Exhibit 10.34
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CREDIT AGREEMENT
DATED AS OF NOVEMBER 6, 1996
AMONG
OUTSOURCING SOLUTIONS INC.,
AS BORROWER,
THE LENDERS LISTED HEREIN,
AS LENDERS,
▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT PARTNERS L.P.
AND
THE CHASE MANHATTAN BANK,
AS CO-ADMINISTRATIVE AGENTS,
▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT PARTNERS L.P.
AND
CHASE SECURITIES INC.,
AS ARRANGING AGENTS,
AND
SUNTRUST BANK, ATLANTA,
AS COLLATERAL AGENT
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OUTSOURCING SOLUTIONS INC.
CREDIT AGREEMENT
TABLE OF CONTENTS
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SECTION 1.
DEFINITIONS............................. 2
1.1 Certain Defined Terms................................... 2
1.2 Accounting Terms; Utilization of GAAP for Purposes
of Calculations Under Agreement......................... 31
1.3 Other Definitional Provisions........................... 31
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS.............. 32
2.1 Commitments; Loans...................................... 32
2.2 Interest on the Loans................................... 40
2.3 Fees.................................................... 44
2.4 Repayments, Prepayments and Reductions in
Revolving Loan Commitments; General
Provisions Regarding Payments........................... 44
2.5 Use of Proceeds......................................... 53
2.6 Special Provisions Governing Eurodollar Rate Loans...... 54
2.7 Increased Costs; Taxes; Capital Adequacy................ 56
2.8 Obligation of Lenders and Issuing Lenders to Mitigate... 61
SECTION 3.
LETTERS OF CREDIT.......................... 62
3.1 Issuance of Letters of Credit and Lenders'
Purchase of Participations Therein...................... 62
3.2 Letter of Credit Fees................................... 65
3.3 Drawings and Payments and Reimbursement
of Amounts Paid Under Letters of Credit................. 65
3.4 Obligations Absolute.................................... 68
3.5 Indemnification; Nature of Issuing Lender's Duties...... 69
3.6 Increased Costs and Taxes Relating to Letters of Credit. 70
SECTION 4.
CONDITIONS TO LOANS AND LETTERS OF CREDIT.............. 71
4.1 Conditions to Term Loans................................ 71
4.2 Conditions to All Loans................................. 78
4.3 Conditions to Letters of Credit......................... 79
SECTION 5.
(i)
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REPRESENTATIONS AND WARRANTIES.................... 80
5.1 Organization, Powers, Qualification, Good
Standing, Business and Subsidiaries..................... 80
5.2 Authorization of Borrowing, etc......................... 81
5.3 Financial Condition; Projections........................ 82
5.4 No Material Adverse Change; No Restricted
Junior Payments......................................... 83
5.5 Title to Properties; Liens.............................. 83
5.6 Litigation; Adverse Facts............................... 83
5.7 Payment of Taxes........................................ 84
5.8 Performance of Agreements; Materially Adverse Agreements 84
5.9 Governmental Regulation................................. 85
5.10 Securities Activities................................... 85
5.11 Employee Benefit Plans.................................. 85
5.12 Certain Fees............................................ 85
5.14 Employee Matters........................................ 87
5.15 Solvency................................................ 87
5.16 Matters Relating to Collateral.......................... 87
5.17 Related Agreements...................................... 88
5.18 Disclosure.............................................. 89
5.19 Subordination of Seller Notes........................... 89
SECTION 6.
AFFIRMATIVE COVENANTS........................ 89
6.1 Financial Statements and Other Reports.................. 90
6.2 Corporate Existence, etc................................ 95
6.3 Payment of Taxes and Claims; Tax Consolidation.......... 95
6.4 Maintenance of Properties; Insurance.................... 95
6.5 Inspection; Lender Meeting.............................. 96
6.6 Compliance with Laws, etc............................... 96
6.7 Environmental Disclosure and Inspection................. 96
6.8 Company's Remedial Action Regarding Hazardous Materials. 98
6.9 of Subsidiary Guaranty and Subsidiary
Security Agreements by Subsidiaries and
Future Subsidiaries..................................... 98
6.10 Interest Rate Protection................................ 99
6.11 Further Assurances...................................... 99
SECTION 7.
NEGATIVE COVENANTS.......................... 100
7.1 Indebtedness............................................ 100
7.2 Liens and Related Matters............................... 101
7.3 Investments; Joint Ventures............................. 102
7.4 Contingent Obligations.................................. 103
7.5 Restricted Junior Payments.............................. 104
(ii)
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7.6 Financial Covenants..................................... 105
7.7 Restriction on Fundamental Changes; Asset Sales......... 107
7.8 Sales and Lease-Backs................................... 109
7.9 Transactions with Shareholders and Affiliates........... 109
7.10 Disposal of Subsidiary Stock............................ 109
7.11 Conduct of Business..................................... 110
7.12 Amendments or Waivers of Certain Related
Agreements; Amendments of Documents Relating
to Subordinated Indebtedness; Designation of
"Designated Senior Debt"; Preferred Stock............... 110
7.13 Fiscal Year............................................. 111
SECTION 8.
EVENTS OF DEFAULT.......................... 111
8.1 Failure to Make Payments When Due....................... 111
8.2 Default in Other Agreements............................. 111
8.3 Breach of Certain Covenants............................. 112
8.4 Breach of Warranty...................................... 112
8.5 Other Defaults Under Loan Documents..................... 112
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.... 112
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc...... 113
8.8 Judgments and Attachments............................... 113
8.9 Dissolution............................................. 114
8.10 Employee Benefit Plans.................................. 114
8.11 Change in Control....................................... 114
8.12 Invalidity of Guaranties................................ 115
8.13 Failure of Security..................................... 115
8.14 Failure to Consummate Acquisition or Merger............. 115
8.15 Default Under Subordination Provisions.................. 115
SECTION 9.
AGENTS................................ 116
9.1 Appointment............................................. 116
9.2 Powers; General Immunity................................ 118
9.3 Representations and Warranties; No Responsibility
For Appraisal of Creditworthiness....................... 119
9.4 Right to Indemnity...................................... 120
9.5 Successor Agents and Swing Line Lender.................. 120
9.6 Collateral Documents.................................... 121
SECTION 10.
MISCELLANEOUS............................ 121
10.1 Assignments and Participations in Loans,
Letters of Credit....................................... 121
10.2 Expenses................................................ 124
(iii)
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10.3 Indemnity............................................... 125
10.4 Set-Off; Security Interest in Deposit Accounts.......... 126
10.5 Ratable Sharing......................................... 126
10.6 Amendments and Waivers.................................. 127
10.7 Independence of Covenants............................... 129
10.8 Notices................................................. 129
10.9 Survival of Representations, Warranties and Agreements.. 129
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative... 130
10.11 Marshalling; Payments Set Aside......................... 130
10.12 Severability............................................ 130
10.13 Obligations Several; Independent Nature of
Lenders' Rights......................................... 130
10.14 Headings................................................ 131
10.15 Applicable Law.......................................... 131
10.16 Successors and Assigns.................................. 131
10.17 Consent to Jurisdiction and Service of Process.......... 131
10.18 Waiver of Jury Trial.................................... 132
10.19 Confidentiality......................................... 132
10.20 Counterparts; Effectiveness............................. 133
Signature pages............................................... S-1
(iv)
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV-A FORM OF TRANCHE A TERM NOTE
IV-B FORM OF TRANCHE B TERM NOTE
V FORM OF REVOLVING NOTE
VI FORM OF SWING LINE NOTE
VII FORM OF SUBSIDIARY GUARANTY
VIII FORM OF PLEDGE AGREEMENT
IX-A FORM OF SECURITY AGREEMENT
IX-B FORM OF LIMITED PARTNERSHIP SECURITY AGREEMENT
IX-C FORM OF TRADEMARK SECURITY AGREEMENT
X FORM OF COMPLIANCE CERTIFICATE
XI FORM OF OPINION OF WHITE & CASE
XII FORM OF OPINION OF O'MELVENY & ▇▇▇▇▇ LLP
XIII FORM OF ASSIGNMENT AGREEMENT
XIV FORM OF PERMITTED SELLER NOTE
XV FORM OF CERTIFICATE RE NON-BANK STATUS
XVI FORM OF COLLATERAL ACCOUNT AGREEMENT
(v)
SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES; LENDING
OFFICES
4.1R CORPORATE AND CAPITAL STRUCTURE; MANAGEMENT
5.1 SUBSIDIARIES OF COMPANY
5.13 CERTAIN ENVIRONMENTAL MATTERS
7.1 CERTAIN EXISTING INDEBTEDNESS
7.2 CERTAIN EXISTING LIENS
7.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
7.4(iv)(a) CERTAIN EXISTING EARN OUT AGREEMENTS
7.4(iv)(b) CERTAIN EXISTING FORWARD FLOW CONTRACTS
(vi)
OUTSOURCING SOLUTIONS INC.
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of November 6, 1996 and entered into by
and among OUTSOURCING SOLUTIONS INC., a Delaware corporation ("Company"), THE
FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually
referred to herein as a "Lender" and collectively as "Lenders"), ▇▇▇▇▇▇▇ SACHS
CREDIT PARTNERS L.P. and THE CHASE MANHATTAN BANK, as co-administrative agents
(each, in such capacity, a "Co-Administrative Agent" and, collectively,
"Co-Administrative Agents"), ▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT PARTNERS L.P. and CHASE
SECURITIES INC., as arranging agents (each, in such capacity, an "Arranging
Agent" and collectively, "Arranging Agents"), and SUNTRUST BANK, ATLANTA, as
collateral agent (in such capacity, "Collateral Agent").
R E C I T A L S
WHEREAS, Company is party to that certain Agreement and Plan of Merger
dated as of August 13, 1996, by and among Company, Boxer Acquisition Corp., a
Delaware corporation and wholly owned subsidiary of Company ("Acquisition Sub"),
and Payco American Corporation, a Wisconsin corporation ("Payco"), pursuant to
which, among other things, Company will acquire all of the capital stock of
Payco;
WHEREAS, Company desires that Lenders extend certain credit facilities to
Company in an aggregate principal amount of $200,000,000 which, together with
the proceeds of the Subordinated Notes (capitalized terms used in these Recitals
without definition shall have the respective meanings assigned in subsection 1.1
hereof) and certain other funds, will be used to fund the acquisition of Payco,
to refinance certain indebtedness of Company, Payco and their respective
Subsidiaries, to pay Transaction Costs and to provide certain working capital
and acquisition facilities to Company;
WHEREAS, certain domestic Subsidiaries of Company desire to guaranty all
of the obligations of Company with respect to the credit facilities provided by
Lenders;
WHEREAS, Company desires to secure all of the Obligations, and each such
Subsidiary of Company desires to secure its respective obligations under the
Subsidiary Guaranty, by granting to Collateral Agent, for the benefit of Agents
and Lenders, (i) a first priority Lien on substantially all of their respective
real and personal property and (ii) a first priority pledge of all of the
capital stock of their respective direct Subsidiaries;
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NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Lenders, Co-Administrative
Agents, Arranging Agents and Collateral Agent agree as follows:
SECTION 1.
DEFINITIONS
1.1 Certain Defined Terms.
The following terms used in this Agreement shall have the following
meanings:
"Acquisition" means the transactions contemplated by the Acquisition
Agreement.
"Acquisition Agreement" means that certain Agreement and Plan of Merger
dated as of August 13, 1996, by and among Company, Acquisition Sub and Payco, as
in effect on the Closing Date and as such agreement may be amended, restated,
supplemented or otherwise modified from time to time to the extent permitted
under subsection 7.12A.
"Acquisition Sub" has the meaning assigned to that term in the Recitals to
this Agreement.
"Adjustment Eurodollar Rate" means, for any Interest Rate Determination
Date, the rate per annum obtained by dividing (i) the London Interbank offered
rate for deposits in U.S. Dollars for maturities comparable to the Interest
Period for which such Adjusted Eurodollar Rate will apply as of approximately
11:00 A.M. (London time) on such Interest Rate Determination Date as set forth
on Telerate Page 3750 by (ii) a percentage equal to 100% minus the stated
maximum rate of all reserve requirements (including, without limitation, any
marginal, emergency, supplemental, special or other reserves) applicable on such
Interest Rate Determination Date to any member bank of the Federal Reserve
System in respect of "Eurocurrency liabilities" as defined in Regulation D (or
any successor category of liabilities under Regulation D).
"Affected Lender" has the meaning assigned to that term in subsection
2.6C.
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise; provided, however, that "Affiliate" as applied to
Company or its Subsidiaries shall not include Chase, CSI, GSCP, ▇▇▇▇▇▇▇, ▇▇▇▇▇ &
Co. or CS First Boston Corporation and their respective Affiliates, except that
▇▇▇▇▇▇▇, Sachs & Co. and GSCP shall be considered Affiliates of Company and its
Subsidiaries for purposes of
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subsection 7.9 hereof to the extent such Persons are acting as agents or brokers
for Company or any of its Subsidiaries in connection with any sales of
receivables portfolios.
"Agent" means, individually, each of Collateral Agent, Co-Administrative
Agents and Arranging Agents, and "Agents" means Collateral Agent,
Co-Administrative Agents and Arranging Agents, collectively.
"Agreement" means this Credit Agreement dated as of November 6, 1996, as
it may be amended, restated, supplemented or otherwise modified from time to
time.
"Anniversary" means each of the dates that are anniversaries of the
Closing Date.
"Applicable Base Rate Margin" means, with respect to the applicable Loan
set forth below, the corresponding per annum rate set forth below:
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APPLICABLE
LOAN BASE RATE MARGIN
===============================================================
Tranche A Term Loans 1.50%
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Tranche B Term Loans 2.00%
---------------------------------------------------------------
Revolving Loans 1.50%
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; provided that the Applicable Base Rate Margin set forth above with respect to
Tranche A Term Loans and Revolving Loans shall be reduced by the Pricing
Reduction, if any.
"Applicable Eurodollar Rate Margin" means, with respect to the applicable
Loan set forth below, the corresponding per annum rate set forth below:
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APPLICABLE
EURODOLLAR RATE
LOAN MARGIN
===============================================================
Tranche A Term Loans 2.50%
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Tranche B Term Loans 3.00%
---------------------------------------------------------------
Revolving Loans 2.50%
===============================================================
; provided that the Applicable Eurodollar Rate Margin set forth above with
respect to Tranche A Term Loans and Revolving Loans shall be reduced by the
Pricing Reduction, if any.
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"Arranging Agent" and "Arranging Agents" have the respective meanings
assigned to such terms in the introduction to this Agreement; provided that
after the Closing Date, Arranging Agents shall only mean and include GSCP.
"Articles of Merger" means the Articles of Merger dated as of November 6,
1996 by and between Acquisition Sub and Payco to be filed with the Secretary of
State of Wisconsin, as in effect on the Closing Date and as such articles may be
amended, restated, supplemented or otherwise modified from time to time
thereafter to the extent permitted under subsection 7.12A.
"Asset Sale" means the sale (including in any sale-leaseback transaction)
by Company or any of its Subsidiaries to any Person (other than Company or any
of its Wholly Owned Subsidiaries) of (i) any of the stock of any of Company's
Subsidiaries, (ii) all or substantially all of the assets of any division or
line of business of Company or any of its Subsidiaries, or (iii) any other
assets other than sales of assets in the ordinary course of business and sales
of obsolete equipment, excluding any such other assets to the extent that the
aggregate value of such assets sold in any single transaction or transactions is
equal to $250,000 or less in any one Fiscal Year; provided that in no event
shall a sale of all or any portion of a receivables portfolio be deemed a sale
of assets in the ordinary course of business.
"Assignment Agreement" means an assignment agreement in substantially the
form of Exhibit XIII annexed hereto or in such other form as may be approved by
Co-Administrative Agents.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"Base Rate" means, at any time, the higher of (x) the Prime Rate or (y)
the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.
"Base Rate Loans" means Loans bearing interest at rates determined by
reference to the Base Rate as provided in subsection 2.2A.
"Business Day" means (i) for all purposes other than as covered by clause
(ii) below, any day excluding Saturday, Sunday and any day which is a legal
holiday under the laws of the State of New York or is a day on which banking
institutions located in such state are authorized or required by law or other
governmental action to close, and (ii) with respect to all notices,
determinations, fundings, issuances and payments in connection with the Adjusted
Eurodollar Rate or any Eurodollar Rate Loans, any day that is a Business Day
described in clause (i) above and that is also (a) a day for trading by and
between banks in Dollar deposits in the London interbank market and (b) a day on
which banking institutions are open for business in London.
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"Capital Lease" means, as applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
Person.
"Cash" means money, currency or a credit balance in a Deposit Account.
"Cash Equivalents" means (i) marketable securities issued or directly and
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from either Standard & Poor's Rating Service ("S&P") or ▇▇▇▇▇'▇ Investors
Service, Inc. ("Moody's"); (iii) commercial paper maturing no more than one year
from the date of creation thereof and, at the time of acquisition, having a
rating of at least A-1 from S&P or at least P-1 from Moody's; (iv) certificates
of deposit or bankers' acceptances maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody's, issued by any Lender or any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia having unimpaired capital and surplus
of not less than $250,000,000 (each Lender and each such commercial bank being
herein called a "Cash Equivalent Bank"); and (v) Eurodollar time deposits having
a maturity of less than one year purchased directly from any Cash Equivalent
Bank (provided such deposit is with such Cash Equivalent Bank or any other Cash
Equivalent Bank).
"Cash Proceeds" means, with respect to any Asset Sale, Cash payments
(including any Cash received by way of deferred payment pursuant to, or
monetization of, a note receivable or otherwise, but only as and when so
received) received by Company or any of its Subsidiaries from such Asset Sale.
"Certificate of Merger" means the Certificate of Merger dated as of
November 6, 1996 by and between Acquisition Sub and Payco to be filed with the
Secretary of State of Delaware, as in effect on the Closing Date and as such
certificate may be amended, restated, supplemented or otherwise modified from
time to time thereafter to the extent permitted under subsection 7.12A.
"Certificate re Non-Bank Status" means a certificate substantially in the
form of Exhibit XV annexed hereto delivered by a Lender to Chase
Co-Administrative Agent pursuant to subsection 2.7B(iii).
"Chase" means The Chase Manhattan Bank and its successors, including,
without limitation, its successors by merger.
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"Chase Co-Administrative Agent" means Chase, in its capacity as a
Co-Administrative Agent, and any successor to Chase in such capacity appointed
pursuant to subsection 9.5A.
"Closing Date" means the date on or before November 30, 1996 on which the
initial Loans are made.
"Co-Administrative Agent" and "Co-Administrative Agents" have the
respective meanings assigned to such terms in the introduction to this Agreement
and also mean and include any successor Co-Administrative Agent appointed
pursuant to subsection 9.5A.
"Collateral" means all of the properties and assets (including capital
stock) in which Liens are purported to be granted by the Collateral Documents.
"Collateral Account" has the meaning assigned to that term in the
Collateral Account Agreement.
"Collateral Account Agreement" means the Collateral Account Agreement
executed and delivered by Company and Chase Co-Administrative Agent on the
Closing Date, substantially in the form of Exhibit XVI annexed hereto, pursuant
to which Company may pledge cash to Chase Co-Administrative Agent to secure the
obligations of Company to reimburse Issuing Lenders for payments made under one
or more Letters of Credit as such Collateral Account Agreement may hereafter be
amended, restated, supplemented or otherwise modified from time to time.
"Collateral Agent" means SunTrust, in its capacity as Collateral Agent,
and any successor to SunTrust, in such capacity appointed pursuant to subsection
9.5A.
"Collateral Documents" means the Pledge Agreement, the Security Agreement,
the Limited Partnership Security Agreement, the Trademark Security Agreement,
the Collateral Account Agreement, the Mortgages, the Deeds of Trust, and any
other documents, instruments or agreements delivered by any Loan Party pursuant
to this Agreement or any of the other Loan Documents in order to grant or
perfect liens on any assets of such Loan Party as security for the Obligations.
"Commercial Letter of Credit" means any letter of credit or similar
instrument issued for the purpose of providing the primary payment mechanism in
connection with the purchase of any materials, goods or services by Company or
any of its Subsidiaries in the ordinary course of business of Company or such
Subsidiary.
"Commitments" means the commitments of Lenders to make Loans as set forth
in subsection 2.1A.
"Company Common Stock" means, collectively, Company's (i) Voting Common
Stock, par value $0.01 per share, (ii) Class A Non-Voting Common Stock, par
value $0.01
6
per share, (iii) Class B Non-Voting Common Stock, par value $0.01
per share, and (iv) Class C NonVoting Common Stock, par value $0.01 per share.
"Company Preferred Stock" means Company's 8.0% Non-Voting Cumulative
Redeemable Exchangeable Preferred Stock outstanding as of the Closing Date in
the approximate amount of $10,800,000, together with any shares of such
preferred stock issued after the Closing Date as dividends thereon permitted
under subsection 7.5.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit X annexed hereto delivered to Chase Co-Administrative Agent by Company
pursuant to subsection 6.1(iv).
"Condemnation Proceeds" has the meaning assigned to that term in
subsection 2.4B(iii)(d).
"Consolidated Capital Expenditures" means, for any period, the sum of (i)
the aggregate of all expenditures (whether paid in cash or other consideration
or accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of Company and its Subsidiaries)
by Company and its Subsidiaries during that period that, in conformity with
GAAP, are included in "purchases of property, plant or equipment" or comparable
items reflected in the consolidated statement of cash flows of Company and its
Subsidiaries plus (ii) to the extent not covered by clause (i) of this
definition, the aggregate of all expenditures by Company and its Subsidiaries
during that period to acquire (by purchase or otherwise) the business, property
(except inventory, other than any receivables portfolios, in the ordinary course
of business) or fixed assets of any Person, or stock or other evidence of
beneficial ownership of any Person that, as a result of the acquisition of such
stock or other evidence, becomes a Subsidiary of Company.
"Consolidated Current Assets" means, as at any date of determination, the
total assets of Company and its Subsidiaries on a consolidated basis which may
properly be classified as current assets in conformity with GAAP, excluding Cash
and Cash Equivalents.
"Consolidated Current Liabilities" means, as at any date of determination,
the total liabilities of Company and its Subsidiaries on a consolidated basis
which may properly be classified as current liabilities in conformity with GAAP.
"Consolidated EBITDA" means, for any period, (i) the sum of the amounts
for such period of (a) Consolidated Net Income, (b) Consolidated Interest
Expense, (c) provisions for taxes based on income, (d) total depreciation
expense, (e) total amortization expense, (f) other non-cash items reducing
Consolidated Net Income, (g) to the extent deducted in determining Consolidated
Net Income, non-recurring charges not exceeding $10,000,000 identified prior to
the first Anniversary (whether or not incurred prior to the first Anniversary)
with respect to the rationalization of the business of Company and its
Subsidiaries following the Acquisition and (h) to the extent deducted in
determining Consolidated Net Income, any non-recurring charges incurred after
the Closing Date in
7
connection with the resolution of litigation of Company and its Subsidiaries
disclosed in that certain Offering Circular dated October 31, 1996 prepared in
connection with the offering of the Subordinated Notes, less (ii) the sum of the
amounts for such period of (a) other non-cash items increasing Consolidated Net
Income and (b) to the extent not otherwise deducted in determining Consolidated
Net Income, payments made during such period with respect to Earn Out Agreements
permitted hereunder and Management Fees, all of the foregoing as determined on a
consolidated basis for Company and its Subsidiaries in conformity with GAAP.
"Consolidated Excess Cash Flow" means, for any period, an amount (if
positive) equal to (i) the sum, without duplication, of the amounts for such
period of (a) Consolidated EBITDA and (b) the Consolidated Working Capital
Adjustment minus (ii) the sum, without duplication, of the amounts for such
period of (a) voluntary and scheduled cash repayments of Consolidated Total Debt
(excluding repayments of Revolving Loans except to the extent the Revolving Loan
Commitments are permanently reduced in connection with such repayments), (b)
Consolidated Capital Expenditures (net of any proceeds of any related financings
with respect to such expenditures), (c) Consolidated Interest Expense, and (d)
the provision for current taxes based on income of Company and its Subsidiaries
and payable in cash with respect to such period.
"Consolidated Fixed Charges" means, for any period, an amount equal to the
sum of the amounts for such period of (i) scheduled cash repayments of principal
of all Indebtedness, as reduced by prepayments previously made, (ii)
Consolidated Interest Expense, (iii) Consolidated Maintenance Capital
Expenditures and (iv) the portion of taxes based on income actually paid in
cash.
"Consolidated Interest Expense" means, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP) payable in cash of Company and its Subsidiaries on a consolidated
basis with respect to all outstanding Indebtedness of Company and its
Subsidiaries, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Agreements, but
excluding, however, any amounts referred to in subsection 2.3 payable to Agents
and Lenders on or before the Closing Date.
"Consolidated Maintenance Capital Expenditures" means, for any period, all
Consolidated Capital Expenditures for such period other than Consolidated
Capital Expenditures expended to make Permitted Acquisitions or Permitted
Portfolio Acquisitions.
"Consolidated Net Income" means, for any period, the net income (or loss)
of Company and its Subsidiaries on a consolidated basis for such period taken as
a single accounting period determined in conformity with GAAP; provided that
there shall be excluded (i) the income (or loss) of any Person (other than a
Subsidiary of Company) in which any other Person (other than Company or any of
its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to
8
Company or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a Subsidiary
of Company or is merged into or consolidated with Company or any of its
Subsidiaries or that Person's assets are acquired by Company or any of its
Subsidiaries, (iii) the income of any Subsidiary of Company to the extent that
the declaration or payment of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Subsidiary, (iv) any
after-tax gains or losses attributable to Asset Sales, and (v) (to the extent
not included in clauses (i) through (iv) above) any net extraordinary gains or
net non-cash extraordinary losses.
"Consolidated Total Debt" means, as at any date of determination, the
aggregate stated balance sheet amount of all outstanding Indebtedness of Company
and its Subsidiaries on a consolidated basis as determined in conformity with
GAAP.
"Consolidated Working Capital" means, as at any date of determination, the
excess of Consolidated Current Assets over Consolidated Current Liabilities.
"Consolidated Working Capital Adjustment" means, for any period on a
consolidated basis, the amount (which may be a negative number) by which
Consolidated Working Capital as of the beginning of such period exceeds (or is
less than) Consolidated Working Capital as of the end of such period.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to 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 (iii)
under Interest Rate Agreements. Contingent Obligations shall include, without
limitation, (a) the direct or indirect guaranty, endorsement (otherwise than for
collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of the obligation
of another, (b) the obligation to make take-or-pay or similar payments if
required regardless of non-performance by any other party or parties to an
agreement, and (c) any liability of such Person for the obligation of another
through any agreement (contingent or otherwise) (x) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide funds
for the payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise) or (y) to
maintain the solvency or any balance sheet item, level of income or financial
condition of another if, in the case of any agreement described under subclauses
(x) or (y) of this sentence, the primary purpose or intent thereof is as
described in the preceding sentence. The amount of any Contingent
9
Obligation shall be equal to the amount of the obligation so guaranteed or
otherwise supported or, if less, the amount to which such Contingent Obligation
is specifically limited.
"Continuing Director" shall mean, as of any date of determination, any
member of the Board of Directors of Company who (i) was a member of such Board
of Directors on the Closing Date or (ii) was nominated for election or elected
to such Board of Directors with the affirmative vote of the MDC Entities.
"Contractual Obligation" means, as applied to any Person, any provision of
any Security issued by that Person or of any material indenture, mortgage, deed
of trust, contract, undertaking, agreement or other instrument to which that
Person is a party or by which it or any of its properties is bound or to which
it or any of its properties is subject.
"Corporate Loan Party" means any Loan Party which is a corporation.
"CSI" means Chase Securities Inc. and its successors and assigns,
including, without limitation, its successors by merger.
"Debt Collection Laws" means the Fair Debt Collection Practices Act and
any similar state laws relating to the collection of consumer debt.
"Deed of Trust" means any deed of trust granted by Company or any of its
Subsidiaries in any interest in real property to secure the Obligations, as such
deed of trust may be amended, restated, supplemented or otherwise modified from
time to time.
"Defaulting Lender" means any Lender with respect to which a Lender
Default is in effect.
"Deposit Account" means a demand, time, savings, passbook or like account
with a bank, savings and loan association, credit union or like organization,
other than an account evidenced by a negotiable certificate of deposit.
"Dollars" and the sign "$" mean the lawful money of the United States of
America.
"Earn Out Agreement" shall mean (i) the agreements set forth in Schedule
7.4(iv)(a) hereto and (ii) any other agreement entered into after the Closing
Date by Company to pay the seller or sellers of any Person or assets acquired in
accordance with the provisions of subsection 7.7(v) at any time following the
consummation of such acquisition by reference to the financial performance of
Company or the Person or assets acquired.
"Eligible Assignee" means (i) (a) a commercial bank organized under the
laws of the United States or any state thereof; (b) a commercial bank organized
under the laws of any other country or a political subdivision thereof; provided
that (x) such bank is acting through a branch or agency located in the United
States or (y) such bank is organized under the laws of a country that is a
member of the Organization for Economic Cooperation and
10
Development or a political subdivision of such country; (c) any other entity
which is an "accredited investor" (as defined in Regulation D under the
Securities Act) which extends credit or buys loans as one of its businesses
including, but not limited to, insurance companies, mutual funds and lease
financing companies; and (d) any other financial institution or fund (whether a
corporation, partnership, trust or other entity) that is engaged in making,
purchasing or otherwise investing in commercial loans in the ordinary course of
its business and has combined capital and surplus or net assets of at least
$100,000,000, in each case (under clauses (a) through (d) above) that is
reasonably acceptable to Co-Administrative Agents; and (ii) any Lender and any
Affiliate of any Lender; provided that no Affiliate of Company shall be an
Eligible Assignee.
"Employee Benefit Plan" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which is subject to ERISA and which is maintained or
contributed to by Company or any of its ERISA Affiliates.
"Employment Agreements" means, collectively, (i) that certain Employment
Agreement and that certain Covenant Not-To-Compete Agreement, in each case dated
as of August 13, 1996 by and between Payco and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, (ii) that
certain Employment Agreement and that certain Covenant Not-To-Compete Agreement,
in each case dated as of August 13, 1996 by and between Payco and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, (iii) that certain Employment Agreement and that certain Covenant
Not-To-Compete Agreement, in each case dated as of August 13, 1996 by and
between Payco and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, (iv) that certain Employment Agreement and
that certain Covenant Not-To-Compete Agreement, in each case dated as of August
13, 1996 by and between Payco and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, (v) that certain
Employment Agreement and that certain Covenant Not-To-Compete Agreement, in
each case dated as of August 13, 1996 by and between Payco and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
(vi) that certain Employment Agreement and that certain Covenant Not-To-Compete
Agreement, in each case dated as of August 13, 1996 by and between Payco and
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, (vii) that certain Employment Agreement and that certain
Covenant Not-To-Compete Agreement, in each case dated as of August 13, 1996 by
and between Payco and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, (viii) that certain Employment
Agreement and that certain Covenant Not-To-Compete Agreement, in each case
dated as of August 13, 1996 by and between Payco and ▇▇▇▇ ▇. ▇▇▇▇▇▇, and (ix)
that certain Consulting Agreement and that certain Covenant Not-To-Compete
Agreement, in each case dated as of August 13, 1996 by and between Payco and
▇▇▇▇▇▇ Punches.
"Environmental Claim" means any written accusation, allegation, notice of
violation, claim, demand, abatement order or other order or direction
(conditional or otherwise) by any governmental authority or any Person for any
damage, including, without limitation, personal injury (including sickness,
disease or death), tangible or intangible property damage, contribution,
indemnity, indirect or consequential damages, damage to the environment,
nuisance, pollution, contamination or other adverse effects on the environment,
or for fines, penalties or restrictions, in each case relating to, resulting
from or in connection with Hazardous Materials and relating to Company, any
11
of its Subsidiaries, any of their respective Affiliates that are directly or
indirectly controlled by Company, or any Facility.
"Environmental Laws" means all laws, statutes, ordinances, orders, rules,
regulations, plans, policies or decrees and the like relating to (i)
environmental matters, including, without limitation, those relating to fines,
injunctions, penalties, damages, contribution, cost recovery compensation,
losses or injuries resulting from the Release or threatened Release of Hazardous
Materials, (ii) the generation, use, storage, transportation or disposal of
Hazardous Materials, or (iii) occupational safety and health, public health and
safety, industrial hygiene or protection of wetlands, in any manner applicable
to Company or any of its Subsidiaries or any of their respective properties,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. ss. 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Federal Water
Pollution Control Act ( 33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42
U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601
et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
ss.136 et seq.), the Occupational Safety and Health Act (29 U.S.C. ss. 651 et
seq.) and the Emergency Planning and Community Right-to-Know Act (42 U.S.C. ss.
11001 et seq.), each as amended or supplemented, and any analogous future or
present local, state and federal statutes and regulations promulgated pursuant
thereto, each as in effect as of the date of determination.
"Equity Proceeds" means the cash proceeds (net of underwriting discounts
and commissions and other reasonable costs associated therewith) from the
issuance of any equity Securities of Company after the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA Affiliate" means, as applied to any Person, (i) any corporation
which is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated) which is a member of a
group of trades or businesses under common control within the meaning of Section
414(c) of the Internal Revenue Code of which that Person is a member; and (iii)
solely for purposes of obligations under Section 412 of the Internal Revenue
Code or under the applicable sections set forth in Section 414(t)(2) of the
Internal Revenue Code, any member of an affiliated service group within the
meaning of Section 414(m) or (o) of the Internal Revenue Code of which that
Person, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is a member.
"ERISA Event" means (i) a "reportable event" within the meaning of Section
4043(c) of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal
12
Revenue Code with respect to any Pension Plan (whether or not waived in
accordance with Section 412(d) of the Internal Revenue Code) or the failure to
make by its due date a required installment under Section 412(m) of the Internal
Revenue Code with respect to any Pension Plan or the failure to make any
required contribution to a Multiemployer Plan; (iii) the provision by the
administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a
notice of intent to terminate such plan in a distress termination described in
Section 4041(c) of ERISA; (iv) the withdrawal by Company or any of its ERISA
Affiliates from any Pension Plan with two or more contributing sponsors or the
termination of any such Pension Plan resulting, in either case, in liability
pursuant to Section 4063 or 4064 of ERISA, respectively; (v) the institution by
the PBGC of proceedings to terminate any Pension Plan pursuant to Section 4042
of ERISA; (vi) the imposition of liability on Company or any of its ERISA
Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the
application of Section 4212(c) of ERISA; (vii) the withdrawal by Company or any
of its ERISA Affiliates in a complete or partial withdrawal (within the meaning
of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan resulting in
withdrawal liability pursuant to Section 4201 of ERISA, or the receipt by
Company or any of its ERISA Affiliates of written notice from any Multiemployer
Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245
of ERISA, or that it intends to terminate or has terminated under Section 4042
of ERISA or under Section 4041A of ERISA if such termination would result in
liability to Company or any of its ERISA Affiliates; (viii) the imposition on
Company or any of its ERISA Affiliates of fines, penalties or taxes under
Chapter 43 of the Internal Revenue Code or under Section 409 or 502(c), (i) or
(l) or 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the failure
of any Pension Plan (or any other Employee Benefit Plan intended to be qualified
under Section 401(a) of the Internal Revenue Code) to qualify under Section
401(a) of the Internal Revenue Code, or the failure of any trust forming part of
any Pension Plan to qualify for exemption from taxation under Section 501(a) of
the Internal Revenue Code; or (x) the imposition of a Lien pursuant to Section
401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA with
respect to any Pension Plan.
"Eurodollar Rate Loans" means Loans bearing interest at rates determined
by reference to the Adjusted Eurodollar Rate as provided in subsection 2.2A.
"Event of Default" means each of the events set forth in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute.
"Existing API Credit Agreement" means that certain Credit Agreement dated
as of March 21, 1996, by and among Perimeter Credit, L.P., Gulf State Credit,
L.P., and Account Portfolios, L.P., as borrowers, SunTrust Bank, Atlanta, as
lender and administrative agent, and Wachovia Bank of Georgia, N.A., as lender
and collateral agent, as amended, supplemented or otherwise modified to the
Closing Date.
13
"Existing OSI Credit Agreement" means that certain Credit Agreement dated
as of January 10, 1996, by and among Outsourcing Solutions Incorporated, ▇▇▇▇▇▇
Financial, Inc. and National Westminster Bank Plc ("NatWest"), as lenders,
co-arrangers and co-administrative agents, and NatWest, as L/C issuer, as
amended, supplemented or otherwise modified to the Closing Date.
"Existing Seller Note" means that certain 9% Non-Negotiable Subordinated
Note issued by Outsourcing Solutions Incorporated to ▇▇▇▇ ▇▇▇▇▇▇ in the
principal amount of $5,000,000, due July 10, 2001, as in effect on the Closing
Date and as such note may be amended, restated, supplemented or otherwise
modified from time to time thereafter to the extent permitted under subsection
7.12B.
"Facilities" means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon) now,
hereafter or heretofore owned, leased, operated or used by Company or any of its
Subsidiaries (but only as to portions of buildings actually leased or used) or
any of their respective predecessors or any of their respective Affiliates that
are directly or indirectly controlled by Company.
"Fair Debt Collection Practices Act" means the Federal Fair Debt
Collection Practices Act, as amended from time to time, and any successor
statute.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Chase Co-Administrative Agent from three Federal funds
brokers of recognized standing selected by Chase Co-Administrative Agent.
"Fiscal Quarter" means a fiscal quarter of a Fiscal Year.
"Fiscal Year" means the fiscal year of Company and its Subsidiaries ending
on December 31 of each calendar year.
"Forward Flow Contract" shall mean (i) the agreement set forth in Schedule
7.4(iv)(b) hereto and (ii) any other agreement entered into after the Closing
Date by Company or any of its Subsidiaries to purchase receivables portfolios
from time to time meeting the criteria enumerated therein.
"Funding and Payment Office" means the office of Chase Co-Administrative
Agent and Swing Line Lender located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
or such offices of Chase Co-Administrative Agent or any successor Chase
Co-Administrative Agent specified by Chase Co-Administrative Agent or such
successor Chase Co-Administrative Agent in a written notice to Loan Parties and
Lenders).
14
"Funding Date" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application thereof set
forth in subsection 1.2, generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, in each case as the same are applicable to the circumstances as of
the date of determination and specifically, terms used herein applicable to
Company and its Subsidiaries defined by reference to GAAP shall give effect to
the subtraction of minority interests.
"Governmental Acts" has the meaning assigned to that term in subsection
3.5.
"Governmental Authorization" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court.
"GSCP" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P., a Bermuda limited
partnership.
"Guaranty" means the Subsidiary Guaranty and any other guaranty of the
Obligations.
"Guarantors" means the Subsidiary Guarantors.
"Hazardous Materials" means (i) any chemical, material or substance
defined as or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous waste", "restricted
hazardous waste", "infectious waste", "toxic substances" or any other
formulations intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable Environmental Laws;
(ii) any oil, petroleum, petroleum fraction or petroleum derived substance;
(iii) any drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas or geothermal
resources; (iv) any flammable substances or explosives; (v) any radioactive
materials; (vi) asbestos in any form; (vii) urea formaldehyde foam insulation;
(viii) electrical equipment which contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of fifty parts per
million; (ix) pesticides; and (x) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental
authority.
"HBR Services Agreement" means that certain Master Services Agreement
dated as of October 1, 1992, by and between Account Portfolios, L.P. and HBR
Capital, Ltd., as in effect on the Closing Date and as such agreement may be
amended, restated, supplemented
15
or otherwise modified from time to time thereafter to the extent permitted under
subsection 7.12A.
"Immaterial Subsidiaries" means, with respect to any Person, any
Subsidiary or Subsidiaries of such Person the assets of which constitute,
individually or in the aggregate, less than 5% of the total assets of such
Person and its Subsidiaries.
"Indebtedness" means, as applied to any Person, (i) all indebtedness for
borrowed money, (ii) that portion of obligations with respect to Capital Leases
that is properly classified as a liability on a balance sheet in conformity with
GAAP, (iii) notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money (other than accounts
payable incurred in the ordinary course of business and accrued expenses
incurred in the ordinary course of business), (iv) any obligation owed for all
or any part of the deferred purchase price of property or services (excluding
any such obligations incurred under ERISA or under Earn Out Agreements), which
purchase price is (a) due more than six months from the date of incurrence of
the obligation in respect thereof or (b) evidenced by a note or similar written
instrument, and (v) all indebtedness secured by any Lien on any property or
asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person. Obligations under Interest Rate Agreements, Currency
Agreements and Earn Out Agreements constitute Contingent Obligations and not
Indebtedness.
"Indemnitee" has the meaning assigned to that term in subsection 10.3.
"Initial Period" means the period commencing on and including the Closing
Date and ending on (but excluding) the earlier of (i) 60 days after the Closing
Date and (ii) the date on which Arranging Agents notify Company that they have
concluded their primary syndication of the Loans and the Commitments.
"Insurance Proceeds" has the meaning assigned to that term in subsection
2.4B(iii)(d).
"Interest Coverage Ratio" means, as of any date of determination, the
ratio of Consolidated EBITDA to Consolidated Interest Expense, in each case
calculated for the 12 consecutive months ending on the last day of the month
preceding such date of determination.
"Interest Payment Date" means (i) with respect to any Base Rate Loan, each
January 15, April 15, July 15 and October 15 of each year, commencing on January
15, 1997 and (ii) with respect to any Eurodollar Rate Loan, the last day of each
Interest Period applicable to such Loan; provided that in the case of each
Interest Period of longer than three months, "Interest Payment Date" shall also
include the date that is three months after the commencement of such Interest
Period.
16
"Interest Period" has the meaning assigned to that term in subsection
2.2B.
"Interest Rate Agreement" means any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement or
arrangement designed to hedge Company or any of its Subsidiaries against
fluctuations in interest rates.
"Interest Rate Determination Date" means each date for calculating the
Adjusted Eurodollar Rate, for purposes of determining the interest rate in
respect of an Interest Period. The Interest Rate Determination Date in respect
of calculating the Adjusted Eurodollar Rate shall be the second Business Day
prior to the first day of the related Interest Period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"Investment" means (i) any direct or indirect purchase or other
acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, stock or other Securities of any other Person (other than a Person
that, prior to such purchase or acquisition, was a Wholly Owned Subsidiary of
Company), or (ii) any direct or indirect loan, advance (other than advances to
employees for moving, entertainment and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business) or capital contribution
by Company or any of its Subsidiaries to any other Person other than a Wholly
Owned Subsidiary of Company, including all indebtedness and accounts receivable
acquired from that other Person that are not current assets or did not arise
from sales to that other Person in the ordinary course of business; provided,
however, that the term "Investment" shall not include (a) current trade and
customer accounts receivable for goods furnished or services rendered in the
ordinary course of business and payable in accordance with customary trade
terms, (b) advances and prepayments to suppliers for goods and services in the
ordinary course of business, (c) stock or other securities acquired in
connection with the satisfaction or enforcement of Indebtedness or claims due or
owing to Company or any of its Subsidiaries or as security for any such
Indebtedness or claims, (d) Cash held in Deposit Accounts with banks and trust
companies (other than Lenders) not exceeding $2,000,000 in aggregate amount, (e)
Cash held in Deposit Accounts with banks and trust companies (other than
Lenders) in which amounts received from credit card issuers are concentrated and
held to be swept to Company's operating accounts with a Lender on a daily basis,
(f) Cash held in any Deposit Account with a Lender and (g) shares in a mutual
fund that invests solely in Cash Equivalents. The amount of any Investment shall
be the original cost of such Investment plus the cost of all additions thereto,
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.
"Issuing Lender" means, with respect to any Letter of Credit, the Lender
which agrees or is otherwise obligated to issue such Letter of Credit,
determined as provided in subsection 3.1B(ii).
17
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
"Lender" and "Lenders" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns pursuant to subsection 10.1, and the term "Lenders" shall
include Swing Line Lender unless the context otherwise requires provided that
the term "Lenders", when used in the context of a particular Commitment, shall
mean Lenders having that Commitment.
"Lender Default" shall mean (i) the refusal (which has not been retracted)
of a Lender to make available its portion of any Loans (including any Revolving
Loans made to pay Refunded Swing Line Loans or to reimburse drawings under
Letters of Credit) in accordance with subsection 2.1A(iv) or its portion of any
unreimbursed drawing or payment under a Letter of Credit in accordance with
subsection 3.3C or (ii) a Lender having notified Company and/or Chase
Co-Administrative Agent in writing that it does not intend to comply with its
obligations under subsection 2.1 or subsections 3.1C, 3.3B or 3.3C, in any such
case as a result of any takeover of such Lender by any regulatory authority or
agency.
"Lending Office" means, as to any Lender, the office or offices of such
Lender specified as the "Lending Office" on Schedule 2.1, or such other office
or offices as such Lender may from time to time notify Company and Chase
Co-Administrative Agent.
"Letter of Credit" or "Letters of Credit" means Commercial Letters of
Credit and Standby Letters of Credit issued or to be issued by Issuing Lenders
for the account of Company pursuant to subsection 3.1.
"Letter of Credit Usage" means, as at any date of determination, the sum
of (i) the maximum aggregate amount which is or at any time thereafter may
become available for drawing under all Letters of Credit then outstanding plus
(ii) the aggregate amount of all drawings under Letters of Credit honored by
Issuing Lenders and not theretofore reimbursed by Company (including any such
reimbursement out of the proceeds of Revolving Loans pursuant to subsection
3.3B).
"Leverage Ratio" means, as of any date of determination, the ratio of
Consolidated Total Debt, as of the date of determination, to Consolidated
EBITDA, for the 12 consecutive months ending on the last day of such month, in
each case, calculated for Company and its Subsidiaries on a consolidated basis
in accordance with GAAP.
"Lien" means any lien, mortgage, pledge, assignment, security interest,
fixed or floating charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature thereof, and
any agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
18
"Limited Partnership Security Agreement" means the Limited Partnership
Security Agreement entered into by and among Company, certain Subsidiary
Guarantors and Collateral Agent dated as of the date hereof, substantially in
the form of Exhibit IX-B annexed hereto, as such Limited Partnership Security
Agreement may thereafter be amended, restated, supplemented or otherwise
modified from time to time.
"Loan" or "Loans" means, as the context requires, one or more of the
Tranche A Term Loans, Tranche B Term Loans, Revolving Loans and Swing Line Loans
or any combination thereof.
"Loan Documents" means this Agreement, the Notes, the Letters of Credit
(and any applications for, or reimbursement agreements or other documents or
certificates executed by Company in favor of an Issuing Lender relating to, the
Letters of Credit), the Guaranty, and the Collateral Documents.
"Loan Parties" means Company and each Subsidiary Guarantor.
"Management Fees" means the fees payable by Company pursuant to the MDC
Advisory Services Agreement and the HBR Services Agreement.
"Margin Stock" has the meaning assigned to that term in Regulation U of
the Board of Governors of the Federal Reserve System as in effect from time to
time.
"Material Adverse Effect" means (i) a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Company and its Subsidiaries, taken as a whole, (ii) the material
impairment of the ability of any Loan Party to perform the Obligations and (iii)
a material adverse effect upon the legality, validity, binding effect or
enforceability against a Loan Party of a Loan Document to which it is a party;
provided that Company's consummation of the Acquisition in accordance with the
terms of the Acquisition Agreement shall not be deemed to have a Material
Adverse Effect for purposes of subsection 5.4.
"MDC Advisory Services Agreement" means that certain Advisory Services
Agreement dated as of September 21, 1995, by and between Company and MDC
Management Company III, L.P., as in effect on the Closing Date and as such
agreement may be amended, restated, supplemented or otherwise modified from time
to time thereafter to the extent permitted under subsection 7.12A.
"MDC Entities" means ▇▇▇▇▇▇ De Leeuw & Co. III, L.P., a California limited
partnership, ▇▇▇▇▇▇ De Leeuw & Co. Offshore (Europe) III, L.P., a Bermuda
limited partnership, ▇▇▇▇▇▇ De Leeuw & Co. III (Asia), L.P., a Bermuda limited
partnership and Gamma Fund LLC, a California limited liability company.
19
"Merger" means the merger of Acquisition Sub with and into Payco in
accordance with the terms of the Acquisition Agreement, the Articles of Merger
and the Certificate of Merger, with Payco being the surviving corporation in
such merger.
"Mortgage" means any mortgage or legal charge granted by Company or any of
its Subsidiaries in any interest in real property to secure the Obligations, as
such mortgage may be amended, restated, supplemented or otherwise modified from
time to time.
"Multiemployer Plan" means a "multiemployer plan", as defined in Section
4001(a)(3) of ERISA which is subject to Title IV of ERISA, to which Company or
any of its ERISA Affiliates is contributing or to which Company or any of its
ERISA Affiliates has an obligation to contribute.
"Net Cash Proceeds" means, with respect to any Asset Sale, Cash Proceeds
of such Asset Sale net of bona fide direct costs of sale including, without
limitation, (i) income taxes reasonably estimated to be actually payable as a
result of such Asset Sale within one year of the date of receipt of such Cash
Proceeds, (ii) transfer, sales, use and other taxes payable in connection with
such Asset Sale, (iii) payment of the outstanding principal amount of, premium
or penalty, if any, and interest on any Indebtedness (other than the Loans) that
is secured by a Lien on the stock or assets in question and that is required to
be repaid under the terms thereof as a result of such Asset Sale, and (iv)
broker's commissions and reasonable fees and expenses of counsel in connection
with such Asset Sale.
"Non-Defaulting Lender" means and includes each Lender other than a
Defaulting Lender.
"Notes" means one or more of the Term Notes, Revolving Notes or Swing Line
Note or any combination thereof.
"Notice of Borrowing" means a notice in the form of Exhibit I annexed
hereto delivered by Company to Chase Co-Administrative Agent pursuant to
subsection 2.1B with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice substantially in the
form of Exhibit II annexed hereto delivered by Company to Chase
Co-Administrative Agent pursuant to subsection 2.2D with respect to a proposed
conversion or continuation of the applicable basis for determining the interest
rate with respect to the Loans specified therein.
"Notice of Issuance of Letter of Credit" means a notice in the form of
Exhibit III annexed hereto delivered by Company to Chase Co-Administrative Agent
pursuant to subsection 3.1B(i) with respect to the proposed issuance of a Letter
of Credit.
"Obligations" means all obligations of every nature of each Loan Party
from time to time owed to Agents, Lenders or any of them under the Loan
Documents, whether for principal, interest, reimbursement of amounts drawn under
Letters of Credit or payments
20
for early termination of Interest Rate Agreements, fees, expenses,
indemnification or otherwise.
"Officer's Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the board
(if an officer), its president, its chief financial officer or a vice president;
provided that every Officer's Certificate with respect to the compliance with a
condition precedent to the making of any Loans hereunder shall include (i) a
statement that the officer making or giving such Officer's Certificate has read
such condition and any definitions or other provisions contained in this
Agreement relating thereto, (ii) a statement that, in the opinion of the signer
he or she has made or has caused to be made such examination or investigation as
is necessary to enable him or her to express an informed opinion as to whether
or not such condition has been complied with, and (iii) a statement as to
whether, in the opinion of the signer, such condition has been complied with.
"Operating Lease" means, as applied to any Person, any lease (including,
without limitation, leases that may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) that is not a Capital Lease other
than any such lease under which that Person is the lessor.
"Partnership Loan Party" means any Loan Party which is a limited
partnership.
"Payco" has the meaning assigned to that term in the Recitals to this
Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant
to Section 4002 of ERISA (or any successor thereto).
"Pension Plan" means any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to Title IV of ERISA.
"Permitted Acquisition" means an acquisition of assets or a business
(other than receivables portfolios) effected in accordance with the provisions
of subsection 7.7(v).
"Permitted Encumbrances" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims
the payment of which is not, at the time, required by subsection 6.3;
(ii) statutory Liens of landlords, statutory Liens of carriers,
warehousemen, mechanics and materialmen and other Liens imposed by law
(other than any such Lien imposed pursuant to Section 401(a)(29) or 412(n)
of the Internal Revenue Code or by ERISA) incurred in the ordinary course
of business for sums not yet delinquent or being contested in good faith,
if such reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor;
21
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money);
(iv) any attachment or judgment Lien not constituting an Event of
Default under subsection 8.8;
(v) leases or subleases granted to others not interfering in any
material respect with the ordinary conduct of the business of Company or
any of its Subsidiaries;
(vi) easements, rights-of-way, restrictions, minor defects,
encroachments or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the ordinary
conduct of the business of Company or any of its Subsidiaries;
(vii) any (a) interest or title of a lessor or sublessor under any
Capital Lease permitted by subsection 7.1(iii) or any operating lease not
prohibited by this Agreement, (b) restriction or encumbrance that the
interest or title of such lessor or sublessor may be subject to, or (c)
subordination of the interest of the lessee or sublessee under such lease
to any restriction or encumbrance referred to in the preceding clause (b);
(viii) Liens arising from filing UCC financing statements relating
solely to leases permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(x) deposits in the ordinary course of business to secure
liabilities to insurance carriers, lessors, utilities and other service
providers; and
(xi) bankers liens and rights of setoff with respect to customary
depository arrangements entered into in the ordinary course of business.
"Permitted Joint Venture" means a Subsidiary engaged in substantially the
same line of business as Company and its Subsidiaries on the date hereof in
which (i) at least 51% of the outstanding equity interests are owned by Company
or a Wholly Owned Subsidiary of Company, (ii) any equity interests (other than
Regulatory Shares) not owned by Company or a Wholly Owned Subsidiary of Company
are beneficially owned by non-Affiliates of
22
Company and (iii) Company or a Wholly Owned Subsidiary, as a general partner or
otherwise, controls the management, operations and policies.
"Permitted Portfolio Acquisition" means an acquisition of a receivables
portfolio effected in accordance with the provisions of subsection 7.7(v).
"Permitted Seller Note" means a promissory note substantially in the form
of Exhibit XIV annexed hereto representing any Indebtedness of Company incurred
in connection with any Permitted Acquisition payable to the seller in connection
therewith, as such note may be amended, restated, supplemented or otherwise
modified from time to time to the extent permitted under subsection 7.12B;
provided that no Permitted Seller Note shall (i) be guarantied by any Subsidiary
of Company or secured by any property of Company or any of its Subsidiaries or
(ii) bear cash interest at a rate in excess of 12% per annum; and provided
further, that no Permitted Seller Note issued after the first Anniversary shall
provide for any prepayment or repayment of all or any portion of the principal
thereof prior to the date of the final scheduled installment of principal of any
of the Loans.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, Joint Ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.
"Pledge Agreement" means that certain Pledge Agreement by and among
Company, the Subsidiary Guarantors and Collateral Agent dated as of the date
hereof and substantially in the form of Exhibit VIII annexed hereto, as such
Pledge Agreement may be amended, restated, supplemented or otherwise modified
from time to time.
"Portfolio Purchase Business" means assets or operations generating
revenues from collections on acquired or purchased portfolios of loans,
accounts, chattel paper, general intangibles or instruments.
"Potential Event of Default" means a condition or event that, after notice
or after any applicable grace period has lapsed, or both, would constitute an
Event of Default.
"Pricing Reduction" means, at any time after the Closing Date, a pricing
reduction determined by reference to the correlative Leverage Ratio set forth
below:
================================================================================
Leverage Ratio Pricing Reduction
================================================================================
Greater than or equal to 2.25:1.0, but less than 2.75:1.0 .25%
--------------------------------------------------------------------------------
Less than 2.25:1.0 .50%
================================================================================
23
The Pricing Reduction shall be determined by reference to the Leverage Ratio set
forth in the most recent financial statements delivered by Company pursuant to
clause (ii) or (iii) of subsection 6.1 (accompanied by a Compliance Certificate
delivered by Company pursuant to clause (iv) of subsection 6.1) commencing with
the delivery of audited financial statements pursuant to subsection 6.1(iii)
with respect to the Fiscal Year ending December 31, 1996; provided, however,
that for purposes of determining the Leverage Ratio for any four-Fiscal Quarter
period including the Closing Date, Consolidated EBITDA shall be calculated on a
pro forma basis assuming that the Closing Date, the related borrowings by
Company pursuant to this Agreement and the Subordinated Notes, and the
Acquisition occurred on the first day of the applicable four-Fiscal Quarter
period, all such calculations to be in form and substance reasonably
satisfactory to Co-Administrative Agents. The Pricing Reduction shall be
effective on the day following delivery of the relevant Compliance Certificate
to Chase Co-Administrative Agent and shall remain in effect through the next
scheduled date for delivery of a Compliance Certificate. It is understood that
the Pricing Reductions set forth in the table above are not cumulative.
Notwithstanding anything herein to the contrary, at any time an Event of Default
shall have occurred and be continuing the Pricing Reduction shall be zero.
"Prime Rate" means the rate of interest per annum publicly announced from
time to time by Chase as its prime commercial lending rate in effect at its
principal office in New York City. The Prime Rate is a reference rate and does
not necessarily represent the lowest or best rate actually charged to any
customer. Chase or any other Lender may make commercial loans or other loans at
rates of interest at, above or below the Prime Rate.
"Projections" has the meaning assigned thereto in subsection 5.3B.
"Pro Rata Share" means (i) with respect to all payments, computations and
other matters relating to the Tranche A Term Loan Commitment or the Tranche A
Term Loan of any Lender, the percentage obtained by dividing (x) the Tranche A
Term Loan Exposure of that Lender by (y) the aggregate Tranche A Term Loan
Exposure of all Lenders; (ii) with respect to all payments, computations and
other matters relating to the Tranche B Term Loan Commitment or the Tranche B
Term Loan of any Lender, the percentage obtained by dividing (x) the Tranche B
Term Loan Exposure of that Lender by (y) the aggregate Tranche B Term Loan
Exposure of all Lenders; (iii) with respect to all payments, computations and
other matters relating to the Revolving Loan Commitment or the Revolving Loans
of any Lender or any Letters of Credit issued by any Lender or any
participations purchased by any Lender therein or in any Swing Line Loans, the
percentage obtained by dividing (x) the Revolving Loan Exposure of that Lender
by (y) the aggregate Revolving Loan Exposure of all Lenders; and (iv) for all
other purposes with respect to each Lender, the percentage obtained by dividing
(x) the sum of the Tranche A Term Loan Exposure of that Lender plus the Tranche
B Term Loan Exposure of that Lender plus the Revolving Loan Exposure of that
Lender by (y) the sum of the aggregate Tranche A Term Loan Exposure of all
Lenders plus the aggregate Tranche B Term Loan Exposure of all Lenders plus the
aggregate Revolving Loan Exposure of all Lenders; in any such case as the
applicable percentage may be adjusted by assignments permitted pursuant to
subsection 10.1. The
24
initial Pro Rata Share of each Lender for purposes of each of clauses (i), (ii),
(iii), and (iv) of the preceding sentence is set forth opposite the name of that
Lender in Schedule 2.1 annexed hereto.
"Qualified Loan Portfolio" means a portfolio of loans, accounts, chattel
paper, general intangibles or instruments acquired or purchased by Company or
one of its Subsidiaries from any Person, where (i) the portfolio is free and
clear of all Liens, except Liens in favor of Collateral Agent for the benefit of
Agents and Lenders under this Agreement; (ii) no participation or other interest
in the portfolio or the collections from the portfolio exists in favor of any
other Person other than a participation or other interest which does not exceed
50% of the portfolio or collections from the portfolio and which is on terms
approved in advance by Co-Administrative Agents and Requisite Lenders; and (iii)
the portfolio consists of loans, accounts, chattel paper, general intangibles or
instruments similar in type, characteristics and quality to those owned or
previously owned by Company and its Subsidiaries. Notwithstanding the foregoing,
a Qualified Loan Portfolio may be subject to participations, interests and/or
Liens granted to ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. pursuant to arrangements in effect as of
the Closing Date or substantially similar thereto.
"Refunded Swing Line Loans" has the meaning assigned to that term in
subsection 2.1A(iv).
"Register" has the meaning assigned to that term in subsection 2.1D.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"Regulatory Shares" means, with respect to any Person, shares of such
Person required to be issued as qualifying shares to directors or persons
similarly situated or shares issued to Persons other than Company or a Wholly
Owned Subsidiary of Company in response to regulatory requirements of foreign
jurisdictions pursuant to a resolution of the Board of Directors of such Person,
so long as such shares do not exceed one percent of the total outstanding shares
of equity such Person and any owners of such shares irrevocably covenant with
Company to remit to Company or waive any dividends or distributions paid or
payable in respect of such shares.
"Reimbursement Date" has the meaning assigned to that term in subsection
3.3B.
"Related Agreements" means the Subordinated Notes, the Subordinated Note
Indenture, the other Subordinated Note Documents, the Acquisition Agreement, the
Articles of Merger and the Certificate of Merger.
"Release" means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials into the indoor or outdoor environment
(including, without limitation, the abandonment or disposal of any barrels,
containers or other closed receptacles
25
containing any Hazardous Materials), or into or out of any Facility, including
the movement of any Hazardous Material through the air, soil, surface water,
groundwater or property.
"Requisite Lenders" means Non-Defaulting Lenders having or holding not
less than 51% of the sum of the aggregate Tranche A Term Loan Exposure of all
Non-Defaulting Lenders plus the aggregate Tranche B Term Loan Exposure of all
Non-Defaulting Lenders plus the aggregate Revolving Loan Exposure of all
Non-Defaulting Lenders.
"Restricted Junior Payment" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of Company
now or hereafter outstanding, except a dividend payable solely in shares of that
class of stock to the holders of that class, (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any shares of any class of stock of Company now or hereafter
outstanding, (iii) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any class
of stock of Company now or hereafter outstanding, and (iv) any payment or
prepayment of principal of, premium, if any, or interest on, or redemption,
purchase, retirement, defeasance (including in-substance or legal defeasance),
sinking fund or similar payment with respect to, any Subordinated Indebtedness.
"Revolving Loan Commitment" means the commitment of a Lender to make
Revolving Loans to Company pursuant to subsection 2.1A(iii) and "Revolving Loan
Commitments" means such commitments of all Lenders in the aggregate.
"Revolving Loan Commitment Termination Date" means October 15, 2001.
"Revolving Loan Exposure" means, with respect to any Lender as of any date
of determination (i) prior to the termination of the Revolving Loan Commitments,
that Lender's Revolving Loan Commitment and (ii) after the termination of the
Revolving Loan Commitments, the sum of (a) the aggregate outstanding principal
amount of the Revolving Loans of that Lender plus (b) in the event that Lender
is an Issuing Lender, the aggregate Letter of Credit Usage in respect of all
Letters of Credit issued by that Lender (net of any participations purchased by
other Lenders in such Letters of Credit) plus (c) the aggregate amount of all
participations purchased by that Lender in any outstanding Letters of Credit or
any unreimbursed drawings under any Letters of Credit plus (d) the aggregate
amount of all participations purchased by that Lender in any outstanding Swing
Line Loans plus (e) in the case of Swing Line Lender, the sum of the aggregate
outstanding principal amount of all Swing Line Loans (in each case net of any
participations therein purchased by other Lenders).
"Revolving Loans" means the Loans made by Lenders to Company pursuant to
subsection 2.1A(iii).
"Revolving Notes" means (i) the promissory notes of Company issued
pursuant to subsection 2.1E(i)(c) on the Closing Date and (ii) any promissory
notes issued by Company
26
pursuant to the last sentence of subsection 10.1B(i) in connection with
assignments of the Revolving Loan Commitment and Revolving Loans of any Lender,
in each case substantially in the form of Exhibit V annexed hereto, as they may
be amended, restated, supplemented or otherwise modified from time to time.
"Securities" means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit-sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and any successor statute.
"Security Agreement" means the Security Agreement entered into by and
among Company, the Subsidiary Guarantors and Collateral Agent dated as of the
date hereof and substantially in the form of Exhibit IX annexed hereto, as such
Security Agreement may be amended, restated, supplemented or otherwise modified
from time to time.
"Solvent" means, with respect to any Person, that as of the date of
determination both (i) (a) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (b) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (c) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (ii) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"Standby Letter of Credit" means any standby letter of credit or similar
instrument issued for the purpose of supporting (i) workers' compensation
liabilities of Company or any of its Subsidiaries, (ii) the obligations of third
party insurers of Company or any of its Subsidiaries arising by virtue of the
laws of any jurisdiction requiring third party insurers, (iii) performance,
payment, deposit or surety obligations of Company or any of its Subsidiaries, in
any case if required by law or governmental rule or regulation or in accordance
with custom and practice in the industry, and (iv) such other obligations of
Company and its Subsidiaries as may be reasonably acceptable to
Co-Administrative Agents;
27
provided that Standby Letters of Credit may not be issued for the purpose of
supporting (a) trade payables or (b) Indebtedness constituting "antecedent debt"
(as that term is used in Section 547 of the Bankruptcy Code).
"Stockholders Agreement" means that certain Amended and Restated
Stockholders Agreement dated as of February 16, 1996, by and among Company and
various stockholders of Company, as in effect on the Closing Date and as such
agreement may be amended, restated, supplemented or otherwise modified from time
to time thereafter to the extent permitted under subsection 7.12A.
"Subordinated Indebtedness" means (i) the Indebtedness of Company
evidenced by the Subordinated Notes, (ii) the Indebtedness of Company evidenced
by the Existing Seller Note and any Permitted Seller Notes and (iii) any other
Indebtedness of Company or any of its Subsidiaries subordinated in right of
payment to the Obligations pursuant to documentation containing maturities,
amortization schedules, covenants, defaults, remedies, subordination provisions
and other material terms in form and substance satisfactory to Co-Administrative
Agents and Requisite Lenders.
"Subordinated Note Documents" means the Subordinated Notes, the
Subordinated Note Indenture, the Subordinated Note Guaranty and each other
document executed in connection with the Subordinated Notes, as each such
document may be amended, restated, supplemented or otherwise modified from time
to time to the extent permitted by subsection 7.12B.
"Subordinated Note Guaranty" means the guaranty of the Subordinated Notes
executed by certain Subsidiaries of Company and contained in the Subordinated
Note Indenture, as such guaranty may be amended, restated, supplemented or
otherwise modified from time to time (including by any supplemental indenture
thereto executed by any Subsidiary of Company after the Closing Date) to the
extent permitted under subsection 7.12B.
"Subordinated Note Indenture" means the indenture pursuant to which the
Subordinated Notes are issued, as in effect on the Closing Date and as such
indenture may be amended, restated, supplemented or otherwise modified from time
to time to the extent permitted under subsection 7.12B.
"Subordinated Notes" means the $100,000,000 in aggregate principal amount
of 11% Senior Subordinated Notes due 2006 of Company issued pursuant to the
Subordinated Note Indenture.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association, joint venture or other business entity of which more
than 50% of the total voting power of shares of stock or other ownership
interests entitled (without regard to the occurrence of any contingency) to vote
in the election of the Person or Persons (whether directors, managers, trustees
or other Persons performing similar functions) having the
28
power to direct or cause the direction of the management and policies thereof is
at the time owned or controlled, directly or indirectly, by that Person or one
or more of the other Subsidiaries of that Person or a combination thereof.
"Subsidiary Guarantor" means any Wholly Owned Subsidiary of Company that
becomes party to the Subsidiary Guaranty on the Closing Date or at any time
thereafter pursuant to subsection 6.9.
"Subsidiary Guaranty" means the Subsidiary Guaranty, substantially in the
form of Exhibit VII annexed hereto, delivered by the existing Subsidiary
Guarantors on the Closing Date and any additional Subsidiary Guarantor from time
to time thereafter pursuant to subsection 6.9, as such Subsidiary Guaranty may
be amended, restated, supplemented or otherwise modified from time to time.
"SunTrust" means SunTrust Bank, Atlanta and its successors and assigns,
including, without limitation, its successors by merger.
"Swing Line Lender" means Chase, or any Person serving as a successor
Chase Co-Administrative Agent hereunder, in its capacity as Swing Line Lender
hereunder.
"Swing Line Loan Commitment" means the commitment of Swing Line Lender to
make Swing Line Loans to Company pursuant to subsection 2.1A(iv).
"Swing Line Loans" means the Loans made by Swing Line Lender pursuant to
subsection 2.1A(iv).
"Swing Line Note" means (i) the promissory note of Company issued pursuant
to subsection 2.1E(ii) on the Closing Date and (ii) any promissory note issued
by Company to any successor Chase Co-Administrative Agent and Swing Line Lender
pursuant to the last sentence of subsection 9.5B, in each case substantially in
the form of Exhibit VI annexed hereto, as it may be amended, restated,
supplemented or otherwise modified from time to time.
"Tax" or "Taxes" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "Tax on the overall net income" of a Person shall be
construed as a reference to a tax imposed by the jurisdiction in which that
Person's principal office (and/or, in the case of a Lender, its relevant Lending
Office) is located or in which that Person is deemed to be doing business on all
or part of the net income, profits or gains of that Person (whether worldwide,
or only insofar as such income, profits or gains are considered to arise in or
to relate to a particular jurisdiction, or otherwise).
"Term Loans" means, collectively, the Tranche A Term Loans and the Tranche
B Term Loans.
29
"Total Utilization of Revolving Loan Commitments" means, as at any date of
determination, the sum of (i) the aggregate principal amount of all outstanding
Revolving Loans (other than Revolving Loans made for the purpose of repaying any
Refunded Swing Line Loans or reimbursing the applicable Issuing Lender for any
amount drawn under any Letter of Credit but not yet so applied) plus (ii) the
aggregate principal amount of all outstanding Swing Line Loans plus (iii) the
Letter of Credit Usage.
"Trademark Security Agreement" means the Trademark Security Agreement
entered into by and among Company, the Subsidiary Guarantors and Collateral
Agent dated as of the date hereof, substantially in the form of Exhibit IX-C
annexed hereto, as such Trademark Security Agreement may thereafter be amended,
restated, supplemented or otherwise modified from time to time.
"Tranche A Term Loan Commitment" means the commitment of a Lender to make
a Tranche A Term Loan to Company pursuant to subsection 2.1A(i), and "Tranche A
Term Loan Commitments" means such commitments of all Lenders in the aggregate.
"Tranche A Term Loan Exposure" means, with respect to any Lender as of any
date of determination (i) prior to the funding of the Tranche A Term Loans, that
Lender's Tranche A Term Loan Commitment and (ii) after the funding of the
Tranche A Term Loans, the outstanding principal amount of the Tranche A Term
Loan of that Lender.
"Tranche A Term Loans" means the Loans made by Lenders to Company pursuant
to subsection 2.1A(i).
"Tranche A Term Notes" means (i) the promissory notes of Company issued
pursuant to subsection 2.1E (i)(a) on the Closing Date and (ii) any promissory
notes issued by Company pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Tranche A Term Loan Commitments or Tranche A
Term Loans of any Lenders, in each case substantially in the form of Exhibit
IV-A annexed hereto, as they may be amended, restated, supplemented or otherwise
modified from time to time.
"Tranche B Term Loan Commitment" means the commitment of a Lender to make
a Tranche B Term Loan to Company pursuant to subsection 2.1A(ii), and "Tranche B
Term Loan Commitments" means such commitments of all Lenders in the aggregate.
"Tranche B Term Loan Exposure" means, with respect to any Lender as of any
date of determination (i) prior to the funding of the Tranche B Term Loans, that
Lender's Tranche B Term Loan Commitment and (ii) after the funding of the
Tranche B Term Loans, the outstanding principal amount of the Tranche B Term
Loan of that Lender.
"Tranche B Term Loans" means the Loans made by Lenders to Company pursuant
to subsection 2.1A(ii).
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"Tranche B Term Notes" means (i) the promissory notes of Company issued
pursuant to subsection 2.1E (i)(b) on the Closing Date and (ii) any promissory
notes issued by Company pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Tranche B Term Loan Commitments or Tranche B
Term Loans of any Lenders, in each case substantially in the form of Exhibit
IV-B annexed hereto, as they may be amended, restated, supplemented or otherwise
modified from time to time.
"Transaction Costs" means the fees, costs and expenses payable by Company
and its Subsidiaries on or before the Closing Date in connection with the
transactions contemplated hereby and by the Related Agreements.
"Unfunded Current Liability" means, with respect to any Pension Plan, the
amount, if any, by which the actuarial present value of the accumulated plan
benefits under such Pension Plan as of the close of its most recent plan year
exceeds the fair market value of the assets allocable thereto, each determined
in accordance with Statement of Financial Accounting Standards No. 35, based
upon the actuarial assumptions used by such Pension Plan's actuary in the most
recent annual valuation of such Pension Plan.
"Wholly Owned Subsidiary" means, with respect to any Person, a Subsidiary
of such Person all of the outstanding capital stock or other ownership interests
of which (other than Regulatory Shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
Agreement.
Except as otherwise expressly provided in this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to them in
conformity with GAAP. Financial statements and other information required to be
delivered by Company to Lenders pursuant to clauses (i), (ii), (iii) and (xiii)
of subsection 6.1 shall be prepared in accordance with GAAP (except, with
respect to interim financial statements, normal year-end audit adjustments and
the absence of explanatory footnotes) as in effect at the time of such
preparation (and delivered together with the reconciliation statements provided
for in subsection 6.1(v)). Calculations in connection with the definitions,
covenants and other provisions of this Agreement shall utilize accounting
principles and policies in conformity with those used to prepare the financial
statements referred to in subsection 5.3A.
1.3 Other Definitional Provisions.
References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 1.1 may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference. The words "includes", "including" and similar
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terms used in any Loan Document shall be construed as if followed by the words
"without limitation".
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Loans.
A. Commitments. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of Loan Parties set forth
herein and in the other Loan Documents, each Lender hereby severally agrees to
make the Loans described in subsections 2.1A(i), 2.1A(ii) and 2.1A(iii) and
Swing Line Lender hereby agrees to make the Swing Line Loans as described in
subsection 2.1A(iv).
(i) Tranche A Term Loans. Each Lender severally agrees to lend to
Company on the Closing Date an amount not exceeding its Pro Rata Share of
the aggregate amount of the Tranche A Term Loan Commitments to be used for
the purposes identified in subsection 2.5A. The amount of each Lender's
Tranche A Term Loan Commitment is set forth opposite its name on Schedule
2.1 annexed hereto and the aggregate amount of the Tranche A Term Loan
Commitments is $71,000,000; provided that the Tranche A Term Loan
Commitments of Lenders shall be adjusted to give effect to any assignments
of the Tranche A Term Loan Commitments pursuant to subsection 10.1B. Each
Lender's Tranche A Term Loan Commitment shall expire immediately and
without further action on February 15, 1997 if the Tranche A Term Loans
are not made on or before that date. Company may make only one borrowing
under the Tranche A Term Loan Commitments. Amounts borrowed under this
subsection 2.1A(i) and subsequently repaid or prepaid may not be
reborrowed.
(ii) Tranche B Term Loans. Each Lender severally agrees to lend to
Company on the Closing Date an amount not exceeding its Pro Rata Share of
the aggregate amount of the Tranche B Term Loan Commitments to be used for
the purposes identified in subsection 2.5A. The amount of each Lender's
Tranche B Term Loan Commitment is set forth opposite its name on Schedule
2.1 annexed hereto and the aggregate amount of the Tranche B Term Loan
Commitments is $71,000,000; provided that the Tranche B Term Loan
Commitments of Lenders shall be adjusted to give effect to any assignments
of the Tranche B Term Loan Commitments pursuant to subsection 10.1B. Each
Lender's Tranche B Term Loan Commitment shall expire immediately and
without further action on February 15, 1997 if the Tranche B Term Loans
are not made on or before that date. Company may make only one borrowing
under the Tranche B Term Loan Commitments. Amounts borrowed under this
subsection 2.1A(ii) and subsequently repaid or prepaid may not be
reborrowed.
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(iii) Revolving Loans. Each Lender severally agrees, subject to the
limitations set forth below with respect to the maximum amount of
Revolving Loans permitted to be outstanding from time to time, to lend to
Company from time to time during the period from the Closing Date to but
excluding the Revolving Loan Commitment Termination Date an aggregate
amount which shall not exceed its Pro Rata Share of the aggregate amount
of the Revolving Loan Commitments, to be used for the purposes identified
in subsection 2.5B. The original amount of each Lender's Revolving Loan
Commitment is set forth opposite its name on Schedule 2.1 annexed hereto
and the aggregate original amount of the Revolving Loan Commitments is
$58,000,000; provided that the Revolving Loan Commitments of Lenders shall
be adjusted to give effect to any assignments of the Revolving Loan
Commitments pursuant to subsection 10.1B; provided further that the amount
of the Revolving Loan Commitments shall be reduced from time to time by
the amount of any reductions thereto made pursuant to subsections 2.4A or
2.4B. Each Lender's Revolving Loan Commitment shall expire on the
Revolving Loan Commitment Termination Date and all Revolving Loans and all
other amounts owed hereunder with respect to the Revolving Loans and the
Revolving Loan Commitments shall be paid in full no later than that date;
provided that each Lender's Revolving Loan Commitment shall expire
immediately and without further action on February 15, 1997 if the Term
Loans are not made on or before that date. Amounts borrowed under this
subsection 2.1A(iii) may be repaid and reborrowed to but excluding the
Revolving Loan Commitment Termination Date.
Notwithstanding anything contained herein to the contrary, in no
event shall the Total Utilization of Revolving Loan Commitments at any
time exceed the Revolving Loan Commitments then in effect.
(iv) Swing Line Loans. Swing Line Lender hereby agrees, subject to
the limitations set forth below with respect to the maximum aggregate
amount of all Swing Line Loans outstanding from time to time, to make a
portion of the Revolving Loan Commitments available to Company from time
to time during the period from the Closing Date to but excluding the
Revolving Loan Commitment Termination Date by making Base Rate Loans as
Swing Line Loans to Company in an aggregate amount not to exceed the
amount of the Swing Line Loan Commitment, to be used for the purposes
identified in subsection 2.5B, notwithstanding the fact that such Swing
Line Loans, when aggregated with the sum of Swing Line Lender's
outstanding Revolving Loans and Swing Line Lender's Pro Rata Share of the
Letter of Credit Usage then in effect, may exceed Swing Line Lender's
Revolving Loan Commitment. The original amount of the Swing Line Loan
Commitment is $2,000,000; provided that the amounts of the Swing Line Loan
Commitment are subject to reduction as provided in clause (c) of the next
paragraph. The Swing Line Loan Commitment shall expire on the Revolving
Loan Commitment Termination Date and all Swing Line Loans and all other
amounts owed hereunder with respect to the Swing Line Loans shall be paid
in full no later than that date; provided that the Swing Line Loan
Commitment shall expire immediately and without further action on February
15,
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1997 if the Term Loans are not made on or before that date. Amounts
borrowed under this subsection 2.1A(iv) may be repaid and reborrowed to
but excluding the Revolving Loan Commitment Termination Date.
Notwithstanding anything contained herein to the contrary, the Swing
Line Loans, and the Swing Line Loan Commitment shall be subject to the
following limitations in the amounts indicated:
(a) in no event shall the Total Utilization of Revolving Loan
Commitments at any time exceed the Revolving Loan Commitments then
in effect;
(b) any reduction of the Revolving Loan Commitments made
pursuant to subsection 2.4A or 2.4B which reduces the aggregate
Revolving Loan Commitments to an amount less than the then current
sum of the Swing Line Loan Commitment shall result in an automatic
corresponding pro rata reduction of the Swing Line Loan Commitment
such that the sum thereof equals the amount of the Revolving Loan
Commitments, as so reduced, without any further action on the part
of Company, Chase Co-Administrative Agent or Swing Line Lender.
With respect to any Swing Line Loans which have not been voluntarily
prepaid by Company pursuant to subsection 2.4B(i), Swing Line Lender may,
at any time in its sole and absolute discretion, deliver to Chase
Co-Administrative Agent (with a copy to Company), no later than 12:00 Noon
(New York time) at least one Business Day in advance of the proposed
Funding Date, a notice (which shall be deemed to be a Notice of Borrowing
given by Company) requesting Lenders to make Revolving Loans that are Base
Rate Loans to Company on such Funding Date in an amount equal to the
amount of such Swing Line Loans (the "Refunded Swing Line Loans")
outstanding on the date such notice is given which Swing Line Lender
requests Lenders to prepay. Anything contained in this Agreement to the
contrary notwithstanding, (i) the proceeds of such Revolving Loans made by
Lenders other than Swing Line Lender shall be immediately delivered by
Co-Administrative Agents to Swing Line Lender (and not to Company) and
applied to repay a corresponding portion of the Refunded Swing Line Loans
and (ii) on the day such Revolving Loans are made, Swing Line Lender's Pro
Rata Share of the Refunded Swing Line Loans shall be deemed to be paid
with the proceeds of a Revolving Loan made by Swing Line Lender to
Company, and such portion of the Swing Line Loans deemed to be so paid
shall no longer be outstanding as Swing Line Loans and shall no longer be
due under the Swing Line Note of Swing Line Lender but shall instead
constitute part of Swing Line Lender's outstanding Revolving Loans to
Company and shall be due under the Revolving Note issued by Company to
Swing Line Lender. Company hereby authorizes each of Chase
Co-Administrative Agent and Swing Line Lender to charge Company's accounts
with Chase Co-Administrative Agent and Swing Line Lender (up to the amount
available in each such account) in order to immediately
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pay Swing Line Lender the amount of the Refunded Swing Line Loans to the
extent the proceeds of such Revolving Loans made by Lenders, including the
Revolving Loan deemed to be made by Swing Line Lender, are not sufficient
to repay in full the Refunded Swing Line Loans. If any portion of any such
amount paid (or deemed to be paid) to Swing Line Lender should be
recovered by or on behalf of Company from Swing Line Lender in bankruptcy,
by assignment for the benefit of creditors or otherwise, the loss of the
amount so recovered shall be ratably shared among all Lenders in the
manner contemplated by subsection 10.5.
If for any reason Revolving Loans are not made pursuant to this
subsection 2.1A(iv) in an amount sufficient to repay any amounts owed to
Swing Line Lender in respect of any outstanding Swing Line Loans on or
before the third Business Day after demand for payment thereof by Swing
Line Lender, each Lender shall be deemed to, and hereby agrees to, have
purchased a participation in such outstanding Swing Line Loans, and in an
amount equal to its Pro Rata Share of the applicable unpaid amount
together with accrued interest thereon. Upon one Business Day's notice
from Swing Line Lender, each Lender shall deliver to Swing Line Lender an
amount in equal to its respective participation in the applicable unpaid
amount in same day funds at the Funding and Payment Office. In order to
evidence such participation each Lender agrees to enter into a
participation agreement at the request of Swing Line Lender in form and
substance satisfactory to Swing Line Lender. In the event any Lender fails
to make available to Swing Line Lender the amount of such Lender's
participation as provided in this paragraph, Swing Line Lender shall be
entitled to recover such amount on demand from such Lender together with
interest thereon at the rate customarily used by Swing Line Lender for the
correction of errors among banks for three Business Days and thereafter at
the Base Rate, as applicable.
Notwithstanding anything contained herein to the contrary, (i) each
Lender's obligation to make Revolving Loans for the purpose of repaying
any Refunded Swing Line Loans pursuant to the second preceding paragraph
and each Lender's obligation to purchase a participation in any unpaid
Swing Line Loans pursuant to the immediately preceding paragraph shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, (a) any set-off, counterclaim, recoupment,
defense or other right which such Lender may have against Swing Line
Lender, Company or any other Person for any reason whatsoever; (b) the
occurrence or continuation of an Event of Default or a Potential Event of
Default; (c) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Company or any
of its Subsidiaries; (d) any breach of this Agreement or any other Loan
Document by any party thereto; or (e) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing; provided
that no Lender shall have any such obligation unless (x) Swing Line Lender
believed in good faith that all conditions under Section 4 to the making
of the applicable Refunded Swing Line Loans or other unpaid Swing Line
Loans, were satisfied at the time such Refunded Swing Line
35
Loans or unpaid Swing Line Loans were made, or (y) such Lender had actual
knowledge, by receipt of any notices required to be delivered to Lenders
pursuant to subsection 6.1(ix) or otherwise, that any such condition under
Section 4 had not been satisfied and such Lender failed to notify Swing
Line Lender and Chase Co-Administrative Agent in writing that it had no
obligation to make Revolving Loans until such condition was satisfied (any
such notice to be effective as of the date of receipt thereof by Swing
Line Lender and Chase Co-Administrative Agent), or (z) the satisfaction of
any such condition under Section 4 not satisfied had been waived by
Requisite Lenders prior to or at the time such Refunded Swing Line Loans
or other unpaid Swing Line Loans were made; and (ii) Swing Line Lender
shall not be obligated to make any Swing Line Loans if it has elected not
to do so after the occurrence and during the continuation of a Potential
Event of Default or Event of Default.
B. Borrowing Mechanics. Term Loans or Revolving Loans (including any such
Loans made as Eurodollar Rate Loans with a particular Interest Period) made on
any Funding Date (other than Revolving Loans made pursuant to a request by Swing
Line Lender pursuant to subsection 2.1A(iv) for the purpose of repaying any
Refunded Swing Line Loans Revolving Loans made pursuant to subsection 3.3B for
the purpose of reimbursing any Issuing Lender for the amount of a drawing or
payment under a Letter of Credit issued by it) shall be in an aggregate minimum
amount of $1,000,000 and integral multiples of $100,000 in excess of that
amount. Swing Line Loans made on any Funding Date shall be in an aggregate
minimum amount of $250,000 and integral multiples of $100,000 in excess of that
amount. Whenever Company desires that Lenders make Term Loans or Revolving Loans
it shall deliver to Chase Co-Administrative Agent on behalf of Company a Notice
of Borrowing no later than 12:00 Noon (New York time), at least three Business
Days in advance of the proposed Funding Date in the case of a Eurodollar Rate
Loan, or at least one Business Day in advance of the proposed Funding Date in
the case of a Base Rate Loan. Whenever Company desires that Swing Line Lender
make a Swing Line Loan, it shall deliver to Chase Co-Administrative Agent a
Notice of Borrowing no later than 12:00 Noon (New York time) on the proposed
Funding Date. The Notice of Borrowing shall specify (i) the proposed Funding
Date (which shall be a Business Day), (ii) the amount and type of Loans
requested, (iii) in the case of Swing Line Loans, that such Loans shall be Base
Rate Loans, (iv) in the case of any Loans other than Swing Line Loans, whether
such Loans shall be Base Rate Loans or Eurodollar Rate Loans, and (v) in the
case of any Loans requested to be made as Eurodollar Rate Loans, the initial
Interest Period requested therefor. Term Loans and Revolving Loans may be
continued as or converted into Base Rate Loans and Eurodollar Rate Loans in the
manner provided in subsection 2.2D. In lieu of delivering the above-described
Notice of Borrowing, Company may give Chase Co-Administrative Agent telephonic
notice by the required time of any proposed borrowing under this subsection
2.1B; provided that such notice shall be promptly confirmed in writing by
delivery of a Notice of Borrowing to Chase Co-Administrative Agent on or before
the applicable Funding Date.
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Neither Chase Co-Administrative Agent nor any Lender shall incur any
liability to Company in acting upon any telephonic notice referred to above that
Chase Co-Administrative Agent believes in good faith to have been given by a
duly authorized officer or other person authorized to borrow on behalf of
Company or for otherwise acting in good faith under this subsection 2.1B, and
upon funding of Loans by Lenders in accordance with this Agreement pursuant to
any such telephonic notice Company shall have effected Loans hereunder.
Company shall notify Chase Co-Administrative Agent prior to the funding of
any Loans in the event that any of the matters to which Company is required to
certify in the applicable Notice of Borrowing are no longer true and correct as
of the applicable Funding Date, and the acceptance by Company of the proceeds of
any Loans shall constitute a re-certification by Company, as of the applicable
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu thereof)
shall be irrevocable on and after the related Interest Rate Determination Date,
and Company shall be bound to make a borrowing in accordance therewith.
C. Disbursement of Funds. All Term Loans and all Revolving Loans under
this Agreement shall be made by Lenders simultaneously and proportionately to
their respective Pro Rata Shares, it being understood that no Lender shall be
responsible for any default by any other Lender in that other Lender's
obligation to make a Loan requested hereunder nor shall the Commitment of any
Lender to make the particular type of Loan requested be increased or decreased
as a result of a default by any other Lender in that other Lender's obligation
to make a Loan requested hereunder. Promptly after receipt by Co-Administrative
Agents of a Notice of Borrowing pursuant to subsection 2.1B (or telephonic
notice in lieu thereof), Chase Co-Administrative Agent shall notify each Lender
or Swing Line Lender, as the case may be, of the proposed borrowing and of the
amount of such Lender's Pro Rata Share of the applicable Loans.
Each Lender shall make the amount of its Loan available to Chase
Co-Administrative Agent not later than 12:00 Noon (New York time) on the
applicable Funding Date, and Swing Line Lender shall make the amount of its
Swing Line Loan available to Chase Co-Administrative Agent not later than 12:00
Noon (New York time) on the applicable Funding Date, in each case in same day
funds, at the Funding and Payment Office. Except as provided in subsection
2.1A(iv) or subsection 3.3B with respect to Revolving Loans used to repay
Refunded Swing Line Loans or to reimburse any Issuing Lender for the amount of
an honored drawing or payment under a Letter of Credit issued by it, upon
satisfaction or waiver of the conditions precedent specified in subsections 4.1
(in the case of Loans made on the Closing Date) and 4.2 (in the case of all
Loans), Chase Co-Administrative Agent shall make the proceeds of such Loans
available to Company on the applicable Funding Date by causing an amount of same
day funds equal to the proceeds of all such Loans
37
received by Chase Co-Administrative Agent from Lenders or Swing Line Lender, as
the case may be, to be credited to the account of Company at the Funding and
Payment Office.
Unless Chase Co-Administrative Agent shall have been notified by any
Lender prior to the Funding Date for any Loans that such Lender does not intend
to make available to Chase Co-Administrative Agent the amount of such Lender's
Loan requested on such Funding Date, Chase Co-Administrative Agent may assume
that such Lender has made such amount available to Chase Co-Administrative Agent
on such Funding Date and Chase Co-Administrative Agent may, in its sole
discretion, but shall not be obligated to, make available to Company a
corresponding amount on such Funding Date. If such corresponding amount is not
in fact made available to Chase Co-Administrative Agent by such Lender, Chase
Co-Administrative Agent shall be entitled to recover such corresponding amount
on demand from such Lender together with interest thereon, for each day from
such Funding Date until the date such amount is paid to Chase Co-Administrative
Agent, at the customary rate set by Chase Co-Administrative Agent for the
correction of errors among banks for three Business Days and thereafter at the
Base Rate. If such Lender does not pay such corresponding amount forthwith upon
Chase Co-Administrative Agent's demand therefor, Chase Co-Administrative Agent
shall promptly notify Company and Company shall immediately pay such
corresponding amount in the to Chase Co-Administrative Agent together with
interest thereon, for each day from such Funding Date until the date such amount
is paid to Chase Co-Administrative Agent, at the rate applicable to such Loan.
Nothing in this subsection 2.1C shall be deemed to relieve any Lender from its
obligation to fulfill its Commitments hereunder or to prejudice any rights that
Company may have against any Lender as a result of any default by such Lender
hereunder.
D. The Register.
(i) Chase Co-Administrative Agent shall maintain, at the address
referred to in subsection 10.8, a register for the recordation of the
names and addresses of Lenders and the Commitments and Loans of each
Lender from time to time (the "Register"). The Register shall be available
for inspection by Company or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(ii) Chase Co-Administrative Agent shall record in the Register the
Commitments and the outstanding Loans from time to time of each Lender and
each repayment or prepayment in respect of the principal amount of the
outstanding Loans of each Lender. Any such recordation shall be conclusive
and binding on Company and each Lender, absent manifest error; provided
that failure to make any such recordation, or any error in such
recordation, shall not affect Company's Obligations in respect of the
applicable Loans.
(iii) Each Lender shall record on its internal records (including,
without limitation, the Notes held by such Lender) the amount of each Loan
made by it and each payment in respect thereof. Any such recordation shall
be prima facie evidence of the amount of such Loans; provided that failure
to make any such recordation, or
38
any error in such recordation, shall not affect Company's Obligations in
respect of the applicable Loans; and provided, further that in the event
of any inconsistency between the Register and any Lender's records, the
recordations in the Register shall govern.
(iv) Company, Agents and Lenders shall deem and treat the Persons
listed as Lenders in the Register as the holders and owners of the
corresponding Commitments and Loans listed therein for all purposes
hereof, and no assignment or transfer of any Commitment or Loan shall be
effective, in each case unless an until an Assignment Agreement effecting
the assignment or transfer thereof shall have been accepted by Chase
Co-Administrative Agent and recorded in the Register as provided in
subsection 10.1B(ii). Prior to such recordation, all amounts owed with
respect to the applicable Commitment or Loan shall be owed to the Lender
listed in the Register as the owner thereof, and any request, authority or
consent of any Person who, at the time of making such request or giving
such authority or consent, is listed in the Register as a Lender shall be
conclusive and binding on any subsequent holder, assignee or transferee of
the corresponding Commitments or Loans.
(v) Company hereby designates Chase, and any financial institution
serving as a successor Chase Co-Administrative Agent, to serve as
Company's agent solely for purposes of maintaining the Register as
provided in this subsection 2.1D, and Company hereby agrees that, to the
extent Chase serves in such capacity, Chase and its officers, directors,
employees, agents and affiliates shall constitute Indemnitees for all
purposes under subsection 10.3.
E. Notes. Company shall execute and deliver on the Closing Date (i) to
each Lender (or to Co-Administrative Agents for that Lender) (a) a Tranche A
Term Note substantially in the form of Exhibit IV-A annexed hereto, to evidence
that Lender's Tranche A Term Loans in the principal amount of that Lender's
Tranche A Term Loans and with other appropriate insertions, (b) a Tranche B Term
Note substantially in the form of Exhibit IV-B annexed hereto to evidence that
Lender's Tranche B Term Loans in the principal amount of that Lender's Tranche B
Term Loans and with other appropriate insertions, and (c) a Revolving Note
substantially in the form of Exhibit V annexed hereto to evidence that Lender's
Revolving Loans, in the principal amount of that Lender's Revolving Loan
Commitment and with other appropriate insertions, and (ii) to Swing Line Lender,
a Swing Line Note substantially in the form of Exhibit VI annexed hereto to
evidence Swing Line Lender's Swing Line Loans, in the principal amount of the
Swing Line Loan Commitment and with other appropriate insertions. The Notes and
the Obligations evidenced thereby shall be governed by, subject to and benefit
from all of the terms and conditions of this Agreement and the other Loan
Documents and shall be guarantied and/or secured by the Collateral as provided
in the Loan Documents.
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2.2 Interest on the Loans.
A. Rate of Interest. Subject to the provisions of subsections 2.6 and 2.7,
each Term Loan and each Revolving Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to the Base Rate or
the Adjusted Eurodollar Rate, as the case may be. Subject to the provisions of
subsection 2.7, each Swing Line Loan shall bear interest on the unpaid principal
amount thereof from the date made through maturity (whether by acceleration or
otherwise) at a rate determined by reference to the Base Rate. The applicable
basis for determining the rate of interest with respect to any Loan shall be
selected by Company initially at the time a Notice of Borrowing is given with
respect to such Loan pursuant to subsection 2.1B. The basis for determining the
interest rate with respect to any Term Loan or any Revolving Loan may be changed
from time to time pursuant to subsection 2.2D. If on any day any Term Loan or
Revolving Loan is outstanding with respect to which notice has not been
delivered to Co-Administrative Agents in accordance with the terms of this
Agreement specifying the applicable basis for determining the rate of interest,
then for that day that Loan shall bear interest determined by reference to the
Base Rate.
Subject to the provisions of subsections 2.2E and 2.7, the Term Loans and
the Revolving Loans shall bear interest through maturity as follows:
(i) if a Base Rate Loan, then at the sum of the Base Rate plus the
Applicable Base Rate Margin; or
(ii) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Eurodollar Rate Margin.
Subject to the provisions of subsections 2.2E and 2.7, the Swing Line
Loans shall bear interest through maturity at the sum of the Base Rate plus the
Applicable Base Rate Margin less 0.50% per annum.
B. Interest Periods. In connection with each Eurodollar Rate Loan, Company
may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"Interest Period") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a one, three or six month period; provided that:
(i) the initial Interest Period for any Eurodollar Rate Loan shall
commence on the Funding Date in respect of such Loan, in the case of a
Loan initially made as a Eurodollar Rate Loan, or on the date specified in
the applicable Notice of Conversion/Continuation, in the case of a Loan
converted to a Eurodollar Rate Loan;
40
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan continued as such pursuant to a
Notice of Conversion/Continuation, each successive Interest Period shall
commence on the day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) 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, subject to clause (v) of this subsection 2.2B, end on the
last Business Day of a calendar month;
(v) no Interest Period with respect to any portion of the Tranche A
Term Loans shall extend beyond the fifth Anniversary, no Interest Period
with respect to any portion of the Tranche B Term Loans shall extend
beyond the seventh Anniversary and no Interest Period with respect to any
portion of the Revolving Loans shall extend beyond the Revolving Loan
Commitment Termination Date;
(vi) no Interest Period with respect to any portion of the Tranche A
Term Loans or Tranche B Term Loans shall extend beyond a date on which
Company is required to make a scheduled payment of principal of the
Tranche A Term Loans or Tranche B Term Loans, as the case may be, unless
the sum of (a) the aggregate principal amount of Tranche A Term Loans or
Tranche B Term Loans, as the case may be, that are Base Rate Loans plus
(b) the aggregate principal amount of Tranche A Term Loans or Tranche B
Term Loans, as the case may be, that are Eurodollar Rate Loans with
Interest Periods expiring on or before such date equals or exceeds the
principal amount required to be paid on the Tranche A Term Loans or
Tranche B Term Loans, as the case may be, on such date;
(vii) no Interest Period with respect to any portion of the
Revolving Loans shall extend beyond the date on which a permanent
reduction of the Revolving Loan Commitments is scheduled to occur unless
the sum of (a) the aggregate principal amount of Revolving Loans that are
Base Rate Loans plus (b) the aggregate principal amount of Revolving Loans
that are Eurodollar Rate Loans with Interest Periods expiring on or before
such date plus (c) the excess of the Revolving Loan Commitments then in
effect over the aggregate principal amount of Revolving Loans then
outstanding equals or exceeds the permanent reduction of the Revolving
Loan Commitments that is scheduled to occur on such date;
(viii) Company may not select an Interest Period of longer than two
months prior to the end of the Initial Period;
41
(ix) there shall be no more than ten (10) Interest Periods
outstanding at any time; and
(x) in the event Company fails to specify an Interest Period for any
Eurodollar Rate Loan in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, Company shall be deemed to have selected an
Interest Period of one month.
C. Interest Payments. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity); provided that in the event that any Swing Line Loans, any Revolving
Loans or any Term Loans that are Base Rate Loans are prepaid pursuant to
subsection 2.4B(i), interest accrued on such Swing Line Loans, Revolving Loans
or Term Loans through the date of such prepayment shall be payable on the next
succeeding Interest Payment Date applicable to Base Rate Loans (or, if earlier,
at final maturity).
D. Conversion or Continuation. Subject to the provisions of subsection
2.6, Company shall have the option (i) to convert at any time all or any part of
its outstanding Term Loans or Revolving Loans equal to $1,000,000 and integral
multiples of $100,000 in excess of that amount from Loans bearing interest at a
rate determined by reference to one basis to Loans bearing interest at a rate
determined by reference to an alternative basis or (ii) upon the expiration of
any Interest Period applicable to a Eurodollar Rate Loan, to continue all or any
portion of such Loan equal to $1,000,000 and integral multiples of $100,000 in
excess of that amount as a Eurodollar Rate Loan; provided, however, that a
Eurodollar Rate Loan may only be converted into a Base Rate Loan on the
expiration date of an Interest Period applicable thereto.
Company shall deliver a Notice of Conversion/Continuation to Chase
Co-Administrative Agent no later than 12:00 Noon (New York time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan), and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan). A Notice of
Conversion/Continuation shall specify (i) the proposed conversion/continuation
date (which shall be a Business Day), (ii) the amount and type of the Loan to be
converted/continued, (iii) the nature of the proposed conversion/continuation,
(iv) in the case of a conversion to, or a continuation of, a Eurodollar Rate
Loan, the requested Interest Period, and (v) in the case of a conversion to, or
a continuation of, a Eurodollar Rate Loan, that no Potential Event of Default or
Event of Default has occurred and is continuing. In lieu of delivering the
above-described Notice of Conversion/Continuation, Company may give Chase
Co-Administrative Agent telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2D; provided that such notice
shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to Chase Co-Administrative Agent on or before the
proposed conversion/continuation date.
42
Neither Chase Co-Administrative Agent nor any Lender shall incur any
liability to Company in acting upon any telephonic notice referred to above that
Chase Co-Administrative Agent believes in good faith to have been given by a
duly authorized officer or other person authorized to act on behalf of Company
or for otherwise acting in good faith under this subsection 2.2D, and upon
conversion or continuation of the applicable basis for determining the interest
rate with respect to any Loans in accordance with this Agreement pursuant to any
such telephonic notice Company shall have effected a conversion or continuation,
as the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Conversion/Continuation for conversion to, or continuation of, a Eurodollar
Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on and
after the related Interest Rate Determination Date, and Company shall be bound
to effect a conversion or continuation in accordance therewith.
E. Post-Default Interest. Upon the occurrence and during the continuation
of any Event of Default, the outstanding principal amount of all Loans and, to
the extent permitted by applicable law, any interest payments thereon not paid
when due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code, or other applicable bankruptcy or insolvency laws)
payable upon demand at a rate that is 2% per annum in excess of the interest
rate otherwise payable under this Agreement with respect to the applicable Loans
(or, in the case of any such fees and other amounts, at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Revolving Loans bearing interest at a rate determined by reference to the Base
Rate); provided that, in the case of Eurodollar Rate Loans, upon the expiration
of the Interest Period in effect at the time any such increase in interest rate
is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans
and shall thereafter bear interest payable upon demand at a rate equal to 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Loans that are Tranche A Term Loans, Tranche B Term Loans or Revolving
Loans, as applicable. Payment or acceptance of the increased rates of interest
provided for in this subsection 2.2E is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of any Agent or Lender.
F. Computation of Interest. Interest on Loans shall be computed on the
basis of a 360-day year and for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the date of the
making of such Loan or the first day of an Interest Period applicable to such
Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate
Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate
Loan, as the case may be, shall be included, and the date of payment of such
Loan or the expiration date of an Interest Period applicable to such Loan or,
with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the
date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the
case may be,
43
shall be excluded; provided that if a Loan is repaid on the same day on which it
is made, one day's interest shall be paid on that Loan.
2.3 Fees.
A. Commitment Fees. Company agrees to pay to Chase Co-Administrative
Agent, for distribution to each Lender in proportion to that Lender's Pro Rata
Share, commitment fees for the period from and including the Closing Date to (i)
and excluding the Revolving Loan Commitment Termination Date equal to the
average of the daily excess of the Revolving Loan Commitments over the sum of
the aggregate principal amount of Revolving Loans outstanding (but not any Swing
Line Loans outstanding) plus the Letter of Credit Usage multiplied by (ii) 1/2
of 1% per annum. All such commitment fees shall be calculated on the basis of a
360-day year and the actual number of days elapsed and shall be payable
quarterly in arrears on January 15, April 15, July 15 and October 15 of each
year, commencing on January 15, 1997.
B. Annual Collateral Agent's Fee. Company agrees to pay to Collateral
Agent an annual Collateral Agent's fee in such amounts as may be agreed between
them from time to time.
C. Other Fees. Company agrees to pay to Agents such other fees in the
amounts and at the times separately agreed upon between Company and the
applicable Agents.
2.4 Repayments, Prepayments and Reductions in Revolving Loan Commitments;
General Provisions Regarding Payments.
A. Scheduled Payments of Term Loans.
(i) Scheduled Payments of Tranche A Term Loans. Company shall make
principal payments on the Tranche A Term Loans in installments on the
dates and in the amounts set forth below:
===============================================================
SCHEDULED REPAYMENT
DATE OF TRANCHE A
TERM LOANS
===============================================================
January 15, 1997 $2,125,000
April 15, 1997 $2,125,000
July 15, 1997 $2,125,000
October 15, 1997 $2,125,000
---------------------------------------------------------------
January 15, 1998 $3,312,500
April 15, 1998 $3,312,500
July 15, 1998 $3,312,500
October 15, 1998 $3,312,500
---------------------------------------------------------------
44
===============================================================
SCHEDULED REPAYMENT
DATE OF TRANCHE A
TERM LOANS
===============================================================
January 15, 1999 $3,312,500
April 15, 1999 $3,312,500
July 15, 1999 $3,312,500
October 15, 1999 $3,312,500
---------------------------------------------------------------
January 15, 2000 $4,250,000
April 15, 2000 $4,250,000
July 15, 2000 $4,250,000
October 15, 2000 $4,250,000
---------------------------------------------------------------
January 15, 2001 $4,750,000
April 15, 2001 $4,750,000
July 15, 2001 $4,750,000
October 15, 2001 $4,750,000
===============================================================
; provided that the scheduled installments of principal of the Tranche A
Term Loans set forth above shall be reduced in connection with any
voluntary or mandatory prepayments of the Tranche A Term Loans in
accordance with subsection 2.4C; and provided further, that the Tranche A
Term Loans and all other amounts owed hereunder with respect to the
Tranche A Term Loans shall be paid in full no later than October 15, 2001,
and the final installment payable by Company in respect of the Tranche A
Term Loans on such date shall be in an amount, if such amount is different
from that specified above, sufficient to repay all amounts owing by
Company under this Agreement with respect to the Tranche A Term Loans.
(ii) Scheduled Payments of Tranche B Term Loans. Company shall make
principal payments on the Tranche B Term Loans in installments on the
dates and in the amounts set forth below:
===============================================================
SCHEDULED REPAYMENT
DATE OF TRANCHE B
TERM LOANS
===============================================================
January 15, 1997 $ 250,000
April 15, 1997 $ 250,000
July 15, 1997 $ 250,000
October 15, 1997 $ 250,000
---------------------------------------------------------------
January 15, 1998 $ 250,000
April 15, 1998 $ 250,000
July 15, 1998 $ 250,000
October 15, 1998 $ 250,000
---------------------------------------------------------------
45
===============================================================
SCHEDULED REPAYMENT
DATE OF TRANCHE B
TERM LOANS
===============================================================
January 15, 1999 $ 250,000
April 15, 1999 $ 250,000
July 15, 1999 $ 250,000
October 15, 1999 $ 250,000
---------------------------------------------------------------
January 15, 2000 $ 250,000
April 15, 2000 $ 250,000
July 15, 2000 $ 250,000
October 15, 2000 $ 250,000
---------------------------------------------------------------
January 15, 2001 $ 250,000
April 15, 2001 $ 250,000
July 15, 2001 $ 250,000
October 15, 2001 $ 250,000
---------------------------------------------------------------
January 15, 2002 $7,000,000
April 15, 2002 $7,000,000
July 15, 2002 $7,000,000
October 15, 2002 $7,000,000
---------------------------------------------------------------
January 15, 2003 $9,500,000
April 15, 2003 $9,500,000
July 15, 2003 $9,500,000
October 15, 2003 $9,500,000
===============================================================
; provided that the scheduled installments of principal of the Tranche B
Term Loans set forth above shall be reduced in connection with any
voluntary or mandatory prepayments of the Tranche B Term Loans in
accordance with subsection 2.4C; and provided, further that the Tranche B
Term Loans and all other amounts owed hereunder with respect to the
Tranche B Term Loans shall be paid in full no later than October 15, 2003,
and the final installment payable by Company in respect of the Tranche B
Term Loans on such date shall be in an amount, if such amount is different
from that specified above, sufficient to repay all amounts owing by
Company under this Agreement with respect to the Tranche B Term Loans.
B. Prepayments and Unscheduled Reductions in Revolving Loan Commitments.
(i) Voluntary Prepayments. Company may, upon written or telephonic
notice to Chase Co-Administrative Agent on or prior to 12:00 Noon (New
York time) on the date of prepayment, which notice, if telephonic, shall
be promptly confirmed in writing, at any time and from time to time
prepay, without premium or penalty, any Swing Line Loan on any Business
Day in whole or in part in an aggregate minimum amount of $250,000 and
integral multiples of $50,000 in excess
46
of that amount. In addition, so long as no Swing Line Loans are then
outstanding, Company may, upon not less than one Business Day's prior
written or telephonic notice, in the case of Base Rate Loans, and three
Business Days' prior written or telephonic notice, in the case of
Eurodollar Rate Loans, in each case confirmed in writing to Chase
Co-Administrative Agent (which notice Chase Co-Administrative Agent will
promptly transmit by telefacsimile or telephone to each Lender), at any
time and from time to time prepay, without premium or penalty, the Loans
other than Swing Line Loans on any Business Day in whole or in part in an
aggregate minimum amount of $1,000,000 and integral multiples of $250,000
in excess of that amount; provided, however, that in the event Company
shall prepay a Eurodollar Rate Loan other than on the expiration of the
Interest Period applicable thereto, Company shall, at the time of such
prepayment, also pay the amount payable under Section 2.6D hereof. Notice
of prepayment having been given as aforesaid, the Loans shall become due
and payable on the prepayment date specified in such notice and in the
aggregate principal amount specified therein. Any voluntary prepayments
pursuant to this subsection 2.4B(i) shall be applied as specified in
subsection 2.4C.
(ii) Voluntary Reductions of Revolving Loan Commitments . Company
may, upon not less than three Business Days' prior written or telephonic
notice confirmed in writing to Chase Co-Administrative Agent (which notice
Chase Co-Administrative Agent will promptly transmit by telefacsimile or
telephone to each Lender), at any time and from time to time terminate in
whole or permanently reduce in part, without premium or penalty, the
Revolving Loan Commitments in an amount up to the amount by which the
Revolving Loan Commitments exceed the Total Utilization of Revolving Loan
Commitments at the time of such proposed termination or reduction;
provided that any such partial reduction of the Revolving Loan Commitments
shall be in an aggregate minimum amount of $1,000,000 and integral
multiples of $250,000 in excess of that amount. Company's notice to Chase
Co-Administrative Agent shall designate the date (which shall be a
Business Day) of such termination or reduction and the amount of any
partial reduction, and such termination or reduction of the Revolving Loan
Commitments shall be effective on the date specified in such notice and
shall reduce the Revolving Loan Commitment of each Lender proportionately
to its Pro Rata Share. Any such voluntary reduction of the Revolving Loan
Commitments shall be applied as specified in subsection 2.4C.
(iii) Mandatory Prepayments and Mandatory Reductions of Revolving
Loan Commitments.
The Loans shall be prepaid and the Revolving Loan Commitments shall
be reduced in the manner provided in subsection 2.4C upon the occurrence
of the following circumstances:
(a) Prepayments and Reductions from Asset Sales. No later than
the first Business Day following the date of receipt by Company or
any of its Subsidiaries of the Cash Proceeds of any Asset Sale
(other than any portion
47
of such proceeds that is reinvested (or scheduled for reinvestment)
in a Qualified Loan Portfolio and/or assets of the general type used
in the business of Company and its Subsidiaries within 270 days from
the date of receipt of such proceeds), Company shall prepay the
Loans (and/or the Revolving Loan Commitments shall be reduced) in
the amount of such proceeds not so reinvested (or scheduled for such
reinvestment); provided, that if (1) the Net Cash Proceeds of any
individual Asset Sale of receivables portfolios exceed $5,000,000 or
(2) the Net Cash Proceeds of all such Asset Sales in any Fiscal Year
exceed $10,000,000, then in each case the amount of such excess Net
Cash Proceeds may not be reinvested (or scheduled for reinvestment);
provided further, that if the Net Cash Proceeds of Asset Sales of
businesses in any Fiscal Year exceed 10% of Consolidated EBITDA for
the preceding Fiscal Year, then the amount of such excess Net Cash
Proceeds may not be reinvested (or scheduled for reinvestment); and
provided further, that Company may not reinvest (or schedule for
reinvestment) Net Cash Proceeds upon the occurrence and during the
continuation of an Event of Default. Company shall, no later than
365 days after receipt of any such Net Cash Proceeds that have not
theretofore been applied to the Obligations, make an additional
prepayment of the Loans (and/or the Revolving Loan Commitments shall
be reduced) in the full amount of all such proceeds that have not
therefore been so reinvested. Concurrently with any prepayment of
the Loans and/or reduction of the Commitments pursuant to this
subsection 2.4B(iii)(a), Company shall deliver to Chase
Co-Administrative Agent an Officer's Certificate demonstrating the
derivation of the Net Cash Proceeds of the correlative Asset Sale
from the gross sales price thereof. In the event that Company shall,
at any time after receipt of Cash Proceeds of any Asset Sale
requiring a prepayment or a reduction of the Revolving Loan
Commitments pursuant to this subsection 2.4B(iii)(a), determine that
the prepayments and/or reductions of the Revolving Loan Commitments
previously made in respect of such Asset Sale were in an aggregate
amount less than that required by the terms of this subsection
2.4B(iii)(a), Company shall promptly cause to be made an additional
prepayment of the Loans (and/or reduction in the Revolving Loan
Commitments) in an amount equal to the amount of any such deficit,
and Company shall concurrently therewith deliver to
Co-Administrative Agents an Officer's Certificate demonstrating the
derivation of the additional Net Cash Proceeds resulting in such
deficit.
(b) Prepayments and Reductions Due to Issuance of Debt. On or
prior to the first Business Day after receipt by Company or any of
its Subsidiaries of any proceeds of any Indebtedness (other than the
Loans and any other Indebtedness permitted by this Agreement),
Company shall prepay the Loans (and/or the Revolving Loan
Commitments shall be reduced) in an amount equal to the amount of
such proceeds; provided that payment or acceptance of the amounts
provided for in this subsection 2.4B(iii)(b) shall not constitute a
waiver of any Event of Default resulting from the incurrence of
48
such Indebtedness or otherwise prejudice any rights or remedies of
Agents or Lenders.
(c) Prepayments and Reductions Due to Issuance of Equity
Securities. On or prior to the first Business Day after receipt by
Company or any of its Subsidiaries of any Equity Proceeds, Company
shall prepay the Loans (and/or the Revolving Loan Commitments shall
be reduced) in an amount equal to such Equity Proceeds; provided
that such Equity Proceeds shall not be applied to prepay Loans
pursuant to this subsection if (1) such Equity Proceeds were not
derived from a public offering of Securities and (2) such Equity
Proceeds (y) are, upon receipt, designated for reinvestment in the
businesses of Company and its Subsidiaries and (z) are within 30
days of receipt thereof by Company or any of its Subsidiaries,
reinvested in the businesses of Company and its Subsidiaries.
(d) Prepayments and Reductions from Insurance and Condemnation
Proceeds. No later than the second Business Day following the date
of receipt by Company or any of its Subsidiaries of any cash
payments under any of the casualty insurance policies covering
damage to or loss of property maintained pursuant to subsection 6.4
resulting from damage to or loss of all or any portion of the
Collateral or any other tangible asset (net of actual and documented
reasonable costs incurred by Company or any of its Subsidiaries in
connection with adjustment and settlement thereof, "Insurance
Proceeds") or any proceeds resulting from the taking of assets by
the power of eminent domain, condemnation or otherwise (net of
actual and documented reasonable costs incurred by Company or any of
its Subsidiaries in connection with adjustment and settlement
thereof, "Condemnation Proceeds") (other than any portion of any
such proceeds that is reinvested (or scheduled for reinvestment) in
assets of the general type used in the business of Company and its
Subsidiaries within 270 days from the date of receipt of such
proceeds), Company shall prepay the Loans (and/or the Revolving Loan
Commitments shall be reduced) in the amount of such proceeds not so
reinvested (or scheduled for such reinvestment). Company shall, no
later than 270 days after receipt of any such Insurance Proceeds or
Condemnation Proceeds that have not theretofore been applied to the
Obligations, make an additional prepayment of the Loans (and/or the
Revolving Loan Commitments shall be reduced) in the full amount of
all such proceeds that have not therefore been reinvested in such
assets.
(e) Prepayments and Reductions from Consolidated Excess Cash
Flow. In the event that there shall be Consolidated Excess Cash Flow
for any Fiscal Year (commencing with the Fiscal Year ending December
31, 1997), Company shall, no later than 100 days after the end of
such Fiscal Year, prepay the Loans (and/or the Revolving Loan
Commitments shall be reduced) in an aggregate amount equal to (1)
for Fiscal Year 1997, 50% of
49
the portion of such Consolidated Excess Cash Flow for such Fiscal
Year in excess of $7,500,000, and (2) for any Fiscal Year
thereafter, 50% of such Consolidated Excess Cash Flow for such
Fiscal Year.
(f) Prepayments Due to Reductions or Restrictions of Revolving
Loan Commitments. Company shall prepay the Swing Line Loans and/or
the Revolving Loans from time to time to the extent necessary so
that (y) the Total Utilization of Revolving Loan Commitments shall
not at any time exceed the Revolving Loan Commitments then in
effect, and (z) the aggregate principal amount of all outstanding
Swing Line Loans shall not at any time exceed the Swing Line Loan
Commitment then in effect. All Swing Line Loans shall be prepaid in
full prior to the prepayment of any Revolving Loans pursuant to this
subsection 2.4B(iii)(f).
C. Application of Prepayments and Reductions of Revolving Loan
Commitments.
(i) Application of Voluntary Prepayments by Type of Loans. Any
voluntary prepayments pursuant to subsection 2.4B(i) shall be applied:
first to repay outstanding Swing Line Loans to the full extent thereof,
second to repay outstanding Revolving Loans to the full extent thereof,
and third, to repay outstanding Term Loans to the full extent thereof.
(ii) Application of Mandatory Prepayments by Type of Loans. Any
amount (the "Applied Amount") required to be applied as a mandatory
prepayment of the Loans and/or a reduction of the Revolving Loan
Commitments pursuant to subsections 2.4B(iii)(a)-(e) shall be applied
first to prepay the Term Loans to the full extent thereof, second, to the
extent of any remaining portion of the Applied Amount, to prepay the Swing
Line Loans to the full extent thereof and to permanently reduce the
Revolving Loan Commitments by the amount of such prepayment, third, to the
extent of any remaining portion of the Applied Amount, to prepay the
Revolving Loans to the full extent thereof and to further permanently
reduce the Revolving Loan Commitments by the amount of such prepayment,
and fourth, to the extent of any remaining portion of the Applied Amount,
to further permanently reduce the Revolving Loan Commitments to the full
extent thereof.
(iii) Application of Prepayments of Term Loans to Tranche A Term
Loans and Tranche B Term Loans and the Scheduled Installments of Principal
Thereof. Any prepayments of the Term Loans pursuant to subsection 2.4B(i)
or 2.4B(iii) shall be applied to prepay the Tranche A Term Loans and the
Tranche B Term Loans on a pro rata basis in accordance with the respective
outstanding principal amounts thereof. Any mandatory prepayments applied
to the Tranche A Term Loans or the Tranche B Term Loans pursuant to this
subsection shall be applied on a pro rata basis (in accordance with the
respective outstanding principal amounts thereof) to each scheduled
installment of principal of the Tranche A Term Loans or the Tranche
50
B Term Loans, as the case may be, set forth in subsection 2.4A(i) or
2.4A(ii), respectively, that is unpaid at the time of such prepayment.
(iv) Application of Prepayments to Base Rate Loans and Eurodollar
Rate Loans. Considering Tranche A Term Loans, Tranche B Term Loans and
Revolving Loans being prepaid separately, any prepayment thereof shall be
applied first to Base Rate Loans to the full extent thereof before
application to Eurodollar Rate Loans, in each case in a manner which
minimizes the amount of any payments required to be made by Company
pursuant to subsection 2.6D.
D. Application of Proceeds of Collateral and Payments Under Subsidiary
Guaranty.
(i) Application of Proceeds of Collateral. Except as provided in
subsection 2.4B(iii)(a) with respect to prepayments from Net Asset Sale
Proceeds, all proceeds received by Collateral Agent in respect of any sale
of, collection from, or other realization upon all or any part of the
Collateral under any Collateral Document may, in the discretion of
Collateral Agent, be held by Collateral Agent as Collateral for, and/or
(then or at any time thereafter) applied in full or in part by Collateral
Agent against, the applicable Secured Obligations (as defined in such
Collateral Document) in the following order of priority:
(a) To the payment of all costs and expenses of such sale,
collection or other realization, including without limitation
reasonable compensation to Collateral Agent and its agents and
counsel, and all other reasonable expenses, liabilities and advances
made or incurred by Collateral Agent in connection therewith, and
all amounts for which Collateral Agent is entitled to
indemnification under such Collateral Document and all advances made
by Collateral Agent thereunder for the account of the applicable
Loan Party, and to the payment of all reasonable costs and expenses
paid or incurred by Collateral Agent in connection with the exercise
of any right or remedy under such Collateral Document, all in
accordance with the terms of this Agreement and such Collateral
Document;
(b) thereafter, to the extent of any excess such proceeds, to
the payment of all other such Secured Obligations for the ratable
benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such proceeds, to
the payment to or upon the order of such Loan Party or to whosoever
may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
51
(ii) Application of Payments Under Subsidiary Guaranty. All payments
received by Collateral Agent under the Subsidiary Guaranty shall be
applied promptly from time to time by Collateral Agent in the following
order of priority:
(a) To the payment of the reasonable costs and expenses of any
collection or other realization under the Subsidiary Guaranty,
including without limitation reasonable compensation to Collateral
Agent and its agents and counsel, and all expenses, liabilities and
advances made or incurred by Collateral Agent in connection
therewith, all in accordance with the terms of this Agreement and
the Subsidiary Guaranty;
(b) thereafter, to the extent of any excess such payments, to
the payment of all other Guarantied Obligations (as defined in the
Subsidiary Guaranty) for the ratable benefit of the holders thereof;
and
(c) thereafter, to the extent of any excess such payments, to
the payment to the applicable Subsidiary Guarantor or to whosoever
may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
E. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments by Company of
principal, interest, fees and other Obligations hereunder and under the
Notes shall be made in same day funds and without defense, setoff or
counterclaim, free of any restriction or condition, and delivered to Chase
Co-Administrative Agent not later than 12:00 Noon (New York time) on the
date due at the Funding and Payment Office for the account of Lenders;
funds received by Chase Co-Administrative Agent after that time on such
due date shall be deemed to have been paid by Company on the next
succeeding Business Day. Company hereby authorizes Chase Co-Administrative
Agent to charge its accounts with such Chase Co-Administrative Agent in
order to cause timely payment to be made to Chase Co-Administrative Agent
of all principal, interest, fees and expenses due hereunder (subject to
sufficient funds being available in its accounts for that purpose).
(ii) Application of Payments to Principal and Interest. Except as
provided in subsection 2.2C, all payments in respect of the principal
amount of any Loan shall include payment of accrued interest on the
principal amount being repaid or prepaid, and all such payments (and in
any event any payments made in respect of any Loan on a date when interest
is due and payable with respect to such Loan) shall be applied to the
payment of interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and interest
payments shall be apportioned among all outstanding Loans to which such
payments relate, in each case proportionately to Lenders' respective Pro
Rata Shares. Chase
52
Co-Administrative Agent shall promptly distribute to each Lender, at its
applicable Lending Office specified on Schedule 2.1 or at such other
address as such Lender may request, its Pro Rata Share of all such
payments received by Chase Co-Administrative Agent and the commitment fees
of such Lender when received by Chase Co-Administrative Agent pursuant to
subsection 2.3. Notwithstanding the foregoing provisions of this
subsection 2.4E(iii) if, pursuant to the provisions of subsection 2.6C,
any Notice of Conversion/Continuation is withdrawn as to any Affected
Lender or if any Affected Lender makes Base Rate Loans in lieu of its Pro
Rata Share of any Eurodollar Rate Loans, Chase Co-Administrative Agent
shall give effect thereto in apportioning payments received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder or of the commitment fees hereunder, as the case may
be.
(v) Notation of Payment. Each Lender agrees that before disposing of
any Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of all
Loans evidenced by that Note and all principal payments previously made
thereon and of the date to which interest thereon has been paid; provided
that the failure to make (or any error in the making of) a notation of any
Loan made under such Note shall not limit or otherwise affect the
obligations of Company hereunder or under such Note with respect to any
Loan or any payments of principal or interest on such Note.
2.5 Use of Proceeds.
A. Term Loans. The proceeds of Term Loans made to Company shall, together
with the proceeds of the Subordinated Notes, be applied to (i) finance the
Acquisition, (ii) refinance certain existing Indebtedness, including
Indebtedness under the Existing API Credit Agreement and the Existing OSI Credit
Agreement, and (iii) pay Transaction Costs.
B. Revolving Loans; Swing Line Loans. Revolving Loans and Swing Line Loans
in an aggregate amount not to exceed $10,000,000 at any time outstanding may be
used to finance the general corporate purposes of Company and its Subsidiaries.
Revolving Loans and Swing Line Loans in an additional amount not to exceed
$48,000,000 at any time outstanding may be used to finance expenditures which
are included in the definition of Consolidated Capital Expenditures; provided
that Revolving Loans and Swing Line Loans in an aggregate amount not to exceed
$58,000,000 at any time outstanding may be used to finance such acquisitions if
at all times such additional amount of Revolving Loans is outstanding the sum of
(i) unrestricted Cash and Cash Equivalents on the balance sheet of Company plus
(ii) the excess of the Revolving Loan Commitments over the Total Utilization of
Revolving Loan Commitments equals or exceeds $7,500,000.
53
C. Compliance With Laws. Company hereby undertakes that no portion of the
proceeds of any Loans or other extensions of credit under this Agreement shall
be used by any Loan Party in any manner which would be illegal under, or which
would cause the invalidity or unenforceability (in each case in whole or in
part) of any Loan Document under, any applicable law.
D. Margin Regulations. Without limiting the generality of subsection 2.5C,
no portion of the proceeds of any borrowing under this Agreement shall be used
by Company or any of its Subsidiaries in any manner that might cause the
borrowing or the application of such proceeds to violate Regulation G,
Regulation U, Regulation T or Regulation X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board or to violate the
Exchange Act, in each case as in effect on the date or dates of such borrowing
and such use of proceeds.
2.6 Special Provisions Governing Eurodollar Rate Loans.
Notwithstanding any other provision of this Agreement to the contrary, the
following provisions shall govern with respect to Eurodollar Rate Loans as to
the matters covered:
A. Determination of Applicable Interest Rate. As soon as practicable after
11:00 A.M. (New York time) on each Interest Rate Determination Date, Chase
Co-Administrative Agent shall determine (which determination shall, absent
manifest error, be final, conclusive and binding upon all parties) the interest
rate that shall apply to the Eurodollar Rate Loans for which an interest rate is
then being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.
B. Inability to Determine Applicable Interest Rate. In the event that
Chase Co-Administrative Agent shall have reasonably determined (which
determination shall be final and conclusive and binding upon all parties
hereto), on any Interest Rate Determination Date with respect to any Eurodollar
Rate Loans, that by reason of circumstances arising after the date of this
Agreement affecting the London interbank market, adequate and fair means do not
exist for ascertaining the interest rate applicable to such Loans on the basis
provided for in the definition of Adjusted Eurodollar Rate Chase
Co-Administrative Agent shall on such date give notice (by telecopy or by
telephone confirmed in writing) to Company and each Lender of such
determination, whereupon (i) no Loans may be made as, or converted to,
Eurodollar Rate Loans, until such time as Chase Co-Administrative Agent notifies
Company and Lenders that the circumstances giving rise to such notice no longer
exist (such notification not to be unreasonably withheld or delayed) and (ii)
any Notice of Borrowing or Notice of Conversion/Continuation given by Company
with respect to the Loans in respect of which such determination was made shall
be deemed to be rescinded by Company.
C. Illegality or Impracticability of Eurodollar Rate Loans. In the event
that on any date any Lender shall have reasonably determined (which
determination shall be final
54
and conclusive and binding upon all parties hereto but shall be made only after
consultation with Company and Chase Co-Administrative Agent) that the making,
maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful
as a result of compliance by such Lender in good faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order not having the
force of law even though the failure to comply therewith would not be unlawful)
or (ii) has become impracticable, or would cause such Lender material hardship,
as a result of contingencies occurring after the date of this Agreement which
materially and adversely affect the London interbank market, then, and in any
such event, such Lender shall be an "Affected Lender" and it shall on that day
give notice (by telecopy or by telephone confirmed in writing) to Company and
Chase Co-Administrative Agent of such determination (which notice Chase
Co-Administra- tive Agent shall promptly transmit to each other Lender).
Thereafter (a) the obligation of the Affected Lender to make Loans as, or to
convert Loans to, Eurodollar Rate Loans, shall be suspended until such notice
shall be withdrawn by the Affected Lender, (b) to the extent such determination
by the Affected Lender relates to a Eurodollar Rate Loan then being requested by
Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, the Affected Lender shall make such Loan as (or convert
such Loan to, as the case may be) a Base Rate Loan, (c) the Affected Lender's
obligation to maintain its outstanding Eurodollar Rate Loans, as the case may be
(the "Affected Loans"), shall be terminated at the earlier to occur of the
expiration of the Interest Period then in effect with respect to the Affected
Loans or when required by law, and (d) the Affected Loans shall automatically
convert into Base Rate Loans on the date of such termination. Notwithstanding
the foregoing, to the extent a determination by an Affected Lender as described
above relates to a Eurodollar Rate Loan then being requested by Company pursuant
to a Notice of Borrowing or a Notice of Conversion/Continuation, Company shall
have the option, subject to the provisions of subsection 2.6D, to rescind such
Notice of Borrowing or Notice of Conversion/Continuation as to all Lenders by
giving notice (by telecopy or by telephone confirmed in writing) to Chase
Co-Administrative Agent of such rescission on the date on which the Affected
Lender gives notice of its determination as described above (which notice of
rescission Chase Co-Administrative Agent shall promptly transmit to each other
Lender). Except as provided in the immediately preceding sentence, nothing in
this subsection 2.6C shall affect the obligation of any Lender other than an
Affected Lender to make or maintain Loans as, or to convert Loans to, Eurodollar
Rate Loans in accordance with the terms of this Agreement.
D. Compensation For Breakage or Non-Commencement of Interest Periods.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including, without limitation, any
interest paid by that Lender to lenders of funds borrowed by it to make or carry
its Eurodollar Rate Loans and any loss, expense or liability sustained by that
Lender in connection with the liquidation or re-employment of such funds) which
that Lender may sustain: (i) if for any reason (other than a default by that
Lender) a borrowing of any Eurodollar Rate Loan does not occur on a date
55
specified therefor in a Notice of Borrowing or a telephonic request for
borrowing, or a conversion to or continuation of any Eurodollar Rate Loan does
not occur on a date specified therefor in a Notice of Conversion/Continuation or
a telephonic request for conversion or continuation, (ii) if any prepayment
(including without limitation any prepayment pursuant to subsection 2.4B(i)) or
conversion of any of its Eurodollar Rate Loans occurs on a date that is not the
last day of an Interest Period applicable to that Loan, (iii) if any prepayment
of any of its Eurodollar Rate Loans is not made on any date specified in a
notice of prepayment given by Company, or (iv) as a consequence of any other
default by Company in the repayment of its Eurodollar Rate Loans when required
by the terms of this Agreement.
E. Booking of Eurodollar Rate Loans. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation of
all amounts payable to a Lender under this subsection 2.6 and under subsection
2.7A shall be made as though that Lender had actually funded each of its
relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Rate Loans
in any manner it sees fit and the foregoing assumptions shall be utilized only
for the purposes of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. Eurodollar Rate Loans After Default. After the occurrence of and during
the continuation of a Potential Event of Default or an Event of Default, (i)
Company may not elect to have a Loan be made or maintained as, or converted to,
a Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any
Notice of Borrowing or Notice of Conversion/Continuation given by Company with
respect to a requested borrowing or conversion/continuation that has not yet
occurred shall be deemed to be rescinded by Company.
2.7 Increased Costs; Taxes; Capital Adequacy.
A. Compensation for Increased Costs and Taxes. Subject to the provisions
of subsection 2.7B (which shall be controlling with respect to the matters
covered thereby), in the event that any law, treaty or governmental rule,
regulation or order, or any change therein or in the interpretation,
administration or application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or any determination of
a court or governmental authority, in each case that becomes effective after the
date hereof, or compliance by such Lender with any guideline, request or
directive issued or made after the date hereof by any central bank or other
governmental or quasi-governmental authority (whether or not having the force of
law):
56
(i) results in a change in the basis of taxation of such Lender (or
its applicable lending office) (other than a change with respect to any
Tax on the overall net income of such Lender) with respect to this
Agreement or any of its obligations hereunder or any payments to such
Lender (or its applicable lending office) of principal, interest, fees or
any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including,
without limitation, any marginal, emergency, supplemental, special or
other reserve), special deposit, compulsory loan, FDIC insurance or
similar requirement against assets held by, or deposits or other
liabilities in or for the account of, or advances or loans by, or other
credit extended by, or any other acquisition of funds by, any office of
such Lender (other than any such reserve or other requirements with
respect to Eurodollar Rate Loans that are reflected in the definition of
Adjusted Eurodollar Rate; or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder, or the London interbank market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Eurodollar Rate Loans hereunder or to
reduce any amount received or receivable by such Lender (or its applicable
lending office) with respect thereto; then, in any such case, Lender shall
promptly notify Company and Chase Co-Administrative Agent thereof and Company
shall promptly pay to such Lender, upon receipt of the statement referred to in
the next sentence, such additional amount or amounts (in the form of an
increased rate of, or a different method of calculating, interest or otherwise
as such Lender shall reasonably determine) as may be necessary to compensate
such Lender for any such increased cost or reduction in amounts received or
receivable hereunder. Such Lender shall deliver to Company (with a copy to Chase
Co-Administrative Agent) a written statement, setting forth in reasonable detail
the basis for calculating the additional amounts owed to such Lender under this
subsection 2.7A, which statement shall be prima facie evidence of such
additional amounts.
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums payable by Company under
this Agreement and the other Loan Documents shall (except to the extent
required by law) be paid free and clear of, and without any deduction or
withholding on account of, any Tax (other than a Tax on the overall net
income of any Lender) imposed, levied, collected, withheld or assessed by
or within the United States of America or any political subdivision in or
of the United States of America or any other jurisdiction from which a
payment is made by or on behalf of Company.
(ii) Withholding of Taxes. If Company or any other Person is
required by law to make any deduction or withholding on account of any
such Tax from any sum
57
paid or payable by Company to Chase Co-Administrative Agent or any Lender
under any of the Loan Documents:
(a) Company shall notify Chase Co-Administrative Agent of any
such requirement or any change in any such requirement as soon as
Company becomes aware of it;
(b) Company shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability
to pay is imposed on Company) for its own account or (if that
liability is imposed on Chase Co-Administrative Agent or such
Lender, as the case may be) on behalf of and in the name of Chase
Co-Administrative Agent or such Lender;
(c) the sum payable by Company in respect of which the
relevant deduction, withholding or payment is required shall be
increased to the extent necessary to ensure that, after the making
of that deduction, withholding or payment, Chase Co-Administrative
Agent or such Lender, as the case may be, receives on the due date a
net sum equal to what it would have received had no such deduction,
withholding or payment been required or made; and
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30
days after the due date of payment of any Tax which it is required
by clause (b) above to pay, Company shall deliver to Chase
Co-Administrative Agent evidence of such deduction, withholding or
payment and of the remittance thereof to the relevant taxing or
other authority;
provided that no such additional amount shall be required to be paid to any
Lender under clause (c) above except to the extent that any change after the
date hereof (in the case of each Lender listed on the signature pages hereof) or
after the date of the Assignment Agreement pursuant to which such Lender became
a Lender (in the case of each other Lender) in any such requirement for a
deduction, withholding or payment as is mentioned therein shall result in an
increase in the rate of such deduction, withholding or payment from that in
effect at the date of this Agreement or at the date of such Assignment
Agreement, as the case may be, in respect of payments to such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection
2.7B(iii), a "Non-US Lender") shall deliver to Chase
Co-Administrative Agent for transmission to Company, on or prior to
the Closing Date (in the case of each Lender listed on the signature
pages hereof) or on or prior to the date of the Assignment Agreement
pursuant to which it becomes a Lender (in the case of each other
Lender), and at such
58
other times as may be necessary in the determination of Company or
Chase Co-Administrative Agent (each in the reasonable exercise of
its discretion), (1) two original copies of Internal Revenue Service
Form 1001 or 4224 (or any successor forms), accurately completed and
duly executed by such Lender, together with any other certificate or
statement of exemption required under the Internal Revenue Code or
the regulations issued thereunder to establish that such Lender is
not subject to deduction or withholding of United States federal
income tax with respect to any payments to such Lender of principal,
interest, fees or other amounts payable under any of the Loan
Documents or (2) if such Lender is not a "bank" or other Person
described in Section 881(c)(3) of the Internal Revenue Code and
cannot deliver either Internal Revenue Service Form 1001 or 4224 (or
any successor forms) pursuant to clause (1) above, a Certificate re
Non-Bank Status together with two original copies of Internal
Revenue Service Form W-8 (or any successor form), properly completed
and duly executed by such Lender, together with any other
certificate or statement of exemption required under the Internal
Revenue Code or the regulations issued thereunder to establish that
such Lender is not subject to deduction or withholding of United
States federal income tax with respect to any payments to such
Lender of interest payable under any of the Loan Documents.
(b) Each Lender required to deliver any forms, certificates or
other evidence with respect to United States federal income tax
withholding matters pursuant to subsection 2.7B(iii)(a) hereby
agrees, from time to time after the initial delivery by such Lender
of such forms, certificates or other evidence, whenever a lapse in
time or change in circumstances renders such forms, certificates or
other evidence obsolete or inaccurate in any material respect, such
Lender shall (1) deliver to Chase Co-Administrative Agent for
transmission to Company two new original copies of Internal Revenue
Service Form 1001 or 4224 (or any successor forms), or a Certificate
re Non-Bank Status and two original copies of Internal Revenue
Service Form W-8 (or any successor form), as the case may be,
accurately completed and duly executed by such Lender,
together with any other certificate or statement of exemption
required in order to confirm or establish that such Lender is not
subject to deduction or withholding of United States federal income
tax with respect to payments to such Lender under the Loan Documents
or (2) immediately notify Chase Co-Administrative Agent and Company
of its inability to deliver any such forms, certificates or other
evidence.
(c) Company shall not be required to pay any additional amount
to any Non-US Lender under clause (c) of subsection 2.7B(ii) in
respect of deductions or withholdings of United States federal
income taxes if such Lender shall have failed to satisfy the
requirements of subsection 2.7B(iii)(a) or 2.7B(iii)(b); provided
that if such Lender shall have satisfied such requirements on the
Closing Date (in the case of each Lender listed on the
59
signature pages hereof) or on the date of the Assignment Agreement
pursuant to which it became a Lender (in the case of each other
Lender), nothing in this subsection 2.7B(iii)(c) shall relieve
Company of its obligation to pay any additional amounts pursuant to
clause (c) of subsection 2.7B(ii) in the event that, as a result of
any change in any applicable law, treaty or governmental rule,
regulation or order, or any change in the interpretation,
administration or application thereof, such Lender is no longer
properly entitled to deliver forms, certificates or other evidence
at a subsequent date establishing the fact that such Lender is not
subject to withholding as described in subsection 2.7B(iii)(a) or
2.7B(iii)(b).
C. Capital Adequacy Adjustment. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof by the National Association of Insurance Commissioners, any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its applicable lending
office) with any guideline, request or directive regarding capital adequacy
(whether or not having the force of law) of the National Association of
Insurance Commissioners, any such governmental authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the capital of such Lender or any corporation controlling such Lender as a
consequence of, or with reference to, such Lender's Loans or Commitments or
Letters of Credit or participations therein or other obligations hereunder with
respect to the Loans or the Letters of Credit to a level below that which such
Lender reasonably determines such Lender or such controlling corporation could
have achieved but for such adoption, effectiveness, phase-in, applicability,
change or compliance (taking into consideration the policies of such Lender or
such controlling corporation with regard to capital adequacy), then from time to
time, within fifteen Business Days after receipt by Company from such Lender of
the statement referred to in the next sentence, Company shall pay to such Lender
such additional amount or amounts as will compensate such Lender or such
controlling corporation on an after-tax basis for such reduction. Such Lender
shall deliver to Company (with a copy to Chase Co-Administrative Agent) a
written statement, setting forth in reasonable detail the basis of the
calculation of such additional amounts, which statement shall be conclusive and
binding upon all parties hereto absent manifest error.
D. Substitute Lenders. In the event Company is required under the
provisions of this subsection 2.7 to make payments in a material amount to any
Lender or in the event any Lender fails to lend to Company in accordance with
this Agreement, Company may, so long as no Event of Default or Potential Event
of Default shall have occurred and be continuing, elect to terminate such Lender
as a party to this Agreement; provided that, concurrently with such termination,
(i) Company shall pay that Lender all principal, interest and fees and other
amounts (including without limitation amounts, if any, owed under this
subsection 2.7) due to be paid to such Lender with respect to all periods
through such date of termination, (ii) another financial institution
satisfactory to Company and Co-Administra-
60
tive Agents (or, in the case of a Co-Administrative Agent that is also the
Lender to be terminated, its successor Co-Administrative Agent) shall agree, as
of such date, to become a Lender for all purposes under this Agreement (whether
by assignment or amendment) and to assume all obligations of the Lender to be
terminated as of such date, and (iii) all documents and supporting materials
necessary, in the judgment of Co-Administrative Agents (or, in the case of a
Co-Administrative Agent that is also the Lender to be terminated, its successor
Co-Administrative Agent) to evidence the substitution of such Lender shall have
been received and approved by Co-Administrative Agents as of such date.
2.8 Obligation of Lenders and Issuing Lenders to Mitigate.
Each Lender and Issuing Lender agrees that, as promptly as practicable
after the officer of such Lender or Issuing Lender responsible for administering
the Loans or Letters of Credit of such Lender or Issuing Lender, as the case may
be, becomes aware of the occurrence of an event or the existence of a condition
that would cause such Lender to become an Affected Lender or that would entitle
such Lender or Issuing Lender to receive payments under subsection 2.7 or
subsection 3.6, it will, to the extent not inconsistent with the internal
policies of such Lender or Issuing Lender and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, issue, fund or maintain the
Commitments of such Lender or the affected Loans or Letters of Credit of such
Lender or Issuing Lender through another lending or letter of credit office of
such Lender or Issuing Lender, or (ii) take such other measures as such Lender
or Issuing Lender may deem reasonable, if as a result thereof the circumstances
which would cause such Lender to be an Affected Lender would cease to exist or
the additional amounts which would otherwise be required to be paid to such
Lender or Issuing Lender pursuant to subsection 2.7 or subsection 3.6 would be
materially reduced and if, as determined by such Lender or Issuing Lender in its
sole discretion, the making, issuing, funding or maintaining of such Commitments
or Loans or Letters of Credit through such other lending or letter of credit
office or in accordance with such other measures, as the case may be, would not
otherwise materially adversely affect such Commitments or Loans or Letters of
Credit or the interests of such Lender or Issuing Lender; provided that such
Lender or Issuing Lender will not be obligated to utilize such other lending or
letter of credit office pursuant to this subsection 2.8 unless Company agrees to
pay all incremental expenses incurred by such Lender or Issuing Lender as a
result of utilizing such other lending or letter of credit office. A certificate
as to the amount of any such expenses payable by Company pursuant to this
subsection 2.8 (setting forth in reasonable detail the basis for requesting such
amount) submitted by such Lender or Issuing Lender to Company (with a copy to
Chase Co-Administrative Agent) shall be conclusive absent manifest error.
61
SECTION 3.
LETTERS OF CREDIT
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations
Therein.
A. Letters of Credit. In addition to Company requesting that Lenders make
Revolving Loans pursuant to subsection 2.1A(iii), and that Swing Line Lender
make Swing Line Loans pursuant to subsection 2.1A(iv), Company may request, in
accordance with the provisions of this subsection 3.1, from time to time during
the period from the Closing Date to but excluding the Revolving Loan Commitment
Termination Date, that one or more Lenders issue Letters of Credit for the
account of Company for the purposes specified in the definitions of Commercial
Letters of Credit and Standby Letters of Credit. Subject to the terms and
conditions of this Agreement and in reliance upon the representations and
warranties of Company herein set forth, any one or more Lenders may, but (except
as provided in subsection 3.1B(ii)) shall not be obligated to, issue such
Letters of Credit in accordance with the provisions of this subsection 3.1;
provided that Company shall not request that any Lender issue (and no Lender
shall issue):
(i) any Letter of Credit if, after giving effect to such issuance,
the Total Utilization of Revolving Loan Commitments would exceed the
Revolving Loan Commitments then in effect;
(ii) any Letter of Credit if, after giving effect to such issuance,
the Letter of Credit Usage would exceed $5,000,000;
(iii) any Standby Letter of Credit having an expiration date later
than the earlier of (a) the Revolving Loan Commitment Termination Date and
(b) the date which is one year from the date of issuance of such Standby
Letter of Credit; provided that the immediately preceding clause (b) shall
not prevent any Issuing Lender from agreeing that a Standby Letter of
Credit will automatically be extended for one or more successive periods
not to exceed one year each unless such Issuing Lender elects not to
extend for any such additional period; provided further that, unless
Requisite Lenders otherwise consent, such Issuing Lender shall give notice
that it will not extend such Standby Letter of Credit if it has knowledge
that an Event of Default has occurred and is continuing on the last day on
which such Issuing Lender may give notice to the beneficiary that it will
not extend such Standby Letter of Credit;
(iv) any Commercial Letter of Credit (a) having an expiration date
later than the earlier of (X) 30 days prior to the Revolving Loan
Commitment Termination Date and (Y) the date which is 180 days from the
date of issuance of such Commercial Letter of Credit or (b) that is
otherwise unacceptable to the applicable Issuing Lender in its reasonable
discretion;
(v) any Letter of Credit denominated in a currency other than
Dollars; or
62
(vi) any Letter of Credit during any period when a Lender Default
exists, unless each Issuing Lender has entered into arrangements
satisfactory to it and Company to eliminate such Issuing Lender's risk
with respect to the Defaulting Lender, including by cash collateralizing
such Defaulting Lender's Pro Rata Share of the Letter of Credit Usage
(after giving effect to the issuance of the proposed Letter of Credit).
B. Mechanics of Issuance.
(i) Notice of Issuance. Whenever Company desires the issuance of a
Letter of Credit, it shall deliver to Chase Co-Administrative Agent, at
the Funding and Payment Office, a Notice of Issuance of Letter of Credit
no later than 12:00 Noon (New York time) at least five Business Days, or
such shorter period as may be agreed to by the Issuing Lender in any
particular instance, in advance of the proposed date of issuance. The
Notice of Issuance of Letter of Credit shall specify (a) the proposed date
of issuance (which shall be a Business Day), (b) the face amount of or
maximum aggregate liability under, as applicable, the Letter of Credit,
(c) the expiration date of the Letter of Credit, (d) the name and address
of the beneficiary, and (e) the verbatim text of the proposed Letter of
Credit or the proposed terms and conditions thereof, including a precise
description of any documents and the verbatim text of any certificates to
be presented by the beneficiary which, if presented by the beneficiary
prior to the expiration date of the Letter of Credit, would require the
Issuing Lender to make payment under the Letter of Credit; provided that
the Issuing Lender, in its reasonable discretion, may require changes in
the text of the proposed Letter of Credit or any such documents or
certificates; provided further that no Letter of Credit shall require
payment against a conforming draft or other request for payment to be made
thereunder on the same business day (under the laws of the jurisdiction in
which the office of the Issuing Lender to which such draft or other
request for payment is required to be presented is located) that such
draft or other request for payment is presented if such presentation is
made after 10:00 A.M. (in the time zone of such office of the Issuing
Lender) on such business day.
Company shall notify the applicable Issuing Lender (and Chase
Co-Administrative Agent, if Chase Co-Administrative Agent is not such
Issuing Lender) prior to the issuance of any Letter of Credit in the event
that any of the matters to which Company is required to certify in the
applicable Notice of Issuance of Letter of Credit is no longer true and
correct as of the proposed date of issuance of such Letter of Credit, and
upon the issuance of any Letter of Credit, Company shall be deemed to have
re-certified, as of the date of such issuance, as to the matters to which
Company is required to certify in the applicable Notice of Issuance of
Letter of Credit.
(ii) Determination of Issuing Lender. Upon receipt by Chase
Co-Administrative Agent of a Notice of Issuance of Letter of Credit
pursuant to
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subsection 3.1B(i) requesting the issuance of a Letter of Credit, in the
event Chase Co-Administrative Agent elects to issue such Letter of Credit,
Chase Co-Administrative Agent shall promptly so notify Company, and such
Chase Co-Administrative Agent shall be the Issuing Lender with respect
thereto. In the event that Chase Co-Administrative Agent, in its sole
discretion, elects not to issue such Letter of Credit, Chase
Co-Administrative Agent shall promptly so notify the Company, whereupon
Company may request any other Lender to issue such Letter of Credit by
delivering to such Lender a copy of the applicable Notice of Issuance of
Letter of Credit. Any Lender so requested to issue such Letter of Credit
shall promptly notify Company and Chase Co-Administrative Agent whether or
not, in its sole discretion, it has elected to issue such Letter of
Credit, and any such Lender which so elects to issue such Letter of Credit
shall be the Issuing Lender with respect thereto. In the event that all
other Lenders shall have declined to issue such Letter of Credit,
notwithstanding the prior election of Chase Co-Administrative Agent not to
issue such Letter of Credit, Chase Co-Administrative Agent shall be
obligated to issue such Letter of Credit and shall be the Issuing Lender
with respect thereto, notwithstanding the fact that the sum of the Letter
of Credit Usage with respect to such Letter of Credit and with respect to
all other Letters of Credit issued by Chase Co-Administrative Agent, when
aggregated with Chase Co-Administrative Agent's outstanding Revolving
Loans and Swing Line Loans, may exceed Chase Co-Administrative Agent's
Revolving Loan Commitment then in effect.
(iii) Issuance of Letter of Credit. Upon satisfaction or waiver (in
accordance with subsection 10.6) of the conditions set forth in subsection
4.3, the Issuing Lender shall issue the requested Letter of Credit in
accordance with the Issuing Lender's standard operating procedures (any
such issuance by Chase Co-Administrative Agent being effected through the
Funding and Payment Office), and upon its issuance of such Letter of
Credit the Issuing Lender shall promptly notify Chase Co-Administrative
Agent and each Lender of such issuance, which notice shall be accompanied
by a copy of such Letter of Credit.
(iv) Reports to Lenders. Within 30 days after the end of each
calendar quarter ending after the Closing Date, so long as any Letter of
Credit shall have been outstanding during such calendar quarter, each
Issuing Lender shall deliver to Chase Co-Administrative Agent and Chase
Co-Administrative Agent shall deliver to each Lender a report setting
forth for such calendar quarter the daily maximum amount available to be
drawn under the Letters of Credit that were outstanding during such
calendar quarter.
C. Lenders' Purchase of Participations in Letters of Credit. Immediately
upon the issuance of each Letter of Credit, each Lender having a Revolving Loan
Commitment shall be deemed to, and hereby agrees to, have irrevocably purchased
from the Issuing Lender a participation in such Letter of Credit and any
drawings honored or payments made thereunder in an amount equal to such Lender's
Pro Rata Share (with respect to the
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Revolving Loan Commitments) of the maximum amount which is or at any time may
become available to be drawn or required to be paid thereunder.
3.2 Letter of Credit Fees.
Company agrees to pay the following amounts to each Issuing Lender with
respect to Letters of Credit issued by it for the account of Company:
(i) with respect to each Letter of Credit, (a) a fronting fee equal
to 1/4 of 1% per annum of the daily maximum amount available to be drawn
under such Letter of Credit and (b) a Letter of Credit fee equal to the
product of (x) the Applicable Eurodollar Rate Margin with respect to
Revolving Loans and (y) the daily maximum amount available to be drawn
under such Letter of Credit, in each case payable in arrears on and to
each January 15, April 15, July 15 and October 15 of each year, commencing
on January 15, 1997, and computed on the basis of a 360-day year for the
actual number of days elapsed; and
(ii) with respect to the issuance, amendment or transfer of each
Letter of Credit and each drawing made thereunder (without duplication of
the fees payable under clause (i) above), documentary and processing
charges in accordance with such Issuing Lender's standard schedule for
such charges in effect at the time of such issuance, amendment, transfer
or drawing, as the case may be.
Promptly upon receipt by such Issuing Lender of any amount described in clause
(i)(b) of this subsection 3.2, such Issuing Lender shall distribute to each
other Lender its Pro Rata Share of such amount.
3.3 Drawings and Payments and Reimbursement of Amounts Paid Under Letters of
Credit.
A. Responsibility of Issuing Lender With Respect to Requests For Drawings
and Payments. In determining whether to honor any drawing or request for payment
under any Letter of Credit by the beneficiary thereof, the Issuing Lender shall
be responsible only to determine that the documents and certificates required to
be delivered under such Letter of Credit have been delivered and that they
comply on their face with the requirements of such Letter of Credit.
B. Reimbursement by Company of Amounts Paid Under Letters of Credit. In
the event an Issuing Lender has determined to honor a drawing or request for
payment under a Letter of Credit issued by it, such Issuing Lender shall
immediately notify Company and Chase Co-Administrative Agent, and Company shall
reimburse such Issuing Lender on or before the Business Day immediately
following the date on which such drawing is honored or such payment is made (the
applicable "Reimbursement Date"), in an amount in same day funds equal to the
amount of such drawing; provided that, anything contained in this Agreement to
the contrary notwithstanding, (i) unless Company shall have notified
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Chase Co-Administrative Agent and such Issuing Lender prior to 12:00 Noon (New
York time) on the date of such drawing or request for payment that Company
intends to reimburse such Issuing Lender for the amount of such honored drawing
or payment with funds other than the proceeds of Revolving Loans, Company shall
be deemed to have given a timely Notice of Borrowing to Chase Co-Administrative
Agent requesting Lenders to make Revolving Loans which are Base Rate Loans, on
the applicable Reimbursement Date in an amount equal to the amount of such
honored drawing or payment and (ii) subject to satisfaction or waiver of the
conditions specified in subsection 4.2B, Lenders shall, on the applicable
Reimbursement Date, make Revolving Loans and in the amount of such honored
drawing or payment, the proceeds of which shall be applied directly by Chase
Co-Administrative Agent to reimburse such Issuing Lender for the amount of such
honored drawing or payment; provided further that if for any reason proceeds of
Revolving Loans are not received by such Issuing Lender on the applicable
Reimbursement Date in an amount equal to the amount of such honored drawing or
payment, Company shall reimburse such Issuing Lender, on demand, in an amount in
Dollars and in same day funds equal to the excess of the amount of such honored
drawing or payment over the aggregate amount of such Revolving Loans, if any,
which are so received. Nothing in this subsection 3.3B shall be deemed to
relieve any Lender from its obligation to make Revolving Loans on the terms and
conditions set forth in this Agreement, and Company shall retain any and all
rights it may have against any Lender resulting from the failure of such Lender
to make such Revolving Loans under this subsection 3.3B.
C. Payment by Lenders of Unreimbursed Payments Under Letters of Credit.
(i) Payment by Lenders. In the event that Company shall fail for any
reason to reimburse any Issuing Lender as provided in subsection 3.3B in
an amount equal to the amount of any honored drawing or payment made by
such Issuing Lender under a Letter of Credit issued by it, such Issuing
Lender shall promptly notify each other Lender of the unreimbursed amount
of such honored drawing or payment and of such other Lender's respective
participation therein based on such Lender's Pro Rata Share of the
Revolving Loan Commitments. Each Lender shall make available to such
Issuing Lender an amount equal to its respective participation, in same
day funds, at the office of such Issuing Lender specified in such notice,
not later than 12:00 Noon (New York time) on the first business day (under
the laws of the jurisdiction in which such office of such Issuing Lender
is located) after the date notified by such Issuing Lender. In the event
that any Lender fails to make available to such Issuing Lender on such
business day the amount of such Lender's participation in such Letter of
Credit as provided in this subsection 3.3C, such Issuing Lender shall be
entitled to recover such amount on demand from such Lender together with
interest thereon at the rate customarily used by such Issuing
Lender for the correction of errors among banks for three Business Days
and thereafter at the Base Rate. Nothing in this subsection 3.3C shall be
deemed to prejudice the right of any Lender to recover from any Issuing
Lender any amounts made available by such Lender to such Issuing Lender
pursuant to this subsection 3.3C in the event that it is determined by the
final judgment of a court of competent jurisdiction that the
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payment with respect to a Letter of Credit by such Issuing Lender in
respect of which payment was made by such Lender constituted gross
negligence or willful misconduct on the part of such Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received From
Company. In the event any Issuing Lender shall have been reimbursed by
other Lenders pursuant to subsection 3.3C(i) for all or any portion of any
honored drawing or payment made by such Issuing Lender under a Letter of
Credit issued by it, such Issuing Lender shall distribute to each other
Lender which has paid all amounts payable by it under subsection 3.3C(i)
with respect to such honored drawing or payment such other Lender's Pro
Rata Share of all payments subsequently received by such Issuing Lender
from Company in reimbursement of such honored drawing or payment when such
payments are received. Any such distribution shall be made to a Lender at
its primary address set forth below its name on the appropriate signature
page hereof or at such other address as such Lender may request.
D. Interest on Amounts Paid Under Letters of Credit.
(i) Payment of Interest by Company. Company agrees to pay to each
Issuing Lender, with respect to drawings honored or payments made under
any Letters of Credit issued by it, interest on the amount paid by such
Issuing Lender in respect of each such drawing or payment from the date
such drawing is honored or payment is made to but excluding the date such
amount is reimbursed by Company (including any such reimbursement out of
the proceeds of Revolving Loans pursuant to subsection 3.3B) at a rate
equal to (a) for the period from the date such drawing is honored or
payment is made to but excluding the applicable Reimbursement Date, the
Base Rate plus the Applicable Base Rate Margin with respect to Revolving
Loans, and (b) thereafter, a rate which is 2% per annum in excess of the
rate of interest described in the foregoing clause (a). Interest payable
pursuant to this subsection 3.3D(i) shall be computed on the basis of a
360-day year for the actual number of days elapsed in the period during
which it accrues and shall be payable on demand or, if no demand is made,
on the date on which the related drawing or payment under a Letter of
Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender. Promptly
upon receipt by any Issuing Lender of any payment of interest pursuant to
subsection 3.3D(i), (a) such Issuing Lender shall distribute to each other
Lender, out of the interest received by such Issuing Lender in respect of
the period from the date of the applicable honored drawing or payment
under a Letter of Credit issued by such Issuing Lender to but excluding
the date on which such Issuing Lender is reimbursed for the amount of such
drawing or payment (including any such reimbursement out of the proceeds
of Revolving Loans pursuant to subsection 3.3B), the amount that such
other Lender would have been entitled to receive in respect of the Letter
of Credit fee that would have been payable in respect of such Letter of
Credit for such period pursuant to subsection 3.2 if no drawing had been
honored or payment had
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been made under such Letter of Credit, and (b) in the event such Issuing
Lender shall have been reimbursed by other Lenders pursuant to subsection
3.3C(i) for all or any portion of such drawing or payment, such Issuing
Lender shall distribute to each other Lender which has paid all amounts
payable by it under subsection 3.3C(i) with respect to such drawing or
payment such other Lender's Pro Rata Share of any interest received by
such Issuing Lender in respect of that portion of such drawing or payment
so reimbursed by other Lenders for the period from the date on which such
Issuing Lender was so reimbursed by other Lenders to and including the
date on which such portion of such drawing or payment is reimbursed by
Company. Any such distribution shall be made to a Lender at its Lending
Office set forth on Schedule 2.1 or at such other address as such Lender
may request.
3.4 Obligations Absolute.
The obligation of Company to reimburse each Issuing Lender for drawings
honored or payments made under the Letters of Credit issued by it and to repay
any Revolving Loans made by Lenders pursuant to subsection 3.3B and the
obligations of Lenders under subsection 3.3C(i) shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, set-off, defense or other right
which Company or any Lender may have at any time against a beneficiary or
any transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), any Issuing Lender or other Lender or any other
Person or, in the case of a Lender, against Company whether in connection
with this Agreement, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between Company or one
of its Subsidiaries and the beneficiary for which any Letter of Credit was
procured);
(iii) 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;
(iv) payment by the applicable Issuing Lender under any Letter of
Credit against presentation of a demand, draft or certificate or other
document which does not substantially comply with the terms of such Letter
of Credit;
(v) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Company or any
of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by any
party thereto;
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(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event of
Default shall have occurred and be continuing;
provided, in each case, that payment by the applicable Issuing Lender under the
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).
3.5 Indemnification; Nature of Issuing Lender's Duties.
A. Indemnification. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which such Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing
Lender, other than as a result of (a) the gross negligence or willful misconduct
of such Issuing Lender as determined by a final judgment of a court of competent
jurisdiction or (b) subject to the following clause (ii), the wrongful dishonor
by such Issuing Lender of a proper demand for payment made under any Letter of
Credit issued by it or (ii) the failure of such Issuing Lender to honor a
drawing or other request for payment under any such Letter of Credit as a result
of any act or omission, whether rightful or wrongful, of any present or future
de jure or de facto government or governmental authority (all such acts or
omissions herein called "Governmental Acts").
B. Nature of Issuing Lenders' Duties. As between Company and any Issuing
Lender, Company assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit issued by such Issuing Lender by, the respective beneficiaries
of such Letters of Credit. In furtherance and not in limitation of the
foregoing, such Issuing Lender shall not be responsible for: (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
any such Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such 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; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions required in order
to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary
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of any such Letter of Credit of the proceeds of any drawing or payment under
such Letter of Credit; or (viii) any consequences arising from causes beyond the
control of such Issuing Lender, including, without limitation, any Governmental
Acts, and none of the above shall affect or impair, or prevent the vesting of,
any of such Issuing Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by any Issuing Lender under or in connection with the Letters
of Credit issued by it or any documents and certificates delivered thereunder,
if taken or omitted in good faith, shall not put such Issuing Lender under any
resulting liability to Company.
Notwithstanding anything to the contrary contained in this subsection 3.5,
Company shall retain any and all rights it may have against any Issuing Lender
for any liability arising solely out of the gross negligence or willful
misconduct of such Issuing Lender, as determined by a final judgment of a court
of competent jurisdiction.
3.6 Increased Costs and Taxes Relating to Letters of Credit.
In the event that any law, treaty or governmental rule, regulation or
order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by any Issuing Lender or Lender with any guideline,
request or directive issued or made after the date hereof by any central bank or
other governmental or quasi-governmental authority (whether or not having the
force of law):
(i) results in any change in the basis of taxation of such Issuing
Lender or Lender (or its applicable lending or letter of credit office)
(other than a change with respect to any Tax on the overall net income of
such Issuing Lender or Lender) with respect to the issuing or maintaining
of any Letters of Credit or the purchasing or maintaining of any
participations therein or any other obligations under this Section 3,
whether directly or by such being imposed on or suffered by any particular
Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve (including,
without limitation, any marginal, emergency, supplemental, special or
other reserve), special deposit, compulsory loan, FDIC insurance or
similar requirement in respect of any Letters of Credit issued by any
Issuing Lender or participations therein purchased by any Lender; or
(iii) imposes any other condition on or affecting such Issuing
Lender or Lender (or its applicable lending or letter of credit office)
regarding this Section 3 or any Letter of Credit or any participation
therein;
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and the result of any of the foregoing is to increase the cost to such Issuing
Lender or Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or to reduce any amount received or receivable by such Issuing Lender or
Lender (or its applicable lending or letter of credit office) with respect
thereto; then, in any case, Company shall promptly pay to such Issuing Lender or
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (reasonably determined by such Issuing Lender or
Lender) as may be necessary to compensate such Issuing Lender or Lender for any
such increased cost or reduction in amounts received or receivable hereunder.
Such Issuing Lender or Lender shall deliver to Company a written statement,
setting forth in reasonable detail the basis for calculating the additional
amounts owed to such Issuing Lender or Lender under this subsection 3.6, which
statement shall be prima facie evidence of such additional amounts.
SECTION 4.
CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the issuance of Letters of
Credit hereunder are subject to the satisfaction of the following conditions.
4.1 Conditions to Term Loans.
The obligations of Lenders to make the Term Loans are, in addition to the
conditions precedent specified in subsection 4.2, subject to prior or concurrent
satisfaction of the following conditions:
A. Company Documents. On or before the Closing Date, Company shall deliver
or cause to be delivered to Lenders (or to Chase Co-Administrative Agent for
Lenders with sufficient originally executed copies, where appropriate, for each
Lender and its counsel) the following, each, unless otherwise noted, dated the
Closing Date:
(i) Certified copies of its Certificate of Incorporation, together
with a good standing certificate from the Secretary of State of the State
of Delaware and each other state in which it is qualified as a foreign
corporation to do business, each dated a recent date prior to the Closing
Date;
(ii) Copies of its Bylaws, certified as of the Closing Date by its
corporate secretary or an assistant secretary;
(iii) Resolutions of its Board of Directors approving and
authorizing the execution, delivery and performance of this Agreement and
the other Loan Documents and Related Agreements to which it is a party,
certified as of the Closing Date by its corporate secretary or an
assistant secretary as being in full force and effect without modification
or amendment;
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(iv) Signature and incumbency certificates of its officers executing
this Agreement and the other Loan Documents;
(v) Executed originals of this Agreement and the other Loan
Documents to which it is a party; and
(vi) Such other documents as Agents may reasonably request.
B. Subsidiary Documents. On or before the Closing Date, Company shall
deliver or cause to be delivered to Lenders (or to Chase Co-Administrative Agent
for Lenders with sufficient originally executed copies, where appropriate, for
each Lender and its counsel) the following, each, unless otherwise noted, dated
the Closing Date:
(i) Certified copies of the Certificate of Incorporation (or
equivalent organizational document) of each domestic corporate Wholly
Owned Subsidiary of Company, together with a good standing certificate
from the secretary of state of its jurisdiction of incorporation and each
other state in which it is qualified as a foreign corporation to do
business (except any such other state or states in which failure to be so
qualified could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect), each dated a recent date
prior to the Closing Date;
(ii) Copies of the Bylaws of each such domestic corporate Wholly
Owned Subsidiary of Company, certified as of the Closing Date by its
corporate secretary or an assistant secretary;
(iii) Resolutions of the Board of Directors of each such domestic
corporate Wholly Owned Subsidiary of Company approving and authorizing the
execution, delivery and performance of the Subsidiary Guaranty, the
Security Agreement, the Pledge Agreement, the Trademark Security
Agreement, the Limited Partnership Security Agreement (as applicable) and
the other Loan Documents and Related Agreements to which such Subsidiary
is party, certified as of the Closing Date by its corporate secretary or
an assistant secretary as being in full force and effect without
modification or amendment;
(iv) Conformed copies of the partnership agreement of each domestic
Subsidiary of Company that is a partnership, certified by each general
partner of such partnership as of the Closing Date as being in full force
and effect without modification or amendment;
(v) Certificates of limited partnership or statements of
partnership, as applicable, of each such Subsidiary of Company that is a
partnership, certified by the Secretary of State (or similar official) of
its jurisdiction of formation and a certificate of existence or good
standing, as the case may be, from the Secretary of State (or similar
official) of such jurisdiction, together with a certificate or other
evidence of good standing from the secretary of state of each other state
in which it is authorized
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as a foreign limited partnership to do business (except any such other
state or states in which failure to be so qualified could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect), each dated as of a recent date prior to the
Closing Date;
(vi) All documents executed by the appropriate partners approving or
authorizing, the execution, delivery and performance of the Subsidiary
Guaranty, the Security Agreement, the Pledge Agreement, the Trademark
Security Agreement, the Limited Partnership Security Agreement (as
applicable) and the other Loan Documents and Related Agreements to which
such Subsidiary is a party, each certified as of the Closing Date by the
general partner of such partnership Subsidiary or other Loan Party;
(vii) Signature and incumbency certificates of its officers,
partners or other Persons executing the Subsidiary Guaranty, the Security
Agreement, the Pledge Agreement, the Trademark Security Agreement, the
Limited Partnership Security Agreement (as applicable) and the other Loan
Documents to which such Subsidiary is party;
(viii) Executed originals of the Subsidiary Guaranty, the Security
Agreement, the Pledge Agreement and the other Loan Documents to which any
corporate or partnership Subsidiary of Company is a party; and
(ix) Such other documents as Agents may reasonably request.
C. Acquisition Agreement. On the Closing Date (i) Agents shall have
received executed or conformed copies of the Acquisition Agreement and any
amendments thereto and documents executed in connection therewith, (ii) such
Acquisition Agreement shall be in full force and effect and, no term or
condition thereof shall have been amended, modified or waived after the
execution thereof except with the prior written consent of Arranging Agents,
(iii) the parties thereto shall not have failed in any material respect to
perform any material obligation or covenant required by any such Acquisition
Agreement to be performed or complied with by any of them on or before the
Closing Date, and (iv) Agents shall have received an Officer's Certificate from
Company to the effect set forth in clauses (ii) and (iii).
D. Issuance of Subordinated Debt. On or before the Closing Date, Company
shall have issued and sold the Subordinated Notes in an aggregate principal
amount of not less than $100,000,000 and Company shall have delivered to
Arranging Agents complete, correct and conformed copies of the Subordinated
Notes and the Subordinated Note Documents, all in form and substance
satisfactory to Arranging Agents. In addition, all opinions by counsel to
Company or any of its Subsidiaries (and, if requested by Co-Administrative
Agents, any certificates and letters) delivered in connection with the
Subordinated Notes, Subordinated Note Documents and the Acquisition shall be
addressed to Agents and Lenders or accompanied by a written authorization from
each Person
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delivering such an opinion stating that Agents and Lenders may rely on such
opinion as though it were addressed to them.
E. Related Agreements. Co-Administrative Agents shall have received (i) a
fully executed or conformed copy of each Related Agreement and all principal
documents executed in connection therewith, and each Related Agreement shall be
in full force and effect and no provision thereof shall have been modified or
waived in any respect determined by Agents to be material, in each case without
consent of Agents and (ii) an Officer's Certificate from Company to the effect
set forth in clause (i), and each such Related Agreement shall be satisfactory
in form and substance to Agents.
F. Consummation of Acquisition and Merger.
(i) All conditions to the Acquisition and the Merger set forth in
the Acquisition Agreement shall have been satisfied or the fulfillment of
any such conditions shall have been waived with the consent of Arranging
Agents;
(ii) Agents shall have received evidence in form and substance
satisfactory to Agents that (a) the Acquisition shall become effective in
accordance with the terms of the Acquisition Agreement immediately upon
the making of the initial Loans and (b) the Merger shall become effective
in accordance with the terms of the Articles of Merger and the Certificate
of Merger and the laws of the States of Delaware and Wisconsin immediately
upon the making of the initial Loans;
(iii) the aggregate cash consideration paid to the holders of equity
interests in respect of such equity interests in connection with the
Acquisition shall not exceed $150,235,000;
(iv) Transaction Costs shall not exceed $20,000,000, and Arranging
Agents shall have received evidence satisfactory in form and substance to
Arranging Agents to such effect: and
(v) Agents shall have received an Officer's Certificate of Company
to the effect set forth in clauses (i)-(iv) above and stating that Company
will proceed to consummate the Acquisition and the Merger immediately upon
the making of the initial Loans.
G. Repayment of Existing Debt. All Indebtedness of Company and its
Subsidiaries (other than existing Indebtedness identified in Schedule 7.1
annexed hereto, the terms and conditions of which Indebtedness shall be in form
and in substance satisfactory to Arranging Agents), including Indebtedness under
the Existing OSI Credit Agreement and the Existing API Credit Agreement, shall
have been paid in full, redeemed or defeased, any commitments to lend thereunder
shall have been terminated, all security interests created to secure the
obligations arising in connection therewith shall have been terminated or
effectively assigned to Collateral Agent for the benefit of Agents and Lenders,
and Company
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shall have delivered to Chase Co-Administrative Agent UCC-3 termination
statements or assignments (or comparable forms) and any and all other
instruments of release, satisfaction, assignment and/or reconveyance (or
evidence of the filing thereof) as may be necessary or advisable to terminate or
assign to Agents and Lenders all such security interests and all other security
interests in the Collateral. Arranging Agents shall have received evidence
satisfactory to Arranging Agents and their counsel that Indebtedness under the
Existing OSI Credit Agreement was paid in full with the proceeds of Term Loans.
H. Necessary Consents. Company shall have obtained all consents necessary
or advisable in connection with the Acquisition and the Merger, the transactions
contemplated by the Loan Documents and Related Agreements and the continued
operation of the business conducted by Company and its Subsidiaries, and each of
the foregoing shall be in full force and effect and in form and substance
satisfactory to Arranging Agents (except as disclosed to and approved by
Arranging Agents). All applicable waiting periods shall have expired without any
action being taken or threatened by any competent authority which would
restrain, prevent or otherwise impose adverse conditions on the Acquisition or
the Merger or the financing thereof, and no action, request for stay, petition
for review or rehearing, reconsideration or appeal shall be pending and any time
for agency action to set aside its consent on its own motion shall have expired.
I. No Utilization of Revolving Loan Commitments On the Closing Date, after
giving effect to the Acquisition and the Merger, the Total Utilization of
Revolving Loan Commitments shall equal zero.
J. Perfection of Security Interests in Personal Property and Mixed
Collateral. Company shall have taken or caused to be taken such actions in such
a manner so that Collateral Agent has, for the benefit of Agents and Lenders, a
valid and perfected first priority security interest in the entire personal
property and mixed Collateral (subject to Liens permitted by this Agreement).
Such actions shall include, without limitation: (i) the delivery pursuant to the
applicable Collateral Documents of (a) certificates (which certificates shall be
properly endorsed in blank for transfer or accompanied by irrevocable undated
stock powers duly endorsed in blank, all in form and substance satisfactory to
Chase Co-Administrative Agent) representing all of the shares of capital stock
and all of the limited partnership interests required to be pledged pursuant to
the Collateral Documents, together with an acknowledgment from each partnership
Subsidiary that the pledge to Collateral Agent of all limited and general
partnership interests constituting Collateral is recorded on the books of such
partnership Subsidiary, and (b) all promissory notes or other instruments (duly
endorsed, where appropriate, in a manner satisfactory to Chase Co-Administrative
Agent) evidencing any Collateral; (ii) delivery to Agents of (a) the results of
a recent search, by a Person satisfactory to Agents, of all effective UCC
financing statements and fixture filings and all judgment and tax lien filings
which may have been made with respect to any personal or mixed property of any
Loan Party, together with copies of all such filings disclosed by such search;
(iii) the delivery to Chase Co-Administrative Agent of Uniform Commercial Code
financing statements executed by the applicable Loan Parties as to all such
Collateral granted by such Loan Parties for all jurisdictions as
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may be necessary or desirable to perfect Collateral Agent's security interest in
such Collateral; and (iv) the delivery to Chase Co-Administrative Agent of
evidence reasonably satisfactory to Chase Co-Administrative Agent that all other
filings (including, without limitation, Uniform Commercial Code termination
statements and filings with the United States Patent and Trademark Office of
trademark assignments for all trademarks used by Company and its Subsidiaries
registered in the United States), recordings and other actions that either Chase
Co-Administrative Agent or Collateral Agent deems necessary or advisable to
establish, preserve and perfect the first priority Liens (subject to Liens
consented to in writing by Co-Administrative Agents and Requisite Lenders or
permitted by subsection 7.2 with respect to such Collateral) granted to
Collateral Agent in personal and mixed property shall have been made.
K. Solvency Appraisal; Financial Condition Certificate. Company shall have
delivered to Co-Administrative Agents and Lenders a certificate from the chief
financial officer of Company dated the Closing Date, in form, scope and
substance satisfactory to Arranging Agents, with appropriate attachments
demonstrating that, after giving effect to the consummation of the Acquisition
and the Merger and the financing transactions contemplated hereby, Company and
its Subsidiaries are Solvent.
L. Transaction Costs. Not less than three days prior to the Closing Date,
Company shall have delivered to Co-Administrative Agents and Lenders a schedule,
in a form satisfactory to Co-Administrative Agents, setting forth Company's
reasonable best estimate of the Transaction Costs (other than amounts payable to
Agents and Lenders).
M. Opinions of Loan Parties' Counsel. Lenders and their respective counsel
shall have received (i) originally executed copies of one or more favorable
written opinions of White & Case, counsel for the Loan Parties, in form and
substance reasonably satisfactory to Arranging Agents and their counsel, dated
as of the Closing Date and setting forth substantially the matters in the
opinions designated in Exhibit XI annexed hereto and as to such other matters as
Arranging Agents acting on behalf of Lenders may reasonably request, and (ii)
evidence satisfactory to Arranging Agents that Loan Parties have instructed such
counsel to deliver such opinions to Lenders.
N. Opinions of Agents' Counsel. Lenders shall have received originally
executed copies of one or more favorable written opinions of O'Melveny & ▇▇▇▇▇
LLP, counsel to Arranging Agents and Co-Administrative Agents, dated as of the
Closing Date, substantially in the form of Exhibit XII annexed hereto and as to
such other matters as Agents acting on behalf of Lenders may reasonably request.
O. Fees. Company shall have paid to Agents, for distribution (as
appropriate) to Agents and Lenders, the fees payable on the Closing Date
referred to in subsection 2.3.
P. Financial Statements; Pro Forma Balance Sheet. On or before the Closing
Date, Lenders shall have received from Company (i) audited financial statements
of each of Company (or, with respect to years prior to 1995, Account Portfolios,
L.P., as predecessor
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of Company) and Payco and their respective Subsidiaries for the fiscal years
ending December 31 of 1993, 1994 and 1995, consisting of balance sheets and the
related consolidated statements of income, stockholders' equity and cash flows
for such fiscal years, (ii) unaudited financial statements of each of Company
and Payco and their respective Subsidiaries as at June 30, 1996, consisting of a
balance sheet and the related consolidated statements of income, stockholders'
equity and cash flows for the six-month period ending on such date, all in
reasonable detail and certified by the chief financial officer of Company that
they fairly present the financial condition of each of Company and Payco and
their respective Subsidiaries, as the case may be, as at the dates indicated and
the results of their operations and their cash flows for the periods indicated,
subject to changes resulting from audit and normal year-end adjustments, and
(iii) pro forma consolidated and consolidating balance sheets of Company and its
Subsidiaries as at June 30, 1996 prepared in accordance with GAAP and reflecting
the consummation of the Acquisition and the Merger, the related financings and
the other transactions contemplated by the Loan Documents and the Related
Agreements, which pro forma balance sheets shall be in form and substance
satisfactory to Lenders.
Q. Insurance Appraisal; Evidence of Insurance. Chase Co-Administrative
Agent shall have received (i) a copy of the insurance report prepared by Aon
Corp. with respect to Company and its Subsidiaries and such report shall be in
form and substance satisfactory to Arranging Agents, and (ii) satisfactory
certificates of insurance with respect to each of the insurance policies
required pursuant to subsection 6.4, and Arranging Agents shall be satisfied
with the nature and scope of these insurance policies.
R. Corporate Structure; Management.
(i) Corporate Structure. The corporate organizational structure,
capital structure and ownership of Company and its Subsidiaries, after
giving effect to the Acquisition and the Merger, shall be as set forth on
Schedule 4.1R annexed hereto.
(ii) Management. The management structure of Company after giving
effect to the Acquisition and the Merger shall be as set forth on Schedule
4.1R annexed hereto. Arranging Agents shall have received duly executed
copies of, and shall be satisfied with the form and substance of, the
Employment Agreements, certified by the corporate secretary of Company as
being in full force and effect as of the Closing Date without
modification, waiver or amendment.
S. Representations and Warranties; Performance of Agreements. Company
shall have delivered to Chase Co-Administrative Agent an Officer's Certificate,
in form and substance satisfactory to Chase Co-Administrative Agent, to the
effect that the representations and warranties in Section 5 hereof are true and
correct in all material respects on and as of the Closing Date to the same
extent as though made on and as of that date and that Company shall have
performed in all material respects all agreements and satisfied all conditions
which this Agreement provides shall be performed or satisfied by them on or
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before the Closing Date, except as otherwise disclosed to and agreed to in
writing by Chase Co-Administrative Agent.
T. Completion of Proceedings. All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Arranging
Agents, acting on behalf of Lenders, and its counsel shall be satisfactory in
form and substance to Arranging Agents and such counsel, and Arranging Agents
and such counsel shall have received all such counterpart originals or certified
copies of such documents as Arranging Agents may reasonably request.
4.2 Conditions to All Loans.
The obligations of Lenders to make Loans on each Funding Date are subject
to the following further conditions precedent:
▇. ▇▇▇▇▇ Co-Administrative Agent shall have received on or before that
Funding Date, in accordance with the provisions of subsection 2.1B, an
originally executed Notice of Borrowing, signed by the chief executive officer,
the chief financial officer or the controller of Company or by any executive
officer of Company designated by any of the above-described officers on behalf
of Company in a writing delivered to Chase Co-Administrative Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in the
other Loan Documents shall be true and correct in all material respects on
and as of that Funding Date to the same extent as though made on and as of
that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations
and warranties shall have been true and correct in all material respects
on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing that would constitute an Event of Default or a Potential Event
of Default;
(iii) Each Loan Party shall have performed in all material respects
all agreements and satisfied all conditions which this Agreement and the
other Loan Documents provide shall be performed or satisfied by it on or
before that Funding Date;
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making the Loans to be made by it, on that Funding Date;
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(v) The making of the Loans requested on such Funding Date shall not
violate any law including, without limitation, Regulation G, Regulation T,
Regulation U or Regulation X of the Board of Governors of the Federal
Reserve System; and
(vi) There shall not be pending or, to the knowledge of Company,
threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries that has not been disclosed
by Company in writing and that is required to be so disclosed pursuant to
subsection 5.6 or 6.1(x) prior to the making of the last preceding Loans
(or, in the case of the initial Loans, prior to the execution of this
Agreement), and there shall have occurred no development not so disclosed
in any such action, suit, proceeding, governmental investigation or
arbitration so disclosed that, in either event, in the opinion of Chase
Co-Administrative Agent or of Requisite Lenders, would be expected to have
a Material Adverse Effect; and no injunction or other restraining order
shall have been issued and no hearing to cause an injunction or other
restraining order to be issued shall be pending or noticed with respect to
any action, suit or proceeding seeking to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a result
of, the transactions contemplated by this Agreement or the making of Loans
hereunder.
4.3 Conditions to Letters of Credit.
The issuance of any Letter of Credit hereunder (whether or not the
applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
A. On or before the date of issuance of the initial Letter of Credit
pursuant to this Agreement, the initial Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit, Chase
Co-Administrative Agent shall have received, in accordance with the provisions
of subsection 3.1B(i), an originally executed Notice of Issuance of Letter of
Credit, signed by the chief executive officer, the chief financial officer or
the controller of Company or by any executive officer of Company designated by
any of the above-described officers on behalf of Company in a writing delivered
to Chase Co-Administrative Agent, together with all other information specified
in subsection 3.1B(i) and such other documents or information as the applicable
Issuing Lender may reasonably require in connection with the issuance of such
Letter of Credit.
C. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.2B shall be satisfied to the same extent as
if the issuance of such Letter of Credit were the making of a Loan and the date
of issuance of such Letter of Credit were a Funding Date.
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SECTION 5.
REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make the
Loans, to induce Issuing Lender to issue Letters of Credit and to induce other
Lenders to purchase participations therein, Company represents and warrants to
each Lender, on the date of this Agreement, on each Funding Date, and on the
date of issuance of each Letter of Credit, that the following statements are
true and correct:
5.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries.
A. Organization and Powers. Each Corporate Loan Party is a corporation
duly organized, validly existing and in good standing under the laws of its
state of incorporation. Each Partnership Loan Party is a duly organized and
validly existing limited partnership under the laws of its jurisdiction of
formation and is in good standing in such jurisdiction. Each Loan Party has all
requisite corporate or partnership (as applicable) power and authority to own
and operate its properties, to carry on its business as now conducted and as
proposed to be conducted, to enter into the Loan Documents and to carry out the
transactions contemplated thereby. Company has all requisite corporate power and
authority to issue and pay the Notes.
B. Qualification and Good Standing. Each Corporate Loan Party is qualified
to do business and in good standing, and each Partnership Loan Party is
authorized as a foreign limited partnership to do business, in every
jurisdiction where its assets are located and wherever necessary to carry out
its business and operations, except in jurisdictions where the failure to be so
qualified, authorized or in good standing has not had and will not have a
Material Adverse Effect.
C. Conduct of Business. Company and its Subsidiaries are engaged only in
the businesses permitted to be engaged in pursuant to subsection 7.11.
D. Company and Subsidiaries. All of the Subsidiaries of Company as of the
Closing Date after giving effect to the Acquisition and the Merger are
identified in Schedule 5.1 annexed hereto. The capital stock of each of the
domestic Subsidiaries of Company identified in Schedule 5.1 annexed hereto which
are corporations is duly authorized, validly issued, fully paid and
nonassessable and none of such capital stock constitutes Margin Stock. The
limited and general partnership interests of each of the subsidiaries of Company
identified in Schedule 5.1 annexed hereto which are limited partnerships are
duly and validly issued. Company and each of the domestic Subsidiaries of
Company identified in Schedule 5.1 annexed hereto are duly organized, validly
existing and in good standing under the laws of their respective jurisdictions
of incorporation or formation set forth therein, have full corporate or
partnership (as applicable) power and authority to own their assets and
properties and to operate their business as presently owned and conducted and as
proposed to be conducted, and are qualified to do business and in good standing
in every jurisdiction where their assets are located and wherever necessary
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to carry out their business and operations, in each case except where failure to
be so qualified or in good standing or a lack of such corporate power and
authority has not had and will not have a Material Adverse Effect. Schedule 5.1
annexed hereto correctly sets forth the ownership interest of Company in each of
its Subsidiaries identified therein.
5.2 Authorization of Borrowing, etc.
A. Authorization of Borrowing. The execution, delivery and performance of
the Loan Documents and the Related Agreements and the issuance, delivery and
payment of the Notes have been duly authorized by all necessary corporate and/or
partnership (as applicable) action on the part of each of the Loan Parties
thereto.
B. No Conflict. After giving effect to the consummation of the
transactions contemplated hereby to occur on the Closing Date, the execution,
delivery and performance by each of the Loan Parties of the Loan Document and
the Related Agreements to which they are parties, the issuance, delivery and
payment of the Notes and the consummation of the transactions contemplated by
the Loan Documents do not and will not (i) violate any provision of any law or
any governmental rule or regulation applicable to Company or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws (or other
analogous organizational document) of Company or any of its Subsidiaries or any
order, judgment or decree of any court or other agency of government binding on
Company or any of its Subsidiaries, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of Company or any of its Subsidiaries, (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of Company or any of its Subsidiaries (other than any Liens created under
any of the Loan Documents in favor of Chase Co-Administrative Agent on behalf of
Lenders), or (iv) require any approval of stockholders or partners or any
approval or consent of any Person under any Contractual Obligation of Company or
any of its Subsidiaries, except for such approvals or consents which will be
obtained on or before the Closing Date.
C. Governmental Consents. The execution, delivery and performance by the
Loan Parties of the Loan Documents and Related Agreements to which they are
party, the issuance, delivery and payment of the Notes and the consummation of
the transactions contemplated by the Loan Documents do not and will not require
any registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body except for such registrations, consents, approvals, notices or other
actions which will be made, obtained or taken on or before the Closing Date.
D. Binding Obligation. Each of the Loan Documents and the Related
Agreements has been duly executed and delivered by each of the Loan Parties
party thereto and is the legally valid and binding obligation of each such Loan
Party, enforceable against such Loan Party in accordance with its respective
terms, except as may be limited by
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bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles relating to
enforceability.
E. Valid Issuance of Subordinated Notes. Company has the corporate power
and authority to issue the Subordinated Notes. The Subordinated Notes, when
issued and paid for, will be the legally valid and binding obligations of
Company, enforceable against Company in accordance with their respective terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability. The subordination provisions of
the Subordinated Notes will be enforceable against the holders thereof and the
Loans and all other monetary Obligations hereunder are and will be within the
definition of "Senior Debt" included in such provisions. The Subordinated Notes,
when issued and sold, will either (a) have been registered or qualified under
applicable federal and state securities laws or (b) be exempt therefrom.
5.3 Financial Condition; Projections.
A. Financial Statements. Company has heretofore delivered to Lenders, at
Lenders' request, the following financial statements and information: (i) the
audited consolidated balance sheets of Company and its Subsidiaries (or, with
respect to years prior to 1995, Account Portfolios, L.P. (as predecessor of
Company) and its Subsidiaries) as at December 31 of 1993, 1994 and 1995, and the
related audited consolidated statements of operations, stockholders' equity and
cash flows of Company and its Subsidiaries for the periods then ended, together
with the report on such consolidated financial statements of Deloitte & Touche
LLP setting forth in each case in comparative form the corresponding figures for
the previous Fiscal Year (other than the Fiscal Year ending December 31, 1992),
(ii) the unaudited consolidated balance sheet of Company and its Subsidiaries as
at June 30, 1996 and the related unaudited consolidated statements of
operations, stockholders' equity and cash flows of Company and its Subsidiaries
for the six months then ended, together with the corresponding figures for the
corresponding periods of the previous Fiscal Year (other than the Fiscal Year
ending December 31, 1992), and (iii) the audited consolidated balance sheet of
Payco and its subsidiaries as at December 31 of 1993, 1994 and 1995, and the
audited consolidated statement of operations, stockholders' equity, and cash
flows of Payco and its Subsidiaries for the fiscal year then ended, together
with the report on such consolidated financial statements of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
Co setting forth in comparative form the corresponding figures for the previous
fiscal year (other than the fiscal year ending December 31, 1992) and (iv) the
unaudited consolidated balance sheet of Payco and its Subsidiaries as at June
30, 1996 and the related unaudited consolidated statements of operations,
stockholders' equity and cash flows of Payco and its Subsidiaries for the six
months then ended, together with the corresponding figures for the corresponding
period of the previous fiscal year (other than the fiscal year ending December
31, 1992). All such statements were prepared in conformity with GAAP and fairly
present, in all material respects, the financial position (on a consolidated
basis) of the entities described in such financial statements as at the
respective dates thereof and the results of operations and cash flows (on a
consolidated basis) of the entities described therein for each of the periods
then
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ended, subject, in the case of any such unaudited financial statements, to
changes resulting from audit and normal year-end adjustments and the absence of
footnote disclosure required in accordance with GAAP. Neither Company nor Payco
has (and will not immediately following the funding of the initial Loans) have
any Contingent Obligation, contingent liability or liability for taxes,
long-term lease or unusual forward or long-term commitment that is not reflected
in the most recent financial statements delivered pursuant to subsection 6.1,
the notes thereto and which in any such case is material in relation to the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Company and its Subsidiaries taken as a whole.
B. Projections. On and as of the Closing Date, the financial projections
of Company and its Subsidiaries for the period from December 31, 1996 through
December 31, 2003 (giving effect to the Acquisition) previously delivered to
Lenders (the "Projections") are based on good faith estimates and assumptions
made by the management of Company, it being recognized, however, that
projections as to future events are not to be viewed as facts and that the
actual results during the period or periods covered by the Projections may
differ from the projected results and that the differences may be material.
Notwithstanding the foregoing, as of the Closing Date, management of Company and
Payco believed that the Projections were reasonable and attainable.
5.4 No Material Adverse Change; No Restricted Junior Payments.
Since December 31, 1995, no event or change has occurred that has caused
or evidences, either in any case or in the aggregate, a Material Adverse Effect.
Neither Company nor any of its Subsidiaries has directly or indirectly declared,
ordered, paid or made, or set apart any sum or property for, any Restricted
Junior Payment or agreed to do so except as permitted by subsection 7.5.
5.5 Title to Properties; Liens.
After giving effect to the transactions contemplated by this Agreement to
occur on the Closing Date, Company and its Subsidiaries have good, sufficient
and legal title to all of their respective properties and assets reflected in
the financial statements referred to in subsection 5.3 or in the most recent
financial statements delivered pursuant to subsection 6.1, except for assets
disposed of since the date of such financial statements in the ordinary course
of business or as otherwise permitted under subsection 7.7. Except as permitted
by this Agreement, all such properties and assets are free and clear of Liens.
5.6 Litigation; Adverse Facts.
There is no action, suit, proceeding, arbitration or governmental
investigation (whether or not purportedly on behalf of Company or any of its
Subsidiaries) at law or in equity or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, pending or, to the knowledge of
Company, threatened against or affecting Company or any of its
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Subsidiaries or any property of Company or any of its Subsidiaries that, either
individually or in the aggregate together with all other such actions,
proceedings and investigations, has had, or could reasonably be expected to
result in, a Material Adverse Effect, it being understood, solely for purposes
of this sentence, that any money judgments or settlements the occurrence of
which do not give rise to an Event of Default under subsection 8.8 shall not be
deemed to have a Material Adverse Effect. Neither Company nor any of its
Subsidiaries is or has been (i) in violation of any applicable law (including
any Debt Collection Laws) that has had, or could reasonably be expected to
result in, a Material Adverse Effect, it being understood for purposes of this
clause (i) that any such violation which results in money judgments or
settlements the occurrence of which do not give rise to an Event of Default
under subsection 8.8 shall not be deemed to have a Material Adverse Effect, or
(ii) subject to or in default with respect to any final judgment, writ,
injunction, decree, rule or regulation of any court or any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that has had, or could reasonably be
expected to result in, a Material Adverse Effect.
5.7 Payment of Taxes.
Except to the extent permitted by subsection 6.3, all material tax returns
and reports of Company and its Subsidiaries required to be filed by any of them
have been timely filed, and all material taxes, assessments, fees and other
governmental charges upon Company and its Subsidiaries and upon their respective
properties, assets, income, businesses and franchises which are due and payable
have been paid when due and payable. Company does not know of any proposed tax
assessment against Company or any of its Subsidiaries other than those which are
being actively contested by Company or such Subsidiary in good faith and by
appropriate proceedings and for which reserves or other appropriate provisions,
if any, as may be required in conformity with GAAP shall have been made or
provided therefor.
5.8 Performance of Agreements; Materially Adverse Agreements.
A. Neither Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, would not have a Material Adverse Effect.
B. Neither Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreement or instrument or any charter or other
internal restriction which has had, or could reasonably be expected (based upon
assumptions that are reasonable at the time made) to result in, individually or
in the aggregate, a Material Adverse Effect.
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5.9 Governmental Regulation.
Neither Company nor any of its Subsidiaries is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.
5.10 Securities Activities.
Neither Company nor any of its Subsidiaries is engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock.
5.11 Employee Benefit Plans.
A. Company and each of its ERISA Affiliates are in substantial compliance
with all applicable provisions and requirements of ERISA with respect to each
Employee Benefit Plan, and have substantially performed all their obligations
under each Employee Benefit Plan, except to the extent that any non-compliance
with ERISA or any such failure to perform would not result in material liability
of Company or any of its ERISA Affiliates.
B. No ERISA Event has occurred which has resulted or is reasonably likely
to result in any material liability to the PBGC or to any other Person.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code and/or Section 601 of ERISA, neither Company nor any of its
Subsidiaries maintains or contributes to any employee welfare benefit plan (as
defined in Section 3(1) of ERISA) that provides health or welfare benefits
(through the purchase of insurance or otherwise) for any retired or former
employees of Company or any of its Subsidiaries, except to the extent that the
provision of such benefits would not have a Material Adverse Effect.
D. No Pension Plan has an Unfunded Current Liability in an amount that
would have a Material Adverse Effect.
5.12 Certain Fees.
No broker's or finder's fee or commission will be payable with respect to
this Agreement or any of the loan transactions contemplated hereby, and Company
hereby indemnifies Lenders against, and agrees that it will hold Lenders
harmless from, any claim, demand or liability for any such broker's or finder's
fees alleged to have been incurred in connection herewith or therewith and any
expenses (including reasonable fees, expenses and disbursements of counsel)
arising in connection with any such claim, demand or liability.
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5.13 Environmental Protection.
Except as set forth on Schedule 5.13 annexed hereto:
(i) the operations of Company and each of its Subsidiaries
(including, without limitation, all operations and conditions at or in the
Facilities) comply in all material respects with all Environmental Laws;
(ii) Company and each of its Subsidiaries have obtained all material
Governmental Authorizations under Environmental Laws necessary to their
respective operations, and all such Governmental Authorizations are in
good standing, and Company and each of its Subsidiaries are in compliance
with all material terms and conditions of such Governmental
Authorizations;
(iii) neither Company nor any of its Subsidiaries has received (a)
any notice or claim to the effect that it is or may be liable to any
Person as a result of or in connection with any Hazardous Materials or (b)
any letter or request for information under Section 104 of the
Comprehensive Environmental Response, Compensation, and Liability Act (42
U.S.C. ss. 9604) or comparable state laws, and, to the best knowledge of
Company, none of the operations of Company or any of its Subsidiaries is
the subject of any federal or state investigation relating to or in
connection with any Hazardous Materials at any Facility or at any other
location;
(iv) none of the operations of Company or any of its Subsidiaries is
subject to any judicial or administrative proceeding alleging the
violation of or liability under any Environmental Laws which could
reasonably be expected to have a Material Adverse Effect;
(v) to the knowledge of Company, neither Company nor any of its
Subsidiaries nor any of their respective Facilities or operations are
subject to any outstanding written order or agreement with any
governmental authority or private party relating to (a) any Environmental
Laws or (b) any Environmental Claims that could reasonably be expected to
have a Material Adverse Effect;
(vi) neither Company nor any of its Subsidiaries has any material
contingent liability in connection with any Release of any Hazardous
Materials by Company or any of its Subsidiaries;
(vii) neither Company nor any of its Subsidiaries nor, to the
knowledge of Company, any predecessor of Company or any of its
Subsidiaries has filed any notice under any Environmental Law indicating
past or present treatment or Release of Hazardous Materials at any
Facility, and none of Company's or any of its Subsidiaries' operations
involves the generation, transportation, treatment, storage or disposal of
hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any state
equivalent;
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(viii) to the knowledge of Company, no Hazardous Materials exist on
or under any Facility in a manner that has a reasonable possibility of
giving rise to an Environmental Claim having a Material Adverse Effect,
and neither Company nor any of its Subsidiaries has filed any notice or
report of a Release of any Hazardous Materials that has a reasonable
possibility of giving rise to an Environmental Claim having a Material
Adverse Effect;
(ix) neither Company nor any of its Subsidiaries nor, to the
knowledge of Company, any of their respective predecessors has disposed of
any Hazardous Materials in a manner that has a reasonable possibility of
giving rise to an Environmental Claim having a Material Adverse Effect;
(x) to the knowledge of Company, no underground storage tanks or
surface impoundments are on or at any Facility; and
(xi) to the knowledge of Company, no Lien in favor of any Person
relating to or in connection with any Environmental Claim has been filed
or has been attached to any Facility.
5.14 Employee Matters.
There is no strike or work stoppage in existence or threatened involving
Company or any of its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect.
5.15 Solvency.
Each Loan Party is, and Company and its Subsidiaries, taken as a whole,
are, and, upon the incurrence of any Obligations by any Loan Party on any date
on which this representation is made, will be, Solvent.
5.16 Matters Relating to Collateral.
A. Creation, Perfection and Priority of Liens. The execution and delivery
of the Collateral Documents by Loan Parties, together with (i) the actions taken
on or prior to the date hereof pursuant to subsections 4.1J and 6.9 and (ii) the
delivery to Collateral Agent of any Pledged Collateral not delivered to
Collateral Agent at the time of execution and delivery of the applicable
Collateral Document (all of which Pledged Collateral has been so delivered) are
effective to create in favor of Collateral Agent for the benefit of Agents and
Lenders, as security for the respective Secured Obligations (as defined in the
applicable Collateral Document in respect of any Collateral), a valid and
perfected first priority Lien on all of the Collateral, and all filings and
other actions necessary or desirable to perfect and maintain the perfection and
first priority status of such Liens have been duly made or taken and remain in
full force and effect, other than the filing of any UCC financing statements
delivered to Collateral Agent for filing (but not yet filed) and the periodic
filing
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of UCC continuation statements in respect of UCC financing statements filed by
or on behalf of Collateral Agent.
B. Governmental Authorizations. No authorization, approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for either (i) the pledge or grant by any Loan Party of the
Liens purported to be created in favor of Chase Co-Administrative Agent pursuant
to any of the Collateral Documents or (ii) the exercise by Chase
Co-Administrative Agent of any rights or remedies in respect of any Collateral
(whether specifically granted or created pursuant to any of the Collateral
Documents or created or provided for by applicable law), except for filings or
recordings contemplated by subsection 5.16A and except as may be required, in
connection with the disposition of any Pledged Collateral, by laws generally
affecting the offering and sale of securities.
C. Absence of Third-Party Filings. Except such as may have been filed in
favor of Chase Co-Administrative Agent as contemplated by subsection 5.16A, (i)
no effective UCC financing statement, fixture filing or other instrument similar
in effect covering all or any part of the Collateral is on file in any filing or
recording office and (ii) no effective filing covering all or any part of the
intellectual property Collateral is on file in the United States Patent and
Trademark Office.
D. Margin Regulations. The pledge of the Pledged Collateral pursuant to
the Collateral Documents does not violate Regulation G, Regulation T, Regulation
U or Regulation X of the Board of Governors of the Federal Reserve System.
E. Information Regarding Collateral. All information supplied to any Agent
by or on behalf of any Loan Party with respect to any of the Collateral (in each
case taken as a whole with respect to any particular Collateral) is accurate and
complete in all material respects.
5.17 Related Agreements.
A. Delivery of Related Agreements. Company has delivered to Agents
complete and correct copies of each Related Agreement and of all exhibits and
schedules thereto.
B. Payco's Warranties. Except to the extent otherwise set forth herein or
in the schedules hereto, each of the representations and warranties given by
Payco to Company in the Acquisition Agreement is true and correct in all
material respects as of the date hereof (or as of any earlier date to which such
representation and warranty specifically relates) and will be true and correct
in all material respects as of the Closing Date (or as of such earlier date, as
the case may be), in each case subject to the qualifications set forth in the
schedules to the Acquisition Agreement.
C. Warranties of Company. Subject to the qualifications and the schedules
set forth therein, each of the representations and warranties given by Company
to Payco in the
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Acquisition Agreement is true and correct in all material respects as of the
date hereof and will be true and correct in all material respects as of the
Closing Date.
D. Survival. Notwithstanding anything in the Acquisition Agreement to the
contrary, the representations and warranties of Company set forth in subsections
5.17B and 5.17C shall, solely for purposes of this Agreement, survive the
Closing Date for the benefit of Agents and Lenders.
5.18 Disclosure.
The representations of Company and its Subsidiaries contained in the Loan
Documents, Related Documents and in any other document, certificate or written
statement furnished to Lenders by or on behalf of Company or any of its
Subsidiaries for use in connection with the transactions contemplated by this
Agreement, when taken as a whole, do not contain any untrue statement of a
material fact or omit to state a material fact (known to Company or the
applicable Subsidiary, in the case of any document not furnished by Company or
such Subsidiary) necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances in which the same were
made. Any projections and pro forma financial information contained in such
materials are based upon good faith estimates and assumptions believed by
Company to be reasonable at the time made, it being recognized by Lenders that
such projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such projections may
differ from the projected results. There is no fact known (or which should upon
the reasonable exercise of diligence be known) to Company (other than matters of
a general economic nature) that has had, or could reasonably be expected to
result in, a Material Adverse Effect and that has not been disclosed herein or
in such other documents, certificates and statements furnished to Lenders for
use in connection with the transactions contemplated hereby.
5.19 Subordination of Seller Notes.
The subordination provisions of the Existing Seller Note and any Permitted
Seller Notes are enforceable against the holders thereof, and the Loans and
other monetary Obligations hereunder are and will be within the definition of
"Senior Indebtedness" included in such provisions.
SECTION 6.
AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 6.
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6.1 Financial Statements and Other Reports.
Company will maintain, and cause each of its Subsidiaries to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Company will deliver to Chase Co-Administrative Agent (and Chase
Co-Administrative Agent will, after receipt thereof, deliver to each Lender):
(i) Monthly Financials: as soon as available and in any event within
30 days after the calendar month-end for the months of January 1997
through and including June 1997 and within 20 days after each calendar
month-end thereafter, (a) the consolidated balance sheets of Company and
its Subsidiaries as at the end of each fiscal month ending after the
Closing Date and the related consolidated statements of income,
stockholders' equity and cash flows of Company and its Subsidiaries for
such month and for the period from the beginning of the then current
Fiscal Year to the end of such month, setting forth in each case in
comparative form the corresponding figures for the corresponding periods
of the previous fiscal year and the corresponding figures from the
consolidated plan and financial forecast for the current Fiscal Year
delivered pursuant to subsection 6.1(xiii), all in reasonable detail and
certified by the chief financial officer of Company that they fairly
present, in all material respects, the financial condition of Company and
its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to
changes resulting from audit and normal year-end adjustments; and (b) a
narrative report describing the operations of Company and its Subsidiaries
in the form prepared for presentation to senior management for such month
and for the period from the beginning of the then current Fiscal Year to
the end of such month;
(ii) Quarterly Financials: as soon as available and in any event
within 45 days after the end of each Fiscal Quarter, (a) the consolidated
balance sheets of Company and its Subsidiaries as at the end of such
Fiscal Quarter and the related consolidated statements of income,
stockholders' equity and cash flows of Company and its Subsidiaries for
such Fiscal Quarter and for the period from the beginning of the then
current Fiscal Year to the end of such Fiscal Quarter, setting forth in
each case in comparative form the corresponding figures for the
corresponding periods of the previous fiscal year and the corresponding
figures from the consolidated plan and financial forecast for the current
Fiscal Year delivered pursuant to subsection 6.1(xiii), all in reasonable
detail and certified by the chief financial officer of Company that they
fairly present, in all material respects, the financial condition of
Company and its Subsidiaries as at the dates indicated and the results of
their operations and their cash flows for the periods indicated, subject
to changes resulting from audit and normal year-end adjustments, and (b) a
narrative report describing the operations of Company and its Subsidiaries
in the form prepared for presentation to senior management for such Fiscal
Quarter and for the period from the beginning of the then current Fiscal
Year to the end of such Fiscal Quarter;
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(iii) Year-End Financials: as soon as available and in any event
within 90 days after the end of each Fiscal Year, (a) the consolidated and
consolidating balance sheets of Company and its Subsidiaries as at the end
of such Fiscal Year and the related consolidated and consolidating
statements of income, stockholders' equity and cash flows of Company and
its Subsidiaries for such Fiscal Year, setting forth in each case in
comparative form the corresponding figures for the previous fiscal year
and the corresponding figures from the consolidated plan and financial
forecast delivered pursuant to subsection 6.1(xiii) for the Fiscal Year
covered by such financial statements, all in reasonable detail and
certified by the chief financial officer of Company that they fairly
present, in all material respects, the financial condition of Company and
its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, (b) a narrative
report describing the operations of Company and its Subsidiaries in the
form prepared for presentation to senior management for such Fiscal Year,
and (c) in the case of such consolidated financial statements, a report
thereon of independent certified public accountants of recognized national
standing selected by Company and reasonably satisfactory to Chase
Co-Administrative Agent, which report shall be unqualified as to the
ability of Company and its Subsidiaries to continue as a going concern and
as to scope of audit, and shall state that such consolidated financial
statements fairly present, in all material respects, the consolidated
financial position of Company and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for the
periods indicated in conformity with GAAP applied on a basis consistent
with prior years (except as otherwise disclosed in such financial
statements) and that the examination by such accountants in connection
with such consolidated financial statements has been made in accordance
with generally accepted auditing standards;
(iv) Officer's and Compliance Certificates: together with each
delivery of financial statements of Company and its Subsidiaries pursuant
to subdivisions (ii) and (iii) above, (a) an Officer's Certificate of
Company stating that the signer has reviewed the terms of this Agreement
and have made, or caused to be made under their supervision, a review in
reasonable detail of the transactions and condition of Company and its
Subsidiaries during the accounting period covered by such financial
statements and that such review has not disclosed the existence during or
at the end of such accounting period, and that the signer does not have
knowledge of the existence as at the date of such Officer's Certificate,
of any condition or event that constitutes an Event of Default or
Potential Event of Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what
action Company has taken, is taking and proposes to take with respect
thereto; and (b) a Compliance Certificate demonstrating in reasonable
detail compliance during and at the end of the applicable accounting
periods with the restrictions contained in Section 7;
(v) Reconciliation Statements: if, as a result of any change in
accounting principles and policies from those used in the preparation of
the audited financial
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statements referred to in subsection 5.3, the consolidated financial
statements of Company and its Subsidiaries delivered pursuant to
subdivisions (i), (ii), (iii) or (xiii) of this subsection 6.1 will differ
in any material respect from the consolidated financial statements that
would have been delivered pursuant to such subdivisions had no such change
in accounting principles and policies been made, then (a) together with
the first delivery of financial statements pursuant to subdivision (i),
(ii), (iii) or (xiii) of this subsection 6.1 following such change,
consolidated financial statements of Company and its Subsidiaries for (y)
the current Fiscal Year to the effective date of such change and (z) the
two full Fiscal Years immediately preceding the Fiscal Year in which such
change is made, in each case prepared on a pro forma basis as if such
change had been in effect during such periods, and (b) together with each
delivery of financial statements pursuant to subdivision (i), (ii), (iii)
or (xiii) of this subsection 6.1 following such change, a written
statement of the chief accounting officer or chief financial officer of
Company setting forth the differences which would have resulted if such
financial statements had been prepared without giving effect to such
change;
(vi) Accountants' Certification: together with each delivery of
consolidated financial statements of Company and its Subsidiaries pursuant
to subdivision (iii) above, a written statement by the independent
certified public accountants giving the report thereon (a) stating that
their audit examination has included a reading of the terms of this
Agreement and the other Loan Documents as they relate to accounting
matters, and (b) stating whether, in connection with their audit
examination, any condition or event, insofar as such condition or event
relates to the covenants set forth in subsection 7.6 or to accounting
matters, that constitutes an Event of Default or Potential Event of
Default has come to their attention and, if such a condition or event has
come to their attention, specifying the nature and period of existence
thereof; provided that such accountants shall not be liable by reason of
any failure to obtain knowledge of any such Event of Default or Potential
Event of Default that would not be disclosed in the course of their audit
examination;
(vii) Accountants' Reports: promptly upon receipt thereof (unless
restricted by applicable professional standards), copies of all reports
submitted to Company by independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of Company and its respective Subsidiaries made by such
accountants, including, without limitation, any comment letter submitted
by such accountants to management in connection with their annual audit;
(viii) SEC Filings and Press Releases: promptly upon their becoming
available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by Company to its
security holders, (b) all regular and periodic reports and all
registration statements (other than on Form S-8 or a similar form) and
prospectuses, if any, filed by Company or any of its Subsidiaries with any
securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority, and (c) all press releases
and other
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statements made available generally by Company or any of its Subsidiaries
to the public concerning material developments in the business of Company
or any of its Subsidiaries;
(ix) Events of Default, etc.: promptly upon any officer of Company
obtaining knowledge (a) of any condition or event that constitutes an
Event of Default or Potential Event of Default, or becoming aware that any
Lender has given any notice (other than to Chase Co-Administrative Agent)
or taken any other action with respect to a claimed Event of Default or
Potential Event of Default, (b) that any Person has given any notice to
Company or any of its Subsidiaries or taken any other action with respect
to a claimed default or event or condition of the type referred to in
subsection 8.2, (c) of any condition or event that would be required to be
disclosed in a current report filed by Company with the Securities and
Exchange Commission on Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in
effect on the date hereof) if Company were required to file such reports
under the Exchange Act, or (d) of the occurrence of any event or change
that has caused or evidences, either in any case or in the aggregate, a
Material Adverse Effect, an Officer's Certificate specifying the nature
and period of existence of such condition, event or change, or specifying
the notice given or action taken by any such Person and the nature of such
claimed Event of Default, Potential Event of Default, default, event or
condition, and what action Company has taken, is taking and proposes to
take with respect thereto;
(x) Litigation or Other Proceedings: (a) promptly upon any officer
of Company obtaining knowledge of the institution of, or non-frivolous
threat of, any action, suit, proceeding (whether administrative, judicial
or otherwise), governmental investigation or arbitration against or
affecting Company or any of its Subsidiaries or any property of Company or
any of its Subsidiaries (collectively, "Proceedings") not previously
disclosed in writing by Company to Lenders or Chase Co-Administrative
Agent any material development in any Proceeding that, in any case:
(1) if adversely determined, has a reasonable possibility of
giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of,
or to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters; and (b) within 45 days after the end of each Fiscal
Quarter, a schedule of all Proceedings involving an alleged liability of,
or claims against or affecting, Company or any of its Subsidiaries equal
to or greater than $250,000 and promptly after request by either Co-
Administrative Agent such other information as may be reasonably requested
by such Co-Administrative Agent to enable such Co-Administrative Agent
and its counsel to evaluate any of such Proceedings;
93
(xi) ERISA Events: promptly upon becoming aware of the occurrence of
any ERISA Event, a written notice specifying the nature thereof, what
action Company or any of its ERISA Affiliates has taken, is taking or
proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, the Department of Labor or the
PBGC with respect thereto;
(xii) ERISA Notices: with reasonable promptness, copies of (a) all
written notices received by Company or any of its ERISA Affiliates from a
Multiemployer Plan sponsor concerning an ERISA Event; and (b) such other
documents or governmental reports or filings relating to any Employee
Benefit Plan as either Co-Chase Co-Administrative Agent shall reasonably
request;
(xiii) Financial Plans: as soon as practicable and in any event no
later than the beginning of each Fiscal Year, a monthly consolidated and
consolidating plan and financial forecast for the next succeeding Fiscal
Year, including, without limitation, (a) forecasted consolidated and
consolidating balance sheets and forecasted consolidated and consolidating
statements of income and cash flows of Company and its Subsidiaries for
such Fiscal Year, together with a pro forma Compliance Certificate for
such Fiscal Year and an explanation of the assumptions on which such
forecasts are based, and (b) such other information and projections as
either Co-Administrative Agent may reasonably request;
(xiv) Insurance: as soon as practicable and in any event by the last
day of each Fiscal Year, a report in form and substance satisfactory to
Co-Administrative Agents outlining all material insurance coverage
maintained as of the date of such report by Company and its Subsidiaries
and all material insurance coverage planned to be maintained by Company
and its Subsidiaries in the immediately succeeding Fiscal Year;
(xv) Environmental Audits and Reports: as soon as practicable
following receipt thereof, copies of all environmental audits and reports,
whether prepared by personnel of Company or any of its Subsidiaries or by
independent consultants, with respect to significant environmental matters
at any Facility or which relate to an Environmental Claim which could
result in a Material Adverse Effect;
(xvi) Board of Directors: with reasonable promptness, written notice
of any change in the Board of Directors of Company;
(xvii) New Subsidiaries: promptly upon any Person becoming a
Subsidiary of Company, a written notice setting forth with respect to such
Person (a) the date on which such Person became a Subsidiary of Company
and (b) all of the data required to be set forth in Schedule 5.1 annexed
hereto with respect to all Subsidiaries of Company (it being understood
that such written notice shall be deemed to supplement Schedule 5.1
annexed hereto for all purposes of this Agreement); and
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(xviii) Other Information: with reasonable promptness, such other
information and data with respect to Company or any of its Subsidiaries as
from time to time may be reasonably requested by either Co-Administrative
Agent.
For purposes of subsection 4.1P(iii) and this subsection 6.1,
"consolidating" balance sheets and "consolidating" statements of income,
stockholders equity and cash flows refer to financial statements consolidating
the financial position, results of operations and cash flows of the major
operating groups of Company's Subsidiaries, which operating groups as of the
Closing Date consist of (1) A.M. ▇▇▇▇▇▇ & Associates, Inc. and its Subsidiaries,
(2) Account Portfolios, Inc. and its Subsidiaries, (3) Continental Credit
Services, Inc., Alaska Financial Services, Inc., Southwest Credit Services, Inc.
and their respective Subsidiaries, and (4) Payco and its Subsidiaries.
6.2 Corporate Existence, etc.
Except as permitted under subsection 7.7, Company will, and will cause
each of its Subsidiaries to, at all times preserve and keep in full force and
effect its corporate existence and all rights and franchises material to the
business of Company and its Subsidiaries (on a consolidated basis). Without
limiting the foregoing, Company shall, and shall cause each of its Subsidiaries
to, file and diligently process to completion applications for all material
permits, licenses and other governmental approvals necessary for the operation
of its debt collection business.
6.3 Payment of Taxes and Claims; Tax Consolidation.
A. Company will, and will cause each of its Subsidiaries to, pay all
material taxes and all assessments and other governmental charges imposed upon
it or any of its properties or assets or in respect of any of its income,
businesses or franchises before any penalty accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums that have become due and payable and that by law have or may
become a Lien upon any of its properties or assets, prior to the time when any
penalty or fine shall be incurred with respect thereto; provided that no such
charge or claim need be paid if it is being contested in good faith by
appropriate proceedings timely instituted and diligently conducted and if such
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor.
B. Company will not, nor will it permit any of its Subsidiaries to, file
or consent to the filing of any consolidated income tax return with any Person
(other than Company and its Subsidiaries).
6.4 Maintenance of Properties; Insurance.
Company will, and will cause each of its Subsidiaries to, maintain or
cause to be maintained in good repair, working order and condition, ordinary
wear and tear excepted, all material properties used or useful in the business
of Company and its Subsidiaries and
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from time to time will make or cause to be made all appropriate repairs,
renewals and replacements thereof. Company will maintain or cause to be
maintained, with financially sound and reputable insurers, insurance with
respect to its properties and business and the properties and businesses of its
Subsidiaries against loss or damage of the kinds customarily carried or
maintained under similar circumstances by corporations of established reputation
engaged in similar businesses. Each such policy of casualty insurance covering
damage to or loss of property shall name Chase Co-Administrative Agent for the
benefit of Agent and Lenders as the loss payee thereunder for all losses,
subject to application of proceeds as required by subsection 2.4B(iii)(d), and
shall provide for at least 30 days' prior written notice to Chase
Co-Administrative Agent of any modification or cancellation of such policy.
6.5 Inspection; Lender Meeting.
Company shall, and shall cause each of its Subsidiaries to, permit any
authorized representatives designated by any Agent or Lender to visit and
inspect any of the properties of Company or any of its Subsidiaries, including
its and their financial and accounting records, and to make copies and take
extracts therefrom, and to discuss its and their affairs, finances and accounts
with its and their officers and independent public accountants, all upon
reasonable advance notice and at such reasonable times during normal business
hours and as often as may be reasonably requested. Without in any way limiting
the foregoing, Company will, upon the request of Chase Co-Administrative Agent,
participate in a meeting of Agents and Lenders once during each Fiscal Year to
be held at Company's corporate offices (or such other location as may be agreed
to by Company and Chase Co-Administrative Agent) at such time as may be agreed
to by Company and Chase Co-Administrative Agent.
6.6 Compliance with Laws, etc.
Company shall, and shall cause each of its Subsidiaries to, comply with
the requirements of all applicable laws, rules, regulations and orders of any
governmental authority (including all Debt Collection Laws), noncompliance with
which could reasonably be expected to cause a Material Adverse Effect.
6.7 Environmental Disclosure and Inspection.
A. Company shall, and shall cause each of its Subsidiaries to, exercise
all due diligence in order to comply and cause (i) all tenants under any leases
or occupancy agreements affecting any portion of the Facilities and (ii) all
other Persons on or occupying such property, to comply with all Environmental
Laws.
B. Company agrees that Chase Co-Administrative Agent may, from time to
time and in its reasonable discretion, retain, at Company's expense, an
independent professional consultant to review any report relating to Hazardous
Materials prepared by or for Company and to conduct its own investigation of any
Facility currently owned, leased, operated or used by Company or any of its
Subsidiaries, and Company agrees to use all reasonable
96
efforts to obtain permission for Chase Co-Administrative Agent's professional
consultant to conduct its own investigation of any such Facility previously
owned, leased, operated or used by Company or any of its Subsidiaries. Company
shall use its reasonable efforts to obtain for Chase Co-Administrative Agent
and its agents, employees, consultants and contractors the right, upon
reasonable notice to Company, to enter into or on to the Facilities currently
owned, leased, operated or used by Company or any of its Subsidiaries to perform
such tests on such property as are reasonably necessary to conduct such a review
and/or investigation. Any such investigation of any Facility shall be conducted,
unless otherwise agreed to by Company and Chase Co-Administrative Agent, during
normal business hours and, to the extent reasonably practicable, shall be
conducted so as not to interfere with the ongoing operations at any such
Facility or to cause any damage or loss to any property at such Facility.
Company and Chase Co-Administrative Agent hereby acknowledge and agree that any
report of any investigation conducted at the request of Chase Co-Administrative
Agent pursuant to this subsection 6.7B will be obtained and shall be used by
Chase Co-Administrative Agent and Lenders for the purposes of Lenders' internal
credit decisions, to monitor and police the Loans and to protect Lenders'
security interests, if any, created by the Loan Documents. Chase
Co-Administrative Agent agrees to deliver a copy of any such report to Company
with the understanding that Company acknowledges and agrees that (i) it will
indemnify and hold harmless each Agent and Lender from any costs, losses or
liabilities relating to any Loan Party's use of or reliance on such report, (ii)
no Agent nor any Lender makes any representation or warranty with respect to
such report, and (iii) by delivering such report to Company, no Agent nor any
Lender is requiring or recommending the implementation of any suggestions or
recommendations contained in such report.
C. Company shall promptly advise Chase Co-Administrative Agent in writing
and in reasonable detail of (i) any Release of any Hazardous Materials required
to be reported to any federal, state, local or foreign governmental or
regulatory agency under any applicable Environmental Laws, (ii) any and all
written communications with respect to any Environmental Claims that have a
reasonable possibility of giving rise to a Material Adverse Effect or with
respect to any Release of Hazardous Materials required to be reported to any
federal, state or local governmental or regulatory agency, (iii) any remedial
action taken by Company or any other Person in response to (x) any Hazardous
Materials on, under or about any Facility, the existence of which has a
reasonable possibility of resulting in an Environmental Claim having a Material
Adverse Effect, or (y) any Environmental Claim that could have a Material
Adverse Effect, (iv) Company's discovery of any occurrence or condition on any
real property adjoining or in the vicinity of any Facility that could cause such
Facility or any part thereof to be subject to any restrictions on the ownership,
occupancy, transferability or use thereof under any Environmental Laws, and (v)
any request for information from any governmental agency that suggests such
agency is investigating whether Company or any of its Subsidiaries may be
potentially responsible for a Release of Hazardous Materials.
D. Company shall promptly notify Chase Co-Administrative Agent of (i) any
proposed acquisition of stock, assets, or property by Company or any of its
Subsidiaries that could reasonably be expected to expose Company or any of its
Subsidiaries to, or result in,
97
Environmental Claims that could have a Material Adverse Effect or that could
reasonably be expected to have a material adverse effect on any Governmental
Authorization then held by Company or any of its Subsidiaries and (ii) any
proposed action to be taken by Company or any of its Subsidiaries to commence
manufacturing, industrial or other similar operations that could reasonably be
expected to subject Company or any of its Subsidiaries to additional laws, rules
or regulations, including, without limitation, laws, rules and regulations
requiring additional environmental permits or licenses.
E. Company shall, at its own expense, provide copies of such documents or
information as either Co-Administrative Agent may reasonably request in relation
to any matters disclosed pursuant to this subsection 6.7.
6.8 Company's Remedial Action Regarding Hazardous Materials.
Company shall promptly take, and shall cause each of its Subsidiaries
promptly to take, any and all necessary remedial action in connection with the
presence, storage, use, disposal, transportation or Release of any Hazardous
Materials on or under any Facility in order to comply with all applicable
Environmental Laws and Governmental Authorizations unless the failure to so
comply could not reasonably be expected to have a Material Adverse Effect. In
the event Company or any of its Subsidiaries takes any remedial action with
respect to any Hazardous Materials on or under any Facility, Company or such
Subsidiary shall conduct and complete such remedial action in material
compliance with all applicable Environmental Laws, and in accordance with the
policies, orders and directives of all federal, state and local governmental
authorities except when, and only to the extent that, Company's or such
Subsidiary's liability for such presence, storage, use, disposal, transportation
or Release of any Hazardous Materials is being contested in good faith by
Company or such Subsidiary.
6.9 of Subsidiary Guaranty and Subsidiary Security Agreements by Subsidiar-
ies and Future Subsidiaries.
In the event that any Person becomes a domestic Subsidiary after the date
hereof, Company will promptly notify Chase Co-Administrative Agent of that fact
and cause such Subsidiary to execute and deliver to Chase Co-Administrative
Agent and Collateral Agent a counterpart of the Subsidiary Guaranty and the
Pledge Agreement, the Security Agreement, the Limited Partnership Security
Agreement and the Trademark Security Agreement (collectively, the "Subsidiary
Security Agreements"), and to take all such further actions and execute all such
further documents and instruments as may be required to grant and perfect in
favor of Collateral Agent, for the benefit of Lenders, a first-priority security
interest in all of the personal property assets of such Subsidiary described in
the Subsidiary Security Agreements. Company shall deliver to Chase
Co-Administrative Agent and Collateral Agent, together with such Loan Documents,
(i) certified copies of such Subsidiary's Articles or Certificate of
Incorporation (or comparable constituent documents), together, if applicable,
with a good standing certificate from the Secretary of State of the jurisdiction
of its incorporation, each to be dated a recent date prior
to their delivery to
98
Chase Co-Administrative Agent, (ii) a copy, if applicable, of such Subsidiary's
Bylaws, certified by its corporate secretary or an assistant corporate secretary
as of a recent date prior to their delivery to Chase Co-Administrative Agent and
Collateral Agent, (iii) a certificate executed by the secretary or an assistant
secretary of such Subsidiary as to (a) the incumbency and signatures of the
officers of such Subsidiary executing the Subsidiary Guaranty and to which such
Subsidiary is a party and (b) the fact that the attached resolutions of the
Board of Directors of such Subsidiary authorizing the execution, delivery and
performance of the Subsidiary Guaranty and the Subsidiary Security Agreements to
which such Subsidiary is a party are in full force and effect and have not been
modified or rescinded, and (iv) a favorable opinion of counsel to such
Subsidiary, in form and substance satisfactory to Chase Co-Administrative Agent
and its counsel, as to (a) the due organization and good standing of such
Subsidiary, (b) the due authorization, execution and delivery by such Subsidiary
of the Subsidiary Guaranty and the Subsidiary Security Agreements to which such
Subsidiary is a party, (c) the enforceability of the Subsidiary Guaranty and the
Subsidiary Security Agreements to which such Subsidiary is a party against such
Subsidiary, and (d) such other matters as Chase Co-Administrative Agent and
Collateral Agent may reasonably request, all of the foregoing to be reasonably
satisfactory in form and substance to Chase Co-Administrative Agent and its
counsel and Collateral Agent.
6.10 Interest Rate Protection.
At all times after the date which is 180 days after the Closing Date,
Company shall maintain in effect one or more Interest Rate Agreements with
respect to the Loans, in an aggregate notional principal amount of not less than
$50,000,000, which Interest Rate Agreements shall have the effect of
establishing a maximum interest rate of not more than 10% per annum with respect
to such notional principal amount, each such Interest Rate Agreement to be in
form and substance satisfactory to Co-Administrative Agents and with a term of
not less than three years.
6.11 Further Assurances.
At any time or from time to time upon the request of either
Co-Administrative Agent, Company will, at its expense, promptly execute,
acknowledge and deliver such further documents and do such other acts and things
as such Co-Administrative Agent may reasonably request in order to effect fully
the purposes of the Loan Documents and to provide for payment of the Obligations
in accordance with the terms of this Agreement, the Notes and the other Loan
Documents. In furtherance and not in limitation of the foregoing, Company shall
take, and cause each of its Subsidiaries to take, such actions as either
Co-Administrative Agent may reasonably request from time to time (including,
without limitation, the execution and delivery of guaranties, security
agreements, pledge agreements, mortgages, deeds of trust, stock powers,
financing statements and other documents, the filing or recording of any of the
foregoing, title insurance with respect to any of the foregoing that relates to
an interest in real property, and the delivery of stock certificates and other
collateral with respect to which perfection is obtained by possession) to ensure
that the Obligations are guarantied by Subsidiary Guarantors and are secured by
substantially all of
99
the assets of Company and its domestic Subsidiaries. In the event that Company
or any of its Subsidiaries creates a new domestic Subsidiary, all of the capital
stock or partnership interests of such new domestic Subsidiary shall be duly and
validly pledged to Collateral Agent for the benefit of Agents and Lenders
pursuant to the Collateral Documents, subject to no other Liens.
SECTION 7.
NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 7.
7.1 Indebtedness.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become
or remain directly or indirectly liable with respect to, any Indebtedness,
except:
(i) Company may become and remain liable with respect to the
Obligations;
(ii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations permitted by subsection 7.4 and, upon
any matured obligations actually arising pursuant thereto, the
Indebtedness corresponding to the Contingent Obligations so extinguished;
(iii) Company and its Subsidiaries, as applicable, may remain liable
with respect to Indebtedness described in Schedule 7.1 annexed hereto;
(iv) Indebtedness of Company and its Subsidiaries (a) under Capital
Leases capitalized on the consolidated balance sheet of Company as
liabilities or (b) secured by Liens permitted under subsection 7.2A(iii),
in an aggregate amount not exceeding $15,000,000 at any time outstanding;
(v) Company may become and remain liable with respect to
Indebtedness to any of its domestic Wholly Owned Subsidiaries, and any
domestic Wholly Owned Subsidiary of Company may become and remain liable
with respect to Indebtedness to Company or any other domestic Wholly Owned
Subsidiary of Company provided that (a) all such intercompany Indebtedness
shall be evidenced by promissory notes, (b) all such intercompany
Indebtedness owed by Company to any of its respective Subsidiaries shall
be subordinated in right of payment to the payment in full of the
100
Obligations pursuant to the terms of the applicable promissory notes or an
intercompany subordination agreement, in each case in form and substance
satisfactory to Co-Administrative Agents, and (c) any payment by Company
or by any Subsidiary of Company under any guaranty of the Obligations
shall result in a pro tanto reduction of the amount of any intercompany
Indebtedness owed by Company or by such Subsidiary to Company or to any of
its Subsidiaries for whose benefit such payment is made;
(vi) Company may become and remain liable with respect to the
Subordinated Notes;
(vii) Company may become and remain liable with respect to Permitted
Seller Notes, provided that the aggregate principal amount of such notes
issued shall not exceed $5,000,000 prior to the first Anniversary and
$25,000,000 thereafter; and
(viii) Company and its Subsidiaries may become and remain liable
with respect to other Indebtedness in an aggregate principal amount not to
exceed at any time outstanding $5,000,000.
7.2 Liens and Related Matters.
A. Prohibition on Liens. Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement, or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any state or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens described in Schedule 7.2 annexed hereto;
(iii) Purchase money security interests (including mortgages,
conditional sales, Capital Leases and any other title retention or
deferred purchase devices) in tangible personal property of Company or any
of its Subsidiaries existing or created at the time of acquisition thereof
or within 30 days thereafter, and the renewal, extension and refunding of
any such security interest in an amount not exceeding the amount thereof
remaining unpaid immediately prior to such renewal, extension or
refunding; provided, however, that such Indebtedness is permitted by
subsection 7.1(iv) hereof;
101
(iv) Other Liens on assets of Company and its Subsidiaries securing
Indebtedness in an aggregate amount not to exceed $2,000,000 at any time
outstanding; and
(v) Liens granted pursuant to the Collateral Documents.
B. Equitable Lien in Favor of Lenders. If Company or any of its
Subsidiaries shall create or assume any consensual Lien upon any of its
properties or assets, whether now owned or hereafter acquired, other than Liens
excepted by the provisions of subsection 7.2A, it shall make or cause to be made
effective provision whereby the Obligations will be secured by such Lien equally
and ratably with any and all other Indebtedness secured thereby as long as any
such Indebtedness shall be so secured; provided that, notwithstanding the
foregoing, this covenant shall not be construed as a consent by Requisite
Lenders to the creation or assumption of any such Lien not permitted by the
provisions of subsection 7.2A.
C. No Further Negative Pledges. Except with respect to specific property
encumbered to secure payment of particular Indebtedness or to be sold pursuant
to an executed agreement with respect to an Asset Sale, neither Company nor any
of its Subsidiaries shall enter into any agreement prohibiting the creation or
assumption of any Lien upon any of its properties or assets, whether now owned
or hereafter acquired.
D. No Restrictions on Subsidiary Distributions to Company or Other
Subsidiaries. Except as provided herein Company will not, and will not permit
any of its Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any such Subsidiary to (i) pay dividends or make any other
distributions on any of such Subsidiary's capital stock owned by Company or any
other Subsidiary of Company, (ii) repay or prepay any Indebtedness owed by such
Subsidiary to Company or any other Subsidiary of Company, (iii) make loans or
advances to Company or any other Subsidiary of Company, or (iv) transfer any of
its property or assets to Company or any other Subsidiary of Company.
7.3 Investments; Joint Ventures.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any
Joint Venture, except:
(i) Company and its Subsidiaries may make and own Investments in
Cash Equivalents;
(ii) Company and its Subsidiaries may continue to own the
Investments owned by them as of the Closing Date (after giving effect to
the Acquisition and the Merger) in any Subsidiaries of Company;
(iii) Company and its Subsidiaries may make intercompany loans to
the extent permitted under subsection 7.1(v);
102
(iv) Payco may continue to own the Joint Ventures owned by it as of
the Closing Date (after giving effect to the Acquisition and the Merger);
(v) Company and its Subsidiaries may make and own Investments in
Permitted Joint Ventures; provided that (a) at the time of such
Investment, and after giving effect thereto, no Potential Event of Default
or Event of Default shall have occurred and be continuing, (b) the
aggregate amount of all such Investments made after the Closing Date shall
not exceed $5,000,000, and (c) Company and its Subsidiaries shall pledge
all of their respective equity interests in any Permitted Joint Venture to
Collateral Agent to secure the Obligations under the Loan Documents
(except to the extent, and only to the extent, such pledge of the equity
interests in a Permitted Joint Venture organized under the laws of a
foreign country would result in Company incurring additional liabilities
for taxes);
(vi) Company may make and own Investments consisting of notes
received in connection with any Asset Sale limited to 20% of the total
sale price of the assets sold in such Asset Sale; provided that the
aggregate principal amount of such notes at any time outstanding shall not
exceed $2,000,000;
(vii) Company and its Subsidiaries may make and own Investments in
connection with a Permitted Acquisition or a Permitted Portfolio
Acquisition;
(viii) Company and its Subsidiaries may make Consolidated
Maintenance Capital Expenditures permitted by subsection 7.8; and
(ix) Company and its Subsidiaries may make and own other Investments
in an aggregate amount not to exceed at any time $2,500,000.
7.4 Contingent Obligations.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
(i) Company may become and remain liable with respect to Contingent
Obligations in respect of Letters of Credit, as applicable, and
Subsidiaries of Company may become and remain liable with respect to
Contingent Obligations arising under the Subsidiary Guaranty;
(ii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations under Interest Rate Agreements required
under subsection 6.10;
(iii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of customary indemnification
103
and purchase price adjustment obligations incurred in the ordinary course
of business in connection with Asset Sales or other sales of assets;
(iv) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations under guarantees in the ordinary course
of business of the obligations of suppliers, landlords, customers,
franchisees and licensees of Company and its Subsidiaries in an aggregate
amount not to exceed at any time $1,000,000;
(v) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations under guarantees in the ordinary course
of business with respect to the performance by Company or any of its
Subsidiaries of obligations under collection contracts;
(vi) Company may become and remain liable with respect to Contingent
Obligations in respect of Earn Out Agreements in connection with Permitted
Acquisitions and Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of Forward Flow
Contracts; provided that to the extent that purchases of receivables
portfolios from a single seller (together with all Affiliates of such
seller) party to a Forward Flow Contract with Company or any of its
Subsidiaries exceed $750,000 in any 12-month period, any receivables
portfolio purchased during such 12-month period under a Forward Flow
Contract with such seller shall be a Qualified Loan Portfolio;
(vii) Company and its Subsidiaries, as applicable, may remain liable
with respect to Contingent Obligations described in Schedule 7.4 annexed
hereto;
(viii) Subsidiaries of Company may become and remain liable with
respect to the Subordinated Note Guaranty; and
(ix) Company and its Subsidiaries may become and remain liable with
respect to other Contingent Obligations; provided that the maximum
aggregate liability, contingent or otherwise, of Company and its
Subsidiaries in respect of all such Contingent Obligations shall at no
time exceed $1,000,000.
7.5 Restricted Junior Payments.
Company shall not, and shall not permit any of its respective Subsidiaries
to, directly or indirectly, declare, order, pay, make or set apart any sum for
any Restricted Junior Payment; provided that (i) Company may make scheduled
interest payments in respect of the Subordinated Notes in accordance with the
terms of the Subordinated Note Indenture; (ii) Company may make scheduled
interest and principal payments in respect of the Existing Seller Note and any
Permitted Seller Notes permitted by subsection 7.1(viii) in accordance with the
terms of the Existing Seller Note and such Permitted Seller Notes; (iii) so long
as no Event of Default or Potential Event of Default shall have occurred and be
continuing
104
or shall be caused thereby, Company may make payments in an aggregate amount not
to exceed $1,000,000 in any Fiscal Year to the extent necessary to repurchase
shares of Company Common Stock from officers, directors or employees of Company
or any of its Subsidiaries following termination of employment of any such
officer, director or employee by reason of death, disability, retirement or
resignation or following other events customarily requiring or permitting such
repurchase, in each case in accordance with the terms of customary terms of
management and/or employee stock plans, stock subscription agreements or
shareholder agreements entered into with officers, directors or employees of
Company or any of its Subsidiaries; (iv) so long as no Event of Default or
Potential Event of Default shall have occurred and be continuing or shall be
caused thereby, Company may repurchase Company Preferred Stock and make payments
of accrued and unpaid dividends to the holders of Company Preferred Stock,
provided that in no event may Company pay any dividend on or repurchase Company
Preferred Stock unless both (x) the Leverage Ratio for the most recently ended
four-Fiscal Quarter period does not exceed 2.0:1.0 and (y) at least 50% of the
initial aggregate principal amount of the Term Loans has been repaid.
7.6 Financial Covenants.
A. Minimum Interest Coverage Ratio. The ratio of (i) Consolidated EBITDA
to (ii) Consolidated Interest Expense for any four-Fiscal Quarter period (or for
any of the one, two or three consecutive Fiscal Quarter periods, as the case may
be, ending after the Closing Date and on or prior to June 30, 1997) (each
applicable one-, two-, three-or four-Fiscal Quarter period being a "Calculation
Period") ending during any of the periods set forth below shall not be less than
the correlative ratio indicated:
===============================================================
PERIOD DURING MINIMUM
WHICH CALCULATION INTEREST COVERAGE
PERIOD ENDS RATIO
===============================================================
Closing Date - 12/31/97 2.25:1.00
---------------------------------------------------------------
01/01/98 - 12/31/98 2.50:1.00
---------------------------------------------------------------
01/01/99 - 12/31/99 2.75:1.00
---------------------------------------------------------------
Thereafter 3.00:1.00
===============================================================
B. Maximum Leverage Ratio. The ratio of (i) Consolidated Total Debt as of
the last day (any such day being a "Calculation Date") of any Fiscal Quarter
ending during any of the periods set forth below to (ii) Consolidated EBITDA for
the Calculation Period ending on such Calculation Date shall not exceed the
correlative ratio indicated:
105
===============================================================
PERIOD DURING MAXIMUM
WHICH CALCULATION LEVERAGE
DATE OCCURS RATIO
===============================================================
Closing Date - 12/31/97 4.00:1.00
---------------------------------------------------------------
01/01/98 - 12/31/98 3.75:1.00
---------------------------------------------------------------
01/01/99 - 12/31/99 3.50:1.00
---------------------------------------------------------------
01/01/00 - 12/31/00 3.25:1.00
---------------------------------------------------------------
01/01/01 - 12/31/01 3.00:1.00
---------------------------------------------------------------
Thereafter 2.75:1.00
===============================================================
C. Minimum Fixed Charge Coverage Ratio. The ratio of (i) Consolidated
EBITDA to (ii) Consolidated Fixed Charges for any Calculation Period ending
after the Closing Date shall not be less than 1.05:1.00.
D. Consolidated Maintenance Capital Expenditures. Company shall not, and
shall not permit its Subsidiaries to, make or incur Consolidated Maintenance
Capital Expenditures, in any Fiscal Year (or specified portion thereof)
indicated below, in an aggregate amount in excess of the corresponding amount
(the "Maximum Consolidated Maintenance Capital Expenditures Amount") set forth
below opposite such Fiscal Year (or such portion thereof); provided that the
Maximum Consolidated Maintenance Capital Expenditures Amount for any Fiscal Year
shall be increased by an amount equal to the excess, if any (but in no event
more than 25% of the Maximum Consolidated Maintenance Capital Expenditures
Amount for the previous Fiscal Year (or, in the event such previous Fiscal Year
is 1996, for the specified portion of such previous Fiscal Year)), of the
Maximum Consolidated Maintenance Capital Expenditures Amount for the previous
Fiscal Year (or such portion of Fiscal Year 1996, if applicable) over the actual
amount of Consolidated Maintenance Capital Expenditures for such previous Fiscal
Year (or such portion of Fiscal Year 1996, if applicable); and provided further,
that the Maximum Consolidated Maintenance Capital Expenditures Amount for any
Fiscal Year (or, in the case of Fiscal Year 1996, the specified portion thereof)
and for each Fiscal Year thereafter shall be increased, immediately following
any acquisition permitted under subsection 7.7(v), by an amount (in each such
Fiscal Year (or portion thereof, if applicable)) equal to the product of (i) the
Maximum Consolidated Maintenance Capital Expenditures Amount in effect
immediately prior to such acquisition multiplied by (ii) the ratio of (a)
Consolidated EBITDA attributable to the business or assets so acquired but not
attributable to any Portfolio Purchase Business so acquired to (b) Consolidated
EBITDA not attributable to the Portfolio Purchase Business of Company and its
Subsidiaries without giving effect to such acquisition, determined in the case
of clauses (a) and (b) for the four-Fiscal Quarter period most recently ended
prior to such acquisition.
106
===============================================================
MAXIMUM CONSOLIDAT-
FISCAL YEAR ED MAINTENANCE
(OR PORTION THEREOF) CAPITAL EXPENDITURES
===============================================================
Closing Date - 12/31/96 $3,000,000
---------------------------------------------------------------
1997 $8,000,000
---------------------------------------------------------------
Thereafter $8,000,000
===============================================================
E. Certain Calculations. With respect to any period during which new
Subsidiaries, assets or businesses are acquired pursuant to subsection 7.7(v),
for purposes of determining compliance with the financial covenants set forth in
this subsection 7.6, Consolidated EBITDA and Consolidated Interest Expense shall
be calculated with respect to such periods and such Subsidiaries, assets or
businesses on a pro forma basis (including any pro forma expense and cost
reductions calculated on a basis consistent with Regulation S-X promulgated
under the Securities Act) using the historical financial statements of all
entities or assets so acquired or to be acquired and the consolidated financial
statements of Company and its Subsidiaries which shall be reformulated (i) as if
such acquisition, and any acquisitions which have been consummated during such
period, and any Indebtedness or other liabilities incurred in connection with
any such acquisition had been consummated or incurred at the beginning of such
period (and assuming that such Indebtedness bears interest during any portion of
the applicable measurement period prior to the relevant acquisition at the
weighted average of the interest rates applicable to outstanding Loans during
such period), and (ii) otherwise in conformity with certain procedures to be
agreed upon between Co-Administrative Agents and Company, all such calculations
to be in form and substance satisfactory to Co-Administrative Agents.
7.7 Restriction on Fundamental Changes; Asset Sales.
Company shall not, and shall not permit any of its Subsidiaries to, alter
the corporate, capital or legal structure of Company or any of its Subsidiaries,
create any new Subsidiaries or enter into any transaction of merger or
consolidation, or liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, sub-lease, transfer or
otherwise dispose of, in one transaction or a series of transactions, all or any
substantial part of its business, property or fixed assets, whether now owned or
hereafter acquired, or acquire by purchase or otherwise any part of the
business, property or fixed assets of, or stock or other evidence of beneficial
ownership of, any Person, except:
(i) any Subsidiary of Company may be merged with or into Company or
any domestic Wholly Owned Subsidiary of Company, or be liquidated, wound
up or dissolved, or all or any substantial part of its business, property
or assets may be conveyed, sold, leased, transferred or otherwise disposed
of, in one transaction or a series of transactions, to Company or any
domestic Wholly Owned Subsidiary of
107
Company; provided that, in the case of such a merger, Company or such
Wholly Owned Subsidiary shall be the continuing or surviving corporation;
(ii) Company and its Subsidiaries may acquire inventory (other than
receivables portfolios), equipment and other assets in the ordinary course
of business;
(iii) Company and its Subsidiaries may sell or otherwise dispose of
assets in transactions that do not constitute Asset Sales; provided that
the consideration received for such assets shall be in an amount at least
equal to the fair market value thereof (determined in good faith by the
board of directors of Company);
(iv) Company and its Subsidiaries may make any Asset Sale of assets
that have, in the aggregate, a fair market value (determined in good faith
by the board of directors of Company) not in excess of 20% of Consolidated
EBITDA for the four-Fiscal Quarter period most recently ended prior to
such Asset Sale; provided that (x) the consideration received for such
assets shall be in an amount at least equal to the fair market value
thereof (determined in good faith by the board of directors of Company);
(y) not less than 80% of the consideration received therefor shall be
cash; and (z) the proceeds of such Asset Sales shall be applied as
required by subsection 2.4B(iii)(a); and
(v) Company may make acquisitions of receivables portfolios and
other assets and businesses (including acquisitions of the capital stock
of another Person), provided that:
(a) in the event that the aggregate amount of all such
acquisitions in any Fiscal Year would exceed $5,000,000 after giving
effect to any such proposed acquisition, (y) the Interest Coverage
Ratio (calculated on a pro forma basis giving effect to the proposed
acquisition) shall not be less than the ratio set forth in
subsection 7.6A applicable at the time of such acquisition plus 0.25
and (z) the Leverage Ratio (calculated on a pro forma basis giving
effect to the proposed acquisition) shall not be greater than the
ratio set forth in subsection 7.6B applicable at the time of such
acquisition minus 0.25.
(b) any receivables portfolio acquired shall be a Qualified
Loan Portfolio;
(c) the aggregate amount expended for such acquisitions during
any successive twelve-month period following the Closing Date shall
not exceed $30,000,000; provided that such amount shall, in any such
twelve-month period, be increased by an amount equal to the excess,
if any (but in no event more than $10,000,000), of $30,000,000 over
the actual amount expended for acquisitions under this clause (v)
for the twelve-month period immediately preceding such twelve-month
period;
108
(d) that portion of Consolidated EBITDA attributable to any
assets so acquired, as projected by Company for the twelve-month
period immediately following the date of such acquisition, shall not
exceed 20% of Consolidated EBITDA for the four-Fiscal Quarter period
most recently ended prior to the date of such acquisition, and
Company shall have delivered an Officer's Certificate to
Co-Administrative Agents (together with supporting information
therefor) to the foregoing effect; and
(e) no Event of Default or Potential Event of Default shall
have occurred and be continuing at the time of such acquisition or
shall be caused thereby.
7.8 Sales and Lease-Backs.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, (i) which Company or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person (other than Company or
any of its Subsidiaries) or (ii) which Company or any of its Subsidiaries
intends to use for substantially the same purpose as any other property which
has been or is to be sold or transferred by Company or any of its Subsidiaries
to any Person (other than Company or any of its Subsidiaries) in connection with
such lease.
7.9 Transactions with Shareholders and Affiliates.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of 5% or more of any
class of equity Securities of Company or with any Affiliate of Company or of any
such holder, on terms that are less favorable to Company or that Subsidiary, as
the case may be, than those that might be obtained at the time from Persons who
are not such a holder or Affiliate; provided that the foregoing restriction
shall not apply to (i) any transaction between Company and any of its Wholly
Owned Subsidiaries or between any of its Wholly Owned Subsidiaries, (ii)
reasonable and customary fees paid to members of the boards of directors of
Company and its Subsidiaries, (iii) fees, expenses and other amounts payable to
the MDC Entities on the Closing Date, and (iv) the Management Fees.
7.10 Disposal of Subsidiary Stock.
Company shall not:
(i) directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity
Securities of any of its
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Subsidiaries, except as permitted under this Agreement or the Collateral
Documents or to qualify directors if required by applicable law; or
(ii) permit any of its Subsidiaries directly or indirectly to sell,
assign, pledge or otherwise encumber or dispose of any shares of capital
stock or other equity Securities of any of its Subsidiaries (including
such Subsidiary), except as permitted under this Agreement or the
Collateral Documents or to Company, another wholly-owned Subsidiary of
Company, or to qualify directors if required by applicable law.
7.11 Conduct of Business.
Company shall not, and shall not permit any of its Subsidiaries to, engage
in any business other than (i) the businesses engaged in by Company and its
Subsidiaries on the Closing Date (after giving effect to the Acquisition and the
Merger) and similar or related businesses and (ii) such other lines of business
as may be consented to by Co-Administrative Agents and Requisite Lenders.
7.12 Amendments or Waivers of Certain Related Agreements; Amendments of
Documents Relating to Subordinated Indebtedness; Designation of
"Designated Senior Debt"; Preferred Stock.
A. Amendments or Waivers of Certain Related Agreements. Neither Company
nor any of its Subsidiaries will agree to any material amendment to, or waive
any of its material rights under, any Related Agreement (other than any Related
Agreement evidencing or governing any Subordinated Indebtedness), the MDC
Advisory Services Agreement, the HBR Services Agreement or the Stockholders
Agreement after the Closing Date if such amendment or waiver would be adverse to
Lenders without in each case obtaining the prior written consent of Requisite
Lenders to such amendment or waiver; provided, however, that if certain
performance criteria determined by the Board of Directors of Company are met
from time to time, Company may amend the MDC Advisory Services Agreement without
the consent of Lenders to provide for an increase or increases in the annual
Management Fee payable thereunder, provided that such Management Fee shall not
exceed $750,000 annually.
B. Amendments of Documents Relating to Subordinated Indebtedness. Company
shall not, and shall not permit any of its Subsidiaries to, amend or otherwise
change the terms of any Subordinated Indebtedness or Subordinated Note Document,
or make any payment consistent with an amendment thereof or change thereto, if
the effect of such amendment or change is to increase the interest rate on such
Subordinated Indebtedness, change (to earlier dates) any dates upon which
payments of principal or interest are due thereon, change any event of default
or condition to an event of default with respect thereto (other than to
eliminate any such event of default or increase any grace period related
thereto), change the redemption, prepayment or defeasance provisions thereof,
change the subordination provisions thereof (or of any guaranty thereof), or
change any collateral therefor (other than to release such collateral), or if
the effect of such amendment or
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change, together with all other amendments or changes made, is to increase
materially the obligations of the obligor thereunder or to confer any additional
rights on the holders of such Subordinated Indebtedness (or trustee or other
representative on their behalf) which would be adverse to Company or Lenders.
C. Designation of "Designated Senior Debt". Company shall not designate
any Indebtedness as "Designated Senior Debt" (as defined in the Subordinated
Note Indenture) for purposes of the Subordinated Note Indenture without the
prior written consent of Requisite Lenders.
D. Preferred Stock. Without the prior written approval of Requisite
Lenders, Company shall not amend, restate, supplement or otherwise modify its
Articles of Incorporation if the effect of such amendment, restatement,
supplement or modification is to (i) increase the dividend rate payable on, or
change the redemption provisions of, the Company Preferred Stock, (ii) together
with all other amendments or changes made, increase materially the obligations
of Company to the holders of the Company Preferred Stock, (iii) confer any
additional rights on the holders of the Company Preferred Stock which would be
adverse to Company or Lenders, or (iv) provide for the issuance of any preferred
stock of Company in addition to the Company Preferred Stock or the filing or
amendment of any certificate of designation with respect thereto.
7.13 Fiscal Year.
Company shall not change its Fiscal Year-end from December 31.
SECTION 8.
EVENTS OF DEFAULT
IF any of the following conditions or events ("Events of Default") shall
occur:
8.1 Failure to Make Payments When Due.
Failure by Company to pay any installment of principal of any Loan when
due, whether at stated maturity, by acceleration, by notice of prepayment or
otherwise; failure by Company to pay when due any amount payable to an Issuing
Lender in reimbursement of any drawing honored or payment made under a Letter of
Credit; or failure by Company to pay any interest on any Loan or any fee or any
other amount due under this Agreement within five days after the date due; or
8.2 Default in Other Agreements.
(i) Failure of Company or any of its Subsidiaries to pay when due (a) any
principal of or interest on any Indebtedness (other than Indebtedness referred
to in subsection 8.1)
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in an individual principal amount of $2,500,000 or more or any items of
Indebtedness with an aggregate principal amount of $5,000,000 or more or (b) any
Contingent Obligation in an individual principal amount of $2,500,000 or more or
any Contingent Obligations with an aggregate principal amount of $5,000,000 or
more, in each case beyond the end of any grace period provided therefor; or (ii)
breach or default by Company or any of its Subsidiaries with respect to any
other material term of (a) any evidence of any Indebtedness in an individual
principal amount of $2,500,000 or more or any items of Indebtedness with an
aggregate principal amount of $5,000,000 or more or any Contingent Obligation in
an individual principal amount of $2,500,000 or more or any Contingent
Obligations with an aggregate principal amount of $5,000,000 or more or (b) any
loan agreement, mortgage, indenture or other agreement relating to such
Indebtedness or Contingent Obligation(s), if in any case under this clause (ii)
the effect of such breach or default is to cause, or to permit the holder or
holders of that Indebtedness or Contingent Obligation(s) (or a trustee on behalf
of such holder or holders) to cause, that Indebtedness or Contingent
Obligation(s) to become or be declared due and payable prior to its stated
maturity or the stated maturity of any underlying obligation, as the case may be
(upon the giving or receiving of notice, lapse of time, both, or otherwise); or
8.3 Breach of Certain Covenants.
Failure of Company to perform or comply with any term or condition
contained in subsection 2.4, 2.5 or 6.2 or Section 7 of this Agreement; or
8.4 Breach of Warranty.
Any material representation, warranty, certification or other statement
made by Company or any of its Subsidiaries in any Loan Document or in any
statement or certificate at any time given by Company or any of its Subsidiaries
in writing pursuant hereto or thereto or in connection herewith or therewith
shall be false in any material respect on the date as of which made; or
8.5 Other Defaults Under Loan Documents.
Any Loan Party shall default in the performance of or compliance with any
term contained in this Agreement or any of the other Loan Documents, other than
any such term referred to in any other subsection of this Section 8, and such
default shall not have been remedied or waived within 30 days after the earlier
of (i) an officer of Company becoming aware of such default or (ii) receipt by
Company of notice from any Agent or Lender of such default; or
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
(i) A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of Company or any of its Subsidiaries (other than
Immaterial Subsidiaries) in an involuntary case under the Bankruptcy Code or
under any other applicable bankruptcy,
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insolvency or similar law now or hereafter in effect, which decree or order is
not stayed; or any other similar relief shall be granted under any applicable
federal or state law; or (ii) an involuntary case shall be commenced against
Company or any of its Subsidiaries (other than Immaterial Subsidiaries) under
the Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over
Company or any of its Subsidiaries (other than Immaterial Subsidiaries), or over
all or a substantial part of its property, shall have been entered; or there
shall have occurred the involuntary appointment of an interim receiver, trustee
or other custodian of Company or any of its Subsidiaries (other than Immaterial
Subsidiaries) for all or a substantial part of its property; or a warrant of
attachment, execution or similar process shall have been issued against any
substantial part of the property of Company or any of its Subsidiaries (other
than Immaterial Subsidiaries), and any such event described in this clause (ii)
shall continue for 60 days unless dismissed, bonded or discharged; or
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
(i) Company or any of its Subsidiaries (other than Immaterial
Subsidiaries) shall have an order for relief entered with respect to it or
commence a voluntary case under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect, or
shall consent to the entry of an order for relief in an involuntary case, or to
the conversion of an involuntary case to a voluntary case, under any such law,
or shall consent to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its property; or
Company or any of its Subsidiaries (other than Immaterial Subsidiaries) shall
make any assignment for the benefit of creditors; or (ii) Company or any of its
Subsidiaries (other than Immaterial Subsidiaries) shall be unable, or shall fail
generally, or shall admit in writing its inability, to pay its debts as such
debts become due; or the Board of Directors of Company or any of its
Subsidiaries (other than Immaterial Subsidiaries) (or any committee thereof)
shall adopt any resolution or otherwise authorize any action to approve any of
the actions referred to in clause (i) above or this clause (ii); or
8.8 Judgments and Attachments.
(i) Any money judgment, writ or warrant of attachment or similar process
involving (a) in any individual case an amount in excess of $2,500,000 or (b) in
the aggregate at any time an amount in excess of $5,000,000 (in either case not
adequately covered by insurance as to which a solvent and unaffiliated insurance
company has acknowledged coverage) shall be entered or filed against Company or
any of its Subsidiaries or any of their respective assets and shall remain
undischarged, unvacated, unbonded or unstayed for a period of 60 days (or in any
event later than five days prior to the date of any proposed sale thereunder);
or (ii) any money judgment shall be rendered against Company or any of its
Subsidiaries or any of their respective assets, or any settlement shall require
payment by, Company or any of its Subsidiaries in any individual case in an
amount in excess of $12,000,000; (iii) any of
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the following shall occur twice or both of the following shall occur: (a) a
money judgment in excess of $5,000,000 in an individual case shall be rendered
against Company or any of its Subsidiaries or any of their respective assets, or
(b) a settlement shall require payment by Company or any of its Subsidiaries in
excess of $5,000,000 in an individual case; provided, however, that the amount
of any money judgment or required settlement under the preceding clauses (ii)
and (iii) shall not include for the purposes of such clauses any portion thereof
which has been paid for by insurance or which is adequately covered by insurance
as to which a solvent and unaffiliated insurance company has acknowledged
coverage; or
8.9 Dissolution.
Any order, judgment or decree shall be entered against Company or any of
its Subsidiaries decreeing the dissolution or split up of Company or that
Subsidiary and such order shall remain undischarged or unstayed for a period in
excess of 30 days; or
8.10 Employee Benefit Plans.
There shall occur one or more ERISA Events which individually or in the
aggregate results in a Material Adverse Effect; or there shall exist an Unfunded
Current Liability, individually or in the aggregate for all Pension Plans
(excluding for purposes of such computation any Pension Plans with respect to
which there is no Unfunded Current Liability), which would have a Material
Adverse Effect; or
8.11 Change in Control.
(i) Prior to the consummation of any initial public offering of Company
Common Stock, (a) the MDC Entities shall at any time not own, in the aggregate,
at least 51% of the combined voting power of Company voting Securities; or (b)
any Person (other than the MDC Entities), including a "group" (within the
meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) which includes such
Person, shall purchase or otherwise acquire, directly or indirectly, beneficial
ownership of Securities of Company and, as a result of such purchase or
acquisition, any Person (together with its associates and Affiliates), shall
directly or indirectly beneficially own in the aggregate Securities representing
more than 35% of the combined voting power of Company voting Securities; or (ii)
at any time thereafter, (a) the MDC Entities together shall own, directly or
indirectly, in the aggregate, a lesser percentage of the combined voting power
of Company voting Securities than any other holder, including a "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) which includes
such holder, of such voting Securities; (b) a majority of the members of the
Board of Directors of Company shall not be Continuing Directors; or (c) any
Person (other than the MDC Entities), including a "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange Act) which includes such Person,
shall purchase or otherwise acquire, directly or indirectly, beneficial
ownership of Securities of Company and, as a result of such purchase or
acquisition, any Person (together with its associates and Affiliates), shall
directly or indirectly beneficially own in the aggregate Securities representing
more than 25% of the combined voting power of Company voting Securities; or
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8.12 Invalidity of Guaranties.
At any time after the execution and delivery thereof, any Guaranty of the
Obligations of Company, for any reason other than the satisfaction in full of
all Obligations, ceases to be in full force and effect or is declared to be null
and void (except with respect to the obligations thereunder of Immaterial
Subsidiaries of Company) or any Loan Party (other than Immaterial Subsidiaries
of Company) denies in writing that it has any further liability, including,
without limitation, with respect to future advances by Lenders, under any Loan
Document to which it is a party; or
8.13 Failure of Security.
Any Collateral Document shall, at any time, cease to be in full force and
effect (other than by reason of a release of Collateral thereunder in accordance
with the terms hereof or thereof, the satisfaction in full of the Obligations or
any other termination of such Collateral Document in accordance with the terms
hereof or thereof) or shall be declared null and void; or the validity or
enforceability thereof shall be contested in writing by any Loan Party; or Agent
shall not have or shall cease to have a valid security interest in any
Collateral purported to be covered thereby, perfected and with the priority
required by the relevant Collateral Document, for any reason other than the
failure of Agents or any Lender to take any action within its control, subject
only to Liens permitted under the applicable Collateral Documents; or
8.14 Failure to Consummate Acquisition or Merger.
The Acquisition or the Merger shall not be consummated in accordance with
this Agreement and the applicable Related Agreements concurrently with the
making of the initial Loans, or the Acquisition or the Merger shall be unwound,
reversed or otherwise rescinded in whole or in part for any reason; or
8.15 Default Under Subordination Provisions.
Company or any guarantor of Subordinated Indebtedness shall fail to comply
with the subordination provisions contained in the Subordinated Note Indenture
or any other instrument, indenture or agreement pursuant to which such
Subordinated Indebtedness is issued;
THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans, (b) an amount equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding (whether or not any beneficiary
under any such Letter of Credit shall have presented, or shall be entitled at
such time to present, the drafts or other documents or certificates required to
draw under such Letter of Credit) and (c) all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived
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by Company, and the obligation of each Lender to make any Loan, the obligation
of Chase Co-Administrative Agent to issue any Letter of Credit and the right of
any Lender to issue any Letter of Credit hereunder shall thereupon terminate,
and (ii) upon the occurrence and during the continuation of any other Event of
Default, Chase Co-Administrative Agent shall, upon the written request of
Requisite Lenders, by written notice to Company, declare all or any portion of
the amounts described in clauses (a) through (c) above to be, and the same shall
forthwith become, immediately due and payable, and the obligation of each Lender
to make any Loan, the obligation of Chase Co-Administrative Agent to issue any
Letter of Credit and the right of any Lender to issue any Letter of Credit
hereunder shall thereupon terminate; provided that the foregoing shall not
affect in any way the obligations of Lenders under subsection 3.3C(i) or the
obligations of Lenders to purchase participations in any unpaid Swing Line Loans
as provided in subsection 2.1A(iv).
Any amounts described in clause (b) above, when received by Chase
Co-Administrative Agent, shall be held by Chase Co-Administrative Agent pursuant
to the terms of the Collateral Account Agreement and shall be applied as therein
provided.
Notwithstanding anything contained in the second preceding paragraph, if
at any time within 60 days after an acceleration of the Loans pursuant to such
paragraph Company shall pay all arrears of interest and all payments on account
of principal which shall have become due otherwise than as a result of such
acceleration (with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement) and all Events of
Default and Potential Events of Default (other than non-payment of the principal
of and accrued interest on the Loans, in each case which is due and payable
solely by virtue of acceleration) shall be remedied or waived pursuant to
subsection 10.6, then Requisite Lenders, by written notice to Company, may at
their option rescind and annul such acceleration and its consequences; but such
action shall not affect any subsequent Event of Default or Potential Event of
Default or impair any right consequent thereon. The provisions of this paragraph
are intended merely to bind Lenders to a decision which may be made at the
election of Requisite Lenders and are not intended to benefit Company and do not
grant Company the right to require Lenders to rescind or annul any acceleration
hereunder or preclude Agents or Lenders from exercising any of the rights or
remedies available to them under any of the Loan Documents, even if the
conditions set forth in this paragraph are met.
SECTION 9.
AGENTS
9.1 Appointment.
A. Each of GSCP and Chase is hereby appointed a Co-Administrative Agent
hereunder and under the other Loan Documents and each Lender hereby authorizes
each Co-Administrative Agent to act as its agent in accordance with the terms
of this Agreement and the other Loan Documents. Each of GSCP and CSI is hereby
appointed an Arranging
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Agent hereunder and under the other Loan Documents and each Lender hereby
authorizes each Arranging Agent to act as its agent in accordance with the terms
of this Agreement and the other Loan Documents. SunTrust is hereby appointed
Collateral Agent hereunder and under the other Loan Documents and each Lender
hereby authorizes Collateral Agent to act as its agent in accordance with the
terms of this Agreement and the other Loan Documents. Each Agent agrees to act
upon the express conditions contained in this Agreement and the other Loan
Documents, as applicable. The provisions of this Section 9 are solely for the
benefit of Agents and Lenders and Company shall have no rights as a third party
beneficiary of any of the provisions thereof. In performing its functions and
duties under this Agreement, each Agent shall act solely as an agent of Lenders
and does not assume and shall not be deemed to have assumed any obligation
towards or relationship of agency or trust with or for Company or any of its
Subsidiaries. Upon the conclusion of the Initial Period, all obligations of
Arranging Agents hereunder shall terminate.
B. Appointment of Supplemental Collateral Agents. It is the purpose of
this Agreement and the other Loan Documents that there shall be no violation of
any law of any jurisdiction denying or restricting the right of banking
corporations or associations to transact business as agent or trustee in such
jurisdiction. It is recognized that in case of litigation under this Agreement
or any of the other Loan Documents, and in particular in case of the enforcement
of any of the Loan Documents, or in case Chase Co-Administrative Agent deems
that by reason of any present or future law of any jurisdiction Collateral Agent
may not exercise any of the rights, powers or remedies granted herein or in any
of the other Loan Documents or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that Chase
Co-Administrative Agent appoint an additional individual or institution as a
separate trustee, co-trustee, collateral agent or collateral co-agent (any such
additional individual or institution being referred to herein individually as a
"Supplemental Collateral Agent" and collectively as "Supplemental Collateral
Agents").
In the event that Chase Co-Administrative Agent appoints a Supplemental
Collateral Agent with respect to any Collateral, (i) each and every right,
power, privilege or duty expressed or intended by this Agreement or any of the
other Loan Documents to be exercised by or vested in or conveyed to Chase
Co-Administrative Agent with respect to such Collateral shall be exercisable by
and vest in such Supplemental Collateral Agent to the extent, and only to the
extent, necessary to enable such Supplemental Collateral Agent to exercise such
rights, powers and privileges with respect to such Collateral and to perform
such duties with respect to such Collateral, and every covenant and obligation
contained in the Loan Documents and necessary to the exercise or performance
thereof by such Supplemental Collateral Agent shall run to and be enforceable by
either Agent or such Supplemental Collateral Agent, and (ii) the provisions of
this Section 9 and of subsections 10.2 and 10.3 that refer to Collateral Agent
shall inure to the benefit of such Supplemental Collateral Agent and all
references therein to Collateral Agent shall be deemed to be references to
Collateral Agent and/or such Supplemental Collateral Agent, as the context may
require.
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Should any instrument in writing from Company or any other Loan Party be
required by any Supplemental Collateral Agent so appointed by Chase
Co-Administrative Agent for more fully and certainly vesting in and confirming
to him or it such rights, powers, privileges and duties, Company shall, or shall
cause such Loan Party to, execute, acknowledge and deliver any and all such
instruments promptly upon request by Chase Co-Administrative Agent. In case any
Supplemental Collateral Agent, or a successor thereto, shall die, become
incapable of acting, resign or be removed, all the rights, powers, privileges
and duties of such Supplemental Collateral Agent, to the extent permitted by
law, shall vest in and be exercised by Collateral Agent until the appointment of
a new Supplemental Collateral Agent.
9.2 Powers; General Immunity.
A. Duties Specified. Each Lender irrevocably authorizes each Agent to take
such action on such Lender's behalf and to exercise such powers hereunder and
under the other Loan Documents as are specifically delegated to such Agent by
the terms hereof and thereof, together with such powers as are reasonably
incidental thereto. Each Agent shall have only those duties and responsibilities
that are expressly specified in this Agreement and the other Loan Documents, and
it may perform such duties by or through its agents or employees. No Agent shall
have, by reason of this Agreement or any of the other Loan Documents, a
fiduciary relationship in respect of any Lender; and nothing in this Agreement
or any of the other Loan Documents, expressed or implied, is intended to or
shall be so construed as to impose upon any Agent any obligations in respect of
this Agreement or any of the other Loan Documents except as expressly set forth
herein or therein.
B. No Responsibility for Certain Matters. No Agent shall be responsible to
any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statement or in any
financial or other statements, instruments, reports or certificates or any other
documents furnished by any Agent to Lenders or by or on behalf of Company and/or
its Subsidiaries to any Agent or any Lender in connection with the Loan
Documents and the transactions contemplated thereby or for the financial
condition or business affairs of Company or any other Person liable for the
payment of any Obligations, nor shall any Agent be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents or as
to the use of the proceeds of the Loans or the use of the Letters of Credit or
as to the existence or possible existence of any Event of Default or Potential
Event of Default. Anything contained in this Agreement to the contrary
notwithstanding, neither Co-Administrative Agent shall have any liability
arising from confirmations of the amount of outstanding Loans or the Total
Utilization of Revolving Loan Commitments or the component amounts thereof.
C. Exculpatory Provisions. Neither any Agent nor any of such Agent's
respective officers, directors, employees or agents shall be liable to Lenders
for any action taken or
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omitted by such Agent under or in connection with any of the Loan Documents
except to the extent caused by such Agent's gross negligence or willful
misconduct. If any Agent shall request instructions from Lenders with respect to
any act or action (including the failure to take an action) in connection with
this Agreement or any of the other Loan Documents, such Agent shall be entitled
to refrain from such act or taking such action unless and until such Agent shall
have received instructions from Requisite Lenders (or such other Lenders as may
be required to give such instructions under subsection 10.6). Without prejudice
to the generality of the foregoing, (i) such Agent shall be entitled to rely,
and shall be fully protected in relying, upon any communication, instrument or
document believed by it to be genuine and correct and to have been signed or
sent by the proper person or persons, and shall be entitled to rely and shall be
protected in relying on opinions and judgments of attorneys (who may be
attorneys for Company and its Subsidiaries), accountants, experts and other
professional advisors selected by it; and (ii) no Lender shall have any right of
action whatsoever against such Agent as a result of such Agent acting or (where
so instructed) refraining from acting under this Agreement or any of the other
Loan Documents in accordance with the instructions of Requisite Lenders (or such
other Lenders as may be required to give such instructions under subsection
10.6). Such Agent shall be entitled to refrain from exercising any power,
discretion or authority vested in it under this Agreement or any of the other
Loan Documents unless and until it has obtained the instructions of Requisite
Lenders (or such other Lenders as may be required to give such instructions
under subsection 10.6).
D. Agents Entitled to Act as Lender. The agency hereby created shall in no
way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans and the Letters of Credit, each
Agent shall have the same rights and powers hereunder as any other Lender and
may exercise the same as though it were not performing the duties and functions
delegated to it hereunder, and the term "Lender" or "Lenders" or any similar
term shall, unless the context clearly otherwise indicates, include such Agent
in its individual capacity. Each Agent and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with Company or any of its Affiliates as if
it were not performing the duties specified herein, and may accept fees and
other consideration from Company and/or its Subsidiaries for services in
connection with this Agreement and otherwise without having to account for the
same to Lenders.
9.3 Representations and Warranties; No Responsibility For Appraisal of
Creditworthiness.
Each Lender represents and warrants that it has made its own independent
investigation of the financial condition and affairs of Company and its
Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Company and its Subsidiaries. No Agent
shall have any duty or responsibility, either initially or on a continuing
basis, to make any such investigation or any such appraisal on
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behalf of Lenders or to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before the making of
the Loans or at any time or times thereafter, and no Agent shall have any
responsibility with respect to the accuracy of or the completeness of any
information provided to Lenders.
9.4 Right to Indemnity.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify each Agent, to the extent that such Agent shall not have been
reimbursed by Company, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including, without limitation, counsel fees and disbursements) or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against such Agent in performing its duties hereunder or under the
other Loan Documents or otherwise in its capacity as such Agent in any way
relating to or arising out of this Agreement or the other Loan Documents;
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct.
9.5 Successor Agents and Swing Line Lender.
A. Successor Agents. Any Agent may resign at any time by giving 30 days'
prior written notice thereof to the other Agents, Lenders and Company, and any
Agent may be removed at any time with or without cause by an instrument or
concurrent instruments in writing delivered to Company and Co-Administrative
Agents and signed by Requisite Lenders. Upon any such notice of resignation or
any such removal, Requisite Lenders shall have the right, upon five Business
Days' notice to Company, to appoint a successor Agent. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, that successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Agent and the retiring or
removed Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Agent's resignation or removal
hereunder as Agent, the provisions of this Section 9 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement.
B. Successor Swing Line Lender. Any resignation or removal of Chase Co-
Administrative Agent pursuant to subsection 9.5A shall also constitute the
resignation or removal of Chase or its successor as Swing Line Lender, and any
successor Chase Co-Administrative Agent appointed pursuant to subsection 9.5A
shall, upon its acceptance of such appointment, become the successor Swing Line
Lender for all purposes hereunder. In such event (i) Company shall prepay any
outstanding Swing Line Loans made by the retiring or removed Chase Co-
Administrative Agent in its capacity as Swing Line Lender, (ii) upon such
prepayment, the retiring or removed Chase Co-Administrative Agent and Swing Line
Lender shall surrender the Swing Line Note held by it to Company for
cancellation, and (iii) Company shall issue a new Swing Line Note to the
successor Chase Co-Administrative
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Agent and Swing Line Lender substantially in the form of Exhibit VI annexed
hereto, in the principal amount of the Swing Line Loan Commitment then in effect
and with other appropriate insertions.
9.6 Collateral Documents.
Each Lender and Agent hereby further authorizes Collateral Agent to enter
into each Collateral Document as secured party on behalf of and for the benefit
of Agents and Lenders and agrees to be bound by the terms of each Collateral
Document; provided that Collateral Agent shall not enter into or consent to any
amendment, modification, termination or waiver of any provision contained in any
Collateral Document without the prior consent of Requisite Lenders (or, if
required pursuant to subsection 10.6, all Lenders); provided further, however,
that, without further written consent or authorization from Requisite Lenders,
Collateral Agent may execute any documents or instruments necessary to effect
the release of any asset constituting Collateral from the Lien of the applicable
Collateral Document in the event that such asset is sold or otherwise disposed
of in a transaction effected in accordance with subsection 7.7. Anything
contained in any of the Loan Documents to the contrary notwithstanding, each
Lender agrees that no Lender shall have any right individually to realize upon
any of the Collateral under any Collateral Document (including, without
limitation, through the exercise of a right of set-off against call deposits of
such Lender in which any funds on deposit in the Collateral Account may from
time to time be invested), it being understood and agreed that all rights and
remedies under the Collateral Documents may be exercised solely by Collateral
Agent for the benefit of Lenders in accordance with the terms thereof.
SECTION 10.
MISCELLANEOUS
10.1 Assignments and Participations in Loans, Letters of Credit.
A. General. Subject to subsection 10.1B, each Lender shall have the right
at any time to (i) sell, assign, transfer or negotiate to any Eligible Assignee,
or (ii) sell participations to any Person in, all or any part of its Commitments
(together with its Letters of Credit or participations therein made or arising
pursuant to its Revolving Loan Commitment) or any Loan or Loans made by it or
any other interest herein or in any other Obligations owed to it; provided that
no such sale,
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assignment, transfer or participation shall, without the consent of Company,
require Company to file a registration statement with the Securities and
Exchange Commission or apply to qualify such sale, assignment, transfer or
participation under the securities laws of any state; provided further, that no
such sale, assignment or transfer described in clause (i) above shall be
effective unless and until an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted by Chase Co-Administrative Agent
and recorded in the Register as provided in subsection 10.1B(ii); provided,
further that no such sale, assignment, transfer or participation of any Letter
of Credit or any participation therein may be made separately from a sale,
assignment, transfer or participation of a corresponding interest in the
Revolving Loan Commitment and the Revolving Loans of the Lender effecting such
sale, assignment, transfer or participation; and provided further that, anything
contained herein to the contrary notwithstanding, the Swing Line Loan Commitment
and the Swing Line Loans of Swing Line Lender may not be sold, assigned or
transferred as described in clause (i) above to any Person other than a
successor Chase Co-Administrative Agent and Swing Line Lender to the extent
contemplated by subsection 9.5. Except as otherwise provided in this subsection
10.1, no Lender shall, as between Company and such Lender, be relieved of any of
its obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or any granting of participations in, all or any part of its
Commitments or the Loans, the Letters of Credit or participations therein or the
other Obligations owed to such Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter
of Credit, or participation therein or other Obligation may (a) be
assigned in any amount to another Lender who is a Non-Defaulting Lender,
or to an Affiliate of the assigning Lender or another Lender who, in
either such case, is a Non-Defaulting Lender, with the consent of
Co-Administrative Agents (which consent shall not be unreasonably
withheld) and the giving of notice to Company; provided that, after giving
effect to a proposed assignment to another Lender, the assigning Lender
shall have an aggregate Commitment of at least $5,000,000 unless the
proposed assignment constitutes the aggregate amount of the Commitments,
Loans, Letters of Credit, and participations therein and other Obligations
of the assigning Lender, or (b) be assigned in an aggregate amount of not
less than $5,000,000 (or such lesser amount as shall constitute the
aggregate amount of the Commitments, Loans, Letters of Credit, and
participations therein and other Obligations of the assigning Lender) to
any other Eligible Assignee with the consent of Co-Administrative Agents
(which consent shall not be unreasonably withheld) and the giving of
notice to Company. To the extent of any such assignment in accordance with
either clause (a) or (b) above, the assigning Lender shall be relieved of
its obligations with respect to its Commitments, Loans, Letters of Credit,
or participations therein or other Obligations or the portion thereof so
assigned. The parties to each such assignment shall execute and deliver to
Chase Co-Administrative Agent, for its acceptance and recording in the
Register, an Assignment Agreement, together with a processing fee of
$3,000 payable by the assigning Lender and such certificates, documents or
other evidence, if any, with respect to United States federal income tax
withholding matters as the assignee under such Assignment Agreement may be
required to deliver to Chase Co-Administrative Agent pursuant to
subsection 2.7B(iii) (a). Upon such execution, delivery, acceptance and
recordation, from and after the effective date specified in such
Assignment Agreement, (y) 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 Agreement, shall have the
rights and obligations of a Lender hereunder and (z) the assigning Lender
thereunder shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment
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Agreement, relinquish its rights (other than any rights which survive the
termination of this Agreement under subsection 10.9B) and be released from
its obligations under this Agreement (and, in the case of an Assignment
Agreement covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be
a party hereto; provided that, anything contained in any of the Loan
Documents to the contrary notwithstanding, if such Lender is the Issuing
Lender with respect to any outstanding Letters of Credit such Lender shall
continue to have all rights and obligations of an Issuing Lender with
respect to such Letters of Credit until the cancellation or expiration of
such Letters of Credit and the reimbursement of any amounts drawn
thereunder). The Commitments hereunder shall be modified to reflect the
Commitments of such assignee and any remaining Commitments of such
assigning Lender and, if any such assignment occurs after the issuance of
the Notes hereunder, the assigning Lender shall surrender its applicable
Notes and, upon such surrender, new Notes shall be issued to the assignee
and, if applicable, to the assigning Lender, substantially in the form of
Exhibit IV, Exhibit V or Exhibit VI annexed hereto, as the case may be,
with appropriate insertions, to reflect the new Commitments and/or
outstanding Term Loans of the assignee and the assigning Lender.
(ii) Acceptance by Chase Co-Administrative Agent; Recordation in
Register. Upon its receipt of an Assignment Agreement executed by an
assigning Lender and an assignee representing that it is an Eligible
Assignee, together with the processing fee referred to in subsection
10.1B(i) and any certificates, documents or other evidence with respect to
United States federal income tax withholding matters that such assignee
may be required to deliver to Chase Co-Administrative Agent pursuant to
subsection 2.7B(iii) (a), Chase Co-Administrative Agent shall, if such
Assignment Agreement has been completed and is in substantially the form
of Exhibit XIII hereto and if Co-Administrative Agents have consented to
the assignment evidenced thereby (to the extent such consent is required
pursuant to subsection 10.1B(i)), (a) accept such Assignment Agreement by
executing a counterpart thereof as provided therein (which acceptance
shall evidence any required consent of Chase Co-Administrative Agent to
such assignment), (b) record the information contained therein in the
Register, and (c) give prompt notice thereof to Company. Chase
Co-Administrative Agent shall maintain a copy of each Assignment Agreement
delivered to and accepted by it as provided in this subsection 10.1B(ii).
C. Participations. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
(i) effecting the extension of the final maturity of the Loan allocated to such
participation, (ii) effecting a reduction of the principal amount of or
affecting the rate of interest payable on any Loan allocated to such
participation, (iii) releasing all or substantially all of the Collateral, or
(iv) releasing all of the Guarantors from their obligations under the
Guaranties, and all amounts payable by Company hereunder (including, without
limitation, amounts payable to such Lender
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pursuant to subsections 2.6D, 2.7 and 3.6) shall be determined as if such Lender
had not sold such participation. Company and each Lender hereby acknowledge and
agree that, solely for purposes of subsections 10.4 and 10.5, (a) any
participation will give rise to a direct obligation of Company to the
participant and (b) the participant shall be considered to be a "Lender".
D. Assignments to Federal Reserve Banks. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
10.1, any Lender may assign and pledge all or any portion of its Loans, the
other Obligations owed to such Lender and its Notes to any Federal Reserve Bank
as collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.
E. Information. Each Lender may furnish any information concerning Company
and its Subsidiaries in the possession of that Lender from time to time to
assignees and participants (including prospective assignees and participants),
subject to subsection 10.20.
F. Limitation. No assignee, participant or other transferee or any
Lender's rights shall be entitled to receive any greater payment under
subsection 2.7 than such Lender would have been entitled to receive with respect
to the rights transferred, unless such transfer is made with Company's prior
written consent or at a time when the circumstances giving rise to such greater
payment did not exist.
G. Representations of Lenders. Each Lender listed on the signature pages
hereof hereby represents and warrants (i) that it is an Eligible Assignee
described in clause (i) of the definition thereof; (ii) that it has experience
and expertise in the making of loans such as the Loans; and (iii) that it will
make its Loans for its own account in the ordinary course of its business and
without a view to distribution of such Loans within the meaning of the
Securities Act or the Exchange Act or other federal securities laws (it being
understood that, subject to the provisions of this subsection 10.1, the
disposition of such Loans or any interests therein shall at all times remain
within its exclusive control). Each Lender that becomes a party hereto pursuant
to an Assignment Agreement shall be deemed to agree that the representations and
warranties of such Lender contained in Section 2(c) of such Assignment Agreement
are incorporated herein by this reference.
10.2 Expenses.
Whether or not the transactions contemplated hereby shall be consummated,
Company agrees to pay promptly (i) all the actual and reasonable costs and out
of pocket expenses of Co-Administrative Agents in connection with the
preparation of the Loan Documents; (ii) all the actual and reasonable costs of
furnishing all opinions by counsel for
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Company (including, without limitation, any opinions requested by Lenders as to
any legal matters arising hereunder) and of Company's performance of and
compliance with all agreements and conditions on its part to be performed or
complied with under this Agreement and the other Loan Documents including,
without limitation, with respect to confirming compliance with environmental and
insurance requirements; (iii) the reasonable fees, expenses and disbursements of
counsel to Agents (including allocated costs of internal counsel) in connection
with the negotiation, preparation, execution and administration of the Loan
Documents and the Loans and any consents, amendments, waivers or other
modifications hereto or thereto and any other documents or matters requested by
Company; (iv) all other actual and reasonable costs and expenses incurred by
Agents in connection with the negotiation, preparation and execution of the Loan
Documents and the transactions contemplated hereby and thereby; and (v) after
the occurrence of an Event of Default, all costs and expenses, including
reasonable attorneys' fees (including allocated costs of internal counsel) and
costs of settlement, incurred by Agents and Lenders in enforcing any Obligations
of or in collecting any payments due from Company hereunder or under the other
Loan Documents by reason of such Event of Default or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a "work-out" or pursuant to any insolvency or
bankruptcy proceedings.
10.3 Indemnity.
In addition to the payment of expenses pursuant to subsection 10.2,
whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend, indemnify, pay and hold harmless Agents and Lenders,
and the officers, directors, trustees, partners, employees, agents, attorneys
and affiliates of any of Agents and Lenders (collectively called the
"Indemnitees") from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (including, without
limitation, the reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened by any Person, whether or not any such
Indemnitee shall be designated as a party or a potential party thereto), whether
direct, indirect or consequential and whether based on any federal, state or
foreign laws, statutes, rules or regulations (including, without limitation,
securities and commercial laws, statutes, rules or regulations and Environmental
Laws), on common law or equitable cause or on contract or otherwise, that may be
imposed on, incurred by, or asserted against any such Indemnitee, in any manner
relating to or arising out of this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby (including, without limitation,
Lenders' agreement to make the Loans hereunder or the use or intended use of the
proceeds of any of the Loans or the issuance of Letters of Credit hereunder or
the use or intended use of any of the Letters of Credit) (collectively called
the "Indemnified Liabilities"); provided that Company shall not have any
obligation to any Indemnitee hereunder with respect to any Indemnified
Liabilities to the extent, and only to the extent, of any particular liability,
obligation, loss, damage, penalty, claim, cost, expense or disbursement that
arose from the gross negligence or willful misconduct of that Indemnitee as
determined by a final judgment of a court of competent jurisdiction. To the
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extent that the undertaking to defend, indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, Company shall contribute the maximum portion that it
is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them.
10.4 Set-Off; Security Interest in Deposit Accounts.
In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence and during
the continuance of any Event of Default each Lender is hereby authorized by
Company at any time or from time to time, without notice to Company or to any
other Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts) and any other
Indebtedness at any time held or owing by that Lender (at any office of that
Lender wherever located) to or for the credit or the account of Company against
and on account of the obligations and liabilities of Company to that Lender
under this Agreement, the Notes, the Letters of Credit and participations
therein, including, but not limited to, all claims of any nature or description
arising out of or connected with this Agreement, the Notes, the Letters of
Credit and participations therein or any other Loan Document, irrespective of
whether or not (i) that Lender shall have made any demand hereunder or (ii) the
principal of or the interest on the Loans or any amounts in respect of the
Letters of Credit or any other amounts due hereunder shall have become due and
payable pursuant to Section 8 and although said obligations and liabilities, or
any of them, may be contingent or unmatured. Company hereby further grants to
each Agent and Lender a security interest in all deposits and accounts
maintained with such Agent or Lender as security for the Obligations.
10.5 Ratable Sharing.
Lenders hereby agree among themselves that if any of them shall, whether
by voluntary payment (other than a voluntary prepayment of Loans made and
applied in accordance with the terms of this Agreement), by realization upon
security, through the exercise of any right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any right under the Loan
Documents or otherwise, or as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, amounts payable in
respect of Letters of Credit, fees and other amounts then due and owing to that
Lender hereunder or under the other Loan Documents (collectively, the "Aggregate
Amounts Due" to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such other Lender,
then the Lender receiving such proportionately greater payment shall (i) notify
Chase Co-Administrative Agent and each other Lender of the receipt of such
payment and (ii) apply a portion of such payment to purchase participations
(which it shall be deemed to have purchased from each seller of a participation
simultaneously upon the receipt by such seller of its portion of such payment)
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in the Aggregate Amounts Due to the other Lenders so that all such recoveries of
Aggregate Amounts Due shall be shared by all Lenders in proportion to the
Aggregate Amounts Due to them; provided that if all or part of such
proportionately greater payment received by such purchasing Lender is thereafter
recovered from such Lender upon the bankruptcy, reorganization or insolvency
proceeding of Company or otherwise, those purchases shall be rescinded and the
purchase prices paid for such participations shall be returned to such
purchasing Lender ratably to the extent of such recovery, but without interest.
Company expressly consents to the foregoing arrangement and agrees that any
holder of a participation so purchased may exercise any and all rights of
banker's lien, set-off or counterclaim with respect to any and all monies owing
by Company to that holder with respect thereto as fully as if that holder were
owed the amount of the participation held by that holder.
10.6 Amendments and Waivers.
A. No amendment, modification, termination or waiver of any provision of
this Agreement or of the Notes, or consent to any departure by Company or any
other Loan Party therefrom, shall in any event be effective without the written
concurrence of Requisite Lenders; provided that any such amendment,
modification, termination, waiver or consent which: reduces the principal amount
of any of the Loans; changes in any manner the definition of "Requisite Lenders"
or "Pro Rata Share"; changes in any manner any provision of this Agreement
which, by its terms, expressly requires the approval or concurrence of all
Lenders; postpones the scheduled final maturity date of any of the Loans;
postpones the date or reduces the amount of any scheduled payment (but not
prepayment) of principal of any of the Loans; postpones the date on which any
interest or any fees are payable; decreases the interest rate borne by any of
the Loans (other than any waiver of any increase in the interest rate applicable
to any of the Loans pursuant to subsection 2.2E) or the amount of any fees
payable hereunder; increases the maximum duration of Interest Periods permitted
hereunder; releases all or substantially all of the Collateral; releases all of
the Guarantors from their obligations under the Guaranties; reduces the amount
or postpones the due date of any amount payable in respect of, or extends the
required expiration date of, any Letter of Credit; changes the obligations of
Lenders relating to the purchase of participations in Letters of Credit in any
manner that could be adverse to any Issuing Lender; or changes in any manner the
provisions contained in subsection 8.1 or this subsection 10.6; shall be
effective only if evidenced by a writing signed by or on behalf of all Lenders
to whom are owed Obligations being directly affected by such amendment,
modification, termination, waiver or consent. In addition, (i) any amendment,
modification, termination or waiver of any of the provisions contained in
Section 4 shall be effective only if evidenced by a writing signed by or on
behalf of Co-Administrative Agents and Requisite Lenders, (ii) no amendment,
modification, termination or waiver of any provision of any Note shall be
effective without the written concurrence of the Lender which is the holder of
that Note, (iii) no amendment, modification, termination or waiver of any
provision of this Agreement which disproportionately and adversely affects the
obligation of any Loan Party to make payments (including without limitation
mandatory prepayments) to the holders of the Tranche A Term Loans, the holders
of the Tranche B Term Loans or the
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holders of the Revolving Loans and Revolving Loan Commitments, shall be
effective without the written concurrence of the holders of 51% in principal
amount of the class (i.e., Tranche A Term Loans, Tranche B Term Loans or
Revolving Loans and Revolving Loan Commitments each being a "class" of Loans) of
Loans so disproportionately and adversely affected; (iv) no increase in the
Commitments of any Lender over the amount thereof then in effect shall be
effective without the written concurrence of that Lender, it being understood
and agreed that in no event shall waivers or modifications of conditions
precedent, covenants, Events of Default, Potential Events of Default or of a
mandatory prepayment or a reduction of any or all of the Commitments be deemed
to constitute an increase of the Commitment of any Lender and that an increase
in the available portion of any Commitment of any Lender shall not be deemed to
constitute an increase in the Commitment of such Lender, (v) no amendment,
modification, termination or waiver of any provision of subsection 2.1A(iii) or
any other provision of this Agreement relating to the Swing Line Loan Commitment
or the Swing Line Loans shall be effective without the written concurrence of
Swing Line Lender, (vi) no amendment, modification, termination or waiver of any
provision of Section 3 relating to the rights or obligations of any or all
Issuing Lenders shall be effective without the written concurrence of Chase
Co-Administrative Agent and each Lender who is an Issuing Lender with respect to
any Letter of Credit then outstanding, and (vii) no amendment, modification,
termination or waiver of any provision of Section 9 or of any other provision of
this Agreement which, by its terms, expressly requires the approval or
concurrence of Chase Co-Administrative Agent or Co-Administrative Agent shall be
effective without the written concurrence of Chase Co-Administrative Agent or
Co-Administrative Agent, as the case may be, Chase Co-Administrative Agent may,
but shall have no obligation to, with the concurrence of any Lender, execute
amendments, modifications, waivers or consents on behalf of that Lender. Any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given. No notice to or demand on Company in
any case shall entitle Company to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this subsection 10.6 shall be binding
upon each Lender at the time outstanding, each future Lender and, if signed by
Company, on Company.
B. If, in connection with any proposed change, waiver, discharge or
termination to any of the provision of this Agreement as contemplated by the
proviso in the first sentence of this subsection 10.6, the consent of Requisite
Lenders is obtained but consent of one or more of such other Lenders whose
consent is required is not obtained, then Company may, so long as all
non-consenting Lenders are so treated, elect to terminate such Lender as a party
to this Agreement; provided that, concurrently with such termination, (i)
Company shall pay that Lender all principal, interest and fees and other amounts
due to be paid to such Lender with respect to all periods through such date of
termination, (ii) another financial institution satisfactory to Company and
Co-Administrative Agents (or if either Co-Administrative Agent is also a Lender
to be terminated, the successor Co-Administrative Agent and the Co-
Administrative Agent not so terminated) shall agree, as of such date, to become
a Lender for all purposes under this Agreement (whether by assignment or
amendment) and to assume all obligations of the Lender to be terminated
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as of such date, and (iii) all documents and supporting materials necessary, in
the judgment of Co-Administrative Agents (or if either Co-Administrative Agent
is also a Lender to be terminated, the successor Co-Administrative Agent and the
Co-Administrative Agent not so terminated) to evidence the substitution of such
Lender shall have been received and approved by Co-Administrative Agents as of
such date.
10.7 Independence of Covenants.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
10.8 Notices.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telecopied, telexed or sent by United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of telecopy or telex, or four Business Days
after depositing it in the United States mail, registered or certified, with
postage prepaid and properly addressed; provided that notices to Chase
Co-Administrative Agent shall not be effective until received. For the purposes
hereof, the address of each party hereto shall be as set forth under such
party's name on the signature pages hereof or (i) as to Company and Chase
Co-Administrative Agent, such other address as shall be designated by such
Person in a written notice delivered to the other parties hereto and (ii) as to
each other party, such other address as shall be designated by such party in a
written notice delivered to Chase Co-Administrative Agent.
10.9 Survival of Representations, Warranties and Agreements.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Company set forth in subsections 2.6D, 2.7, 3.5A,
3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in subsections
9.2C, 9.4, 10.4, 10.5 and 10.20 shall survive the payment of the Loans, the
cancellation or expiration of the Letters of Credit and the reimbursement of any
amounts drawn or paid thereunder, and the termination of this Agreement.
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10.10 Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Chase Co-Administrative Agent,
Collateral Agent or any Lender in the exercise of any power, right or privilege
hereunder or under any other Loan Document shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other power, right or
privilege. All rights and remedies existing under this Agreement and the other
Loan Documents are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
10.11 Marshalling; Payments Set Aside.
Neither Chase Co-Administrative Agent nor any Lender shall be under any
obligation to marshal any assets in favor of Company or any other party or
against or in payment of any or all of the Obligations. To the extent that
Company makes a payment or payments to Chase Co-Administrative Agent,
Collateral Agent or Lenders (or to Chase Co-Administrative Agent or Collateral
Agent for the benefit of Lenders), or Chase Co-Administrative Agent, Collateral
Agent or Lenders enforce any security interests or exercise their rights of
setoff, and such payment or payments or the proceeds of such enforcement or
setoff or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, any other state or federal
law, common law or any equitable cause, then, to the extent of such recovery,
the obligation or part thereof originally intended to be satisfied, and all
Liens, rights and remedies therefor or related thereto, shall be revived and
continued in full force and effect as if such payment or payments had not been
made or such enforcement or setoff had not occurred.
10.12 Severability.
In case any provision in or obligation under this Agreement or the Notes
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
10.13 Obligations Several; Independent Nature of Lenders' Rights.
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
130
10.14 Headings.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
10.15 Applicable Law.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
10.16 Successors and Assigns.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 10.1). Company's rights
or obligations hereunder nor any interest therein may not be assigned or
delegated by Company without the prior written consent of all Lenders.
10.17 Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇. BY EXECUTING AND
DELIVERING THIS AGREEMENT, COMPANY, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEX- CLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN
ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
SUBSECTION 10.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN
131
ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE
AND BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST COMPANY IN
THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402
OR OTHERWISE.
10.18 Waiver of Jury Trial.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including,
without limitation, contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. Each party hereto acknowledges that this
waiver is a material inducement to enter into a business relationship, that each
has already relied on this waiver in entering into this Agreement, and that each
will continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
10.19 Confidentiality.
Each Lender shall hold all non-public information obtained pursuant to the
requirements of this Agreement which has been identified as confidential by
Company in accordance with such Lender's customary procedures for handling
confidential information of this nature, it being understood and agreed by
Company that in any event a Lender may
132
make disclosures reasonably required by any bona fide assignee, transferee or
participant in connection with the contemplated assignment or transfer by such
Lender of any Loans or any participation therein or as required or requested by
any governmental agency or representative thereof or pursuant to legal process
or by the National Association of Insurance Commissioners or in connection with
the exercise of any remedy under the Loan Documents; provided that, unless
specifically prohibited by applicable law or court order, each Lender shall
notify Company of any request by any governmental agency or representative
thereof (other than any such request in connection with any examination of the
financial condition of such Lender by such governmental agency) for disclosure
of any such non-public information prior to disclosure of such information; and
provided, further that in no event shall any Lender be obligated or required to
return any materials furnished by Company or any of its Subsidiaries.
10.20 Counterparts; Effectiveness.
This Agreement and any amendments, waivers, consents or supplements hereto
or in connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Chase Co-Administrative Agent of written or telephonic notification of such
execution and authorization of delivery thereof.
[Remainder of page intentionally left blank]
133
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY: OUTSOURCING SOLUTIONS INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
Notice Address:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ De Leeuw & Co.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
and a copy to:
White & Case
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-1
AGENTS AND LENDERS: ▇▇▇▇▇▇▇ SACHS CREDIT PARTNERS L.P.,
individually, as a Co-Administrative Agent
and as an Arranging Agent
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Authorized Signatory
Notice Address:
▇▇▇▇▇▇▇ Sachs Credit Partners L.P.
c/o Goldman, ▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P.
c/o Goldman, Sachs & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-2
THE CHASE MANHATTAN BANK,
individually and as a
Co-Administrative Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
Notice Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
29th Floor
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Loan Servicing Group
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇-▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
individually and as Collateral Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Assistant Vice President
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Notice Address:
Suntrust Bank, Atlanta
▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Suntrust Bank, Atlanta
▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Devyonne Aabeel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-4
FLEET NATIONAL BANK
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
Notice Address:
Fleet National Bank
One ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Fleet National Bank
One ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-5
NBD BANK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Authorized Agent
Notice Address:
NBD Bank
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
NBD Bank
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇-▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
Notice Address:
Bank of Scotland
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Bank of Scotland
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Assistant Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-7
▇▇▇▇▇▇▇ ▇▇▇▇▇ SENIOR FLOATING
RATE FUND, INC.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Asset Management, L.P.,
as Investment Advisor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Authorized Signatory
Notice Address:
▇▇▇▇▇▇▇ ▇▇▇▇▇ Asset Management
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ - ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-8
LASALLE NATIONAL BANK
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
Notice Address:
LaSalle National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
LaSalle National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-9
CREDITANSTALT - BANKVEREIN
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Senior Associate
Notice Address:
Creditanstalt
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-10
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
Title: Director
Notice Address:
Bank of Boston
Diversified Finance
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇-▇▇-▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Assistant Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Bank of Boston
Commercial Loan Services
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇-▇▇-▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Administrative Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-11
▇▇▇▇▇▇ FINANCIAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
Notice Address:
▇▇▇▇▇▇ Financial
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-12
GIROCREDIT BANK AKTIENGESELLSCHA-
FT DER SPARKASSEN
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Assistant Vice President
Notice Address:
GiroCredit Bank A.G. Sparkassen, NY Branch
Park Avenue Tower
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Assistant Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
GiroCredit Bank A.G. Sparkassen, NY Branch
Park Avenue Tower
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-13
PNC BANK, NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Notice Address:
PNC Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
PNC Bank
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-14
SOUTHERN PACIFIC THRIFT & LOAN
ASSOCIATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
Notice Address:
Southern Pacific Thrift & Loan Association
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇/3315
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Southern Pacific Thrift & Loan Association
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-15
▇▇▇ ▇▇▇▇▇▇ AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President & Director
Notice Address:
▇▇▇ ▇▇▇▇▇▇ American Capital
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-16
EXHIBIT I
[FORM OF NOTICE OF BORROWING]
NOTICE OF BORROWING
Pursuant to that certain Credit Agreement dated as of November 6, 1996, as
amended, restated, supplemented or otherwise modified to the date hereof (said
Credit Agreement, as so amended, restated, supplemented or otherwise modified,
being the "Credit Agreement", the terms defined therein and not otherwise
defined herein being used herein as therein defined), by and among Outsourcing
Solutions Inc., a Delaware corporation ("Company"), the financial institutions
listed therein as Lenders, ▇▇▇▇▇▇▇ Sachs Credit Partners L.P. and The Chase
Manhattan Bank ("Chase"), as Co-Administrative Agents (Chase, in such capacity,
"Chase Co-Administrative Agent"), SunTrust Bank, Atlanta, as Collateral Agent,
and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and Chase Securities Inc., as Arranging
Agents, this represents Company's request to borrow as follows:
1. Date of borrowing: ___________________, [199_] [200_]
2. Amount of borrowing: $___________________
3. Lender(s): |_| a. Lenders, in accordance with their
applicable Pro Rata Shares
|_| b. Swing Line Lender
4. Type of Loans: |_| a. Tranche A Term Loans
|_| b. Tranche B Term Loans
|_| c. Revolving Loans
|_| d. Swing Line Loan
5. Interest rate option:(1) |_| a. Base Rate Loan(s)
|_| b. Eurodollar Rate Loans with an
initial Interest Period of
____________ month(s)
The proceeds of such Loans are to be deposited in Company's account at Chase
Co-Administrative Agent.
--------
(1) Term Loans and Revolving Loans may be Base Rate Loans or Eurodollar
Rate Loans. Swing Line Loans shall be Base Rate Loans.
The undersigned officer, to the best of his or her knowledge, and Company
certify that:
(i) The representations and warranties contained in the Credit
Agreement and the other Loan Documents are true and correct in all material
respects on and as of the date hereof to the same extent as though made on
and as of the date hereof, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties were true and correct in all material
respects on and as of such earlier date;
(ii) No event has occurred and is continuing or would result from the
consummation of the borrowing contemplated hereby that would constitute an
Event of Default or a Potential Event of Default; [and]
(iii) Company has performed in all material respects all agreements
and satisfied all conditions which the Credit Agreement provides shall be
performed or satisfied by it on or before the date hereof[; and][.]
[(iv) FOR REVOLVING LOANS: The amount of the proposed borrowing will
not cause the Total Utilization of Revolving Loan Commitments to exceed the
Revolving Loan Commitments.]
DATED: ____________________ OUTSOURCING SOLUTIONS INC.
By:__________________________________
Name:
Title:
EXHIBIT II
[FORM OF NOTICE OF CONVERSION/CONTINUATION]
NOTICE OF CONVERSION/CONTINUATION
Pursuant to that certain Credit Agreement dated as of November 6, 1996, as
amended, restated, supplemented or otherwise modified to the date hereof (said
Credit Agreement, as so amended, restated, supplemented or otherwise modified,
being the "Credit Agreement", the terms defined therein and not otherwise
defined herein being used herein as therein defined), by and among Outsourcing
Solutions Inc., a Delaware corporation ("Company"), the financial institutions
listed therein as Lenders, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and The Chase
Manhattan Bank, as Co-Administrative Agents, SunTrust Bank, Atlanta, as
Collateral Agent, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and Chase Securities
Inc., as Arranging Agents, this represents Company's request to convert or
continue Loans as follows:
1. Date of conversion/continuation: __________________, [199_] [200_]
2. Amount of Loans being converted/continued: $___________________
3. Type of Loans being converted/continued:
|_| a. Tranche A Term Loans
|_| b. Tranche B Term Loans
|_| c. Revolving Loans
4. Nature of conversion/continuation:
|_| a. Conversion of Base Rate Loans to Eurodollar Rate Loans
|_| b. Conversion of Eurodollar Rate Loans to Base Rate Loans
|_| c. Continuation of Eurodollar Rate Loans as such
5. If Loans are being continued as or converted to Eurodollar Rate Loans,
the duration of the new Interest Period that commences on the
conversion/ continuation date: _______________ month(s)
II-1
In the case of a conversion to or continuation of Eurodollar Rate Loans,
the undersigned officer, to the best of his or her knowledge, and Company
certify that no Event of Default or Potential Event of Default has occurred and
is continuing under the Credit Agreement.
DATED: _____________________ OUTSOURCING SOLUTIONS INC.
By:______________________________________
Name:
Title:
II-2
EXHIBIT III
[FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT]
NOTICE OF ISSUANCE OF LETTER OF CREDIT
Pursuant to that certain Credit Agreement dated as of November 6, 1996, as
amended, restated, supplemented or otherwise modified to the date hereof (said
Credit Agreement, as so amended, restated, supplemented or otherwise modified,
being the "Credit Agreement", the terms defined therein and not otherwise
defined herein being used herein as therein defined), by and among Outsourcing
Solutions Inc., a Delaware corporation ("Company"), the financial institutions
listed therein as Lenders, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and The Chase
Manhattan Bank, as Co-Administrative Agents, SunTrust Bank, Atlanta, as
Collateral Agent, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and Chase Securities
Inc., as Arranging Agents, this represents Company's request for the issuance of
a Letter of Credit by Chase Co-Administrative Agent as follows:
1. Date of issuance of Letter of Credit: ________________, [199_] [200_]
2. Type of Letter of Credit:
|_| a. Commercial Letter of Credit
|_| b. Standby Letter of Credit
3. Face amount of Letter of Credit: $________________________
4. Expiration date of Letter of Credit: ________________, [199_] [200_]
5. Name and address of beneficiary:
______________________________________________
______________________________________________
______________________________________________
______________________________________________
6. Attached hereto is:
|_| a. the verbatim text of such proposed Letter of Credit
|_| b. a description of the proposed terms and conditions of such
Letter of Credit, including a precise description of any
documents to be presented by the beneficiary which, if
presented by the beneficiary prior to the expiration date of
such Letter of Credit, would require the Issuing Lender to
make payment under such Letter of Credit.
III-1
The undersigned officer, to the best of his or her knowledge, and Company
certify that:
(i) The representations and warranties contained in the Credit
Agreement and the other Loan Documents are true and correct in all material
respects on and as of the date hereof to the same extent as though made on
and as of the date hereof, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties were true and correct in all material
respects on and as of such earlier date;
(ii) No event has occurred and is continuing or would result from the
issuance of the Letter of Credit contemplated hereby that would constitute
an Event of Default or a Potential Event of Default;
(iii) Company has performed in all material respects all agreements
and satisfied all conditions which the Credit Agreement provides shall be
performed or satisfied by it on or before the date hereof; and
(iv) The issuance of the proposed Letter of Credit will not cause (a)
the Letter of Credit Usage to exceed $5,000,000 or (b) the Total
Utilization of Revolving Loan Commitments to exceed the Revolving Loan
Commitments.
DATED: ____________________ OUTSOURCING SOLUTIONS INC.
By:____________________________________
Name:
Title:
III-2
EXHIBIT IV-A
[FORM OF TRANCHE A TERM NOTE]
OUTSOURCING SOLUTIONS INC.
PROMISSORY NOTE DUE OCTOBER 15, 2001
$[1] New York, New York
[Closing Date]
FOR VALUE RECEIVED, OUTSOURCING SOLUTIONS INC., a Delaware corporation
("Company"), promises to pay to [2] ("Payee") or its registered assigns the
principal amount of [3] ($[1]) in the installments referred to below.
Company also promises to pay interest on the unpaid principal amount
hereof, from the date hereof until paid in full, at the rates and at the times
which shall be determined in accordance with the provisions of that certain
Credit Agreement dated as of November 6, 1996, by and among Company, the
financial institutions listed therein as Lenders, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners
L.P. and The Chase Manhattan Bank ("Chase"), as Co-Administrative Agents (Chase,
in such capacity, "Chase Co-Administrative Agent"), SunTrust Bank, Atlanta, as
Collateral Agent, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and Chase Securities
Inc., as Arranging Agents (said Credit Agreement, as it may be amended,
restated, supplemented or otherwise modified from time to time, being the
"Credit Agreement", the terms defined therein and not otherwise defined herein
being used herein as therein defined).
Company shall make principal payments on this Note in consecutive quarterly
installments as set forth in the Credit Agreement, commencing on January 15,
1997 and ending on October 15, 2001. Each such installment shall be due on the
date specified in the Credit Agreement and in an amount determined in accordance
with the provisions thereof; provided that the last such installment shall be in
an amount sufficient to repay the entire unpaid principal balance of this Note,
together with all accrued and unpaid interest thereon.
--------
[1] Insert amount of Lender's Tranche A Term Loan in numbers.
[2] Insert Lender's name in capital letters.
[3] Insert amount of Lender's Tranche A Term Loan in words.
IV-A-1
This Note is one of Company's "Tranche A Term Notes" in the aggregate
principal amount of $71,000,000 and is issued pursuant to and entitled to the
benefits of the Credit Agreement, to which reference is hereby made for a more
complete statement of the terms and conditions under which the Tranche A Term
Loan evidenced hereby was made and is to be repaid.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
Funding and Payment Office or at such other place as shall be designated in
writing for such purpose in accordance with the terms of the Credit Agreement.
Unless and until an Assignment Agreement effecting the assignment or transfer of
this Note shall have been accepted by Chase Co-Administrative Agent and recorded
in the Register as provided in subsection 10.1B(ii) of the Credit Agreement,
Company and Chase Co-Administrative Agent shall be entitled to deem and treat
Payee as the owner and holder of this Note and the Loan evidenced hereby. Payee
hereby agrees, by its acceptance hereof, that before disposing of this Note or
any part hereof it will make a notation hereon of all principal payments
previously made hereunder and of the date to which interest hereon has been
paid; provided, however, that the failure to make a notation of any payment made
on this Note shall not limit or otherwise affect the obligations of Company
hereunder with respect to payments of principal of or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day which
is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in subsection
2.4B(iii) of the Credit Agreement and to prepayment at the option of Company as
provided in subsection 2.4B(i) of the Credit Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note, together with all accrued and unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
This Note is entitled to the benefits of the Guaranty and is secured
pursuant to the Collateral Documents.
The terms of this Note are subject to amendment only in the manner provided
in the Credit Agreement.
IV-A-2
This Note is subject to restrictions on transfer or assignment as provided
in subsections 10.1 and 10.16 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this Note
or the Credit Agreement shall alter or impair the obligations of Company, which
are absolute and unconditional, to pay the principal of and interest on this
Note at the place, at the respective times, and in the currency herein
prescribed.
Company promises to pay all costs and expenses, including reasonable
attorneys' fees, all as provided in subsection 10.2 of the Credit Agreement,
incurred in the collection and enforcement of this Note. Company and any
endorsers of this Note hereby consent to renewals and extensions of time at or
after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
IN WITNESS WHEREOF, Company has caused this Note to be duly executed and
delivered by its officer thereunto duly authorized as of the date and at the
place first written above.
OUTSOURCING SOLUTIONS INC.
By:_____________________________________
Name:
Title:
IV-A-3
EXHIBIT IV-B
[FORM OF TRANCHE B TERM NOTE]
OUTSOURCING SOLUTIONS INC.
PROMISSORY NOTE DUE OCTOBER 15, 2003
$[1] New York, New York
[Closing Date]
FOR VALUE RECEIVED, OUTSOURCING SOLUTIONS INC., a Delaware corporation
("Company"), promises to pay to [2] ("Payee") or its registered assigns the
principal amount of [3] ($[1]) in the installments referred to below.
Company also promises to pay interest on the unpaid principal amount
hereof, from the date hereof until paid in full, at the rates and at the times
which shall be determined in accordance with the provisions of that certain
Credit Agreement dated as of November 6, 1996, by and among Company, the
financial institutions listed therein as Lenders, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners
L.P. and The Chase Manhattan Bank ("Chase"), as Co-Administrative Agents (Chase,
in such capacity, "Chase Co-Administrative Agent"), SunTrust Bank, Atlanta, as
Collateral Agent, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and Chase Securities
Inc., as Arranging Agents (said Credit Agreement, as it may be amended,
restated, supplemented or otherwise modified from time to time, being the
"Credit Agreement", the terms defined therein and not otherwise defined herein
being used herein as therein defined).
Company shall make principal payments on this Note in consecutive quarterly
installments as set forth in the Credit Agreement, commencing on January 15,
1997 and ending on October 15, 2003. Each such installment shall be due on the
date specified in the Credit Agreement and in an amount determined in accordance
with the provisions thereof; provided that the last such installment shall be in
an amount sufficient to repay the entire unpaid principal balance of this Note,
together with all accrued and unpaid interest thereon.
--------
[1] Insert amount of Lender's Tranche B Term Loan in numbers.
[2] Insert Lender's name in capital letters.
[3] Insert amount of Lender's Tranche B Term Loan in words.
IV-B-1
This Note is one of Company's "Tranche B Term Notes" in the aggregate
principal amount of $71,000,000 and is issued pursuant to and entitled to the
benefits of the Credit Agreement, to which reference is hereby made for a more
complete statement of the terms and conditions under which the Tranche B Term
Loan evidenced hereby was made and is to be repaid.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
Funding and Payment Office or at such other place as shall be designated in
writing for such purpose in accordance with the terms of the Credit Agreement.
Unless and until an Assignment Agreement effecting the assignment or transfer of
this Note shall have been accepted by Chase Co-Administrative Agent and recorded
in the Register as provided in subsection 10.1B(ii) of the Credit Agreement,
Company and Chase Co-Administrative Agent shall be entitled to deem and treat
Payee as the owner and holder of this Note and the Loan evidenced hereby. Payee
hereby agrees, by its acceptance hereof, that before disposing of this Note or
any part hereof it will make a notation hereon of all principal payments
previously made hereunder and of the date to which interest hereon has been
paid; provided, however, that the failure to make a notation of any payment made
on this Note shall not limit or otherwise affect the obligations of Company
hereunder with respect to payments of principal of or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day which
is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in subsection
2.4B(iii) of the Credit Agreement and to prepayment at the option of Company as
provided in subsection 2.4B(i) of the Credit Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note, together with all accrued and unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
This Note is entitled to the benefits of the Guaranty and is secured
pursuant to the Collateral Documents.
The terms of this Note are subject to amendment only in the manner provided
in the Credit Agreement.
IV-B-2
This Note is subject to restrictions on transfer or assignment as provided
in subsections 10.1 and 10.16 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this Note
or the Credit Agreement shall alter or impair the obligations of Company, which
are absolute and unconditional, to pay the principal of and interest on this
Note at the place, at the respective times, and in the currency herein
prescribed.
Company promises to pay all costs and expenses, including reasonable
attorneys' fees, all as provided in subsection 10.2 of the Credit Agreement,
incurred in the collection and enforcement of this Note. Company and any
endorsers of this Note hereby consent to renewals and extensions of time at or
after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
IN WITNESS WHEREOF, Company has caused this Note to be duly executed and
delivered by its officer thereunto duly authorized as of the date and at the
place first written above.
OUTSOURCING SOLUTIONS INC.
By:____________________________________
Name:
Title:
IV-B-3
EXHIBIT V
[FORM OF REVOLVING NOTE]
OUTSOURCING SOLUTIONS INC.
PROMISSORY NOTE DUE OCTOBER 15, 2001
$[1] New York, New York
[Closing Date]
FOR VALUE RECEIVED, OUTSOURCING SOLUTIONS INC., a Delaware corporation
("Company"), promises to pay to the order of [2] ("Payee") or its registered
assigns, on or before October 15, 2001, the lesser of (x) [3] ($[1]) and (y) the
unpaid principal amount of all advances made by Payee to Company as Revolving
Loans under the Credit Agreement referred to below.
Company also promises to pay interest on the unpaid principal amount
hereof, from the date hereof until paid in full, at the rates and at the times
which shall be determined in accordance with the provisions of that certain
Credit Agreement dated as of November 6, 1996, by and among Company, the
financial institutions listed therein as Lenders, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners
L.P. and The Chase Manhattan Bank ("Chase"), as Co-Administrative Agents (Chase,
in such capacity, "Chase Co-Administrative Agent"), SunTrust Bank, Atlanta, as
Collateral Agent, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and Chase Securities
Inc., as Arranging Agents (said Credit Agreement, as it may be amended,
restated, supplemented or otherwise modified from time to time, being the
"Credit Agreement", the terms defined therein and not otherwise defined herein
being used herein as therein defined).
This Note is one of Company's "Revolving Notes" in the aggregate principal
amount of $58,000,000 and is issued pursuant to and entitled to the benefits of
the Credit Agreement, to which reference is hereby made for a more complete
statement of the terms and conditions under which the Revolving Loans evidenced
hereby were made and are to be repaid.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
Funding and Payment Office
--------
[1] Insert amount of Lender's Revolving Loan Commitment in numbers.
[2] Insert Lender's name in capital letters.
[3] Insert amount of Lender's Revolving Loan Commitment in words.
V-1
or at such other place as shall be designated in writing for such purpose in
accordance with the terms of the Credit Agreement. Unless and until an
Assignment Agreement effecting the assignment or transfer of this Note shall
have been accepted by Chase Co-Administrative Agent and recorded in the Register
as provided in subsection 10.1B(ii) of the Credit Agreement, Company and Chase
Co-Administrative Agent shall be entitled to deem and treat Payee as the owner
and holder of this Note and the Loans evidenced hereby. Payee hereby agrees, by
its acceptance hereof, that before disposing of this Note or any part hereof it
will make a notation hereon of all principal payments previously made hereunder
and of the date to which interest hereon has been paid; provided, however, that
the failure to make a notation of any payment made on this Note shall not limit
or otherwise affect the obligations of Company hereunder with respect to
payments of principal of or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day which
is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in subsection
2.4B(iii) of the Credit Agreement and to prepayment at the option of Company as
provided in subsection 2.4B(i) of the Credit Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note, together with all accrued and unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
This Note is entitled to the benefits of the Guaranty and is secured
pursuant to the Collateral Documents.
The terms of this Note are subject to amendment only in the manner provided
in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment as provided
in subsections 10.1 and 10.16 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this Note
or the Credit Agreement shall alter or impair the obligations of Company, which
are absolute and unconditional, to pay the principal of and interest on this
Note at the place, at the respective times, and in the currency herein
prescribed.
V-2
Company promises to pay all costs and expenses, including reasonable
attorneys' fees, all as provided in subsection 10.2 of the Credit Agreement,
incurred in the collection and enforcement of this Note. Company and any
endorsers of this Note hereby consent to renewals and extensions of time at or
after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
IN WITNESS WHEREOF, Company has caused this Note to be duly executed and
delivered by its officer thereunto duly authorized as of the date and at the
place first written above.
OUTSOURCING SOLUTIONS INC.
By:___________________________________
Name:
Title:
V-3
TRANSACTIONS
ON
REVOLVING NOTE
Outstanding
Type of Amount of Amount of Principal
Loan Made Loan Made Principal Paid Balance Notation
Date This Date This Date This Date This Date Made By
---- --------- --------- --------- --------- -------
V-4
EXHIBIT VI
[FORM OF SWING LINE NOTE]
OUTSOURCING SOLUTIONS INC.
PROMISSORY NOTE DUE OCTOBER 15, 2001
$2,000,000.00 New York, New York
[Closing Date]
FOR VALUE RECEIVED, OUTSOURCING SOLUTIONS INC., a Delaware corporation
("Company"), promises to pay to THE CHASE MANHATTAN BANK ("Payee") or its
registered assigns, on or before October 15, 2001, the lesser of (x) Two Million
and no/100 Dollars ($2,000,000.00) and (y) the unpaid principal amount of all
advances made by Payee to Company as Swing Line Loans under the Credit Agreement
referred to below.
Company also promises to pay interest on the unpaid principal amount
hereof, from the date hereof until paid in full, at the rates and at the times
which shall be determined in accordance with the provisions of that certain
Credit Agreement dated as of November 6, 1996, by and among Company, the
financial institutions listed therein as Lenders, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners
L.P. and The Chase Manhattan Bank ("Chase"), as Co-Administrative Agents (Chase,
in such capacity, "Chase Co-Administrative Agent"), SunTrust Bank, Atlanta, as
Collateral Agent, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and Chase Securities
Inc., as Arranging Agents (said Credit Agreement, as it may be amended,
restated, supplemented or otherwise modified from time to time, being the
"Credit Agreement", the terms defined therein and not otherwise defined herein
being used herein as therein defined).
This Note is Company's "Swing Line Note" and is issued pursuant to and
entitled to the benefits of the Credit Agreement, to which reference is hereby
made for a more complete statement of the terms and conditions under which the
Swing Line Loans evidenced hereby were made and are to be repaid.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
Funding and Payment Office or at such other place as shall be designated in
writing for such purpose in accordance with the terms of the Credit Agreement.
Whenever any payment on this Note shall be stated to be due on a day which
is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note.
VI-1
This Note is subject to mandatory prepayment as provided in subsection
2.4B(iii) of the Credit Agreement and to prepayment at the option of Company as
provided in subsection 2.4B(i) of the Credit Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note, together with all accrued and unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
This Note is entitled to the benefits of the Guaranty and is secured
pursuant to the Collateral Documents.
The terms of this Note are subject to amendment only in the manner provided
in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment as provided
in subsections 10.1 and 10.16 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this Note
or the Credit Agreement shall alter or impair the obligations of Company, which
are absolute and unconditional, to pay the principal of and interest on this
Note at the place, at the respective times, and in the currency herein
prescribed.
Company promises to pay all costs and expenses, including reasonable
attorneys' fees, all as provided in subsection 10.2 of the Credit Agreement,
incurred in the collection and enforcement of this Note. Company and any
endorsers of this Note hereby consent to renewals and extensions of time at or
after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
[Remainder of page intentionally left blank]
VI-2
IN WITNESS WHEREOF, Company has caused this Note to be duly executed and
delivered by its officer thereunto duly authorized as of the date and at the
place first written above.
OUTSOURCING SOLUTIONS INC.
By:__________________________________
Name:
Title:
VI-3
TRANSACTIONS
ON
SWING LINE NOTE
Outstanding
Amount of Amount of Principal
Loan Made Principal Paid Balance Notation
Date This Date This Date This Date Made By
---- --------- --------- --------- -------
VI-4
EXHIBIT VII
[FORM OF SUBSIDIARY GUARANTY]
SUBSIDIARY GUARANTY
This SUBSIDIARY GUARANTY is entered into as of November 6, 1996 by THE
UNDERSIGNED DIRECT AND INDIRECT DOMESTIC SUBSIDIARIES of Outsourcing Solutions
Inc., a Delaware corporation ("Company") (each such undersigned Subsidiary a
"Guarantor" and collectively, "Guarantors"; provided that after the Closing
Date, Guarantors shall be deemed to include any Additional Guarantors (as
hereinafter defined)), in favor of and for the benefit of SUNTRUST BANK,
ATLANTA, as agent for and representative of (in such capacity herein called
"Guarantied Party") the financial institutions ("Lenders") party to the Credit
Agreement referred to below and any Interest Rate Exchangers (as hereinafter
defined).
RECITALS
A. Company has entered into that certain Credit Agreement dated as of
November 6, 1996 (said Credit Agreement, as it may hereafter be amended,
restated, supplemented or otherwise modified from time to time, being the
"Credit Agreement"; capitalized terms defined therein and not otherwise defined
herein being used herein as therein defined) with Lenders, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit
Partners L.P. and The Chase Manhattan Bank, as Co-Administrative Agents,
Guarantied Party, as Collateral Agent, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P.
and Chase Securities Inc., as Arranging Agents.
B. Company may from time to time enter, or may from time to time have
entered, into one or more Interest Rate Agreements (collectively, the "Lender
Interest Rate Agreements") with or one or more Lenders or their Affiliates (in
such capacity, collectively, "Interest Rate Exchangers") in accordance with the
terms of the Credit Agreement, and it is desired that the obligations of Company
under the Lender Interest Rate Agreements, including without limitation the
obligation of Company to make payments thereunder in the event of early
termination thereof (all such obligations being the "Interest Rate
Obligations"), together with all obligations of Company under the Credit
Agreement and the other Loan Documents, be guarantied hereunder.
C. A portion of the proceeds of the Loans may be advanced to Guarantors and
thus the Guarantied Obligations (as hereinafter defined) are being incurred for
and will inure to the benefit of Guarantors (which benefits are hereby
acknowledged).
D. It is a condition precedent to the making of the initial Loans under the
Credit Agreement that Company's obligations thereunder be guarantied by
Guarantors.
VII-1
E. Guarantors are willing irrevocably and unconditionally to guaranty such
obligations of Company.
NOW, THEREFORE, based upon the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
in order to induce Lenders and Guarantied Party to enter into the Credit
Agreement and to make Loans and other extensions of credit thereunder and to
induce Interest Rate Exchangers to enter into the Lender Interest Rate
Agreements, Guarantors hereby agree as follows:
SECTION 1.
DEFINITIONS
1.1 Certain Defined Terms.
As used in this Guaranty, the following terms shall have the following
meanings unless the context otherwise requires:
"Beneficiaries" means Guarantied Party, Lenders and any Interest Rate
Exchangers.
"Guarantied Obligations" has the meaning assigned to that term in
subsection 2.1.
"Guaranty" means this Subsidiary Guaranty dated as of November 6,
1996, as it may be amended, restated, supplemented or otherwise modified
from time to time.
"payment in full", "paid in full" or any similar term means payment in
full of the Guarantied Obligations, including without limitation all
principal, interest, costs, fees and expenses (including without limitation
legal fees and expenses) of Beneficiaries as required under the Loan
Documents and the Lender Interest Rate Agreements.
1.2 Interpretation.
(a) References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Guaranty unless otherwise specifically
provided.
(b) In the event of any conflict or inconsistency between the terms,
conditions and provisions of this Guaranty and the terms, conditions and
provisions of the Credit Agreement, the terms, conditions and provisions of this
Guaranty shall prevail.
VII-2
SECTION 2.
THE GUARANTY
2.1 Guaranty of the Guarantied Obligations.
Subject to the provisions of subsection 2.2(a), Guarantors jointly and
severally hereby irrevocably and unconditionally guaranty the due and punctual
payment in full of all Guarantied Obligations when the same shall become due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. ss. 362(a)). The term "Guarantied Obligations" is used herein in its most
comprehensive sense and includes:
(a) any and all Obligations of Company and any and all Interest Rate
Obligations, in each case now or hereafter made, incurred or created,
whether absolute or contingent, liquidated or unliquidated, whether due or
not due, and however arising under or in connection with the Credit
Agreement and the other Loan Documents and the Lender Interest Rate
Agreements, including those arising under successive borrowing transactions
under the Credit Agreement which shall either continue the Obligations of
Company or from time to time renew them after they have been satisfied and
including interest which, but for the filing of a petition in bankruptcy
with respect to Company, would have accrued on any Guarantied Obligations,
whether or not a claim is allowed against Company for such interest in the
related bankruptcy proceeding; and
(b) those expenses set forth in subsection 2.8 hereof.
2.2 Limitation on Amount Guarantied; Contribution by Guarantors.
(a) Anything contained in this Guaranty to the contrary notwithstanding, if
any Fraudulent Transfer Law (as hereinafter defined) is determined by a court of
competent jurisdiction to be applicable to the obligations of any Guarantor
under this Guaranty, the obligations of such Guarantor hereunder shall be
limited to a maximum aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance as a fraudulent transfer
or conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law (collectively, the "Fraudulent
Transfer Laws"), in each case after giving effect to all other liabilities of
such Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (i) in respect of intercompany indebtedness to Company or other
affiliates of Company to the extent that such indebtedness would be discharged
in an amount equal to the amount paid by such Guarantor hereunder and (ii) under
any guaranty of Subordinated Indebtedness which guaranty contains a limitation
as to maximum amount similar to that set forth in this subsection 2.2(a),
pursuant to which the liability of such Guarantor hereunder is included in the
liabilities taken into account in determining such maximum amount) and after
giving effect as assets to the value (as determined under the applicable
provisions of the Fraudulent Transfer Laws) of any rights to subrogation,
reimbursement, indemnification or
VII-3
contribution of such Guarantor pursuant to applicable law or pursuant to the
terms of any agreement (including without limitation any such right of
contribution under subsection 2.2(b)).
(b) Guarantors under this Guaranty together desire to allocate among
themselves (collectively, the "Contributing Guarantors"), in a fair and
equitable manner, their obligations arising under this Guaranty. Accordingly, in
the event any payment or distribution is made on any date by any Guarantor under
this Guaranty (a "Funding Guarantor") that exceeds its Fair Share (as defined
below) as of such date, that Funding Guarantor shall be entitled to a
contribution from each of the other Contributing Guarantors in the amount of
such other Contributing Guarantor's Fair Share Shortfall (as defined below) as
of such date, with the result that all such contributions will cause each
Contributing Guarantor's Aggregate Payments (as defined below) to equal its Fair
Share as of such date. "Fair Share" means, with respect to a Contributing
Guarantor as of any date of determination, an amount equal to (i) the ratio of
(x) the Adjusted Maximum Amount (as defined below) with respect to such
Contributing Guarantor to (y) the aggregate of the Adjusted Maximum Amounts with
respect to all Contributing Guarantors multiplied by (ii) the aggregate amount
paid or distributed on or before such date by all Funding Guarantors under this
Guaranty in respect of the obligations guarantied. "Fair Share Shortfall" means,
with respect to a Contributing Guarantor as of any date of determination, the
excess, if any, of the Fair Share of such Contributing Guarantor over the
Aggregate Payments of such Contributing Guarantor. "Adjusted Maximum Amount"
means, with respect to a Contributing Guarantor as of any date of determination,
the maximum aggregate amount of the obligations of such Contributing Guarantor
under this Guaranty determined as of such date, in the case of any Guarantor, in
accordance with subsection 2.2(a); provided that, solely for purposes of
calculating the "Adjusted Maximum Amount" with respect to any Contributing
Guarantor for purposes of this subsection 2.2(b), any assets or liabilities of
such Contributing Guarantor arising by virtue of any rights to subrogation,
reimbursement or indemnification or any rights to or obligations of contribution
hereunder shall not be considered as assets or liabilities of such Contributing
Guarantor. "Aggregate Payments" means, with respect to a Contributing Guarantor
as of any date of determination, an amount equal to (i) the aggregate amount of
all payments and distributions made on or before such date by such Contributing
Guarantor in respect of this Guaranty (including in respect of this subsection
2.2(b)) minus (ii) the aggregate amount of all payments received on or before
such date by such Contributing Guarantor from the other Contributing Guarantors
as contributions under this subsection 2.2(b). The amounts payable as
contributions hereunder shall be determined as of the date on which the related
payment or distribution is made by the applicable Funding Guarantor. The
allocation among Contributing Guarantors of their obligations as set forth in
this subsection 2.2(b) shall not be construed in any way to limit the liability
of any Contributing Guarantor hereunder.
2.3 Payment by Guarantors; Application of Payments.
Subject to the provisions of subsection 2.2(a), Guarantors hereby jointly
and severally agree, in furtherance of the foregoing and not in limitation of
any other right which any Beneficiary may have at law or in equity against any
Guarantor by virtue hereof, that upon the failure of Company to pay any of the
Guarantied Obligations when and as the same shall become due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or
VII-4
otherwise (including amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss.
362(a)), Guarantors will upon demand pay, or cause to be paid, in cash, to
Guarantied Party for the ratable benefit of Beneficiaries, an amount equal to
the sum of the unpaid principal amount of all Guarantied Obligations then due as
aforesaid, accrued and unpaid interest on such Guarantied Obligations (including
without limitation interest which, but for the filing of a petition in
bankruptcy with respect to Company, would have accrued on such Guarantied
Obligations, whether or not a claim is allowed against Company for such interest
in the related bankruptcy proceeding) and all other Guarantied Obligations then
owed to Beneficiaries as aforesaid. All such payments shall be applied promptly
from time to time by Guarantied Party as provided in subsection 2.4D of the
Credit Agreement.
2.4 Liability of Guarantors Absolute.
Each Guarantor agrees that its obligations hereunder are irrevocable,
absolute, independent and unconditional and shall not be affected by any
circumstance which constitutes a legal or equitable discharge of a guarantor or
surety other than payment in full of the Guarantied Obligations. In furtherance
of the foregoing and without limiting the generality thereof, each Guarantor
agrees as follows:
(a) This Guaranty is a guaranty of payment when due and not of
collectibility.
(b) Guarantied Party may enforce this Guaranty upon the occurrence of
an Event of Default under the Credit Agreement or the occurrence of an
Early Termination Date (as defined in a Master Agreement or an Interest
Rate Swap Agreement or Interest Rate and Currency Exchange Agreement in the
form prepared by the International Swap and Derivatives Association Inc. or
a similar event under any similar swap agreement) under any Lender Interest
Rate Agreement (either such occurrence being an "Event of Default" for
purposes of this Guaranty) notwithstanding the existence of any dispute
between Company and any Beneficiary with respect to the existence of such
Event of Default.
(c) The obligations of each Guarantor hereunder are independent of the
obligations of Company under the Loan Documents or the Lender Interest Rate
Agreements and the obligations of any other guarantor (including any other
Guarantor) of the obligations of Company under the Loan Documents or the
Lender Interest Rate Agreements, and a separate action or actions may be
brought and prosecuted against such Guarantor whether or not any action is
brought against Company or any of such other guarantors and whether or not
Company is joined in any such action or actions.
(d) Payment by any Guarantor of a portion, but not all, of the
Guarantied Obligations shall in no way limit, affect, modify or abridge any
Guarantor's liability for any portion of the Guarantied Obligations which
has not been paid. Without limiting the generality of the foregoing, if
Guarantied Party is awarded a judgment in any suit brought to enforce any
Guarantor's covenant to pay a portion of the Guarantied
VII-5
Obligations, such judgment shall not be deemed to release such Guarantor
from its covenant to pay the portion of the Guarantied Obligations that is
not the subject of such suit, and such judgment shall not, except to the
extent satisfied by such Guarantor, limit, affect, modify or abridge any
other Guarantor's liability hereunder in respect of the Guarantied
Obligations.
(e) Any Beneficiary, upon such terms as it deems appropriate, without
notice or demand and without affecting the validity or enforceability of
this Guaranty or giving rise to any reduction, limitation, impairment,
discharge or termination of any Guarantor's liability hereunder, from time
to time may (i) renew, extend, accelerate, increase the rate of interest
on, or otherwise change the time, place, manner or terms of payment of the
Guarantied Obligations, (ii) settle, compromise, release or discharge, or
accept or refuse any offer of performance with respect to, or substitutions
for, the Guarantied Obligations or any agreement relating thereto and/or
subordinate the payment of the same to the payment of any other
obligations; (iii) request and accept other guaranties of the Guarantied
Obligations and take and hold security for the payment of this Guaranty or
the Guarantied Obligations; (iv) release, surrender, exchange, substitute,
compromise, settle, rescind, waive, alter, subordinate or modify, with or
without consideration, any security for payment of the Guarantied
Obligations, any other guaranties of the Guarantied Obligations, or any
other obligation of any Person (including any other Guarantor) with respect
to the Guarantied Obligations; (v) enforce and apply any security now or
hereafter held by or for the benefit of such Beneficiary in respect of this
Guaranty or the Guarantied Obligations and direct the order or manner of
sale thereof, or exercise any other right or remedy that such Beneficiary
may have against any such security, in each case as such Beneficiary in its
discretion may determine consistent with the Credit Agreement or the
applicable Lender Interest Rate Agreement and any applicable security
agreement, including foreclosure on any such security pursuant to one or
more judicial or nonjudicial sales, whether or not every aspect of any such
sale is commercially reasonable, and even though such action operates to
impair or extinguish any right of reimbursement or subrogation or other
right or remedy of any Guarantor against Company or any security for the
Guarantied Obligations; and (vi) exercise any other rights available to it
under the Loan Documents or the Lender Interest Rate Agreements.
(f) This Guaranty and the obligations of Guarantors hereunder shall be
valid and enforceable and shall not be subject to any reduction,
limitation, impairment, discharge or termination for any reason (other than
payment in full of the Guarantied Obligations), including without
limitation the occurrence of any of the following, whether or not any
Guarantor shall have had notice or knowledge of any of them: (i) any
failure or omission to assert or enforce or agreement or election not to
assert or enforce, or the stay or enjoining, by order of court, by
operation of law or otherwise, of the exercise or enforcement of, any claim
or demand or any right, power or remedy (whether arising under the Loan
Documents the Lender Interest Rate Agreements, at law, in equity or
otherwise) with respect to the Guarantied Obligations or any agreement
relating thereto, or with respect to any other guaranty of or security for
the payment of the Guarantied
VII-6
Obligations; (ii) any rescission, waiver, amendment or modification of, or
any consent to departure from, any of the terms or provisions (including
without limitation provisions relating to events of default) of the Credit
Agreement, any of the other Loan Documents, any of the Lender Interest Rate
Agreements or any agreement or instrument executed pursuant thereto, or of
any other guaranty or security for the Guarantied Obligations, in each case
whether or not in accordance with the terms of the Credit Agreement or such
Loan Document, such Lender Interest Rate Agreement or any agreement
relating to such other guaranty or security; (iii) the Guarantied
Obligations, or any agreement relating thereto, at any time being found to
be illegal, invalid or unenforceable in any respect; (iv) the application
of payments received from any source (other than payments received pursuant
to the other Loan Documents or any of the Lender Interest Rate Agreements
or from the proceeds of any security for the Guarantied Obligations, except
to the extent such security also serves as collateral for indebtedness
other than the Guarantied Obligations) to the payment of indebtedness other
than the Guarantied Obligations, even though any Beneficiary might have
elected to apply such payment to any part or all of the Guarantied
Obligations; (v) any Beneficiary's consent to the change, reorganization or
termination of the corporate structure or existence of Company or any of
its Subsidiaries and to any corresponding restructuring of the Guarantied
Obligations; (vi) any failure to perfect or continue perfection of a
security interest in any collateral which secures any of the Guarantied
Obligations; (vii) any defenses, set-offs or counterclaims which Company
may allege or assert against any Beneficiary in respect of the Guarantied
Obligations, including, but not limited to, failure of consideration,
breach of warranty, payment, statute of frauds, statute of limitations,
accord and satisfaction and usury; and (viii) any other act or thing or
omission, or delay to do any other act or thing, which may or might in any
manner or to any extent vary the risk of any Guarantor as an obligor in
respect of the Guarantied Obligations.
2.5 Waivers by Guarantors.
Each Guarantor hereby waives, for the benefit of Beneficiaries:
(a) any right to require any Beneficiary, as a condition of payment or
performance by such Guarantor, to (i) proceed against Company, any other
guarantor (including any other Guarantor) of the Guarantied Obligations or
any other Person, (ii) proceed against or exhaust any security held from
Company, any such other guarantor or any other Person, (iii) proceed
against or have resort to any balance of any deposit account or credit on
the books of any Beneficiary in favor of Company or any other Person, or
(iv) pursue any other remedy in the power of any Beneficiary whatsoever;
(b) any defense arising by reason of the incapacity, lack of authority
or any disability or other defense of Company including without limitation
any defense based on or arising out of the lack of validity or the
unenforceability of the Guarantied Obligations or any agreement or
instrument relating thereto or by reason of the cessation
VII-7
of the liability of Company from any cause other than payment in full of
the Guarantied Obligations;
(c) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal;
(d) any defense based upon any Beneficiary's errors or omissions in
the administration of the Guarantied Obligations, except behavior which
amounts to bad faith;
(e) (i) any principles or provisions of law, statutory or otherwise,
which are or might be in conflict with the terms of this Guaranty and any
legal or equitable discharge of such Guarantor's obligations hereunder,
(ii) the benefit of any statute of limitations affecting such Guarantor's
liability hereunder or the enforcement hereof, (iii) any rights to
set-offs, recoupments and counterclaims, and (iv) promptness, diligence and
any requirement that any Beneficiary protect, secure, perfect or insure any
security interest or lien or any property subject thereto;
(f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including
acceptance of this Guaranty, notices of default under the Credit Agreement,
the Lender Interest Rate Agreements or any agreement or instrument related
thereto, notices of any renewal, extension or modification of the
Guarantied Obligations or any agreement related thereto, notices of any
extension of credit to Company and notices of any of the matters referred
to in subsection 2.4 and any right to consent to any thereof; and
(g) any defenses or benefits that may be derived from or afforded by
law which limit the liability of or exonerate guarantors or sureties, or
which may conflict with the terms of this Guaranty.
2.6 Guarantors' Rights of Subrogation, Contribution, Etc.
Until the Guarantied Obligations have been paid in full and the Commitments
terminated, each Guarantor hereby waives any claim, right or remedy, direct or
indirect, that such Guarantor now has or may hereafter have against Company or
any of its assets in connection with this Guaranty or the performance by such
Guarantor of its obligations hereunder, in each case whether such claim, right
or remedy arises in equity, under contract, by statute, under common law or
otherwise and including, without limitation, (a) any right of subrogation,
reimbursement or indemnification that such Guarantor now has or may hereafter
have against Company, (b) any right to enforce, or to participate in, any claim,
right or remedy that any Beneficiary now has or may hereafter have against
Company, and (c) any benefit of, and any right to participate in, any collateral
or security now or hereafter held by any Beneficiary. In addition, until the
Guarantied Obligations shall have been paid in full and the Commitments shall
have terminated and all Letters of Credit shall have expired or been cancelled,
each Guarantor shall withhold
VII-8
exercise of any right of contribution such Guarantor may have against any other
guarantor (including any other Guarantor) of the Guarantied Obligations
(including without limitation any such right of contribution under subsection
2.2(b)). Each Guarantor further agrees that, to the extent the waiver or
agreement to withhold the exercise of its rights of subrogation, reimbursement,
indemnification and contribution as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any rights of
subrogation, reimbursement or indemnification such Guarantor may have against
Company or against any collateral or security, and any rights of contribution
such Guarantor may have against any such other guarantor, shall be junior and
subordinate to any rights any Beneficiary may have against Company, to all
right, title and interest any Beneficiary may have in any such collateral or
security, and to any right any Beneficiary may have against such other
guarantor. If any amount shall be paid to any Guarantor on account of any such
subrogation, reimbursement, indemnification or contribution rights at any time
when all Guarantied Obligations shall not have been paid in full, such amount
shall be held in trust for Guarantied Party on behalf of Beneficiaries and shall
forthwith be paid over to Guarantied Party for the benefit of Beneficiaries to
be credited and applied against the Guarantied Obligations, whether matured or
unmatured, in accordance with the terms hereof.
2.7 Subordination of Other Obligations.
Any indebtedness of Company or any Guarantor now or hereafter held by any
Guarantor (the "Obligee Guarantor") is hereby subordinated in right of payment
to the Guarantied Obligations, and any such indebtedness collected or received
by the Obligee Guarantor after an Event of Default has occurred and is
continuing shall be held in trust for Guarantied Party on behalf of
Beneficiaries and shall forthwith be paid over to Guarantied Party for the
benefit of Beneficiaries to be credited and applied against the Guarantied
Obligations but without affecting, impairing or limiting in any manner the
liability of the Obligee Guarantor under any other provision of this Guaranty.
2.8 Expenses.
Guarantors jointly and severally agree to pay, or cause to be paid, on
demand, and to save Beneficiaries harmless against liability for, any and all
costs and expenses (including fees and disbursements of counsel and allocated
costs of internal counsel) incurred or expended by any Beneficiary in connection
with the enforcement of or preservation of any rights under this Guaranty.
2.9 Continuing Guaranty.
This Guaranty is a continuing guaranty and shall remain in effect until all
of the Guarantied Obligations shall have been paid in full and the Commitments
shall have terminated and all Letters of Credit shall have expired or been
cancelled. Each Guarantor hereby irrevocably waives any right to revoke this
Guaranty as to future transactions giving rise to any Guarantied Obligations.
VII-9
2.10 Authority of Guarantors or Company.
It is not necessary for any Beneficiary to inquire into the capacity or
powers of any Guarantor or Company or the officers, directors or any agents
acting or purporting to act on behalf of any of them.
2.11 Financial Condition of Company.
Any Loans may be granted to Company or continued from time to time, and any
Lender Interest Rate Agreement may be entered into from time to time, in each
case without notice to or authorization from any Guarantor regardless of the
financial or other condition of Company at the time of any such grant or
continuation or at the time such Lender Interest Rate Agreement is entered into,
as the case may be. No Beneficiary shall have any obligation to disclose or
discuss with any Guarantor its assessment, or any Guarantor's assessment, of the
financial condition of Company. Each Guarantor has adequate means to obtain
information from Company on a continuing basis concerning the financial
condition of Company and its ability to perform its obligations under the Loan
Documents and the Lender Interest Rate Agreements, and each Guarantor assumes
the responsibility for being and keeping informed of the financial condition of
Company and of all circumstances bearing upon the risk of nonpayment of the
Guarantied Obligations. Each Guarantor hereby waives and relinquishes any duty
on the part of any Beneficiary to disclose any matter, fact or thing relating to
the business, operations or conditions of Company now known or hereafter known
by any Beneficiary.
2.12 Rights Cumulative.
The rights, powers and remedies given to Beneficiaries by this Guaranty are
cumulative and shall be in addition to and independent of all rights, powers and
remedies given to Beneficiaries by virtue of any statute or rule of law or in
any of the other Loan Documents, any of the Lender Interest Rate Agreements or
any agreement between any Guarantor and any Beneficiary or Beneficiaries or
between Company and any Beneficiary or Beneficiaries. Any forbearance or failure
to exercise, and any delay by any Beneficiary in exercising, any right, power or
remedy hereunder shall not impair any such right, power or remedy or be
construed to be a waiver thereof, nor shall it preclude the further exercise of
any such right, power or remedy.
2.13 Bankruptcy; Post-Petition Interest; Reinstatement of Guaranty.
(a) So long as any Guarantied Obligations remain outstanding, no Guarantor
shall, without the prior written consent of Guarantied Party acting pursuant to
the instructions of Requisite Obligees (as defined in subsection 3.14), commence
or join with any other Person in commencing any bankruptcy, reorganization or
insolvency proceedings of or against Company. The obligations of Guarantors
under this Guaranty shall not be reduced, limited, impaired, discharged,
deferred, suspended or terminated by any proceeding, voluntary or involuntary,
involving the bankruptcy, insolvency, receivership, reorganization, liquidation
or arrangement
VII-10
of Company or by any defense which Company may have by reason of the order,
decree or decision of any court or administrative body resulting from any such
proceeding.
(b) Each Guarantor acknowledges and agrees that any interest on any portion
of the Guarantied Obligations which accrues after the commencement of any
proceeding referred to in clause (a) above (or, if interest on any portion of
the Guarantied Obligations ceases to accrue by operation of law by reason of the
commencement of said proceeding, such interest as would have accrued on such
portion of the Guarantied Obligations if said proceedings had not been
commenced) shall be included in the Guarantied Obligations because it is the
intention of Guarantors and Beneficiaries that the Guarantied Obligations which
are guarantied by Guarantors pursuant to this Guaranty should be determined
without regard to any rule of law or order which may relieve Company of any
portion of such Guarantied Obligations. Guarantors will permit any trustee in
bankruptcy, receiver, debtor in possession, assignee for the benefit of
creditors or similar person to pay Guarantied Party, or allow the claim of
Guarantied Party in respect of, any such interest accruing after the date on
which such proceeding is commenced.
(c) In the event that all or any portion of the Guarantied Obligations are
paid by Company, the obligations of Guarantors hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) are rescinded or recovered
directly or indirectly from any Beneficiary as a preference, fraudulent transfer
or otherwise, and any such payments which are so rescinded or recovered shall
constitute Guarantied Obligations for all purposes under this Guaranty.
2.14 Notice of Events.
As soon as any Guarantor obtains knowledge thereof, such Guarantor shall
give Guarantied Party written notice of any condition or event which has
resulted in a breach of or noncompliance with any term, condition or covenant
contained herein.
2.15 Set Off.
In addition to any other rights any Beneficiary may have under law or in
equity, if any amount shall at any time be due and owing by any Guarantor to any
Beneficiary under this Guaranty, such Beneficiary is authorized at any time or
from time to time upon the occurrence and during the continuation of any Event
of Default, without notice (any such notice being hereby expressly waived), to
set off and to appropriate and to apply any and all deposits (general or
special, including, but not limited to, indebtedness evidenced by certificates
of deposit, whether matured or unmatured) and any other indebtedness of such
Beneficiary owing to such Guarantor and any other property of such Guarantor
held by any Beneficiary to or for the credit or the account of such Guarantor
against and on account of the Guarantied Obligations and liabilities of such
Guarantor to any Beneficiary under this Guaranty.
VII-11
2.16 Discharge of Guaranty Upon Sale of Guarantor.
If all of the stock of any Guarantor or any of its successors in interest
under this Guaranty shall be sold or otherwise disposed of (including by merger
or consolidation) in an Asset Sale not prohibited by subsection 7.7 of the
Credit Agreement or otherwise consented to by Requisite Lenders, the Guaranty of
such Guarantor or such successor in interest, as the case may be, hereunder
shall automatically be discharged and released without any further action by any
Beneficiary or any other Person effective as of the time of such Asset Sale;
provided that, as a condition precedent to such discharge and release,
Guarantied Party shall have received evidence satisfactory to it that
arrangements satisfactory to it have been made for delivery to Guarantied Party
of the applicable Net Cash Proceeds.
SECTION 3.
MISCELLANEOUS
3.1 Survival of Warranties.
All agreements, representations and warranties made herein shall survive
the and delivery of this Guaranty and the other Loan Documents and the Lender
Interest Rate Agreements and any increase in the Commitments under the Credit
Agreement.
3.2 Notices.
Any notice or other communication herein required or permitted to be given
shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier and shall be deemed to have been
given when delivered in person or by courier service, or upon receipt of
telefacsimile or telex (with received answerback) or three Business Days after
depositing it in the United States mail with postage pre-paid and properly
addressed; provided, notices to Guarantied Party shall not be effective until
received. For purposes hereof, the address of each party hereto shall be as set
forth under such party's name on the signature pages hereof or, as to any party,
such other address as shall be designated by such party in a written notice
delivered to the other parties hereto.
3.3 Severability.
In case any provision in or obligation under this Guaranty shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
3.4 Amendments and Waivers.
No amendment, modification, termination or waiver of any provision of this
Guaranty, and no consent to any departure by any Guarantor therefrom, shall in
any event be effective
VII-12
without the written concurrence of Guarantied Party and, in the case of any such
amendment or modification, each Guarantor against whom enforcement of such
amendment or modification is sought. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
3.5 Headings.
Section and subsection headings in this Guaranty are included herein for
convenience of reference only and shall not constitute a part of this Guaranty
for any other purpose or be given any substantive effect.
3.6 Applicable Law; Rules of Construction.
THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF GUARANTORS AND
BENEFICIARIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. The
rules of construction set forth in subsection 1.3 of the Credit Agreement shall
be applicable to this Guaranty mutatis mutandis.
3.7 Successors and Assigns.
This Guaranty is a continuing guaranty and shall be binding upon each
Guarantor and its respective successors and assigns. This Guaranty shall inure
to the benefit of Beneficiaries and their respective successors and assigns. No
Guarantor shall assign this Guaranty or any of the rights or obligations of such
Guarantor hereunder without the prior written consent of all Lenders. Any
Beneficiary may, without notice or consent, assign its interest in this Guaranty
in whole or in part. The terms and provisions of this Guaranty shall inure to
the benefit of any transferee or assignee of any Loan, and in the event of such
transfer or assignment the rights and privileges herein conferred upon such
Beneficiary shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof.
3.8 Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR ARISING OUT OF OR
RELATING TO THIS GUARANTY, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇. BY EXECUTING AND DELIVERING THIS GUARANTY, EACH GUARANTOR, FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY
AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II)
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL
PROCESS IN
VII-13
ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO SUCH GUARANTOR AT ITS ADDRESS PROVIDED IN
ACCORDANCE WITH SUBSECTION 3.2; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE
(III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH GUARANTOR IN
ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT BENEFICIARIES RETAIN THE RIGHT
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST SUCH GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND (VI) AGREES
THAT THE PROVISIONS OF THIS SUBSECTION 3.8 RELATING TO JURISDICTION AND VENUE
SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW
YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
3.9 Waiver of Trial by Jury.
EACH GUARANTOR AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF, EACH
BENEFICIARY HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY. The scope
of this waiver is intended to be all encompassing of any and all disputes that
may be filed in any court and that relate to the subject matter of this
transaction, including without limitation contract claims, tort claims, breach
of duty claims and all other common law and statutory claims. Each Guarantor
and, by its acceptance of the benefits hereof, each Beneficiary (i) acknowledges
that this waiver is a material inducement for such Guarantor and Beneficiaries
to enter into a business relationship, that such Guarantor and Beneficiaries
have already relied on this waiver in entering into this Guaranty or accepting
the benefits thereof, as the case may be, and that each will continue to rely on
this waiver in their related future dealings and (ii) further warrants and
represents that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION 3.9 AND EXECUTED BY GUARANTIED
PARTY AND EACH GUARANTOR), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY. In the
event of litigation, this Guaranty may be filed as a written consent to a trial
by the court.
3.10 No Other Writing.
This writing is intended by Guarantors and Beneficiaries as the final
expression of this Guaranty and is also intended as a complete and exclusive
statement of the terms of their agreement with respect to the matters covered
hereby. No course of dealing, course of performance or trade usage, and no parol
evidence of any nature, shall be used to supplement
VII-14
or modify any terms of this Guaranty. There are no conditions to the full
effectiveness of this Guaranty.
3.11 Further Assurances.
At any time or from time to time, upon the request of Guarantied Party,
Guarantors shall execute and deliver such further documents and do such other
acts and things as Guarantied Party may reasonably request in order to effect
fully the purposes of this Guaranty.
3.12 Additional Guarantors.
The initial Guarantors hereunder shall be such of the Subsidiaries of
Company as are signatories hereto on the date hereof. From time to time
subsequent to the date hereof, additional Subsidiaries of Company may become
parties hereto, as additional Guarantors (each an "Additional Guarantor"), by
executing a counterpart of this Guaranty. Upon delivery of any such counterpart
to Chase Co-Administrative Agent, notice of which is hereby waived by
Guarantors, each such Additional Guarantor shall be a Guarantor and shall be as
fully a party hereto as if such Additional Guarantor were an original signatory
hereof. Each Guarantor expressly agrees that its obligations arising hereunder
shall not be affected or diminished by the addition or release of any other
Guarantor hereunder, nor by any election of Chase Co-Administrative Agent not
to cause any Subsidiary of Company to become an Additional Guarantor hereunder.
This Guaranty shall be fully effective as to any Guarantor that is or becomes a
party hereto regardless of whether any other Person becomes or fails to become
or ceases to be a Guarantor hereunder.
3.13 Counterparts; Effectiveness.
This Guaranty may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original for all purposes; but
all such counterparts together shall constitute but one and the same instrument.
This Guaranty shall become effective as to each Guarantor upon the of a
counterpart hereof by such Guarantor (whether or not a counterpart hereof shall
have been executed by any other Guarantor) and receipt by Guarantied Party of
written or telephonic notification of such and authorization of delivery
thereof.
3.14 Guarantied Party as Agent.
(a) Guarantied Party has been appointed to act as Guarantied Party
hereunder by Lenders and, by their acceptance of the benefits hereof, Interest
Rate Exchangers. Guarantied Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action, solely in
accordance with this Guaranty and the Credit Agreement; provided that Guarantied
Party shall exercise, or refrain from exercising, any remedies hereunder in
accordance with the instructions of (i) Requisite Lenders or (ii) after payment
in full of all Obligations under the Credit Agreement and the other Loan
Documents, the holders of a majority of the aggregate
VII-15
notional amount (or, with respect to any Lender Interest Rate Agreement that has
been terminated in accordance with its terms, the amount then due and payable
(exclusive of expenses and similar payments but including any early termination
payments then due) under such Lender Interest Rate Agreement) under all Lender
Interest Rate Agreements (Requisite Lenders or, if applicable, such holders
being referred to herein as "Requisite Obligees"). In furtherance of the
foregoing provisions of this subsection 3.14, each Interest Rate Exchanger, by
its acceptance of the benefits hereof, agrees that it shall have no right
individually to enforce this Guaranty, it being understood and agreed by such
Interest Rate Exchanger that all rights and remedies hereunder may be exercised
solely by Guarantied Party for the benefit of Beneficiaries in accordance with
the terms of this subsection 3.14.
(b) Guarantied Party shall at all times be the same Person that is
Collateral Agent under the Credit Agreement. Written notice of resignation by
Collateral Agent pursuant to subsection 9.5 of the Credit Agreement shall also
constitute notice of resignation as Guarantied Party under this Guaranty;
removal of Collateral Agent pursuant to subsection 9.5 of the Credit Agreement
shall also constitute removal as Guarantied Party under this Guaranty; and
appointment of a successor Collateral Agent pursuant to subsection 9.5 of the
Credit Agreement shall also constitute appointment of a successor Guarantied
Party under this Guaranty. Upon the acceptance of any appointment as Collateral
Agent under subsection 9.5 of the Credit Agreement by a successor Collateral
Agent, that successor Collateral Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Guarantied Party under this Guaranty, and the retiring or removed
Guarantied Party under this Guaranty shall promptly (i) transfer to such
successor Guarantied Party all sums held hereunder, together with all records
and other documents necessary or appropriate in connection with the performance
of the duties of the successor Guarantied Party under this Guaranty, and (ii)
take such other actions as may be necessary or appropriate in connection with
the assignment to such successor Guarantied Party of the rights created
hereunder, whereupon such retiring or removed Guarantied Party shall be
discharged from its duties and obligations under this Guaranty. After any
retiring or removed Guarantied Party's resignation or removal hereunder as
Guarantied Party, the provisions of this Guaranty shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Guaranty while it
was Guarantied Party hereunder.
[Remainder of page intentionally left blank]
VII-16
IN WITNESS WHEREOF, each of the undersigned Guarantors has caused this
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of the date first written above.
ALASKA FINANCIAL SERVICES, INC.
CFC SERVICES CORP.
THE CONTINENTAL ALLIANCE, INC.
SOUTHWEST CREDIT SERVICES, INC.
By:___________________________________
Name:
Title:
ACCOUNT PORTFOLIOS, L.P.
GULF STATE CREDIT, L.P.
PERIMETER CREDIT, L.P.
By: ACCOUNT PORTFOLIOS G.P., INC.,
general partner
By:______________________________
Name:
Title:
VII-17
A.M. ▇▇▇▇▇▇ & ASSOCIATES, INC.
ACCOUNT PORTFOLIOS G.P., INC.
ACCOUNT PORTFOLIOS, INC.
ASSET RECOVERY & MANAGEMENT CORP.
FM SERVICES CORPORATION
▇▇▇▇▇ AND ▇▇▇▇▇, INC.
INDIANA MUTUAL CREDIT ASSOCIATION, INC.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ASSOCIATES, INC.
NATIONAL ACCOUNT SYSTEMS, INC.
PAYCO AMERICAN CORPORATION
PAYCO AMERICAN INTERNATIONAL CORP.
PAYCO-GENERAL AMERICAN CREDITS, INC.
PROFESSIONAL RECOVERIES INC.
QUALINK, INC.
UNIVERSITY ACCOUNTING SERVICE, INC.
By:____________________________________
Name:
Title:
Notice Address for the foregoing
Guarantors:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ De Leeuw & Co.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
VII-18
and a copy to:
White & Case
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
VII-19
IN WITNESS WHEREOF, the undersigned Additional Guarantor has caused this
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of ______________, [199_] [200_].
[NAME OF ADDITIONAL GUARANTOR]
By:___________________________________
Name:
Title:
Notice Address:
________________________________
________________________________
________________________________
________________________________
VII-20
EXHIBIT VIII
[FORM OF PLEDGE AGREEMENT]
PLEDGE AGREEMENT
This PLEDGE AGREEMENT (this "Agreement") is dated as of November 6, 1996
and entered into by and among OUTSOURCING SOLUTIONS INC., a Delaware corporation
("Company"), each of THE UNDERSIGNED DIRECT AND INDIRECT DOMESTIC SUBSIDIARIES
of Company (each of such undersigned Subsidiaries being a "Subsidiary Pledgor"
and collectively "Subsidiary Pledgors", and each of Company and Subsidiary
Pledgors being a "Pledgor" and collectively "Pledgors"; provided that after the
Closing Date, "Pledgors" shall be deemed to include any Additional Pledgors (as
hereinafter defined)) and SUNTRUST BANK, ATLANTA, as agent for and
representative of (in such capacity herein called "Secured Party") the financial
institutions ("Lenders") party to the Credit Agreement referred to below and any
Interest Rate Exchangers (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Pledgors are the legal and beneficial owners of (i) the shares of stock
(the "Pledged Shares") described in Part A of Schedule I annexed hereto and
issued by the corporations named therein and (ii) the indebtedness (the "Pledged
Debt") described in Part B of said Schedule I and issued by the obligors named
therein.
B. Pursuant to that certain Credit Agreement dated as of November 6, 1996
(said Credit Agreement, as it may hereafter be amended, restated, supplemented
or otherwise modified from time to time, being the "Credit Agreement", the terms
defined therein and not otherwise defined herein being used herein as therein
defined), by and among Company, Lenders, ▇▇▇▇▇▇▇ Sachs Credit Partners L.P. and
The Chase Manhattan Bank, as Co-Administrative Agents, Secured Party, as
Collateral Agent, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and Chase Securities
Inc., as Arranging Agents, Lenders have made certain commitments, subject to the
terms and conditions set forth in the Credit Agreement, to extend certain credit
facilities to Company.
C. Company may from time to time enter, or may from time to time have
entered, into one or more Interest Rate Agreement (collectively, the "Lender
Interest Rate Agreements") with one or more Lenders or their Affiliates (in such
capacity, collectively, "Interest Rate Exchangers") in accordance with the terms
of the Credit Agreement, and it is desired that the obligations of Company under
the Lender Interest Rate Agreements, including without limitation the obligation
of Company to make payments thereunder in the event of early termination thereof
(all such obligations being the "Interest Rate Obligations"), together with all
obligations of Company under the Credit Agreement and the other Loan Documents,
be secured hereunder.
VIII-1
D. Subsidiary Pledgors have executed and delivered that certain Subsidiary
Guaranty dated as of November 6, 1996 (said Subsidiary Guaranty, as it may
hereafter be amended, restated, supplemented or otherwise modified from time to
time, being the "Guaranty") in favor of Secured Party for the benefit of Lenders
and any Interest Rate Exchangers, pursuant to which each Subsidiary Pledgor has
guarantied the prompt payment and performance when due of all obligations of
Company under the Credit Agreement and all obligations of Company under the
Lender Interest Rate Agreements, including without limitation the obligation of
Company to make payments thereunder in the event of early termination thereof.
E. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that each Pledgor shall have granted the
security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make Loans and other extensions of credit under the Credit Agreement
and to induce Interest Rate Exchangers to enter into Lender Interest Rate
Agreements, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, each Pledgor hereby agrees with
Secured Party as follows:
SECTION 1. Pledge of Security.
Each Pledgor hereby pledges and assigns to Secured Party, and hereby grants
to Secured Party a security interest in, all of Pledgor's right, title and
interest in and to the following (the "Pledged Collateral"):
(a) the Pledged Shares owned by such Pledgor and the certificates
representing such Pledged Shares and any interest of such Pledgor in the
entries on the books of any financial intermediary pertaining to such
Pledged Shares, and all dividends, cash, warrants, rights, instruments and
other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
Pledged Shares; provided, however, that to the extent the issuer of any of
the Pledged Shares is a controlled foreign corporation (used hereinafter as
such term is defined in Section 957(a) or a successor provision of the
Internal Revenue Code of 1986, as amended from time to time), such Pledgor
shall only be required to pledge Pledged Shares of, certificates
representing Pledged Shares of, and such interests pertaining to Pledged
Shares of such issuer possessing up to but not exceeding 65% of the voting
power of all classes of capital stock entitled to vote of such issuer, and
all dividends, cash, warrants, rights, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such Pledged Shares;
(b) the Pledged Debt owned by such Pledgor and the instruments
evidencing such Pledged Debt, and all interest, cash, instruments and other
property or proceeds
VIII-2
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such Pledged Debt;
(c) all additional shares of, and all securities convertible into and
warrants, options and other rights to purchase or otherwise acquire, stock
of any issuer of any Pledged Shares from time to time acquired by such
Pledgor in any manner (which shares shall be deemed to be part of the
Pledged Shares), the certificates or other instruments representing such
additional shares, securities, warrants, options or other rights and any
interest of such Pledgor in the entries on the books of any financial
intermediary pertaining to such additional shares (all such shares,
securities, warrants, options, rights, certificates, instruments and
interests collectively being "Additional Pledged Shares"), and all
dividends, cash, warrants, rights, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such Additional Pledged Shares;
provided, however, that to the extent that the issuer of any Additional
Pledged Shares is a controlled foreign corporation, such Pledgor shall only
be required to pledge Additional Pledged Shares of such issuer possessing
up to but not exceeding 65% of the voting power of all classes of capital
stock entitled to vote of such issuer, and all dividends, cash, warrants,
rights, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange
for any or all of such Additional Pledged Shares;
(d) all additional indebtedness from time to time owed to such Pledgor
by any obligor on any Pledged Debt and the instruments evidencing such
indebtedness, and all interest, cash, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such indebtedness;
(e) all shares of, and all securities convertible into and warrants,
options and other rights to purchase or otherwise acquire, stock of any
Person that, after the date of this Agreement, becomes, as a result of any
occurrence, a direct Subsidiary of such Pledgor (which shares shall be
deemed to be part of the Pledged Shares), the certificates or other
instruments representing such shares, securities, warrants, options or
other rights and any interest of such Pledgor in the entries on the books
of any financial intermediary pertaining to such shares (all such shares,
securities, warrants, options, rights, certificates, instruments and
interests collectively being "New Pledged Shares"), and all dividends,
cash, warrants, rights, instruments and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such shares, securities, warrants, options or
other rights; provided, however, that in the event that any such direct
Subsidiary is a controlled foreign corporation, such Pledgor shall only be
required to pledge New Pledged Shares of such Subsidiary possessing up to
but not exceeding 65% of the voting power of all classes of capital stock
entitled to vote of such Subsidiary, and all dividends, cash, warrants,
rights, instruments and other property or proceeds from time to time
received, receivable or
VIII-3
otherwise distributed in respect of or in exchange for any or all of such
New Pledged Shares;
(f) all indebtedness from time to time owed to such Pledgor by any
Person that, after the date of this Agreement, becomes, as a result of such
any occurrence, a direct or indirect Subsidiary of such Pledgor, and all
interest, cash, instruments and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such indebtedness; and
(g) to the extent not covered by clauses (a) through (f) above, all
proceeds of any or all of the foregoing Pledged Collateral. For purposes of
this Agreement, the term "proceeds" includes whatever is receivable or
received when Pledged Collateral or proceeds are sold, exchanged, collected
or otherwise disposed of, whether such disposition is voluntary or
involuntary, and includes, without limitation, proceeds of any indemnity or
guaranty payable to such Pledgor or Secured Party from time to time with
respect to any of the Pledged Collateral.
SECTION 2. Security for Obligations.
This Agreement secures, and the Pledged Collateral pledged and assigned by
each Pledgor is collateral security for, the prompt payment or performance in
full when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including without limitation the payment of
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all Secured
Obligations with respect to such Pledgor. "Secured Obligations" means
(a) with respect to Company, all obligations and liabilities of every
nature of Company now or hereafter existing under or arising out of or in
connection with the Credit Agreement and the other Loan Documents and any
Lender Interest Rate Agreements, and
(b) with respect to each Subsidiary Pledgor and Additional Pledgor,
all obligations and liabilities of every nature of Pledgors now or
hereafter existing under or arising out of or in connection with the
Guaranty,
in each case together with all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Company, would accrue on such
obligations, whether or not a claim is allowed against Company for such interest
in the related bankruptcy proceeding), reimbursement of amounts drawn under
Letters of Credit, payments for early termination of Lender Interest Rate
Agreements, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased,
VIII-4
created or incurred, and all or any portion of such obligations or liabilities
that are paid, to the extent all or any part of such payment is avoided or
recovered directly or indirectly from Secured Party or any Lender or Interest
Rate Exchanger as a preference, fraudulent transfer or otherwise, and all
obligations of every nature of Pledgors now or hereafter existing under this
Agreement.
SECTION 3. Delivery of Pledged Collateral.
All certificates or instruments representing or evidencing the Pledged
Collateral shall be delivered to and held by or on behalf of Secured Party
pursuant hereto and shall be in suitable form for transfer by delivery or, as
applicable, shall be accompanied by the appropriate Pledgor's endorsement, where
necessary, or duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to Secured Party. Upon the occurrence and
during the continuation of an Event of Default (as defined in the Credit
Agreement) or the occurrence of an Early Termination Date (as defined in a
Master Agreement or an Interest Rate Swap Agreement or Interest Rate and
Currency Exchange Agreement in the form prepared by the International Swap and
Derivatives Association Inc. or a similar event under any similar swap
agreement) under any Lender Interest Rate Agreement (either such occurrence
being an "Event of Default" for purposes of this Agreement), Secured Party shall
have the right, without notice to any Pledgor, to transfer to or to register in
the name of Secured Party or any of its nominees any or all of the Pledged
Collateral, subject only to the revocable rights specified in Section 7(a). In
addition, Secured Party shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations.
SECTION 4. Representations and Warranties.
Each Pledgor represents and warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the Pledged
Shares owned by such Pledgor have been duly authorized and validly issued
and are fully paid and non-assessable. All of the Pledged Debt owned by
such Pledgor has been duly authorized, authenticated or issued, and
delivered and is the legal, valid and binding obligation of the issuers
thereof and is not in default.
(b) Description of Pledged Collateral. The Pledged Shares owned by
such Pledgor constitute the percentage of the issued and outstanding shares
of stock of each issuer thereof set forth on Schedule I annexed hereto, and
there are no outstanding warrants, options or other rights to purchase, or
other agreements outstanding with respect to, or property that is now or
hereafter convertible into, or that requires the issuance or sale of, any
Pledged Shares. The Pledged Debt owned by such Pledgor constitutes all of
the issued and outstanding intercompany indebtedness evidenced by a
promissory note of the respective issuers thereof owing to such Pledgor.
VIII-5
(c) Ownership of Pledged Collateral. Such Pledgor is the legal, record
and beneficial owner of the Pledged Collateral owned by such Pledgor free
and clear of any Lien except for the security interest created by this
Agreement.
(d) Perfection. The pledge of the Pledged Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest in
the Pledged Collateral, securing the payment of the Secured Obligations.
SECTION 5. Transfers and Other Liens; Additional Pledged Collateral; etc.
Each Pledgor shall:
(a) not, except as expressly permitted by the Credit Agreement, (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral, (ii)
create or suffer to exist any Lien upon or with respect to any of the
Pledged Collateral, except for the security interest under this Agreement,
or (iii) permit any issuer of Pledged Shares to merge or consolidate unless
all the outstanding capital stock of the surviving or resulting corporation
is, upon such merger or consolidation, pledged hereunder and no cash,
securities or other property is distributed in respect of the outstanding
shares of any other constituent corporation; provided that if the surviving
or resulting corporation upon any such merger or consolidation involving an
issuer of Pledged Shares which is a controlled foreign corporation is a
controlled foreign corporation, then such Pledgor shall only be required to
pledge outstanding capital stock of such surviving or resulting corporation
possessing up to but not exceeding 65% of the voting power of all classes
of capital stock of such issuer entitled to vote; provided further that in
the event any Pledgor makes an Asset Sale permitted by the Credit Agreement
and the assets subject to such Asset Sale are Pledged Shares, Secured Party
shall release the Pledged Shares that are the subject of such Asset Sale to
such Pledgor free and clear of the lien and security interest under this
Agreement concurrently with the consummation of such Asset Sale; and
provided further, that as a condition precedent to such release, Secured
Party shall have received evidence satisfactory to it that arrangements
satisfactory to it have been made for delivery to Secured Party of the Net
Cash Proceeds of such Asset Sale in the event and to the extent that all or
any portion of such Net Cash Proceeds are required to be applied to prepay
the Loans under the Credit Agreement.
(b) (i) cause each issuer of Pledged Shares not to issue any stock or
other securities in addition to or in substitution for the Pledged Shares
issued by such issuer, except to a Pledgor, (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and
all additional shares of stock or other securities of each issuer of
Pledged Shares, and (iii) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all shares of stock
of any Person that, after the date of this Agreement, becomes, as a result
of any occurrence, a direct Subsidiary of any Pledgor; provided, that
notwithstanding anything contained in this clause (b) to the contrary, such
VIII-6
Pledgor shall only be required to pledge the outstanding capital stock of a
controlled foreign corporation possessing up to but not exceeding 65% of
the voting power of all classes of capital stock of such controlled foreign
corporation entitled to vote;
(c) (i) pledge hereunder, immediately upon their issuance, any and all
instruments or other evidences of additional indebtedness from time to time
owed to such Pledgor by any obligor on the Pledged Debt, and (ii) pledge
hereunder, immediately upon their issuance, any and all instruments or
other evidences of indebtedness from time to time owed to such Pledgor by
any Person that after the date of this Agreement becomes, as a result of
any occurrence, a direct or indirect Subsidiary of any Pledgor;
(d) promptly deliver to Secured Party all written notices received by
it with respect to the Pledged Collateral; and
(e) pay promptly when due all taxes, assessments and governmental
charges or levies imposed upon, and all claims against, the Pledged
Collateral, except to the extent the validity thereof is being contested in
good faith; provided that such Pledgor shall in any event pay such taxes,
assessments, charges, levies or claims not later than five days prior to
the date of any proposed sale under any judgement, writ or warrant of
attachment entered or filed against Pledgor or any of the Pledged
Collateral as a result of the failure to make such payment.
SECTION 6. Further Assurances; Pledge Amendments.
(a) Each Pledgor agrees that from time to time, at the expense of Pledgors,
such Pledgor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Secured Party may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral. Without limiting the generality of the foregoing, such
Pledgor will: (i) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or desirable, or as Secured Party may request, in order to perfect and preserve
the security interests granted or purported to be granted hereby and (ii) at
Secured Party's request, appear in and defend any action or proceeding that may
affect such Pledgor's title to or Secured Party's security interest in all or
any part of the Pledged Collateral.
(b) Each Pledgor further agrees that it will, upon obtaining any additional
shares of stock or other securities required to be pledged hereunder as provided
in Section 5(b) or (c), promptly (and in any event within five Business Days)
deliver to Secured Party a Pledge Amendment, duly executed by such Pledgor, in
substantially the form of Schedule II annexed hereto (a "Pledge Amendment"), in
respect of the additional Pledged Shares or Pledged Debt to be pledged pursuant
to this Agreement. Each Pledgor hereby authorizes Secured Party to attach each
Pledge Amendment to this Agreement and agrees that all Pledged Shares or Pledged
VIII-7
Debt listed on any such Pledge Amendment delivered to Secured Party shall for
all purposes hereunder be considered Pledged Collateral; provided that the
failure of a Pledgor to execute a Pledge Amendment with respect to any
additional Pledged Shares or Pledged Debt pledged pursuant to this Agreement
shall not impair the security interest of Secured Party therein or otherwise
adversely affect the rights and remedies of Secured Party hereunder with respect
thereto.
SECTION 7. Voting Rights; Dividends; Etc.
(a) Pledgors' Rights. So long as no Event of Default shall have occurred
and be continuing:
(i) Pledgors shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Collateral or any part
thereof for any purpose not inconsistent with the terms of this Agreement
or the Credit Agreement;
(ii) Pledgors shall be entitled to receive and retain, and to utilize
free and clear of the lien of this Agreement, any and all dividends and
interest paid in respect of the Pledged Collateral; provided, however, that
any and all
(1) dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Pledged
Collateral,
(2) dividends and other distributions paid or payable in cash in
respect of any Pledged Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(3) cash paid, payable or otherwise distributed in respect of
principal or in redemption of or in exchange for any Pledged
Collateral,
shall be, and shall forthwith be delivered to Secured Party to hold as,
Pledged Collateral and shall, if received by a Pledgor, be received in
trust for the benefit of Secured Party, be segregated from the other
property or funds of such Pledgor and be forthwith delivered to Secured
Party as Pledged Collateral in the same form as so received (with all
necessary endorsements); and
(iii) Secured Party shall promptly execute and deliver (or cause to be
executed and delivered) to Pledgors all such proxies, dividend payment
orders and other instruments as Pledgors may from time to time reasonably
request for the purpose of enabling Pledgors to exercise the voting and
other consensual rights which they are entitled to exercise pursuant to
paragraph (i) above and to receive the dividends, principal
VIII-8
or interest payments which they are authorized to receive and retain
pursuant to paragraph (ii) above.
(b) Secured Party's Rights. Upon acceleration of the maturity of the Loans
in accordance with Section 8 of the Credit Agreement and upon the occurrence and
during the continuation of an Event of Default:
(i) upon written notice from Secured Party to a Pledgor, all rights of
such Pledgor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant to Section 7(a)(i) shall
cease, and all such rights shall thereupon become vested in Secured Party
who shall thereupon have the sole right to exercise such voting and other
consensual rights;
(ii) all rights of Pledgors to receive the dividends and interest
payments which they would otherwise be authorized to receive and retain
pursuant to Section 7(a)(ii) shall cease, and all such rights shall
thereupon become vested in Secured Party who shall thereupon have the sole
right to receive and hold as Pledged Collateral such dividends and interest
payments; and
(iii) all dividends, principal and interest payments which are
received by a Pledgor contrary to the provisions of paragraph (ii) of this
Section 7(b) shall be received in trust for the benefit of Secured Party,
shall be segregated from other funds of such Pledgor and shall forthwith be
paid over to Secured Party as Pledged Collateral in the same form as so
received (with any necessary endorsements).
(c) Irrevocable Proxy. In order to permit Secured Party to exercise the
voting and other consensual rights which it may be entitled to exercise pursuant
to Section 7(b)(i) and to receive all dividends and other distributions which it
may be entitled to receive under Section 7(a)(ii) or Section 7(b)(ii), (i) each
Pledgor shall promptly execute and deliver (or cause to be executed and
delivered) to Secured Party all such proxies, dividend payment orders and other
instruments as Secured Party may from time to time reasonably request and (ii)
without limiting the effect of the immediately preceding clause (i), each
Pledgor hereby grants to Secured Party an IRREVOCABLE PROXY to vote the Pledged
Shares owned by such Pledgor and to exercise all other rights, powers,
privileges and remedies to which a holder of the Pledged Shares would be
entitled (including without limitation giving or withholding written consents of
shareholders, calling special meetings of shareholders and voting at such
meetings), which proxy shall be effective, automatically and without the
necessity of any action (including any transfer of any Pledged Shares on the
record books of the issuer thereof) by any other Person (including the issuer of
the Pledged Shares or any officer or agent thereof), upon the occurrence of an
Event of Default and which proxy shall only terminate upon the payment in full
of the Secured Obligations.
VIII-9
SECTION 8. Secured Party Appointed Attorney-in-Fact.
Each Pledgor hereby irrevocably appoints Secured Party as such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor and
in the name of such Pledgor, Secured Party or otherwise, from time to time in
Secured Party's discretion to take any action and to execute any instrument that
Secured Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation:
(a) to file one or more financing or continuation statements, or
amendments thereto, relative to all or any part of the Pledged Collateral
without the signature of such Pledgor;
(b) to ask, demand, collect, ▇▇▇ for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Pledged Collateral;
(c) to receive, endorse and collect any instruments made payable to
such Pledgor representing any dividend, principal or interest payment or
other distribution in respect of the Pledged Collateral or any part thereof
and to give full discharge for the same; and
(d) to file any claims or take any action or institute any proceedings
that Secured Party may deem necessary or desirable for the collection of
any of the Pledged Collateral or otherwise to enforce the rights of Secured
Party with respect to any of the Pledged Collateral.
SECTION 9. Secured Party May Perform.
If any Pledgor fails to perform any agreement contained herein, Secured
Party may itself perform, or cause performance of, such agreement, and the
expenses of Secured Party incurred in connection therewith shall be payable by
Pledgors under Section 13(b).
SECTION 10. Standard of Care.
The powers conferred on Secured Party hereunder are solely to protect its
interest in the Pledged Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Pledged Collateral in its possession and the accounting for
moneys actually received by it hereunder, Secured Party shall have no duty as to
any Pledged Collateral, it being understood that Secured Party shall have no
responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating to any
Pledged Collateral, whether or not Secured Party has or is deemed to have
knowledge of such matters, (b) taking any necessary steps (other than steps
taken in accordance with the standard of care set forth above to maintain
possession of the
VIII-10
Pledged Collateral) to preserve rights against any parties with respect to any
Pledged Collateral, (c) taking any necessary steps to collect or realize upon
the Secured Obligations or any guarantee therefor, or any part thereof, or any
of the Pledged Collateral, or (d) initiating any action to protect the Pledged
Collateral against the possibility of a decline in market value. Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of Pledged Collateral in its possession if such Pledged Collateral
is accorded treatment substantially equal to that which Secured Party accords
its own property consisting of negotiable securities.
SECTION 11. Remedies.
(a) If any Event of Default shall have occurred and be continuing, Secured
Party may exercise in respect of the Pledged Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the Uniform
Commercial Code as in effect in any relevant jurisdiction (the "Code") (whether
or not the Code applies to the affected Pledged Collateral), and Secured Party
may also in its sole discretion, without notice except as specified below, sell
the Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange or broker's board or at any of Secured Party's
offices or elsewhere, for cash, on credit or for future delivery, at such time
or times and at such price or prices and upon such other terms as Secured Party
may deem commercially reasonable, irrespective of the impact of any such sales
on the market price of the Pledged Collateral. Secured Party or any Lender or
Interest Rate Exchanger may be the purchaser of any or all of the Pledged
Collateral at any such sale and Secured Party, as agent for and representative
of Lenders and Interest Rate Exchangers (but not any Lender or Lenders or
Interest Rate Exchanger or Interest Rate Exchangers in its or their respective
individual capacities unless Requisite Obligees (as defined in Section 15(a))
shall otherwise agree in writing), shall be entitled, for the purpose of bidding
and making settlement or payment of the purchase price for all or any portion of
the Pledged Collateral sold at any such public sale, to use and apply any of the
Secured Obligations as a credit on account of the purchase price for any Pledged
Collateral payable by Secured Party at such sale. Each purchaser at any such
sale shall hold the property sold absolutely free from any claim or right on the
part of any Pledgor, and each Pledgor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it now has
or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Each Pledgor agrees that, to the extent notice of
sale shall be required by law, at least ten days' notice to such Pledgor of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. Secured Party shall not be
obligated to make any sale of Pledged Collateral regardless of notice of sale
having been given. Secured Party may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. Each Pledgor hereby waives any claims against Secured Party arising
by reason of the fact that the price at which any Pledged Collateral may have
been sold at such a private sale was less than the price which might have been
obtained at a public sale, even if Secured Party accepts the first offer
received and does not offer such Pledged Collateral to more than one offeree. If
the proceeds of any sale or other disposition of the Pledged
VIII-11
Collateral are insufficient to pay all the Secured Obligations, Pledgors shall
be jointly and severally liable for the deficiency and the fees of any attorneys
employed by Secured Party to collect such deficiency.
(b) Each Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws, Secured
Party may be compelled, with respect to any sale of all or any part of the
Pledged Collateral conducted without prior registration or qualification of such
Pledged Collateral under the Securities Act and/or such state securities laws,
to limit purchasers to those who will agree, among other things, to acquire the
Pledged Collateral for their own account, for investment and not with a view to
the distribution or resale thereof. Each Pledgor acknowledges that any such
private sales may be at prices and on terms less favorable than those obtainable
through a public sale without such restrictions and, notwithstanding such
circumstances, such Pledgor agrees that any such private sale shall be deemed to
have been made in a commercially reasonable manner and that Secured Party shall
have no obligation to engage in public sales and no obligation to delay the sale
of any Pledged Collateral for the period of time necessary to permit the issuer
thereof to register it for a form of public sale requiring registration under
the Securities Act or under applicable state securities laws, even if such
issuer would, or should, agree to so register it.
(c) If Secured Party determines to exercise its right to sell any or all of
the Pledged Collateral, upon written request, each Pledgor shall and shall cause
each issuer of any Pledged Shares owned by such Pledgor to be sold hereunder
from time to time to furnish to Secured Party all such information as Secured
Party may request in order to determine the number of shares and other
instruments included in the Pledged Collateral which may be sold by Secured
Party in exempt transactions under the Securities Act and the rules and
regulations of the Securities and Exchange Commission thereunder, as the same
are from time to time in effect.
SECTION 12. Application of Proceeds.
All proceeds received by Secured Party in respect of any sale of,
collection from, or other realization upon all or any part of the Pledged
Collateral shall be applied as provided in subsection 2.4D of the Credit
Agreement.
SECTION 13. Indemnity and Expenses.
(a) Pledgors jointly and severally agree to indemnify Secured Party, each
Lender and each Interest Rate Exchanger from and against any and all claims,
losses and liabilities in any way relating to, growing out of or resulting from
this Agreement and the transactions contemplated hereby (including without
limitation enforcement of this Agreement), except to the extent such claims,
losses or liabilities result solely from Secured Party's or such Lender's or
Interest Rate Exchanger's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
VIII-12
(b) Pledgors jointly and severally agree to pay to Secured Party upon
demand the amount of any and all costs and expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, that Secured
Party may incur in connection with (i) the administration of this Agreement,
(ii) the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of Secured Party hereunder, or (iv) the failure
by any Pledgor to perform or observe any of the provisions hereof.
(c) The obligations of Pledgors in this Section 13 shall survive the
termination of this Agreement and the discharge of Pledgors' other obligations
under this Agreement, the Lender Interest Rate Agreements, the Credit Agreement
and the other Loan Documents.
SECTION 14. Continuing Security Interest; Transfer of Loans.
This Agreement shall create a continuing security interest in the Pledged
Collateral and shall (a) remain in full force and effect until the payment in
full of all Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (b) be binding upon Pledgors and their respective successors and
assigns, and (c) inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of Secured Party and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), but
subject to the provisions of subsection 10.1 of the Credit Agreement, any Lender
may assign or otherwise transfer any Loans held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to Lenders herein or otherwise. Upon the payment in full of all
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall terminate and all rights to the Pledged Collateral
shall revert to the applicable Pledgors. Upon any such termination Secured Party
will, at Pledgors' expense, execute and deliver to Pledgors such documents as
Pledgors shall reasonably request to evidence such termination and Pledgors
shall be entitled to the return, upon their request and at their expense,
against receipt and without recourse to Secured Party, of such of the Pledged
Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof.
SECTION 15. Secured Party as Agent.
(a) Secured Party has been appointed to act as Secured Party hereunder by
Lenders and, by their acceptance of the benefits hereof, Interest Rate
Exchangers. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including
without limitation the release or substitution of Pledged Collateral), solely in
accordance with this Agreement and the Credit Agreement; provided that Secured
Party shall exercise, or refrain from exercising, any remedies provided for in
Section 11 in accordance with the instructions of (i) Requisite Lenders or (ii)
after payment in full of all Obligations under the Credit Agreement
VIII-13
and the other Loan Documents, the holders of a majority of the aggregate
notional amount (or, with respect to any Lender Interest Rate Agreement that has
been terminated in accordance with its terms, the amount then due and payable
(exclusive of expenses and similar payments but including any early termination
payments then due) under such Lender Interest Rate Agreement) under all Lender
Interest Rate Agreements (Requisite Lenders or, if applicable, such holders
being referred to herein as "Requisite Obligees"). In furtherance of the
foregoing provisions of this Section 15(a), each Interest Rate Exchanger, by its
acceptance of the benefits hereof, agrees that it shall have no right
individually to realize upon any of the Pledged Collateral hereunder, it being
understood and agreed by such Interest Rate Exchanger that all rights and
remedies hereunder may be exercised solely by Secured Party for the benefit of
Lenders and Interest Rate Exchangers in accordance with the terms of this
Section 15(a).
(b) Secured Party shall at all times be the same Person that is Collateral
Agent under the Credit Agreement. Written notice of resignation by Collateral
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
notice of resignation as Secured Party under this Agreement; removal of
Collateral Agent pursuant to subsection 9.5 of the Credit Agreement shall also
constitute removal as Secured Party under this Agreement; and appointment of a
successor Collateral Agent pursuant to subsection 9.5 of the Credit Agreement
shall also constitute appointment of a successor Secured Party under this
Agreement. Upon the acceptance of any appointment as Collateral Agent under
subsection 9.5 of the Credit Agreement by a successor Collateral Agent, that
successor Collateral Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring or removed Secured
Party under this Agreement, and the retiring or removed Secured Party under this
Agreement shall promptly (i) transfer to such successor Secured Party all sums,
securities and other items of Collateral held hereunder, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Secured Party under this Agreement,
and (ii) execute and deliver to such successor Secured Party such amendments to
financing statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor Secured Party of
the security interests created hereunder, whereupon such retiring or removed
Secured Party shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Collateral Agent's resignation or
removal hereunder as Secured Party, the provisions of this Agreement shall inure
to its benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was Secured Party hereunder.
SECTION 16. Amendments; Etc.
No amendment, modification, termination or waiver of any provision of this
Agreement, and no consent to any departure by any Pledgor therefrom, shall in
any event be effective unless the same shall be in writing and signed by Secured
Party and, in the case of any such amendment or modification, by Pledgors;
provided that any Pledge Amendment in the form of Schedule II annexed hereto or
any amendment hereto pursuant to Section 19 shall be effective upon by any
Pledgor and Pledgors hereby waive any requirement of notice of or
VIII-14
consent to any such Pledge Amendment or amendment. Any such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which it was given.
SECTION 17. Notices.
Any notice or other communication herein required or permitted to be given
shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
telefacsimile or telex (with received answerback), or three Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed; provided that notices to Secured Party shall not be effective until
received. For the purposes hereof, the address of each party hereto shall be as
provided in subsection 10.8 of the Credit Agreement or as set forth under such
party's name on the signature pages hereof or such other address as shall be
designated by such party in a written notice delivered to the other parties
hereto.
SECTION 18. Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Secured Party in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
any other or further exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 19. Additional Pledgors.
The initial Subsidiary Pledgors hereunder shall be such of the Subsidiaries
of Company as are signatories hereto on the date hereof. From time to time
subsequent to the date hereof, additional Subsidiaries of Company may become
parties hereto, as additional Pledgors (each an "Additional Pledgor"), by
executing an acknowledgement to this Agreement substantially in the form of
Schedule III annexed hereto. Upon delivery of any such counterpart to Chase Co-
Administrative Agent and Secured Party, notice of which is hereby waived by
Pledgors, each such Additional Pledgor shall be a Pledgor and shall be as fully
a party hereto as if such Additional Pledgor were an original signatory hereto.
Each Pledgor expressly agrees that its obligations arising hereunder shall not
be affected or diminished by the addition or release of any other Pledgor
hereunder, nor by any election of Chase Co-Administrative Agent not to cause any
Subsidiary of Company to become an Additional Pledgor hereunder. This Agreement
shall be fully effective as to any Pledgor that is or becomes a party hereto
regardless of whether any other Person becomes or fails to become or ceases to
be a Pledgor hereunder.
VIII-15
SECTION 20. Severability.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 21. Headings.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
SECTION 22. Governing Law; Terms; Rules of Construction.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES
THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER,
IN RESPECT OF ANY PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein
or in the Credit Agreement, terms used in Articles 8 and 9 of the Uniform
Commercial Code in the State of New York are used herein as therein defined. The
rules of construction set forth in subsection 1.3 of the Credit Agreement shall
be applicable to this Agreement mutatis mutandis.
SECTION 23. Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PLEDGOR ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH PLEDGOR, FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY
AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II)
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH PLEDGOR AT
VIII-16
ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 17; (IV) AGREES THAT SERVICE AS
PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION
OVER SUCH PLEDGOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE
CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT
SECURED PARTY RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH PLEDGOR IN THE COURTS OF ANY OTHER
JURISDICTION; AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 23 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT
PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
SECTION 24. Waiver of Jury Trial.
PLEDGORS AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
Each Pledgor and Secured Party acknowledge that this waiver is a material
inducement for Pledgors and Secured Party to enter into a business relationship,
that Pledgors and Secured Party have already relied on this waiver in entering
into this Agreement and that each will continue to rely on this waiver in their
related future dealings. Each Pledgor and Secured Party further warrant and
represent that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SECTION 24 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
SECTION 25. Counterparts.
This Agreement may be executed in one or more counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may be detached from
multiple separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.
VIII-17
[Remainder of page intentionally left blank]
VIII-18
IN WITNESS WHEREOF, Pledgors and Secured Party have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
OUTSOURCING SOLUTIONS INC.
ALASKA FINANCIAL SERVICES, INC.
CFC SERVICES CORP.
THE CONTINENTAL ALLIANCE, INC.
SOUTHWEST CREDIT SERVICES, INC.
By:____________________________________
Name:
Title:
ACCOUNT PORTFOLIOS, L.P.
GULF STATE CREDIT, L.P.
PERIMETER CREDIT, L.P.
By: ACCOUNT PORTFOLIOS G.P., INC.,
general partner
By:_______________________________
Name:
Title:
VIII-19
A.M. ▇▇▇▇▇▇ & ASSOCIATES, INC.
ACCOUNT PORTFOLIOS G.P., INC.
ACCOUNT PORTFOLIOS, INC.
ASSET RECOVERY & MANAGEMENT CORP.
FM SERVICES CORPORATION
▇▇▇▇▇ AND ▇▇▇▇▇, INC.
INDIANA MUTUAL CREDIT
ASSOCIATION, INC.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ASSOCIATES, INC.
NATIONAL ACCOUNT SYSTEMS, INC.
PAYCO AMERICAN CORPORATION
PAYCO AMERICAN INTERNATIONAL CORP.
PAYCO-GENERAL AMERICAN CREDITS, INC.
PROFESSIONAL RECOVERIES INC.
QUALINK, INC.
UNIVERSITY ACCOUNTING SERVICE, INC.
By:____________________________________
Name:
Title:
Notice Address for the foregoing
Pledgors:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ De Leeuw & Co.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
VIII-20
and a copy to:
White & Case
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
VIII-21
SUNTRUST BANK, ATLANTA,
as Secured Party
By:____________________________________
Name:
Title:
By:____________________________________
Name:
Title:
VIII-22
SCHEDULE I
TO PLEDGE AGREEMENT
Attached to and forming a part of the Pledge Agreement dated as of November
6, 1996, by and among the Pledgors referred to therein and SunTrust Bank,
Atlanta, as Secured Party.
Part A
================================================================================
Percent-
age of
Out-
Stock Number standing
Class of Certificate Par of Shares
Pledgor Stock Issuer Stock Nos. Value Shares Pledged
================================================================================
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
================================================================================
Part B
================================================================================
Pledgor Debt Issuer Amount of
Indebtedness
================================================================================
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
================================================================================
VIII-23
SCHEDULE II
TO PLEDGE AGREEMENT
[FORM OF PLEDGE AMENDMENT]
This Pledge Amendment, dated _______________, [199_] [200_] is delivered
pursuant to Section 6(b) of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement dated as of November 6, 1996, by and among the Pledgors
referred to therein and SunTrust Bank, Atlanta, as Secured Party (the "Pledge
Agreement", capitalized terms defined therein being used herein as therein
defined), and that the [Pledged Shares] [Pledged Debt] listed on this Pledge
Amendment shall be deemed to be part of the [Pledged Shares] [Pledged Debt] and
shall become part of the Pledged Collateral and shall secure all Secured
Obligations.
[NAME OF PLEDGOR]
By:_____________________________________
Name:
Title:
================================================================================
Percentage of
Class of Stock Par Number of Outstanding
Stock Issuer Stock Certificate Nos. Value Shares Shares Pledged
================================================================================
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
================================================================================
=====================================================
Amount of
Debt Issuer Indebtedness
=====================================================
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
=====================================================
VIII-24
SCHEDULE III
TO PLEDGE AGREEMENT
[FORM OF PLEDGE ACKNOWLEDGEMENT]
This Pledge Acknowledgement, dated _______________, [199_] [200_], is
delivered pursuant to Section 19 of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Acknowledgement may be attached to
the Pledge Agreement dated November 6, 1996, by and among the Pledgors referred
to therein and SunTrust Bank, Atlanta, as Secured Party (the "Pledge Agreement",
capitalized terms defined therein being used herein as therein defined), that
the undersigned by executing and delivering this Acknowledgement hereby becomes
a Pledgor under the Pledge Agreement in accordance with Section 19 thereof and
agrees to be bound by all of the terms thereof, and that the [Pledged Shares]
[Pledged Debt] listed on this Pledge Acknowledgement shall be deemed to be part
of the [Pledged Shares] [Pledged Debt] and shall become part of the Pledged
Collateral and shall secure all Secured Obligations.
[NAME OF ADDITIONAL PLEDGOR]
By:_____________________________________
Name:
Title:
Notice Address:
VIII-25
================================================================================
Percentage of
Class of Stock Par Number of Outstanding
Stock Issuer Stock Certificate Nos. Value Shares Shares Pledged
================================================================================
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
================================================================================
=====================================================
Amount of
Debt Issuer Indebtedness
=====================================================
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
=====================================================
VIII-26
EXHIBIT IX-A
[FORM OF SECURITY AGREEMENT]
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement") is dated as of November 6, 1996
and entered into by and among OUTSOURCING SOLUTIONS INC., a Delaware corporation
("Company"), each of THE UNDERSIGNED DIRECT AND INDIRECT DOMESTIC SUBSIDIARIES
of Company (each of such undersigned Subsidiaries being a "Subsidiary Grantor"
and collectively "Subsidiary Grantors", and each of Company and Subsidiary
Grantors being a "Grantor" and collectively "Grantors"; provided that after the
Closing Date, "Grantors" shall include any Additional Grantors (as hereinafter
defined)) and SUNTRUST BANK, ATLANTA, as agent for and representative of (in
such capacity herein called "Secured Party") the financial institutions
("Lenders") party to the Credit Agreement referred to below and any Interest
Rate Exchangers (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Pursuant to that certain Credit Agreement dated as of November 6, 1996
(said Credit Agreement, as it may hereafter be amended, restated, supplemented
or otherwise modified from time to time, being the "Credit Agreement", the terms
defined therein and not otherwise defined herein being used herein as therein
defined) by and among Company, Lenders, ▇▇▇▇▇▇▇ Sachs Credit Partners L.P. and
The Chase Manhattan Bank, as Co-Administrative Agents, Secured Party, as
Collateral Agent, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and Chase Securities
Inc., as Arranging Agents, Lenders have made certain commitments, subject to the
terms and conditions set forth in the Credit Agreement, to extend certain credit
facilities to Company.
B. Company may from time to time enter, or may from time to time have
entered, into one or more Interest Rate Agreement (collectively, the "Lender
Interest Rate Agreements") with one or more Lenders or their Affiliates (in such
capacity, collectively, "Interest Rate Exchangers") in accordance with the terms
of the Credit Agreement, and it is desired that the obligations of Company under
the Lender Interest Rate Agreements, including without limitation the obligation
of Company to make payments thereunder in the event of early termination thereof
(all such obligations being the "Interest Rate Obligations"), together with all
obligations of Company under the Credit Agreement and the other Loan Documents,
be secured hereunder.
C. Subsidiary Grantors have executed and delivered that certain Subsidiary
Guaranty dated as of November 6, 1996 (said Subsidiary Guaranty, as it may
hereafter be amended, restated, supplemented or otherwise modified from time to
time, being the "Guaranty") in favor of Secured Party for the benefit of Lenders
and any Interest Rate Exchangers, pursuant
IX-A-1
to which Subsidiary Grantors have guarantied the prompt payment and performance
when due of all obligations of Company under the Credit Agreement and the other
Loan Documents and all obligations of Company under the Lender Interest Rate
Agreements, including without limitation the obligation of Company to make
payments thereunder in the event of early termination thereof.
D. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Grantors shall have granted the security
interests and undertaken the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make Loans and other extensions of credit under the Credit Agreement
and to induce Interest Rate Exchangers to enter into the Lender Interest Rate
Agreements, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, each Grantor hereby agrees with
Secured Party as follows:
SECTION 1. Grant of Security.
Each Grantor hereby assigns to Secured Party, and hereby grants to Secured
Party a security interest in, all of such Grantor's right, title and interest in
and to the following, in each case whether now or hereafter existing or in which
Grantor now has or hereafter acquires an interest and wherever the same may be
located (the "Collateral"):
(a) all equipment in all of its forms (including, but not limited to,
all machinery, all computers, all data processing, computer or office
equipment, all furniture and all trucks and other vehicles), all parts
thereof and all accessions thereto (any and all such equipment, parts and
accessions being the "Equipment");
(b) all inventory in all of its forms (including, but not limited to,
(i) all goods held by such Grantor for sale or lease or to be furnished
under contracts of service or so leased or furnished, (ii) all raw
materials, work in process, finished goods, and materials used or consumed
in the manufacture, packing, shipping, advertising, selling, leasing,
furnishing or production of such inventory or otherwise used or consumed in
such Grantor's business, (iii) all goods in which such Grantor has an
interest in mass or a joint or other interest or right of any kind, and
(iv) all goods which are returned to or repossessed by such Grantor) and
all accessions thereto and products thereof (all such inventory, accessions
and products being the "Inventory") and all negotiable and non-negotiable
documents of title (including without limitation warehouse receipts, dock
receipts and bills of lading) issued by any Person covering any Inventory
(any such negotiable document of title being a "Negotiable Document of
Title");
(c) all accounts, contract rights, chattel paper, documents,
instruments, general intangibles and other rights and obligations of any
kind owned by or owing to such Grantor and all rights in, to and under all
security agreements, leases and other
IX-A-2
contracts securing or otherwise relating to any such accounts, contract
rights, chattel paper, documents, instruments, general intangibles or other
obligations (any and all such accounts, contract rights, chattel paper,
documents, instruments, general intangibles and other obligations being the
"Accounts", and any and all such security agreements, leases and other
contracts being the "Related Contracts");
(d) all agreements to which such Grantor is a party, as each such
agreement may be amended, restated, supplemented or otherwise modified from
time to time (said agreements, as so amended, restated, supplemented or
otherwise modified, being referred to herein individually as an "Assigned
Agreement" and collectively as the "Assigned Agreements"), including,
without limitation, (i) all rights of such Grantor to receive moneys due or
to become due under or pursuant to the Assigned Agreements, (ii) all rights
of such Grantor to receive proceeds of any insurance, indemnity, warranty
or guaranty with respect to the Assigned Agreements, (iii) all claims of
such Grantor for damages arising out of any breach of or default under the
Assigned Agreements, and (iv) all rights of such Grantor to terminate,
amend, supplement, modify or exercise rights or options under the Assigned
Agreements, to perform thereunder and to compel performance and otherwise
exercise all remedies thereunder;
(e) all cash, money, currency and deposit accounts, including without
limitation demand, time, savings, passbooks or similar accounts maintained
with Lenders or other banks, savings and loan associations or other
financial institutions (but excluding deposit accounts maintained in trust
by such Grantor or otherwise segregated from other funds of such Grantor
for the benefit of customers of such Grantor and containing only funds
owing to such customers);
(f) all trademarks, tradenames, tradesecrets, business names, patents,
patent applications, licenses, copyrights, registrations and franchise
rights owned by such Grantor, and all goodwill associated with any of the
foregoing;
(g) to the extent not included in any other paragraph of this Section
1, all other general intangibles (including without limitation tax refunds,
rights to payment or performance, choses in action and judgments taken on
any rights or claims included in the Collateral);
(h) all plant fixtures, business fixtures and other fixtures and
storage and office facilities, and all accessions thereto and products
thereof;
(i) all books, records, ledger cards, files, correspondence, computer
programs, tapes, disks and related data processing software that at any
time evidence or contain information relating to any of the Collateral or
are otherwise necessary or helpful in the collection thereof or realization
thereupon; and
(j) all proceeds, products, rents and profits of or from any and all
of the foregoing Collateral and, to the extent not otherwise included, all
payments under
IX-A-3
insurance (whether or not Secured Party is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral. For purposes of
this Agreement, the term "proceeds" includes whatever is receivable or
received when Collateral or proceeds are sold, exchanged, collected or
otherwise disposed of, whether such disposition is voluntary or
involuntary.
Notwithstanding anything herein to the contrary, in no event shall the
Collateral include, and no Grantor shall be deemed to have granted a security
interest in, any of such Grantor's rights or interests in any license, contract
or agreement to which such Grantor is a party or any of its rights or interests
thereunder to the extent, but only to the extent, that such a grant would, under
the terms of such license, contract or agreement or otherwise, result in a
breach of the terms of, or constitute a default under any license, contract or
agreement to which such Grantor is a party (other than to the extent that any
such term would be rendered ineffective pursuant to Section 9-318(4) of the
Uniform Commercial Code of any relevant jurisdiction or any other applicable law
(including the Bankruptcy Code) or principles of equity); provided, that
immediately upon the ineffectiveness, lapse or termination of any such
provision, the Collateral shall include, and such Grantor shall be deemed to
have granted a security interest in, all such rights and interests as if such
provision had never been in effect.
SECTION 2. Security for Obligations.
This Agreement secures, and the Collateral assigned by each Grantor is
collateral security for, the prompt payment or performance in full when due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including without limitation the payment of amounts that
would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all Secured Obligations
with respect to such Grantor. "Secured Obligations" means
(a) with respect to Company, all obligations and liabilities of every
nature of Company now or hereafter existing under or arising out of or in
connection with the Credit Agreement and the other Loan Documents and any
Lender Interest Rate Agreement, and
(b) with respect to each Subsidiary Grantor and Additional Grantor,
all obligations and liabilities of every nature of Grantors now or
hereafter existing under or arising out of or in connection with the
Guaranty,
in each case together with all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Company, would accrue on such
obligations, whether or not a claim is allowed against Company for such interest
in the related bankruptcy proceeding), reimbursement of amounts drawn under
Letters of Credit, payments for early termination of Lender Interest Rate
IX-A-4
Agreements, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Secured Party or any Lender or Interest Rate Exchanger as a
preference, fraudulent transfer or otherwise, and all obligations of every
nature of Grantors now or hereafter existing under this Agreement.
SECTION 3. Grantors Remain Liable.
Anything contained herein to the contrary notwithstanding, (a) each Grantor
shall remain liable under any contracts and agreements included in the
Collateral, to the extent set forth therein, to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by Secured Party of any of its rights hereunder shall
not release any Grantor from any of its duties or obligations under the
contracts and agreements included in the Collateral, and (c) Secured Party shall
not have any obligation or liability under any contracts and agreements included
in the Collateral by reason of this Agreement, nor shall Secured Party be
obligated to perform any of the obligations or duties of any Grantor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
SECTION 4. Representations and Warranties.
Each Grantor represents and warrants as follows:
(a) Ownership of Collateral. Except as expressly permitted by the
Credit Agreement and for the security interest created by this Agreement,
such Grantor owns the Collateral owned by such Grantor free and clear of
any Lien.
(b) Locations of Equipment and Inventory. All of the Equipment and
Inventory is, as of the date hereof, located at the places specified in
Schedule 4(b) annexed hereto.
(c) Negotiable Documents of Title. No Negotiable Documents of Title
are outstanding with respect to any of the Inventory.
(d) Office Locations. The chief place of business, the chief executive
office and the office where such Grantor keeps its records regarding the
Accounts and all originals of all chattel paper that evidence Accounts are,
and, except as set forth on Schedule 4(d) annexed hereto, have been for the
four month period preceding the date hereof, located at the locations set
forth on Schedule 4(d) annexed hereto.
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(e) Names. No Grantor has in the past done, and no Grantor now does,
business under any other name (including any trade-name or fictitious
business name) except the names listed in Schedule 4(e) annexed hereto.
(f) Delivery of Certain Collateral. All notes and other instruments
(excluding checks) comprising any and all items of Collateral have been
delivered to Secured Party duly endorsed and accompanied by duly executed
instruments of transfer or assignment in blank.
(g) Perfection. The security interests in the Collateral granted to
Secured Party for the ratable benefit of the Lenders and Interest Rate
Exchangers hereunder constitute valid security interests in the Collateral.
Upon the filing of UCC financing statements naming each Grantor as
"debtor", naming Secured Party as "secured party" and describing the
Collateral in the filing offices set forth on Schedule 4(g) annexed hereto,
the security interests in the Collateral granted to Secured Party for the
ratable benefit of the Lenders and Interest Rate Exchangers will, to the
extent a security interest in the Collateral may be perfected by filing UCC
financing statements, constitute perfected security interests therein prior
to all other Liens.
SECTION 5. Further Assurances.
(a) Each Grantor agrees that from time to time, at the expense of Grantors,
such Grantor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Secured Party may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, each Grantor will:
(i) at the request of Secured Party, ▇▇▇▇ conspicuously each item of chattel
paper included in the Accounts, each Related Contract and, at the request of
Secured Party, each of its records pertaining to the Collateral, with a legend,
in form and substance satisfactory to Secured Party, indicating that such
Collateral is subject to the security interest granted hereby, (ii) at the
request of Secured Party, deliver and pledge to Secured Party hereunder all
promissory notes and other instruments (including checks) and all original
counterparts of chattel paper constituting Collateral, duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to Secured Party, (iii) execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as Secured Party
may request, in order to perfect and preserve the security interests granted or
purported to be granted hereby, (iv) promptly after the acquisition by such
Grantor of any item of Equipment which is covered by a certificate of title
under a statute of any jurisdiction under the law of which indication of a
security interest on such certificate is required as a condition of perfection
thereof, execute and file with the registrar of motor vehicles or other
appropriate authority in such jurisdiction an application or other document
requesting the notation or other indication of the security interest created
hereunder on such certificate of title, (v) within 30 days after the end of each
calendar year and
IX-A-6
June 30 of each calendar year, deliver to Agent copies of all such applications
or other documents filed during such semiannual period and copies of all such
certificates of title issued during such semiannual period indicating the
security interest created hereunder in the items of Equipment covered thereby,
(vi) at any reasonable time, upon request by Secured Party, exhibit the
Collateral to and allow inspection of the Collateral by Secured Party, or
persons designated by Secured Party, and (vii) at Secured Party's request,
appear in and defend any action or proceeding that may affect such Grantor's
title to or Secured Party's security interest in all or any part of the
Collateral.
(b) Each Grantor hereby authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of any Grantor. Each Grantor
agrees that a carbon, photographic or other reproduction of this Agreement or of
a financing statement signed by such Grantor shall be sufficient as a financing
statement and may be filed as a financing statement in any and all
jurisdictions.
(c) Each Grantor will furnish to Secured Party from time to time statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as Secured Party may reasonably
request, all in reasonable detail.
SECTION 6. Certain Covenants of Grantors.
Each Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Secured Party of any change in such Grantor's name,
identity or corporate structure within 15 days of such change;
(c) give Secured Party 30 days' prior written notice of any change in
such Grantor's chief place of business, chief executive office or residence
or the office where such Grantor keeps its records regarding the Accounts
and all originals of all chattel paper that evidence Accounts; and
(d) pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Collateral, except
to the extent the validity thereof is being contested in good faith;
provided that such Grantor shall in any event pay such taxes, assessments,
charges, levies or claims not later than five days prior to the date of any
proposed sale under any judgement, writ or warrant of attachment entered or
filed against such Grantor or any of the Collateral as a result of the
failure to make such payment.
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SECTION 7. Special Covenants With Respect to Equipment and Inventory.
Each Grantor shall:
(a) keep the Equipment and Inventory owned by such Grantor at the
places therefor specified on Schedule 4(b) annexed hereto or, upon 30 days'
prior written notice to Secured Party, at such other places in
jurisdictions where all action that may be necessary or desirable, or that
Secured Party may request, in order to perfect and protect any security
interest granted or purported to be granted hereby, or to enable Secured
Party to exercise and enforce its rights and remedies hereunder, with
respect to such Equipment and Inventory shall have been taken;
(b) cause the Equipment owned by such Grantor to be maintained and
preserved in the same condition, repair and working order as when new,
ordinary wear and tear excepted, and in accordance with such Grantor's past
practices. Each Grantor shall promptly furnish to Secured Party a statement
respecting any material loss or damage to any of the Equipment owned by
such Grantor;
(c) keep correct and accurate records of Inventory owned by such
Grantor, itemizing and describing the kind, type and quantity of such
Inventory, such Grantor's cost therefor and (where applicable) the current
list prices for such Inventory;
(d) if any Inventory is in possession or control of any of such
Grantor's agents or processors, if the aggregate book value of all such
Inventory exceeds $500,000, and in any event upon the occurrence of an
Event of Default (as defined in the Credit Agreement) or the occurrence of
an Early Termination Date (as defined in a Master Agreement or an Interest
Rate Swap Agreement or Interest Rate and Currency Exchange Agreement in the
form prepared by the International Swap and Derivatives Association Inc. or
a similar event under any similar swap agreement) under any Lender Interest
Rate Agreement (either such occurrence being an "Event of Default" for
purposes of this Agreement), instruct such agent or processor to hold all
such Inventory for the account of Secured Party and subject to the
instructions of Secured Party.
(e) promptly upon the issuance and delivery to such Grantor of any
Negotiable Document of Title, deliver such Negotiable Document of Title to
Secured Party.
SECTION 8. Insurance.
Each Grantor shall, at its own expense, maintain insurance with respect to
the Equipment and Inventory in accordance with the terms of the Credit
Agreement.
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SECTION 9. Special Covenants with respect to Accounts and Related Contracts.
(a) Each Grantor shall keep its chief place of business and chief executive
office and the office where it keeps its records concerning the Accounts and
Related Contracts, and all originals of all chattel paper that evidence
Accounts, at the location therefor specified in Section 4 or, upon 30 days'
prior written notice to Secured Party, at such other location in a jurisdiction
where all action that may be necessary or desirable, or that Secured Party may
request, in order to perfect and protect any security interest granted or
purported to be granted hereby, or to enable Secured Party to exercise and
enforce its rights and remedies hereunder, with respect to such Accounts and
Related Contracts shall have been taken. Each Grantor will hold and preserve
such records and chattel paper and will permit representatives of Secured Party
at any time during normal business hours to inspect and make abstracts from such
records and chattel paper, and each Grantor agrees to render to Secured Party,
at Grantor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. Promptly upon the request of Secured
Party, each Grantor shall deliver to Secured Party complete and correct copies
of each Related Contract.
(b) Each Grantor shall, for not less than 3 years from the date on which
such Account arose, maintain (i) complete records of each Account of such
Grantor, including records of all payments received, credits granted and
merchandise returned, and (ii) all documentation relating thereto.
(c) Except as otherwise provided in this subsection (c), each Grantor shall
continue to collect, at its own expense, all amounts due or to become due to
such Grantor under the Accounts and Related Contracts. In connection with such
collections, each Grantor may take (and, at Secured Party's direction, shall
take) such action as such Grantor or Secured Party may deem necessary or
advisable to enforce collection of amounts due or to become due under the
Accounts; provided, however, that Secured Party shall have the right at any
time, upon the occurrence and during the continuation of an Event of Default or
a Potential Event of Default and upon written notice to such Grantor of its
intention to do so, to notify the account debtors or obligors under any Accounts
of the assignment of such Accounts to Secured Party and to direct such account
debtors or obligors to make payment of all amounts due or to become due to such
Grantor thereunder directly to Secured Party, to notify each Person maintaining
a lockbox or similar arrangement to which account debtors or obligors under any
Accounts have been directed to make payment to remit all amounts representing
collections on checks and other payment items from time to time sent to or
deposited in such lockbox or other arrangement directly to Secured Party and,
upon such notification and at the expense of Grantors, to enforce collection of
any such Accounts and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Grantor might have
done. After receipt by such Grantor of the notice from Secured Party referred to
in the proviso to the preceding sentence, (i) all amounts and proceeds
(including checks and other instruments) received by such Grantor in respect of
the Accounts and the Related Contracts shall be received in trust for the
benefit of Secured Party hereunder, shall be segregated from other funds of such
Grantor and shall be forthwith paid over or delivered to Secured Party in the
same form as so received (with any necessary endorsement) to be held as cash
Collateral and applied as provided
IX-A-9
by Section 18, and (ii) such Grantor shall not adjust, settle or compromise the
amount or payment of any Account, or release wholly or partly any account debtor
or obligor thereof, or allow any credit or discount thereon.
SECTION 10. Special Provisions With Respect to the Assigned Agreements.
(a) Each Grantor shall at its expense:
(i) if consistent with sound business practices, perform and observe
all terms and provisions of the Assigned Agreements to be performed or
observed by it, maintain the Assigned Agreements in full force and effect,
enforce the Assigned Agreements in accordance with their terms, and take
all such action to such end as may be from time to time requested by
Secured Party; and
(ii) upon the reasonable request of Secured Party, furnish to Secured
Party, promptly upon receipt thereof, copies of all notices, requests and
other documents received by such Grantor under or pursuant to the Assigned
Agreements, and from time to time (A) furnish to Secured Party such
information and reports regarding the Assigned Agreements as Secured Party
may reasonably request and (B) upon request of Secured Party make to the
parties to such Assigned Agreements such demands and requests for
information and reports or for action as such Grantor is entitled to make
under the Assigned Agreements.
(b) Upon the occurrence and during the continuance of an Event of Default,
no Grantor shall:
(i) cancel or terminate any of the Assigned Agreements or consent to
or accept any cancellation or termination thereof;
(ii) amend or otherwise modify the Assigned Agreements or give any
consent, waiver or approval thereunder;
(iii) waive any default under or breach of the Assigned Agreements;
(iv) consent to or permit or accept any prepayment of amounts to
become due under or in connection with the Assigned Agreements, except as
expressly provided therein; or
(v) take any other action in connection with the Assigned Agreements
that would materially impair the value of the interest or rights of such
Grantor thereunder or that would materially impair the interest or rights
of Secured Party.
IX-A-10
SECTION 11. Deposit Accounts.
Upon the occurrence and during the continuation of an Event of Default,
Secured Party may exercise dominion and control over, and refuse to permit
further withdrawals (whether of money, securities, instruments or other
property) from any deposit accounts maintained with Secured Party constituting
part of the Collateral.
SECTION 12. License of Patents, Trademarks, Copyrights, etc.
Each Grantor hereby assigns, transfers and conveys to Secured Party,
effective upon the occurrence of any Event of Default, the nonexclusive right
and license to use all trademarks, tradenames, copyrights, patents or technical
processes owned or used by such Grantor that relate to the Collateral and any
other collateral granted by such Grantor as security for the Secured
Obligations, together with any goodwill associated therewith, all to the extent
necessary to enable Secured Party to use, possess and realize on the Collateral
and to enable any successor or assign to enjoy the benefits of the Collateral.
This right and license shall inure to the benefit of all successors, assigns and
transferees of Secured Party and its successors, assigns and transferees,
whether by voluntary conveyance, operation of law, assignment, transfer,
foreclosure, deed in lieu of foreclosure or otherwise. Such right and license is
granted free of charge, without requirement that any monetary payment whatsoever
be made to such Grantor.
SECTION 13. Transfers and Other Liens.
No Grantor shall:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit
Agreement; or
(b) except for the security interest created by this Agreement, create
or suffer to exist any Lien upon or with respect to any of the Collateral
to secure the indebtedness or other obligations of any Person.
SECTION 14. Secured Party Appointed Attorney-in-Fact.
Each Grantor hereby irrevocably appoints Secured Party as such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor, Secured Party or otherwise, from time to time in
Secured Party's discretion to take any action and to execute any instrument that
Secured Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation:
IX-A-11
(a) upon the occurrence and during the continuance of an Event of
Default, to obtain and adjust insurance required to be maintained by such
Grantor or paid to Secured Party pursuant to Section 8;
(b) upon the occurrence and during the continuance of an Event of
Default, to ask for, demand, collect, ▇▇▇ for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral;
(c) upon the occurrence and during the continuance of an Event of
Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clauses (a) and (b) above;
(d) upon the occurrence and during the continuance of an Event of
Default, to file any claims or take any action or institute any proceedings
that Secured Party may deem necessary or desirable for the collection of
any of the Collateral or otherwise to enforce the rights of Secured Party
with respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens permitted
under this Agreement or the Credit Agreement) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Secured Party
in its sole discretion, any such payments made by Secured Party to become
obligations of such Grantor to Secured Party, due and payable immediately
without demand;
(f) upon the occurrence and during the continuance of an Event of
Default, to sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with Accounts and
other documents relating to the Collateral; and
(g) upon the occurrence and during the continuance of an Event of
Default, generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though Secured Party were the absolute owner thereof for all
purposes, and to do, at Secured Party's option and Grantors' expense, at
any time or from time to time, all acts and things that Secured Party deems
necessary to protect, preserve or realize upon the Collateral and Secured
Party's security interest therein in order to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do.
SECTION 15. Secured Party May Perform.
If any Grantor fails to perform any agreement contained herein, Secured
Party may itself perform, or cause performance of, such agreement, and the
expenses of Secured Party incurred in connection therewith shall be payable by
such Grantor under Section 19(b).
IX-A-12
SECTION 16. Standard of Care.
The powers conferred on Secured Party hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the exercise of reasonable care in the custody of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, Secured Party shall have no duty as to any Collateral or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral. Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which Secured Party accords its own property.
SECTION 17. Remedies.
If any Event of Default shall have occurred and be continuing, Secured
Party may exercise in respect of the Collateral, in addition to all other rights
and remedies provided for herein or otherwise available to it, all the rights
and remedies of a secured party on default under the Uniform Commercial Code as
in effect in any relevant jurisdiction (the "Code") (whether or not the Code
applies to the affected Collateral), and also may (a) require each Grantor to,
and each Grantor hereby agrees that it will at its expense and upon request of
Secured Party forthwith, assemble all or part of the Collateral as directed by
Secured Party and make it available to Secured Party at a place to be designated
by Secured Party that is reasonably convenient to both parties, (b) enter onto
the property where any Collateral is located and take possession thereof with or
without judicial process, (c) prior to the disposition of the Collateral, store,
process, repair or recondition the Collateral or otherwise prepare the
Collateral for disposition in any manner to the extent Secured Party deems
appropriate, (d) take possession of any Grantor's premises or place custodians
in exclusive control thereof, remain on such premises and use the same and any
of such Grantor's equipment for the purpose of completing any work in process,
taking any actions described in the preceding clause (c) and collecting any
Secured Obligation, and (e) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of Secured Party's offices or elsewhere, for cash, on credit or for
future delivery, at such time or times and at such price or prices and upon such
other terms as Secured Party may deem commercially reasonable. Secured Party or
any Lender or Interest Rate Exchanger may be the purchaser of any or all of the
Collateral at any such sale and Secured Party, as agent for and representative
of Lenders and Interest Rate Exchangers (but not any Lender or Lenders or
Interest Rate Exchanger or Interest Rate Exchangers in its or their respective
individual capacities unless Requisite Obligees (as defined in Section 21(a))
shall otherwise agree in writing), shall be entitled, for the purpose of bidding
and making settlement or payment of the purchase price for all or any portion of
the Collateral sold at any such public sale, to use and apply any of the Secured
Obligations as a credit on account of the purchase price for any Collateral
payable by Secured Party at such sale. Each purchaser at any such sale shall
hold the property sold absolutely free from any claim or right on the part of
any Grantor, and each Grantor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it now has
or may at any
IX-A-13
time in the future have under any rule of law or statute now existing or
hereafter enacted. Each Grantor agrees that, to the extent notice of sale shall
be required by law, at least ten days' notice to such Grantor of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. Secured Party shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
Secured Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. Each
Grantor hereby waives any claims against Secured Party arising by reason of the
fact that the price at which any Collateral may have been sold at such a private
sale was less than the price which might have been obtained at a public sale,
even if Secured Party accepts the first offer received and does not offer such
Collateral to more than one offeree. If the proceeds of any sale or other
disposition of the Collateral are insufficient to pay all the Secured
Obligations, Grantors shall be jointly and severally liable for the deficiency
and the fees of any attorneys employed by Secured Party to collect such
deficiency.
SECTION 18. Application of Proceeds.
Except as expressly provided elsewhere in this Agreement, all proceeds
received by Secured Party in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral shall be applied as provided
in subsection 2.4D of the Credit Agreement.
SECTION 19. Indemnity and Expenses.
(a) Grantors jointly and severally agree to indemnify Secured Party, each
Lender and each Interest Rate Exchanger from and against any and all claims,
losses and liabilities in any way relating to, growing out of or resulting from
this Agreement and the transactions contemplated hereby (including without
limitation enforcement of this Agreement), except to the extent such claims,
losses or liabilities result solely from Secured Party's or such Lender's or
Interest Rate Exchanger's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Grantors jointly and severally agree to pay to Secured Party upon
demand the amount of any and all costs and expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, that Secured
Party may incur in connection with (i) the administration of this Agreement,
(ii) the custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of Secured Party hereunder, or (iv) the failure
by any Grantor to perform or observe any of the provisions hereof.
(c) The obligations of Grantors in this Section 19 shall survive the
termination of this Agreement and the discharge of Grantors' other obligations
under this Agreement, the Lender Interest Rate Agreements, the Credit Agreement
and the other Loan Documents.
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SECTION 20. Continuing Security Interest; Transfer of Loans.
This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the payment in
full of the Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (b) be binding upon Grantors and their respective successors and
assigns, and (c) inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of Secured Party and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), but
subject to the provisions of subsection 10.1 of the Credit Agreement, any Lender
may assign or otherwise transfer any Loans held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to Lenders herein or otherwise. Upon the payment in full of all
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to the applicable Grantors. Upon any such termination Secured Party will,
at Grantors' expense, execute and deliver to Grantors such documents as Grantors
shall reasonably request to evidence such termination.
SECTION 21. Secured Party as Agent.
(a) Secured Party has been appointed to act as Secured Party hereunder by
Lenders and, by their acceptance of the benefits hereof, Interest Rate
Exchangers. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including
without limitation the release or substitution of Collateral), solely in
accordance with this Agreement and the Credit Agreement; provided that Secured
Party shall exercise, or refrain from exercising, any remedies provided for in
Section 17 in accordance with the instructions of (i) Requisite Lenders or (ii)
after payment in full of all Obligations under the Credit Agreement and the
other Loan Documents, the holders of a majority of the aggregate notional amount
(or, with respect to any Lender Interest Rate Agreement that has been terminated
in accordance with its terms, the amount then due and payable (exclusive of
expenses and similar payments but including any early termination payments then
due) under such Lender Interest Rate Agreement) under all Lender Interest Rate
Agreements (Requisite Lenders or, if applicable, such holders being referred to
herein as "Requisite Obligees"). In furtherance of the foregoing provisions of
this Section 21(a), each Interest Rate Exchanger, by its acceptance of the
benefits hereof, agrees that it shall have no right individually to realize upon
any of the Collateral hereunder, it being understood and agreed by such Interest
Rate Exchanger that all rights and remedies hereunder may be exercised solely by
Secured Party for the benefit of Lenders and Interest Rate Exchangers in
accordance with the terms of this Section 21(a).
(b) Secured Party shall at all times be the same Person that is Collateral
Agent under the Credit Agreement. Written notice of resignation by Collateral
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
notice of resignation as Secured Party under this Agreement; removal of
Collateral Agent pursuant to subsection 9.5 of the Credit Agreement
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shall also constitute removal as Secured Party under this Agreement; and
appointment of a successor Collateral Agent pursuant to subsection 9.5 of the
Credit Agreement shall also constitute appointment of a successor Secured Party
under this Agreement. Upon the acceptance of any appointment as Collateral Agent
under subsection 9.5 of the Credit Agreement by a successor Collateral Agent,
that successor Collateral Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring or removed
Secured Party under this Agreement, and the retiring or removed Secured Party
under this Agreement shall promptly (i) transfer to such successor Secured Party
all sums, securities and other items of Collateral held hereunder, together with
all records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Secured Party under this Agreement,
and (ii) execute and deliver to such successor Secured Party such amendments to
financing statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor Secured Party of
the security interests created hereunder, whereupon such retiring or removed
Secured Party shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Collateral Agent's resignation or
removal hereunder as Secured Party, the provisions of this Agreement shall inure
to its benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was Secured Party hereunder.
SECTION 22. Additional Grantors.
The initial Subsidiary Grantors hereunder shall be such of the Subsidiaries
of Company as are signatories hereto on the date hereof. From time to time
subsequent to the date hereof, additional Subsidiaries of Company may become
parties hereto as additional Grantors (each an "Additional Grantor"), by
executing a counterpart of this Agreement. Upon delivery of any such counterpart
to Chase Co-Administrative Agent and Secured Party, notice of which is hereby
waived by Grantors, each such Additional Grantor shall be a Grantor and shall be
as fully a party hereto as if such Additional Grantor were an original signatory
hereto. Each Grantor expressly agrees that its obligations arising hereunder
shall not be affected or diminished by the addition or release of any other
Grantor hereunder, nor by any election of Chase Co-Administrative Agent not to
cause any Subsidiary of Company to become an Additional Grantor hereunder. This
Agreement shall be fully effective as to any Grantor that is or becomes a party
hereto regardless of whether any other Person becomes or fails to become or
ceases to be a Grantor hereunder.
SECTION 23. Amendments; Etc.
No amendment, modification, termination or waiver of any provision of this
Agreement, and no consent to any departure by any Grantor therefrom, shall in
any event be effective unless the same shall be in writing and signed by Secured
Party and, in the case of any such amendment or modification, by Grantors;
provided that any amendment hereto pursuant to Section 22 shall be effective
upon by any Additional Grantor and Grantors hereby waive any requirement of
notice of or consent to any such amendment. Any such waiver or
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consent shall be effective only in the specific instance and for the specific
purpose for which it was given.
SECTION 24. Notices.
Any notice or other communication herein required or permitted to be given
shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
telefacsimile or telex (with received answerback), or three Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed; provided that notices to Secured Party shall not be effective until
received. For the purposes hereof, the address of each party hereto shall be as
provided in subsection 10.8 of the Credit Agreement or as set forth under such
party's name on the signature pages hereof or such other address as shall be
designated by such party in a written notice delivered to the other parties
hereto.
SECTION 25. Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Secured Party in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
any other or further exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 26. Severability.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 27. Headings.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
IX-A-17
SECTION 28. Governing Law; Terms; Rules of Construction.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES
THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER,
IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein
or in the Credit Agreement, terms used in Articles 8 and 9 of the Uniform
Commercial Code in the State of New York are used herein as therein defined. The
rules of construction set forth in subsection 1.3 of the Credit Agreement shall
be applicable to this Agreement mutatis mutandis.
SECTION 29. Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH GRANTOR, FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY
AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II)
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH GRANTOR AT ITS ADDRESS
PROVIDED IN ACCORDANCE WITH SECTION 24; (IV) AGREES THAT SERVICE AS PROVIDED IN
CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH
GRANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT SECURED PARTY
RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
BRING PROCEEDINGS AGAINST SUCH GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION;
AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 29 RELATING TO JURISDICTION
AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE
UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
IX-A-18
SECTION 30. Waiver of Jury Trial.
GRANTORS AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
Each Grantor and Secured Party acknowledge that this waiver is a material
inducement for Grantors and Secured Party to enter into a business relationship,
that Grantors and Secured Party have already relied on this waiver in entering
into this Agreement and that each will continue to rely on this waiver in their
related future dealings. Each Grantor and Secured Party further warrant and
represent that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SECTION 30 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
SECTION 31. Counterparts.
This Agreement may be executed in one or more counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may be detached from
multiple separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.
[Remainder of page intentionally left blank]
IX-A-19
IN WITNESS WHEREOF, Grantors and Secured Party have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
OUTSOURCING SOLUTIONS INC.
ALASKA FINANCIAL SERVICES, INC.
CFC SERVICES CORP.
THE CONTINENTAL ALLIANCE, INC.
SOUTHWEST CREDIT SERVICES, INC.
By:_____________________________________
Name:
Title:
ACCOUNT PORTFOLIOS, L.P.
GULF STATE CREDIT, L.P.
PERIMETER CREDIT, L.P.
By: ACCOUNT PORTFOLIOS G.P., INC.,
general partner
By:________________________________
Name:
Title:
IX-A-20
A.M. ▇▇▇▇▇▇ & ASSOCIATES, INC.
ACCOUNT PORTFOLIOS G.P., INC.
ACCOUNT PORTFOLIOS, INC.
ASSET RECOVERY & MANAGEMENT CORP.
FM SERVICES CORPORATION
▇▇▇▇▇ AND ▇▇▇▇▇, INC.
INDIANA MUTUAL CREDIT
ASSOCIATION, INC.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ASSOCIATES, INC.
NATIONAL ACCOUNT SYSTEMS, INC.
PAYCO AMERICAN CORPORATION
PAYCO AMERICAN INTERNATIONAL CORP.
PAYCO-GENERAL AMERICAN CREDITS, INC.
PROFESSIONAL RECOVERIES INC.
QUALINK, INC.
UNIVERSITY ACCOUNTING SERVICE, INC.
By:_____________________________________
Name:
Title:
Notice Address for the foregoing
Grantors:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ De Leeuw & Co.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
IX-A-21
and a copy to:
White & Case
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇-▇-▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
as Secured Party
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
IX-A-23
IN WITNESS WHEREOF, the undersigned Additional Grantor has caused this
Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of __________, [199_] [200_].
[NAME OF ADDITIONAL GRANTOR]
By:_____________________________________
Name:
Title:
Notice Address:
____________________________
____________________________
____________________________
IX-A-24
SCHEDULE 4(b)
TO
SECURITY AGREEMENT
Locations of Equipment and Inventory
Name of Company/Limited Partner- Locations of Equipment and Inventory
-------------------------------- ------------------------------------
ship
----
IX-A-25
SCHEDULE 4(d)
TO
SECURITY AGREEMENT
Office Locations
Name of Company/Limited Partnership Office Locations
----------------------------------- ----------------
IX-A-26
SCHEDULE 4(e)
TO
SECURITY AGREEMENT
Other Names
Name of Company/Limited Partnership Other Names
----------------------------------- -----------
IX-A-27
SCHEDULE 4(g)
TO
SECURITY AGREEMENT
Filing Offices
IX-A-28
EXHIBIT IX-B
[FORM OF LIMITED PARTNERSHIP SECURITY AGREEMENT]
LIMITED PARTNERSHIP SECURITY AGREEMENT
This LIMITED PARTNERSHIP SECURITY AGREEMENT (this "Agreement") is dated as
of November 6, 1996 and entered into by and among each of THE UNDERSIGNED DIRECT
AND INDIRECT DOMESTIC SUBSIDIARIES of Outsourcing Solutions Inc., Delaware
corporation ("Company") (each of such undersigned Subsidiaries being a "Grantor"
and collectively, "Grantors"; provided that after the Closing Date, "Grantors"
shall include any Additional Grantors (as hereinafter defined)), and SUNTRUST
BANK, ATLANTA, as agent for and representative of (in such capacity herein
called "Secured Party") the financial institutions ("Lenders") party to the
Credit Agreement referred to below and any Interest Rate Exchangers (as
hereinafter defined).
PRELIMINARY STATEMENTS
A. Pursuant to that certain Credit Agreement dated as of November 6, 1996
(said Credit Agreement, as it may hereafter be amended, restated, supplemented
or otherwise modified from time to time, being the "Credit Agreement", the terms
defined therein and not otherwise defined herein being used herein as therein
defined) by and among Company, Lenders, ▇▇▇▇▇▇▇ Sachs Credit Partners L.P. and
The Chase Manhattan Bank, as Co-Administrative Agents, Secured Party, as
Collateral Agent, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and Chase Securities
Inc., as Arranging Agents, Lenders have made certain commitments, subject to the
terms and conditions set forth in the Credit Agreement, to extend certain credit
facilities to Company.
B. Company may from time to time enter, or may from time to time have
entered, into one or more Interest Rate Agreement (collectively, the "Lender
Interest Rate Agreements") with one or more Lenders or their Affiliates (in such
capacity, collectively, "Interest Rate Exchangers") in accordance with the terms
of the Credit Agreement.
C. Grantors are party to the limited partnership agreements described on
Schedule I annexed hereto (as such agreements have heretofore been and may
hereafter be amended, restated, supplemented or otherwise modified from time to
time, collectively, the "Partnership Agreements"), and Grantors own the limited
partnership interests and general partnership interests in the applicable
limited partnerships as set forth on Schedule I annexed hereto (collectively,
the "Partnerships");
D. Grantors, together with certain other Subsidiaries of Company, have
executed and delivered that certain Subsidiary Guaranty dated as of November 6,
1996 (said Subsidiary
IX-B-1
Guaranty, as it may hereafter be amended, restated, supplemented or otherwise
modified from time to time, being the "Guaranty") in favor of Secured Party for
the benefit of Lenders and any Interest Rate Exchangers, pursuant to which each
Grantor has guarantied the prompt payment and performance when due of all
obligations of Company under the Credit Agreement and the other Loan Documents
and all obligations of Company under the Lender Interest Rate Agreements,
including without limitation the obligation of Company to make payments
thereunder in the event of the termination thereof.
E. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Grantors shall have granted the security
interests and undertaken the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make Loans and other extensions of credit under the Credit Agreement
and to induce Interest Rate Exchangers to enter into the Lender Interest Rate
Agreements and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, each Grantor hereby agrees with
Secured Party as follows:
SECTION 1. Grant of Security.
Each Grantor hereby pledges and assigns to Secured Party, and hereby grants
to Secured Party a security interest in, all of such Grantor's right, title and
interest in and to the following (the "Collateral"):
(a) all of such Grantor's right, title and interest as a limited
and/or general partner in the Partnerships, whether now owned or hereafter
acquired, including without limitation all of such Grantor's right, title
and interest in, to and under the Partnership Agreements to which it is a
party (including without limitation, if such Grantor is a general partner
of any Partnership, the right to vote with respect to and to manage and
administer the business of such Partnership) together with all other
rights, interests, claims and other property of such Grantor in any manner
arising out of or relating to its limited and/or general partnership
interest in the Partnerships, whatever their respective kind or character,
whether they are tangible or intangible property, and wheresoever they may
exist or be located, and further including without limitation all of the
rights of such Grantor as a limited and/or general partner: (i) to (x)
receive money due and to become due (including without limitation
dividends, distributions, interest, income from partnership properties and
operations, proceeds of sale of partnership assets and returns of capital)
under or pursuant to the Partnership Agreements, (y) receive payments upon
termination of the Partnership Agreements, and (z) receive any other
payments or distributions, whether cash or noncash, in respect of such
Grantor's limited and/or general partnership interest evidenced by the
Partnership Agreements; (ii) in and with respect to claims and causes of
action arising out of or relating to the Partnerships; and (iii) to have
access to the Partnerships' books and records and to other information
concerning or affecting the Partnerships;
IX-B-2
(b) any "certificate of interest" or "certificates of interest" (or
other certificates or instruments however designated or titled) issued by
the Partnerships and evidencing such Grantor's interest as a limited and/or
general partner in the Partnerships (collectively, the "Certificates") and
any interest of such Grantor in the entries on the books of any financial
intermediary pertaining to such Grantor's interest as a limited and/or
general partner in the Partnerships;
(c) all books, records, ledger cards, files, correspondence, computer
programs, tapes, disks and related data processing software that at any
time evidence or contain information relating to any of the Collateral or
are otherwise necessary or helpful in the collection thereof or realization
thereupon; and
(d) all proceeds, products, rents and profits of or from any and all
of the foregoing Collateral and, to the extent not otherwise included, all
payments under insurance (whether or not Secured Party is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss
or damage to or otherwise with respect to any of the foregoing Collateral.
For purposes of this Agreement, the term "proceeds" includes whatever is
receivable or received when Collateral or proceeds are sold, exchanged,
collected or otherwise disposed of, whether such disposition is voluntary
or involuntary.
SECTION 2. Security for Obligations.
This Agreement secures, and the Collateral is collateral security for, the
prompt payment or performance in full when due, whether at stated maturity, by
required prepayment, declaration, acceleration, demand or otherwise (including
without limitation the payment of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. ss.362(a)), of all Secured Obligations with respect to such Grantor.
"Secured Obligations" means all obligations and liabilities of every nature of
Grantors now or hereafter existing under or arising out of or in connection with
the Guaranty, together with all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Company, would accrue on such
obligations, whether or not a claim is allowed against Company for such interest
in the related bankruptcy proceeding), reimbursement of amounts drawn under
Letters of Credit, payments for early termination of Lender Interest Rate
Agreements, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Secured Party or any Lender or Interest Rate Exchanger as a
preference, fraudulent transfer or otherwise, and all obligations of every
nature of Grantors now or hereafter existing under this Agreement.
IX-B-3
SECTION 3. No Assumption.
Notwithstanding any of the foregoing, this Agreement shall not in any way
be deemed to obligate Secured Party, any Lender or any purchaser at a
foreclosure sale under this Agreement to assume any of Grantors' obligations,
duties, expenses or liabilities under the Partnership Agreement (including
without limitation any obligation of any Grantor as a general partner
thereunder) or under any and all other agreements now existing or hereafter
drafted or executed (collectively, the "Grantor Obligations") unless Secured
Party, any Lender or any such purchaser otherwise expressly agrees to assume any
or all of said Grantor Obligations in writing.
SECTION 4. Delivery of Certificate; Instructions to Partnerships Regarding
Registration of Pledge.
Any Certificate shall be delivered to and held by or on behalf of Secured
Party pursuant hereto and shall be in suitable form for transfer by delivery or
shall be accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to Secured Party. Grantor, at its
own expense, shall deliver to such of the Partnerships in which it is a partner
an order, satisfactory in form and substance to Secured Party, requesting that
the pledge of Grantor's interest as a limited and/or general partner in such
Partnership be registered on the books of such Partnership.
SECTION 5. Representations and Warranties.
Each Grantor represents and warrants as follows:
(a) Ownership of Collateral. Except as expressly permitted by the
Credit Agreement and for the security interest created by this Agreement,
such Grantor is the legal and beneficial owner of the Collateral pledged
and assigned hereunder free and clear of any Lien.
(b) Description of Collateral. Such Grantor is the owner and holder of
the limited and/or general partnership interests set forth on Schedule I
annexed hereto. The interest of such Grantor as a limited and/or general
partner in the Partnerships is not evidenced by one or more "certificates
of interest" or any other certificates or instruments however designated or
titled.
(c) Partnership Agreements. Each Partnership Agreement to which such
Grantor is a party, true and complete copies of which have been furnished
to Secured Party, is in full force and effect and has not been amended or
modified except as disclosed in writing to Secured Party. No default by
such Grantor exists under the Partnership Agreements and no event has
occurred or exists which, with notice or lapse of time or both, would
constitute a default by any Grantor thereunder.
IX-B-4
(d) Office Locations; Other Names. The chief place of business, the
chief executive office and the office where such Grantor keeps its records
regarding the Collateral is, and has been for the four month period
preceding the date hereof, located at the locations set forth on Schedule
II annexed hereto.
(e) Names. No Grantor has in the past done, and no Grantor now does,
business under any other name (including any trade-name or fictitious
business name) except the names listed on Schedule II annexed hereto.
(f) Consents or Governmental Authorizations. No consent of any other
Person (including without limitation any other limited or general partner
of the Partnerships or any creditor of Grantors), and no authorization,
approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required for either (i) the
grant by Grantors of the security interests granted hereby, (ii) the ,
delivery or performance of this Agreement by Grantors, or (iii) the
perfection of or the exercise by Secured Party of its rights and remedies
hereunder (except as may have been taken by or at the direction of
Grantors).
(g) Perfection. The security interests in the Collateral granted to
Secured Party for the ratable benefit of the Lenders and Interest Rate
Exchangers hereunder constitute valid security interests in the Collateral.
Upon the registration of the security interest of Secured Party hereunder
on the books and records of the Partnerships and the filing of UCC
financing statements naming each Grantor as "debtor", naming Secured Party
as "secured party" and describing the Collateral in the filing offices set
forth on Schedule III annexed hereto, the security interests in the
Collateral granted to Secured Party for the ratable benefit of the Lenders
and Interest Rate Exchangers will, to the extent a security interest in the
Collateral may be perfected by such registration and by filing UCC
financing statements, constitute valid and perfected security interests
therein prior to all other Liens.
SECTION 6. Further Assurances; New Partnership Interests.
(a) Each Grantor agrees that from time to time, at the expense of Grantors,
such Grantor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Secured Party may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, each Grantor will:
(i) deliver to any Partnership in which it is a partner such orders requesting
that the pledge of such Grantor's interest as a limited or general partner, as
the case may be, be registered on the books of such Partnership, (ii) execute
and file such financing or continuation statements, or amendments thereto, and
such other instruments or notices, as may be necessary or desirable, or as
Secured Party may request, in order to perfect and preserve the security
interests granted or purported to be granted hereby, and (iii) at Secured
Party's reasonable request, appear in and
IX-B-5
defend any action or proceeding that may affect such Grantor's title to or
Secured Party's security interest in all or any part of the Collateral.
(b) Each Grantor further agrees that it will, upon obtaining any additional
partnership interests required to be pledged hereunder as provided in the Credit
Agreement, promptly (and in any event within ten Business Days), deliver to
Secured Party an amendment, duly executed by such Grantor, in substantially the
form of Schedule IV annexed hereto (an "Amendment"), in respect of the
additional partnership interests to be pledged pursuant to this Agreement. Each
Grantor hereby authorizes Secured Party to attach each Amendment to this
Agreement and agrees that all partnership interests listed on any such Amendment
shall for all purposes hereunder be considered Collateral; provided that the
failure of a Grantor to execute an Amendment with respect to any additional
partnership interests pledged pursuant to this Agreement shall not impair the
security interest of Secured Party therein or otherwise adversely affect the
rights and remedies of Secured Party hereunder with respect thereto.
(c) Each Grantor hereby authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of any Grantor. Each Grantor
agrees that a carbon, photographic or other reproduction of this Agreement or of
a financing statement signed by such Grantor shall be sufficient as a financing
statement and may be filed as a financing statement in any and all
jurisdictions.
(d) Each Grantor will furnish to Secured Party from time to time statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as Secured Party may reasonably
request, all in reasonable detail.
SECTION 7. Certain Covenants of Grantor.
Except as otherwise permitted pursuant to the Credit Agreement, each
Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) not (i) cancel or terminate any of the Partnership Agreements or
consent to or accept any cancellation or termination thereof, (ii) sell,
assign (by operation of law or otherwise) or otherwise dispose of any part
of its limited or general partnership interest in any of the Partnerships,
(iii) amend, supplement or otherwise modify any of the Partnership
Agreements (as in effect on the date hereof), (iv) waive any default under
or breach of any of the Partnership Agreements or waive, fail to enforce,
forgive or release any right, interest or entitlement of any kind,
howsoever arising, under or in respect of any of the Partnership Agreements
or vary or agree to the variation in any respect of any of the provisions
of any of the Partnership Agreements or of the performance of any other
Person under any of the Partnership Agreements, or (v)
IX-B-6
petition, request or take any other legal or administrative action which
seeks, or may reasonably be expected, to rescind, terminate or suspend any
of the Partnership Agreements or to amend or modify any of the Partnership
Agreements, except where such amendment or modification would not have a
material adverse effect on Secured Party's rights in the Collateral;
(c) at its expense (i) perform and comply in all material respects
with all terms and provisions of the Partnership Agreements required to be
performed or complied with by it, (ii) maintain the Partnership Agreements
to which it is a party in full force and effect, (iii) enforce each of the
Partnership Agreements to which it is a party in accordance with its terms,
and (iv) take all such action to that end as from time to time may be
reasonably requested by Secured Party;
(d) not create or suffer to exist any Lien upon or with respect to any
of the Collateral to secure the indebtedness or other obligations of any
Person, except for the security interest created by this Agreement;
(e) not vote to permit the Partnerships to enter into any transaction
of merger or consolidation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution);
(f) notify Secured Party of any change in Grantor's name, identity or
corporate or partnership structure within 15 days of such change;
(g) give Secured Party 30 days' prior written notice of any change in
such Grantor's chief place of business, chief executive office or residence
or the office where such Grantor keeps its records regarding the
Collateral; and
(h) pay promptly when due all taxes, assessments and governmental
charges or levies imposed upon, and all claims against, the Collateral,
except to the extent the validity thereof is being contested in good faith;
provided that such Grantor shall in any event pay such taxes, assessments,
charges, levies or claims not later than five days prior to the date of any
proposed sale under any judgement, writ or warrant of attachment entered or
filed against such Grantor or any of the Collateral as a result of the
failure to make such payment.
SECTION 8. Voting Rights; Profits, Interest and Dividends.
(a) So long as no Event of Default (as defined in the Credit Agreement) or
the occurrence of an Early Termination Date (as defined in a Master Agreement or
an Interest Rate Swap Agreement or Interest Rate and Currency Exchange Agreement
in the form prepared by the International Swap and Derivatives Association Inc.
or a similar event under any similar swap agreement) under any Lender Interest
Rate Agreement (either such occurrence being an "Event of Default" for purposes
of this Agreement) shall have occurred and be continuing:
IX-B-7
(i) Grantors shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Collateral or any part thereof
(including without limitation rights of approval arising under the
Partnership Agreements and, in the case of any Grantor which is a general
partner in any Partnership, the right to manage and administer the business
of such Partnership) for any purpose not inconsistent with the terms of
this Agreement or the Credit Agreement;
(ii) Grantors shall be entitled to receive and retain, and to utilize
free and clear of the lien of this Agreement, any and all payments,
including but not limited to profits, dividends and other distributions,
paid in respect of the Collateral; provided, however, that any and all
(A) profits, dividends, and other distributions paid or payable
other than in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of, or in
exchange for, any Collateral,
(B) profits, dividends and other distributions paid or payable in
cash in respect of any Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, and
(C) cash paid, payable or otherwise distributed in redemption of
or in exchange for any Collateral,
shall be, and shall forthwith be delivered to Secured Party to hold as,
Collateral and shall, if received by any Grantor, be received in trust for
the benefit of Secured Party, be segregated from the other property or
funds of such Grantor and be forthwith delivered to Secured Party as
Collateral in the same form as so received (with all necessary
endorsements); and
(iii) Secured Party shall execute and deliver (or cause to be executed
and delivered) to Grantors all such proxies and other instruments as
Grantors may from time to time reasonably request for the purpose of
enabling Grantors to exercise the voting and other consensual rights that
it is entitled to exercise pursuant to Section 8(a)(i) and to receive the
profits, dividends and other distributions that it is authorized to receive
and retain pursuant to Section 8(a)(ii).
(b) Upon acceleration of the maturity of the Loans in accordance with
Section 8 of the Credit Agreement and upon the occurrence and during the
continuation of an Event of Default:
(i) upon written notice from Secured Party to any Grantors, all rights
of such Grantor to exercise the voting and other consensual rights that it
would otherwise be entitled to exercise pursuant to Section 8(a)(i) shall
cease, and all such rights shall thereupon become vested in Secured Party
who shall thereupon have the sole right to exercise such voting and other
consensual rights;
IX-B-8
(ii) all rights of each Grantor to receive any and all payments under
or in connection with the Partnership Agreements, including but not limited
to the profits, dividends, and other distributions which it would otherwise
be authorized to receive and retain pursuant to Section 8(a)(ii), shall
cease, and all such rights shall thereupon become vested in Secured Party
who shall thereupon have the sole right to receive and hold such payments
as Collateral; and
(iii) all payments which are received by any Grantor contrary to the
provisions of Section 8(b)(ii) shall be received in trust for the benefit
of Secured Party, shall be segregated from other funds of such Grantor and
shall be forthwith paid over to Secured Party as Collateral in the same
form as so received (with any necessary endorsement).
SECTION 9. Secured Party Appointed Attorney-in-Fact.
Each Grantor hereby irrevocably appoints Secured Party as such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor, Secured Party or otherwise, from time to time in
Secured Party's discretion to take any action and to execute any instrument that
Secured Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation:
(a) to ask for, demand, collect, ▇▇▇ for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral;
(b) to receive, endorse and collect all instruments made payable to
such Grantor representing any payment of profits, dividends or any other
distribution in respect of any of the Collateral;
(c) to file any claims or take any action or institute any proceedings
that Secured Party may deem necessary or desirable for the collection of
any of the Collateral or otherwise to enforce the rights of Secured Party
with respect to any of the Collateral; and
(d) to do, at Secured Party's option and Grantors' expense, at any
time or from time to time, all acts and things that Secured Party deems
necessary to protect, preserve or realize upon the Collateral and Secured
Party's security interest therein in order to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do.
SECTION 10. Secured Party May Perform.
IX-B-9
If any Grantor fails to perform any agreement contained herein, Secured
Party may itself perform, or cause performance of, such agreement, and the
expenses of Secured Party incurred in connection therewith shall be payable such
Grantor under Section 14 hereof.
SECTION 11. Standard of Care.
The powers conferred on Secured Party hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the exercise of reasonable care in the custody of any
Collateral in its possession and the accounting for monies actually received by
it hereunder, Secured Party shall have no duty as to any Collateral or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral. Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which Secured Party accords its own property of a similar nature.
SECTION 12. Remedies.
(a) If any Event of Default shall have occurred and be continuing, Secured
Party may exercise in respect of the Collateral, in addition to all other rights
and remedies provided for herein or otherwise available to it, all the rights
and remedies of a secured party on default under the Uniform Commercial Code as
in effect in any relevant jurisdiction (the "Code") (whether or not the Code
applies to the affected Collateral), and Secured Party may also in its sole
discretion, without notice except as specified below, sell the Collateral or any
part thereof in one or more parcels at public or private sale, at any exchange
or broker's board or at any of Secured Party's offices or elsewhere, for cash,
on credit or for future delivery, at such time or times and at such price or
prices and upon such other terms as Secured Party may deem commercially
reasonable, irrespective of the impact of any such sales on the market price of
the Collateral. Secured Party or any Lender or Interest Rate Exchanger may be
the purchaser of any or all of the Collateral at any such sale and Secured
Party, as agent for and representative of Lenders and Interest Rate Exchangers
(but not any Lender or Lenders or Interest Rate Exchanger or Interest Rate
Exchangers in its or their respective individual capacities unless Requisite
Obligees (as defined in Section 16(a)) shall otherwise agree in writing), shall
be entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold at any such public
sale, to use and apply any of the Secured Obligations as a credit on account of
the purchase price for any Collateral payable by Secured Party at such sale.
Each purchaser at any such sale shall hold the property sold absolutely free
from any claim or right on the part of any Grantor, and each Grantor hereby
waives (to the extent permitted by applicable law) all rights of redemption,
stay and/or appraisal which it now has or may at any time in the future have
under any rule of law or statute now existing or hereafter enacted. Each Grantor
agrees that, to the extent notice of sale shall be required by law, at least ten
days' notice to such Grantor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification. Secured Party
IX-B-10
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. Secured Party may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned. Each Grantor hereby waives any claims against Secured Party
arising by reason of the fact that the price at which any Collateral may have
been sold at such a private sale was less than the price which might have been
obtained at a public sale, even if Secured Party accepts the first offer
received and does not offer such Collateral to more than one offeree. If the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay all the Secured Obligations, Grantors shall be jointly and severally liable
for the deficiency and the fees of any attorneys employed by Secured Party to
collect such deficiency.
(b) Each Grantor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as from time to time amended (the
"Securities Act"), and applicable state securities laws, Secured Party may be
compelled, with respect to any sale of all or any part of the Collateral
conducted without prior registration or qualification of such Collateral under
the Securities Act and/or such state securities laws, to limit purchasers to
those who will agree, among other things, to acquire the Collateral for their
own account, for investment and not with a view to the distribution or resale
thereof. Each Grantor acknowledges that any such private sales may be at prices
and on terms less favorable than those obtainable through a public sale without
such restrictions and, notwithstanding such circumstances, each Grantor agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner and that Secured Party shall have no obligation to engage in
public sales and no obligation to delay the sale of any Collateral for the
period of time necessary to permit the Partnerships to register it for a form of
public sale requiring registration under the Securities Act or under applicable
state securities laws, even if the Partnerships would, or should, agree to so
register it.
(c) If Secured Party determines to exercise its right to sell any or all of
the Collateral, upon written request, Grantors shall and shall cause the
Partnerships from time to time to furnish to Secured Party all such information
as Secured Party may request in order to determine the number and nature of the
interests included in the Collateral which may be sold by Secured Party in
exempt transactions under the Securities Act and the rules and regulations of
the Securities and Exchange Commission thereunder, as the same are from time to
time in effect.
SECTION 13. Application of Proceeds.
Except as expressly provided elsewhere in this Agreement, all proceeds
received by Secured Party in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral shall be applied as provided
in subsection 2.4D of the Credit Agreement.
IX-B-11
SECTION 14. Indemnity and Expenses.
(a) Grantors jointly and severally agree to indemnify Secured Party, each
Lender and each Interest Rate Exchanger from and against any and all claims,
losses and liabilities in any way relating to, growing out of or resulting from
this Agreement and the transactions contemplated hereby (including without
limitation enforcement of this Agreement), except to the extent such claims,
losses or liabilities result solely from Secured Party's or such Lender's or
Interest Rate Exchanger's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Grantors jointly and severally agree to pay to Secured Party upon
demand the amount of any and all costs and expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, that Secured
Party may incur in connection with (i) the administration of this Agreement,
(ii) the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Secured Party hereunder, or (iv) the failure by any Grantor
to perform or observe any of the provisions hereof.
(c) The obligations of Grantors in this Section 14 shall survive the
termination of this Agreement and the discharge of Grantors' other obligations
under this Agreement, the Lender Interest Rate Agreements, the Credit Agreement
and the other Loan Documents.
SECTION 15. Continuing Security Interest; Transfer of Loans.
This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the payment in
full of the Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (b) be binding upon Grantors and their respective successors and
assigns, and (c) inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of Secured Party and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), but
subject to the provisions of subsection 10.1 of the Credit Agreement, any Lender
may assign or otherwise transfer any Loans held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to Lenders herein or otherwise. Upon the payment in full of all
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to the applicable Grantors. Upon any such termination Secured Party will,
at Grantors' expense, execute and deliver to Grantors such documents as Grantors
shall reasonably request to evidence such termination.
IX-B-12
SECTION 16. Secured Party as Agent.
(a) Secured Party has been appointed to act as Secured Party hereunder by
Lenders and, by their acceptance of the benefits hereof, Interest Rate
Exchangers. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including
without limitation the release or substitution of Collateral), solely in
accordance with this Agreement and the Credit Agreement; provided that Secured
Party shall exercise, or refrain from exercising, any remedies provided for in
Section 12 in accordance with the instructions of (i) Requisite Lenders or (ii)
after payment in full of all Obligations under the Credit Agreement and the
other Loan Documents, the holders of a majority of the aggregate notional amount
(or, with respect to any Lender Interest Rate Agreement that has been terminated
in accordance with its terms, the amount then due and payable (exclusive of
expenses and similar payments but including any early termination payments then
due) under such Lender Interest Rate Agreement) under all Lender Interest Rate
Agreements (Requisite Lenders or, if applicable, such holders being referred to
herein as "Requisite Obligees"). In furtherance of the foregoing provisions of
this Section 16(a), each Interest Rate Exchanger, by its acceptance of the
benefits hereof, agrees that it shall have no right individually to realize upon
any of the Collateral hereunder, it being understood and agreed by such Interest
Rate Exchanger that all rights and remedies hereunder may be exercised solely by
Secured Party for the benefit of Lenders and Interest Rate Exchangers in
accordance with the terms of this Section 16(a).
(b) Secured Party shall at all times be the same Person that is Collateral
Agent under the Credit Agreement. Written notice of resignation by Collateral
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
notice of resignation as Secured Party under this Agreement; removal of
Collateral Agent pursuant to subsection 9.5 of the Credit Agreement shall also
constitute removal as Secured Party under this Agreement; and appointment of a
successor Collateral Agent pursuant to subsection 9.5 of the Credit Agreement
shall also constitute appointment of a successor Secured Party under this
Agreement. Upon the acceptance of any appointment as Collateral Agent under
subsection 9.5 of the Credit Agreement by a successor Collateral Agent, that
successor Collateral Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring or removed Secured
Party under this Agreement, and the retiring or removed Secured Party under this
Agreement shall promptly (i) transfer to such successor Secured Party all sums,
securities and other items of Collateral held hereunder, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Secured Party under this Agreement,
and (ii) execute and deliver to such successor Secured Party such amendments to
financing statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor Secured Party of
the security interests created hereunder, whereupon such retiring or removed
Secured Party shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Collateral Agent's resignation or
removal hereunder as Secured Party, the provisions of this Agreement shall inure
to its benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was Secured Party hereunder.
IX-B-13
SECTION 17. Amendments; Etc.
No amendment, modification, termination or waiver of any provision of this
Agreement, and no consent to any departure by any Grantor therefrom, shall in
any event be effective unless the same shall be in writing and signed by Secured
Party and, in the case of any such amendment or modification, by Grantors;
provided that any amendment hereto pursuant to Section 20 or Section 6(b) shall
be effective upon by any Additional Grantor and Grantors hereby waive any
requirement of notice of or consent to any such amendment. Any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given.
SECTION 18. Notices.
Any notice or other communication herein required or permitted to be given
shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
telefacsimile or telex (with received answerback), or three Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed; provided that notices to Secured Party shall not be effective until
received. For the purposes hereof, the address of each party hereto shall be as
provided in subsection 10.8 of the Credit Agreement or as set forth under such
party's name on the signature pages hereof or such other address as shall be
designated by such party in a written notice delivered to the other parties
hereto.
SECTION 19. Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Secured Party in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
any other or further exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 20. Additional Grantors.
The initial Grantors hereunder shall be such of the Subsidiaries of Company
as are signatories hereto on the date hereof. From time to time subsequent to
the date hereof, additional Subsidiaries of Company may become parties hereto as
additional Grantors (each an "Additional Grantor"), by executing an
acknowledgement to this Agreement substantially in the form of Schedule V
annexed hereto. Upon delivery of any such acknowledgment to Chase
Co-Administrative Agent and Secured Party, notice of which is hereby waived by
Grantors, each such Additional Grantor shall be a Grantor and shall be as fully
a party hereto as if such
IX-B-14
Additional Grantor were an original signatory hereto. Each Grantor expressly
agrees that its obligations arising hereunder shall not be affected or
diminished by the addition or release of any other Grantor hereunder, nor by any
election of Chase Co-Administrative Agent not to cause any Subsidiary of Company
to become an Additional Grantor hereunder. This Agreement shall be fully
effective as to any Grantor that is or becomes a party hereto regardless of
whether any other Person becomes or fails to become or ceases to be a Grantor
hereunder.
SECTION 21. Severability.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 22. Headings.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
SECTION 23. Governing Law; Terms; Rules of Construction.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES
THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER,
IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein
or in the Credit Agreement, terms used in Articles 8 and 9 of the Uniform
Commercial Code in the State of New York are used herein as therein defined. The
rules of construction set forth in subsection 1.3 of the Credit Agreement shall
be applicable to this Agreement mutatis mutandis.
SECTION 24. Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇-▇-▇▇
COMPETENT JURISDICTION IN ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇. BY EXECUTING
AND DELIVERING THIS AGREEMENT, EACH GRANTOR, FOR ITSELF AND IN CONNECTION WITH
ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO SUCH GRANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
SECTION 18; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH GRANTOR IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING
SERVICE IN EVERY RESPECT; (V) AGREES THAT SECURED PARTY RETAINS THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST SUCH GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND (VI) AGREES
THAT THE PROVISIONS OF THIS SECTION 24 RELATING TO JURISDICTION AND VENUE SHALL
BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK
GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
SECTION 25. Waiver of Jury Trial.
GRANTORS AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
Each Grantor and Secured Party acknowledge that this waiver is a material
inducement for Grantors and Secured Party to enter into a business relationship,
that Grantors and Secured Party have already relied on this waiver in entering
into this Agreement and that each will continue to rely on this waiver in their
related future dealings. Each Grantor and Secured Party further warrant and
represent that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SECTION 25 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
IX-B-16
SECTION 26. Counterparts.
This Agreement may be executed in one or more counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may be detached from
multiple separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.
[Remainder of page intentionally left blank]
IX-B-17
IN WITNESS WHEREOF, Grantors and Secured Party have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
ACCOUNT PORTFOLIOS G.P., INC.
ACCOUNT PORTFOLIOS, INC.
By:____________________________________
Name:
Title:
ACCOUNT PORTFOLIOS, L.P.
By: ACCOUNT PORTFOLIOS G.P., INC.
General Partner
By:_______________________________
Name:
Title:
Notice Address for the foregoing
Grantors:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ De Leeuw & Co.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
IX-B-18
and a copy to:
White & Case
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇-▇-▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
as Secured Party
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
IX-B-20
SCHEDULE I
TO LIMITED PARTNERSHIP SECURITY AGREEMENT
Partnership Interests
1. [Name of Agreement of Limited Partnership]
=============================================================
Partner (General or Limited) Partnership Interests
=============================================================
-------------------------------------------------------------
-------------------------------------------------------------
=============================================================
IX-B-21
SCHEDULE II
TO LIMITED PARTNERSHIP SECURITY AGREEMENT
Office Locations
Other Names
Name of Company/Limited Partnership Other Names
----------------------------------- -----------
IX-B-22
SCHEDULE III
TO LIMITED PARTNERSHIP SECURITY AGREEMENT
Filing Offices
IX-B-23
SCHEDULE IV
TO LIMITED PARTNERSHIP SECURITY AGREEMENT
[FORM OF AMENDMENT]
This Amendment, dated _______________, [199_] [200_] is delivered pursuant
to Section 6(b) of the Limited Partnership Security Agreement referred to below.
The undersigned hereby agrees that this Amendment may be attached to the Limited
Partnership Security Agreement dated as of November 6, 1996, by and among the
Grantors referred to therein and SunTrust Bank, Atlanta, as Secured Party (the
"Limited Partnership Security Agreement", capitalized terms defined therein
being used herein as therein defined), and that the partnership interests listed
on this Amendment shall be deemed to be part of the Collateral and shall secure
all Secured Obligations.
[NAME OF GRANTOR]
By:___________________________________
Name:
Title:
Partnership Interests
1. [Name of Agreement of Limited Partnership]
=============================================================
Partner (General or Limited) Partnership Interests
=============================================================
-------------------------------------------------------------
-------------------------------------------------------------
=============================================================
IX-B-24
SCHEDULE V
TO LIMITED PARTNERSHIP SECURITY AGREEMENT
[FORM OF ACKNOWLEDGEMENT]
This Acknowledgement, dated _______________, [199_] [200_], is delivered
pursuant to Section 20 of the Limited Partnership Security Agreement referred to
below. The undersigned hereby agrees that this Acknowledgement may be attached
to the Limited Partnership Security Agreement dated November 6, 1996, by and
among the Grantors referred to therein and SunTrust Bank, Atlanta, as Secured
Party (the "Limited Partnership Security Agreement", capitalized terms defined
therein being used herein as therein defined), that the undersigned by executing
and delivering this Acknowledgement hereby becomes a Grantor under the Limited
Partnership Security Agreement in accordance with Section 20 thereof and agrees
to be bound by all of the terms thereof, and that the partnership interests
described on this Acknowledgement shall be deemed to be part of the and shall
become part of the Collateral and shall secure all Secured Obligations.
[NAME OF ADDITIONAL GRANTOR]
By:____________________________________
Name:
Title:
Notice Address:
_________________________________
_________________________________
_________________________________
_________________________________
Partnership Interests
1. [Name of Agreement of Limited Partnership]
=============================================================
Partner (General or Limited) Partnership Interests
=============================================================
-------------------------------------------------------------
-------------------------------------------------------------
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇-▇-▇▇
▇▇▇▇▇▇▇ ▇▇-▇
[FORM OF TRADEMARK SECURITY AGREEMENT]
TRADEMARK SECURITY AGREEMENT
This TRADEMARK SECURITY AGREEMENT (this "Agreement") is dated as of
November 6, 1996 and entered into by and among OUTSOURCING SOLUTIONS INC., a
Delaware corporation ("Company"), THE UNDERSIGNED DIRECT AND INDIRECT DOMESTIC
SUBSIDIARIES of Company (each of such undersigned Subsidiaries being a
"Subsidiary Grantor" and collectively "Subsidiary Grantors" and each of Company
and Subsidiary Grantors being a "Grantor" and collectively, "Grantors"; provided
that after the Closing Date, "Grantors" shall include any Additional Grantors
(as hereinafter defined)) and SUNTRUST BANK, ATLANTA, as agent for and
representative of (in such capacity herein called "Secured Party") the financial
institutions ("Lenders") party to the Credit Agreement referred to below and any
Interest Rate Exchangers (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Pursuant to that certain Credit Agreement dated as of November 6, 1996
(said Credit Agreement, as it may hereafter be amended, restated, supplemented
or otherwise modified from time to time, being the "Credit Agreement", the terms
defined therein and not otherwise defined herein being used herein as therein
defined) by and among Company, Lenders, ▇▇▇▇▇▇▇ Sachs Credit Partners L.P. and
The Chase Manhattan Bank, as Co-Administrative Agents, Secured Party, as
Collateral Agent, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and Chase Securities
Inc., as Arranging Agents, Lenders have made certain commitments, subject to the
terms and conditions set forth in the Credit Agreement, to extend certain credit
facilities to Company.
B. Company may from time to time enter, or may from time to time have
entered, into one or more Interest Rate Agreement (collectively, the "Lender
Interest Rate Agreements") with one or more Lenders or their Affiliates (in such
capacity, collectively, "Interest Rate Exchangers") in accordance with the terms
of the Credit Agreement, and it is desired that the obligations of Company under
the Lender Interest Rate Agreements, including without limitation the obligation
of Company to make payments thereunder in the event of early termination thereof
(all such obligations being the "Interest Rate Obligations"), together with all
obligations of Company under the Credit Agreement and the other Loan Documents,
be secured hereunder.
C. Subsidiary Grantors have executed and delivered that certain Subsidiary
Guaranty dated as of November 6, 1996 (said Subsidiary Guaranty, as it may
hereafter be amended, restated, supplemented or otherwise modified from time to
time, being the "Guaranty") in favor of Secured Party for the benefit of Lenders
and any Interest Rate Exchangers, pursuant to which Subsidiary Grantors have
guarantied the prompt payment and performance when due
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of all obligations of Company under the Credit Agreement and the other Loan
Documents and all obligations of Company under the Lender Interest Rate
Agreements, including without limitation the obligation of Company to make
payments thereunder in the event of early termination thereof.
D. Grantors own and use in their business, and will in the future adopt and
so use, various intangible assets, including trademarks, service marks, designs,
logos, indicia, tradenames, corporate names, company names, business names,
fictitious business names, trade styles and/or other source and/or business
identifiers and applications pertaining thereto (collectively, the
"Trademarks").
E. Secured Party desires Grantors to assign and grant to it a lien on and
security interest in all of Grantors' existing and future Trademarks, all
registrations that have been or may hereafter be issued or applied for thereon
in the United States and any state thereof and in foreign countries (the
"Registrations"), all common law and other rights in and to the Trademarks in
the United States and any state thereof and in foreign countries (the "Trademark
Rights"), all goodwill of Grantors' business symbolized by the Trademarks and
associated therewith, including without limitation the documents and things
described in Section 1(b) (the "Associated Goodwill"), and all proceeds of the
Trademarks, the Registrations, the Trademark Rights and the Associated Goodwill,
and Grantors agree to assign and grant to Secured Party a secured and protected
interest in the Trademarks, the Registrations, the Trademark Rights, the
Associated Goodwill and all the proceeds thereof as provided herein.
F. Pursuant to the Security Agreement, each Grantor has assigned and
granted to Secured Party a lien on and security interest in, among other assets,
all Grantors' equipment, inventory, accounts and general intangibles relating to
the products and services sold or delivered under or in connection with the
Trademarks such that, upon the occurrence and during the continuation of an
Event of Default (as defined in the Credit Agreement) or the occurrence of an
Early Termination Date (as defined in a Master Agreement or an Interest Rate
Swap Agreement or Interest Rate and Currency Exchange Agreement in the form
prepared by the International Swap and Derivatives Association Inc. or a similar
event under any similar swap agreement) under any Lender Interest Rate Agreement
(either such occurrence being an "Event of Default" for purposes of this
Agreement), Secured Party would be able to exercise its remedies consistent with
the Security Agreement, this Agreement and applicable law to foreclose upon
Grantors' business and use the Trademarks, the Registrations and the Trademark
Rights in conjunction with the continued operation of such business, maintaining
substantially the same product and service specifications and quality as
maintained by Grantors, and benefit from the Associated Goodwill.
G. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Grantors shall have assigned and granted
the security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make Loans and other extensions of credit under the Credit Agreement
and to induce Interest
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Rate Exchangers to enter into the Lender Interest Rate Agreements, and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, each Grantor hereby agrees with Secured Party as follows:
SECTION 1. Assignment and Grant of Security.
Each Grantor hereby grants to Secured Party a security interest in all of
such Grantor's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which Grantor now has or hereafter
acquires an interest and wherever the same may be located (the "Collateral"):
(a) each of the Trademarks and rights and interests in Trademarks
which are presently, or in the future may be, owned or held (whether
pursuant to a license or otherwise) by such Grantor, in whole or in part
(including without limitation the Trademarks specifically identified in
Schedule I annexed hereto, as the same may be amended pursuant hereto from
time to time), and including all Trademark Rights with respect thereto and
all federal, state and foreign Registrations therefor heretofore or
hereafter granted or applied for, the right (but not the obligation) to
register claims under any state or federal trademark law or regulation or
any trademark law or regulation of any foreign country and to apply for,
renew and extend the Trademarks, Registrations and Trademark Rights, the
right (but not the obligation) to ▇▇▇ or bring opposition or cancellation
proceedings in the name of such Grantor or in the name of Secured Party or
otherwise for past, present and future infringements of the Trademarks,
Registrations or Trademark Rights and all rights (but not obligations)
corresponding thereto in the United States and any foreign country, and the
Associated Goodwill; it being understood that the rights and interests
included herein shall include, without limitation, all rights and interests
pursuant to licensing or other contracts in favor of such Grantor
pertaining to the Trademarks, Registrations or Trademark Rights presently
or in the future owned or used by third parties but, in the case of third
parties which are not Affiliates of such Grantor, only to the extent
permitted by such licensing or other contracts or otherwise permitted by
applicable law and, if not so permitted under any such contracts and
applicable law, only with the consent of such third parties;
(b) the following documents and things in such Grantor's possession,
or subject to such Grantor's right to possession, related to (Y) the
production, sale and delivery by such Grantor, or by any Affiliate,
licensee or subcontractor of such Grantor, of products or services sold or
delivered by or under the authority of such Grantor in connection with the
Trademarks, Registrations or Trademark Rights (which products and services
shall, for purposes of this Agreement, be deemed to include, without
limitation, products and services sold or delivered pursuant to
merchandising operations utilizing any Trademarks, Registrations or
Trademark Rights); or (Z) any retail or other merchandising operations
conducted under the name of or in connection with the Trademarks,
Registrations or Trademark Rights by such Grantor or any Affiliate,
licensee or subcontractor of such Grantor:
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(i) all lists and ancillary documents that identify and describe
any of such Grantor's customers, or those of their Affiliates,
licensees or subcontractors, for products sold and services delivered
under or in connection with the Trademarks or Trademark Rights,
including without limitation any lists and ancillary documents that
contain a customer's name and address, the name and address of any of
its warehouses, branches or other places of business, the identity of
the Person or Persons having the principal responsibility on a
customer's behalf for ordering products or services of the kind
supplied by such Grantor, or the credit, payment, discount, delivery
or other sale terms applicable to such customer, together with
information setting forth the total purchases, by brand, product,
service, style, size or other criteria, and the patterns of such
purchases;
(ii) all product and service specification documents and
production and quality control manuals used in the manufacture or
delivery of products and services sold or delivered under or in
connection with the Trademarks or Trademark Rights;
(iii) all documents which reveal the name and address of any
source of supply, and any terms of purchase and delivery, for any and
all materials, components and services used in the production of
products and services sold or delivered under or in connection with
the Trademarks or Trademark Rights; and
(iv) all documents constituting or concerning the then current or
proposed advertising and promotion by such Grantor or its Affiliates,
licensees or subcontractors of products and services sold or delivered
under or in connection with the Trademarks or Trademark Rights
including, without limitation, all documents which reveal the media
used or to be used and the cost for all such advertising conducted
within the described period or planned for such products and services;
and
(c) all proceeds, products, rents and profits (including without
limitation license royalties and proceeds of infringement suits) of or from
any and all of the foregoing Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not Secured Party is the
loss payee thereof), or any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any of the
foregoing Collateral. For purposes of this Agreement, the term "proceeds"
includes whatever is receivable or received when Collateral or proceeds are
sold, exchanged, collected or otherwise disposed of, whether such
disposition is voluntary or involuntary.
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SECTION 2. Security for Obligations.
This Agreement secures, and the Collateral assigned by each Grantor is
collateral security for, the prompt payment or performance in full when due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including without limitation the payment of amounts that
would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all Secured Obligations
with respect to such Grantor. "Secured Obligations" means
(a) with respect to Company, all obligations and liabilities of every
nature of Company now or hereafter existing under or arising out of or in
connection with the Credit Agreement and the other Loan Documents and any
Lender Interest Rate Agreement, and
(b) with respect to each Subsidiary Grantor and Additional Grantor,
all obligations and liabilities of every nature of Grantors now or
hereafter existing under or arising out of or in connection with the
Guaranty,
in each case together with all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Company, would accrue on such
obligations, whether or not a claim is allowed against Company for such interest
in the related bankruptcy proceeding), reimbursement of amounts drawn under
Letters of Credit, payments for early termination of Lender Interest Rate
Agreements, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Secured Party or any Lender or Interest Rate Exchanger as a
preference, fraudulent transfer or otherwise, and all obligations of every
nature of Grantors now or hereafter existing under this Agreement.
SECTION 3. Grantors Remains Liable.
Anything contained herein to the contrary notwithstanding, (a) each Grantor
shall remain liable under any contracts and agreements included in the
Collateral, to the extent set forth therein, to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by Secured Party of any of its rights hereunder shall
not release any Grantor from any of its duties or obligations under the
contracts and agreements included in the Collateral, and (c) Secured Party shall
not have any obligation or liability under any contracts and agreements included
in the Collateral by reason of this Agreement, nor shall Secured Party be
obligated to perform any of the obligations or duties of any Grantor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
IX-C-5
SECTION 4. Representations and Warranties.
Each Grantor represents and warrants as follows:
(a) Ownership of Collateral. Except as expressly permitted by the
Credit Agreement and for the security interest assigned and created by this
Agreement, such Grantor is the legal and beneficial owner of the entire
right, title and interest in and to each Material Trademark Property, free
and clear of any Lien other than Liens of mechanics, materialmen, attorneys
and other similar liens imposed by laws in the ordinary course of business
in connection with the establishment, creation or application for
Registration of any Trademarks, Registrations or Trademark Rights for sums
not yet delinquent or being contested in good faith (such Liens being
referred to herein as "Permitted Trademark Liens"). Except such as may have
been filed in favor of Secured Party relating to this Agreement, no
effective financing statement or other instrument similar in effect
covering all or any part of the Collateral is on file in any filing or
recording office, including the United States Patent and Trademark Office.
(b) Description of Collateral. A true and complete list of all
Trademarks, Registrations and Trademark Rights owned, held (whether
pursuant to a license or otherwise) or used by such Grantor, in whole or in
part, as of the date of this Agreement is set forth in Schedule I annexed
hereto. Each Trademark, Registration or Trademark Right designated on
Schedule I annexed hereto as a Material Trademark Property, and each other
Trademark, Registration or Trademark Right hereafter arising or otherwise
owned, held or used by any Grantor that is material to any of such
Grantor's business or operations is referred to herein as a "Material
Trademark Property".
(c) Validity and Enforceability of Collateral. To the knowledge of
Grantors, each Material Trademark Property is valid, subsisting and
enforceable. As of the Closing Date, such Grantor is not aware of any
pending or threatened claim by any third party that any Material Trademark
Property is invalid or unenforceable or that the use of any Material
Trademark Property violates the rights of any third person or of any basis
for any such claim, and there is no such pending or threatened claim
whether arising prior to or after the Closing Date, that could reasonably
be expected to have a Material Adverse Effect.
(d) Office Locations. The chief place of business, the chief executive
office and the office where such Grantor keeps its records regarding the
Collateral is, and has been for the four month period preceding the date
hereof, at the locations set forth on Schedule II annexed hereto.
(e) Names. No Grantor has in the past done, and no Grantor now does,
business under any other name (including any tradename or fictitious
business name) except under the names listed on Schedule III annexed
hereto.
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(f) Perfection. The security interests in the Collateral granted to
Secured Party for the ratable benefit of the Lenders and Interest Rate
Exchangers hereunder constitute valid security interests in the Collateral.
Upon the filing of UCC financing statements naming each Grantor as
"debtor", naming Secured Party as "secured party" and describing the
Collateral in the filing offices set forth on Schedule 4(g) annexed hereto
and the recording of this Agreement with the United Sates Patent and
Trademark Office, the security interests in the Collateral granted to
Secured Party for the ratable benefit of the Lenders and Interest Rate
Exchangers will, to the extent a security interest in the Collateral may be
perfected by filing UCC financing statements and recording this Agreement,
constitute valid and perfected security interests therein prior to all
other Liens (subject only to Permitted Trademark Liens).
SECTION 5. Further Assurances; New Trademarks, Registrations and Trademark
Rights; Certain Inspection Rights.
(a) Each Grantor agrees that from time to time, at the expense of Grantors,
such Grantor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Secured Party may request, in order to perfect and protect any security
interest assigned or purported to be assigned or granted hereby or to enable
Secured Party to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the foregoing,
each Grantor will: (i) at the request of Secured Party, ▇▇▇▇ conspicuously each
of its records pertaining to the Collateral with a legend, in form and substance
satisfactory to Secured Party, indicating that such Collateral is subject to the
security interest granted hereby, (ii) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as Secured Party may request, in
order to perfect and preserve the security interests granted or purported to be
granted hereby, (iii) use its best efforts to obtain any necessary consents of
third parties to the assignment and perfection of a security interest to Secured
Party with respect to any Collateral, and (iv) at Secured Party's request,
appear in and defend any action or proceeding that may affect such Grantor's
title to or Secured Party's security interest in all or any part of the
Collateral.
(b) Each Grantor hereby authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of any Grantor. Each Grantor
agrees that a carbon, photographic or other reproduction of this Agreement or of
a financing statement signed by such Grantor shall be sufficient as a financing
statement and may be filed as a financing statement in any and all
jurisdictions.
(c) Each Grantor hereby authorizes Secured Party to modify this Agreement
without obtaining such Grantor's approval of or signature to such modification
by amending Schedule I annexed hereto to include reference to any right, title
or interest in any existing Trademark, Registration or Trademark Right or any
Trademark, Registration or Trademark Right acquired or developed by any Grantor
after the hereof or to delete any reference to any right,
IX-C-7
title or interest in any Trademark, Registration or Trademark Right in which no
Grantor has or claims any right, title or interest.
(d) Each Grantor will furnish to Secured Party from time to time statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as Secured Party may reasonably
request, all in reasonable detail.
(e) If any Grantor shall obtain rights to any new Trademarks, Registrations
or Trademark Rights, the provisions of this Agreement shall automatically apply
thereto. Each Grantor shall promptly notify Secured Party in writing of any
rights to any new Trademarks or Trademark Rights acquired by such Grantor after
the date hereof and of any Registrations issued or applications for Registration
made after the date hereof, which notice shall state whether such Trademark,
Registration or Trademark Right constitutes a Material Trademark Property.
Concurrently with the filing of an application for Registration for any
Trademark, the applicable Grantor shall execute, deliver and record in all
places where this Agreement is recorded an appropriate Trademark Security
Agreement, substantially in the form hereof, with appropriate insertions, or an
amendment to this Agreement, in form and substance satisfactory to Secured
Party, pursuant to which such Grantor shall assign and grant a security interest
to the extent of its interest in such Registration as provided herein to Secured
Party unless so doing would, in the reasonable judgment of such Grantor, after
due inquiry, result in the grant of a Registration in the name of Secured Party,
in which event such Grantor shall give written notice to Secured Party as soon
as reasonably practicable and the filing shall instead be undertaken as soon as
practicable but in no case later than immediately following the grant of the
Registration.
(f) Each Grantor hereby grants to Secured Party and its employees,
representatives and agents the right to visit such Grantor's and any of its
Affiliate's or subcontractor's plants, facilitates and other places of business
that are utilized in connection with the manufacture, production, inspection,
storage or sale of products and services sold or delivered under any of the
Trademarks, Registrations or Trademark Rights (or which were so utilized during
the prior six month period), and to inspect the quality control and all other
records relating thereto upon reasonable notice to such Grantor and as often as
my be reasonably requested.
SECTION 6. Certain Covenants of Grantors.
Each Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Secured Party of any change in such Grantor's name,
identity or corporate structure within 15 days of such change;
IX-C-8
(c) give Secured Party 30 days' prior written notice of any change in
such Grantor's chief place of business or chief executive office or the
office where such Grantor keeps its records regarding the Collateral;
(d) pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Collateral, except
to the extent the validity thereof is being contested in good faith;
provided that such Grantor shall in any event pay such taxes, assessments,
charges, levies or claims not later than five days prior to the date of any
proposed sale under any judgement, writ or warrant of attachment entered or
filed against such Grantor or any of the Collateral as a result of the
failure to make such payment;
(e) not sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit
Agreement;
(f) except for Permitted Trademark Liens and the security interest
assigned and created by this Agreement, not create or suffer to exist any
Lien upon or with respect to any of the Collateral to secure the
indebtedness or other obligations of any Person;
(g) diligently keep reasonable records respecting the Collateral
assigned by it hereunder and at all times keep at least one complete set of
its records concerning substantially all of the Trademarks, Registrations
and Trademark Rights at its chief executive office or principal place of
business;
(h) not permit the inclusion in any contract to which it becomes a
party of any provision that could or might in any way conflict with this
Agreement or impair or prevent the assignment and creation of a security
interest in any Grantor's rights and interests in any property included
within the definitions of any Trademarks, Registrations, Trademark Rights
and Associated Goodwill acquired;
(i) use proper statutory notice in connection with its use of each
Material Trademark Property to the extent reasonably necessary for the
protection of such Material Trademark Property;
(j) use consistent standards of quality (which may be consistent with
such Grantor's past practices) in the manufacture, sale and delivery of
products and services sold or delivered under or in connection with the
Trademarks, Registrations and Trademark Rights, including, to the extent
applicable, in the operation and maintenance of its retail stores and other
merchandising operations; and
(k) upon any officer of such Grantor obtaining knowledge thereof,
promptly notify Secured Party in writing of any event that may materially
and adversely affect the value of the Collateral or any portion thereof,
the ability of any Grantor or Secured Party
IX-C-9
to dispose of the Collateral or any portion thereof, or the rights and
remedies of Secured Party in relation thereto, including without limitation
the levy of any legal process against the Collateral or any portion
thereof.
SECTION 7. Amounts Payable in Respect of the Collateral.
Except as otherwise provided in this Section 7, each Grantor shall continue
to collect, at its own expense, all amounts due or to become due to Grantors in
respect of the Collateral or any portion thereof. In connection with such
collections, each Grantor may take (and, at Secured Party's direction, shall
take) such action as such Grantor or Secured Party may deem necessary or
advisable to enforce collection of such amounts; provided, however, that Secured
Party shall have the right at any time, upon the occurrence and during the
continuation of an Event of Default or a Potential Event of Default and upon
written notice to such Grantor of its intention to do so, to notify the obligors
with respect to any such amounts of the existence of the security interest
assigned and created hereby, and to direct such obligors to make payment of all
such amounts directly to Secured Party, and, upon such notification and at the
expense of Grantors, to enforce collection of any such amounts and to adjust,
settle or compromise the amount or payment thereof, in the same manner and to
the same extent as such Grantor might have done. After receipt by such Grantor
of the notice from Secured Party referred to in the proviso to the preceding
sentence, (i) all amounts and proceeds (including checks and other instruments)
received by such Grantor in respect of amounts due to such Grantor in respect of
the Collateral or any portion thereof shall be received in trust for the benefit
of Secured Party hereunder, shall be segregated from other funds of such Grantor
and shall be forthwith paid over or delivered to Secured Party in the same form
as so received (with any necessary endorsement) to be held as cash Collateral
and applied as provided by Section 14, and (ii) such Grantor shall not adjust,
settle or compromise the amount or payment of any such amount or release wholly
or partly any obligor with respect thereto or allow any credit or discount
thereon.
SECTION 8. Trademark Applications and Litigation.
(a) Each Grantor shall have the duty diligently to prosecute any trademark
application relating to any Material Trademark Property that is pending as of
the date of this Agreement, to make federal application on any existing or
future registerable but unregistered Material Trademark Property (whenever it is
commercially reasonable in the reasonable judgement of such Grantor to do so),
and to file and prosecute opposition and cancellation proceedings, renew
Registrations and do any and all acts which are necessary or desirable to
preserve and maintain all rights in all Material Trademark Properties. Any
expenses incurred in connection therewith shall be borne solely by Grantors. No
Grantor shall abandon any Material Trademark Property.
(b) Except as provided in Section 8(d), each Grantor shall have the right
to commence and prosecute in its own name, as real party in interest, for its
own benefit and at its own expense, such suits, proceedings or other actions for
infringement, unfair competition, dilution or other damage as are in its
reasonable business judgment necessary to protect the Collateral.
IX-C-10
Secured Party shall provide, at Grantor's expense, all reasonable and necessary
cooperation in connection with any such suit, proceeding or action including,
without limitation, joining as a necessary party.
(c) Each Grantor shall promptly, following its becoming aware thereof,
notify Secured Party of the institution of, or of any adverse determination in,
any proceeding (whether in the United States Patent and Trademark Office or any
federal, state, local or foreign court) described in Section 8(a) or 8(b) or
regarding such Grantor's claim of ownership in or right to use any of the
Trademarks, Registrations or Trademark Rights, its right to register the same,
or its right to keep and maintain such Registration. Such Grantor shall provide
to Secured Party any information with respect thereto requested by Secured
Party.
(d) Anything contained herein to the contrary notwithstanding, upon the
occurrence and during the continuation of an Event of Default, Secured Party
shall have the right (but not the obligation) to bring suit, in the name of any
Grantor, Secured Party or otherwise, to enforce any Trademark, Registration,
Trademark Right and any license thereunder and to enforce its rights hereunder
in Associated Goodwill, in which event each Grantor shall, at the request of
Secured Party, do any and all lawful acts and execute any and all documents
required by Secured Party in aid of such enforcement and each Grantor shall
promptly, upon demand, reimburse and indemnify Secured Party as provided in
Section 15 in connection with the exercise of its rights under this Section 8.
To the extent that Secured Party shall elect not to bring suit to enforce any
Trademark, Registration, Trademark Right or any license thereunder or to enforce
its rights hereunder in Associated Goodwill as provided in this Section 8(d),
each Grantor agrees to use all reasonable measures, whether by action, suit,
proceeding or otherwise, to prevent the infringement of any of the Trademarks,
Registrations or Trademark Rights or of Grantors' or Secured Party's rights in
Associated Goodwill by others and for that purpose agrees to diligently maintain
any action, suit or proceeding against any Person so infringing necessary to
prevent such infringement.
SECTION 9. Non-Disturbance Agreements, etc.
If and to the extent that any Grantor is permitted to license the
Collateral, Secured Party shall enter into a non-disturbance agreement or other
similar arrangement, at Grantors' request and expense, with such Grantor and any
licensee of any Collateral permitted hereunder in form and substance
satisfactory to Secured Party pursuant to which (a) Secured Party shall agree
not to disturb or interfere with such licensee's rights under its license
agreement with such Grantor so long as such licensee is not in default
thereunder and (b) such licensee shall acknowledge and agree that the Collateral
licensed to it is subject to the security interest assigned and created in favor
of Secured Party and the other terms of this Agreement.
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SECTION 10. Secured Party Appointed Attorney-in-Fact.
Each Grantor hereby irrevocably appoints Secured Party as such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor, Secured Party or otherwise, from time to time in
Secured Party's discretion to take any action and to execute any instrument that
Secured Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation:
(a) to endorse such Grantor's name on all applications, documents,
papers and instruments necessary for Secured Party in the use or
maintenance of the Collateral;
(b) to ask for, demand, collect, ▇▇▇ for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral;
(c) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (b) above;
(d) to file any claims or take any action or institute any proceedings
that Secured Party may deem necessary or desirable for the collection of
any of the Collateral or otherwise to enforce the rights of Secured Party
with respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens permitted
under this Agreement or the Credit Agreement) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Secured Party
in its sole discretion, any such payments made by Secured Party to become
obligations of such Grantor to Secured Party, due and payable immediately
without demand; and
(f) upon the occurrence and during the continuance of an Event of
Default, (i) to execute and deliver any of the assignments or documents
requested by Secured Party pursuant to Section 13(b), (ii) to grant or
issue an exclusive or non-exclusive license to the Collateral or any
portion thereof to any Person, and (iii) otherwise generally to sell,
transfer, pledge, make any agreement with respect to or otherwise deal with
any of the Collateral as fully and completely as though Secured Party were
the absolute owner thereof for all purposes, and to do, at Secured Party's
option and Grantors' expense, at any time or from time to time, all acts
and things that Secured Party deems necessary to protect, preserve or
realize upon the Collateral and Secured Party's security interest therein
in order to effect the intent of this Agreement, all as fully and
effectively as such Grantor might do.
IX-C-12
SECTION 11. Secured Party May Perform.
If any Grantor fails to perform any agreement contained herein, Secured
Party may itself perform, or cause performance of, such agreement, and the
expenses of Secured Party incurred in connection therewith shall be payable by
such Grantor under Section 15.
SECTION 12. Standard of Care.
The powers conferred on Secured Party hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the exercise of reasonable care in the custody of any
Collateral in its possession and the accounting for monies actually received by
it hereunder, Secured Party shall have no duty as to any Collateral or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral. Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which Secured Party accords its own property of a similar nature.
SECTION 13. Remedies.
If any Event of Default shall have occurred and be continuing:
(a) Secured Party may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the Uniform Commercial Code as in effect in any relevant jurisdiction
(the "Code") (whether or not the Code applies to the affected Collateral),
and also may (i) require each Grantor to, and each Grantor hereby agrees
that it will at its expense and upon request of Secured Party forthwith,
assemble all or part of the Collateral as directed by Secured Party and
make it available to Secured Party at a place to be designated by Secured
Party that is reasonably convenient to both parties, (ii) enter onto the
property where any Collateral is located and take possession thereof with
or without judicial process, (iii) prior to the disposition of the
Collateral, store the Collateral or otherwise prepare the Collateral for
disposition in any manner to the extent Secured Party deems appropriate,
(iv) take possession of any Grantor's premises or place custodians in
exclusive control thereof, remain on such premises and use the same for the
purpose of taking any actions described in the preceding clause (iii) and
collecting any Secured Obligation, (v) exercise any and all rights and
remedies of Grantors under or in connection with the contracts related to
the Collateral or otherwise in respect of the Collateral, including without
limitation any and all rights of Grantors to demand or otherwise require
payment of any amount under, or performance of any provision of, such
contracts, and (vi) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private
sale, at any of Secured Party's offices or elsewhere, for cash, on credit
or for future delivery, at such
IX-C-13
time or times and at such price or prices and upon such other terms as
Secured Party may deem commercially reasonable. Secured Party or any Lender
or Interest Rate Exchanger may be the purchaser of any or all of the
Collateral at any such sale and Secured Party, as agent for and
representative of Lenders and Interest Rate Exchangers (but not any Lender
or Lenders or Interest Rate Exchanger or Interest Rate Exchangers in its or
their respective individual capacities unless Requisite Obligees (as
defined in Section 17(a)) shall otherwise agree in writing), shall be
entitled, for the purpose of bidding and making settlement or payment of
the purchase price for all or any portion of the Collateral sold at any
such public sale, to use and apply any of the Secured Obligations as a
credit on account of the purchase price for any Collateral payable by
Secured Party at such sale. Each purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of any
Grantor, and each Grantor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it
now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. Each Grantor agrees that, to the
extent notice of sale shall be required by law, at least ten days' notice
to such Grantor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Secured Party
may adjourn any public or private sale from time to time by announcement at
the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned. Each
Grantor hereby waives any claims against Secured Party arising by reason of
the fact that the price at which any Collateral may have been sold at such
a private sale was less than the price which might have been obtained at a
public sale, even if Secured Party accepts the first offer received and
does not offer such Collateral to more than one offeree. If the proceeds of
any sale or other disposition of the Collateral are insufficient to pay all
the Secured Obligations, Grantors shall be jointly and severally liable for
the deficiency and the fees of any attorneys employed by Secured Party to
collect such deficiency.
(b) Upon written demand from Secured Party, each Grantor shall execute
and deliver to Secured Party an assignment or assignments of the
Trademarks, Registrations, Trademark Rights and the Associated Goodwill and
such other documents as are requested by Secured Party. Each Grantor agrees
that such an assignment and/or recording shall be applied to reduce the
Secured Obligations outstanding only to the extent that Secured Party (or
any Lender) receives cash proceeds in respect of the sale of, or other
realization upon, the Collateral.
(c) Within five Business Days after written notice from Secured Party,
each Grantor shall make available to Secured Party, to the extent within
each applicable Grantor's power and authority, such personnel in such
Grantor's employ on the date of such Event of Default as Secured Party may
reasonably designate, by name, title or job responsibility, to permit such
Grantor to continue, directly or indirectly, to produce, advertise and sell
the products and services sold or delivered by such Grantor under or in
connection with the Trademarks, Registrations and Trademark Rights, such
persons
IX-C-14
to be available to perform their prior functions on Secured Party's behalf
and to be compensated by Secured Party at Grantors' expense on a per diem,
pro-rata basis consistent with the salary and benefit structure applicable
to each as of the date of such Event of Default.
SECTION 14. Application of Proceeds.
Except as expressly provided elsewhere in this Agreement, all proceeds
received by Secured Party in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral shall be applied as provided
in subsection 2.4D of the Credit Agreement.
SECTION 15. Indemnity and Expenses.
(a) Grantors jointly and severally agree to indemnify Secured Party, each
Lender and each Interest Rate Exchanger from and against any and all claims,
losses and liabilities in any way relating to, growing out of or resulting from
this Agreement and the transactions contemplated hereby (including without
limitation enforcement of this Agreement), except to the extent such claims,
losses or liabilities result solely from Secured Party's or such Lender's or
Interest Rate Exchanger's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Grantors jointly and severally agree to pay to Secured Party upon
demand the amount of any and all costs and expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, that Secured
Party may incur in connection with (i) the administration of this Agreement,
(ii) the custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of Secured Party hereunder, or (iv) the failure
by any Grantor to perform or observe any of the provisions hereof.
(c) The obligations of Grantors in this Section 15 shall survive the
termination of this Agreement and the discharge of Grantors' other obligations
under this Agreement, the Interest Rate Agreements, the Credit Agreement and the
other Loan Documents.
SECTION 16. Continuing Security Interest; Transfer of Loans.
This Agreement shall assign and create a continuing security interest in
the Collateral and shall (a) remain in full force and effect until the payment
in full of the Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (b) be binding upon Grantors and their respective successors and
assigns, and (c) inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of Secured Party and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), but
subject to the provisions of subsection 10.1 of the Credit Agreement, any Lender
may assign or otherwise transfer any Loans held by it to any
IX-C-15
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to Lenders herein or otherwise. Upon the
payment in full of all Secured Obligations, the cancellation or termination of
the Commitments and the cancellation or expiration of all outstanding Letters of
Credit, the security interest assigned and granted hereby shall terminate and
all rights to the Collateral shall revert to the applicable Grantors. Upon any
such termination Secured Party will, at Grantors' expense, execute and deliver
to Grantors such documents as Grantors shall reasonably request to evidence such
termination.
SECTION 17. Secured Party as Agent.
(a) Secured Party has been appointed to act as Secured Party hereunder by
Lenders and, by their acceptance of the benefits hereof, Interest Rate
Exchangers. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including
without limitation the release or substitution of Collateral), solely in
accordance with this Agreement and the Credit Agreement; provided that Secured
Party shall exercise, or refrain from exercising, any remedies provided for in
Section 13 in accordance with the instructions of (i) Requisite Lenders or (ii)
after payment in full of all Obligations under the Credit Agreement and the
other Loan Documents, the holders of a majority of the aggregate notional amount
(or, with respect to any Lender Interest Rate Agreement that has been terminated
in accordance with its terms, the amount then due and payable (exclusive of
expenses and similar payments but including any early termination payments then
due) under such Lender Interest Rate Agreement) under all Lender Interest Rate
Agreements (Requisite Lenders or, if applicable, such holders being referred to
herein as "Requisite Obligees"). In furtherance of the foregoing provisions of
this Section 17(a), each Interest Rate Exchanger, by its acceptance of the
benefits hereof, agrees that it shall have no right individually to realize upon
any of the Collateral hereunder, it being understood and agreed by such Interest
Rate Exchanger that all rights and remedies hereunder may be exercised solely by
Secured Party for the benefit of Lenders and Interest Rate Exchangers in
accordance with the terms of this Section 17(a).
(b) Secured Party shall at all times be the same Person that is Collateral
Agent under the Credit Agreement. Written notice of resignation by Collateral
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
notice of resignation as Secured Party under this Agreement; removal of
Collateral Agent pursuant to subsection 9.5 of the Credit Agreement shall also
constitute removal as Secured Party under this Agreement; and appointment of a
successor Collateral Agent pursuant to subsection 9.5 of the Credit Agreement
shall also constitute appointment of a successor Secured Party under this
Agreement. Upon the acceptance of any appointment as Collateral Agent under
subsection 9.5 of the Credit Agreement by a successor Collateral Agent, that
successor Collateral Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring or removed Secured
Party under this Agreement, and the retiring or removed Secured Party under this
Agreement shall promptly (i) transfer to such successor Secured Party all sums,
securities and other items of Collateral held hereunder, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor
IX-C-16
Secured Party under this Agreement, and (ii) execute and deliver to such
successor Secured Party such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party of the security interests created
hereunder, whereupon such retiring or removed Secured Party shall be discharged
from its duties and obligations under this Agreement. After any retiring or
removed Collateral Agent's resignation or removal hereunder as Secured Party,
the provisions of this Agreement shall inure to its benefit as to any actions
taken or omitted to be taken by it under this Agreement while it was Secured
Party hereunder.
SECTION 18. Amendments; Etc.
No amendment, modification, termination or waiver of any provision of this
Agreement, and no consent to any departure by any Grantor therefrom, shall in
any event be effective unless the same shall be in writing and signed by Secured
Party and, in the case of any such amendment or modification, by Grantors;
provided that any amendment hereto pursuant to Section 21 or Section 5(c) shall
be effective upon by any Additional Grantor and Grantors hereby waive any
requirement of notice of or consent to any such amendment. Any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given.
SECTION 19. Notices.
Any notice or other communication herein required or permitted to be given
shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
telefacsimile or telex (with received answerback), or three Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed; provided that notices to Secured Party shall not be effective until
received. For the purposes hereof, the address of each party hereto shall be
provided in subsection 10.8 of the Credit Agreement or as set forth under such
party's name on the signature pages hereof or such other address as shall be
designated by such party in a written notice delivered to the other parties
hereto.
SECTION 20. Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Secured Party in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
any other or further exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
IX-C-17
SECTION 21. Additional Grantors.
The initial Subsidiary Grantors hereunder shall be such of the Subsidiaries
of Company as are signatories hereto on the date hereof. From time to time
subsequent to the date hereof, additional Subsidiaries of Company may become
parties hereto as additional Grantors (each an "Additional Grantor"), by
executing an acknowledgement to this Agreement substantially in the form of
Schedule V annexed hereto. Upon delivery of any such acknowledgment to Chase
Co-Administrative Agent and Secured Party, notice of which is hereby waived by
Grantors, each such Additional Grantor shall be a Grantor and shall be as fully
a party hereto as if such Additional Grantor were an original signatory hereto.
Each Grantor expressly agrees that its obligations arising hereunder shall not
be affected or diminished by the addition or release of any other Grantor
hereunder, nor by any election of Chase Co-Administrative Agent not to cause any
Subsidiary of Company to become an Additional Grantor hereunder. This Agreement
shall be fully effective as to any Grantor that is or becomes a party hereto
regardless of whether any other Person becomes or fails to become or ceases to
be a Grantor hereunder.
SECTION 22. Severability.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 23. Headings.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
SECTION 24. Governing Law; Terms; Rules of Construction.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES
THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER,
IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein
or in the Credit Agreement, terms used in Articles 8 and 9 of the Uniform
Commercial Code in the State of New York are
IX-C-18
used herein as therein defined. The rules of construction set forth in
subsection 1.3 of the Credit Agreement shall be applicable to this Agreement
mutatis mutandis.
SECTION 25. Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH GRANTOR, FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY
AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II)
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH GRANTOR AT ITS ADDRESS
PROVIDED IN ACCORDANCE WITH SECTION 19; (IV) AGREES THAT SERVICE AS PROVIDED IN
CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH
GRANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT SECURED PARTY
RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
BRING PROCEEDINGS AGAINST SUCH GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION;
AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 25 RELATING TO JURISDICTION
AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE
UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
SECTION 26. Waiver of Jury Trial.
GRANTORS AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
Each Grantor and Secured Party acknowledge that this waiver is a material
inducement for Grantors and Secured Party to enter into a business relationship,
that Grantors and Secured Party have already relied on this waiver in entering
into this Agreement and that each will continue to rely on this waiver in their
related future dealings. Each Grantor and Secured Party further warrant and
represent that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS
IX-C-19
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS
SECTION 26 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
SECTION 27. Counterparts.
This Agreement may be executed in one or more counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may be detached from
multiple separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.
[Remainder of page intentionally left blank]
IX-C-20
IN WITNESS WHEREOF, Grantors and Secured Party have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
OUTSOURCING SOLUTIONS INC.
ALASKA FINANCIAL SERVICES, INC.
CFC SERVICES CORP.
THE CONTINENTAL ALLIANCE, INC.
SOUTHWEST CREDIT SERVICES, INC.
By:_____________________________________
Name:
Title:
ACCOUNT PORTFOLIOS, L.P.
GULF STATE CREDIT, L.P.
PERIMETER CREDIT, L.P.
By: ACCOUNT PORTFOLIOS G.P., INC.,
general partner
By:________________________________
Name:
Title:
IX-C-21
A.M. ▇▇▇▇▇▇ & ASSOCIATES, INC.
ACCOUNT PORTFOLIOS G.P., INC.
ACCOUNT PORTFOLIOS, INC.
ASSET RECOVERY & MANAGEMENT CORP.
FM SERVICES CORPORATION
▇▇▇▇▇ AND ▇▇▇▇▇, INC.
INDIANA MUTUAL CREDIT ASSOCIATION, INC.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ASSOCIATES, INC.
NATIONAL ACCOUNT SYSTEMS, INC.
PAYCO AMERICAN CORPORATION
PAYCO AMERICAN INTERNATIONAL CORP.
PAYCO-GENERAL AMERICAN CREDITS, INC.
PROFESSIONAL RECOVERIES INC.
QUALINK, INC.
UNIVERSITY ACCOUNTING SERVICE, INC.
By:_____________________________________
Name:
Title:
Notice Address for the foregoing
Grantors:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ De Leeuw & Co.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
IX-C-22
and a copy to:
White & Case
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
IX-C-23
SUNTRUST BANK, ATLANTA,
as Secured Party
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
IX-C-24
SCHEDULE I
TO
TRADEMARK SECURITY AGREEMENT
Registered United States Trademark Registration Registration
Owner Description Number Date
---------- ----------- ------------ ------------
IX-C-25
SCHEDULE II
TO
TRADEMARK SECURITY AGREEMENT
Office Locations
Name of Company/Limited Partnership Office Location
----------------------------------- ---------------
IX-C-26
SCHEDULE III
TO
TRADEMARK SECURITY AGREEMENT
Other Names
Name of Company/Limited Partnership Other Names
----------------------------------- -----------
IX-C-27
SCHEDULE IV
TO
TRADEMARK SECURITY AGREEMENT
Filing Offices
IX-C-28
SCHEDULE V
TO TRADEMARK SECURITY AGREEMENT
[FORM OF ACKNOWLEDGEMENT]
This Acknowledgement, dated _______________, [199_] [200_], is delivered
pursuant to Section 20 of the Trademark Security Agreement referred to below.
The undersigned hereby agrees that this Acknowledgement may be attached to the
Trademark Security Agreement dated November 6, 1996, by and among the Grantors
referred to therein and SunTrust Bank, Atlanta, as Secured Party (the "Trademark
Security Agreement", capitalized terms defined therein being used herein as
therein defined), that the undersigned by executing and delivering this
Acknowledgement hereby becomes a Grantor under the Trademark Security Agreement
in accordance with Section 20 thereof and agrees to be bound by all of the terms
thereof, and that the Registrations and Trademark Rights described on this
Acknowledgement shall be deemed to be part of the and shall become part of the
Collateral and shall secure all Secured Obligations.
[NAME OF ADDITIONAL GRANTOR]
By:_____________________________________
Name:
Title:
Notice Address:
_________________________________
_________________________________
_________________________________
_________________________________
Registrations
Registered Trademark Registration Registration
Owner Description Number Date Jurisdiction
---------- --------- ------------ ------------ ------------
IX-C-29
EXHIBIT X
[FORM OF COMPLIANCE CERTIFICATE]
COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFIES THAT:
(1) I am the duly elected [Title] of Outsourcing Solutions Inc., a
Delaware corporation ("Company");
(2) I have reviewed the terms of that certain Credit Agreement dated
as of November 6, 1996, by and among Company, the financial institutions
listed therein as Lenders, ▇▇▇▇▇▇▇ Sachs Credit Partners L.P. and The Chase
Manhattan Bank, as Co-Administrative Agents, SunTrust Bank, Atlanta, as
Collateral Agent, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and Chase
Securities Inc., as Arranging Agents, as amended, restated, supplemented or
otherwise modified to the date hereof (said Credit Agreement, as so
amended, restated, supplemented or otherwise modified, being the "Credit
Agreement", the terms defined therein and not otherwise defined in this
Certificate (including Attachment No. 1 annexed hereto and made a part
hereof) being used in this Certificate as therein defined), and the terms
of the other Loan Documents, and I have made, or have caused to be made
under my supervision, a review in reasonable detail of the transactions and
condition of Company and its Subsidiaries during the accounting period
covered by the attached financial statements; and
(3) The examination described in paragraph (2) above did not disclose,
and I have no knowledge of, the existence of any condition or event which
constitutes an Event of Default or Potential Event of Default during or at
the end of the accounting period covered by the attached financial
statements or as of the date of this Certificate[, except as set forth
below].
[Set forth [below] [in a separate attachment to this Certificate] are all
exceptions to paragraph (3) above listing, in detail, the nature of the
condition or event, the period during which it has existed and the action which
Company has taken, is taking, or proposes to take with respect to each such
condition or event:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________________]
X-1
The foregoing certifications, together with the computations set forth in
Attachment No. 1 annexed hereto and made a part hereof and the financial
statements delivered with this Certificate in support hereof, are made and
delivered this __________ day of _____________, [199_] [200_] pursuant to
subsection 6.1(iv) of the Credit Agreement.
OUTSOURCING SOLUTIONS INC.
By:_____________________________________
Name:
Title:
X-2
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
This Attachment No. 1 is attached to and made a part of a Compliance
Certificate dated as of ____________, [199_][200_] and pertains to the period
from ____________, [199_][200_] to ____________, [199_][200_]. Subsection
references herein relate to subsections of the Credit Agreement.
A. Indebtedness
1. Indebtedness under Capital Leases of the type described
in subsection 7.1(iv): $____________
2. Indebtedness secured by Liens permitted under
subsection 7.2A(iii): $____________
3. Indebtedness of the type described in subsection
7.1(iv) (A.1 + A.2): $____________
4. Maximum Indebtedness permitted under subsection
7.1(iv): $ 15,000,000
5. Aggregate amount of Permitted Seller Notes issued after
the Closing Date: $____________
6. Maximum amount of Permitted Seller Notes permitted to
be issued under subsection 7.1(vii): $____________
7. Indebtedness of the type described in subsection
7.1(viii): $____________
8. Maximum Indebtedness permitted under subsection 7.1(v-
iii): $ 5,000,000
B. Liens
1. Indebtedness secured by Liens described in subsection
7.2A(iv): $____________
2. Maximum Indebtedness permitted to be secured by Liens
under subsection 7.2A(iv): $ 2,000,000
X-3
C. Investments
1. Investments made after the Closing Date in Joint
Ventures of the type described in subsection 7.3(v): $____________
2. Maximum permitted under subsection 7.3(v): $ 5,000,000
3. Investments consisting of notes received in Asset Sales
of the type described in subsection 7.3(vi): $____________
4. Total sales price of assets sold in applicable Asset
Sales in which notes described under subsection 7.3(vi)
are received: $____________
5. Maximum portion of sales price permitted to be received
as notes under subsection 7.3(vi) (.20 x (C.4)): $____________
6. Maximum outstanding principal amount of notes permitted
under subsection 7.3(vi): $ 2,000,000
7. Investments of the type described in subsection
7.3(ix): $____________
8. Maximum permitted under subsection 7.3(ix): $ 2,500,000
D. Contingent Obligations
1. Contingent Obligations of the type described in
subsection 7.4(iv): $____________
2. Maximum permitted under subsection 7.4(iv): $ 1,000,000
3. Contingent Obligations of the type described in
subsection 7.4(ix): $____________
4. Maximum permitted under subsection 7.4(ix): $ 1,000,000
E. Restricted Junior Payments
1. Restricted Junior Payments of the type described in
subsection 7.5(iii): $____________
2. Maximum permitted under subsection 7.5(iii): $ 1,000,000
X-4
F. Minimum Interest Coverage Ratio (for the Calculation Period
ending _____________, [199_] [200_])
1. Consolidated Net Income: $____________
2. Consolidated Interest Expense: $____________
3. Provisions for taxes based on income: $____________
4. Total depreciation expense: $____________
5. Total amortization expense: $____________
6. Other non-cash items reducing Consolidated Net Income: $____________
7. Non-recurring charges identified prior to the first
Anniversary with respect to the rationalization of the
business of Company and its Subsidiaries following the
Acquisition, to the extent deducted in determining
Consolidated Net Income (if greater than $10,000, enter
"$10,000"): $____________
8. Non-recurring charges identified incurred after the
Closing Date in connection with the resolution of
litigation of Company and its Subsidiaries disclosed in
the Offering Circular relating to the Subordinated
Notes, to the extent deducted in determining
Consolidated Net Income: $____________
9. Non-cash items increasing Consolidated Net Income: $____________
10. Payments made with respect to Earn Out Agreements
permitted under the Credit Agreement, to the extent
not otherwise deducted in determining Consolidated
Net Income: $____________
11. Payments made with respect to Management Fees, to the
extent not otherwise deducted in determining
Consolidated Net Income: $____________
12. Consolidated EBITDA ((F.1 + F.2 + F.3 + F.4 + F.5 +
F.6 + F.7 + F.8) - (F.9 + F.10 + F.11)): $____________
13. Consolidated Interest Expense: $____________
X-5
14. Interest Coverage Ratio ((F.12):(F.13)): _____:1.00
15. Minimum Interest Coverage Ratio required under
subsection 7.6A: _____:1.00
G. Maximum Leverage Ratio (as of _____________, [199_] [200_])
1. Consolidated Total Debt: $____________
2. Consolidated EBITDA for the Calculation Period ended on
the above date (F.12 above): $____________
3. Maximum Leverage Ratio permitted under subsection 7.6B: _____:1.00
H. Minimum Fixed Charge Coverage Ratio (for Calculation Period
ending _____________, [199_] [200_])
1. Consolidated EBITDA (F.12 above): $____________
2. Scheduled cash repayments of principal of all
Indebtedness (as reduced by prepayments previously
made): $____________
3. Consolidated Interest Expense (F.13 above): $____________
4. Consolidated Maintenance Capital Expenditures: $____________
5. Taxes based on income actually paid in cash: $____________
6. Consolidated Fixed Charges (H.2 + H.3 + H.4 + H.5): $____________
7. Fixed Charge Coverage Ratio ((H.1):(H.6)): _____:1.00
8. Minimum Fixed Charge Coverage Ratio required under
subsection 7.6C: _____:1.00
I. Consolidated Maintenance Capital Expenditures (for the
Fiscal Year ending December 31, [199_] [200_] [to date]) $____________
1. Consolidated Maintenance Capital Expenditures: $____________
X-6
2. Maximum Consolidated Maintenance Capital Expenditures
Amount permitted under subsection 7.6D (as adjusted
(calculations and supporting information therefor
attached hereto) in accordance with the provisos to
such subsection): $____________
J. Fundamental Changes
1. Aggregate fair market value of assets sold in Asset
Sales described in subsection 7.7(iv) during the
period commencing _________________, [199_] [200_]: $____________
2. Consolidated EBITDA (F.12 above): $____________
3. Maximum Asset Sales permitted under subsection
7.7(iv) (.20 x (J.2)): $____________
4. Permitted Acquisitions made during preceding 12-month
period: $____________
5. Permitted Portfolio Acquisitions made during preceding
12-month period: $____________
6. Aggregate amount expended for acquisitions described
under subsection 7.7(v) for the preceding 12-month
period: $____________
7. Maximum amount permitted to be expended on acquisitions
permitted under subsection 7.7(v) (calculations and
supporting information therefor attached hereto), as
adjusted in accordance with the proviso to such
subsection: $____________
[K. Consolidated Excess Cash Flow (for the Fiscal Year ending
December 31, [199_] [200_]) [for Fiscal Years 1997 and
thereafter]
1. Consolidated EBITDA (F.12 above): $____________
2. Consolidated Working Capital Adjustment: $____________
3. Voluntary and scheduled cash repayments of
Consolidated Total Debt (excluding repayments of
Revolving Loans
X-7
except to the extent the Revolving Loan Commitments
are permanently reduced): $____________
4. Consolidated Capital Expenditures (minus any portion
thereof financed with proceeds of Indebtedness): $____________
5. Consolidated Interest Expense (F.13 above): $____________
6. Provisions for current taxes based on income and
payable in cash: $____________
7. Consolidated Excess Cash Flow ((K.1 + K.2) -
(K.3 + K.4 + K.5 + K.6)): $____________
8. Portion of Consolidated Excess Cash Flow required
to be prepaid (.50 x (K.7 [- $7,500,000 [FOR 1997
ONLY]])): $____________
L. Leverage Ratio (as of ___________, [199_] [200_], for
purposes of determining Pricing Reduction, if any)
1. Consolidated Total Debt: $____________
2. Consolidated EBITDA (F.12 above): $____________
3. Leverage Ratio ((L.1):(L.2)) _____:1.00
X-8
EXHIBIT XI
[FORM OF OPINION OF WHITE & CASE]
XI-A-1
EXHIBIT XII
[FORM OF OPINION OF O'MELVENY & ▇▇▇▇▇ LLP]
[O'M&M Letterhead]
[Date]
1996
657,392-031
[doc ID]
▇▇▇▇▇▇▇ Sachs Credit Partners L.P.,
as Arranging Agent and Co-Administrative Agent
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
The Chase Manhattan Bank,
as Co-Administrative Agent
Chase Securities Inc.,
as Arranging Agent
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
SunTrust Bank, Atlanta,
as Collateral Agent
▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
and
The Lenders Party to the Credit
Agreement Referenced Below
Re: Loans to Outsourcing Solutions Inc.
Ladies and Gentlemen:
We have acted as counsel to ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and The
Chase Manhattan Bank, as Co-Administrative Agents (in such capacity,
"Co-Administrative Agents"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and Chase
Securities Inc., as Arranging Agents (in such capacity, the "Arranging Agents"),
in connection with the preparation and delivery of a Credit
XII-1
▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P.
The Chase Manhattan Bank
Chase Securities Inc.
SunTrust Bank, Atlanta
[date]
Page 2
Agreement dated as of November 6, 1996 (the "Credit Agreement") among
Outsourcing Solutions Inc., a Delaware corporation ("Company"), the financial
institutions listed therein as lenders, Arranging Agents, SunTrust Bank,
Atlanta, as Collateral Agent (in such capacity, "Collateral Agent"), and
Co-Administrative Agents (collectively, Co-Administrative Agents, Collateral
Agent and Arranging Agents are "Agents") and in connection with the preparation
and delivery of certain related documents.
We have participated in various conferences with representatives of Company
and Agents and conferences and telephone calls with White & Case, counsel to
Loan Parties, during which the Credit Agreement and related matters have been
discussed, and we have also participated in the meeting held on the date hereof
(the "Closing") incident to the funding of the initial loans made under the
Credit Agreement. We have reviewed the forms of the Credit Agreement and the
exhibits thereto, including the forms of the promissory notes annexed thereto
(the "Notes"), and the opinion of White & Case (the "Opinion") and the officers'
certificates and other documents delivered at the Closing. We have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals or copies and the due authority of all persons executing the same,
and we have relied as to factual matters on the documents that we have reviewed.
Although we have not independently considered all of the matters covered by
the Opinion to the extent necessary to enable us to express the conclusions
therein stated, we believe that the Credit Agreement and the exhibits thereto
are in substantially acceptable legal form and that the Opinion and the
officers' certificates and other documents delivered in connection with the and
delivery of, and as conditions to the making of the initial loans under, the
Credit Agreement and the Notes are substantially responsive to the requirements
of the Credit Agreement.
Respectfully submitted,
XII-2
EXHIBIT XIII
[FORM OF ASSIGNMENT AGREEMENT]
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT (this "Agreement") is entered into by and between
the parties designated as Assignor ("Assignor") and Assignee ("Assignee") above
the signatures of such parties on the Schedule of Terms attached hereto and
hereby made an integral part hereof (the "Schedule of Terms") and relates to
that certain Credit Agreement described in the Schedule of Terms (said Credit
Agreement, as amended, restated, supplemented or otherwise modified to the date
hereof and as it may hereafter be amended, restated, supplemented or otherwise
modified from time to time, being the "Credit Agreement", the terms defined
therein and not otherwise defined herein being used herein as therein defined).
IN CONSIDERATION of the agreements, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
SECTION 1. Assignment and Assumption.
(a) Effective upon the Settlement Date specified in Item 4 of the Schedule
of Terms (the "Settlement Date"), Assignor hereby sells and assigns to Assignee,
without recourse, representation or warranty (except as expressly set forth
herein), and Assignee hereby purchases and assumes from Assignor, that
percentage interest in all of Assignor's rights and obligations as a Lender
arising under the Credit Agreement and the other Loan Documents with respect to
Assignor's Commitments and outstanding Loans, if any, which represents, as of
the Settlement Date, the percentage interest specified in Item 3 of the Schedule
of Terms of all rights and obligations of Lenders arising under the Credit
Agreement and the other Loan Documents with respect to the Commitments and any
outstanding Loans (the "Assigned Share"). Without limiting the generality of the
foregoing, the parties hereto hereby expressly acknowledge and agree that any
assignment of all or any portion of Assignor's rights and obligations relating
to Assignor's Revolving Loan Commitment shall include (i) in the event Assignor
is an Issuing Lender with respect to any outstanding Letters of Credit (any such
Letters of Credit being "Assignor Letters of Credit"), the sale to Assignee of a
participation in the Assignor Letters of Credit and any drawings thereunder as
contemplated by subsection 3.1C of the Credit Agreement and (ii) the sale to
Assignee of a ratable portion of any participations previously purchased by
Assignor pursuant to said subsection 3.1C with respect to any Letters of Credit
other than the Assignor Letters of Credit.
(b) In consideration of the assignment described above, Assignee hereby
agrees to pay to Assignor, on the Settlement Date, the principal amount of any
outstanding Loans included within the Assigned Share, such payment to be made by
wire transfer of immediately available
XIII-1
funds in accordance with the applicable payment instructions set forth in Item 5
of the Schedule of Terms.
(c) Assignor hereby represents and warrants that Item 3 of the Schedule of
Terms correctly sets forth the amount of the Commitments, the outstanding
Tranche A Term Loan, the outstanding Tranche B Term Loan and the Pro Rata Share
corresponding to the Assigned Share.
(d) Assignor and Assignee hereby agree that, upon giving effect to the
assignment and assumption described above, (i) Assignee shall be a party to the
Credit Agreement and shall have all of the rights and obligations under the Loan
Documents, and shall be deemed to have made all of the covenants and agreements
contained in the Loan Documents, arising out of or otherwise related to the
Assigned Share, and (ii) Assignor shall be absolutely released from any of such
obligations, covenants and agreements assumed or made by Assignee in respect of
the Assigned Share. Assignee hereby acknowledges and agrees that the agreement
set forth in this Section 1(d) is expressly made for the benefit of Company,
Agents, Assignor and the other Lenders and their respective successors and
permitted assigns.
(e) Assignor and Assignee hereby acknowledge and confirm their
understanding and intent that (i) this Agreement shall effect the assignment by
Assignor and the assumption by Assignee of Assignor's rights and obligations
with respect to the Assigned Share, (ii) any other assignments by Assignor of a
portion of its rights and obligations with respect to the Commitments and any
outstanding Loans shall have no effect on the Commitments, the outstanding
Tranche A Term Loan, the outstanding Tranche B Term Loan and the Pro Rata Share
corresponding to the Assigned Share as set forth in Item 3 of the Schedule of
Terms or on the interest of Assignee in any outstanding Revolving Loans
corresponding thereto, and (iii) from and after the Settlement Date, Chase
Co-Administrative Agent shall make all payments under the Credit Agreement in
respect of the Assigned Share (including without limitation all payments of
principal and accrued but unpaid interest, commitment fees and letter of credit
fees with respect thereto) (1) in the case of any such interest and fees that
shall have accrued prior to the Settlement Date, to Assignor, and (2) in all
other cases, to Assignee; provided that Assignor and Assignee shall make
payments directly to each other to the extent necessary to effect any
appropriate adjustments in any amounts distributed to Assignor and/or Assignee
by Chase Co-Administrative Agent under the Loan Documents in respect of the
Assigned Share in the event that, for any reason whatsoever, the payment of
consideration contemplated by Section 1(b) occurs on a date other than the
Settlement Date.
SECTION 2. Certain Representations, Warranties and Agreements.
(a) Assignor represents and warrants that it is the legal and beneficial
owner of the Assigned Share, free and clear of any adverse claim.
(b) Assignor shall not be responsible to Assignee for the , effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of any of
the Loan Documents or for any representations, warranties, recitals or
statements made therein or made in any written
XIII-2
or oral statements or in any financial or other statements, instruments, reports
or certificates or any other documents furnished or made by Assignor to Assignee
or by or on behalf Company or of any other Loan Party to Assignor or Assignee in
connection with the Loan Documents and the transactions contemplated thereby or
for the financial condition or business affairs of Company or any other Person
liable for the payment of any Obligations, nor shall Assignor be required to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained in any of the Loan
Documents or as to the use of the proceeds of the Loans or the use of the
Letters of Credit or as to the existence or possible existence of any Event of
Default or Potential Event of Default.
(c) Assignee represents and warrants that it is an Eligible Assignee; that
it has experience and expertise in the making or purchasing of loans such as the
Loans; that it has acquired the Assigned Share for its own account in the
ordinary course of its business and without a view to distribution of the Loans
within the meaning of the Securities Act or the Exchange Act or other federal
securities laws (it being understood that, subject to the provisions of
subsection 10.1 of the Credit Agreement, the disposition of the Assigned Share
or any interests therein shall at all times remain within its exclusive
control); and that it has received, reviewed and approved a copy of the Credit
Agreement (including all Exhibits and Schedules thereto).
(d) Assignee represents and warrants that it has received from Assignor
such financial information regarding Company and its Subsidiaries as is
available to Assignor and as Assignee has requested, that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the assignment evidenced by this Agreement,
and that it has made and shall continue to make its own appraisal of the
creditworthiness of Company and its Subsidiaries. Assignor shall have no duty or
responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of Assignee or to provide Assignee
with any other credit or other information with respect thereto, whether coming
into its possession before the making of the initial Loans or at any time or
times thereafter, and Assignor shall not have any responsibility with respect to
the accuracy of or the completeness of any information provided to Assignee.
(e) Each party to this Agreement represents and warrants to the other party
hereto that it has full power and authority to enter into this Agreement and to
perform its obligations hereunder in accordance with the provisions hereof, that
this Agreement has been duly authorized, executed and delivered by such party
and that this Agreement constitutes a legal, valid and binding obligation of
such party, enforceable against such party in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity.
SECTION 3. Miscellaneous.
(a) Each of Assignor and Assignee hereby agrees from time to time, upon
request of the other such party hereto, to take such additional actions and to
execute and deliver such
XIII-3
additional documents and instruments as such other party may reasonably request
to effect the transactions contemplated by, and to carry out the intent of, this
Agreement.
(b) Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated, except by an instrument in writing signed by the party
(including, if applicable, any party required to evidence its consent to or
acceptance of this Agreement) against whom enforcement of such change, waiver,
discharge or termination is sought.
(c) Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed. For the purposes hereof, the notice address of each of
Assignor and Assignee shall be as set forth on the Schedule of Terms or, as to
either such party, such other address as shall be designated by such party in a
written notice delivered to the other such party. In addition, the notice
address of Assignee set forth on the Schedule of Terms shall serve as the
initial notice address of Assignee for purposes of subsection 10.8 of the Credit
Agreement.
(d) In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
(e) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
(f) This Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto and their respective successors and assigns.
(g) This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
(h) This Agreement shall become effective upon the date (the "Effective
Date") upon which all of the following conditions are satisfied: (i) the of a
counterpart hereof by each of Assignor and Assignee, (ii) the giving of notice
to Company, (iii) the receipt by Chase Co-Administrative Agent of the processing
and recordation fee referred to in subsection 10.1B(i) of the Credit Agreement,
(iv) in the event Assignee is a Non-US Lender (as defined in subsection
XIII-4
2.7B(iii)(a) of the Credit Agreement), the delivery by Assignee to Chase
Co-Administrative Agent of such forms, certificates or other evidence with
respect to United States federal income tax withholding matters as Assignee may
be required to deliver to Chase Co-Administrative Agent pursuant to said
subsection 2.7B(iii)(a), (v) the of a counterpart hereof by each
Co-Administrative Agent as evidence of its consent hereto to the extent required
under subsection 10.1B(i) of the Credit Agreement and by Chase Co-Administrative
Agent as evidence of its acceptance hereof in accordance with subsection
10.1B(ii) of the Credit Agreement, (vi) the receipt by Chase Co-Administrative
Agent of originals or telefacsimiles of the counterparts described above and
authorization of delivery thereof, and (vii) the recordation by Chase
Co-Administrative Agent in the Register of the pertinent information regarding
the assignment effected hereby in accordance with subsection 10.1B(ii) of the
Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized, such being made as of the Effective Date in the applicable spaces
provided on the Schedule of Terms.
XIII-5
SCHEDULE OF TERMS
1. Company: OUTSOURCING SOLUTIONS INC.
2. Name and Date of Credit Agreement: Credit Agreement dated as of November 6,
1996, by and among Company, the financial institutions listed therein as
Lenders, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and The Chase Manhattan Bank,
as Co-Administra- tive Agents, SunTrust Bank, Atlanta, as Collateral Agent,
and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and Chase Securities Inc., as
Arranging Agents.
3. Amounts: Re: Tranche A Re: Tranche B Re: Revolving
Term Loans Term Loans Loans
(a) Aggregate Commitments of all
all Lenders: $ $ $
----------- ----------- -----------
(b) Assigned Share/Pro Rata Share: % % %
----------- ----------- -----------
(c) Amount of Assigned Share of
Commitments: $ $ $
----------- ----------- -----------
(d) Amount of Assigned Share of
Term Loans: $ $
----------- -----------
4. Settlement Date: ____________, [199_][200_]
5. Payment Instructions:
ASSIGNOR: ASSIGNEE:
___________________________ __________________________________
___________________________ __________________________________
___________________________ __________________________________
Attention:_________________ Attention:________________________
Reference:_________________ Reference:________________________
6. Notice Addresses:
ASSIGNOR: ASSIGNEE:
___________________________ __________________________________
___________________________ __________________________________
___________________________ __________________________________
Attention:_________________ Attention:________________________
Reference:_________________ Reference:________________________
XIII-6
7. Signatures:
[NAME OF ASSIGNOR], [NAME OF ASSIGNEE],
as Assignor as Assignee
By:__________________________ By:__________________________
Name: Name:
Title: Title:
Consented to in accordance with Consented to and accepted in accor-
subsection 10.1B(i) of the Credit dance with subsections 10.1B(i) and
Agreement (ii) of the Credit Agreement
▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT THE CHASE MANHATTAN
PARTNERS L.P., BANK,
as Co-Administrative Agent as Chase Co-Administrative Agent
By:__________________________ By:__________________________
Name: Name:
Title: Title:
XIII-7
EXHIBIT XIV
[FORM OF PERMITTED SELLER NOTE]
% NON-NEGOTIABLE SUBORDINATED NOTE
[Insert Date] $_____________
OUTSOURCING SOLUTIONS INC., a Delaware corporation (the "Borrower"), hereby
promises upon the terms and subject to the provisions hereof to pay to [NAME OF
SELLER] (the "Holder"), the principal amount of [___________] Dollars
($____________).
This ___% Non-Negotiable Junior Subordinated Note (the "Note") was issued
pursuant to the Purchase Agreement (the "Purchase Agreement") dated as of
[__________, [199_] [200_], between the Borrower and the Holder.
1. Definitions. As used herein, the following terms shall have the
following meanings:
"Indebtedness" means (i) all obligations for borrowed money or for the
deferred purchase price of property or services (including, without limitation,
all obligations contingent or otherwise in connection with acceptance, letter of
credit or similar facilities, (ii) all obligations evidenced by bonds, notes,
debentures or other similar instruments or securities, (iii) all indebtedness
created or arising under any sale and leaseback arrangement, conditional sale or
other title retention agreement with respect to property owned or acquired
(whether or not the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (iv) all rental obligations under capital leases to the extent not
included in clause (iii) above, (v) all guarantees (direct or indirect), all
contingent reimbursement obligations under undrawn letters of credit and all
other contingent obligations in respect of, or obligations to purchase or
otherwise acquire or to assure payment of, indebtedness of others and (vi)
indebtedness of others secured by any lien upon property, whether or not
assumed, but only to the extent of such property's fair market value.
"Person" means an individual, a partnership, a corporation, an association,
a limited liability company, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof
"Senior Agent" shall mean The Chase Manhattan Bank, N.A., as Co-
Administrative Agent for the Lenders under the Senior Credit Agreement, and its
successors in such capacity, or if there is then no acting Administrative Agent
under the Senior Credit Agreement, financial institutions holding a majority in
principal amount of the Senior Debt outstanding thereunder.
XIV-1
"Senior Credit Agreement" shall mean the Credit Agreement, dated as of
November 6, 1996, by and among the Borrower, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P.
and The Chase Manhattan Bank, N.A., as Co-Administrative Agents, SunTrust Bank,
Atlanta, as Collateral Agent, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and Chase
Securities Inc., as Arranging Agents, and the financial institutions listed
therein as Lenders, as amended, restated, modified or supplemented from time to
time hereafter, together with any credit agreement or similar document from time
to time executed by the Borrower to evidence any Refinancing (as defined in the
definition of Senior Indebtedness) or successive Refinancings.
"Senior Indebtedness" shall mean (i) all Obligations (as defined in the
Senior Credit Agreement) (including Contingent Obligations, as defined in the
Senior Credit Agreement) now or hereafter incurred pursuant to and in accordance
with the terms of the Senior Debt Documents, (ii) any additional Indebtedness
incurred under or pursuant to the Senior Credit Agreement and the other Senior
Debt Documents whether such Obligations or additional Indebtedness involve
principal prepayment charges, interest (including, without limitation, interest
accruing after the filing of a petition initiating any proceeding under the
Bankruptcy Code, whether or not allowed as a claim in such proceeding)
indemnities or reimbursement of fees, expenses or other amounts, and (iii) any
indebtedness incurred for the purpose of refinancing, restructuring, extending
or renewing (collectively, "Refinancing") the obligations of the Borrower under
the Senior Credit Agreement as set forth in clauses (i) and (ii) above.
"Senior Debt Documents" shall mean the Senior Credit Agreement and all
other documents and instruments delivered or filed in connection with the
creation or incurrence of any Senior Indebtedness (including, without
limitation, the guaranty agreements executed and delivered by the subsidiaries
of the Borrower in respect of the Obligations under the Senior Credit
Agreement).
"Senior Lenders" shall mean the financial institutions party to the Senior
Credit Agreement as "Lenders" from time to time.
2. Payment of Interest. Interest shall accrue on the unpaid principal
amount of this Note from the date hereof at the rate of [____]% per annum [NOT
TO EXCEED 12%] (the "Interest Rate"), calculated on the basis of a 365 day year.
The Borrower shall pay interest semi-annually in arrears on the fifteenth day of
January and July in each year (each, an "Interest Payment Date") commencing on
___________, [199_][200_].
3. Payment of Principal.
(a) Scheduled Payment. Subject to the provisions of Section 4 hereof, on
[_____________], [199_][200_] (the "Maturity Date"), the Borrower shall pay to
the holder of this Note the entire principal amount of this Note, plus all
accrued and unpaid interest hereon which is then unpaid.
(b) Optional Prepayments. Subject to the provisions of Section 4 hereof,
the Borrower may, at any time and from time to time, without premium or penalty,
prepay all or a
XIV-2
portion of the unpaid principal amount of this Note, together with unpaid
interest accrued since the preceding Interest Payment Date to which interest has
been paid on such portion of the principal amount which it is prepaying;
provided, that no such prepayment shall be made if such prepayment is then
prohibited by the terms of any Senior Indebtedness. A prepayment of less than
all of the unpaid principal amount of this Note shall not relieve the Borrower
of its obligation to make the scheduled payment on this Note on the Maturity
Date. Each partial payment under this Note shall first be credited to accrued
and unpaid interest on the principal being prepaid, and the remainder shall be
credited to principal. Whenever any payment to be made hereunder shall be due on
a date which is not a business day, the payment shall be made on the next
succeeding business day and such extension of time shall be included in the
computation of interest with respect to such payment
4. Subordination.
(a) Agreement to Subordinate. The Borrower and, by its acceptance hereof,
each Holder agree that the indebtedness of the Borrower evidenced by this Note,
whether for principal, interest on any other amount payable under or in respect
hereof and all rights or claims arising out of or associated with such
Indebtedness (the "Subordinated Obligations"), shall be junior and subordinate
in right of payment to the prior payment in full in cash of all Senior
Indebtedness, in accordance with the provisions of this Section 4. Each holder
of Senior Indebtedness shall be deemed to have acquired Senior Indebtedness in
reliance upon the agreements of the Borrower and the holder of this Note
contained in this Section 4. The provisions of this Section 4 shall be
reinstated if at any time any payment of any of the Senior Indebtedness is
rescinded or must otherwise be returned by any holder of Senior Indebtedness or
any representative of such holder upon the insolvency, bankruptcy or
reorganization of the Borrower. Any provision of this Note to the contrary
notwithstanding (other than the provision contained in Section 6), the Borrower
shall not make, and no Holder shall accept, any payment or prepayment of
principal, or prepayment of other amounts due thereunder, of any kind whatsoever
(including without limitation by distribution of assets, set off, exchange or
any other manner) with respect to the Subordinated Obligations at any time when
any of the Senior Indebtedness remains outstanding. Holder may receive interest
payments in respect of the Subordinated Obligations in accordance with the terms
of this Note except to the extent and at the times prohibited or restricted by
the provisions of this Section 4. In no event shall the Holder commence any
action or proceeding to contest the provisions of this Section 4 or the priority
of the Liens (as defined in the Senior Credit Agreement) granted to the holders
of the Senior Indebtedness by the Borrower. No Holder shall take, accept or
receive any collateral security from the Borrower for the payment of the
Subordinated Obligations.
(b) Liquidation, Dissolution, Bankruptcy. In the event of any insolvency,
bankruptcy, dissolution, winding up, liquidation, arrangement, reorganization,
marshalling of assets or liabilities, composition, assignment for the benefit of
creditors or other similar proceedings relating to the Borrower, its debts, its
property or its operations, whether voluntary or involuntary, including, without
limitation the filing of any petition or the taking of any action to commence
any of the foregoing (which, in the case of action by a third party, is not
dismissed within 60 days) (a "Bankruptcy Event"), all Senior Indebtedness shall
first be paid in full in
XIV-3
cash or other immediately available funds before Holder shall be entitled to
receive or retain any payment or distribution of assets of the Borrower with
respect to any Subordinated Obligations. In the event of any such Bankruptcy
Event, any payment or distribution of assets to which Holder would be entitled
if the Subordinated Obligations were not subordinated to the Senior Indebtedness
in accordance with this Section 4, whether in cash, property, securities or
otherwise, shall be paid or delivered by the debtor, custodian, trustee or agent
or other Person making such payment or distribution, or by the Holder if
received by it, directly to the Senior Agent on behalf of the holders of the
Senior Indebtedness for application to the payment of the Senior Indebtedness
remaining unpaid, to the extent necessary to make payment in full in cash or
other immediately available funds of all Senior Indebtedness remaining unpaid,
after giving effect to any concurrent payment or distribution to or for the
holders of the Senior Indebtedness.
(c) No Payments with Respect to Subordinated Obligations in Certain
Circumstances.
(i) In circumstances in which Section 4(b) is not applicable, no
payment of any nature (including, without limitation, any distribution of
assets) in respect of the Subordinated Obligations (including, without
limitation, pursuant to any judgment with respect thereto or on account of the
purchase or redemption or other acquisition of Subordinated Obligations, by set
off, prepayment exchange or other manner) shall be made by or on behalf of the
Borrower if, at the time of such payment:
(A) a default in the payment when due (whether at the
maturity thereof, or upon acceleration of maturity or otherwise and
without giving effect to any applicable grace periods) of all or any
portion of the Senior Indebtedness (whether of principal, interest or
any other amount with respect thereto) shall have occurred, and such
default shall not have been cured or waived in accordance with the
terms of the Senior Debt Documents; or
(B) subject to the last sentence of this Section 4(c), (x)
the Borrower shall have received notice from the Senior Agent of the
occurrence of one or more Events of Default (as defined in the Senior
Credit Agreement) in respect of the Senior Indebtedness (other than
payment defaults described in Section 4(c)(i)(A) above), (y) each such
Event of Default shall not have been cured or waived in accordance
with the terms of the Senior Debt Documents, and (z) 180 days shall
not have elapsed since the date such notice was received.
The Borrower may resume payments (and may make any payments missed due to
the application of Section 4(c)(i) in respect of the Subordinated Obligations or
any judgment with respect thereto:
(A) in the case of a default referred to in clause (A) of
this Section 4(c)(i), upon a cure or waiver thereof in accordance with
the terms of the Senior Debt Documents; or
XIV-4
(B) in the case of an Event of Default or Events of Default
referred to in clause (B) of this Section 4(c)(i), upon the earlier to
occur of (1) the cure or waiver of all such Events of Default in
accordance with the terms of the Senior Debt Documents, or (2) the
expiration of such period of 180 days.
(ii) Following any acceleration of the maturity of any Senior
Indebtedness and as long as such acceleration shall continue unrescinded
and unannulled, such Senior Indebtedness shall first be paid in full in
cash, or provision for such payment shall be made in a manner satisfactory
to the holders of the Senior Indebtedness, before any payment is made on
account of or applied on the Subordinated Obligations.
(iii) The Borrower shall give prompt written notice to the Holder of
(i) any default in respect of Senior Obligations referred to in Section
4(c)(i)(A) and (ii) any notice of the type described in Section 4(c)(i)(B)
from the Senior Agent.
(d) When Distribution Must Be Paid Over. In the event that Holder shall
receive any payment or distribution of assets that Holder is not entitled to
receive or retain under the provisions of this Note, Holder shall hold any
amount so received in trust for the holders of Senior Indebtedness, shall
segregate such assets from other assets held by Holder and shall forthwith turn
over such payment or distribution (without liability for interest thereon) to
the Senior Agent on behalf of the holders of Senior Indebtedness in the form
received (with any necessary endorsement) to be applied to Senior Indebtedness.
(e) Exercise of Remedies. So long as any Senior Indebtedness is outstanding
(including any loans, any letters of credit, any commitments to lend or any
lender guarantees), Holder (solely in its capacity as a holder of this Note)
shall not exercise any rights or remedies with respect to an Event of Default
under this Note, including, without limitation, any action (l) to demand or ▇▇▇
for collection of amounts payable hereunder, (2) to accelerate the principal of
this Note, or (3) to commence or join with any other creditor (other than the
holder of a majority in principal amount of the Senior Indebtedness) in
commencing any proceeding in connection with or premised on the occurrence of a
Bankruptcy Event prior to the earlier of:
(A) the payment in full in cash or other immediately
available funds of all Senior Indebtedness;
(B) the initiation of a proceeding (other than a proceeding
prohibited by clause (3) of this Section 4(e)) in connection with or
premised upon the occurrence of a Bankruptcy Event;
(C) the expiration of 180 days immediately following the
receipt by the Senior Agent of notice of the occurrence of such Event
of Default from the Holder; and
(D) the acceleration of the maturity of the Senior
Indebtedness;
XIV-5
provided, however, that if, with respect to (B) and (D) above, such proceeding
or acceleration, respectively, is rescinded, or with respect to (C) above,
during such 180-day period such Event of Default has been cured or waived, the
prohibition against taking the actions described in this section 4(e) shall
automatically be reinstated as of the date of the rescission, cure or waiver, as
applicable. In all events, unless an event described in clause (A), (B) or (D)
above has occurred and not been rescinded, the Holder shall give thirty (30)
days prior written notice to the Senior Agent before taking any action described
in this Section 4(e), which notice shall describe with specificity the action
that the Holder in good faith intends to take.
(f) Acceleration of Payment of Note. If this Note is declared due and
payable prior to the Maturity Date, no direct or indirect payment that is due
solely by reason of such declaration shall be made, nor shall application be
made of any distribution of assets of the Borrower (whether by set off or in any
other manner, including, without limitation, from or by way of collateral) to
the payment, purchase or other acquisition or retirement of this Note, unless,
in either case, (i) all amounts due or to become due on or in respect of the
Senior Indebtedness (including with respect to any outstanding letters of
credit) shall have been previously paid in full in cash or other immediately
available funds or in any other manner satisfactory to all holders of such
Senior Indebtedness, (ii) all commitments to lend under Senior Indebtedness
shall have been terminated, (iii) all guarantees constituting Senior
Indebtedness shall have been terminated and (iv) all lender guarantees
constituting Senior Indebtedness shall have been permanently reduced to zero.
(g) Proceedings Against Borrower. So long as any Senior Indebtedness is
outstanding (including any loans, any commitments to lend or open lender
guarantees or any lender guarantees, Holder (solely in its capacity as a holder
of this Note) shall not commence any bankruptcy, insolvency, reorganization or
other similar proceeding against Borrower.
(h) Amending Senior Indebtedness. Any holder of Senior Indebtedness may, at
any time and from time to time, without the consent of or notice to Holder (i)
modify or amend the terms of the Senior Indebtedness provided that such Senior
Indebtedness cannot be extended or renewed past December 31, 2003, (ii) sell,
exchange, release, fail to perfect a lien on or a security interest in or
otherwise in any manner deal with or apply any property pledged or mortgaged to
secure, or otherwise securing, Senior Indebtedness, (iii) release any guarantor
or any other person liable in any manner for the Senior Indebtedness, (iv)
exercise or refrain from exercising any rights against Borrower or any other
person, (v) apply any sums by whomever paid or however realized to Senior
Indebtedness or (vi) take any other action that might be deemed to impair in any
way the rights of the holder of this Note. Any and all of such actions may be
taken by the holders of Senior Indebtedness without incurring responsibility to
Holder and without impairing or releasing the obligations of Holder to the
holders of Senior Indebtedness.
(i) Certain Rights in Bankruptcy. Holder hereby irrevocably authorizes and
empowers each holder of Senior Indebtedness (and its representative or
representatives) to demand, ▇▇▇ for, collect and receive all payments and
distributions under the terms of this Note, to file and prove all claims
(including claims in bankruptcy) relating to this Note, to exercise any
XIV-6
right to vote arising with respect to this Note and any claims hereunder in any
bankruptcy, insolvency or similar proceeding and take any and all other actions
in the name of Holder (solely in its capacity as a holder of this Note), as such
holder of Senior Indebtedness determines to be necessary or appropriate.
(j) Subrogation. No payment or distribution to any holder of Senior
Indebtedness pursuant to the provisions of this Note shall entitle Holder to
exercise any right of subrogation in respect thereof until (i)(w) all Senior
Indebtedness shall have been paid in full in cash or other immediately available
funds or in any other manner satisfactory to all holders of Senior Indebtedness,
(x) all commitments to lend under Senior Indebtedness shall have been
terminated, (y) all guarantees constituting Senior Indebtedness shall have been
terminated and (z) all lender guarantees constituting Senior Indebtedness shall
have been permanently reduced to zero or (ii) all holders of Senior Indebtedness
have consented in writing to the taking of such action.
(k) Relative Rights. The provisions of this Section 4 are for the benefit
of the holders of Senior Indebtedness (and their successors and assigns) and
shall be enforceable by them directly against Holder. Holder acknowledges and
agrees that any breach of the provisions of this Section 4 will cause
irreparable harm for which the payment of monetary damages may be inadequate.
For this reason, Holder agrees that, in addition to any remedies at law or
equity to which a holder of the Senior Indebtedness may be entitled, a holder of
the Senior Indebtedness will be entitled to an injunction or other equitable
relief to prevent breaches of the provisions of this Section 4 and/or to compel
specific performance of such provisions. The provisions of this Section 4 shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of Senior Indebtedness is rescinded or must otherwise be returned by
any holder of Senior Indebtedness upon the occurrence of a Bankruptcy Event or
otherwise, all as though such payment had not been made. The provisions of this
Section 4 are not intended to impair and shall not impair as between Borrower
and Holder, the obligation of Borrower, which is absolute and unconditional, to
pay Holder all amounts owing under this Note.
(l) Reliance on Orders and Decrees. Subject to the provisions of Section
4(d) hereof, upon any payment or distribution of assets of Borrower, whether in
cash, property, securities or otherwise, Holder shall be entitled to rely upon
any order or decree entered by any court of competent jurisdiction in which any
insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution,
winding up or similar case or proceeding is pending, or a certificate of the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for
the benefit of creditors, agent or other Person making such payment or
distribution, delivered to Holder for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of Senior
Indebtedness, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Section
4.
XIV-7
5. Events of Default.
(a) Definition. The following shall be an "Event of Default" under this
Note;
(i) the Borrower shall fail to make any payment of interest on
this Note when the same shall become due and payable and such failure shall
continue for a period of 5 days;
(ii) the Borrower shall fail to make any payment of the principal
of this Note when the same shall become due and payable, whether on the
Maturity Date or otherwise;
(iii) (A) the Borrower shall commence any case, proceeding or
action (x) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to its debts, or (y)
seeking appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its assets, (B) the
Borrower shall make a general assignment for the benefit of its creditors,
(C) there shall be commenced against the Borrower any case, proceeding or
other action of a nature referred to in clause (A) above which shall not
have been vacated or discharged within 60 days from the commencement
thereof, or (iv) a court shall enter a decree or order for relief in any
involuntary case under Title 11 of the United States Code, as amended from
time to time, or any applicable bankruptcy or similar law now or hereafter
in effect, which decree or order is not stayed, vacated, discharged, or
bonded pending appeal within 60 days from the entry thereof; or
(iv) the acceleration of the maturity of the Senior Indebtedness.
(b) Remedies. If an Event of Default shall occur and be continuing, then,
subject to the provisions of Section 4, the Holder may, upon written notice to
the Borrower, declare all amounts owing under this Note to be immediately due
and payable.
Subject to the immediately preceding paragraph and to Section 4 above, the
Holder shall also have all other rights in respect of this Note following the
occurrence and during the continuance of an Event of Default which are available
pursuant to applicable law or in equity.
[6. Right of Set-Off. Anything in this Note to the contrary
notwithstanding, nothing in this Note shall preclude the Borrower from timely
exercising such Borrower's right pursuant to Section ______ of the Purchase
Agreement to set-off indemnification claims against this Note and/or interest
payments under this Note.]
XIV-8
7. No Presentment. The Borrower, for itself and any guarantors hereof, and
their successors and assigns, waives presentment, demand, protest and notice
thereof or of dishonor, and waives any right to be released by reason of any
extension of time or change in the terms of payment.
8. Amendment. So long as any Senior Indebtedness is outstanding (including
any commitment under the Senior Agent Documents) the terms of this Note may be
amended only with the consent of the Senior Agent. Subject to the foregoing,
without the consent of the Senior Agent hereof, this Note may be amended by the
Borrower and the Holder to cure any ambiguity, defect or inconsistency that does
not affect the subordination provisions hereof or the rights of the Senior
Lenders.
9. Cancellation. After all unpaid principal and interest owed on this Note
has been paid in full, this Note shall be surrendered to the Borrower for
cancellation and shall not be reissued.
10. Transfer Restrictions: Acknowledgment of Security Interest. This Note
shall not be transferrable by the Holder hereof without the prior written
consent of the Borrower (which consent shall not be unreasonably withheld). The
Holder hereby acknowledges, and agrees to, the Borrower's grant of its interest
herein to the Lenders under the Credit Agreement, dated as of the date hereof,
to collaterally secure the Borrower's obligations under such Credit Agreement.
11. Payment of Expenses. The Borrower agrees to pay all costs and expenses
(including reasonable attorneys' fees) reasonably incurred by the Holder after
the occurrence and during the continuance of an Event of Default in enforcing
any obligations under this Note or in collecting any payments due from Borrower
under this Note (including in connection with a bankruptcy or insolvency
proceeding with respect to the Borrower).
12. Governing Law. The construction, validity and interpretation of this
Note shall be governed by and construed in accordance with the domestic laws of
the State of New York, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
13. Descriptive Headings. The descriptive headings of this Note are
inserted for convenience only, and do not constitute a part of this Note.
XIV-9
IN WITNESS WHEREOF, the Borrower has executed and delivered this Note on
the date first written above.
OUTSOURCING SOLUTIONS INC.
By:____________________________________
Name:
Title:
Agreed:
[NAME OF SELLER]
By:________________________________
Name:
Title:
XIV-10
EXHIBIT XV
[FORM OF CERTIFICATE RE NON-BANK STATUS]
CERTIFICATE RE NON-BANK STATUS
Reference is hereby made to that certain Credit Agreement dated as of
November 6, 1996 (said Credit Agreement, as amended, restated, supplemented or
otherwise modified to the date hereof, being the "Credit Agreement"), by and
among Outsourcing Solutions Inc., a Delaware corporation, the financial
institutions listed therein as Lenders ("Lenders"), ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit
Partners L.P. and The Chase Manhattan Bank, as co-administrative agents for
Lenders, SunTrust Bank, Atlanta, as collateral agent, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit
Partners L.P. and Chase Securities Inc., as arranging agents. Pursuant to
subsection 2.7B(iii) of the Credit Agreement, the undersigned hereby certifies
that it is not a "bank" or other Person described in Section 881(c)(3) of the
Internal Revenue Code of 1986, as amended.
[NAME OF LENDER]
By:____________________________________
Name:
Title:
XV-1
EXHIBIT XVI
[FORM OF COLLATERAL ACCOUNT AGREEMENT]
COLLATERAL ACCOUNT AGREEMENT
This COLLATERAL ACCOUNT AGREEMENT (this "Agreement") is dated as of
November 6, 1996 and entered into by and between OUTSOURCING SOLUTIONS INC., a
Delaware corporation ("Pledgor"), and SUNTRUST BANK, ATLANTA, as agent for and
representative of (in such capacity herein called "Secured Party") the financial
institutions ("Lenders") party to the Credit Agreement referred to below.
PRELIMINARY STATEMENTS
A. Pursuant to that certain Credit Agreement dated as of November 6, 1996
(said Credit Agreement, as it may hereafter be amended, restated, supplemented
or otherwise modified from time to time, being the "Credit Agreement", the terms
defined therein and not otherwise defined herein being used herein as therein
defined), by and among Pledgor,, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and The
Chase Manhattan Bank, as Co-Administrative Agents, Secured Party, as Collateral
Agent, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. and Chase Securities Inc., as
Arranging Agents, Lenders have made certain commitments, subject to the terms
and conditions set forth in the Credit Agreement, to extend certain credit
facilities to Pledgor.
B. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Pledgor shall have granted the security
interests and undertaken the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make Loans and issue Letters of Credit under the Credit Agreement and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Pledgor hereby agrees with Secured Party as follows:
SECTION 1. Certain Definitions.
The following terms used in this Agreement shall have the following
meanings:
"Collateral" means (i) the Collateral Account, (ii) all amounts on
deposit from time to time in the Collateral Account, (iii) all interest,
cash, instruments, securities and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange
for any or all of the Collateral, and (iv) to the extent not covered by
clauses (i) through (iii) above, all proceeds of any or all of the
foregoing Collateral.
XVI-1
"Collateral Account" means the restricted deposit account established
and maintained by Secured Party pursuant to subsection 2(a).
"Secured Obligations" means all obligations and liabilities of every
nature of Pledgor now or hereafter existing under or arising out of or in
connection with the Credit Agreement and the other Loan Documents and all
extensions or renewals thereof, whether for principal, interest (including
without limitation interest that, but for the filing of a petition in
bankruptcy with respect to Pledgor, would accrue on such obligations),
reimbursement of amounts drawn under Letters of Credit, fees, expenses,
indemnities or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or
not jointly owed with others, and whether or not from time to time
decreased or extinguished and later increased, created or incurred, and all
or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Secured Party or any Lender as a preference, fraudulent
transfer or otherwise, and all obligations of every nature of Pledgor now
or hereafter existing under this Agreement.
SECTION 2. Establishment and Operation of Collateral Account.
(a) Secured Party is hereby authorized to establish and maintain at its
office at _____________________________________________, as a blocked account in
the name of Secured Party and under the sole dominion and control of Secured
Party, a restricted deposit account designated as "Outsourcing Solutions Inc.
Collateral Account".
(b) The Collateral Account shall be operated in accordance with the terms
of this Agreement.
(c) All amounts at any time held in the Collateral Account shall be
beneficially owned by Pledgor but shall be held in the name of Secured Party
hereunder, for the benefit of Lenders, as collateral security for the Secured
Obligations upon the terms and conditions set forth herein. Pledgor shall have
no right to withdraw, transfer or, except as expressly set forth herein,
otherwise receive any funds deposited into the Collateral Account.
(d) Anything contained herein to the contrary notwithstanding, the
Collateral Account shall be subject to such applicable laws, and such applicable
regulations of the Board of Governors of the Federal Reserve System and of any
other appropriate banking or governmental authority, as may now or hereafter be
in effect.
SECTION 3. Deposits of Cash Collateral.
(a) All deposits of funds in the Collateral Account shall be made by wire
transfer (or, if applicable, by intra-bank transfer from another account of
Pledgor) of immediately available funds, in each case addressed as follows:
XVI-2
Account No.:
ABA No.:
Reference:
Attention:
Pledgor shall, promptly after initiating a transfer of funds to the Collateral
Account, give notice to Secured Party by telefacsimile of the date, amount and
method of delivery of such deposit.
(b) If an Event of Default has occurred and is continuing and, in
accordance with Section 8 of the Credit Agreement, Pledgor is required to pay to
Secured Party an amount equal to the maximum amount that may at any time be
drawn under all Letters of Credit then outstanding under the Credit Agreement,
Pledgor shall deliver funds in such an amount for deposit in the Collateral
Account in accordance with Section 3(a). Upon any drawing under any outstanding
Letter of Credit in respect of which Pledgor has deposited in the Collateral
Account any amounts described above, Secured Party shall apply such amounts to
reimburse the Issuing Lender for the amount of such drawing. In the event the
amount deposited in the Collateral Account pursuant to this Section 3(b) exceeds
the maximum amount available to be drawn under all Letters of Credit, Secured
Party shall apply such excess amount then on deposit in the Collateral Account
in accordance with subsection 2.4D of the Credit Agreement.
(c) Pledgor shall, promptly after initiating a transfer of funds to the
Collateral Account, give notice to Secured Party by telefacsimile of the date,
amount and method of delivery of such deposit.
SECTION 4. Pledge of Security for Secured Obligations.
Pledgor hereby pledges and assigns to Secured Party, and hereby grants to
Secured Party a security interest in, all of Pledgor's right, title and interest
in and to the Collateral as collateral security for the prompt payment or
performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all
Secured Obligations.
SECTION 5. No Investment of Amounts in the Collateral Account; Interest on
Amounts in the Collateral Account.
(a) Cash held by Secured Party in the Collateral Account shall not be
invested by Secured Party but instead shall be maintained as a cash deposit in
the Collateral Account pending application thereof as elsewhere provided in this
Agreement.
(b) To the extent permitted under Regulation Q of the Board of Governors of
the Federal Reserve System, any cash held in the Collateral Account shall bear
interest at the standard rate paid by Secured Party to its customers for
deposits of like amounts and terms.
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(c) Subject to Secured Party's rights under Section 12, any interest earned
on deposits of cash in the Collateral Account in accordance with subsection 5(b)
shall be deposited directly in, and held in the Collateral Account.
SECTION 6. Representations and Warranties.
Pledgor represents and warrants as follows:
(a) Ownership of Collateral. Pledgor is (or at the time of transfer
thereof to Secured Party will be) the legal and beneficial owner of the
Collateral from time to time transferred by Pledgor to Secured Party, free
and clear of any Lien except for the security interest created by this
Agreement.
(b) Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the grant by Pledgor of the
security interest granted hereby, (ii) the , delivery or performance of
this Agreement by Pledgor, or (iii) the perfection of or the exercise by
Secured Party of its rights and remedies hereunder (except as may have been
taken by or at the direction of Pledgor).
(c) Perfection. The pledge and assignment of the Collateral pursuant
to this Agreement creates a valid and perfected first priority security
interest in the Collateral, securing the payment of the Secured
Obligations.
(d) Other Information. All information heretofore, herein or hereafter
supplied to Secured Party by or on behalf of Pledgor with respect to the
Collateral is accurate and complete in all respects.
SECTION 7. Further Assurances.
Pledgor agrees that from time to time, at the expense of Pledgor, Pledgor
will promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or desirable, or that Secured
Party may request, in order to perfect and protect any security interest granted
or purported to be granted hereby or to enable Secured Party to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, Pledgor will: (a) execute and
file such financing or continuation statements, or amendments thereto, and such
other instruments or notices, as may be necessary or desirable, or as Secured
Party may request, in order to perfect and preserve the security interests
granted or purported to be granted hereby and (b) at Secured Party's request,
appear in and defend any action or proceeding that may affect Pledgor's
beneficial title to or Secured Party's security interest in all or any part of
the Collateral.
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SECTION 8. Transfers and other Liens.
Pledgor agrees that it will not (a) sell, assign (by operation of law or
otherwise) or otherwise dispose of any of the Collateral or (b) create or suffer
to exist any Lien upon or with respect to any of the Collateral, except for the
security interest under this Agreement.
SECTION 9. Secured Party Appointed Attorney-in-Fact.
Pledgor hereby irrevocably appoints Secured Party as Pledgor's
attorney-in-fact, with full authority in the place and stead of Pledgor and in
the name of Pledgor, Secured Party or otherwise, from time to time in Secured
Party's discretion to take any action and to execute any instrument that Secured
Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation to file one or more financing or
continuation statements, or amendments thereto, relative to all or any part of
the Collateral without the signature of Pledgor.
SECTION 10. Secured Party May Perform.
If Pledgor fails to perform any agreement contained herein, Secured Party
may itself perform, or cause performance of, such agreement, and the expenses of
Secured Party incurred in connection therewith shall be payable by Pledgor under
subsection 10.2 of the Credit Agreement.
SECTION 11. Standard of Care.
The powers conferred on Secured Party hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the exercise of reasonable care in the custody of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, Secured Party shall have no duty as to any Collateral, it being
understood that Secured Party shall have no responsibility for (a) taking any
necessary steps (other than steps taken in accordance with the standard of care
set forth above to maintain possession of the Collateral) to preserve rights
against any parties with respect to any Collateral or (b) taking any necessary
steps to collect or realize upon the Secured Obligations or any guarantee
therefor, or any part thereof, or any of the Collateral. Secured Party shall be
deemed to have exercised reasonable care in the custody and preservation of
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which Secured Party accords its own property of like
kind.
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SECTION 12. Remedies.
(a) If any Event of Default or Potential Event of Default shall have
occurred and be continuing, Secured Party may (i) transfer any or all of the
Collateral to an account established in Secured Party's name (whether at Secured
Party or otherwise) or (ii) otherwise register title to any Collateral in the
name of Secured Party or one of its nominees or agents, without reference to any
interest of Pledgor.
(b) If any Event of Default shall have occurred and be continuing, subject
to the provisions of subsection 3(b), Secured Party may exercise in respect of
the Collateral, in addition to all other rights and remedies otherwise available
to it, all the rights and remedies of a secured party on default under the
Uniform Commercial Code as in effect in any relevant jurisdiction (the "Code")
(whether or not the Code applies to the affected Collateral).
(c) If the proceeds of any disposition of the Collateral are insufficient
to pay all the Secured Obligations, Pledgor shall be liable for the deficiency
and the fees of any attorneys employed by Secured Party to collect such
deficiency.
(d) Anything contained herein to the contrary notwithstanding, any of the
Collateral consisting of cash held by Secured Party in the Collateral Account
shall be subject to Secured Party's rights of set-off under subsection 10.4 of
the Credit Agreement.
SECTION 13. Continuing Security Interest; Transfer of Loans.
This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the payment in
full of the Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (b) be binding upon Pledgor, its successors and assigns, and (c) inure,
together with the rights and remedies of Secured Party hereunder, to the benefit
of Secured Party and its successors, transferees and assigns. Without limiting
the generality of the foregoing clause (c), but subject to the provisions of
subsection 10.1 of the Credit Agreement, any Lender may assign or otherwise
transfer any Loans held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
Lenders herein or otherwise. Upon the payment in full of all Secured
Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to Pledgor. Upon any such termination Secured Party shall, at Pledgor's
expense, execute and deliver to Pledgor such documents as Pledgor shall
reasonably request to evidence such termination and Pledgor shall be entitled to
the return, upon its request and at its expense, against receipt and without
recourse to Secured Party, of such of the Collateral as shall not have been
otherwise applied pursuant to the terms hereof.
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SECTION 14. Secured Party as Agent.
(a) Secured Party has been appointed to act as Secured Party hereunder by
Lenders. Secured Party shall be obligated, and shall have the right hereunder,
to make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking any action (including without
limitation the release or substitution of Collateral), solely in accordance with
this Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person that is Collateral
Agent under the Credit Agreement. Written notice of resignation by Collateral
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
notice of resignation as Secured Party under this Agreement; removal of
Collateral Agent pursuant to subsection 9.5 of the Credit Agreement shall also
constitute removal as Secured Party under this Agreement; and appointment of a
successor Collateral Agent pursuant to subsection 9.5 of the Credit Agreement
shall also constitute appointment of a successor Secured Party under this
Agreement. Upon the acceptance of any appointment as Collateral Agent under
subsection 9.5 of the Credit Agreement by a successor Collateral Agent, that
successor Collateral Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring or removed Secured
Party under this Agreement, and the retiring or removed Secured Party under this
Agreement shall promptly (i) transfer to such successor Secured Party all sums
held by Secured Party hereunder (which shall be deposited in a new Collateral
Account established and maintained by such successor Secured Party), together
with all records and other documents necessary or appropriate in connection with
the performance of the duties of the successor Secured Party under this
Agreement, and (ii) execute and deliver to such successor Secured Party such
amendments to financing statements, and take such other actions, as may be
necessary or appropriate in connection with the assignment to such successor
Secured Party of the security interests created hereunder, whereupon such
retiring or removed Secured Party shall be discharged from its duties and
obligations under this Agreement. After any retiring or removed Collateral
Agent's resignation or removal hereunder as Secured Party, the provisions of
this Agreement shall inure to its benefit as to any actions taken or omitted to
be taken by it under this Agreement while it was Secured Party hereunder.
SECTION 15. Amendments; Etc.
No amendment, modification, termination or waiver of any provision of this
Agreement, and no consent to any departure by Pledgor therefrom, shall in any
event be effective unless the same shall be in writing and signed by Secured
Party and, in the case of any such amendment or modification, by Pledgor. Any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given.
XVI-7
SECTION 16. Notices.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex (with
received answerback), or three Business Days after depositing it in the United
States mail with postage prepaid and properly addressed; provided that notices
to Secured Party shall not be effective until received. For the purposes hereof,
the address of each party hereto shall be as provided in subsection 10.8 of the
Credit Agreement.
SECTION 17. Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Secured Party in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
any other or further exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 18. Severability.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 19. Headings.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
SECTION 20. Governing Law; Terms.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES
THAT THE PERFECTION OF THE SECURITY INTEREST
XVI-8
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless
otherwise defined herein or in the Credit Agreement, terms used in Articles 8
and 9 of the Uniform Commercial Code in the State of New York are used herein as
therein defined.
SECTION 21. Counterparts.
This Agreement may be executed in one or more counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may be detached from
multiple separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.
[Remainder of page intentionally left blank]
XVI-9
IN WITNESS WHEREOF, Pledgor and Secured Party have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
OUTSOURCING SOLUTIONS INC.
By:_____________________________________
Name:
Title:
XVI-10
SUNTRUST BANK, ATLANTA,
as Secured Party
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
XVI-11