EXHIBIT 10.1
LOAN AND SECURITY AGREEMENT
DATED AS OF MAY 30, 2001
between
BANCTEC, INC.,
as Borrower,
▇▇▇▇▇▇ FINANCIAL, INC.,
as Agent and as Lender, and
The Financial Institution(s) Listed
on the Signature Pages Hereof,
as Lenders
TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS AND ACCOUNTING TERMS 1
1.1 Certain Defined Terms............................................................................................... 1
SECTION 2. LOANS AND COLLATERAL 1
2.1 Loans............................................................................................................... 1
(A) [Intentionally Omitted]........................................................................................ 1
(B) Revolving Loan................................................................................................. 1
(D) Eligible Collateral............................................................................................ 2
(E) Swingline Loan................................................................................................. 7
(F) Borrowing Mechanics............................................................................................ 8
(G) Notes 8
(H) Letters of Credit.............................................................................................. 9
(1) Maximum Amount............................................................................................ 9
(2) Reimbursement............................................................................................. 9
(3) Request for Letters of Credit............................................................................. 10
(I) Other Letter of Credit Provisions.............................................................................. 10
(1) Obligations Absolute...................................................................................... 10
(2) Nature of Lender's Duties................................................................................. 11
(3) Liability................................................................................................. 11
(J) Availability of a Lender's Pro Rata Share...................................................................... 12
(1) Lender's Amounts Available on a Funding Date.............................................................. 12
(2) Lender's Failure to Fund.................................................................................. 12
(3) Payments to a Defaulting Lender........................................................................... 12
(4) Defaulting Lender's Right to Vote......................................................................... 12
2.2 Interest............................................................................................................ 13
(A) Rate of Interest............................................................................................... 13
(B) Computation and Payment of Interest............................................................................ 14
(C) Interest Laws.................................................................................................. 15
(D) Conversion or Continuation..................................................................................... 15
2.3 Fees................................................................................................................ 16
(A) Unused Line Fee................................................................................................ 16
(B) Letter of Credit Fees.......................................................................................... 16
(C) Prepayment Fees................................................................................................ 17
(D) Audit Fees..................................................................................................... 17
(E) Other Fees and Expenses........................................................................................ 17
(F) Fee Letter..................................................................................................... 17
2.4 Payments and Prepayments............................................................................................ 18
(A) Manner and Time of Payment..................................................................................... 18
(B) Mandatory Prepayments.......................................................................................... 18
(1) Overadvance............................................................................................... 18
i
(2) Prepayments from Proceeds of Asset Dispositions (other than Insurance Proceeds and Condemnation
Proceeds.................................................................................................. 18
(3) Prepayments from Insurance and Condemnation Proceeds...................................................... 18
(4) Prepayments from Issuance of Securities................................................................... 19
(C) Voluntary Prepayments and Repayments........................................................................... 19
(D) Payments on Business Days...................................................................................... 20
(E) Application of Prepayment Proceeds............................................................................. 20
2.5 Term of this Agreement.............................................................................................. 20
2.6 Statements.......................................................................................................... 20
2.7 Grant of Security Interest.......................................................................................... 21
2.8 Yield Protection.................................................................................................... 22
(A) Capital Adequacy and Other..................................................................................... 22
(B) Increased LIBOR Funding Costs.................................................................................. 22
2.9 Taxes............................................................................................................... 22
(A) No Deductions.................................................................................................. 22
(B) Changes in Tax Laws............................................................................................ 23
(C) Foreign Lenders................................................................................................ 24
2.10 Required Termination and Prepayment................................................................................. 24
2.11 Optional Prepayment/Replacement of Lenders.......................................................................... 25
(A) Replacement of an Affected Lender.............................................................................. 25
(B) Prepayment of an Affected Lender............................................................................... 25
2.12 Compensation........................................................................................................ 25
2.13 Booking of LIBOR Loans.............................................................................................. 26
2.14 Assumptions Concerning Funding of LIBOR Loans....................................................................... 26
SECTION 3. CONDITIONS TO LOANS................................................................................................ 26
SECTION 4. BORROWER'S REPRESENTATIONS, WARRANTIES............................................................................. 26
4.1 Organization, Powers, Capitalization................................................................................ 27
(A) Organization and Powers........................................................................................ 27
(B) Capitalization................................................................................................. 27
4.2 Authorization of Borrowing, No Conflict............................................................................. 27
4.3 Financial Condition................................................................................................. 27
4.4 Indebtedness and Liabilities........................................................................................ 28
4.5 Account Warranties and Covenants.................................................................................... 28
4.6 Names and Locations................................................................................................. 29
4.7 Title to Properties; Liens.......................................................................................... 29
4.8 Litigation; Adverse Facts........................................................................................... 29
4.9 Payment of Taxes.................................................................................................... 30
4.10 Performance of Agreements........................................................................................... 30
4.11 Employee Benefit Plans.............................................................................................. 30
4.12 Intellectual Property............................................................................................... 31
4.13 Broker's Fees....................................................................................................... 31
4.14 Environmental Compliance............................................................................................ 31
4.15 Solvency............................................................................................................ 31
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4.16 Disclosure.......................................................................................................... 31
4.17 Insurance........................................................................................................... 32
4.18 Compliance with Laws................................................................................................ 33
4.19 Bank Accounts....................................................................................................... 33
4.20 Employee Matters.................................................................................................... 33
4.21 Governmental Regulation............................................................................................. 33
4.22 Access to Accountants and Management................................................................................ 33
4.23 Inspection.......................................................................................................... 34
4.24 Collateral Records.................................................................................................. 34
4.25 Collection of Accounts and Payments................................................................................. 34
4.26 Inactive Subsidiaries............................................................................................... 35
4.27 Obligations Constitute Senior Indebtedness under Senior Subordinated Note........................................... 35
SECTION 5. REPORTING AND OTHER AFFIRMATIVE COVENANTS.......................................................................... 35
5.1 Financial Statements and Other Reports.............................................................................. 35
5.2 Endorsement......................................................................................................... 35
5.3 Maintenance of Properties........................................................................................... 35
5.4 Compliance with Laws................................................................................................ 36
5.5 Further Assurances.................................................................................................. 36
5.6 Mortgages; Title Insurance; Surveys................................................................................. 36
(A) Title Insurance................................................................................................ 36
(B) Additional Mortgaged Property.................................................................................. 36
(C) Surveys........................................................................................................ 37
5.7 Use of Proceeds and Margin Security................................................................................. 37
5.8 Bailee.............................................................................................................. 37
5.9 Third Party Inventory............................................................................................... 37
5.10 Pledge of Assets and Execution of Guaranties by Foreign Subsidiaries of Borrower.................................... 37
5.11 Pledge of Assets and Execution of Guaranties by Inactive Subsidiaries which become Active
Subsidiaries........................................................................................................ 38
5.12 Inclusion of BancTec (Canada), Inc. as CoBorrower................................................................... 38
5.13 Pledge of Assets and Execution of Guaranty of BancTec (Puerto Rico), Inc............................................ 38
5.14 Delivery of Good Standing Certificates.............................................................................. 39
5.15 Delivery of Original Stock Certificates............................................................................. 39
5.16 Schedules to Trademark Security Agreement, Copyright Security Agreement and Patent Security
Agreement........................................................................................................... 39
SECTION 6. FINANCIAL COVENANTS................................................................................................ 39
SECTION 7. NEGATIVE COVENANTS................................................................................................. 39
[7.1 Indebtedness and Liabilities........................................................................................ 40
7.2 Guaranties.......................................................................................................... 41
7.3 Transfers, Liens and Related Matters................................................................................ 41
(A) Transfers...................................................................................................... 41
(B) Liens.......................................................................................................... 41
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(C) No Negative Pledges............................................................................................ 42
(D) No Restrictions on Subsidiary Distributions to Borrower........................................................ 42
7.4 Investments and Loans............................................................................................... 43
7.5 Restricted Junior Payments.......................................................................................... 43
7.6 Restriction on Fundamental Changes.................................................................................. 43
7.7 Changes Relating to Subordinated Debt............................................................................... 43
7.8 Transactions with Affiliates........................................................................................ 44
7.9 Conduct of Business................................................................................................. 44
7.10 Tax Consolidations.................................................................................................. 44
7.11 Subsidiaries........................................................................................................ 44
7.12 Fiscal Year; Tax Designation........................................................................................ 44
7.13 Press Release; Public Offering Materials............................................................................ 44
7.14 Bank Accounts....................................................................................................... 44
7.15 IRS Form 8821....................................................................................................... 45
SECTION 8. DEFAULT, RIGHTS AND REMEDIES....................................................................................... 45
8.1 Event of Default.................................................................................................... 45
(A) Payment........................................................................................................ 45
(B) Default in Other Agreements.................................................................................... 45
(C) Breach of Certain Provisions................................................................................... 45
(D) Breach of Warranty............................................................................................. 45
(E) Other Defaults Under Loan Documents............................................................................ 45
(F) Change in Control.............................................................................................. 46
(G) Involuntary Bankruptcy; Appointment of Receiver, etc........................................................... 46
(H) Voluntary Bankruptcy; Appointment of Receiver, etc............................................................. 46
(I) Liens.......................................................................................................... 46
(J) Judgment and Attachments....................................................................................... 47
(K) Dissolution.................................................................................................... 47
(L) Solvency....................................................................................................... 47
(M) Injunction..................................................................................................... 47
(N) Invalidity of Loan Documents................................................................................... 47
(O) Failure of Security............................................................................................ 47
(P) Damage, Strike, Casualty....................................................................................... 47
(Q) Licenses and Permits........................................................................................... 48
(R) Forfeiture..................................................................................................... 48
8.2 Suspension of Commitments........................................................................................... 48
8.3 Acceleration........................................................................................................ 48
8.4 Remedies............................................................................................................ 48
8.5 Appointment of AttorneyinFact....................................................................................... 49
8.6 Limitation on Duty of Agent with Respect to Collateral.............................................................. 50
8.7 Application of Proceeds............................................................................................. 50
8.8 License of Intellectual Property.................................................................................... 50
8.9 Waivers; NonExclusive Remedies...................................................................................... 51
SECTION 9. AGENT.............................................................................................................. 51
9.1 Agent............................................................................................................... 51
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(A) Appointment.................................................................................................... 51
(B) Nature of Duties............................................................................................... 51
(C) Rights, Exculpation, Etc....................................................................................... 52
(D) Reliance....................................................................................................... 53
(E) Indemnification................................................................................................ 53
(F) ▇▇▇▇▇▇ Individually............................................................................................ 53
(G) Successor Agent................................................................................................ 54
(1) Resignation............................................................................................... 54
(2) Appointment of Successor.................................................................................. 54
(3) Successor Agent........................................................................................... 54
(H) Collateral Matters............................................................................................. 54
(1) Release of Collateral..................................................................................... 54
(2) Confirmation of Authority; Execution of Releases.......................................................... 55
(3) Absence of Duty........................................................................................... 55
(I) Agency for Perfection.......................................................................................... 56
(J) Exercise of Remedies........................................................................................... 56
9.2 Notice of Default................................................................................................... 56
9.3 Action by Agent..................................................................................................... 57
9.4 Amendments, Waivers and Consents.................................................................................... 57
(A) Percentage of Lenders Required................................................................................. 57
(B) Specific Purpose or Intent..................................................................................... 58
(C) Failure to Give Consent; Replacement of NonConsenting Lender................................................... 58
9.5 Assignments and Participations in Loans............................................................................. 58
(A) Assignments.................................................................................................... 58
(B) Participations................................................................................................. 59
(C) No Relief of Obligations; Cooperation; Ability to Make LIBOR Loans............................................. 59
(D) Security Interests; Assignment to Affiliates................................................................... 60
(E) Recording of Assignments....................................................................................... 60
9.6 Set Off and Sharing of Payments..................................................................................... 61
9.7 Disbursement of Funds............................................................................................... 61
9.8 Settlements, Payments and Information............................................................................... 61
(A) Revolving Advances and Payments; Fee Payments.................................................................. 61
(1) Fluctuation of Revolving Loan Balance..................................................................... 61
(2) Settlement Dates.......................................................................................... 62
(3) Settlement Definitions.................................................................................... 62
(4) Settlement Payments....................................................................................... 63
(B) [Intentionally Omitted]........................................................................................ 63
(C) Return of Payments............................................................................................. 63
(1) Recovery After NonReceipt of Expected Payment............................................................. 63
(2) Recovery of Returned Payment.............................................................................. 64
9.9 Discretionary Advances.............................................................................................. 64
SECTION 10. MISCELLANEOUS..................................................................................................... 64
10.1 Expenses and Attorneys' Fees........................................................................................ 64
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10.2 Indemnity........................................................................................................... 65
10.3 Notices............................................................................................................. 65
10.4 Survival of Representations and Warranties and Certain Agreements................................................... 66
10.5 Indulgence Not Waiver............................................................................................... 67
10.6 Marshaling; Payments Set Aside...................................................................................... 67
10.7 Entire Agreement.................................................................................................... 67
10.8 Severability........................................................................................................ 67
10.9 Lenders' Obligations Several; Independent Nature of Lenders' Rights................................................. 67
10.10 Headings............................................................................................................ 68
10.11 APPLICABLE LAW...................................................................................................... 68
10.12 Successors and Assigns.............................................................................................. 68
10.13 No Fiduciary Relationship; No Duty; Limitation of Liabilities....................................................... 68
(A) No Fiduciary Relationship...................................................................................... 68
(B) No Duty........................................................................................................ 68
(C) Limitation of Liabilities...................................................................................... 68
10.14 CONSENT TO JURISDICTION............................................................................................. 69
10.15 WAIVER OF JURY TRIAL................................................................................................ 70
10.16 Construction........................................................................................................ 70
10.17 Counterparts; Effectiveness......................................................................................... 70
10.18 Confidentiality..................................................................................................... 70
SECTION 11. DEFINITIONS AND ACCOUNTING TERMS.................................................................................. 71
11.1 Certain Defined Terms............................................................................................... 71
11.2 Accounting Terms.................................................................................................... 89
11.3 Other Definitional Provisions....................................................................................... 90
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INDEX OF DEFINED TERMS
Defined Term Defined in Section
------------ ------------------
Accounting Changes (S)11.2
Accounts (S)11.1
Additional Mortgaged Property (S)11.1
Adjustment Date (S)2.2(A)
Advance (S)11.1
Affected Lender (S)2.11
Affiliate (S)11.1
Agent (S)11.1
Agent's Account (S)11.1
Agreement (S)11.1
All Obligations Collateral (S)2.7
Asset Disposition (S)11.1
Assignment and Acceptance Agreement (S)11.1
Availability (S)11.1
Average Daily Availability (S)11.1
Bank Letter of Credit (S)11.1
Base Rate (S)11.1
Base Rate Loans (S)11.1
Base Rate Margin (S)2.2(A)
Blocked Accounts (S)4.25
Borrower Recitals
Borrower's Accountants (S)11.1
Borrowing Base (S)2.1(B)(2)
Borrowing Base Certificate (S)11.1
Business Day (S)11.1
Calculation Period (S)2.2(A)
Capital Expenditures (S)11.1
Capital Lease (S)11.1
Cash Equivalents (S)11.1
Certificate of Exemption (S)2.9(C)
Closing Date (S)11.1
Closing Date Mortgaged Property (S)11.1
Collateral (S)2.7
Collecting Banks (S)4.25
Commitment(s) (S)11.1
Compliance and Pricing Certificate (S)11.1
Consolidated Net Tangible Assets (S)11.1
Daily Interest Amount (S)9.8(A)(3)
Daily Interest Rate (S)9.8(A)(3)
Daily Loan Balance (S)9.8(A)(3)
Default (S)11.1
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INDEX OF DEFINED TERMS
(Continued)
Defined Term Defined in Section
------------ ------------------
Defaulted Amount (S)11.1
Defaulting Lender (S)11.1
Default Rate (S)2.2(A)
Designated Account Debtors (S)11.1
Dilution Reserve (S)2.1(B)(2)
EBITDA (S)11.1
Eligible Accounts (S)2.1(D)
Eligible Assignee (S)11.1
Eligible Field Spare Parts (S)2.1(D)
Eligible Inventory (S)2.1(D)
Employee Benefit Plan (S)11.1
Environmental Claims (S)11.1
Environmental Laws (S)11.1
Equipment (S)11.1
ERISA (S)11.1
ERISA Affiliate (S)11.1
Event of Default (S)8.1
Excess Interest (S)2.2(C)
Federal Funds Effective Rate (S)11.1
Field Spare Parts (S)11.1
Fiscal Year (S)11.1
Fixed Charge Coverage (S)11.1
Fixed Charges (S)11.1
Foreign Lender (S)2.9(C)
Funding Date (S)11.1
GAAP (S)11.1
Guarantor (S)11.1
Hazardous Material (S)11.1
▇▇▇▇▇▇ Recitals
Indebtedness (S)11.1
Indemnified Liabilities (S)10.2
Indemnitees (S)10.2
Intangible Assets (S)11.1
Intellectual Property (S)11.1
Interest Expense (S)11.1
Interest Period (S)11.1
Interest Rate (S)2.2(A)
Interest Rate Agreement (S)5.10
Interest Ratio (S)9.8(A)(3)
Interest Settlement Date (S)9.8(A)(4)
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INDEX OF DEFINED TERMS
(Continued)
Defined Term Defined in Section
------------ ------------------
Inventory (S)11.1
IRC (S)11.1
IRS (S)7.15
Issuing Lender (S)2.1(I)(2)
Lender(s) Recitals
Lender Letter of Credit (S)2.1(H)
Letter of Credit Liability (S)11.1
Letter of Credit Reserve (S)11.1
Letter of Non-Exemption (S)2.9(C)
Liabilities (S)11.1
LIBOR (S)11.1
LIBOR Loans (S)11.1
LIBOR Margin (S)2.2(A)
Lien (S)11.1
Loan or Loans (S)11.1
Loan Documents (S)11.1
Loan Party (S)11.1
Loan Year (S)11.1
London Banking Day (S)11.1
Material Adverse Effect (S)11.1
Maximum Rate (S)2.2(C)
Maximum Revolving Loan Amount (S)2.1(B)(1)
Maximum Swingline Loan Amount (S)11.1
Mortgage (S)11.1
Mortgage Policies (S)5.6(A)
Mortgaged Property (S)11.1
Non-All Obligations Collateral (S)2.7
Notes (S)11.1
Notice of Borrowing (S)11.1
Obligations (S)11.1
Operating Cash Flow (S)11.1
Permitted Encumbrances (S)11.1
Person (S)11.1
Pro Rata Share (S)11.1
Projections (S)11.1
Real Property Advance Amount (S)11.1
Register (S)9.5(E)
Related Fund (S)9.5(D)
ix
INDEX OF DEFINED TERMS
(Continued)
Defined Term Defined in Section
------------ ------------------
Replacement Lender (S)2.11
Requisite Lenders (S)11.1
Restricted Junior Payment (S)11.1
Revolving Advance (S)11.1
Revolving Loan (S)11.1
Revolving Loan Commitment (S)11.1
Revolving Note (S)11.1
Settlement Date (S)9.8(A)(2)
Stock Pledge Agreements (S)11.1
Subordinated Debt (S)11.1
Subsidiary (S)11.1
Swingline Advance (S)11.1
Swingline Lender (S)11.1
Swingline Loan (S)11.1
Swingline Note (S)11.1
Tax Liabilities (S)2.9(A)
Termination Date (S)2.5
Total Loan Commitment (S)11.1
UCC (S)11.1
Unsecured Senior Notes (S)11.1
Unsecured Senior Notes Indenture (S)11.1
Unsecured Senior Notes Permitted Liens
Limitation (S)11.1
WCAS (S)11.1
Working Capital (S)11.1
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LOAN AND SECURITY AGREEMENT
This AGREEMENT is dated as of May 30, 2001 and entered into among
BANCTEC, INC., a Delaware corporation ("Borrower"), the financial institution(s)
listed on the signature pages hereof, and their respective successors and
Eligible Assignees (each individually a "Lender" and collectively "Lenders") and
▇▇▇▇▇▇ FINANCIAL, INC., a Delaware corporation (in its individual capacity,
"▇▇▇▇▇▇"), for itself as a Lender and as Agent.
WHEREAS, Borrower desires that Lenders extend a credit (i) to
refinance the present indebtedness of Borrower pursuant to that certain Credit
Agreement, dated as of July 22, 1999, executed by Borrower, Chase Bank of Texas,
N.A., et al., as amended, (ii) to finance fees and expenses relating to the
credit facility, and (iii) to provide working capital financing and to provide
funds for other general corporate purposes; and
WHEREAS, to secure Borrower's obligations under the Loan Documents
Borrower is granting to Agent, for the benefit of Agent and Lenders, a security
interest in and lien upon certain of Borrower's property; and
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrower, Agent and Lenders agree as
follows:
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS
--------------------------------
1.1 Certain Defined Terms. The capitalized terms not otherwise
---------------------
defined in this Agreement and the accounting terms used in this Agreement shall
have the meanings set forth in Section 11 of this Agreement:
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SECTION 2. LOANS AND COLLATERAL
--------------------
2.1 Loans.
-----
(A) [Intentionally Omitted]
(B) Revolving Loan. Each Lender, severally, agrees to lend to
--------------
Borrower from time to time its Pro Rata Share of each advance under the
Revolving Loan Commitment. The aggregate amount of the Revolving Loan
Commitment shall not exceed at any time $100,000,000.00. Amounts borrowed under
this subsection 2.1(B) may be repaid and reborrowed at any time prior to the
-----------------
earlier of (i) the termination of the Revolving Loan Commitment pursuant to
subsection 8.3 or (ii) the Termination Date. Except as otherwise provided
--------------
herein, no Lender shall have any obligation to make a Revolving Advance to the
extent such Revolving Advance would cause the
1
Revolving Loan (after giving effect to any immediate application of the proceeds
thereof) to exceed the Maximum Revolving Loan Amount.
"Maximum Revolving Loan Amount" means, as of any date of
determination, the lesser of (a) the Revolving Loan Commitments of all Lenders
less the sum of the Letter of Credit Reserve and the Swingline Loan and (b) the
----
Borrowing Base less the sum of the Letter of Credit Reserve and the Swingline
----
Loan.
"Borrowing Base" means, as of any date of determination, an
amount equal to the sum of (a) 85.00% of Eligible Accounts less Dilution
Reserves, plus (b) 50.00% of Eligible Accrued Unbilled Accounts less Dilution
----
Reserves; plus (c) the lesser of (i) $30,000,000, or (ii) 85.00% of the net
---- -------------
orderly liquidation value of Eligible Inventory (net orderly liquidation value
to be determined in a manner and pursuant to documentation satisfactory to
Agent, in its reasonable credit judgment) or (iii) 50.00% of Eligible Inventory,
plus (c) the lesser of (i) the Unsecured Senior Notes Permitted Liens Limitation
---- -------------
or (ii) (A) the lesser of (1) $20,000,000, or (2) 85.00% of the net orderly
-------------
liquidation value of Eligible Field Spare Parts (net orderly liquidation value
to be determined in a manner and pursuant to documentation satisfactory to
Agent, in its reasonable credit judgment), or (3) 50.00% of Eligible Field Spare
Parts, plus (B) the Real Property Advance Amount and less, in each case, such
----
reserves as Agent in its reasonable credit judgment may elect to establish.
"Dilution Reserve" means, as of any date of determination, a reserve for the
amount by which the total dilution of Accounts exceeds five percent (5%); with
dilution referring to all actual and potential offsets to an Account, including,
without limitation, customer payment and/or volume discounts, write-offs, credit
memoranda, returns and allowances, and billing errors. The Dilution Reserve
shall be adjusted after each field examination audit of the Collateral conducted
by Agent or any authorized representative designated by Agent.
(C) [Intentionally Omitted]
(D) Eligible Collateral.
-------------------
"Accrued Unbilled Account" means any unbilled Account
generated in the ordinary course of Borrower's business which (i) pursuant to
GAAP Borrower has completed the work regarding and has earned the right for
payment of, but the amount of which Borrower has not yet invoiced, and (ii) on
the records of Borrower the amount of which until invoiced is credited to
revenue with the amount of the unbilled Account debited, with such entries being
reversed upon the invoicing of such Account.
"Eligible Accounts" means, as at any date of determination,
the aggregate of all Accounts that Agent, in its reasonable credit judgment,
deems to be eligible for borrowing purposes. Without limiting the generality of
the
2
foregoing, the Agent may determine that the following Accounts are not Eligible
Accounts:
(1) Accounts (a) from account debtors other than Designated
Account Debts which, at the date of issuance of the respective invoice therefor,
were payable more than ninety (90) days after the date of issuance, and (b) from
Designated Account Debtors which, at the date of the respective invoice
therefore, were payable more than one hundred twenty (120) days after the date
of issuance;
(2) Accounts (a) from account debtors other than Designated
Account Debtors which remain unpaid for more than sixty (60) days after the due
date specified in the original invoice or for more than ninety (90) days after
invoice date if no due date was specified, and (b) from Designated Account
Debtors which remain unpaid for more than ninety (90) days after the due date
specified in the original invoice or for more than one hundred twenty (120) days
after invoice date if no due date was specified.
(3) Accounts which are otherwise eligible with respect to
which the account debtor is owed a credit by Borrower, but only to the extent of
such credit;
(4) Accounts due from an account debtor whose principal
place of business is located outside the United States of America or Canada
unless such Account is backed by a letter of credit, in form and substance
acceptable to Agent and issued or confirmed by a bank that is organized under
the laws of the United States of America or a State thereof, that is acceptable
to Agent; provided that such letter of credit has been delivered to Agent as
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additional Collateral;
(5) Accounts due from an account debtor which Agent has
notified Borrower does not have a satisfactory credit standing;
(6) Accounts in excess of an aggregate face amount of
$50,000 with respect to which the account debtor is the United States of
America, any state or any municipality, or any department, agency or
instrumentality thereof, unless Borrower has, with respect to such Accounts,
complied with the Federal Assignment of Claims Act of 1940 as amended (31 U.S.C.
Section 3727 et seq.) or any applicable statute or municipal ordinance of
similar purpose and effect;
(7) Accounts with respect to which the account debtor is an
Affiliate of Borrower or a director, officer, agent, stockholder or employee of
Borrower or any of its Affiliates;
3
(8) Accounts (a) due from an account debtor other than a
Designated Account Debtor if more than fifty percent (50%) of the aggregate
amount of Accounts of such account debtor have at the time remained unpaid for
more than sixty (60) days after due date or ninety (90) days after the invoice
date if no due date was specified, and (b) due from a Designated Account Debtor
if more than twenty-five percent (25%) of the aggregate amount of Accounts of
such account debtor have at the time remained unpaid for more than ninety (90)
days after due date or one hundred twenty (120) days after the invoice date if
no due date was specified;
(9) Accounts with respect to which there is any unresolved
dispute with the respective account debtor (but only to the extent of such
dispute);
(10) Accounts evidenced by an "instrument" or "chattel
paper" (as defined in the UCC) not in the possession of Agent, on behalf of
itself and Lenders;
(11) Accounts with respect to which Agent, on behalf of
itself and Lenders, does not have a valid, first priority and fully perfected
security interest;
(12) Accounts subject to any Lien except those in favor of
Agent, on behalf of itself and Lenders;
(13) Accounts with respect to which the account debtor is
the subject of any bankruptcy or other insolvency proceeding;
(14) Accounts due from an account debtor to the extent that
such Accounts exceed in the aggregate an amount equal to twenty percent (20%) of
the aggregate of all Accounts at said date;
(15) Accounts with respect to which the account debtor's
obligation to pay is conditional or subject to a repurchase obligation or
contractual right to return or with respect to which the goods or services
giving rise to such Account have not been delivered (or performed, as
applicable) and accepted by such account debtor, including progress ▇▇▇▇▇▇▇▇,
▇▇▇▇ and hold sales, guarantied sales, sale or return transactions, sales on
approval or consignment sales;
(16) Unless Borrower has either qualified as a foreign
corporation authorized to transact business in New Jersey or any other state
described in this paragraph or has filed a Notice of Business Activities Report
or similar filing with the applicable state agency for the then current year,
Accounts with respect to which the account debtor is located in New Jersey or
4
any other state denying creditors access to its courts in the absence of a
Notice of Business Activities Report or other similar filing; and
(17) Accounts with respect to which the account debtor is a
creditor of Borrower; provided, however, that any such Account shall only be
-------- -------
ineligible as to that portion of such Account which is less than or equal to the
amount owed by Borrower to such Person.
In no event shall an Eligible Accrued Unbilled Account constitute
an Eligible Account for purposes of the Borrowing Base.
"Eligible Accrued Unbilled Accounts" means, as at any date of
determination, the aggregate of all Accrued Unbilled Accounts that Agent, in its
reasonable credit judgment, deems to be eligible for borrowing purposes. Without
limiting the generality of the foregoing, the Agent may determine that if such
Accrued Unbilled Account would not (other than the fact of being not yet
invoiced) otherwise constitute an Eligible Account, such Accrued Unbilled
Account shall not constitute an Eligible Accrued Unbilled Account.
"Eligible Inventory" means, as at any date of determination, the
value (determined at the lower of cost or market on a first-in, first-out basis
or a moving average basis) of all Inventory owned by Borrower and located in the
United States of America that Agent, in its reasonable credit judgment, deems to
be eligible for borrowing purposes. Without limiting the generality of the
foregoing, the Agent may determine that the following is not Eligible Inventory:
(a) work-in-process; (b) finished goods which do not meet the specifications of
the purchase order for such goods; (c) Inventory which Agent determines, in its
reasonable credit judgment, is unacceptable for borrowing purposes due to age,
quality, type, category and/or quantity; (d) packaging, shipping materials or
supplies consumed in Borrower's business; (e) Inventory with respect to which
Agent, on behalf of itself and Lenders, does not have a valid, first priority
and fully perfected security interest; (f) Inventory with respect to which there
exists any Lien in favor of any Person other than Agent, on behalf of itself and
Lenders; (g) Inventory produced in violation of the Fair Labor Standards Act and
subject to the so-called "hot goods" provisions contained in Title 29 U.S.C. 215
(a)(i) or any replacement statute; (h) Inventory located at any location other
than those identified pursuant to Schedule 2.1D (as such Schedule 2.1D may be
------------- -------------
amended from time to time with the consent of Agent); (i) Inventory located at a
vendor's location or with a consignee; (j) Inventory located with a
warehouseman, bailee, processor or similar third party, unless such Person has
executed a waiver of interest satisfactory to Agent; (k) unless otherwise agreed
to by Agent, Inventory in any location for which Agent has not received an
agreement, in form and substance acceptable to Agent, acknowledging Agent's
rights and waiving its own interest in such Inventory from each lessor and
sublessor of such location (in the case of a location not owned by Borrower) and
each mortgagee (other than if the mortgagee is Agent) of such
5
location (in the case of a location owned by Borrower), provided, however, that
-------- -------
as to the locations listed on Schedule 2.1D, the failure of Agent to receive
such an agreement shall not by itself constitute a basis for Agent to exclude
the Inventory at such location from being Eligible Inventory, though the
foregoing shall in no event limit the ability of Agent to establish such
reserves as Agent in its reasonable credit judgment determines should be
established against the Loans due to the lack of such an agreement at such
location, and (l) any Field Spare Parts.
"Eligible Field Spare Parts" means, as at any date of
determination, the value (determined at the lower of cost or market on a first-
in, first-out basis or a moving average basis or last purchase price basis) of
all Field Spare Parts and located in the United States of America that Agent, in
its reasonable credit judgment, deems to be eligible for borrowing purposes.
Without limiting the generality of the foregoing, the Agent may determine that
the following is not Eligible Field Spare Parts: (a) Field Spare Parts that are
not readily marketable in their current form; (b) Field Spare Parts which do not
meet the specifications of the purchase order for such goods; (c) Field Spare
Parts which Agent determines, in its reasonable credit judgment, are
unacceptable for borrowing purposes due to age, quality, type, category and/or
quantity; (d) Field Spare Parts with respect to which Agent, on behalf of itself
and Lenders, does not have a valid, first priority and fully perfected security
interest; (e) Field Spare Parts with respect to which there exist any Lien in
favor of any Person other than Agent, on behalf of itself and Lenders; (f) Field
Spare Parts produced in violation of the Fair Labor standards Act and subject to
the so-called "hot goods" provisions contained in Title 29 U.S.C. 215 (a)(i) or
any replacement statute; (g) Field Spare Parts located at a location other than
those identified pursuant to Schedule 2.1D (as such Schedule 2.1D may be amended
------------- -------------
from time to time with the consent of Agent); (h) Field Spare Parts located at a
vendor's location or with a consignee; (i) Field Spare Parts located with a
warehouseman, bailee, processor or similar third party, unless such Person has
executed a waiver of interest satisfactory to Agent; and (j) unless otherwise
agreed to by Agent, Field Spare Parts in any location for which Agent has not
received an agreement, in form and substance acceptable to Agent, acknowledging
Agent's rights and waiving its own interest in such Field Spare Parts from each
lessor and sublessor of such location (in the case of a location not owned by
Borrower) and each mortgagee (other than if the mortgagee is Agent) of such
location (in the case of a location owned by Borrower); provided, however, that
-------- -------
as to the locations listed on Schedule 2.1D, the failure of Agent to receive
such an agreement shall not by itself constitute a basis for Agent to exclude
the Field Spare Parts at such location from being Eligible Field Spare Parts,
though the foregoing shall in no event limit the ability of Agent to establish
such reserves as Agent in its reasonable credit judgment determines should be
established against the Loans due to the lack of such an agreement at such
location.
6
(E) Swingline Loan. Agent may convert any request by Borrower
--------------
for a Revolving Advance into a request for an advance under the Swingline Loan
in an amount not to exceed $10,000,000. The Swingline Loan shall be a Base Rate
Loan and shall not exceed in the aggregate at any time outstanding the Maximum
Swingline Loan Amount. In the event that on any Business Day Swingline Lender
desires that all or any portion of the Swingline Loan should be reduced in whole
or in part, Swingline Lender shall promptly notify Agent to that effect and
indicate the portion of the Swingline Loan to be reduced. Agent agrees to
transmit to Lenders the information contained in each notice received by Agent
from Swingline Lender and shall concurrently notify Lenders of each Lender's Pro
Rata Share of the obligation to make a Revolving Advance to repay the Swingline
Loan (or portion thereof).
Each of the Lenders hereby unconditionally and irrevocably agrees
to fund to Agent for the benefit of Swingline Lender, in lawful money of the
United States and in same day funds, not later than 1:00 p.m. Chicago time on
the Business Day immediately following the Business Day of such Lender's receipt
of such notice from Agent (provided that if any Lender shall receive such notice
at or prior to 11:00 a.m. Chicago time on a Business Day, such funding shall be
made by such Lender on such Business Day), such Lender's Pro Rata Share of a
Revolving Advance (which Revolving Advance shall be a Base Rate Loan and shall
be deemed to be requested by Borrower) in the principal amount of such portion
of the Swingline Loan which is required to be paid to Swingline Lender under
this subsection 2.1 (E) (regardless of whether the conditions precedent thereto
------------------
set forth in Section 3 and the Conditions Rider are then satisfied and whether
---------
or not Borrower has provided a notice of borrowing under subsection 2.1(F) and
-----------------
whether or not any Default or Event of Default exists or all or any of the Loans
have been accelerated, but subject to the other provisions of this subsection
----------
2.1(E)). The proceeds of any such Revolving Advance shall be immediately paid
------
over to Agent for the benefit of Swingline Lender for application to the
Swingline Loan.
In the event that an Event of Default shall occur and either (i)
such Event of Default is of the type described in subsection 8.1 (G) or (H)
-------------------------
hereof or (ii) no further Revolving Advances are being made under this
Agreement, so long as any such Event of Default is continuing, then, each of the
Lenders (other than Swingline Lender) shall be deemed to have irrevocably,
unconditionally and immediately purchased a participation in the Swingline Loan
from Swingline Lender in an amount equal to such Lender's Pro Rata Share of the
Revolving Loan Commitment multiplied by the total amount of the Swingline Loan
outstanding. Each Lender shall effect such purchase by making available the
amount of such Lender's participation in the Swingline Loan in U.S. Dollars in
immediately available funds to Agent's Account for the benefit of Swingline
Lender. In the event any Lender fails to make available to Swingline Lender when
due the amount of such Lender's participation in the Swingline Loan, Swingline
Lender shall be entitled to recover such amount on
7
demand from such Lender together with interest at the Federal Funds Effective
Rate. Each such purchase by a Lender shall be made without recourse to Swingline
Lender, without representation or warranty of any kind, and shall be effected
and evidenced pursuant to documents reasonably acceptable to Swingline Lender.
The obligations of the Lenders under this subsection 2.1 (E) shall be absolute,
------------------
irrevocable and unconditional, shall be made under all circumstances and shall
not be affected, reduced or impaired for any reason whatsoever.
(F) Borrowing Mechanics. (1) LIBOR Loans made on any Funding
-------------------
Date shall be in an aggregate minimum amount of $2,500,000 and integral
multiples of $500,000 in excess of such amount. (2) On any day when Borrower
desires a Revolving Advance under this subsection 2.1, Borrower shall give Agent
--------------
written or telephonic notice of the proposed borrowing by 11:00 a.m. Chicago
time on the Funding Date of a Base Rate Loan less than $5,000,000, written or
telephonic notice by 11:00 a.m. Chicago time one (1) Business Day prior to the
Funding Date of a Base Rate Loan equal to or greater than $5,000,000, and three
(3) Business Days in advance of the Funding Date of a LIBOR Loan, which notice
shall specify the proposed Funding Date (which shall be a Business Day), whether
such Loans shall consist of Base Rate Loans or LIBOR Loans, and, for LIBOR
Loans, the Interest Period applicable thereto. Any such telephonic notice shall
be confirmed with a Notice of Borrowing on the same day as such request. Neither
Agent nor Lender shall incur any liability to Borrower for acting upon any
telephonic notice or a Notice of Borrowing Agent believes in good faith to have
been given by a duly authorized officer or other person authorized to borrow on
behalf of Borrower or for otherwise acting in good faith under this subsection
----------
2.1(F). Neither Agent nor Lender will be required to make any advance pursuant
------
to any telephonic or written notice or a Notice of Borrowing, unless all of the
terms and conditions set forth in Section 3 and the Conditions Rider have been
---------
satisfied and Agent has also received the most recent Borrowing Base Certificate
and all other documents required under Section 5 and the Reporting Rider by
---------
11:00 a.m. Chicago time on the date of such funding request. Each Advance shall
be deposited by wire transfer in immediately available funds in such account as
Borrower may from time to time designate to Agent in writing. The becoming due
of any amount required to be paid under this Agreement or any of the other Loan
Documents as principal, Lender Letter of Credit reimbursement obligation,
accrued interest, fees, compensation or any other amounts shall be deemed
irrevocably to be an automatic request by Borrower for a Revolving Advance,
which shall be a Base Rate Loan on the due date of, and in the amount required
to pay (as set forth on Agent's books and records), such principal, Lender
Letter of Credit reimbursement obligation, accrued interest fees, compensation
or any other amounts.
(G) Notes. Borrower shall execute and deliver to each Lender
-----
with appropriate insertions Notes to evidence such Lender's Commitments. In
8
the event of an assignment under subsection 9.5, Borrower shall, upon surrender
--------------
of the assigning Lender's Notes, issue new Notes to reflect the interest held by
the assigning Lender and its Eligible Assignee.
(H) Letters of Credit. The Revolving Loan Commitments may, in
-----------------
addition to Revolving Advances, be utilized, upon the request of Borrower, for
(i) the issuance of letters of credit by Agent; or with Agent's consent any
Lender, or (ii) the issuance by Agent of risk participations to banks to induce
such banks to issue Bank Letters of Credit for the account of Borrower (each of
(i) and (ii) above a "Lender Letter of Credit"). Each Lender shall be deemed to
have purchased a participation in each Lender Letter of Credit issued on behalf
of Borrower in an amount equal to its Pro Rata Share thereof. In no event shall
any Lender Letter of Credit be issued to the extent that the issuance of such
Lender Letter of Credit would cause the sum of the Letter of Credit Reserve
(after giving effect to such issuance), plus the Revolving Loan, plus the
Swingline Loan to exceed the lesser of (x) the Borrowing Base and (y) the
Revolving Loan Commitments.
(1) Maximum Amount. The aggregate amount of Letter of
--------------
Credit Liability with respect to all Lender Letters of Credit outstanding at
any time shall not exceed $5,000,000.00.
(2) Reimbursement. Borrower shall be irrevocably and
-------------
unconditionally obligated forthwith without presentment, demand, protest or
other formalities of any kind, to reimburse Agent or the issuer for any amounts
paid with respect to a Lender Letter of Credit including all fees, costs and
expenses paid to any bank that issues a Bank Letter of Credit. Borrower hereby
authorizes and directs Agent, at Agent's option, to debit Borrower's account (by
increasing the Revolving Loan) in the amount of any payment made with respect to
any Lender Letter of Credit. In the event that Agent elects not to debit
Borrower's account and Borrower fails to reimburse Agent in full on the date of
any payment under a Lender Letter of Credit, Agent shall promptly notify each
Lender of the unreimbursed amount of such payment together with accrued interest
thereon and each Lender, on the next Business Day, shall deliver to Agent an
amount equal to its respective participation in same day funds. The obligation
of each Lender to deliver to Agent an amount equal to its respective
participation pursuant to the foregoing sentence shall be absolute and
unconditional and such remittance shall be made notwithstanding the occurrence
or continuation of an Event of Default or Default or the failure to satisfy any
condition set forth in Section 3 and the Conditions Rider. In the event any
---------
Lender fails to make available to Agent the amount of such Lender's
participation in such Lender Letter of Credit, Agent shall be entitled to
recover such amount on demand from such Lender together with interest on such
amount calculated at the Base Rate.
9
(3) Request for Letters of Credit. Borrower shall give
-----------------------------
Agent at least three (3) Business Days prior notice specifying the date a Lender
Letter of Credit is to be issued, identifying the beneficiary and describing the
nature of the transactions proposed to be supported thereby. The notice shall be
accompanied by the form of the letter of credit being requested. Any letter of
credit which Borrower requests must be in such form, be for such amount, contain
such terms and support such transactions as are reasonably satisfactory to
Agent. The expiration date of each Lender Letter of Credit shall be on a date
which is at least thirty (30) days prior to the Termination Date.
(I) Other Letter of Credit Provisions.
---------------------------------
(1) Obligations Absolute. The obligation of Borrower to
--------------------
reimburse Agent or any Lender for payments made under, and other amounts payable
in connection with, any Lender Letter of Credit shall be unconditional and
irrevocable and shall be paid under all circumstances strictly in accordance
with the terms of this Agreement including, without limitation, the following
circumstances:
(a) any lack of validity or enforceability of any
Lender Letter of Credit, or any other agreement;
(b) the existence of any claim, set-off, defense or
other right which Borrower, any of its Affiliates, Agent or any Lender, on the
one hand, may at any time have against any beneficiary or transferee of any
Lender Letter of Credit (or any Persons for whom any such transferee may be
acting), Agent, any Lender or any other Person, on the other hand, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction (including any underlying transaction between Borrower or
any of its Affiliates and the beneficiary of the Lender Letter of Credit);
(c) any draft, demand, certificate or any other
document presented under any Lender Letter of Credit is alleged to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect;
(d) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of Loan
Parties or any of their Subsidiaries;
(e) any breach of this Agreement or any other Loan
Document by any party thereto;
(f) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing;
10
(g) the fact that a Default or an Event of Default
shall have occurred and be continuing; or
(h) payment under any Lender Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
comply with the terms of such Lender Letter of Credit; provided that, in the
--------
case of any payment by Agent or a Lender under any Lender Letter of Credit,
Agent or such Lender has not acted with gross negligence or willful misconduct
(as determined by a court of competent jurisdiction) in determining that the
demand for payment under such Lender Letter of Credit complies on its face with
any applicable requirements for a demand for payment under such Lender Letter of
Credit.
(2) Nature of Lender's Duties. As between any Lender that
-------------------------
issues a Lender Letter of Credit (an "Issuing Lender"), on the one hand, and all
Lenders on the other hand, all Lenders assume all risks of the acts and
omissions of, or misuse of any Lender Letter of Credit by the beneficiary
thereof. In furtherance and not in limitation of the foregoing, neither Agent
nor any Issuing Lender shall be responsible: (a) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document by any party
in connection with the application for and issuance of any Lender Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (b) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Lender Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (c) for failure of the beneficiary of any
Lender Letter of Credit to comply fully with conditions required in order to
demand payment thereunder; provided that, in the case of any payment under any
--------
such Lender Letter of Credit, any Issuing Lender has not acted with gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction) in determining that the demand for payment under any such Lender
Letter of Credit complies on its face with any applicable requirements for a
demand for payment thereunder; (d) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (e) for errors in
interpretation of technical terms; (f) for any loss or delay in the transmission
or otherwise of any document required in order to make a payment under any such
Lender Letter of Credit; (g) for the credit of the proceeds of any drawing under
any such Lender Letter of Credit; and (h) for any consequences arising from
causes beyond the control of Agent or any Lender as the case may be.
(3) Liability. Subject to Section 2.1(I)(2) above, in
--------- -----------------
furtherance and extension of and not in limitation of, the specific provisions
herein above set forth, any action taken or omitted by Agent or any Lender under
or in connection with any Lender Letter of Credit, if taken or omitted in
11
good faith, shall not put Agent or any Lender under any resulting liability to
Borrower or any other Lender.
(J) Availability of a Lender's Pro Rata Share.
-----------------------------------------
(1) Lender's Amounts Available on a Funding Date. Unless
--------------------------------------------
Agent receives written notice from a Lender on or prior to any Funding Date that
such Lender will not make available to Agent as and when required such Lender's
Pro Rata Share of any requested Loan or Advance, Agent may assume that each
Lender will make such amount available to Agent in immediately available funds
on the Funding Date and Agent may (but shall not be so required), in reliance
upon such assumption, make available to Borrower on such date a corresponding
amount.
(2) Lender's Failure to Fund. A Defaulting Lender shall
------------------------
pay interest to Agent at the Federal Funds Effective Rate on the Defaulted
Amount from the Business Day following the applicable Funding Date of such
Defaulted Amount until the date such Defaulted Amount is paid to Agent. A notice
of Agent submitted to any Lender with respect to amounts owing under this
subsection shall be conclusive, absent manifest error. If such amount is not
paid when due to Agent, Agent, at its option, may notify Borrower of such
failure to fund and, upon demand by Agent, Borrower shall pay the unpaid amount
to Agent for Agent's account, together with interest thereon for each day
elapsed since the date of such borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Loan made by the other Lenders on
such Funding Date. The failure of any Lender to make available any portion of
its Commitment on any Funding Date or to fund its participation in a Lender
Letter of Credit or Swingline Loan shall not relieve any other Lender of any
obligation hereunder to fund such Lender's Commitment on such Funding Date or to
fund any such participation, but no Lender shall be responsible for the failure
of any other Lender to honor its Commitment on any Funding Date or to fund any
participation to be funded by any other Lender.
(3) Payments to a Defaulting Lender. Agent shall not be
-------------------------------
obligated to transfer to a Defaulting Lender any payment made by Borrower to
Agent or any amount otherwise received by Agent for application to the
Obligations nor shall a Defaulting Lender be entitled to the sharing of any
interest, fees or payments hereunder.
(4) Defaulting Lender's Right to Vote. For purposes of
---------------------------------
voting or consenting to matters with respect to (i) the Loan Documents or (ii)
any other matter concerning the Loans, a Defaulting Lender shall be deemed not
to be a "Lender" and such Lender's Commitments and outstanding Loans and
Advances shall be deemed to be zero.
12
2.2 Interest.
--------
(A) Rate of Interest. From the date the Loans are made and the
----------------
date the other Obligations become due the Loans and the other Obligations shall
bear interest at the applicable rates set forth below (collectively, the
"Interest Rate"):
(1) The Revolving Loan and all other Obligations for which
no other interest rate is specified shall bear interest as follows:
(a) If a Base Rate Loan, then at the sum of the Base
Rate plus the Base Rate Margin applicable to Revolving Loans.
(b) If a LIBOR Loan, then at the sum of the LIBOR plus
the LIBOR Margin applicable to Revolving Loans.
(2) The Swingline Loan shall bear interest at the sum of the
Base Rate plus the Base Rate Margin applicable to the Swingline Loan.
Subject to the provisions of subsection 2.1(F), Borrower shall
designate to Agent whether a Loan shall be a Base Rate or LIBOR Loan at the time
a Notice of Borrowing is given pursuant to subsection 2.1(F). Such designation
by Borrower may be changed from time to time pursuant to subsection 2.2(D). If
on any day a Loan or a portion of any Loan is outstanding with respect to which
notice has not been delivered to Agent in accordance with the terms of this
Agreement specifying the basis for determining the rate of interest or if LIBOR
has been specified and no LIBOR quote is available, then for that day that Loan
or portion thereof shall bear interest determined by reference to the Base Rate.
"Base Rate Margin" shall mean (i) as of the Closing Date, 1.25%
per annum, and (ii) thereafter, as of February 1, May 1, August 1 and November 1
of each year (each, an "Adjustment Date"), commencing on August 1, 2002, the
Base Rate Margin shall be adjusted, if necessary, to the applicable percent per
annum set forth in the pricing table set forth on Schedule 2.2(A) hereto
corresponding to the Average Daily Availability for the three-month period
ending on the last day of the most recently completed calendar quarter prior to
the applicable Adjustment Date (each such period, a "Calculation Period")
calculated in the manner described in Financial Covenants Rider hereto.
"LIBOR Margin" shall mean (i) as of the Closing Date, 2.75% per
annum, and (ii) thereafter, as of each Adjustment Date, commencing on August 1,
2002, the LIBOR Margin shall be adjusted, if necessary, to the applicable
percent per annum set forth in the pricing table set forth on Schedule 2.2(A)
hereto corresponding to the Average Daily Availability for the applicable
Calculation Period.
13
If after the initial Adjustment Date the Borrower shall fail to
deliver a Compliance and Pricing Certificate by the date required pursuant to
the Reporting Rider effective as of the tenth (10th) Business Day following the
date on which such Compliance and Pricing Certificate was due, each applicable
Base Rate Margin and each applicable LIBOR Margin shall be conclusively presumed
to equal the highest applicable Base Rate Margin and the highest applicable
LIBOR Margin specified in the pricing table set forth on Schedule 2.2(A) hereto
until the date of delivery of the Compliance and Pricing Certificate.
After the occurrence and during the continuance of an Event of
Default (i) the Loans and all other Obligations shall, at the election of Agent
or Requisite Lenders, bear interest at a rate per annum equal to two percent
(2%) plus the applicable Interest Rate (the "Default Rate"), (ii) each LIBOR
Loan shall automatically convert to a Base Rate Loan at the end of any
applicable Interest Period and (iii) no Loans may be converted to LIBOR Loans.
If an Event of Default has occurred and is continuing on an Adjustment Date, no
reduction in the Base Rate Margin or LIBOR Margin shall occur on such Adjustment
Date.
(B) Computation and Payment of Interest. Interest on the Loans
-----------------------------------
and all other Obligations shall be computed on the daily principal balance on
the basis of a three hundred sixty (360) day year for the actual number of days
elapsed. In computing interest on any Loan, the date of funding of the Loan or
the first (1st) day of an Interest Period applicable to such Loan or, with
respect to a Base Rate Loan being converted from a LIBOR Loan, the date of
conversion of such LIBOR Loan to such Base Rate Loan, shall be included; and the
date of payment of such Loan or the expiration date of an Interest Period
applicable to such Loan, or with respect to a Base Rate Loan being converted to
a LIBOR Loan, the date of conversion of such Base Rate Loan to such LIBOR Loan,
shall be excluded; provided that if a Loan is repaid on the same day on which it
is made, one (1) day's interest shall be paid on that Loan. Interest on Base
Rate Loans and all other Obligations other than LIBOR Loans shall be payable to
Agent for the benefit of Lenders monthly in arrears on the first (1st) day of
each month, on the date of any prepayment of Loans, and at maturity, whether by
acceleration or otherwise. Interest on LIBOR Loans shall be payable to Agent for
the benefit of Lenders on the last day of the applicable Interest Period for
such Loan, on the date of any prepayment of the Loans, and at maturity, whether
by acceleration or otherwise. In addition, for each LIBOR Loan having an
Interest Period longer than three (3) months, interest accrued on such Loan
shall also be payable on the last day of each three (3) month interval during
such Interest Period.
(C) Interest Laws. Notwithstanding any provision to the
-------------
contrary contained in this Agreement or any other Loan Document, Borrower
14
shall not be required to pay, and neither Agent nor any Lender shall be
permitted to collect, any amount of interest in excess of the maximum amount of
interest permitted by applicable law ("Excess Interest"). If any Excess Interest
is provided for or determined by a court of competent jurisdiction to have been
provided for in this Agreement or in any other Loan Document, then in such
event: (1) the provisions of this subsection shall govern and control; (2)
neither Borrower nor any other Loan Party shall be obligated to pay any Excess
Interest; (3) any Excess Interest that Agent or any Lender may have received
hereunder shall be, at such Lender's option, (a) applied as a credit against the
outstanding principal balance of the Obligations or accrued and unpaid interest
(not to exceed the maximum amount permitted by law), (b) refunded to the payor
thereof, or (c) any combination of the foregoing; (4) the interest rate(s)
provided for herein shall be automatically reduced to the maximum lawful rate
allowed from time to time under applicable law (the "Maximum Rate"), and this
Agreement and the other Loan Documents shall be deemed to have been and shall
be, reformed and modified to reflect such reduction; and (5) neither Borrower
nor any Loan Party shall have any action against Agent or any Lender for any
damages arising out of the payment or collection of any Excess Interest.
Notwithstanding the foregoing, if for any period of time interest on any
Obligations is calculated at the Maximum Rate rather than the applicable rate
under this Agreement, and thereafter such applicable rate becomes less than the
Maximum Rate, the rate of interest payable on such Obligations shall remain at
the Maximum Rate until each Lender shall have received the amount of interest
which such Lender would have received during such period on such Obligations had
the rate of interest not been limited to the Maximum Rate during such period.
(D) Conversion or Continuation. Subject to the other provisions
--------------------------
of this Agreement, Borrower shall have the option to (1) convert at any time all
or any part of outstanding Loans equal to $2,500,000 and integral multiples of
$500,000 in excess of that amount from Base Rate Loans to LIBOR Loans or (2)
upon the expiration of any Interest Period applicable to a LIBOR Loan, to (a)
continue all or any portion of such LIBOR Loan equal to $2,500,000 and integral
multiples of $500,000 in excess of that amount as a LIBOR Loan or (b) convert
all or any portion of such LIBOR Loan to a Base Rate Loan. The succeeding
Interest Period(s) of such continued or converted Loan commence on the last day
of the Interest Period of the Loan to be continued or converted; provided that
no outstanding Loan may be continued as, or be converted into, a LIBOR Loan,
when any Event of Default or Default has occurred and is continuing.
Borrower shall deliver a Notice of Borrowing with respect to any
such conversion/continuation to Agent no later than 11:00 a.m. (Chicago time) at
least three (3) Business Days in advance of the proposed conversion/continuation
date. The Notice of Borrowing with respect to such conversion/continuation shall
certify: (1) the proposed
15
conversion/continuation date (which shall be a Business Day); (2) the amount of
the Loan to be converted/continued; (3) the nature of the proposed
conversion/continuation; (4) in the case of conversion to, or a continuation of,
a LIBOR Loan, the requested Interest Period; and (5) that no Default or Event of
Default has occurred and is continuing or would result from the proposed
conversion/continuation.
In lieu of delivering a Notice of Borrowing with respect to any
such conversion/continuation, Borrower may give Agent telephonic notice by the
required time of any proposed conversion/continuation under this subsection
----------
2.2(D); provided that such notice shall be promptly confirmed in writing by
------
delivery of a Notice of Borrowing (in form and substance described herein) with
respect to such conversion/continuation to Agent on or before the proposed
conversion/continuation date.
Neither Agent nor any Lender shall incur any liability to
Borrower in acting upon any telephonic notice or a Notice of Borrowing referred
to above that Agent believes in good faith to have been given by an officer or
other person authorized to act on behalf of Borrower or for otherwise acting in
good faith under this subsection 2.2(D).
------------------
2.3 Fees.
----
(A) Unused Line Fee. Borrower shall pay to Agent, for the
---------------
benefit of Lenders, a fee in an amount equal to the Revolving Loan Commitment
less the sum of (i) the average daily balance of each of the Revolving Loan and
the Swingline Loan, plus, (ii) the average daily face amount of the Letter of
Credit Reserve during the preceding month, multiplied by (iii) 0.50% per annum.
Such fee to be calculated on the basis of a three hundred sixty (360) day year
for the actual number of days elapsed and to be payable monthly in arrears on
the first (1st) day of each month following the Closing Date.
(B) Letter of Credit Fees. Borrower shall pay to Agent a fee
---------------------
with respect to the Lender Letters of Credit (i) for the benefit of all Lenders
with a Revolving Loan Commitment (based on their respective Pro Rata Share) in
the amount of the average daily amount of Letter of Credit Liability outstanding
during such month multiplied by the per annum percentage equal to the LIBOR
Margin at such time in effect, and (ii) for the account of Agent a fronting fee
for each Letter of Credit issued or obtained by Agent from the date of issuance
to the date of termination equal to the average daily amount of Letter of Credit
Liability with respect to such Letters of Credit outstanding during such month
multiplied by twenty-five one hundredths of one percent (0.25%) per annum. Such
fees will be calculated on the basis of a three hundred sixty (360) day year for
the actual number of days elapsed and will be payable monthly in arrears on the
first (1st) day of each month. Borrower shall also
16
reimburse Agent for any and all fees and expenses, if any, paid by Agent or any
Lender to the issuer of any Bank Letter of Credit.
(C) Prepayment Fees. If during the first Loan Year Borrower
---------------
establishes a credit facility with another Person and in connection therewith
terminates the credit facility provided for herein and prepays the Obligations
in full, Borrower, at the time of prepayment, shall pay to Agent for the benefit
of Lenders, as compensation for the costs of being prepared to make funds
available to Borrower under this Agreement, and not as a penalty, an amount
determined by multiplying 1.00% by the amount of the Revolving Loan Commitment.
No prepayment fee shall be payable during any Loan Year after the first Loan
Year.
(D) Audit Fees. Borrower agrees to pay all fees and expenses
----------
of the firm or individual(s) engaged by Agent to perform audits of Borrower's
operations. Notwithstanding the foregoing, if Agent uses its internal auditors
to perform any such audit, Borrower agrees to pay to Agent, for its own account,
an audit fee with respect to each such audit equal to $750 per internal auditor
per day or any portion thereof, together with all out of pocket expenses.
Exclusive of any audits performed in connection with the credit facility
initially established by this Agreement and the initial transactions
contemplated by this Agreement, as long as no Event of Default has occurred and
is continuing and the Average Daily Availability for the three-month period
ending on the last day of the most recent calendar month is at least
$10,000,000.00, Borrower shall not be required to pay for more than two such
audits during any Loan Year of Borrower and the aggregate amount of audit fees
required to be paid by Borrower during any Loan Year shall be limited to
$50,000.00, but if an Event of Default has occurred and is continuing or the
Average Daily Availability in the above-described period is less than the above
indicated amount, Borrower shall be required to pay for up to one such audit
during each quarter of each Loan Year of Borrower, and there shall be no
$50,000.00 cap on audit fees payable by Borrower during any individual Loan
Year.
(E) Other Fees and Expenses. Borrower shall pay to Agent, for
-----------------------
its own account, all charges for returned items and all other bank charges
incurred by Agent, as well as Agent's standard wire transfer charges for each
wire transfer made under this Agreement.
(F) Fee Letter. Borrower shall pay to ▇▇▇▇▇▇, individually,
----------
the fees specified in that certain letter agreement dated between Borrower and
▇▇▇▇▇▇ in the amounts and at the times specified therein.
17
2.4 Payments and Prepayments.
------------------------
(A) Manner and Time of Payment. In its sole discretion, Agent
--------------------------
may elect to honor the automatic requests by Borrower for Revolving Advances for
all principal, Lender Letter of Credit reimbursement obligations, interest,
fees, compensation and any other amounts due hereunder or under any of the other
Loan Documents on their applicable due dates pursuant to subsection 2.1 (F), up
------------------
to the Revolving Loan Commitment of all Revolving Loan Lenders, and the proceeds
of each such Revolving Advance, if made, shall be applied as a direct payment of
the relevant Obligation. To the extent such amounts exceed the Revolving Loan
Commitment of all Revolving Loan Lenders, or if Agent elects to ▇▇▇▇ Borrower
for any amount due hereunder or under any of the other Loan Documents, such
amount shall be immediately due and payable with interest thereon as provided
herein. All payments made by Borrower with respect to the Obligations shall be
made without deduction, defense, setoff or counterclaim. All payments to Agent
hereunder shall, unless otherwise directed by Agent, be made to Agent's Account
or in accordance with subsection 4.25. All proceeds remitted to Agent's Account
---------------
shall be credited to the Obligations on the first Business Day following the day
such proceeds were received. For the purpose of calculating interest on the
Obligations, all funds shall be deemed received on the first Business Day
following the day such proceeds were received.
(B) Mandatory Prepayments.
---------------------
(1) Overadvance. At any time that the sum of the Revolving
-----------
Loan exceeds the Maximum Revolving Loan Amount, Borrower shall, promptly repay
the Revolving Loan to the extent necessary to reduce the aggregate principal
balance to an amount equal to or less than the Maximum Revolving Loan Amount.
(2) Prepayments from Proceeds of Asset Dispositions (other
------------------------------------------------------
than Insurance Proceeds and Condemnation Proceeds). Immediately upon receipt
--------------------------------------------------
by Borrower or any of its domestic Subsidiaries of Net Proceeds of any Asset
Disposition (in one or a series of related transactions), which proceeds exceed
$100,000 (it being understood that if the Net Proceeds exceed $100,000 within
any 12-month period the portion above $100,000, shall be subject to this
subsection 2.4(B)(2)), Borrower shall prepay the Obligations in an amount equal
---------------------
to such proceeds. All such prepayments shall be applied to the Loans in
accordance with subsection 2.4(E). Notwithstanding the foregoing, Net Proceeds
-----------------
from insurance policies shall be governed by the provisions of subsection
----------
2.4(B)(3).
---------
(3) Prepayments from Insurance and Condemnation Proceeds.
----------------------------------------------------
Immediately upon receipt by Borrower or any of its domestic Subsidiaries of Net
Proceeds from any insurance policy or from a condemnation
18
award, Borrower shall prepay the Obligations in an amount equal to such
proceeds. All such prepayments shall be applied to the Loans in accordance with
subsection 2.4(B); provided, however, if Borrower reasonably expects such
----------------- -------- -------
insurance proceeds or condemnation award proceeds to begin to be used within 180
days to repair or replace the assets as to which such insurance proceeds or
condemnation award proceeds are paid with like assets, an amount equal to the
amount of the insurance proceeds or condemnation award proceeds shall be placed
in a cash collateral account pursuant to which Agent, on behalf of the Lenders,
shall have a first priority Lien, and sole dominion and control, and Borrower
may, so long as no Event of Default shall have occurred and be continuing, be
disbursed such proceeds, but only for such repair or replacement. If Borrower
fails to begin commencement of such repair or replacement within one hundred
eighty (180) days (or thereafter at any time does not continue to diligently
pursue completion of such repair or replacement), Borrower hereby authorizes
Agent and Lenders to liquidate the cash collateral account and apply the
proceeds from such liquidation to the Obligations. In addition to the other
components of the Borrowing Base, at any particular date an amount equal to
ninety percent (90%) of the amount in such cash collateral account at such date
shall be added to the Borrowing Base.
(4) Prepayments from Issuance of Securities. Within three
---------------------------------------
Business Days of the receipt by Borrower or any of its Subsidiaries of the cash
Net Proceeds of the issuance of equity securities (other than proceeds from the
issuance of equity securities to Borrower to WCAS or any Affiliate of WCAS or to
employees of the Borrower, WCAS or any such Affiliate, provided that the
proceeds from such issuance are not used in a manner which violates the
provisions of this Agreement), Borrower shall prepay the Loans in an amount
equal to such proceeds, net of underwriting discounts and commissions and other
reasonable costs associated therewith. All such prepayments shall be applied to
the Loans in accordance with subsection 2.4(E).
-----------------
(C) Voluntary Prepayments and Repayments. Borrower may, at any
------------------------------------
time upon not less than three (3) Business Days prior notice to Agent, terminate
in full or in part the Revolving Loan Commitment; provided, however, the
-------- -------
Revolving Loan Commitment may not be terminated in full by Borrower until all
Obligations are paid in full. At any time the Borrower may prepay the Loans, in
whole or in part, without premium or penalty (unless payment of such premium is
required by the provision of subsection 2.3(C)) upon not less than one Business
-----------------
Days' prior written notice to Agent (or three Business Days' prior notice in the
case of a prepayment of any LIBOR Loans); provided, however, that
-------- -------
notwithstanding the foregoing, Borrower shall be liable for any amounts payable
by Borrower pursuant to subsection 2.12 because of prepayment of any LIBOR
---------------
Loans. Any prepayment of the Obligations permitted in this subsection 2.4(C)
-----------------
shall be subject to the payment of all fees set forth in subsection 2.3,
---------------
including, without limitation, the fees set forth in subsection 2.3(C) and the
-----------------
payment of any amounts owing pursuant to subsection 2.12
---------------
19
resulting from such prepayment. In the event any Lender Letters of Credit are
outstanding at the time that Borrower prepays the Obligations and desires to
terminate the Revolving Loan Commitment, Borrower shall cause Agent and each
Lender to be released from all liability under any Lender Letters of Credit or,
at Agent's option, Borrower shall (1) deposit with Agent for the benefit of all
Lenders with a Revolving Loan Commitment cash in an amount equal to one hundred
and five percent (105%) of the aggregate outstanding Letter of Credit Liability
to be available to Agent to reimburse payments of drafts drawn under such Lender
Letters of Credit and pay any fees and expenses related thereto and (2) prepay
the fees payable under subsection 2.3(B) with respect to such Lender Letters of
-----------------
Credit for the full remaining terms of such Lender Letters of Credit. Upon
termination of any such Letter of Credit, the unearned portion of such prepaid
fee attributable to such Letter of Credit shall be refunded to Borrower.
(D) Payments on Business Days. Whenever any payment to be made
-------------------------
hereunder shall be stated to be due on a day that is not a Business Day, the
payment may be made on the next succeeding Business Day and such extension of
time shall be included in the computation of the amount of interest or fees due
hereunder.
(E) Application of Prepayment Proceeds. With respect to the
----------------------------------
prepayments described in subsections 2.4(B)(2) and 2.4(B)(3), such payments
-----------------------------------
shall be applied to reduce the outstanding principal balance of the Revolving
Loans but not as a permanent reduction of the Revolving Loan Commitment.
Considering each type of Loan being prepaid separately, any such prepayment
shall be applied first to Base Rate Loans of the type required to be prepaid
before application to LIBOR Loans of the type required to be prepaid.
2.5 Term of this Agreement. This Agreement shall be effective until
----------------------
the earlier of (a) the fifth anniversary of the Closing Date and (b) the
acceleration of all Obligations pursuant to subsection 8.3 (the "Termination
--------------
Date"). The Commitments shall terminate (unless earlier terminated pursuant to
the terms hereunder) upon the Termination Date and all Obligations shall become
immediately due and payable without notice or demand. Notwithstanding any
termination, until all Obligations have been fully paid and satisfied, Agent, on
behalf of itself and Lenders, shall be entitled to retain security interests in
and liens upon all Collateral, and even after payment of all Obligations
hereunder, Borrower's obligation to indemnify Agent and each Lender in
accordance with the terms hereof shall continue.
2.6 Statements. Agent shall render a monthly statement of account to
----------
Borrower within twenty (20) days after the end of each month. Such statement of
account shall constitute an account stated unless Borrower makes written
objection thereto within forty-five (45) days from the date such statement is
mailed to Borrower. Agent shall record in its books and records, including
20
computer records, (a) all Loans, interest charges and payments thereof, (b) all
Letter of Credit Liability, (c) the charging and payment of all fees, costs and
expenses and (d) all other debits and credits pursuant to this Agreement. The
balance in the loan accounts shall constitute presumptive evidence, absent
manifest error, of the accuracy of the information contained therein; provided,
--------
however, that any failure by Agent to so record shall not limit or affect the
-------
Borrower's obligation to pay.
2.7 Grant of Security Interest. To secure the payment and
--------------------------
performance of the Obligations, including all renewals, extensions,
restructurings and refinancings of any or all of the Obligations, Borrower
hereby grants to Agent, on behalf of Agent and Lenders, a continuing security
interest, lien and mortgage in and to all right, title and interest of Borrower
in all of Borrower's personal and real property, whether now owned or existing
or hereafter acquired or arising and regardless of where located (all being
collectively referred to as the "Collateral") including, without limitation, (A)
Accounts, and all guaranties and security therefor, and all goods and rights
represented thereby or arising therefrom including the rights of stoppage in
transit, replevin and reclamation; (B) Inventory; (C) general intangibles (as
defined in the UCC); (D) documents (as defined in the UCC) or other receipts
covering, evidencing or representing goods; (E) instruments (as defined in the
UCC); (F) chattel paper (as defined in the UCC); (G) Equipment; (H) Mortgaged
Property; (I) investment property (as defined in the UCC) including, without
limitation, all securities (certificated and uncertificated) security accounts,
security entitlements, commodity contracts and commodity accounts; (J)
Intellectual Property; (K) all deposit accounts of Borrower maintained with any
bank or financial institution; (L) all cash and other monies and property of
Borrower in the possession or under the control of Agent, any Lender or any
participant; (M) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that at any
time evidence or contain information relating to any of the property described
above or are otherwise necessary or helpful in the collection thereof or
realization thereon; and (N) proceeds and products of all or any of the property
described above, including, without limitation, the proceeds of any insurance
policies covering any of the above described property. Notwithstanding the
forgoing provisions of this subsection 2.7, (i) in the case of foreign
Subsidiaries of Borrower, 65% of all the issued capital stock of such Subsidiary
shall constitute "Collateral" and (ii) the All Obligations Collateral (as
defined below) shall secure payment and performance of all the Obligations, but
the amount of the Obligations secured by all the other Collateral (i.e.
Collateral which does not constitute All Obligations Collateral and which shall
be referred to in this Agreement as the "Non-All Obligations Collateral") shall
at no specific date exceed the Unsecured Senior Notes Permitted Liens
Limitation. The term "All Obligations Collateral" shall mean all rights, title
and interest of Borrower, whether now owned or existing or hereafter acquired or
arising and
21
regardless of where located in all "accounts receivable" and "inventory" as such
terms are defined in the Unsecured Senior Notes Indenture.
2.8 Yield Protection.
----------------
(A) Capital Adequacy and Other. In the event any Lender shall
--------------------------
have determined that the adoption after the date hereof of any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy, reserve requirements or similar requirements or
compliance by such Lender or any corporation controlling such Lender with any
request or directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) from any central bank or governmental
agency or body having jurisdiction does or shall have the effect of increasing
the amount of capital, reserves or other funds required to be maintained by such
Lender or any corporation controlling such Lender and thereby reducing the rate
of return on such Lender's or such corporation's capital as a consequence of its
obligations hereunder, then Borrower shall within fifteen (15) days after notice
and demand from such Lender (together with the certificate referred to in the
next sentence and with a copy to Agent) pay to Agent, for the account of such
Lender, additional amounts sufficient to compensate such Lender for such
reduction. A certificate as to the amount of such cost and showing the basis of
the computation of such cost submitted by such Lender to Borrower shall, absent
manifest error, be final, conclusive and binding for all purposes.
(B) Increased LIBOR Funding Costs. If, after the date hereof, the
-----------------------------
introduction of, change in or interpretation of any law, rule, regulation,
treaty or directive would impose or increase reserve requirements (other than as
taken into account in the definition of LIBOR) or otherwise increase the cost to
any Lender of making or maintaining a LIBOR Loan, then Borrower shall from time
to time within fifteen (15) days after notice and demand from such affected
Lenders (together with the certificate referred to in the next sentence and with
a copy to Agent) pay to Agent, for the account of such affected Lenders,
additional amounts sufficient to compensate such Lenders for such increased
cost. A certificate as to the amount of such cost and showing the basis of the
computation of such cost submitted by such affected Lenders to Borrower and
Agent shall, absent manifest error, be final, conclusive and binding for all
purposes.
2.9 Taxes.
-----
(A) No Deductions. Any and all payments or reimbursements made
-------------
hereunder shall be made free and clear of and without deduction for any and all
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto (all such taxes, levies, imposts, deductions,
22
charges or withholdings and all liabilities with respect thereto referred to
herein as "Tax Liabilities"; excluding, however, taxes imposed on the net income
of any Lender or Agent by the jurisdiction under the laws of which Agent or such
Lender is organized or doing business or any political subdivision thereof and
taxes imposed on its net income by the jurisdiction of Agent's or such Lender's
applicable lending office or any political subdivision). If Borrower shall be
required by law to deduct any such Tax Liabilities from or in respect of any sum
payable hereunder to Agent or any Lender, then the sum payable hereunder shall
be increased as may be necessary so that, after making all required deductions,
Agent or such Lender receives an amount equal to the sum it would have received
had no such deductions been made.
(B) Changes in Tax Laws. In the event that, subsequent to the
-------------------
Closing Date, (i) any changes in any existing law, regulation, treaty or
directive or in the interpretation or application thereof, (ii) any new law,
regulation, treaty or directive enacted or any interpretation or application
thereof, or (iii) compliance by Lender with any request or directive (whether or
not having the force of law) from any governmental authority, agency or
instrumentality:
(1) does or shall subject Agent or any Lender to any tax of any kind
whatsoever with respect to this Agreement, the other Loan Documents or any
Loans made or Lender Letters of Credit issued hereunder, or change the
basis of taxation of payments to Agent or such Lender of principal, fees,
interest or any other amount payable hereunder (except for net income
taxes, or franchise taxes imposed in lieu of net income taxes, imposed
generally by federal, state or local taxing authorities with respect to
interest or commitment or other fees payable hereunder or changes in the
rate of tax on the overall net income of Agent or such Lender); or
(2) does or shall impose on Agent or any Lender any other condition or
increased cost in connection with the transactions contemplated hereby or
participations herein; and the result of any of the foregoing is to
increase the cost to Agent or such Lender of issuing any Lender Letter of
Credit or making or continuing any Loan hereunder, as the case may be, or
to reduce any amount receivable hereunder;
then, in any such case, Borrower shall promptly pay to Agent or such Lender,
upon its notice and demand, any additional amounts necessary to compensate Agent
or such Lender, on an after-tax basis, for such additional cost or reduced
amount receivable, as determined by Agent or such Lender with respect to this
Agreement or the other Loan Documents. If Agent or any Lender becomes entitled
to claim any additional amounts pursuant to this subsection, it shall promptly
notify Borrower of the event by reason of which Agent or such Lender has become
so entitled (with any such Lender concurrently notifying Agent). A certificate
as to any additional amounts payable pursuant to the foregoing
23
sentence submitted by Agent or any Lender to Borrower shall, absent manifest
error, be final, conclusive and binding for all purposes.
(C) Foreign Lenders. Each Lender organized under the laws of a
---------------
jurisdiction outside the United States (a "Foreign Lender") as to which payments
to be made under this Agreement are exempt from United States withholding tax or
are subject to United States withholding tax at a reduced rate under an
applicable statute or tax treaty shall provide to Borrower and Agent (i) a
properly completed and executed Internal Revenue Service Form W-8BEN or Form W-
8ECI or other applicable form, certificate or document prescribed by the
Internal Revenue Service of the United States of America certifying as to such
Foreign Lender's entitlement to such exemption or reduced rate of withholding
with respect to payments to be made to such Foreign Lender under this Agreement,
(a "Certificate of Exemption"), or (ii) a letter from any such Foreign Lender
stating that it is not entitled to any such exemption or reduced rate of
withholding (a "Letter of Non-Exemption"). Prior to becoming a Lender under
this Agreement and within fifteen (15) days after a reasonable written request
by Borrower or Agent from time to time thereafter, each Foreign Lender that
becomes a Lender under this Agreement shall provide a Certificate of Exemption
or a Letter of Non-Exemption to Borrower and Agent.
If a Foreign Lender is entitled to an exemption with respect to
payments to be made to such Foreign Lender under this Agreement (or to a reduced
rate of withholding) and does not provide a Certificate of Exemption to Borrower
and Agent within the time periods set forth in the preceding paragraph, Borrower
shall withhold taxes from payments to such Foreign Lender at the applicable
statutory rates and Borrower shall not be required to pay any additional amounts
as a result of such withholding; provided, however, that all such withholding
-----------------
shall cease upon delivery by such Foreign Lender of a Certificate of Exemption
to Borrower and Agent.
2.10 Required Termination and Prepayment. If on any date any Lender
-----------------------------------
shall have reasonably determined (which determination shall be final and
conclusive and binding upon all parties) that the making or continuation of its
LIBOR Loans has become unlawful or impossible by compliance by such Lender in
good faith with any law, governmental rule, regulation or order (whether or not
having the force of law and whether or not failure to comply therewith would be
unlawful), then, and in any such event, that Lender shall promptly give notice
(by telephone confirmed in writing) to Borrower and Agent of that determination.
Subject to prior withdrawal of a Notice of Borrowing or prepayment of LIBOR
Loans as contemplated by subsection 2.12, the obligation of such Lender to make
---------------
or maintain its LIBOR Loans during any such period shall be terminated at the
earlier of the termination of the Interest Period then in effect or when
required by law and Borrower shall no later than the termination of the Interest
Period in effect at the time any such determination pursuant to this subsection
----------
2.10 is made or, earlier when
----
24
required by law, repay or prepay LIBOR Loans together with all interest accrued
thereon or convert LIBOR Loans to Base Rate Loans.
2.11 Optional Prepayment/Replacement of Lenders. Within fifteen (15)
------------------------------------------
days after receipt by Borrower of: (i) written notice and demand from any Lender
for payment of additional costs as provided in subsection 2.8 or subsection 2.9,
-------------- --------------
or (ii) written notice of any Lender's inability to make LIBOR Loans as provided
in subsection 2.10, (any such Lender demanding such payment or having such
---------------
inability being referred to herein as an "Affected Lender"), Borrower may, at
its option notify Agent and such Affected Lender of its intention to take one of
the actions set forth herein in subparagraphs (A) or (B) below.
(A) Replacement of an Affected Lender. Borrower may obtain, at
---------------------------------
Borrower's expense, a replacement Lender ("Replacement Lender") for an Affected
Lender, which Replacement Lender shall be reasonably satisfactory to Agent. In
the event Borrower obtains a Replacement Lender that will purchase all
outstanding Obligations owed to such Affected Lender and assume its Commitments
hereunder within ninety (90) days following notice of Borrower's intention to do
so, the Affected Lender shall sell and assign its Loans and Commitments to such
Replacement Lender in accordance with the provisions of subsection 9.5 (it being
--------------
understood that no administrative fee shall be payable under subsection 9.5 in
--------------
connection with such assignment); provided, however, Borrower has in any case
-------- -------
where such replacement occurs as the result of a demand for payment of certain
costs pursuant to subsection 2.8 or subsection 2.9, paid all increased costs for
-------------- --------------
which such Affected Lender is entitled to under subsection 2.8 or subsection 2.9
-------------- --------------
through the date of such sale and assignment; or
(B) Prepayment of an Affected Lender. Borrower may prepay in
--------------------------------
full all outstanding Obligations owed to an Affected Lender and terminate such
Affected Lender's Commitments. Borrower shall, within ninety (90) days following
notice of its intention to do so, prepay in full all outstanding Obligations
owed to such Affected Lender, including such Affected Lender's increased costs
for which it is entitled to reimbursement under this Agreement through the date
of such prepayment, but excluding the prepayment fee referenced in subsection
----------
2.3(C) and terminate such Affected Lender's Commitments.
------
2.12 Compensation. Borrower shall promptly compensate Agent for the
------------
benefit of Lenders (Agent's calculation of such amounts shall be in accordance
with its internal credit policies and reasonable commercial banking practices
and, absent manifest error, be conclusive and binding upon all parties hereto),
for any losses, expenses and liabilities including, without limitation, any loss
(including interest paid) sustained by such Lender in connection with the re-
employment of such funds: (i) if for any reason (other than a default by any
25
Lender) a borrowing of any LIBOR Loan does not occur on a date specified
therefor in a Notice of Borrowing or a telephonic request of borrowing by
Borrower; (ii) if any prepayment of any of its LIBOR Loans occurs on a date that
is not the last day of an Interest Period applicable to that Loan (regardless of
the source of such prepayment and whether voluntary, by acceleration or
otherwise); (iii) if any prepayment of any of its LIBOR Loans is not made on any
date specified in a notice of prepayment given by Borrower; or (iv) as a
consequence of any other default by Borrower to repay its LIBOR Loans when
required by the terms of this Agreement; provided that during the period while
any such amounts have not been paid, Agent may, in its sole discretion, (a) in
accordance with subsection 2.4(A), elect to honor the automatic request by
------------------
Borrower for a Revolving Advance for such amount pursuant to subsection 2.1(F)
-----------------
or (b) reserve an equal amount from amounts otherwise available to be borrowed
under the Revolving Loan.
2.13 Booking of LIBOR Loans. Each Lender may make, carry or transfer
----------------------
LIBOR Loans at, to, or for the account of, any of its branch offices or the
office of an affiliate of such Lender.
2.14 Assumptions Concerning Funding of LIBOR Loans . Calculation of
---------------------------------------------
all amounts payable to each Lender under subsection 2.12 shall be made as though
---------------
each Lender had actually funded its relevant LIBOR Loan through the purchase of
a LIBOR deposit bearing interest at LIBOR in an amount equal to the amount of
that LIBOR Loan and having maturity comparable to the relevant Interest Period
and through the transfer of such LIBOR deposit from an offshore office to a
domestic office in the United States of America; provided, however, each Lender
-------- -------
may fund each of its LIBOR Loans in any manner it sees fit and the foregoing
assumption shall be utilized only for the calculation of amounts payable under
subsection 2.12.
---------------
SECTION 3. CONDITIONS TO LOANS
-------------------
The obligations of Agent and each Lender to make Loans and the obligation of
Agent or any Lender to issue Lender Letters of Credit on the Closing Date and on
each Funding Date are subject to satisfaction of all of the terms and conditions
set forth in this Agreement and in the Conditions Rider, attached hereto and the
accuracy of all the representations and warranties of Borrower and the other
Loan Parties set forth herein and in the other Loan Documents.
SECTION 4. BORROWER'S REPRESENTATIONS, WARRANTIES
--------------------------------------
AND CERTAIN COVENANTS
---------------------
To induce Agent and each Lender to enter into the Loan Documents, to
make and to continue to make Loans and to issue and to continue to issue Lender
Letters of Credit or risk participations to the banks that issue Bank
26
Letters of Credit, Borrower represents, warrants and covenants to Agent and each
Lender that the following statements are and will be true, correct and complete
and, unless specifically limited, shall remain so for so long as any of the
Commitments hereunder shall be in effect and until payment in full of all
Obligations:
4.1 Organization, Powers, Capitalization.
------------------------------------
(A) Organization and Powers. Each of the Loan Parties is a
-----------------------
Person duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization and qualified to do business in all states
where such qualification is required except where failure to be so qualified
could not reasonably be expected to have a Material Adverse Effect. Each of the
Loan Parties has all requisite organizational power and authority to own and
operate its properties, to carry on its business as now conducted and proposed
to be conducted and to enter into each Loan Document.
(B) Capitalization. As of the Closing Date, the authorized
--------------
capital stock or equivalent ownership interest of each of the Loan Parties and
its respective Subsidiaries is as set forth on Schedule 4.1(B), including all
---------------
preemptive or other outstanding rights, options, warrants, conversion rights or
similar agreements or understandings for the purchase or acquisition from any
Loan Party of any shares of capital stock or other securities or ownership
interests of any such entity. All issued and outstanding shares of capital stock
or equivalent ownership interests of each of the Loan Parties are duly
authorized and validly issued, fully paid, nonassessable, free and clear of all
Liens other than those in favor of Agent for the benefit of Agent and Lenders,
and such shares or equivalent ownership interests were issued in compliance with
all applicable state and federal and foreign laws concerning the issuance of
securities. Each Loan Party will promptly notify Lender of any material change
in its ownership or organizational structure.
4.2 Authorization of Borrowing, No Conflict. Borrower has the
---------------------------------------
corporate power and authority to incur the Obligations and to grant security
interests in the Collateral. On the Closing Date, the execution, delivery and
performance of the Loan Documents by each Loan Party signatory thereto will have
been duly authorized by all necessary organizational and owner action. The
execution, delivery and performance by each Loan Party of each Loan Document to
which it is a party and the consummation of the transactions contemplated by the
Loan Documents by each Loan Party do not contravene any applicable law, the
corporate organizational or regulatory documentation of any Loan Party or any
material agreement or order by which any Loan Party or any Loan Party's property
is bound. The Loan Documents are the legally valid and binding obligations of
the applicable Loan Parties respectively, each enforceable against the Loan
Parties, as applicable, in accordance with their respective terms.
27
4.3 Financial Condition. All financial statements concerning
-------------------
Borrower and its Subsidiaries furnished by or on behalf of Borrower or its
Subsidiaries to Agent or any Lender pursuant to this Agreement have been
prepared in accordance with GAAP consistently applied throughout the periods
involved (except as disclosed therein) and present fairly the financial
condition of Persons covered thereby as at the dates thereof and the results of
their operations for the periods then ended. The Projections delivered by
Borrower will be prepared in light of the past operations of the business of
Borrower and its Subsidiaries, and such Projections will represent the
reasonable good faith estimate of Borrower and its senior management concerning
the most probable course of its business as of the date such Projections are
delivered.
4.4 Indebtedness and Liabilities. As of the Closing Date, neither
----------------------------
Borrower nor any of its Subsidiaries has (a) any Indebtedness except as
reflected on the most recent financial statements delivered to Agent and
Lenders; or (b) any Liabilities other than as reflected on the most recent
financial statements delivered to Agent and Lenders or as incurred in the
ordinary course of business following the date of the most recent financial
statements delivered to Agent and Lenders. Borrower shall promptly deliver
copies of all notices given or received by Borrower and any of its Subsidiaries
with respect to noncompliance with any term or condition related to any
Subordinated Debt or any other Indebtedness in excess of $100,000, and shall
promptly notify Agent of any potential or actual Event of Default with respect
to any Subordinated Debt or any other Indebtedness in excess of $100,000.
4.5 Account Warranties and Covenants. Except as otherwise disclosed
--------------------------------
to Agent in writing, as to each Account that, at the time of its creation, to
the best of Borrower's knowledge, the Account is a valid, bona fide account,
representing an undisputed indebtedness incurred by the named account debtor for
goods actually sold and delivered or for services completely rendered; there are
no setoffs, offsets or counterclaims, genuine or otherwise, against the Account;
the Account does not represent a sale to an Affiliate or a consignment, sale or
return or a ▇▇▇▇ and hold transaction; no agreement exists permitting any
deduction or discount (other than the discount stated on the invoice); Borrower
is the lawful owner of the Account and has the right to assign the same to
Agent, for the benefit of Agent and Lenders; the Account is free of all security
interests, liens and encumbrances other than those in favor of Agent and
Permitted Encumbrances on behalf of itself and Lenders, and the Account is due
and payable in accordance with its terms. Borrower shall, at its own expense:
(a) cause all invoices evidencing Accounts and all copies thereof to bear a
notice that such invoices are payable to the lockboxes established in accordance
with subsection 4.25 and (b) use its best efforts to assure prompt payment of
---------------
all amounts due or to become due under the Accounts. Without Agent's prior
written consent, which Borrower may presume until Agent notifies Borrower to the
contrary, no discounts, credits or allowances in excess
28
of $250,000 will be issued, granted or allowed by Borrower to customers and no
returns will be accepted. Borrower will promptly notify Agent in the event that
a customer alleges any dispute or claim with respect to an Account or of any
other circumstances known to Borrower which has a reasonable likelihood to
impair the validity or collectibility of an Account in excess of $250,000. Agent
shall have the right, at any time or times hereafter, to verify the validity,
amount or any other matter relating to an Account, by mail, telephone or in
person. After the occurrence of a Default or an Event of Default, Borrower shall
not, without the prior consent of Agent, adjust, settle or compromise the amount
or payment of any Account, or release wholly or partly any customer or obligor
thereof, or allow any credit or discount thereon, other than an individual
account equal to or less than $250,000 (provided the aggregate amount of such
individual Accounts does not exceed $1,000,000).
4.6 Names and Locations. Schedule 4.6 sets forth all names, trade
------------------- ------------
names, fictitious names and business names under which Borrower and each of its
Subsidiaries currently conducts business or has at any time during the five
years preceding the Closing Date conducted business and the name of any entity
which Borrower or any of its Subsidiaries has acquired in whole or in part or
from whom Borrower or any of its Subsidiaries has acquired a significant amount
of assets within the past five years and sets forth the location of Borrower's
and each of its Subsidiaries' principal place of business, the location of
Borrower's and each of its Subsidiary's accounting records, the location of all
other offices of Borrower and each of its domestic and Canadian Subsidiaries and
all Collateral locations in the United States and Canada, and such locations are
Borrower's or each of its Subsidiary's sole locations for its business and the
Collateral. Borrower and each of its Subsidiaries will give Agent at least
thirty (30) days advance written notice of: (a) any change of name or of any new
trade name or fictitious business name, (b) change of principal place of
business, (c) any change in the location of such party's accounting records or
the Collateral, or (d) any new location for such Person's accounting records or
any requested change to Schedule 2.1D. Borrower and each of its Subsidiaries
-------------
will give Agent monthly written reports as to new locations for such Person's
Collateral (other than a new location which Borrower intends to be added to
Schedule 2.1D.)
-------------
4.7 Title to Properties; Liens. Borrower and each of its
--------------------------
Subsidiaries has good, sufficient and legal title to or valid leasehold
interests in to all of its respective material properties and assets, in each
case, free and clear of all Liens except Permitted Encumbrances.
4.8 Litigation; Adverse Facts. There are no judgments outstanding
-------------------------
against any Loan Party or affecting any property of any Loan Party nor is there
any action, charge, claim, demand, suit, proceeding, petition, governmental
investigation or arbitration now pending or, to the best knowledge of Borrower
after due inquiry, threatened against or affecting any Loan Party or any
property
29
property of any Loan Party which could reasonably be expected to result in any
Material Adverse Effect. Promptly upon any officer of Borrower or its
Subsidiaries obtaining knowledge of (a) the institution of any action, suit,
proceeding , governmental investigation or arbitration against or
affecting any Loan Party or any property of any Loan Party not previously
disclosed by Borrower to Agent or (b) any material development in any action,
suit, proceeding, governmental investigation or arbitration at any time pending
against or affecting any Loan Party or any property of any Loan Party which
could reasonably be expected to have a Material Adverse Effect, Borrower will
promptly give notice thereof to Agent and provide such other information as may
be reasonably available to enable Agent and its counsel to evaluate such matter.
4.9 Payment of Taxes. All material tax returns and reports of
----------------
Borrower and each of its Subsidiaries required to be filed by any of them have
been timely filed and are complete and accurate in all material respects. All
taxes, assessments, fees and other governmental charges which are due and
payable by Borrower and each of its Subsidiaries have been paid when due;
provided that no such tax need be paid if Borrower or one of its Subsidiaries is
--------
contesting same in good faith by appropriate proceedings promptly instituted and
diligently conducted and if Borrower or such Subsidiary has established
appropriate reserves as shall be required in conformity with GAAP. As of the
Closing Date, none of the income tax returns of Borrower or any of its
Subsidiaries are under audit and Borrower shall promptly notify Agent in the
event that any of Borrower's or any of its Subsidiaries' tax returns become the
subject of an audit; provided, however, that Agent need not be notified as to
-------- -------
any such audit involving a foreign Subsidiary if the amount of tax expense on
such foreign Subsidiary's tax return is less than $1,000,000. No tax liens have
been filed against Borrower or any of its Subsidiaries unless the aggregate
amount of tax liability secured by such liens is equal to or less than $250,000.
The charges, accruals and reserves on the books of Borrower and each of its
Subsidiaries in respect of any taxes or other governmental charges are in
accordance with GAAP. Borrower's federal tax identification number is 75-
1559633.
4.10 Performance of Agreements. None of the Loan Parties and none of
-------------------------
their respective Subsidiaries is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
material contractual obligation of any such Person, and no condition exists
that, with the giving of notice or the lapse of time or both, would constitute
such a default (except as could not reasonably be expected to have a Material
Adverse Effect). Borrower shall promptly notify Agent of (a) the occurrence of
any default or breach under any material contractual obligation of any Loan
Party, (b) the termination of any material contractual obligation of any Loan
Party, or (c) the amendment or modification of any material contractual
obligation of any Loan Party, in any such case described in clauses (a), (b) and
30
(c) that, individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect.
4.11 Employee Benefit Plans. Borrower, each of its Subsidiaries and
----------------------
each ERISA Affiliate is in compliance, and will continue to remain in
compliance, in all material respects with all applicable provisions of ERISA,
the IRC and all other applicable laws and the regulations and interpretations
thereof with respect to all Employee Benefit Plans. No material liability has
been incurred by Borrower, any Subsidiaries or any ERISA Affiliate which remains
unsatisfied for any funding obligation, taxes or penalties with respect to any
Employee Benefit Plan. Neither Borrower nor any of its Subsidiaries shall
establish any new Employee Benefit Plan or amend any existing Employee Benefit
Plan if the liability or increased liability resulting from such establishment
or amendment is material.
4.12 Intellectual Property. Borrower and each of its Subsidiaries
owns, is licensed to use or otherwise has the right to use, all Intellectual
Property used in or necessary for the conduct of its business as currently
conducted, and all such Intellectual Property is identified on Schedule 4.12, as
-------------
modified on each Anniversary Date. All federally registered Intellectual
Property owned by Borrower is valid, subsisting and enforceable and all filings
necessary to maintain the effectiveness of such registrations have been made.
4.13 Broker's Fees. No broker's or finder's fee or commission will be
-------------
payable with respect to any of the transactions contemplated hereby.
4.14 Environmental Compliance. Each Loan Party is in compliance with
------------------------
all applicable Environmental Laws, except as to any non-compliance which would
not have a Material Adverse Effect. There are no claims, liabilities, Liens,
investigations, litigation, administrative proceedings, whether pending or
threatened, or judgments or orders relating to any Hazardous Materials asserted
or threatened against any Loan Party or relating to any real property currently
or formerly owned, leased or operated by any Loan Party, except such as which
would not have a Material Adverse Effect.
4.15 Solvency. From and after the date of this Agreement, to the best
--------
of Borrower's knowledge, Borrower: (a) owns assets the fair value of which are
greater than the total amount of its liabilities (including contingent
liabilities); (b) has capital that is not unreasonably small in relation to its
business as presently conducted or any contemplated or undertaken transaction;
and (c) does not intend to incur and does not believe that it will incur debts
beyond its ability to pay such debts as they become due.
4.16 Disclosure. No representation or warranty of Borrower, any of its
----------
Subsidiaries or any other Loan Party contained in this Agreement, the financial
statements, the other Loan Documents, or any other document, certificate or
31
written statement furnished to Agent or any Lender by or on behalf of any such
Person (as modified or supplemented by other information so furnished) for use
in connection with the Loan Documents contains any untrue statement of a
material fact or omitted, omits or will omit to state a material fact necessary
in order to make the statements contained herein, provided that with respect to
any Projections, the Borrower represents that such represent reasonable good
faith estimate of Borrower and its senior management concerning the probable
course of its business as of the date such Projections are delivered or therein
not misleading in light of the circumstances in which the same were made,
provided that with respect to any Projections, the Borrower represents that such
represent reasonable good faith estimate of Borrower and its senior management
concerning the probable course of its business as of the date such Projections
are delivered. There is no material fact known to Borrower that has had or
could have a Material Adverse Effect and that has not been disclosed herein or
in such other documents, certificates and statements furnished to Agent or any
Lender for use in connection with the transactions contemplated hereby.
4.17 Insurance. Borrower and each of its Subsidiaries maintains
---------
adequate insurance policies for public liability, property damage, product
liability, and business interruption with respect to its business and properties
and the business and properties of its Subsidiaries against loss or damage of
the kinds customarily carried or maintained by corporations of established
reputation engaged in similar businesses and in amounts acceptable to Agent, in
its reasonable credit judgment. Borrower shall cause Agent to be named as loss
payee on all insurance policies relating to any Collateral and shall cause Agent
to be named as additional insured under all liability policies, in each case
pursuant to appropriate endorsements in form and substance satisfactory to Agent
and shall collaterally assign to Agent, for itself and on behalf of Lenders, as
security for the payment of the Obligations all business interruption insurance
of Borrower. No notice of cancellation has been received with respect to such
policies and Borrower and each of its Subsidiaries is in compliance with all
conditions contained in such policies or if any such notice of cancellation has
been received, no lapse in insurance coverage occurs and replacement insurance
coverage is obtained in compliance with the terms and conditions of this
subsection 4.17. Borrower shall apply any proceeds received from any policies of
---------------
insurance relating to any Collateral to the Obligations as set forth in
subsection 2.4(E) and subsection 2.4(B)(3). In the event Borrower fails to
----------------- ---------------------
provide Agent with evidence of the insurance coverage required by this
Agreement, Agent may, but is not required to, purchase insurance at Borrower's
expense to protect Agent's and the Lender's interests in the Collateral. This
insurance may, but need not, protect Borrower's interests. The coverage
purchased by Agent may not pay any claim made by Borrower or any claim that is
made against Borrower in connection with the Collateral. Borrower may later
cancel any insurance purchased by Agent, but only after providing Agent with
evidence that Borrower has obtained
32
insurance as required by this Agreement. If Agent purchases insurance for the
Collateral, Borrower will be responsible for the costs of that insurance,
including interest thereon and other charges imposed on Agent in connection with
the placement of the insurance, until the effective date of the cancellation or
expiration of the insurance, and such costs may be added to the Obligations. The
costs of the insurance may be more than the cost of insurance Borrower is able
to obtain on its own.
4.18 Compliance with Laws. Except as set forth on Schedule 4.18,
-------------------- -------------
neither Borrower nor any of its Subsidiaries is in violation of any material
law, ordinance, rule, regulation, order, policy, guideline or other requirement
of any domestic or foreign government or any instrumentality or agency thereof,
having jurisdiction over the conduct of its business or the ownership of its
properties, including, without limitation, any Environmental Law, which
violation would subject Borrower or any of its Subsidiaries, or any of their
respective officers to criminal liability or have a Material Adverse Effect and
no such violation has been alleged.
4.19 Bank Accounts. Schedule 4.19 sets forth the account numbers and
------------- -------------
locations of all bank accounts of Borrower and its Subsidiaries as of the
Closing Date. Borrower shall not amend or terminate any Blocked Account or
lockbox agreement without Agent's prior written consent and Borrower shall not
establish any new bank accounts without Agent's prior written consent, which
consent as to establishment of new bank accounts shall not be unreasonably
withheld.
4.20 Employee Matters. Except as set forth on Schedule 4.20, (a) no
---------------- -------------
Loan Party nor any of such Loan Party's employees is subject to any collective
bargaining agreement, (b) no petition for certification or union election is
pending with respect to the employees of any Loan Party and no union or
collective bargaining unit has sought such certification or recognition with
respect to the employees of any Loan Party and (c) there are no strikes,
slowdowns, work stoppages or controversies pending or, to the best knowledge of
Borrower, threatened between any Loan Party and its respective employees, other
than employee grievances arising in the ordinary course of business, which could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. Except as set forth on Schedule 4.20, as amended from
-------------
time to time, neither Borrower nor any of its Subsidiaries is subject to an
employment contract.
4.21 Governmental Regulation. None of the Loan Parties is subject to
-----------------------
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act or the Investment Company Act of 1940 or to any federal or state
statute or regulation limiting its ability to incur indebtedness for borrowed
money.
33
4.22 Access to Accountants and Management. Borrower authorizes Agent
------------------------------------
and Lenders to discuss the financial condition and financial statements of
Borrower and its Subsidiaries with Borrower's Accountants upon reasonable notice
to Borrower of its intention to do so, and authorizes Borrower's Accountants to
respond to all of Agent's inquiries. Agent and each Lender may, with the consent
of Agent, which will not be unreasonably denied, confer with Borrower's
management directly regarding Borrower's business, operations and financial
condition.
4.23 Inspection. Subject to the provisions of Section 10.18, Borrower
---------- -------------
shall permit Agent and any authorized representatives designated by Agent to
visit and inspect any of the properties of Borrower or any of its Subsidiaries,
including their financial and accounting records, and, in conjunction with such
inspection, to make copies and take extracts therefrom, and to discuss their
affairs, finances and business with their officers and Borrower's Accountants,
at such reasonable times during normal business hours and as often as may be
reasonably requested. Each Lender may with the consent of Agent, which will not
be unreasonably denied, accompany Agent on any such visit or inspection. If
Agent or Lenders schedules any meeting with the Borrower's Accountants, Agent
and/or Lenders agree that an officer of the Borrower shall have the right to be
present at any such meeting.
4.24 Collateral Records. Borrower shall keep full and accurate books
------------------
and records relating to the Collateral.
4.25 Collection of Accounts and Payments. Borrower shall establish
-----------------------------------
lockboxes and blocked accounts (collectively, "Blocked Accounts") in Borrower's
name with such banks ("Collecting Banks") as are acceptable to Agent (subject to
irrevocable instructions acceptable to Agent as hereinafter set forth) to which
all account debtors shall directly remit all payments on Accounts and in which
Borrower will immediately deposit all payments made for Inventory or other
payments constituting proceeds of Collateral in the identical form in which such
payment was made, whether by cash or check. The Collecting Banks shall
acknowledge and agree, in a manner satisfactory to Agent, that all payments made
to the Blocked Accounts are the sole and exclusive property of Agent, for its
benefit and for the benefit of Lenders, and that the Collecting Banks have no
right to setoff against the Blocked Accounts and that all such payments received
will be promptly transferred to Agent's Account subject to the payment of the
collecting Banks' fees, chargebacks and other customary exceptions, to the
extent, if any, provided for in the documentation establishing the Blocked
Accounts. Borrower hereby agrees that all payments made to such Blocked
Accounts or otherwise received by Agent and whether on the Accounts or as
proceeds of other Collateral or otherwise will be the sole and exclusive
property of Agent, for the benefit of itself and Lenders. Borrower shall
irrevocably instruct each Collecting Bank to promptly transfer all payments or
deposits to the Blocked Accounts into Agent's Account. If Borrower, or any if
34
its Affiliates, employees, agents or other Person acting for or in concert with
Borrower, shall receive any monies, checks, notes, drafts or any other payments
relating to and/or proceeds of Accounts or other Collateral, Borrower or such
Person shall hold such instrument or funds in trust for Agent, and, immediately
upon receipt thereof, shall remit the same or cause the same to be remitted, in
kind, to the Blocked Accounts or to Agent at its address set forth in subsection
----------
10.3 below.
----
Borrower may amend any one or more of the Schedules referred in this
Section 4 (subject to prior notice to Agent, as applicable) and any
---------
representation, warranty, or covenant contained herein which refers to any such
Schedule shall from and after the date of any such amendment refer to such
Schedule as so amended; provided however, that in no event shall the amendment
-------- -------
of any such Schedule constitute a waiver by Agent and Lenders of any Default or
Event of Default that exists notwithstanding the amendment of such Schedule.
4.26 Inactive Subsidiaries. Schedule 4.26, as updated from time to
---------------------
time, sets forth all of the Borrower's current inactive Subsidiaries and
identifies the book value of all of the assets and the total number of employees
for each such inactive Subsidiary. Borrower will promptly notify Lender of any
material change in either the total book value of the assets or the number of
employees with respect to any such Subsidiary.
4.27 Obligations Constitute Senior Indebtedness under Senior
-------------------------------------------------------
Subordinated Note. The Obligations constitute "Senior Indebtedness" pursuant to
-----------------
and as such term is defined in the Senior Subordinated Note, and this Agreement
and the other Loan Documents collectively constitute the "Credit Agreement"
pursuant to and as such term is defined in the Senior Subordinated Note.
SECTION 5. REPORTING AND OTHER AFFIRMATIVE COVENANTS
-----------------------------------------
Borrower covenants and agrees that, so long as any of the Commitments
hereunder shall be in effect and until payment in full of all Obligations,
Borrower shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 5.
---------
5.1 Financial Statements and Other Reports. Borrower will deliver to
--------------------------------------
Agent the financial statements and other reports contained in the Reporting
Rider attached hereto.
5.2 Endorsement. Borrower hereby constitutes and appoints Agent and
-----------
all Persons designated by Agent for that purpose as Borrower's true and lawful
attorney-in-fact, with power to endorse Borrower's name to any of the items of
payment or proceeds described in subsection 4.25 above and all
---------------
35
proceeds of Collateral that come into Agent's possession or under Agent's
control. Both the appointment of Agent as Borrower's attorney and Agent's rights
and powers are coupled with an interest and are irrevocable until payment in
full and complete performance of all of the Obligations.
5.3 Maintenance of Properties. Borrower will maintain or cause to be
-------------------------
maintained in good repair, working order and condition (ordinary wear and tear
excepted) all material properties used in the business of Borrower and its
Subsidiaries and will make or cause to be made all appropriate repairs, renewals
and replacements thereof.
5.4 Compliance with Laws. Borrower will, and will cause each of its
--------------------
Subsidiaries to, comply with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority as now in effect and which
may be imposed in the future in all jurisdictions in which Borrower or any of
its Subsidiaries is now doing business or may hereafter be doing business, other
than those laws the noncompliance with which would not have a Material Adverse
Effect.
5.5 Further Assurances. Borrower shall (and to the extent, if any,
------------------
required by other provisions of this Agreement, shall cause each of its
Subsidiaries to), from time to time, execute such guaranties, financing or
continuation statements, documents, security agreements, reports and other
documents or deliver to Agent such instruments, certificates of title,
mortgages, deeds of trust, or other documents as Agent at any time may
reasonably request to evidence, perfect or otherwise implement the guaranties
and security for repayment of the Obligations provided for in the Loan
Documents.
5.6 Mortgages; Title Insurance; Surveys.
-----------------------------------
(A) Title Insurance. On the Closing Date (or within sixty (60)
---------------
days following delivery of any Mortgage with respect to Additional Mortgaged
Property), Borrower shall deliver or cause to be delivered to Agent ALTA
lender's title insurance policies issued by title insurers reasonably
satisfactory to Agent (the "Mortgage Policies") in form and substance and in
amounts reasonably satisfactory to Agent assuring Agent that the Mortgages are
valid and enforceable first priority mortgage liens on the respective Mortgaged
Property or Additional Mortgaged Property, free and clear of all defects and
encumbrances except Permitted Encumbrances. The Mortgage Policies shall be in
form and substance reasonably satisfactory to Agent and shall include an
endorsement insuring against the effect of future advances under this Agreement,
for mechanics' liens and for any other matter that Agent may reasonably request
to the extent such endorsement is available under relevant local law. In the
case of each leasehold constituting Mortgaged Property or Additional Mortgaged
Property, Agent shall have received such estoppel letters, consents and waivers
from the landlords and non-disturbance agreements from any holders of
36
mortgages or deeds of trust on such real estate as may have been requested by
Agent, which letters shall be in form and substance satisfactory to Agent.
(B) Additional Mortgaged Property. Borrower shall as promptly as
-----------------------------
possible (and in any event within sixty (60) days after such designation)
deliver to Agent a fully executed Mortgage, in form and substance satisfactory
to Agent together with title insurance policies and surveys on any Additional
Mortgaged Property designated by Agent.
(C) Surveys. On or before the Closing Date (or within sixty (60)
-------
days following delivery of any Mortgage with respect to Additional Mortgaged
Property), Borrower shall deliver or cause to be delivered to Agent current
surveys, certified by a licensed surveyor, for all real property that is the
subject of the Mortgage Policies including Additional Mortgaged Property for
which a Mortgage Policy is issued. All such surveys shall be sufficient to allow
the issuer of the mortgage policy to issue an ALTA lender's policy.
5.7 Use of Proceeds and Margin Security. Borrower shall use the
-----------------------------------
proceeds of all Loans for proper business purposes (as described in the recitals
to this Agreement) consistent with all applicable laws, statutes, rules and
regulations. No portion of the proceeds of any Loan shall be used by Borrower or
any of its Subsidiaries for the purpose of purchasing or carrying margin stock
within the meaning of Regulation U, or in any manner that might cause the
borrowing or the application of such proceeds to violate Regulation T or
Regulation X or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Exchange Act.
5.8 Bailee. If any Collateral is at any time in the possession or
------
control of any warehouseman, bailee or any of Borrower's agents or processors,
Borrower shall, upon the request of Agent, notify such warehouseman, bailee,
agent or processor of the security interests in favor of Agent, for the benefit
of Agent and Lenders, created hereby and shall instruct such Person to hold all
such Collateral for Agent's account subject to Agent's instructions.
5.9 Third Party Inventory. All inventory and products owned by
---------------------
Persons other than Borrower and located on any premises owned, leased or
controlled by Borrower, shall be separately and conspicuously identified as such
and shall be segregated from Borrower's own Inventory located at such premises.
5.10 Pledge of Assets and Execution of Guaranties by Foreign
-------------------------------------------------------
Subsidiaries of Borrower. Borrower shall deliver to Agent by the ninetieth
------------------------
(90th) day after the Closing Date all executed and issued documentation (in form
and substance satisfactory to Agent) necessary, in the judgment of Agent (i) to
grant Agent, for the benefit of Lenders, a perfected first priority Lien in all
the Accounts and Inventory of each active foreign Subsidiary of Borrower (other
37
than any Subsidiary organized under the laws of the country of Japan and other
than BancTec (Canada), Inc., a Subsidiary organized under the laws of Canada) as
security for the Obligations, provided that the amount of the Obligations
secured by such Lien shall be limited to the extent necessary, if at all, to
avoid any conflict with the provisions of the Unsecured Senior Notes Indenture,
and (ii) to guarantee by such Subsidiaries payment of the Obligations, provided
that the amount of the Obligations guaranteed by any such guaranty shall be
limited to the extent necessary, if at all, to avoid any conflict with the
provisions of the Unsecured Senior Notes Indenture. The parties hereto agree
that if at any time because of actual or reasonably contemplated future
undistributed earnings and profits of any such foreign Subsidiary the existence
of such guaranty and/or the pledge of such assets creates an actual or
reasonably likely material liability for Borrower under the income tax laws of
the United States or any state or municipality thereof, Agent and Borrower will
in good faith negotiate changes to the provisions of this Agreement dealing with
loans, advances and other transactions between such foreign Subsidiary and
Borrower in order to minimize such adverse tax consequences. The parties hereto
further agree that the relevant guaranty shall be terminated and the relevant
pledge of assets released as to any such foreign Subsidiary which obtains
working capital financing from a local lender in compliance with the provisions
of subsection 7.1(i).
5.11 Pledge of Assets and Execution of Guaranties by Inactive
--------------------------------------------------------
Subsidiaries which become Active Subsidiaries. In the event any inactive
---------------------------------------------
Subsidiary (whether domestic or foreign) of Borrower becomes an active
Subsidiary, Borrower shall promptly deliver to Agent all executed and issued
documentation (in form and substance satisfactory to Agent) necessary, in the
judgment of Agent, (i) to grant Agent, for the benefit of Lenders, a perfected
first priority Lien in all assets of each such domestic Subsidiary and in the
Accounts and Inventory of each foreign Subsidiary (other than any Subsidiary
organized under the laws of the country of Japan) as security for the
Obligations, provided that the amount of the Obligations secured by such Lien
shall be limited to the extent necessary, if at all, to avoid any conflict with
the provisions of the Unsecured Senior Notes Indenture, and (ii) to guarantee by
such Subsidiaries payment of the Obligations, provided that the amount of the
Obligations guaranteed by any such guaranty shall be limited to the extent
necessary, if at all, to avoid any conflict with the provisions of the Unsecured
Senior Notes Indenture.
5.12 Inclusion of BancTec (Canada), Inc. as Co-Borrower. Borrower
--------------------------------------------------
shall deliver to Agent by the ninetieth (90th) day after the Closing Date all
executed and issued documentation (in form and substance satisfactory to Agent)
necessary, in the judgment of Agent (i) to grant Agent, for the benefit of
Lenders, a perfected first priority Lien in all assets of BancTec (Canada),
Inc., a Canadian Subsidiary of Borrower, as security for the Obligations,
provided that the amount of the Obligations secured by such Lien shall be
limited to the
38
extent necessary, if at all, to avoid any conflict with the provisions of the
Unsecured Senior Notes Indenture and (ii) to make BancTec (Canada), Inc. a "co-
borrower" under this Agreement.
5.13 Pledge of Assets and Execution of Guaranty by BancTec (Puerto
-------------------------------------------------------------
Rico), Inc.. Borrower shall deliver to Agent by the thirtieth (30th) day after
----------
the Closing Date all executed and issued documentation (in form and substance
satisfactory to Agent) necessary, in the judgment of Agent (i) to grant Agent,
for the benefit of Lenders, a perfected first priority Lien in all assets of
BancTec (Puerto Rico), Inc., a Delaware corporation, as security for the
Obligations, provided that the amount of the Obligations secured by such Lien
shall be limited to the extent necessary, if at all, to avoid any conflict with
the provisions of the Unsecured Senior Notes Indenture, and (ii) to guarantee by
BancTec (Puerto Rico), Inc. payment of the Obligations, provided that the amount
of the Obligations guaranteed by such guaranty shall be limited to the extent
necessary, if at all, to avoid any conflict with the provisions of the Unsecured
Senior Notes Indenture.
5.14 Deliver of Good Standing Certificates. Borrower shall deliver to
-------------------------------------
Agent by the sixtieth (60th) day after the Closing Date, for each state where
the failure to be so qualified would have a Material Adverse Effect, a current
certificate issued by the Secretary of State or comparable official of such
state certifying that Borrower is duly qualified to do business and is in good
standing in such state.
5.15 Delivery of Original Stock Certificates. Borrower shall deliver
---------------------------------------
to Agent by the thirtieth (30th) day after the Closing Date the originals of all
stock certificates evidencing outstanding capital stock of each Subsidiary of
Borrower and each Subsidiary of BancTec Holding N.V. (other than the original
stock certificates evidencing all the outstanding capital stock of BancTec
(Canada), Inc., BancTec Limited, and BancTec Japan, Inc., which are to be
delivered to the Agent on the Closing Date), accompanied by stock powers duly
executed in blank by the owner of such stock certificate.
5.16 Schedules to Trademark Security Agreement, Copyright Security
-------------------------------------------------------------
Agreement and Patent Security Agreement. Borrower shall deliver to Agent by the
---------------------------------------
fourteenth (14th) day after the Closing Date, duly completed and accurate
Schedules to the Trademark Security Agreement, the Copyright Security Agreement
and the Patent Security Agreement.
SECTION 6. FINANCIAL COVENANTS
-------------------
Borrower covenants and agrees that so long as any of the Commitments
remain in effect and until indefeasible payment in full of all Obligations and
termination of all Lender Letters of Credit, Borrower shall comply with and
39
shall cause each of its Subsidiaries to comply with all covenants contained in
the Financial Covenant Rider.
SECTION 7. NEGATIVE COVENANTS
------------------
Borrower covenants and agrees that so long as any of the Commitments
remain in effect and until indefeasible payment in full of all Obligations and
termination of all Lender Letters of Credit, Borrower shall not and will not
permit any of its Subsidiaries to:
7.1 Indebtedness and Liabilities. Directly or indirectly create,
----------------------------
incur, assume, guaranty, or otherwise become or remain directly or indirectly
liable, on a fixed or contingent basis, with respect to any Indebtedness except:
(a) the Obligations; (b) intercompany Indebtedness owed to Borrower by its
Subsidiaries the aggregate outstanding principal amount of which does not exceed
at any time the sum of (i) the aggregate amount of such intercompany
Indebtedness in existence on the Closing Date and disclosed on Schedule 7.1 and
------------
(ii) $6,000,000; provided that such Indebtedness is subordinated in right of
--------
payment to the Obligations; (c) Capital Leases and Indebtedness secured by
purchase money liens not to exceed $5,000,000 in the aggregate amount
outstanding at any time; (d) Indebtedness resulting from a refinance of any of
Borrower's Closing Date Mortgaged Property by another financial institution;
provided that (i) Borrower grants Agent a second priority Lien in such
--------
refinanced Closing Date Mortgaged Property, unless the relevant mortgagee
refuses to consent to such Lien of Agent, in which event Agent will not require
the grant of such a second Lien, (ii) Borrower immediately applies the proceeds
derived from such refinance directly to the Revolving Loan, (iii) Borrower
obtains from the refinancing mortgagee an executed mortgagee waiver, in form and
substance satisfactory to Agent, whereby mortgagee agrees to allow Agent access
rights upon such real property and mortgagee subordinates any Lien it has on any
personal property Collateral located on such real property to the Lien of Agent,
and (iv) the terms of such refinancing are not less favorable than the
amortization of real property currently provided herein as the Real Property
Advance Rate and the interest rate provided for in this Agreement; (e)
Indebtedness existing on the Closing Date and identified on Schedule 7.1; (f)
------------
(i) up to $15,000,000 of additional Subordinated Debt issued to WCAS, it being
understood that such additional Subordinated Debt may be secured by a junior
Lien on such assets of the Borrower and its Subsidiaries which constitute
Collateral for payment of the Obligations, provided such Subordinated Debt and
junior Lien is subordinated in a manner and pursuant to documentation
satisfactory to Agent and (ii) "payment in kind" interest on Subordinated Debt;
(g) Indebtedness of any Person that becomes a Subsidiary after the Closing Date,
provided that such Indebtedness exists at the time such Person becomes a
Subsidiary and is not created in contemplation of or in connection with such
Person becoming a Subsidiary; (h) Indebtedness of any Subsidiary organized under
the laws of Japan in an aggregate principal
40
amount at any one time not to exceed $5,000,000; (i) Indebtedness of Borrower's
foreign Subsidiaries for borrowed money not in excess at any particular date of
the aggregate amount of $20,000,000, which Indebtedness will be used for the
working capital and liquidity needs of such Subsidiaries and which Indebtedness
may be secured by Liens on assets of such Subsidiaries, in which event Agent
will release such Liens as Agent may have in such assets; and (j) extensions and
renewals of any such Indebtedness that do not increase the outstanding principal
amount thereof. Except as permitted above, Borrower will not, and will not
permit any of its Subsidiaries to, incur any Liabilities except for Indebtedness
permitted herein and trade payables and normal accruals in the ordinary course
of business not yet due and payable or with respect to which Borrower or any of
its Subsidiaries is contesting in good faith the amount or validity thereof by
appropriate proceedings and then only to the extent that Borrower or any of its
Subsidiaries has established adequate reserves therefor under GAAP.
7.2 Guaranties. Except for endorsements of instruments or items of
----------
payment for collection in the ordinary course of business, guaranty, endorse, or
otherwise in any way become or be responsible for any obligations of any other
Person, whether directly or indirectly by agreement to purchase the indebtedness
of any other Person or through the purchase of goods, supplies or services, or
maintenance of working capital or other balance sheet covenants or conditions,
or by way of stock purchase, capital contribution, advance or loan for the
purpose of paying or discharging any indebtedness or obligation of such other
Person or otherwise, other than guarantees constituting Indebtedness permitted
by Section 7.1.
-----------
7.3 Transfers, Liens and Related Matters.
------------------------------------
(A) Transfers. Sell, assign (by operation of law or otherwise) or
---------
otherwise dispose of, or grant any option with respect to any of the Collateral
or the assets of any Loan Party, except that Borrower and its Subsidiaries may
(i) make Asset Dispositions if all of the following conditions are met: (1) the
market value of assets sold or otherwise disposed of in any single transaction
or series of related transactions does not exceed $1,000,000 and the aggregate
market value of assets sold or otherwise disposed of in any Fiscal Year does not
exceed $2,500,000; (2) the majority of the consideration received is at least
equal to the fair market value of such assets; (3) the sole consideration
received is cash; (4) the Net Proceeds of such Asset Disposition are applied as
required by subsection 2.4; (5) after giving effect to the sale or other
--------------
disposition of the assets included within the Asset Disposition and the
repayment of the Obligations with the proceeds thereof, Borrower is in
compliance on a pro forma basis with the covenants set forth in the Financial
Covenant Rider recomputed for the most recently ended month for which
information is available and is in compliance with all other terms and
conditions contained in this Agreement; and (6) no Default or Event of Default
shall then exist or result
41
from such sale or other disposition, and (ii) sell inventory in the ordinary
course of business and license Intellectual Property in the ordinary course of
business.
(B) Liens. Except for Permitted Encumbrances, directly or indirectly
-----
create, incur, assume or permit to exist any Lien on or with respect to any of
the Collateral or the assets of such Person or any proceeds, income or profits
therefrom.
(C) No Negative Pledges. Enter into or assume any agreement (other
-------------------
than the Loan Documents) prohibiting the creation or assumption of any Lien upon
its properties or assets, whether now owned or hereafter acquired, other than
(i) restrictions pursuant to agreements in effect on the Closing Date and
described on Schedule 7.3(c), (ii) restrictions pursuant to Indebtedness of any
---------------
Person that becomes a Subsidiary after the date hereof; provided that such
--------
Indebtedness exists at the time such Person becomes a Subsidiary and is not
created in contemplation of or in connection with such Person becoming a
Subsidiary; (iii) customary restrictions and conditions contained in agreements
relating to the sale of all or a substantial part of the capital stock or assets
of any Subsidiary pending such sale, provided such restrictions and conditions
apply only to the Subsidiary to be sold and such sale is permitted hereunder;
(iv) restrictions or conditions imposed by any agreement relating to purchase
money Liens, Capital Leases and any other secured Indebtedness permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Indebtedness and (v) customary provisions in leases and
other contracts restricting the assignment thereof.
(D) No Restrictions on Subsidiary Distributions to Borrower. Except as
-------------------------------------------------------
provided herein, directly or indirectly create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any such Subsidiary to: (1) pay dividends or make any other
distribution on any of such Subsidiary's capital stock owned by Borrower or any
Subsidiary of Borrower; (2) pay any indebtedness owed to Borrower or any other
Subsidiary; (3) make loans or advances to Borrower or any other Subsidiary; or
(4) transfer any of its property or assets to Borrower or any other Subsidiary,
other than (i) restrictions pursuant to agreements in effect on the Closing Date
and described on Schedule 7.3(d), (ii) restrictions pursuant to Indebtedness of
---------------
any Person that becomes a Subsidiary after the date hereof; provided that such
--------
Indebtedness exists at the time such Person becomes a Subsidiary and is not
created in contemplation of or in connection with such Person becoming a
Subsidiary; (iii) customary restrictions and conditions contained in agreements
relating to the sale of all or a substantial part of the capital stock or assets
of any Subsidiary pending such sale, provided such restrictions and conditions
apply only to the Subsidiary to be sold and such sale is permitted hereunder;
(iv) restrictions or conditions imposed by any agreement relating to purchase
money Liens, Capital Leases
42
and any other secured Indebtedness permitted by this Agreement if such
restrictions or conditions apply only to the property or assets securing such
Indebtedness and (v) customary provisions in leases and other contracts
restricting the assignment thereof.
7.4 Investments and Loans. Make or permit to exist investments in or
---------------------
loans to any other Person, except: (a) Cash Equivalents; and (b) loans and
advances to employees for moving, entertainment, travel and other similar
expenses in the ordinary course of business in an aggregate outstanding amount
not in excess of $1,000,000 at any time; and (c) investments which would be
permitted Indebtedness pursuant to Subsection 7.1 and 7.2; and (d) permitted
-------------- ---
acquisitions.
7.5 Restricted Junior Payments. Directly or indirectly declare, order,
--------------------------
pay, make or set apart any sum for any Restricted Junior Payment, except that
(a) Subsidiaries of Borrower may make Restricted Junior Payments with respect to
their common stock, (b) the Borrower may declare and pay dividends with respect
to its capital stock payable in additional shares of its common stock, (c) the
Borrower may make Restricted Junior Payments pursuant to and in accordance with
currently existing stock option plans or other benefit plans for management or
employees of the Borrower and its Subsidiaries, and (d) Borrower may make
regularly scheduled interest payments on the Senior Subordinated Note and issue
and pay interest on Deferred Interest Notes (as defined in the Senior
Subordinated Note) provided that at the time of such payment or issuance
Borrower is in compliance with the Fixed Charge Coverage Ratio specified in B of
the Financial Covenants Rider.
7.6 Restriction on Fundamental Changes. (a) Enter into any transaction of
----------------------------------
merger or consolidation, other than a merger or consolidation of a foreign
Subsidiary (not including, however, BancTec (Canada), Inc.) into another foreign
Subsidiary (not including, however, BancTec (Canada), Inc.); (b) liquidate,
wind-up or dissolve itself (or suffer any liquidation or dissolution), other
than the liquidation, wind-up or dissolving of any of the inactive Subsidiaries
described on Schedule 4.26; (c) convey, sell, lease, sublease, transfer or
-------------
otherwise dispose of, in one transaction or a series of transactions, all or any
substantial part of its business or assets, or the capital stock of any of its
Subsidiaries, whether now owned or hereafter acquired; other than from one
foreign Subsidiary (not including, however, BancTec (Canada), Inc.) to another
foreign Subsidiary (not including, however, BancTec (Canada) Inc.) or (d)
acquire by purchase or otherwise all or any substantial part of the business or
assets of, or stock or other beneficial ownership of, any Person.
7.7 Changes Relating to Subordinated Debt. Change or amend the terms
-------------------------------------
of the Subordinated Debt if the effect of such amendment is an attempt to: (a)
increase the interest rate on such Indebtedness; (b) change the dates upon
43
which payments of principal or interest are due on such Indebtedness; (c) change
any event of default or add any covenant with respect to such Indebtedness; (d)
change the payment provisions of such Indebtedness; (e) change the subordination
provisions thereof; or (f) change or amend any other term if such change or
amendment would materially increase the obligations of the obligor or confer
additional material rights on the holder of such Indebtedness in a manner
adverse to Borrower, any of its Subsidiaries, Agent or any Lender.
7.8 Transactions with Affiliates. Directly or indirectly, enter into or
----------------------------
permit to exist any transaction (including the purchase, sale or exchange of
property or the rendering of any service) with any Affiliate or with any
officer, director or employee of any Loan Party, except for transactions in the
ordinary course of Borrower's business and upon fair and reasonable terms which
are fully disclosed to Agent and Lenders and which are no less favorable to
Borrower than it would obtain in a comparable arm's length transaction with an
unaffiliated Person, and except for transactions permitted pursuant to
subsection 7.4 or subsection 7.5 and except for transactions between Borrower
-------------- --------------
and its Subsidiaries consistent with past practices.
7.9 Conduct of Business. From and after the Closing Date, engage in any
-------------------
business other than businesses of the type engaged in by Borrower or any
Subsidiary on the Closing Date.
7.10 Tax Consolidations. File or consent to the filing of any
------------------
consolidated income tax return with any Person other than any of Borrower's
Subsidiaries; provided that in the event Borrower files a consolidated return
--------
with any such Person, Borrower's contribution with respect to taxes as a result
of the filing of such consolidated return shall not be greater, nor the receipt
of tax benefits less, than they would have been had Borrower not filed a
consolidated return with such Person.
7.11 Subsidiaries. Other than the Subsidiaries set forth on Schedule
------------ --------
7.11, establish, create or acquire any new Subsidiaries.
----
7.12 Fiscal Year; Tax Designation. As to Borrower and its domestic
----------------------------
Subsidiaries, change its Fiscal Year; or elect to be designated as an entity
other than a C corporation as defined in IRC.
7.13 Press Release; Public Offering Materials. Disclose the name of Agent
----------------------------------------
or any Lender in any press release or in any prospectus, proxy statement or
other materials filed with any governmental entity relating to a public offering
of the capital stock of any Loan Party except as may be required by law or as
approved by the Agent.
44
7.14 Bank Accounts. Establish any new bank accounts without Agent's prior
-------------
written consent, which consent will not be unreasonably withheld, or attempt to
amend or terminate any Blocked Account or lockbox agreement without Agent's
prior written consent.
7.15 IRS Form 8821. As to Borrower and its domestic Subsidiaries, revoke
-------------
United States of America Internal Revenue Service ("IRS") Form 8821 designating
Agent as Borrower's appointee to receive directly from the IRS, on an on-going
basis, certain tax information, notices and other written communication or fail
to take actions necessary to renew such Form 8821 prior to its expiration for
all time periods prior to the Termination Date.
SECTION 8. DEFAULT, RIGHTS AND REMEDIES
----------------------------
8.1 Event of Default. "Event of Default" shall mean the occurrence or
----------------
existence of any one or more of the following (for each subsection a different
grace or cure period may be specified, if no grace or cure period is specified,
such occurrence or existence constitutes an immediate Event of Default):
(A) Payment. Failure to make payment of any of the Obligations when
-------
due and in the case of interest, such failure shall not be cured within three
(3) Business Days of the applicable due date; or
(B) Default in Other Agreements. (1) Failure of Borrower or any of its
---------------------------
Subsidiaries to pay when due any principal or interest on any Indebtedness
(other than the Obligations) or (2) breach or default of Borrower or any of its
Subsidiaries with respect to any Indebtedness (other than the Obligations); if
such failure to pay, breach or default entitles the holder to cause such
Indebtedness having an aggregate principal amount in excess of $1,000,000 to
become or be declared due prior to its stated maturity; or
(C) Breach of Certain Provisions. Failure of Borrower to perform or
----------------------------
comply with any term or condition contained in paragraphs (A), (B) and (C) of
the Reporting Rider and subsections 5.3, 5.5 or 5.6, or contained in Section 4,
--------------------------- ---------
Section 6, Section 7 or the Financial Covenants Rider; or
--------- ---------
(D) Breach of Warranty. Any representation, warranty, certification or
------------------
other statement made by any Loan Party in any Loan Document or in any statement
or certificate at any time given by such Person in writing pursuant or in
connection with any Loan Document is false in any material respect on the date
made; or
(E) Other Defaults Under Loan Documents. Borrower or any other Loan
-----------------------------------
Party defaults in the performance of or compliance with any term contained in
this Agreement other than those otherwise set forth in this subsection 8.1, or
--------------
defaults in the performance of or compliance with any term
45
contained in the other Loan Documents and such default is not remedied or waived
within twenty (20) days after notice from Agent, or Requisite Lenders, to
Borrower of such default; or
(F) Change in Control. Prior to an Initial Public Offering of the
-----------------
Borrower, WCAS and its Affiliates together cease to beneficially own and
control, directly or indirectly, at least 51.00% of the issued and outstanding
shares of capital stock of Borrower entitled (without regard to the occurrence
of any contingency) to vote for the election of a majority of the members of the
board of directors of Borrower; or
(G) Involuntary Bankruptcy; Appointment of Receiver, etc. (1) A
----------------------------------------------------
court enters a decree or order for relief with respect to any Guarantor,
Borrower or any of its Subsidiaries (other than an inactive Subsidiary described
on Schedule 4.26) in an involuntary case under any applicable bankruptcy,
-------------
insolvency or other similar law now or hereafter in effect, which decree or
order is not stayed or other similar relief is not granted under any applicable
federal or state law; or (2) the continuance of any of the following events for
sixty (60) days unless dismissed, bonded or discharged: (a) an involuntary case
is commenced against any Guarantor, Borrower or any of its Subsidiaries (other
than an inactive Subsidiary described on Schedule 4.26), under any applicable
-------------
bankruptcy, insolvency or other similar law now or hereafter in effect; or (b) a
receiver, liquidator, sequestrator, trustee, custodian or other fiduciary having
similar powers over any Guarantor, Borrower or any of its Subsidiaries (other
than an inactive Subsidiary described on Schedule 4.26), or over all or a
-------------
substantial part of their respective property, is appointed; or
(H) Voluntary Bankruptcy; Appointment of Receiver, etc. (1) Any
---------------------------------------------------
Guarantor, Borrower or any of its Subsidiaries (other than an inactive
Subsidiary described on Schedule 4.26) commences a voluntary case under any
-------------
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or consents to the entry of an order for relief in an involuntary case
or to the conversion of an involuntary case to a voluntary case under any such
law or consents to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its property; or (2)
any Guarantor, Borrower or any of its Subsidiaries (other than an inactive
Subsidiary described on Schedule 4.26) makes any assignment for the benefit of
-------------
creditors; or (3) the board of directors of any Guarantor, Borrower or any of
its Subsidiaries (other than an inactive Subsidiary described on Schedule 4.26)
-------------
adopts any resolution or otherwise authorizes action to approve any of the
actions referred to in this subsection 8.1(H); or
-----------------
(I) Liens. Unless the aggregate dollar amount covered by all such
-----
liens, levies and assessments is less than $250,000 in the aggregate, any levy
or assessment is filed or recorded with respect to or otherwise imposed
46
upon all or any part of the Collateral or the assets of Borrower or any of its
Subsidiaries by the United States or any department or instrumentality thereof
or by any state, county, municipality or other governmental agency (other than
Permitted Encumbrances) and such lien, levy or assessment is not stayed,
vacated, paid or discharged within ten (10) days; or
(J) Judgment and Attachments. Any money judgment, writ or warrant of
------------------------
attachment, or similar process involving (1) an amount in any individual case in
excess of $250,000 or (2) an amount in the aggregate at any time in excess of
$1,000,000 (in either case not adequately covered by insurance as to which the
insurance company has acknowledged coverage) is entered or filed against
Borrower or any of its Subsidiaries or any of their respective assets and
remains undischarged, unvacated, unbonded or unstayed for a period of thirty
(30) days, but in any event not later than five (5) days prior to the date of
any proposed sale thereunder; or
(K) Dissolution. Any order, judgment or decree is entered against
-----------
Borrower or any of its Subsidiaries (other than an inactive Subsidiary described
on Schedule 4.26) decreeing the dissolution or split up of Borrower or that
-------------
Subsidiary and such order remains undischarged or unstayed for a period in
excess of twenty (20) days, but in any event not later than five (5) days prior
to the date of any proposed dissolution or split up; or
(L) Solvency. Borrower ceases to be solvent (as represented by
--------
Borrower in subsection 4.15) or admits in writing its present or prospective
---------------
inability to pay its debts as they become due; or
(M) Injunction. Borrower or any of its Subsidiaries is enjoined,
----------
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting all or any material part of
its business and such order continues for thirty (30) days or more; or
(N) Invalidity of Loan Documents. Any of the Loan Documents for any
----------------------------
reason, other than a partial or full release in accordance with the terms
thereof, ceases to be in full force and effect or is declared to be null and
void, or any Loan Party denies that it has any further liability under any Loan
Documents to which it is party, or gives notice to such effect; or
(O) Failure of Security. Except as to Collateral with the lower of
-------------------
book or fair market value of less than $250,000 in the aggregate, Agent, on
behalf of itself and Lenders, does not have or ceases to have a valid and
perfected first priority security interest in the Collateral (subject to
Permitted Encumbrances), in each case for any reason other than the failure of
Agent or any Lender to take any action within its control.
47
(P) Damage, Strike, Casualty. Any material damage to, or loss, theft
------------------------
or destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy, or
other casualty which causes, for more than fifteen (15) consecutive days, the
cessation or substantial curtailment of revenue producing activities at any
facility of Borrower or any of its Subsidiaries if any such event or
circumstance could reasonably be expected to have a Material Adverse Effect; or
(Q) Licenses and Permits. The loss, suspension or revocation of, or
--------------------
failure to renew, any license or permit now held or hereafter acquired by
Borrower or any of its Subsidiaries, if such loss, suspension, revocation or
failure to renew could reasonably be expected to have a Material Adverse Effect;
or
(R) Forfeiture. There is filed against Borrower or any Guarantor any
----------
civil or criminal action, suit or proceeding under any federal or state
racketeering statute (including, without limitation, the Racketeer Influenced
and Corrupt Organization Act of 1970), which action, suit or proceeding (1) is
not dismissed within one hundred twenty (120) days; and (2) could reasonably be
expected to result in the confiscation or forfeiture of any material portion of
the Collateral.
8.2 Suspension of Commitments. Upon the occurrence of any Default or
-------------------------
Event of Default, notwithstanding any grace period or right to cure, Agent may
or upon demand by Requisite Lenders shall, without notice or demand, immediately
cease making additional Loans and the Commitments shall be suspended; provided
--------
that, in the case of a Default, if the subject condition or event is waived or
cured within any applicable grace or cure period, the Commitments shall be
reinstated.
8.3 Acceleration. Upon the occurrence of any Event of Default described
------------
in the foregoing subsections 8.1(G) or 8.1(H), all Obligations shall
----------------------------
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Borrower, and the Commitments shall thereupon terminate. Upon the
occurrence and during the continuance of any other Event of Default, Agent may,
and upon demand by Requisite Lenders shall, by written notice to Borrower, (a)
declare all or any portion of the Obligations to be, and the same shall
forthwith become, immediately due and payable and the Commitments shall
thereupon terminate and (b) demand that Borrower immediately deposit with Agent
an amount equal to one hundred five percent (105%) of the Letter of Credit
Reserve to enable Agent or any Lender that has issued any Lender Letter of
Credit to make payments under the Lender Letters of Credit when required and
such amount shall become immediately due and payable.
48
8.4 Remedies. If any Event of Default shall have occurred and be
--------
continuing, in addition to and not in limitation of any other rights or remedies
available to Agent and Lenders at law or in equity, Agent may, and shall upon
the request of Requisite Lenders, exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default under
the UCC (whether or not the UCC applies to the affected Collateral) and may
also, to the extent not prohibited by law, (a) require Borrower to, and Borrower
hereby agrees that it will, at its expense and upon request of Agent forthwith,
assemble all or part of the Collateral as directed by Agent and make it
available to Agent at a place to be designated by Agent which is reasonably
convenient to both parties; (b) withdraw all cash in the Blocked Accounts and
apply such monies in payment of the Obligations in the manner provided in
subsection 8.7; and (c) without notice or demand or legal process, enter upon
--------------
any premises of Borrower and take possession of the Collateral. Borrower agrees
that, to the extent notice of sale of the Collateral or any part thereof shall
be required by law, at least ten (10) days notice to Borrower of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. At any sale of the Collateral
(whether public or private), if permitted by law, Agent or any Lender may bid
(which bid may be, in whole or in part, in the form of cancellation of
indebtedness) for the purchase of the Collateral or any portion thereof for the
account of Agent or such Lender. Agent shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. Borrower shall
remain liable for any deficiency. Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned. To the extent permitted by law, Borrower hereby specifically
waives all rights of redemption, stay or appraisal which it has or may have
under any law now existing or hereafter enacted. Agent shall not be required to
proceed against any Collateral but may proceed against Borrower directly.
8.5 Appointment of Attorney-in-Fact. Borrower hereby constitutes and
-------------------------------
appoints Agent as Borrower's attorney-in-fact with full authority in the place
and stead of Borrower and in the name of Borrower, Agent or otherwise, from time
to time in Agent's discretion while an Event of Default is continuing to take
any action and to execute any instrument that Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, including: (a) to ask,
demand, collect, ▇▇▇ for, recover, compound, receive and give acquittance and
receipts for moneys due and to become due under or in respect of any of the
Collateral; (b) to adjust, settle or compromise the amount or payment of any
Account, or release wholly or partly any customer or obligor thereunder or allow
any credit or discount thereon; (c) to receive, endorse, and collect any drafts
or other instruments, documents and chattel paper, in connection with clause (a)
above; (d) to file any claims or take any action or institute any proceedings
that Agent may deem necessary or desirable for the collection of or
49
to preserve the value of any of the Collateral or otherwise to enforce the
rights of Agent and Lenders with respect to any of the Collateral; and (e) to
sign and endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, assignments, verifications and notices in
connection with Accounts and other documents relating to the Collateral. The
appointment of Agent as Borrower's attorney and Agent's rights and powers are
coupled with an interest and are irrevocable until indefeasible payment in full
and complete performance of all of the Obligations and termination of the
Commitments.
8.6 Limitation on Duty of Agent with Respect to Collateral. Beyond the
------------------------------------------------------
safe custody thereof, Agent and each Lender shall have no duty with respect to
any Collateral in its possession or control (or in the possession or control of
any agent or bailee) or with respect to any income thereon or the preservation
of rights against prior parties or any other rights pertaining thereto. Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which Agent accords its own property.
Neither Agent nor any Lender shall be liable or responsible for any loss or
damage to any of the Collateral, or for any diminution in the value thereof, by
reason of the act or omission of any warehouseman, carrier, forwarding agency,
consignee, broker or other agent or bailee selected by Borrower or selected by
Agent in good faith.
8.7 Application of Proceeds. Notwithstanding anything to the contrary
-----------------------
contained in this Agreement, upon the occurrence and during the continuance of
an Event of Default, (a) Borrower irrevocably waives the right to direct the
application of any and all payments at any time or times thereafter received by
Agent from or on behalf of Borrower, and Agent shall have the continuing and
exclusive right to apply and to reapply any and all payments received at any
time or times after the occurrence and during the continuance of an Event of
Default against the Obligations in such manner as Agent may deem advisable
notwithstanding any previous application by Agent and (b) in the absence of a
specific determination by Agent with respect thereto the proceeds of any sale
of, or other realization upon, all or any part of the Collateral shall be
applied: first, to all fees, costs and expenses incurred by or owing to Agent
-----
and then any Lender with respect to this Agreement, the other Loan Documents or
the Collateral; second, to accrued and unpaid interest on the Obligations
------
(including any interest which but for the provisions of any bankruptcy or
insolvency law would have accrued on such amounts); third, to the principal
-----
amounts of the Obligations outstanding and fourth, to any other Obligations or
------
other obligations or indebtedness of Borrower owing to Agent or any Lender under
the Loan Documents. Any balance remaining shall be delivered to Borrower or to
whomever may be lawfully entitled to receive such balance or as a court of
competent jurisdiction may direct.
50
8.8 License of Intellectual Property. Borrower hereby assigns, transfers
--------------------------------
and conveys to Agent, for the benefit of Agent and Lenders, effective upon the
occurrence of any Event of Default hereunder, the non-exclusive right and
license to use all Intellectual Property owned or used by Borrower together with
any goodwill associated therewith, all to the extent necessary to enable Agent
to realize on the Collateral and any successor or assign to enjoy the benefits
of the Collateral; provided, however, such non-exclusive right and license shall
-------- -------
terminate at such time when each of the following is true: (i) the Obligations
have been indefeasibly paid in full, and (ii) the Commitments under this
Agreement have terminated. This right and license shall inure to the benefit of
all successors, assigns and transferees of Agent and its successors, assigns and
transferees, whether by voluntary conveyance, operation of law, assignment,
transfer, foreclosure, deed in lieu of foreclosure or otherwise. Such right and
license is granted free of charge.
8.9 Waivers; Non-Exclusive Remedies. No failure on the part of Agent or
-------------------------------
any Lender to exercise, and no delay in exercising and no course of dealing with
respect to, any right under this Agreement or the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise by Agent
or any Lender of any right under this Agreement or any other Loan Document
preclude any other or further exercise thereof or the exercise of any other
right. The rights in this Agreement and the other Loan Documents are cumulative
and shall in no way limit any other remedies provided by law.
SECTION 9. AGENT
-----
9.1 Agent.
-----
(A) Appointment. Each Lender hereto and, upon obtaining an interest in
-----------
any Loan, any participant, transferee or other assignee of any Lender
irrevocably appoints, designates and authorizes ▇▇▇▇▇▇ Financial, Inc. as Agent
to take such actions or refrain from taking such action as its agent on its
behalf and to exercise such powers hereunder and under the other Loan Documents
as are delegated by the terms hereof and thereof, together with such powers as
are reasonably incidental thereto. Neither the Agent nor any of its directors,
officers, employees or agents shall be liable for any action so taken. The
provisions of this subsection 9.1 are solely for the benefit of Agent and
--------------
Lenders and neither Borrower nor any other Loan Party shall have any rights as a
third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and the other Loan Documents, Agent
shall act solely as agent of Lenders and does not assume and shall not be deemed
to have assumed any obligation toward or relationship of agency or trust with or
for Borrower or any other Loan Party. Agent may perform any of its duties
hereunder, or under the Loan Documents, by or through its agents or employees.
51
(B) Nature of Duties. Agent shall have no duties, obligations or
----------------
responsibilities except those expressly set forth in this Agreement or in the
Loan Documents. The duties of Agent shall be mechanical and administrative in
nature. Agent shall not have by reason of this Agreement a fiduciary, trust or
agency relationship with or in respect of any Lender, Borrower or any other
Loan Party. Nothing in this Agreement or any of the Loan Documents, express or
implied, is intended to or shall be construed to impose upon Agent any
obligations in respect of this Agreement or any of the Loan Documents except as
expressly set forth herein or therein. Each Lender shall make its own appraisal
of the credit worthiness of Borrower, and shall have independently taken
whatever steps it considers necessary to evaluate the financial condition and
affairs of Borrower, and Agent shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Lender with any credit or
other information with respect thereto (other than as expressly required
herein), whether coming into its possession before the Closing Date or at any
time or times thereafter. If Agent seeks the consent or approval of any Lenders
to the taking or refraining from taking any action hereunder, then Agent shall
send notice thereof to each Lender. Agent shall promptly notify each Lender any
time that the Requisite Lenders have instructed Agent to act or refrain from
acting pursuant hereto.
(C) Rights, Exculpation, Etc. Neither Agent nor any of its officers,
------------------------
directors, employees or agents shall be liable to any Lender for any action
taken or omitted by them hereunder or under any of the Loan Documents, or in
connection herewith or therewith, except that Agent shall be liable to the
extent of its own gross negligence or willful misconduct as determined by a
court of competent jurisdiction. Agent shall not be liable for any
apportionment or distribution of payments made by it in good faith and if any
such apportionment or distribution is subsequently determined to have been made
in error, the sole recourse of any Lender to whom payment was due but not made,
shall be to recover from other Lenders any payment in excess of the amount to
which they are determined to be entitled (and such other Lenders hereby agree to
return to such Lender any such erroneous payments received by them). In
performing its functions and duties hereunder, Agent shall exercise the same
care which it would in dealing with loans for its own account, but neither Agent
nor any of its agents or representatives shall be responsible to any Lender for
any recitals, statements, representations or warranties herein or for the
execution, effectiveness, genuineness, validity, enforceability, collectibility,
or sufficiency of this Agreement or any of the Loan Documents or the
transactions contemplated thereby, or for the financial condition of any Loan
Party. Agent shall not be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any of the Loan Documents or the financial condition of any Loan
Party, or the existence or possible existence of any Default or Event of
Default. Agent may at any time request instructions from Lenders with respect
to any actions or approvals which by the terms of
52
this Agreement or of any of the Loan Documents Agent is permitted or required to
take or to grant, and if such instructions are promptly requested, Agent shall
be absolutely entitled to refrain from taking any action or to withhold any
approval and shall not be under any liability whatsoever to any Person for
refraining from any action or withholding any approval under any of the Loan
Documents until it shall have received such instructions from Requisite Lenders
or all or such other portion of the Lenders as shall be prescribed by this
Agreement. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against Agent as a result of Agent acting or refraining from
acting under this Agreement or any of the other Loan Documents in accordance
with the instructions of Requisite Lenders in the absence of an express
requirement for a greater percentage of Lender approval hereunder for such
action.
(D) Reliance. Agent shall be under no duty to examine, inquire into,
--------
or pass upon the validity, effectiveness or genuineness of this Agreement, any
other Loan Document, or any instrument, document or communication furnished
pursuant hereto or in connection herewith. Agent shall be entitled to rely, and
shall be fully protected in relying, upon any written or oral notices,
statements, certificates, orders or other documents or any telephone message or
other communication (including any writing, fax, telecopy or telegram) believed
by it in good faith to be genuine and correct and to have been signed, sent or
made by the proper Person, and with respect to all matters pertaining to this
Agreement or any of the Loan Documents and its duties hereunder or thereunder.
Agent shall be entitled to rely upon the advice of legal counsel, independent
accountants, and other experts selected by Agent in its sole discretion.
(E) Indemnification. Lenders will reimburse and indemnify Agent for
---------------
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including, without limitation,
attorneys' fees and expenses), advances or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against Agent in
any way relating to or arising out of this Agreement or any of the Loan
Documents or any action taken or omitted by Agent under this Agreement or any of
the Loan Documents, in proportion to each Lender's Pro Rata Share, but only to
the extent that any of the foregoing is not promptly reimbursed by Borrower;
provided, however, no Lender shall be liable for any portion of such
-------- -------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, advances or disbursements resulting from Agent's gross
negligence or willful misconduct as determined by a final non-appealable
judgment by a court of competent jurisdiction. If any indemnity furnished to
Agent for any purpose shall, in the opinion of Agent, be insufficient or become
impaired, Agent may call for additional indemnity and cease, or not commence, to
do the acts indemnified against, even if so directed by Lenders or Requisite
Lenders, until such additional indemnity is furnished.
53
The obligations of Lenders under this subsection 9.1(E) shall survive the
-----------------
payment in full of the Obligations and the termination of this Agreement.
(F) ▇▇▇▇▇▇ Individually. With respect to its Commitments and the Loans
-------------------
made by it, ▇▇▇▇▇▇ shall have and may exercise the same rights and powers
hereunder and is subject to the same obligations and liabilities as and to the
extent set forth herein for any other Lender. The terms "Lenders" or "Requisite
Lenders" or any similar terms shall, unless the context clearly otherwise
indicates, include ▇▇▇▇▇▇ in its individual capacity as a Lender or one of the
Requisite Lenders. ▇▇▇▇▇▇, either directly or through strategic affiliations,
may lend money to, acquire equity or other ownership interests in, provide
advisory services to and generally engage in any kind of banking, trust or other
business with any Loan Party or other Affiliate of Borrower as if it were not
acting as Agent pursuant hereto and without any duty to account therefor to
Lenders. ▇▇▇▇▇▇, either directly or through strategic affiliations, may accept
fees and other consideration from any Loan Party or other Affiliate of Borrower
for services or loans made in connection with this Agreement or otherwise
without having to account for the same to Lenders.
(G) Successor Agent.
---------------
(1) Resignation. Agent may resign from the performance of all its
-----------
agency functions and duties hereunder at any time by giving at least thirty (30)
Business Days' prior written notice to Borrower and the Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent of
appointment as provided below.
(2) Appointment of Successor. Upon any such notice of resignation
------------------------
pursuant to clause (G)(1) above, Requisite Lenders shall appoint a successor
Agent which, unless an Event of Default has occurred and is continuing, shall be
reasonably acceptable to Borrower. If a successor Agent shall not have been so
appointed within said thirty (30) Business Day period, the retiring Agent, upon
notice to Borrower, shall then appoint a successor Agent who shall serve as
Agent until such time, if any, as Requisite Lenders appoint a successor Agent as
provided above.
(3) Successor Agent. Upon the acceptance of any appointment as
---------------
Agent under the Loan Documents by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under the Loan Documents. After any retiring
Agent's resignation as Agent, the provisions of this Section 9 shall inure to
---------
its benefit as to any actions taken or omitted to be taken by it while it was
Agent.
54
(H) Collateral Matters.
------------------
(1) Release of Collateral. Lenders hereby irrevocably authorize
---------------------
Agent, at its option and in its discretion, to release any Lien granted to or
held by Agent upon any Collateral (i) upon termination of the Commitments and
upon payment and satisfaction of all Obligations (other than contingent
indemnification obligations to the extent no claims giving rise thereto have
been asserted); or (ii) constituting property being sold or disposed of if
Borrower certifies to Agent that the sale or disposition is made in compliance
with the provisions of this Agreement (and Agent may rely in good faith
conclusively on any such certificate, without further inquiry). In addition,
with the consent of Requisite Lenders, Agent may release Liens granted to or
held by Agent upon any Collateral having a book value of not greater than ten
percent (10%) of the total book value of all Collateral, as determined by Agent,
either in a single transaction or in a series of related transactions; provided,
--------
however, in no event will Agent, acting under the authority granted to it
-------
pursuant to this sentence, release during any calendar year Liens granted to or
held by Agent upon any Collateral having a total book value in excess of twenty
percent (20%) of the total book value of all Collateral, as determined by Agent.
(2) Confirmation of Authority; Execution of Releases. Without in
------------------------------------------------
any manner limiting Agent's authority to act without any specific or further
authorization or consent by Lenders (as set forth in subsection 9.2(H)(1)
--------------------
above), each Lender agrees to confirm in writing, upon request by Agent or
Borrower, the authority to release any Collateral conferred upon Agent under
clauses (i) and (ii) of subsection 9.2(H)(1). Upon receipt by Agent of
--------------------
confirmation from the requisite percentage of Lenders (as set forth in
subsection 9.1(H)(1) above), if any, of Agent's authority to release any Liens
--------------------
upon any Collateral, and upon at least ten (10) Business Days prior written
request by Borrower, Agent shall, and is hereby irrevocably authorized by
Lenders to, execute such documents as may be necessary to evidence the release
of the Liens granted to Agent, for the benefit of Agent and Lenders, upon such
Collateral; provided, however, that (i) Agent shall not be required to execute
-------- -------
any such document on terms which, in Agent's opinion, would expose Agent to
liability or create any obligation or entail any consequence other than the
release of such Liens without recourse or warranty, and (ii) such release shall
not in any manner discharge, affect or impair the Obligations or any Liens
granted to Agent on behalf of Agent and Lenders upon (or obligations of any Loan
Party, in respect of) all interests retained by any Loan Party, including,
without limitation, the proceeds of any sale, all of which shall continue to
constitute part of the property covered by this Agreement or the Loan Documents.
(3) Absence of Duty. Agent shall have no obligation whatsoever to
---------------
any Lender or any other Person to assure that the property covered by this
Agreement or the Loan Documents exists or is owned by
55
Borrower or is cared for, protected or insured or has been encumbered or that
the Liens granted to Agent on behalf of Agent and Lenders herein or pursuant
hereto have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to Agent in this Agreement or in any of the Loan Documents,
it being understood and agreed that in respect of the property covered by this
Agreement or the Loan Documents or any act, omission or event related thereto,
Agent may act in any manner it may deem appropriate, in its discretion, given
Agent's own interest in property covered by this Agreement or the Loan Documents
as one of the Lenders and that Agent shall have no duty or liability whatsoever
to any of the other Lenders; provided, however, that Agent shall exercise the
-------- -------
same care which it would in dealing with loans for its own account.
(I) Agency for Perfection. Agent and each Lender hereby appoint each
---------------------
other Lender as agent for the purpose of perfecting Agent's security interest in
assets which, in accordance with the Uniform Commercial Code in any applicable
jurisdiction, can be perfected only by possession. Should any Lender (other
than Agent) obtain possession of any such assets, such Lender shall notify Agent
thereof, and, promptly upon Agent's request therefor, shall deliver such assets
to Agent or in accordance with Agent's instructions. The Agent may file such
proofs of claim or documents as may be necessary or advisable in order to have
the claims of the Agent and the Lenders (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Agent and the Lenders,
their respective agents, financial advisors and counsel), allowed in any
judicial proceedings relative to Borrower and/or its Subsidiaries, or any of
their respective creditors or property, and shall be entitled and empowered to
collect, receive and distribute any monies, securities or other property payable
or deliverable on any such claims. Any custodian in any judicial proceedings
relative to Borrower and/or its Subsidiaries is hereby authorized by each Lender
to make payments to the Agent and, in the event that the Agent shall consent to
the making of such payments directly to the Lenders, to pay to the Agent any
amount due for the reasonable compensation, expenses, disbursements and advances
of the Agent, its agents, financial advisors and counsel, and any other amounts
due the Agent. Nothing contained in this Agreement or the other Loan Documents
shall be deemed to authorize the Agent to authorize or consent to or accept or
adopt on behalf of any Lender any plan of reorganization, arrangement,
adjustment or composition affecting the Loans, or the rights of any holder
thereof, or to authorize the Agent to vote in respect of the claim of any Lender
in any such proceeding, except as specifically permitted herein.
56
(J) Exercise of Remedies. Each Lender agrees that it will not have any
--------------------
right individually to enforce or seek to enforce this Agreement or any Loan
Document or to realize upon any collateral security for the Loans, unless
instructed to do so by Agent, it being understood and agreed that such rights
and remedies may be exercised only by Agent.
9.2 Notice of Default.
-----------------
Agent shall not be deemed to have knowledge or notice of the occurrence
of any Default or Event of Default except with respect to defaults in the
payment of principal, interest and fees required to be paid to Agent for the
account of Lenders, unless Agent shall have received written notice from a
Lender or Borrower referring to this Agreement, describing such Default or Event
of Default and stating that such notice is a "notice of default". Agent will
notify each Lender of its receipt of any such notice.
9.3 Action by Agent.
---------------
Agent shall take such action with respect to any Default or Event of
Default as may be requested by Requisite Lenders in accordance with Section 8.
---------
Unless and until Agent has received any such request, Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to any Default or Event of Default as it shall deem advisable or in the
best interests of Lenders.
9.4 Amendments, Waivers and Consents.
--------------------------------
(A) Percentage of Lenders Required. Except as otherwise provided
------------------------------
herein or in any of the other Loan Documents, no amendment, modification,
termination or waiver of any provision of this Agreement or any other Loan
Document, or consent to any departure by any Loan Party therefrom, shall in any
event be effective unless the same shall be in writing and signed by Requisite
Lenders (or, Agent, if expressly set forth herein or in any of the other Loan
Documents) and the applicable Loan Party; provided however, no amendment,
-------- -------
modification, termination, waiver or consent shall be effective, unless in
writing and signed by all Lenders, to do any of the following: (i) increase any
of the Commitments; (ii) reduce the principal of or the rate of interest on any
Loan or reduce the fees payable with respect to any Loan or Letter of Credit;
(iii) extend the Termination Date or the scheduled due date for all or any
portion of principal of the Loans or any interest or fees due hereunder; (iv)
amend the definition of the term "Requisite Lenders" or the percentage of
Lenders which shall be required for Lenders to take any action hereunder; (v)
amend or waive this subsection 9.4 or the definitions of the terms used in this
--------------
subsection 9.4 insofar as the definitions affect the substance of this
--------------
subsection 9.4; (vi) release Collateral (except if the sale, disposition or
--------------
release of such Collateral is permitted under subsection 7.3 or
--------------
57
subsection 9.1 or under any other Loan Document); or (vii) consent to the
--------------
assignment, delegation or other transfer by any Loan Party of any of its rights
and obligations under any Loan Document; provided, further, that no amendment,
-------- -------
modification, termination, waiver or consent affecting the rights or duties of
Agent under this Section 9 or under any Loan Document shall in any event be
---------
effective, unless in writing and signed by Agent, in addition to the Lenders
required to take such action, and provided, further, that no amendment,
-------- -------
modification, termination, waiver or consent of any provision relating to the
Swingline Loan shall be effective unless in writing and signed by Swingline
Lender. Any amendment, modification, termination, waiver or consent effected in
accordance with this Section 9 shall be binding upon each Lender or future
---------
Lender and, if signed by a Loan Party, on such Loan Party.
(B) Specific Purpose or Intent. Each amendment, modification,
--------------------------
termination, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which it was given. No amendment,
modification, termination, waiver or consent shall be required for Agent to take
additional Collateral.
(C) Failure to Give Consent; Replacement of Non-Consenting Lender. In
-------------------------------------------------------------
the event Agent requests the consent of a Lender and does not receive a written
consent or denial thereof within ten (10) Business Days after such Lender's
receipt of such request, then such Lender will be deemed to have denied the
giving of such consent. If, in connection with any proposed amendment,
modification, termination or waiver of any of the provisions of this Agreement
requiring the consent or approval of all Lenders under this subsection 9.4, the
--------------
consent of Requisite Lenders is obtained but the consent of one or more other
Lenders whose consent is required is not obtained, then Borrower shall have the
right, so long as all such non-consenting Lenders are either replaced or prepaid
as described in clauses (A) or (B) below, to either (A) replace the non-
consenting Lenders with one or more Replacement Lenders pursuant to subsection
----------
2.11(A), as if such Lender were an Affected Lender thereunder, but only so long
-------
as each such Replacement Lender consents to the proposed amendment,
modification, termination or waiver, or (B) prepay in full the Obligations of
the non-consenting Lenders and terminate the non-consenting Lenders' Commitments
pursuant to subsection 2.11(B), as if such Lender were an Affected Lender
------------------
thereunder.
Notwithstanding anything in this subsection 9.4, Agent and Borrower, without
--------------
the consent of either Requisite Lenders or all Lenders, may execute amendments
to this Agreement and the Loan Documents, which consist solely of the making of
typographical corrections.
9.5 Assignments and Participations in Loans.
---------------------------------------
58
(A) Assignments. Each Lender may assign its rights and delegate its
-----------
obligations under this Agreement to an Eligible Assignee; provided, however, (1)
-------- -------
such Lender shall first obtain the written consent of Borrower which consent
shall not be unreasonably withheld and such Lender (other than ▇▇▇▇▇▇) shall
also obtain the written consent of Agent, which consent shall not be
unreasonably withheld, (2) the amount of Commitments and Loans of the assigning
Lender being assigned shall in no event be less than the lesser of (a)
$1,000,000 or (b) the entire amount of the Commitments and Loans of such
assigning Lender and (3)(a) each such assignment shall be of a pro rata portion
of all such assigning Lender's Loans and Commitments hereunder, and (b) the
parties to such assignment shall execute and deliver to Agent for acceptance and
recording a Assignment and Acceptance Agreement together with (i) a processing
and recording fee of $3,500 payable by the assigning Lender to Agent and (ii)
each of the Notes originally delivered to the assigning Lender. The
administrative fee referred to in clause (3) of the preceding sentence shall not
apply to an assignment of a security interest in all or any portion of a
Lender's rights under this Agreement or the other Loan Documents, as described
in paragraph (D)(1) below. Upon receipt of all of the foregoing, Agent shall
notify Borrower of such assignment and Borrower shall comply with its
obligations under the last sentence of subsection 2.1(G). In the case of an
-----------------
assignment authorized under this subsection 9.5, the assignee shall be
--------------
considered to be a "Lender" hereunder and Borrower hereby acknowledges and
agrees that any assignment will give rise to a direct obligation of Borrower to
the assignee. The assigning Lender shall be relieved of its obligations to make
Loans hereunder with respect to the assigned portion of its Commitment. Except
during any period in which an Event of Default exists, ▇▇▇▇▇▇ agrees that at no
time shall the amount of ▇▇▇▇▇▇'▇ Commitments be less than the amount of the
largest Commitments held by any other Lender.
(B) Participations. Each Lender may sell participations in all or any
--------------
part of any Loans or Commitments made by it to another Person; provided,
--------
however, such Lender shall first obtain the prior written consent of Agent,
-------
which consent shall not be unreasonably withheld. All amounts payable by
Borrower hereunder shall be determined as if that Lender had not sold such
participation and the holder of any such participation shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly effecting (1) any reduction in the principal amount or an interest rate
on any Loan in which such holder participates; (2) any extension of the
Termination Date or the date fixed for any payment of interest or principal
payable with respect to any Loan in which such holder participates; and (3) any
release of substantially all of the Collateral. Borrower hereby acknowledges
and agrees that the participant under each participation shall for purposes of
subsections 2.8, 2.9, 2.10, 9.6 and 10.2 be considered to be a "Lender,"
----------------------------------------
provided that a participant shall not be entitled to receive any greater payment
under such Sections than the applicable Lender would have been entitled to
receive with respect to the participation sold to such participant.
59
(C) No Relief of Obligations; Cooperation; Ability to Make LIBOR
------------------------------------------------------------
Loans. Except as otherwise provided in subsection 9.5(A) no Lender shall, as
----- -----------------
between Borrower and that Lender, be relieved of any of its obligations
hereunder as a result of any sale, assignment, transfer or negotiation of, or
granting of participation in, all or any part of the Loans or other Obligations
owed to such Lender. Each Lender may furnish any information concerning Borrower
and its Subsidiaries in the possession of that Lender from time to time to
Eligible Assignees and participants (including prospective assignees and
participants), subject to the provisions of subsection 10.18. Borrower agrees
----------------
that until such time as the Revolving Credit Commitment of ▇▇▇▇▇▇ is no more
than $30,000,000 it will use its best efforts to assist and cooperate with Agent
in any manner reasonably requested by Agent to effect the sale of a
participation or an assignment described above, including without limitation
assistance in the preparation of appropriate disclosure documents or placement
memoranda. As to any participation or assignment by any Lender other than ▇▇▇▇▇▇
and as to any participation or assignment by ▇▇▇▇▇▇ after the Revolving Credit
Commitment of ▇▇▇▇▇▇ is reduced to no more than $30,000,000, Borrower agrees
that it will use its reasonable efforts to assist and cooperate with such Lender
and ▇▇▇▇▇▇ in such case to effect the sale of a participation or an assignment
describe above. Notwithstanding anything contained in this Agreement to the
contrary, so long as the Requisite Lenders shall remain capable of making LIBOR
Loans, no Person shall become a Lender hereunder unless such Person shall also
be capable of making LIBOR Loans.
(D) Security Interests; Assignment to Affiliates. Notwithstanding any
--------------------------------------------
other provision set forth in this Agreement, any Lender may at any time
following written notice to Agent (1) pledge the Obligations held by it or
create a security interest in all or any portion of its rights under this
Agreement or the other Loan Documents in favor of any Person; provided, however
-------- -------
(a) no such pledge or grant of security interest to any Person shall release
such Lender from its obligations hereunder or under any other Loan Document and
(b) the acquisition of title to such Lender's Obligations pursuant to any
foreclosure or other exercise of remedies by such Person shall be subject to the
provisions of this Agreement and the other Loan Documents in all respects
including, without limitation, any consent required by subsection 9.5; and (2)
--------------
subject to complying with the provisions of subsection 9.5 (A), assign all or
------------------
any portion of its funded loans to an Eligible Assignee which is a Subsidiary of
such Lender or its parent company, to one or more other Lenders, or to a Related
Fund. For purposes of this paragraph, a "Related Fund" shall mean, with respect
to any Lender, a fund or other investment vehicle that invests in commercial
loans and is managed by such Lender or by the same investment advisor that
manages such Lender or by an Affiliate of such investment advisor.
(E) Recording of Assignments. Agent shall maintain at its office in
------------------------
Chicago, Illinois a copy of each Assignment and Acceptance Agreement
60
delivered to it and a register for the recordation of the names and addresses of
Lenders, and the commitments of, and principal amount of the Loans owing to each
Lender pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be presumptive evidence of the amounts due and
owing to Lender in the absence of manifest error. Borrower, Agent and each
Lender may treat each Person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by Borrower and any Lender, at any
reasonable time upon reasonable prior notice.
9.6 Set Off and Sharing of Payments. In addition to any rights now or
-------------------------------
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default,
each Lender is hereby authorized by Borrower at any time or from time to time,
with reasonably prompt subsequent notice to Borrower (any prior or
contemporaneous notice being hereby expressly waived) to set off and to
appropriate and to apply any and all (a) balances held by such Lender at any of
its offices for the account of Borrower or any of its Subsidiaries (regardless
of whether such balances are then due to Borrower or its Subsidiaries), and (b)
other property at any time held or owing by such Lender to or for the credit or
for the account of Borrower or any of its Subsidiaries, against and on account
of any of the Obligations; except that no Lender shall exercise any such right
without the prior written consent of Agent. Any Lender exercising its right to
set off shall purchase for cash (and the other Lenders shall sell) interests in
each of such other Lender's Pro Rata Share of the Obligations as would be
necessary to cause all Lenders to share the amount so set off with each other
Lender in accordance with their respective Pro Rata Shares. Borrower agrees,
to the fullest extent permitted by law, that any Lender may exercise its right
to set off with respect to amounts in excess of its Pro Rata Share of the
Obligations and upon doing so shall deliver such amount so set off to Agent for
the benefit of Agent and of all Lenders in accordance with their Pro Rata
Shares.
9.7 Disbursement of Funds. Agent may, on behalf of Lenders, disburse
---------------------
funds to Borrower for Loans requested. Each Lender shall reimburse Agent on
demand for all funds disbursed on its behalf by Agent, or if Agent so requests,
each Lender will remit to Agent its Pro Rata Share of any Loan or Advance before
Agent disburses same to Borrower. If Agent elects to require that each Lender
make funds available to Agent prior to a disbursement by Agent to Borrower,
Agent shall advise each Lender by telephone, telex, fax or telecopy of the
amount of such Lender's Pro Rata Share of the Loan requested by Borrower no
later than 1:00 p.m. Chicago time on the Funding Date applicable thereto, and
each such Lender shall pay Agent such Lender's Pro Rata Share of such requested
Loan, in same day funds, by wire transfer to Agent's account on such Funding
Date.
61
9.8 Settlements, Payments and Information.
-------------------------------------
(A) Revolving Advances and Payments; Fee Payments.
---------------------------------------------
(1) Fluctuation of Revolving Loan Balance. The Revolving Loan
-------------------------------------
balance may fluctuate from day to day through Agent's disbursement of funds to,
and receipt of funds from, Borrower. In order to minimize the frequency of
transfers of funds between Agent and each Lender notwithstanding terms to the
contrary set forth in Section 2 and subsection 9.7, Revolving Advances and
--------- --------------
repayments (except as set forth in subsection 2.1(E)) will be settled according
------------------
to the procedures described in this subsection 9.8. Notwithstanding these
--------------
procedures, each Lender's obligation to fund its portion of any advances made by
Agent to Borrower will commence on the date such advances are made by Agent.
Such payments will be made by such Lender without set-off, counterclaim or
reduction of any kind.
(2) Settlement Dates. Once each week for the Revolving Loan or
----------------
more frequently (including daily), if Agent so elects (each such day being a
"Settlement Date"), Agent will advise each Lender by telephone, fax or telecopy
of the amount of each such Lender's Pro Rata Share of the Revolving Loan. In the
event payments are necessary to adjust the amount of such Lender's required Pro
Rata Share of the Revolving Loan balance to such Lender's actual Pro Rata Share
of the Revolving Loan balance as of any Settlement Date, the party from which
such payment is due will pay the other, in same day funds, by wire transfer to
the other's account not later than 3:00 p.m. Chicago time on the Business Day
following the Settlement Date.
(3) Settlement Definitions. For purposes of this subsection
---------------------- ----------
9.8(A), the following terms and conditions will have the meanings indicated:
------
(a) "Daily Loan Balance" means an amount calculated as of the
end of each calendar day by subtracting (i) the cumulative principal amount
paid by Agent to a Lender on a Loan from the Closing Date through and
including such calendar day, from (ii) the cumulative principal amount on a
Loan advanced by such Lender to Agent on that Loan from the Closing Date
through and including such calendar day.
(b) "Daily Interest Rate" means an amount calculated by
dividing the interest rate payable to a Lender on a Loan (as set forth in
subsection 2.2) as of each calendar day by three hundred sixty (360).
--------------
62
(c) "Daily Interest Amount" means an amount calculated by
multiplying the Daily Loan Balance of a Loan by the associated Daily Interest
Rate on that Loan.
(d) "Interest Ratio" means a number calculated by dividing
the total amount of the interest on a Loan received by Agent with respect to
the immediately preceding month by the total amount of interest on that Loan
due from Borrower during the immediately preceding month.
(4) Settlement Payments. On the first (1st) Business Day of each
-------------------
month ("Interest Settlement Date"), Agent will advise each Lender by telephone,
fax or telecopy of the amount of such Lender's share of interest and fees on
each of the Loans as of the end of the last day of the immediately preceding
month. Provided that such Lender has made all payments required to be made by it
under this Agreement, Agent will pay to such Lender, by wire transfer to such
Lender's account (as specified by such Lender on the signature page of this
Agreement or the applicable Assignment and Acceptance Agreement, as amended by
such Lender from time to time after the date hereof or in the applicable
Assignment and Acceptance Agreement) not later than 3:00 p.m. Chicago time on
the next Business Day following the Interest Settlement Date, such Lender's
share of interest and fees on each of the Loans. Such Lender's share of interest
on each Loan will be calculated for that Loan by adding together the Daily
Interest Amounts for each calendar day of the prior month for that Loan and
multiplying the total thereof by the Interest Ratio for that Loan. Each Lender's
share of the Unused Line Fee described in subsection 2.3(A) shall be an amount
-----------------
equal to (a)(i) such Lender's average Revolving Loan Commitment during such
month, less (ii) the sum of (x) such Lender's average Daily Loan Balance of the
----
Revolving Loans and the Swingline Loan, plus (y) such Lender's Pro Rata Share of
----
the average daily aggregate amount of Letter of Credit Liability, in each case
for the preceding month, multiplied by (b) the percentage required by subsection
---------- ----------
2.3(A). All other fees paid to Agent for the benefit of Lenders hereunder shall
------
be paid and calculated based on each Lender's Commitment in the appropriate Loan
facilities on which such fees are associated.
(B) [Intentionally Omitted]
(C) Return of Payments.
------------------
(1) Recovery After Non-Receipt of Expected Payment. If Agent pays
----------------------------------------------
an amount to a Lender under this Agreement in the belief or expectation that a
related payment has been or will be received by Agent from Borrower and such
related payment is not received by Agent, then Agent will be entitled to recover
such amount from such Lender without set-off, counterclaim or deduction of any
kind together with interest thereon, for each day from and
63
including the date such amount is made available by Agent to such Lender to but
excluding the date of repayment to Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by Agent in accordance with banking
industry rules on interbank compensation.
(2) Recovery of Returned Payment. If Agent determines at any time
----------------------------
that any amount received by Agent under this Agreement must be returned to
Borrower or paid to any other Person pursuant to any requirement of law, court
order or otherwise, then, notwithstanding any other term or condition of this
Agreement, Agent will not be required to distribute any portion thereof to any
Lender. In addition, each Lender will repay to Agent on demand any portion of
such amount that Agent has distributed to such Lender, together with interest at
such rate, if any, as Agent is required to pay to Borrower or such other Person,
without set-off, counterclaim or deduction of any kind.
9.9 Discretionary Advances. Notwithstanding anything contained herein to
----------------------
the contrary, Agent may, in its sole discretion make Revolving Advances in an
aggregate amount of not more than $10,000,000 in excess of the limitations set
forth in the Borrowing Base for the purpose of preserving or protecting the
Collateral or for incurring any costs associated with collection or enforcing
rights or remedies against the Collateral, or incurred in any action to enforce
this Agreement or any other Loan Document.
SECTION 10. MISCELLANEOUS
-------------
10.1 Expenses and Attorneys' Fees. Whether or not the transactions
----------------------------
contemplated hereby shall be consummated, Borrower agrees to promptly pay all
reasonable fees, costs and expenses incurred in connection with any matters
contemplated by or arising out of this Agreement or the other Loan Documents
including the following, and all such fees, costs and expenses shall be part of
the Obligations, payable on demand and secured by the Collateral: (a) fees,
costs and expenses incurred by Agent (including attorneys' fees and expenses,
the allocated costs of Agent's internal legal staff and fees of environmental
consultants, accountants and other professionals retained by Agent) incurred in
connection with the examination, review, due diligence investigation,
documentation and closing of the financing arrangements evidenced by the Loan
Documents; (b) fees, costs and expenses incurred by Agent (including attorneys'
fees and expenses, the allocated costs of Agent's internal legal staff and fees
of environmental consultants, accountants and other professionals retained by
Agent) incurred in connection with the review, negotiation, preparation,
documentation, execution, syndication, and administration of the Loan Documents,
the Loans, and any amendments, waivers, consents, forbearances and other
modifications relating thereto or any subordination or intercreditor agreements,
including reasonable documentation charges assessed by Agent for amendments,
waivers, consents
64
and any other documentation prepared by Agent's internal legal staff; (c) fees,
costs and expenses (including attorneys' fees and allocated costs of internal
legal staff) incurred by Agent in creating, perfecting and maintaining
perfection of Liens in favor of Agent, on behalf of Agent and Lenders; (d) fees,
costs and expenses incurred by Agent in connection with forwarding to Borrower
the proceeds of Loans including Agent's or any Lenders' standard wire transfer
fee; (e) fees, costs, expenses and bank charges, including bank charges for
returned checks, incurred by Agent or any Lender in establishing, maintaining
and handling lock box accounts, blocked accounts or other accounts for
collection of the Collateral; (f) fees, costs and expenses of Agent or any
Lender (including as to Agent, but not as to any Lender, attorneys' fees and
allocated costs of internal legal staff, unless otherwise approved by Agent) and
costs of settlement incurred in collecting upon or enforcing rights against the
Collateral or incurred in any action to enforce this Agreement or the other Loan
Documents or to collect any payments due from Borrower or any other Loan Party
under this Agreement or any other Loan Document or incurred in connection with
any refinancing or restructuring of the credit arrangements provided under this
Agreement, whether in the nature of a "workout" or in connection with any
insolvency or bankruptcy proceedings or otherwise.
10.2 Indemnity. In addition to the payment of expenses pursuant to
---------
subsection 10.1, whether or not the transactions contemplated hereby shall be
---------------
consummated, Borrower agrees to indemnify, pay and hold Agent and each Lender,
and the officers, directors, employees, agents, consultants, auditors, persons
engaged by Agent or any Lender, to evaluate or monitor the Collateral,
affiliates and attorneys of Agent, Lender and such holders (collectively called
the "Indemnitees") harmless from and against any and all liabilities,
obligations, actual losses, actual damages, penalties, actions, judgments,
suits, claims, costs, reasonable expenses and disbursements of any kind or
nature whatsoever (including the fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding, commenced or threatened, whether or not such Indemnitee shall be
designated a party thereto) that may be imposed on, incurred by, or asserted
against that Indemnitee, in any manner relating to or arising out of this
Agreement or the other Loan Documents, the consummation of the transactions
contemplated by this Agreement, the statements contained in the commitment
letters, if any, delivered by Agent or any Lender, Agent's and each Lender's
agreement to make the Loans hereunder, the use or intended use of the proceeds
of any of the Loans or the exercise of any right or remedy hereunder or under
the other Loan Documents (the "Indemnified Liabilities"); provided that Borrower
--------
shall have no obligation to an Indemnitee hereunder with respect to Indemnified
Liabilities arising from the gross negligence or willful misconduct of that
Indemnitee as determined by a final non-appealable judgment by a court of
competent jurisdiction. The foregoing indemnity shall not apply to amounts
intended to be covered by yield protection, tax and
65
breakage provisions set forth in subsections 2.9, 2.10 and 2.12, which are the
--------------- ---- ----
only indemnification obligations that shall apply to such amounts.
10.3 Notices. Unless otherwise specifically provided herein, all notices
-------
shall be in writing addressed to the respective party as set forth below and may
be personally served, faxed, telecopied or sent by overnight courier service or
United States mail and shall be deemed to have been given: (a) if delivered in
person, when delivered; (b) if delivered by fax or telecopy, on the date of
transmission if transmitted on a Business Day before 4:00 p.m. Chicago time or,
if not, on the next succeeding Business Day; (c) if delivered by overnight
courier, the next day after delivery to such courier properly addressed; or (d)
if by U.S. Mail, four (4) Business Days after depositing in the United States
mail, with postage prepaid and properly addressed.
If to Borrower: BANCTEC, INC.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ #▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Fax/Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Reboul, MacMurray, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
& Kristol
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Fax/Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Agent or to ▇▇▇▇▇▇: ▇▇▇▇▇▇ FINANCIAL, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attn: Account Manager - ▇▇▇▇▇▇ Corporate
Finance - BancTec, Inc.
Fax/Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ FINANCIAL, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Legal Services/HCF- BancTec, Inc.
Fax/Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Lender: Its address indicated on the signature page hereto, in an
Assignment and Acceptance Agreement or in a notice to Agent and Borrower or to
such other address as the party addressed shall have previously designated by
written notice to the serving party, given in accordance with this subsection
----------
10.3.
----
66
10.4 Survival of Representations and Warranties and Certain Agreements.
-----------------------------------------------------------------
All agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement and the making of the Loans hereunder.
Notwithstanding anything in this Agreement or implied by law to the contrary,
the agreements of Borrower and Lender set forth in subsections 10.1, 10.2, 10.6,
-----------------------------
10.11, 10.14, and 10.15 (Borrower's agreement to pay fees, agreement to
-----------------------
indemnify Lender, the reinstatement of Obligations, agreement as to choice of
law and jurisdiction and Borrower's and Lender's waiver of a jury trial) shall
survive the payment of the Loans and the termination of this Agreement.
10.5 Indulgence Not Waiver. No failure or delay on the part of Agent, any
---------------------
Lender or any holder of any Note in the exercise of any power, right or
privilege hereunder or under any Note shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege.
10.6 Marshaling; Payments Set Aside. Neither Agent nor any Lender shall
------------------------------
be under any obligation to marshal any assets in favor of any Loan Party or any
other party or against or in payment of any or all of the Obligations. To the
extent that any Loan Party makes a payment or payments to Agent and/or any
Lender or Agent and/or any Lender enforces its security interests or exercise
its rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, state or federal
law, common law or equitable cause, then to the extent of such recovery, the
Obligations or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor, shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or setoff had
not occurred.
10.7 Entire Agreement. This Agreement and the other Loan Documents embody
----------------
the entire agreement among the parties hereto and supersede all prior
commitments, agreements, representations, and understandings, whether written or
oral, relating to the subject matter hereof, and may not be contradicted or
varied by evidence of prior, contemporaneous, or subsequent oral agreements or
discussions of the parties hereto.
10.8 Severability. The invalidity, illegality or unenforceability in any
------------
jurisdiction of any provision in or obligation under this Agreement or the other
Loan Documents shall not affect or impair the validity, legality or
enforceability
67
of the remaining provisions or obligations under this Agreement, or the other
Loan Documents.
10.9 Lenders' Obligations Several; Independent Nature of Lenders' Rights.
-------------------------------------------------------------------
The obligation of each Lender hereunder is several and not joint and neither
Agent nor any Lender shall be responsible for the obligation or Commitment of
any other Lender hereunder. In the event that any Lender at any time should
fail to make a Loan as herein provided, the Lenders, or any of them, at their
sole option, may make the Loan that was to have been made by the Lender so
failing to make such Loan. Nothing contained in any Loan Document or any other
agreement relating to the credit facility established herein and no action taken
by Agent or any Lender pursuant hereto or thereto or in connection with the
credit facility established herein shall be deemed to constitute Lenders to be a
partnership, an association, a joint venture or any other kind of entity or
establish a fiduciary, trust or agency relationship among the Lenders. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt. Provided Agent fails or refuses to exercise any remedies
against Borrower after receiving the direction of the Requisite Lenders, each
Lender shall be entitled to protect and enforce its rights arising out of this
Agreement and it shall not be necessary for any other Lender to be joined as an
additional party in any proceeding for such purpose.
10.10 Headings. Section and subsection headings in this Agreement are
--------
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
10.11 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
--------------
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
10.12 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors and
assigns, provided, however, Borrower may not assign its rights or obligations
-------- -------
hereunder without the written consent of Lenders.
10.13 No Fiduciary Relationship; No Duty; Limitation of Liabilities.
-------------------------------------------------------------
(A) No Fiduciary Relationship. No provision in this Agreement or in
-------------------------
any of the other Loan Documents and no course of dealing between the parties
shall be deemed to create any fiduciary duty by Agent or any Lender to Borrower.
(B) No Duty. All attorneys, accountants, appraisers, and other
-------
professional Persons and consultants retained by Agent or any Lender shall have
the right to act exclusively in the interest of Agent or such Lender and
68
shall have no duty of disclosure, duty of loyalty, duty of care, or other duty
or obligation of any type or nature whatsoever to Borrower or any of Borrower's
shareholders or any other Person.
(C) Limitation of Liabilities. Neither Agent nor any Lender, nor any
-------------------------
affiliate, officer, director, shareholder, employee, attorney, or agent of Agent
or any Lender shall have any liability with respect to, and Borrower hereby
waives, releases, and agrees not to ▇▇▇ any of them upon, any claim for any
special, indirect, incidental, or consequential damages (as opposed to direct or
actual damages that are reasonably foreseeable as a result of any breach)
suffered or incurred by Borrower in connection with, arising out of, or in any
way related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.
To the extent not prohibited by applicable law, Borrower hereby waives,
releases, and agrees not to ▇▇▇ Agent or any Lender or any of Agent's or any
Lender's affiliates, officers, directors, employees, attorneys, or agents for
punitive damages in respect of any claim in connection with, arising out of, or
in any way related to, this Agreement or any of the other Loan Documents, or any
of the transactions contemplated by this Agreement or any of the transactions
contemplated hereby.
10.14 CONSENT TO JURISDICTION. BORROWER HEREBY CONSENTS TO THE
-----------------------
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF ▇▇▇▇,
STATE OF ILLINOIS AND IRREVOCABLY AGREES THAT, SUBJECT TO AGENT'S ELECTION, ALL
ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. BORROWER EXPRESSLY SUBMITS
AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE
OF FORUM NON CONVENIENS. BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON BORROWER BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWER,
AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE
TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED. IN ANY LITIGATION, TRIAL,
ARBITRATION OR OTHER DISPUTE RESOLUTION PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS, ALL DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
OF BORROWER OR OF ITS AFFILIATES SHALL BE DEEMED TO BE EMPLOYEES OR MANAGING
AGENTS OF BORROWER FOR PURPOSES OF ALL APPLICABLE LAW OR COURT RULES REGARDING
THE PRODUCTION OF WITNESSES BY NOTICE FOR TESTIMONY (WHETHER IN A DEPOSITION, AT
TRIAL OR OTHERWISE). BORROWER AGREES THAT AGENT'S OR ANY LENDER'S COUNSEL IN
ANY SUCH DISPUTE RESOLUTION PROCEEDING MAY EXAMINE ANY OF THESE INDIVIDUALS AS
IF UNDER CROSS-EXAMINATION AND THAT ANY DISCOVERY DEPOSITION OF ANY OF THEM
69
MAY BE USED IN THAT PROCEEDING AS IF IT WERE AN EVIDENCE DEPOSITION. BORROWER IN
ANY EVENT WILL USE ALL COMMERCIALLY REASONABLE EFFORTS TO PRODUCE IN ANY SUCH
DISPUTE RESOLUTION PROCEEDING, AT THE TIME AND IN THE MANNER REQUESTED BY AGENT
OR ANY LENDER, ALL PERSONS, DOCUMENTS (WHETHER IN TANGIBLE, ELECTRONIC OR OTHER
FORM) OR OTHER THINGS UNDER ITS CONTROL AND RELATING TO THE DISPUTE.
10.15 WAIVER OF JURY TRIAL. BORROWER, AGENT AND EACH LENDER HEREBY WAIVE
--------------------
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. BORROWER,
AGENT AND EACH LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN
ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT EACH WILL
CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. BORROWER,
AGENT AND EACH LENDER WARRANT AND REPRESENT THAT EACH HAS HAD THE OPPORTUNITY OF
REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
10.16 Construction. Borrower, Agent and each Lender each acknowledge that
------------
it has had the benefit of legal counsel of its own choice and has been afforded
an opportunity to review this Agreement and the other Loan Documents with its
legal counsel and that this Agreement and the other Loan Documents shall be
construed as if jointly drafted by Borrower, Agent and each Lender.
10.17 Counterparts; Effectiveness. This Agreement and any amendments,
---------------------------
waivers, consents, or supplements may be executed via telecopier or facsimile
transmission in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which counterparts together shall constitute one
and the same instrument. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto.
10.18 Confidentiality. Agent and each Lender agree to exercise their best
---------------
efforts to keep confidential any non-public information delivered pursuant to
the Loan Documents and not to disclose such confidential non-public information
to Persons other than Persons on "a need to know basis", including respective
affiliates, officers, directors and employees; or its potential assignees or
participants; or Persons employed by or engaged by Agent, a Lender or a Lender's
assignees or participants including, without limitation, attorneys, auditors,
professional consultants, rating agencies and portfolio
70
management services. The confidentiality provisions contained in this subsection
shall not apply to disclosures (i) required to be made by Agent or any Lender to
any regulatory or governmental agency or pursuant to legal process (provided
that Agent or such Lender agrees to use reasonable efforts to notify Borrower of
such requirement or legal process and will not oppose any action by Borrower to
obtain an appropriate protective order or injunction to prevent such
disclosure), or (ii) consisting of general portfolio information that does not
identify Borrower, or (iii) to the extent needed by Agent or any Lender for the
protection or enforcement of any of its rights or interests pursuant to the Loan
Documentation, and shall not apply to any information already known to Agent or
a Lender at the time of delivery thereof (other than such information already
known by Agent or such Lender by virtue of any breach by any third party of any
confidentiality obligation owed to Borrower) or any information which becomes
public information (other than as a result of a breach of this Agreement). The
obligations of Agent and Lenders under this subsection 10.18 shall supersede and
----------------
replace the obligations of Agent and Lenders under any confidentiality agreement
in respect of this financing executed and delivered by Agent or any Lender prior
to the date hereof. In no event shall Agent or any Lender be obligated or
required to return any materials furnished by Borrower; provided, however, each
-------- -------
potential assignee or participant shall be required to agree that if it does not
become an assignee (or participant) it shall return all materials furnished to
it by Borrower in connection herewith.
SECTION 11. DEFINITIONS AND ACCOUNTING TERMS
--------------------------------
11.1 Certain Defined Terms. The following terms used in this Agreement
---------------------
shall have the following meanings:
"Accounts" means all "accounts" (as defined in the UCC), accounts receivable,
contract rights and general intangibles relating thereto, notes, drafts and
other forms of obligations owed to or owned by Borrower arising or resulting
from the sale of goods or the rendering of services, whether or not earned by
performance.
"Additional Mortgaged Property" means all real property owned or leased by
Borrower or its Subsidiaries in which after the Closing Date Agent requires a
mortgage to secure the Obligations.
"Advance" shall mean an advance under the Revolving Loan or Swingline Loan.
"Affiliate" means any Person (other than Agent or any Lender): (a) directly
or indirectly controlling, controlled by, or under common control with, any Loan
Party; (b) directly or indirectly owning or holding five percent (5%) or more of
any equity interest in Borrower; (c) five percent (5%) or more of whose stock
71
or other equity interest having ordinary voting power for the election of
directors or the power to direct or cause the direction of management, is
directly or indirectly owned or held by Borrower; or (d) which has a senior
officer who is also a senior officer of Borrower. For purposes of this
definition, "control" (including with correlative meanings, the terms
"controlling", "controlled by" and "under common control with") means the
possession directly or indirectly of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of
voting securities or other equity interest, or by contract or otherwise.
"Agent" means ▇▇▇▇▇▇ in its capacity as agent for the Lenders under the Loan
Documents and any successor in such capacity appointed pursuant to subsection
----------
9.1(G).
------
"Agent's Account" means ABA No. ▇▇▇▇-▇▇▇▇-▇, Account No. 52-98695 at Bank
One, NA, ▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Reference: ▇▇▇▇▇▇ Corporate
Finance for the benefit of BancTec, Inc.
"Agreement" means this Loan and Security Agreement as it may be amended,
restated, supplemented or otherwise modified from time to time.
"Asset Disposition" means the disposition, whether by sale, lease, transfer,
loss, damage, destruction, condemnation or otherwise, of any or all of the
assets of Borrower or any of its Subsidiaries other than sales of Inventory in
the ordinary course of business.
"Assignment and Acceptance Agreement" shall mean an Assignment and Acceptance
Agreement substantially in the form of Exhibit A.
---------
"Availability" means the excess, if any, of the Borrowing Base over the sum
of the Revolving Loan and Letter of Credit Reserve.
"Average Daily Availability" means the amount obtained by adding the
Availability at the end of each day during the period in question and by
dividing such sum by the number of days in such period.
"Bank Letter of Credit" means each letter of credit issued by a bank
acceptable to and approved by Agent for the account of Borrower and supported by
a risk participation agreement issued by Agent.
"Base Rate" means a variable rate of interest per annum equal to the higher
of (a) the rate of interest from time to time published by the Board of
Governors of the Federal Reserve System as the "Bank Prime Loan" rate in Federal
Reserve Statistical Release H.15(519) entitled "Selected Interest Rates" or any
successor publication of the Federal Reserve System reporting the Bank Prime
Loan rate or its equivalent, or (b) the Federal Funds Effective Rate plus
72
fifty (50) basis points. The statistical release generally sets forth a Bank
Prime Loan rate for each Business Day. The applicable Bank Prime Loan rate for
any date not set forth shall be the rate set forth for the last preceding date.
In the event the Board of Governors of the Federal Reserve System ceases to
publish a Bank Prime Loan rate or its equivalent, the term "Base Rate" shall
mean a variable rate of interest per annum equal to the highest of the "prime
rate", "reference rate", "base rate", or other similar rate announced from time
to time by any of the three largest banks (based on combined capital and
surplus) headquartered in New York, New York (with the understanding that any
such rate may merely be a reference rate and may not necessarily represent the
lowest or best rate actually charged to any customer by any such bank).
"Base Rate Loans" means Loans bearing interest at rates determined by
reference to the Base Rate.
"Borrower's Accountants" means the independent certified public accountants
selected by Borrower and its Subsidiaries and reasonably acceptable to Agent,
which selection shall not be modified during the term of this Agreement without
Agent's prior written consent. Notwithstanding the foregoing, any "Big Five"
accounting firm shall constitute acceptable independent certified public
accountants.
"Borrowing Base Certificate" means a certificate and schedule duly executed
by an officer of Borrower appropriately completed and in substantially the form
of Exhibit B.
---------
"Business Day" means any day excluding Saturday, Sunday and any day which is
a legal holiday under the laws of the States of Illinois, Pennsylvania, or is a
day on which banking institutions located in any such state are closed, or for
the purposes of LIBOR Loans only, a day on which commercial banks are open for
dealings in Dollar deposits in the London, England (U.K.) market.
"Capital Expenditures" means all expenditures (including deposits) for, or
contracts for expenditures (excluding contracts for expenditures under or with
respect to Capital Leases, but including cash down payments for assets acquired
under Capital Leases) with respect to any fixed assets or improvements, or for
replacements, substitutions or additions thereto, which have a useful life of
more than one year, including the direct or indirect acquisition of such assets
by way of increased product or service charges, offset items or otherwise.
"Capital Lease" means any lease of any property (whether real, personal or
mixed) that, in conformity with GAAP, should be accounted for as a capital
lease.
73
"Cash Equivalents" means: (a) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within twelve (12) months from the date of acquisition
thereof; (b) commercial paper maturing no more than twelve (12) months from the
date issued and, at the time of acquisition, having a rating of at least A-1
from Standard & Poor's Corporation or at least P-1 from ▇▇▇▇▇'▇ Investors
Service, Inc.; (c) certificates of deposit or bankers' acceptances maturing
within twelve (12) months from the date of issuance thereof issued by, or
overnight repurchase agreements having a term of ninety (90) days or less from
any commercial bank organized under the laws of the United States of America, or
any state thereof or the District of Columbia, having combined capital and
surplus of not less than $250,000,000 and not subject to setoff rights in favor
of such bank; (d) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the foregoing requirements; and (e) other
short-term liquid investments approved in writing by the Agent. In addition to
the foregoing, as to any foreign Subsidiary of Borrower "Cash Equivalents" shall
also mean (i) marketable direct obligations issued or unconditionally guaranteed
by such country in which such foreign Subsidiary has operations or issued by any
agency thereof and backed by the full faith and credit of such country and is
maturing within 12 months from the date of acquisition thereof and (ii)
certificates of deposit or banker's acceptances maturing within 12 months from
the date of issuance thereof issued by, or repurchase agreements having a term
of 90 days or less from any commercial bank organized under the laws of any
country in which such foreign Subsidiary has operations, and (iii) deposits with
any commercial bank organized under the laws of any country in which such
foreign Subsidiary has operations.
"Closing Date" means May 30, 2001.
"Closing Date Mortgaged Property" means the Mortgaged Property owned by
Borrower on the Closing Date, provided that Agent has a first priority Lien on
such Mortgaged Property, subject to Permitted Encumbrances. If subsequent to
the Closing Date Agent ceases to have a first priority Lien on such Mortgaged
Property or such Mortgaged Property is sold or otherwise transferred, such
Mortgaged Property shall cease to constitute Closing Date Mortgaged Property.
"Commitment" or "Commitments" means the commitment or commitments of Lenders
to make Loans as set forth in subsection 2.1(B) and to provide Lender Letters of
-----------------
Credit as set forth in subsection 2.1(H).
----------------
"Compliance and Pricing Certificate" means a certificate duly executed by the
chief executive officer or chief financial officer of Borrower appropriately
completed and in substantially the form of Exhibit D.
---------
74
"Consolidated Net Tangible Assets" shall have the same meaning as in the
Unsecured Senior Notes Indenture.
"Default" means a condition, act or event that, after notice or lapse of time
or both, would constitute an Event of Default if that condition, act or event
were not cured or removed within any applicable grace or cure period.
"Defaulted Amount" means, with respect to any Lender at any time, any amount
required to be paid by such Lender to the Agent or any other Lender hereunder or
under any other Loan Document which has not been so paid.
"Defaulting Lender" means, at any time, any Lender that owes a Defaulted
Amount.
"Designated Account Debtors" means each of the account Debtors as set forth
on Schedule 11.1(a). Agent reserves the right from time to time and at any time
----------------
to determine in its reasonable credit judgment which account debtors, if any, of
Borrower shall constitute Designated Account Debtors.
"EBITDA" means, for any period, without duplication, the total of the
following for Borrower and its Subsidiaries on a consolidated basis, each
calculated for such period: (1) net income determined in accordance with GAAP;
plus, to the extent included in the calculation of net income, (2) the sum of
----
(a) income and franchise taxes paid or accrued; (b) interest expenses, net of
interest income, paid or accrued, (c) amortization or write-off of debt discount
and debt issuance costs and commissions, discounts and other fees and charges
associated with Indebtedness; (d) amortization and depreciation and (e) other
non-cash charges (excluding accruals for cash expenses made in the ordinary
course of business); less, to the extent included in the calculation of net
----
income, (3) the sum of (a) the income of any Person (other than wholly-owned
Subsidiaries of Borrower) in which Borrower or a wholly owned Subsidiary of
Borrower has an ownership interest except to the extent such income is received
by Borrower or such wholly-owned Subsidiary in a cash distribution during such
period; (b) gains or losses from sales or other dispositions of assets (other
than Inventory in the normal course of business); and (c) extraordinary or non-
recurring gains, but not net of extraordinary "cash" losses and not net of non-
recurring "cash" losses and expenses which exceed $2,000,000 in the aggregate
during any Loan Year. Notwithstanding anything herein to the contrary, to the
extent that the Fixed Charge Coverage Ratio is lower than the ratio permitted by
the Financial Covenants Rider, EBITDA shall include the cash investment (through
the purchase of preferred or common stock or Indebtedness of the Company, in
each case on terms subordinating such investment to Indebtedness of the Company
to the Lenders at least to the same extent as the Subordinated Debt, or
otherwise on terms and conditions satisfactory to the Agent) in the Company made
by WCAS or any of its Affiliates prior to the date by which the Compliance and
Pricing
75
Certificate must be delivered in respect to the applicable period, in order to
increase the Fixed Charge Coverage Ratio to the required level.
"Eligible Assignee" shall mean (a) a commercial bank organized under the laws
of the United States, or any state thereof, and having a combined capital and
surplus of at least $100,000,000 (or $250,000,000 in the case of an assignment
of a Revolving Loan Commitment); (b) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least $100,000,000 (or
$250,000,000 in the case of an assignment of a Revolving Loan Commitment),
provided that such bank is acting through a branch or agency located in the
country in which it is organized or another country which is also a member of
the OECD; (c) any other entity which is an "accredited investor" (as defined in
Regulation D under the Securities Act) which extends credit or buys loans as one
of its businesses, including but not limited to, insurance companies, mutual
funds and lease financing companies, (d) a Related Fund (as such term is defined
in subsection 9.5(D)), and (e) a Person that is primarily engaged in the
-----------------
business of lending that is (i) a Subsidiary of a Lender, (ii) a Subsidiary of a
Person of which a Lender is a Subsidiary, or (iii) a Person of which a Lender is
a Subsidiary; provided however, that no Affiliate of Borrower shall be an
-----------------
Eligible Assignee.
"Employee Benefit Plan" means any employee benefit plan within the meaning of
Section 3(3) of ERISA which (a) is maintained for employees of any Loan Party or
------------
any ERISA Affiliate or (b) has at any time within the preceding 6 years been
maintained for the employees of any Loan Party or any current or former ERISA
Affiliate.
"Environmental Claims" means claims, liabilities, investigations, litigation,
administrative proceedings, judgments or orders relating to Hazardous
Materials.
"Environmental Laws" means any present or future federal, state or local law,
rule, regulation or order relating to pollution, waste, disposal or the
protection of human health or safety, plant life or animal life, natural
resources or the environment.
"Equipment" means all "equipment" (as defined in the UCC), all furniture,
furnishings, "fixtures" (as defined in the UCC), machinery, motor vehicles,
trucks, trailers, vessels, aircraft and rolling stock and all parts thereof and
all additions and accessions thereto and replacements therefor.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and any successor statute and all rules and regulations
promulgated thereunder.
76
"ERISA Affiliate", as applied to any Loan Party, means any Person who is a
member of a group which is under common control with any Loan Party, who
together with any Loan Party is treated as a single employer within the meaning
of Section 414(b) and (c) of the IRC.
----------------------
"Federal Funds Effective Rate" means, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the
immediately following Business Day by the Board of Governors of the Federal
Reserve System as the Federal Funds Rate or Federal Reserve Statistical Release
H.15(519) entitled "Selected Interest Rates" or any successor publication of the
Federal Reserve System reporting the Federal Funds Effective Rate or its
equivalent or, if such rate is not published for any Business Day, the average
of the quotations for the day of the requested Loan received by Agent from three
Federal funds brokers of recognized standing selected by Agent.
"Field Spare Parts" means Inventory of Borrower that is considered under GAAP
to be fixed assets or is otherwise capitalized under GAAP and that is held by
Borrower for the purpose of selling or leasing or furnishing under contracts of
sale in replacement or repair of or otherwise in substitution for Inventory
already sold or leased or furnished under contract of service by Borrower.
"Fiscal Year" means each twelve (12) month period ending on the last day of
December 31 in each year.
"Fixed Charge Coverage Ratio" means, for any period, Operating Cash Flow
divided by Fixed Charges.
"Fixed Charges" means, for any period, and each calculated for such period
(without duplication), (a) cash interest expense of the Borrower and its
Subsidiaries; plus (b) scheduled payments of principal with respect to all
----
Indebtedness of Borrower and its Subsidiaries; plus (c) any provision for (to
----
the extent it is greater than zero) income or franchise taxes included in the
determination of net income, excluding any provision for deferred taxes; plus
----
(d) payment of deferred taxes accrued in any prior period.
"Funding Date" means the date of each funding of a Loan or issuance of a
Lender Letter of Credit.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board that are applicable to the
circumstances as of the date of determination.
77
"Guarantor" means any Subsidiary who presently or hereafter guarantees
payment of any or all of the Obligations.
"Hazardous Material" means all or any of the following: (a) substances that
are defined or listed in, or otherwise classified pursuant to, any Environmental
Laws or regulations as "hazardous substances", "hazardous materials", "hazardous
wastes", "toxic substances" or any other formulation intended to define, list or
classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, or toxicity; (b) oil, petroleum or
petroleum derived substances, natural gas, natural gas liquids or synthetic gas
and drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas or geothermal
resources; (c) any flammable substances or explosives or any radioactive
materials; and (d) asbestos in any form or electrical equipment which contains
any oil or dielectric fluid containing polychlorinated biphenyls.
"Indebtedness", as applied to any Person, means without duplication: (a) all
indebtedness for borrowed money; (b) obligations under leases which in
accordance with GAAP constitute Capital Leases; (c) notes payable and drafts
accepted representing extensions of credit whether or not representing
obligations for borrowed money; (d) any obligation owed for all or any part of
the deferred purchase price of property or services if the purchase price is due
more than six (6) months from the date the obligation is incurred or is
evidenced by a note or similar written instrument; (e) all indebtedness secured
by any Lien on any property or asset owned or held by that Person regardless of
whether the indebtedness secured thereby shall have been assumed by that Person
or is non-recourse to the credit of that Person and (f) reimbursement
obligations in respect of letters of credit and (g) any advances under any
factoring arrangement.
"Initial Public Offering" means a public offering of capital stock to the
general public under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, completed by Borrower.
"Intangible Assets" means all intangible assets (determined in conformity
with GAAP) including, without limitation, goodwill, Intellectual Property,
licenses, organizational costs, deferred amounts, covenants not to compete,
unearned income and restricted funds.
"Intellectual Property" means all present and future designs, patents, patent
rights and applications therefor, trademarks and registrations or applications
therefor, trade names, inventions, copyrights and all applications and
registrations therefor, software or computer programs, license rights, trade
secrets, methods, processes, know-how, drawings, specifications, descriptions,
78
and all memoranda, notes and records with respect to any research and
development, whether now owned or hereafter acquired, all goodwill associated
with any of the foregoing, and proceeds of all of the foregoing, including,
without limitation, proceeds of insurance policies thereon.
"Interest Expense" means, without duplication, for any period, the
following, for Borrower and its Subsidiaries each calculated for such period:
interest expenses deducted in the determination of net income (excluding (i) the
amortization of fees and costs with respect to the transactions contemplated by
this Agreement which have been capitalized as transaction costs in accordance
with the provisions of subsection 11.2; and (ii) interest paid in kind).
---------------
"Interest Period" means, in connection with each LIBOR Loan, an interest
period which Borrower shall elect to be applicable to such Loan, which Interest
Period shall be either a one(1), two (2), three (3), or six (6) month period;
provided that:
(1) the initial Interest Period for any LIBOR Loan shall commence on the
Funding Date of such Loan;
(2) in the case of successive Interest Periods, each successive Interest
Period shall commence on the day on which the immediately preceding Interest
Period expires;
(3) if an Interest Period expiration date is not a Business Day, such
Interest Period shall expire on the next succeeding Business Day; provided that
if any Interest Period expiration date is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such Interest
Period shall expire on the immediately preceding Business Day;
(4) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall, subject to part (5)
below, end on the last Business Day of a calendar month;
(5) no Interest Period shall extend beyond the Termination Date;
(6) no Interest Period may extend beyond a scheduled principal payment date
of any Loan, unless the aggregate principal amount of such Loan that is a Base
Rate Loan or that has Interest Periods expiring on or before such scheduled
principal payment date equals or exceeds the principal amount required to be
paid on such Loan on such scheduled principal payment date; and
(7) there shall be no more than 6 Interest Periods relating to LIBOR Loans
outstanding at any time.
79
"Inventory" means all "inventory" (as defined in the UCC), including, without
limitation, finished goods, raw materials, work in process and other materials
and supplies used or consumed in a Person's business, and goods which are
returned or repossessed.
"IRC" means the Internal Revenue Code of 1986, as amended from time to time,
and any successor statute and all rules and regulations promulgated thereunder.
"Lender Letter of Credit" has the meaning assigned to that term in subsection
----------
2.1(H).
------
"Letter of Credit Liability" means, all reimbursement and other liabilities
of Borrower or any of its Subsidiaries with respect to each Lender Letter of
Credit, whether contingent or otherwise, including: (a) the amount available to
be drawn or which may become available to be drawn; (b) all amounts which have
been paid or made available by any Lender issuing a Lender Letter of Credit or
any bank issuing a Bank Letter of Credit to the extent not reimbursed and not
debited to the revolving loan pursuant to subsection 2.1(H)(2).
--------------------
"Letter of Credit Reserve" means, at any time, an amount equal to (a) the
aggregate amount of Letter of Credit Liability with respect to all Lender
Letters of Credit outstanding at such time plus, without duplication, (b) the
----
aggregate amount theretofore paid by Agent or any Lender under Lender Letters of
Credit and not debited to the Revolving Loan pursuant to subsection 2.1(H)(2) or
--------------------
otherwise reimbursed by Borrower.
"Liabilities" shall have the meaning given that term in accordance with GAAP
and shall include Indebtedness.
"LIBOR" means, for each Interest Period, a rate per annum equal to:
(a) the offered rate for deposits in U.S. dollars in an amount
comparable to the amount of the applicable Loan in the London interbank market
for the relevant Interest Period which is published by the British Bankers'
Association and currently appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on the day which is two (2) Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period; provided,
--------
however, that if such a rate ceases to be available to Agent on that or any
-------
other source from the British Bankers' Association, LIBOR shall be equal to a
rate per annum equal to the average rate (rounded upwards, if necessary, to the
nearest 1/100 of 1%) at which Agent determines that U.S. dollars in an amount
comparable to the amount of the applicable Loans are being offered to prime
banks at approximately 11:00 a.m. (London time) on the day which is two (2)
Business Days prior to the first (1st) day of such Interest Period for a
80
term comparable to such Interest Period for settlement in immediately available
funds by leading banks in the London interbank market selected by Agent; divided
-------
by
--
(b) a number equal to one (1.0) minus the maximum reserve percentages
-----
(expressed as a decimal fraction) (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other governmental authority
having jurisdiction with respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) which are required to be maintained
by any Lender by the Board of Governors of the Federal Reserve System; such rate
to be rounded upward to the next whole multiple of one-sixteenth of one percent
(.0625%). LIBOR shall be adjusted automatically on and as of the effective date
of any change in any such reserve percentage.
"LIBOR Loans" means at any time that portion of the Loans bearing interest at
rates determined by reference to LIBOR. Notwithstanding anything herein to the
contrary, no LIBOR Loan shall be made prior to the LIBOR Loans Commencement
Date.
"LIBOR Loans Commencement Date" means the earlier to occur of (i) the 90th
day after the Closing Date; (ii) the date on which ▇▇▇▇▇▇'▇ Commitment as a
Lender shall have been reduced to $30,000,000 or less; or (iii) the date of the
successful syndication of the credit facility on terms that are acceptable to
Agent.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, whether voluntary or involuntary, (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest).
"Loan" or "Loans" means an advance or advances under the Swingline Loan or
the Revolving Loan Commitment.
"Loan Documents" means this Agreement and all other documents, instruments
and agreements executed by or on behalf of Borrower, Borrower's Subsidiaries or
any Guarantor and delivered concurrently herewith or at any time hereafter to or
for Agent or any Lender in connection with the Loans, any Lender Letter of
Credit, and any other transaction contemplated by this Agreement, all as
amended, restated, supplemented or modified from time to time.
"Loan Party" means each of Borrower and Borrower's Subsidiaries.
Notwithstanding the foregoing, the term "Loan Party" shall not include (i) any
inactive Subsidiaries which are also described on Schedule 4.26, (ii) any
-------------
81
Subsidiary organized under the laws of the country of Japan, or (iii) any
foreign Subsidiary which obtains working capital financing from a local lender
in compliance with the provisions of subsection 7.1(i),
-----------------
"Loan Year" means each period of twelve (12) consecutive months commencing on
the Closing Date and on each anniversary thereof.
"London Banking Day" means any day on which dealings in deposits in U.S.
dollars are transacted in the London Interbank market.
"Material Adverse Effect" means a material adverse effect upon (a) the
business, operations, prospects, properties, assets or condition (financial or
otherwise) of Borrower on an individual basis or Borrower and its Subsidiaries
taken as a whole or (b) the ability of any Loan Party to perform its obligations
under any Loan Document to which it is a party or of Agent or any Lender to
enforce or collect any of the Obligations.
"Maximum Revolving Loan Amount" has the meaning assigned to that term in
subsection 2.1(B)(1).
--------------------
"Maximum Swingline Loan Amount" means at any time the lesser of (i)
$10,000,000, (ii) the Revolving Loan Commitments of all Lenders at such time and
(iii) that amount which is the Borrowing Base at such time, plus $10,000,000,
----
less the sum of (x) the Revolving Loan at such time, and (y) the Letter of
----
Credit Reserve at such time.
"Mortgage" means each of the mortgages, deeds of trust, leasehold mortgages,
leasehold deeds of trust, collateral assignments of leases or other real estate
security documents delivered by any Loan Party to Agent, on behalf of Agent and
Lenders, with respect to Mortgaged Property or Additional Mortgaged Property,
all in form and substance satisfactory to Agent.
"Mortgaged Property" means the real property owned or leased by Borrower or
its Subsidiaries as described on Schedule 11.1(B).
----------------
"Net Proceeds" means cash proceeds received by any Loan Party or any of its
Subsidiaries from any Asset Disposition (including insurance proceeds, awards by
condemnation, and payment under notes or other debt securities received in
connection with any Asset Disposition), net of (a) the cost of such sale, lease,
transfer or other disposition (including taxes paid in connection with such
sale, lease or transfer), and (b) amounts applied to repayment of Indebtedness
(other than the Obligations) secured by a Lien on the asset or property
disposed.
"Notes" means the Revolving Notes and the Swingline Notes.
82
"Notice of Borrowing" means a notice duly executed by an authorized
representative of Borrower appropriately completed and in the form of Exhibit E.
---------
"Obligations" means all obligations, liabilities and indebtedness of every
nature of each Loan Party from time to time owed to Agent or to any Lender under
the Loan Documents (whether incurred before or after the Termination Date)
including the principal amount of all debts, claims and indebtedness, accrued
and unpaid interest and all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from
time to time hereafter owing, due or payable including, without limitation, all
interest, fees, cost and expenses accrued or incurred after the filing of any
petition under any bankruptcy or insolvency law.
"Operating Cash Flow" means, for any period, (a) EBITDA; less (b) Capital
----
Expenditures.
"Permitted Encumbrances" means the following types of Liens: (a) Liens (other
than Liens relating to Environmental Claims or ERISA) for taxes, assessments or
other governmental charges not yet due and payable or are the subject of
Permitted Protests; (b) statutory Liens of landlords, carriers, warehousemen,
mechanics, materialmen and other similar liens imposed by law, which are
incurred in the ordinary course of business for sums not more than thirty (30)
days delinquent or are the subject of Permitted Protests; (c) Liens (other than
any Lien imposed by ERISA) incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, trade contracts, performance and return-of-
money bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money); (d) easements, rights-of-way, restrictions, and
other similar charges or encumbrances not interfering in any material respect
with the ordinary conduct of the business of any Loan Party or any of its
Subsidiaries; (e) Liens for purchase money obligations, provided that (i) the
--------
purchase of the asset subject to any such Lien is permitted under paragraph a of
the Financial Covenants Rider, (ii) the Indebtedness secured by any such Lien is
permitted under subsection 7.1, and (iii) such Lien encumbers only the asset so
--------------
purchased; (f) Liens in favor of Agent, on behalf of itself and Lenders, (g)
Liens set forth on Schedule 11.1(C); (h) judgment liens in respect of judgments
----------------
that do not constitute an Event of Default under clause (J) of subsection 8.1;
---------- --------------
(i) any Lien existing on any property or asset prior to the acquisition thereof
by the Borrower or any Subsidiary; provided that (1) such Lien is not created in
--------
contemplation of or in connection with such acquisition, and (2) such Lien does
not apply to any other property or assets of the Borrower or any Subsidiary; (j)
any junior Lien securing Indebtedness incurred pursuant to clause (f) of
----------
subsection 7.1; (k) any interest or title of a lessor or any Lien encumbering
--------------
83
such lessor's interest with respect to any lease to the Company or any
Subsidiary; and (l) Liens permitted pursuant to clause (I) of subsection 7.1.
---------- --------------
"Permitted Protests" means the right of Borrower to protest any Lien (other
than any such Lien that secures the Obligations), taxes (other than payroll
taxes or taxes that are the subject of a United States federal tax lien), or
rental payment, provided that (a) a reserve with respect to such obligation is
established by Borrower in such amount as is required under GAAP, (b) any such
protest is instituted promptly and prosecuted diligently by Borrower in good
faith, and (c) Agent has determined in its reasonable credit judgment that,
while any such protest is pending, there will be no impairment of the
enforceability, validity or priority of any of the Agent's Liens on a material
portion of the Collateral.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.
"Pro Rata Share" means with respect to a particular Lender, the percentage
obtained by dividing (a) the Commitment of that Lender by (b) all the
Commitments of all Lenders as such percentage may be adjusted by assignments
permitted pursuant to subsection 9.5; provided, however, if any Commitment is
-------------- -------- -------
terminated pursuant to the terms hereof, then "Pro Rata Share" means the
percentage obtained by dividing (i) the aggregate amount of such Lender's
outstanding Loans related to such Commitment by (ii) the aggregate amount of all
outstanding Loans related to such Commitment.
"Projections" means Borrower's forecasted consolidated and consolidating:
(a) balance sheets; (b) profit and loss statements; (c) cash flow statements;
and (d) capitalization statements, all prepared on a division by division and
Subsidiary by Subsidiary basis consistent with Borrower's historical financial
statements and based upon good faith estimates and assumptions by Borrower
believed to be reasonable at the time made, together with appropriate supporting
details and a statement of underlying assumptions.
"Real Property Advance Amount" shall mean the amount indicated below during
the period indicated below:
Period Amount
------ ------
(i) Closing Date (i) The lesser of: (a) $12,000,000
through or (b) 63% of the fair market value
84
August 31, 2001 of the Closing Date Mortgaged Property (as
determined by the most recent appraisal
delivered to Agent pursuant to clause (I) of
the Reporting Rider).
(ii) September 1, 2001 (ii) The lesser of: (a) $11,000,000
through or (b) 63% of the fair market value
November 30, 2001 of the Closing Date Mortgaged Property
(as determined by the most recent appraisal
delivered to Agent pursuant to clause (I) of
the Reporting Rider).
(iii) December 1, 2001 (iii) The lesser of: (a) $10,000,000
through or (b) 63% of the fair market value
February 28, 2002 of the Closing Date Mortgaged Property
(as determined by the most recent appraisal
delivered to Agent pursuant to clause (I) of
the Reporting Rider).
(iv) March 1, 2002 (iv) The lesser of: (a) $9,000,000
through or (b) 63% of the fair market value
May 31, 2002 of the Closing Date Mortgaged
Property (as determined by the most recent
appraisal delivered to Agent pursuant to
clause (I) of the Reporting Rider).
(v) June 1, 2002 (v) The lesser of: (a) $8,000,000
through or (b) 63% of the fair market value
August 31, 2002 of the Closing Date Mortgaged Property
(as determined by the most recent
appraisal delivered to Agent pursuant to
clause (I) of the Reporting Rider).
(vi) September 1, 2002 (vi) The lesser of: (a) $7,000,000
through or (b) 63% of the fair market value
November 30, 2002 of the Closing Date Mortgaged Property
(as determined by the most recent
appraisal delivered to Agent
85
pursuant to clause (I) of the Reporting Rider).
(vii) December 1, 2002 (vii) The lesser of: (a) $6,000,000
through or (b) 63% of the fair market value
February 28, 2003 of the Closing Date Mortgaged Property
(as determined by the most recent
appraisal delivered to Agent pursuant to
clause (I) of the Reporting Rider).
(viii) March 1, 2003 (viii) The lesser of: (a) $5,000,000
through or (b) 63% of the fair market value
May 31, 2003 of the Closing Date Mortgaged Property
(as determined by the most recent
appraisal delivered to Agent pursuant to
clause (I) of the Reporting Rider).
(ix) June 1, 2003 (ix) The lesser of: (a) $4,000,000
through or (b) 63% of the fair market value
August 31, 2003 of the Closing Date Mortgaged Property
(as determined by the most recent
appraisal delivered to Agent pursuant to
clause (I) of the Reporting Rider).
(x) September 1, 2003 (x) The lesser of: (a) $3,000,000
through or (b) 63% of the fair market value
November 30, 2003 of the Closing Date Mortgaged Property
(as determined by the most recent
appraisal delivered to Agent pursuant to
clause (I) of the Reporting Rider).
(xi) December 1, 2003 (xi) The lesser of: (a) $2,000,000
through or (b) 63% of the fair market value
February 28, 2004 of the Closing Date Mortgaged Property
(as determined by the most recent
appraisal delivered to Agent pursuant to
clause (I) of the Reporting Rider).
(xii) March 1, 2004 (xii) The lesser of: (a) $1,000,000
86
through or (b) 63% of the fair market value
May 31, 2004 of the Closing Date Mortgaged Property
(as determined by the most recent
appraisal delivered to Agent pursuant to
clause (I) of the Reporting Rider).
(xiii) June 1, 2004 (xiii) $0.00
and thereafter
The parties hereto agree that at such time that Agent ceases to have a first
priority Lien in any Mortgaged Property which initially constitutes Closing Date
Mortgaged Property or such Mortgaged Property is sold or otherwise transferred,
such Mortgaged Property shall no longer constitute Closing Date Mortgaged
Property for the purposes of the Borrowing Base and the Real Property Advance
Amount, and the portion of the Real Property Advance Amount attributable to the
value of such Mortgaged Property (as compared to the value of all other
Mortgaged Property constituting Closing Date Mortgaged Property) shall be
subtracted from the otherwise applicable Real Property Advance Amount in order
to determine the Real Property Advance Amount relevant to the other Closing Date
Mortgaged Property.
"Requisite Lenders" means Lenders, (other than a Defaulting Lender), holding
or being responsible for 66.67% or more of the sum of (a) outstanding Loans, (b)
outstanding Letter of Credit Liability and (c) unutilized Commitments of all
Lenders which are not Defaulting Lenders.
"Restricted Junior Payment" means: (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of Borrower
or any of its Subsidiaries now or hereafter outstanding, except a dividend
payable solely with shares of the class of stock on which such dividend is
declared; (b) any payment or prepayment of principal of, premium, if any, or
interest on, or any redemption, conversion, exchange, retirement, defeasance,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any Subordinated Debt or any shares of any class of stock of
Borrower or any of its Subsidiaries now or hereafter outstanding, or the
issuance of a notice of an intention to do any of the foregoing; (c) any payment
made to retire, or to obtain the surrender of, any outstanding warrants, options
or other rights to acquire shares of any class of stock of Borrower or any of
its Subsidiaries now or hereafter outstanding; and (d) any payment by Borrower
or any of its Subsidiaries of any management, consulting or similar fees to any
Affiliate, whether pursuant to a management agreement or otherwise, in excess
during any Loan Year of the aggregate amount as to all Affiliates of $1,000,000.
87
"Revolving Advance" means each advance made by Lender(s) under the Revolving
Loan Commitment pursuant to subsection 2.1 (B).
------------------
"Revolving Loan" means the outstanding balance of all Revolving Advances and
any amounts added to the principal balance of the Revolving Loan pursuant to
this Agreement.
"Revolving Loan Commitment" means (a) as to any Lender, the commitment
of such Lender to make Revolving Advances pursuant to subsection 2.1 (B), and to
------------------
purchase participations in Lender Letters of Credit pursuant to subsection
----------
2.1(H) and without duplication to purchase a participation in the Swingline Loan
------
pursuant to subsection 2.1(E) in the aggregate amount set forth on the signature
-----------------
page of this Agreement opposite such Lender's signature or in the most recent
Assignment and Acceptance Agreement, if any, executed by such Lender and (b) as
to all Lenders, the aggregate commitment of all Lenders to make Revolving
Advances and to purchase participations in Lender Letters of Credit and without
duplication to purchase participations in the Swingline Loan pursuant to
subsection 2.1(E).
-----------------
"Revolving Note" means each promissory note of Borrower in form and substance
reasonably acceptable to Agent, issued to evidence the Revolving Loan
Commitments.
"Senior Subordinated Note" means the Indebtedness owing by Borrower to WCAS
Capital Partners III, L.P. pursuant to that certain Senior Subordinated Note due
2009 dated July 22, 1999, in the original principal amount of $160,000,000.00
issued by Borrower to WCAS Capital Partners III, L.P.
"Stock Pledge Agreements" means each of the stock pledge agreements or
equivalent form of security document executed by any Loan Party and delivered to
Agent whereby Agent is granted, for the benefit of Lenders, as collateral for
the Obligations, a first priority Lien in (i) in the case of a domestic
Subsidiaries of Borrower, 100% of all the issued capital stock or equivalent
equity ownership interest of each such Subsidiary, and (ii) in the case of
foreign Subsidiaries of Borrower, 65% of all the issued capital stock or
equivalent equity ownership interest of each such Subsidiary, each such document
to be in form and substance satisfactory to Agent.
"Subordinated Debt" means (i) the Senior Subordinated Note, and (ii) any
other Indebtedness of Borrower which is subordinated to payment of the
Obligations upon terms and conditions and pursuant to documentation satisfactory
to Agent, in its sole discretion.
"Subsidiary" means, with respect to any Person, any corporation, association
or other business entity of which more than fifty percent (50%) of
88
the total voting power of shares of stock (or equivalent ownership or
controlling interest) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other subsidiaries of that Person or a combination thereof.
"Swingline Advance" means each Revolving Advance converted by Agent into an
advance under the Swingline Loan pursuant to subsection 2.1(E).
-----------------
"Swingline Lender" means ▇▇▇▇▇▇, or if ▇▇▇▇▇▇ shall resign as Swingline
Lender, another Lender selected by Agent and reasonably acceptable to Borrower.
"Swingline Loan" means the outstanding balance of all Swingline Advances and
any amounts added to the principal balance of the Swingline Loan pursuant to
this Agreement.
"Swingline Note" means the promissory note of Borrower in form and substance
acceptable to Agent, issued to evidence the Swingline Loan.
"UCC" means the Uniform Commercial Code as in effect on the date hereof in
the State of Illinois, as amended from time to time, and any successor statute.
"Unsecured Senior Notes" means those certain 7.50% unsecured notes in the
aggregate principal original principal amount of $150,000,000, dated as of May
22, 1998, issued under the Unsecured Senior Notes Indenture, as amended,
modified, renewed or restated from time to time.
"Unsecured Senior Notes Indenture" means that certain Indenture dated as of
May 22, 1998, between Borrower and The First National Bank of Chicago, pursuant
to which the Unsecured Senior Notes have been issued, as amended, modified,
renewed or restated from time to time.
"Unsecured Senior Notes Permitted Liens Limitation" means at any particular
date the greater of $40,000,000 or fifteen percent (15.00%) of Consolidated Net
Tangible Assets at such date.
"WCAS" means Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VIII, L.P., a Delaware limited
partnership.
11.2 Accounting Terms. For purposes of this Agreement, all accounting terms
----------------
not otherwise defined herein shall have the meanings assigned to such terms in
conformity with GAAP. Financial statements and other information furnished to
Agent or any Lender pursuant to subsection 5.1 shall be prepared in accordance
--------------
with GAAP (as in effect at the time of such preparation) on a
89
consistent basis. In the event any "Accounting Changes" (as defined below)
shall occur and such changes affect financial covenants, standards or terms in
this Agreement, then Borrower and Lenders agree to enter into negotiations in
order to amend such provisions of this Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating the
financial condition of Borrower shall be the same after such Accounting Changes
as if such Accounting Changes had not been made, and until such time as such an
amendment shall have been executed and delivered by Borrower and Requisite
Lenders, (A) all financial covenants, standards and terms in this Agreement
shall be calculated and/or construed as if such Accounting Changes had not been
made, and (B) Borrower shall prepare footnotes to each Compliance and Pricing
Certificate and the financial statements required to be delivered hereunder that
show the differences between the financial statements delivered (which reflect
such Accounting Changes) and the basis for calculating financial covenant
compliance (without reflecting such Accounting Changes). "Accounting Changes"
means: (a) changes in accounting principles required by GAAP and implemented by
Borrower; and (b) changes in accounting principles recommended by Borrower's
Accountants. All such adjustments resulting from expenditures made subsequent
to the Closing Date (including, but not limited to, capitalization of costs and
expenses or payment of pre-Closing Date liabilities) shall be treated as
expenses in the period the expenditures are made and deducted as part of the
calculation of EBITDA in such period.
11.3 Other Definitional Provisions. References to "Sections",
-----------------------------
"subsections", "Riders", "Exhibits", "Schedules" and "Addendums" shall be to
Sections, subsections, Riders, Exhibits, Schedules and Addendums, respectively,
of this Agreement unless otherwise specifically provided. Any of the terms
defined in subsection 11.1 may, unless the context otherwise requires, be used
---------------
in the singular or the plural depending on the reference. In this Agreement,
words importing any gender include the other genders; the words "including,"
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; references to agreements and other contractual instruments shall be
deemed to include subsequent amendments, assignments, and other modifications
thereto, but only to the extent such amendments, assignments and other
modifications are not prohibited by the terms of this Agreement or any other
Loan Document; references to Persons include their respective permitted
successors and assigns or, in the case of governmental Persons, Persons
succeeding to the relevant functions of such Persons; and all references to
statutes and related regulations shall include any amendments of same and any
successor statutes and regulations.
[The Remainder of this Page is Intentionally Left Blank]
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Witness the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
BANCTEC, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Title: Senior Vice President & CFO
-----------------------------
FEIN: 75 1559633
------------------------------
▇▇▇▇▇▇ FINANCIAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Title: Senior Vice President
-----------------------------
Revolving Loan Commitment:
$100,000,000.00
A-1