EXHIBIT 10.3
REVOLVING CREDIT AND TERM LOAN AGREEMENT
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Dated as of October 24, 1996
among
SALESLINK CORPORATION,
CMG INFORMATION SERVICES
PACIFIC DIRECT MARKETING CORP.
THE FIRST NATIONAL BANK OF BOSTON
AND THE OTHER LENDING
INSTITUTIONS SET FORTH ON SCHEDULE 1 HERETO
and
THE FIRST NATIONAL BANK OF BOSTON
as Agent
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TABLE OF CONTENTS
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1. DEFINITIONS: 1
2. REVOLVING CREDIT FACILITY. 11
2.1. Commitment to Lend 11
2.2. Requests for Loans 12
2.3. Conversion Options 13
2.3.1. Conversion to Different Loan Type 13
2.3.2. Continuation of Loan Type 14
2.3.3. LIBOR Rate Loans 14
2.4. Interest 14
2.5. Repayments and Prepayments 15
2.6. Funds for Revolving Credit Loan 15
2.6.1. Funding Procedures 15
2.6.2. Advances by Agent 16
3. THE TERM LOAN 16
3.1. Commitment to Lend 16
3.2. The Term Notes 16
3.3. Schedule of Installment Payments of Principal of Term Loan 17
3.4. Optional Prepayment of Term Loan 17
3.5. Interest on Term Loan 17
3.5.1. Interest Rates 18
3.5.2. Notification by Borrower 18
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3.5.3. Amounts, Etc 18
4. LETTER OF CREDIT FACILITY 18
4.1. Letter of Credit Commitment 18
4.2. Reimbursement Obligation of the Borrower 20
4.3. Letter of Credit Payments 20
4.4. Obligations Absolute 21
4.5. Reliance by Issuer 22
4.6. Letter of Credit Fees 22
5. CHANGES IN CIRCUMSTANCES, ETC. 22
5.1. Inability to Determine LIBOR Rate 22
5.2. Illegality 22
5.3. Changes in Circumstances 23
5.4. Certificate 24
5.5. Indemnity. 24
6. FEES AND PAYMENTS 24
7. REPRESENTATIONS AND WARRANTIES. 25
8. CONDITIONS PRECEDENT. 27
9. COVENANTS. 29
9.1. Affirmative Covenants 29
9.2. Negative Covenants 31
9.3. Financial Covenants 32
10. EVENTS OF DEFAULT; ACCELERATION. 33
11. SETOFF. 35
12. THE AGENT. 36
12.1. Authorization. 36
12.2. Employees and Agents. 37
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12.3. No Liability 37
12.4. No Representations 37
12.5. Payments 38
12.5.1. Payments to Agent. 38
12.5.2. Distribution by Agent. 38
12.5.3. Delinquent Banks. 38
12.6. Holders of Notes. 39
12.7. Indemnity. 39
12.8. Agent as Bank 39
12.9. Resignation 39
12.10. Notification of Defaults and Events of Default 40
12.11. Duties in the Case of Enforcement. 40
13. ASSIGNMENT AND PARTICIPATION. 40
13.1. Conditions to Assignment by Banks 40
13.2. Certain Representations and Warranties; Limitations;
Covenants 41
13.3. Register 42
13.4. New Notes 42
13.5. Participations. 43
13.6. Disclosure. 43
13.7. Assignee or Participant Affiliated with the Borrower. 43
13.8. Miscellaneous Assignment Provisions. 44
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13.9. Assignment by Borrower 44
14. MISCELLANEOUS 44
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REVOLVING CREDIT AND TERM LOAN AGREEMENT
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This REVOLVING CREDIT AND TERM LOAN AGREEMENT (this "Agreement") is made as of
October 24, 1996, by and among (a) SALESLINK CORPORATION (the "Borrower"), a
Massachusetts corporation having its principal place of business at ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (b) CMG INFORMATION SERVICES, INC. (the
"Parent Guarantor"), a Delaware corporation having its principal place of
business at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ 01887-
7000, (c) PACIFIC DIRECT MARKETING CORP., a California corporation having its
principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (the
"Subsidiary Guarantor"), (d) THE FIRST NATIONAL BANK OF BOSTON, a national
banking association, and the other lending institutions listed on Schedule 1
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hereto and (e) THE FIRST NATIONAL BANK OF BOSTON as agent for itself and such
other lending institutions.
I. DEFINITIONS:
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Certain capitalized terms are defined below:
Accounts: All rights of the Borrower or any of its Subsidiaries to any payment
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of money for goods sold, leased or otherwise marketed in the ordinary course of
business, whether evidenced by or under or in respect of a contract or
instrument, and to all proceeds in respect thereof.
Acquisition: The acquisition by the Borrower on the Acquisition Closing Date of
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all of the outstanding shares of capital stock of the Subsidiary Guarantor
pursuant to the Acquisition Documents.
Acquisition Closing Date: The first date on which the conditions set forth in
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the Stock Purchase Agreement have been satisfied and the Acquisition has
occurred.
Acquisition Documents: Collectively, the Stock Purchase Agreement and all
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agreements and documents required to be entered into or delivered pursuant
thereto or in connection with the Acquisition, each in the form delivered to the
Agent on the Acquisition Closing Date.
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Adjustment Date: The first day of the month immediately following the month in
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which a Compliance Certificate is to be delivered by the Borrower to the Agent
pursuant to (S)9.1(a)(iv).
Agent: The First National Bank of Boston acting as agent for the Banks.
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Agent's Head Office: The Agent's head office located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
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▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other location as the Agent may
designate from time to time.
Agreement: See the preamble, which term shall include this Agreement and the
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Schedules and Exhibits hereto, all as amended and in effect from time to time.
Applicable Margin: For each period commencing on an Adjustment Date through the
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date immediately preceding the next Adjustment Date (each a "Rate Adjustment
Period"), the Applicable Margin shall be the applicable margin set forth below
with respect to the Borrower's Leverage Ratio, as determined for the fiscal
period of the Borrower and its Subsidiaries ending immediately prior to the
applicable Rate Adjustment Period:
BASE RATE LIBOR RATE
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LEVERAGE RATIO LOANS LOANS
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Greater than or equal to 2.00:1.00 .50% 2.00%
Less than 2.00:1.00 but greater
t han or equal to 1.50:1.00 .25% 1.75%
Less than 1.50:1.00 0% 1.50%
Notwithstanding the foregoing, (a) for Loans outstanding during the period
commencing on the Closing Date through the date immediately preceding the first
Adjustment Date to occur after the fiscal quarter ending January 31, 1997, the
Applicable Margin shall be at the highest Applicable Margin set forth above and
(b) if the Borrower fails to deliver any Compliance Certificate pursuant to
(S)9.1(a)(iv) hereof, then, for the period commencing on the next Adjustment
Date to occur
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subsequent to such failure through the date immediately following
the date on which such Compliance Certificate is delivered, the Applicable
Margin shall be the highest Applicable Margin set forth above.
Assignment and Acceptance: See (S)13.
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Banks: FNBB and the other lending institutions listed on Schedule 1 hereto and
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any other Person who becomes an assignee of any rights and obligations of a Bank
pursuant to (S)13.
Base Rate: The higher of (a) the annual rate of interest announced from time to
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time by FNBB at its head office as it's "base rate" and (b) one-half of one
percent (1/2%) above the Federal Funds Effective Rate.
Base Rate Loans: Revolving Credit Loans and all or any portion of the Term Loan
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bearing interest calculated by reference to the Base Rate.
Borrower: See the preamble.
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Business Day: Any day on which banking institutions in Boston, Massachusetts,
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are open for the conduct of a substantial part of its commercial banking
business generally and, in the case of LIBOR Rate Loans, also a day which is a
LIBOR Business Day.
Capitalized Leases: Leases under which the Borrower or any of its Subsidiaries
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is the Lessee or obligor, the discounted, future rental payment obligations
under which are required to be capitalized on the consolidated balance sheet of
the Borrower and its Subsidiaries in accordance with GAAP.
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Cash Equivalents: Collectively, (a) negotiable certificates of deposit and
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bankers' acceptances, maturing in one hundred eighty (180) days or less from the
date of issue, or demand deposit or money market accounts, with any commercial
bank or trust company which is organized under the laws of the United States or
of any state thereof and which has, or which is owned by a bank holding company
which has, total assets in excess of $1,000,000,000; (b) any securities (i)
which are commonly known as "commercial paper"; (ii) which are due and payable
within two hundred seventy (270) days from the date of issue; (iii) which have
been issued by any corporation organized under the laws of the United States or
of any state thereof or issued by a foreign corporation if such securities are
denominated in United States dollars; and (iv) the ratings for which, at the
time of the acquisition thereof by the Parent Guarantor, are not less than "P-1"
if rated by ▇▇▇▇▇'▇ Investors Services, Inc., and not less than "A-1" if rated
by Standard and Poor's Corporation; (c) any marketable direct or unconditionally
guaranteed obligations of the United States or any agency thereof which mature
within one (1) year from the date of acquisition thereof; and (d) solely for
purposes of determining compliance with (S)9.3(f)(i), to the extent the Swap
Program has been entered into, is in full force and effect and no defaults have
occurred and are continuing thereunder, securities held by the Parent Guarantor
which are eligible pursuant to the terms of the Swap Program to be included in
such Swap Program but are not, as of the date of determination, so included.
Charter Documents: In respect of any entity, the certificate or articles of
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incorporation or organization and the by-laws of such entity, or other
constitutive documents of such entity.
Closing Date: The first date on which the conditions set forth in (S)8 have
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been satisfied and any Revolving Credit Loans and the Term Loan are to be made
or the Letter of Credit is to be issued hereunder.
Commitment: Collectively, the Revolving Credit Loan Commitment, the Term Loan
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Commitment and the Letter of Credit Commitment.
Commitment Percentage: With respect to each Bank, the percentage set forth on
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Schedule 1 hereto as such Bank's percentage of the aggregate Commitments of all
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the Banks.
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Compliance Certificate: See (S)9.1(a)(iv) hereof.
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Consent: In respect of any person or entity, any permit, license or exemption
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from, approval, consent of, registration or filing with any local, state or
federal governmental or regulatory agency or authority, required under
applicable law.
Consolidated Current Assets: All assets of any Person and its Subsidiaries on a
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consolidated basis that in accordance with GAAP are properly classified as
current assets, excluding bad debts and inventory not yet saleable.
Consolidated Current Liabilities: All liabilities of any Person and its
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Subsidiaries on a consolidated basis payable on demand or maturing within one
(1) year from the date as of which current liabilities are to be determined, and
such other liabilities that in accordance with GAAP are properly classified as
current liabilities.
Consolidated Net Income (or Deficit): The consolidated net income (or deficit)
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of any Person and its Subsidiaries, after deduction of all expenses, taxes and
other proper charges, determined in accordance with GAAP.
Consolidated Operating Cash Flow: For any period, the amount equal to (a) the
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sum of (i) EBITDA for such period, minus (b) cash payments for all taxes paid
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during such period, minus (c) capital expenditures made during such period to
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the extent permitted hereunder.
Consolidated Total Debt Service: For any Reference Period, all scheduled
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mandatory payment of principal on Indebtedness of any Person and its
Subsidiaries made or required to be made in that period, plus the Consolidated
Total Interest Expense of such Person and its Subsidiaries for that period.
Consolidated Total Interest Expense. For any period, the aggregate amount of
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interest required to be paid or accrued by any Person and its Subsidiaries
during such period on all Indebtedness of such Person and its Subsidiaries
outstanding during all or any part of such period, whether such interest was or
is required to be reflected as an item of expense or capitalized, including
payments consisting of interest in respect of Capitalized Leases and including
commitment fees, agency fees, facility fees, balance deficiency fees and similar
fees or expenses in connection with the borrowing of money.
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Conversion Request: A notice by the Borrower to the Agent of the Borrower's
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election to convert or continue a Loan in accordance with (S)2.3 hereof.
Default: An event or act which with the giving of notice and/or the lapse of
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time, would become an Event of Default.
Domestic Lending Office: Initially, the office of each Bank designated as such
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in Schedule 1 hereto; thereafter, such other office of such Bank, if any,
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located within the United States that will be making or maintaining Base Rate
Loans.
Drawdown Date: The date on which any Revolving Credit Loan or the Term Loan is
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made or is to be made, and the date on which any Revolving Credit Loan is
converted or continued in accordance with (S)2.3 or all or any portion of the
Term Loan is converted or continued in accordance with (S)3.5.
EBITDA: With respect to any fiscal period, an amount equal to the sum of (a)
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Consolidated Net Income for such period, plus (b) to the extent deducted in the
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calculation of such Person's Consolidated Net Income and without duplication,
(i) depreciation and amortization for such period, plus (ii) other noncash
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charges, including, without limitation, in process research and development
expenses or charges, made in calculating Consolidated Net Income for such
period, plus (iii) tax expense for such period, plus (iv) Consolidated Total
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Interest Expense paid or accrued during such period, all as determined in
accordance with GAAP.
Eligible Assignee: Any of (a) a commercial bank or finance company organized
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under the laws of the United States, or any State thereof or the District of
Columbia, and having total assets in excess of $1,000,000,000; (b) a savings and
loan association or savings bank organized under the laws of the Untied States,
or any State thereof or the District of Columbia, and having a net worth of at
least $100,000,000, calculated in accordance with GAAP; (c) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development ( the "OECD"), or a
political subdivision of any such country, and having total assets in excess of
$1,000,000,000, provided, that such bank is acting through a branch or agency
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located in the country in which it is organized or another country which is also
a member of the
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OECD; (d) the central bank of any country which is a member of the OECD; and
(e) if, but only if, any Event of Default has occurred and is continuing, any
other bank, insurance company, commercial finance company or other financial
institution or other Person approved by the Agent, such approval not to be
unreasonably withheld.
Environmental Laws: All laws pertaining to environmental matters, including
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without limitation, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, the
Superfund Amendments and Reauthorization Act of 1986, the Federal Clean Water
Act, the Federal Clean Air Act, the Toxic Substances Control Act, in each case
as amended, and all rules, regulations, judgments, decrees, orders and licenses
arising under all such laws.
ERISA: The Employee Retirement Income Security Act of 1974, as amended, and all
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rules, regulations, judgments, decrees, and orders arising thereunder.
Eurocurrency Reserve Rate: For any day with respect to a LIBOR Rate Loan, the
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maximum rate (expressed as a decimal) at which any lender subject thereto would
be required to maintain reserves under Regulation D of the Board of Governors of
the Federal Reserve System (or any successor or similar regulations relating to
such reserve requirements) against "Eurocurrency Liabilities" (as that term is
used in Regulation D), if such liabilities were outstanding. The Eurocurrency
Reserve Rate shall be adjusted automatically on and as of the effective date of
any change in the Eurocurrency Reserve Rate.
Event of Default: Any of the events listed in (S)10 hereof.
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Federal Funds Effective Rate: For any day, the rate per annum equal to the
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weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from three
funds brokers of recognized standing selected by the Agent.
Financials: In respect of any period, the consolidated balance sheet of any
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Person and its Subsidiaries as at the end of such period, and the related
statement of income and consolidated statement of cash flow for such period,
each setting forth in
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comparative form the figures for the previous comparable fiscal period, all in
reasonable detail and prepared in accordance with GAAP.
FNBB: The First National Bank of Boston, a national banking association, in its
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individual capacity.
GAAP: Generally accepted accounting principles consistent with those adopted by
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the Financial Accounting Standards Board and its predecessor, (a) generally, as
in effect from time to time, and (b) for purposes of determining compliance by
each of the Guarantors and the Borrower with its financial covenants set forth
herein, as in effect for the fiscal year therein reported in the most recent
Financials submitted to the Agent prior to execution of this Agreement.
Guarantors: The Parent Guarantor and the Subsidiary Guarantor.
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Guaranty: The Guaranty, dated or to be dated on or prior to the Closing Date,
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made by each of the Guarantor and the Subsidiary Guarantor in favor of the Banks
and the Agent pursuant to which each such Guarantor guaranties to the Banks and
the Agent the payment and performance of the Obligations in form and substance
satisfactory to the Banks and the Agent.
Indebtedness: In respect of any entity, all obligations, contingent and
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otherwise, that in accordance with GAAP should be classified upon the obligor's
balance sheet as liabilities, or to which reference should be made by footnotes
thereto, including in any event and whether or not so classified, but without
duplication with respect liabilities under swap arrangements where the
underlying obligation appears on the balance sheet of such entity: (a) all debt
and similar monetary obligations, whether direct or indirect, (b) all
liabilities secured by Liens, whether or not the liability secured thereby shall
have been assumed, (c) all guarantees, endorsements and other contingent
obligations whether direct or indirect in respect of indebtedness of others,
including any obligation to supply funds to or in any manner to invest in,
directly or indirectly, the debtor, to purchase indebtedness, or to assure the
owner of indebtedness against loss, through an agreement to purchase goods,
supplies or services for the purpose of enabling the debtor to make payment of
the indebtedness held by such owner or otherwise and (d) all liabilities in
respect of bankers' acceptances or letters of credit.
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Interest Payment Date: (a) As to any Base Rate Loan, the last day of the
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calendar month which includes the Drawdown Date thereof; and (b) as to any LIBOR
Rate Loan in respect of which the Interest Period is (i) ninety (90) days or
less, the last day of such Interest Period and (ii) more than ninety (90) days,
the date that is ninety (90) days from the first day of such Interest Period
and, in addition, the last day of such Interest Period.
Interest Period: With respect to each Revolving Credit Loan or all or any
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relevant portion of the Term Loan, (a) initially, the period commencing on the
Drawdown Date of such Loan and ending on the last day of one of the periods set
forth below, as selected by the Borrower in a Loan Request (i) for any Base Rate
Loans, the last day of the calendar month; and (ii) for any LIBOR Rate Loan, 1,
2, 3, 6 or, if available, 12 months; and (b) thereafter each period commencing
on the last day of the immediately preceding Interest Period applicable to such
Loan and ending on the last day of one of the periods set forth above, as
selected by the Borrower in a Conversion Request; provided that all of the
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foregoing provisions relating to Interest Periods are subject to the following:
(a) if any Interest Period with respect to a LIBOR Rate Loan would
otherwise end on a day that is not a LIBOR Business Day, that Interest
Period shall be extended to the next succeeding LIBOR Business Day
unless the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding LIBOR Business Day;
(b) if any Interest Period with respect to a Base Rate Loan would end on a
day that is not a Business Day, that Interest Period shall end on the
next succeeding Business Day;
(c) If the Borrower shall fail to give notice as provided in (S)2.3, the
Borrower shall be deemed to have requested a conversion of the
affected LIBOR Rate Loan to a Base Rate Loan and the continuance of
all Base Rate Loans as Base Rate Loans on the last day of the then
current Interest Period with respect thereto ;
(d) any Interest Period relating to any LIBOR Rate Loan that begins on the
last LIBOR Business Day of a calendar month (or on a day for which
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there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last LIBOR Business Day
of a calendar month; and
(e) any Interest period relating to any LIBOR Rate Loan that would
otherwise extend beyond the Revolving Credit Loan Maturity Date (if
comprising a Revolving Credit Loan) or the Term Loan Maturity Date (if
comprising the Term Loan or a portion thereof) shall end on the
Revolving Credit Loan Maturity Date or, as the case may be, the Term
Loan Maturity Date.
Investment Equivalents: Cash Equivalents of the Parent Guarantor, plus, without
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duplication, the amount of any "Allowable Instruments" (as such term is defined
in the Investment Policy) which are set forth in the Parent Guarantor's
quarterly and annual statements as "cash equivalents", provided, however,
Allowable Instruments shall not include any securities issued by a corporation
unless such corporation's securities are publically traded and there are no
restrictions on transferability or sale imposed on the holder thereof.
Investment Policy: The Borrower's investment policy set forth on Schedule 2
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hereto.
Letter of Credit: See (S)4.1(a).
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Letter of Credit Application: See (S)4.1(a).
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Letter of Credit Commitment. With respect to each Bank, the amount set forth on
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Schedule 1 hereto as the amount of such Bank's commitment to participate in the
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issuance, extension and renewal of the Letter of Credit for the account of the
Borrower or the Parent Guarantor with a Maximum Drawing Amount under such Letter
of Credit of not more than $7,500,000 in the aggregate, as the same may be
reduced from time to time or terminated hereunder.
Letter of Credit Fee: See (S)4.6.
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Letter of Credit Maturity Date: October 24, 1997, as the same shall be extended
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on a yearly basis at the Agent's and the Banks' discretion.
Letter of Credit Participation: See (S)4.1(d).
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Letter of Credit Participation: See (S)4.1(d).
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Leverage Ratio: As at any date of determination, the ratio of (a) Total Funded
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Indebtedness of the Borrower and its Subsidiaries outstanding on such date to
(b) the EBITDA of the Borrower and its Subsidiaries for the period of four (4)
consecutive fiscal quarters (treated as a single accounting period) ending on
such date; provided, however, for purposes of (S)9.3(b) hereof, for the fiscal
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quarter ending (1) January 31, 1997, the Leverage Ratio shall be calculated as
twenty-five percent (25%) of Total Funded Indebtedness of the Borrower and its
Subsidiaries outstanding on such date to the EBITDA of the Borrower and its
Subsidiaries for such one quarter period; (2) April 30, 1997, the Leverage Ratio
shall be calculated as fifty percent (50%) of Total Funded Indebtedness of the
Borrower and its Subsidiaries outstanding on such date to the EBITDA of the
Borrower and its Subsidiaries for such two quarter period; and (3) July 31,
1997, the Leverage Ratio shall be calculated as seventy-five percent (75%) of
Total Funded Indebtedness of the Borrower and its Subsidiaries outstanding on
such date to the EBITDA of the Borrower and its Subsidiaries for such three
quarter period.
LIBOR Business Day: Any day on which commercial banks are open for
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international business (including dealings in U.S. dollar deposits) in London or
such other eurodollar interbank market as may be selected by the Agent in its
sole discretion acting in good faith.
LIBOR Lending Office: Initially, the office of each Bank designated as such in
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Schedule 1 hereto; thereafter, such other office of such Bank, if any, that
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shall be making or maintaining LIBOR Rate Loans.
LIBOR Rate: For any Interest Period with respect to a LIBOR Rate Loan, the rate
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of interest equal to (a) the rate determined by the Agent at which U.S. dollar
deposits for such Interest Period are offered based on information presented on
Telerate Page 3750 (or any successor publication or source selected by the Bank
in its reasonable discretion) at 11:00 a.m. (London time) on the second LIBOR
Business Day, prior to the first day of such Interest Period, divided by (b) a
number equal to 1.00 minus the Eurocurrency Reserve Rate, if applicable.
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LIBOR Rate Loans: Revolving Credit Loans and all or any portion of the Term
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Loan bearing interest calculated by reference to the LIBOR Rate.
Liens: Any encumbrance, mortgage, pledge, hypothecation, charge, restriction or
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other security interest of any kind securing any obligation of any entity or
person.
Loan Documents: This Agreement, the Notes, the Letter of Credit Application,
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the Letter of Credit and the Guaranty, in each case as from time to time amended
or supplemented.
Loan Request: See (S)2.1.
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Loans: The Revolving Credit Loans and the Term Loan.
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Majority Banks: As of any date, (a) if there are only two (2) Banks, Majority
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Banks shall mean Banks, and (b) if there are three (3) or more Banks the Banks
whose aggregate Commitments constitute at least sixty six and two thirds percent
(66 2/3%) of the Total Commitment.
Materially Adverse Effect: Any materially adverse effect on the financial
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condition or business operations of the Guarantors, the Borrower and its other
Subsidiaries taken together or material impairment of the ability of the
Guarantors, the Borrower or any of its other Subsidiaries to perform its
obligations hereunder or under any of the other Loan Documents.
Maximum Drawing Amount: The maximum aggregate amount from time to time that the
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beneficiary may draw under the outstanding Letter of Credit, as such aggregate
amount may be reduced from time to time pursuant to the terms of the Letter of
Credit.
Notes: The Term Note and the Revolving Credit Note.
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Obligations: All indebtedness, obligations and liabilities of the Guarantors,
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the Borrower and its other Subsidiaries to any of the Banks and the Agent,
existing on the date of this Agreement or arising thereafter, direct or
indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract, operation
of law or otherwise, arising or incurred under this Agreement or any other Loan
Document or in respect of any of the Loans made or Reimbursement Obligations
incurred or any of the Notes, Letter of Credit Application, Letter of Credit, or
arising or incurred in connection with any interest rate protection arrangements
contemplated by (S)9.1(g) or any documents, agreements or instruments executed
in connection therewith, or other instruments at any time evidencing any
thereof.
Parent Guarantor: See the preamble.
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Person: Any individual, corporation, partnership, trust, unincorporated
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association, business or other legal entity, and any government or any
governmental agency or political subdivision thereof.
Rate Adjustment Period: See the definition of Applicable Margin.
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Record: See (S)3.2 hereof.
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Reference Period: The period of four (4) consecutive fiscal quarters (or such
----------------
shorter period of one, two or three consecutive fiscal quarters as has elapsed
since the Closing Date), treated as a single accounting period.
Reimbursement Obligation: The Borrower's and, in the event the Letter of Credit
------------------------
is issued for the account of the Parent Guarantor, the Parent Guarantor's joint
and several obligation to reimburse the Agent and the Banks on account of any
drawing under the Letter of Credit as provided in (S)4.2.
Requirement of Law: In respect of any person or entity, any law, treaty, rule,
------------------
regulation or determination of an arbitrator, court, or other governmental
authority, in each case applicable to or binding upon such person or entity or
affecting any of its property.
-14-
Revolving Credit Loan Commitment: With respect to each Bank, the amount set
--------------------------------
forth on Schedule 1 hereto as the amount of such Bank's commitment to make
-------- -
Revolving Credit Loans to the Borrower, as the same may be reduced from time to
time or terminated hereunder.
Revolving Credit Loan Maturity Date: October 1, 1998.
-----------------------------------
Revolving Credit Loans: Revolving credit loans made or to be made by the Banks
----------------------
to the Borrower pursuant to (S)2 hereof.
Revolving Credit Note: See (S)2.2(d) hereof.
---------------------
Seller: Each of the Stockholders (as such term is defined in the Stock Purchase
------
Agreement) set forth on Schedule 1 to the Stock Purchase Agreement.
----------
Seller Note: The unsecured promissory note from the Borrower to the Seller in
-----------
the original principal amount of $7,500,000 issued pursuant to the Acquisition,
which promissory note shall be in form and substance satisfactory to the Banks
and the Agent, and any replacement note issued pursuant to Sections 1.4 and 1.6
to the Stock Purchase Agreement, so long as such replacement note is on terms
satisfactory to the Agent.
Stock Purchase Agreement: The Stock Purchase Agreement dated as of October 24,
------------------------
1996 among the Borrower, each of the Guarantors, and the Sellers, together with
all schedules, exhibits and annexes thereto.
Subsidiary: In respect of any Person, any business entity of which such Person
-----------
at any time owns or controls directly or indirectly more than fifty percent
(50%) of the outstanding shares of stock having voting power, regardless of
whether such right to vote depends upon the occurrence of a contingency.
Subsidiary Guarantor: Pacific Direct Marketing Corp., a California corporation
--------------------
and, immediately upon the effectiveness of the Acquisition, a wholly-owned
Subsidiary of the Borrower.
-15-
Swap Program: The "total rate of return swap program" or such similar
------------
"monitization" program entered into between the Parent Guarantor and FNBB on
terms and conditions substantially as agreed to on the Closing Date.
Term Loan: The term loan made or to be made by the Banks to the Borrower on the
---------
Closing Date in the aggregate principal amount of $5,500,000 pursuant to (S)3
hereof.
Term Loan Commitment: With respect to each Bank, the amount set forth on
--------------------
Schedule 1 hereto as the amount of such Bank's commitment to make the Term Loan
----------
to the Borrower on the Closing Date.
Term Loan Maturity Date: October 1, 2001.
-----------------------
Term Note: See (S)3.2 hereof.
---------
Total Commitment: The sum of the Commitments of the Banks, as in effect from
----------------
time to time.
Total Revolving Credit Commitment: The sum of the Revolving Credit Commitments
---------------------------------
of the Banks, as in effect from time to time. As of the Closing Date the Total
Revolving Credit Commitment is $2,500,000.
Total Funded Indebtedness: All Indebtedness of the Borrower and its
-------------------------
Subsidiaries for borrowed money, purchase money Indebtedness and with respect to
Capitalized Leases, determined on a consolidated basis in accordance with GAAP.
Unencumbered Cash: The sum of (a) a Person's cash held in demand deposit
-----------------
accounts or interest bearing accounts at any financial institution, which cash
is not subject to any Lien, and which has not been advanced by FNBB plus (b) a
----
Person's Cash Equivalents which are not subject to any Lien, plus (c) solely for
----
purposes of determining compliance with (S)9(f)(ii) hereof, a Person's
Investment Equivalents which are not subject to any Lien.
Uniform Customs: With respect to any Letter of Credit, the Uniform Customs and
---------------
-16-
Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 or any successor version thereto adopted by the
Agent in the ordinary course of its business as a letter of credit issuer and in
effect at the time of issuance of such Letter of Credit.
Unpaid Reimbursement Obligation: Any Reimbursement Obligation for which the
-------------------------------
Borrower or the Parent Guarantor, as the case may be, does not reimburse the
Agent and the Banks on the date specified in, and in accordance with, (S)3.2(a).
II. REVOLVING CREDIT FACILITY.
-------------------------
A. COMMITMENT TO LEND.
------------------
Upon the terms and subject to the conditions of this Agreement, each of the
Banks severally agrees to lend to the Borrower such sums that the Borrower may
request, from the Closing Date until but not including the Revolving Credit Loan
Maturity Date, up to a maximum aggregate amount outstanding (after giving effect
to all amounts requested) at any one time equal to such Bank's Revolving Credit
Loan Commitment, provided that the sum of the outstanding amount of the
--------
Revolving Credit Loans (after giving effect to all amounts requested) shall not
at any time exceed the Total Revolving Credit Commitment. Revolving Credit
Loans shall be in the minimum aggregate amount of $100,000 or an integral
multiple thereof.
B. REQUESTS FOR LOANS.
------------------
(a) The Borrower shall give to the Agent written notice in form and substance
satisfactory to the Agent (or telephonic notice confirmed in writing in form and
substance satisfactory to the Agent) of each Revolving Credit Loan being
requested hereunder (a "Loan Request") (i) no later than 10:00 a.m. (Boston
time) on the proposed Drawdown Date of any Base Rate Loan and (ii) no less than
three (3) LIBOR Business Days prior to the proposed Drawdown Date of any LIBOR
Rate Loan. Each such notice shall specify (A) the principal amount of the
Revolving Credit Loan being requested, (B) the proposed Drawdown Date of such
Revolving Credit Loan, (C) in the event the Revolving Credit Loan being
requested is a LIBOR Rate Loan, the Interest Period for such Revolving Credit
Loan and (D) whether such Revolving Credit Loan shall be a Base Rate Loan or a
LIBOR Rate Loan. Promptly
-17-
upon receipt of any such notice, the Agent shall notify each of the Banks
thereof. Each Loan Request shall be irrevocable and binding upon the Borrower
and shall obligate the Borrower to accept the Revolving Credit Loan requested
from the Banks on the proposed Drawdown Date. Each Loan Request shall be in a
minimum aggregate amount of $100,000 or an integral multiple thereof.
(b) Notwithstanding the notice requirements set forth in (S)2.2(a) and the
minimum Revolving Credit Loan amount provisions contained in (S)2.1 and 2.2(a),
Revolving Credit Loans may be made from time to time in the following manner:
the Banks may make Revolving Credit Loans to the Borrower by entry of credits by
the Agent to the Borrower's controlled disbursement account (the "Disbursement
Account") with the Agent to cover checks and other charges which the Borrower
has drawn or made against such Disbursement Account. The Borrower hereby
requests and authorizes the Banks to make from time to time such Revolving
Credit Loans by means of appropriate entries of such credits sufficient to cover
checks and other charges then presented. The Borrower and the Banks may also
agree to effect such other controlled disbursement arrangements as may be
mutually satisfactory. The Borrower acknowledges and agrees that the making of
such Revolving Credit Loans in accordance with this (S)2.2(b) shall, in each
case, be subject in all respects to the provisions of this Agreement as if they
were Revolving Credit Loans covered by a Loan Request, including without
limitation, the limitations set forth in (S)2.1 and the requirement that the
applicable provisions of (S)8 be satisfied. All actions taken by the Agent and
the Banks pursuant to the provisions of this (S)2.2(b) shall be conclusive and
binding upon the Borrower.
(c) Notwithstanding the notice requirement set forth in (S)2.2(a) and the
minimum Revolving Credit Loan provisions contained in (S)2.1 and (S)2.2(a), each
of the Banks agrees to make Revolving Credit Loans to the Borrower sufficient to
pay to the Banks any Unpaid Reimbursement Obligations on the date on which such
Reimbursement Obligations become Unpaid Reimbursement Obligations. The Borrower
hereby requests and authorizes the Banks to make from time to time such
Revolving Credit Loans by means of paying Unpaid Reimbursement Obligations. The
Borrower acknowledges and agrees that the making of such Revolving Credit Loans
shall, in each case, be subject in all respects to the provisions of this
Agreement, including, without limitation, the limitations set forth in (S)2.1(a)
and the requirements of the applicable conditions in (S)8. All actions taken by
the Agent and the Banks pursuant to the provisions of this (S)2.2(c) shall be
conclusive and binding on the Borrower.
(d) The obligation of the Borrower to repay to the Banks the principal of the
-18-
Revolving Credit Loans and interest accrued thereon shall be evidenced by
separate promissory notes (each a "Revolving Credit Note") dated as of the
Closing Date and completed with appropriate insertions. One Revolving Credit
Note shall be payable to the order of each Bank in a principal amount equal to
such Bank's Revolving Credit Loan Commitment or, if less, the outstanding amount
of all Revolving Credit Loans made by such Bank, plus interest accrued thereon,
as set forth in (S)2.4 below.
C. CONVERSION OPTIONS.
------------------
1. CONVERSION TO DIFFERENT LOAN TYPE.
---------------------------------
The Borrower may elect from time to time to convert any outstanding Revolving
Credit Loan from a Base Rate Loan to a LIBOR Rate Loan or from a LIBOR Rate Loan
to a Base Rate Loan, provided that (a) with respect to any such conversion of a
--------
LIBOR Rate Loan to a Base Rate Loan, the Borrower shall give the Agent at least
three (3) Business Day's prior written notice of such election; (b) with respect
to any such conversion of a Base Rate Loan to a LIBOR Rate Loan, the Borrower
shall give the Agent at least three (3) LIBOR Business Days prior written notice
of such election; (c) with respect to any such conversion of a LIBOR Rate Loan
into a Base Rate Loan, such conversion shall only be made on the last day of the
Interest Period with respect thereto; and (d) no Revolving Credit Loan may be
converted into a LIBOR Rate Loan when any Default or Event of Default has
occurred and is continuing. On the date on which such conversion is being made
each Bank shall take such action as is necessary to transfer its Commitment
Percentage of such Revolving Credit Loans to its Domestic Lending Office or its
LIBOR Lending Office, as the case may be. All or any part of Revolving Credit
Loans may be converted as provided herein, provided that any partial conversion
--------
shall be in an aggregate principal amount of $100,000 or a whole multiple
thereof. Each Conversion Request relating to the conversion of a Base Rate Loan
to a LIBOR Rate Loan shall be irrevocable by the Borrower.
2. CONTINUATION OF LOAN TYPE.
-------------------------
Any Base Rate Loan or LIBOR Rate Loan may be continued as such upon the
-19-
expiration of an Interest Period with respect thereto by compliance by the
Borrower with the notice provisions contained in (S)2.3.1; provided that no
--------
LIBOR Rate Loan may be continued as such when any Default or Event of Default
has occurred and is continuing, but shall be automatically converted to a Base
Rate Loan on the last day of the first Interest Period relating thereto ending
during the continuance of any Default or Event of Default of which officers of
the Agent active upon the Borrower's account have actual knowledge. In the
event that the Borrower fails to provide any such notice with respect to the
continuation of any LIBOR Rate Loan as such, then such LIBOR Rate Loan shall be
automatically converted to a Base Rate Loan on the last day of the first
Interest Period relating thereto.
3. LIBOR RATE LOANS.
----------------
Any conversion to or from LIBOR Rate Loans shall be in such amounts and be made
pursuant to such elections so that, after giving effect thereto, the aggregate
principal amount of all LIBOR Rate Loans having the same Interest Period shall
not be less than $100,000 or a whole multiple thereof, and there shall not be
more than three (3) outstanding Revolving Credit Loans which are LIBOR Rate
Loans at any time.
D. INTEREST.
--------
So long as no Event of Default is continuing, and except as otherwise provided
herein, (a) each Base Rate Loan shall bear interest for the period commencing
with the Drawdown Date thereof and ending of the last day of the Interest Period
with respect thereto at the rate per annum equal to the Base Rate plus the
----
Applicable Margin; (b) each LIBOR Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at the rate per annum equal to the LIBOR
Rate for such Interest Period plus the Applicable Margin; and (c) the Borrower
----
promises to pay interest on each Revolving Credit Loan in arrears on each
Interest Payment Date with respect thereto. While an Event of Default is
continuing, amounts payable under any of the Loan Documents shall bear interest
(compounded monthly and payable on demand in respect of overdue amounts) at a
rate per annum which is equal to the sum of (a) the Base Rate, and (b) four
percent (4%) above the Margin until such amount is paid in full or (as the case
may be) such Event of Default has been cured or waived in writing by the
Majority Banks (after as well as before judgment).
E. REPAYMENTS AND PREPAYMENTS.
--------------------------
-20-
The Borrower hereby agrees to pay to the Agent for the benefit of the Banks on
the Revolving Credit Loan Maturity Date the entire unpaid principal of and
interest on all Revolving Credit Loans. If at any time the outstanding amount
of the Revolving Credit Loans exceeds the Total Revolving Credit Commitment,
then the Borrower shall immediately pay the amount of such excess to the Agent
for the respective accounts of the Banks for application, first to any Unpaid
Reimbursement Obligation; second, to the Revolving Credit Loans; and third, to
provide to the Agent cash collateral for Reimbursement Obligations as
contemplated by (S)4. Each payment of any Unpaid Reimbursement Obligation or
prepayment of Revolving Credit Loans shall be allocated among the Banks, in
proportion, as nearly as practicable, to each Reimbursement Obligation or (as
the case may be) the respective unpaid principal amount of each Bank's Revolving
Credit Note, with adjustments to be extent practicable to equalize any prior
payments or repayments not exactly in proportion. The Borrower may elect to
prepay the outstanding principal of all or any part of any Revolving Credit
Loan, without premium or penalty, in a minimum amount of $100,000 or an integral
multiple thereof, upon written notice to the Agent given by 10:00 a.m. Boston
time on the date of such prepayment, of the amount to be prepaid. Each partial
prepayment shall be allocated among the Banks, in proportion, as nearly as
practicable, to the respective unpaid principal amount of each Bank's Revolving
Credit Note, with adjustments to the extent practicable to equalize any prior
repayments not exactly in proportion. The Borrower shall be entitled to
reborrow before the Revolving Credit Loan Maturity Date such amounts, upon the
terms and subject to the conditions of this Agreement. Each repayment or
prepayment of principal of any Revolving Credit Loan shall be accompanied by
payment of the unpaid interest accrued to such date on the principal being
repaid or prepaid. If at any time the aggregate amount of all outstanding
Revolving Credit Loans shall exceed the Revolving Credit Loan Commitment, the
Borrower shall immediately pay the amount of such excess to the Agent for
application to the Revolving Credit Loans. The Borrower may elect to reduce or
terminate the Revolving Credit Loan Commitment by a minimum principal amount of
$100,000 or an integral multiple thereof, upon written notice to the Agent given
by 10:00 a.m. Boston time at least two (2) Business Days prior to the date of
such reduction or termination. The Borrower shall not be entitled to reinstate
the Revolving Credit Loan Commitment following such reduction or termination.
F. FUNDS FOR REVOLVING CREDIT LOAN.
-------------------------------
1. FUNDING PROCEDURES.
------------------
-21-
Not later than 11:00 a.m. (Boston time) on the proposed Drawdown Date of any
Revolving Credit Loans, each of the Banks will make available to the Agent, at
the Agent's Head Office, in immediately available funds, the amount of such
Bank's Commitment Percentage of the amount of the requested Revolving Credit
Loans. Upon receipt from each Bank of such amount, and upon receipt of the
documents required by (S)8 and the satisfaction of the other conditions set
forth therein, to the extent applicable, the Agent will make available to the
Borrower the aggregate amount of such Revolving Credit Loans made available to
the Agent by the Banks. The failure or refusal of any Bank to make available to
the Agent at the aforesaid time and place on any Drawdown Date the amount of its
Commitment Percentage of the requested Revolving Credit Loans shall not relieve
any other Bank from its several obligation hereunder to make available to the
Agent the amount of such other Bank's Commitment Percentage of any requested
Revolving Credit Loans.
2. ADVANCES BY AGENT.
-----------------
The Agent may, unless notified to the contrary by any Bank prior to a Drawdown
Date, assume that such Bank has made available to the Agent on such Drawdown
Date the amount of such Bank's Commitment Percentage of the Revolving Credit
Loans to be made on such Drawdown Date, and the Agent may (but it shall not be
required to), in reliance upon such assumption, make available to the Borrower a
corresponding amount. If any Bank makes available to the Agent such amount on a
date after such Drawdown Date, such Bank shall pay to the Agent on demand an
amount equal to the product of (a) the average computed for the period referred
to in clause (c) below, of the weighted average interest rate paid by the Agent
for federal funds acquired by the Agent during each day included in such period,
times (b) the amount of such Bank's Commitment Percentage of such Revolving
-----
Credit Loans, times (c) a fraction, the numerator of which is the number of days
-----
that elapse from and including such Drawdown Date to the date on which the
amount of such Bank's Commitment Percentage of such Revolving Credit Loans shall
become immediately available to the Agent, and the denominator of which is 365.
A statement of the Agent submitted to such Bank with respect to any amounts
owing under this paragraph shall be prima facie evidence of the amount due and
----- -----
owing to the Agent by such Bank. If the amount of such Bank's Commitment
Percentage of such Revolving Credit Loans is not made available to the Agent by
such Bank within three (3) Business Days following such Drawdown Date, the Agent
shall be entitled to recover such amount from the Borrower on demand, with
interest thereon at the rate per annum applicable to the Revolving Credit Loans
made on such Drawdown
-22-
Date.
III. THE TERM LOAN.
-------------
A. COMMITMENT TO LEND.
------------------
Upon the terms and subject to the conditions of this Agreement, each Bank agrees
to lend to the Borrower on the Closing Date the amount of its Commitment
Percentage of the principal amount of $5,500,000.
B. THE TERM NOTES.
--------------
The Term Loan shall be evidenced by separate promissory notes of the Borrower in
form and substance satisfactory to the Agent (each a "Term Note"), dated the
Closing Date and completed with appropriate insertions. One Term Note shall be
payable to the order of each Bank in a principal amount equal to such Bank's
Commitment Percentage of the Term Loan and representing the obligation of the
Borrower to pay to such Bank such principal amount or, if less, the outstanding
amount of such Bank's Commitment Percentage of the Term Loan, plus interest
accrued thereon, as set forth below. The Borrower irrevocable authorizes each
Bank to make or cause to be made a notation on each grid attached to such Bank's
Term Note (the "Record") reflecting the original principal amount of the Term
Loan and, at or about the time of such Bank's receipt of any principal payment
on such Term Note, an appropriate notation on such Record reflecting such
payment. The aggregate unpaid amount set forth on the Record shall be prima
facie evidence of the principal amount thereof owing and unpaid to such Bank,
but the failure to record, or any error in so recording, any such amount on the
Record shall not affect the obligations of the Borrower hereunder or under the
Term Note to make payments of principal of and interest on the Term Note when
due.
C. SCHEDULE OF INSTALLMENT PAYMENTS OF PRINCIPAL OF TERM LOAN.
----------------------------------------------------------
The Borrower promises to pay to the Agent for the account of the Banks the
principal amount of the Term Loan in sixteen (16) consecutive quarterly
payments, payable on the last Business Day of each calendar quarter ending
within any period set forth below in the amount set forth opposite such period,
commencing on January 31,
-23-
1998 with a final payment on the Term Loan Maturity Date in an amount equal to
the unpaid balance of the Term Loan.
QUARTER ENDING: AMOUNT OF EACH PAYMENT
--------------- ----------------------
January 31, 1997 - October 31, 1997 $ 0
January 31, 1998 - October 31, 1998 $125,000
January 31, 1999 - October 31, 1999 $125,000
January 31, 2000 - October 31, 2000 $500,000
January 31, 2001 - July 31, 2001 $625,000
Term Loan Maturity Date Remaining unpaid balance of
Term Loan
D. OPTIONAL PREPAYMENT OF TERM LOAN.
The Borrower shall have the right at any time to prepay the Term Notes on or
before the Term Loan Maturity Date, as a whole, or in part, upon not less than
five (5) Business Days prior written notice to the Agent, without premium or
penalty, provided, that (a) each partial prepayment shall be in the principal
--------
amount of $100,000 or an integral multiple thereof; (b) no portion of the Term
Loan bearing interest at the LIBOR Rate may be prepaid pursuant to this (S)3.4
except on the last day of the Interest Period relating thereto; and (c) each
partial prepayment shall be allocated among the Banks, in proportion, as nearly
as practicable, to the respective outstanding amount of each Bank's Term Note,
with adjustments to the extent practicable to equalize any prior prepayments not
exactly in proportion. Any prepayment of principal of the Term Loan shall
include all interest accrued to the date of prepayment and shall be applied
against the scheduled installments of principal due on the Term Loan in the
inverse order of maturity No amount repaid with respect to the Term Loan may be
reborrowed.
-24-
F. INTEREST ON TERM LOAN.
---------------------
1. INTEREST RATES.
--------------
So long as no Event of Default is continuing, and except as otherwise provided
herein, the Term Loan shall bear interest during each Interest Period relating
to all or any portion of the Term Loan at the following rates: (a) to the
extent that all or any portion of the Term Loan bears interest during such
Interest Period at the Base Rate, the Term Loan or such portion shall bear
interest during such Interest Period at the rate per annum equal to the Base
Rate plus the Applicable Margin; (b) to the extent that all or any portion of
----
the Term Loan bears interest during such Interest Period at the LIBOR Rate, the
Term Loan or such portion shall bear interest during such Interest Period at the
rate per annum equal to the LIBOR Rate for such Interest Period plus the
----
Applicable Margin. The Borrower promises to pay interest on the Term Loan or
any portion thereof outstanding during each Interest Period in arrears on each
Interest Payment Date applicable to such Interest Period. While an Event of
Default is continuing, amounts payable under any of the Loan Documents shall
bear interest (compounded monthly and payable on demand in respect of overdue
amounts) at a rate per annum which is equal to the sum of (a) the Base Rate, and
(b) three percent (3%) above the Margin until such amount is paid in full or (as
the case may be) such Event of Default has been cured or waived in writing by
the Majority Banks (after as well as before judgment).
2. NOTIFICATION BY BORROWER.
------------------------
The Borrower shall notify the Agent, such notice to be irrevocable, at least
three (3) LIBOR Business Days prior to the Drawdown Date of the Term Loan if all
or any portion of the Term Loan is to bear interest at the LIBOR Rate. After
the Term Loan has been made, the provisions of (S)2.3 shall apply mutatis
-------
mutandis with respect to all or any portion of the Term Loan so that the
--------
Borrower may have the same interest rate options with respect to all or any
portion of the Term Loan as it would be entitled to with respect to the
Revolving Credit Loans.
-25-
3. AMOUNTS, ETC..
-------------
Any portion of the Term Loan bearing interest at the LIBOR Rate relating to any
Interest Period shall be in the amount of $100,000 or an integral multiple
thereof. No Interest Period relating to the Term Loan or any portion thereof
bearing interest at the LIBOR Rate shall extend beyond the date on which a
regularly scheduled installment payment of the principal of the Term Loan is to
be made unless a portion of the Term Loan at least equal to such installment
payment has an Interest Period ending on such date or is then bearing interest
at the Base Rate.
IV. LETTER OF CREDIT FACILITY.
-------------------------
A. LETTER OF CREDIT COMMITMENT.
---------------------------
(a) Subject to the terms and conditions hereof and the execution and delivery
by the Borrower or, as the case may be, the Parent Guarantor, of a letter of
credit application on the Agent's customary form (a "Letter of Credit
Application"), the Agent on behalf of the Banks, in reliance upon the agreement
of the Banks set forth in (S)4.1(d) and upon the representations and warranties
of the Borrower and the Parent Guarantor contained herein, agrees, in its
individual capacity, to issue, extend and renew from time to time from the date
hereof until but not including the date which is fourteen (14) days prior to the
then scheduled Letter of Credit Maturity Date, for the account of the Borrower,
or, at the Borrower's request, for the account of the Parent Guarantor, a
standby letter of credit (the "Letter of Credit"), in the form as may be
requested by the Borrower or, as the case may be, the Parent Guarantor and
agreed to by the Agent; provided, however, that, after giving effect to such
-------- -------
request, the aggregate Maximum Drawing Amount and all Unpaid Reimbursement
Obligations shall not exceed $7,500,000 at any one time. The Letter of Credit
shall not be issued, extended or renewed with an expiration date occurring after
the then scheduled Letter of Credit Maturity Date;
(b) The Letter of Credit Application shall be completed to the satisfaction of
the Agent. In the event that any provision of the Letter of Credit Application
shall be inconsistent with any provision of this Agreement, then the provisions
of this Agreement shall, to the extent of any such inconsistency, govern;
-26-
(c) The Letter of Credit issued, extended or renewed hereunder shall, among
other things, provide for the payment of sight drafts for honor thereunder when
presented in accordance with the terms thereof and when accompanied by the
documents described therein. The Letter of Credit so issued, extended or
renewed shall be subject to the Uniform Customs;
(d) Each Bank severally agrees that it shall be absolutely liable, without
regard to the occurrence of any Default or Event of Default or any other
condition precedent whatsoever, to the extent of such Bank's Commitment
Percentage, to reimburse the Agent on demand for the amount of each draft paid
by the Agent under each Letter of Credit to the extent that such amount is not
reimbursed by the Borrower pursuant to (S)4.2 (such agreement for a Bank being
called herein the "Letter of Credit Participation" of such Bank).
(e) Each such payment made by a Bank shall be treated as the purchase by such
Bank of a participating interest in the Borrower's Reimbursement Obligation
under (S)4.2 in an amount equal to such payment. Each Bank shall share in
accordance with its participating interest in any interest which accrues
pursuant to (S)4.2.
(f) The parties hereto hereby acknowledge and agree that (i) the Letter of
Credit shall be issued solely for the benefit of the Seller to support the
Seller Note, (ii) the Maximum Drawing Amount shall be in the aggregate amount of
$7,500,000, and (iii) such Maximum Drawing Amount being automatically reduced
commencing July 31, 1997 and on the last day of each succeeding month thereafter
for a total of 30 months by the amount (which shall include principal and
interest) set forth on Schedule 1 attached to the Seller Note (or, in the case
-------- -
the original Seller Note is replaced by one or more replacement notes pursuant
to Sections 1.4 or 1.6 of the Stock Purchase Agreement, by the amount set forth
on Schedule 1 to such replacement note, or, if no such revised Schedule 1 is
-------- - -------- -
attached thereto, by an amount equal to the total amount of such replacement
note (which shall include principal and interest) divided by a number which is
equal to the remaining installments due on such replacement note) until the
Maximum Drawing Amount is zero, provided, however, (a) the aggregate amount of
-------- -------
the Letter of Credit will also decrease by the amount of any reductions in the
Base Purchase Price (as such term is defined in the Stock Purchase Agreement)
made pursuant to the Stock Purchase Agreement on the date which is the earliest
to occur of (i) receipt by the Agent of a
-27-
written statement signed by the Borrower or the Parent Guarantor that such a
reduction in the Base Purchase Price has been made; (ii) receipt by the Agent of
a certified copy of a replacement Seller Note indicating a principal amount of
less than principal amount appearing on the most recent Seller Note; or (iii)
receipt by the Agent of evidence in form and substance satisfactory to the Agent
(which evidence can consistent of copies of an audited balance sheet of the
Parent Guarantor or the Borrower) evidencing a reduction in the Base Purchase
Price; and (b) in the event the Seller delivers to the Agent a written statement
signed by the Seller, duly notarized, at least two (2) Business Days prior to
the date of any scheduled reduction of the Letter of Credit that the Borrower
has failed to make a payment due to the Seller under the Seller Note and the
Seller is prohibited from making a draw under the Letter of Credit pursuant to
Section 7.6 of the Stock Purchase Agreement, such reduction shall not occur on
the date scheduled for such reduction buy any subsequent reductions shall,
unless a similar notice is delivered in the time set forth above, occur as set
forth on Schedule 1 attached hereto.
B. REIMBURSEMENT OBLIGATION OF THE BORROWER.
----------------------------------------
In order to induce the Agent to issue, extend and renew the Letter of Credit and
the Banks to participate therein, each of the Borrower and the Parent Guarantor
hereby jointly and severally agrees to reimburse or pay to the Agent, for the
account of the Agent or, as the case may be, the Banks, with respect to the
Letter of Credit issued, extended or renewed by the Agent hereunder,
(a) except as otherwise expressly provided in (S)4.2(b) and (c), on each date
that any draft presented under the Letter of Credit is honored by the Agent, or
the Agent otherwise makes a payment with respect thereto, (i) the amount paid by
the Agent under or with respect to the Letter of Credit, and (ii) the amount of
any taxes, fees, charges or other costs and expenses whatsoever incurred by the
Agent or any Bank in connection with any payment made by the Agent or any Bank
under, or with respect to, the Letter of Credit;
(b) upon the termination of the Letter of Credit Commitment, or the
acceleration of the Reimbursement Obligations with respect to the Letters of
Credit in accordance with (S)10 an amount equal to the Maximum Drawing Amount,
which amount shall be held by the Agent for the benefit of the Agent and the
Banks as cash collateral for all Reimbursement Obligations.
-28-
Unless funded by a Revolving Credit Loan pursuant to (S)2.2(c)(i), each such
payment shall be made to the Agent at the Agent's Head Office in immediately
available funds. Interest on any and all amounts remaining unpaid by the
Borrower or the Parent Guarantor under this (S)4.2 and not required to be funded
by a Revolving Credit Loan pursuant to (S)2.2(c)(i) at any time from the date
such amounts become due and payable (whether as stated in this (S)4.2, by
acceleration or otherwise) until payment in full (whether before or after
judgment) shall be payable to the Bank on demand at the rate specified in (S)2.2
following an Event of Default.
C. LETTER OF CREDIT PAYMENTS.
-------------------------
If any draft shall be presented or other demand for payment shall be made under
the Letter of Credit, the Agent shall notify the Borrower of the date and amount
of the draft presented or demand for payment and of the date and time when it
expects to pay such draft or honor such demand for payment. If the Borrower
fails to reimburse the Agent as provided in (S)4.2 on or before the date that
such draft is paid or other payment is made by the Agent, the Agent may at any
time thereafter notify the Banks of the amount of any such Unpaid Reimbursement
Obligation. No later than 3:00 p.m. (Boston time) on the Business Day next
following the receipt of such notice, each Bank shall make available to the
Agent, at the Agent's Head Office, in immediately available funds, such Bank's
Commitment Percentage of such Unpaid Reimbursement Obligation, together with an
amount equal to the product of (a) the average, computed for the period referred
to in clause (c) below, of the weighted average interest rate paid by the Agent
for federal funds acquired by the Agent during each day included in such period,
times (b) the amount equal to such Bank's Commitment Percentage of such Unpaid
-----
Reimbursement Obligation, times (c) a fraction, the numerator of which is the
-----
number of days that elapse from and including the date the Agent paid the draft
presented for honor or otherwise made payment to the date on which such Bank's
Commitment Percentage of such Unpaid Reimbursement obligation shall become
immediately available to the Agent, and the denominator of which is 360. The
responsibility of the Bank to the Borrower, the Parent Guarantor and the Banks,
as the case may be, shall be only to determine that the documents (including
each draft) delivered under the Letter of Credit in connection with such
presentment shall be in conformity in all material respects with the Letter of
Credit.
D. OBLIGATIONS ABSOLUTE.
--------------------
Each of the Borrower's and the Parent Guarantor's joint and several obligations
under
-29-
this (S)4 shall be absolute and unconditional under any and all
circumstances and irrespective of the occurrence of any Default or Event of
Default or any condition precedent whatsoever or any setoff, counterclaim or
defense to payment which the Borrower or the Parent Guarantor may have or have
had against the Agent, any Bank or the beneficiary of the Letter of Credit.
Each of the Parent Guarantor and the Borrower further agrees with the Agent and
the Banks that the Agent and the Banks shall not be responsible for, and the
Reimbursement Obligations shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even if
such documents should in fact prove to be in any or all respects invalid,
fraudulent or forged, or any dispute between or among the Borrower, the
beneficiary of the Letter of Credit or any financing institution or other party
to which the Letter of Credit may be transferred or any claims or defenses
whatsoever of either the Parent Guarantor or the Borrower against the
beneficiary of the Letter of Credit or any such transferee. The Agent and the
Banks shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with the Letter of Credit. Each of the Parent
Guarantor and the Borrower agrees that any action taken or omitted by the Agent
or any Bank under or in connection with the Letter of Credit and the related
drafts and documents, if done in good faith, shall be binding upon the Borrower
and the Parent Guarantor and shall not result in any liability on the part of
the Agent or any Bank to the Borrower or the Parent Guarantor.
E. RELIANCE BY ISSUER.
------------------
To the extent not inconsistent with (S)4.4, the Agent shall be entitled to rely,
and shall be fully protected in relying upon, the Letter of Credit, draft,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document believed by it to be genuine and correct and to have been signed, sent
or made by the proper person or entity and upon advice and statements of legal
counsel, independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement unless it shall first have received such advice or concurrence of
the Majority Banks as it reasonably deems appropriate or it shall first be
indemnified to its reasonable satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all case be fully
protected in acting, or in refraining from acting, under this Agreement in
accordance with a request of the Majority Banks, and such request and any action
taken or failure to act pursuant thereto shall be binding upon the Banks and all
future holders of a Letter of Credit Participation.
-30-
F. LETTER OF CREDIT FEES.
---------------------
The Borrower shall, on the date of issuance or of any extension or renewal of
the Letter of Credit and at such other time or times as such charges are
customarily made by the Agent, pay a fee (in each case a "Letter of Credit Fee")
to the Agent in an amount equal to one percent (1%) per annum of the face amount
of such Letter of Credit, plus the Agent's customary issuance, amendment and
----
other administrative processing fees, such Letter of Credit Fee (but not such
issuance, amendment or administrative fee) to be for the accounts of the Banks
in accordance with their respective Commitment Percentages.
V. CHANGES IN CIRCUMSTANCES, ETC.
-----------------------------
A. INABILITY TO DETERMINE LIBOR RATE.
---------------------------------
In the event, prior to the commencement of any Interest Period relating to any
LIBOR Rate Loan, the Agent shall determine or be notified by the Majority Banks
that adequate and reasonable methods do not exist for ascertaining the LIBOR
Rate that would otherwise determine the rate of interest to be applicable to any
LIBOR Rate Loan during any Interest Period, the Agent shall forthwith give
notice of such determination (which shall be conclusive and binding on the
Borrower and the Banks) to the Borrower and the Banks. In such event (a) any
Loan Request or Conversion Request with respect to LIBOR Rate Loans shall be
automatically withdrawn and shall be deemed a request for a Base Rate Loan, (b)
each LIBOR Rate Loan will automatically, on the last day of the then current
Interest Period relating thereto, become a Base Rate Loan, and (c) the
obligations of the Banks to make LIBOR Rate Loans shall be suspended until the
Agent or the Majority Banks determines that the circumstances giving rise to
such suspension no longer exist, whereupon the Agent or, as the case may be, the
Agent upon the instruction of the Majority Banks shall so notify the Borrower
and the Banks.
B. ILLEGALITY.
----------
Notwithstanding any other provisions herein, if any present or future law,
regulation, treaty or directive or in the interpretation or application thereof
shall make it unlawful for any Bank to make or maintain LIBOR Rate Loans, such
Bank shall forthwith give notice of such circumstances to the Borrower and the
other Banks and thereupon (a) the commitment of such Bank to make LIBOR Rate
Loans or convert
-31-
Base Rate Loans to LIBOR Rate Loans shall forthwith be suspended and (b) such
Bank's Loans then outstanding as LIBOR Rate Loans, if any, shall be converted
automatically to Base Rate Loans on the last day of each Interest Period
applicable to such LIBOR Rate Loans or within such earlier period as may be
required by law. The Borrower hereby agrees promptly to pay the Agent for the
account of such Bank, upon demand by such Bank, any additional amounts necessary
to compensate such Bank for any costs incurred by such Bank in making any
conversion in accordance with this (S)5.2, including the discounted present
value of any interest or fees payable by such Bank to lenders of funds obtained
by it in order to make or maintain its LIBOR Loans hereunder.
C. CHANGES IN CIRCUMSTANCES.
------------------------
If, on or after the date hereof any Bank or the Agent determines that (a) the
adoption of, or any change in, any applicable law, rule, regulation or guideline
or the interpretation or administration thereof (whether or not having the force
of law), or (b) compliance by such Bank or the Agent or its parent holding
company with any guideline, request or directive (whether or not having the
force of law), (i) has the effect of reducing the return on the Bank's, the
Agent's or such holding company's capital as a consequence of the Commitment,
the Loans or the Letters of Credit to a level below that which such Bank, the
Agent or such holding company could have achieved but for such adoption, change
or compliance by any amount deemed by such Bank or the Agent to be material, or
(ii) shall subject such Bank to any tax, duty or other charge with respect to
any LIBOR Rate Loan or any Note, or shall change the basis of taxation of
payments to such Bank of the principal of or interest on, LIBOR Rate Loans or in
respect of any other amount due under this Agreement in respect of LIBOR Rate
Loans (other than with respect to taxes based upon such Bank's net income); or
(iii) shall impose, modify or deem applicable any reserve, special deposit or
similar requirement (including, without limitation, any imposed by the Board of
Governors of the Federal Reserve System, but excluding with respect to any LIBOR
Rate Loan any such requirement included in the applicable Eurocurrency Reserve
Rate) against assets of, deposits with or for the account of, or credit extended
by, any Bank or the Agent, or shall impose on any Bank, the Agent or the London
interbank market any other condition affecting LIBOR Rate Loans or the Notes,
and the result of any of the foregoing is to increase the cost to any Bank of
making or maintaining any LIBOR Rate Loan, or to reduce the amount of any sum
received or receivable by such Bank under this Agreement or under any Note with
respect to any Loan or the Letter of Credit, by an amount reasonably deemed by
such Bank or the Agent to be material, then such Bank or the Agent may notify
the Borrower thereof. The Borrower agrees to pay to the Agent for the account
of such Bank or the Agent, as the case may be, (A) the amount of the Borrower's
allocable share of the amount of such reduction in the return on capital as and
when such reduction is determined, upon presentation by such Bank of a
statement in the
-32-
amount and setting forth such Bank's calculation thereof, which statement shall
be deemed true and correct absent manifest error and (B) such additional amount
or amounts as will compensate such Bank for such other increased costs or
reduction. Each Bank agrees to allocate shares of such reduction among the
Borrower and such Bank's other customers similarly situated on a fair and non-
discriminatory basis.
D. CERTIFICATE.
-----------
A certificate setting forth any additional amounts payable pursuant to (S)5.3
and a brief explanation of such amounts which are due, submitted by any Bank or
the Agent to the Borrower, shall be conclusive, absent manifest error, that such
amounts are due and owing.
E. INDEMNITY.
---------
The Borrower agrees to indemnify each Bank and to hold each Bank harmless from
and against any loss, cost or expense that such Bank may sustain or incur as a
consequence of (a) default by the Borrower in payment of the principal amount of
or any interest on any LIBOR Rate Loans as and when due and payable, including
any such loss or expense arising from interest or fees payable by such Bank to
lenders of funds obtained by it in order to maintain its LIBOR Rate Loans, (b)
default by the Borrower in making a borrowing or conversion after the Borrower
has given (or is deemed to have given) a Loan Request or a Conversion Request
relating thereto in accordance with (S)2.2, (S)2.3 or (S)3.5 or (c) the making
of any payment of a LIBOR Rate Loan or the making of any conversion of any such
Loan to a Base Rate Loan on a day that is not the last day of the applicable
Interest Period with respect thereto, including interest or fees payable by any
Bank to lenders of funds obtained by it in order to maintain any such LIBOR Rate
Loans.
VI. FEES AND PAYMENTS.
-----------------
Contemporaneously with execution and delivery of this Agreement, the Borrower
shall pay to the Agent a closing fee in the amount of three eighths of one
percent (3/8%) of the Commitment. The Borrower shall pay to the Agent for the
Agent's own account an agent's fee at the times and in the amounts determined by
the Agent and the Borrower. The Borrower shall pay to the Agent for the pro
---
rata accounts of the Banks, on the first day of each calendar quarter hereafter,
----
and upon the Revolving Credit Loan Maturity Date or the date upon which the
Revolving Credit Loan
-33-
Commitment is no longer in effect, a commitment fee calculated at a rate per
annum which is equal to one half of one percent (1/2%) of the average daily
difference by which the Total Revolving Credit Commitment amount exceeds the
aggregate sum of the outstanding Revolving Credit Loans during the preceding
calendar quarter or portion thereof. All payments to be made by the Borrower
hereunder or under any of the other Loan Documents shall be made in U.S. dollars
in immediately available funds at the Agent's Head Office, without set-off or
counterclaim and without any withholding or deduction whatsoever. Each Bank and
the Agent shall be entitled to charge any account of the Borrower with such Bank
for any sum due and payable by the Borrower to such Bank hereunder or under any
of the other Loan Documents. If any payment hereunder is required to be made on
a day which is not a Business Day, it shall be paid on the immediately
succeeding Business Day, with interest and any applicable fees adjusted
accordingly. All computations of interest or of the commitment fee or any Letter
of Credit Fees payable hereunder shall be made by the Bank on the basis of
actual days elapsed and on a 360-day year.
VII. REPRESENTATIONS AND WARRANTIES.
------------------------------
Each of the Borrower and the Guarantors represents and warrants to the Banks and
the Agent on the date hereof, on the date of any Loan Request, on the date of
the request for a Letter of Credit, on each Drawdown Date and on the date on
which the Letter of Credit is issued, extended or renewed that:
(a) the Guarantors, the Borrower and each of its other Subsidiaries is duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified and in good standing in
every other jurisdiction where it is doing business, and the execution, delivery
and performance by the Guarantors and the Borrower of the Loan Documents to
which it is a party (i) are within its corporate authority, (ii) have been duly
authorized, (iii) do not conflict with or contravene its Charter Documents;
(b) upon execution and delivery thereof, each Loan Document shall constitute
the legal, valid and binding obligation of the Guarantors, the Borrower and its
other Subsidiaries party thereto, enforceable in accordance with its terms;
(c) each of the Guarantors and the Borrower has good and marketable title to
all its material properties, subject only to Liens permitted hereunder, and
possesses all assets, including intellectual properties, franchises and
Consents, adequate for the
-34-
conduct of its business as now conducted, without known conflict with any
rights of others. Each of the Guarantors and the Borrower maintains insurance
with financially responsible insurers, copies of the policies for which have
been previously delivered to the Agent, covering such risks and in such amounts
and with such deductibles as are customary in the each of Guarantor's and the
Borrower's business and are adequate;
(d) the Parent Guarantor has provided to the Agent its audited Financials as at
July 31, 1995, and for the fiscal period then ended, and such Financials are
complete and correct and fairly present the position of the Parent Guarantor and
its Subsidiaries on a consolidated basis as at such date and for such period in
accordance with GAAP consistently applied. Each of the Parent Guarantor has
also provided to the Agent its projections of the consolidated operations of the
Parent Guarantor, the Borrower and the Subsidiary Guarantor for the period from
July 31, 1996 through July 31, 1997, and such forecast has been prepared in good
faith based upon reasonable assumptions;
(e) since July 31, 1996, there has been no materially adverse change of any
kind in the Parent Guarantor, the Borrower or any of its other Subsidiaries
which would have a Materially Adverse Effect, and since July 31, 1996 there has
been no materially adverse change of any kind in the business or assets to be
acquired in the Acquisition which would have, either individually or in the
aggregate, a Materially Adverse Effect;
(f) there are no legal or other proceedings or investigations pending or
threatened against the Guarantors, the Borrower or any of their Subsidiaries
before any court, tribunal or regulatory authority which would, if adversely
determined, alone or together, have a Materially Adverse Effect;
(g) the execution, delivery, performance of its obligations, and exercise of
its rights under the Loan Documents by each of the Guarantors and the Borrower,
including borrowing under this Agreement and the obtaining of Letters of Credit
(i) do not require any Consents; and (ii) are not and will not be in conflict
with or prohibited or prevented by (A) any Requirement of Law, or (B) any
Charter Document, corporate minute or resolution, instrument, agreement or
provision thereof, in each case
-35-
binding on it or affecting its property;
(h) neither of the Guarantors nor the Borrower is in violation of (i) any
Charter Document, corporate minute or resolution, (ii) any instrument or
agreement, in each case binding on it or affecting its property, or (iii) any
Requirement of Law, in a manner which could have a Materially Adverse Effect,
including, without limitation, all applicable federal and state tax laws, ERISA
and Environmental Laws;
(i) the Borrower is a wholly-owned Subsidiary of the Parent Guarantor, the
Borrower has no Subsidiaries other than the Subsidiary Guarantor and neither of
the Guarantors nor the Borrower is a party to any partnership or joint venture;
(j) the Borrower has not amended any of the Acquisition Documents in any
material respect. Each of the representations and warranties made by the
Borrower in any of the Loan Documents or the Acquisition Documents was true and
correct in all material respects when made and continues to be true and correct
in all material respects on the Closing Date, except to the extent that any of
such representations and warranties relate, by the express terms thereof, solely
to a date falling prior to the Closing Date, and except to the extent that any
of such representations and warranties may have been affected by the
consummation of the transactions contemplated and permitted or required by the
Loan Documents or the Acquisition;
(k) no representation or warranty made by either of the Guarantors or the
Borrower in this Agreement or in any agreement, instrument, document,
certificate, statement or letter furnished to the Agent or any Bank by or on
behalf of such Guarantor and the Borrower in connection with any of the
transactions contemplated by any of the Loan Documents and the Acquisition
Documents contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained therein not
misleading in light of the circumstances in which they are made;
(l) to the best of the Borrower's knowledge, each of the representations and
warranties of the Sellers and the Subsidiary Guarantor contained in the Stock
-36-
Purchase Agreement are true and correct in all material respects as of the
Closing Date and the Acquisition Closing Date; and
(m) the proceeds of the Loans shall be used for the Acquisition and for working
capital and general corporate purposes of the Borrower and its Subsidiaries.
The Borrower or, as the case may be, the Parent Guarantor, will obtain the
Letter of Credit solely as credit enhancement for the Seller Note. No portion
of any Loan is to be used, and no portion of the Letter of Credit is to be
obtained, for the purpose of purchasing or carrying any "margin security" or
"margin stock" as such terms are used in Regulations U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
VII. CONDITIONS PRECEDENT.
--------------------
In addition to the making of the foregoing representations and warranties and
the delivery of the Loan Documents, the Acquisition Documents and such other
documents and the taking of such actions as the Agent and each Bank may require
at or prior to the time of executing this Agreement, the obligation of any Bank
to make any Loan or of the Agent or to issue, renew or extend the Letter of
Credit to the Borrower or, as the case may be in respect of the Letter of
Credit, the Parent Guarantor hereunder, is subject to the satisfaction of the
following further conditions precedent:
(a) each of the representations and warranties of each of the Guarantors and
the Borrower to the Agent and the Banks herein, in any of the other Loan
Documents or any documents, certificate or other paper or notice in connection
herewith shall be true and correct in all material respects as of the time made
or claimed to have been made;
(b) no Default or Event of Default shall be continuing;
(c) all proceedings in connection with the transactions contemplated hereby
shall be in form and substance satisfactory to the Agent and the Banks, and the
Agent and the Banks shall have received all information and documents as it may
have reasonably
-37-
requested;
(d) no change shall have occurred in any law or regulation or in the
interpretation thereof that in the reasonable opinion of the Agent or any Bank
would make it unlawful for such Bank to make such Loan or for the Agent to issue
the Letter of Credit;
(e) each of the Guarantors and the Borrower shall have delivered to the Agent
and the Banks (i) certified copies of its Charter Documents; (ii) evidence that
all corporate action necessary for the valid execution, delivery and
performance by each of the Guarantors and the Borrower of the Loan Documents to
which it is a party has been duly and effectively taken; (iii) an incumbency
certificate signed by a duly authorized officer of each of the Guarantors and
the Borrower, and giving the name and bearing a specimen signature of each
individual who shall be authorized to sign, in the name and on behalf of each of
the Guarantors and the Borrower, each of the Loan Documents to which each is a
party and to give notices and to take action on each of the Guarantor's and the
Borrower's behalf under the Loan Documents; (iv) a solvency certificate of each
of the Guarantors and the Borrower in form and substance satisfactory to the
Agent; and (v) a favorable legal opinion addressed to the Agent and the Banks in
form and substance satisfactory to the Agent and the Banks from counsel to each
of the Guarantors and the Borrower;
(f) the Borrower shall have paid to the Agent the closing fee and the agent's
fee as set forth in (S)6 hereof;
(g) the Agent and the Banks shall have received a draft prepared by KPMG of the
Subsidiary Guarantor's consolidated audited Financials for the fiscal year ended
July 31, 1996 the results of which shall be satisfactory to the Agent and Banks
in all respects;
(h) the Agent and the Banks shall have received an opinion of counsel to the
Borrower and the Guarantor satisfactory to the Agent and the Banks;
-38-
(i) the Borrower shall have caused the Agent to receive evidence that all of
the closing conditions in the Stock Purchase Agreement have been satisfied
without recourse to any provision permitting the waiver by any party thereto of
any condition, obligation, covenant or other requirement and that the
Acquisition shall have been completed pursuant to the Stock Purchase Agreement
and otherwise on terms and conditions that are satisfactory to the Agent in all
respects. In addition the purchase price of the capital stock acquired pursuant
to the Acquisition and all expenditures and transaction costs associated
therewith shall not exceed $17,300,000 in the aggregate, and the Acquisition
shall have been completed on terms and conditions that are satisfactory to the
Agent in all respects;
(j) the Agent and the Banks shall be satisfied that all information provided to
the Agent and the Banks prior to the Closing Date accurately sets forth the cash
flow for such period attributable to the assets and business to be acquired in
the Acquisition and the Agent and the Banks shall be satisfied with the results
of its due diligence;
(k) the Agent and the Banks shall have received evidence satisfactory to the
Agent and the Banks that the Borrower has received invested capital in cash in a
minimum amount of $3,000,000 on terms and conditions which are satisfactory to
the Agent and the Banks in all respects; and
(l) the Agent and the Banks shall be satisfied with the results of all
environmental site assessments performed on all real property owned or leased by
the Guarantor and the Borrower.
IX. COVENANTS.
---------
A. AFFIRMATIVE COVENANTS.
---------------------
Each of the Guarantors and the Borrower agrees that so long as there are any
Loans or Letter of Credit outstanding and until the termination of the
Commitment and the payment and satisfaction in full of all the Obligations, each
of the Guarantors and the Borrower will, and where applicable the Borrower will
cause each of its other Subsidiaries to comply with, its obligations as set
forth throughout this Agreement
-39-
and to:
(a) furnish the Agent and the Banks: (i) as soon as available but in any event
within ninety (90) days after the close of each fiscal year, the Parent
Guarantor's and the Borrower's audited consolidated and consolidating Financials
for such fiscal year, certified by the Parent Guarantor's and the Borrower's
accountants, respectfully, and the Parent Guarantor's and the Borrower's
consolidating Financials for such fiscal period; (ii) as soon as available but
in any event within forty-five (45) days after the end of each fiscal quarter
the Parent Guarantor's and the Borrower's unaudited consolidated and
consolidating Financials for such quarter, certified by their respective chief
financial officers; (iii) as soon as available but in any event within thirty
(30) days after the end of each month in each fiscal year of the Parent
Guarantor and the Borrower, unaudited monthly consolidated Financials for such
month, certified by their respective chief financial officers; (iv) together
with the quarterly and annual audited Financials, a certificate of the Borrower
(the "Compliance Certificate") setting forth computations demonstrating
compliance with the Parent Guarantor's and the Borrower's financial covenants
set forth herein, and certifying that no Default or Event of Default has
occurred, or if it has, the actions taken by the Borrower with respect thereto,
and which Compliance Certificate shall include a quarterly (or more frequently,
if required by the Agent) detailed report of the Unencumbered Cash of the Parent
Guarantor and its Subsidiaries, including a ▇▇▇▇ to market adjustment of the
"Allowable Instruments" included in the calculation of the Investment
Equivalents portion of Unencumbered Cash; (v) contemporaneously with the
delivery thereof, copies of all accountants' management letters delivered to the
Parent Guarantor, the Borrower or any of their Subsidiaries; and (vi) from time
to time such other financial data and information as the Agent or any Bank may
request;
(b) keep true and accurate books of account in accordance with GAAP, maintain
its current fiscal year and permit the Agent or any Bank or its designated
representatives to inspect the Guarantors' and the Borrower's premises during
normal business hours, to examine and be advised as to such or other business
records upon the request of the Agent or any Bank, and to permit the Agent's or
any Bank's commercial finance examiners to conduct periodic commercial finance
examinations which prior to an Event of Default shall be no more often than two
(2) per year;
(c) (i) maintain its corporate existence, business and assets, (ii) keep its
business and assets adequately insured, (iii) maintain its chief executive
office in the United States, (iv) with to the Borrower and its Subsidiaries,
continue to engage in substantially
-40-
similar lines of business, and (v) comply with all Requirements of Law,
including ERISA and Environmental Laws;
(d) notify the Agent and the Banks promptly in writing of (i) the occurrence of
any Default or Event of Default, (ii) any noncompliance with ERISA or any
Environmental Law or proceeding in respect thereof which could have a Materially
Adverse Effect, (iii) any change of address, (iv) any threatened or pending
litigation or similar proceeding affecting the Guarantors or the Borrower or
its other Subsidiaries or any material change in any such litigation or
proceeding previously reported and (v) claims against any assets or properties
of the Guarantors, the Borrower or any such Subsidiaries encumbered in favor of
the Agent or any Bank;
(e) use the proceeds of the Loans solely to finance the Acquisition and for
working capital purposes of the Borrower and its Subsidiaries, and use the
Letter of Credit solely for credit enhancement for the Seller Note, and not for
the carrying of "margin security" or "margin stock" within the meaning of
Regulations U and X of the Board of Governors of the Federal Reserve System, 12
C.F.R. Parts 221 and 224;
(f) cooperate with the Agent and the Banks, take such action, execute such
documents, and provide such information as the Agent and the Banks may from
time to time reasonably request in order further to effect the transactions
contemplated by and the purposes of the Loan Documents;
(g) by not later than ninety (90) days of the Closing Date, purchase an
interest rate cap or swap or effect other interest rate protection arrangements
for a minimum period of three (3) years applicable to not less than fifty
percent (50%) of the Commitment, on terms and conditions satisfactory to the
Agent; and
(h) simultaneously with delivery thereof, deliver to the Agent a certified copy
of any replacement Seller Note issued by the Company to the Seller pursuant to
Sections 1.4 or 1.6 of the Stock Purchase Agreement.
-41-
B. NEGATIVE COVENANTS.
------------------
Each of the Guarantors and the Borrower agrees that so long as there are any
Loans or Letter of Credit outstanding and until the termination of the
Commitment and the payment and satisfaction in full of all the Obligations,
neither of the Guarantors nor the Borrower will and where applicable the
Borrower will not permit its other Subsidiaries to:
(a) create, incur or assume any Indebtedness other than (i) Indebtedness to the
Agent and the Banks, (ii) current liabilities of the Guarantors, the Borrower or
any Subsidiaries of the Borrower not incurred through the borrowing of money or
the obtaining of credit except credit on an open account customarily extended,
(iii) Indebtedness in respect of taxes or other governmental charges contested
in good faith and by appropriate proceedings and for which adequate reserves
have been taken; (iv) Indebtedness of the Borrower in respect of interest rate
protection arrangements required to be maintained by (S)9.1(g) or in respect of
currency swap arrangements so long as such arrangements are in the ordinary
course of business and not for speculative purposes; (v) unsecured Indebtedness
of the Parent Guarantor not otherwise provided for in this (S)9.2(a) which, when
taken together with all such Indebtedness of the Parent Guarantor set forth on
Schedule 9.2(a) does not exceed, in the aggregate, $5,000,000; (vi) unsecured
---------------
Indebtedness of the Borrower and its Subsidiaries not otherwise provided for in
this (S)9.2(a) which, when taken together with all such Indebtedness of the
Borrower and its Subsidiaries set forth on Schedule 9.2(a) does not exceed, in
---------------
the aggregate, $500,000; and (vii) Indebtedness not included above and listed on
Schedule 9.2(a) hereto;
-------- ------
(b) create or incur any Liens on any of the property or assets of the
Guarantors, the Borrower or any of its other Subsidiaries except (i) Liens
securing the Obligations; (ii) Liens securing taxes or other governmental
charges not yet due; (iii) deposits or pledges made in connection with social
security obligations; (iv) Liens of carriers, warehousemen, mechanics and
materialmen, less than 120 days old as to obligations not yet due; (v)
easements, rights-of-way, zoning restrictions and similar minor Liens which
individually and in the aggregate do not have a Materially Adverse Effect; (vi)
purchase money security interests in or purchase money mortgages on real or
personal property securing purchase money Indebtedness permitted by
(S)9.2(a)(ii), covering only the property so acquired; and (vii) other Liens
existing on the date hereof and listed on Schedule 9.2(b) hereto;
-------- ------
-42-
(c) with respect to the Borrower and its Subsidiaries, make any investments
other than investments in (i) marketable obligations of the United States
maturing within one (1) year, (ii) certificates of deposit, bankers' acceptances
and time and demand deposits of United States banks having total assets in
excess of $1,000,000,000, and (iii) Subsidiaries which are parties to the Loan
Documents or (iv) such other investments as the Agent and the Majority Banks may
from time to time approve in writing;
(d) with respect to the Borrower and its Subsidiaries, make any distributions
on or in respect of its capital of any nature whatsoever, other than dividends
payable solely in shares of common stock or distributions by Subsidiaries of the
Borrower to the Borrower;
(e) become party to a merger or sale-leaseback transaction, or to effect any
disposition of assets other than in the ordinary course, or to purchase, lease
or otherwise acquire assets other than in the ordinary course; provided,
--------
however, the Borrower shall be permitted to acquire the assets and/or stock of
-------
another entity so long as (i) such entity is in the same or a similar line of
business as the Borrower; (ii) the Borrower has provided the Bank with five (5)
Business Days prior written notice of such acquisition, which notice shall
include a reasonably detailed description of the acquisition; (iii) the business
and/or entity to be acquired would not subject the Agent or any Bank to
regulatory or third party approvals in connection with the exercise of its
rights and remedies under this Agreement or the other Loan Documents; (iv) the
Borrower has demonstrated to the satisfaction of the Agent and the Banks, based
on a pro forma Compliance Certificate, compliance with (S)9.3 on a pro forma
--- ----- --- -----
basis immediately prior to and after giving effect to any such acquisition; (v)
the business and assets so acquired in each such acquisition shall be acquired
by the Borrower free and clear of all liens and Indebtedness; (vi) the aggregate
purchase price for each acquisition, or a series of related acquisitions, does
not exceed $5,000,000 and the aggregate purchase price of all acquisitions
permitted hereunder does not exceed $10,000,000 during the term of this
Agreement; and (vii) the Parent Guarantor shall at all times maintain a majority
voting interest in such entity to be acquired;
(f) make any change in or amendment to either of the Guarantors' or the
Borrower's Charter Documents unless such change or amendment that would not have
any adverse effect on the Agent's or any Bank's interest under the Loan
Documents or the
-43-
Guarantors' or Borrower's obligations under the Loan Documents;
(g) the Parent Guarantor will not make any material change in its Investment
Policy; and
(h) enter into any agreement, contract or arrangement (other than the Credit
Agreement and the other Loan Documents) restricting the ability of any of the
Parent Guarantor's Subsidiaries to pay or make dividends or distributions in
cash or kind, to make loans, advances or other payments of whatsoever nature or
to make transfers or distributions of all or any part of its assets to the
Parent Guarantor if all or any part of such Subsidiary's cash or Investment
Equivalents is included as Unencumbered Cash for purposes of compliance with
(S)9.3(f)(ii).
C. FINANCIAL COVENANTS.
-------------------
Each of the Guarantors and the Borrower agrees that so long as there are any
Loans or Letter of Credit outstanding and until the termination of the
Commitment and the payment and satisfaction in full of all the Obligations,
neither of the Guarantors nor the Borrower will and where applicable the
Borrower will not permit its other Subsidiaries to:
(a) permit the Borrower to make capital expenditures which in the aggregate and
on a consolidated basis which exceed (i) $1,200,000 in fiscal year 1998, and
(ii) $1,000,000 in any fiscal year thereafter; provided, however, that, if
-------- -------
during any fiscal year the amount of capital expenditures permitted for that
fiscal year is not so utilized, such unutilized amount may be utilized in the
next succeeding fiscal year but not in any subsequent fiscal year;
(b) permit the Leverage Ratio of the Borrower and its Subsidiaries for any
fiscal quarter ending during any period described in the table below to be
greater than the ratio set forth opposite such period in such table:
-44-
PERIOD RATIO
------ -----
November 1, 1996 - January 31, 1997 3.30:1.00
February 1, 1997 - October 31, 1997 3.00:1.00
November 1, 1997 - January 31, 1998 2.70:1.00
February 1, 1998 - April 30, 1998 2.60:1.00
May 1, 1998 - July 31, 1998 2.40:1.00
August 1, 1998 - January 31, 1999 2.25:1.00
February 1, 1999 - July 31, 1999 2.00:1.00
August 1, 1999 - thereafter 1.50:1.00
(c) permit the ratio of the Borrower's Consolidated Operating Cash Flow to
Consolidated Total Debt Service for any Reference Period to be less than the
ratio set forth opposite such period in such table:
-45-
PERIOD RATIO
------ -----
November 1, 1996 - July 31, 1997 2.50:1.00
August 1, 1997 - October 31, 1997 2.00:1.00
November 1, 1997 - January 31, 1998 1.60:1.00
February 1, 1998 - January 31, 1999 1.25:1.00
February 1, 1999 - thereafter 1.50:1.00
(d) permit the ratio of the Borrower's Consolidated Current Assets to
Consolidated Current Liabilities at any time, commencing April 30, 1996, to be
less than 1.00:1.00.
(e) permit the Borrower's Consolidated Net Income for any fiscal quarter to be
less than $1.00; or
(f) permit (i) the Parent Guarantor's Unencumbered Cash to be less than
$10,000,000 at any time from the Closing Date through November 30, 1996 and
$20,000,000 at any time thereafter; and (ii) the Parent Guarantor's and its
Subsidiaries Unencumbered Cash to be less than $35,000,000 at any time.
X. EVENTS OF DEFAULT; ACCELERATION.
-------------------------------
If any of the following events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay when due and payable any principal of the
Loans when the same becomes due;
-46-
(b) the Borrower shall fail to pay interest on the Loans, or the Borrower or
the Parent Guarantor shall fail to pay any Reimbursement Obligations not funded
by a Revolving Credit Loan pursuant to (S)2.2(c), or any other sum due under any
of the Loan Documents within two (2) Business Days after the date on which the
same shall have first become due and payable;
(c) either of the Guarantors or the Borrower shall fail to perform any term,
covenant or agreement contained in (S)(S)9.1(a), 9.1(d) through (g), 9.2 and
9.3;
(d) the Guarantors, the Borrower or any other Subsidiary of the Borrower shall
fail to perform any other term, covenant or agreement contained in the Loan
Documents within fifteen (15) days after the Agent has given written notice of
such failure to the Borrower;
(e) any representation or warranty of the Guarantors, the Borrower or any of
its other Subsidiaries in the Loan Documents or in any certificate or notice
given in connection therewith shall have been false or misleading in any
material respect at the time made or deemed to have been made;
(f) the Guarantors, the Borrower or any of its other Subsidiaries shall be in
default (after any applicable period of grace or cure period) under any
agreement or agreements evidencing Indebtedness owing to the Bank or any
affiliates of the Bank, to the Seller, or in excess of $500,000 in aggregate
principal amount, or shall fail to pay such Indebtedness when due, or within any
applicable period of grace;
(g) any of the Loan Documents shall cease to be in full force and effect,
(h) the Guarantors, the Borrower or any of its other Subsidiaries (i) shall
make an
-47-
assignment for the benefit of creditors, (ii) shall be adjudicated
bankrupt or insolvent, (iii) shall seek the appointment of, or be the subject of
an order appointing, a trustee, liquidator or receiver as to all or part of its
assets, (iv) shall commence, approve or consent to, any case or proceeding under
any bankruptcy, reorganization or similar law and, in the case of an involuntary
case or proceeding, such case or proceeding is not dismissed within forty-five
(45) days following the commencement thereof, or (v) shall be the subject of an
order for relief in an involuntary case under federal bankruptcy law;
(i) the Guarantors, the Borrower or any of its other Subsidiaries shall be
unable to pay its debts as they mature;
(j) there shall remain undischarged for more than thirty (30) days any final
judgment or execution action against the Guarantors, the Borrower or any of its
other Subsidiaries that, together with other outstanding claims and execution
actions against the Guarantors, the Borrower and its other Subsidiaries exceeds
$500,000 in the aggregate;
(k) the Parent Guarantor ceases to own legally or beneficially 100% or more of
the voting stock of the Borrower or more than 51% of the voting stock of any
Subsidiary of the Borrower, and the Borrower ceases to own legally or
beneficially 100% or more of the voting stock of Subsidiary Guaranty;
then, and in any such event, so long as the same may be continuing, the Agent
may, and upon the request of the Majority Banks shall, by notice in writing to
the Borrower declare all amounts owing with respect to this Credit Agreement,
the Notes and the other Loan Documents and all Reimbursement Obligations to be,
and they shall thereupon forthwith become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower; provided that in the event of any Event
--------
of Default specified in (S)(S)10.1(h) or 10.1(i), all such amounts shall become
immediately due and payable automatically and without any requirement of notice
from the Agent or any Bank.
If any one or more of the Events of Default specified in (S)10.1(h) or
(S)10.1(i) shall occur, any unused portion of the credit hereunder shall
forthwith terminate and each of the Banks shall be relieved of all further
obligations to make Loans to the
-48-
Borrower and the Agent shall be relieved of all further obligations to issue,
extend or renew the Letter of Credit. If any other Event of Default shall have
occurred and be continuing, the Agent may and, upon the request of the Majority
Banks, shall, by notice to the Borrower, terminate the unused portion of the
credit hereunder, and upon such notice being given such unused portion of the
credit hereunder shall terminate immediately and each of the Banks shall be
relieved of all further obligations to make Loans and the Agent shall be
relieved of all further obligations to issue, extend or renew the Letter of
Credit. No termination of the credit hereunder shall relieve the Borrower, the
Guarantors or any other of Subsidiaries of the Borrower of any of the
Obligations.
In case any one or more of the Events of Default shall have occurred and be
continuing, and whether or not the Banks shall have accelerated the maturity of
the Loans pursuant to (S)10.1, each Bank, if owed any amount with respect to the
Loans or the Reimbursement Obligations, may, with the consent of the Majority
Banks but not otherwise, proceed to protect and enforce its rights by suit in
equity, action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Agreement and the
other Loan Documents or any instrument pursuant to which the Obligations to such
Bank are evidenced, including as permitted by applicable law the obtaining of
the ex parte appointment of a receiver, and, if such amount shall have become
-- -----
due, by declaration or otherwise, proceed to enforce the payment thereof or any
other legal or equitable right of such Bank. No remedy herein conferred upon
any Bank or the Agent or the holder of any Note or purchaser of a Letter of
Credit Participation is intended to be exclusive of any other remedy and each
and every remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or any other provision of law.
XI. SETOFF.
------
Regardless of the adequacy of any collateral for the Obligations, any deposits
or other sums credited by or due from any of the Banks to the Borrower or the
Guarantors may be applied to or set off following an Event of Default against
any principal, interest and any other amounts due from the Borrower or either
the Guarantors to the Banks at any time without notice to the Borrower or the
Guarantors, or compliance with any other procedure imposed by statute or
otherwise, all of which are hereby expressly waived by the Borrower and the
Guarantors. Each of the Banks agrees with each other Bank that (a) if an amount
to be set off is to be applied to Indebtedness of the Borrower to such Bank,
other than Indebtedness evidenced by the Notes held by such Bank or constituting
Reimbursement Obligations owed to such Bank, such amount shall be applied
ratably to such other Indebtedness and to the Indebtedness
-49-
evidenced by all such Notes held by such Bank or constituting Reimbursement
Obligations owed to such Bank, and (b) if such Bank shall receive from the
Borrower, whether by voluntary payment, exercise of the right of setoff,
counterclaim, cross action, enforcement of the claim evidenced by the Notes held
by, or constituting Reimbursement Obligations owed to, such Bank by proceedings
against the Borrower at law or in equity or by proof thereof in bankruptcy,
reorganization, liquidation, receivership or similar proceedings, or otherwise,
and shall retain and apply to the payment of the Note or Notes held by, or
Reimbursement Obligations owed to, such Bank any amount in excess of its ratable
portion of the payments received by all of the Banks with respect to the Notes
held by, and Reimbursement Obligations owed to, all of the Banks, such Bank will
make such disposition and arrangements with the other Banks with respect to such
excess, either by way of distribution, pro tanto assignment of claims,
--- -----
subrogation or otherwise as shall result in each Bank receiving in respect of
the Notes held by it or Reimbursement obligations owed it, its proportionate
payment as contemplated by this Agreement; provided that if all or any part of
--------
such excess payment is thereafter recovered from such Bank, such disposition and
arrangements shall be rescinded and the amount restored to the extent of such
recovery, but without interest.
XII. THE AGENT.
---------
A. AUTHORIZATION.
-------------
(a) The Agent is authorized to take such action on behalf of each of the Banks
and to exercise all such powers as are hereunder and under any of the other Loan
Documents and any related documents delegated to the Agent, together with such
powers as are reasonably incident thereto, provided that no duties or
--------
responsibilities not expressly assumed herein or therein shall be implied to
have been assumed by the Agent.
(b) The relationship between the Agent and each of the Banks is that of an
independent contractor. The use of the term "Agent" is for convenience only and
is used to describe, as a form of convention, the independent contractual
relationship between the Agent and each of the Banks. Nothing contained in this
Agreement nor the other Loan Documents shall be construed to create an agency,
trust or other fiduciary relationship between the Agent and any of the Banks.
(c) As an independent contractor empowered by the Banks to exercise certain
rights
-50-
and perform certain duties and responsibilities hereunder and under the
other Loan Documents, the Agent is nevertheless a "representative" of the Banks,
as that term is defined in Article 1 of the Uniform Commercial Code, for
purposes of actions for the benefit of the Banks and the Agent with respect to
all collateral security and guaranties contemplated by the Loan Documents.
Such actions include the designation of the Agent as "secured party",
"mortgagee" or the like on all financing statements and other documents and
instruments, whether recorded or otherwise, relating to the attachment,
perfection, priority or enforcement of any security interests, mortgages or
deeds of trust in collateral security intended to secure the payment or
performance of any of the Obligations, all for the benefit of the Banks and the
Agent.
B. EMPLOYEES AND AGENTS.
--------------------
The Agent may exercise its powers and execute its duties by or through employees
or agents and shall be entitled to take, and to rely on, advice of counsel
concerning all matters pertaining to its rights and duties under this Agreement
and the other Loan Documents. The Agent may utilize the services of such
Persons as the Agent in its sole discretion may reasonably determine, and all
reasonable fees and expenses of any such Persons shall be paid by the Borrower
and the Guarantors.
C. NO LIABILITY.
------------
Neither the Agent nor any of its shareholders, directors, officers or employees
nor any other Person assisting them in their duties nor any agent or employee
thereof, shall be liable for any waiver, consent or approval given or any action
taken, or omitted to be taken, in good faith by it or them hereunder or under
any of the other Loan Documents, or in connection herewith or therewith, or be
responsible for the consequences of any oversight or error of judgment
whatsoever, except that the Agent or such other Person, as the case may be, may
be liable for losses due to its willful misconduct or gross negligence.
D. NO REPRESENTATIONS.
------------------
The Agent shall not be responsible for the execution or validity or
enforceability of this Agreement, the Notes, the Letter of Credit, any of the
other Loan Documents or any instrument at any time constituting, or intended to
constitute, collateral security
-51-
for the Notes, or for the value of any such collateral security or for the
validity, enforceability or collectability of any such amounts owing with
respect to the Notes, or for any recitals or statements, warranties or
representations made herein or in any of the other Loan Documents or in any
certificate or instrument hereafter furnished to it by or on behalf of the
Guarantors, the Borrower or any of its other Subsidiaries, or be bound to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, covenants or agreements herein or in any instrument at any time
constituting, or intended to constitute, collateral security for the Notes or to
inspect any of the properties, books or records of the Guarantors, the Borrower
or any of its other Subsidiaries. The Agent shall not be bound to ascertain
whether any notice, consent, waiver or request delivered to it by the
Guarantors, the Borrower or any holder of any of the Notes shall have been duly
authorized or is true, accurate and complete. The Agent has not made nor does it
now make any representations or warranties, express or implied, nor does it
assume any liability to the Banks, with respect to the credit worthiness or
financial conditions of the Borrower or any of its Subsidiaries. Each Bank
acknowledges that it has, independently and without reliance upon the Agent or
any other Bank, and based upon such information and documents as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement.
E. PAYMENTS.
--------
1. PAYMENTS TO AGENT.
-----------------
A payment by the Borrower or either of the Guarantors to the Agent hereunder or
any of the other Loan Documents for the account of any Bank shall constitute a
payment to such Bank. The Agent agrees promptly to distribute to each Bank such
Bank's pro rata share of payments received by the Agent for the account of the
--- ----
Banks except as otherwise expressly provided herein or in any of the other Loan
Documents.
2. DISTRIBUTION BY AGENT.
---------------------
If in the opinion of the Agent the distribution of any amount received by it in
such capacity hereunder, under the Notes or under any of the other Loan
Documents
-52-
might involve it in liability, it may refrain from making distribution until
its right to make distribution shall have been adjudicated by a court of
competent jurisdiction. If a court of competent jurisdiction shall adjudge that
any amount received and distributed by the Agent is to be repaid, each Person to
whom any such distribution shall have been made shall either repay to the Agent
its proportionate share of the amount so adjudged to be repaid or shall pay over
the same in such manner and to such Persons as shall be determined by such
court.
3. DELINQUENT BANKS.
----------------
Notwithstanding anything to the contrary contained in this Agreement or any of
the other Loan Documents, any Bank that fails (a) to make available to the Agent
its pro rata share of any Loan or to purchase the Letter of Credit Participation
--- ----
or (ii) to comply with the provisions of (S)11 with respect to making
dispositions and arrangements with the other Banks, where such Bank's share of
any payment received, whether by setoff or otherwise, is in excess of its pro
---
rata share of such payments due and payable to all of the Banks, in each case
----
as, when and to the full extent required by the provisions of this Agreement,
shall be deemed delinquent (a "Delinquent Bank") and shall be deemed a
Delinquent Bank until such time as such delinquency is satisfied. A Delinquent
Bank shall be deemed to have assigned any and all payments due to it from the
Borrower and the Guarantors, whether on account of outstanding Loans, Unpaid
Reimbursement Obligations, interest, fees or otherwise, to the remaining
nondelinquent Banks for application to, and reduction of, their respective pro
---
rata shares of all outstanding Loans and Unpaid Reimbursement Obligations. The
----
Delinquent Bank hereby authorizes the Agent to distribute such payments to the
nondelinquent Banks in proportion to their respective pro rata shares of all
--- ----
outstanding Loans and Unpaid Reimbursement Obligations. A Delinquent Bank shall
be deemed to have satisfied in full a delinquency when and if, as a result of
application of the assigned payments to all outstanding Loans and Unpaid
Reimbursement Obligations of the nondelinquent Banks, the Banks' respective pro
---
rata shares of all outstanding Loans and Unpaid Reimbursement Obligations have
----
returned to those in effect immediately prior to such delinquency and without
giving effect to the nonpayment causing such delinquency.
F. HOLDERS OF NOTES.
----------------
The Agent may deem and treat the payee of any Note or the purchaser of any
Letter
-53-
of Credit Participation as the absolute owner or purchaser thereof for
all purposes hereof until it shall have been furnished in writing with a
different name by such payee or by a subsequent holder, assignee or transferee.
G. INDEMNITY.
---------
The Banks ratably agree hereby to indemnify and hold harmless the Agent from and
against any and all claims, actions and suits (whether groundless or otherwise),
losses, damages, costs, expenses (including any expenses for which the Agent has
not been reimbursed by the Borrower as required by (S)14), and liabilities of
every nature and character arising out of or related to this Agreement, the
Notes, or any of the other Loan Documents or the transactions contemplated or
evidenced hereby or thereby, or the Agent's actions taken hereunder or
thereunder, except to the extent that any of the same shall be directly caused
by the Agent's willful misconduct or gross negligence.
H. AGENT AS BANK.
-------------
In its individual capacity, FNBB shall have the same obligations and the same
rights, powers and privileges in respect to its Commitment and the Loans made by
it, and as the holder of any of the Notes and as the purchaser of any Letter of
Credit Participations, as it would have were it not also the Agent.
I. RESIGNATION.
-----------
The Agent may resign at any time by giving sixty (60) days prior written notice
thereof to the Banks and the Borrower. Upon any such resignation, the Majority
Banks shall have the right to appoint a successor Agent. Unless a Default or
Event of Default shall have occurred and be continuing, such successor Agent
shall be reasonably acceptable to the Borrower. If no successor Agent shall
have been so appointed by the Majority Banks and shall have accepted such
appointment within thirty (30) days after the retiring Agent's giving of notice
of resignation, then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a financial institution having a rating of not
less than A or its equivalent by Standard & Poor's Corporation. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations
-54-
hereunder. After any retiring Agent's resignation, the provisions of this
Agreement and the other Loan Documents shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as Agent.
J. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT.
----------------------------------------------
Each Bank hereby agrees that, upon learning of the existence of a Default or an
Event of Default, it shall promptly notify the Agent thereof. The Agent hereby
agrees that upon receipt of any notice under this (S)12.10 it shall promptly
notify the other Banks of the existence of such Default or Event of Default.
XIII. ASSIGNMENT AND PARTICIPATION.
----------------------------
A. CONDITIONS TO ASSIGNMENT BY BANKS.
---------------------------------
Except as provided herein, each Bank may assign to one or more Eligible
Assignees all or a portion of its interests, rights and obligations under this
Credit Agreement (including all or a portion of its Commitment Percentage and
Commitment and the same portion of the Loans at the time owing to it, the Notes
held by it and its participating interest in the risk relating to any Letters of
Credit); provided that (a) each of the Agent and, unless a Default or Event of
--------
Default shall have occurred and be continuing, the Borrower shall have given its
prior written consent to such assignment, which consent, in the case of the
Borrower, will not be unreasonably withheld, (b) each such assignment shall be
of a constant, and not a varying, percentage of all the assigning Bank's rights
and obligations under this Agreement, (c) each assignment shall be in an amount
that is a whole multiple of $1,000,000 and (d) the parties to such assignment
shall execute and deliver to the Agent, for recording in the Register (as
hereinafter defined), an Assignment and Acceptance, in form and substance
satisfactory to the Agent (an "Assignment and Acceptance"), together with any
Notes subject to such assignment. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five (5) Business Days after
the execution thereof, (i) the assignee thereunder shall be a party hereto and,
to the extent provided in such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder, and (ii) the assigning Bank shall, to the
extent provided in such assignment and upon payment to the Agent of the
registration fee referred to in (S)13.3, be released from its obligations under
this Agreement.
-55-
B. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS.
--------------------------------------------------------------
By executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of any
adverse claim, the assigning Bank makes no representation or warranty, express
or implied, and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Credit Agreement, the other Loan Documents or any other instrument
or document furnished pursuant hereto,
(b) the assigning Bank makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower and their
Subsidiaries or any other Person primarily or secondarily liable in respect of
any of the Obligations, or the performance or observance by the Guarantors, the
Borrower and its other Subsidiaries or any other Person primarily or secondarily
liable in respect of any of the Obligations of any of their obligations under
this Agreement or any of the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this Credit
Agreement, together with copies of the most recent financial statements referred
to in (S)9.1 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance;
(d) such assignee will, independently and without reliance upon the assigning
Bank, the Agent or any other Bank and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement;
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(e) such assignee represents and warrants that it is an Eligible Assignee;
(f) such assignee appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement and the
other Loan Documents as are delegated to the Agent by the terms hereof or
thereof, together with such powers as are reasonably incidental thereto;
(g) such assignee agrees that it will perform in accordance with their terms
all of the obligations that by the terms of this Agreement are required to be
performed by it as a Bank;
(h) such assignee represents and warrants that it is legally authorized to
enter into such Assignment and Acceptance; and
(i) such assignee acknowledges that it has made arrangements with the assigning
Bank satisfactory to such assignee with respect to its pro rata share of Letter
--- ----
of Credit Fees in respect of the outstanding Letter of Credit.
C. REGISTER.
--------
The Agent shall maintain a copy of each Assignment and Acceptance delivered to
it and a register or similar list (the "Register") for the recordation of the
names and addresses of the Banks and the Commitment Percentage of, and principal
amount of the Revolving Credit Loans owing to and Letter of Credit
Participations purchased by, the Banks from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Agent and the Banks may treat each Person whose name is recorded
in the Register as a Bank hereunder for all purposes of this Credit Agreement.
The Register shall be available for inspection by the Borrower and the Banks at
any reasonable time and from time to time upon reasonable prior notice. Upon
each such recordation, the assigning Bank agrees to pay to the Agent a
registration fee in the sum of $2,500.
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D. NEW NOTES.
---------
Upon its receipt of an Assignment and Acceptance executed by the parties to such
assignment, together with each Note subject to such assignment, the Agent shall
(a) record the information contained therein in the Register, and (b) give
prompt notice thereof to the Borrower and the Banks (other than the assigning
Bank). Within five (5) Business Days after receipt of such notice, the Borrower,
at its own expense, shall execute and deliver to the Agent, in exchange for each
surrendered Note, a new Note to the order of such Eligible Assignee in an amount
equal to the amount assumed by such Eligible Assignee pursuant to such
Assignment and Acceptance and, if the assigning Bank has retained some portion
of its obligations hereunder, a new Note to the order of the assigning Bank in
an amount equal to the amount retained by it hereunder. Such new Notes shall
provide that they are replacements for the surrendered Notes, shall be in an
aggregate principal amount equal to the aggregate principal amount of the
surrendered Notes, shall be dated the effective date of such in Assignment and
Acceptance and shall otherwise be substantially the form of the assigned Notes.
Within five (5) days of issuance of any new Notes pursuant to this (S)13.4, the
Borrower shall deliver an opinion of counsel, addressed to the Banks and the
Agent, relating to the due authorization, execution and delivery of such new
Notes and the legality, validity and binding effect thereof, in form and
substance satisfactory to the Banks. The surrendered Notes shall be cancelled
and returned to the Borrower.
E. PARTICIPATIONS.
--------------
Each Bank may sell participations to one or more banks or other entities in all
or a portion of such Bank's rights and obligations under this Credit Agreement
and the other Loan Documents; provided that (a) any such sale or participation
--------
shall not affect the rights and duties of the selling Bank hereunder to the
Borrower, and (b) the only rights granted to the participant pursuant to such
participation arrangements with respect to waivers, amendments or modifications
of the Loan Documents shall be the rights to approve waivers, amendments or
modifications that would reduce the principal of or the interest rate on any
Loans, extend the term or increase the amount of the Commitment of such Bank as
it relates to such participant, reduce the amount of any commitment fees or
Letter of Credit Fees to which such participant is entitled or extend any
regularly scheduled payment date for principal or interest.
F. DISCLOSURE.
----------
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Each of the Borrower and the Guarantors agrees that in addition to disclosures
made in accordance with standard and customary banking practices any Bank may
disclose information obtained by such Bank pursuant to this Agreement to
assignees or participants and potential assignees or participants hereunder;
provided that such assignees or participants or potential assignees or
--------
participants shall agree (a) to treat in confidence such information unless such
information otherwise becomes public knowledge, (b) not to disclose such
information to a third party, except as required by law or legal process and (c)
not to make use of such information for purposes of transactions unrelated to
such contemplated assignment or participation.
G. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE BORROWER.
----------------------------------------------------
If any assignee Bank is an Affiliate of either the Guarantors or the Borrower,
then any such assignee Bank shall have no right to vote as a Bank hereunder or
under any of the other Loan Documents for purposes of granting consents or
waivers or for purposes of agreeing to amendments or other modifications to any
of the Loan Documents or for purposes of making requests to the Agent pursuant
to (S)10.1 or (S)10.2, and the determination of the Majority Banks shall for all
purposes of this Agreement and the other Loan Documents be made without regard
to such assignee Bank's interest in any of the Loans. If any Bank sells a
participating interest in any of the Loans or Reimbursement Obligations to a
participant, and such participant is either a Guarantor or the Borrower or an
Affiliate of either the Guarantors or the Borrower, then such transferor Bank
shall promptly notify the Agent of the sale of such participation. A transferor
Bank shall have no right to vote as a Bank hereunder or under any of the other
Loan Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or modifications to any of the Loan Documents or for
purposes of making requests to the Agent pursuant to (S)13.1 or (S)13.2 to the
extent that such participation is beneficially owned by either the Guarantors or
the Borrower or any Affiliate of either the Guarantors or the Borrower, and the
determination of the Majority Banks shall for all purposes of this Agreement and
the other Loan Documents be made without regard to the interest of such
transferor Bank in the Loans to the extent of such participation.
H. MISCELLANEOUS ASSIGNMENT PROVISIONS.
-----------------------------------
Any assigning Bank shall retain its rights to be indemnified pursuant to (S)14
with respect to any claims or actions arising prior to the date of such
assignment. If any
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assignee Bank is not incorporated under the laws of the United States of America
or any state thereof, it shall, prior to the date on which any interest or fees
are payable hereunder or under any of the other Loan Documents for its account,
deliver to the Borrower and the Agent certification as to its exemption from
deduction or withholding of any United States federal income taxes. Anything
contained in this (S)13 to the contrary notwithstanding, any Bank may at any
time pledge all or any portion of its interest and rights under this Agreement
(including all or any portion of its Notes) to any of the twelve Federal Reserve
Banks organized under (S)4 of the Federal Reserve Act, 12 U.S.C. (S)341. No such
pledge or the enforcement thereof shall release the pledgor Bank from its
obligations hereunder or under any of the other Loan Documents.
I. ASSIGNMENT BY BORROWER.
----------------------
Neither of the Guarantors nor Borrower shall assign or transfer any of its
rights or obligations under any of the Loan Documents without the prior written
consent of each of the Banks.
XIV. MISCELLANEOUS.
-------------
Each of the Guarantors and the Borrower agrees to indemnify and hold harmless
the Agent and the Banks and their officers, employees, affiliates, agents, and
controlling persons from and against all claims, damages, liabilities and losses
of every kind arising out of the Loan Documents, including without limitation,
against those in respect of the application of Environmental Laws to the
Guarantors, the Borrower and its other Subsidiaries absent the gross negligence
or willful misconduct of the Agent and the Banks. The Borrower shall pay to the
Agent and the Banks promptly on demand all costs and expenses (including any
taxes and reasonable legal and other professional fees and fees of its
commercial finance examiner which commercial finance examiner fees shall not
exceed $5,000 in any twelve (12) month period prior to the occurrence of an
-----
Event of Default) incurred by the Agent and the Banks in connection with the
preparation, negotiation, execution, amendment, administration or enforcement of
any of the Loan Documents. Any communication to be made hereunder shall (a) be
made in writing, but unless otherwise stated, may be made by telex, facsimile
transmission, overnight delivery or letter, and (b) be made or delivered to the
address of the party receiving notice which is identified with its signature
below (unless such party has by five (5) days written notice specified another
address), and shall be deemed made or delivered, when dispatched, left at that
address, one (1) day after given to an overnight delivery service, or five (5)
days after being mailed, postage prepaid, to such address. This Agreement shall
be binding upon and inure to the benefit of each party hereto and its successors
and assigns, but neither of the Guarantors nor the Borrower may not assign its
rights or
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obligations hereunder. This Agreement may not be amended or waived
except by a written instrument signed by the Borrower, the Agent and the
Majority Banks, and any such amendment or waiver shall be effective only for the
specific purpose given; provided, however, notwithstanding the foregoing, the
-------- -------
rate of interest on the Notes, the term of the Notes, the Commitment amounts
and the amount of the fees hereunder, the definition of Majority Banks and this
sentence of (S)14 shall not be changed without the written consent of all the
Banks, and the amount of the agent's fee and (S)12 may not be amended without
the consent of the Agent. No failure or delay by the Bank to exercise any right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege preclude any other right, power or
privilege. The provisions of this Agreement are severable and if any one
provision hereof shall be held invalid or unenforceable in whole or in part in
any jurisdiction, such invalidity or unenforceability shall affect only such
provision in such jurisdiction. This Agreement, together with all Schedules
hereto, expresses the entire understanding of the parties with respect to the
transactions contemplated hereby. This Agreement and any amendment hereby may
be executed in several counterparts, each of which shall be an original, and all
of which shall constitute one agreement. In proving this Agreement, it shall
not be necessary to produce more than one such counterpart executed by the party
to be charged. THIS AGREEMENT AND THE NOTES ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL BE CONSTRUED IN ACCORDANCE THEREWITH AND
GOVERNED THEREBY. EACH OF THE GUARANTORS AND THE BORROWER AGREES THAT ANY SUIT
FOR THE ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF
THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN. Each of
the Guarantors and the Borrower, as an inducement to the Bank to enter into this
Agreement, hereby waives its right to a jury trial with respect to any action
arising in connection with any Loan Document.
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IN WITNESS WHEREOF, the undersigned have duly executed this Revolving Credit and
Term Loan Agreement as a sealed instrument as of the date first above written.
SALESLINK CORPORATION
By: /s/ Its Duly Authorized Officer
Name:
Title:
Address:
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (617)
Fax: (617)
CMG INFORMATION SERVICES, INC.
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By: /s/ Its Duly Authorized Officer
Name:
Title:
Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: (508)
Fax: (508)
PACIFIC DIRECT MARKETING CORP.
By: /s/ Its Duly Authorized Officer
Name:
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Title:
Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
Tel:
Fax:
THE FIRST NATIONAL BANK OF BOSTON, INDIVIDUALLY AND AS AGENT
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Director and Vice President
Address:
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▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
High Technology Division
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇)▇▇▇-▇▇▇▇
Fax: (▇▇▇)▇▇▇-▇▇▇▇
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SCHEDULE 9.2(A)
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SCHEDULE 9.2(B)
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