EXHIBIT 10.42
================================================================================
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of February 25, 2000
Among
PC CONNECTION, INC.,
as Borrower,
THE LENDERS PARTY HERETO,
and
CITIZENS BANK OF MASSACHUSETTS,
as Agent for the Lenders
================================================================================
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS............................... 2
Section 1.1. Definitions...............................................2
Section 1.2. Accounting Terms.........................................10
ARTICLE 2. THE REVOLVING CREDITS..........................................10
Section 2.1. The Revolving Credit.....................................10
Section 2.2. Making of Advances.......................................11
Section 2.3. Interest on Advances.....................................12
Section 2.4. Election of LIBOR Pricing Options........................12
Section 2.5. Additional Payments......................................13
Section 2.6. Computation of Interest, Etc.............................13
Section 2.7. Fees.....................................................14
Section 2.8. Set-Off..................................................14
Section 2.9. Sharing of Payments......................................14
Section 2.10. Reduction of Commitment by the Borrower..................15
Section 2.11. Increased Costs, Etc.....................................15
Section 2.12. Changed Circumstances....................................16
Section 2.13. Use of Proceeds..........................................17
Section 2.14. Letters of Credit........................................17
ARTICLE 3. CONDITIONS TO LOANS AND ADVANCES...............................21
Section 3.1. Conditions to First Advance..............................21
Section 3.2. Conditions to All Advances...............................24
ARTICLE 4. PAYMENT AND REPAYMENT..........................................24
Section 4.1. Mandatory Prepayment.....................................25
Section 4.2. Voluntary Prepayments....................................25
Section 4.3. Payment and Interest Cutoff..............................25
Section 4.4. Payment or Other Actions on Non-Business Days............25
Section 4.5. Method and Timing of Payments............................25
Section 4.6. Payments Not at End of Interest Period...................26
Section 4.7. Currency.................................................26
ARTICLE 5. REPRESENTATIONS AND WARRANTIES.................................27
Section 5.1. Corporate Existence, Charter Documents, Etc..............27
Section 5.2. Principal Place of Business; Location of Records.........27
Section 5.3. Qualification............................................27
Section 5.4. Subsidiaries.............................................27
Section 5.5. Corporate Power..........................................27
Section 5.6. Valid and Binding Obligations............................28
(i)
Page
Section 5.7. Other Agreements.........................................28
Section 5.8. Payment of Taxes.........................................28
Section 5.9. Financial Statements.....................................29
Section 5.10. Other Materials Furnished................................29
Section 5.11. Stock....................................................29
Section 5.12. Changes in Condition.....................................29
Section 5.13. Assets, Licenses, Patents, Trademarks, Etc...............29
Section 5.14. Litigation...............................................30
Section 5.15. Pension Plans............................................30
Section 5.16. Outstanding Indebtedness.................................30
Section 5.17. Environmental Matters....................................31
Section 5.18. Foreign Trade Regulations................................32
Section 5.19. Governmental Regulations.................................32
Section 5.20. Margin Stock.............................................32
ARTICLE 6. REPORTS AND INFORMATION........................................32
Section 6.1. Quarterly Financial Statements and Reports...............32
Section 6.2. Annual Financial Statements..............................33
Section 6.3. Notice of Defaults.......................................33
Section 6.4. Notice of Litigation.....................................33
Section 6.5. Communications with Others...............................33
Section 6.6. Reportable Events........................................33
Section 6.7. Annual Pension Reports...................................34
Section 6.8. Reports to other Creditors...............................34
Section 6.9. Communications with Independent Public Accountants.......34
Section 6.10. Environmental Reports....................................34
Section 6.11. Miscellaneous............................................35
ARTICLE 7. FINANCIAL COVENANTS............................................35
Section 7.1. Consolidated Net Worth...................................35
Section 7.2. Minimum Consolidated Net Income..........................35
ARTICLE 8. AFFIRMATIVE COVENANTS..........................................36
Section 8.1. Existence and Business...................................36
Section 8.2. Taxes and Other Obligations..............................36
Section 8.3. Maintenance of Properties and Leases.....................37
Section 8.4. Insurance................................................37
Section 8.5. Records, Accounts and Places of Business.................37
Section 8.6. Inspection...............................................37
Section 8.7. Maintenance of Accounts..................................37
Section 8.8 Year 2000 Compatibility..................................37
ARTICLE 9. NEGATIVE COVENANTS.............................................38
Section 9.1. Restrictions on Indebtedness.............................38
Section 9.2. Restriction on Liens.....................................39
(ii)
Page
Section 9.3. Investments..............................................40
Section 9.4. Dispositions of Assets...................................40
Section 9.5. Assumptions, Guaranties, Etc. of Indebtedness of Other
Persons................................................. 41
Section 9.6. Mergers, Etc.............................................41
Section 9.7. ERISA....................................................41
Section 9.8. Distributions............................................41
Section 9.9. Sale and Leaseback.......................................41
Section 9.10. Transactions with Affiliates.............................42
Section 9.11. Creation of Subsidiaries.................................42
Section 9.12. Voluntary Payment........................................42
ARTICLE 10. EVENTS OF DEFAULT AND REMEDIES................................42
Section 10.1. Events of Default........................................42
Section 10.2. Remedies.................................................44
Section 10.3. Distribution of Proceeds.................................44
ARTICLE 11. CONSENTS; AMENDMENTS; WAIVERS; REMEDIES.......................45
Section 11.1. Actions by Lenders.......................................45
Section 11.2. Actions by Borrower......................................45
ARTICLE 12. SUCCESSORS AND ASSIGNS........................................46
Section 12.1. General..................................................46
Section 12.2. Assignments..............................................46
Section 12.3. Participations...........................................47
ARTICLE 13. THE AGENT.....................................................48
Section 13.1. Authorization and Action.................................48
Section 13.2. Agent's Reliance, Etc....................................49
Section 13.3. Agent as a Lender........................................49
Section 13.4. Lender Credit Decision...................................50
Section 13.5. Indemnification of Agent.................................50
Section 13.6. Successor Agent..........................................50
Section 13.7. Amendment of Article 13..................................51
Section 13.8. Replacement of Agent Upon Assignment of Majority of
Commitment Percentage................................... 51
ARTICLE 14. MISCELLANEOUS................................................51
Section 14.1. Notices..................................................51
Section 14.2. Merger...................................................52
Section 14.3. Governing Law; Consent to Jurisdiction...................52
Section 14.4. Counterparts.............................................52
Section 14.5. Expenses and Indemnification.............................52
Section 14.6. Confidentiality..........................................53
Section 14.7. WAIVER OF JURY TRIAL.....................................54
(iii)
LIST OF EXHIBITS AND SCHEDULES
Exhibit A Form of Revolving Credit Note
Exhibit B Form of Notice of Borrowing
Exhibit C Form of Certificate of Permitted Acquisition
Exhibit D Form of Compliance Certificate
Exhibit E Form of Pricing Notice
Exhibit F Form of Opinion of Borrower's Counsel
Exhibit G Form of Opinion of Guarantor's Counsel
Exhibit H Form of Assignment and Acceptance Agreement
Exhibit I Form of Letter of Credit Request
Schedule 1 Schedule of Commitment Percentages
Schedule 2 Pricing Schedule
Schedule 5.2 Schedule of Locations
Schedule 5.4 Schedule of Subsidiaries
Schedule 5.7 Schedule of Agreements
Schedule 5.8 Schedule of Unaudited Tax Returns
Schedule 5.9 Schedule of Financial Statements
Schedule 5.11 Schedule of Issued and Outstanding Stock
Schedule 5.13 Schedule of Licenses, Patents, Copyrights and
Trademarks
Schedule 5.15 Schedule of Pension Plans
Schedule 5.16 Schedule of Indebtedness, Liens, Charges and
Encumbrances
Schedule 5.17 Environmental Matters
Schedule 8.4 Schedule of Insurance
(iv)
AMENDED AND RESTATED
CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of February
25, 2000 by and among PC CONNECTION, INC. (fka PC Holdco, Inc.) ("Borrower"), a
Delaware corporation, the lenders from time to time party hereto, and CITIZENS
BANK OF MASSACHUSETTS (the "Agent"), as agent for the lenders from time to time
party hereto.
RECITALS
WHEREAS, PC CONNECTION SALES CORP. (fka PC Connection, Inc.) ("Sales), a
Delaware corporation and wholly-owned subsidiary of Borrower, is the borrower
under that certain Credit Agreement dated as of May 29, 1999 (the "May 99 Credit
Agreement"), by and among Sales, the lenders from time to time party thereto,
and Citizens Bank of Massachusetts, as successor in interest to State Street
Bank and Trust Company, as agent;
WHEREAS, pursuant to a corporate reorganization (the "Corporate
Restructuring") consummated on or about December 31, 1999, (i) Sales formed
Borrower as its subsidiary, (ii) Sales merged into a transitory subsidiary
formed by Borrower which resulted in Sales being a wholly-owned subsidiary of
Borrower, (iii) Sales formed two-wholly owned subsidiaries, PC Connection Sales
of Massachusetts, Inc. ("Sales-MA"), a Delaware corporation, and Merrimack
Services Corp. ("Merrimack"), a Delaware corporation, and contributed certain
assets to such entities, and (iv) Sales then distributed its stock in Merrimack
and Comteq Federal, Inc. ("Comteq"), a Maryland corporation;
WHEREAS, Borrower desires to succeed Sales as Borrower under the May 99
Credit Agreement to support Borrower's ongoing working capital requirements as
well as potential acquisitions and the Lenders (as hereinafter defined) have
agreed to such succession subject to the terms and conditions set forth herein;
WHEREAS, to induce Lenders and the Agent to enter into and make advances
under this Agreement, Sales, Sales-MA, Comteq and Merrimack (Sales, Sales-MA,
Comteq and Merrimack each a "Guarantor" and collectively the "Guarantors") have
entered into a Guaranty Agreement dates as of even date herewith, for the
benefit of the Lenders, guaranteeing the obligations of Borrower arising under
this Agreement and the Lender Agreements.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto enter into this
Amended and Restate Credit Agreement and do hereby agree as follows:
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS
Section 1.1. Definitions. In addition to the terms defined elsewhere in
this Agreement, unless otherwise specifically provided herein, the following
terms shall have the following meanings for all purposes when used in this
Agreement, and in any note, agreement, certificate, report or other document
made or delivered in connection with this Agreement:
"Advance or Advances" shall mean any loan or advance, including Letter
of Credit Outstandings, from any Lender to the Borrower under the Revolving
Credit Facility pursuant to Section 2.1 of this Agreement.
"Additional Guarantor" shall have the meaning set forth in Section
9.11 hereof.
"Affiliate" shall mean (a) any director or officer of the Borrower and
(b) any Person that controls, is controlled by or is under common control
with the Borrower. For purposes of this definition, "control" of a Person
shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" shall mean Citizens Bank of Massachusetts, in its capacity as
agent for the Lenders, and its successors in that capacity.
"Agreement" shall mean this Credit Agreement, as amended or
supplemented from time to time. References to Articles, Sections, Exhibits,
Schedules and the like refer to the Articles, Sections, Exhibits, Schedules
and the like of this Agreement unless otherwise indicated, as amended and
supplemented from time to time.
"Applicable Prime Rate" shall mean the sum of (i) the Prime Rate as is
in effect from time to time plus (ii) the Prime Rate Margin determined in
accordance with the Pricing Schedule.
"Applicable LIBOR Rate" shall mean the sum of (i) the LIBOR Rate plus
(ii) the LIBOR Rate Margin determined in accordance with the Pricing
Schedule.
"Assignment and Acceptance Agreement" shall have the meaning set forth
in Section 12.2(a) hereof.
"Borrower" shall mean PC Connection, Inc. (fka PC HoldCo, Inc.) a
Delaware corporation.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day other than a Saturday, Sunday or legal
holiday on which banks in Boston, Massachusetts and Manchester, New
Hampshire are open for the conduct of a substantial part of their
commercial banking business, and (ii) with respect to all notices and
determinations in connection with, and payments of principal and interest
on, LIBOR
Rate Loans any day that is a Business Day described in clause (i) and that
is also a day for trading by and between banks in U.S. Dollar deposits in
the London interbank Eurodollar market.
"Capitalized Lease" shall mean any lease which is or should be
capitalized on the balance sheet of the lessee in accordance with generally
accepted accounting principles and Statement of Financial Accounting
Standards No. 13.
"Capitalized Lease Obligations" shall mean the amount of the liability
reflecting the aggregate discounted amount of future payments under all
Capitalized Leases calculated in accordance with generally accepted
accounting principles and Statement of Financial Accounting Standards No.
13.
"Closing Date" shall mean the date on which all of the conditions set
forth in Section 3.1 have been satisfied.
"Commitment Amount" shall mean each Lender's Commitment Percentage
multiplied by the Maximum Credit Amount.
"Commitment Fee" shall have the meaning set forth in Section 2.7(b).
"Commitment Percentage" shall mean as to each Lender its percentage
interest in the Maximum Credit Amount as set forth on Schedule 1 hereto.
"Compliance Certificate" shall mean a certificate in the form of
Exhibit D hereto and executed by the chief executive officer or chief
financial officer of the Borrower.
"Consolidated" and "Consolidating," and "consolidated" and
"consolidating" when used with reference to any term, mean that term (or
the terms "combined" and "combining", as the case may be, in the case of
partnerships, joint ventures and Affiliates that are not Subsidiaries) as
applied to the accounts of the Borrower (or other specified Person) and all
of its Subsidiaries (or other specified Persons), or such of its
Subsidiaries as may be specified, consolidated (or combined) in accordance
with generally accepted accounting principles and with appropriate
deductions for minority interests in Subsidiaries, as required by generally
accepted accounting principles.
"Consolidated Current Liabilities" shall mean, at any date as of which
the amount thereof shall be determined, all liabilities of the Borrower and
its Subsidiaries which should properly be classified as current in
accordance with generally accepted accounting principles consistently
applied, including, without limitation, all fixed prepayments of, and
sinking fund payments with respect to, Indebtedness and all estimated taxes
of the Borrower and its Subsidiaries required to be made within one year
from the date of determination, including all Indebtedness of the Borrower
hereunder.
"Consolidated EBIT" shall mean for any period the sum of (a)
Consolidated Net Income and (b) all amounts deducted in computing
Consolidated Net Income in respect of (i) interest expense on Indebtedness
and (ii) taxes based on or measured by income, in each case for the period
under review.
"Consolidated EBITDA" shall mean the sum of (a) Consolidated EBIT,
plus (b) the aggregate amount of consolidated depreciation and amortization
expense plus (c) non-cash extraordinary or non-recurring losses less (d)
extraordinary or non-recurring gains.
"Consolidated Net Income" shall mean the net income (or deficit) from
operations of the Borrower and its Subsidiaries, after taxes, determined in
accordance with generally accepted accounting principles consistently
applied.
"Consolidated Net Worth" shall mean, at any date as of which the
amount thereof shall be determined, the consolidated total assets of the
Borrower and its Subsidiaries, less the consolidated total liabilities of
the Borrower and its Subsidiaries.
"Consolidated Senior Debt" shall mean all Indebtedness of the Borrower
and its Subsidiaries (including, without limitation, Capitalized Lease
Obligations) for borrowed money (excluding Subordinated Indebtedness).
"Credit Termination Date" shall mean May 31, 2002.
"Credit Participants" shall have the meaning set forth in Section 12.3
hereof.
"Default" shall mean an Event of Default or an event or condition
which with the passage of time or giving of notice, or both, would become
such an Event of Default.
"Default Rate" shall mean the interest rate otherwise in effect plus
three percent (3%) effective immediately in the event of an Event of
Default under Section 10.1(a) hereof and within thirty (30) days notice
from the Agent for any other Event of Default.
"Distribution" shall mean as to any Person: (a) the declaration or
payment of any dividend on or in respect of any shares of any class of
capital stock of such Person, other than dividends payable solely in shares
of common stock of such Person, (b) the purchase, redemption, or other
acquisition or retirement of any shares of any class of capital stock of
such Person directly or indirectly, (c) any other distribution on or in
respect of any shares of any class of capital stock of such Person, (d) any
setting apart or allocating any sum for the payment of any dividend or
distribution, or for the purchase, redemption or retirement of any shares
of capital stock of such Person and (e) any payment of, principal of,
interest on, or fees or any other amounts with respect to Subordinated
Indebtedness.
"Environmental Law" means any judgment, decree, order, law, license,
rule or regulation pertaining to environmental matters, or any federal,
state, county or local statute, regulation, ordinance, order or decree
relating to public health, welfare, the environment, or to the storage,
handling, use or generation of hazardous substances in or at the workplace,
worker health or safety, whether now existing or hereafter enacted.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Event of Default" shall have the meaning set forth in Section 10.1
hereof.
"Facility Fee" shall have the meaning set forth in Section 2.7(a)
hereof.
"Facing Fee" shall have the meaning set forth in Section 2.7(d)
hereof.
"Generally accepted accounting principles" shall mean generally
accepted accounting principles as defined by controlling pronouncements of
the Financial Accounting Standards Board, as from time to time supplemented
and amended.
"Guarantor" and "Guarantors" shall have the meaning set forth in the
preamble hereof.
"Guaranty Agreement" shall mean the Guaranty dated as of even date
herewith from the Guarantors in favor of Agent and the Lenders in form and
substance satisfactory to Agent and the Lenders.
"Guaranty" or "Guarantee" or "Guaranties" shall include any
arrangement whereby a Person is or becomes liable in respect of any
Indebtedness or other obligation of another and any other arrangement
whereby credit is extended to another obligor on the basis of any promise
of a guarantor, whether that promise is expressed in terms of an obligation
to pay the Indebtedness of such obligor, or to purchase or lease assets
under circumstances that would enable such obligor to discharge one or more
of its obligations, or to maintain the capital, the working capital,
solvency or general financial condition of such obligor, whether or not
such arrangement is listed in the balance sheet of the guarantor or
referred to in a footnote thereto.
"Indebtedness" shall mean, as to any Person, all obligations,
contingent and otherwise, which in accordance with generally accepted
accounting principles consistently applied should be classified upon such
Person's balance sheet as liabilities, but in any event including
liabilities secured by any mortgage, pledge, security interest, lien,
charge or other encumbrance existing on property owned or acquired by such
Person whether or not the liability secured thereby shall have been
assumed, letters of credit open for account, obligations under acceptance
facilities, Capitalized Lease Obligations and all obligations on account of
Guaranties, endorsements and any other contingent obligations
in respect of the Indebtedness of others whether or not reflected on such
balance sheet or in a footnote thereto.
"Interest Period" shall mean with respect to each LIBOR Rate Loan, the
period commencing on the date of such LIBOR Rate Loan and ending one, two,
three, four or six months (if available), as the Borrower may request as
provided in Section 2.4 hereof, provided, that:
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (c) below) that would otherwise end on a day that
is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in the next calendar
month, in which case such Interest Period shall end on the immediately
preceding Business Day;
(b) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (c) below, end on the last Business
Day of a calendar month;
(c) any Interest Period in connection with an Advance that would
otherwise end after the Credit Termination Date shall end on the
Credit Termination Date; and
(d) notwithstanding clause (c) above, no Interest Period shall
have a duration of less than one month, and if any Interest Period
applicable to any LIBOR Rate Loan would be for a shorter period, such
Interest Period shall not be available hereunder.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986
as amended from time to time.
"Investment" shall mean (a) any stock, evidence of Indebtedness or
other security of another Person, (b) any loan, advance, contribution to
capital, extension of credit (except for current trade and customer
accounts receivable for inventory sold or services rendered in the ordinary
course of business and payable in accordance with customary trade terms) to
another Person, and (c) any purchase of (i) stock or other securities of
another Person or (ii) any business or undertaking of another Person
(whether by purchase of assets or securities), any commitment or option to
make any such purchase if, in the case of an option, the aggregate
consideration paid for such option was in excess of $100, or (d) any other
investment, in all cases whether existing on the date of this Agreement or
thereafter made.
"Issuing Lender" shall mean a Lender issuing to Borrower a letter of
credit pursuant to Section 2.14 hereof.
"L/C Supportable Obligations" shall have the meaning set forth in
Section 2.14 hereof.
"Lender Agreements" shall mean this Agreement, the LMCS Agreement, the
Notes, the Guaranty Agreement and any other present or future agreement
from time to time entered into between the Borrower or any Subsidiary and
the Agent or the Lenders, each as from time to time amended or
supplemented, and all statements, reports and certificates delivered by the
Borrower to the Agent or the Lenders in connection therewith.
"Lender Obligations" shall mean all present and future obligations and
Indebtedness of the Borrower or any Subsidiary owing to the Agent or the
Lenders under this Agreement or any other Lender Agreement, including,
without limitation, the obligations to pay the Indebtedness from time to
time evidenced by the Notes, and obligations to pay interest, commitment
fees, balance deficiency fees, charges, expenses and indemnification from
time to time owed under any Lender Agreement.
"Lenders" shall mean (i) initially, each Lender listed on the
signature pages hereof, (ii) any other Person who becomes a Successor
Lender hereunder in accordance with the terms of Section 12.2 hereof, and
(iii) their respective successors and their assigns.
"Letter of Credit Limit" shall mean $5,000,000.
"Letter of Credit Outstandings" shall mean, at any time, the sum of,
without duplication, (i) the aggregate Stated Amount of all outstanding
Letters of Credit and (ii) the aggregate amount of all Unpaid Drawings in
respect of all Letters of Credit.
"Letter of Credit Request" shall mean a request by Borrower to an
Issuing Lender substantially in the form of Exhibit H hereto.
"LIBOR Pricing Option" shall mean the option granted to the Borrower
pursuant to Section 2.4 hereof to have interest on all or a portion of the
Loans computed on the basis of the Applicable LIBOR Rate for an applicable
Interest Period.
"LIBOR Rate" shall mean for any Interest Period for any LIBOR Rate
Loan, the quotient of (i) the rate of interest determined by the Agent, at
about 10:00 a.m. (Boston time) on the LIBOR Rate Fixing Day as being the
rate at which deposits in U.S. dollars are offered to it by first-class
banks in the London interbank market for deposit for such Interest Period
in amounts comparable to the aggregate principal amount of LIBOR Rate Loans
to which such Interest Period relates, divided by (ii) the difference
between one (1) minus the Reserve Requirement (expressed as a decimal)
applicable to that Interest Period. The LIBOR Rate shall be adjusted
automatically as of the effective date of any change in the Reserve
Requirement.
"LIBOR Rate Fixing Day" shall mean, in the case of any LIBOR Rate
Loan, the second Business Day preceding the Business Day on which an
Interest Period begins.
"LIBOR Rate Loan" shall mean any Loan hereunder upon which interest
will accrue on the basis of a formula including as a component thereof the
LIBOR Rate. The expiration date of any LIBOR Rate Loan shall be the last
day of the Interest Period applicable to such LIBOR Rate Loan.
"LIBOR Rate Margin" shall mean a rate per annum determined in
accordance with the Pricing Schedule.
"LMCS Agreement" shall mean an agreement entered into between the
Agent and the Borrower governing the cash management of the Borrower on
terms satisfactory to the Agent and Borrower.
"Loan" shall mean all or a portion of the Advances outstanding
hereunder or made to the Borrower by the Lenders pursuant to Article 2 of
this Agreement, and "Loans" means all of such loans, collectively.
"Material Adverse Effect" shall mean a material adverse effect on the
business, properties, prospects, assets or condition, financial or
otherwise, of the Borrower or any of its Subsidiaries.
"Maximum Credit Amount" shall mean $50,000,000; provided that if the
obligations of the Lenders to make further Advances is terminated upon the
occurrence of a Default, the Maximum Credit Amount as of any date of
determination thereafter shall be deemed to be $0.
"1998 Financial Statements" shall mean the Consolidated Balance Sheet
of the Borrower and its Subsidiaries as of December 31, 1998 and the
related Consolidated Statements of Income, Shareholders' Equity and Cash
Flow for the year then ended and notes to such financial statements.
"Note or Notes" shall mean the Notes issued by the Borrower to
Lender's in accordance with the provisions of Section 2.1(a) hereof.
"Notice of Borrowing" shall have the meaning set forth in Section
2.2(a).
"Pension Plan" shall mean an employee benefit plan or other plan
maintained for the employees of the Borrower or any Subsidiary as described
in Section 4021(a) of ERISA.
"Permitted Acquisition Advance or Advances" shall mean any loan or
advance from any Lender to the Borrower for Permitted Acquisitions.
"Permitted Acquisitions" shall mean the acquisition of all or
substantially all of the assets, shares or partnership interests of a
Person by the Borrower, provided that (a) any such Person must be in a
substantially similar or related line of business as the Borrower, (b) the
ratio of total consideration paid for such property to the fair market
value of such property must be comparable to recent industry transactions,
(c) such Person must have positive EBITDA for at least the twelve months of
operations prior to the proposed acquisition, (d) immediately subsequent to
the acquisition, the Borrower must be in compliance with all terms of the
Lender Agreements, and (e) after giving effect to the acquisition, the
ratio of Consolidated Senior Debt to EBITDA must not exceed 2.5 to 1.
"Person" shall mean an individual, corporation, partnership, joint
venture, association, estate, joint stock company, trust, organization,
business, or a government or agency or political subdivision thereof.
"Pricing Notice" shall have the meaning set forth in Section 2.4
hereof.
"Pricing Schedule" shall mean the schedule attached hereto as Schedule
2.
"Prime Rate" shall mean the greater of (i) the rate of interest
announced from time to time by the Agent at its head office located at ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ as its "Prime Rate" and (ii) the
Federal Funds Effective Rate plus 1/2 of 1% per annum (rounded upwards, if
necessary, to the next 1/8 of 1%).
"Prime Rate Loan" shall mean any Advance on the Loan bearing interest
at a fluctuating rate determined by reference to the Applicable Prime Rate.
"Prime Rate Margin" shall mean a rate per annum determined in
accordance with the Pricing Schedule.
"Reportable Event" shall mean an event reportable to the Pension
Benefit Guaranty Corporation under Section 4043 of Title IV of ERISA.
"Required Lenders" shall mean, at any time, any two or more of the
Lenders having made not less than 66.7% of the outstanding principal amount
of the Loans and the unused Commitment Amounts of the Lenders hereunder.
"Reserve Requirement" shall mean the maximum aggregate reserve
requirement (including all basic, supplemental, marginal and other
reserves) which is imposed under Regulation D on the Lenders against
"Euro-currency Liabilities" as defined in said Regulation D.
"Revolving Credit Facility" shall have the meaning set forth in
Section 2.1.
"Stated Amount" of each Letter of Credit shall mean the maximum
available to be drawn thereunder (regardless of whether any conditions for
drawing could then be met.
"Subordinated Indebtedness" shall mean Indebtedness of the Borrower
which is subordinated to (i) the Indebtedness of the Borrower hereunder,
(ii) the Notes and (iii) to all other Lender Obligations, on terms and
conditions approved in writing by the Agent.
"Subsidiary" shall mean any Person of which the Borrower or other
specified parent shall now or hereafter at the time own, directly or
indirectly through one or more Subsidiaries or otherwise, sufficient voting
stock (or other beneficial interest) to entitle it to elect at least a
majority of the board of directors or trustees or similar managing body.
"UCC" shall mean the Massachusetts Uniform Commercial Code,
Massachusetts General Laws c. 106, as amended from time to time.
"Unpaid Drawings" shall have the meaning set forth in Section 2.14(d).
Section 1.2. Accounting Terms. All accounting terms used and not defined in
this Agreement shall be construed in accordance with generally accepted
accounting principles consistently applied, and all financial data required to
be delivered hereunder shall be prepared in accordance with such principles.
ARTICLE 2. THE REVOLVING CREDITS
Section 2.1. The Revolving Credit.
(a Except as otherwise provided for in the LMCS Agreement, subject to
the terms and conditions of this Agreement and so long as there exists no
Default, at any time prior to the Credit Termination Date, each Lender,
severally and not jointly, shall make such Advances to the Borrower as the
Borrower may from time to time request, by notice to the Agent in
accordance with Section 2.2(a), in an aggregate amount for all outstanding
Advances (i) as to each Lender, not to exceed at any time such Lender's
Commitment Percentage of the Maximum Credit Amount, and (ii) as to all
Lenders, not to exceed the Maximum Credit Amount (the "Revolving Credit
Facility"). The outstanding principal amount of the Advances, together with
all accrued interest and other fees and charges related thereto, shall be
repaid in full on the Credit Termination Date. On the Closing Date the
Borrower shall execute and deliver to each Lender a Note to evidence the
Advances from time to time made by such Lender to the Borrower hereunder.
Upon receipt of an affidavit of an officer of any Lender as to the loss,
theft, destruction or mutilation of a Note and, in the case of any such
loss, theft, destruction or mutilation, upon cancellation of such Note,
Borrower will issue, in lieu thereof, a replacement Note in the same
principal amount thereof and otherwise of like tenor.
(b Subject to the foregoing limitations and the provisions of Section
4.2, the Borrower shall have the right to make prepayments reducing the
outstanding balance of
Advances and to request further Advances, all in accordance with Section
2.2, without other restrictions hereunder; provided that the Lenders shall
have the absolute right to refuse to make any Advances for so long as there
exists any Default or any other condition which would constitute a Default
upon the making of such an Advance.
Section 2.2. Making of Advances.
(a Except as otherwise provided for in the LMCS Agreement, each
Advance other than a Letter of Credit Request which shall be submitted in
accordance with the provisions of Section 2.14 hereof, shall be made on
notice given by the Borrower to the Agent not later than 12:00 noon (Boston
time) one Business Day prior to the date of the proposed Borrowing (a
"Notice of Borrowing") substantially in the form of Exhibit B hereto;
provided, however, that (i) if the Borrower elects a LIBOR Rate Pricing
Option with respect to any Advance in accordance with Section 2.4 hereof,
such Notice of Borrowing shall be given by the Borrower contemporaneously
with a Pricing Notice in the manner and within the time specified in
Section 2.4, (ii) if such Advance is a Permitted Acquisition Advance, such
Notice of Borrowing shall be given by the Borrower contemporaneously with a
Certificate of Permitted Acquisition substantially in the form of Exhibit C
hereto and (iii) no Notice of Borrowing requesting a Permitted Acquisition
Advance equal to or in excess of $20,000,000 shall be effective (and no
Advance from the Lenders required) without the prior consent of the Agent.
The Agent shall give the Lenders notice of each Notice of Borrowing in
accordance with the Agent's customary practice. Each such Notice of
Borrowing shall be by telephone or telecopy, in each case confirmed
immediately in writing by the Borrower in substantially the form of Exhibit
B hereto, specifying therein (i) the requested date of such Advance, and
(ii) the amount of such Advance (which must be a minimum of $100,000). The
Borrower agrees to indemnify and hold the Lenders harmless for any action,
including the making of any Advances hereunder, or loss or expense, taken
or incurred by the Agent and the Lenders in good faith reliance upon such
telephone request. At the time of the initial request for an Advance made
under this Section 2.2(a), the Borrower shall have provided the Agent with
a Compliance Certificate. The Borrower hereby agrees (i) that the Lenders
shall be entitled to rely upon the Compliance Certificate most recently
delivered to the Agent until it is superseded by a more recent Compliance
Certificate, and (ii) that each request for an Advance, whether by
telephone or in writing or otherwise, shall constitute a confirmation of
the representations and warranties contained in the most recent Compliance
Certificate then in the Agent's possession.
(b Subject to the terms and conditions of this Agreement, each Lender
shall make available on or before 2:00 p.m. on the date of each proposed
Advance, to the Agent at the Agent's address and in immediately available
funds, such Lender's Commitment Percentage of such Advance. After the
Agent's receipt of such funds and upon fulfillment of the applicable
conditions set forth in Article 3, the Agent will credit such funds to the
Borrower's account on the date of the proposed Advance.
(c Unless the Agent shall have received notice from a Lender prior to
the date of any Advance that such Lender will not make available to the
Agent such Lender's Commitment Percentage of such Advance, the Agent may
assume that such Lender has made
such amount available to the Agent on the date of such Advance in
accordance with and as provided in this Section 2.2 and the Agent may, in
reliance upon such assumption, make available on such date a corresponding
amount to the Borrower. If and to the extent such Lender shall not have so
made its Commitment Percentage of such Advance available to the Agent and
the Agent shall have made available such corresponding amount to the
Borrower, such Lender agrees to pay to the Agent forthwith on demand, and
the Borrower agrees to repay to the Agent within two Business Days after
demand (but only after demand for payment has first been made to such
Lender and such Lender has failed to make such payment), an amount equal to
such corresponding amount together with interest thereon for each day from
the date the Agent shall make such amount available to the Borrower until
the date such amount is paid or repaid to the Agent, at an interest rate
equal to the interest rate applicable at the time to such Advances. If such
Lender shall pay to the Agent such corresponding amount, such amount so
paid shall constitute such Lender's Advance for purposes of this Agreement.
If the Borrower makes a repayment required by the foregoing provisions of
this Section 2.2(c) and thereafter the applicable Lender or Lenders make
the payments to the Agent required by this Section 2.2(c), the Agent shall
promptly refund the amount of the Borrower's payment.
(d The failure of any Lender to make the Advance to be made by it on
any date shall not relieve any other Lender of its obligation, if any,
hereunder to make its Advance on such date, but no Lender shall be
responsible for the failure of any other Lender to make the Advance to be
made by such other Lender.
Section 2.3. Interest on Advances.
(a Subject to the terms of Section 2.4 relating to LIBOR Pricing
Options, the Borrower shall pay interest on the unpaid balance of the
Advances from time to time outstanding at a per annum rate equal to the
Applicable Prime Rate. Interest on the Advances shall be payable monthly in
arrears on the first day of the month commencing March 1, 2000, and
continuing until all of the Indebtedness of the Borrower to the Lenders
under the Notes shall have been paid in full.
Section 2.4. Election of LIBOR Pricing Options.
(a Subject to all the terms and conditions hereof and so long as there
exists no Default, the Borrower may, by delivering a pricing notice (the
"Pricing Notice") to the Agent received at or before 10:00 a.m. Boston time
on the date two Business Days prior to the commencement of the Interest
Period selected in such Pricing Notice, elect to have all or a portion of
the outstanding Advances, as the Borrower may specify in such Pricing
Notice, accrue and bear daily interest during the Interest Period so
selected at a per annum rate equal to the Applicable LIBOR Rate for such
Interest Period; provided, however, that any such election made with
respect to the Advances shall be in an amount not less than $1,000,000 and
in increments of $1,000,000; and provided further that no such election
will be made if it would result in there being more than four (4) LIBOR
Pricing Options in the aggregate outstanding at any one time. Interest on
Loans bearing interest at the Applicable LIBOR Rate shall be paid for the
applicable Interest Period on the last day thereof and when such Loan is
due (whether at maturity, by reason of acceleration or otherwise).
(b Each Pricing Notice shall be substantially in the form of Exhibit E
attached hereto and shall specify: (i) the selection of a LIBOR Pricing
Option; (ii) the effective date and amount of Advances or a portion thereof
subject to such LIBOR Pricing Option, subject to the limitations set forth
herein; and (iii) the duration of the applicable Interest Period. Each
Pricing Notice shall be irrevocable.
(c The Agent will promptly inform each Lender of a Pricing Notice and
the Interest Period specified by the Borrower therein. Upon determination
by the Agent of the Applicable LIBOR Rate for any Interest Period selected
by the Borrower, the Agent will promptly inform the Borrower and each
Lender of such Applicable LIBOR Rate so determined or, if applicable, the
reason why the Borrower's election will not become effective.
Section 2.5. Additional Payments.
(a During the continuance of any Default, the Borrower shall, on
demand, pay to the Agent for the account of the Lenders interest on the
unpaid principal balance of the Advances and, to the extent permitted by
law, on any overdue installments of interest, at a rate per annum equal to
the lesser of (i) the stated interest rate(s) applicable thereto plus 3%
per annum, and (ii) the maximum rate of interest permitted to be charged
under applicable law.
(b In addition to any amounts payable under Section 2.5(a) above, if
any payment of principal or interest due hereunder is not made within ten
(10) days of its due date, the Borrower will pay to the Agent for the
account of the Lenders, on demand, a late payment charge equal to 5% of the
amount of such payment; provided, however, that the provisions of this
Section 2.5(b) shall not limit the Agent's and the Lenders' rights to
exercise any of their rights or remedies, including those provided in
Section 10.2, if an Event of Default has occurred.
Section 2.6. Computation of Interest, Etc. Interest hereunder and under the
Advances shall be computed on the basis of a 360-day year for the number of days
actually elapsed. Any
increase or decrease in the interest rate on the Advances resulting from a
change in the Prime Rate shall be effective immediately from the date of such
change. No interest payment or interest rate charged hereunder shall exceed the
maximum rate authorized from time to time by applicable law. The outstanding
balance of the Notes as reflected on the Agent's records from time to time shall
be considered correct and binding on the Borrower and the Lenders (absent
manifest error) unless within thirty (30) days after receipt of any notice by
the Agent or any Lender of such outstanding amount, the Borrower or a Lender
notifies the Agent to the contrary.
Section 2.7. Fees
(a The Borrower shall pay to the Agent, for the accounts of the
Lenders in accordance with their respective Commitment Percentages, a
facility fee (the "Facility Fee") computed at a rate of one quarter percent
(1/4%) per annum on the average daily unused amount of the Maximum Credit
Amount from time to time in effect from the date hereof to and including
the Credit Termination Date. The Commitment Fee shall be payable quarterly
in arrears on the first day of each of the quarter, e.g. July 1, October 1,
January 1 and April 1, commencing April 1, 2000.
(b The Borrower shall pay to the Agent, for the Agent's own account,
such agency fees as are provided in a letter agreement between the Borrower
and the Agent.
(c The Borrower agrees to pay to the Issuing Lender a fee in respect
of each Letter of Credit issued by it (the "Facing Fee") computed for each
day at the rate of one quarter percent (1/4%) per annum on the Stated
Amount of all Letters of Credit outstanding on such day. Accrued Facing
Fees shall be due and payable quarterly in arrears on the first day of each
of the quarterly payment dates, e.g. July 1, October 1, January 1, and
April 1, commencing April 1, 2000, and payable on the date upon which the
Revolving Credit Facility is terminated.
Section 2.8. Set-Off. To the extent not prohibited by applicable law, the
Borrower hereby authorizes the Agent and each Lender, without notice to the
Borrower, if and to the extent payment is not promptly made when due pursuant to
the Notes or pursuant to any provision hereof or of any other Lender Agreement,
to charge against any account of the Borrower with the Agent or such Lender, an
amount equal to the accrued interest and principal and other amounts from time
to time then due and payable to the Agent and the Lenders hereunder and under
all other Lender Agreements.
Section 2.9. Sharing of Payments. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of the Loans made by it in excess of its ratable share
(according to the then outstanding principal amount of the Loans) of payments on
account of the Loans obtained by all the Lenders, such Lender shall purchase
from the other Lenders such participations in the Loans held by such other
Lenders as shall cause such purchasing Lender to share such payment ratably
according to the then outstanding principal amount of the Loans with each of
such other Lenders; provided, however, that if all or any portion of such
payment is thereafter recovered from such purchasing Lender, the purchase shall
be rescinded and the purchase price restored to the extent of such
recovery, with interest at an interest rate per annum equal to the Applicable
Prime Rate. The Borrower agrees that any Lender so purchasing a participation in
the Loans from another Lender pursuant to this Section 2.9 may, to the fullest
extent permitted by law, exercise all its rights of payment with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
Section 2.10. Reduction of Commitment by the Borrower. The Borrower at its
option may, at any time and from time to time, irrevocably reduce in part (in
integral multiples of $1,000,000) the unused portion of the Maximum Credit
Amount on not less than five (5) Business Days' prior written notice to the
Agent. No such reduction may be reinstated by the Borrower.
Section 2.11. Increased Costs, Etc.
(a Anything herein to the contrary notwithstanding, if any changes in
present or future applicable law (which term "applicable law", as used in
this Agreement, includes statutes and rules and regulations thereunder and
interpretations thereof by any competent court or by any governmental or
other regulatory body or official charged with the administration or the
interpretation thereof and requests, directives, instructions and notices
at any time or from time to time heretofore or hereafter made upon or
otherwise issued to any Lender by any central bank or other fiscal,
monetary or other authority, whether or not having the force of law),
including without limitation any change according to a prescribed schedule
of increasing requirements, whether or not known or in effect as of the
date hereof, shall (i) subject such Lender to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to this
Agreement or the payment to such Lender of any amounts due to it hereunder,
or (ii) materially change the basis of taxation of payments to such Lender
of the principal of or the interest on the Advances or any other amounts
payable to such Lender hereunder, or (iii) impose or increase or render
applicable any special or supplemental deposit or reserve or similar
requirements or assessment against assets held by, or deposits in or for
the account of, or any liabilities of, or loans by an office of such Lender
in respect of the transactions contemplated herein, or (iv) impose on such
Lender any other condition or requirement with respect to this Agreement or
any Advance, and the result of any of the foregoing is (A) to increase the
cost to such Lender of making, funding or maintaining all or any part of
the Advances or its commitment hereunder, or (B) to reduce the amount of
principal, interest or other amount payable to such Lender hereunder, or
(C) to require such Lender to make any payment or to forego any interest or
other sum payable hereunder, the amount of which payment or foregone
interest or other sum is calculated by reference to the gross amount of any
sum receivable or deemed received by such Lender from the Borrower
hereunder, then, and in each such case not otherwise provided for
hereunder, the Borrower will upon demand made by such Lender promptly
following such Lender's receipt of notice pertaining to such matters
accompanied by calculations thereof in reasonable detail, pay to such
Lender such additional amounts as will be sufficient to compensate such
Lender for such additional cost, reduction, payment or foregone interest or
other sum; provided that the foregoing provisions of this sentence shall
not apply in the case of any additional cost, reduction, payment or
foregone interest or other sum resulting from any taxes charged upon or by
reference to the overall net income, profits or gains of any Lender. In
determining the additional amounts payable hereunder, the Lenders may use
any reasonable method of averaging, allocating or attributing such
additional costs, reductions, payments, foregone interest or other sums
among their respective customers.
(b Anything herein to the contrary notwithstanding, if, after the date
hereof, any Lender shall have determined that any present or future
applicable law, rule, regulation, guideline, directive or request (whether
or not having force of law), including without limitation any change
according to a prescribed schedule of increasing requirements, whether or
not known or in effect as of the date hereof, regarding capital
requirements for banks or bank holding companies generally, or any change
therein or in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Lender with
any of the foregoing, either imposes a requirement upon such Lender to
allocate additional capital resources or increases such Lender's
requirement to allocate capital resources or such Lender's commitment to
make, or to such
Lender's maintenance of, the Advances hereunder, which has or would have
the effect of reducing the return on such Lender's capital to a level below
that which such Lender could have achieved (taking into consideration such
Lender's then existing policies with respect to capital adequacy and
assuming full utilization of such Lender's capital) but for such
applicability, change, interpretation, administration or compliance, by any
amount deemed by such Lender to be material, such Lender shall promptly
after its determination of such occurrence give notice thereof to the
Borrower. In such event, commencing on the date of such notice (but not
earlier than the effective date of any such applicability, change,
interpretation, administration or compliance), the fees payable hereunder
shall increase by an amount which will, in such Lender's reasonable
determination, evidenced by calculations in reasonable detail furnished to
the Borrower, compensate such Lender for such reduction, such Lender's
determination of such amount to be conclusive and binding upon the
Borrower, absent manifest error. In determining such amount, such Lender
may use any reasonable methods of averaging, allocating or attributing such
reduction among its customers.
Section 2.12. Changed Circumstances. In the event that:
(a on any date on which the Applicable LIBOR Rate would otherwise be
set the Agent shall have determined in good faith (which determination
shall be final and conclusive) that adequate and fair means do not exist
for ascertaining the LIBOR Rate, as applicable; or
(b at any time the Agent shall have determined in good faith (which
determination shall be final and conclusive) that
(i the implementation of LIBOR Pricing Option has been made
impracticable or unlawful by (A) the occurrence of a contingency that
materially and adversely affects the London interbank market, or (B)
compliance by any Lender in good faith with any applicable law or
governmental regulation, guideline or order or interpretation or
change thereof by any governmental authority charged with the
interpretation or administration thereof or with any request or
directive of any such governmental authority (whether or not having
the force of law); or
(ii the LIBOR Rate shall no longer represent the effective cost
to the Lenders for U.S. dollar deposits in the London interbank
market, as applicable for deposits in which they regularly
participate;
then, and in such event, the Agent shall forthwith so notify the Borrower
thereof. Until the Agent notifies the Borrower that the circumstances
giving rise to such notice no longer apply, the obligation of the Lenders
and the Agent to allow election by the Borrower of a LIBOR Pricing Option
shall be suspended. If at the time the Agent so notifies the Borrower, the
Borrower has previously given the Agent a Pricing Notice with respect to a
LIBOR Pricing Option, but the LIBOR Pricing Option requested therein has
not yet gone into effect, such Pricing Notice shall automatically be deemed
to be withdrawn and be of no force or effect. Upon such date as shall be
specified in such notice (which shall not be earlier than the date such
notice is given), the
LIBOR Pricing Option with respect to all LIBOR Rate Loans shall be
terminated and the Borrower shall pay all interest due on such LIBOR Rate
Loans and any amounts required to be paid pursuant to Section 4.6.
Section 2.13. Use of Proceeds. The proceeds of all Advances shall be used
by the Borrower for corporate and general working capital purposes, repurchases
or redemptions by Borrower of Borrower's capital stock in an aggregate amount
not to exceed $5,000,000 and for Permitted Acquisitions. The Borrower will not,
directly or indirectly, use any part of such proceeds for the purpose of
purchasing or carrying any margin stock within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System or to extend credit to any
Person for the purpose of purchasing or carrying any such margin stock.
Section 2.14. Letters of Credit.
(a Letters of Credit.
(i Subject to and upon the terms and conditions herein set forth,
the Borrower may request that any Issuing Lender issue, at any time
and from time to time on and after the Closing Date and prior to the
Credit Termination Date, for the account of the Borrower an
irrevocable standby letter of credit, in a form customarily used by
such Issuing Lender or in such other form as has been approved by such
Issuing Lender, such approval not to be unreasonably withheld or
delayed (each such standby letter of credit, a "Letter of Credit") in
support of standby obligations of the Borrower incurred in the
ordinary course of business and acceptable to the Agent (the "L/C
Supportable Obligations").
(ii Subject to the terms and conditions contained herein, the
Agent hereby agrees that it will (and at the Borrower's request each
other Issuing Lender may, at its option, agree that it will), at any
time and from time to time on or after the Closing Date and prior to
the Credit Termination Date, following its receipt of the respective
Letter of Credit Request, issue for the account of the Borrower one or
more Letters of Credit in support of such L/C Supportable Obligations
of the Borrower or any of its Subsidiaries as is permitted to remain
outstanding without giving rise to a Default or Event of Default
hereunder, provided that the respective Issuing Lender shall be under
no obligation to issue any Letter of Credit if at the time of such
issuance:
(A any order, judgment or decree of any governmental
authority or arbitrator shall purport by its terms to enjoin or
restrain such Issuing Lender from issuing such Letter of Credit
or any requirement of law applicable to such Issuing Lender or
any request or directive (whether or not having the force of law)
from any governmental authority with jurisdiction over such
Issuing Lender shall prohibit, or request that such Issuing
Lender refrain from, the issuance of letters of credit generally
or such Letter of Credit in particular or shall impose upon such
Issuing Lender with respect to such Letter of Credit any
restriction or reserve or capital requirement (for which such
Issuing Lender is not otherwise
compensated) not in effect on the date hereof, or any
unreimbursed loss, cost or expense which was not applicable, in
effect or known to such Issuing Lender as of the date hereof and
which such Issuing Lender in good ▇▇▇▇▇ ▇▇▇▇▇ material to it; or
(B such Issuing Lender shall have received notice from any
Lender prior to the issuance of such Letter of Credit of the type
described in the second sentence of Section 2.14(b)(ii), i.e.
that another Lender has issued a Letter of Credit based on the
same Letter of Credit Request.
(iii Notwithstanding the foregoing, (A) no Letter of Credit shall
be issued the Stated Amount of which, when added to the Letter of
Credit Outstandings (exclusive of Unpaid Drawings which are repaid on
the date of, and prior to the issuance of, the respective Letter of
Credit) and the aggregate principal amount of all Advances made by the
Lenders and then outstanding, would exceed the Maximum Credit Amount
at such time, (B) each Letter of Credit shall be denominated in
Dollars, (C) each Letter of Credit shall by its terms terminate on or
before the earlier of (x) the date which occurs 12 months after the
date of the issuance thereof (although any such Letter of Credit may
be automatically extendable for successive periods of up to 12 months,
but not beyond the tenth Business Day prior to the Credit Termination
Date, on terms acceptable to the Issuing Lender thereof) and (y) the
tenth Business Day prior to the Credit Termination Date, (D) the
Stated Amount of each Letter of Credit upon issuance shall be not less
than $100,000 or such lesser amount as is acceptable to the respective
Issuing Lender and (E) no Letter of Credit shall be issued the Stated
Amount of which, when added to the Letter of Credit Outstandings
(exclusive of Unpaid Drawings which are repaid on the date of, and
prior to the issuance of, the respective Letter of Credit) would
exceed the Letter of Credit Limit.
(b Letter of Credit Requests.
(i Whenever the Borrower desires that a Letter of Credit be
issued for its account, the Borrower shall give the Agent and the
respective Issuing Lender at least three Business Days' (or such
shorter period as is acceptable to the respective Issuing Lender)
written notice thereof. Each notice shall be in the form of Exhibit I
(each a "Letter of Credit Request").
(ii The making of each Letter of Credit Request shall be deemed
to be a representation and warranty by the Borrower that such Letter
of Credit may be issued in accordance with, and will not violate the
requirements of, Section 2.14(a)(iii). Upon the issuance of any Letter
of Credit, such Issuing Lender shall promptly notify each Lender of
such issuance and such notice shall be accompanied by a copy of the
issued Letter of Credit.
(c Letter of Credit Participations.
(i Immediately upon the issuance by any Issuing Lender of any
Letter of Credit, such Issuing Lender shall be deemed to have sold and
transferred to each Lender, other than such Issuing Lender (each such
Lender, in its capacity under this Section 2.14(c), a "Participant"),
and each such Participant shall be deemed irrevocably and
unconditionally to have purchased and received from such Issuing
Lender, without recourse or warranty, an undivided interest and
participation, to the extent of such Participant's Commitment
Percentage, in such Letter of Credit, each drawing made thereunder and
the obligations of the Borrower under this Agreement with respect
thereto (excluding the Facing Fee), and any security therefor or
guaranty pertaining thereto. Upon any change in the Commitment
Percentages of the Lenders pursuant hereto, it is hereby agreed that,
with respect to all outstanding Letters of Credit and Unpaid Drawings,
there shall be an automatic adjustment to the participations pursuant
to this Section 2.14(c) to reflect the new Commitment Percentages of
the assignor and assignee Lender or of all Lenders, as the case may
be.
(ii In determining whether to pay under any Letter of Credit, the
respective Issuing Lender shall have no obligation relative to the
other Lenders other than to confirm that any documents required to be
delivered under such Letter of Credit appear to have been delivered
and that they appear to comply on their face with the requirements of
such Letter of Credit. Any action taken or omitted to be taken by any
Issuing Lender under or in connection with any Letter of Credit, if
taken or omitted in the absence of gross negligence or willful
misconduct, shall not create for such Issuing Lender any resulting
liability to the Borrower or any Lender.
(iii In the event that any Issuing Lender makes any payment under
any Letter of Credit and the Borrower shall not have reimbursed such
amount in full to such Issuing Lender pursuant to Section 2.14(d)(i),
such Issuing Lender shall promptly notify the Agent, which shall
promptly notify each Participant, of such failure, and each
Participant shall promptly and unconditionally pay to such Issuing
Lender the amount of such Participant's Commitment Percentage of such
unreimbursed payment in Dollars and same day funds. If the Agent so
notifies any Participant prior to 11:00 A.M. (Boston time) on any
Business Day, such Participant shall make available such funds to such
Issuing Lender on such Business Day. If and to the extent such
Participant shall not have so made its Commitment Percentage of the
amount of such payment available to such Issuing Lender, such
Participant agrees to pay to such Issuing Lender, forthwith on demand
such amount, together with interest thereon, for each day from such
date until the date such amount is paid to such Issuing Lender at the
overnight federal funds rate. The failure of any Participant to make
available to such Issuing Lender its Commitment Percentage of any
payment under any Letter of Credit shall not relieve any other
Participant of its obligation hereunder to make available to such
Issuing Lender its Commitment Percentage of any payment under any
Letter of Credit on the date required, as specified above, but no
Participant shall be responsible for the failure of any other
Participant to make available to such Issuing Lender such other
Participant's Commitment Percentage of any such payment.
(iv Whenever any Issuing Lender receives a payment of a
reimbursement obligation as to which it has received any payments from
the Participants pursuant to clause (c) above, such Issuing Lender
shall forward such payment to the Agent, which in turn shall
distribute to each Participant which has paid its Commitment
Percentage thereof, in United States dollars and in same day funds, an
amount equal to such Participant's share (based upon the proportionate
aggregate amount originally funded by such Participant to the
aggregate amount funded by all Participants) of the principal amount
of such reimbursement obligation and interest thereon accruing after
the purchase of the respective participations.
(v Upon the request of any Participant, each Issuing Lender shall
furnish to such Participant copies of any Letter of Credit issued by
it and such other documentation as may reasonably be requested by such
Participant.
(vi The obligations of the Participants to make payments to each
Issuing Lender with respect to Letters of Credit issued by it shall be
irrevocable and, except as provided in Section 2.14(c)(ii), not
subject to any qualification or exception whatsoever and shall be made
in accordance with the terms and conditions of this Agreement under
all circumstances, including, without limitation, any of the following
circumstances:
(A any lack of validity or enforceability of this Agreement
or any of the other Lender Agreement;
(B the existence of any claim, setoff, defense or other
right which the Borrower or any of its Subsidiaries may have at
any time against a beneficiary named in a Letter of Credit, any
transferee of any Letter of Credit (or any Person for whom any
such transferee may be acting), the Agent, any Issuing Lender,
any Participant, or any other Person, whether in connection with
this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any
underlying transaction between the Borrower and the beneficiary
named in any such Letter of Credit);
(C any draft, certificate or any 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;
(D the surrender or impairment of any security for the
performance or observance of any of the terms of any of the
Lender Agreements; or
(E the occurrence of any Default or Event of Default.
(d Agreement to Repay Letter of Credit Drawings.
(i The Borrower hereby agrees to reimburse the respective Issuing
Lender, by making payment to the Agent in immediately available funds,
for any drawing (each, a "Drawing") made by it under any Letter of
Credit (each such Drawing until reimbursed, an "Unpaid Drawing"), no
later than four Business Days after the date of such Drawing, with
interest on the amount of such Drawing, to the extent not reimbursed
prior to 12:00 Noon (Boston time) on the date of such Drawing, from
and including the date of such Drawing to but excluding the date such
Issuing Lender was reimbursed by the Borrower therefor at a rate per
annum which shall be the Applicable Prime Rate; provided, however, to
the extent such amounts are not reimbursed prior to 12:00 Noon (Boston
time) on the seventh Business Day following such Drawing, interest
shall thereafter accrue on the amount (and until reimbursed by the
Borrower) at a rate per annum which shall be the Prime Rate in effect
from time to time plus 4%, in each such case, with interest to be
payable on demand. The respective Issuing Lender shall give the
Borrower prompt written notice of each Drawing under any Letter of
Credit, provided that the failure to give any such notice shall in no
way affect, impair or diminish the Borrower's obligations hereunder.
(ii The obligations of the Borrower under this Section 2.14(d) to
reimburse the respective Issuing Lender with respect to Drawings
(including interest thereon) shall be absolute and unconditional under
any and all circumstances and irrespective of any setoff, counterclaim
or defense to payment which the Borrower may have or have had against
any Lender (including in its capacity as an Issuing Lender or as a
Participant), or any nonapplication or misapplication by the
beneficiary of the proceeds of such Drawing, the respective Issuing
Lender's only obligation to the Borrower being to confirm that any
documents required to be delivered under such Letter of Credit appear
to have been delivered and that they appear to comply on their face
with the requirements of such Letter of Credit. Any action taken or
omitted to be taken by any Issuing Lender under or in connection with
any Letter of Credit if taken or omitted in the absence of gross
negligence or willful misconduct, shall not create for such Issuing
Lender any resulting liability to the Borrower.
ARTICLE 3. CONDITIONS TO LOANS AND ADVANCES
Section 3.1. Conditions to First Advance. The Lenders' obligations to make
the first Advance shall be subject to compliance by the Borrower with its
agreements contained in this Agreement, and to the condition precedent that the
Lenders shall have received each of the following, in form and substance
satisfactory to the Agent, Lenders and their counsel or in the form attached
hereto as an Exhibit, as the case may be:
(a The Lender Agreements, including but not limited to the Guaranty
Agreement and the Notes, duly executed by the Borrower.
(b Copies of the resolutions of the Board of Directors of the Borrower
authorizing the execution, delivery and performance of this Agreement, the
Notes and the other Lender Agreements to which the Borrower is a party,
certified by the Secretary or an Assistant Secretary (or Clerk or Assistant
Clerk) of the Borrower (which certificate shall state that such resolutions
are in full force and effect).
(c A certificate of the Secretary or an Assistant Secretary (or Clerk
or Assistant Clerk) of the Borrower certifying the name and signatures of
the officers of the Borrower authorized to sign this Agreement, the Notes,
the other Lender Agreements to which the Borrower is a party and the other
documents to be delivered by the Borrower hereunder.
(d Certificates of legal existence and corporate good standing for the
Borrower of recent date issued by the appropriate governmental authorities.
(e Certificate of tax good standing for the Borrower of recent date
issued by the appropriate governmental authorities.
(f Certified copies of the Certificate of Incorporation of Borrower.
(g Copies of By-laws of the Borrower certified by the Secretary or
Assistant Secretary (or Clerk or Assistant Clerk) to be a true and correct
copy thereof.
(h The opinions of counsel to the Borrower, dated the date of
execution of this Agreement, in substantially the form of Exhibit F hereto.
(i A certificate of a duly authorized officer of the Borrower, dated
the date of the first Advance, to the effect that (i) all conditions
precedent on the part of the Borrower to the execution and delivery hereof
and the making of the first Advance has been satisfied, (ii) the
representations and warranties of the Borrower herewith and in all other
Lender Agreements are true and correct as of the date hereof, (iii) no
material litigation affecting the Borrower or its Subsidiaries exists, (iv)
the absence of any material adverse change in the business, operations,
assets, financial condition or prospects of the Borrower and its
Subsidiaries, as specified in Section 5.12 thereto, (v) the Borrower has
received all necessary governmental and third party approvals and is in
compliance with all applicable laws, and (vi) upon execution and delivery
of this Agreement and all other Lender Agreements no Default will exist
hereunder and thereunder.
(j A Compliance Certificate dated the date of the first Advance if
requested by Agent.
(k) A Certificate of the President or Chief Executive Officer of
Borrower to the effect that all necessary governmental and third-party
approvals have been obtained, and that Borrower is, and will be after
giving effect to the transactions contemplated by this Agreement, in
compliance with all applicable laws.
(l) A Certificate of the Chief Financial Officer of Borrower, in form
satisfactory to Agent, dated the date of the first Advance, regarding (i)
payment of all taxes by Borrower, (ii) filing of all required tax returns,
and (iii) solvency of Borrower.
(m) If requested by the Agent, certificates of insurance issued to the
Agent from an independent insurance broker dated the Closing Date, in form
and substance satisfactory to the Agent, certifying as to the insurance on
the assets of the Borrower and its Subsidiaries as required by the Agent
and naming the Agent as loss payee.
(n) Copies of the resolutions of the Board of Directors of each of the
Guarantors authorizing the execution, delivery and performance of the
Lender Agreements to which such Guarantor is a party, certified by the
Secretary or an Assistant Secretary (or Clerk or Assistant Clerk) of the
Guarantor (which certificate shall state that such resolutions are in full
force and effect).
(o) A certificate of the Secretary or an Assistant Secretary (or Clerk
or Assistant Clerk) of each of the Guarantors certifying the name and
signatures of the officers of such Guarantor authorized to sign the Lender
Agreements to which such Guarantor is a party and the other documents to be
delivered by such Guarantor hereunder.
(p) Certificates of legal existence and corporate good standing for
each of the Guarantors of recent date issued by the appropriate
governmental authorities.
(q) If requested by the Agent, certificates of tax good standing for
each of the Guarantors of recent date issued by the appropriate
governmental authorities.
(r) Certified copies of the Certificates of Incorporation of each of
the Guarantors.
(s) Copies of By-laws of each of the Guarantors certified by the
Secretary or Assistant Secretary (or Clerk or Assistant Clerk) to be a true
and correct copy thereof.
(t) The opinions of counsel to the each of the Guarantors, dated the
date of execution of this Agreement, in substantially the form of Exhibit G
hereto.
(u) A certificate of a duly authorized officer of each of the
Guarantors, dated the date of the first Advance, to the effect that (i) the
representations and warranties of the Borrower as they relate to such
Guarantor herewith and in all other Lender Agreements are true and correct
as of the date hereof, (ii) no material litigation affecting such Guarantor
or its Subsidiaries exists, (iii) the absence of any material adverse
change in the business, operations, assets, financial condition or
prospects of such Guarantor and its Subsidiaries, as specified in Section
5.12 thereto, (iv) such Guarantor has received all necessary governmental
and third party approvals and is in compliance with all applicable laws,
and (v) upon execution and delivery of this Agreement and all other Lender
Agreements no Default will exist hereunder and thereunder.
(v) A Certificate of the Chief Financial Officer of each of the
Guarantors, in form satisfactory to Agent, dated the date of the first
Advance, regarding (i) payment of all taxes by such Guarantor, (ii) filing
of all required tax returns by such Guarantor, and (iii) solvency of
Guarantor.
(w) Evidence of the completion of the Corporate Restructuring.
(x) Evidence of restructuring and/or amendment of indebtedness of
Borrower and Guarantors to IBM Credit Corp. and Deutsche Financial Services
and their affiliates satisfactory to Agent, including, without limitation,
evidence of the filing or delivery to Agent of all necessary Uniform
Commercial Code amendments or termination statements.
(y) Such other documents, certificates and opinions as the Agent or
the Lenders may reasonably request.
Section 3.2. Conditions to All Advances. The Lenders' obligations to make
any Advances pursuant to this Agreement shall be subject to compliance by the
Borrower with its agreements contained in this Agreement and each other Lender
Agreement, and to the satisfaction, at or before the making of each Advance, of
all of the following conditions precedent:
(a) The representations and warranties herein and those made by or on
behalf of the Borrower in any other Lender Agreement shall be correct as of
the date on which any Advance is made, with the same effect as if made at
and as of such time (except as to transactions permitted hereunder and
described in a Compliance Certificate previously delivered to the Agent and
except that the references in Article 5 to the 1998 Financial Statements
shall be deemed to refer to the most recent annual audited consolidated
financial statements of the Borrower and its Subsidiaries furnished to the
Agent.)
(b) On the date of any Advances hereunder, there shall exist no
Default.
(c) The making of the requested Advances shall not be prohibited by
any law or governmental order or regulation applicable to the Lenders or to
the Borrower, and all necessary consents, approvals and authorizations of
any Person for any such Advances shall have been obtained.
ARTICLE 4. PAYMENT AND REPAYMENT
Section 4.1. Mandatory Prepayment. If at any time the aggregate outstanding
principal balance of all Advances made hereunder exceeds the Maximum Credit
Amount, the Borrower shall immediately repay to the Agent for the ratable
accounts of the Lenders an amount equal to such excess.
Section 4.2. Voluntary Prepayments.
(a) Except as otherwise provided for in the LMCS Agreement, the
Borrower may make prepayments to the Agent for the ratable accounts of the
Lenders of any outstanding principal amount of the Advances equal to
$500,000 or an integral multiple thereof which are Prime Rate Loans in
accordance with Section 4.3 at any time prior to 12:00 noon (Boston time)
on any Business Day without premium or penalty.
(b) The Borrower may make prepayments to the Agent for the ratable
accounts of the Lenders of any Advances equal to $500,000 or an integral
multiple thereof which are LIBOR Rate Loans in accordance with Section 4.3
at any time prior to 12:00 noon (Boston time) on any Business Day subject,
however, to the premiums and penalties set forth in Section 4.6.
Section 4.3. Payment and Interest Cutoff. Notice of each prepayment
pursuant to Section 4.2 shall be given to the Agent (a) in the case of
prepayment of Prime Rate Loans, not later than 12:00 noon (Boston time) on the
Business Day immediately prior to the date of payment, and (b) in the case of
prepayment of LIBOR Rate Loans on any day other than the last day of the
Interest Period applicable thereto, not later than 12:00 noon (Boston time) two
(2) Business Days prior to the proposed date of payment, and, in each case,
shall specify the total principal amount of the Advances to be paid on such
date. Notice of prepayment having been given in compliance with this Section
4.3, the amount specified to be prepaid shall become due and payable on the date
specified for prepayment and from and after said date (unless the Borrower shall
default in the payment thereof) interest thereon shall cease to accrue. Unpaid
interest on the principal amount of any Advances so prepaid accrued to the date
of prepayment shall be due on the date of prepayment.
Section 4.4. Payment or Other Actions on Non-Business Days. Whenever any
payment to be made hereunder shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest or fees, as the case may be. In the case of any other action
the last day for performance of which shall be a day other than a Business Day,
the date for performance shall be extended to the next succeeding Business Day.
Section 4.5. Method and Timing of Payments.
(a) All payments required to be made pursuant to the provisions of
this Agreement and any other Lender Agreement, and all prepayments pursuant
to Section 4.1, may be charged by the Agent against the Borrower's accounts
with the Agent. The Borrower hereby authorizes the Agent and the Lenders,
without notice to the Borrower, to charge against any account of the
Borrower with the Agent or such Lender an amount equal to the accrued
interest, principal and other amounts from time to time due and payable to
the Agent and the Lenders hereunder and under all other Lender Agreements.
(b) The Borrower shall make each payment to be made by it hereunder
not later than 12:00 noon (Boston time) on the day when due in lawful money
of the United States to the Agent at its address set forth in Section 14.1
in immediately available funds. The Agent will, after its receipt thereof,
distribute like funds relating to the payment of principal, interest or any
other amounts payable hereunder ratably to the Lenders in accordance with
their respective Commitment Percentages. Any payment made by the Borrower
to the Agent under this Agreement or under the Notes in the manner provided
in this Agreement shall be deemed to be a payment to each of the respective
Lenders, unless the provisions of this Agreement expressly provide that any
such payment shall be solely for the account of the Agent or any specific
Lender.
Section 4.6. Payments Not at End of Interest Period. If the Borrower for
any reason makes any payment of principal with respect to any LIBOR Rate Loan on
any day other than the last day of the Interest Period applicable to such LIBOR
Rate Loan, including without limitation by reason of acceleration, or fails to
borrow a LIBOR Rate Loan after electing a LIBOR Pricing Option with respect
thereto pursuant to Section 2.4, the Borrower shall pay to the Agent, for the
ratable account of the Lenders, any amounts required to compensate the Lenders
for any additional losses, costs or expenses which they may reasonably incur as
a result of such payment or failure to borrow, including without limitation, any
loss, including lost profits, costs or expenses incurred by reason of the
liquidation, reutilization or reemployment of deposits or other funds acquired
by the Lenders to fund or maintain such Advances. Such compensation may include,
without limitation, an amount equal to (a) the amount of interest which would
have accrued on the amount so paid or not borrowed, for the period from the date
of such payment or failure to borrow, to the last day of the then current
Interest Period for such Advance (or, in the case of a failure to borrow, to the
last day of the Interest Period for the Advance which would have commenced on
the date of such failure to borrow), at the applicable rate of interest for such
Advance provided for herein minus (b) the amount of interest (as reasonably
determined by the Agent), which would accrue and become payable to the Lenders
during such period on the principal repaid or not borrowed if the Lenders,
following such repayment or failure to borrow, were to reinvest such principal
in U.S. Treasury securities selected by the Agent in an amount equal (as nearly
as may be) to the principal so repaid or not borrowed and having a term equal
(as near as may be) to such period. The Borrower shall pay such amount upon
presentation by the Agent of a statement setting forth the amount and the
Agent's calculation thereof pursuant hereto, which statement shall be deemed
true and correct absent manifest error.
Section 4.7. Currency. All payments and prepayments provided for under this
Agreement shall be made in lawful currency of the United States of America in
immediately available funds.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Lenders to enter into this Agreement
and to induce the Lenders to make the Advances as contemplated hereby, the
Borrower hereby makes the following representations and warranties:
Section 5.1. Corporate Existence, Charter Documents, Etc. The Borrower and
each Subsidiary is a corporation or limited liability company validly organized,
legally existing and in good standing under the laws of the jurisdiction in
which it is organized and has corporate or limited liability company power, as
applicable, to own its properties and conduct its business as now conducted and
as proposed to be conducted by it. Certified copies of the charter documents,
By-Laws and limited liability company agreements, as applicable, of the Borrower
and each Subsidiary have been delivered to the Lenders and are true, accurate
and complete as of the date hereof.
Section 5.2. Principal Place of Business; Location of Records. The
Borrower's and each Subsidiary's principal place of business is located at ▇▇▇▇▇
▇▇▇▇ (▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇), ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and the Borrower and each
Subsidiary has had no other principal place of business during the last six
months except as listed on Schedule 5.2 hereto. All of the books and records or
true and complete copies thereof relating to the accounts and contracts of the
Borrower and each Subsidiary are and will be kept at such location except as
listed on Schedule 5.2 hereto.
Section 5.3. Qualification. The Borrower and each Subsidiary is duly
qualified, licensed and authorized to do business and is in good standing as a
foreign corporation in each jurisdiction where its ownership or leasing of
properties or the conduct of its business requires it to be qualified.
Section 5.4. Subsidiaries. The Borrower has no Subsidiaries except for
those listed in Schedule 5.4. All of the issued and outstanding capital stock of
each Subsidiary listed on Schedule 5.4 is owned of record and beneficially by
the Borrower or by one of the Subsidiaries.
Section 5.5. Corporate Power. The execution, delivery and performance of
this Agreement, the Notes and all other Lender Agreements and other documents
delivered or to be delivered by the Borrower or any Subsidiary to the Agent or
the Lenders, and the incurrence of Indebtedness to the Lenders hereunder or
thereunder, now or hereafter owing:
(a) are within the corporate or limited liability company powers, as
applicable, of the Borrower and each Subsidiary, as the case may be, having
been duly authorized by its Board of Directors or other similar governing
body, and, if required by law, by its charter documents or by its By-Laws,
by its stockholders;
(b) do not require any approval or consent of, or filing with, any
governmental agency or other Person (or such approvals and consents have
been obtained and delivered to the Lenders) and are not in contravention of
law or the terms of the charter documents or By-Laws of the Borrower and
each Subsidiary or any amendment thereof;
(c) do not and will not
(i) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which the Borrower or any Subsidiary is a party or by
which the Borrower, any Subsidiary or any of their respective
properties are bound or affected,
(ii) result in, or require, the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest or other
charge or encumbrance of any nature on any property now owned or
hereafter acquired by the Borrower or any Subsidiary, except as
provided in the Lender Agreements, or
(iii) result in a violation of or default under any law, rule,
regulation, order, writ, judgment, injunction, decree, determination
or award having applicability to the Borrower or any Subsidiary, or to
any of their respective properties.
Section 5.6. Valid and Binding Obligations. This Agreement, the Notes and
all the other Lender Agreements executed in connection herewith and therewith
constitute, or will constitute when delivered, the valid and binding obligations
of the Borrower and its Subsidiaries, as the case may be, enforceable in
accordance with their respective terms, except as the enforceability thereof may
be subject to bankruptcy, insolvency, moratorium and other laws affecting the
rights and remedies of creditors and secured parties and to the exercise of
judicial discretion in accordance with general equitable principles.
Section 5.7. Other Agreements. Except as set forth in Schedule 5.7 hereto,
neither the Borrower nor any Subsidiary is a party to any indenture, loan or
credit agreement, or any lease or other agreement or instrument, or subject to
any charter or corporate restriction, which is likely to have a Material Adverse
Effect, or which restricts the ability of the Borrower or any Subsidiary to
carry out any of the provisions of this Agreement, the Notes or any of the
Lender Agreements executed in connection herewith and therewith.
Section 5.8. Payment of Taxes. The Borrower and its Subsidiaries have filed
all tax returns which are required to be filed by them and have paid, or made
adequate provision for the payment of, all taxes which have or may become due
pursuant to said returns or to assessments received. Except as set forth on
Schedule 5.8 hereto, all federal tax returns of the Borrower and its
Subsidiaries through their fiscal year ended in 1998 have been audited by the
Internal Revenue Service or are not subject to such audit by virtue of the
expiration of the applicable statute of limitation, and the results of such
audits are fully reflected in the balance sheet contained in the 1998 Financial
Statements. The Borrower knows of no material additional assessments since such
date for which adequate reserves appearing in the balance sheet contained in the
1998 Financial Statements have not been established. The Borrower and its
Subsidiaries have made adequate provision for all current taxes, and to the best
of the Borrower's knowledge there will not be any additional assessments for any
fiscal periods prior to and including that which ended on the date of said
balance sheet in excess of the amounts reserved therefor.
Section 5.9. Financial Statements. All balance sheets, statements and other
financial information furnished to the Lenders in connection with this Agreement
and the transactions contemplated hereby (each of which is listed on Schedule
5.9), including, without limitation, the 1998 Financial Statements, have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved (except for normal year-end
adjustments and for the absence of footnotes with interim statements) and
present fairly the consolidated financial condition of the Borrower and its
Subsidiaries and all such information so furnished was true, correct and
complete as of the date thereof.
Section 5.10. Other Materials Furnished. No written information, exhibits,
memoranda or reports furnished to the Lenders by or on behalf of the Borrower or
any Subsidiary in connection with the negotiation of this Agreement contains any
material misstatement of fact or omits to state a material fact necessary to
make the statements contained therein not misleading.
Section 5.11. Stock. There are presently issued by the Borrower and its
Subsidiaries and outstanding the shares of capital stock indicated on Schedule
5.11. The Borrower and its Subsidiaries have received the consideration for
which such stock was authorized to be issued and have otherwise complied with
all legal requirements relating to the authorization and issuance of shares of
stock and all such shares are validly issued, fully paid and non-assessable. The
Borrower and its Subsidiaries have no other capital stock or other equity
interest of any class outstanding.
Section 5.12. Changes in Condition. Since the date of the balance sheet
contained in the 1998 Financial Statements, there has been no material adverse
change in the business or assets or in the condition, financial or otherwise, of
the Borrower or any Subsidiary, and neither the Borrower nor any Subsidiary has
entered into any transaction outside of the ordinary course of business which is
material to the Borrower or any Subsidiary. Neither the Borrower nor any
Subsidiary has any contingent liabilities of any material amount which are not
referred to in the 1998 Financial Statements.
Section 5.13. Assets, Licenses, Patents, Trademarks, Etc.
(a) The Borrower and its Subsidiaries have good and marketable
title to, or valid leasehold interests in, all of their assets, real
and personal, including the assets carried on their books and
reflected in the 1998 Financial Statements, subject to no liens,
charges or encumbrances, except for (i) liens, charges and
encumbrances described in Schedule 5.16 and permitted by Section 9.2
hereof, and (ii) assets sold, abandoned or otherwise disposed of in
the ordinary course of business.
(b) The Borrower and its Subsidiaries own all material licenses,
patents, patent applications, copyrights, service marks, trademarks,
trademark applications, and trade names necessary to continue to
conduct their business as heretofore conducted by them, now conducted
by them and proposed to be conducted by them, each of which is listed,
together with Patent and Trademark Office application or registration
numbers, where applicable, on Schedule 5.13 hereto. The Borrower and
its Subsidiaries conduct their respective businesses without
infringement or claim of infringement of any license, patent,
copyright, service ▇▇▇▇, trademark, trade name, trade secret or other
intellectual property right of others, except where such claim or
infringement would have no Material Adverse Effect. To the best
knowledge of the Borrower, there is no infringement or claim of
infringement by others of any material license, patent, copyright,
service ▇▇▇▇, trademark, trade name, trade secret or other
intellectual property right of Borrower and its Subsidiaries.
Section 5.14. Litigation. There is no litigation, at law or in equity, or
any proceeding before any federal, state, provincial or municipal board or other
governmental or administrative agency pending or, to the knowledge of the
Borrower, threatened, or any basis therefor, which involves a material risk of
any judgment or liability which could result in any material adverse change in
the business or assets or in the condition, financial or otherwise, of the
Borrower or any Subsidiary, and no judgment, decree, or order of any federal,
state, provincial or municipal court, board or other governmental or
administrative agency has been issued against the Borrower or any Subsidiary
which has or may have a Material Adverse Effect.
Section 5.15. Pension Plans. No employee benefit plan established or
maintained by the Borrower or any Subsidiary or any other Person a member of the
same "control group," as the Borrower (a "Pension Affiliate"), within the
meaning of Section 302(f)(6)(b) of ERISA, (including any multi-employer plan to
which the Borrower or any Subsidiary contributes) which is subject to Part 3 of
Subtitle B of Title I of the ERISA, had a material accumulated funding
deficiency (as such term is defined in Section 302 of ERISA) as of the last day
of the most recent fiscal year of such plan ended prior to the date hereof, or
would have had an accumulated funding deficiency (as so defined) on such day if
such year were the first year of such plan to which Part 3 of Subtitle B of
Title I of ERISA applied, and no material liability under Title IV of ERISA has
been, or is expected by the Borrower or any Subsidiary to be, incurred with
respect to any such plan by the Borrower or any Subsidiary or any Pension
Affiliate. The execution, delivery and performance by the Borrower of this
Agreement and the other Lender Agreements executed on the date hereof will not
involve any prohibited transaction within the meaning of ERISA or Section 4975
of the Internal Revenue Code. The Borrower and its Subsidiaries have no Pension
Plan other than those described on Schedule 5.15.
Section 5.16. Outstanding Indebtedness. The outstanding amount of
Indebtedness for borrowed money, including Capitalized Lease Obligations and
Guaranties of borrowed money, of the Borrower and its Subsidiaries as of the
date hereof, in excess of $250,000 is correctly set forth in Schedule 5.16
hereto, and said schedule correctly describes the credit agreements, guaranties,
leases and other instruments pursuant to which such Indebtedness has been
incurred and all liens, charges and encumbrances securing such Indebtedness.
Said schedule also describes all agreements and other arrangements pursuant to
which the Borrower or any Subsidiary may borrow any money.
Section 5.17. Environmental Matters. Except as set forth in Schedule 5.17:
(a) None of the Borrower, any Subsidiary or any operator of any
of their respective properties is in violation, or to the Borrower's
knowledge is in alleged violation, of any Environmental Law, which
violation would have a Material Adverse Effect.
(b) None of the Borrower, any Subsidiary or any operator of any
of their respective properties has received notice from any third
party, including without limitation any federal, state, county, or
local governmental authority, (i) that it has been identified as a
potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 as amended ("CERCLA")
or any equivalent state law, with respect to any site or location;
(ii) that any hazardous waste, as defined in 42 U.S.C. ss. 6903(5),
any hazardous substances, as defined in 42 U.S.C. ss. 9601(14), any
pollutant or contaminant, as defined in 42 U.S.C. ss. 9601(33), or any
toxic substance, oil or hazardous materials or other chemicals or
substances regulated by any Environmental Laws ("Hazardous
Substances") which it has generated, transported or disposed of, has
been found at any site at which a federal, state, county, or local
agency or other third party has conducted or has ordered the Borrower,
any Subsidiary or another third party or parties (e.g. a committee of
potentially responsible parties) to conduct a remedial investigation,
removal or other response action pursuant to any Environmental Law; or
(iii) that it is or shall be a named party to any claim, action, cause
of action, complaint (contingent or otherwise) or legal or
administrative proceeding arising out of any actual or alleged release
or threatened release of Hazardous Substances. For purposes of this
Agreement, "release" means any past or present releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, disposing or dumping of Hazardous Substances into the
environment.
(c) (i) The Borrower, each Subsidiary and each operator of any
real property owned or operated by the Borrower is in compliance, in
all material respects, with all provisions of the Environmental Laws
relating to the handling, manufacturing, processing, generation,
storage or disposal of any Hazardous Substances; (ii) to the best of
the Borrower's knowledge, no portion of property owned, operated or
controlled by the Borrower or any Subsidiary has been used for the
handling, manufacturing, processing, generation, storage or disposal
of Hazardous Substances except in accordance with applicable
Environmental Laws; (iii) to the best of the Borrower's knowledge,
there have been no releases or threatened releases of Hazardous
Substances on, upon, into or from any property owned, operated or
controlled by the Borrower or any Subsidiary, which releases could
have a Material Adverse Effect; (iv) to the best of the Borrower's
knowledge, there have been no releases of Hazardous Substances on,
upon, from or into any real property in the vicinity of the real
properties owned, operated or controlled by the Borrower or any
Subsidiary which, through soil or groundwater contamination, may have
come to be located on the properties of the Borrower or any
Subsidiary; (v) to the best of the Borrower's knowledge, there have
been no releases of Hazardous Substances on, upon, from or into any
real property formerly but no longer owned, operated or controlled by
the Borrower or any Subsidiary.
(d) None of the properties of the Borrower or any Subsidiary is
or, to their knowledge, shall be subject to any applicable
environmental cleanup responsibility law or environmental restrictive
transfer law or regulation by virtue of the transactions set forth
herein and contemplated hereby.
Section 5.18. Foreign Trade Regulations. Neither the Borrower nor any
Subsidiary is (a) a person included within the definition of "designated foreign
country" or "national" of a "designated foreign country" in Executive Order No.
8389, as amended, in Executive Order No. 9193, as amended, in the Foreign Assets
Control Regulations (31 C.F.R., Chapter V, Part 500, as amended), in the Cuban
Assets Control Regulations of the United States Treasury Department (31 C.F.R.,
Chapter V, Part 515, as amended) or in the Regulations of the Office of Alien
Property, Department of Justice (8 C.F.R., Chapter II, Part 507, as amended) or
within the meanings of any of the said Orders or Regulations, or of any
regulations, interpretations, or rulings issued thereunder, or in violation of
said Orders or Regulations or of any regulations, interpretations or rulings
issued thereunder; or (b) an entity listed in Section 520.101 of the Foreign
Funds Control Regulations (31 C.F.R., Chapter V, Part 520, as amended).
Section 5.19. Governmental Regulations. Except for Chapter 399-B of the New
Hampshire Revised Statutes Annotated, none of the Borrower, any Subsidiary or
any Affiliate of the Borrower is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Investment Company Act
of 1940, or is a common carrier under the Interstate Commerce Act, or is engaged
in a business or activity subject to any statute or regulation which regulates
the incurring by the Borrower of Indebtedness for borrowed money, including
statutes or regulations relating to common or contract carriers or to the sale
of electricity, gas, steam, water, telephone or telegraph or other public
utility services.
Section 5.20. Margin Stock. Neither the Borrower nor any Subsidiary owns
any "margin stock" within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System, or any regulations, interpretations or rulings
thereunder, nor is the Borrower or any Subsidiary engaged principally or as one
of its important activities in extending credit which is used for the purpose of
purchasing or carrying margin stock.
ARTICLE 6. REPORTS AND INFORMATION
Section 6.1. Quarterly Financial Statements and Reports. As soon as
available, and in any event within forty-five (45) days after the end of each of
the first three quarters of each fiscal year of the Borrower, the Borrower shall
furnish to the Agent and each Lender: (i) consolidated and consolidating balance
sheets of the Borrower and its Subsidiaries as of the end of such quarter and
consolidated and consolidating statements of income, shareholders' equity and
cash flow of the Borrower and its Subsidiaries for such quarter and for the
period commencing at the end of the previous fiscal year and ending with the end
of such quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding period of the preceding fiscal year,
all in reasonable detail; and (ii) a Compliance Certificate.
Section 6.2. Annual Financial Statements. As soon as available, but in any
event within ninety (90) days after the end of each fiscal year of the Borrower,
the Borrower shall furnish to the Agent and each Lender: (a) consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries as of the end
of such fiscal year and consolidated and consolidating statements of income,
shareholders' equity and cash flow of the Borrower and its Subsidiaries for such
fiscal year, in each case (other than the consolidating statements) reported on
by Deloitte & Touche LLP, or other independent certified public accountants of
recognized national standing acceptable to the Lenders, which report shall
express, without reliance upon others, a positive opinion regarding the fairness
of the presentation of such financial statements in accordance with generally
accepted accounting principles consistently applied, except in cases of
unresolved litigation and accounting changes with which such accountants concur,
together with the statement of such accountants that they have caused the
provisions of this Agreement to be reviewed and that nothing has come to their
attention to lead them to believe that any Default exists hereunder or
specifying any Default and the nature thereof; (b) copies of a budget and
strategic plan for the Borrower for the current fiscal year together with
management's written discussion and analysis of such budget and strategic plan
and shall promptly advise the Agent of any changes therein and all material
deviations therefrom; and (c) a Compliance Certificate.
Section 6.3. Notice of Defaults. As soon as possible, and in any event
within five (5) days after the occurrence of each Default, the Borrower shall
furnish to the Agent and each Lender the statement of its chief executive
officer or chief financial officer setting forth details of such Default and the
action which the Borrower has taken or proposes to take with respect thereto.
Section 6.4. Notice of Litigation. Promptly after the commencement thereof,
the Borrower shall furnish to the Agent and each Lender written notice of all
actions, suits and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting the Borrower or any Subsidiary, which, if adversely determined, would
have a Material Adverse Effect.
Section 6.5. Communications with Others. If and when the stock of the
Borrower is or is proposed to be traded publicly, the Borrower shall furnish to
the Agent and each Lender copies of all regular, periodic and special reports
and all registration statements which the Borrower files with the Securities and
Exchange Commission or any governmental authority which may be substituted
therefor, or with any national or regional securities exchange.
Section 6.6. Reportable Events. At any time that the Borrower or any
Subsidiary has a Pension Plan, the Borrower shall furnish to the Agent and each
Lender, as soon as possible, but in any event within thirty (30) days after the
Borrower knows or has reason to know that any Reportable Event with respect to
any Pension Plan has occurred, the statement of its chief executive officer or
chief financial officer setting forth the details of such Reportable Event and
the action which the Borrower or any Subsidiary has taken or proposes to take
with respect thereto, together with a copy of the notice of such Reportable
Event to the Pension Benefit Guaranty Corporation.
Section 6.7. Annual Pension Reports. At any time that the Borrower or any
Subsidiary has a Pension Plan, the Borrower shall furnish to the Agent and each
Lender, promptly after the filing thereof with the Secretary of Labor or the
Pension Benefit Guaranty Corporation, copies of each annual report which is
filed with respect to each Pension Plan for each plan year, including:
(a) a statement of assets and liabilities of such Pension Plan as of
the end of such plan year and statements of changes in fund balance and in
financial position, or a statement of changes in net assets available for
plan benefits, for such plan year;
(b) an opinion of Deloitte & Touche LLP (or other independent
certified public accountants of recognized standing acceptable to the
Lender) relating to such Pension Plan to the extent that any such opinion
for the Pension Plan is required by law; and
(c) an actuarial statement of such Pension Plan applicable to such
plan year, together with an opinion of an enrolled actuary of recognized
standing acceptable to the Lenders, to the extent that any such statement
and/or opinion for the Pension Plan is required by law.
Section 6.8. Reports to other Creditors. Promptly after filing the same,
the Borrower shall furnish to the Agent and each Lender copies of any compliance
certificate and other information furnished to any other holder of the
securities (including debt obligations) of the Borrower or any Subsidiary
pursuant to the terms of any indenture, loan or credit or similar agreement and
not otherwise required to be furnished to the Agent or the Lenders pursuant to
any other provision of this Agreement.
Section 6.9. Communications with Independent Public Accountants. At any
reasonable time and from time to time, the Borrower shall provide the Agent and
the Lenders and any agents or representatives of the Lenders access to the
independent public accountants of the Borrower to discuss the Borrower's and its
Subsidiaries' financial condition, including, without limitation any
recommendations of such independent public accountants concerning the
management, finances, financial controls or operations of the Borrower and its
Subsidiaries. Promptly after the receipt thereof, the Borrower shall furnish to
the Agent and each Lender copies of any written recommendations concerning the
management, finances, financial controls, or operations of the Borrower or any
Subsidiary received from the Borrower's independent public accountants.
Section 6.10. Environmental Reports. The Borrower shall furnish to the
Agent and each Lender: (a) not later than seven (7) days after notice thereof,
notice of any enforcement actions, or, to the knowledge of the Borrower,
threatened enforcement actions affecting the Borrower or any Subsidiary by any
Governmental Agency related to Environmental Laws; (b) copies, promptly after
they are received, of all orders, notices of responsibility, notices of
violation, notices of enforcement actions, and assessments, and other written
communications pertaining to any such orders, notices, claims and assessments
received by the Borrower or any Subsidiary from any Governmental Agency; (c) not
later than seven (7) days after notice thereof, notice of any civil claims or
threatened civil claims affecting the Borrower or any Subsidiary by any third
party alleging any violation of Environmental Laws or harm to human health or
the environment; (d) copies of all cleanup plans, site assessment reports,
response plans, remedial proposals, or
other submissions of the Borrower or any Subsidiary, other third party (e.g.,
committee of potentially responsible parties at a Superfund site), or any
combination of same, submitted to a Governmental Agency in response to any
communication referenced in subsections (a) and (b) herein simultaneously with
their submission to such Governmental Agency; and (e) from time to time, on
request of the Agent, evidence satisfactory to the Agent of the Borrower's and
its Subsidiaries' insurance coverage, if any, for any environmental liabilities.
Section 6.11. Miscellaneous. The Borrower shall provide the Agent and the
Lenders with such other information as the Agent or the Lenders may from time to
time reasonably request respecting the business, properties, prospects,
condition or operations, financial or otherwise, of the Borrower and its
Subsidiaries.
ARTICLE 7. FINANCIAL COVENANTS
On and after the date hereof, until all of the Lender Obligations shall
have been paid in full and the Lenders shall have no commitment hereunder, the
Borrower and its Subsidiaries shall observe the following covenants:
Section 7.1. Consolidated Net Worth. At the end of each period indicated
below, the Borrower and its Subsidiaries shall maintain a Consolidated Net Worth
of not less than the sums indicated.
Period: Minimum Net Worth
------ -----------------
Closing Date through March 31, 2000 $ 76,000,000
April 1, 2000 through June 30, 2000 $ 76,000,000
July 1, 2000 through September 30, 2000 $ 76,000,000
October 1, 2000 through December 31, 2000 $ 96,000,000
January 1, 2001 through March 31, 2001 $ 96,000,000
April 1, 2001 through June 30, 2001 $ 96,000,000
July 1, 2001 through September 30, 2001 $ 96,000,000
Each Fiscal Quarter Thereafter $120,000,000
Section 7.2. Minimum Consolidated Net Income. As of each date indicated
below, for the twelve months ending on that date, the Borrower and its
Subsidiaries shall maintain the Consolidated Net Income indicated:
Date: Minimum Net Income
---- ------------------
March 31, 2000 $16,000,000
June 30, 2000 $16,000,000
September 30, 2000 $16,000,000
December 31, 2000 $20,000,000
March 31, 2001 $20,000,000
June 30, 2001 $20,000,000
September 30, 2001 $20,000,000
On the last day of each Fiscal Quarter Thereafter $24,000,000
ARTICLE 8. AFFIRMATIVE COVENANTS
On and after the date hereof, until all of the Lender Obligations shall
have been paid in full and the Lenders shall have no commitment hereunder, the
Borrower covenants that it will, and will cause each of its Subsidiaries to,
comply with the following covenants and provisions:
Section 8.1. Existence and Business. The Borrower and each Subsidiary will
(a) subject to Section 9.6, preserve and maintain its corporate or limited
liability company existence, as the case may be, and qualify and remain
qualified as a foreign corporation in each jurisdiction in which such
qualification is required, (b) preserve and maintain in full force and effect
all material rights, licenses, patents and franchises, (c) comply in all
material respects with all valid and applicable statutes, rules and regulations
necessary for the conduct of business, and (d) engage only in the businesses
which it is conducting on the date of this Agreement and substantially related
businesses.
Section 8.2. Taxes and Other Obligations. The Borrower and each Subsidiary
(a) will duly pay and discharge, or cause to be paid and discharged, before the
same shall become in arrears, all material taxes, assessments and other
governmental charges, imposed upon it and its properties, sales and activities,
or upon the income or profits therefrom, as well as the claims for labor,
materials, or supplies which if unpaid might by law result in a lien or charge
upon any of its properties; provided, however, that the Borrower and any
Subsidiary may contest any such charges or claims in good faith so long as (i)
an adequate reserve therefor has been established and is maintained if and as
required by generally accepted accounting principles and (ii) no action to
foreclose any such lien has been commenced, and (b) will promptly pay or cause
to be paid when due, or in conformance with customary trade terms (but, unless
contested in good faith, not later than 60 days from the due date in the case of
trade debt), all lease obligations, trade debt and all other Indebtedness
incident to its operations. The Borrower and each Subsidiary shall cause all
applicable tax returns and all amounts due thereunder to be filed and paid, as
the case may be, in order to maintain its good standing with the Internal
Revenue Service and state, local and foreign tax authorities.
Section 8.3. Maintenance of Properties and Leases. The Borrower and each
Subsidiary shall maintain, keep and preserve all of its properties (tangible and
intangible) in good repair and working order, ordinary wear and tear excepted.
The Borrower and each Subsidiary shall replace and improve its properties as
necessary for the conduct of its business. The Borrower and each Subsidiary
shall comply in all material respects with all leases naming it as lessee.
Section 8.4. Insurance. The Borrower and each Subsidiary (a) will keep its
principal assets which are of an insurable character insured by financially
sound and reputable insurers against loss or damage by fire, explosion or
hazards, by extended coverage in an amount sufficient to avoid co-insurance
liability, and (b) will maintain with financially sound and reputable insurers
insurance against other hazards and risks and liability to persons and property
to the extent and in a manner satisfactory to the Lenders, and in any event as
customary for companies in similar businesses similarly situated; provided,
however, that on prior notice to the Agent and the Lenders it may effect
workmen's compensation insurance through an insurance fund operated by such
state or jurisdiction and may also be a self-insurer with respect to workmen's
compensation and with respect to group medical benefits under any medical
benefit plan. On request of the Agent from time to time, the Borrower will
render to the Agent and the Lenders a statement in reasonable detail as to all
insurance coverage required by this Section 8.4. A description of the material
elements of insurance coverage of the Borrower and its Subsidiaries as of the
date hereof is set forth on Schedule 8.4.
Section 8.5. Records, Accounts and Places of Business. The Borrower and
each Subsidiary shall maintain comprehensive and accurate records and accounts
in accordance with generally accepted accounting principles consistently
applied. The Borrower and each Subsidiary shall maintain adequate and proper
reserves. The Borrower and each Subsidiary shall promptly notify the Agent of
(a) any changes in the places of business of the Borrower and its Subsidiaries
and (b) any additional places of business which may arise hereafter.
Section 8.6. Inspection. At any reasonable time and from time to time, the
Borrower shall permit the Agent and the Lenders and any of the Lenders' agents
or representatives to examine and make copies of and abstracts from the records
and books of account of, and visit the properties of, the Borrower and its
Subsidiaries and to discuss the affairs, finances and accounts of the Borrower
and its Subsidiaries with any of their officers or directors and with the
Borrower's independent accountants.
Section 8.7. Maintenance of Accounts. The Borrower and its Subsidiaries
shall maintain all of their depository, operating, concentration and
disbursement accounts with the Agent, provided that an amount not to exceed
$1,000,000 may be on deposit at certain depository and operating accounts of
Comteq which are maintained at Bank of America (or one if its affiliates).
Section 8.8 Year 2000 Compatibility. Take all reasonable action necessary
to assure that its computer based systems, hardware and software used in each of
the Borrower's and its Subsidiaries' business and operations are able to operate
and effectively receive transmit, process, store, retrieve or retransmit data
including dates on and after January 1, 2000, and, at the
request of the Agent, the Borrower shall provide evidence to the reasonable
satisfaction of the Agent of such year 2000 compatibility.
ARTICLE 9. NEGATIVE COVENANTS
On and after the date hereof, until all of the Lender Obligations shall
have been paid in full and the Lenders shall have no commitments to make any
loans or advances to the Borrower hereunder, the Borrower covenants that neither
the Borrower nor any of its Subsidiaries will:
Section 9.1. Restrictions on Indebtedness. Create, incur, suffer or permit
to exist, or assume or guarantee, either directly or indirectly, or otherwise
become or remain liable with respect to, any Indebtedness, except the following:
(a) Indebtedness outstanding at the date of this Agreement as set
forth on Schedule 5.16 but no refinancings thereof.
(b) Indebtedness on account of Consolidated Current Liabilities (other
than for money borrowed) incurred in the normal and ordinary course of
business.
(c) Indebtedness in respect of (i) taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the
extent that payment thereof shall not at the time be required to be made in
accordance with the provisions of Section 8.2 hereof, (ii) judgments or
awards which have been in force for less than the applicable appeal period
so long as execution is not levied thereunder or in respect of which the
Borrower or any Subsidiary shall at the time in good faith be prosecuting
an appeal or proceedings for review in a manner satisfactory to the Lenders
and in respect of which a stay of execution shall have been obtained
pending such appeal or review and for which adequate reserves have been
established in accordance with generally accepted accounting principles,
and (iii) endorsements made in connection with the deposit of items for
credit or collection in the ordinary course of business.
(d) Indebtedness in an amount not to exceed $1,000,000 in respect of
purchase money security interests under Section 9.2(b) hereof.
(e) Indebtedness in an amount not to exceed $10,000,000 in the
aggregate with respect to equipment financing and Capitalized Leases, or as
otherwise approved by the Agent.
(f) Indebtedness to the Lenders.
(g) Indebtedness on account of inventory financed by IBM Credit Corp.
and Deutsche Financial Services Corporation not to exceed $60,000,000
without the written consent of the Agent.
(h) Guarantees permitted under Section 9.5 hereof.
(i) Indebtedness between the Borrower and any Subsidiaries or between
Subsidiaries.
Section 9.2. Restriction on Liens. Create or incur or suffer to be created
or incurred or to exist any encumbrance, mortgage, pledge, lien, charge or other
security interest of any kind upon any of its property or assets of any
character, whether now owned or hereafter acquired, or transfer any of such
property or assets for the purposes of subjecting the same to the payment of
Indebtedness or performance of any other obligation in priority to payment of
its general creditors, or acquire or agree or have an option to acquire any
property or assets upon conditional sale or other title retention agreement,
device or arrangement (including Capitalized Leases) or suffer to exist for a
period of more than 30 days after the same shall have been incurred any
Indebtedness against it which if unpaid might by law or upon bankruptcy or
insolvency, or otherwise, be given any priority whatsoever over the claims of
its general creditors, or sell, assign, pledge or otherwise transfer for
security any of its accounts, contract rights, general intangibles, or chattel
paper (as those terms are defined in the UCC) with or without recourse;
provided, however, that the Borrower or any Subsidiary may create or incur or
suffer to be created or incurred or to exist:
(a) Existing liens and security interests described in Schedule 5.13
securing presently outstanding Indebtedness permitted by Section 9.1(a).
(b) Purchase money security interests (which term shall include
mortgages, conditional sale contracts, Capitalized Leases in accordance
with Section 9.1(e) hereof, and all other title retention or deferred
purchase devices) to secure the purchase price of property acquired
hereafter by the Borrower or a Subsidiary, or to secure Indebtedness
incurred solely for the purpose of financing such acquisitions; provided,
however, that no such purchase money security interests shall extend to or
cover any property other than the property the purchase price of which is
secured by it, and that the principal amount of Indebtedness (whether or
not assumed) with respect to each item of property subject to such a
security interest shall not exceed the fair value of such item on the date
of its acquisition.
(c) Deposits or pledges made in connection with, or to secure payment
of, workmen's compensation, unemployment insurance, old age pensions or
other social security; liens in respect of judgments or awards to the
extent such judgments or awards are permitted as Indebtedness by the
provisions of Section 9.1(c); and liens for taxes, assessments or
governmental charges or levies and liens to secure claims for labor,
material or supplies to the extent that payment thereof shall not at the
time be required to be made in accordance with Section 8.2.
(d) Encumbrances in the nature of zoning restrictions, easements, and
rights or restrictions of record on the use of real property which do not
materially detract from the value of such property or impair its use in the
business of the owner or lessee.
(e) Liens (other than judgments and awards) created by or resulting
from any litigation or legal proceeding, provided the execution or other
enforcement thereof is effectively stayed and the claims secured thereby
are being actively contested in good faith by appropriate proceedings
satisfactory to the Agent.
(f) Liens arising by operation of law to secure landlords, lessors or
renters under leases or rental agreements made in the ordinary course of
business and confined to the premises or property rented.
(g) Liens in favor of the Agent for the benefit of the Lenders.
(h) Liens on inventory in accordance with Section 9.1(g) hereof.
Nothing contained in this Section 9.2 shall permit the Borrower to incur any
Indebtedness or take any other action or permit to exist any other condition
which would be in contravention of any other provision of this Agreement.
Section 9.3. Investments. Have outstanding or hold or acquire or make or
commit itself to acquire or make any Investment except the following:
(a) Investments having a maturity of less than one year from the date
thereof by the Borrower in: (i) obligations of the Agent or any of the
Lenders; (ii) obligations of the United States of America or any agency or
instrumentality thereof; (iii) repurchase agreements involving securities
described in clauses (i) and (ii) with the Agent or any of the Lenders; and
(iv) commercial paper which is rated not less than prime-one or A-1 or
their equivalents by ▇▇▇▇▇'▇ Investor Service, Inc. or Standard & Poor's
Corporation, respectively, or their successors.
(b) Investments between the Borrower and any of its Subsidiaries and
between any Subsidiaries.
(c) Investments consisting of normal travel and similar advances to
employees of the Borrower and its Subsidiaries and advances with respect to
a computer purchase program to employees of the Borrower and its
Subsidiaries not exceeding $750,000 in the aggregate at any one time
outstanding.
(d) Investments resulting from mergers permitted under Section 9.6
hereto.
(e) Permitted Acquisitions financed with Permitted Acquisition
Advances.
(f) Investments in Subsidiaries permitted under Sections 9.8(i) and
9.11 hereto.
Section 9.4. Dispositions of Assets. Sell, lease or otherwise dispose of
any assets except for (i) the sale, lease or other disposition of inventory or
other property (not including receivables) in the ordinary course of business or
(ii) the sale or other disposition of any assets as permitted under Section 9.9
hereof.
Section 9.5. Assumptions, Guaranties, Etc. of Indebtedness of Other
Persons. Assume, guarantee, endorse or otherwise be or become directly or
contingently liable (including, without limitation, by way of agreement,
contingent or otherwise, to purchase, provide funds for payment, supply funds to
or otherwise invest in any Person or otherwise assure the creditors of any such
Person against loss) in connection with any Indebtedness of any other Person,
except (i) for Guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business and
(ii) Guarantees to IBM or DFS in connection with Indebtedness permitted under
9.1(g).
Section 9.6. Mergers, Etc. Enter into any merger or consolidation with or
acquire all or substantially all of the assets of any Person, or sell, assign,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to any Person, except that (a) any Subsidiary may merge into
the Borrower or any other Subsidiary, (b) the Borrower and any Subsidiary may
enter into a merger with or acquire all or substantially all of the assets of
another entity, provided that immediately after and giving effect thereto, no
event shall occur and be continuing which constitutes or which, upon the passage
of time or giving of notice or both would constitute, a Default (including under
Section 8.1 and including under Article 7, assuming that the financial
restrictions set forth in Article 7 are applied immediately after and giving
effect to such merger or acquisition) and provided further that the Borrower or
such Subsidiary is the surviving corporation to any such merger and (c) the
Borrower may enter into Permitted Acquisitions.
Section 9.7. ERISA. At any time while the Borrower or any Subsidiary has a
Pension Plan, permit any accumulated funding deficiency to occur with respect to
any Pension Plan or other employee benefit plans established or maintained by
the Borrower or any Subsidiary or to which contributions are made by the
Borrower or any Subsidiary (the "Plans"), and which are subject to the "Pension
Reform Act" and the rules and regulations thereunder or to Section 412 of the
Internal Revenue Code, and at all times comply in all material respects with the
provisions of the Act and Code which are applicable to the Plans. The Borrower
will not permit the Pension Benefit Guaranty Corporation to cause the
termination of any Pension Plan under circumstances which would cause the lien
provided for in Section 4068 of the Pension Reform Act to attach to the assets
of the Borrower or any Subsidiary.
Section 9.8. Distributions. Make any Distribution or make any other payment
on account of the purchase, acquisition, redemption, or other retirement of any
shares of stock, whether now or hereafter outstanding, other than (i) repurchase
or redemption of Borrower's capital stock not to exceed $5,000,000 and (ii) any
Subsidiary may make a Distribution to the Borrower.
Section 9.9. Sale and Leaseback. Sell or transfer any of its properties
with the intention of taking back a lease of the same property or leasing other
property for substantially the same use as the property being sold or
transferred, except in connection with financings permitted under Section 9.1(d)
and (e).
Section 9.10. Transactions with Affiliates. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate, except that the Borrower and its
Subsidiaries (a) may pay salaries, fees and bonuses to its directors, officers
and employees as are usual and customary in the Borrower's or its Subsidiaries'
business and (b) may, in the ordinary course of business, enter into other
transactions with Affiliates on terms that are no less favorable to the Borrower
or any Subsidiary than those which could be obtained at the time from Persons
who are not Affiliates.
Section 9.11. Creation of Subsidiaries. Borrower shall not, without prior
written consent by Agent, create or cause the creation of any Subsidiary other
than those in existence at the Closing, unless such Subsidiary becomes an
additional guarantor ("Additional Guarantor") under the Guaranty Agreement.
Section 9.12. Voluntary Payment. While any amount remains outstanding under
the Notes, Borrower shall not make any voluntary prepayments on any
Indebtedness, except under a Lender Agreement or Indebtedness permitted under
Section 9.1(g) hereof.
ARTICLE 10. EVENTS OF DEFAULT AND REMEDIES
Section 10.1. Events of Default. Each of the following events shall be
deemed to be Events of Default hereunder:
(a) The Borrower shall fail to make any payment in respect of (i) the
principal of any of the Lender Obligations as the same shall become due,
whether at the stated payment dates, required prepayment or by
acceleration, demand or otherwise, or (ii) interest or commitment fees on
or in respect of any of the Lender Obligations as the same shall become
due.
(b) The Borrower or any Subsidiary shall fail to perform or observe
any of the terms, covenants, conditions or provisions of Articles 6, 7, 8
or 9 hereof.
(c) The Borrower or any Subsidiary shall fail to perform or observe
any other term, covenant, condition or provision to be performed or
observed by the Borrower under this Agreement or any other Lender
Agreement, and such failure shall not be rectified or cured to the Agent's
satisfaction within thirty (30) days after the occurrence thereof.
(d) Any representation or warranty of the Borrower herein or in any
other Lender Agreement or any amendment to any thereof shall have been
materially false or misleading at the time made or intended to be
effective.
(e) The Borrower shall fail to make any payment of principal of or
interest on Indebtedness for money borrowed by the Borrower or any Guaranty
of money borrowed, in either case an outstanding principal amount of not
less than $1,000,000, when such payment is due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) or
shall fail to perform or observe any provision of any agreement or
instrument relating to such Indebtedness, and such failure shall permit the
holder thereof to accelerate such Indebtedness.
(f) The Borrower or any Subsidiary shall be involved in financial
difficulties as evidenced:
(i) by its commencement of a voluntary case under Title 11 of the
United States Code as from time to time in effect, or by its
authorizing, by appropriate proceedings of its board of directors or
other governing body, the commencement of such a voluntary case;
(ii) by its filing an answer or other pleading admitting or
failing to deny the material allegations of a petition filed against
it commencing an involuntary case under said Title 11, or seeking,
consenting to or acquiescing in the relief therein provided, or by its
failing to controvert timely the material allegations of any such
petition;
(iii) by the entry of an order for relief in any involuntary case
commenced under said Title 11;
(iv) by its seeking relief as a debtor under any applicable law,
other than said Title 11, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or
alteration of the rights of creditors, or by its consenting to or
acquiescing in such relief;
(v) by the entry of an order by a court of competent jurisdiction
(1) by finding it to be bankrupt or insolvent, (2) ordering or
approving its liquidation, reorganization or any modification or
alteration of the rights of its creditors, or (3) assuming custody of,
or appointing a receiver or other custodian for all or a substantial
part of its property and such order shall not be vacated or stayed on
appeal or otherwise stayed within 30 days;
(vi) by the filing of a petition against the Borrower or any
Subsidiary under said Title 11 which shall not be vacated within 30
days; or
(vii) by its making an assignment for the benefit of, or entering
into a composition with, its creditors, or appointing or consenting to
the appointment of a receiver or other custodian for all or a
substantial part of its property.
(g) There shall have occurred a judgment against the Borrower or any
Subsidiary in any court (i) for an amount in excess of $1,000,000, and from
which no appeal has been taken or with respect to which all appeal periods
have expired, unless such judgment is, to the Agent's satisfaction, insured
against in full, or (ii) which shall have a materially adverse effect upon
the assets, properties or condition, financial or otherwise, of the
Borrower.
(h) Any "Event of Default" under any other Lender Agreement shall have
occurred.
Section 10.2. Remedies. Upon the occurrence of an Event of Default, in each
and every case, the Agent may, and upon the request of the Required Lenders,
shall proceed to protect and enforce the rights of the Agent and the Lenders by
suit in equity, action at law and/or other appropriate proceeding either for
specific performance of any covenant or condition contained in this Agreement or
any other Lender Agreement or in any instrument delivered to the Agent or the
Lenders pursuant hereto or thereto, or in aid of the exercise of any power
granted in this Agreement, any Lender Agreement or any such instrument, and
(unless there shall have occurred an Event of Default under Section 10.1(f), in
which case the unpaid balance of Lender Obligations shall automatically become
due and payable without notice or demand) by notice in writing to the Borrower
declare (a) the obligations of the Lenders to make Advances to be terminated,
whereupon such obligations shall be terminated, and (b) all or any part of the
unpaid balance of the Lender Obligations then outstanding to be forthwith due
and payable, whereupon such unpaid balance or part thereof shall become so due
and payable without presentation, protest or further demand or notice of any
kind, all of which are hereby expressly waived, and the Agent may proceed to
enforce payment of such balance or part thereof in such manner as the Agent may
elect, and the Agent and each Lender may offset and apply toward the payment of
such balance or part thereof any Indebtedness of the Agent or any Lender to the
Borrower or to any Subsidiary, or to any obligor of the Lender Obligations,
including any Indebtedness represented by deposits in any general or special
account maintained with the Agent or any Lender or with any other Person
controlling, controlled by or under common control with the Agent or any Lender.
Section 10.3. Distribution of Proceeds. Notwithstanding anything to the
contrary contained herein, in the event that following the occurrence or during
the continuance of any Event of Default, the Agent or any Lender receives any
monies on account of the Lender Obligations from the Borrower or otherwise, such
monies shall be distributed for application as follows:
(a) First, to the payment of or the reimbursement of, the Agent for or
in respect of all costs, expenses, disbursements and losses which shall
have been incurred or sustained by the Agent in connection with the
collection of such monies by the Agent, or in connection with the exercise,
protection or enforcement by the Agent of all or any of the rights,
remedies, powers and privileges of the Agent or the Lenders under this
Agreement or any other Lender Agreement;
(b) Second, to the payment of all interest, including interest on
overdue amounts, and late charges, then due and payable with respect to the
Loans, allocated among the Lenders in proportion to their respective
Commitment Percentages;
(c) Third, to the payment of the outstanding principal balance of the
Loans, allocated among the Lenders in proportion to their respective
Commitment Percentages;
(d) Fourth, to any other outstanding Lender Obligations, allocated
among the Lenders in proportion to their respective Commitment Percentages;
and
(e) Fifth, the excess, if any, shall be returned to the Borrower or to
such other Persons as are entitled thereto.
ARTICLE 11. CONSENTS; AMENDMENTS; WAIVERS; REMEDIES
Section 11.1. Actions by Lenders. Except as otherwise expressly set forth
in any particular provision of this Agreement, any consent or approval required
or permitted by this Agreement to be given by the Lenders, including without
limitation under Section 11.2, may be given, and any term of this Agreement or
of any other instrument related hereto or mentioned herein may be amended, and
the performance or observance by the Borrower of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively
or prospectively) with, but only with, the written consent of the Borrower and
the Required Lenders; provided, however, that without the written consent of all
Lenders:
(a) no reduction in the interest rates on or any fees relating to the
Advances shall be made;
(b) no extension or postponement shall be made of the stated time of
payment of the principal amount of, interest on, or fees payable to the
Lenders relating to the Advances;
(c) no increase in the Maximum Credit Amount, or extension of the
Credit Termination Date shall be made;
(d) no release of all or substantially all of the collateral security
for the Lender Obligations or of the obligations of any Guarantor under the
Guaranty Agreement shall be made;
(e) no change in the definition of the term "Required Lenders" shall
be made; and
(f) no change in the provisions of this Section 11.1 shall be made.
Section 11.2. Actions by Borrower. No delay or omission on the Agent's or
the Lenders' part in exercising their rights and remedies against the Borrower
or any other interested party shall constitute a waiver. A breach by the
Borrower of its obligations under this Agreement may be waived only by a written
waiver executed by the Agent and the Lenders in accordance with Section 11.1.
The Agent's and the Lenders' waiver of the Borrower's breach in one or more
instances shall not constitute or otherwise be an implicit waiver of subsequent
breaches. To the extent permitted by applicable law, the Borrower hereby agrees
to waive, and does hereby absolutely and irrevocably waive (a) all presentments,
demands for performance, notices of protest and notices of dishonor in
connection with any of the Indebtedness evidenced by the Term Notes, (b) any
requirement of diligence or promptness on the Agent's or the Lenders' part in
the enforcement of its rights under the provisions of this Agreement or any
Lender Agreement,
and (c) any and all notices of every kind and description which may be required
to be given by any statute or rule of law with respect to its liability (i)
under this Agreement or in respect of the Indebtedness evidenced by the Notes or
any other Lender Obligation or (ii) under any other Lender Agreement. No course
of dealing between the Borrower and the Agent or the Lenders shall operate as a
waiver of any of the Agent's or the Lenders' rights under this Agreement or any
Lender Agreement or with respect to any of the Lender Obligations. This
Agreement shall be amended only by a written instrument executed by the
Borrower, the Agent and the Lenders in accordance with Section 11.1 making
explicit reference to this Agreement. The Agent's and the Lenders' rights and
remedies under this Agreement and under all subsequent agreements between the
Agent, the Lenders and the Borrower shall be cumulative and any rights and
remedies expressly set forth herein shall be in addition to, and not in
limitation of, any other rights and remedies which may be applicable to the
Agent and the Lenders in law or at equity.
ARTICLE 12. SUCCESSORS AND ASSIGNS
Section 12.1. General. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors (which
shall include in the case of the Agent or any Lender any entity resulting from a
merger or consolidation) and assigns, except that (a) the Borrower may not
assign its rights or obligations under this Agreement, and (b) each Lender may
assign its rights in this Agreement only as set forth below in this Article 12.
Section 12.2. Assignments.
(a) Assignments. In compliance with applicable laws with respect to
such assignment and with the consent of the Borrower (provided that if
there shall exist a Default, the Borrower's consent shall not be required
for any such assignment) and the Agent (which consents in all cases shall
not be unreasonably withheld), a Lender may assign to one or more financial
institutions (each a "Successor Lender") a proportionate part of its rights
and obligations in connection with this Agreement, its Note, and the
related Lender Agreements and each such Successor Lender shall assume such
rights and obligations pursuant to an Assignment and Acceptance Agreement
("Assignment and Acceptance Agreement") duly executed by such Successor
Lender and such assigning Lender and acknowledged and consented to by the
Agent, substantially in the form of Exhibit H attached hereto; provided;
however, if Agent assigns more than fifty percent of the Agent's Commitment
Percentage listed on Schedule 1 as of the Closing Date, the Required
Lenders may request replacement of the Agent in accordance with Section
13.8 hereunder. Any assignment under this Section (a) shall be in a minimum
amount of $5,000,000. In connection with any assignment under this Section
12.2(a) there shall be paid to the Agent by the assigning Lender or the
Successor Lender an administrative processing fee in the amount of $5,000;
provided, however, that no such administrative processing fee shall be paid
if the Lender or Successor Lender makes an assignment to an affiliate of
such Lender or Successor Lender.
(b) Assignment Procedures. In the event of an assignment in accordance
with Section 12.2(a), upon execution and delivery of such an assignment at
least five (5) Business
Days prior to the proposed assignment date, and payment by such Successor
Lender to the assigning Lender of an amount equal to the purchase price
agreed between such assigning Lender and such Successor Lender, such
Successor Lender shall become party to this Agreement as a signatory hereto
and shall have all the rights and obligations of a Lender under this
Agreement and the other Lender Agreements with an interest therein as set
forth in such assignment, and such assignor making such assignment shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required. Upon the
consummation of any such assignment, the assigning Lender, the Successor
Lender and the Borrower shall make appropriate arrangements so that, if
required, a new Note is issued to the Successor Lender and a replacement
Note is issued to the assigning Lender in principal amounts reflecting
their respective revised interests.
(c) Register. The Agent shall maintain a register (the "Register") for
the recordation of (i) the names and addresses of all Successor Lenders
that enter into Assignment and Acceptance Agreements, (ii) the interests of
each Lender, and (iii) the amounts of the Advances owing to each Lender
from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrower, the Agent and the Lenders may
treat each Person whose name is registered therein for all purposes as a
party to this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time
upon reasonable prior notice.
(d) Further Assurances. The Borrower shall sign such documents and
take such other actions from time to time reasonably requested by the Agent
or a Lender to enable any Successor Lender to share in the benefits and
rights created by the Lender Agreements.
(e) Assignments to Federal Reserve Bank. Any Lender at any time may
assign all or any portion of its rights under this Agreement and its Notes
to a Federal Reserve Bank. No such assignment shall release the transferor
Lender from its obligations hereunder.
Section 12.3. Participations. Any Lender may, with the consent of Agent and
without the consent of the Borrower, at any time grant or offer to grant to one
or more financial institutions ("Credit Participants") participating interests
in such Lender's rights and obligations in this Agreement, its Notes and the
related Lender Agreements, and each such Credit Participant shall acquire such
participation subject to the terms set forth below.
(a) Amount. Each such participation shall be in a minimum amount of at
least $5,000,000.
(b) Procedure. Each Lender granting such participation shall comply
with all applicable laws with respect to such transfer and shall remain
responsible for the performance of its obligations hereunder and under the
other Lender Agreements and shall retain the sole right and responsibility
to exercise its rights and to enforce the obligations of the Borrower
hereunder and under the other Lender Agreements, including the right to
consent to any amendment, modification or waiver of any provision of any
Lender Agreement, except for those matters
referred to in Section 11.1 which require the consent of all Lenders and
which may also require the consent of each Credit Participant.
(c) Dealing with Lenders. The Borrower shall continue to deal solely
and directly with the Lenders in connection with their rights and
obligations under this Agreement and the other Lender Agreements.
(d) Rights of Credit Participants. The Borrower agrees that each
Credit Participant shall, to the extent provided in its participation
instrument, be entitled to the benefits of Sections 2.7, 2.8, 2.9, 2.11,
2.12, and 14.5, and the setoff rights in Section 10.2 with respect to its
participating interest; provided, however, that no Credit Participant shall
be entitled to receive any greater payment under such Sections than the
Lender granting such participation would have been entitled to receive with
respect to the interests transferred.
(e) Notice. At the time of granting any participation, the Lender
granting such participation shall notify the Agent and the Borrower.
(f) New Hampshire and Massachusetts Law. The Agent shall execute all
certificates as it may deem reasonably necessary for the granting of the
participation under the laws of the State of New Hampshire and The
Commonwealth of Massachusetts.
ARTICLE 13. THE AGENT
Section 13.1. Authorization and Action. Each Lender hereby appoints and
authorizes the Agent to take such action on its behalf and to exercise such
powers under this Agreement and the other Lender Agreements as are delegated to
the Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement and the other Lender Agreements (including, without limitation,
enforcement or collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding upon all Lenders; provided, however, that the
Agent shall not be required to take any action which exposes the Agent to
liability or which is contrary to this Agreement or the other Lender Agreements
or applicable law. Subject to the foregoing provisions and to the other
provisions of this Article 13, the Agent shall, on behalf of the Lenders: (a)
execute any documents on behalf of the Lenders providing collateral for or
guarantees of the Lender Obligations; (b) hold and apply any collateral for the
Lender Obligations, and the proceeds thereof, at any time received by it, in
accordance with the provisions of this Agreement and the other Lender
Agreements; (c) exercise any and all rights, powers and remedies of the Lenders
under this Agreement or any of the other Lender Agreements, including the giving
of any consent or waiver or the entering into of any amendment, subject to the
provisions of Section 11.1; (d) at the direction of the Lenders, execute,
deliver and file UCC financing statements, mortgages, deeds of trust, lease
assignments and such other agreements in respect of any collateral for the
Lender Obligations, and possess instruments included in the collateral on behalf
of the Lenders; and (e) in the event of acceleration of the Borrower's
Indebtedness hereunder, act at the direction of the Required Lenders to exercise
the rights of the Lenders hereunder and under the other Lender Agreements.
Section 13.2. Agent's Reliance, Etc. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to the Lenders for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement or the other Lender Agreements, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Agent: (a) may treat the payee of any Note as the holder thereof
until the Agent receives written notice of the assignment or transfer thereof
signed by such payee and in form required under Article 12 hereof; (b) may
consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representations to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other Lender
Agreements; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Lender Agreements on the part of the Borrower or any
other Person or to inspect the property (including the books and records) of the
Borrower or any other Person; (e) shall not be responsible to any Lender for the
due execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or the other Lender Agreements or any other instrument
or document furnished pursuant hereto or thereto; and (f) shall incur no
liability under
or in respect of this Agreement or the other Lender Agreements by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telecopy or telegram) believed by the Agent to be genuine and signed or sent by
the proper party or parties.
Section 13.3. Agent as a Lender. With respect to its interest in the
Commitment Percentage of the Advances hereunder, Citizens Bank of Massachusetts
shall have the same rights and powers under this Agreement and the other Lender
Agreements as any other Lender and may exercise the same as though it were not
the Agent; and the term "Lender" or "Lender(s)" shall, unless otherwise
expressly indicated, include Citizens Bank of Massachusetts in its individual
capacity. Citizens Bank of Massachusetts and its affiliates may lend money to,
and generally engage in any kind of business with, the Borrower, any of the
Borrower's Affiliates and any Person who may do business with or own securities
of the Borrower or any such Affiliate of the Borrower, all as if Citizens Bank
of Massachusetts were not the Agent and without any duty to account therefor to
the Lenders.
Section 13.4. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements referred to in Section 5.9 and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement.
Section 13.5. Indemnification of Agent. Each Lender agrees to indemnify the
Agent and its directors, officers, employees and agents (to the extent that the
Agent is not reimbursed by the Borrower), ratably according to each Lender's
Commitment Percentage, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the Agent or its directors, officers, employees or
agents in any way relating to or arising out of this Agreement or any other
Lender Agreement or any action taken or omitted by the Agent in such capacity
under this Agreement; 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 the Agent's gross
negligence or wilful misconduct. Without limitation of the foregoing, each
Lender agrees to reimburse the Agent promptly upon demand for its ratable share
of any out-of-pocket expenses (including counsel fees) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and each other Lender Agreement, to the
extent that the Agent is not reimbursed for such expenses by the Borrower.
Section 13.6. Successor Agent. Except as provided below, the Agent may
resign at any time by giving written notice thereof to the Lenders and the
Borrower. Upon any such resignation, the Lenders shall have the right to appoint
a successor Agent (the "Successor Agent") which, absent the existence of a
default, shall be reasonably acceptable to the Borrower.
If no Successor Agent shall have been so appointed by the Lenders (other than
the resigning Agent), and shall have accepted such appointment, within thirty
(30) days after the retiring Agent's giving notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a Successor Agent which,
absent the existence of a default, shall be reasonably acceptable to Borrower,
which shall be a commercial bank or financial institution organized under the
laws of the United States of America or of any state thereof and having a
combined capital and surplus of at least $50,000,000. Upon the acceptance of any
appointment as Agent hereunder by a Successor Agent, such Successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement and the other Lender
Agreements. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article 13 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement and the
other Lender Agreements.
Section 13.7. Amendment of Article 13. The Borrower hereby agrees that the
foregoing provisions of this Article 13 constitute an agreement among the Agent
and the Lenders (and the Agent and the Lenders acknowledge that except for the
provisions of Section 13.6, the Borrower is not a party to or bound by such
foregoing provisions) and that any and all of the provisions of this Article 13,
with the exception of the reasonable approval of Borrower as may be required
under Section 13.6 hereto, may be amended at any time by the Lenders without the
consent or approval of, or notice to, the Borrower (other than the requirement
of notice to the Borrower of the resignation of the Agent and the appointment of
a successor Agent).
Section 13.8. Replacement of Agent Upon Assignment of Majority of
Commitment Percentage. If Agent assigns more than fifty percent of Agent's
Commitment Percentage Interest listed on Schedule 1 as of the Closing Date (in
accordance with the provisions of Section 12.2 hereunder) the Lenders can
request the appointment of a Successor Agent, with the consent of the Borrower.
If such Successor Agent is to be appointed under this Section 13.8, such
Successor Agent and the process of electing it shall be governed by Section 13.6
regarding Successor Agents.
ARTICLE 14. MISCELLANEOUS
Section 14.1. Notices. All notices and other communications made or
required to be given pursuant to this Agreement shall be in writing and shall be
mailed by United States mail, postage prepaid, or sent by hand, by telecopy or
by nationally-recognized overnight carrier service, addressed as follows:
(a) If to the Agent, at __________, with a copy to: ▇▇▇▇▇▇▇, Procter &
▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Telecopier No. ▇▇▇-▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, P.C. or at such other address(es) or to the
attention of such other Person(s) as the Agent shall from time to time
designate in writing to the Borrower and the Lenders.
(b) If to the Borrower, at ▇▇▇▇▇ ▇▇▇▇ (▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇), ▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, Telecopier No. ▇▇▇-▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇, with a copy
to ▇▇▇▇ and ▇▇▇▇ LLP,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Telecopier No. 617-526-5000, Attn: ▇▇▇
▇▇▇▇▇▇▇▇, Esquire, or at such other address(es) or to the attention of such
other Person(s) as the Borrower shall from time to time designate in
writing to the Agent and the Lenders.
(c) If to any Lender, at the address(es) and to the attention of the
Person(s) specified below such Lender's name on the execution page of this
Agreement (or in the case of a Successor Lender, at the address(es) and to
the attention of the Person(s) specified in the Assignment and Acceptance
Agreement executed by such Successor Lender), or at such other address(es)
and to the attention of such other Person(s) as any Lender shall from time
to time designate in writing to the Agent and the Borrower.
Any notice so addressed and mailed by registered or certified mail shall be
deemed to have been given when mailed. Any notice so addressed and sent by hand,
by telecopy or by overnight carrier service shall be deemed to have been given
when received.
A notice from the Agent stating that it has been given on behalf of the
Lenders shall be relied upon by the Borrower as having been given by the
Lenders.
Section 14.2. Merger. This Agreement and the other Lender Agreements and
documents contemplated hereby constitute the entire agreement of the Borrower
and the Agent and the Lenders and express their entire understanding with
respect to credit advanced or to be advanced by the Lenders to the Borrower.
Section 14.3. Governing Law; Consent to Jurisdiction. This Agreement shall
be governed by and construed and enforced under the laws of The Commonwealth of
Massachusetts. The Borrower and each Subsidiary hereby irrevocably submits
itself to the non-exclusive jurisdiction of the courts of The Commonwealth of
Massachusetts and to the non-exclusive jurisdiction of any Federal court of the
United States located in the District of Massachusetts for the purpose of any
suit, action or other proceeding arising out of this Agreement or any other
Lender Agreement or any of the transactions contemplated hereby or thereby.
Section 14.4. Counterparts. This Agreement and all amendments to this
Agreement may be executed in several counterparts, each of which shall be an
original. The several counterparts shall constitute a single Agreement.
Section 14.5. Expenses and Indemnification.
(a) The Borrower agrees to pay, on demand, all of the Agent's
reasonable expenses in preparing, executing, delivering and administering
this Agreement, the Lender Agreements and all related instruments and
documents, including, without limitation, the reasonable fees and
out-of-pocket expenses of the Agent's special counsel, ▇▇▇▇▇▇▇, Procter &
▇▇▇▇ LLP, and, absent the existence of a default, up to an amount of $1,500
annually, the Agent's and Lenders' expenses in connection with periodic
audits of the Borrower. The Borrower also agrees to pay, on demand, all
reasonable out-of-pocket expenses incurred by the Agent and the Lenders,
including, without limitation, reasonable legal and accounting fees, in
connection with the collection of amounts due hereunder and under all other
Lender Agreements upon the occurrence of an Event of Default hereunder, the
revision, protection or enforcement of any of the Agent's or the Lenders'
rights against the Borrower under this Agreement, the Notes and all other
Lender Agreements and the administration of special problems that may arise
under this Agreement or any other Lender Agreement. The Borrower also
agrees to pay all stamp and other taxes in connection with the execution
and delivery of this Agreement and related instruments and documents.
(b) Without limitation of any other obligation or liability of the
Borrower or right or remedy of the Agent or the Lenders contained herein,
the Borrower hereby covenants and agrees to indemnify and hold the Agent,
the Lenders, and the directors, officers, subsidiaries, shareholders,
agents, affiliates and Persons controlling the Agent and the Lenders,
harmless from and against any and all damages, losses, settlement payments,
obligations, liabilities, claims, including, without limitation, claims for
finder's or broker's fees, actions or causes of action, and reasonable
costs and expenses incurred, suffered, sustained or required to be paid by
any such indemnified party in each case by reason of or resulting from any
claim relating to the transactions contemplated hereby, other than any such
claims which are determined by a final, non-appealable judgment or order of
a court of competent jurisdiction to be the result of the gross negligence
or willful misconduct of such indemnified party. Promptly upon receipt by
any indemnified party hereunder of notice of the commencement of any action
against such indemnified party for which a claim is to be made against the
Borrower hereunder, such indemnified party shall notify the Borrower in
writing of the commencement thereof, although the failure to provide such
notice shall not affect the indemnification rights of any such indemnified
party hereunder. The Borrower shall have the right, at its option upon
notice to the indemnified parties, to defend any such matter at its own
expense and with its own counsel, except as provided below, which counsel
must be reasonably acceptable to the indemnified parties. The indemnified
party shall cooperate with the Borrower in the defense of such matter. The
indemnified party shall have the right to employ separate counsel and to
participate in the defense of such matter at its own expense. In the event
that (a) the employment of separate counsel by an indemnified party has
been authorized in writing by the Borrower, (b) the Borrower has failed to
assume the defense of such matter within fifteen (15) days of notice
thereof from the indemnified party, or (c) the named parties to any such
action (including impleaded parties) include any indemnified party who has
been advised by counsel that there may be one or more legal defenses
available to it or prospective bases for liability against it, which are
different from those available to or against the Borrower, then the
Borrower shall not
have the right to assume the defense of such matter with respect to such
indemnified party. The Borrower shall not compromise or settle any such
matter against an indemnified party without the written consent of the
indemnified party, which consent may not be unreasonably withheld or
delayed.
Section 14.6. Confidentiality. The Agent and the Lenders agree to use
commercially reasonable efforts to keep in confidence all financial data and
other information relative to the affairs of the Borrower and its Subsidiaries
heretofore furnished or which may hereafter be furnished to them pursuant to the
provisions of this Agreement; provided, however, that this Section 14.6 shall
not be applicable to information otherwise disseminated to the public by the
Borrower or any of its Affiliates; and provided further, however, that such
obligation of the Agent and the Lenders shall be subject to the Agent's or the
Lenders', as the case may be, (a) obligation to disclose such information
pursuant to a request or order under applicable laws and regulations or pursuant
to a subpoena or other legal process, (b) right to disclose any such information
to bank examiners, affiliates, auditors, accountants and counsel who agree to
keep such information confidential, and (c) right to disclose any such
information (i) in connection with the transactions set forth herein including
assignments or the sale of participation interests pursuant to Article 12, so
long as such potential assignees or participants shall agree in writing to be
bound by the terms of this Section 14.6, or (ii) in connection with any
litigation or dispute involving the Agent or any transfer or other disposition
by the Agent or the Lenders, as the case may be, of any of the Lender
Obligations; provided that information disclosed pursuant to this provision
shall be so disclosed subject to such procedures as are reasonably calculated to
maintain the confidentiality thereof.
Section 14.7. WAIVER OF JURY TRIAL. THE AGENT, THE LENDERS AND THE BORROWER
AGREE THAT NONE OF THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A) SEEK A JURY
TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION BASED UPON OR
ARISING OUT OF, THIS AGREEMENT, NOTES, ANY LENDER AGREEMENT, ANY RELATED
INSTRUMENTS, ANY COLLATERAL OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG
ANY OF THEM, OR (B) SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN
WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS
PARAGRAPH HAVE BEEN FULLY DISCUSSED BY EACH OF THE AGENT, THE LENDERS AND THE
BORROWER WITH THEIR RESPECTIVE COUNSEL, AND THESE PROVISIONS SHALL BE SUBJECT TO
NO EXCEPTIONS. NONE OF THE AGENT, THE LENDERS OR THE BORROWER HAS AGREED WITH OR
REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE
FULLY ENFORCED IN ALL INSTANCES.
IN WITNESS WHEREOF, the Borrower, the Agent and the Lenders have caused
this Credit Agreement to be executed by their duly authorized officers as of the
date set forth above.
PC CONNECTION, INC. (fka PC HoldCo, Inc.)
By:
---------------------------------
Name:
Title:
CITIZENS BANK OF MASSACHUSETTS, as Agent
By:
---------------------------------
Name:
Title:
CITIZENS BANK OF MASSACHUSETTS, as Lender
By:
---------------------------------
Name:
Title:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No:
Attention:
CITIZENS BANK NEW HAMPSHIRE
By:
---------------------------------
Name:
Title:
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No:
Attention:
FLEET BANK - NH
By:
---------------------------------
Name:
Title:
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No:
Attention:
SCHEDULE 1
Commitment Percentages
Commitment Commitment
Lender Percentage Amount
------------------- -----------
Citizens Bank of
Massachusetts 50.00% $25,000,000
Citizens Bank New Hampshire 20.00% $10,000,000
Fleet Bank - NH 30.00% $15,000,000
TOTALS 100.00% $50,000,000
SCHEDULE 2
Ratio of Consolidated Applicable Applicable LIBOR
Senior Debt to Prime Rate Rate
Consolidated EBITDA Margin Margin
---------- ----------------
Greater than or equal to 2.0x 0% 2.00%
Greater than or equal to 1.5x
but less than 2.0x (0.25%) 1.75%
Greater than or equal to 1.0x
but less than 1.5x (0.50%) 1.50%
Greater than or equal to 0.5x
but less than 1.0x (0.75%) 1.25%
Less than 0.5x (1.00%) 1.00%
The ratio of Consolidated Senior Debt to Consolidated EBITDA shall be
determined by taking the daily average Consolidated Senior Debt at the end of
each fiscal quarter and dividing it by historical rolling twelve-month
Consolidated EBITDA. The initial ratio of Consolidated Senior Debt to
Consolidated EBITDA (the "Ratio") shall be deemed to be less than 0.5x;
thereafter the Ratio shall be determined three (3) Business Days after the date
on which the Agent receives financial statements pursuant to Sections 6.1(b) and
6.2 and a certificate from the Chief Financial Officer of the Borrower
demonstrating the Ratio. If the Borrower has not submitted to the Agent the
information described above as and when required under Sections 6.1(b) and 6.2,
as the case may be, the Applicable Margin shall be determined by the Agent in
its discretion for so long as such information has not been received by the
Agent. The Applicable Margin shall be adjusted, if applicable, as of the first
day of the month following the date of determination described in the two
preceding sentences. In all circumstance, with respect to determination of the
Applicable Margin, the Applicable Margin will be adjusted retroactively to the
beginning of the applicable quarter.
EXHIBIT A
FORM OF REVOLVING CREDIT NOTE
$______________ February 25, ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, the undersigned, PC CONNECTION, INC., a Delaware
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of _______
(the "Lender") the principal sum of _______________________________ DOLLARS
($____________) (or, if less, the aggregate unpaid principal amount of all
Advances made by the Lender to the Borrower pursuant to the Credit Agreement as
hereinafter defined), together with interest on the unpaid principal from time
to time outstanding at the rate or rates and computed and payable at the times
as described in the Credit Agreement. The entire balance of outstanding
principal and accrued and unpaid interest shall be paid in full on the Credit
Termination Date (as defined in the Credit Agreement).
This note represents indebtedness for one or more Advances made by the
Lender to the Borrower under the Credit Agreement dated as of February 25, 2000
(as the same may be amended, modified or supplemented from time to time, the
"Credit Agreement") by and among the Borrower, the Lenders from time to time
parties thereto, and Citizens Bank of Massachusetts, as Agent for the Lenders
(the "Agent"). Capitalized terms used herein and not otherwise defined shall
have the meaning set forth in the Credit Agreement.
The Borrower shall have the right, at any time, to voluntarily prepay all
or any part of the outstanding principal amount of this note subject to the
provisions of the Credit Agreement. In addition to the payment of interest as
provided above, the Borrower shall, on demand, pay interest on any overdue
installments of principal and, to the extent permitted by applicable law, on
overdue installments of interest at the rate set forth in the Credit Agreement.
If any payment of principal or interest due hereunder is not made within
ten (10) days of its due date, the Borrower will pay to the Agent for the
account of the Lender, on demand, a late payment charge equal to the amount set
forth in the Credit Agreement.
The holder of this note is entitled to all the benefits and rights of a
Lender under the Credit Agreement to which reference is hereby made for a
statement of the terms and conditions under which the entire unpaid balance of
this note, or any portion hereof, shall become immediately due and payable. Any
capitalized term used in this note which is not otherwise expressly defined
herein shall have the meaning ascribed thereto in the Credit Agreement.
The Borrower hereby waives presentment, demand, notice, protest and other
demands and notices in connection with the delivery, acceptance or enforcement
of this note.
No delay or omission on the part of the holder of this note in exercising
any right hereunder shall operate as a waiver of such right or of any other
right under this note, and a waiver, delay or omission on any one occasion shall
not be construed as a bar to or waiver of any such right on any future occasion.
The Borrower hereby agrees to pay on demand all reasonable costs and
expenses, including, without limitation, reasonable attorneys' fees and legal
expenses, incurred or paid by the holder of this note in enforcing this note on
default.
THE LENDER AND THE BORROWER AGREE THAT NEITHER OF THEM NOR ANY OF THEIR
ASSIGNEES OR SUCCESSORS SHALL (A) SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING,
COUNTERCLAIM OR ANY OTHER ACTION BASED UPON OR ARISING OUT OF, THIS NOTE, THE
CREDIT AGREEMENT, ANY LENDER AGREEMENT, ANY DOCUMENT, INSTRUMENT OR AGREEMENT
EXECUTED IN CONNECTION WITH ANY OF THE FOREGOING, ANY COLLATERAL SECURING ALL OR
ANY PART OF THE LENDER OBLIGATIONS OR THE DEALINGS OR THE RELATIONSHIP BETWEEN
OR AMONG ANY OF THEM, OR (B) SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF
THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY EACH OF THE LENDER AND THE BORROWER
WITH THEIR RESPECTIVE COUNSEL, AND THESE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. NEITHER THE LENDER NOR THE BORROWER HAS AGREED WITH OR REPRESENTED
TO THE OTHER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN
ALL INSTANCES.
This note shall be deemed to be under seal, and all rights and obligations
hereunder shall be governed by the laws of The Commonwealth of Massachusetts
(without giving effect to any conflicts of law provisions contained therein).
PC CONNECTION, INC.
By:
--------------------------------
Name:
Title:
EXHIBIT B
FORM OF NOTICE OF BORROWING
PC CONNECTION, INC.
------------- ---
Citizens Bank of Massachusetts, as Agent
_______________, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ________________
Re: Credit Agreement Dated as of February 25, 2000 by and among PC
Connection, Inc., the Lenders parties thereto, and Citizens Bank of
Massachusetts, as Agent (the "Credit Agreement")
Ladies and Gentlemen:
Pursuant to Section 2.2(a) of the Credit Agreement, the undersigned hereby
requests that the Lenders make Advances to the Borrower in the aggregate amount
of $________ on ____________, ____.
The representations and warranties contained or referred to in Article 5 of
the Credit Agreement are true and accurate on and as of the effective date of
the requested Advances as though made at and as of such date (except as to
representations and warranties made as of a certain date, which shall be true
and correct as of such date, and except that the references in the Agreement to
the 1998 Financial Statements are deemed to refer to the most recent annual
financial statements furnished to the Agent and the Lenders pursuant to Section
6.2 of the Credit Agreement); and no Default has occurred and is continuing or
will result from the requested Advances.
PC CONNECTION, INC.
By:
--------------------------------
Name:
Title:
EXHIBIT C
FORM OF CERTIFICATE OF PERMITTED ACQUISITION
PC CONNECTION, INC.
------------- ---
Citizens Bank of Massachusetts, as Agent
_______________, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ________________
Re: Credit Agreement Dated as of February 25, 2000 by and among PC
Connection, Inc., the Lenders parties thereto, and Citizens Bank of
Massachusetts, as Agent (the "Credit Agreement)"
Ladies and Gentlemen:
The undersigned intends to request, pursuant to Section 2.2(a) of the
Credit Agreement, that the Lenders make Permitted Acquisition Advances to the
Borrower in the aggregate amount of $________ on ____________, ____ and hereby
represents and warrants that the requested Permitted Acquisition Advance will be
used for the acquisition described in Schedule 1 hereto (including but not
limited to name and location of company to be acquired) (the "Permitted
Acquisition"). The Borrower hereby certifies that the Permitted Acquisition
provides for (a) the acquisition of substantially all of the assets, shares or
partnership interests of a Person, (b) such Person is in a substantially similar
or related line of business as the Borrower, (c) the ratio of total
consideration paid for such property to the fair market value of such property
is comparable to recent industry transactions, and such determination has been
confirmed by the Agent, (d) such Person has positive EBITDA for the twelve
months of operations prior to this acquisition, (e) immediately subsequent to
the acquisition, the Borrower will be in compliance with all terms of the Lender
Agreements, and (f) after giving effect to the acquisition, the ratio of
Consolidated Senior Debt to EBITDA will not exceed 2.5 to 1. Capitalized terms
used herein and not otherwise defined shall have the meaning set forth in the
Credit Agreement.
PC CONNECTION, INC.
By:
--------------------------------
Name:
Title:
Schedule 1 to the Certificate of Permitted Acquisition
EXHIBIT D
FORM OF COMPLIANCE CERTIFICATE
PC CONNECTION, INC.
------------- ----
Citizens Bank of Massachusetts, as Agent
_______________, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ________________
Re: Credit Agreement Dated as of February 25, 2000 by and among PC
Connection, Inc., the Lenders parties thereto, and Citizens Bank of
Massachusetts, as Agent (the "Credit Agreement")
Ladies and Gentlemen:
Pursuant to the provisions of Section 6.1 or 6.2 of the Credit Agreement,
the undersigned hereby certifies on behalf of the Borrower as follows:
(A) Advances........................... $_________
(B) Letter of Credit Outstandings...... $_________
(C) Maximum Credit Amount.............. $_________
(D) Amount available for Advances under
the Credit Agreement
(line C minus the sum of line A plus line B)........................ $_________
(E) Letter of Credit Limit............. $5,000,000
(F) Amount available for Letter of Credit Requests
(lesser of line D or sum of line E minus line B)....................... $_________
(G) (1) The representations and warranties made by or on behalf of the
Borrower in the Credit Agreement and in all other Lender
Agreements are true and correct in all material respects on and
as of the date hereof, with the same effect as if made at and as
of the date hereof (except as to representations and warranties
made as of a certain date, which shall be true and correct only
as of such date, except as to transactions permitted under the
terms of the Credit Agreement, and except that the references in
the Agreement to the 1998 Financial Statements are deemed to
refer to the most recent annual financial statements furnished to
the Agent and the Lenders pursuant to Section 6.2 of the Credit
Agreement);
(2)since the end of the last fiscal year, neither the business nor
assets, nor the condition, financial or otherwise, of the
Borrower has been subject to any Material Adverse Effect;
(3)except as set forth in the certificates attached hereto and
except as heretofore disclosed to the Agent in a previous
Compliance Certificate, there has been no change (i) in the
charter documents or By-Laws of the Borrower heretofore certified
to the Agent or (ii) in the incumbency of the officers of the
Borrower whose signatures have heretofore been certified to the
Agent;
(4)the financial statements attached hereto as Schedule 1 are in
compliance with the applicable provisions of Section 6.1 or 6.2
of the Credit Agreement, as the case may be;
(5)the undersigned has caused the provisions of the Credit Agreement
to be reviewed and, as of the date hereof, there is no Default
thereunder, and no condition which, with the passage of time or
giving of notice or both, would constitute a Default thereunder,
other than as set forth on Schedule 2 attached hereto.
(I) Attached hereto as Schedule 3 are calculations demonstrating that,
based upon the consolidated financial statements of the Borrower
attached hereto as Schedule 1, the Borrower is in compliance with all
financial restrictions set forth in the Credit Agreement.
Terms defined in the Credit Agreement and not otherwise expressly defined
herein are used herein with the meanings so defined in the Credit Agreement.
In witness whereof, the undersigned has caused an authorized officer to
execute this Certificate on this _____ day of ____________, ____.
PC CONNECTION, INC.
By:
--------------------------------
Name:
Title:*
----------
* Must be signed by the chief executive officer or chief financial officer of
the Borrower.
SCHEDULE 1
to Compliance Certificate
The financial statements attached to this Schedule are submitted in
compliance with the following section of the Credit Agreement (check one):
[ ] Section 6.1
[ ] Section 6.2
SCHEDULE 2
to Compliance Certificate
Defaults - Action Being Taken
SCHEDULE 3
to Compliance Certificate
For purposes of computing the ratios and limitations comprising the financial
restrictions that follow, terms that are capitalized and not defined herein will
be given the meanings ascribed to such terms in the Credit Agreement.
A. Consolidated Net Worth
(a) Consolidated total assets $_______
(b) Consolidated total liabilities $_______
(c) line (a) - line (b) $_______
(d) Minimum Consolidated Net Worth required in
Credit Agreement $_______
B. Minimum Consolidated Net Income $_______
(a) Consolidated Net Income for last four consecutive
quarters $_______
(b) Minimum Consolidated Net Income required in
Credit Agreement $_______
C. Amount of Inventory Financing
(a) Reported amount of inventory and equipment financed under
inventory and equipment finance agreements in prior
Compliance Certificate $_______
(b) Amount of inventory and equipment financed under finance
agreements as of the date of the financing statements
attached to Schedule 1 hereto $_______
EXHIBIT E
FORM OF LIBOR PRICING NOTICE
PC CONNECTION, INC.
---------------- ----
Citizens Bank of Massachusetts, as Agent
_______________, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ________________
Re: Credit Agreement Dated as of February 25, 2000 by and among PC Connection,
Inc., the Lenders parties thereto, and Citizens Bank of Massachusetts, as
Agent (the "Credit Agreement")
Ladies and Gentlemen:
Pursuant to Section 2.4 of the Agreement, the undersigned hereby confirms
its request made on _______________, for a LIBOR Rate Loan in the amount of
$__________ comprising [all or a portion] of the outstanding Advances, effective
__________.
The Interest Period applicable to said LIBOR Rate Loan will be
[one][two][three][four][six] months.
Said LIBOR Rate Loan represents a [conversion/continuation] of the [Prime]
[LIBOR] Rate Loan in the same amount made on __________.
PC CONNECTION, INC.
By:
--------------------------------
Name:
Title:
▇▇▇▇ AND ▇▇▇▇ LLP
COUNSELLORS AT LAW
▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
617-526-6000o FAX ▇▇▇-▇▇▇-▇▇▇▇
EXHIBIT F
FORM OF OPINION OF BORROWER'S COUNSEL
February 25, 2000
To the Banks party to the Credit
Agreement referred to below,
Citizens Bank of Massachusetts, as
Administrative Agent for such
Banks
PC Connection, Inc.
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 3.1 of the Amended and
Restated Credit Agreement dated as of February 25, 2000 (the "Credit
Agreement"), among PC Connection, Inc. (fka PC Holdco, Inc.) a Delaware
corporation ( the "Borrower"), the lenders party thereto (the "Banks"), and
Citizens Bank of Massachusetts, as Administrative Agent for such Banks (the
"Agent"). Capitalized terms used but not otherwise defined herein shall have the
respective meanings ascribed to them in the Credit Agreement.
We have acted as counsel to (i) the Borrower, and (ii) PC Connection Sales
Corp., a Delaware corporation, Merrimack Services Corp., a Delaware corporation,
ComTeq Federal, Inc., a Maryland corporation ("ComTeq"), each a wholly owned
subsidiary of the Borrower and for PC Connection Sales of Massachusetts, Inc., a
wholly owned subsidiary of PC Connection Sales Corp. (collectively, the
"Subsidiaries") in connection with the preparation, execution and delivery of
the Credit Agreement and the other Credit Documents (as defined below).
In rendering the opinions expressed below, we have examined:
(a) the Credit Agreement;
(b) the Notes in favor of each of the Banks;
▇▇▇▇ and ▇▇▇▇ LLP Includes Professional Corporations
* an independent joint venture law firm
BOSTON WASHINGTON, DC NEW YORK
(c) the Guaranty executed by each of the Subsidiaries in favor of the
Agent on behalf of the Banks (the "Subsidiary Guaranty");
(d) the respective Certificate of Incorporation or Articles of
Incorporation of each of the Borrower and the Subsidiaries (as the case may
be), as in effect on the date hereof (collectively, the "Certificates of
Incorporation");
(e) the By-laws of each of the Borrower and the Subsidiaries (as the
case may be) each as in effect on the date hereof, provided to us by the
Borrower and the Subsidiaries (together, the "By-Laws");
(f) certified copies of resolutions of the boards of directors of each
of the Borrower and the Subsidiaries (as the case may be) approving the
transactions contemplated by such entities in connection with the Credit
Agreement (the "Authorizing Resolutions");
(g) authorization, incumbency and signature certificates as to the
officers of each of the Borrower and the Subsidiaries;
(h) certificates of legal existence and corporate good standing for
each of the Borrower and the Subsidiaries, as listed on Schedule I;
(i) certificates of authorization to transact business as a foreign
corporation of each of the Borrower and the Subsidiaries, as listed on
Schedule I;
(j) an Officers' Certificate of the President and Chief Operating
Officer of the Borrower, and the President and chief accounting officer of
each of the Subsidiaries of even date herewith (the "Officers'
Certificate"), a copy of which is attached hereto as Exhibit B; and
(k) such other documents, instruments and certificates (including, but
not limited to, certificates of public officials and officers of the
Borrower) as we have considered necessary for purposes of this opinion.
The documents listed in lettered clauses (a)-(c) are referred to collectively
herein as the "Credit Documents".
In our examination of the documents described above, we have assumed the
genuineness of all signatures, the capacity, power and authority of all parties
(other than the Borrower and the Subsidiaries) to execute and deliver all
applicable documents, the legal capacity of all individual signatories, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all copies of document submitted to us , and the
authenticity of the originals of such latter documents.
Insofar as this opinion relates to factual information which is in the
possession of the Borrower or the Subsidiaries, we have relied exclusively upon
the representations of the Borrower and the Subsidiaries contained in the Credit
Documents and the Officers' Certificate. Although we have not conducted any
independent investigation of the factual matters, nothing has come to our
attention leading us to question the accuracy of such matters.
Any reference to "our knowledge" or "knowledge" or any variation thereof
shall mean the conscious awareness of the attorneys in this firm who have
rendered substantive attention to this transaction of the existence or absence
of any facts which would contradict our opinions and statements set forth
herein. We have not undertaken any independent investigation to determine the
existence or absence of the factual information referred to in the first
sentence hereof, and no inference as to our knowledge of the existence or
absence of such facts should be drawn from the fact of our representation of the
Borrower and the Subsidiaries. Without limiting the foregoing, with respect to
our opinions in paragraphs 5(c) and 7 below, we have not conducted a search of
the dockets of any court or administrative or other regulatory agency.
We have assumed that the Agent and each Bank and each of the other parties
to the Credit Documents (other than the Borrower and the Subsidiaries) has the
power and authority and has taken the corporate action necessary to execute and
deliver the Credit Documents to which it is a party, and that no consent,
approval, authorization, declaration or filing by or with any governmental
commission, board or agency is required for the valid execution and delivery of
such documents by such parties (other than the Borrower and the Subsidiaries).
We have assumed the due execution and delivery by each Bank and each of the
other parties to the Credit Documents (other than the Borrower and the
Subsidiaries) of each of the Credit Documents to which it is a party, and that
such Credit Documents constitute their valid and binding obligations enforceable
against it in accordance with their terms.
We express no opinion herein with respect to the laws of any state or
jurisdiction other than the Commonwealth of Massachusetts, the General
Corporation Law of the State of Delaware, the federal laws of the United States
of America and (solely with respect to the opinions in (i) paragraph 2 below to
the extent of our statements regarding ComTeq Federal, Inc.'s corporate power
and authority to own, operate and lease its properties and assets and to carry
on its business as it is now being conducted and (ii) paragraph 3 below to the
extent applicable to ComTeq Federal, Inc.) the Corporations and Associations
Article of the Annotated Code of Maryland. To the extent that the laws of any
other jurisdiction govern any of the matters as to which we are opining herein,
we have assumed that such laws are identical to the state laws of the
Commonwealth of Massachusetts, and we are expressing no opinion herein as to
whether such assumption is reasonable or correct.
For purposes of our opinions in paragraph 4 insofar as they relate to the
enforceability of the Subsidiary Guaranty executed and delivered by the
Subsidiaries, we have assumed that each Subsidiary has received reasonably
equivalent value and fair consideration in exchange for their respective
undertakings under the Subsidiary Guaranty. With respect to the opinions
expressed in paragraph 4 below for each of the Subsidiaries, we have assumed
that the execution and delivery of such Subsidiary Guaranty by such entity is
necessary or convenient to the conduct, promotion or attainment of the business
of such Subsidiary under Delaware Corporation Law ss. 122(13).
The opinions expressed in paragraphs 1 and 2 below, insofar as they relate
to the due organization, valid existence and corporate good standing of each of
the Borrower and the Subsidiaries in Delaware, are based solely upon the
certificates referred to in clause (h) above, are rendered as of the respective
dates of such certificates and are limited accordingly. Our opinions expressed
in paragraphs 1 and 2 below, insofar as they relate to the qualification to
transact business as a foreign corporation of the Borrower and the Subsidiaries
are based solely upon the certificates referred to in clause (i) above, are
rendered as of the respective dates of such certificates and are limited
accordingly.
We express no opinion as to the enforceability of any right to set-off
against any deposit account of the Borrower or any Subsidiary to the extent that
(a) the funds on deposit in said accounts have been accepted by the Agent or any
Bank with an intent to apply such funds to a preexisting claim rather than to
hold such funds subject to withdrawals in the ordinary course, (b) the set-off
is directed against checks held by the Agent or any Bank for collection only and
not for deposit, (c) the funds on deposit in said accounts are in any manner
special accounts which, by the express terms on which they are created are made
subject to the rights of a third party, or (d) the obligations against which any
deposit account is set-off are not due and payable.
Our opinions below are qualified to the extent that the validity or
enforceability of the documents referred to or of any of the rights granted to
any party pursuant thereto may be subject to or affected by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or
similar laws affecting the rights of creditors generally, (ii) statutory or
decisional law concerning recourse by creditors to security in the absence of
notice or hearing, and (iii) duties and standards imposed generally on creditors
and parties to contracts, including, without limitation, requirements of good
faith, reasonableness and fair dealing. Furthermore, we express no opinion as to
the availability of any equitable or specific remedy upon any breach of any of
the agreements as to which we are opining herein or any of the agreements,
documents or obligations referred to therein, as the availability of such
remedies may be subject to the discretion of a court. We express no opinion as
to the enforceability of a waiver of rights granted by the Constitution of the
United States of America, or any state thereof, or the vesting of jurisdiction
in, or the consent to the exercise of jurisdiction by, any court. We have
assumed for the purposes of our opinions that the Agent and each Bank is subject
to control, regulation or examination by a state or federal regulatory agency.
Based upon and subject to the foregoing, and further subject to the
qualifications set forth below, it is our opinion that:
The Borrower is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware, with all requisite corporate
power and authority to own, operate or lease its properties and assets (as such
property and assets are known to us) and to carry on its business as, to our
knowledge, it is now being conducted. The Borrower is qualified to transact
business as a foreign corporation in New Hampshire and Ohio.
Each of the Subsidiaries (other than ComTeq Federal, Inc.) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with all requisite corporate power and authority to own, operate or
lease its properties and assets (as such property and assets are known to us)
and to carry on its business as, to our knowledge, it is now being conducted. PC
Connection Sales Corp. is qualified to transact business as a foreign
corporation in the Commonwealth of Massachusetts. ComTeq Federal, Inc. is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Maryland, with all requisite corporate power and authority to
own, operate or lease its properties and assets (as such property and assets are
known to us) and to carry on its business as, to our knowledge, it is now being
conducted.
Each of the Borrower and the Subsidiaries has full corporate power and authority
to execute, deliver and perform each of the Credit Documents to which it is a
party. All necessary corporate action on the part of each of the Borrower and
the Subsidiaries required to be taken by law and by their respective
Certificates of Incorporation or Articles of Incorporation and By-laws to
authorize the execution and delivery by each of them of each of the Credit
Documents to which it is a party and the performance of its obligations
thereunder, has been taken.
Each of the Credit Documents to which the Borrower or the Subsidiaries is a
party has been duly executed and delivered by the Borrower or the Subsidiaries
party thereto, as the case may be, constitutes a valid and binding obligation of
the Borrower or the Subsidiaries party thereto, as the case may be, and is
enforceable against the Borrower or the Subsidiaries party thereto, as the case
may be, in accordance with its respective terms.
The execution and delivery by the Borrower and the Subsidiaries of each of the
Credit Documents to which it is a party, the performance by each of the Borrower
and the Subsidiaries of the respective terms and provisions thereof, and the
consummation of the transactions contemplated by the Credit Documents will not
violate, conflict with, result in a breach or termination of, or a default under
(or an event which, with or without due notice or lapse of time, or both, would
constitute a default under) or accelerate the performance required by, or result
in the creation of any lien, security interest, charge or other encumbrance upon
any of the properties or assets of any of the Borrower or the Subsidiaries under
any of the terms, conditions or provisions of: (a) their respective Certificates
of Incorporation or Articles of Incorporation or By-laws; (b) any laws
applicable to any of the Borrower or the Subsidiaries; (c) to our knowledge, any
judgment, order, decree, ruling or injunction issued in the United States of
America specifically naming any of the Borrower or the Subsidiaries of any court
or governmental authority; or (d) any agreement, contract, instrument or other
document listed on Exhibit A hereto.
No authorization, approval or consent of, and no filing or registration with,
any governmental or regulatory authority or agency of the United States of
America, the Commonwealth of Massachusetts, is required on the part of the
Borrower or Subsidiaries for the execution, delivery or performance by any of
the Borrower or the Subsidiaries of the Credit Documents.
To our knowledge there are no private or governmental litigation matters or
proceedings or investigations pending against the Borrower or any Subsidiary.
The foregoing opinions are subject to the following comments and
qualifications:
A. The enforceability of provisions in the Credit Documents, to the
effect that terms may not be waived or modified except in writing, may be
limited under certain circumstances.
B. We express no opinion as to the enforceability of sections of the
Credit Documents concerning evidentiary standards applicable to your notes
and records.
This opinion is based upon currently existing statutes, rules, regulations
and judicial decisions, and we disclaim any obligation to advise you of any
change in any of these sources of law
or subsequent legal or factual developments which might affect any matters or
opinions set forth herein.
Please note that we are opining only as to the matters expressly set forth
herein, and no opinion should be inferred as to any other matters. A copy of
this opinion may be delivered to each Person that may become a Bank under the
Credit Agreement, and each such Person may rely on this opinion as if it were
addressed to it and had been delivered to it on the date hereof. Subject to the
foregoing, this opinion is solely for your benefit, and the benefit of your
counsel, in connection with the consummation of the transactions contemplated by
the Credit Agreement, and may not be quoted or relied upon by any other person
for any purpose or used by you or your counsel for any other purpose, without
our prior written consent.
Very truly yours,
▇▇▇▇ AND ▇▇▇▇ LLP
SCHEDULE I [to Borrower's Counsel's Opinion]
(Good Standing/Foreign Qualification Certificates)
A. PC Connection, Inc. (fka PC Holdco, Inc.) ("Parent")
1) Certificate of Legal Existence and Good Standing of Parent dated
February 18, 2000 issued by the Secretary of State of the State of Delaware.
2) Certificate of Qualification As A Foreign Corporation Doing Business of
Parent dated February 18, 2000 issued by the Secretary of State of the State of
New Hampshire.
3) Certificate of Qualification As A Foreign Corporation Doing Business of
Parent dated February 18, 2000 issued by the Secretary of State of the State of
Ohio.
B. PC Connection Sales Corp. (fka PC Connection, Inc.) ("Sales")
1) Certificate of Legal Existence and Good Standing of Sales dated February
18, 2000 issued by the Secretary of State of the State of Delaware.
2) Certificate of Qualification As A Foreign Corporation Doing Business of
Sales dated February 18, 2000 issued by the Secretary of State of the
Commonwealth of Massachusetts.
C. PC Connection Sales of Massachusetts, Inc. ("Massachusetts")
1) Certificate of Legal Existence and Good Standing of Massachusetts dated
February 18, 2000 issued by the Secretary of State of the Sate of Delaware.
D. Merrimack Services Corp. ("Merrimack")
1) Certificate of Legal Existence and Good Standing of Merrimack dated
February 18, 2000 issued by the Secretary of State of the State of Delaware.
E. ComTeq Federal, Inc. ("Comteq")
1) Certificate of Legal Existence and Good Standing of Comteq dated
February 18, 2000 issued by the Secretary of State of the State of Maryland.
2) Certificate of Qualification As A Foreign Corporation Doing Business of
Comteq dated February 18, 2000 issued by the Superintendent of Corporations for
the Government of the District of Columbia.
3) Certificate of Qualification As A Foreign Corporation Doing Business of
Comteq dated February 17, 2000 issued by the Secretary of State of the
Commonwealth of Virginia.
EXHIBIT A [to Borrower's Counsel's Opinion]
1. Lease between PC Connection, Inc. and ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Partners, dated
September 24, 1990, as amended, for property located at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇. ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Partners assigned this lease to EWE Warehouse
Investments V Ltd. on August 6, 1999.
2. Lease between PC Connection, Inc. and Gallup & Hall partnership, dated May 1,
1997, for property located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇.
3. Lease between PC Connection, Inc. and Gallup & Hall partnership, dated June
1, 1987, as amended, for property located in Marlow, New Hampshire.
4. Lease between PC Connection, Inc. and Gallup & Hall partnership, dated July
22, 1998, for property located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇.
5. Lease between PC Connection, Inc. and Century Park, LLC, dated October 1,
1997 for property located at ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇.
6. Amended and Restated Lease between PC Connection, Inc. and G&H Post, LLC,
dated December 29, 1997 for property located at ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇.
7. Sublease between PC Connection, Inc. and ABX Air Inc., dated June 7, 1995,
for property located at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇.
8. Letter Agreement between PC Connection, Inc. and Airborne Freight Corporation
D/B/A "Airborne Express," dated April 30, 1990, as amended.
9. Agreement between PC Connection, Inc. and ▇▇▇▇▇▇ Micro, Inc., dated October
30, 1997, as amended.
10. Form of Registration Rights Agreement among PC Connection, Inc., ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ and the 1998 PC Connection Voting Trust.
11. Amendment No. 1 to Amended and Restated Lease between PC Connection, Inc.
and G&H Post, LLC, dated December 29, 1998 for property located at ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇.
12. Lease between PC Connection, Inc. and Dover ▇▇▇▇▇, LLC, dated August 1, 1998
for property located at Cocheco Falls Millworks, Dover, New Hampshire.
13. Amended Lease Agreement between PC Connection, Inc. and Dover ▇▇▇▇▇, LLC
dated August 1, 1998.
14. Lease Assignment between to PC Connection, Inc., MicroWarehouse, Inc.
(leasee) and EWE Warehouse Investments V, Ltd. (▇▇▇▇▇▇), dated December 13,
1999, for property located at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇.
15. Lease between PC Connection, Inc. and The Hillsborough Group, dated January
5, 2000, for property located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇.
16. Lease Assignment between PC Connection, Inc. and Merisel Americas, Inc.
(leasee) and Bronx II, LLC (▇▇▇▇▇▇), dated January 4, 2000, for property located
at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇.
17. Lease Assignment between PC Connection, Inc. and PC Connection Sales of
Massachusetts, Inc., dated January 5, 2000, for property located at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇.
18. Agreement for Inventory Financing, dated August 17, 1999, as amended
(including an Amendment to Agreement for Inventory Financing, dated February 25,
2000), between PC Connection Sales Corp. and IBM Credit Corporation.
19. Agreement for Wholesale Financing (Security Interest), dated October 12,
1993, as amended (including an Amendment to Agreement for Wholesale Financing,
dated February 25, 2000), between ComTeq Federal, Inc. and IBM Credit
Corporation.
20. Guaranty by the Subsidiaries (other than ComTeq Federal, Inc.), dated
February 25, 2000, in favor of IBM Credit Corporation.
21. Guaranty by the Subsidiaries (other than PC Connection Sales Corp.), dated
February 25, 2000, in favor of IBM Credit Corporation.
22. Agreement for Wholesale Financing, dated March 25, 1998, as amended
(including an Amendment to Agreement for Wholesale Financing, dated February 25,
2000), between PC Connection Sales Corp. and Duetsche Financial Services
Corporation.
23. Agreement for Wholesale Financing (Unsecured - Negative Covenant), dated
February 25, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc. and Duetsche Financial Services
Corporation.
24. Guaranties, dated February 25, by PC Connection, Inc. in favor of Duetsche
Financial Services Corporation.
EXHIBIT B [to Borrower's Counsel's Opinion]
PC CONNECTION, INC.
Officers' Certificate
Each of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, in his capacity as President and Chief Operating
Officer of PC Connection, Inc., a Delaware corporation (the "Company") and
President of Merrimack Services Corp., a Delaware corporation ("Merrimack");
▇▇▇▇ ▇. ▇▇▇▇▇, Vice President and Chief Financial Officer of the Company and
Chief Financial Officer of Merrimack; ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President and Treasurer
of PC Connection Sales Corp., a Delaware corporation ("Sales") and President and
Treasurer of PC Connection Sales of Massachusetts, Inc. ("Massachusetts"); and
▇▇▇▇ ▇▇▇▇▇▇, President and Treasurer of ComTeq Federal, Inc., a Maryland
corporation ("ComTeq", and together with Merrimack, Sales and Massachusetts, the
"Subsidiaries"), hereby certifies to ▇▇▇▇ and ▇▇▇▇ LLP ("▇▇▇▇ and ▇▇▇▇") on
behalf of the Company and the Subsidiaries that:
1. All shares of capital stock of the Company issued by the Company to date were
issued originally for consideration of money paid or tangible or intangible
property received or services rendered or a combination thereof, as approved or
ratified by the Board of Directors of the Company in authorizing such issuances,
and such authorized consideration was in each case received by the Company.
2. All shares of capital stock of the Subsidiaries issued by the Subsidiaries to
date were issued originally for consideration of money paid or tangible or
intangible property received or services rendered or a combination thereof, as
approved or ratified by the Board of Directors of the Subsidiaries in
authorizing such issuances, and such authorized consideration was in each case
received by the Subsidiaries.
3. The Company owns of record and beneficially all of the outstanding shares of
capital stock of the Subsidiaries.
4. The outstanding shares of capital stock of the Subsidiaries are owned free
and clear of all liens, encumbrances, equities and claims, and no options,
warrants or other rights to purchase, agreements or other obligations to issue
or other rights to convert any obligations into any shares of capital stock of
or ownership interests in the Subsidiaries are outstanding.
5. He does not know of any private or governmental litigation matters or
proceedings or investigations pending against the Company or any of the
Subsidiaries.
6. Other than ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and Mr. ▇▇▇▇▇ ▇▇▇▇, the Company is not aware
of any entity or person which beneficially owns 25% or more of the Company's
outstanding voting securities.
7. The execution and delivery by the Company and its Subsidiaries of each of the
Credit Documents to which it is a party, the performance by each of the Company
and its Subsidiaries of the respective terms and provisions thereof, and the
consummation of the transactions contemplated by the Credit Documents will not
violate, conflict with, result in a breach or termination of, or a default under
(or an event which, with or without due notice or lapse of time, or both, would
constitute a default under) or accelerate the performance required by, or result
in the creation of any lien, security interest, charge or other encumbrance upon
any of the properties or assets of any of the Company or
its Subsidiaries under any of the terms, conditions or provisions of: (a) their
respective Certificates of Incorporation or Articles of Incorporation or
By-laws; (b) any laws applicable to any of the Company or its Subsidiaries; (c)
to our knowledge, any judgment, order, decree, ruling or injunction issued in
the United States of America specifically naming any of the Company or its
Subsidiaries of any court or governmental authority; or (d) any agreement,
contract, instrument or other document listed on Exhibit A to ▇▇▇▇ and ▇▇▇▇'▇
legal opinion dated the date hereof.
8. The Exhibit A attached to ▇▇▇▇ and ▇▇▇▇'▇ legal opinion is a list of all of
the material contracts, agreements, instruments or other documents of the
Company and its Subsidiaries (other than the Credit Documents).
This certificate is given to ▇▇▇▇ and ▇▇▇▇ in connection with ▇▇▇▇ and
▇▇▇▇'▇ delivery of certain legal opinions dated as of the date hereof in
connection with the transactions described in the Amended and Restated Credit
Agreement dated as of February ___, 2000 among the Company, the lenders party
thereto and Citizens Bank of Massachusetts, as Administrative Agent (the "Credit
Agreement"). This certificate may be relied upon by ▇▇▇▇ and ▇▇▇▇ for purposes
of such opinions. All capitalized terms used and not otherwise defined in this
certificate shall have the meanings ascribed to them in the Credit Agreement.
EXHIBIT H
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
Assignment and Acceptance Agreement dated as of _______, _____, by and
between __________ (the "Assignor") and __________ (the "Successor Lender").
WHEREAS, the Assignor is one of the Lenders party to the Credit Agreement
referred to below; and
WHEREAS, the Assignor desires to sell and the Successor Lender desires to
purchase, all or a portion of the outstanding loans, advances of credit and
commitments of Assignor under the Credit Agreement and the other documents,
instruments and agreements related thereto.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties agree as follows:
Reference is made to the Credit Agreement dated as of February 25, 2000 (as
amended or supplemented and as from time to time in effect, the "Credit
Agreement"), among PC CONNECTION, INC. (the "Borrower"), the lenders party
thereto (the "Lenders"), and CITIZENS BANK OF MASSACHUSETTS, as agent for the
Lenders (the "Agent"). Terms defined in the Credit Agreement and not otherwise
defined herein are used herein with the meanings so defined.
1. Assignment and Acceptance. Pursuant to Section 12.2 of the
Agreement, as of the close of business on __________________ (the
"Assignment Date"), the Assignor hereby assigns to the Successor Lender
$________ of its $________ outstanding Term Loan, $________ of its
$____________ current interest in the outstanding Advances and a ____%
interest in its Commitment Percentage.
The foregoing assignment which constitutes a ___% Commitment Percentage
under the Credit Agreement, is made together with the concomitant proportionate
amount of the undersigned's other rights and obligations under the Credit
Agreement and the other Lender Agreements, and the Successor Lender hereby
accepts and assumes such rights and obligations completely. After giving effect
to this assignment, the Assignor and the Successor Lender shall have the
interests in the Notes and the Commitment Percentages set forth on Schedule 1
attached hereto, and the Commitment Percentages of all of the Lenders under the
Credit Agreement shall be as set forth on Schedule 2 attached hereto.
2. Representations and Warranties.
(a) Other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned hereby free
and clear of any adverse claim, the Assignor makes no representation
or warranty and assumes no responsibility with respect to (i) the
execution, delivery, effectiveness, enforceability, genuineness,
validity or adequacy of the Credit Agreement, the Notes or any other
Lender Agreement, (ii) any recital, representation, warranty,
document, certificate, report or statement in, provided for in,
received under or in connection with, the Credit Agreement or any
other Lender Agreement, or (iii) the existence, validity,
enforceability, perfection, recordation, priority, adequacy or value,
now or hereafter, of any lien or other direct or indirect security
afforded or purported to be afforded by any of the Lender Agreements
or otherwise from time to time.
(b) The Assignor makes no representation or warranty and assumes
no responsibility with respect to (i) the performance or observance of
any of the terms or conditions of the Credit Agreement or any other
Lender Agreement on the part of the Borrower, (ii) the business,
operations, condition (financial or otherwise) or prospects of the
Borrower or any other Person, or (iii) the existence of any Default.
(c) The Successor Lender confirms that it has received a copy of
the Credit Agreement and each of the other Lender Agreements, together
with copies of the most recent financial statements delivered pursuant
to Sections 6.1 and 6.2 of the Credit Agreement, and such other
documents and information as it has deemed appropriate to make its own
credit and legal analysis and decision to enter into this Assignment
and Acceptance Agreement. The Successor Lender confirms that it has
made such analysis and decision independently and without reliance
upon the Agent, the Assignor or any other Lender.
(d) The Successor Lender, independently and without reliance upon
the Agent, the Assignor or any other Lender, and based on such
documents and information as it shall be deem appropriate at the time,
will make its own decisions to take or not take action under or in
connection with the Credit Agreement or any other Lender Agreement.
(e) The Successor Lender irrevocably appoints the Agent to act as
Agent for the Successor Lender under the Credit Agreement and the
other Lender Agreements, all in accordance with Article 13 of the
Agreement and the other provisions of the Credit Agreement and each
other Lender Agreement.
(f) The Successor Lender agrees that it will perform in
accordance with their terms all of the obligations which by the terms
of the Credit Agreement and the other Lender Agreements are required
to be performed by it as a Lender.
(g) Except as to paragraph (a) above, the foregoing assignment is
made without any representation, warranty or recourse of any kind by
the Assignor.
3. Party to the Agreement, etc. Upon (a) the execution and delivery hereof
by the parties hereto at least 5 Business Days prior to the Assignment Date, and
(b) the payment by the Successor Lender to Assignor of an amount equal to the
purchase price agreed between the Successor Lender and the Assignor, and (c)
payment to the Agent of the fee required to be paid pursuant to Section 12.2(a)
of the Agreement, the Successor Lender shall automatically become party to the
Credit Agreement as a signatory thereto. As of the Assignment Date, the
Successor Lender shall have all the rights and obligations of a Lender under the
Credit Agreement and the other Lender Agreements as and to the extent set forth
on Schedule 1 and Schedule 2 attached hereto. Copies of all notices and
other information required to be delivered to the Lenders under the Credit
Agreement shall be delivered to the Successor Lender at the address(es) and to
attention of the Person(s) specified below the Successor Lender's name on the
execution page of this Assignment and Acceptance Agreement. As of the Assignment
Date, the Assignor shall be released from its obligations under the Credit
Agreement to a corresponding extent, and no further consent or action by any
party shall be required.
4. Miscellaneous. This Assignment and Acceptance Agreement may be executed
in any number of counterparts, which together shall constitute one instrument,
shall be governed by and construed in accordance with the laws of The
Commonwealth of Massachusetts (without giving effect to the conflict of laws
rules of any jurisdiction) and shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the Assignor and the Successor Lender have executed
this Assignment and Acceptance Agreement as of the date first above written.
[ASSIGNOR]
By:
--------------------------------
Name:
Title:
[SUCCESSOR LENDER]
By:
--------------------------------
Name:
Title:
[Address for Notices]
Telecopier No.:
Attention:
The foregoing is hereby acknowledged and approved:
PC CONNECTION, INC.*
By:
--------------------------------
Name:
Title:
CITIZENS BANK OF MASSACHUSETTS, as Agent
By:
--------------------------------
Name:
Title:
---------------
* Include unless Borrower is in Default, at which point Borrower's consent is
not required.
Schedule 1
Successor Lender's and Assignor's Interest
The Successor Lender's interest under the Credit Agreement on and after the
Assignment Date shall be as follows:
Commitment Percentage %
-------
Principal Amount of Note $
The Assignor's interest under the Credit Agreement on and after the Assignment
Date shall be as follows:
Commitment Percentage %
-------
Principal Amount of Note $
Schedule 2
Lenders' Commitment Percentages
After giving effect to the assignment on the Assignment Date, the
Lenders' respective Commitment Percentages under the Credit Agreement shall be
as follows:
Commitment Maximum Credit
Lender Percentage Amount
---------- --------------
_____________________ ____.__% $____________
_____________________ ____.__% $____________
_____________________ ____.__% $____________
TOTALS 100.00% _________.00
EXHIBIT I
FORM OF LETTER OF CREDIT REQUEST