1
Exhibit 10.2
LOAN AGREEMENT
dated as of
June 25, 2001
between
STUDENT ADVANTAGE, INC.
The SUBSIDIARY GUARANTORS Party Hereto
The LENDERS Party Hereto
and
RESERVOIR CAPITAL PARTNERS, L.P.,
as Administrative Agent
$15,000,000
2
TABLE OF CONTENTS
Page
SCHEDULE I - Commitments
SCHEDULE II - Material Agreements and Liens
SCHEDULE III - Restrictive Agreements
SCHEDULE IV - Litigation
SCHEDULE V - Environmental Matters
SCHEDULE VI - Subsidiaries and Investments
SCHEDULE VII - Intellectual Property
EXHIBIT A - Form of Assignment and Acceptance
EXHIBIT B - Form of Security Agreement
EXHIBIT C - Form of Guarantee Assumption Agreement
EXHIBIT D - Form of Note
EXHIBIT E - Form of Opinion of Counsel to the Obligors
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3
LOAN AGREEMENT dated as of June 25, 2001, among STUDENT ADVANTAGE,
INC., the SUBSIDIARY GUARANTORS party hereto, the LENDERS party hereto, and
RESERVOIR CAPITAL PARTNERS, L.P., as Administrative Agent.
The Borrower (as hereinafter defined) has requested that the Lenders
(as so defined) make loans to it, under the guarantee of the Subsidiary
Guarantors (as so defined), in an aggregate principal amount not exceeding
$15,000,000 at any one time outstanding, to enable an acquisition by the
Obligors (as so defined), and for other purposes. The Lenders are prepared to
make such loans upon the terms and conditions hereof, and, accordingly, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"Accounts Payable Quotient" means, on any date of determination, the
result obtained by dividing (a) the result obtained by multiplying (i) 365 by
(ii) the accounts payable of the Borrower and its Subsidiaries on such date
(determined on a consolidated basis without duplication in accordance with GAAP)
by (b) the aggregate cost of revenues for the Borrower and its Subsidiaries for
the four consecutive fiscal quarters thereof then most recently ended
(determined on a consolidated basis without duplication in accordance with
GAAP).
"Accounts Receivable Quotient" means, on any date of determination,
the result obtained by dividing (a) the result obtained by multiplying (i) 365
by (ii) the aggregate accounts receivable of the Borrower and its Subsidiaries
on such date (determined on a consolidated basis without duplication in
accordance with GAAP) by (b) the aggregate total revenue of the Borrower and its
Subsidiaries for the four consecutive fiscal quarters thereof then most recently
ended (determined on a consolidated basis without duplication in accordance with
GAAP).
"Acquisition" means the acquisition contemplated by the Acquisition
Agreement.
"Acquisition Agreement" means that certain Agreement and Plan of
Merger dated June 25, 2001 by and among the Borrower, Orion Acquisition Corp.
and OCM Enterprises, Inc. and its stockholders.
"Administrative Agent" means RCP, in its capacity as administrative
agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire
in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
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"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments or Loans hereunder represented by the
aggregate amount of such Lender's Commitments or Loans hereunder.
"Applicable Rate" means, for any day with respect to any Loan, as
the case may be, 12% per annum.
"Approved Fund" means, with respect to any Lender that is a fund
that invests in commercial loans, any other fund that invests in commercial
loans and is managed or advised by the same investment advisor as such Lender or
by an Affiliate of such investment advisor.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 10.04), and accepted by the Administrative Agent,
in the form of Exhibit A or any other form approved by the Administrative Agent.
"Basic Documents" means, collectively, the Loan Documents and the
Warrant Documents.
"Board" means the Board of Governors of the Federal Reserve System
of the United States of America.
"Borrower" means Student Advantage, Inc., a Delaware corporation.
"Borrowing" means either a Term Borrowing or a Revolving Borrowing.
"Borrowing Request" means a request by the Borrower for a Borrowing
in accordance with Section 2.03.
"Budget" means for the two fiscal quarters ended December 31, 2001
Cash Flow of zero and thereafter the reasonably detailed fiscal consolidated
year budget of the Borrower and its Subsidiaries on a quarterly basis that has
been approved in good faith by the Board of Directors of the Company; provided
that the Cash Flow reflected in such budgets shall be at least $5,000,000 for
2002, $7,000,000 for 2003 and $10,000,000 for 2004.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to remain closed.
"Capital Expenditures" means, for any period, expenditures
(including the aggregate amount of Capital Lease Obligations incurred during
such period) made by the Borrower or any of its Subsidiaries to acquire or
construct fixed assets, plant and equipment (including capitalized equipment
purchases and renewals, improvements and replacements, but excluding repairs to
the extent excluded from capital expenditures under GAAP), and any other assets
(tangible or intangible) that are required to be capitalized during such period
computed in accordance with GAAP, including development expenses related to
software and product development.
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"Capital Lease Obligations" of any Person means the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Cash and Cash Equivalents" means Dollars, direct general
obligations of, or obligations fully and unconditionally guaranteed as to the
timely payment of principal and interest by, the United States of America or any
agency or instrumentality thereof (but excluding any such obligations whose
terms do not provide for payment of a fixed Dollar amount upon maturity or call
for redemption) having maturities of not more than one year from the relevant
date of determination, certificates of deposit and eurodollar time deposits with
maturities of twelve months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding twelve months and overnight bank
deposits, in each case with any domestic commercial bank having capital and
surplus in excess of $500,000,000 and a ▇▇▇▇▇▇▇▇ Bank Watch Rating of "B" or
better, and money market funds at least 95% of the assets of which constitute
Cash and Cash Equivalents of the kinds described above in this definition.
"Cash Flow" means, for any period, the sum, for the Borrower and its
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following: (a) net operating income (calculated
before income taxes, Interest Expense, extraordinary and unusual items and
income or loss attributable to equity in Affiliates) for such period excluding
the impact of any non-recurring, non-ordinary course, reversals of accrued
expenses plus (b) depreciation and amortization (to the extent deducted in
determining net operating income) for such period.
"Change in Control" means (a) the acquisition of ownership, directly
or indirectly, beneficially or of record, by any Person or group other than
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. (within the meaning of the Securities Exchange Act of 1934
and the rules of the Securities and Exchange Commission thereunder as in effect
on the date hereof), of shares representing more than 35% of the aggregate
ordinary voting power represented by the issued and outstanding capital stock of
the Borrower; (b) occupation of a majority of the seats (other than vacant
seats) on the board of directors of the Borrower by Persons who were neither (i)
nominated by the board of directors of the Borrower nor (ii) appointed by
directors so nominated; (c) the acquisition of direct or indirect Control of the
Borrower by any Person or group other than ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.; or (d) the
failure of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. to be Borrower's chief executive officer.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender with
any request, guideline or directive (whether or not having the force of law) of
any Governmental Authority made or issued after the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
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"Commitments" means the Term Loan Commitments and the Revolving Loan
Commitments.
"Common Stock" means the Company's authorized Common Stock, par
value $.01 per share, and any stock into which such Common Stock may thereafter
be changed, including any subdivisions, combinations, consolidation, splits or
reclassifications thereof, and also shall include stock of the Company of any
other class (including, without limitation, any future class(es) of such Common
Stock), which is not preferred as to dividends or assets over any class of stock
of the company.
"Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Current Ratio" means, at any time, the ratio of (a) the current
assets of the Borrower and its Subsidiaries to (b) the sum without duplication
of the Revolving Loans then outstanding (whether or not treated as current under
GAAP) plus the current liabilities of the Borrower and its Subsidiaries
(excluding any portion thereof attributable to deferred income).
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings
disclosed in Schedule IV and the environmental matters disclosed in Schedule V.
"Disposition" means any sale, assignment, transfer or other
disposition of any property (whether now owned or hereafter acquired) by the
Borrower or any of its Subsidiaries to any other Person excluding any sale,
assignment, transfer or other disposition of any property sold or disposed of in
the ordinary course of business and on ordinary business terms.
"Dollars" or "$" refers to lawful money of the United States of
America.
"Effective Date" means the date on which the conditions specified in
Section 5.01 are satisfied (or waived in accordance with Section 10.02).
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or
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threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.
"Equity Issuance" means (a) any issuance or sale by the Borrower or
any of its Subsidiaries after the Effective Date of (i) any of its capital
stock, (ii) any warrants or options exercisable in respect of its capital stock
(other than any warrants or options issued to directors, officers, consultants
or employees of the Borrower or any of its Subsidiaries pursuant to employee
benefit plans established in the ordinary course of business and any capital
stock of the Borrower issued upon the exercise of such warrants or options) or
(iii) any other security or instrument representing an equity interest (or the
right to obtain any equity interest) in the Borrower or any of its Subsidiaries
or (b) the receipt by the Borrower or any of its Subsidiaries after the
Effective Date of any capital contribution (whether or not evidenced by any
equity security issued by the recipient of such contribution); provided that
Equity Issuance shall not include (x) any such issuance or sale by any
Subsidiary of the Borrower to the Borrower or any wholly owned Subsidiary
Guarantor or (y) any capital contribution by the Borrower or any wholly owned
Subsidiary Guarantor to any wholly owned Subsidiary Guarantor.
"Equity Rights" means, with respect to any Person, any
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including any shareholders' or voting trust agreements) for the
issuance, sale, registration or voting of, or securities convertible into, any
additional shares of capital stock of any class, or partnership or other
ownership interests of any type in, such Person.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the
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imposition of Withdrawal Liability or a determination that a Multiemployer Plan
is, or is expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA.
"Event of Default" has the meaning assigned to such term in Article
VIII.
"Excluded Taxes" means, with respect to the Administrative Agent,
any Lender or any other recipient of any payment to be made by or on account of
any obligation of the Borrower hereunder, (a) income or franchise taxes imposed
on (or measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.12(b)), any withholding tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party to this Agreement
or is attributable to such Foreign Lender's failure or inability (other than as
a result of a Change in Law) to comply with Section 2.10(e), except to the
extent that such Foreign Lender's assignor (if any) was entitled, at the time of
assignment, to receive additional amounts from the Borrower with respect to such
withholding tax pursuant to Section 2.10(a).
"Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of the Borrower.
"Foreign Lender" means any Lender that is organized under the laws
of a jurisdiction other than that in which the Borrower is located. For purposes
of this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"GAAP" means generally accepted accounting principles in the United
States of America.
"Governmental Authority" means the government of the United States
of America, or of any other nation, or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such
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Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
"Guarantee Assumption Agreement" means a Guarantee Assumption
Agreement substantially in the form of Exhibit C by an entity that, pursuant to
Section 6.09(a) is required to become a "Subsidiary Guarantor" hereunder in
favor of the Administrative Agent.
"Hazardous Materials" means all explosive or radioactive substances
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Increase in Cash Position" means, for any period of the Borrower
and its Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP):
(a) the amount of Cash and Cash Equivalents held by the Borrower and
its Subsidiaries on the last day of the period
minus
(b) the amount of Cash and Cash Equivalents held by the Borrower and
its Subsidiaries on the first day of the period
plus
(c) the sum of all payments of principal, interest and fees in
respect of the Term Loans and Revolving Loans made thereby during
such period
minus
(d) the Net Available Proceeds of all Equity Issuances and
Dispositions received thereby during such period
minus
(e) the aggregate principal amount of all Term Loans and Revolving
Loans received by the Borrower during such period
minus
(f) the amount of any Capital Lease Obligations entered into during
such period.
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"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, excluding accounts payable
treated as a current liability incurred in the ordinary course of business, (d)
all obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (e) all obligations of
such Person in respect of the deferred purchase price of property or services
(excluding accounts payable treated as a current liability incurred in the
ordinary course of business), (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed, (g)
all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease
Obligations of such Person, (i) all obligations, contingent or otherwise, of
such Person as an account party in respect of letters of credit and letters of
guaranty, and (j) all obligations, contingent or otherwise, of such Person in
respect of bankers' acceptances. The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person's ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Intellectual Property" has the meaning assigned to such term in the
Security Agreement.
"Interest Expense" means, for any period, the sum, for the Borrower
and its Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following: (a) all interest in respect of
Indebtedness (including the interest component of any payments in respect of
Capital Lease Obligations) accrued or capitalized during such period (whether or
not actually paid during such period) plus (b) the net amount payable (or minus
the net amount receivable) under Hedging Agreements relating to interest during
such period (whether or not actually paid or received during such period).
"Investment" means, for any Person: (a) the acquisition (whether for
cash, property, services or securities or otherwise) of capital stock, bonds,
notes, debentures, partnership or other ownership interests or other securities
of any other Person or any agreement to make any such acquisition (including any
"short sale" or any sale of any securities at a time when such securities are
not owned by the Person entering into such sale); (b) the making of any deposit
with, or advance, loan or other extension of credit to, any other Person
(including the purchase of property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such property to
such Person), but excluding any such advance, loan or extension of credit having
a term not exceeding 90 days arising in connection with the sale of inventory or
supplies by such Person in the ordinary course of business; or (c) the entering
into of any Guarantee of, or other contingent obligation with respect to,
Indebtedness or other liability of any other Person and (without duplication)
any amount committed to be advanced, lent or extended to such Person.
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"Lenders" means the Persons listed on Schedule I and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.
"Letter Agreement" means the letter agreement between the Borrower
and RCP dated June 4, 2001.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" means, collectively, this Agreement and the
Security Documents.
"Loans" means the Term Loans and the Revolving Loans.
"Margin Stock" means "margin stock" within the meaning of
Regulations T, U and X of the Board.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Borrower and its Subsidiaries taken as a whole, (b) the ability of any
Obligor to perform any of its obligations under this Agreement or any of the
other Basic Documents to which it is a party or (c) the rights of or benefits
available to the Lenders under this Agreement or any of the other Basic
Documents.
"Material Indebtedness" means Indebtedness (other than the Loans),
or obligations in respect of one or more Hedging Agreements, of any one or more
of the Borrower and its Subsidiaries in an aggregate principal amount exceeding
$500,000. For purposes of determining Material Indebtedness, the "principal
amount" of the obligations of any Person in respect of any Hedging Agreement at
any time shall be the maximum aggregate amount (giving effect to any netting
agreements) that such Person would be required to pay if such Hedging Agreement
were terminated at such time.
"Maturity Date" means June 15, 2004.
"Monthly Date" means the last Business Day of each calendar month,
the first of which shall be the first such day after the date hereof, and on the
Maturity Date.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Available Proceeds" means:
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(a) in the case of any Disposition, the aggregate amount of all cash
payments, and the fair market value of any non-cash consideration, received by
the Borrower and its Subsidiaries directly or indirectly in connection with such
Disposition; provided that (i) Net Available Proceeds shall be net of (x) the
amount of any legal, title and recording tax expenses, commissions and other
fees and expenses paid by the Borrower and its Subsidiaries in connection with
such Disposition and (y) any Federal, state and local income or other taxes
estimated to be payable by the Borrower and its Subsidiaries as a result of such
Disposition (but only to the extent that such estimated taxes are in fact paid
to the relevant Federal, state or local governmental authority within three
months of the date of such Disposition) and (ii) Net Available Proceeds shall be
net of any repayments by the Borrower or any of its Subsidiaries of Indebtedness
to the extent that (x) such Indebtedness is secured by a Lien on the property
that is the subject of such Disposition and (y) the transferee of (or holder of
a Lien on) such property requires that such Indebtedness be repaid as a
condition to the purchase of such property; and
(b) in the case of any Equity Issuance, the aggregate amount of all
cash received by the Borrower and its Subsidiaries in respect of such Equity
Issuance net of reasonable expenses incurred by the Borrower and its
Subsidiaries in connection therewith.
"Non-PIK Event" means the actual Cash Flow of the Borrower for the
following periods is less than 95% of the Cash Flow set forth on the Budget or
Budgets for the following corresponding periods:
Test Period(s) Budget Period(s)
Three fiscal quarters ended Three fiscal quarters ended
March 31, 2002 March 31, 2002
Four fiscal quarters ended Four fiscal quarters ended
June 30, 2002 June 30, 2002
Three fiscal quarters ended Three fiscal quarters ended
September 30, 2002 September 30, 2002
Four fiscal quarters ended Four fiscal quarters ended
on each subsequent on such fiscal quarter
fiscal quarter until
March 31, 2004
"Notes" means, collectively, the Promissory Notes substantially in
the form of Exhibit D made by the Borrower to the Lenders.
"Obligor" means the Borrower and each Subsidiary Guarantor.
"Other Taxes" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
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"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA and any successor entity performing similar functions.
"Permitted Acquisition" means any acquisition of a business which
had positive Increase in Cash Position (excluding cash flow from incurrence of
Indebtedness, issuance of equity or dispositions of assets other than in the
ordinary course) over the four fiscal quarters ending immediately preceding the
date of acquisition and is forecast to have positive Increase in Cash Position
(on the same basis) after the acquisition in a forecast acceptable to the
Required Lenders.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 6.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the ordinary course
of business and securing obligations that are not overdue by more than 30 days
or are being contested in compliance with Section 6.04;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other social
security laws or regulations;
(d) cash deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case in the ordinary
course of business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (j) of Article VIII; and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected property or interfere with the ordinary
conduct of business of the Borrower or any Subsidiary;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from
the date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable
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from Standard & Poor's Ratings Services, a Division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc., or from ▇▇▇▇▇'▇ Investors Services, Inc;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, any domestic office of any commercial bank organized under the
laws of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $250,000,000; and
(d) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) of this definition and
entered into with a financial institution satisfying the criteria described in
clause (c) of this definition.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Quarterly Dates" means the 15th of February, May, August and
November in each year, the first of which shall be the first such day after the
date hereof.
"RCP" means Reservoir Capital Partners, L.P.
"Register" has the meaning set forth in Section 10.04.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having outstanding
Loans and unused Commitments representing more than 50% of the sum of the total
outstanding Loans and unused Commitments at such time.
"Restricted Payment" means (i) any dividend or other distribution
(whether in cash, securities or other property) with respect to any shares of
any class of capital stock or membership interest of the Borrower or any of its
Subsidiaries, or (ii) any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such shares of capital stock of the Borrower or any option, warrant or other
right to acquire any such shares of capital stock of the Borrower.
"Revolving Borrowing" means all Revolving Loans made on the same
date.
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"Revolving Loan Availability Period" means the period from and
including the Effective Date to and including June 15, 2004.
"Revolving Loan Commitment" means, with respect to each Lender, the
commitment of such Lender to make one or more Revolving Loans hereunder during
the Revolving Loan Availability Period, expressed as an amount representing the
maximum aggregate principal amount of the Revolving Loans to be made by such
Lender which shall be outstanding at any one time hereunder, as such commitment
may be (a) reduced from time to time pursuant to Section 2.05 or 2.07(b) and (b)
reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 10.04. The initial amount of each Lender's Revolving
Loan Commitment is set forth on Schedule I, or in the Assignment and Acceptance
pursuant to which such Lender shall have assumed its Revolving Loan Commitment,
as applicable. The initial aggregate amount of the Lenders' Revolving Loan
Commitments is $5,000,000.
"Revolving Loan Interest Payment Date" means, with respect to any
Revolving Loan, each Monthly Date and the date the Revolving Loan Commitment is
reduced to zero.
"Revolving Loans" means the revolving loans made by the Lenders to
the Borrower pursuant to the second sentence of Section 2.02(a).
"Security Agreement" means a Security Agreement substantially in the
form of Exhibit B between the Borrower and the Subsidiary Guarantors and the
Administrative Agent, as the same shall be modified and supplemented and in
effect from time to time.
"Security Documents" means, collectively, the Security Agreement,
all Uniform Commercial Code financing statements and all other filings required
by the Security Agreement to be filed with respect to the security interests in
personal property and fixtures created pursuant to the Security Agreement.
"Subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or, in the case
of a partnership, more than 50% of the general partnership interests are, as of
such date, owned, controlled or held. Unless otherwise specified, "Subsidiary"
means a Subsidiary of the Borrower. OCM Direct, Inc. and its Subsidiaries are
Subsidiaries of the Borrower as of the date hereof.
"Subsidiary Guarantor" means each of the Subsidiaries of the
Borrower identified under the caption "SUBSIDIARY GUARANTORS" on the signature
pages hereto and each Subsidiary of the Borrower that becomes a "Subsidiary
Guarantor" after the date hereof pursuant to Section 6.09(a).
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
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"Term Borrowing" means all Term Loans made on the same date.
"Term Loan Availability Period" means the period from and including
the Effective Date to and including June 15, 2004.
"Term Loan Commitment" means, with respect to each Lender, the
commitment of such Lender to make one or more Term Loans hereunder during the
Term Loan Availability Period, expressed as an amount representing the maximum
aggregate principal amount of the Term Loans to be made by such Lender
hereunder, as such commitment may be (a) reduced from time to time pursuant to
Section 2.05 or 2.07(b) and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04. The initial
amount of each Lender's Term Loan Commitment is set forth on Schedule I, or in
the Assignment and Acceptance pursuant to which such Lender shall have assumed
its Term Loan Commitment, as applicable. The initial aggregate amount of the
Lenders' Term Loan Commitments is $10,000,000.
"Term Loan Interest Payment Date" means, with respect to any Term
Loan, each Quarterly Date and the Maturity Date.
"Term Loans" means the term loans made by the Lenders to the
Borrower pursuant to the first sentence of Section 2.02(a).
"Transactions" means the execution, delivery and performance by each
Obligor of this Agreement and the other Basic Documents to which such Obligor is
intended to be a party, the borrowing of Loans and the use of the proceeds
thereof and the issuance of the Warrants.
"Volume Weighted Average Price" means, as of any date, (a) the
aggregate amount of the purchase price of shares of Common Stock traded on the
10 trading days immediately prior to such date determined by adding together,
with respect to each such trade on such trading days, the product of (1) the
trade price as reported on the Nasdaq for each such trade and (2) the number of
shares of Common Stock traded in such trade divided by (b) the total number of
shares of Common Stock traded during such 10-trading day period.
"Warrant Agreement" means the Warrant Agreement, dated as of the
date hereof, among the Borrower and the Lenders.
"Warrant Documents" means, collectively, the Warrant Agreement and
the Warrants.
"Warrants" means the warrants to be issued by the Borrower to the
Lenders pursuant to the Warrant Agreement.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require,
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any pronoun shall include the corresponding masculine, feminine and neuter
forms. The words "include", "includes" and "including" shall be deemed to be
followed by the phrase "without limitation". The word "will" shall be construed
to have the same meaning and effect as the word "shall". Unless the context
requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.03. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith. To enable the ready
and consistent determination of compliance with the covenants set forth in
Article VII, the Borrower will not change the last day of its fiscal year from
December 31, or the last days of the first three fiscal quarters in each of its
fiscal years from March 31, June 30 and September 30, respectively.
ARTICLE II
THE LOANS
SECTION 2.01. The Commitments. Subject to the terms and conditions
set forth herein, each Lender agrees to make one or more Term Loans to the
Borrower during the Term Loan Availability Period in an aggregate principal
amount not exceeding its Term Loan Commitment and to make one or more Revolving
Loans to the Borrower during the Revolving Loan Availability Period in an
aggregate principal amount at any one time outstanding not exceeding its
Revolving Loan Commitment. Amounts prepaid or repaid in respect of Term Loans
may not be reborrowed. Amounts repaid in respect of Revolving Loans may be
reborrowed within the limits of the respective Revolving Loan Commitments of the
Lenders and subject to the terms and conditions set forth herein.
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SECTION 2.02. Loans and Borrowings.
(a) Obligations of Lenders. Each Term Loan shall be made as part of
a Term Borrowing consisting of Term Loans made by the Lenders ratably in
accordance with their respective Term Loan Commitments. Each Revolving Loan
shall be made as part of a Revolving Borrowing consisting of Revolving Loans
made by the Lenders ratably in accordance with their respective Revolving Loan
Commitments. The failure of any Lender to make any Loan required to be made by
it shall not relieve any other Lender of its obligations hereunder; provided
that the Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender's failure to make Loans as required.
(b) Minimum Amounts. Each Term Borrowing shall be in an aggregate
amount equal to $1,000,000 or a larger multiple of $100,000 and each Revolving
Borrowing shall be in an aggregate amount equal to $250,000 or a larger multiple
of $50,000; provided that a Term Borrowing may be in an aggregate amount that is
equal to the entire unused balance of the total Term Loan Commitments and a
Revolving Borrowing may be in an aggregate amount that is equal to the entire
unused balance of the total Revolving Loan Commitments at such time.
SECTION 2.03. Requests for Borrowings.
(a) Notice by the Borrower. To request a Borrowing (other than any
Borrowing on the date hereof), the Borrower shall notify the Lenders and the
Administrative Agent of such request in writing not later than 12:00 noon, New
York City time, 15 Business Days before the date of the proposed Borrowing. Each
such Borrowing Request shall be irrevocable and shall be in a form approved by
the Administrative Agent and signed by the Borrower.
(b) Content of Borrowing Requests. Each telephonic and written
Borrowing Request shall specify the following information in compliance with
Section 2.02:
(i) whether such requested Borrowing is a Term Borrowing
or a Revolving Borrowing;
(ii) the aggregate amount of such requested Borrowing
and the share of such Borrowing requested from each Lender, which
share shall be determined in accordance with Section 2.02(a);
(iii) the date of such requested Borrowing, which, in
the case of a Term Borrowing, shall be a Business Day during the
Term Loan Availability Period and which, in the case of a Revolving
Borrowing, shall be a Business Day during the Revolving Loan
Availability Period; provided that the Borrower may request a
Revolving Borrowing no more than two times in any one calendar
month; and
(iv) the location and number of the Borrower's account
to which funds are to be disbursed, which shall comply with the
requirements of Section 2.04.
SECTION 2.04. Funding of Borrowings. Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available
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funds by 12:00 noon, New York City time, to the account of the Borrower most
recently designated by it for such purpose by notice to the Lenders and the
Administrative Agent.
SECTION 2.05. Termination and Reduction of the Commitments.
(a) Scheduled Termination. Unless previously terminated, the Term
Loan Commitments shall terminate at 5:00 p.m., New York City time, on the last
day of the Term Loan Availability Period and the Revolving Loan Commitments
shall terminate at 5:00 p.m., New York City time, on the last day of the
Revolving Loan Availability Period.
(b) Voluntary Termination or Reduction. The Borrower may at any time
terminate, or from time to time reduce, the Term Loan Commitments and/or the
Revolving Loan Commitments; provided that (i) the Borrower shall not reduce or
terminate the Revolving Loan Commitments if after giving effect to any
concurrent prepayment of Revolving Loans in accordance with Section 2.07, the
Revolving Loans outstanding would exceed the total Revolving Loan Commitments,
and (ii) each reduction of the Term Loan Commitments and each reduction of the
Revolving Loan Commitments pursuant to this Section shall be in an amount that
is $100,000 or a larger multiple of $100,000.
(c) Notice of Voluntary Termination or Reduction. The Borrower shall
notify the Lenders and the Administrative Agent of any election to terminate or
reduce the Commitments under paragraph (b) of this Section at least three
Business Days prior to the effective date of such termination or reduction,
specifying such election and the effective date thereof. Each notice delivered
by the Borrower pursuant to this Section shall be irrevocable.
(d) Effect of Termination or Reduction. Any termination or reduction
of the Commitments shall be permanent. Each reduction of the Term Loan
Commitments or the Revolving Loan Commitments shall be made ratably among the
Lenders in accordance with their respective Term Loan Commitments or Revolving
Loan Commitments, respectively.
SECTION 2.06. Repayment of Loans; Evidence of Debt.
(a) Repayment. The Borrower hereby unconditionally promises to pay
to the Lenders the aggregate outstanding principal amount of the Loans on the
Maturity Date.
(b) Ratable Application of Payments. Each payment of a Borrowing
shall be applied ratably to the Loans included in such Borrowing.
(c) Maintenance of Records by Lenders. Each Lender shall maintain in
accordance with its usual practice records evidencing the indebtedness of the
Borrower to such Lender resulting from each Loan made by such Lender, including
the amounts of principal and interest payable and paid to such Lender from time
to time hereunder.
(d) Effect of Entries. The entries made in the records maintained
pursuant to paragraph (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender to maintain such records or any error therein shall not in
any manner affect the obligation of the Borrower to repay the Loans in
accordance with the terms of this Agreement.
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(e) Promissory Notes. The Borrower shall prepare, execute and
deliver to each Lender a Note payable to such Lender (or, if requested by such
Lender, to such Lender and its registered assigns). Thereafter, the Loans
evidenced by such Note and interest thereon shall at all times (including after
assignment pursuant to Section 10.04) be represented by one or more Notes in
such form payable to the payee named therein (or, if such Note is a registered
Note, to such payee and its registered assigns).
SECTION 2.07. Prepayment of Loans.
(a) Optional Prepayments. Subject to the requirements of this
Section, the Borrower shall have the right (i) from time to time, on any
Business Day, to prepay any Term Borrowing in whole or in part and (ii) from
time to time, not more than twice in any month, to prepay Revolving Borrowings
in whole or in part. The Borrower shall make no prepayment in respect of any
Loan other than as expressly permitted or required pursuant to this Section
2.07.
(b) Mandatory Prepayments. Unless the Administrative Agent directs
the Borrower to the contrary, the Borrower will prepay the Loans, and/or the
Commitments shall be subject to automatic reduction, as follows:
(i) Equity Issuance. Upon any Equity Issuance, the
Borrower shall prepay the Loans, and/or the Commitments shall be
subject to automatic reduction, in an aggregate amount equal to 0%
of the Net Available Proceeds thereof until the aggregate Net
Available Proceeds of such Equity Issuance and all prior Equity
Issuances exceed $5,000,000; 25% of the Net Available Proceeds of
such Equity Issuance to the extent the Net Available Proceeds of
such Equity Issuance, together with all prior Equity Issuances,
exceed $5,000,000 and do not exceed $10,000,000; and 50% of the Net
Available Proceeds of such Equity Issuance to the extent the Net
Available Proceeds of such Equity Issuance, together with all prior
Equity Issuances, exceed $10,000,000; such prepayment and/or
reduction to be effected in each case in the manner and to the
extent specified in clause (iii) of this paragraph.
(ii) Sale of Assets. Without limiting the obligation of
the Borrower to obtain the consent of the Required Lenders pursuant
to Section 7.03 to any Disposition not otherwise permitted
hereunder, in the event that the Net Available Proceeds of any
Disposition (herein, the "Current Disposition"), and of all prior
Dispositions as to which a prepayment has not yet been made under
this paragraph, shall exceed $500,000, then, no later than five
Business Days prior to the occurrence of the Current Disposition,
the Borrower will deliver to the Lenders a statement, certified by a
Financial Officer of the Borrower, in form and detail satisfactory
to the Administrative Agent, of the amount of the Net Available
Proceeds of the Current Disposition and of all such prior
Dispositions and will prepay the Loans, and/or the Commitments shall
be subject to automatic reduction, in an aggregate amount equal to
100% of the Net Available Proceeds of the Current Disposition and
such prior Dispositions, such prepayment and/or reduction to be
effected in each case in the manner and to the extent specified in
clause (iii) of this paragraph.
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(iii) Application. Prepayments and/or reductions of
Commitments pursuant to this Section 2.07(b) shall be applied in the
following order: (A) to prepay Term Loans to the extent outstanding
(first Term Loans representing capitalized interest and thereafter
other Term Loans), and (B) to reduce and/or terminate the Revolving
Loan Commitments to the extent outstanding and to the extent that after
giving effect to such reduction, the total Revolving Loans outstanding
would exceed the Revolving Loan Commitments, the Borrower shall prepay
Revolving Loans in an amount equal to the excess.
(c) Notices, Etc. The Borrower shall notify the Lenders and the
Administrative Agent by telephone (confirmed by telecopy) of any prepayment
hereunder not later than 11:00 a.m., New York City time, three Business Days
before the date of prepayment. Each such notice shall be irrevocable and shall
specify the Borrowing to be prepaid, the prepayment date, the principal amount
of such Borrowing or portion thereof to be prepaid and, in the case of a
mandatory prepayment, a reasonably detailed calculation of the amount of such
prepayment. Each partial prepayment of any Borrowing shall be in an amount that
would be permitted in the case of a Borrowing as provided in Section 2.02,
except as necessary to apply fully the required amount of a mandatory
prepayment. Each prepayment of a Borrowing shall be applied ratably to the Loans
included in the prepaid Borrowing. All prepayments shall be accompanied by
accrued interest.
(d) Lenders' Call Right. The Administrative Agent, on behalf of the
Lenders, shall have the right, at any time at its sole discretion, by furnishing
a notice to the Borrower to such effect, to require repayment by the Borrower of
all Loans outstanding on the ninetieth day after the anniversary date of this
Agreement next following the date on which such notice is so furnished to the
Borrower and, upon the furnishing of such notice to the Borrower: (i) all Loans
outstanding on such ninetieth day shall be immediately due and payable by the
Borrower, together with accrued interest thereon and all fees and other amounts
owing by the Borrower hereunder; (ii) all Commitments of the Lenders hereunder
shall terminate on such ninetieth day; (iii) the commitment fees and facility
fees in respect of the Term Loans otherwise payable under Section 2.08 shall be
deemed fully paid by the Borrower in the event it pays to the Lenders on each of
the respective dates such fees are due thereunder an amount equal to 25% of the
amount otherwise so due on such date thereunder; and (iv) in the event the
Borrower shall not have fully paid all such amounts set forth in the foregoing
clause (i) above on such ninetieth day, then, notwithstanding any other
provision hereof, the Borrower shall pay an additional amount equal to 1/3 of
the amount payable pursuant to clause (iii), but such failure to pay the amounts
set forth in clause (i) shall constitute an Event of Default only if any of such
amounts remains unpaid on the date occurring thirty days following such
ninetieth day (in which event, notwithstanding clause (iii) above, all fees in
respect of the Term Loans under Section 2.08 shall be reinstated in full (other
than to the extent previously paid) and shall be immediately due and payable
together with all other amounts payable by the Borrower hereunder). If the
Borrower pays all amounts pursuant to clauses (i) and (iii) before the ninetieth
day, each Lender shall refund to the Borrower a portion of the fees paid to it
under clause (iii) in proportion to the number of days remaining until such
ninetieth day. If the Borrower pays all amounts pursuant to clauses (i), (iii)
and (iv) before the 120th day, each Lender shall refund to the Borrower a
portion of the amount paid to it under clause (iv) in proportion to the number
of days remaining until such 120th day.
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SECTION 2.08. Fees. In respect of the Term Loans, the Borrower
agrees to pay to the Lenders on the date hereof and, so long as any Term Loans
are then outstanding, on the first and second anniversary of the date hereof, an
annual commitment fee of 2% of the amount of the Term Loans outstanding on such
date (excluding capitalized interest) and an annual facility fee of 1/2 of 1%
of the amount of the Term Loans outstanding on such date (excluding capitalized
interest); provided, however that if the Borrower is required to prepay all or a
portion of the Term Loan pursuant to Section 2.07(b) after such anniversary,
then at the time of such prepayment each Lender shall refund to the Borrower an
amount equal to the product of (a) the entire amount of such fee, (b) a
fraction, (i) the numerator of which is the amount of such required prepayment
actually paid and (ii) the denominator of which is the amount of Term Loans
outstanding on such anniversary (excluding capitalized interest) and (c) a
fraction (i) the numerator of which is the number of days until the next
anniversary and (ii) the denominator of which is 365. In respect of the
Revolving Loans, the Borrower agrees to pay to the Lenders a utilization fee on
the average daily aggregate principal amount of outstanding Revolving Loans
hereunder, from the date hereof to (and including) the Maturity Date, payable in
arrears on the last Business Day of each calendar month prior to the date the
Revolving Credit Commitment is reduced to zero, and on the date the Revolving
Credit Commitment is reduced to zero, at the fixed rate per annum of 2.5%. All
such fees will be payable on the dates due, in Dollars in immediately available
funds, to the Lenders in proportion to their respective Term Loan Commitments or
Revolving Loan Commitments, as applicable. Except as provided above, fees paid
shall not be refundable under any circumstances.
SECTION 2.09. Interest.
(a) Loans. Each Loan shall bear interest at a rate per annum equal
to the Applicable Rate.
(b) Default Interest. Notwithstanding the foregoing, if any
principal of or interest on any Loan or other amount payable by the Borrower
hereunder is not paid when due, whether at stated maturity, upon acceleration,
by mandatory prepayment or otherwise, such overdue amount shall bear interest,
after as well as before judgment, at a rate per annum equal to 14% until the end
of the calendar month in which such Default shall have occurred, increased by 1%
on the first day of each calendar month thereafter, until such rate shall equal
22%.
(c) Payment of Interest. Accrued interest on each Term Loan shall be
payable in arrears on each Term Loan Interest Payment Date and accrued interest
on each Revolving Loan shall be payable in arrears in cash on each Revolving
Loan Interest Payment Date; provided that (i) interest accrued pursuant to
paragraph (b) of this Section shall be payable on demand and (ii) in the event
of any repayment or prepayment of any Loan, accrued interest on the principal
amount repaid or prepaid shall be payable on the date of such repayment or
prepayment (except that for this purpose the interest accrued in connection with
any Term Loan repaid or prepaid before the first anniversary hereof shall
include all interest that would have accrued with respect to such Loan had it
remained outstanding through such first anniversary). Notwithstanding the
foregoing, provided that the conditions of Section 5.02 are satisfied on the
applicable Term Loan Interest Payment Date, each regularly scheduled interest
payment due on any Term Loan on any Term Loan Interest Payment Date (other than
February 15, 2002 and the Maturity Date) shall be capitalized ratably amongst
the Lenders in accordance with their
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respective Term Loan Commitments; provided, further that if a Non-PIK Event
occurs for the fiscal quarter ended immediately prior to the applicable Term
Loan Interest Payment Date, then the Administrative Agent on behalf of the
Lenders may require that such interest payment not be capitalized, and the
interest payment due on February 15, 2002 shall not be capitalized, in which
event such interest payment shall not be capitalized but shall be paid in cash
or shares of duly authorized, validly issued, fully paid and non-assessable
Common Stock, at the option of the Company on notice to Lenders. In the event of
such payment in Common Stock, the Company shall, within three Business Days of
the Term Loan Interest Payment Date, deliver ratably to each Lender in
accordance with its Term Loan Commitments certificates representing the number
of shares of Common Stock determined by dividing the amount of such interest
payment by 80% of the Volume Weighted Average Price as of such Term Loan
Interest Payment Date. Unless on the date of delivery all such shares of Common
Stock may be immediately resold by the Lenders pursuant to a registration
statement that has been declared effective by the Securities and Exchange
Commission and with respect to which no stop order has been issued and remains
outstanding and the prospectus remains current (in which case the shares will be
said to be "Freely Transferable"), the Borrower shall pay to each Lender, on the
date the shares become Freely Transferable, an amount in cash for each share
delivered to such Lender equal to the amount, if any, by which the Volume
Weighted Average Price on the date of delivery is more than the Volume Weighted
Average Price on the date the shares become Freely Transferable, provided that
if the shares have not become Freely Transferable by the 60th day after the Term
Loan Interest Payment Date, the Borrower shall pay each Lender in cash an amount
equal to the interest due on that Term Loan Interest Payment Date plus interest
on such amount as provided by paragraph (b) of this Section 2.09, and the Lender
shall surrender the shares to the Borrower. In the event of such capitalization,
the applicable interest payment shall, from the date of the applicable Term Loan
Interest Payment Date, be deemed to be a Term Loan made by the Lenders
hereunder, provided that such Term Loan shall increase the Term Loan Commitments
of the Lenders by the amount thereof. The Borrower may elect to make any such
interest payment due on such Term Loan Interest Payment Date in cash upon
irrevocable written notice to the Lenders and the Administrative Agent, such
notice to be given no later than five Business Days prior to the applicable Term
Loan Interest Payment Date. On each Revolving Loan Interest Payment Date, the
Borrower shall deliver to the Administrative Agent a certificate of a Financial
Officer of the Borrower setting forth reasonably detailed calculations of the
interest paid on such date.
(d) Computation. All interest hereunder shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and shall be payable
for the actual number of days elapsed (including the first day but excluding the
last day).
SECTION 2.10. Taxes.
(a) Payments Free of Taxes. Any and all payments by or on account of
any obligation of the Borrower hereunder or under any other Loan Document shall
be made free and clear of and without deduction for any Indemnified Taxes or
Other Taxes; provided that if the Borrower shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent or Lender (as the case may be) receives an amount equal
to
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the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.
(b) Payment of Other Taxes by the Borrower. In addition, the
Borrower shall pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.
(c) Indemnification by the Borrower. The Borrower shall indemnify
the Administrative Agent and each Lender, within 10 days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) paid by the Administrative Agent or such
Lender, as the case may be, and any penalties, interest and reasonable expenses
arising therefrom or with respect thereto, whether or not such Indemnified Taxes
or Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender, or by the Administrative Agent
on its own behalf or on behalf of a Lender, shall be conclusive absent manifest
error.
(d) Evidence of Payments. As soon as practicable after any payment
of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.
(e) Foreign Lenders. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement shall deliver to the
Borrower (with a copy to the Administrative Agent), at the time or times
prescribed by applicable law or reasonably requested by the Borrower, such
properly completed and executed documentation prescribed by applicable law as
will permit such payments to be made without withholding or at a reduced rate.
SECTION 2.11. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs.
(a) Payments by the Obligors. Each Obligor shall make each payment
required to be made by it hereunder (whether of principal, interest or fees, or
under Section 2.10, or otherwise) or under any other Basic Document (except to
the extent otherwise provided therein) prior to 12:00 noon, New York City time,
on the date when due, in immediately available funds, without set-off or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Administrative Agent, be deemed to have been received on the
next succeeding Business Day for purposes of calculating interest thereon. All
such payments shall be made to each Lender at its office (or directly to such
Lender's bank or other financial institution) designated to the Borrower from
time to time by such Lender, except as otherwise expressly provided in the
relevant Loan Document and except payments pursuant to Sections 2.10 and 10.03,
which shall be made directly to the Persons entitled thereto. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day and, in the case of any
payment accruing interest, interest thereon
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shall be payable for the period of such extension. All payments hereunder or
under any other Basic Document (except to the extent otherwise provided therein)
shall be made in Dollars.
(b) Application of Insufficient Payments. If at any time
insufficient funds are received by and available to the Lenders to pay fully all
amounts of principal, interest and fees then due hereunder, such funds shall be
applied (i) first, to pay interest and fees then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (ii) second, to pay principal then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal then due to such parties.
(c) Pro Rata Treatment. Except to the extent otherwise provided
herein: (i) each Borrowing shall be made from the Lenders, each Borrowing shall
be allocated among the Lenders, and each termination or reduction of the amount
of the Term Loan Commitments or the Revolving Loan Commitments under Section
2.05 shall be applied to the respective Term Loan Commitments or Revolving Loan
Commitments, as applicable, of the Lenders, pro rata according to the amounts of
their respective Term Loan Commitments or Revolving Loan Commitments, as
applicable; (ii) each payment or prepayment of principal of Term Loans or
Revolving Loans by the Borrower shall be made for account of the Lenders pro
rata in accordance with the respective unpaid principal amounts of the Term
Loans or Revolving Loans, as applicable, held by them; and (iii) each payment of
interest on Loans by the Borrower shall be made for account of the Lenders pro
rata in accordance with the amounts of interest on such Loans then due and
payable to the respective Lenders.
(d) Sharing of Payments by Lenders. If any Lender shall, by
exercising any right of set-off or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of its Term Loans or Revolving
Loans resulting in such Lender receiving payment of a greater proportion of the
aggregate amount of its Term Loans or Revolving Loans, as applicable, and
accrued interest thereon then due than the proportion received by any other
Lender, then the Lender receiving such greater proportion shall purchase (for
cash at face value) participations in the Term Loans or Revolving Loans, as
applicable, of other Lenders to the extent necessary so that the benefit of all
such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Term
Loans or Revolving Loans, as applicable; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by any Obligor pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans to any assignee or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply). Each Obligor
consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against such Obligor rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of such Obligor in the amount of such participation.
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SECTION 2.12. Mitigation Obligations; Replacement of Lenders.
(a) Designation of a Different Lending Office. If the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for account of any Lender pursuant to Section 2.10, then such Lender
shall use reasonable efforts to designate a different lending office for funding
or booking its Loans hereunder or to assign its rights and obligations hereunder
to another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.10 in the future and (ii) would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.
(b) Replacement of Lenders. If the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for account of any
Lender pursuant to Section 2.10, or if any Lender defaults in its obligation to
fund Loans hereunder, then the Borrower may, at its sole expense and effort,
upon notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 10.04), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior
written consent of the Administrative Agent, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans, accrued interest
thereon, fees and all other amounts payable to it hereunder, from the assignee
(to the extent of such outstanding principal and accrued interest and fees) or
the Borrower (in the case of all other amounts) and (iii) in the case of any
such assignment resulting from payments required to be made pursuant to Section
2.10, such assignment will result in a reduction in such payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Borrower to require such assignment and delegation cease to apply.
ARTICLE III
GUARANTEE
SECTION 3.01. The Guarantee. The Subsidiary Guarantors hereby
jointly and severally guarantee to each Lender and the Administrative Agent and
their respective successors and assigns the prompt payment in full when due
(whether at stated maturity, by acceleration or otherwise) of the principal of
and interest on the Loans made by the Lenders to the Borrower and all other
amounts from time to time owing to the Lenders or the Administrative Agent by
the Borrower under this Agreement and by any Obligor under any of the other
Basic Documents, in each case strictly in accordance with the terms thereof
(such obligations being herein collectively called the "Guaranteed
Obligations"). The Subsidiary Guarantors hereby further jointly and severally
agree that if the Borrower shall fail to pay in full when due (whether at stated
maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the
Subsidiary Guarantors will
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promptly pay the same, without any demand or notice whatsoever, and that in the
case of any extension of time of payment or renewal of any of the Guaranteed
Obligations, the same will be promptly paid in full when due (whether at
extended maturity, by acceleration or otherwise) in accordance with the terms of
such extension or renewal.
SECTION 3.02. Obligations Unconditional. The obligations of the
Subsidiary Guarantors under Section 3.01 are absolute and unconditional, joint
and several, irrespective of the value, genuineness, validity, regularity or
enforceability of the obligations of the Borrower under this Agreement or any
other agreement or instrument referred to herein, or any substitution, release
or exchange of any other guarantee of or security for any of the Guaranteed
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section that the obligations of the Subsidiary
Guarantors hereunder shall be absolute and unconditional, joint and several,
under any and all circumstances. Without limiting the generality of the
foregoing, it is agreed that the occurrence of any one or more of the following
shall not alter or impair the liability of the Subsidiary Guarantors hereunder,
which shall remain absolute and unconditional as described above:
(i) at any time or from time to time, without notice to
the Subsidiary Guarantors, the time for any performance of or
compliance with any of the Guaranteed Obligations shall be extended,
or such performance or compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions
of this Agreement or any other agreement or instrument referred to
herein shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations
shall be accelerated, or any of the Guaranteed Obligations shall be
modified, supplemented or amended in any respect, or any right under
this Agreement or any other agreement or instrument referred to
herein shall be waived or any other guarantee of any of the
Guaranteed Obligations or any security therefor shall be released or
exchanged in whole or in part or otherwise dealt with; or
(iv) any lien or security interest granted to, or in
favor of, the Administrative Agent or any Lender or Lenders as
security for any of the Guaranteed Obligations shall fail to be
perfected.
The Subsidiary Guarantors hereby expressly waive diligence,
presentment, demand of payment, protest and all notices whatsoever, and any
requirement that the Administrative Agent or any Lender exhaust any right, power
or remedy or proceed against the Borrower under this Agreement or any other
agreement or instrument referred to herein, or against any other Person under
any other guarantee of, or security for, any of the Guaranteed Obligations.
SECTION 3.03. Reinstatement. The obligations of the Subsidiary
Guarantors under this Article shall be automatically reinstated if and to the
extent that for any reason any payment by or on behalf of the Borrower in
respect of the Guaranteed Obligations is rescinded or
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must be otherwise restored by any holder of any of the Guaranteed Obligations,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise, and the Subsidiary Guarantors jointly and severally agree that they
will indemnify the Administrative Agent and each Lender on demand for all
reasonable costs and expenses (including fees of counsel) incurred by the
Administrative Agent or such Lender in connection with such rescission or
restoration, including any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
SECTION 3.04. Subrogation. The Subsidiary Guarantors hereby jointly
and severally agree that until the payment and satisfaction in full of all
Guaranteed Obligations and the expiration and termination of the Commitments of
the Lenders under this Agreement they shall not exercise any right or remedy
arising by reason of any performance by them of their guarantee in Section 3.01,
whether by subrogation or otherwise, against the Borrower or any other guarantor
of any of the Guaranteed Obligations or any security for any of the Guaranteed
Obligations.
SECTION 3.05. Remedies. The Subsidiary Guarantors jointly and
severally agree that, as between the Subsidiary Guarantors and the Lenders, the
obligations of the Borrower under this Agreement may be declared to be forthwith
due and payable as provided in Article VIII (and shall be deemed to have become
automatically due and payable in the circumstances provided in Article VIII) for
purposes of Section 3.01 notwithstanding any stay, injunction or other
prohibition preventing such declaration (or such obligations from becoming
automatically due and payable) as against the Borrower and that, in the event of
such declaration (or such obligations being deemed to have become automatically
due and payable), such obligations (whether or not due and payable by the
Borrower) shall forthwith become due and payable by the Subsidiary Guarantors
for purposes of Section 3.01.
SECTION 3.06. Instrument for the Payment of Money. Each Subsidiary
Guarantor hereby acknowledges that the guarantee in this Article constitutes an
instrument for the payment of money, and consents and agrees that any Lender or
the Administrative Agent, at its sole option, in the event of a dispute by such
Subsidiary Guarantor in the payment of any moneys due hereunder, shall have the
right to bring motion-action under New York CPLR Section 3213.
SECTION 3.07. Continuing Guarantee. The guarantee in this Article is
a continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.
SECTION 3.08. Rights of Contribution. The Subsidiary Guarantors
hereby agree, as between themselves, that if any Subsidiary Guarantor shall
become an Excess Funding Guarantor (as defined below) by reason of the payment
by such Subsidiary Guarantor of any Guaranteed Obligations, each other
Subsidiary Guarantor shall, on demand of such Excess Funding Guarantor (but
subject to the next sentence), pay to such Excess Funding Guarantor an amount
equal to such Subsidiary Guarantor's Pro Rata Share (as defined below and
determined, for this purpose, without reference to the properties, debts and
liabilities of such Excess Funding Guarantor) of the Excess Payment (as defined
below) in respect of such Guaranteed Obligations. The payment obligation of a
Subsidiary Guarantor to any Excess Funding Guarantor under this
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Section shall be subordinate and subject in right of payment to the prior
payment in full of the obligations of such Subsidiary Guarantor under the other
provisions of this Article and such Excess Funding Guarantor shall not exercise
any right or remedy with respect to such excess until payment and satisfaction
in full of all of such obligations.
For purposes of this Section, (i) "Excess Funding Guarantor" means,
in respect of any Guaranteed Obligations, a Subsidiary Guarantor that has paid
an amount in excess of its Pro Rata Share of such Guaranteed Obligations, (ii)
"Excess Payment" means, in respect of any Guaranteed Obligations, the amount
paid by an Excess Funding Guarantor in excess of its Pro Rata Share of such
Guaranteed Obligations and (iii) "Pro Rata Share" means, for any Subsidiary
Guarantor, the ratio (expressed as a percentage) of (x) the amount by which the
aggregate present fair saleable value of all properties of such Subsidiary
Guarantor (excluding any shares of stock or membership interest of any other
Subsidiary Guarantor) exceeds the amount of all the debts and liabilities of
such Subsidiary Guarantor (including contingent, subordinated, unmatured and
unliquidated liabilities, but excluding the obligations of such Subsidiary
Guarantor hereunder and any obligations of any other Subsidiary Guarantor that
have been Guaranteed by such Subsidiary Guarantor) to (y) the amount by which
the aggregate fair saleable value of all properties of all of the Subsidiary
Guarantors exceeds the amount of all the debts and liabilities (including
contingent, subordinated, unmatured and unliquidated liabilities, but excluding
the obligations of the Borrower and the Subsidiary Guarantors hereunder and
under the other Loan Documents) of all of the Subsidiary Guarantors, determined
(A) with respect to any Subsidiary Guarantor that is a party hereto on the
Effective Date, as of the Effective Date, and (B) with respect to any other
Subsidiary Guarantor, as of the date such Subsidiary Guarantor becomes a
Subsidiary Guarantor hereunder.
SECTION 3.09. General Limitation on Guarantee Obligations. In any
action or proceeding involving any state corporate law, or any state or Federal
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Subsidiary Guarantor under
Section 3.01 would otherwise, taking into account the provisions of Section
3.08, be held or determined to be void, invalid or unenforceable, or
subordinated to the claims of any other creditors, on account of the amount of
its liability under Section 3.01, then, notwithstanding any other provision
hereof to the contrary, the amount of such liability shall, without any further
action by such Subsidiary Guarantor, any Lender, the Administrative Agent or any
other Person, be automatically limited and reduced to the highest amount that is
valid and enforceable and not subordinated to the claims of other creditors as
determined in such action or proceeding.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that, taking
into account the Acquisition:
SECTION 4.01. Organization; Powers. Each of the Borrower and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the
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jurisdiction of its organization, has all requisite power and authority to carry
on its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.
SECTION 4.02. Authorization; Enforceability. The Transactions are
within each Obligor's corporate powers and have been duly authorized by all
necessary corporate action and, if required, by all necessary shareholder
action. This Agreement has been duly executed and delivered by each Obligor and
constitutes, and each of the other Basic Documents to which it is a party when
executed and delivered by such Obligor will constitute, a legal, valid and
binding obligation of such Obligor, enforceable against each Obligor in
accordance with its terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
similar laws of general applicability affecting the enforcement of creditors'
rights and (b) the application of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
SECTION 4.03. Governmental Approvals; No Conflicts. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, subject to the accuracy of the
representations of the Lenders in Section 2.03 of the Warrant Agreement, except
for (i) such as have been obtained or made and are in full force and effect and
(ii) filings and recordings in respect of the Liens created pursuant to the
Security Documents, (b) will not violate any applicable law or regulation or the
charter, by-laws or other organizational documents of the Borrower or any of its
Subsidiaries or any order of any Governmental Authority, (c) will not violate or
result in a default under any indenture, agreement or other instrument binding
upon the Borrower or any of its Subsidiaries or assets, or give rise to a right
thereunder to require any payment to be made by any such Person, and (d) except
for the Liens created pursuant to the Security Documents, will not result in the
creation or imposition of any Lien on any asset of the Borrower or any of its
Subsidiaries.
SECTION 4.04. Financial Condition; No Material Adverse Change.
(a) Financial Condition. The Borrower has heretofore furnished to
the Lenders its consolidated balance sheet and statements of income,
stockholders' equity and cash flows (i) as of and for the fiscal year ended
December 31, 2000, reported on by PricewaterhouseCoopers LLP, independent public
accountants, and (ii) as of and for the fiscal quarter and the portion of the
fiscal year ended March 31, 2001, certified by the chief financial officer of
the Borrower. Such financial statements present fairly, in all material
respects, the financial position and results of operations and cash flows of the
Borrower and its Subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence of
footnotes in the case of the statements referred to in clause (ii) of the first
sentence of this paragraph.
(b) No Material Adverse Change. Since December 31, 2000, there has
been no material adverse change in the business, assets, operations, prospects
or condition, financial or otherwise, of the Borrower and its Subsidiaries,
taken as a whole.
SECTION 4.05. Properties.
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(a) Property Generally. Each of the Borrower and its Subsidiaries
has good title to, or valid leasehold interests in, all its real and personal
property material to its business, subject only to Liens permitted by Section
7.02 and except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.
(b) Intellectual Property.
(i) The Borrower and each of its Subsidiaries has all
right, title and interest in or a valid and binding right to use all
Intellectual Property used by it in the conduct of its business, and
no other intellectual property is necessary in the conduct of such
business, other than failures that in the aggregate are not
material.
(ii) All registrations with and applications to
Governmental Authorities in respect of the Intellectual Property are
valid and in full force and effect except for failures to be so that
in the aggregate would not reasonably be expected to have a Material
Adverse Effect.
(iii) [reserved]
(iv) The Borrower and each of its Subsidiaries have
taken reasonable security measures to protect the secrecy,
confidentiality and value of their trade secrets.
(v) Neither the Borrower nor any of its Subsidiaries is,
or has received any notice that it is, in default (or with the
giving of notice or lapse of time or both, would be in default)
under any contract to use its material Intellectual Property.
(vi) To the knowledge of the Borrower or any of its
Subsidiaries, no material Intellectual Property is being infringed
by any other Person except as set forth in Schedule VII.
(vii) Neither the Borrower nor any of its Subsidiaries
has received notice that the Borrower or any Subsidiary is
materially infringing any intellectual property of any other Person,
no claim is pending or, to the knowledge of the Borrower, has been
made to such effect that has not been resolved and neither the
Borrower nor any of its Subsidiaries is materially infringing any
intellectual property of any other Person.
SECTION 4.06. Litigation and Environmental Matters.
(a) Actions, Suits and Proceedings. There are no actions, suits or
proceedings by or before any arbitrator or Governmental Authority now pending
against or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or any of its Subsidiaries (i) as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined, could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect (other than the Disclosed Matters) or (ii) that involve
this Agreement or the Transactions.
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(b) Environmental Matters. Except for the Disclosed Matters and
except with respect to any other matters that, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect, neither
the Borrower nor any of its Subsidiaries (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or
other approval required under any Environmental Law, (ii) has become subject to
any Environmental Liability, (iii) has received notice of any claim with respect
to any Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Disclosed Matters. Since the date of this Agreement, there has
been no change in the status of the Disclosed Matters that, individually or in
the aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.
SECTION 4.07. Compliance with Laws and Agreements. Each of the
Borrower and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. No Default has
occurred and is continuing.
SECTION 4.08. Investment and Holding Company Status. Neither the
Borrower nor any of its Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 4.09. Taxes. Each of the Borrower and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which such Person has set aside on its books
adequate reserves or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 4.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $100,000 the fair market value of the assets of such Plan, and the present
value of all accumulated benefit obligations of all underfunded Plans (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $100,000 the fair market value of
the assets of all such underfunded Plans.
SECTION 4.11. Disclosure. The Borrower has disclosed to the Lenders
all agreements, instruments and corporate or other restrictions to which it or
any of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of the reports, financial
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statements, certificates or other information furnished by or on behalf of the
Obligors to the Lenders in connection with the negotiation of this Agreement and
the other Basic Documents or delivered hereunder or thereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
SECTION 4.12. Use of Credit. Neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose, whether immediate, incidental
or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of
any Loan hereunder will be used to buy or carry any Margin Stock.
SECTION 4.13. Material Agreements and Liens.
(a) Material Agreements. Part A of Schedule II is a complete and
correct list of each credit agreement, loan agreement, indenture, purchase
agreement, guarantee, letter of credit or other arrangement providing for or
otherwise relating to any Indebtedness or any extension of credit (or commitment
for any extension of credit) to, or guarantee by, the Borrower or any of its
Subsidiaries outstanding on the date hereof the aggregate principal or face
amount of which equals or exceeds (or may equal or exceed) $100,000.
Each material agreement of the Company is in full force and effect
and constitutes a legal, valid and binding agreement, enforceable in accordance
with its terms, of each party thereto except where failures to be so, in the
aggregate, would not reasonably be expected to have a Material Adverse Effect;
and neither the Borrower, any Subsidiary nor, to the knowledge of the Borrower,
any other party to such agreement is, or has received notice that it is, in
violation or breach of or default under any such agreement (or with notice or
lapse of time or both would be in violation or breach of or default under any
such agreement) in any material respect.
(b) Liens. Part B of Schedule II is a complete and correct list of
each Lien securing Indebtedness of any Person outstanding on the date hereof the
aggregate principal or face amount of which equals or exceeds (or may equal or
exceed) $500,000 and covering any property of the Borrower or any of its
Subsidiaries, and the aggregate Indebtedness secured (or that may be secured) by
each such Lien and the property covered by each such Lien is correctly described
in Part B of Schedule II.
SECTION 4.14. Capitalization. The authorized capital stock of the
Borrower consists of (a) 150,000,000 shares of common stock of which 44,794,261
shares were duly and validly issued and outstanding as of the close of business
on the date immediately preceding the date hereof, and no shares are held in the
Buyer's treasury and (b) 5,000,000 shares of Preferred Stock, $0.01 par value
per share, of which no shares are issued or outstanding as of the date of this
Agreement. Each outstanding share of capital stock of the Borrower is fully paid
and nonassessable. As of the date hereof, except for (1) 298,870 shares subject
to repurchase rights, (2) 6,402,067 employee stock options which are currently
outstanding, (3) warrants for the
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purchase of up to 5,370,000 shares, (4) obligations to issue options (and the
corresponding shares) to purchase up to 133,334 shares as required under Section
4.8(c) of the Acquisition Agreement, (5) obligations to issue up to 125,000
shares pursuant to employment agreements entered into in connection with the
transaction contemplated by the Acquisition Agreement, and (6) options and
rights to purchase Common Stock under the employee stock purchase plans in
effect on the date hereof, (x) there are no outstanding Equity Rights with
respect to the Borrower and (y) there are no outstanding obligations of the
Borrower or any of its Subsidiaries to repurchase, redeem, or otherwise acquire
any shares of capital stock of the Borrower nor are there any outstanding
obligations of the Borrower or any of its Subsidiaries to make payments to any
Person, such as "phantom stock" payments, where the amount thereof is calculated
with reference to the fair market value or equity value of the Borrower or any
of its Subsidiaries.
SECTION 4.15. Subsidiaries and Investments.
(a) Subsidiaries. Set forth in Part A of Schedule VI is a complete
and correct list of all of the Subsidiaries of the Borrower as of the date
hereof, together with, for each such Subsidiary, (i) the jurisdiction of
organization of such Subsidiary, (ii) each Person holding ownership interests in
such Subsidiary and (iii) the nature of the ownership interests held by each
such Person and the percentage of ownership of such Subsidiary represented by
such ownership interests. Except as disclosed in Part A of Schedule VI, (x) each
of the Borrower and its Subsidiaries owns, free and clear of Liens (other than
Liens created pursuant to the Security Documents), and has the unencumbered
right to vote, all outstanding ownership interests in each Person shown to be
held by it in Part A of Schedule VI, (y) all of the issued and outstanding
capital stock of each such Person organized as a corporation is validly issued,
fully paid and nonassessable and (z) there are no outstanding Equity Rights with
respect to such Person.
(b) Investments. Set forth in Part B of Schedule VI is a complete
and correct list of all Investments (other than Investments disclosed in Part A
of Schedule VI and other than Investments of the types referred to in clauses
(b), (c), (d) and (e) of Section 7.05) held by the Borrower or any of its
Subsidiaries in any Person on the date hereof and, for each such Investment, (x)
the identity of the Person or Persons holding such Investment and (y) the nature
of such Investment. Except as disclosed in Part B of Schedule VI, each of the
Borrower and its Subsidiaries owns, free and clear of all Liens (other than
Liens created pursuant to the Security Documents), all such Investments.
(c) Restrictions on Subsidiaries. Except as disclosed in Schedule
III, none of the Subsidiaries of the Borrower is, on the date hereof, subject to
any indenture, agreement, instrument or other arrangement of the type described
in Section 7.08, after giving effect to the proviso thereto.
SECTION 4.16. SEC Reports. The Borrower delivered to RCP, or RCP has
had access thereto via ▇▇▇▇▇, prior to the execution of this Agreement a true
and complete copy of each form, report, schedule, registration statement,
definitive proxy statement and other document (together with all amendments
thereof and supplements thereto) filed by the Borrower or any of its
Subsidiaries with the Securities and Exchange Commission since January 1, 1999
(as such documents have since the time of their filing been amended or
supplemented, the "SEC Reports"), which are all the documents (other than
preliminary material) that the Borrower and
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its Subsidiaries were required to file with the Securities and Exchange
Commission since such date. As of their respective dates, the SEC Reports (i)
complied as to form in all material respects with the requirements of the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, as the case may be, and the rules and regulations thereunder, and (ii)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
SECTION 4.17. Customers and Suppliers. Except as disclosed in SEC
Reports filed before the date of this Agreement or otherwise disclosed to the
Lenders (provided that any such disclosure after the date thereof shall be in
writing), no customers or suppliers representing in the aggregate more than 5%
of the Borrower's and its Subsidiaries (taken as a whole) sales or purchased has
ceased or materially reduced its purchases from, use of the services of, or
sales or provision of services to the Borrower and the Subsidiaries since
December 31, 2000, unless the sales or purchases from such customers or
suppliers have been replaced by sales or purchases from similarly situated
customers or suppliers, or to the knowledge of the Borrower, has threatened to
cease or materially reduce such purchases, use, sales or provision of services
after the date hereof. Except as disclosed in SEC Reports filed before the date
of this Agreement, to the knowledge of the Borrower, no such customer or
supplier is threatened with bankruptcy or insolvency.
SECTION 4.18. Acquisition Consideration. The total amount of cash
consideration to be payable by the Borrower under the Acquisition Agreement will
not exceed $8,900,000, of which $8,000,000 will be payable at closing and the
remainder is contingent consideration which will be payable following the
earn-out period described in Section 1.9 of the Acquisition Agreement. The
maximum number of shares of Common Stock to be issued as consideration under the
Acquisition Agreement will not exceed 5,183,334 (subject to equitable adjustment
in the event of any stock split, stock dividend, reverse stock split or similar
event affecting the Common Stock after the closing of the Acquisition
Agreement), excluding options to be issued to employees of the target company.
ARTICLE V
CONDITIONS
SECTION 5.01. Effective Date. The obligations of the Lenders to make
Loans hereunder shall not become effective until the date on which the
Administrative Agent shall have received each of the following documents, each
of which shall be satisfactory to the Administrative Agent (and to the extent
specified below, to each Lender) in form and substance (or such condition shall
have been waived in accordance with Section 10.02):
(a) Executed Counterparts. From each party hereto either
(i) a counterpart of this Agreement signed on behalf of such party
or (ii) written evidence satisfactory to the Administrative Agent
(which may include telecopy transmission of a signed signature page
to this Agreement) that such party has signed a counterpart of this
Agreement.
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(b) Opinion of Counsel to the Obligors. A favorable
written opinion (addressed to the Administrative Agent and the
Lenders and dated the Effective Date) of ▇▇▇▇ and ▇▇▇▇ LLP, counsel
for the Obligors, substantially in the form of Exhibit E, and
covering such other matters relating to the Borrower, this Agreement
or the Transactions as the Required Lenders shall reasonably request
(and each Obligor hereby instructs such counsel to deliver such
opinion to the Lenders and the Administrative Agent).
(c) [Reserved].
(d) Documents. Such documents and certificates as the
Administrative Agent or its counsel may reasonably request relating
to the organization, existence and good standing of each Obligor,
the authorization of the Transactions and any other legal matters
relating to the Obligors, this Agreement or the Transactions, all in
form and substance satisfactory to the Administrative Agent and its
counsel.
(e) Officer's Certificate. A certificate, dated the
Effective Date and signed by the President, a Vice President or a
Financial Officer of the Borrower, confirming compliance with the
conditions set forth in the lettered clauses of the first sentence
of Section 5.02.
(f) Security Agreement. The Security Agreement, duly
executed and delivered by the Borrower and the Subsidiary Guarantors
and the Administrative Agent and the certificates identified under
the name of such Obligor in Annex 1 thereto, in each case
accompanied by undated stock powers executed in blank. In addition,
the Borrower and the Subsidiary Guarantors shall have taken such
other action (including delivering to the Administrative Agent, for
filing, appropriately completed and duly executed copies of Uniform
Commercial Code financing statements) as the Administrative Agent
shall have requested in order to perfect the security interests
created pursuant to the Security Agreement.
(g) Warrant Agreement and Warrants. The Warrant
Agreement and a side letter relating to certain matters thereunder
duly executed and delivered by the Borrower and the Lenders,
together with evidence that the Warrants have been properly issued
in accordance with the terms of the Warrant Agreement.
(h) Notes. The Notes, duly executed and delivered by the
Borrower (if requested by the applicable Lender, or by the
Administrative Agent on behalf of such Lender).
(i) Termination of Existing Revolving Facility. Such
documents and certificates as the Administrative Agent or its
counsel may reasonably request relating to the termination of the
existing revolving loan facility, and related security interests
granted by, OCM Enterprises, Inc. and its subsidiaries.
(j) Other Documents. Such other documents as the
Administrative Agent or any Lender or special New York counsel to
RCP may reasonably request.
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The obligation of each Lender to make its initial Loan hereunder is
also subject to the payment or delivery by the Borrower of such consideration as
the Borrower shall have agreed to pay or deliver to any Lender or an affiliate
thereof or the Administrative Agent in connection herewith, including pursuant
to the Letter Agreement, and including the reasonable fees and expenses of
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, special New York counsel to RCP, in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the other Basic Documents and the Loans hereunder, to the extent
that statements for such fees and expenses have been delivered to the Borrower.
The Administrative Agent shall notify the Borrower and the Lenders
of the Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 10.02) on or prior to 3:00 p.m., New
York City time, on the date that the Availability Period terminates (and, in the
event such conditions are not so satisfied or waived, the Commitments shall
terminate at such time).
SECTION 5.02. Each Credit Event. The obligation of each Lender to
make any Loan is additionally subject to the satisfaction of the following
conditions:
(a) the representations and warranties of the Borrower set forth in
this Agreement, and of each Obligor in each of the other Basic Documents
to which it is a party, shall be true and correct on and as of the date of
such Loan (provided, that any representations and warranties made on or
deemed to be made subsequent to the date of this Agreement that
specifically relate to an earlier date shall be true and correct on and as
of such earlier date); and
(b) at the time of and immediately after giving effect to such Loan,
no Default shall have occurred and be continuing.
Each Borrowing shall be deemed to constitute a representation and
warranty by the Borrower on the date thereof as to the matters specified in the
preceding sentence.
SECTION 5.03. Additional Conditions. The obligation of each Lender
to make Loans is additionally subject to the satisfaction of the following
conditions:
(a) the Administrative Agent shall have received evidence (in form
and substance satisfactory to the Administrative Agent) that the
Acquisition shall have been consummated in accordance with the terms of
the Acquisition Agreement (except for any modifications, supplements or
waivers thereof, or written consents or determinations made by the parties
thereto, that shall be satisfactory to the Required Lenders), and the
Administrative Agent shall have received a certificate of a Financial
Officer of the Borrower to such effect and to the effect that attached
thereto are true and complete copies of the documents delivered in
connection with the closing of the Acquisition pursuant to the Acquisition
Agreement; and
(b) the Administrative Agent shall have received copies of any legal
opinions delivered to the Borrower pursuant to the Acquisition Agreement
in connection with such
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Acquisition, together with a letter from each Person delivering such
opinion (or authorization within such opinion) authorizing reliance
thereon by the Administrative Agent and the Lenders, it being
understood that the Borrower shall request counsel for the
respective seller to deliver such a reliance letter and that all
such documents shall be in form and substance satisfactory to the
Administrative Agent.
ARTICLE VI
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated
and the principal of and interest on each Loan and all fees payable hereunder
shall have been paid in full, the Borrower covenants and agrees with the Lenders
that:
SECTION 6.01. Financial Statements and Other Information
The Borrower will furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of
the Borrower, (i) the audited consolidated balance sheet and related
statements of operations, stockholders' equity and cash flows of the
Borrower and its Subsidiaries as of the end of and for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or
other independent public accountants of recognized national standing
(without a "going concern" or like qualification or exception and
without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and
results of operations of the Borrower and its Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied,
together with a statement of such accountants to the effect that, in
making the examination necessary for their opinions, nothing came to
their attention that caused them to believe that the Borrower was
not in compliance with this Agreement, and (ii) a reasonably
detailed management discussion and analysis of the statements
described in the foregoing clause (i);
(b) as soon as practicable, and in any event within 45
days after the end of each of the first eleven calendar months of
each fiscal year of the Borrower, (i) the financial information
package regularly provided to management, including the consolidated
balance sheet and related statements of operations, stockholders'
equity and cash flows of the Borrower and its Subsidiaries as of the
end of and for such month and the then elapsed portion of the fiscal
year, setting forth in each case in comparative form the figures for
(or, in the case of the balance sheet, as of the end of) the
corresponding period or periods of the previous fiscal year, all
certified by a Financial Officer of the Borrower as presenting
fairly in all material respects the financial condition and results
of operations of the Borrower and its Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes, and
(ii) a reasonably detailed management discussion and analysis of the
statements described in the foregoing clause (i); provided, that if
statements of cash
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flow or stockholders' equity and/or management discussion and
analysis are not prepared on a monthly basis, such statements of
stockholders' equity and/or management discussion and analysis, as
applicable, shall be required only at the end of each such calendar
month that is also the end of a fiscal quarter and the Borrower
shall provide at the end of the other months a summary of the
sources and uses of cash for the period or the equivalent; provided,
further, that in place of an income statement for months other than
the last month in a calendar quarter, the Borrower may provide a
summarized schedule of revenue by business unit and a schedule of
expenses compared to budget by department.
(c) concurrently with any delivery of the information
set forth under clause (a) or (b) of this Section, a certificate of
a Financial Officer of the Borrower (i) certifying as to whether a
Default has occurred and, if a Default has occurred, specifying the
details thereof and any action taken or proposed to be taken with
respect thereto, (ii) setting forth reasonably detailed calculations
demonstrating compliance with Sections 7.01, 7.02, 7.05 and 7.10,
and (iii) stating whether any change in GAAP or in the application
thereof has occurred since the date of the audited financial
statements referred to in Section 4.04 and, if any such change has
occurred, specifying the effect of such change on the financial
statements accompanying such certificate;
(d) (i) at least 30 days prior to the end of each fiscal
year, a preliminary Budget for the succeeding fiscal year and within
30 days after the beginning of such fiscal year, a Budget for such
fiscal year (which for purposes of this Agreement cannot thereafter
be changed), and (ii) within 45 days of the end of each calendar
month, a statement setting forth "budgeted versus actual"
performance during the then elapsed portion of the fiscal year
relating to the applicable Budget described in the foregoing clause
(i), together with a reasonably detailed management discussion and
analysis of the variances set forth therein;
(e) promptly after the same become publicly available,
copies of all periodic and other reports, proxy statements and other
materials filed by the Borrower or any of its Subsidiaries with the
Securities and Exchange Commission, or any Governmental Authority
succeeding to any or all of the functions of said Commission, or
with any national securities exchange, or distributed by the
Borrower to its shareholders generally or to holders of
Indebtedness, as the case may be;
(f) as soon as practicable after determining to proceed
with, and in any event at least 15 days before consummating any
proposed Permitted Acquisition, the details thereof, including a
reasonably detailed forecast for the business to be acquired for the
periods following the acquisition;
(g) within five Business Days after any of the dates
specified in paragraphs (f) or (g) of Section 7.10, the Borrower's
Cash and Cash Equivalents as of such date; and
(h) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of the Borrower or any of its
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Subsidiaries, or compliance with the terms of this Agreement and the
other Loan Documents, as the Administrative Agent or any Lender may
reasonably request.
SECTION 6.02. Notices of Material Events. The Borrower
will furnish to the Administrative Agent and each Lender prompt written notice
of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority
against or affecting the Borrower or any of its Subsidiaries that,
if adversely determined, could reasonably be expected to result in a
Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or
together with any other ERISA Events that have occurred, could
reasonably be expected to result in liability of the Borrower and
its Subsidiaries in an aggregate amount exceeding $500,000; and
(d) any other development that results in, or could
reasonably be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 6.03. Existence; Conduct of Business. The
Borrower will, and will cause each of its Subsidiaries to, do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence and the rights, licenses, permits, privileges and franchises
material to the conduct of its business; provided that the foregoing shall not
prohibit any merger, consolidation, liquidation or dissolution permitted under
Section 7.03.
SECTION 6.04. Payment of Obligations. The Borrower will,
and will cause each of its Subsidiaries to, pay its obligations, including tax
liabilities, before the same shall become delinquent or in default, except where
(a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP and (c)
the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 6.05. Maintenance of Properties; Insurance. The
Borrower will, and will cause each of its Subsidiaries to, (a) keep and maintain
all property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations.
SECTION 6.06. Books and Records; Inspection Rights. The
Borrower will, and will cause each of its Subsidiaries to, keep proper books of
record and account in which full, true
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and correct entries are made of all dealings and transactions in relation to its
business and activities. The Borrower will, and will cause each of its
Subsidiaries to, permit any representatives designated by the Administrative
Agent or any Lender, upon reasonable prior notice, to visit and inspect its
properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested.
SECTION 6.07. Compliance with Laws. The Borrower will, and will
cause each of its Subsidiaries to, comply with all laws, rules, regulations and
orders of any Governmental Authority applicable to it or its property, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 6.08. Use of Proceeds. The proceeds of the Loans will be
used solely to (a) fund the Acquisition and (b) for working capital purposes. No
part of the proceeds of any Loan will be used, whether directly or indirectly,
for any purpose that entails a violation of any of the Regulations of the Board,
including Regulations U and X.
SECTION 6.09. Certain Obligations Respecting Subsidiaries; Further
Assurances.
(a) Subsidiary Guarantors. The Borrower will take such action, and
will cause each of its Subsidiaries to take such action, from time to time as
shall be necessary to ensure that all Subsidiaries of the Borrower are
"Subsidiary Guarantors" hereunder. Without limiting the generality of the
foregoing, in the event that the Borrower or any of its Subsidiaries shall form
or acquire any new Subsidiary that shall constitute a Subsidiary hereunder, the
Borrower and its Subsidiaries will cause such new Subsidiary to
(i) become a "Subsidiary Guarantor" hereunder, and a
"Securing Party" under the Security Agreement pursuant to a
Guarantee Assumption Agreement,
(ii) cause such Subsidiary to take such action
(including delivering such shares of stock, executing and delivering
such Uniform Commercial Code financing statements) as shall be
necessary to create and perfect valid and enforceable first priority
Liens on substantially all of the personal property of such new
Subsidiary as collateral security for the obligations of such new
Subsidiary hereunder and
(iii) deliver such proof of corporate action, incumbency
of officers, opinions of counsel and other documents as is
consistent with those delivered by each Obligor pursuant to Section
5.01 on the Effective Date or as the Administrative Agent shall have
requested.
(b) Ownership of Subsidiaries. The Borrower will, and will cause
each of its Subsidiaries to, take such action from time to time as shall be
necessary to ensure that each of its Subsidiaries is a wholly-owned Subsidiary.
In the event that any additional shares of stock shall be issued by any
Subsidiary, the respective Obligor agrees forthwith to deliver to the
Administrative Agent pursuant to the Security Agreement the certificates
evidencing such shares of stock, accompanied by undated stock powers executed in
blank and to take such other action
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as the Administrative Agent shall request to perfect the security interest
created therein pursuant to the Security Agreement.
(c) Further Assurances. The Borrower will, and will cause each of
its Subsidiaries to, take such action from time to time as shall reasonably be
requested by the Administrative Agent to effectuate the purposes and objectives
of this Agreement.
Without limiting the generality of the foregoing, the Borrower will,
and will cause each other Obligor to, take such action from time to time
(including filing appropriate Uniform Commercial Code financing statements and
executing and delivering such assignments, security agreements and other
instruments) as shall be reasonably requested by the Administrative Agent to
create, in favor of the Administrative Agent for the benefit of the Lenders,
perfected security interests and Liens in substantially all of the property of
such Obligor as collateral security for its obligations hereunder; provided that
any such security interest or Lien shall be subject to the relevant requirements
of the Security Documents.
ARTICLE VII
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal
of and interest on each Loan and all fees payable hereunder have been paid in
full, the Borrower covenants and agrees with the Lenders that :
SECTION 7.01. Indebtedness. The Borrower will not, nor will it
permit any of its Subsidiaries to, create, incur, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness created hereunder;
(b) Indebtedness existing on the date hereof that is disclosed as
required in Section 4.13(a);
(c) Indebtedness of the Borrower to any Subsidiary and of any
Subsidiary to the Borrower or any other Subsidiary;
(d) Indebtedness of the Borrower or any Subsidiary incurred to
finance the acquisition, construction or improvement of any fixed or capital
assets, including Capital Lease Obligations and any Indebtedness assumed in
connection with the acquisition of any such assets or secured by a Lien on any
such assets prior to the acquisition thereof, and extensions, renewals and
replacements of any such Indebtedness that do not increase the outstanding
principal amount thereof; provided that such Indebtedness is incurred prior to
or within 90 days after such acquisition or the completion of such construction
or improvement;
(e) Guarantees by the Borrower of Indebtedness of any Subsidiary and
by any Subsidiary of Indebtedness of the Borrower or any other Subsidiary; and
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(f) Indebtedness of the Borrower or any Subsidiary as an account
party in respect of letters of credit in respect of obligations described in
clause (d) of the definition of Permitted Encumbrances.
SECTION 7.02. Liens. The Borrower will not, nor will it permit any
of its Subsidiaries to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except:
(a) Liens created pursuant to the Security Documents;
(b) Permitted Encumbrances;
(c) Liens in existence on the date hereof that are disclosed as
required by Section 4.13(b);
(d) The interests of licensees under licenses granted in the
ordinary course of business; and
(e) Liens on fixed or capital assets acquired, constructed or
improved by the Borrower or any Subsidiary; provided that (i) such security
interests secure Indebtedness permitted by clause (d) of Section 7.01, (ii) such
security interests and the Indebtedness secured thereby are incurred prior to or
within 90 days after such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed the cost of
acquiring, constructing or improving such fixed or capital assets and (iv) such
security interests shall not apply to any other property or assets of the
Borrower or any Subsidiary except proceeds of such property or assets.
SECTION 7.03. Fundamental Changes. The Borrower will not, nor will
it permit any of its Subsidiaries to, enter into any transaction of merger or
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution). The Borrower will not, nor will it
permit any of its Subsidiaries to, acquire any business or property from, or
capital stock of, or be a party to any acquisition of, any Person except for the
Acquisition, purchases of inventory and other property to be sold or used in the
ordinary course of business, Investments (including Permitted Acquisitions)
permitted under Section 7.05(f) and Capital Expenditures that comply with
Section 7.10(c). The Borrower will not, nor will it permit any of its
Subsidiaries to, convey, sell, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or any substantial part of its
business or property, whether now owned or hereafter acquired (including
receivables and leasehold interests, but excluding (x) obsolete or worn-out
property, tools or equipment no longer used or useful in its business so long as
the amount thereof sold in any fiscal year by the Borrower and its Subsidiaries
shall not have a fair market value in excess of $500,000 and (y) any inventory
or other property sold or disposed of in the ordinary course of business and on
ordinary business terms).
Notwithstanding the foregoing provisions of this Section:
(a) any Subsidiary of the Borrower other than OCM Direct, Inc. or
any of its Subsidiaries may be merged or consolidated with or into any
other such Subsidiary or
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into the Borrower; provided that if any such transaction shall be
between a Subsidiary and a wholly owned Subsidiary, the wholly owned
Subsidiary shall be the continuing or surviving corporation; and
(b) the capital stock of any Subsidiary of the Borrower
may be sold, transferred or otherwise disposed of to the Borrower or
any wholly owned Subsidiary of the Borrower.
SECTION 7.04. Lines of Business. The Borrower will not,
nor will it permit any of its Subsidiaries to, engage to any material extent in
any business other than businesses of the type conducted by the Borrower and its
Subsidiaries on the date of execution of this Agreement and business reasonably
related thereto.
SECTION 7.05. Investments. The Borrower will not, nor
will it permit any of its Subsidiaries to, make or permit to remain outstanding
any Investments except:
(a) Investments outstanding on the date hereof and
identified in Part B of Schedule VI;
(b) operating deposit accounts with banks;
(c) Permitted Investments;
(d) Investments by the Borrower and its Subsidiaries in
the Borrower and the Subsidiary Guarantors, including the
Acquisition;
(e) Investments consisting of security deposits with
utilities and other like Persons made in the ordinary course of
business (which shall include, without limitation, security deposits
and guarantees in respect of real property leases of the Borrower or
its Subsidiaries made in the ordinary course of business) and
existing on the date hereof or made in the future in any amount not
in excess of $500,000 in the aggregate; and
(f) (i) additional strategic venture capital Investments
up to but not exceeding $1,000,000 in the aggregate outstanding at
any time (for this purpose, an Investment shall be deemed
outstanding in the original amount thereof except to the extent the
Company or a Subsidiary has received cash proceeds from such
Investment) and (ii) Permitted Acquisitions not involving in the
aggregate cash consideration in any twelve-month period in excess of
$2,000,000, provided that the aggregate of Investments outstanding
under clause (i) and cash consideration involved in Permitted
Investments during the preceding twelve months may not exceed
$2,000,000.
SECTION 7.06. Restricted Payments. The Borrower will
not, nor will it permit any of its Subsidiaries to, declare or make, or agree to
pay or make, directly or indirectly, any Restricted Payment, except (A) that the
Borrower may declare and pay dividends with respect to its capital stock payable
solely in additional shares of its common stock and (B) the Borrower may make
Restricted Payments of the type described in clause (ii) of such definition
pursuant to and in accordance with stock option plans and other benefit plans
existing on the date hereof for directors, management, officers, employees or
consultants, but only to the extent such Restricted
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Payment arises out of a termination of such Person's employment or relationship
with the Borrower and its Subsidiaries and only in an aggregate amount of
$500,000 or less.
Nothing herein shall be deemed to prohibit the payment of dividends
by any Subsidiary of the Borrower to the Borrower or to any Subsidiary
Guarantor.
SECTION 7.07. Transactions with Affiliates. The Borrower will not,
nor will it permit any of its Subsidiaries to, sell, lease or otherwise transfer
any property or assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) transactions in the ordinary course of business at prices
and on terms and conditions not less favorable to the Borrower or such
Subsidiary than could be obtained on an arm's-length basis from unrelated third
parties, (b) transactions between or among the Borrower and its wholly owned
Subsidiary Guarantors not involving any other Affiliate and (c) any Restricted
Payment permitted by Section 7.06.
SECTION 7.08. Restrictive Agreements. The Borrower will not, and
will not permit any of its Subsidiaries to, directly or indirectly, enter into,
incur or permit to exist any agreement or other arrangement that prohibits,
restricts or imposes any condition upon (a) the ability of the Borrower or any
Subsidiary to create, incur or permit to exist any Lien upon any of its property
or assets, or (b) the ability of any Subsidiary to pay dividends or other
distributions with respect to any shares of its capital stock or to make or
repay loans or advances to the Borrower or any other Subsidiary or to Guarantee
Indebtedness of the Borrower or any other Subsidiary; provided that:
(i) the foregoing shall not apply to (w) customary
non-assignment provisions contained in licenses and leases and other
commercial contracts entered into in the ordinary course of business
consistent with past practice, (x) restrictions and conditions
imposed by law or by this Agreement, (y) restrictions and conditions
existing on the date hereof identified on Schedule III (but shall
apply to any extension or renewal of, or any amendment or
modification expanding the scope of, any such restriction or
condition) and (z) customary restrictions and conditions contained
in agreements relating to the sale of a Subsidiary pending such
sale, provided such restrictions and conditions apply only to the
Subsidiary that is to be sold and such sale is permitted hereunder;
and
(ii) clause (a) of the foregoing shall not apply to (x)
restrictions or conditions imposed by any agreement relating to
secured Indebtedness permitted by this Agreement if such
restrictions or conditions apply only to the property or assets
securing such Indebtedness and the proceeds thereof and (y)
customary provisions in leases and other contracts restricting the
assignment thereof.
SECTION 7.09. [Reserved]
SECTION 7.10. Certain Financial Covenants. (a) Cash Flow. The
Borrower will not permit the Cash Flow for the following periods to be less than
the lesser of (i) 80% of the Cash Flow set forth on the Budget or Budgets for
the following corresponding periods or (ii) the Cash Flow set forth on such
Budgets less $1,000,000:
Test Period Budget Period(s)
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Two fiscal quarters ended Two fiscal quarters ended
December 31, 2001 December 31, 2001
Three fiscal quarters ended Three fiscal quarters ended
March 31, 2002 March 31, 2002
Four fiscal quarters ended Four fiscal quarters ended
June 30, 2002 June 30, 2002
Three fiscal quarters ended Three fiscal quarters ended
September 30, 2002 September 30, 2002
Four fiscal quarters ended Four fiscal quarters ended
on each subsequent on such fiscal quarter
fiscal quarter until
March 31, 2004
(b) Current Ratio. The Borrower will not permit the Current Ratio to
be less than 1.0.
(c) Capital Expenditures. The Borrower will not permit Capital
Expenditures for any fiscal year to exceed $4,000,000.
(d) Accounts Receivable Quotient. The Borrower will not permit the
Accounts Receivable Quotient at any fiscal quarter end to exceed 75.
(e) Accounts Payable Quotient. The Borrower will not permit the
Accounts Payable Quotient at any fiscal quarter end to exceed the greater of (i)
45 plus the Accounts Receivable Quotient and (ii) 90.
(f) Change in Cash Position. The Borrower will not permit the
Increase in Cash Position for the following periods of fiscal quarter(s) ending
on or nearest to the following respective dates to be less than the following
respective amounts:
Period/Date Amount
One fiscal quarter
September 30, 2001 $2,000,000
Four fiscal quarters
September 30, 2002 $3,000,000
September 30, 2003 $3,000,000
(g) Cash. At March 31, 2002, Cash and Cash Equivalents of the
Borrower shall exceed either (i) $3,000,000, or (ii) $1,500,000 (in which case
(y) current assets of the Borrower at such date must exceed current liabilities
of the Borrower by at least $4,000,000, and
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(z) the Borrower must realize by April 30, 2002 at least $1,500,000 in Cash and
Cash Equivalents from current assets at March 31, 2002, and on April 30, 2002,
current assets of the Borrower must exceed current liabilities by at least
$4,000,000).
SECTION 7.11. [Reserved]
SECTION 7.12. Modifications of Certain Documents. The Borrower
will not consent to any modification, supplement or waiver of any of the
provisions of any agreement, instrument or other document evidencing or relating
to the Acquisition without the prior consent of the Administrative Agent (with
the approval of the Required Lenders which shall not be unreasonably withheld).
ARTICLE VIII
EVENTS OF DEFAULT
If any of the following events ("Events of Default")
shall occur:
(a) the Borrower shall fail to pay any principal of or
interest (other than interest capitalized on such date as permitted by
Section 2.09(c) and other than as expressly provided in Section
2.07(d)(iv)) on any Loan or any fee or other amount payable under this
Agreement or under any other Basic Document when and as the same shall
become due and payable, whether at the due date thereof or at a date
fixed for prepayment thereof or otherwise;
(b) any representation or warranty made or deemed made by or
on behalf of the Borrower or any of its Subsidiaries in or in
connection with this Agreement or any other Loan Document or any
amendment or modification hereof or thereof, or in any report,
certificate, financial statement or other document furnished pursuant
to or in connection with this Agreement or any other Basic Document or
any amendment or modification hereof or thereof, shall prove to have
been incorrect in any material respect (individually or in the
aggregate) when made or deemed made; or any representation or warranty
made by the seller or any of the shareholders pursuant to the
Acquisition Agreement shall prove to have been false or misleading as
of the time made in any respect except for those which in the aggregate
do not have a Material Adverse Effect on the Borrower;
(c) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 6.02, 6.03 (with
respect to the Borrower's existence or that of OCM Enterprises Inc.),
6.08 or 6.09 or in Article VII or any Obligor shall default in the
performance of any of its obligations contained in Section 4.02 or 5.02
of the Security Agreement;
(d) any Obligor shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those
specified in clause (a) or (c) of this Article) or any other Basic
Document and such failure shall continue unremedied for a period of 30
or more days after written notice thereof from the Administrative Agent
(given at the request of any Lender) to the Borrower;
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(e) the Borrower or any of its Subsidiaries shall fail to make
any payment (whether of principal or interest and regardless of amount)
in respect of any Material Indebtedness, when and as the same shall
become due and payable;
(f) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that
enables or permits (with or without the giving of notice, the lapse of
time or both) the holder or holders of any Material Indebtedness or any
trustee or agent on its or their behalf to cause any Material
Indebtedness to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity;
provided that this clause (f) shall not apply to secured Indebtedness
that becomes due as a result of the voluntary sale or transfer of the
property or assets securing such Indebtedness;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Borrower or any of its
Subsidiaries or its debts, or of a substantial part of its assets,
under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any of its
Subsidiaries or for a substantial part of its assets, and, in any such
case, such proceeding or petition shall continue undismissed for a
period of 60 or more days or an order or decree approving or ordering
any of the foregoing shall be entered;
(h) the Borrower or any of its Subsidiaries shall (i)
voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition
described in clause (g) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any of its
Subsidiaries or for a substantial part of its assets, (iv) file an
answer admitting the material allegations of a petition filed against
it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of
effecting any of the foregoing;
(i) the Borrower or any of its Subsidiaries shall become
unable, admit in writing its inability or fail generally to pay its
debts as they become due;
(j) one or more judgments for the payment of money in an
aggregate amount in excess of $500,000 shall be rendered against the
Borrower or any of its Subsidiaries or any combination thereof and the
same shall remain undischarged for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any action
shall be legally taken by a judgment creditor to attach or levy upon
any assets of the Borrower or any of its Subsidiaries to enforce any
such judgment;
(k) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders (which determination by the Required Lenders shall
be reasonable and made in
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good faith), when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in a Material Adverse
Effect;
(l) a Change in Control shall occur; or
(m) except for failures to be perfected that are not in the
aggregate material, the Liens created by the Security Documents shall
at any time not constitute a valid and perfected Lien on the Collateral
(as defined in the Security Agreement) in favor of the Administrative
Agent, free and clear of all other Liens (other than Liens permitted
under Section 7.02 or under the respective Security Documents), or,
except for expiration in accordance with its terms, any of the Security
Documents shall for whatever reason be terminated or cease to be in
full force and effect, or the enforceability thereof shall be contested
by any Obligor;
then, and in every such event (other than an event with respect to any Obligor
described in clause (g) or (h) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon (computed
in the manner specified in the first sentence of Section 2.09(c)) and all other
obligations of the Obligors accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by each Obligor; and in case of any event with
respect to any Obligor described in clause (g) or (h) of this Article, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon (computed in the manner
specified in the first sentence of Section 2.09(c)) and all other obligations of
the Obligors accrued hereunder, shall automatically become due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by each Obligor.
ARTICLE IX
THE ADMINISTRATIVE AGENT
Each of the Lenders hereby irrevocably appoints the Administrative
Agent as its agent hereunder and under the other Loan Documents and authorizes
the Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto.
The Person serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such
Person and its Affiliates may accept
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deposits from, lend money to and generally engage in any kind of business with
the Borrower or any Subsidiary or other Affiliate thereof as if it were not the
Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein and in the other Loan Documents. Without
limiting the generality of the foregoing, (a) the Administrative Agent shall not
be subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing, (b) the Administrative Agent shall not
have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby or
by the other Loan Documents that the Administrative Agent is required to
exercise in writing by the Required Lenders, and (c) except as expressly set
forth herein and in the other Loan Documents, the Administrative Agent shall not
have any duty to disclose, and shall not be liable for the failure to disclose,
any information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the bank serving as Administrative Agent or any
of its Affiliates in any capacity. The Administrative Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders or in the absence of its own gross negligence or willful
misconduct. The Administrative Agent shall be deemed not to have knowledge of
any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrower or a Lender, and the Administrative Agent
shall not be responsible for or have any duty to ascertain or inquire into (i)
any statement, warranty or representation made in or in connection with this
Agreement or any other Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or thereunder or in connection
herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or therein,
(iv) the validity, enforceability, effectiveness or genuineness of this
Agreement, any other Loan Document or any other agreement, instrument or
document, or (v) the satisfaction of any condition set forth in Article V or
elsewhere herein or therein, other than to confirm receipt of items expressly
required to be delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for an Obligor), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
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The Administrative Agent may resign at any time by notifying the
Lenders and the Borrower. Upon any such resignation, the Required Lenders shall
have the right, in consultation with the Borrower, to appoint a successor. If no
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Administrative Agent
gives notice of its resignation, then the retiring Administrative Agent's
resignation shall nonetheless become effective and (1) the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder and (2) the Required Lenders shall perform the duties of the
Administrative Agent (and all payments and communications provided to be made
by, to or through the Administrative Agent shall instead be made by or to each
Lender directly) until such time as the Required Lenders appoint a successor
agent as provided for above in this paragraph. Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring (or retired) Administrative Agent and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder (if not already discharged therefrom as provided above in this
paragraph). After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 10.03 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or any related agreement or any document furnished
hereunder or thereunder.
Except as otherwise provided in Section 10.02(b) with respect to this
Agreement, the Administrative Agent may, with the prior consent of the Required
Lenders (but not otherwise), consent to any modification, supplement or waiver
under any of the Loan Documents, provided that, without the prior consent of
each Lender, the Administrative Agent shall not (except as provided herein or in
the Security Documents) release all or substantially all of the collateral or
otherwise terminate all or substantially all of the Liens under any Security
Document providing for collateral security, agree to additional obligations
being secured by all or substantially all of such collateral security (unless
the Lien for such additional obligations shall be junior to the Lien in favor of
the other obligations secured by such Security Document, in which event the
Administrative Agent may consent to such junior Lien provided that it obtains
the consent of the Required Lenders thereto), alter the relative priorities of
the obligations entitled to the benefits of the Liens created under the Security
Documents with respect to all or substantially all of such collateral, except
that no such consent shall be required, and the Administrative Agent is hereby
authorized, to release any Lien covering property that is the subject of either
a disposition of property permitted hereunder or a disposition to which the
Required Lenders have consented.
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ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower or any Subsidiary Guarantor, to it at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attn: Chief Financial
Officer, Telephone (▇▇▇) ▇▇▇-▇▇▇▇, Telecopy (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to
▇▇▇▇ and ▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Telephone: (▇▇▇) ▇▇▇-▇▇▇▇; Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇;
(b) if to the Administrative Agent, to Reservoir Capital Partners,
L.P., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇ ▇▇▇▇
(Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇; Telephone No. ▇▇▇-▇▇▇-▇▇▇▇); and
(c) if to a Lender, to it at its address (or telecopy number) set forth
in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto (or, in the case
of any such change by a Lender, by notice to the Borrower and the Administrative
Agent). All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt. Any notice provided by telecopy shall be followed
by a copy sent by any of the other methods under this Section.
SECTION 10.02. Waivers; Amendments.
(a) No Deemed Waivers; Remedies Cumulative. No failure or delay by the
Administrative Agent or any Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or consent to any departure by any Obligor
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent or any Lender may have had notice or knowledge of such
Default at the time.
(b) Amendments. Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered
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into by the Borrower and the Required Lenders or by the Borrower and the
Administrative Agent with the consent of the Required Lenders; provided that no
such agreement shall
(i) increase the Term Loan Commitment or the Revolving Loan
Commitment of any Lender without the written consent of such Lender,
(ii) reduce the principal amount of any Loan or reduce the
rate of interest thereon without the written consent of each Lender
affected thereby,
(iii) postpone the scheduled date of payment of the principal
amount of any Loan, or any interest thereon, or any fee hereunder, or
reduce the amount of, waive or excuse any such payment, or postpone the
scheduled date of expiration of any Commitment, without the written
consent of each Lender affected thereby,
(iv) change Section 2.11(d) without the consent of each Lender
affected thereby,
(v) change any of the provisions of this Section or the
percentage in the definition of the term "Required Lenders" or any
other provision hereof specifying the number or percentage of Lenders
required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, without the written
consent of each Lender, or
(vi) release all or substantially all of the Subsidiary
Guarantors from their guarantee obligations under Article III without
the written consent of each Lender; and provided further that (x) no
such agreement shall amend, modify or otherwise affect the rights or
duties of the Administrative Agent hereunder without the prior written
consent of the Administrative Agent, and (y) that any modification or
supplement of Article III shall require the consent of each Subsidiary
Guarantor.
SECTION 10.03. Expenses; Indemnity; Damage Waiver.
(a) Costs and Expenses. The Borrower shall pay (i) all
reasonable out-of-pocket expenses incurred by the Administrative Agent and its
Affiliates, and any Lender and its Affiliates, including the reasonable fees,
charges and disbursements of counsel for the Administrative Agent and any
Lender, in connection with the preparation and administration of this Agreement
and the other Loan Documents or any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all out-of-pocket expenses
incurred by the Administrative Agent or any Lender, including the fees, charges
and disbursements of any counsel for the Administrative Agent, or any Lender, in
connection with the enforcement or protection of its rights in connection with
this Agreement and the other Loan Documents, including its rights under this
Section, or in connection with the Loans made hereunder, including in connection
with any workout, restructuring or negotiations in respect thereof and (iii) all
costs, expenses, taxes, assessments and other charges incurred in connection
with any filing, registration, recording or perfection of any security interest
contemplated by any Security Document or any other document referred to therein.
If a court of competent jurisdiction determines in a final and non-appealable
judgment that the Administrative Agent or any Lender in bringing an enforcement
action or other proceeding as specified in clause (ii) of this paragraph was
guilty of gross
Loan Agreement
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negligence or willful misconduct, then such Person shall reimburse the Company
for all costs and expenses which it paid such Person under clause (ii).
(b) Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an "Indemnitee") against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including the fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement or any agreement or instrument
contemplated hereby, the performance by the parties hereto of their respective
obligations hereunder or the consummation of the Transactions or any other
transactions contemplated hereby, (ii) any Loan or the use of the proceeds
therefrom, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by the Borrower or any of
its Subsidiaries, or any Environmental Liability related in any way to the
Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.
(c) Reimbursement by Lenders. To the extent that the Borrower fails to
pay any amount required to be paid by it to the Administrative Agent under
paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the
Administrative Agent such Lender's Applicable Percentage (determined as of the
time that the applicable unreimbursed expense or indemnity payment is sought) of
such unpaid amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent in its capacity as such.
(d) Waiver of Consequential Damages, Etc. To the extent permitted by
applicable law, no Obligor shall assert, and each Obligor hereby waives, any
claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or the
use of the proceeds thereof.
(e) Payments. All amounts due under this Section shall be payable not
later than five days after written demand therefor.
SECTION 10.04. Successors and Assigns.
(a) Assignments Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that no Obligor may assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of each Lender (and any attempted assignment or transfer by any
Obligor without such consent shall be null and void). Nothing in
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this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
(b) Assignments by Lenders. Any Lender may assign to one or
more assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans at the
time owing to it); provided that
(i) except in the case of an assignment to a Lender or an
Affiliate (or Approved Fund) of a Lender, the Administrative Agent
(and, only during such time that at least a portion of the Commitments
remains available, the Borrower) must give its prior written consent to
such assignment (which consent shall not be unreasonably withheld),
(ii) except in the case of an assignment to a Lender or an
Affiliate (or Approved Fund) of a Lender or an assignment of the entire
remaining amount of the assigning Lender's Commitment, the amount of
the Commitment of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Administrative Agent) shall not
be less than $5,000,000 unless each of the Borrower and the
Administrative Agent otherwise consent,
(iii) each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement,
(iv) the parties to each assignment shall execute and deliver
to the Administrative Agent an Assignment and Acceptance, together with
a processing and recordation fee of $2,500 (unless such fee is waived
by the Administrative Agent in its sole discretion), and
(v) the assignee, if it shall not be a Lender, shall deliver
to the Administrative Agent an Administrative Questionnaire;
provided further that any consent of the Borrower otherwise required under this
paragraph shall not be required if an Event of Default under clause (a), (g) or
(h) of Article VIII has occurred and is continuing. Upon acceptance and
recording pursuant to paragraph (d) of this Section, from and after the
effective date specified in each Assignment and Acceptance, the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.10 and 10.03). Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does not
comply with this paragraph shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in
accordance with paragraph (e) of this Section.
Loan Agreement
56
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(c) Maintenance of Register by the Administrative Agent. The
Administrative Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices in New York City a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the
Loans owing to, each Lender pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive, and the Borrower,
the Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(d) Effectiveness of Assignments. Upon its receipt of a duly completed
Assignment and Acceptance executed by an assigning Lender and an assignee, the
assignee's completed Administrative Questionnaire (unless the assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in paragraph (b) of this Section and any written consent to such assignment
required by paragraph (b) of this Section, the Administrative Agent shall accept
such Assignment and Acceptance and record the information contained therein in
the Register. No assignment shall be effective for purposes of this Agreement
unless it has been recorded in the Register as provided in this paragraph.
(e) Participations. Any Lender may, without the consent of the Borrower
or the Administrative Agent, sell participations to one or more banks or other
entities (a "Participant") in all or a portion of such Lender's rights and
obligations under this Agreement and the other Loan Documents (including all or
a portion of its Commitment and the Loans owing to it); provided that (i) such
Lender's obligations under this Agreement and the other Loan Documents shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) the Borrower,
the Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and the
other Loan Documents and to approve any amendment, modification or waiver of any
provision of this Agreement or any other Loan Document; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 10.02(b) that affects such
Participant. Subject to paragraph (f) of this Section, the Borrower agrees that
each Participant shall be entitled to the benefits of Section 2.10 to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section.
(f) Limitations on Rights of Participants. A Participant shall not be
entitled to receive any greater payment under Section 2.10 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower's prior written consent. A Participant
that would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 2.10 unless the Borrower is notified of the participation
sold to such Participant and
Loan Agreement
57
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such Participant agrees, for the benefit of the Borrower, to comply with Section
2.10(e) and 2.12(b) as though it were a Lender.
(g) Certain Pledges. Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any such pledge or assignment to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such assignee for such Lender as a party hereto.
(h) No Assignments to the Obligors or Affiliates. Anything in this
Section to the contrary notwithstanding, no Lender may assign or participate any
interest in any Loan held by it hereunder to the Borrower or any of its
Affiliates or Subsidiaries without the prior consent of each Lender.
SECTION 10.05. Survival. All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any
Loans, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Administrative Agent or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any other amount payable under this Agreement is outstanding and unpaid and so
long as the Commitments have not expired or terminated. The provisions of
Sections 2.10, 3.03 and 10.03 and Article IX shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Loans, the expiration or termination of the
Commitments or the termination of this Agreement or any provision hereof.
SECTION 10.06. Counterparts; Integration; Effectiveness. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement constitutes
the entire contract between and among the parties relating to the subject matter
hereof and supersedes any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof. Except as provided in Section
5.01, this Agreement shall become effective when it shall have been executed by
the Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 10.07. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality
Loan Agreement
58
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and enforceability of the remaining provisions hereof; and the invalidity of a
particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
SECTION 10.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of any Obligor against any of and all the
obligations of any Obligor now or hereafter existing under this Agreement held
by such Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement and although such obligations may be unmatured. The
rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.
SECTION 10.09. Governing Law; Jurisdiction; Etc.
(a) Governing Law. This Agreement shall be construed in accordance with
and governed by the law of the State of New York.
(b) Submission to Jurisdiction. Each Obligor hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Administrative Agent or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement against any Obligor or its properties in
the courts of any jurisdiction.
(c) Waiver of Venue. Each Obligor hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any court referred to in paragraph (b) of this Section. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(d) Service of Process. Each party to this Agreement irrevocably
consents to service of process in the manner provided for notices in Section
10.01. Nothing in this Agreement will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING
Loan Agreement
59
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DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.
SECTION 10.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 10.12. Treatment of Certain Information; Confidentiality.
(a) Treatment of Certain Information. The Borrower acknowledges that
from time to time financial advisory, investment banking and other services may
be offered or provided to the Borrower or one or more of its Subsidiaries (in
connection with this Agreement or otherwise) by any Lender or by one or more
subsidiaries or affiliates of such Lender and the Borrower hereby authorizes
each Lender to share any information delivered to such Lender by the Borrower
and its Subsidiaries pursuant to this Agreement, or in connection with the
decision of such Lender to enter into this Agreement, to any such subsidiary or
affiliate, it being understood that any such subsidiary or affiliate receiving
such information shall be bound by the provisions of paragraph (b) of this
Section as if it were a Lender hereunder. Such authorization shall survive the
repayment of the Loans, the expiration or termination of the Commitments or the
termination of this Agreement or any provision hereof.
(b) Confidentiality. Each of the Administrative Agent and the Lenders
agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (i) to its Affiliates, (ii) to its and
its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (iii) to the extent requested by any regulatory authority, (iv)
to the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (v) to any other party to this Agreement, (vi) in
connection with the exercise of any remedies hereunder or under any other Basic
Document or any suit, action or proceeding relating to this Agreement or any
other Basic Document or the enforcement of rights hereunder or thereunder, (vii)
subject to an agreement containing provisions substantially the same as those of
this paragraph, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement, (viii) with the consent of the Borrower or (ix) to the extent such
Information (A) becomes publicly available other than as a result of a breach of
this paragraph or (B) becomes available to the Administrative Agent or any
Lender on a nonconfidential basis from a source other than an Obligor. For the
purposes of this paragraph, "Information" means all information received from
any Obligor relating to any Obligor or its business, other than any such
information that is available to the Administrative Agent or any Lender on a
nonconfidential basis prior to
Loan Agreement
60
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disclosure by an Obligor; provided that, in the case of information received
from an Obligor after the date hereof, such information is clearly identified at
the time of delivery as confidential; and provided, further, that information
provided to the Representatives (as defined in the Warrant Agreement) at or in
connection with any meeting of the Board of Directors of the Borrower need not
be identified as confidential, and provided, further, that information need not
be identified as confidential at the time of delivery to the extent the Borrower
by delivery of a written notice to the Lenders has designated specific
categories of information, including such information, as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
SECTION 10.13. Representations of the Lenders. Each Lender represents
that it is acquiring the Loans for its own account and not with a view to the
distribution thereof, provided that the disposition of such Lender's property
shall at all times be within its control. Each Lender understands that the Loans
have not been registered under the Securities Act of 1933, as amended from time
to time (the "Securities Act"), and may be resold only if registered pursuant to
the provisions of the Securities Act or if an exemption from registration is
available, except under circumstances where neither such registration nor such
an exemption is required by law, and the Borrower is not required to register
such Loans. Each Lender represents that it is an "accredited investor" as
defined in Rule 501(a) under the Securities Act.
[Signature pages follow.]
Loan Agreement
61
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
STUDENT ADVANTAGE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
_________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: President
Opinion of Counsel to the Obligors
62
-2-
SUBSIDIARY GUARANTORS
▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
---------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: President
STUDENT ADVANTAGE SECURITIES CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: President
eSTUDENT LOAN, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: President
▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: President
OCM DIRECT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: President
Loan Agreement
63
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COLLEGIATE CARPETS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: President
Loan Agreement
▇▇
-▇-
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERS, L.P.,
individually and as Administrative
Agent
By: Reservoir Capital Group, L.L.C.,
General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Managing Director
RESERVOIR CAPITAL ASSOCIATES L.P.
By: Reservoir Capital Group, L.L.C.,
General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Managing Director
RESERVOIR CAPITAL MASTER FUND, L.P.
By: Reservoir Capital Group, L.L.C.,
General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Managing Director
[The following schedules and exhibits to this Loan Agreement have been omitted
and will be provided to the Commission upon request to the Company:
SCHEDULE I - Commitments
SCHEDULE II - Material Agreements and Liens
SCHEDULE III - Restrictive Agreements
SCHEDULE IV - Litigation
SCHEDULE V - Environmental Matters
Loan Agreement
65
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SCHEDULE VI - Subsidiaries and Investments
SCHEDULE VII - Intellectual Property
EXHIBIT B - Form of Security Agreement
EXHIBIT E - Form of Opinion of Counsel to the Obligors]
Loan Agreement
66
EXHIBIT A
[Form of Assignment and Acceptance]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Loan Agreement dated as of June 25, 2001 (as
amended and in effect on the date hereof, the "LOAN AGREEMENT"), between Student
Advantage, Inc., the Subsidiary Guarantors party thereto, the Lenders named
therein and Reservoir Capital Partners, L.P., as Administrative Agent for the
Lenders. Terms defined in the Loan Agreement are used herein with the same
meanings.
The Assignor named below hereby sells and assigns, without recourse, to the
Assignee named below, and the Assignee hereby purchases and assumes, without
recourse, from the Assignor, effective as of the Assignment Date set forth
below, the interests set forth below (the "ASSIGNED INTEREST") in the Assignor's
rights and obligations under the Loan Agreement, including the interests set
forth below in the Term Loan Commitment and the Revolving Loan Commitment of the
Assignor on the Assignment Date and the Term Loans and Revolving Loans owing to
the Assignor which are outstanding on the Assignment Date, together with unpaid
interest accrued on the assigned Loans to the Assignment Date, and the amount,
if any, set forth below of the fees accrued to the Assignment Date for account
of the Assignor. The Assignee hereby acknowledges receipt of a copy of the Loan
Agreement. From and after the Assignment Date (i) the Assignee shall be a party
to and be bound by the provisions of the Loan Agreement and, to the extent of
the interests assigned by this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent of
the interests assigned by this Assignment and Acceptance, relinquish its rights
and be released from its obligations under the Loan Agreement.
This Assignment and Acceptance is being delivered to the Administrative
Agent together with (i) if the Assignee is a Foreign Lender, any documentation
required to be delivered by the Assignee pursuant to Section 2.10(e) of the Loan
Agreement, duly completed and executed by the Assignee, and (ii) if the Assignee
is not already a Lender under the Loan Agreement, an Administrative
Questionnaire in the form supplied by the Administrative Agent, duly completed
by the Assignee. The [Assignee/Assignor] shall pay the fee payable to the
Administrative Agent pursuant to Section 10.04(b) of the Loan Agreement.
This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
ASSIGNMENT AND ACCEPTANCE
67
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
("ASSIGNMENT DATE")(1):
PRINCIPAL AMOUNT
FACILITY ASSIGNED
-------- -----------------
Term Loan Commitment Assigned: $
Revolving Loan Commitment Assigned: $
Term Loans:
Revolving Loans:
Fees Assigned (if any):
The terms set forth above and below are hereby agreed to:
[NAME OF ASSIGNOR] , as Assignor
------------------------
By:
--------------------------------
Name:
Title:
[NAME OF ASSIGNEE] , as Assignor
------------------------
By:
--------------------------------
Name:
Title:
---------------------------
(1) Must be at least five Business Days after execution hereof by all required
parties.
ASSIGNMENT AND ACCEPTANCE
68
The undersigned hereby consent to the within assignment:(2)
STUDENT ADVANTAGE, INC.
By:
---------------------------------
Name:
Title:
RESERVOIR CAPITAL PARTNERS, L.P.,
as Administrative Agent
By: Reservoir Capital Group, L.L.C.,
General Partner Name:
By
------------------------------
Name:
Title:
------------------------------
(2) Consents to be included to the extent required by Section 10.04(b) of the
Loan Agreement.
ASSIGNMENT AND ACCEPTANCE
69
EXHIBIT B
[Form of Security Agreement]
SECURITY AGREEMENT
70
EXHIBIT C
[Form of Guarantee Assumption Agreement]
GUARANTEE ASSUMPTION AGREEMENT
GUARANTEE ASSUMPTION AGREEMENT dated as of ________ __, ____ by [NAME OF
ADDITIONAL SUBSIDIARY GUARANTOR], a ________ corporation (the "ADDITIONAL
SUBSIDIARY GUARANTOR"), in favor of Reservoir Capital Partners, L.P., as
administrative agent for the lenders or other financial institutions or entities
party as "Lenders" to the Loan Agreement referred to below (in such capacity,
together with its successors in such capacity, the "ADMINISTRATIVE AGENT").
Student Advantage, Inc., a Delaware corporation, the Subsidiary Guarantors
referred to therein, the Lenders referred to therein and the Administrative
Agent are parties to a Loan Agreement dated as of June 25, 2001 (as modified and
supplemented and in effect from time to time, the "LOAN AGREEMENT").
Pursuant to Section 6.09(a) of the Loan Agreement, the Additional
Subsidiary Guarantor hereby agrees to become a "Subsidiary Guarantor" for all
purposes of the Loan Agreement, and a "Debtor" for all purposes of the Security
Agreement (and hereby supplements Annexes 1 through __ to said Security
Agreement as specified in Appendix A). Without limiting the foregoing, the
Additional Subsidiary Guarantor hereby, jointly and severally with the other
Subsidiary Guarantors, guarantees to each Lender and the Administrative Agent
and their respective successors and assigns the prompt payment in full when due
(whether at stated maturity, by acceleration or otherwise) of all Guaranteed
Obligations (as defined in Section 3.01 of the Loan Agreement) in the same
manner and to the same extent as is provided in Article III of the Loan
Agreement. In addition, the Additional Subsidiary Guarantor hereby makes the
representations and warranties set forth in Sections 4.01, 4.02 and 4.03 of the
Loan Agreement, and in Section 2 of the Security Agreement, with respect to
itself and its obligations under this Agreement, as if each reference in such
Sections to the Basic Documents included reference to this Agreement.
The Additional Subsidiary Guarantor hereby instructs its counsel to deliver
the opinions referred to in Section 6.09(a) of the Loan Agreement to the Lenders
and the Administrative Agent.
GUARANTEE ASSUMPTION AGREEMENT
71
IN WITNESS WHEREOF, the Additional Subsidiary Guarantor has caused this
Guarantee Assumption Agreement to be duly executed and delivered as of the day
and year first above written.
[NAME OF ADDITIONAL SUBSIDIARY
GUARANTOR]
By:
--------------------------------
Name:
Title:
Accepted and agreed:
RESERVOIR CAPITAL PARTNERS, L.P., as
Administrative Agent
By: Reservoir Capital Group, L.L.C.,
General Partner
By
--------------------------------------
Name:
Title:
GUARANTEE ASSUMPTION AGREEMENT
72
Appendix A
SUPPLEMENT[S] TO ANNEX[ES] TO SECURITY AGREEMENT
SUPPLEMENT TO ANNEX 1:
[to be completed]
SUPPLEMENT TO ANNEX 2:
[to be completed]
SUPPLEMENT TO ANNEX 3:
[to be completed]
SUPPLEMENT TO ANNEX 4:
[to be completed]
SUPPLEMENT TO ANNEX 5:
[to be completed]
SUPPLEMENT TO ANNEX 6:
[to be completed]
APPENDIX A TO GUARANTEE ASSUMPTION AGREEMENT
73
EXHIBIT D
[Form of Note]
PROMISSORY NOTE
New York, New York
June 15, 2001
For value received, STUDENT ADVANTAGE, INC., a Delaware corporation (the
"BORROWER"), promises to pay to the order of __________________ (the "LENDER")
the unpaid principal amount of each Loan made by the Lender to the Borrower
pursuant to the Loan Agreement referred to below on the Maturity Date. The
Borrower promises to pay interest on the unpaid principal amount of each such
Loan on the dates, at the rate or rates and in the manner provided for in the
Loan Agreement. All such payments of principal and interest shall be made in
lawful money of the United States of America and in immediately available funds
at the office specified from time to time by the Lender to the Borrower in
accordance with the Loan Agreement.
All Loans made by the Lender and all repayments of the principal thereof
shall be recorded by the Lender and, prior to any transfer hereof, appropriate
notations to evidence the foregoing information with respect to each such Loan
then outstanding shall be endorsed by the Lender on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; PROVIDED that the failure of the Lender to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Loan Agreement.
This Promissory Note is one of the Notes referred to in the Loan Agreement
dated as of June 25, 2001 (as the same shall be modified and supplemented and in
effect from time to time, the "LOAN AGREEMENT"), among the Borrower, the
Subsidiary Guarantors party thereto, the lenders party thereto and Reservoir
Capital Partners, L.P., as Administrative Agent. Terms used but not otherwise
defined herein have the respective meanings assigned to them in the Loan
Agreement. Reference is made to the Loan Agreement for provisions for the
prepayment, the acceleration of the maturity and the limitations on the
transferability of this Promissory Note. Reference is made to the Security
Agreement and the pledge made by the Borrower and the Subsidiary Guarantors
therein securing, among other things, the obligations of the Borrower hereunder.
This Promissory Note shall be construed in accordance with and governed by the
law of the State of New York.
STUDENT ADVANTAGE, INC.
By
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: President
NOTE
74
Promissory Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
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Type of Loan Amount of Principal
Date (Term or Revolving) Amount of Loan Repaid Notation Made By
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NOTE
75
EXHIBIT E
[Opinion of Counsel to the Obligors]
[to be supplied]
OPINION OF COUNSEL TO THE OBLIGORS