been withdrawn in
accordance with the terms of Section 3.1(b) hereof shall be deposited in the
--------------
Collateral Account and thereafter shall be held, applied and/or disbursed by the
Collateral Agent in accordance with the terms of this Agreement. Subject to
Section 4.5 below, all moneys received by the Collateral Agent with respect to
-----------
all or any part of the Collateral either (x) prior to Collateral Agent's receipt
------
of a Notice of Actionable Default, or (y) after the withdrawal of all pending
--
Notices of Actionable Default in accordance with the terms of Section 3.1(b)
--------------
hereof and prior to Collateral Agent's receipt of any additional Notice of
Actionable Default, shall be delivered to the Company for the benefit of the
Grantors.
-12-
Section 4.2 Grant of Security Interest; Control of Collateral Account.
---------------------------------------------------------
(a) To secure the prompt and complete payment, when due, of all
Obligations, the Grantors hereby assign and pledge to the Collateral Agent for
the benefit of the Secured Parties and grant to the Collateral Agent for the
benefit of the Secured Parties a security interest in all of the right, title
and interest of the Grantors, or either of them, in and to the following,
whether presently existing or hereafter arising or acquired (the "Liquid
------
Collateral"): the Collateral Account, all cash deposited therein, all
----------
certificates and instruments, if any, from time to time representing the
Collateral Account; all investments from time to time made pursuant to Section
-------
4.3 hereof; all notes, certificates of deposit and other instruments from time
---
to time hereafter delivered to or otherwise possessed by the Collateral Agent in
substitution for, or in addition to, any or all of the then existing Liquid
Collateral; all interest, dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the then existing Liquid Collateral; and to the
extent not covered above, all Proceeds of any and all collections, earnings and
accruals with respect to any or all of the foregoing (whether the same are
acquired before or after the commencement of a case under the Bankruptcy Code by
or against any of the Grantors as a debtor).
(b) All right, title and interest in and to the Collateral Account shall
vest in the Collateral Agent, for the benefit of the Secured Parties, and funds
on deposit in the Collateral Account and other Liquid Collateral shall
constitute part of the Collateral. The Collateral Account shall be subject to
the exclusive dominion and control of the Collateral Agent, for the benefit of
the Secured Parties.
Section 4.3 Investment of Funds Deposited in Collateral Account. The
---------------------------------------------------
Collateral Agent shall invest and reinvest moneys on deposit (and, in the
Collateral Agent's reasonable judgment, not required to be disbursed in the next
three (3) Business Days) in the Collateral Account at any time in Cash
Equivalents; provided, however, that in order to provide the Holders with a
-------- -------
perfected security interest therein, each such investment shall be either:
(i) evidenced, or deemed under applicable federal regulations to be
evidenced, by negotiable certificates or instruments or nonnegotiable
certificates or instruments issued in the name of the Collateral Agent,
which (together with any appropriate instruments of transfer) are delivered
to, and held by, the Collateral Agent or an agent thereof
-13-
(which shall not be any of the Grantors or any of their respective
Affiliates) in California; or
(ii) in book-entry form and issued in the State of California and in
which (in the opinion of independent counsel to the Collateral Agent) the
Collateral Agent shall have a perfected ownership or security interest
which under applicable law shall not be subject to any other ownership or
security interest.
All such investments and the interest and income received thereon and therefrom
and the net proceeds realized on the sale thereof shall be held in the
Collateral Account as part of the Collateral. Nothing herein shall obligate the
Collateral Agent to invest any Collateral in a manner that maximizes the rate of
return thereon or obtain any particular return thereon.
Section 4.4 Application of Moneys In Collateral Account.
-------------------------------------------
(a) (i) Subject to Section 4.1 hereof, all moneys held by the Collateral
-----------
Agent in the Collateral Account shall, to the extent available for distribution,
be distributed by the Collateral Agent on the applicable Distribution Date, as
follows:
FIRST: To the Collateral Agent in an amount up to the Collateral
Agent's Fees which are unpaid as of such Distribution Date, and to any
Secured Party which has theretofore advanced or paid any such Collateral
Agent's Fees in an amount equal to the amount thereof so advanced or paid
by such Secured Party prior to such Distribution Date; provided, however,
-------- -------
that nothing herein is intended to relieve any of the Grantors of their
respective obligations to pay such costs, fees, expenses and liabilities
from funds outside of the Collateral Account;
SECOND: To (A) the Agent, for itself, the Banks and the Issuing Bank;
and (B) the Noteholders, ratably up to and in accordance with their
respective amounts of all unpaid costs and expenses incurred (1) in the
case of the Banks, the Issuing Bank and the Agent, in connection with
performing their respective duties under the Credit Agreement, including
without limitation those related to the administration and enforcement of
the Credit Agreement, and (2) in the case of the Noteholders, in connection
with the administration and enforcement of the Note Agreement;
THIRD: To the Noteholders and the Agent for the benefit of the Banks
and the Issuing Bank, ratably in accordance with the principal and accrued
interest and other Obligations then owing to each of them under the Note
Agreement and the Credit Agreement, respectively; it being
-- -----
-14-
understood that in the case of outstanding undrawn Letters of Credit, such
----------
Letters of Credit shall, for purposes of calculating the ratable sharing
under this clause THIRD, be deemed to be drawn and unreimbursed;
FOURTH: Any surplus then remaining shall be paid to the Grantors or
their respective successors or assigns.
(b) In the event any of the Obligations are not due and payable on any
Distribution Date, the Company shall be deemed for purposes of the distribution
made on such Distribution Date to have an obligation to make a prepayment of
such Obligation, or, with respect to Letter of Credit Obligations, at the option
of the Majority Banks, to provide cash collateral, in each case, in the amount
of such Obligations. The amount distributed with respect to an obligation to
provide cash collateral for outstanding undrawn Letters of Credit shall (i) be
held by the Collateral Agent subject to the provisions of this Section 4.4(b),
--------------
as cash collateral for such Letters of Credit and (ii) subject to the pro rata
distribution requirements of clause THIRD in Section 4.4(a). The Company shall
--------------
be deemed for purposes of the distribution made on such Distribution Date to
have an obligation to provide cash collateral in an amount equal to the maximum
amount of the outstanding undrawn Letters of Credit. Upon the expiration of, or
draw upon, the last remaining theretofore undrawn Letter of Credit for which
amounts were received or held by the Collateral Agent for the benefit of the
Issuing Bank, any amounts received or held by the Collateral Agent in respect of
undrawn Letters of Credit which expired without having been drawn upon shall be
distributed to the Noteholders and the Agent for the benefit of the Banks and
the Issuing Bank, ratably in accordance with the then remaining unpaid principal
and interest and other Obligations owing to each of them under the Note
Agreement and the Credit Agreement, respectively.
Section 4.5 Application of Net Proceeds. All moneys received or held by
---------------------------
the Collateral Agent as Net Proceeds, shall, to the extent available for
distribution, be distributed by the Collateral Agent, as follows:
FIRST: To the Collateral Agent in an amount up to the Collateral
Agent's Fees which are unpaid as of the date of distribution thereof, and
to any Secured Party which has theretofore advanced or paid any such
Collateral Agent's Fees in an amount equal to the amount thereof so
advanced or paid by such Secured Party prior to such date of distribution;
provided, however, that nothing herein is intended to relieve any of the
-------- -------
Grantors of their respective
-15-
obligations to pay such costs, fees, expenses and liabilities from funds
outside of the Collateral Account;
SECOND: To (A) the Agent, for itself, the Banks and the Issuing Bank,
and (B) the Noteholders, ratably up to and in accordance with their
respective amounts of all unpaid costs and expenses incurred (1) in the
case of the Banks, the Issuing Bank and the Agent, in connection with
performing their respective duties under the Credit Agreement, including
without limitation those related to the administration and enforcement of
the Credit Agreement, and (2) in the case of the Noteholders, in connection
with the administration and enforcement of the Note Agreement; and
THIRD: To the Noteholders and the Agent for the benefit of the Banks,
ratably in accordance with (i) the principal and accrued interest and other
Obligations under the Note Agreement then owing to each of the Noteholders
and (ii) the Commitments of each of the Banks then in existence under the
Credit Agreement.
SECTION V
AGREEMENTS WITH COLLATERAL AGENT
--------------------------------
Section 5.1 Delivery of Debt Agreements. On the date of this Agreement
---------------------------
the Grantors will deliver to the Collateral Agent true and complete copies of
the Debt Agreements and the Collateral Documents. The Grantors agree that,
promptly upon the execution thereof, the Grantors will deliver to the Collateral
Agent a true and complete copy of any and all other Debt Agreements, Collateral
Documents and all amendments, restatements, modifications or supplements to any
Debt Agreements or Collateral Documents entered into by the Grantors subsequent
to the date of this Agreement. Each of the Agent and the Noteholders agree to
promptly notify the Collateral Agent of each amendment, restatement,
modification or supplement to the Credit Agreement or the Note Agreement,
respectively, executed from time to time after the date hereof.
Section 5.2 Information as to Holders. The Company agrees that it shall
-------------------------
deliver to the Collateral Agent for the benefit of each Holder within thirty
(30) days following the end of each fiscal year of the Company, commencing with
the fiscal year ending October 31, 1996 and from time to time upon the
reasonable request of the Collateral Agent, a list setting forth, with respect
to each of the Finance Agreements, (i) the aggregate principal amount
outstanding thereunder, (ii) the interest rate or rates then in effect
thereunder, (iii) each Bank's Commitment
-16-
(to the extent known to the Company) the names and mailing addresses of each of
the Banks and the unpaid principal amount thereof owing to each Bank, and (iv)
with respect to the Note Debt, the name and mailing address of each Noteholder
and the principal amount owing to each. The Company will furnish to the
Collateral Agent on the date of this Agreement a list setting forth the name and
address of each party to whom notices must be sent under or with respect to each
of the Finance Agreements, and the Company agrees to furnish promptly to the
Collateral Agent any changes or additions to such list to the extent the Company
acquires knowledge thereof. With respect to information relating to the Note
Agreement and the Note Debt, the Collateral Agent may request verification of
such information from the Noteholders. With respect to information relating to
the Credit Agreement or the Banks, the Collateral Agent may request verification
of such information from the Agent.
Section 5.3 Expenses.
--------
(a) Except as otherwise provided in Section 5.3(b) below, the Company
--------------
shall pay or reimburse the Collateral Agent within five (5) Business Days after
the Company's receipt of demand therefor for all Attorney Costs and out-of-
pocket costs and expenses:
(i) incurred by the Collateral Agent or any of the Secured Parties
in connection with the administration of this Agreement and the other
Collateral Documents or the Finance Agreements and the development,
preparation, delivery, and execution of any amendment, supplement, waiver
or modification of this Agreement or any of the Collateral Documents or the
Finance Agreements and any other documents prepared in connection herewith
or therewith;
(ii) incurred by the Collateral Agent or any of the Secured Parties
in connection with the enforcement, attempted enforcement, or preservation
of any rights or remedies (including in connection with any "workout" or
restructuring regarding the Collateral Documents or the Finance Agreements,
and including in any Insolvency Proceeding or appellate proceeding) under
this Agreement or any Collateral Document or the Finance Agreements; and
(iii) incurred by the Collateral Agent in performing its duties
hereunder.
(b) Demands by the Collateral Agent for payment or reimbursement of any
costs and expenses referred to in this Section 5.3 or any other provision of
-----------
this Agreement or any of the other Collateral Documents or the Finance
Agreements shall be
-17-
accompanied by a customary invoice which shall, in the discretion of the
Collateral Agent or the Secured Party requesting reimbursement or payment, as
the case may be, be subject to redacting. The Company will not dispute the
payment or reimbursement of costs and expenses incurred by the Collateral Agent
for outside consultants, appraisers, auditors or attorneys provided the
Collateral Agent has engaged and paid such Person in accordance with the same
standards and practices used for engaging and paying professionals for similar
engagements. In the event the Company shall dispute the fact that such a
standard for engagement and payment has been applied, the Company shall so
notify the Collateral Agent and shall nonetheless pay to the Collateral Agent
the amounts due on a timely basis whereupon such amounts will be held in escrow
by the Collateral Agent. A payment deposited into escrow pursuant to this
Section 5.3(b), to the extent it is the full amount owed under Section 5.3(a),
-------------- --------------
shall be deemed a payment in full of such amount owed under Section 5.3(a). The
--------------
Collateral Agent shall be entitled to apply any such amounts held in escrow if
the Company does not commence the dispute resolution process provided for in
Section 5.9 on or before the thirtieth day after such amounts have been paid to
-----------
the Collateral Agent. If the Company commences such proceedings within such 30
day period, the disputed amounts held in escrow by the Collateral Agent pursuant
to this Section 5.3(b) shall be disposed of in accordance with the determination
--------------
made in such proceedings.
Section 5.4 Stamp and Other Similar Taxes. The Grantors jointly and
-----------------------------
severally agree to indemnify and hold harmless the Collateral Agent from, and
shall reimburse the Collateral Agent for, any present or future claim for
liability for any stamp or other similar tax and any penalties or interest with
respect thereto, which may be assessed, levied or collected and required to be
paid by any jurisdiction and required to be paid in connection with this
Agreement, any Collateral Document, the Collateral, or the attachment or
perfection of the security interest granted to the Collateral Agent in any
Collateral.
Section 5.5 Filing Fees, Excise Taxes etc. The Grantors jointly and
------------------------------
severally agree to pay or to reimburse the Collateral Agent-Related Persons for
any and all amounts in respect of all search, filing, recording and registration
fees, taxes, excise taxes and other similar imposts which may be payable or
determined to be payable in respect of the execution, delivery, performance,
administration and enforcement of this Agreement and each Collateral Document
and agrees to save the Collateral Agent-Related Persons harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and fees.
-18-
Section 5.6 Indemnification. Subject to the provisions of subsection
---------------
5.6(f) hereof:
(a) The Company shall pay, indemnify, and hold the Collateral Agent-
Related Persons, each Secured Party and their respective officers, directors,
employees, counsel, agents and attorneys-in-fact (each, an "Indemnified Person")
------------------
harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, reasonable costs, charges, expenses or
disbursements (including Attorney Costs) of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement and any other Collateral Documents or the Finance Agreements,
or the transactions contemplated hereby and thereby, and with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to this Agreement or use of any proceeds thereof,
whether or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities"); provided, that the Company shall
----------------------- --------
have no obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities arising from (i) the gross negligence or willful
misconduct of such Indemnified Person or (ii) to any Secured Party (other than
the Collateral Agent qua "Collateral Agent") for damages, penalties, actions,
judgments or suits owing to or instituted by another Secured Party.
(b) All amounts owing under Sections 5.4, 5.5 and 5.6 shall be paid within
------------ --- ---
30 days after demand. As security for such payments under such Sections, the
Collateral Agent for the benefit of itself and the other Secured Parties shall
have a Lien prior to any other Obligations upon all Collateral and other
property and funds held or collected by the Collateral Agent as part of the
Collateral. The obligations in Sections 5.4, 5.5 and 5.6(a) shall survive
------------ --- ------
payment of all Obligations. However, survival of any of the obligations of the
Company under Sections 5.4, 5.5 and 5.6(a) shall not impair the obligation of
------------ --- ------
the Collateral Agent to release the Collateral upon the terms and conditions set
forth herein as long as no claim under Section 5.4, 5.5 or 5.6 has been
----------- --- ---
asserted. If any such claim is asserted, the Collateral Agent shall maintain a
security interest in Collateral with sufficient value to satisfy such claim, as
reasonably determined by the Collateral Agent.
(c) Each of the Secured Parties agrees to indemnify the Collateral Agent-
Related Persons, ratably in accordance with the amount of the Obligations held
by such Secured Party to the extent not reimbursed by the Company or any Grantor
or out of any Proceeds for any and all Indemnified Liabilities (except to the
extent relating solely to the Finance Agreements), provided, however, (i) that
-------- -------
no such party shall be liable for any of the
-19-
foregoing to the extent they arise solely from the gross negligence or willful
misconduct of the Collateral Agent-Related Persons and (ii each indemnifying
Secured Party shall have a right of subrogation as against the Company and the
Grantors to the extent of such indemnification which shall be included in the
determination of Obligations owed to it.
(d) To assert an indemnity claim against the Company under this Section
-------
5.6, an Indemnified Person shall notify the Company in writing as soon as
---
reasonably practicable under the circumstances (provided that upon the
Collateral Agent's receipt of any service of process which would cause the
Collateral Agent to assert an indemnity claim under this Section 5.6, the
-----------
Collateral Agent shall notify the Company in writing no later than ten (10) days
after receipt of such service of process thereof), stating the facts which
entitle such Indemnified Person to make a claim for indemnification; provided
that the failure to so notify the Company in writing as soon as reasonably
practicable under the circumstances shall void the related indemnity claim (and
thereby proportionately reduce the amount payable in respect thereof) only to
the extent the Company was prejudiced thereby.
(e) The Company shall, at its own cost, expense and risk:
(i) defend all suits, actions or other legal or administrative
proceedings that may be threatened, brought or instituted against such
Indemnified Person on account of any matter or matters described in this
Section 5.6;
-----------
(ii) pay or satisfy any judgment, decree or settlement that may be
tendered against such Indemnified Person in any such suit, action or other
legal or administrative proceeding, provided such Indemnified Person has
given notice in accordance herewith; and
(iii) reimburse such Indemnified Person for any and all reasonable
attorney costs, including, without limitation, all Attorney Costs incurred
in connection with any of the matters described in this Section 5.6 or in
-----------
connection with enforcing the indemnification hereunder, all in accordance
with the provisions of Section 5.3 herein.
-----------
(f) Any law firm selected by the Company to defend an indemnified claim
which is an Indemnified Liability shall be subject to the reasonable approval of
the applicable Indemnified Person, which approval shall not be unreasonably
withheld or delayed; provided that upon thirty (30) days prior written notice,
--------
the Indemnified Person who is the subject of such indemnified claim which is an
Indemnified Liability may elect to defend, using a law firm selected by such
Indemnified Person,
-20-
subject to the reasonable approval of the Company (which approval shall not be
unreasonably withheld or delayed), any such claim, loss, action, legal or
administrative proceeding at the cost and expense of the Company, if, in the
reasonable judgment of such Indemnified Person:
(i) the defense is not proceeding or being conducted in a
professional manner; or
(ii) there is a conflict of interest between the Indemnified Person
and the Company relating to such lawsuit, action, legal or administrative
hearing.
(g) If any Indemnified Person exercises its right to designate counsel
pursuant to subsection (f), all costs and expenses thereof shall be paid by the
Company in accordance with Section 5.3 herein.
-----------
Section 5.7 Further Assurances.
------------------
(a) The Grantors will promptly disclose to the Collateral Agent and
correct any material defect or error that may be discovered in any material
written information, exhibits or reports furnished to the Holders or the
Collateral Agent or in any Collateral Document or in the execution,
acknowledgement or recordation thereof.
(b) Promptly upon request by the Collateral Agent, the Grantors shall (and
shall cause any of their respective Domestic Subsidiaries to) do, execute,
acknowledge, deliver, record, rerecord, file, refile, register and reregister,
any and all such further acts, deeds, conveyances, security agreements,
mortgages, assignments, estoppel certificates, financing statements and
continuations thereof, termination statements, notices of assignment, transfers,
certificates, assurances and other instruments the Collateral Agent may
reasonably require from time to time in order (i) to grant to the Collateral
Agent a valid and perfected lien in accordance with the Collateral Documents on
the Collateral, (ii) to perfect and maintain the validity, effectiveness and
priority of any of the Collateral Documents, and the liens intended to be
created thereby, and (iii) to convey, grant, assign, transfer, preserve, protect
and confirm to the Collateral Agent the rights granted or now or hereafter
intended to be granted to the Holders or the Collateral Agent under any
Collateral Document.
Section 5.8 Information Sharing. (a) In accordance with the terms and
-------------------
conditions of Section 7.10 of the Credit Agreement, Agent, Banks and their
------------
agents are permitted access to the Grantors' books and records and may make site
visits pursuant to such Sections. For so long as the Credit Agreement is in
effect,
-21-
each of the Banks and the Agent hereby agree to make available to Noteholders
(who make a request in accordance with this Section) information in its
possession (exclusive of Proprietary Information) obtained from the Company
through such access and site visits within the 12 consecutive calendar month
period most recently ended, provided that the Agent or the relevant Bank
receives a written request for such information from the Noteholders holding at
least twenty five percent (25%) of the principal amount of the outstanding
Notes. Additionally, as long as the Note Agreement is in effect, each Noteholder
agrees to make available information to the Agent and any Bank who specifically
request information (exclusive of Proprietary Information) obtained by such
Noteholder from the Company under Section 6.6 or 6.7 of the Note Agreement
----------- ---
within the 12 consecutive calendar month period most recently ended, provided
such Noteholder receives a written request for such information from the Banks
holding, individually or collectively, at least 25% of the principal amount of
the outstanding Loans (as defined in the Credit Agreement) (or Commitments (as
defined in the Credit Agreement) if no Loans (as defined in the Credit
Agreement) are then outstanding).
(b) Any Secured Party providing information pursuant to this Section shall
not be deemed to be making any representation or warranty regarding the veracity
or completeness of such information, and such party shall not be responsible to
any other Secured Party for the validity, effectiveness, genuineness or
sufficiency thereof. Any Secured Party requesting information pursuant to this
Section shall indemnify, and the Company and the other Grantors shall release,
the Secured Party providing such information, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, reasonable
costs, charges, expenses or disbursements (including Attorney Costs) of any kind
or nature whatsoever that may be imposed on, incurred by or asserted against the
Secured Party providing such information in any way relating to compliance with
any request under this Section and with respect to any investigation, litigation
or proceeding (including any Insolvency Proceeding or appellate proceeding)
related to compliance with any request under this Section, whether or not the
indemnified Secured Party is a party thereto, provided, however, that no such
-------- -------
indemnifying party shall be liable for any of the foregoing to the extent they
arise solely from the gross negligence or willful misconduct of the indemnified
party. Notwithstanding anything to the contrary in the Finance Agreements, the
Company consents to the information sharing arrangement provided for in this
Section.
Section 5.9 Dispute Resolution Mechanism for Certain Matters. Any
------------------------------------------------
controversy, dispute or claim arising out of or in connection with the
determination of whether the Collateral Agent shall have used its standard
procedures and practices for
-22-
engaging and paying any professional as provided in Section 5.3 herein, shall be
-----------
settled at the request of any party to this Agreement by final and binding
arbitration conducted at a location determined by an arbitrator in Chicago,
Illinois by and in accordance with the then existing Rules of Practice and
Procedure of Judicial Arbitration & Mediation Services, Inc., and judgment upon
any decision rendered by the arbitrator may be entered by any state or federal
court having jurisdiction. The arbitrator shall determine which is the
prevailing party and the non-prevailing party shall pay the reasonable costs and
expenses, including attorneys' costs and fees, incurred by the parties in
connection with such arbitration.
SECTION VI
THE COLLATERAL AGENT
--------------------
Section 6.1 Exculpatory Provisions.
----------------------
(a) The Collateral Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and the Collateral Documents, and
the Collateral Agent shall not by reason of this Agreement or the Collateral
Documents be a trustee for any Holder or have any other fiduciary obligation to
any other Holder (including any obligation under the Trust Indenture Act of
1939, as amended). The Collateral Agent shall not be responsible to any Secured
Party for any recitals, statements, representations or warranties contained in,
or made in connection with any agreement or notes evidencing any of the
Obligations, or the Debt Agreements or in any certificate or other document
referred to or provided for in, or received by any of them, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of any of
the Debt Agreements, or any other document referred to therein or any lien under
the Collateral Documents, or the perfection or priority of any such lien or for
any failure by any party to any such agreement to perform any of its respective
obligations under any of the Debt Agreements. None of the Collateral Agent-
Related Persons shall be liable or responsible for any action taken or omitted
to be taken by it or them hereunder or in connection herewith, except for its or
their own gross negligence or willful misconduct. The Collateral Agent shall
not be responsible for insuring the Collateral or for the payment of taxes,
charges, assessments of liens upon the Collateral or otherwise as to the
maintenance of the Collateral.
(b) From time to time, upon request by the Collateral Agent, each of the
Secured Parties will promptly notify the Collateral Agent of the aggregate
amount of the outstanding
-23-
Obligations owing to each of them as at such date as the Collateral Agent may
specify and of any payment received by them to be applied to the Obligations
owing to them.
(c) Subject to the provisions of the Collateral Documents concerning the
Collateral Agent's duty of care with respect to certificates evidencing the
Pledged Shares in the Collateral Agent's possession, the Collateral Agent shall
not be personally liable for any acts, omissions, errors of judgment or mistakes
of fact or law made, taken or omitted to be made or taken by it in accordance
with this Agreement or any Collateral Document (including, without limitation,
acts, omissions, errors or mistakes with respect to the Collateral), except for
those arising out of or in connection with the Collateral Agent's gross
negligence or willful misconduct. Notwithstanding anything set forth herein to
the contrary, the Collateral Agent shall have a duty of reasonable care with
respect to any "instruments" (as defined in Section 9-105 of the U.C.C.),
documents or other items which are delivered to the Collateral Agent or its
designated representatives as part of the Collateral and are in the Collateral
Agent's or its designated representatives' possession and control.
Section 6.2 Delegation of Duties. The Collateral Agent may perform any
--------------------
duty hereunder either directly or by or through agents, nominees or attorneys-
in-fact, which may include employees or officers of the Company. The Collateral
Agent shall be entitled to advice of counsel concerning all matters pertaining
to such duties.
Section 6.3 Reliance by Collateral Agent.
----------------------------
(a) The Collateral Agent may consult with its counsel, accountants or
other experts in connection with the fulfillment of its duties hereunder, and
the Collateral Agent shall be entitled to rely on the opinion of such counsel,
accountants or other experts in connection with any action taken, omitted to be
taken or suffered by Collateral Agent in fulfilling its duties hereunder.
(b) The Collateral Agent may rely, and shall be fully protected in acting,
upon any resolution, statement, certificate, instrument, opinion, report,
notice, request, consent, order, bond or other paper or document which it has no
reason to believe to be other than genuine and to have been signed or presented
by the proper party or parties or, in the case of cables, telecopies and
telexes, to have been sent by the proper party or parties, including, for the
purpose of identifying the Majority Holders and the amounts of Obligations, the
Holders thereof and Commitments held by them and the information provided by the
Grantors and the Agent and the Noteholders to the Collateral
-24-
Agent pursuant to Section 5.2 of this Agreement. In the absence of its gross
-----------
negligence or willful misconduct, the Collateral Agent may conclusively rely, as
to the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Collateral Agent and
conforming to the requirements of this Agreement or any Collateral Document.
(c) If the Collateral Agent has been requested to take action pursuant to
Section 2.2 or Section 3.6 of this Agreement, the Collateral Agent shall not be
----------- -----------
under any obligation to exercise any of the rights vested in the Collateral
Agent by this Agreement or any Collateral Document unless the Collateral Agent
shall have been provided adequate security and indemnity (as and when required
herein) against the costs, expenses and liabilities which may be incurred by it
in compliance with such request or direction, including such reasonable advances
as may be requested by the Collateral Agent.
(d) The Collateral Agent shall treat the Holder of any Note registered
with the Company as the absolute owner thereof for all purposes hereunder and
shall not be affected by any notice to the contrary, whether such Note shall be
past due or not.
(e) Any Person who shall be designated as the duly authorized
representative of one or more Holders to act as such in connection with any
matters pertaining to this Agreement or any Collateral Document or the
Collateral shall present to the Collateral Agent such documents, including,
without limitation, opinions of counsel, as the Collateral Agent may reasonably
request, in order to demonstrate to the Collateral Agent the authority of such
Person to act as the representative of such Holder(s); provided that, unless the
-------- ----
Collateral Agent has received a prior written notice to the contrary from any
Bank, the Collateral Agent may conclusively presume that the Agent is the duly
authorized representative of all Banks.
Section 6.4 Limitations on Duties of Collateral Agent.
-----------------------------------------
(a) The Collateral Agent shall be obliged to perform such duties and only
such duties as are specifically set forth in this Agreement or in any Collateral
Document, and no implied covenants or obligations shall be read into this
Agreement or any Collateral Document against the Collateral Agent. The
Collateral Agent shall, upon receipt of a Notice of Actionable Default and
during such time as such Notice of Actionable Default shall not have been
withdrawn in accordance with the provisions of Section 3.1(b) hereof, exercise
--------------
the rights vested in it by this Agreement or by any Collateral Document, and the
Collateral Agent shall not be liable with respect to any action taken or omitted
by it in
-25-
accordance with the direction of the Majority Holders pursuant to Section 2.2 or
-----------
3.6 of this Agreement.
---
(b) Except as herein otherwise expressly provided, including, without
limitation, upon the written request of the Majority Holders pursuant to Section
-------
2.2 or 3.6 of this Agreement, the Collateral Agent shall not be under any
--- ---
obligation to take any action which is discretionary with the Collateral Agent
under the provisions hereof or under any Collateral Document. The Collateral
Agent shall furnish to each Holder promptly upon receipt thereof a copy of each
certificate or other paper furnished to the Collateral Agent by any of the
Grantors under or in respect of this Agreement, any Collateral Document or any
of the Collateral, unless by the express terms of any Collateral Document a copy
of the same is required to be furnished by some other Person directly to the
Holders, or the Collateral Agent shall have determined that the same has already
been so furnished; provided, however, that the Collateral Agent shall have no
-------- -------
liability for its inadvertent failure to furnish any such Person with any such
copies and the Collateral Agent shall not be required to furnish copies of
documents which are not material unless reasonably requested to do so by a
Holder.
Section 6.5 Moneys To Be Held in Trust. All moneys received by the
--------------------------
Collateral Agent under or pursuant to any provision of this Agreement or any
Collateral Document shall be held in trust for the purposes for which they were
paid or are held. No other fiduciary duty or relationship is created or
intended between the parties hereto.
Section 6.6 Resignation and Removal of the Collateral Agent.
-----------------------------------------------
(a) The Collateral Agent may resign at any time by giving at least 30
days' written notice thereof to the other Holders and to the Grantors (such
resignation to take effect as hereinafter provided), and the Collateral Agent
may be removed at any time by the Majority Holders. In the event of any such
resignation or removal of the Collateral Agent, the Majority Holders shall
thereupon have the right to appoint a successor Collateral Agent, which
successor Collateral Agent shall, if no Notice of Actionable Default shall have
been given and not withdrawn, be subject to the prior approval of the Grantors,
which approval shall not be unreasonably withheld. If no successor Collateral
Agent shall have been so appointed by the Majority Holders and shall have
accepted such appointment within 30 days after the notice of the intent of the
Collateral Agent to resign, then the retiring Collateral Agent may, on behalf of
the Secured Parties, appoint a successor Collateral Agent. Any successor
Collateral Agent appointed pursuant to this clause (a) shall be either a Holder
or a commercial bank organized under the laws of the
-26-
United States of America or any state thereof and having a combined capital and
surplus of at least $100,000,000.
(b) Upon the acceptance of any appointment as Collateral Agent hereunder
by a successor Collateral Agent, such successor Collateral Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Collateral Agent, and the retiring or removed
Collateral Agent shall pay over to the successor Collateral Agent all Collateral
and Proceeds thereof which it holds and thereupon be discharged from its duties
and future obligations hereunder. After any retiring or removed Collateral
Agent's resignation or removal hereunder as Collateral Agent, the provisions of
Sections 5 and 6 shall continue in effect for its benefit in respect of any
---------- -
actions taken or omitted to be taken by it while it was acting as the Collateral
Agent.
Section 6.7 Secured Parties in Individual Capacities. Each of the Secured
----------------------------------------
Parties and its Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting or other
business with the Company and its Subsidiaries and Affiliates as though such
Secured Party were not a "Secured Party" hereunder and without notice to or
consent of the Holders. The Holders acknowledge that, pursuant to such
activities, each Secured Party or its Affiliates may receive information
regarding the Company or its Affiliates (including information that may be
subject to confidentiality obligations in favor of the Company or such
Affiliate) and acknowledge that such Secured Party shall be under no obligation,
except as expressly provided hereunder with respect to information obtained
pursuant to the Debt Agreements, to provide such information to them.
SECTION VII
RELEASE OF COLLATERAL
---------------------
Section 7.1 Conditions to Release.
---------------------
(a) Subject to this Section 7.1(a) and to Section 7.2(a), all of the
-------------- -------------- ---
Collateral shall be released on the date (the "Collateral Agency Agreement
---------------------------
Termination Date") which shall be the earlier of:
----------------
(i) the date on which all of the principal, interest, fees, costs and
expenses and indemnities (then determinable) and other Obligations owing
under the Debt Agreements, including, without limitation, all accrued and
unpaid
-27-
Collateral Agent's Fees, shall have been paid in full (subject to the
survival of indemnities under Section 5.6(b) hereof, under Sections 11.7
--------------
and 12.5 of the Credit Agreement and under the Note Agreement) and the
Commitments of the Banks shall have been terminated pursuant to the terms
of the Credit Agreement and no Letters of Credit shall be outstanding; or
(ii) the date on which (A) the Company shall have received written
instructions from all of the Holders instructing the Company to direct the
Collateral Agent to release the Collateral, and (B) accrued and unpaid
Collateral Agent's Fees shall have been paid in full.
(b) Each of the Collateral Agent and the Holders agrees that it, or its
designated agent, shall promptly provide on the written request of the Company,
payoff letters setting forth the determinable amounts for the items described in
clause (a)(i) above and, upon payment of such amounts, all certificates and
notices to the Collateral Agent required pursuant to Section 7.2(a).
--------------
(c) If any payment or transfer of any interest in property by any Grantor
to the Collateral Agent or any other Secured Party in fulfillment of any
Obligation is rescinded or must at any time (including after the Collateral
Agency Agreement Termination Date) be returned, in whole or in part, by the
Collateral Agent or any other Secured Party to the Company or any other Person,
upon the insolvency, bankruptcy or reorganization of the Company or otherwise,
the provisions of this Agreement and the other Collateral Documents shall be
reinstated with respect to any such payment or transfer, regardless of any prior
return of Collateral or cancellation or termination of any Lien in respect
thereof.
Section 7.2 Procedure for Release. The procedure for release of the
---------------------
Collateral shall be as set forth in Section 7.2(a) or Section 7.4 of this
-------------- -----------
Agreement, as applicable.
(a) Discharge Notice.
----------------
(i) Upon the occurrence of the Collateral Agency Agreement
Termination Date, the Company shall deliver to the Collateral Agent (A) a
Discharge Notice, together with (B) certificates from the Agent and each
Noteholder certifying that one of the events described in Sections
--------
7.1(a)(i) and (ii) have occurred.
--------- ----
(ii) After receipt by the Collateral Agent of a Discharge Notice
certifying that one of the events set forth in Section 7.1(a)(i) or Section
----------------- -------
7.1(a) (ii) of this Agreement has occurred, together with such certificates
------
as
-28-
are required by Section 7.2(a)(i), the Collateral Agent shall, to the
-----------------
extent requested by the Company, promptly take the actions set forth in
Sections 7.3(a) and (b) of this Agreement.
--------------- ---
(b) Intentionally omitted.
Section 7.3 Effective Time of Release.
-------------------------
(a) In the event that the provisions of Section 7.2 of this Agreement are
-----------
applicable, the Collateral Agent shall promptly release the Collateral effective
with the occurrence of the Collateral Agency Agreement Termination Date. The
Collateral Agent shall promptly notify the Company and the Holders, in the
manner specified in Section 8.2 of this Agreement, on receipt of a Discharge
-----------
Notice.
(b) When the release of any of the Collateral is effective, all right,
title and interest of the Collateral Agent and the Secured Parties in, to and
under such Collateral and the Collateral Documents with respect to such
Collateral shall terminate and shall revert to the Grantors or their respective
successors and assigns, and the estate, right, title and interest of the
Collateral Agent and the Secured Parties therein shall thereupon cease,
terminate and become void. In such case, the Grantors shall deliver to the
Collateral Agent one or more instruments of discharge, satisfaction and release
in form reasonably satisfactory to the Collateral Agent, and, at the cost and
expense of the Company or its successors or assigns, the Collateral Agent shall
execute a discharge, satisfaction or release of such Collateral Documents and
such instruments as are necessary or desirable to terminate and remove of record
any documents constituting public notice of such Collateral Documents and the
Liens and assignments granted thereunder and shall assign and transfer, or cause
to be assigned and transferred, and shall deliver or cause to be delivered to
each of the Grantors, all such property, including all moneys, instruments and
securities of each Grantor, then held by the Collateral Agent. The cancellation
and satisfaction of such Collateral Documents shall be without prejudice to the
rights of the Collateral Agent or any successor Collateral Agent to charge and
be reimbursed for any expenditures which it may thereafter incur in connection
with this Section 7.3.
-----------
Section 7.4 Release of Certain Collateral. To the extent that (a) the
-----------------------------
Majority Holders, at the request of the Company, instruct the release of
specified portions of the Collateral pursuant to Section 2.2 of this Agreement,
-----------
or (b) the security interest in any Collateral granted pursuant to any of the
Collateral Documents is otherwise terminated or released as required by law or
in accordance with the terms thereof upon the
-29-
Disposition of any part of the Collateral as permitted by such Collateral
Document and both of the Finance Agreements, all right, title and interest of
the Collateral Agent in, to and under such Property and the security interest of
the Collateral Agent therein shall terminate and shall revert to the applicable
Grantor or its successors assigns, and the estate, right, title and interest of
the Collateral Agent therein shall thereupon cease, terminate and become void.
The Company's request for any such release shall be accompanied by a written
certification by the Company, in form reasonably satisfactory to the Collateral
Agent, that, as of the date of such release, no Actionable Default has occurred
and is continuing. Following such request, instructions or other termination or
release, the Collateral Agent shall, upon the written request of the Company,
its successors or assigns and at the cost and expense of such Grantor or its
successors or assigns, execute such instruments and take such other actions as
are necessary to terminate any such security interest and otherwise effectuate
the release of the specified portions of the Collateral from the lien of such
security interest. Such termination and release shall be without prejudice to
the rights of the Collateral Agent or any successor collateral agent to charge
and be reimbursed for any expenditures which it may thereafter incur in
connection with this Section 7.4.
-----------
SECTION VII
MISCELLANEOUS
-------------
Section 8.1 Amendments, Supplements, and Waivers.
------------------------------------
(a) The Collateral Agent, the Majority Holders and the Grantors may, from
time to time, enter into written agreements supplemental hereto for the purpose
of adding to or waiving any provision of this Agreement or any of the Collateral
Documents or amending the definition of any capitalized term used herein or
therein, as such capitalized term is used herein or therein, or changing in any
manner the rights of the Collateral Agent, the Holders or the Grantors hereunder
or thereunder; provided, however, that no such supplemental agreement shall:
-------- -------
(i) amend, modify or waive any provision of Section 7 or this Section
--------- -------
8.1 without the written consent of each Holder;
---
(ii) reduce the percentage specified in the definition of Majority
Holders without the written consent of each of the Holders; or
-30-
(iii) amend, modify or waive any provision of Section 4.4 of this
-----------
Agreement or the definition of the term Obligations without the written
consent of any Secured Party whose rights would be adversely affected
thereby; provided that this clause (iii) shall not apply to any such
--------
amendment or modification which only adds additional obligations of the
Grantors to the definition of "Obligations"; or
(iv) be effective without the written consent of the Collateral
Agent and the Grantors.
Any such supplemental agreement shall be binding upon the Grantors, the Holders
and the Collateral Agent and their respective successors and assigns. The
Collateral Agent shall not enter into any such supplemental agreement unless it
shall have received a certificate signed by an Authorized Officer of the Company
to the effect that such supplemental agreement will not result in a breach of
any provision or covenant contained in any of the Debt Agreements. Prior to
executing any amendment pursuant to the terms of this Section 8.1(a), the
--------------
Collateral Agent shall be entitled to receive an opinion of counsel to the
effect that the execution of such document is authorized hereunder.
(b) Without the consent of the Holders, the Grantors and the Collateral
Agent, at any time and from time to time, may enter into additional Collateral
Documents or one or more agreements supplemental hereto or to any Collateral
Document, in form satisfactory to the Collateral Agent:
(i) to add to the covenants of the Grantors for the benefit of the
Holders;
(ii) to mortgage, pledge or grant a security interest in favor of
the Collateral Agent as additional security for the Obligations pursuant to
any Collateral Document; or
(iii) to cure any ambiguity, to correct or supplement any provision
herein or in any Collateral Document which may be defective or inconsistent
with any other provision herein or therein; provided, however, that any
-------- -------
such action contemplated in this clause (iii) shall not adversely affect
the interests of the Holders in any manner whatsoever.
(c) Without the consent of the Holders, the Grantors and the Collateral
Agent may, at the direction of the Agent, or any of the Noteholders and at any
time and from time to time, add additional Persons ("Additional Grantors") to
-------------------
this Agreement, or any of the Collateral Documents, and such additional
provisions hereto and thereto as may be necessary or appropriate to effect the
grant by such Additional Grantors of Liens on any assets of
-31-
such Additional Grantors as additional security for the Obligations.
(d) It shall not be necessary for the consent of the Holders under this
Section 8.1 to approve the particular form of any proposed amendment or
-----------
supplement, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment or supplement under this Section 8.1 becomes effective
-----------
in accordance with its terms, the Company shall mail to the Collateral Agent,
the Agent and each Holder an executed copy of such amendment. The failure to
give such notice to all Holders, or any defect therein, shall not impair or
affect the validity of an amendment under this Section 8.1.
-----------
Section 8.2 Notices. All notices, demands, requests, consents and other
-------
communications provided for hereunder shall be in writing (including, unless the
context expressly otherwise provides, by facsimile transmission, provided that
any matter transmitted by the Company or any Grantor or to the Company or any
Grantor by facsimile (i) shall be immediately confirmed by a telephone call to
the recipient, and (ii) shall be followed promptly by a hard copy original
thereof) and mailed, faxed or delivered:
(a) if to the Company or any other Grantor, at: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: Chief
Financial Officer, or at such other address as shall be designated by it in a
written notice to the Collateral Agent and the Secured Parties, with a copy
thereof to ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Ltd., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ;
(b) if to the Collateral Agent at: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ #▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. 94103, Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇, or at such other address
as shall be designated by it in a written notice to the Company and the Secured
Parties, with a copy to ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: J.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇;
(c) if to the Agent to Bank of America National Trust and Savings
Association at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, #▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. 94103,
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇, or at such other address as shall be designated by
the Agent in a written notice to the Company, the Collateral Agent and the
Secured Parties, with a copy to ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: J.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇; and
-32-
(d) if to any Noteholder at the address for such Noteholder set forth on
Schedule II hereto, or at such other address as shall be designated by any
Noteholder in a written notice to the Collateral Agent and the Secured Parties;
and
(e) if to any Bank, at the address set forth for such Bank on Schedule III
attached hereto, or at such other address as shall be designated by the
applicable Bank in a written notice to the Collateral Agent and the Secured
Parties.
All such notices, requests and communications shall, when transmitted by mail,
overnight delivery, or faxed, be effective when received.
The Grantors acknowledge and agree that any agreement of the Collateral Agent
and the Holders in this Section 8.2 herein to receive certain notices by
-----------
telephone and facsimile is solely for the convenience and at the request of the
Grantors. The Collateral Agent and the Holders shall be entitled to rely on the
authority of any Person purporting to be a Person authorized by the Grantors to
give such notice and the Collateral Agent and the Holders shall not have any
liability to the Grantors or other Person on account of any action taken or not
taken by the Collateral Agent or the Holders in reliance upon such telephonic or
facsimile notice. The obligation of the Company to repay the Obligations shall
not be affected in any way or to any extent by any failure by the Collateral
Agent and the Holders to receive written confirmation of any telephonic or
facsimile notice or the receipt by the Collateral Agent and the Holders of a
confirmation which is at variance with the terms understood by the Collateral
Agent and the Holders to be contained in the telephonic or facsimile notice.
Section 8.3 Headings. Section, subsection and other head ings used in
--------
this Agreement are for convenience only and shall not affect the construction of
this Agreement.
Section 8.4 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall not invalidate the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction; provided that this Agreement shall be construed so as to
-------- ----
give effect to the intention expressed in Section 3.12 hereof.
------------
Section 8.5 Intentionally Omitted.
---------------------
Section 8.6 Dealings With the Company.
-------------------------
-33-
(a) Upon any application or demand by any of the Grantors to the
Collateral Agent to take or permit any action under any of the provisions of
this Agreement or any Collateral Document, such Grantor shall furnish to the
Collateral Agent a certificate signed by an Authorized Officer of such Grantor
stating that all conditions precedent, if any, provided for in this Agreement or
any Collateral Document relating to the proposed action have been complied with,
except that in the case of any such application or demand as to which the
furnishing of such documents is specifically required by any provision of this
Agreement or any Collateral Document, relating to such particular application or
demand, no additional certificate or opinion need be furnished.
(b) Any opinion of counsel may be based, insofar as it relates to factual
matters, upon a certificate of Authorized Officers of the applicable Grantor
delivered to the Collateral Agent.
Section 8.7 Claims against the Collateral Agent. Any claims or causes of
-----------------------------------
action which the Holders or the Grantors shall have against the Collateral Agent
shall survive the termination of this Agreement and the release of the
Collateral hereunder.
Section 8.8 Binding Effect.
--------------
(a) This Agreement shall be binding upon and inure to the benefit of each
of the parties hereto and shall inure to the benefit of the Holders and their
respective successors and assigns, and nothing herein or in any Collateral
Document is intended or shall be construed to give any other Person any right,
remedy or claim under, to or in respect of this Agreement, any Collateral
Document or the Collateral.
(b) The Grantors jointly and severally agree to pay the Collateral Agent's
Fees in accordance with the provisions of Section 5.3 herein. In the event the
-----------
Grantors fail to pay the Collateral Agent's Fees and the Collateral Agent's Fees
cannot be paid out of amounts received in the Collateral Account, each Secured
Party agrees to pay the Collateral Agent's Fees, ratably in accordance with the
proportion of the Obligations held by it.
Section 8.9 Governing Law and Jurisdiction.
------------------------------
(a) THIS AGREEMENT AND THE OTHER COLLATERAL DOCUMENTS SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND TO THE EXTENT
THE VALIDITY OR PERFECTION OF THE SECURITY INTERESTS UNDER ANY OF THE COLLATERAL
DOCUMENTS, OR THE REMEDIES HEREUNDER OR THEREUNDER, IN RESPECT OF ANY COLLATERAL
ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER
-34-
THAN ILLINOIS, PROVIDED THAT THE COLLATERAL AGENT SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT AND ANY
OTHER COLLATERAL DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS
OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS, AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH OF THE GRANTORS, THE COLLATERAL AGENT AND
THE HOLDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-
EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE GRANTORS, THE COLLATERAL
AGENT AND THE HOLDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON-CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
Section 8.10 Waiver of Jury Trial. THE GRANTORS, THE HOLDERS AND THE
--------------------
COLLATERAL AGENT EACH WAIVES THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER COLLATERAL DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE GRANTORS, THE
HOLDERS AND THE COLLATERAL AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION 8.10 AS TO ANY ACTION, COUNTERCLAIM
------------
OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY
OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER COLLATERAL DOCUMENTS OR ANY
PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER COLLATERAL DOCUMENTS.
Section 8.11 Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same instrument.
Section 8.12 The Company as Agent for Grantors. Each Grantor hereby
---------------------------------
designates and appoints the Company as the agent of such Grantor, and each
Grantor irrevocably authorizes the Company, to execute and deliver any notice
required hereunder on behalf of such Grantor. Any notice required to be
delivered to any Grantor hereunder shall be deemed delivered to such Grantor
when delivered to the Company in accordance with the terms hereof. The Company
hereby accepts such designation as agent for the Grantors until all Obligations
have been paid in full and
-35-
this Agreement has been terminated. Each Grantor agrees not to revoke, modify or
withdraw such designation until all Obligations have been paid in full and this
Agreement has been terminated.
Section 8.1 Interest. Any amounts payable to the Collateral Agent or a
--------
Secured Party under this Collateral Agency Agreement or under any of the
Collateral Documents if not paid when due shall bear interest from the date due
until paid in full, at the higher of (i) the rate of interest applicable from
time to time for Base Rate Loans (as defined in the Credit Agreement) under
Section 2.10(c) of the Credit Agreement and (ii) the rate of interest chargeable
for overdue amounts under the Note Agreement. This provision shall survive the
termination of the Finance Agreements.
-36-
In witness whereof, the parties have executed this Agreement as of the day
hereinabove first written.
SYSTEM SOFTWARE ASSOCIATES, INC.
By: _________________________
Its: _________________________
SYSTEM SOFTWARE ASSOCIATES JAPAN
LIMITED LIABILITY COMPANY
By: _________________________
Its: _________________________
SSA JAPAN CORP.
By: _________________________
Its: _________________________
SSA PACIFIC RIM CORP.
By: _________________________
Its: _________________________
SSA NORTH CENTRAL, INC.
By: _________________________
Its: _________________________
SSA CARIBBEAN, INC.
By: _________________________
Its: _________________________
Collateral Agency Agreement
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (as Collateral Agent)
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (as Agent for BAI and ANB)
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
BANK OF AMERICA ILLINOIS
(individually and as Issuing Bank)
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
Collateral Agency Agreement
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By: ______________________________
Name: ____________________________
Title:____________________________
Collateral Agency Agreement
Schedule I
Glossary
Collateral Agency Agreement
Schedule I - Glossary
Schedule II
Noteholder Addresses
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
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MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
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Mail Station F-461
Springfield, MA 01111
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in each case with a copy to:
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Quaker Tower, Suite 3400
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Collateral Agency Agreement
Schedule II - Noteholder Addresses
Schedule III
Bank Addresses
If to Bank of America Illinois:
BANK OF AMERICA NT & SA
Special Assets Group 4346
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Los Angeles, CA 90017
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with copies to:
BANK OF AMERICA NT & SA
The Mid-Cap Technology Division
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BANK OF AMERICA NT & SA
Legal Department-U.S. Wholesale
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BANK OF AMERICA NT & SA
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If to American National Bank and Trust Company of Chicago:
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO
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Attention: Isra ▇. ▇▇▇▇▇
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Collateral Agency Agreement
Schedule III - Bank Addresses