DIGITAL GENERATION SYSTEMS, INC.
EXHIBIT 10.48
CREDIT AGREEMENT
Dated as of
June 1, 2001
among
DIGITAL GENERATION SYSTEMS, INC.,
as Borrower
The Lenders Party Hereto,
THE BANK OF NEW YORK,
as Syndication Agent
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
and Issuing Bank
________________________
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
and
BNY CAPITAL MARKETS, INC.
as Joint Lead Arrangers and Book Managers
TABLE OF CONTENTS
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Page
ARTICLE I Definitions........................................................... 1
SECTION 1.01 Defined Terms.................................................... 1
SECTION 1.02 Terms Generally.................................................. 19
SECTION 1.03 Accounting Terms; GAAP........................................... 19
SECTION 1.04 UCC Changes...................................................... 20
ARTICLE II The Credits........................................................... 20
SECTION 2.01 Commitments...................................................... 20
SECTION 2.02 Loans and Borrowings............................................. 20
SECTION 2.03 Requests for Borrowings.......................................... 21
SECTION 2.04 Letters of Credit................................................ 22
SECTION 2.05 Funding of Borrowings............................................ 26
SECTION 2.06 Interest Elections............................................... 27
SECTION 2.07 Termination and Reduction of Commitments......................... 28
SECTION 2.08 Repayment of Loans; Evidence of Debt............................. 29
SECTION 2.09 Prepayment of Loans.............................................. 30
SECTION 2.10 Fees............................................................. 31
SECTION 2.11 Interest......................................................... 32
SECTION 2.12 Taxes............................................................ 33
SECTION 2.13 Payments Generally; Pro Rata Treatment; Sharing of Set-offs...... 34
SECTION 2.14 Mitigation Obligations; Replacement of Lenders................... 36
ARTICLE III Yield Protection and Illegality....................................... 37
SECTION 3.01 Increased Costs.................................................. 37
SECTION 3.02 Alternate Rate of Interest....................................... 38
SECTION 3.03 Illegality....................................................... 38
SECTION 3.04 Treatment of Affected Borrowings................................. 39
SECTION 3.05 Break Funding Payments........................................... 39
ARTICLE IV Security.............................................................. 40
SECTION 4.01 Collateral....................................................... 40
ARTICLE V Representations and Warranties........................................ 40
SECTION 5.01 Organization; Powers............................................. 41
SECTION 5.02 Authorization; Enforceability.................................... 41
SECTION 5.03 Governmental Approvals; No Conflicts............................. 41
SECTION 5.04 Financial Condition; No Material Adverse Change.................. 41
SECTION 5.05 Properties....................................................... 42
SECTION 5.06 Litigation and Environmental Matters............................. 42
SECTION 5.07 Compliance with Laws and Agreements.............................. 43
SECTION 5.08 Investment and Holding Company Status............................ 43
SECTION 5.09 Taxes............................................................ 43
SECTION 5.10 ERISA............................................................ 43
SECTION 5.11 Disclosure....................................................... 44
SECTION 5.12 Indebtedness..................................................... 44
SECTION 5.13 Subsidiaries..................................................... 44
SECTION 5.14 Inventory........................................................ 44
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SECTION 5.15 Patents, Trademarks and Copyrights.............................. 44
SECTION 5.16 Margin Securities............................................... 45
SECTION 5.17 Labor Matters................................................... 45
SECTION 5.18 Solvency........................................................ 45
SECTION 5.19 Burdensome Agreements........................................... 45
SECTION 5.20 Permits, Licenses, Etc.......................................... 45
ARTICLE VI Conditions........................................................... 46
SECTION 6.01 Effective Date.................................................. 46
SECTION 6.02 Each Credit Event............................................... 49
ARTICLE VII Affirmative Covenants................................................ 49
SECTION 7.01 Financial Statements and Other Information...................... 49
SECTION 7.02 Notices of Material Events...................................... 51
SECTION 7.03 Existence; Conduct of Business.................................. 52
SECTION 7.04 Payment of Obligations.......................................... 52
SECTION 7.05 Maintenance of Properties....................................... 52
SECTION 7.06 Books and Records; Inspection Rights............................ 52
SECTION 7.07 Insurance....................................................... 53
SECTION 7.08 Compliance with Laws............................................ 53
SECTION 7.09 Use of Proceeds and Letters of Credit........................... 53
SECTION 7.10 Compliance with Agreements...................................... 53
SECTION 7.11 Additional Subsidiaries......................................... 53
SECTION 7.12 Real Property................................................... 53
SECTION 7.13 Further Assurances.............................................. 54
ARTICLE VIII Negative Covenants................................................... 54
SECTION 8.01 Indebtedness.................................................... 54
SECTION 8.02 Liens........................................................... 55
SECTION 8.03 Fundamental Changes............................................. 55
SECTION 8.04 Investments, Loans, Advances, Guarantees and Acquisitions....... 56
SECTION 8.05 Hedging Agreements.............................................. 57
SECTION 8.06 Restricted Payments; Certain Payments of Indebtedness........... 57
SECTION 8.07 Transactions with Affiliates.................................... 58
SECTION 8.08 Restrictive Agreements.......................................... 58
SECTION 8.09 Disposition of Assets........................................... 58
SECTION 8.10 Sale and Leaseback.............................................. 59
SECTION 8.11 Accounting...................................................... 59
SECTION 8.12 Amendment of Material Documents................................. 59
SECTION 8.13 Preferred Equity Interests...................................... 59
SECTION 8.14 Synthetic Repurchases........................................... 59
ARTICLE IX Financial Covenants.................................................. 60
SECTION 9.01 Minimum Consolidated EBITDA..................................... 60
SECTION 9.02 Fixed Charge Coverage Ratio..................................... 60
SECTION 9.03 Leverage Ratio.................................................. 60
SECTION 9.04 Capital Expenditures............................................ 61
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ARTICLE X Events of Default............................................ 61
SECTION 10.01 Default................................................ 61
SECTION 10.02 Performance by the Administrative Agent................ 63
ARTICLE XI The Administrative Agent..................................... 65
ARTICLE XII Miscellaneous................................................ 67
SECTION 12.01 Notices................................................ 67
SECTION 12.02 Waivers; Amendments.................................... 67
SECTION 12.03 Expenses; Indemnity; Damage Waiver..................... 68
SECTION 12.04 Successors and Assigns................................. 70
SECTION 12.05 Survival............................................... 73
SECTION 12.06 Counterparts; Effectiveness............................ 73
SECTION 12.07 Severability........................................... 73
SECTION 12.08 Right of Setoff........................................ 73
SECTION 12.09 GOVERNING LAW; VENUE; SERVICE OF PROCESS............... 74
SECTION 12.10 WAIVER OF JURY TRIAL................................... 74
SECTION 12.11 Headings............................................... 75
SECTION 12.12 Confidentiality........................................ 75
SECTION 12.13 Maximum Interest Rate.................................. 75
SECTION 12.14 Non-Application of Chapter 346 of Texas Finance Code... 76
SECTION 12.15 NO ORAL AGREEMENTS..................................... 76
SECTION 12.16 No Fiduciary Relationship.............................. 76
SECTION 12.17 Construction........................................... 76
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CREDIT AGREEMENT
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THIS CREDIT AGREEMENT (this "Agreement") dated as of June 1, 2001, among
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DIGITAL GENERATION SYSTEMS, INC., a Delaware corporation, as Borrower, the
LENDERS party hereto, THE BANK OF NEW YORK, a New York banking corporation, as
Syndication Agent, and THE CHASE MANHATTAN BANK, a New York banking corporation,
as Administrative Agent and Issuing Bank.
The parties hereto agree as follows:
ARTICLE I
Definitions
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SECTION 1.01 Defined Terms. As used in this Agreement, the following
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terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to whether
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such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.
"Acquisition" means any transaction or series of related transactions for
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the direct or indirect (a) acquisition of all or substantially all of the
property of a Person, or of any business or division of a Person, (b)
acquisition of in excess of 50% of the Equity Interests of any Person, or
otherwise causing any Person to become a Subsidiary, or (c) a merger or
consolidation or any other combination with another Person, including, but not
limited to the StarGuide Merger.
"Acquisition Documents" means all documents executed or provided in
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connection with any Acquisition.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing for
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any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means The Chase Manhattan Bank, in its capacity as
--------------------
administrative agent for the Lenders and the Issuing Bank hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire in a
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form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another Person that
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directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
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greatest of (a) the Prime Rate in effect on such day, (b) the CD Rate plus 1%
and (c) the Federal Funds
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Effective Rate in effect on such day plus 0.5%. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the CD Rate or the Federal Funds
Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate, the CD Rate or the Federal Funds Effective Rate,
respectively.
"Annualized StarGuide EBITDA" means, for each period ending prior to
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December 31, 2001, EBITDA of StarGuide and its subsidiaries (excluding CoolCast)
on a consolidated basis for the portion of such fiscal year then ended, less the
----
amount of deferred revenues realized by StarGuide for such period, annualized
for each such period that is less than 12 months.
"Applicable Margin" means, for any day, 3.50% for Eurodollar Borrowings,
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2.00% for ABR Borrowings and 0.50% for the Commitment Fee.
"Applicable Percentage" means, with respect to any Lender, the percentage
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of the total Commitments represented by such Lender's Commitment. If the
Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments.
"Arranger" means each of ▇.▇. ▇▇▇▇▇▇ Securities Inc. and BNY Capital
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Markets, Inc.
"Assignment and Acceptance" means an assignment and acceptance entered into
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by a Lender and an assignee (with the consent of any party whose consent is
required by Section 12.04), and accepted by the Administrative Agent, in the
form of Exhibit "H" or any other form approved by the Administrative Agent and
the Borrower.
"Availability Period" means the period from and including the Effective
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Date to but excluding the earlier of the Revolving Credit Maturity Date and the
date of termination of the Revolving Credit Commitments.
"Board" means the Board of Governors of the Federal Reserve System of the
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United States of America.
"Borrower" means Digital Generation Systems, Inc., a Delaware corporation.
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"Borrowing" means Loans of the same Class and Type, made, converted or
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continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect.
"Borrowing Base" means, at any time, an amount equal to eighty percent
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(80%) of Eligible Accounts.
"Borrowing Base Certificate" means a certificate in the form of Exhibit "G"
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or any other form approved by the Administrative Agent and the Borrower,
together with all attachments contemplated thereby.
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"Borrowing Request" means a request by the Borrower for a Borrowing in
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accordance with Section 2.03.
"Borrowing Request Form" means a certificate in substantially the form of
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Exhibit "B-1", properly completed and signed by the Borrower requesting a
Borrowing or a conversion or continuation of a Borrowing.
"Business Day" means any day that is not a Saturday, Sunday or other day on
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which commercial banks in Dallas, Texas are authorized or required by law to
remain closed; provided that, when used in connection with a Eurodollar Loan,
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the term "Business Day" shall also exclude any day on which banks are not open
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for dealings in dollar deposits in the London interbank market.
"Capital Expenditures" means, for any period, the additions to property,
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plant and equipment and other capital expenditures of the Borrower and its
Subsidiaries that are (or would be) set forth in a consolidated statement of
cash flows of the Borrower for such period prepared in accordance with GAAP.
"Capital Lease Obligations" of any Person means the obligations of such
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Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"CD Rate" means the secondary market rate for three-month certificates of
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deposit (adjusted for statutory reserve requirements).
"Change in Control" means (a) the acquisition of ownership, directly or
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indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), of shares
representing more than 30% of either the aggregate ordinary voting power or the
aggregate equity value represented by the issued and outstanding capital stock
of the Borrower; (b) occupation of a majority of the seats (other than vacant
seats) on the board of directors of the Borrower by Persons who were neither (i)
nominated by the board of directors of the Borrower nor (ii) appointed by
directors so nominated; or (c) the acquisition of direct or indirect Control of
the Borrower by any Person or group.
"Change in Law" means (a) the adoption of any law, rule or regulation after
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the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by any Lender or the Issuing Bank
(or, for purposes of Section 3.01(b), by any lending office of such Lender or by
such Lender's or the Issuing Bank's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
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"Class" means when used in reference to any Loan or Borrowing, refers to
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whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans
or Term Loans and, when used in reference to any Commitment, refers to whether
such commitment is a Revolving Credit Commitment or Term Loan Commitment.
"Code" means the Internal Revenue Code of 1986, as amended from time to
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time.
"Collateral" has the meaning specified in Section 4.01.
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"Commitment" means, a Revolving Credit Commitment, a Term Loan Commitment,
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or any combination thereof (as the context requires).
"Commitment Fee" means the commitment fee payable pursuant to Section 2.10.
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"Compliance Certificate" means a certificate of a Financial Officer of the
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Borrower, in the form of Exhibit "F" hereto.
"Consolidated EBITDA" means, for each period of determination, (a) EBITDA
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of the Borrower and its Subsidiaries (excluding CoolCast) on a consolidated
basis for such period, less (b) deferred revenues realized by StarGuide for such
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period.
"Control" means the possession, directly or indirectly, of the power to
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direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
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"Contribution and Indemnification Agreement" means a contribution and
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indemnification agreement of the Borrower and each Guarantor, in substantially
the form of Exhibit "E", as the same may be amended, supplemented, or modified
from time to time.
"CoolCast" means CoolCast, Inc., a Delaware corporation.
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"CoolCast Investment Limit" means, with respect to the sum of all
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investments, loans, advances and Restricted Payments by Borrower and its
Subsidiaries (excluding subsidiaries of CoolCast), or any of them, to CoolCast,
an amount not to exceed $1,000,000 in the aggregate during any fiscal quarter,
but in no event more than the CoolCast Maximum Investment in the aggregate
during the term of this Agreement.
"CoolCast Maximum Investment" means $3,000,000, provided that if the
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Borrower or any Subsidiary raises New Equity in an amount greater than
$3,000,000, "CoolCast Maximum Investment" shall mean $6,000,000.
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"Current Assets" means, at any particular time, all amounts which, in
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conformity with GAAP, would be included as current assets on a consolidated
balance sheet of the Borrower and its Subsidiaries.
4
"Current Deferred Revenues" means that portion of Current Liabilities
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consisting of current deferred revenues of Borrower and its Subsidiaries on a
consolidated basis.
"Current Liabilities" means, at any particular time, all amounts which, in
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conformity with GAAP, would be included as current liabilities on a consolidated
balance sheet of the Borrower and its Subsidiaries.
"Current Ratio" means the ratio of (a) Current Assets to (b) Current
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Liabilities less Current Deferred Revenues.
"Default" means any event or condition which constitutes an Event of
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Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings and the
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environmental matters disclosed in Schedule 5.06.
"dollars" or "$" refers to lawful money of the United States of America.
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"EBITDA" means, for each period of determination for any Person and its
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subsidiaries on a consolidated basis, the sum of (a) consolidated net income of
such Person and its subsidiaries for such period (whether positive or negative),
plus, (b) each of the following of such Person and its subsidiaries for such
period to the extent actually deducted in arriving at consolidated net income of
such Person and its subsidiaries for such period and without duplication:
depreciation, amortization, taxes, interest expense, a one-time relocation or
move charge for the move of the Borrower's operations from San Francisco to
Dallas in an amount not to exceed $2,000,000, and other non-cash charges, non-
recurring charges and extraordinary charges specifically identified as such as a
separate line item on the Borrower's income statement.
"Effective Date" means the date on which the conditions specified in
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Section 6.01 are satisfied (or waived in accordance with Section 12.02).
"Eligible Accounts" means, at any time, all accounts receivable of the
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Obligors, or any of them, created in the ordinary course of business that are
acceptable to the Administrative Agent in its sole discretion and satisfy the
following conditions:
(a) The account complies with all applicable laws, rules, and
regulations, including, without limitation, usury laws, the Federal Truth
in Lending Act, and Regulation Z of the Board of Governors of the Federal
Reserve System;
(b) The account has not been outstanding for more than one hundred
twenty (120) days past the original date of invoice;
(c) The account was created in connection with (i) the sale of goods
by any Obligor in the ordinary course of business and such sale has been
consummated and such goods have been shipped and delivered and received by
the account debtor, or (ii) the
5
performance of services by any Obligor in the ordinary course of business
and such services have been completed and accepted by the account debtor;
(d) The account arises from an enforceable contract, the performance
of which has been completed by any Obligor;
(e) The account is not a prebilled account and, without limiting the
foregoing, does not consist of or arise from maintenance receivables or
receivables that result in the booking of deferred revenue;
(f) The account does not arise from the sale of any good that is on a
▇▇▇▇-and-hold, guaranteed sale, sale-or-return, sale on approval,
consignment, or any other repurchase or return basis;
(g) An Obligor has good and indefeasible title to the account and the
account is not subject to any Lien except Liens in favor of the
Administrative Agent;
(h) The account does not arise out of a contract with or order form,
an account debtor that, by its terms, prohibits or makes void or
unenforceable the grant of a security interest by any Obligor to the
Administrative Agent in and to such account;
(i) The account is not subject to any counterclaim, defense or
dispute;
(j) If an account is subject to any setoff, recoupment, contra
account, charge back, credit or any other obligation owed by any Obligor to
such account debtor or any adjustment, other than normal discounts for
prompt payment, only the amount in excess of such setoff, recoupment,
contra account, charge back, credit, obligation or adjustment shall be
eligible;
(k) The account debtor is not insolvent or the subject of any
bankruptcy or insolvency proceeding and has not made an assignment for the
benefit of creditors, suspended normal business operations, dissolved,
liquidated, terminated its existence, ceased to pay its debts as they
become due, or suffered a receiver or trustee to be appointed for any of
its assets or affairs;
(l) The account is not evidenced by chattel paper or an instrument;
(m) No default exists under the account by any party thereto;
(n) The account debtor has not returned or refused to retain, or
otherwise notified any Obligor of any dispute concerning, or claimed
nonconformity of, any of the goods from the sale of which the account
arose;
(o) The account is not owed by an Affiliate of any Obligor;
(p) The account is payable in dollars by the account debtor;
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(q) Either (i) the account debtor is domiciled in the United States of
America or (ii) the account is backed or secured by credit insurance or a
letter of credit satisfactory to the Administrative Agent in all respects
and such credit insurance or letter of credit, as applicable, has been
assigned to the Administrative Agent upon terms acceptable to the
Administrative Agent in its discretion;
(r) The account is not owed by an account debtor with respect to which
more than thirty percent (30%) of the aggregate balances then outstanding
on accounts owed by such account debtor and its Affiliates to the Obligors,
or any of them, have been outstanding for more than one hundred twenty
(120) days past the dates of their original invoices;
(s) The account debtor is not the United States of America or any
department, agency, or instrumentality thereof, or any other Governmental
Authority, unless the Federal Assignment of Claims Act of 1940, as amended,
or any similar state statute, as applicable, shall have been complied with.
(t) If the accounts owed by any account debtor represent more than ten
percent (10%) of the aggregate amount of all accounts receivable of the
Obligors, only that portion of the accounts owed by such account debtor
which does not exceed such ten percent (10%) limit shall be eligible.
"Environmental Laws" means all laws, rules, regulations, codes, ordinances,
------------------
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to health
and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
-----------------------
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"Equity Interests" means shares of capital stock, partnership interests,
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membership interests in a limited liability company, beneficial interests in a
trust or other equity or ownership interests in a Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended from time to time.
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"ERISA Affiliate" means any trade or business (whether or not incorporated)
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that, together with the Borrower, is treated as a single employer under Section
414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section 4043
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of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing, refers to
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whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article X.
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"Excess Cash Flow" means, as of each date of determination, (a)
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Consolidated EBITDA for the 12-month period ended on such date of determination,
minus (b) the sum of the following items for Borrower and its Subsidiaries on a
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consolidated basis for such 12-month period: (i) Capital Expenditures; (ii)
regularly scheduled principal payments of Indebtedness scheduled to be paid
during such 12-month period, whether or not actually paid; (iii) voluntary
prepayments of Term Loans; (iv) cash interest expense; and (v) taxes paid or
payable.
"Excluded Taxes" means, with respect to the Administrative Agent, any
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Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.14(b)), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement (or designates a new lending office) or is attributable to
such Foreign Lender's failure
8
to comply with Section 2.12(e), except to the extent that such Foreign Lender
(or its assignor, if any) was entitled, at the time of designation of a new
lending office (or assignment), to receive additional amounts from the Borrower
with respect to such withholding tax pursuant to Section 2.12(a).
"Federal Funds Effective Rate" means, for any day, the weighted average
----------------------------
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve The Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal accounting
-----------------
officer, treasurer or controller of the Borrower.
"Fixed Charge Coverage Ratio" means:
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(a) as of each date of determination prior to December 31, 2001, the
ratio of (i) (A) EBITDA of the Borrower and its Subsidiaries (excluding
StarGuide and its subsidiaries) on a consolidated basis for the 12-month
period ended on such date of determination, plus (B) Annualized StarGuide
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EBITDA, less (C) Capital Expenditures for the 12-month period ended on such
----
date of determination, to (ii) the sum of the following for the Borrower
and its Subsidiaries on a consolidated basis for the 12-month period ended
on such date of determination: (A) regularly scheduled principal payments
of Indebtedness scheduled to be paid during such period, whether or not
actually paid, plus (B) cash interest expense for such period; and
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(b) as of each date of determination on or after December 31, 2001,
the ratio of (i) (A) Consolidated EBITDA for the 12-month period ended on
such date of determination, less (B) Capital Expenditures for the 12-month
----
period ended on such date of determination, to (ii) the sum of the
following for the Borrower and its Subsidiaries on a consolidated basis for
the 12-month period ended on such date of determination: (A) regularly
scheduled principal payments of Indebtedness scheduled to be paid during
such period, whether or not actually paid, plus (B) cash interest expense
----
for such period.
"Foreign Lender" means any Lender that is organized under the laws of a
--------------
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is organized under the laws
------------------
of a jurisdiction other than the United States of America or any state thereof
or the District of Columbia.
9
"GAAP" means generally accepted accounting principles in the United States
----
of America.
"Governmental Authority" means the government of the United States of
----------------------
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any obligation,
--------- ---------
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
---------------
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
--------
collection or deposit in the ordinary course of business.
"Guarantors" means all of the Subsidiaries of the Borrower as of the
----------
Effective Date (except any Foreign Subsidiary) and each other Subsidiary that at
any time executes a Guaranty in favor of the Administrative Agent and the
Lenders.
"Guaranty" means the guaranty agreement of each Guarantor in favor of the
--------
Administrative Agent and the Lenders, in substantially the form of Exhibit "D"
hereto, as the same may be amended, supplemented, or modified from time to time.
"Hazardous Materials" means all explosive or radioactive substances or
-------------------
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" means any interest rate protection agreement, foreign
-----------------
currency exchange agreement, commodity price protection agreement or other
interest or currency exchange rate or commodity price hedging arrangement.
"Indebtedness" of any Person means, without duplication, (a) all
------------
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property
10
acquired by such Person, (e) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (f) all obligations
secured by (or for which the holder of such obligations has an existing right,
contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the obligations secured thereby have
been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h)
all Capital Lease Obligations of such Person, (i) all obligations, contingent or
otherwise, of such Person in respect of letters of credit, letters of guaranty,
bankers' acceptances, surety or other bonds and similar instruments, (j) all
liabilities of such Person in respect of unfunded vested benefits under any Plan
and (k) payment obligations with respect to Hedging Agreements, provided that
for purposes of this definition, the amount of the obligation of any Person
under any Hedging Agreement shall be the amount determined, in respect thereof
as of the end of the most recently ended fiscal quarter of such Person, based on
the assumption that such Hedging Agreement has terminated at the end of such
fiscal quarter, and in making such determination, if such Hedging Agreement
provides for the netting of amounts payable by and to each party thereto or if
any Hedging Agreement provides for the simultaneous payment of amounts by and to
each party, then in each such case, the amount of such obligation shall be the
net amount so determined. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
-----------------
"Interest Election Request" means a request by the Borrower to convert or
-------------------------
continue a Borrowing in accordance with Section 2.06.
"Interest Payment Date" means (a) with respect to any ABR Loan, the last
---------------------
day of each March, June, September and December and (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing
of which such Loan is a part and, in the case of a Eurodollar Borrowing with an
Interest Period of more than three months' duration, each day prior to the last
day of such Interest Period that occurs at intervals of three months' duration
after the first day of such Interest Period.
"Interest Period" means, with respect to any Eurodollar Borrowing, the
---------------
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect, and provided, that (i) if any Interest
--------
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (ii) any Interest Period
that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of
such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period. For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and thereafter shall
be the effective date of the most recent conversion or continuation of such
Borrowing.
11
"Issuing Bank" means The Chase Manhattan Bank, in its capacity as the
------------
issuer of Letters of Credit hereunder, and its successors in such capacity as
provided in Section 2.04(i). The Issuing Bank may, in its discretion, arrange
for one or more Letters of Credit to be issued by Affiliates of the Issuing
Bank, in which case the term "Issuing Bank" shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate.
"LC Disbursement" means a payment made by the Issuing Bank pursuant to a
---------------
Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
-----------
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Lender at any time shall
be its Applicable Percentage of the total LC Exposure at such time.
"Lender Affiliate" means, (a) with respect to any Lender, (i) an Affiliate
----------------
of such Lender or (ii) any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender or an Affiliate of such
Lender and (b) with respect to any Lender that is a fund which invests in bank
loans and similar extensions of credit, any other fund that invests in bank
loans and similar extensions of credit and is managed by the same investment
advisor as such Lender or by an Affiliate of such investment advisor.
"Lenders" means the Persons listed on Schedule 1.01 and any other Person
-------
that shall have become a party hereto pursuant to an Assignment and Acceptance,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Acceptance.
"Letter of Credit" means any letter of credit issued pursuant to this
----------------
Agreement.
"Letter of Credit Request Form" means a certificate, in substantially the
-----------------------------
form of Exhibit "B-2" hereto, properly completed and signed by the Borrower
requesting the issuance of a Letter of Credit (or the amendment, renewal, or
extension of an outstanding Letter of Credit).
"Leverage Ratio" means, as of each date of determination, the ratio of (i)
--------------
Indebtedness of the Borrower and its Subsidiaries on a consolidated basis as of
such date of determination to (ii) consolidated EBITDA for the 12-month period
ended on such date of determination.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
---------
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate
12
for dollar deposits with a maturity comparable to such Interest Period. In the
event that such rate is not available at such time for any reason, then the
"LIBO Rate" with respect to such Eurodollar Borrowing for such Interest Period
-----------
shall be the rate at which dollar deposits of $5,000,000 and for a maturity
comparable to such Interest Period are offered by the principal London office of
the Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of trust,
----
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.
"Loan Documents" means this Agreement and all promissory notes, security
--------------
agreements, pledge agreements, deeds of trust, assignments, guaranties, and
other instruments, documents, and agreements executed and delivered pursuant to
or in connection with this Agreement, as such instruments, documents, and
agreements may be amended, modified, renewed, extended, or supplemented from
time to time.
"Loans" means the loans made by the Lenders to the Borrower pursuant to
-----
this Agreement.
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business, assets, property, operations, condition (financial or otherwise) or
prospects, of the Borrower and the Subsidiaries taken as a whole, (b) the
ability of the Borrower to pay and perform any of the Obligations, (c) the
ability of the Guarantors, collectively, to pay and perform any of the
Obligations, (d) any of the rights of or benefits available to the
Administrative Agent and the Lenders under this Agreement or any of the other
Loan Documents, or (e) the validity or enforceability of this Agreement or any
of the other Loan Documents.
"Material Indebtedness" means Indebtedness (other than the Loans and
---------------------
Letters of Credit), including obligations in respect of one or more Hedging
Agreements, of any one or more of the Borrower and its Subsidiaries in an
aggregate principal amount exceeding $1,000,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of the Borrower
or any Subsidiary in respect of any Hedging Agreement at any time shall be the
amount of its payment obligations thereunder determined as provided in clause
(k) of the definition of "Indebtedness" set forth in this Section 1.01.
"Maximum Rate" means, at any time and with respect to any Lender, the
------------
maximum rate of interest under applicable law that such Lender may charge the
Borrower. The Maximum Rate shall be calculated in a manner that takes into
account any and all fees, payments, and other charges in respect of the Loan
Documents that constitute interest under applicable law. Each change in any
interest rate provided for herein based upon the Maximum Rate resulting from a
change in the Maximum Rate shall take effect without notice to the Borrower at
the time of such
13
change in the Maximum Rate. For purposes of determining the Maximum Rate under
Texas law, the applicable rate ceiling shall be the weekly ceiling described in,
and computed in accordance with, Chapter 303 of the Texas Finance Code.
"Merger Agreement" means that certain Agreement and Plan of Merger dated as
----------------
of July 7, 2000, among the Borrower, Merger Sub and StarGuide.
"Merger Sub" means SG Nevada Merger Sub Inc., formerly a Nevada corporation
----------
and wholly-owned subsidiary of the Borrower.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
-------
"Multiemployer Plan" means a multiemployer plan as defined in Section
------------------
4001(a)(3) of ERISA.
"Net Proceeds" from any issuance, sale or other disposition of any shares
------------
of equity securities (or any securities convertible or exchangeable for any such
shares, or any rights, warrants, or options to subscribe for or purchase any
such shares) means the amount equal to (a) the aggregate gross proceeds of such
issuance, sale or other disposition, less (b) the following: (i) placement
agent fees, (ii) underwriting discounts and commissions, (iii) bank and other
lender fees, and (iv) legal fees and other expenses payable by the issuer in
connection with such issuance, sale or other disposition.
"New Equity" means the Net Proceeds from any issuance, sale or other
----------
disposition after the Effective Date of any shares of equity securities of the
Borrower or any Subsidiary (or any securities convertible or exchangeable for
any such shares, or any rights, warrants or options to subscribe for or purchase
any such shares).
"Notes" means the Revolving Credit Notes and the Term Notes.
-----
"Obligations" means all obligations, indebtedness, and liabilities of the
-----------
Borrower and the Subsidiaries, or any of them, to the Administrative Agent, the
Issuing Bank, the Arranger and the Lenders, or any of them, arising pursuant to
any of the Loan Documents or Hedging Agreements, now existing or hereafter
arising, whether direct, indirect, related, unrelated, fixed, contingent,
liquidated, unliquidated, joint, several, or joint and several, and all interest
accruing thereon and all attorneys' fees and other expenses incurred in the
enforcement or collection thereof.
"Obligors" means the Borrower and the Guarantors.
--------
"Other Taxes" means any and all present or future stamp or documentary
-----------
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
----
defined in ERISA and any successor entity performing similar functions.
14
"Permitted Encumbrances" means:
----------------------
(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 7.04;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's,
landlords' and other like Liens imposed by law, arising in the ordinary
course of business and securing obligations that are not overdue by more
than 30 days or are being contested in compliance with Section 7.04;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary course
of business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Article X; and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Borrower or any Subsidiary;
provided that the term "Permitted Encumbrances" shall not include any Lien
--------
securing Indebtedness.
"Permitted Investments" means:
---------------------
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed
by the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(a) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from S&P or from Moody's;
(b) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market and other deposit
accounts issued or
15
offered by, any domestic office of any commercial bank organized under the
laws of the United States of America or any State thereof which has a
combined capital and surplus and undivided profits of not less than
$500,000,000; and
(c) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into
with a financial institution satisfying the criteria described in clause
(c) above.
"Person" means any natural person, corporation, limited liability company,
------
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plan" means any employee pension benefit plan subject to the provisions of
----
Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in
respect of which the Borrower or any ERISA Affiliate is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Prime Rate" means the rate of interest per annum announced from time to
----------
time by The Chase Manhattan Bank as its prime rate in effect at its principal
office in New York City; each change in the Prime Rate shall be effective from
and including the date such change is announced as being effective.
"Register" has the meaning set forth in Section 12.04.
--------
"Related Parties" means, with respect to any specified Person, such
---------------
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having Revolving Credit
----------------
Exposures, Term Loans and unused Commitments representing more than 66-2/3% of
the sum of the total Revolving Credit Exposures, outstanding Term Loans and
unused Commitments at such time.
"Restricted Indebtedness" means Indebtedness of the Borrower or any
-----------------------
Subsidiary, the payment, prepayment, redemption, repurchase or defeasance of
which is restricted under Section 8.06.
"Restricted Payment" means any dividend or other distribution (whether in
------------------
cash, securities or other property) with respect to any Equity Interests of the
Borrower or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any Equity Interests of the Borrower or any Subsidiary or any option, warrant or
other right to acquire any Equity Interests of the Borrower or any Subsidiary.
"Revolving Credit Commitment" means, with respect to each Lender, the
---------------------------
commitment of such Lender to make Revolving Loans and to acquire participations
in Letters of Credit hereunder, expressed as an amount representing the maximum
aggregate amount of such Lender's Revolving Credit Exposure hereunder, as such
commitment may be (a) reduced from
16
time to time pursuant to Section 2.07 and (b) reduced or increased from time to
time pursuant to assignments by or to such Lender pursuant to Section 12.04. The
initial amount of each Lender's Revolving Credit Commitment is set forth on
Schedule 1.01, or in the Assignment and Acceptance pursuant to which such Lender
shall have assumed its Revolving Credit Commitment, as applicable. The initial
aggregate amount of the Lenders' Revolving Credit Commitments is $17,500,000.
"Revolving Credit Exposure" means, with respect to any Lender at any time,
-------------------------
the sum of the outstanding principal amount of such Lender's Revolving Loans and
its LC Exposure at such time.
"Revolving Credit Maturity Date" means May 31, 2004.
------------------------------
"Revolving Credit Note" means a promissory note of the Borrower payable to
----------------------
the order of a Lender, in substantially the form of Exhibit "A-1" hereto, and
all extensions, renewals, and modifications thereof and all substitutions
therefor.
"Revolving Loan" means a Loan made pursuant to clause (b) of Section 2.01
--------------
hereof.
"S&P" means Standard & Poor's.
---
"Security Agreement" means the Security Agreement of the Borrower and the
------------------
Subsidiaries in favor of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders, in substantially the form of Exhibit "C"
hereto, as the same may be amended, supplemented or modified from time to time.
"Solvent" means, as to any Person, that (a) the aggregate fair market value
-------
of its assets exceeds its liabilities, (b) it has sufficient cash flow to enable
it to pay its Indebtedness as such Indebtedness matures, and (c) it does not
have unreasonably small capital to conduct its business.
"StarGuide" means StarGuide Digital Networks, Inc., a Nevada corporation
---------
and a wholly-owned Subsidiary of the Borrower.
"StarGuide Merger" means the merger of Merger Sub with and into StarGuide
----------------
pursuant to the Merger Agreement, effective January 18, 2001.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
----------------------
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board). Such reserve percentages shall include those
imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to
constitute eurocurrency funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Lender under such Regulation D or any
17
comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"subsidiary" means, with respect to any Person (the "parent") at any date,
---------- ------
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of the Borrower.
----------
"Syndication Agent" means The Bank of New York, as syndication agent
-----------------
hereunder.
"Synthetic Purchase Agreement" means any swap, derivative or other
----------------------------
agreement or combination of agreements pursuant to which the Borrower or a
Subsidiary is or may become obligated to make (i) any payment in connection with
a purchase by any third party from a Person other than the Borrower or a
Subsidiary of any Equity Interest in the Borrower or any Subsidiary, any
warrants, options or other rights to acquire any Equity Interests of the
Borrower or any Subsidiary, or any Restricted Indebtedness or (ii) any payment
(other than on account of a permitted purchase by it of any Equity Interests in
the Borrower or any Subsidiary, any warrants, options or other rights to acquire
any Equity Interests of the Borrower or any Subsidiary, or any Restricted
Indebtedness) the amount of which is determined by reference to the price or
value at any time of any Equity Interest in the Borrower or any Subsidiary, any
warrants, options or other rights to acquire any Equity Interests of the
Borrower or any Subsidiary, or any Restricted Indebtedness; provided that no
--------
phantom stock or similar plan providing for payments only to current or former
directors, officers or employees of the Borrower or the Subsidiaries (or their
heirs or estates) shall be deemed to be a Synthetic Purchase Agreement.
"Taxes" means any and all present or future taxes, levies, imposts, duties,
-----
deductions, charges or withholdings imposed by any Governmental Authority.
"Term Loan" means a Loan made pursuant to clause (a) of Section 2.01
---------
hereof.
"Term Loan Commitment" means, with respect to each Lender, the commitment
--------------------
of such Lender to make a Term Loan hereunder on the Effective Date, expressed
as an amount representing the maximum aggregate amount of the Term Loan to be
made by such Lender hereunder, as such commitment may be (a) reduced from time
to time pursuant to Section 2.07 and (b) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 12.04. The
initial amount of each Lender's Term Loan Commitment is set forth on Schedule
2.01, or in the Assignment and Acceptance pursuant to which such Lender
18
shall have assumed its Term Loan Commitment, as applicable. The initial
aggregate amount of the Lenders' Term Loan Commitments is $12,500,000.
"Term Loan Maturity Date" means May 31, 2004.
-----------------------
"Term Note" means a promissory note of the Borrower payable to the order of
---------
a Lender, in substantially the form of Exhibit "A-2" hereto, and all extensions,
renewals, and modifications thereof and all substitutions therefor.
"Transactions" means the execution, delivery and performance by the
------------
Borrower and each Guarantor of this Agreement and the other Loan Documents to
which it is a party, the borrowing of Loans and the use of the proceeds thereof.
"Type", when used in reference to any Loan or Borrowing, refers to whether
----
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.
"UCC" means the Uniform Commercial Code as in effect in the State of Texas.
---
"Withdrawal Liability" means liability to a Multiemployer Plan as a result
--------------------
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02 Terms Generally. The definitions of terms herein shall
---------------
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.03 Accounting Terms; GAAP. Except as otherwise expressly
----------------------
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
--------
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application
19
thereof on the operation of such provision (or if the Administrative Agent
notifies the Borrower that the Required Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
notice shall have been withdrawn or such provision amended in accordance
herewith.
SECTION 1.04 UCC Changes. All terms used herein which are defined in the
-----------
UCC shall, unless otherwise provided, have the meanings ascribed to them in the
UCC both as in effect on the date of this Agreement and as hereafter amended.
The parties intend that the terms used herein which are defined in the UCC have,
at all times, the broadest and most inclusive meanings possible. Accordingly, if
the UCC shall in the future be amended or held by a court to define any term
used herein more broadly or inclusively than the UCC in effect on the date of
this Agreement, then such term as used herein shall be given such broadened
meaning. If the UCC shall in the future be amended or held by a court to define
any term used herein more narrowly, or less inclusively, than the UCC in effect
on the date of this Agreement, such amendment or holding shall be disregarded in
defining terms used in this Agreement.
ARTICLE II
The Credits
-----------
SECTION 2.01 Commitments. Subject to the terms and conditions set forth
-----------
herein, each Lender agrees (a) to make a Term Loan to the Borrower on the
Effective Date in a principal amount not exceeding its Term Loan Commitment, and
(b) to make Revolving Loans to the Borrower from time to time during the
Availability Period in an aggregate principal amount that will not result in (i)
such Lender's Revolving Credit Exposure exceeding such Lender's Revolving Credit
Commitment, or (ii) the sum of the total Revolving Credit Exposures exceeding
the lesser of the Borrowing Base or the sum of the total Revolving Credit
Commitments. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, prepay and reborrow
Revolving Loans. Amounts repaid in respect of the Term Loans may not be
reborrowed.
SECTION 2.02 Loans and Borrowings.
--------------------
(a) Each Loan shall be made as part of a Borrowing consisting of Loans
of the same Class and Type made by the Lenders ratably in accordance with
their respective Commitments of the applicable Class. The failure of any
Lender to make any Loan required to be made by it shall not relieve any
other Lender of its obligations hereunder; provided that the Commitments of
--------
the Lenders are several and no Lender shall be responsible for any other
Lender's failure to make Loans as required.
(b) Subject to Sections 3.02, 3.03 and 3.04, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may
request in accordance herewith. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of
such Lender to make such Loan;
20
provided that any exercise of such option shall not affect the obligation
--------
of the Borrower to repay such Loan in accordance with the terms of this
Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $100,000 and not less than $500,000. At the time that
each ABR Revolving Loan Borrowing is made, such Borrowing shall be not less
than $500,000 provided that an ABR Revolving Loan Borrowing may be in an
--------
aggregate amount that is equal to the entire unused balance of the total
Revolving Credit Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.04(e).
Borrowings of more than one Type or Class may be outstanding at the same
time; provided that there shall not at any time be more than a total of
--------
eight Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end
after the Revolving Credit Maturity Date or Term Loan Maturity Date, as
applicable.
SECTION 2.03 Requests for Borrowings. To request a Revolving Loan
-----------------------
Borrowing or Term Loan Borrowing, the Borrower shall notify the Administrative
Agent of such request by telephone (a) in the case of a Eurodollar Borrowing,
not later than 11:00 a.m., Dallas, Texas time, three Business Days before the
date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later
than 11:00 a.m., Dallas, Texas time, on the same Business Day as the date of the
proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable
and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request by means of a Borrowing
Request Form signed by the Borrower. Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial Interest Period
to be applicable thereto, which shall be a period contemplated by the
definition of the term "Interest Period"; and
(v) the location and number of the Borrower's account to which funds
are to be disbursed, which shall comply with the requirements of Section
2.05.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar
21
Borrowing, then the Borrower shall be deemed to have selected an Interest Period
of one month's duration. Promptly following receipt of a Borrowing Request in
accordance with this Section, the Administrative Agent shall advise each Lender
of the details thereof and of the amount of such Lender's Loan to be made as
part of the requested Borrowing.
SECTION 2.04 Letters of Credit.
------------------
(a) General. Subject to the terms and conditions set forth herein, the
-------
Borrower may request the issuance of Letters of Credit denominated and
payable in dollars for its own account, in a form reasonably acceptable to
the Administrative Agent and the Issuing Bank, at any time and from time to
time during the Availability Period. Within 30 days after the Effective
Date, the Borrower shall satisfy all conditions necessary for the issuance
of Letters of Credit hereunder in replacement of the letters of credit
issued by ▇▇▇▇▇ Fargo Bank referred to in Section 8.02(d) and, subject to
the satisfaction of such conditions, such letters of credit shall be
terminated and replaced with Letters of Credit issued hereunder within such
30 days. In the event of any inconsistency between the terms and
conditions of this Agreement and the terms and conditions of any form of
letter of credit application or other agreement submitted by the Borrower
to, or entered into by the Borrower with, the Issuing Bank relating to any
Letter of Credit, the terms and conditions of this Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
----------------------------------------------------------
Conditions. To request the issuance of a Letter of Credit (or the
----------
amendment, renewal or extension of an outstanding Letter of Credit), the
Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the
Issuing Bank) to the Issuing Bank and the Administrative Agent (reasonably
in advance of the requested date of issuance, amendment, renewal or
extension) a notice by means of a Letter of Credit Request Form requesting
the issuance of a Letter of Credit, or identifying the Letter of Credit to
be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension (which shall be a Business Day), the date
on which such Letter of Credit is to expire (which shall comply with
paragraph (c) of this Section), the amount of such Letter of Credit, the
name and address of the beneficiary thereof and such other information as
shall be necessary to prepare, amend, renew or extend such Letter of
Credit. If requested by the Issuing Bank, the Borrower also shall submit a
letter of credit application on the Issuing Bank's standard form in
connection with any request for a Letter of Credit. A Letter of Credit
shall be issued, amended, renewed or extended only if (and upon issuance,
amendment, renewal or extension of each Letter of Credit the Borrower shall
be deemed to represent and warrant that), after giving effect to such
issuance, amendment, renewal or extension (i) the LC Exposure shall not
exceed $1,000,000 and (ii) the total Revolving Loan Borrowings and LC
Exposure shall not exceed the lesser of the total Revolving Credit
Commitments and the Borrowing Base then in effect.
(c) Expiration Date. Each Letter of Credit shall expire at or prior to
----------------
the close of business on the earlier of (i) the date one year after the
date of the issuance of such
22
Letter of Credit (or, in the case of any renewal or extension thereof, one
year after such renewal or extension) and (ii) the date that is five
Business Days prior to the Revolving Credit Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an
---------------
amendment to a Letter of Credit increasing the amount thereof) and without
any further action on the part of the Issuing Bank or the Lenders, the
Issuing Bank hereby grants to each Lender, and each Lender hereby acquires
from the Issuing Bank, a participation in such Letter of Credit equal to
such Lender's Applicable Percentage of the aggregate amount available to be
drawn under such Letter of Credit. In consideration and in furtherance of
the foregoing, each Lender hereby absolutely and unconditionally agrees to
pay to the Administrative Agent, for the account of the Issuing Bank, such
Lender's Applicable Percentage of each LC Disbursement made by the Issuing
Bank and not reimbursed by the Borrower on the date due as provided in
paragraph (e) of this Section, or of any reimbursement payment required to
be refunded to the Borrower for any reason. Each Lender acknowledges and
agrees that its obligation to acquire participations pursuant to this
paragraph in respect of Letters of Credit is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including any
amendment, renewal or extension of any Letter of Credit or the occurrence
and continuance of a Default or reduction or termination of the
Commitments, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement
--------------
in respect of a Letter of Credit, the Borrower shall reimburse such LC
Disbursement by paying to the Administrative Agent an amount equal to such
LC Disbursement not later than 12:00 noon, Dallas, Texas time, on the date
that such LC Disbursement is made, if the Borrower shall have received
notice of such LC Disbursement prior to 10:00 a.m., Dallas, Texas time, on
such date, or, if such notice has not been received by the Borrower prior
to such time on such date, then not later than 12:00 noon, Dallas, Texas
time, on (i) the Business Day that the Borrower receives such notice, if
such notice is received prior to 10:00 a.m., Dallas, Texas time, on the day
of receipt, or (ii) the Business Day immediately following the day that the
Borrower receives such notice, if such notice is not received prior to such
time on the day of receipt; provided that the Borrower may, subject to the
--------
conditions to borrowing set forth herein, request in accordance with
Section 2.03 that such payment be financed with an ABR Revolving Borrowing
in an equivalent amount and, to the extent so financed, the Borrower's
obligation to make such payment shall be discharged and replaced by the
resulting ABR Revolving Borrowing. If the Borrower fails to make such
payment when due, the Administrative Agent shall notify each Lender of the
applicable LC Disbursement, the payment then due from the Borrower in
respect thereof and such Lender's Applicable Percentage thereof. Promptly
following receipt of such notice, each Lender shall pay to the
Administrative Agent its Applicable Percentage of the payment then due from
the Borrower, in the same manner as provided in Section 2.05 with respect
to Loans made by such Lender (and Section 2.05 shall apply, mutatis
-------
mutandis, to the payment obligations of the Lenders), and the
--------
Administrative Agent shall promptly pay to the Issuing Bank the amounts so
received by it from the Lenders. Promptly following receipt by the
Administrative Agent of any payment from
23
the Borrower pursuant to this paragraph, the Administrative Agent shall
distribute such payment to the Issuing Bank or, to the extent that Lenders
have made payments pursuant to this paragraph to reimburse the Issuing
Bank, then to such Lenders and the Issuing Bank as their interests may
appear. Any payment made by a Lender pursuant to this paragraph to
reimburse the Issuing Bank for any LC Disbursement (other than the funding
of ABR Revolving Loans as contemplated above) shall not constitute a Loan
and shall not relieve the Borrower of its obligation to reimburse such LC
Disbursement.
(f) Obligations Absolute. The Borrower's obligation to reimburse LC
---------------------
Disbursements as provided in paragraph (e) of this Section shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability
of any Letter of Credit or this Agreement, or any term or provision
therein, (ii) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent or invalid in any respect or any
statement therein being untrue or inaccurate in any respect, (iii) payment
by the Issuing Bank under a Letter of Credit against presentation of a
draft or other document that does not comply with the terms of such Letter
of Credit, or (iv) any other event or circumstance whatsoever, whether or
not similar to any of the foregoing, that might, but for the provisions of
this Section, constitute a legal or equitable discharge of, or provide a
right of setoff against, the Borrower's obligations hereunder. Neither the
Administrative Agent, the Lenders nor the Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or
in connection with the issuance or transfer of any Letter of Credit or any
payment or failure to make any payment thereunder (irrespective of any of
the circumstances referred to in the preceding sentence), or any error,
omission, interruption, loss or delay in transmission or delivery of any
draft, notice or other communication under or relating to any Letter of
Credit (including any document required to make a drawing thereunder), any
error in interpretation of technical terms or any consequence arising from
causes beyond the control of the Issuing Bank; provided that the foregoing
--------
shall not be construed to excuse the Issuing Bank from liability to the
Borrower to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrower to
the extent permitted by applicable law) suffered by the Borrower that are
caused by the Issuing Bank's failure to exercise care when determining
whether drafts and other documents presented under a Letter of Credit
comply with the terms thereof. The parties hereto expressly agree that, in
the absence of gross negligence or willful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction),
the Issuing Bank shall be deemed to have exercised care in each such
determination. In furtherance of the foregoing and without limiting the
generality thereof, the parties agree that, with respect to documents
presented which appear on their face to be in substantial compliance with
the terms of a Letter of Credit, the Issuing Bank may, in its sole
discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of
such Letter of Credit.
24
(g) Disbursement Procedures. The Issuing Bank shall, promptly
------------------------
following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. The Issuing Bank
shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy) of such demand for payment and whether
the Issuing Bank has made or will make an LC Disbursement thereunder;
provided that any failure to give or delay in giving such notice shall not
--------
relieve the Borrower of its obligation to reimburse the Issuing Bank and
the Lenders with respect to any such LC Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC
-----------------
Disbursement, then, unless the Borrower shall reimburse such LC
Disbursement in full on the date such LC Disbursement is made, the unpaid
amount thereof shall bear interest, for each day from and including the
date such LC Disbursement is made to but excluding the date that the
Borrower reimburses such LC Disbursement, at the rate per annum then
applicable to ABR Revolving Loans; provided that, if the Borrower fails to
--------
reimburse such LC Disbursement when due pursuant to paragraph (e) of this
Section, then Section 2.11(c) shall apply. Interest accrued pursuant to
this paragraph shall be for the account of the Issuing Bank, except that
interest accrued on and after the date of payment by any Lender pursuant to
paragraph (e) of this Section to reimburse the Issuing Bank shall be for
the account of such Lender to the extent of such payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be replaced
-------------------------------
at any time by written agreement among the Borrower, the Administrative
Agent, the replaced Issuing Bank and the successor Issuing Bank. The
Administrative Agent shall notify the Lenders of any such replacement of
the Issuing Bank. At the time any such replacement shall become effective,
the Borrower shall pay all unpaid fees accrued for the account of the
replaced Issuing Bank pursuant to Section 2.10(b). From and after the
effective date of any such replacement, (i) the successor Issuing Bank
shall have all the rights and obligations of the Issuing Bank under this
Agreement with respect to Letters of Credit to be issued thereafter and
(ii) references herein to the term "Issuing Bank" shall be deemed to refer
to such successor or to any previous Issuing Bank, or to such successor and
all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall
remain a party hereto and shall continue to have all the rights and
obligations of an Issuing Bank under this Agreement with respect to Letters
of Credit issued by it prior to such replacement, but shall not be required
to issue additional Letters of Credit.
(j) Cash Collateralization. If any Event of Default shall occur and be
-----------------------
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders demanding the deposit of cash
collateral pursuant to this paragraph, the Borrower shall deposit in an
account with the Administrative Agent, in the name of the Administrative
Agent and for the benefit of the Lenders, an amount in cash equal to the LC
Exposure as of such date plus any accrued and unpaid interest thereon;
provided that the obligation to deposit such cash collateral shall become
--------
effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of
any Event
25
of Default with respect to the Borrower described in clause (g) or (h) of
Article X. The Borrower also shall deposit cash collateral pursuant to this
paragraph as and to the extent required by Section 2.09(d). Each such
deposit shall be held by the Administrative Agent as collateral for the
payment and performance of the obligations of the Borrower under this
Agreement. The Administrative Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such account.
Other than any interest earned on the investment of such deposits, which
investments shall be made at the option and sole discretion of the
Administrative Agent and at the Borrower's risk and expense, such deposits
shall not bear interest. Interest or profits, if any, on such investments
shall accumulate in such account. Moneys in such account shall be applied
by the Administrative Agent to reimburse the Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not
so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrower for the LC Exposure at such time or, if the
maturity of the Loans has been accelerated (but subject to the consent of
the Required Lenders, be applied to satisfy other obligations of the
Borrower under this Agreement. If the Borrower is required to provide an
amount of cash collateral hereunder as a result of the occurrence of an
Event of Default, such amount (to the extent not applied as aforesaid)
shall be returned to the Borrower within three Business Days after all
Events of Default have been cured or waived. If the Borrower is required to
provide an amount of cash collateral hereunder pursuant to Section 2.09(d),
such amount (to the extent not applied as aforesaid) shall be returned to
the Borrower as and to the extent that, after giving effect to such return,
the Borrower would remain in compliance with Section 2.09(d) and no Default
shall have occurred and be continuing.
SECTION 2.05 Funding of Borrowings.
---------------------
(a) Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds by
2:00 p.m., Dallas, Texas time, to the account of the Administrative Agent
most recently designated by it for such purpose by notice to the Lenders.
The Administrative Agent will make such Loans available to the Borrower by
promptly crediting the amounts so received, in like funds, to an account of
the Borrower maintained with the Administrative Agent in Dallas, Texas and
designated by the Borrower in the applicable Borrowing Request; provided
that ABR Revolving Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.04(e) shall be remitted by the
Administrative Agent to the Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will
not make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made
such share available on such date in accordance with paragraph (a) of this
Section and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrower severally agree to pay
to the
26
Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is
made available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation
or (ii) in the case of the Borrower, the interest rate applicable to ABR
Loans. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender's Loan included in such Borrowing.
SECTION 2.06 Interest Elections.
------------------
(a) Each Revolving Loan Borrowing and Term Loan Borrowing initially
shall be of the Type specified in the applicable Borrowing Request and, in
the case of a Eurodollar Borrowing, shall have an initial Interest Period
as specified in such Borrowing Request. Thereafter, the Borrower may elect
to convert such Borrowing to a different Type or to continue such Borrowing
and, in the case of a Eurodollar Borrowing, may elect Interest Periods
therefor, all as provided in this Section. The Borrower may elect different
options with respect to different portions of the affected Borrowing, in
which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each
such portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time
that a Borrowing Request would be required under Section 2.03 if the
Borrower were requesting a Borrowing of the Type resulting from such
election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent
of a written Interest Election Request by means of a Borrowing Request Form
signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall specify
the following information in compliance with Section 2.02 and 2.03:
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to
clauses (iii) and (iv) below shall be specified for each resulting
Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or
a Eurodollar Borrowing; and
27
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of
such Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as
provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies
the Borrower, then, so long as an Event of Default is continuing (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar
Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto.
(f) A Borrowing of any Class may not be converted to or continued as a
Eurodollar Borrowing if after giving effect thereto (i) the Interest Period
therefor would commence before and end after a date on which any principal
of the Loans of such Class is scheduled to be repaid and (ii) the sum of
the aggregate principal amount of the outstanding Eurodollar Borrowings of
such Class with Interest Periods ending on or prior to such scheduled
repayment date plus the aggregate principal amount of outstanding ABR
Borrowings of such Class would be less than the aggregate principal amount
of the Loans of such Class required to be repaid on such scheduled
repayment date.
SECTION 2.07 Termination and Reduction of Commitments.
----------------------------------------
(a) Unless previously terminated, (i) the Term Loan Commitments shall
terminate at 5:00 p.m., Dallas, Texas time, on the Effective Date and (ii)
the Revolving Credit Commitments shall terminate on the Revolving Credit
Maturity Date.
(b) The Borrower may at any time terminate, or from time to time
reduce, the Commitments of any Class; provided that (i) each reduction of
--------
the Commitments of any Class shall be in an amount that is an integral
multiple of $500,000 and not less than $1,000,000, or if less, the amount
of such Commitment, and (ii) the Borrower shall not terminate or reduce the
Revolving Credit Commitments if, after giving effect to any concurrent
prepayment of the Revolving Loans in accordance with Section 2.09, the
Revolving Credit Exposures would exceed the total Revolving Credit
Commitments.
28
(c) The Borrower shall notify the Administrative Agent of any election
to terminate or reduce the Commitments under paragraph (b) of this Section
at least two Business Days prior to the effective date of such termination
or reduction, specifying such election and the effective date thereof.
Promptly following receipt of any notice, the Administrative Agent shall
advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; provided that a
--------
notice of termination of the Revolving Credit Commitments delivered by the
Borrower may state that such notice is conditioned upon the effectiveness
of other credit facilities, in which case such notice may be revoked by the
Borrower (by notice to the Administrative Agent on or prior to the
specified effective date) if such condition is not satisfied. Any
termination or reduction of the Commitments of any Class shall be
permanent. Each reduction of the Commitments of any Class shall be made
ratably among the Lenders in accordance with their respective Commitments
of such Class.
SECTION 2.08 Repayment of Loans; Evidence of Debt.
-------------------------------------
(a) The Borrower hereby unconditionally promises to pay (i) to the
Administrative Agent for the account of each Lender the then unpaid
principal amount of each Revolving Loan on the Revolving Credit Maturity
Date and (ii) to the Administrative Agent for the account of each Lender
the then unpaid principal amount of each Term Loan as provided in paragraph
(b) of this Section.
(b) The Borrower shall repay Term Loan Borrowings on each date set
forth below in aggregate principal amount set forth opposite such date:
Date Amount
---- ------
December 31, 2001 $ 500,000
March 31, 2002 $1,000,000
June 30, 2002 $1,500,000
September 30, 2002 $1,500,000
December 31, 2002 $1,500,000
March 31, 2003 $1,500,000
June 30, 2003 $1,500,000
September 30, 2003 $1,500,000
December 31, 2003 $1,500,000
March 31, 2004 $ 500,000
To the extent not previously paid, all Term Loans shall be due and payable
on the Term Loan Maturity Date. Any prepayment of a Term Loan Borrowing
shall be applied to scheduled repayments of the Term Loan Borrowings to be
made pursuant to this paragraph (b) in inverse order of maturity. Prior to
any repayment of any Term Loan
29
Borrowings, the Borrower shall select the Borrowing or Borrowings to be
repaid and shall notify the Administrative Agent by telephone (confirmed by
telecopy) of such selection not later than 11:00 a.m., Dallas, Texas time,
two Business Days before the scheduled date of such repayment. Each
repayment of a Borrowing shall be applied ratably to the loans included in
the repaid Borrowing. Repayments of Term Loan Borrowings shall be
accompanied by accrued interest on the amount repaid.
(c) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
hereunder.
(d) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received
by the Administrative Agent hereunder for the account of the Lenders and
each Lender's share thereof.
(e) The entries made in the accounts maintained pursuant to paragraph
(c) or (d) of this Section shall be prima facie evidence of the existence
----- -----
and amounts of the obligations recorded therein; provided that the failure
--------
of any Lender or the Administrative Agent to maintain such accounts or any
error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
(f) The obligation of the Borrower to repay each Lender for Revolving
Loans made by such Lender and interest thereon shall be evidenced by a
Revolving Credit Note executed by the Borrower, payable to the order of
such Lender, in the principal amount of such Lender's Revolving Credit
Commitment as in effect on the date hereof, and initially dated the date
hereof.
(g) The obligation of the Borrower to repay each Lender for Term Loans
made by such Lender and interest thereon shall be evidenced by a Term Note
executed by the Borrower, payable to the order of such Lender, in the
principal amount of such Lender's Term Commitment as in effect on the date
hereof, and initially dated the date hereof.
SECTION 2.09 Prepayment of Loans.
-------------------
(a) The Borrower shall have the right at any time and from time to time
to prepay any Borrowing in whole or in part, subject to the requirements of
this Section.
(b) Prior to any optional or mandatory prepayment of Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings to be
prepaid and shall specify such selection in the notice of such prepayment
pursuant to paragraph (c) of this Section.
30
(c) The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing that will be made before the last day
of the applicable Interest Period and shall pay all amounts required to be
paid by Section 3.05 concurrently with such prepayment. Such notice shall
be given not later than 11:00 a.m., Dallas, Texas time, two Business Days
before the date of prepayment. Each such notice shall be irrevocable and
shall specify the prepayment date and the principal amount of each
Borrowing or portion thereof to be prepaid; provided that, if a notice of
--------
prepayment is given in connection with a conditional notice of termination
of the Commitments as contemplated by Section 2.07, then such notice of
prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.07. Promptly following receipt of any such
notice, the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial prepayment of any Borrowing shall be in an amount
that would be permitted in the case of an advance of a Borrowing of the
same Type as provided in Section 2.02. Each prepayment of a Borrowing shall
be applied ratably to the Loans included in the prepaid Borrowing.
Prepayments shall be accompanied by accrued interest to the extent required
by Section 2.11.
(d) If at any time the total Revolving Credit Exposures exceeds the
lesser of the Borrowing Base and the total Revolving Credit Commitments,
the Borrower shall promptly prepay the outstanding Borrowings by the amount
of the excess (or, if no such Borrowings are outstanding, deposit cash
collateral in an account with the Administrative Agent pursuant to Section
2.04(j) in an aggregate amount equal to such excess).
(e) Following the end of each fiscal year of the Borrower, commencing
with the fiscal year ending December 31, 2002, the Borrower shall prepay
Term Borrowings in an aggregate amount equal to 50% of Excess Cash Flow for
such fiscal year. Each prepayment pursuant to this paragraph shall be made
on or before the date on which financial statements are delivered pursuant
to Section 7.01 with respect to the fiscal year for which Excess Cash Flow
is being calculated (and in any event within 90 days after the end of such
fiscal year).
SECTION 2.10 Fees.
----
(a) The Borrower agrees to pay to the Administrative Agent for the
account of each Lender (pro rata in accordance with the Revolving Credit
Commitment of each Lender) a Commitment Fee on the daily average unused
amount of the Revolving Credit Commitments for the Availability Period, at
the rate per annum set forth in the definition of Applicable Margin. For
purposes of calculating the Commitment Fee hereunder, the Revolving Credit
Commitments shall be deemed utilized by the amount of all Revolving Loan
Borrowings and LC Exposure. Accrued Commitment Fees payable under this
Section shall be payable in arrears on the last day of March, June,
September and December of each year and on the date on which the Revolving
Credit Commitments terminate, commencing on the first such date to occur
after the date hereof. All Commitment Fees shall be computed on the basis
of a year of 360 days and shall be
31
payable for the actual number of days elapsed (including the first day but
excluding the last day).
(b) The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at the rate of
3.15% per annum on the average daily amount of such Lender's LC Exposure
(excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective Date to
but excluding the later of the date on which such Lender's Revolving Credit
Commitment terminates and the date on which such Lender ceases to have any
LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall
accrue at the rate of 1/8% per annum on the average daily amount of the LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective Date to
but excluding the later of the date of termination of the Revolving Credit
Commitments and the date on which there ceases to be any LC Exposure, as
well as the Issuing Bank's standard fees with respect to the issuance,
amendment, renewal or extension of any Letter of Credit or processing of
drawings thereunder. Participation fees and fronting fees accrued through
and including the last day of March, June, September and December of each
year shall be payable on the third Business Day following such last day,
commencing on the first such date to occur after the Effective Date;
provided that all such fees shall be payable on the date on which the
--------
Revolving Credit Commitments terminate and any such fees accruing after the
date on which the Revolving Credit Commitments terminate shall be payable
on demand. Any other fees payable to the Issuing Bank pursuant to this
paragraph shall be payable within 10 days after demand. All participation
fees and fronting fees shall be computed on the basis of a year of 360 days
and shall be payable for the actual number of days elapsed (including the
first day but excluding the last day).
(c) The Borrower agrees to pay to the Administrative Agent, for its own
account, fees payable in the amounts and at the times separately agreed
upon between the Borrower and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for distribution, in the case of
Commitment Fees, to the Lenders. Fees paid shall not be refundable under
any circumstances.
SECTION 2.11 Interest.
--------
(a) The Loans comprising each ABR Borrowing shall bear interest at the
Alternate Base Rate plus the Applicable Margin.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest
at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Margin.
32
(c) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is
not paid when due, whether at stated maturity, upon acceleration or
otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal
of any Loan, 2% plus the rate otherwise applicable to such Loan as provided
in the preceding paragraphs of this Section or (ii) in the case of any
other amount, including interest and fees, 2% plus the rate applicable to
ABR Loans as provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears (1) on
each Interest Payment Date for such Loan, (2) in the case of Revolving
Loans, upon the earlier of the Revolving Credit Maturity Date and the date
of termination of the Revolving Credit Commitments, and (3) in the case of
Term Loans, upon the Term Loan Maturity Date; provided that (i) interest
--------
accrued pursuant to paragraph (c) of this Section shall be payable on
demand, (ii) in the event of any repayment or prepayment of any Loan (other
than a prepayment of an ABR Revolving Loan prior to the end of the
Availability Period), accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or prepayment and
(iii) in the event of any conversion of any Eurodollar Loan prior to the
end of the current Interest Period therefor, accrued interest on such Loan
shall be payable on the effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base
Rate at times when the Alternate Base Rate is based on the Prime Rate shall
be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days
elapsed (including the first day but excluding the last day). The
applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.
SECTION 2.12 Taxes.
-----
(a) Any and all payments by or on account of any obligation of the
Borrower hereunder shall be made free and clear of and without deduction
for any Indemnified Taxes or Other Taxes; provided that if the Borrower
--------
shall be required to deduct any Indemnified Taxes or Other Taxes from such
payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent,
Lender or Issuing Bank (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant Governmental Authority in accordance
with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
33
(c) The Borrower shall indemnify the Administrative Agent, each Lender
and the Issuing Bank, within 10 days after written demand therefor, for the
full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender or the Issuing Bank, as the case may be,
on or with respect to any payment by or on account of any obligation of the
Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability
delivered to the Borrower by a Lender or Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or Issuing
Bank, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a
copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement shall deliver to the Borrower
(with a copy to the Administrative Agent), at the time or times prescribed
by applicable law, such properly completed and executed documentation
prescribed by applicable law or reasonably requested by the Borrower as
will permit such payments to be made without withholding or at a reduced
rate.
SECTION 2.13 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
-----------------------------------------------------------
(a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees, or reimbursement of LC
Disbursements or of amounts payable under Section 2.12, 3.01 or 3.05, or
otherwise) prior to 12:00 noon, Dallas, Texas time, on the date when due,
in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next
succeeding Business Day for purposes of calculating interest thereon. All
such payments shall be made to the Administrative Agent at its offices at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, except payments to be made directly
to the Issuing Bank and except that payments pursuant to Sections 2.12,
3.01, 3.05 and 12.03 shall be made directly to the Persons entitled
thereto. The Administrative Agent shall distribute any such payments
received by it for the account of any other Person to the appropriate
recipient promptly following receipt thereof. If any payment hereunder
shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of
any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments hereunder shall be made in dollars.
34
(b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal,
unreimbursed LC Disbursements, interest and fees then due hereunder, such
funds shall be applied (i) first, towards payment of interest and fees then
due hereunder, ratably among the parties entitled thereto in accordance
with the amounts of interest and fees then due to such parties, and (ii)
second, towards payment of principal and unreimbursed LC Disbursements then
due hereunder, ratably among the parties entitled thereto in accordance
with the amounts of principal and unreimbursed LC Disbursements then due to
such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans or participations in LC Disbursements
resulting in such Lender receiving payment of a greater proportion of the
aggregate amount of its Loans and participations in LC Disbursements and
accrued interest thereon than the proportion received by any other Lender,
then the Lender receiving such greater proportion shall purchase (for cash
at face value) participations in the Loans and participations in LC
Disbursements of other Lenders to the extent necessary so that the benefit
of all such payments shall be shared by the Lenders ratably in accordance
with the aggregate amount of principal of and accrued interest on their
respective Loans and participations in LC Disbursements; provided that (i)
--------
if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be
rescinded and the purchase price restored to the extent of such recovery,
without interest, and (ii) the provisions of this paragraph shall not be
construed to apply to any payment made by the Borrower pursuant to and in
accordance with the express terms of this Agreement or any payment obtained
by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in LC Disbursements to
any assignee or participant, other than to the Borrower or any Subsidiary
or Affiliate thereof (as to which the provisions of this paragraph shall
apply). The Borrower consents to the foregoing and agrees, to the extent it
may effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against
the Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that the Borrower will not make such payment, the Administrative
Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute
to the Lenders or the Issuing Bank, as the case may be, the amount due. In
such event, if the Borrower has not in fact made such payment, then each of
the Lenders or the Issuing Bank, as the case may be, severally agrees to
repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender or the Issuing Bank with interest thereon, for
each day from and including the date such amount is distributed to it to
but excluding the date of payment to the Administrative Agent, at the
greater of
35
the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.
(e) If any Lender shall fail to make any payment required to be made by
it pursuant to Section 2.04(d) or (e), 2.05(b), or 2.13(d), then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such
Lender's obligations under such Sections until all such unsatisfied
obligations are fully paid.
SECTION 2.14 Mitigation Obligations; Replacement of Lenders.
----------------------------------------------
(a) If any Lender requests compensation under Section 3.01, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section
2.12, then such Lender shall use reasonable efforts to designate a
different lending office for funding or booking its Loans hereunder or to
assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable
pursuant to Section 2.12 or 3.01, as the case may be, in the future and
(ii) would not subject such Lender to any unreimbursed cost or expense and
would not otherwise be disadvantageous to such Lender. The Borrower hereby
agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 3.01, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section
2.12, or if any Lender defaults in its obligation to fund Loans hereunder,
then the Borrower may, at its sole expense and effort, upon notice to such
Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 12.04), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior
--------
written consent of the Administrative Agent (and, if a Revolving Credit
Commitment is being assigned, the Issuing Bank), which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of
an amount equal to the outstanding principal of its Loans and
participations in LC Disbursements, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder, from the assignee (to the
extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts) and (iii) in the case of any
such assignment resulting from a claim for compensation under Section 3.01
or payments required to be made pursuant to Section 2.12, such assignment
will result in a reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and
delegation cease to apply.
36
ARTICLE III
Yield Protection and Illegality
-------------------------------
SECTION 3.01 Increased Costs.
---------------
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing
Bank; or
(ii) impose on any Lender or the Issuing Bank or the London
interbank market any other condition affecting this Agreement or
Eurodollar Loans made by such Lender or any Letter of Credit or
participation therein;
and the result of any of the foregoing shall be to increase the cost to
such Lender of making or maintaining any Eurodollar Loan (or of maintaining
its obligation to make any such Loan) or to increase the cost to such
Lender or the Issuing Bank of participating in, issuing or maintaining any
Letter of Credit or to reduce the amount of any sum received or receivable
by such Lender or the Issuing Bank hereunder (whether of principal,
interest or otherwise), then the Borrower will pay to such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank, as the case may be, for such
additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the
rate of return on such Lender's or the Issuing Bank's capital or on the
capital of such Lender's or the Issuing Bank's holding company, if any, as
a consequence of this Agreement or the Loans made by, or participations in
Letters of Credit held by, such Lender or the Letters of Credit issued by
the Issuing Bank, to a level below that which such Lender or the Issuing
Bank or such Lender's or the Issuing Bank's holding company could have
achieved but for such Change in Law (taking into consideration such
Lender's or the Issuing Bank's policies and the policies of such Lender's
or the Issuing Bank's holding company with respect to capital adequacy),
then from time to time the Borrower will pay to such Lender or the Issuing
Bank such additional amount or amounts as will compensate such Lender or
the Issuing Bank or such Lender's or the Issuing Bank's holding company for
any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank
or its holding company, as the case may be, as specified in paragraph (a)
or (b) of this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower
37
shall pay such Lender or the Issuing Bank the amount shown as due on any
such certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver
of such Lender's or the Issuing Bank's right to demand such compensation;
provided that the Borrower shall not be required to compensate a Lender or
--------
the Issuing Bank pursuant to this Section for any increased costs or
reductions incurred more than 270 days prior to the date that such Lender
or the Issuing Bank, as the case may be, notifies the Borrower of the
Change in Law giving rise to such increased costs or reductions and of such
Lender's or the Issuing Bank's intention to claim compensation therefor;
provided further that, if the Change in Law giving rise to such increased
-------- -------
costs or reductions is retroactive, then the 270-day period referred to
above shall be extended to include the period of retroactive effect
thereof.
SECTION 3.02 Alternate Rate of Interest. If prior to the commencement of
---------------------------
any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as
applicable, for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest
Period will not adequately and fairly reflect the cost to such Lenders (or
Lender) of making or maintaining their Loans (or its Loan) included in such
Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
SECTION 3.03 Illegality. Notwithstanding any other provision of this
----------
Agreement, in the event that it becomes unlawful for any Lender or its
applicable lending office to (a) honor its obligation to make Eurodollar
Borrowings hereunder or (b) maintain Eurodollar Borrowings hereunder, then such
Lender shall promptly notify the Borrower (with a copy to the Administrative
Agent) thereof and such Lender's obligation to make or maintain Eurodollar
Borrowings and to convert other Types of Borrowings into Eurodollar Borrowings
hereunder shall be suspended until such time as such Lender may again make and
maintain Eurodollar Borrowings, in which case (i) all Borrowings which would be
otherwise made by such Lender as Eurodollar Borrowings shall be made instead as
ABR Borrowings and all Borrowings which
38
would otherwise be converted into (or continued as) Eurodollar Borrowings shall
be converted instead into (or shall remain as) ABR Borrowings and (ii) if such
Lender so requests by notice to the Borrower (with a copy to the Administrative
Agent), all Eurodollar Borrowings of such Lender shall be automatically
converted into ABR Borrowings on the date specified by such Lender in such
notice.
SECTION 3.04 Treatment of Affected Borrowings. If the Eurodollar
---------------------------------
Borrowings of any Lender are to be converted pursuant to Section 3.03 hereof,
such Lender's Eurodollar Borrowings shall be automatically converted into ABR
Borrowings on the last day(s) of the then current Interest Period(s) for such
Eurodollar Borrowings (or on such earlier date as such Lender may specify to the
Borrower with a copy to the Administrative Agent) and, unless and until such
Lender gives notice as provided below that the circumstances specified in
Section 3.03 hereof which gave rise to such conversion no longer exist:
(a) To the extent that such Lender's Eurodollar Borrowings have been so
converted, all payments and prepayments of principal which would otherwise
be applied to such Lender's Eurodollar Borrowings shall be applied instead
to its ABR Borrowings;
(b) All Borrowings which would otherwise be made or continued by such
Lender as Eurodollar Borrowings shall be made as or converted into ABR
Borrowings and all Borrowings of such Lender which would otherwise be
converted into Eurodollar Borrowings shall be converted instead into (or
shall remain as) ABR Borrowings; and
If such Lender gives notice to the Borrower (with a copy to the Administrative
Agent) that the circumstances specified in Section 3.03 hereof which gave rise
to the conversion of such Lender's Eurodollar Borrowings pursuant to this
Section 3.04 no longer exist (which such Lender agrees to do promptly upon such
circumstances ceasing to exist) at a time when Eurodollar Borrowings are
outstanding, such Lender's ABR Borrowings shall be automatically converted, on
the first day(s) of the next succeeding Interest Period(s) for such outstanding
Eurodollar Borrowings to the extent necessary so that, after giving effect
thereto, all Borrowings held by the Lenders holding Eurodollar Borrowings and by
such Lender are held pro rata (as to principal amounts, Types, and Interest
Periods) in accordance with their respective Commitments.
SECTION 3.05 Break Funding Payments. In the event of (a) the payment of
-----------------------
any principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto, (c) the failure to borrow, convert, continue or
prepay any Loan on the date specified in any notice delivered pursuant hereto
(regardless of whether such notice may be revoked under Section 2.09(c) and is
revoked in accordance therewith), or (d) the assignment of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto as a result
of a request by the Borrower pursuant to Section 2.14, then, in any such event,
the Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event. In the case of a Eurodollar Loan, such loss, cost or
expense to any Lender shall be deemed to include an amount determined by such
Lender to be the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Loan had such event not occurred, at the
Adjusted LIBO Rate that would have
39
been applicable to such Loan, for the period from the date of such event to the
last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would have been the
Interest Period for such Loan), over (ii) the amount of interest which would
accrue on such principal amount for such period at the interest rate which such
Lender would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay such Lender the amount shown as due on any such certificate within 10
days after receipt thereof.
ARTICLE IV
Security
--------
SECTION 4.01 Collateral. To secure full and complete payment and
-----------
performance of the Obligations, the Borrower shall execute and deliver or cause
to be executed and delivered the documents described below covering the property
and collateral described in this Section 4.01 (which, together with any other
property and collateral which may now or hereafter secure the Obligations or any
part thereof, is sometimes herein called the "Collateral"):
----------
(a) The Borrower will, and will cause each of the Guarantors to, grant
to the Administrative Agent, for the benefit of the Administrative Agent,
the Issuing Bank and the Lenders, a first priority security interest in all
of its accounts, accounts receivable, contract rights, equipment,
machinery, furniture, fixtures, inventory, chattel paper, documents,
instruments, general intangibles, investment property, deposit accounts,
letter-of-credit rights, commercial tort claims, supporting obligations,
intellectual property, and Equity Interests in its Subsidiaries, whether
now owned or hereafter acquired, and all products and cash and noncash
proceeds thereof, pursuant to the Security Agreement; provided that not
more than 65% of the Equity Interests of any Foreign Subsidiary shall be
required to be subject to such security interest.
(b) The Borrower will, and will cause each of its Subsidiaries to,
execute and cause to be executed such further documents and instruments,
including without limitation, Uniform Commercial Code financing statements,
as the Administrative Agent, in its sole discretion, deems necessary or
desirable to evidence and perfect its Liens in the Collateral.
ARTICLE V
Representations and Warranties
------------------------------
The Borrower represents and warrants to the Administrative Agent, the
Issuing Bank and the Lenders that:
40
SECTION 5.01 Organization; Powers. Each of the Borrower and its
---------------------
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where because of the nature of
its activities or properties such qualification is required.
SECTION 5.02 Authorization; Enforceability. The Transactions are within
------------------------------
the powers of the Borrower and the Subsidiaries, respectively, and have been
duly authorized by all necessary action. This Agreement and the other Loan
Documents to which Borrower or any Guarantor is a party have been duly executed
and delivered by such Person and constitutes a legal, valid and binding
obligation of such Person, enforceable in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
SECTION 5.03 Governmental Approvals; No Conflicts. The Transactions (a)
-------------------------------------
do not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as have been obtained
or made and are in full force and effect and except filings necessary to perfect
Liens created under the Loan Documents, (b) will not violate any applicable law
or regulation or the charter, by-laws or other organizational documents of the
Borrower or any of its Subsidiaries or any order of any Governmental Authority,
(c) will not violate or result in a default under any indenture, agreement or
other instrument binding upon the Borrower or any of its Subsidiaries, or their
respective assets, or give rise to a right thereunder to require any payment to
be made by the Borrower or any of its Subsidiaries, except where such violation
or default could not reasonably be expected to result in a Material Adverse
Effect, and (d) will not result in the creation or imposition of any Lien on any
asset of the Borrower or any of its Subsidiaries, other than Liens created or
imposed by the Loan Documents.
SECTION 5.04 Financial Condition; No Material Adverse Change.
-----------------------------------------------
(a) The Borrower has heretofore furnished to the Lenders its
consolidated balance sheet and statements of income, stockholders' equity
and cash flows (i) as of and for the fiscal years ended December 31, 1999
and December 31, 2000, audited by KPMG LLP, independent public accountants
and (ii) as of and for the fiscal quarter and portion of the fiscal year
ended March 31, 2001, certified by its chief financial officer. Such
financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Borrower
and its consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence
of footnotes in the case of the statements referred to in clause (ii)
above.
41
(b) Since December 31, 2000, there has been no material adverse change
in the business, assets, operations or condition, financial or otherwise,
of the Borrower and its Subsidiaries, taken as a whole.
(c) StarGuide has heretofore furnished to the Lenders its consolidated
balance sheet and statements of income, stockholders' equity and cash flows
(i) as of and for the fiscal years ended December 31, 1999 and December 31,
2000, audited by KPMG LLP, independent public accountants and (ii) as of
and for the fiscal quarter ended March 31, 2001, certified by its chief
financial officer. Such financial statements present fairly, in all
material respects, the financial position and results of operations and
cash flows of StarGuide and its consolidated subsidiaries as of such dates
and for such periods in accordance with GAAP, subject to year-end audit
adjustments and the absence of footnotes in the case of the statements
referred to in clause (ii) above.
(d) Since December 31, 2000, there has been no material adverse change
in the business, assets, operations or condition, financial or otherwise,
of StarGuide and its subsidiaries, taken as a whole.
(e) Except as disclosed in the financial statements referred to above
or the notes thereto and except for Disclosed Matters, after giving effect
to the Transactions, none of the Borrower or its Subsidiaries has, as of
the Effective Date, any material contingent liabilities, unusual long term
commitments or unrealized losses.
SECTION 5.05 Properties.
----------
(a) Each of the Borrower and its Subsidiaries has good title to, or
valid leasehold interests in, all its real and personal property material
to its business, except for minor defects in title that do not interfere
with its ability to conduct its business as currently conducted or to
utilize such properties for their intended purposes, and none of the
properties, assets or leasehold interests of the Borrower or any Subsidiary
is subject to any Lien, except as permitted by Section 8.02.
(b) Each of the Borrower and its Subsidiaries owns, or is licensed to
use, all trademarks, tradenames, copyrights, patents and other intellectual
property material to its business, and the use thereof by the Borrower and
its Subsidiaries does not infringe upon the rights of any other Person,
except for any such infringements that, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.06 Litigation and Environmental Matters.
------------------------------------
(a) There are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending against or, to the knowledge
of the Borrower, threatened against or affecting the Borrower or any of its
Subsidiaries (i) as to which there is a reasonable possibility of an
adverse determination and that, if adversely determined, could reasonably
be expected, individually or in the aggregate, to result in a
42
Material Adverse Effect (other than the Disclosed Matters) or (ii) that
involve this Agreement, any of the other Loan Documents or the
Transactions.
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect, neither the Borrower
nor any of its Subsidiaries (i) has failed to comply with any Environmental
Law or to obtain, maintain or comply with any permit, license or other
approval required under any Environmental Law, (ii) has become subject to
any Environmental Liability, (iii) has received notice of any claim with
respect to any Environmental Liability or (iv) knows of any basis for any
Environmental Liability.
(c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 5.07 Compliance with Laws and Agreements. Each of the Borrower
------------------------------------
and its Subsidiaries is in compliance with all laws, regulations and orders of
any Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 5.08 Investment and Holding Company Status. Neither the Borrower
--------------------------------------
nor any of its Subsidiaries is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 5.09 Taxes. Each of the Borrower and its Subsidiaries has timely
-----
filed or caused to be filed all Tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid by
it, except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which the Borrower or such Subsidiary, as applicable, has
set aside on its books adequate reserves or (b) to the extent that the failure
to do so could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 5.10 ERISA. No ERISA Event has occurred or is reasonably
------
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $1,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $1,000,000 the fair
market value of the assets of all such underfunded Plans.
43
SECTION 5.11 Disclosure. The Borrower has disclosed to the Lenders all
-----------
agreements, instruments and corporate or other restrictions to which it, any of
its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of the reports, financial statements,
certificates or other information furnished by or on behalf of the Borrower to
the Administrative Agent or any Lender in connection with the negotiation of
this Agreement or delivered hereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that,
--------
with respect to projected financial information, the Borrower represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time.
SECTION 5.12 Indebtedness. The Borrower and its Subsidiaries have no
-------------
Indebtedness, except as disclosed on Schedule 8.01 or otherwise permitted by
Section 8.01.
SECTION 5.13 Subsidiaries. The Borrower has no Subsidiaries other than
-------------
those listed on Schedule 5.13 hereto, and Schedule 5.13 sets forth the
jurisdiction of organization of each Subsidiary and the percentage of the
Borrower's or any Subsidiary's ownership of the outstanding voting stock or
other ownership or Equity Interests of each Subsidiary. All of the outstanding
Equity Interests of each Subsidiary have been validly issued, is fully paid, and
is nonassessable. The Borrower shall, from time to time as necessary, deliver to
the Administrative Agent an updated Schedule 5.13 to this Agreement, together
with a certificate of an authorized officer of the Borrower certifying that the
information set forth in such schedule is true, correct and complete as of such
date.
SECTION 5.14 Inventory. All inventory of the Borrower and its
----------
Subsidiaries has been and will hereafter be produced in compliance with all
applicable laws, rules, regulations, and governmental standards, including,
without limitation, the minimum wage and overtime provisions of the Fair Labor
Standards Act, as amended (29 U.S.C. (S)(S) 201-219), and the regulations
promulgated thereunder, except any noncompliance that does not have a Material
Adverse Effect.
SECTION 5.15 Patents, Trademarks and Copyrights. Schedule 5.15 sets
-----------------------------------
forth a true, accurate and complete listing, as of the date hereof, of all
patents, trademarks and copyrights, and applications therefor, of the Borrower
and its Subsidiaries. Except as created or permitted under the Loan Documents,
no Lien exists with respect to the interests of the Borrower or any Subsidiary
in any such patents, trademarks, copyrights or applications, and neither the
Borrower nor any Subsidiary has transferred or subordinated any interest it may
have in such patents, trademarks, copyrights and applications, except for
licenses permitted by Section 8.09(b). The Borrower shall, from time to time as
necessary, deliver to the Administrative Agent an updated Schedule 5.15 to this
Agreement, together with a certificate of an authorized officer of the Borrower
certifying that the information set forth on such schedule is true, correct and
complete as of such date. Upon the request of the Administrative Agent at any
time, the
44
Borrower shall execute and deliver and cause to be executed and delivered
assignments of all patents, trademarks, copyrights and applications therefor
included in the Collateral, in favor of the Administrative Agent for the benefit
of the Administrative Agent and the Lenders, which assignments shall be in form
and substance satisfactory to the Administrative Agent and in proper form (i)
for recording in the U.S. Patent and Trademark Office to properly reflect the
Administrative Agent's security interest in all U.S. patents, trademarks and
applications therefor included in the Collateral and (ii) for recording with the
U.S. Library of Congress to properly reflect the Administrative Agent's security
interest in all U.S. copyrights and applications therefor included in the
Collateral.
SECTION 5.16 Margin Securities. Neither the Borrower nor any of its
-----------------
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying any
"margin stock" within the meaning of Regulation T, U or X of the Board, as
amended. No part of the proceeds of any Borrowing will be used, directly or
indirectly, to purchase or carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying margin stock.
SECTION 5.17 Labor Matters. Except for any of the following that would
--------------
not have a Material Adverse Effect, (a) there are no actual or threatened
strikes, labor disputes, slow downs, walkouts, work stoppages, or other
concerted interruptions of operations that involve any employees employed at any
time in connection with the business activities or operations at any of the
Borrower's or its Subsidiaries' locations, (b) hours worked by and payment made
to the employees of the Borrower or its Subsidiaries have not been in violation
of the Fair Labor Standards Act or any other applicable laws, rules and
regulations pertaining to labor matters, (c) all payments due from the Borrower
or its Subsidiaries for employee health and welfare insurance, including,
without limitation, workers' compensation insurance, have been paid or accrued
as a liability on its books, (d) the business activities and operations of the
Borrower and its Subsidiaries are in compliance with the Occupational Safety and
Health Act of 1970, 29 U.S.C. (S) 651 et seq. and other applicable health and
safety laws, rules and regulations.
SECTION 5.18 Solvency. On the Effective Date and on the date of each
--------
Borrowing, the Borrower and each of its Subsidiaries are, and after giving
effect to the Transactions and the requested Borrowing, will be, Solvent.
SECTION 5.19 Burdensome Agreements. Neither the Borrower nor any of its
---------------------
Subsidiaries are a party to any agreements which contain any unusual or
burdensome provisions which are reasonably likely to result in a Material
Adverse Effect.
SECTION 5.20 Permits, Licenses, Etc. The Borrower and each of its
----------------------
Subsidiaries possess all material permits, licenses, patents, patent rights,
trademarks, trademark rights, trade names, trade name rights and copyrights
which are required to conduct their respective businesses.
45
ARTICLE VI
Conditions
----------
SECTION 6.01 Effective Date. The obligations of the Lenders to make
--------------
Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not
become effective until the date on which the Administrative Agent (or its
counsel) has received (or waived in accordance with Section 12.02) each of the
following, in form and substance satisfactory to the Administrative Agent:
(a) Credit Agreement. Either (i) a counterpart of this Agreement
----------------
signed on behalf of each party hereto or (ii) written evidence satisfactory
to the Administrative Agent (which may include telecopy transmission of a
signed signature page of this Agreement) that such party has signed a
counterpart of this Agreement.
(b) Organizational and Authorization Matters. Such documents and
----------------------------------------
certificates as the Administrative Agent or its counsel may request
relating to the organization, existence and good standing of the Borrower
and its Subsidiaries, the authorization of the Transactions, incumbency of
officers, specimen signatures and any other legal matters relating to the
Borrower, its Subsidiaries, the Loan Documents or the Transactions, all in
form and substance satisfactory to the Administrative Agent and its
counsel.
(c) Corporate Structure. Evidence of the Borrower's corporate and
-------------------
subsidiary structure, which evidence and structure shall be satisfactory to
the Administrative Agent.
(d) Governmental and Third Party Approvals. All governmental and
--------------------------------------
third-party approvals necessary or advisable, in the judgment of the
Administrative Agent, in connection with the Loans and in connection with
the continuing operations of each of the Borrower and its Subsidiaries.
(e) Financial Statements. The financial statements specified in
--------------------
Section 5.04, which shall be satisfactory to the Administrative Agent.
(f) Reports and Opinions. An independent auditor's most recent
--------------------
management letter and unqualified report and opinion on the Borrower's
financial statements.
(g) Notes. The Notes executed by the Borrower.
-----
(h) Security Agreement. The Security Agreement executed by the
------------------
Borrower and the Guarantors.
(i) Financing Statements. Uniform Commercial Code financing statements
--------------------
executed by the Borrower and the Guarantors and covering the Collateral.
46
(j) Equity Interests. The original certificates representing the
----------------
Equity Interests included in the Collateral, together with transfer powers
duly executed in blank by the Borrower and the applicable Guarantors.
(k) Instruments and Chattel Paper. The originals of any and all
-----------------------------
instruments and chattel paper included in the Collateral, including without
limitation, all promissory notes evidencing all intercompany Indebtedness
owed to Borrower or any Guarantor by Borrower or any Subsidiary, each
endorsed to the order of the Administrative Agent.
(l) Intellectual Property Documentation. Documentation satisfactory to
-----------------------------------
the Administrative Agent, executed by the appropriate parties, (i) for
recording in the U.S. Patent and Trademark Office to properly reflect the
Administrative Agent's security interest in all U.S. patents, trademarks
and applications therefor of the Borrower and the Guarantors, and (ii) for
recording with the United States Library of Congress to properly reflect
the Administrative Agent's security interest in all U.S. copyrights and
applications therefor of the Borrower and the Guarantors.
(m) Guaranty. The Guaranty executed by each Guarantor.
--------
(n) Contribution and Indemnification Agreement. The Contribution and
------------------------------------------
Indemnification Agreement executed by the Borrower and each Guarantor.
(o) Field Audit; Due Diligence. Completion and satisfactory results of
--------------------------
the field audit conducted by the Administrative Agent, and completion and
satisfactory results of all due diligence conducted by the Administrative
Agent and each Lender, including without limitation customer references.
(p) Insurance Policies. Certificate(s) of insurance evidencing all
------------------
insurance policies required by Section 7.07, together with loss payable
endorsements (where applicable) in favor of the Administrative Agent, for
the benefit of the Administrative Agent and the Lenders, with respect to
all insurance policies covering Collateral.
(q) Lien Searches. The results of UCC, tax and judgment lien searches
-------------
showing all financing statements, other documents or instruments and tax
and judgment liens on file against each of the Borrower and the Guarantors
in such jurisdictions as the Administrative Agent may require, such
searches to be as of a date satisfactory to the Administrative Agent.
(r) Opinion of Counsel. A favorable written opinion (addressed to the
------------------
Administrative Agent and the Lenders and dated the Effective Date) of
Gardere ▇▇▇▇▇ ▇▇▇▇▇▇ LLP, counsel for the Borrower and the Subsidiaries, in
form and substance satisfactory to the Administrative Agent. The Borrower
hereby requests such counsel to deliver such opinion.
(s) Indebtedness. All terms of the Material Indebtedness of the
------------
Borrower and its Subsidiaries which shall be satisfactory to the Lenders,
and all requisite consents,
47
approvals and amendments relating to such Material Indebtedness, which
shall be in form and substance satisfactory to the Administrative Agent.
(t) Compliance Certificate. An initial Compliance Certificate, dated
----------------------
the Effective Date and signed by a Financial Officer of the Borrower,
confirming compliance with the conditions set forth in paragraphs (a), (b)
and (c) of Section 6.02 and showing compliance as of March 31, 2001 with
the financial covenants set forth in Article IX.
(u) Initial Borrowing Base Certificate. An initial Borrowing Base
----------------------------------
Certificate as of April 30, 2001.
(v) Solvency Certificates. Certificates, dated the Effective Date and
---------------------
signed by a Financial Officer of the Borrower and each of the Subsidiaries
certifying as to the Solvency of the Borrower and each of the Subsidiaries
as of the Effective Date and after giving effect to the Transactions.
(w) Fees and Expenses. All fees and other amounts due and payable on
-----------------
or prior to the Effective Date, including (1) all fees payable to the
Administrative Agent, the Arranger and each Lender under this Agreement or
any separate agreement or fee letter, and (2) to the extent invoiced,
reimbursement or payment of all attorneys' fees and out-of-pocket expenses
required to be reimbursed or paid by the Borrower hereunder.
(x) Acquisition Documents. Copies of the Merger Agreement and other
---------------------
Acquisition Documents relating to the StarGuide Merger, certified by a
Financial Officer as complete and correct. The StarGuide Merger shall have
been consummated in accordance with such Acquisition Documents and
applicable law, without any amendment to or waiver of any material terms or
conditions of such Acquisition Documents not approved by the Required
Lenders.
(y) Liens. Evidence that all (i) existing Liens on any assets of the
-----
Borrower and its Subsidiaries, including without limitation Liens of
Foothill Capital Corporation, have been or simultaneously with the initial
Loan hereunder are being terminated and/or released, and (ii) the
Borrower's credit agreement with Foothill Capital Corporation and all
commitments thereunder have been or simultaneously with the initial Loan
hereunder are being terminated.
(z) CoolCast. Evidence that the Borrower has transferred to CoolCast
--------
assets used in CoolCast's operations and evidence of the value of such
assets which shall be an amount acceptable to the Administrative Agent.
(aa) Additional Documentation. Such additional documents and
------------------------
certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of each
of the Borrower and the Subsidiaries, the authorization of the
Transactions, and any other legal matters relating to the Borrower, the
Subsidiaries, this Agreement, the StarGuide Merger, or the Transactions,
all in form and substance satisfactory to the Administrative Agent and its
counsel.
48
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.
SECTION 6.02 Each Credit Event. The obligation of each Lender to make a
-----------------
Loan on the occasion of any Borrowing, and of the Issuing Bank to issue, amend,
renew or extend any Letter of Credit, is subject to the satisfaction of the
following conditions:
(a) Representations and Warranties. The representations and warranties
------------------------------
of the Borrower set forth in this Agreement and the other Loan Documents
shall be true and correct on and as of the date of such Borrowing or the
date of issuance, amendment, renewal or extension of such Letter of Credit,
as applicable.
(b) No Default. At the time of and immediately after giving effect to
----------
such Borrowing or the issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, no Default shall have occurred and be
continuing.
(c) Material Adverse Effect. No event, development or circumstance has
-----------------------
occurred or exists that has had or could reasonably be expected to have a
Material Adverse Effect.
(d) Borrowing Request Form. With respect to any Borrowing, the
----------------------
Administrative Agent shall have received, in accordance with Section 2.03,
a Borrowing Request Form, dated the date of such Borrowing, executed by an
authorized officer of the Borrower.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a), (b)
and (c) of this Section.
ARTICLE VII
Affirmative Covenants
---------------------
Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder shall have been paid in
full and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, the Borrower covenants and agrees with
the Administrative Agent, the Issuing Bank and the Lenders that:
SECTION 7.01 Financial Statements and Other Information. The Borrower
------------------------------------------
will furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of the Borrower,
its audited consolidated and unaudited consolidating balance sheet and
related statements of operations, stockholders' equity and cash flows as of
the end of and for such year, setting
49
forth in each case in comparative form the figures for the previous fiscal
year, all reported on by KPMG LLP or other independent public accountants
of recognized national standing (without a "going concern" or like
qualification or exception and without any qualification or exception as to
the scope of such audit) to the effect that such consolidated financial
statements present fairly in all material respects the financial condition
and results of operations of the Borrower and its consolidated Subsidiaries
on a consolidated basis in accordance with GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, its consolidated and
consolidating balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such fiscal
quarter and the then elapsed portion of the fiscal year, setting forth in
each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the
previous fiscal year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and
results of operations of the Borrower and its consolidated Subsidiaries on
a consolidated basis in accordance with GAAP consistently applied, subject
to normal year-end audit adjustments and the absence of footnotes;
(c) at the request of the Administrative Agent or any Lender, as soon
as available after such request, Borrower's consolidated and consolidating
balance sheet and related statements of operations, stockholders' equity
and cash flows as of the end of and for each month requested and the then
elapsed portion of the fiscal year, setting forth in each case in
comparative form the figures for the corresponding period or periods of
(or, in the case of the balance sheet, as of the end of) the previous
fiscal year, all certified by one of its Financial Officers as presenting
fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
(d) concurrently with any delivery of financial statements under clause
(a) or (b) above, a Compliance Certificate of a Financial Officer of the
Borrower (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken
or proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with the financial covenants
set forth herein and (iii) in the case of clause (b) only, stating whether
any change in GAAP or in the application thereof has occurred since the
date of the audited financial statements and, if any such change has
occurred, specifying the effect of such change on the financial statements
accompanying such certificate;
(e) concurrently with any delivery of financial statements under clause
(a) above, a certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge during the
course of their examination of such financial statements of any Default
(which certificate may be limited to the extent required by accounting
rules or guidelines);
50
(f) within 30 days after and as of the end of each calendar month, a
completed Borrowing Base Certificate calculating and certifying the
Borrowing Base as of the last day of such calendar month, signed on behalf
of the Borrower by a Financial Officer;
(g) within 30 days after and as of the end of each calendar month,
aging and reports of accounts receivable of Borrower in form and detail
satisfactory to the Administrative Agent;
(h) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
the Borrower or any Subsidiary with the Securities and Exchange Commission,
or any Governmental Authority succeeding to any or all of the functions of
said Commission, or with any national securities exchange, or distributed
by the Borrower to its shareholders generally, as the case may be;
(i) as soon as available and in any event within five (5) Business Days
after the date of receipt by the Borrower or any Subsidiary of a management
letter prepared by its independent public accountants with respect to the
internal financial controls of the Borrower and its Subsidiaries, a copy of
such letter; and
(j) promptly following any request therefor, such projections, budgets
and other information regarding the operations, business affairs and
financial condition of the Borrower or any Subsidiary, or compliance with
the terms of this Agreement and the other Loan Documents, as the
Administrative Agent may reasonably request.
SECTION 7.02 Notices of Material Events. The Borrower will furnish to
--------------------------
the Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower and its Subsidiaries in an aggregate
amount exceeding $1,000,000; and
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
51
SECTION 7.03 Existence; Conduct of Business. The Borrower will, and
------------------------------
will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges, agreements and
franchises material to the conduct of its business; provided that the foregoing
--------
shall not prohibit any merger, consolidation, liquidation or dissolution
permitted under Section 8.03.
SECTION 7.04 Payment of Obligations. The Borrower will, and will cause
----------------------
each of its Subsidiaries to, pay its obligations, including Tax liabilities,
that, if not paid, could result in a Material Adverse Effect or become a Lien on
any of its property, before the same shall become delinquent or in default,
except where (a) the validity or amount thereof is being contested in good faith
by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP and (c)
the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 7.05 Maintenance of Properties. The Borrower will, and will
-------------------------
cause each of its Subsidiaries to keep, maintain and preserve all property
(tangible and intangible) material to the conduct of its business in good
working order and condition, ordinary wear and tear excepted.
SECTION 7.06 Books and Records; Inspection Rights
------------------------------------
(a) The Borrower will, and will cause each of its Subsidiaries to, keep
proper books of record and account in which full, true and correct entries
are made of all dealings and transactions in relation to its business and
activities. The Borrower will, and will cause each of its Subsidiaries to,
permit any representatives designated by the Administrative Agent or any
Lender, upon reasonable prior notice, to visit and inspect its properties,
to examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably
requested.
(b) The Borrower will, and will cause each of its Subsidiaries to,
permit any representatives designated by the Administrative Agent
(including any consultants, accountants, lawyers and appraisers retained by
the Administrative Agent) to conduct evaluations and appraisals of the
Borrower's computation of the Borrowing Base and the assets included in the
Borrowing Base, all at such reasonable times and as often as reasonably
requested. The Borrower shall pay the reasonable fees and expenses of any
representatives retained by the Administrative Agent to conduct any such
evaluation or appraisal. The Borrower also agrees to modify or adjust the
computation of the Borrowing Base (which may include maintaining additional
reserves or modifying the eligibility criteria for the components of the
Borrowing Base) to the extent required by the Administrative Agent or the
Required Lenders as a result of any such evaluation or appraisal.
52
SECTION 7.07 Insurance. The Borrower will maintain, and will cause each
---------
of the Subsidiaries to maintain, insurance with financially sound and reputable
insurance companies in such amounts and covering such risks as is usually
carried by corporations engaged in similar businesses and owning similar
properties in the same general areas in which the Borrower and the Subsidiaries
operate, provided that in any event the Borrower will maintain and cause each
Subsidiary to maintain workers' compensation insurance, property insurance,
comprehensive general liability insurance, products liability insurance, and
business interruption insurance reasonably satisfactory to the Lenders. Each
property insurance policy covering Collateral shall name the Administrative
Agent as loss payee for the benefit of the Lenders and shall provide that such
policy will not be canceled or reduced without thirty (30) days' prior written
notice to the Administrative Agent.
SECTION 7.08 Compliance with Laws. The Borrower will, and will cause
--------------------
each of its Subsidiaries to, and with respect to ERISA will cause each of its
ERISA Affiliates to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 7.09 Use of Proceeds and Letters of Credit. The proceeds of the
-------------------------------------
Loans will be used only for general corporate purposes of the Borrower and its
Subsidiaries, including the refinancing of Indebtedness of StarGuide. No part of
the proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations T, U and X. Each Letter of Credit will be issued only to
support a transaction that is entered into in the ordinary course of the
Borrower's or any of its Subsidiaries' business.
SECTION 7.10 Compliance with Agreements. The Borrower will comply, and
--------------------------
will cause each Subsidiary to comply, in all material respects with all
agreements, contracts, and instruments binding on it or affecting its properties
or business.
SECTION 7.11 Additional Subsidiaries. If any additional Subsidiary is
-----------------------
formed or acquired after the Effective Date, the Borrower will notify the
Administrative Agent and the Lenders thereof and (a) the Borrower will cause
such Subsidiary (except any Foreign Subsidiary) to become a Guarantor within
three Business Days after such Subsidiary is formed or acquired and promptly
take such actions to create and perfect Liens on such Subsidiary's assets to
secure the Obligations as the Administrative Agent or the Required Lenders shall
reasonably request and (b) if any Equity Interest in or Indebtedness of such
Subsidiary are owned by or on behalf of the Borrower or any Guarantor, the
Borrower will cause such Equity Interests and promissory notes evidencing such
Indebtedness to be pledged to the Administrative Agent and the Lenders within
three Business Days after such Subsidiary is formed or acquired (except that, if
such Subsidiary is a Foreign Subsidiary, shares of common stock of such
Subsidiary to be pledged may be limited to 65% of the outstanding shares of
common stock of such Subsidiary).
SECTION 7.12 Real Property. Upon acquisition of any ownership interest
-------------
(excluding leasehold interests) in real property by the Borrower or any
Subsidiary, the Borrower will, and will cause each such Subsidiary to, execute
and deliver to the Administrative Agent
53
such documents as the Administrative Agent may require, granting a first
priority lien to the Administrative Agent for the benefit of the Lenders on such
real property and all improvements and other property, rights and interests
located thereon or related thereto, which documents shall be in form and
substance satisfactory to the Administrative Agent, together with evidence of
the recordation thereof and such title insurance policies, surveys, appraisals,
environmental reports, certificates, instruments and legal opinions requested by
the Administrative Agent in connection therewith.
SECTION 7.13 Further Assurances. The Borrower will, and will cause each
------------------
Subsidiary to, execute and deliver such further agreements and instruments and
take such further action as may be requested by the Administrative Agent to
carry out the provisions and purposes of this Agreement and the other Loan
Documents and to create, preserve, and perfect the Liens of the Administrative
Agent, for the benefit of the Administrative Agent and the Lenders, in the
Collateral.
ARTICLE VIII
Negative Covenants
------------------
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit shall have expired or terminated and all LC Disbursements
shall have been reimbursed, the Borrower covenants and agrees with the
Administrative Agent, the Issuing Bank and the Lenders that:
SECTION 8.01 Indebtedness. The Borrower will not, and will not permit
------------
any Subsidiary to, create, incur, assume or permit to exist any Indebtedness,
except:
(a) Indebtedness created hereunder;
(b) Indebtedness existing on the date hereof and set forth in Schedule
8.01, and extensions, renewals and replacements of any such Indebtedness
that do not increase the outstanding principal amount thereof or result in
an earlier maturity date;
(c) Indebtedness of the Borrower to any Guarantor and of any Subsidiary
to the Borrower or any other Subsidiary that is a Guarantor, provided that
such Indebtedness is permitted by Section 8.04;
(d) Guarantees by the Borrower of Indebtedness of any Guarantor (except
CoolCast) and by any Subsidiary of Indebtedness of the Borrower or any
other Subsidiary that is a Guarantor (except CoolCast);
(e) Capital Lease Obligations (other than those set forth in Schedule
8.01) in an aggregate amount not to exceed $3,000,000 at any time
outstanding, provided that no Default exists or results therefrom;
--------
54
(f) purchase money Indebtedness of the Borrower or any Subsidiary
(other than Indebtedness set forth in Schedule 8.01) representing the
purchase price of equipment, that is secured by the asset purchased,
provided that (i) the principal amount of such Indebtedness does not exceed
the purchase price of the equipment acquired, (ii) the Lien does not attach
to any other assets of the Borrower or any Subsidiary, (iii) the aggregate
amount of such Indebtedness incurred in any fiscal year of the Borrower
does not exceed $500,000, and (iv) no Default exists or results therefrom;
(g) Hedging Agreements permitted by Section 8.05; and
(h) the letters of credit specified in Section 8.02 (d).
SECTION 8.02 Liens. The Borrower will not, and will not permit any
-----
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:
(a) Permitted Encumbrances;
(b) any Lien that is set forth on Schedule 8.02 and exists as of the
date hereof on any property or asset of the Borrower or any Subsidiary;
provided that (i) such Lien shall not apply to any other property or asset
--------
of the Borrower or any Subsidiary and (ii) such Lien shall secure only
those obligations which it secures on the date hereof and extensions,
renewals and replacements thereof that do not increase the outstanding
principal amount thereof;
(c) Liens permitted by clauses (e) and (f) of Section 8.01;
(d) a Lien on cash collateral in an amount not to exceed 287,500 to
secure the Borrower's reimbursement obligations in respect of letters of
credit issued by ▇▇▇▇▇ Fargo Bank, provided that such Lien is released upon
the replacement of such letters of credit with Letters of Credit issued
hereunder within thirty (30) days after the Effective Date.
(e) Liens created under the Loan Documents.
SECTION 8.03 Fundamental Changes.
-------------------
(a) The Borrower will not, and will not permit any Subsidiary to, merge
into or consolidate with any other Person, or permit any other Person to
merge into or consolidate with it, or liquidate or dissolve, except that,
if at the time thereof and immediately after giving effect thereto no
Default shall have occurred and be continuing (i) any Subsidiary (except
CoolCast) may merge into the Borrower in a transaction in which the
Borrower is the surviving corporation, (ii) any Subsidiary that is not a
Guarantor may merge into any wholly-owned Subsidiary in a transaction in
which the surviving entity is a wholly-owned Subsidiary, (iii) any
Guarantor (except CoolCast) may
55
be dissolved, liquidated or merged into another Subsidiary, so long as such
dissolution, liquidation or merger results in all assets of such Guarantor
being owned by the Borrower or another Guarantor, and (iv) any Subsidiary
that is not a Guarantor may liquidate or dissolve if the Borrower
determines in good faith that such liquidation or dissolution is in the
best interests of the Borrower and is not materially disadvantageous to the
Lenders and so long as such liquidation or dissolution results in all
assets of such Subsidiary being owned by the Borrower or a wholly-owned
Subsidiary.
(b) The Borrower will not, and will not permit any of its Subsidiaries
to, engage to any material extent in any business other than businesses of
the type conducted by the Borrower and its Subsidiaries on the date of
execution of this Agreement and businesses reasonably related thereto.
SECTION 8.04 Investments, Loans, Advances, Guarantees and Acquisitions.
---------------------------------------------------------
The Borrower will not, and will not permit any of its Subsidiaries to, purchase,
hold or acquire (including pursuant to any merger with any Person that was not a
wholly owned Subsidiary prior to such merger) any Equity Interests, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, Guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) all or substantially
all of the assets of any other Person or any assets of any other Person
constituting a business unit or division, except:
(a) Permitted Investments;
(b) Equity Interests existing on the date hereof in the Subsidiaries;
(c) Equity Interests in Subsidiaries formed after the Effective Date
provided that each such Subsidiary becomes a Guarantor and otherwise
complies with the requirements of Section 7.11.
(d) loans or advances made by the Borrower to any Guarantor (except
CoolCast) and made by any Subsidiary to the Borrower or any other
Subsidiary that is a Guarantor (except CoolCast);
(e) loans or advances to employees of the Borrower or any Subsidiary
not to exceed $200,000 in the aggregate outstanding at any time, including
such loans and advances outstanding on the Effective Date;
(f) accounts receivable for sales of inventory and other products and
services provided by the Borrower and its Subsidiaries to their respective
customers in the ordinary course of business of the Borrower and its
Subsidiaries.
(g) loans, advances and investments in CoolCast which do not exceed the
CoolCast Investment Limit; and
56
(h) Guarantees constituting Indebtedness permitted by Section 8.01.
SECTION 8.05 Hedging Agreements. The Borrower will not, and will not
------------------
permit any of its Subsidiaries to, enter into any Hedging Agreement; provided,
however, that Borrower and its Subsidiaries shall be permitted to enter into
Hedging Agreements in the ordinary course of business (i) to hedge interest rate
risk on the Loans or (ii) to hedge or mitigate risks to which the Borrower or
any Subsidiary is exposed in the conduct of its business or the management of
its liabilities, so long as (a) no Default exists, and (b) (i) such Hedging
Agreements shall have a term of less than 90 days, or (ii) the aggregate amount
of the obligations of Borrower and its Subsidiaries in respect of any and all
Hedging Agreements having a term of 90 days or longer, determined in accordance
with clause (k) of the definition of "Indebtedness" set forth in Section1.01,
shall not exceed $1,000,000.
SECTION 8.06 Restricted Payments; Certain Payments of Indebtedness.
-----------------------------------------------------
(a) The Borrower will not, and will not permit any of its Subsidiaries
to, declare or make, or agree to pay or make, directly or indirectly, any
Restricted Payment or incur any obligation, (contingent or otherwise) to do
so, except (i) the Borrower may declare and pay dividends with respect to
its capital stock payable solely in additional shares of its common stock
and (ii) Subsidiaries may declare and pay dividends to the Borrower or any
Guarantor, and (iii) any Subsidiary of CoolCast may declare dividends
payable to CoolCast.
(b) The Borrower will not, and will not permit any Subsidiary to, make
or agree to pay or make, directly or indirectly, any payment or other
distribution (whether in cash securities or other property) of or in
respect of principal of or interest on any Indebtedness, or any payment or
other distribution (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any
Indebtedness, except:
(i) payment of Indebtedness created under the Loan Documents;
(ii) payment of regularly scheduled interest and principal
payments as and when due in respect of any Indebtedness;
(iii) refinancings of Indebtedness to the extent permitted by
Section 8.01;
(iv) payment of secured Indebtedness that becomes due as a result
of the voluntary sale or transfer of the property or assets securing such
Indebtedness, provided that such sale or transfer is otherwise permitted by
this Agreement;
(v) payment or prepayment of Capital Lease Obligations, so long
as no Default is existing or would result therefrom; and
57
(vi) payment when due of obligations under Hedging Agreements.
SECTION 8.07 Transactions with Affiliates. The Borrower will not, and
----------------------------
will not permit any of its Subsidiaries to, sell, lease or otherwise transfer
any property or assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except as permitted in Section 8.03 and except (a) in the ordinary
course of business at prices and on terms and conditions not less favorable to
the Borrower or such Subsidiary than could be obtained on an arm's-length basis
from unrelated third parties, (b) transactions between or among the Borrower and
the Guarantors (except CoolCast) not involving any other Affiliate and (c) any
Restricted Payment permitted by Section 8.06.
SECTION 8.08 Restrictive Agreements. The Borrower will not, and will not
----------------------
permit any of its Subsidiaries to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of the Borrower or any Subsidiary to
create, incur or permit to exist any Lien upon any of its property or assets, or
(b) the ability of any Subsidiary to pay dividends or other distributions with
respect to any shares of its capital stock or to make or repay loans or advances
to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the
Borrower or any other Subsidiary; provided that (i) the foregoing shall not
--------
apply to restrictions and conditions imposed by law or by any Loan Document,
(ii) the foregoing shall not apply to restrictions and conditions existing on
the date hereof identified on Schedule 8.08 (but shall apply to any extension or
renewal of, or any amendment or modification expanding the scope of, any such
restriction or condition), (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided such restrictions and conditions apply
only to the Subsidiary that is to be sold and such sale is permitted hereunder,
(iv) clause (a) of the foregoing shall not apply to restrictions or conditions
imposed by any agreement relating to secured Indebtedness permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Indebtedness and (v) clause (a) of the foregoing shall not
apply to customary provisions in leases and other contracts restricting the
assignment thereof.
SECTION 8.09 Disposition of Assets. Except as otherwise permitted in
---------------------
Section 8.03, the Borrower will not and will not permit any Subsidiary to sell,
lease, assign, transfer, or otherwise dispose of any of their respective assets
(including without limitation stock or other Equity Interests in any of the
Subsidiaries or any of the voting rights of any such stock or other Equity
Interests); provided, however, that the following dispositions shall be
permitted so long as the Borrower and the Subsidiaries, as applicable, receive
full, fair and reasonable consideration at the time of such disposition at least
equal to the fair market value of such asset being disposed:
(a) dispositions of inventory in the ordinary course of business of the
Borrower and its Subsidiaries;
(b) non-exclusive licenses of intellectual property and leases and
licenses of other property by the Borrower and its Subsidiaries to their
respective customers in
58
connection with providing products and services to such customers in the
ordinary course of business of the Borrower and the Subsidiaries.
(c) sales, transfers and other dispositions to the Borrower or any
wholly-owned Subsidiary that is a Guarantor (except CoolCast);
(d) assignments recorded in the U.S. Patent and Trademark Office and
assignments recorded in the U.S. Library of Congress to reflect the
assignment of assets identified in the ▇▇▇▇ of sale dated May 30, 2001,
from StarGuide to CoolCast.
(e) disposition of assets that are worn out, obsolete or no longer used
or useful in the conduct of the business of the Borrower and the
Subsidiaries, so long as such assets are replaced with assets of equal or
greater value; and
(f) other asset dispositions which do not exceed $500,000 in the
aggregate during the term of this Agreement.
SECTION 8.10 Sale and Leaseback. The Borrower will not enter into, and
------------------
will not permit any Subsidiary to enter into, any arrangement with any Person
pursuant to which it leases from such Person real or personal property that has
been or is to be sold or transferred, directly or indirectly, by it to such
Person; provided that the Borrower and the Subsidiaries will be permitted to
enter into such arrangements involving sales of personal property not to exceed
$500,000 in the aggregate during the term of this Agreement in connection with
Capital Lease Obligations permitted by Section 8.01(e).
SECTION 8.11 Accounting. The Borrower will not, and will not permit
----------
any of its Subsidiaries to, change its fiscal year or make any change (a) in
accounting treatment or reporting practices, except as required by GAAP and
disclosed to the Administrative Agent, or (b) in tax reporting treatment, except
as required by law and disclosed to the Administrative Agent.
SECTION 8.12 Amendment of Material Documents. The Borrower will not,
-------------------------------
and will not permit any Subsidiary to, amend, modify or waive any of its rights
under its certificate of incorporation, by-laws, other organizational documents
or any documents evidencing or relating to any Indebtedness of the Borrower or
any Subsidiary, unless such amendment, modification or waiver would not create a
Material Adverse Effect.
SECTION 8.13 Preferred Equity Interests. The Borrower will not, and will
--------------------------
not permit any Subsidiary to, issue any preferred stock or other preferred
Equity Interests.
SECTION 8.14 Synthetic Repurchases. The Borrower will not, and will not
---------------------
permit any Subsidiary to, enter into, or be a party to, or make any payment
under, any Synthetic Purchase Agreement.
59
ARTICLE IX
Financial Covenants
-------------------
Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder shall have been paid in
full, the Borrower covenants and agrees with the Administrative Agent and the
Lenders that:
SECTION 9.01 Minimum Consolidated EBITDA.
---------------------------
(a) The Borrower will not permit Consolidated EBITDA for each fiscal
quarter specified below to be less than the amount specified below for such
fiscal quarter:
Period Amount
------ ------
Fiscal quarter ending March 31, 2001 $ 900,000
Fiscal quarter ending June 30, 2001 $ 1,400,000
Fiscal quarter ending September 30, 2001 $ 1,700,000
(b) The Borrower will not permit Consolidated EBITDA for each four-
quarter period specified below to be less than the amount specified below
for such period:
Period Amount
------ ------
Four fiscal quarters ending December 31, 2001 $ 9,000,000
Four fiscal quarters ending March 31, 2002 $10,000,000
Four fiscal quarters ending June 30, 2002 $11,000,000
Four fiscal quarters ending September 30, 2002 $12,000,000
Four fiscal quarters ending on or after December 31, 2002 $13,000,000
SECTION 9.02 Fixed Charge Coverage Ratio. The Borrower will at all
---------------------------
times maintain or cause to be maintained a Fixed Charge Coverage Ratio of not
less than 2.0 to 1.0.
SECTION 9.03 Leverage Ratio. The Borrower will at all times maintain or
--------------
cause to be maintained a Leverage Ratio of not greater than the ratio specified
below for the applicable period:
Period Ratio
------ -----
From and including December 31, 2001 to and including September 29, 2002 2.5 to 1.0
From and including September 30, 2002 to and including September 29, 2.0 to 1.0
▇▇▇▇
▇▇ and after September 30, 2003 1.5 to 1.0
60
SECTION 9.04 Current Ratio. The Borrower will at all times on and after
-------------
June 30, 2001 maintain or cause to be maintained a Current Ratio of not less
than 1.0 to 1.0.
SECTION 9.05 Capital Expenditures. The Borrower will not permit the
--------------------
aggregate Capital Expenditures of the Borrower and its Subsidiaries to exceed
(a) $4,500,000 during Borrower's fiscal year ending December 31, 2001 and (b)
$3,500,000 during each fiscal of the Borrower thereafter.
ARTICLE X
Events of Default
-----------------
SECTION 10.01 Default. If any of the following Events of Default shall
-------
occur:
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the
same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in clause (a) of this
Section) payable under this Agreement, when and as the same shall become
due and payable, and such failure shall continue unreminded for five
Business Days;
(c) any representation or warranty made or deemed made by or on behalf
of the Borrower or any Subsidiary in or in connection with this Agreement
or any other Loan Document or any amendment or modification hereof or
thereof or waiver hereunder or thereunder, or in any report, certificate,
financial statement or other document furnished pursuant to or in
connection with this Agreement or any other Loan Document or any amendment
or modification hereof or thereof or waiver hereunder or thereunder, shall
prove to have been materially incorrect when made or deemed made;
(d) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement or any other Loan
Document;
(e) the Borrower or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of
any Material Indebtedness, when and as the same shall become due and
payable;
(f) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables
or permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of any Material Indebtedness or any trustee or
agent on its or their behalf to cause any Material Indebtedness to become
due, or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity; provided that this clause (g)
--------
shall not apply to secured Indebtedness that becomes due as a result of the
voluntary sale or
61
transfer of the property or assets securing such Indebtedness provided that
such sale or transfer is otherwise permitted by this Agreement;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of the Borrower or any Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any
Subsidiary or for a substantial part of its assets, and, in any such case,
such proceeding or petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the foregoing shall be
entered;
(h) the Borrower or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or
other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (h) of this Section, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any
Subsidiary or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of creditors
or (vi) take any action for the purpose of effecting any of the foregoing;
(i) the Borrower or any Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become
due;
(j) one or more judgments for the payment of money in an aggregate
amount in excess of $1,000,000 shall be rendered against the Borrower, any
Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to attach or levy upon any assets of the Borrower or any
Subsidiary to enforce any such judgment;
(k) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the
Borrower and its Subsidiaries in an aggregate amount exceeding $1,000,000;
(l) a Change in Control shall occur;
(m) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall cease to be involved
in the management of the Borrower for any period of time in excess of 60
consecutive days, provided that during such 60-day period the Borrower
shall diligently proceed to replace such Person with an individual having
comparable qualifications and experience as such Person;
62
(n) a Material Adverse Effect shall occur;
(o) this Agreement or any other Loan Document shall cease to be in full
force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by the Borrower or
any Subsidiary or any of their respective shareholders, or the Borrower or
any Guarantor shall deny that it has any further liability or obligation
under any of the Loan Documents, or any Lien created by the Loan Documents
shall for any reason cease to be a valid, first priority perfected security
interest in and Lien upon any of the Collateral purported to be covered
thereby; or
(p) the Borrower or any Subsidiary, or any of their properties,
revenues or assets shall become subject to an order of forfeiture, seizure
or divestiture and the same shall not have been discharged within 30 days
from the date of entry thereof.
then, and in every such event (other than an event with respect to the Borrower
described in clause (g) or (h) of this Section), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower; and
in case of any event with respect to the Borrower described in clause (g) or (h)
of this Section, the Commitments shall automatically terminate and the principal
of the Loans then outstanding, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without notice, demand, presentment,
notice of dishonor, notice of acceleration, notice of intent to accelerate,
notice of intent to demand, protest, or other formalities of any kind, all of
which are hereby waived by the Borrower. If any Event of Default shall occur
and be continuing, the Administrative Agent may exercise all rights and remedies
available to it in law or in equity, under the Loan Documents, or otherwise,
including, without limitation, the right to foreclose or otherwise enforce any
Lien granted to the Administrative Agent for the benefit of itself and the
Lenders to secure payment and performance of the Obligations.
SECTION 10.02 Performance by the Administrative Agent. If the Borrower
---------------------------------------
shall fail to perform any covenant or agreement contained in any of the Loan
Documents, the Administrative Agent may perform or attempt to perform such
covenant or agreement on behalf of the Borrower. In such event, the Borrower
shall, at the request of the Administrative Agent, promptly pay any amount
expended by the Administrative Agent in connection with such performance or
attempted performance to the Administrative Agent, together with interest
thereon at the Maximum Rate from and including the date of such expenditure to
but excluding the date such expenditure is paid in full. Notwithstanding the
foregoing, it is expressly agreed
63
that neither the Administrative Agent nor any Lender shall not have any
liability or responsibility for the performance of any obligation of the
Borrower under this Agreement or any other Loan Document.
64
ARTICLE XI
The Administrative Agent
------------------------
Each of the Lenders and the Issuing Bank hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms of the Loan Documents, together with such
actions and powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations except
those expressly set forth herein. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing, (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby that the Administrative Agent is
required to exercise in writing by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 12.02), and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Borrower or
any of its Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 12.02) or in the absence of its own gross negligence or
willful misconduct. The Administrative Agent shall be deemed not to have
knowledge of any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrower or a Lender, and the Administrative Agent
shall not be responsible for or have any duty to ascertain or inquire into (i)
any statement, warranty or representation made in or in connection with any Loan
Document, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth in any Loan Document, (iv) the validity, enforceability, effectiveness or
genuineness of any Loan Document or any other agreement, instrument or document,
or (v) the satisfaction of any condition set forth in Article VI or elsewhere in
any Loan Document, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone
65
and believed by it to be made by the proper Person, and shall not incur any
liability for relying thereon. The Administrative Agent may consult with legal
counsel (who may be counsel for the Borrower), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not
taken by it in accordance with the advice of any such counsel, accountants or
experts.
The Administrative Agent may perform any and all its duties and exercise
its rights and powers by or through any one or more subagents appointed by the
Administrative Agent. The Administrative Agent and any such subagent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding
paragraphs shall apply to any such subagent and to the Related Parties of the
Administrative Agent and any such subagent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this paragraph, the Administrative Agent may resign at any
time by notifying the Lenders, the Issuing Bank and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, with the consent of the
Borrower (which consent shall not be unreasonably withheld, and shall not be
required if any Default exists) to appoint a successor. If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, after consulting
with the Lenders, the Issuing Bank and the Borrower, appoint a successor
Administrative Agent which shall be a bank with an office in Dallas, Texas, or
an Affiliate of any such bank. Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 12.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its subagents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without reliance
upon the Administrative Agent or any other Lender and based on such 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 Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any related agreement or any
document furnished hereunder or thereunder.
The Syndication Agent shall have no duties or obligations under the
Loan Documents in its capacity as Syndication Agent.
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ARTICLE XII
Miscellaneous
-------------
SECTION 12.01 Notices. Except in the case of notices and other
-------
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at ▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇ ▇▇▇▇▇▇▇▇ (Telecopy No. (972) 402-
4808);
(b) if to the Administrative Agent, to The Chase Manhattan Bank, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇ ▇. ▇▇▇▇▇▇
(Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), and, for any Borrowing Requests, with a copy
to The Chase Manhattan Bank, Agency Services, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (Telecopy
No. (▇▇▇) ▇▇▇-▇▇▇▇); and
(c) if to the Issuing Bank, to it at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇ ▇. ▇▇▇▇▇▇ (Telecopy No. (214) 965-
2884); and
(d) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 12.02 Waivers; Amendments.
-------------------
(a) No failure or delay by the Administrative Agent, the Issuing Bank
or any Lender in exercising any right or power hereunder or under any other
Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any
other or further exercise thereof or the exercise of any other right or
power. The rights and remedies of the Administrative Agent, the Issuing
Bank and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of any Loan Document or consent
to any departure by the Borrower or any Subsidiary therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. Without limiting
the generality of the foregoing, the making of a Loan or issuance of a
Letter of Credit shall not be construed as a waiver of any Default,
regardless of whether the Administrative Agent,
67
any Lender or the Issuing Bank may have had notice or knowledge of such
Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof may be waived, amended or modified except, in the case of
this Agreement, pursuant to an agreement or agreements in writing entered
into by the Borrower and the Required Lenders or by the Borrower and the
Administrative Agent with the consent of the Required Lenders or, in the
case of any other Loan Document, pursuant to an agreement or agreements in
writing entered into by the Administrative Agent and the other parties
thereto; provided that no such agreement shall (i) increase the Commitment
--------
of any Lender without the written consent of such Lender, (ii) reduce the
principal amount of any Loan or LC Disbursement or reduce the rate of
interest thereon, or reduce any fees payable hereunder, without the written
consent of each Lender, (iii) postpone the scheduled date of payment of the
principal amount of any Loan or LC Disbursement, or any interest thereon,
or any fees payable hereunder, or reduce the amount of, waive or excuse any
such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender, (iv) change Section
2.13(b) or (c) in a manner that would alter the pro rata sharing of
payments required thereby, without the written consent of each Lender, (v)
reduce the Commitment of any Lender without the written consent of each
Lender, (vi) release any Guarantor or any Collateral without the written
consent of each Lender, except in connection with dispositions, mergers or
dissolutions expressly permitted by this Agreement, or (vii) change any of
the provisions of this Section or the definition of "Required Lenders" or
any other provision hereof specifying the number or percentage of Lenders
required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent
of each Lender; provided further that no such agreement shall amend, modify
----------------
or otherwise affect the rights or duties of the Administrative Agent or the
Issuing Bank hereunder without the prior written consent of the
Administrative Agent or the Issuing Bank, as the case may be.
SECTION 12.03 Expenses; Indemnity; Damage Waiver.
----------------------------------
(a) The Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by the Administrative Agent and its Affiliates, including the
reasonable fees, charges and disbursements of counsel for the
Administrative Agent, in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of this
Agreement, the other Loan Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by the Issuing Bank in
connection with the issuance, amendment, renewal or extension of any Letter
of Credit or any demand for payment thereunder, (iii) all out-of-pocket
expenses incurred by the Administrative Agent, the Issuing Bank, and, after
an Event of Default, any Lender, including the fees, charges and
disbursements of any counsel for the Administrative Agent, the Issuing Bank
or any Lender in connection with the enforcement or protection of its
rights in connection with this Agreement and the other Loan Documents,
including its rights under this Section, or in connection with the
68
Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit, (iv) all
transfer, stamp, documentary, or other similar taxes, assessments or
charges levied by any Governmental Authority in respect of this Agreement
or any of the other Loan Documents, (v) all costs, out-of-pocket expenses,
assessments and other charges incurred in connection with any filing,
registration, recording, or perfection of any security interest or Lien
contemplated by this Agreement or any other Loan Document, and (vi) all
other costs and out-of-pocket expenses incurred by the Administrative Agent
in connection with this Agreement, any other Loan Document or the
Collateral, including without limitation costs, fees, expenses and other
charges incurred in connection with performing or obtaining any audit or
appraisal in respect of the Collateral or for any surveys, environmental
assessments, title insurance, filing fees, recording costs and lien
searches.
(b) THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT, THE ISSUING
BANK AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING
PERSONS (EACH SUCH PERSON BEING CALLED AN "INDEMNITEE") AGAINST, AND HOLD
----------
EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES,
LIABILITIES AND RELATED EXPENSES, INCLUDING THE FEES, CHARGES AND
DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED
AGAINST ANY INDEMNITEE ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT
OF (I) THE EXECUTION OR DELIVERY OF THIS AGREEMENT OR ANY AGREEMENT OR
INSTRUMENT CONTEMPLATED HEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF
THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THE CONSUMMATION OF THE
TRANSACTIONS OR ANY OTHER TRANSACTIONS CONTEMPLATED HEREBY, (II) ANY LOAN
OR LETTER OF CREDIT OR THE USE OF THE PROCEEDS THEREFROM (INCLUDING ANY
REFUSAL BY THE ISSUING BANK TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF
CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT
STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT), (III) ANY ACTUAL
OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY
PROPERTY OWNED OR OPERATED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR
ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY OF
ITS SUBSIDIARIES, OR (IV) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION,
INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED
ON CONTRACT, TORT OR ANY OTHER THEORY AND REGARDLESS OF WHETHER ANY
INDEMNITEE IS A PARTY THERETO; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS
--------
TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS,
DAMAGES, LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF
COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED
FROM THE GROSS NEGLIGENCE OR WILFUL MISCONDUCT OF SUCH INDEMNITEE.
69
(c) To the extent that the Borrower fails to pay any amount required to
be paid by it to the Administrative Agent or the Issuing Bank under
paragraph (a) or (b) of this Section, each Lender severally agrees to pay
to the Administrative Agent or the Issuing Bank such Lender's Applicable
Percentage (determined as of the time that the applicable unreimbursed
expense or indemnity payment is sought) of such unpaid amount; provided
--------
that the unreimbursed expense or indemnified loss, claim, damage, liability
or related expense, as the case may be, was incurred by or asserted against
the Administrative Agent or the Issuing Bank in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or Letter of Credit or the use of the
proceeds thereof.
(e) All amounts due under this Section shall be payable upon written
demand therefor .
SECTION 12.04 Successors and Assigns.
----------------------
(a) The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and
assigns permitted hereby (including any Affiliate of the Issuing Bank that
issues any Letter of Credit), except that the Borrower may not assign or
otherwise transfer any of its rights or obligations hereunder without the
prior written consent of each Lender (and any attempted assignment or
transfer by the Borrower without such consent shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of the
Issuing Bank that issues any Letter of Credit) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative
Agent, the Issuing Bank and the Lenders) any legal or equitable right,
remedy or claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion of
its rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans at the time owing to it); provided that (i)
--------
except in the case of an assignment to a Lender or a Lender Affiliate of a
Lender, each of the Borrower and the Administrative Agent (and, in the case
of an assignment of all or a portion of a Revolving Credit Commitment or
any Lender's obligations in respect of its LC Exposure, the Issuing Bank)
must give their prior written consent to such assignment (which consent
shall not be unreasonably withheld), (ii) except in the case of an
assignment to a Lender or a Lender Affiliate of a Lender or an assignment
of the entire remaining amount of the assigning Lender's Commitment, the
amount of the Commitment of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and
70
Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, (iii) each partial
assignment shall be made as an assignment of a proportionate part of all
the assigning Lender's rights and obligations under this Agreement, (iv)
the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, together with a
processing and recordation fee of $3,500, and (v) the assignee, if it shall
not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire; and provided further that any consent of the
----------------
Borrower otherwise required under this paragraph shall not be required if a
Default has occurred and is continuing. Subject to acceptance and recording
thereof pursuant to paragraph (d) of this Section, from and after the
effective date specified in each Assignment and Acceptance the assignee
thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations
of a Lender under this Agreement, and the assigning Lender thereunder
shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall
cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.12, 3.01, 3.05 and 12.03). Any assignment or
transfer by a Lender of rights or obligations under this Agreement that
does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in Dallas, Texas a copy
of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment
of, and principal amount of the Loans and LC Disbursements owing to, each
Lender pursuant to the terms hereof from time to time (the "Register").
--------
The entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent, the Issuing Bank and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary. The Register shall be available for inspection by
the Borrower, the Issuing Bank and any Lender, at any reasonable time and
from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b)
of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Acceptance and record the information contained therein in
the Register. No assignment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
paragraph. Each assigning Lender shall surrender any Revolving Credit Note
and Term Note subject to such assignment, and the Borrower shall execute
and deliver to the
71
Administrative Agent in exchange for the surrendered Notes a new Revolving
Credit Note payable to the order of the assignee in an amount equal to the
Revolving Credit Commitment assumed by such assignee pursuant to such
Assignment and Acceptance and a new Term Note payable to the order of the
assignee in an amount equal to the outstanding Term Loans assigned to such
assignee pursuant to such Assignment and Acceptance and, if the assigning
Lender has retained a Revolving Credit Commitment and any Term Loans, a new
Revolving Credit Note payable to the order of the assigning Lender in an
amount equal to the Revolving Credit Commitment retained by it hereunder
and a new Term Note in an amount equal to the Term Loans retained by it
hereunder. Such new Notes shall be in an aggregate face amount of the
surrendered Note, shall be dated the effective date of such Assignment and
Acceptance, and shall otherwise be in substantially the form of Exhibit "A"
hereto and shall each constitute a "Note" for purposes of the Loan
Documents.
(e) Any Lender may, without the consent of the Borrower, the
Administrative Agent or the Issuing Bank, sell participations to one or
more banks or other entities (a "Participant") in all or a portion of such
-----------
Lender's rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans owing to it); provided that (i)
--------
such Lender's obligations under this Agreement shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations and (iii) the Borrower, the
Administrative Agent, the Issuing Bank and the other Lenders shall continue
to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement. Any agreement or
instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce the Loan
Documents and to approve any amendment, modification or waiver of any
provision of the Loan Documents; provided that such agreement or instrument
--------
may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver described in
the first proviso to Section 12.02(b) that affects such Participant.
Subject to paragraph (f) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.12, 3.01 and
3.05 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section. To the
extent permitted by law, each Participant also shall be entitled to the
benefits of Section 12.08 as though it were a Lender, provided such
Participant agrees to be subject to Section 2.13(c) as though it were a
Lender.
(f) A Participant shall not be entitled to receive any greater payment
under Section 2.12 or 3.01 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is
made with the Borrower's prior written consent. A Participant that would be
a Foreign Lender if it were a Lender shall not be entitled to the benefits
of Section 2.12 unless the Borrower is notified of the participation sold
to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 2.12(e) as though it were a Lender.
72
(g) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any pledge or assignment to secure obligations to
a Federal Reserve Bank, and this Section shall not apply to any such pledge
or assignment of a security interest; provided that no such pledge or
--------
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
SECTION 12.05 Survival. All covenants, agreements, representations and
--------
warranties made by the Borrower and the Subsidiaries in the Loan Documents and
in the certificates or other instruments delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the other parties hereto and shall survive the
execution and delivery of the Loan Documents and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any
such other party or on its behalf and notwithstanding that the Administrative
Agent, the Issuing Bank or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and unpaid or any Letter of Credit
is outstanding and so long as the Commitments have not expired or terminated.
The provisions of Sections 2.12, 3.01, 3.05 and 12.03 and Article XI shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loans, the expiration
or termination of the Letters of Credit and the Commitments or the termination
of this Agreement or any provision hereof.
SECTION 12.06 Counterparts; Effectiveness. This Agreement may be executed
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in counterparts (and by different parties hereto on different counterparts),
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. Except as provided in Section 6.01, this
Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 12.07 Severability. Any provision of this Agreement held to be
------------
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 12.08 Right of Setoff. If an Event of Default shall have occurred
---------------
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any
73
time owing by such Lender or Affiliate to or for the credit or the account of
the Borrower against any and all of the Obligations, irrespective of whether or
not any demand shall have been made under this Agreement and although such
Obligations may be unmatured. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
SECTION 12.09 GOVERNING LAW; VENUE; SERVICE OF PROCESS. THIS AGREEMENT
----------------------------------------
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS AGREEMENT
HAS BEEN ENTERED INTO IN DALLAS COUNTY, TEXAS, AND IT SHALL BE PERFORMABLE FOR
ALL PURPOSES IN DALLAS COUNTY, TEXAS. ANY ACTION OR PROCEEDING AGAINST THE
BORROWER UNDER OR IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS MAY BE BROUGHT IN
ANY STATE OR FEDERAL COURT IN DALLAS COUNTY, TEXAS. THE BORROWER HEREBY
IRREVOCABLY (A) SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS, AND (B)
WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT OR THAT ANY SUCH COURT IS AN
INCONVENIENT FORUM. THE BORROWER AGREES THAT SERVICE OF PROCESS UPON IT MAY BE
MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT ITS ADDRESS
SPECIFIED OR DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 12.01.
NOTHING HEREIN OR IN ANY OF THE OTHER LOAN DOCUMENTS SHALL AFFECT THE RIGHT OF
THE ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY LENDER TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE ADMINISTRATIVE
AGENT, THE ISSUING BANK OR ANY LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST
THE BORROWER OR WITH RESPECT TO ANY OF ITS RESPECTIVE PROPERTY IN COURTS IN
OTHER JURISDICTIONS. ANY ACTION OR PROCEEDING BY THE BORROWER AGAINST THE
ADMINISTRATIVE AGENT OR ANY LENDER SHALL BE BROUGHT ONLY IN A COURT LOCATED IN
DALLAS COUNTY, TEXAS.
SECTION 12.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
--------------------
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
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SECTION 12.11 Headings. Article and Section headings and the Table of
--------
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 12.12 Confidentiality. Each of the Administrative Agent, the
---------------
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its Affiliates and to its and its Affiliates' directors, officers, employees and
agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to (i)
any actual or prospective assignee of or Participant in any of its rights or
obligations under this Agreement or (ii) any actual or prospective counterparty
(or its advisors) to any swap or derivative transaction relating to the Borrower
and its obligations, (g) with the consent of the Borrower or (h) to the extent
such Information (i) becomes publicly available other than as a result of a
breach of this Section or (ii) becomes available to the Administrative Agent,
the Issuing Bank or any Lender on a nonconfidential basis from a source other
than the Borrower. For the purposes of this Section, "Information" means all
-----------
information received from the Borrower relating to the Borrower or its business,
other than any such information that is available to the Administrative Agent,
the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by
the Borrower; provided that, in the case of information received from the
--------
Borrower after the date hereof, such information is clearly identified at the
time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
SECTION 12.13 Maximum Interest Rate. No provision of this Agreement or of
---------------------
any other Loan Document shall require the payment or the collection of interest
in excess of the maximum amount permitted by applicable law. If any excess of
interest in such respect is hereby provided for, or shall be adjudicated to be
so provided, in any Loan Document or otherwise in connection with this loan
transaction, the provisions of this Section shall govern and prevail and neither
the Borrower nor the sureties, guarantors, successors, or assigns of the
Borrower shall be obligated to pay the excess amount of such interest or any
other excess sum paid for the use, forbearance, or detention of sums loaned
pursuant hereto. In the event any Lender ever receives, collects, or applies as
interest any such sum, such amount which would be in excess of the maximum
amount permitted by applicable law shall be applied as a payment and reduction
of the principal of the indebtedness evidenced by the Notes; and, if the
principal of the Notes has been paid in full, any remaining excess shall
forthwith be paid to the Borrower. In determining whether or not the interest
paid or payable exceeds the Maximum Rate, the Borrower and each Lender shall, to
the extent permitted by applicable law, (a) characterize any
75
non-principal payment as an expense, fee, or premium rather than as interest,
(b) exclude voluntary prepayments and the effects thereof, and (c) amortize,
prorate, allocate, and spread in equal or unequal parts the total amount of
interest throughout the entire contemplated term of the indebtedness evidenced
by the Notes so that interest for the entire term does not exceed the Maximum
Rate.
SECTION 12.14 Non-Application of Chapter 346 of Texas Finance Code. The
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provisions of Chapter 346 of the Texas Finance Code are specifically declared by
the parties hereto not to be applicable to this Agreement or any of the other
Loan Documents or to the transactions contemplated hereby.
SECTION 12.15 NO ORAL AGREEMENTS. THIS AGREEMENT, THE NOTES, ANY SEPARATE
------------------
LETTER AGREEMENTS WITH RESPECT TO FEES PAYABLE TO THE ADMINISTRATIVE AGENT, AND
THE OTHER LOAN DOCUMENTS REFERRED TO HEREIN REPRESENT THE FINAL AGREEMENT AMONG
THE PARTIES HERETO AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.
SECTION 12.16 No Fiduciary Relationship. The relationship between the
-------------------------
Borrower and each Lender with respect to the Loan Documents and the Transactions
is solely that of debtor and creditor, and neither the Administrative Agent nor
any Lender has any fiduciary or other special relationship with the Borrower
with respect to the Loan Documents and the Transactions, and no term or
condition of any of the Loan Documents shall be construed so as to deem the
relationship between the Borrower and any Lender with respect to the Loan
Documents and the Transactions to be other than that of debtor and creditor.
SECTION 12.17 Construction. The Borrower, the Administrative Agent and
------------
each Lender acknowledge that each of them has had the benefit of legal counsel
of its own choice and has been afforded an opportunity to review this Agreement
and the other Loan Documents with its legal counsel and that this Agreement and
the other Loan Documents shall be construed as if jointly drafted by the parties
hereto.
[Remainder of this page intentionally blank. Signature pages follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
DIGITAL GENERATION SYSTEMS, INC.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
THE CHASE MANHATTAN BANK,
as a Lender, as Issuing Bank and as
Administrative Agent
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
THE BANK OF NEW YORK,
as a Lender and as Syndication Agent
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
COMERICA BANK-TEXAS
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------