EXHIBIT 10.25
U.S. $25,000,000
CREDIT AGREEMENT
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STAR TELECOMMUNICATIONS, INC.
BORROWER
THE FINANCIAL INSTITUTIONS NAMED HEREIN
LENDERS
AND
SANWA BANK CALIFORNIA
AGENT
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Dated as of September 30, 1997
TABLE OF CONTENTS
PAGE
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ARTICLE 1
DEFINITIONS . . . . . . . . . . . . . . . 1
1.1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 RULES AND INTERPRETATION . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 2
THE REVOLVING CREDIT FACILITY. . . . . . . . . . . 15
2.1 COMMITMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.2 OPTIONAL CURRENCIES. . . . . . . . . . . . . . . . . . . . . . . . 16
2.3 ISSUANCE OF LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . 16
2.4 COMMITMENT PERCENTAGE. . . . . . . . . . . . . . . . . . . . . . . 19
2.5 TYPES OF LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.6 EVIDENCE OF OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . 20
2.7 COMMITMENT REDUCTION . . . . . . . . . . . . . . . . . . . . . . . 20
2.8 COMMITMENT TERMINATION . . . . . . . . . . . . . . . . . . . . . . 21
2.9 REQUIRED PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 21
2.10 UNUSED COMMITMENT FEE. . . . . . . . . . . . . . . . . . . . . . . 21
2.11 FACILITY FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.12 ADMINISTRATIVE FEES. . . . . . . . . . . . . . . . . . . . . . . . 21
2.13 VOLUNTARY CONVERSION OF ADVANCES . . . . . . . . . . . . . . . . . 21
2.14 NOTICE OF BORROWING. . . . . . . . . . . . . . . . . . . . . . . . 22
2.15 COMMITMENT OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . 23
2.16 INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.17 RATES APPLICABLE AFTER DEFAULT . . . . . . . . . . . . . . . . . . 23
2.18 METHOD OF PAYMENT. . . . . . . . . . . . . . . . . . . . . . . . . 23
2.19 TELEPHONIC NOTICES . . . . . . . . . . . . . . . . . . . . . . . . 24
2.20 INTEREST PAYMENT DATES; INTEREST AND FEE BASIS . . . . . . . . . . 24
2.21 NOTIFICATION OF LOAN, INTEREST RATES, PREPAYMENTS AND
COMMITMENT REDUCTIONS. . . . . . . . . . . . . . . . . . . . . . . 25
2.22 APPLICABLE LENDING OFFICES . . . . . . . . . . . . . . . . . . . . 25
2.23 NON-RECEIPT OF FUNDS BY THE AGENT. . . . . . . . . . . . . . . . . 25
2.24 WITHHOLDING TAX EXEMPTION. . . . . . . . . . . . . . . . . . . . . 26
2.25 OPTIONAL PREPAYMENT. . . . . . . . . . . . . . . . . . . . . . . . 26
2.26 OPTIONAL CURRENCY DOLLAR EQUIVALENT. . . . . . . . . . . . . . . . 27
2.27 MANDATORY PREPAYMENTS. . . . . . . . . . . . . . . . . . . . . . . 27
2.28 APPLICATION OF REPAYMENTS. . . . . . . . . . . . . . . . . . . . . 28
2.29 INTEREST LIMITATION. . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 3
CHANGE IN CIRCUMSTANCES . . . . . . . . . . . . 29
3.1 YIELD PROTECTION . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.2 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.3 REPLACEMENT OF LENDERS . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 4
CONDITIONS PRECEDENT . . . . . . . . . . . . . 31
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4.1 INITIAL LOAN OR LETTER OF CREDIT . . . . . . . . . . . . . . . . . 31
4.2 ALL LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.3 ALL LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 5
REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . 34
5.1 AUTHORIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.2 ENFORCEABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.3 USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.4 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.5 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . 34
5.6 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.7 SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.8 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.9 ACCURACY OF INFORMATION. . . . . . . . . . . . . . . . . . . . . . 35
5.10 ORGANIZATION AND EXISTENCE . . . . . . . . . . . . . . . . . . . . 35
5.11 CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.12 INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . 36
5.13 DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.14 NATURE OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . 36
5.15 RANKING OF LOANS . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.16 INVESTMENT COMPANY ACTS; OTHER REGULATIONS . . . . . . . . . . . . 36
5.17 ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . 37
5.18 TITLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.19 FICTITIOUS NAME FILING NOTICES . . . . . . . . . . . . . . . . . . 37
ARTICLE 6
FINANCIAL COVENANTS . . . . . . . . . . . . . 37
6.1 CAPITAL EXPENDITURES . . . . . . . . . . . . . . . . . . . . . . . 37
6.2 MINIMUM TOTAL LEVERAGE RATIO . . . . . . . . . . . . . . . . . . . 37
6.3 MINIMUM TANGIBLE NET WORTH . . . . . . . . . . . . . . . . . . . . 37
6.4 MINIMUM CURRENT RATIO. . . . . . . . . . . . . . . . . . . . . . . 38
6.5 MINIMUM CASH FLOW COVERAGE . . . . . . . . . . . . . . . . . . . . 38
6.6 PROFITABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 7
AFFIRMATIVE COVENANTS. . . . . . . . . . . . . 38
7.1 FINANCIAL REPORTING. . . . . . . . . . . . . . . . . . . . . . . . 38
7.2 USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.3 NOTICE OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . 41
7.4 CONDUCT OF BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . 41
7.5 RECORDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.6 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.7 COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . . . 41
7.8 MAINTENANCE OF PROPERTIES. . . . . . . . . . . . . . . . . . . . . 42
7.9 INSPECTION/AUDITS. . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 8
NEGATIVE COVENANTS. . . . . . . . . . . . . . 42
8.1 DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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8.2 MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.3 SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.4 SALE OF ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.5 ACQUISITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.6 AFFILIATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.7 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.8 ENCUMBRANCES AND LIENS . . . . . . . . . . . . . . . . . . . . . . 45
8.9 LOANS, ADVANCES AND GUARANTIES . . . . . . . . . . . . . . . . . . 45
8.10 INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.11 DIVIDENDS AND DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . 45
ARTICLE 9
DEFAULTS . . . . . . . . . . . . . . . . 46
9.1 PAYMENT DEFAULTS.. . . . . . . . . . . . . . . . . . . . . . . . . 46
9.2 REPRESENTATIONS AND WARRANTIES.. . . . . . . . . . . . . . . . . . 46
9.3 OTHER LOAN DOCUMENT DEFAULTS.. . . . . . . . . . . . . . . . . . . 46
9.4 BANKRUPTCY.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.5 OTHER AGREEMENTS.. . . . . . . . . . . . . . . . . . . . . . . . . 46
9.6 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.7 JUDGMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.8 LOAN DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.9 CHANGE OF CONTROL. . . . . . . . . . . . . . . . . . . . . . . . . 47
9.10 MATERIAL ADVERSE EFFECT. . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 10
ACCELERATION, WAIVERS AND AMENDMENTS. . . . . . . . . 47
10.1 ACCELERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.2 CASH COLLATERAL. . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.3 ADDITIONAL REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . 48
10.4 AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.5 PRESERVATION OF RIGHTS . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 11
GENERAL PROVISIONS. . . . . . . . . . . . . . 49
11.1 SURVIVAL OF REPRESENTATIONS. . . . . . . . . . . . . . . . . . . . 49
11.2 GOVERNMENTAL REGULATION. . . . . . . . . . . . . . . . . . . . . . 49
11.3 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.4 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.5 SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT. . . . . . . . . . 49
11.6 EXPENSES; INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . 49
11.7 NUMBERS OF DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . 50
11.8 SEVERABILITY OF PROVISIONS . . . . . . . . . . . . . . . . . . . . 50
11.9 NONLIABILITY OF LENDERS. . . . . . . . . . . . . . . . . . . . . . 50
11.10 CHOICE OF LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.11 CONSENT TO JURISDICTION. . . . . . . . . . . . . . . . . . . . . . 50
11.12 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . 51
11.13 INTEGRATION CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . 51
11.14 CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.15 DISPUTE RESOLUTION . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 12
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THE AGENT. . . . . . . . . . . . . . . . . 52
12.1 APPOINTMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.2 POWERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.3 GENERAL IMMUNITY . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.4 NO RESPONSIBILITY FOR LOANS, RECITALS, ETC.. . . . . . . . . . . . 53
12.5 ACTION ON INSTRUCTIONS OF LENDERS. . . . . . . . . . . . . . . . . 53
12.6 EMPLOYMENT OF AGENTS AND COUNSEL . . . . . . . . . . . . . . . . . 53
12.7 RELIANCE ON DOCUMENTS; COUNSEL . . . . . . . . . . . . . . . . . . 53
12.8 AGENT'S REIMBURSEMENT AND INDEMNIFICATION. . . . . . . . . . . . . 54
12.9 RIGHTS AS A LENDER . . . . . . . . . . . . . . . . . . . . . . . . 54
12.10 LENDER CREDIT DECISION . . . . . . . . . . . . . . . . . . . . . . 54
12.11 SUCCESSOR AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE 13
SETOFF; RATABLE PAYMENTS . . . . . . . . . . . . 55
13.1 SETOFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
13.2 RATABLE PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 14
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS . . . . . . 56
14.1 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . 56
14.2 PARTICIPATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 56
14.3 ASSIGNMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
14.4 DISSEMINATION OF INFORMATION . . . . . . . . . . . . . . . . . . . 58
14.5 TAX TREATMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE 15
NOTICES. . . . . . . . . . . . . . . . . . 59
15.1 GIVING NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . . 59
15.2 CHANGE OF ADDRESS. . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE 16
COUNTERPARTS. . . . . . . . . . . . . . . . . 59
SCHEDULE 1 - LENDERS AND APPLICABLE LENDING OFFICES
SCHEDULE 2 - SUBSIDIARIES
SCHEDULE 3 - DEBT
SCHEDULE 4 - CORPORATE INVESTMENT POLICY
SCHEDULE 5 - APPROVED ACCOUNT DEBTORS
EXHIBIT A - FORM OF NOTE
EXHIBIT B - COMPLIANCE CERTIFICATE
EXHIBIT C - ASSIGNMENT AGREEMENT
EXHIBIT D - FORM OF NOTICE OF BORROWING
EXHIBIT E - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT F - FORM OF BORROWER COUNSEL OPINION
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CREDIT AGREEMENT
This Credit Agreement, dated as of September 30, 1997, is among STAR
TELECOMMUNICATIONS, INC., a Delaware corporation (the "Borrower"), the financial
institutions party hereto (together with their respective successors and
permitted assigns, the "Lenders") and SANWA BANK CALIFORNIA ("Sanwa"), as Agent.
The parties hereto agree as follows:
RECITALS
WHEREAS, the Borrower wishes to obtain commitments from all Lenders for
pro rata credit extensions under a multicurrency revolving credit and letter
of credit facility in an aggregate amount not to exceed $25,000,000 at any
time outstanding, such credit being available on a committed basis as (i) pro
rata multicurrency revolving loans in an aggregate amount at any time
outstanding not to exceed $10,000,000, (ii) commercial or standby letters of
credit in an aggregate amount at any time issued and outstanding not to
exceed $8,000,000, shared by the Lenders on a pro rata risk participation
basis and (iii) pro rata U.S. Dollar revolving loans in an aggregate amount
at any time outstanding not to exceed $25,000,000.
WHEREAS, the Lenders have agreed, on the terms and conditions herein set
forth, to extend credit to the Borrower for the purposes of financing the
conversion of receivables into cash and to provide letters of credit and
foreign exchange capabilities in support of the Borrower's normal operations.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement:
"ACCOUNTS" means all presently existing and hereafter arising accounts
receivable, contract rights, chattel paper, and all other forms of obligations
owing to the Borrower, payable in Dollars or in any Optional Currency consented
to by the Lenders, arising out of the sale or lease of goods, or the rendition
of services by the Borrower, whether or not earned by performance, and any and
all credit insurance, guaranties and other security therefor.
"ACCOUNT DEBTOR" means any obligor on an Account.
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"ADVANCE" means a borrowing hereunder consisting of the aggregate amount
of the several Loans made by the Lenders to the Borrower of the same Type
and, in the case of a Fixed Rate Loan, for the same Interest Period.
"AFFILIATE" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A
Person shall be deemed to control another Person if the controlling Person
possesses, directly or indirectly, the power to direct or cause the direction
of the management or policies of the controlled Person, whether through
ownership of stock, by contract or otherwise; provided that control shall be
conclusively presumed when any Person or affiliated group directly or
indirectly owns 10% or more of the securities having ordinary voting power
for the election of directors of a corporation.
"AGENT" means Sanwa in its capacity as administrative agent for the
Lenders pursuant to Article 12, and not in its individual capacity as a
Lender, and any successor Agent appointed pursuant to Article 12.
"AGGREGATE AVAILABLE COMMITMENT" means the aggregate of the Available
Commitments of all the Lenders.
"AGGREGATE COMMITMENT" means the aggregate of the Commitments of all the
Lenders.
"AGREEMENT" means this Credit Agreement, as it may be amended or modified
and in effect from time to time.
"AGREEMENT ACCOUNTING PRINCIPLES" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
that used in preparing the financial statements referred to in Section 5.5
(except for changes concurred to by the Borrower's independent public
accountants and the Required Lenders).
"APPLICABLE LENDING OFFICE" means for any Lender, its office for Fixed Rate
Loans and Reference Rate Loans, specified in Schedule 1 or in the Assignment and
Acceptance pursuant to which it became a party hereto, as the case may be, any
of which offices may, upon 10 days' prior written notice to the Agent and the
Borrower, be changed by such Lender.
"APPLICABLE MARGIN": for each Fixed Rate Loan is 1.75%.
"ARTICLE" means an article of this Agreement unless another document is
specifically referenced.
"ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance in the form
of Exhibit C hereto.
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"AUTHORIZED OFFICER" means any of the Chairman, Chief Executive Officer,
President, Chief Financial Officer, Controller or Treasurer (specifically
authorized by the Borrower) of the Borrower, acting singly.
"AVAILABLE COMMITMENT" means, with respect to each Lender, the amount by
which (i) the Commitment of each Lender on such date exceeds (ii) the sum of
(a) the aggregate principal sum of such Lender's Loans outstanding, (b) such
Lender's Commitment Percentage of the aggregate Letter of Credit Amount of all
Letters of Credit outstanding and (c) such Lender's Commitment Percentage of the
aggregate amount of unreimbursed drawings under all Letters of Credit on such
date.
"BORROWER" is defined in the first paragraph hereof.
"BORROWING BASE" shall mean, as at any date, the lesser of (i) 75% of the
aggregate Eligible Accounts Receivable and (ii) the Aggregate Available
Commitment.
"BORROWING BASE CERTIFICATE" shall mean a certificate of an Authorized
Officer of the Borrower, in substantially the form of Exhibit E and
appropriately completed.
"BORROWING DATE" means a date on which an Advance is made hereunder.
"BUSINESS DAY" means any day (i) other than a Saturday, Sunday or other day
on which commercial banks are authorized or required by law to close in
Los Angeles, California and (ii) if the applicable Business Day relates to a
Loan in an Optional Currency, on which dealings in foreign currency and exchange
are carried on in the relevant local money market.
"CAPITAL EXPENDITURES" means, for any period, for any person or entity, the
aggregate of all expenditures which are made during such period (whether paid in
cash or accrued as liabilities), by such person or entity, for property, plant
or equipment and which would be reflected as additions to property, plant or
equipment on a balance sheet of such person or entity prepared in accordance
with Agreement Accounting Principles (including, without limitation, all such
property held under Capitalized Leases).
"CAPITALIZED LEASE" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.
"CASH FLOW COVERAGE RATIO" means for the Borrower and its Subsidiaries on a
Consolidated Basis, determined as of the end of each fiscal quarter for the
period of four fiscal quarters then ended (commencing January 1, 1997 with
annualized results until December 31, 1997), the ratio of EBITDA minus income
taxes
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paid to the current portion of long-term debt and Capitalized Leases and
Interest Expense then due and payable.
"CHANGE OF CONTROL" means (i) the acquisition by any Person (including any
syndicate or group deemed to be a "Person" under Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") or any
successor provision to either of the foregoing) of beneficial ownership,
directly or indirectly, of shares of capital stock of the Borrower entitling
such Person to exercise more than 50% of the total voting power of all voting
shares of the Borrower; or (ii) any consolidation of the Borrower with, or
merger of the Borrower into, any other Person, any merger of another Person into
the Borrower, or any sale or transfer of all or substantially all of the assets
of the Borrower to another Person other than (a) a consolidation or merger which
does not result in any reclassification, conversion, exchange or cancellation of
outstanding shares of capital stock other than shares of capital stock owned by
any of the parties to the consolidation or merger and in which the Consolidated
Tangible Net Worth of their surviving corporation immediately after the
transaction equals or exceeds the Consolidated Tangible Net Worth of the
Borrower immediately prior to such transaction or (b) a merger which is effected
solely to change the jurisdiction of incorporation of the Borrower or (c) any
consolidation with or merger of the Borrower into a Subsidiary of the Borrower
with the prior written consent of the Lenders or any sale or transfer by the
Borrower with the written consent of the Lenders of all or substantially all of
its assets to one or more of its wholly-owned Subsidiaries in any one
transaction or a series of transactions, provided that in each case set forth in
clause (ii) hereof that the resulting corporation or each Subsidiary assumes or
guaranties the obligation of the Borrower under this Agreement and other Loan
Documents and the Consolidated Tangible Net Worth of the surviving or acquiring
corporation and any such consolidation, merger or sale of assets immediately
after the consummation of such transaction equals or exceeds the Consolidated
Tangible Net Worth of the Borrower immediately prior to such transaction.
"CLOSING DATE" means the date on which all the conditions precedent set
forth in Section 4.1 shall have been satisfied or waived and this Agreement
becomes effective.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time, including the regulations proposed or
promulgated thereunder.
"COMMITMENT" means, for each Lender, the obligation of such Lender to make
Loans and participate in Letters of Credit not exceeding the amount set forth
opposite its name on Schedule 1 hereto or as set forth in any Assignment and
Acceptance relating to any assignment that has become effective pursuant to
Section 14.3, as such amount may be modified from time to time pursuant to the
terms hereof.
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"COMMITMENT PERCENTAGE" means as to any Lender at any time, the percentage
of the Aggregate Commitments then constituted by such Lender's Commitments.
"COMPLIANCE CERTIFICATE" has the meaning set forth in Section 7.1(iii).
"CONSOLIDATED," "CONSOLIDATING" and "ON A CONSOLIDATED BASIS," when
describing financial statements, refers to those of the Borrower and its
Subsidiaries.
"CONTINGENT LIABILITIES" means with respect to the Borrower and its
Subsidiaries, contingent liabilities as determined in accordance with Agreement
Accounting Principles.
"CONTROL" means the power to direct or cause the direction of the
management or policies of a Person, whether through rights of ownership under
voting securities, under contract or otherwise, and "Controlling" and
"Controlled" shall have meanings correlative thereto.
"CONTROLLED GROUP" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower or any of its Subsidiaries, are treated as a
single employer under Section 414 of the Code.
"CONVERSION/CONTINUATION NOTICE" is the notice referred to in Section 2.13.
"CURRENT ASSETS" means with respect to the Borrower and its Subsidiaries,
current assets, including cash and net trade Accounts, determined on a
Consolidated Basis in accordance with Agreement Accounting Principles.
"CURRENT LIABILITIES" means with respect to the Borrower and its
Subsidiaries, current liabilities, including all amounts outstanding hereunder,
determined on a Consolidated Basis in accordance with Agreement Accounting
Principles.
"DEBT" of any Person means without duplication (i) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services, (ii) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (iii) all indebtedness created or
arising under any conditional-sale or other title-retention agreement with
respect to property acquired by such Person, (iv) that portion of the
obligations of such Person as lessee under leases that have been or should be,
in accordance with Agreement Accounting Principles, recorded on the Borrower's
balance sheet as Capitalized Leases, (v) all obligations of such Person under
direct or indirect guaranties in respect of, and obligations (contingent or
otherwise) to purchase or otherwise acquire, or otherwise to secure a credit
against loss in respect
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of, indebtedness or obligations of others of the kinds referred to in clause
(i), (ii), (iii) or (iv) above and (vi) liabilities in respect of unfunded
vested benefits under plans covered by Title IV of ERISA.
"DEFAULT" means any Event of Default and any default, event or condition
that would, with the giving of any requisite notice and the passage of any
requisite period of time, constitute an Event of Default.
"DISTRIBUTIONS" means the declaration or payment of any dividend or
distribution on or in respect to any shares of any class of capital stock, any
partnership interest or any membership interest of any Person, other than
dividends or other distributions payable solely in shares of common stock,
partnership interests or membership units of such Person, as the case may be;
the purchase, redemption or other retirement of any shares of any class of
capital stocks, partnership interests or membership units of such Person,
directly or indirectly, through a Subsidiary or otherwise; the return of equity
capital by any Person to its shareholders, partners or members as such; or any
other distribution on or in respect of any shares of any class of capital stock,
partnership interests or membership unit of such Person.
"DOLLARS" or "$" shall mean lawful money of the United States of America.
"DOLLAR EQUIVALENT" means with respect to any amounts denominated in a
currency other than Dollars, the amount (as conclusively ascertained by the
Agent absent manifest error) in Dollars which is or could be purchased by the
Agent (in accordance with its normal banking practices) with such amounts
denominated in such other currency in the foreign currency deposits market for
delivery on such date at the spot rate of exchange, at or about 11:00 a.m.,
local time in the foreign currency deposits market, on the date of
determination.
"DRAWING LENDER" has the meaning set forth in Section 2.3(iii).
"EBITDA" means for any period, for the fiscal quarter most recently ended
and the immediately preceding three fiscal quarters, Net Income after
eliminating extraordinary gains and losses, PLUS (i) provisions for taxes,
(ii) depreciation and amortization, (iii) Interest Expense, (iv) all non-cash
costs and (v) taxes paid in cash for such applicable period.
"ELIGIBLE ACCOUNT RECEIVABLE" means those Accounts, net of finance charges,
which have been earned by performance, which are by their terms due and payable
within 31 days, or less, from the date of the invoice, have been validly
assigned to the Agent and strictly comply with all the Borrower's warranties and
-6-
representations to the Lenders, but Eligible Accounts shall not include the
following:
(i) unless an Account of any Account Debtor set forth in Section 5, any
Account with respect to which the Account Debtor is an officer, shareholder,
director, employee or agent of the Borrower;
(ii) any Account with respect to which the Account Debtor is a Subsidiary
of, related to, or affiliated or has common officers or directors with the
Borrower;
(iii) any Account relating to goods placed on consignment, guarantied sale
or other terms by reason of which the payment by the Account Debtor may be
conditional;
(iv) any Account with respect to which the Account Debtor is not a
resident of the United States or Canada, unless agreed to by the Required
Lenders;
(v) any Account with respect to which the Account Debtor is the United
States or any department, agency or instrumentality of the United States unless
agreed to by the Required Lenders;
(vi) any Swap-Check Account, provided, however, that up to $5,000,000 of
Swap-Check Accounts may be included as Eligible Accounts;
(vii) any Account with respect to which there is asserted a defense,
counterclaim, discount or setoff, whether well-founded or otherwise, but only to
the extent thereof and except for those discounts, allowances and returns
arising in the ordinary course of the Borrower's business;
(viii) any Account with respect to which the account debtor becomes
insolvent, fails to pay his debts as they mature or goes out of business or is
owned by an account debtor which has become a subject of a proceeding under any
provision of the United States Bankruptcy Code, as amended, or under any other
bankruptcy or insolvency law, including, but not limited to, assignments for the
benefit of creditors, formal or informal moratoriums, compositions or extensions
with all or substantially all of its creditors;
(ix) all Accounts owed by an Account Debtor with respect to which 25% or
more of the aggregate Dollar amount of its accounts are not paid within 30 days
from the due date of the invoice;
(x) any Account that is not paid by the account debtor within 30 days of
its due date;
(xi) unless an Account of an Account Debtor set forth on Schedule 5 or
unless approved by the Required Lenders, that
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portion of the Accounts owed by any single Account Debtor which exceeds 15%
of all of the Accounts; and
(xii) any Account which the Bank deems not to be an Eligible Account.
"ELIGIBLE ASSIGNEE" means (i) a commercial bank organized under the laws of
the United States, or any State thereof or the District of Columbia, and having
total assets in excess of $250,000,000; (ii) a commercial bank organized under
the laws of any other country which is a member of the Organization for Economic
Cooperation and Development, or a political subdivision of any such country, and
having total assets in excess of $250,000,000, provided that such bank is acting
through a branch or agency located in the United States; (iii) an insurance
company or other financial institution or an investment fund that is engaged in
making, purchasing or otherwise investing in commercial loans in the ordinary
course of its business and having total assets in excess of $250,000,000;
(iv) any Affiliate of an existing Lender; and (v) any other Person approved by
the Agent and, in the absence of any Default, the Borrower; provided, however,
that an Affiliate of the Borrower shall not qualify as an Eligible Assignee.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"EUROCURRENCY LIABILITIES" has the meaning set forth in Regulation D of the
Board of Governors of the Federal Reserve System.
"EVENT OF DEFAULT" has the meaning set forth in Section 9.
"FACILITY TERMINATION DATE" means July 1, 1999, unless accelerated pursuant
to Section 10.1.
"FED FUNDS RATE" means above the overnight federal funds effective rate, as
published by the Board of Governors of the Federal Reserve System as in effect
from time to time.
"FIXED RATE" means the actual cost of funds, adjusted for all reserves,
incurred by the Agent at the time of a Fixed Rate Loan hereunder.
"FIXED RATE LOAN" means a Loan when it bears interest at the Fixed Rate
plus the Applicable Margin.
"FUNDED DEBT" means the sum of the outstanding principal balance of all
Debt of the Borrower and its Subsidiaries on a Consolidated Basis described in
clauses (i), (ii), (iii) and (iv) of the definition of "Debt" set forth herein.
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"GOVERNMENTAL PERSON" means, whether domestic or foreign, any national,
federal, state or local government, any political subdivision thereof or any
governmental, quasi-governmental, judicial, public or regulatory
instrumentality, authority, body or entity, including the Federal Deposit
Insurance Corporation, the Comptroller of the Currency, the Board of Governors
of the Federal Reserve System, any central bank and any comparable authority.
"GOVERNMENTAL RULE" means any treaty, law, rule, regulation, ordinance,
order, code, judgment, decree, directive, interpretation, request, guideline,
policy or similar form of decision of any Governmental Person.
"INTEREST EXPENSE" means as of any date, for the fiscal quarter most
recently ended and the immediately preceding three fiscal quarters, the sum of
(i) the amount of all interest on Funded Debt which was paid, payable and/or
accrued for such period (without duplication of previous amounts) and (ii) all
commitment, letter of credit or line of credit fees paid, payable and/or accrued
for such period (without duplication of previous amounts) to any lender in
exchange for such lender's commitment to lend.
"INTEREST PERIOD" means, with respect to a Fixed Rate Loan, a period of up
to 90 days (subject to availability by the Lenders), commencing on a Business
Day selected by the Borrower pursuant to this Agreement. Such Interest Period
shall end on (but exclude) the day which corresponds numerically to such date up
to 90 days thereafter. If an Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall end on the next succeeding
Business Day, provided, however, that if said next succeeding Business Day falls
in a new calendar month, such Interest Period shall end on the immediately
preceding Business Day. No Interest Period may end after the Facility
Termination Date.
"LENDERS" is defined in the first paragraph hereof.
"LETTER OF CREDIT" shall have the meaning set forth in Section 2.1.
"LETTER OF CREDIT AMOUNT" means the stated maximum amount available to be
drawn under a particular Letter of Credit, as such amount may be reduced or
reinstated from time to time in accordance with the terms of such Letter of
Credit.
"LETTER OF CREDIT FEE" means an amount equal to the product of (i) 1.75%
and (ii) the Letter of Credit Amount of each standby Letter of Credit.
"LETTER OF CREDIT REQUEST" means a request by the Borrower for the issuance
of a Letter of Credit, on the Agent's standard form of standby and/or commercial
letter of credit application
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and agreement (or any successor standard agreement) and containing terms and
conditions satisfactory to the Agent in its sole discretion.
"LIEN" means any voluntary or involuntary lien, security interest or other
charge or encumbrance of any kind, or any other type of preferential
arrangement, including the lien or retained title of a conditional vendor and
any easement, right of way or other encumbrance on title to real property.
"LOAN" means, with respect to a Lender, a Fixed Rate Loan or a Reference
Rate Loan.
"LOAN DOCUMENTS" means this Agreement, any Letter of Credit Requests, the
Letters of Credit, the Security Agreement, UCC-1 Financing Statements and the
Notes executed by the Borrower in connection herewith and any other agreement
executed by the Borrower in connection herewith, as such agreements and
documents may be amended, supplemented and otherwise modified from time to time
in accordance with the terms hereof.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise) or results of operations
of the Borrower and its Subsidiaries taken as a whole, (ii) the ability of the
Borrower to perform its obligations under the Loan Documents or (iii) the
validity or enforceability of any of the Loan Documents or the rights or
remedies of the Agent or the Lenders thereunder.
"MULTIEMPLOYER PLAN" means a Plan that is a "multiemployer plan" as defined
in Section 3(37) or 4001(i)(3) of the Borrower's ERISA Plan.
"NET INCOME" means for the Borrower and its Subsidiaries on a Consolidated
Basis, net income as determined in accordance with Agreement Accounting
Principles.
"NOTES" mean promissory notes, in substantially the form of Exhibit A
hereto, duly executed by the Borrower and payable to the order of a Lender in
the amount of its Commitment, including any amendment, modification, renewal or
replacement of such promissory note.
"NOTICE OF ASSIGNMENT" is defined in Section 14.3(ii).
"OBLIGATIONS" means all unpaid principal of and accrued and unpaid interest
on the Notes, the obligation to reimburse drawings under Letters of Credit
(including the contingent obligation to reimburse any drawings under outstanding
Letters of Credit), all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower to the Lenders
or to any Lender, the Agent or any indemnified party hereunder arising under the
Loan Documents.
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"OPTIONAL CURRENCIES" means the currencies of Great Britain, France,
Germany, Australia or any other currency acceptable to the Agent freely tradable
in the offshore interbank market and which is freely convertible into Dollars.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PERSON" means any natural person, corporation, firm, limited liability
company, joint venture, partnership, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"PLAN" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code maintained by or contributed to by the Borrower or any member of the
Controlled Group.
"PROPERTY" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.
"PURCHASERS" is defined in Section 14.3(i).
"REFERENCE RATE" means the rate per annum (rounded upward, if necessary, to
the next higher 1/100th of 1%) equal to the annual rate of interest announced
from time to time by the Agent at its head office in Los Angeles, California, as
its corporate reference rate (which is a rate set by the Agent based upon
various factors including general economic and market conditions, is used as a
reference point for pricing certain loans and the Agent may price its loan at,
above or below such rate).
"REFERENCE RATE LOAN" means a Loan when it bears interest at the Reference
Rate.
"REGULATION D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.
"REGULATION U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.
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"REPORTABLE EVENT" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Single
Employer Plan, excluding, however, such events as to which the PBGC by
regulation waived the requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event, provided, however, that
a failure to meet the minimum funding standard of Section 412 of the Code and of
Section 302 of ERISA shall be a Reportable Event regardless of the issuance of
any such waiver of the notice requirement in accordance with either
Section 4043(a) of ERISA or Section 412(d) of the Code.
"REQUIRED LENDERS" means Lenders in the aggregate having at least 66 2/3%
of the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding at least 66 2/3% of the aggregate unpaid
principal amount of the outstanding Loans. Any Lender which has refused to make
available its Commitment Percentage of any Advance or to fund its portion of any
Loan or Letter of Credit shall not be included in this calculation.
"REQUIREMENT OF LAW" means as to any Person, the articles or certificate of
incorporation of such Person, and any material law, treaty, rule or regulation,
determination or policy statement or interpretation of an arbitrator or a court
or other Governmental Person, in each case applicable to or binding upon such
Person or any of its Property or to which such Person or any of its Property is
subject.
"RESERVE PERCENTAGE" means, for any Interest Period for any Fixed Rate
Loan, the reserve percentage applicable two Business Days before the first day
of such Interest Period under regulations issued from time to time by the Board
of Governors of the Federal Reserve System for determining the maximum reserve
requirements (including any emergency, supplemental or other marginal reserve
requirement) for the Agent with respect to liabilities or assets consisting of
or including Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
such Fixed Rate Loan is determined) having a term equal to such Interest Period.
"SANWA" is defined in the first paragraph hereof.
"SEC" means the United States Securities and Exchange Commission or any
successor thereto.
"SEC REPORT" means a Current Report on Form 8-K pursuant to the Securities
Exchange Act of 1934.
"SECTION" means a numbered section of this Agreement, unless another
document is specifically referenced.
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"SECURITY AGREEMENT" means the Security Agreement dated as of even date
herewith, executed by the Borrower in favor of the Agent, as secured party, for
the benefit of the Lenders, all in form and substance as may be acceptable to
the Agent, as it may be amended or modified and in effect from time to time.
"SINGLE EMPLOYER PLAN" means a Plan other than a Multiemployer Plan.
"SUBORDINATED INDEBTEDNESS" means, collectively, Debt (i) for which the
Borrower is directly and primarily liable, and in respect of which none of its
Subsidiaries is contingently or otherwise obligated, unless such Subsidiary has
executed a guaranty (in form and substance satisfactory to the Required Lenders)
with respect to the Obligations of the Borrower hereunder and (ii) which is
subordinated to the obligations of the Borrower under this Agreement on terms,
and pursuant to documentation contained in other terms (including interest,
amortization, covenants and events of default), in term, form and substance
satisfactory to the Agent and the Required Lenders.
"SUBSIDIARY" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, joint venture or similar business
organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean a
Subsidiary of the Borrower.
"SWAP-CHECK ACCOUNT" means any Account with respect to which the Borrower
is or may become liable to the Account Debtor for goods sold or services
rendered by the Account Debtor to the Borrower which are not offset on a "net"
basis, but which are billed and settled on a substantially simultaneous basis.
"TANGIBLE NET WORTH" means, as at any date for any Person, the sum for such
Person and its Subsidiaries (determined on a Consolidated Basis without
duplication in accordance with Agreement Accounting Principles) of the
following:
(i) The amount of capital stock plus any additional paid-in capital, PLUS
(ii) Subordinated Indebtedness, PLUS
(iii) The amount of surplus and retained earnings (or, in a case of a
surplus or retained earnings deficit, minus the amount of such deficit), MINUS
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(iv) The sum of the following: the cost of treasury shares and the book
value of all assets which should be classified as intangibles (without
duplication of deductions in respect of items already deducted in arriving at
surplus and retained earnings) but in any event including goodwill, minority
interests, research and development costs, trademarks, tradenames, copyrights,
patents and franchises, unamortized debt discount and expense, MINUS
(v) All amounts due to such Person from officers and/or Affiliates of
such Person.
"TAXES" is defined in Section 3.2.
"TOTAL LEVERAGE RATIO" means for the Borrower and its Subsidiaries on a
Consolidated Basis, determined as of the end of each fiscal quarter for the
period of four fiscal quarters then ended, the ratio of Total Liabilities
(including obligations under Capitalized Leases) outstanding at such time to
Tangible Net Worth.
"TOTAL LIABILITIES" means, as of any date, the sum, for the Borrower and
its Subsidiaries on a Consolidated Basis in accordance with Agreement Accounting
Principles of the following:
(i) all Debt (other than Subordinated Indebtedness) and
(ii) all other liabilities which should be classified as liabilities on the
balance sheet, including all reserves (other than general contingency reserves)
and all deferred taxes and other deferred items.
"TRANSFEREE" is defined in Section 14.4.
"TYPE" means, with respect to a Loan, its nature as a Reference Rate Loan
or a Fixed Rate Loan.
"UNFUNDED LIABILITIES" means the amount (if any) by which the present value
of all nonforfeitable benefits under all Single Employer Plans exceeds the fair
market value of all such Plan assets allocable to such benefits, all determined
in accordance with the respective most recent valuations for such Plans.
1.2 RULES AND INTERPRETATION.
(i) A reference to any document or agreement shall mean such document
or agreement as amended, modified or supplemented from time to time in
accordance with its terms and the terms of this Agreement.
(ii) The singular includes the plural and the plural includes the
singular.
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(iii) A reference to any law includes any amendment or modification of
such law.
(iv) A reference to any Person includes its permitted successors and
permitted assigns.
(v) Accounting terms capitalized but not otherwise defined herein
shall have their meanings applied to them by Agreement Accounting Principles
applied on a consistent basis by the accounting entity to which they refer.
(vi) The words "include," "includes," and "including" are not
limiting.
(vii) All terms not specifically defined herein or by Agreement
Accounting Principles, which terms are defined in the Uniform Commercial Code as
in effect in the State of California, have the meanings assigned to them
therein.
(viii) Reference to a particular "section" refers to that section of
this Agreement unless otherwise indicated.
(ix) The words "herein," "hereof," "hereunder" and words of like
import shall mean to this Agreement as a whole and not to any particular section
or subdivision of this Agreement.
ARTICLE 2
THE REVOLVING CREDIT FACILITY
2.1 COMMITMENTS. Each Lender severally agrees, on the terms and
conditions set forth in this Agreement, (i) to make Loans on a revolving
credit basis and in Dollars or in any Optional Currency to the Borrower from
time to time and (ii) to participate in standby and/or commercial letters of
credit issued for the account of the Borrower pursuant to Section 2.3 from
time to time (each a "Letter of Credit" and, collectively, the "Letters of
Credit"), from and including the Closing Date to but excluding the Facility
Termination Date in an amount not to exceed the amount of its Commitment. Up
to $10,000,000 in aggregate principal amount of the Aggregate Commitment may
be borrowed in Optional Currencies by the Borrower pursuant to the provisions
of Section 2.2 hereof. The sum of (i) the aggregate principal amount of all
Loans outstanding (including Loans in any Optional Currency calculated at the
Dollar Equivalent thereof), (ii) the aggregate Letter of Credit Amount of all
Letters of Credit outstanding and (iii) the aggregate amount of unreimbursed
drawings under all Letters of Credit, shall not exceed, at any time, the
Borrowing Base. The Borrowing Base availability shall be determined on the
basis of the Borrowing Base Certificate which is delivered on the Closing
Date and in accordance with Section 7.1(iv). Further, the sum of (x) the
aggregate Letter of Credit Amount of all Letters of Credit
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outstanding and (y) the aggregate amount of unreimbursed drawings under all
Letters of Credit shall not exceed $8,000,000 at any time. Within the limit
of each Lender's Commitment and as set forth herein, the Borrower may borrow,
have Letters of Credit issued and/or renewed for its account, prepay Loans,
reborrow and have additional Letters of Credit issued for its account.
2.2 OPTIONAL CURRENCIES. The Borrower shall be entitled to request Loans
on a revolving credit basis and in an Optional Currency from time to time from
and including the Closing Date to but excluding the Facility Termination Date by
giving the Agent a notice of borrowing pursuant to the provisions of
Section 2.14 hereof. The sum of the aggregate amount of all Optional Currency
Loans to the Borrower shall not at any time exceed $10,000,000.
2.3 ISSUANCE OF LETTERS OF CREDIT.
(i) The Borrower shall be entitled to request the issuance of standby
and/or commercial Letters of Credit from time to time from and including the
Closing Date to but excluding the date which is seven Business Days prior to the
Facility Termination Date by giving the Agent a Letter of Credit Request at
least three Business Days before the requested date of issuance of such Letter
of Credit (provided that such Letter of Credit Request is received by the Agent
no later than 11:00 a.m., Los Angeles time, and any Letter of Credit Request
received after such time shall be deemed to have been received on the next
Business Day) (which date of issuance shall be a Business Day). No Letter of
Credit shall have an expiration date beyond the Facility Termination Date. The
aggregate Letter of Credit Amounts under all outstanding Letters of Credit and
the aggregate amount of unreimbursed drawings under Letters of Credit shall
reduce, dollar for dollar, the Aggregate Available Commitment. Letters of
Credit may only be requested in Dollars. The sum of (a) the aggregate Letter of
Credit Amount of all Letters of Credit outstanding and (b) the aggregate amount
of unreimbursed drawings under all Letters of Credit shall not at any time
exceed $8,000,000. In addition, the sum of (i) the aggregate principal amount
of all Loans outstanding, (ii) the aggregate Letter of Credit Amount of all
Letters of Credit outstanding and (iii) the aggregate amount of unreimbursed
drawings under all Letters of Credit shall not exceed, at any time, the
Borrowing Base. Each Letter of Credit Request shall be made in writing, shall
be signed by an Authorized Officer, shall be irrevocable and shall be effective
upon receipt by the Agent. Provided that a valid Letter of Credit Request has
been received by the Agent and upon fulfillment of the other applicable
conditions set forth in Section 4.3, the Agent will issue the requested Letter
of Credit from its office specified in Section 15.1.
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Letters of Credit shall be used only for the purpose of supporting the
operations of the Borrower and its Subsidiaries incurred in the ordinary course
of business.
(ii) Immediately upon the issuance of each Letter of Credit, the Agent
shall be deemed to have sold and transferred to each Lender, and each Lender
shall be deemed to have purchased and received from the Agent, in each case
irrevocably and without any further action by any party, an undivided interest
and participation in such Letter of Credit, each drawing thereunder and the
obligations of the Borrower under this Agreement in respect thereof in an amount
equal to the product of (i) such Lender's Commitment Percentage and (ii) the
maximum amount available to be drawn under such Letter of Credit (assuming
compliance with all conditions to drawing). The Agent shall promptly advise
each Lender of the issuance of each Letter of Credit, the Letter of Credit
Amount of such Letter of Credit, any change in the face amount or expiration
date of such Letter of Credit, the cancellation or other termination of such
Letter of Credit and any drawing under such Letter of Credit.
(iii) The payment by the Agent of a draft drawn under any Letter of
Credit shall first be made from any cash collateral deposit held by the Agent
with respect to such Letter of Credit. After any such cash collateral deposit
has been applied, and unless the Borrower has repaid any remaining amount due to
the Agent pursuant to the Agent's payment on such Letter of Credit, the payment
by the Agent of a draft drawn under any Letter of Credit shall constitute for
all purposes of this Agreement the making by the Agent in its individual
capacity as a Lender hereunder (in such capacity, the "Drawing Lender") of a
Reference Rate Loan in the amount of such payment (but without any requirement
of compliance with the conditions set forth in Section 4.3). In the event that
any such Loan by the Drawing Lender resulting from a drawing under any Letter of
Credit is not repaid by the Borrower by 12:00 noon, Los Angeles time, on the day
of payment of such drawing, the Agent shall promptly notify each other Lender.
Each Lender shall, on the day of such notification (or if such notification is
not given by 1:00 p.m., Los Angeles time, on such day, then on the next
succeeding Business Day), make a Reference Rate Loan, which shall be used to
repay the applicable portion of the Reference Rate Loan of the Drawing Lender
with respect to such Letter of Credit drawing, in an amount equal to the amount
of such Lender's participation in such drawing for application to repay the
Drawing Lender (but without any requirement of compliance with the applicable
conditions set forth in Section 4.3) and shall deliver to the Agent for the
account of the Drawing Lender, on the day of such notification (or if such
notification is not given by 1:00 p.m., Los Angeles time, on such day, then on
the next succeeding Business Day) and in immediately available funds, the amount
of such Reference Rate Loan. In the event that any Lender fails to make
available to the Agent for the account of the Drawing Lender the amount of such
Reference Rate
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Loan, the Drawing Lender shall be entitled to recover such amount on demand
from such Lender together with interest thereon at the Federal Funds Rate.
(iv) The obligations of the Borrower with respect to any Letter of Credit,
any Letter of Credit Request and any other agreement or instrument relating to
any Letter of Credit and any Reference Rate Loan made under Section 2.3(iii)
shall be absolute, unconditional and irrevocable and shall be paid strictly in
accordance with the terms of the aforementioned documents under all
circumstances, including the following:
(a) any lack of validity or enforceability of any Letter of Credit,
this Agreement or any other Loan Document;
(b) the existence of any claim, setoff, defense or other right that
the Borrower may have at any time against any beneficiary or transferee of any
Letter of Credit (or any Person for whom any such beneficiary or transferee may
be acting), the Agent, any Lender (other than the defense of payment to a Lender
in accordance with the terms of this Agreement) or any other Person, whether in
connection with this Agreement, any other Loan Document, the transactions
contemplated hereby or thereby or any unrelated transaction;
(c) any statement or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect,
or any statement therein being untrue or inaccurate in any respect whatsoever;
(d) payment by the Agent under any Letter of Credit against
presentation of a draft or certificate that does not comply on its face with the
terms of such Letter of Credit;
(e) any exchange, release or nonperfection of any collateral, or any
release, amendment or waiver of or consent to departure from any Loan Document
or other guaranty, for any of the Obligations of the Borrower in respect of the
Letters of Credit; and
(f) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
(v) The Borrower shall pay to the Agent with respect to each Letter of
Credit issued hereunder, the following fees:
(a) for each standby Letter of Credit, a Letter of Credit Fee to
the Agent for the pro rata benefit of the Lenders (provided that the Agent
shall retain for its account alone the initial $250 of any such Letter of
Credit Fee as an issuance fee), equal to the product of (i) the Applicable
Margin and (ii) the Letter of Credit Amount of such Letter of Credit (such
fee to be payable on the date such Letter of Credit is issued);
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(b) for each commercial Letter of Credit a letter of credit fee
to the Agent for the pro rata benefit of the Lenders (provided that the Agent
shall retain for its account alone the initial $120 of any such fee as an
issuance fee) equal to Agent's standard fees for issuance of commercial letters
of credit; and
(c) from time to time, such additional fees and charges (including
cable charges) as are generally associated with letters of credit, in accordance
with the Agent's standard internal charge guidelines and the related Letter of
Credit Request.
(vi) The terms of this Agreement shall take precedence if there is any
inconsistency between the terms of this Agreement and the terms of any Letter of
Credit Request utilized by the Agent.
(vii) The Borrower assumes all risks of the acts or omissions of any
beneficiary or transferee of any Letter of Credit with respect to its use of
such Letter of Credit. Neither the Agent nor any Lender nor any of their
respective officers or directors shall be liable or responsible for (i) the use
that may be made of any Letter of Credit or any acts or omissions of any
beneficiary or transferee in connection therewith; (ii) in the absence of any
gross negligence or willful misconduct by the Agent, the validity, sufficiency
or genuineness of documents, or of any endorsement thereof, even if such
documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (iii) in the absence of any gross negligence or willful
misconduct by the Agent, payment by the Agent against presentation of documents
that do not comply with the terms of any Letter of Credit, including failure of
any documents to bear any reference or adequate reference to any Letter of
Credit; or (iv) in the absence of any gross negligence or willful misconduct by
the Agent, any other circumstance whatsoever in making or failing to make
payment under any Letter of Credit. In furtherance and not in limitation of the
foregoing, the Agent may accept any document that appears on its face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
2.4 COMMITMENT PERCENTAGE. The principal amount of each Lender's Loan
and participation in a Letter of Credit shall be in an amount equal to the
product of (i) such Lender's Commitment Percentage (expressed as a fraction)
and (ii) the total amount of the Loan or Loans or Letters of Credit
requested; PROVIDED THAT in no event shall any Lender be obligated to make a
Loan if, after giving effect to such Loan, such Lender's Loans, its
Commitment Percentage of the aggregate Letter of Credit Amount of all Letters
of Credit outstanding and its Commitment Percentage of the aggregate amount
of unreimbursed drawings under all Letters of Credit outstanding
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would exceed its Commitment or if the amount of such requested Loan is in
excess of such Lender's Available Commitment.
2.5 TYPES OF LOANS. Except as limited herein, the Loans may from time to
time be (i) Fixed Rate Loans, (ii) Reference Rate Loans or (iii) a combination
thereof, as determined by the Borrower and notified to the Agent in accordance
with Section 2.14. Notwithstanding the foregoing, the initial Loans made on the
Closing Date shall be made as Reference Rate Loans and shall be subject to
conversion to Fixed Rate Loans pursuant to Section 2.13. Each Lender may make
or maintain its Loans to the Borrower by or through any Applicable Lending
Office.
2.6 EVIDENCE OF OBLIGATIONS. The Loans made by each Lender to the
Borrower shall be evidenced by a Note, with appropriate insertions therein as to
payee, date and principal amount, payable to the order of such Lender and
representing the obligation of the Borrower to pay the aggregate unpaid
principal amount of all Loans made by such Lender to the Borrower, with interest
thereon as prescribed in Sections 2.16 and 2.17. Each Lender is hereby
authorized (but not required) to record the date and amount of each payment or
prepayment of principal of its Loans made to the Borrower, each continuation
thereof, each conversion of all or a portion thereof to another Type or Optional
Currency and, in the case of Fixed Rate Loans, the length of each Interest
Period with respect thereto, in the books and records of such Lender, and any
such recordation shall constitute PRIMA FACIE evidence of the accuracy of the
information so recorded. The failure of any Lender to make any such recordation
or notation in the books and records of the Lender (or any error in such
recordation or notation) shall not affect the obligations of the Borrower
hereunder or under the Notes. Each Note shall (i) be dated the Closing Date,
(ii) provide for the payment of interest in accordance with Sections 2.16 and
2.17 and (iii) be stated to be payable on the Facility Termination Date.
2.7 COMMITMENT REDUCTION. At the Borrower's option and upon at least five
Business Days' prior irrevocable written notice to the Agent, with such notice
specifying the amount and the date of such reduction, the Borrower may
permanently reduce the Aggregate Commitment in whole at any time or in part from
time to time; provided, however, that each partial reduction of the Aggregate
Commitment shall be in an aggregate amount equal to at least $1,000,000 or an
integral multiple of $100,000. The Agent shall promptly notify each Lender (by
telecopy or by telephone) of such requested Commitment reduction.
Reductions of the Aggregate Commitment pursuant to this Section 2.7 shall
automatically effect a reduction of the Commitment of each Lender to an amount
equal to the product of (i) the Aggregate Commitment of all Lenders, as reduced
pursuant to this Section 2.7 and (ii) the Commitment Percentage of such
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Lender, in each case determined immediately prior to such reduction of the
Aggregate Commitment on such date. Any such Commitment reduction shall be
applied as the Borrower directs, but in the absence of any such direction,
all sublimits shall be ratably reduced.
Upon each reduction of the Aggregate Commitment, the Borrower shall (i) pay
the unused commitment fee, payable pursuant to Section 2.10, accrued on the
amount of the Aggregate Commitment so reduced through the date of such
reduction, (ii) prepay the amount, if any, by which the sum of (a) the aggregate
unpaid principal amount of the Loans, (b) the aggregate Letter of Credit Amount
of all Letters of Credit outstanding and (c) the aggregate amount of
unreimbursed drawings under all Letters of Credit exceeds the amount of the
Aggregate Commitment as so reduced, together with accrued interest on the amount
being prepaid to the date of such prepayment (or, with respect to outstanding
Letters of Credit, make a cash collateral deposit in an amount equal to such
excess to the extent such excess is not corrected by the foregoing prepayment)
and (d) compensate the Lenders for their funding costs, if any, in accordance
with Section 3.1(i).
2.8 COMMITMENT TERMINATION. The Commitment of each Lender and the
Aggregate Commitment shall terminate on the Facility Termination Date.
2.9 REQUIRED PAYMENTS. The outstanding Loans and all other unpaid
Obligations shall be paid in full by the Borrower on the Facility Termination
Date.
2.10 UNUSED COMMITMENT FEE. The Borrower agrees to pay to the Agent for
the benefit of the Lenders an unused commitment fee to be shared among Lenders
on the basis of their respective Commitment Percentages with respect to the
Commitments for the period from and including the Closing Date to but excluding
the Facility Termination Date, computed at .25% of the average daily aggregate
amount of the Aggregate Available Commitment from time to time in effect, to be
payable quarterly in arrears, within 5 days after the end of each quarter, and
on the Facility Termination Date.
2.11 FACILITY FEE. The Borrower agrees to pay to the Agent on the Closing
Date for the pro rata benefit of the Lenders a facility fee set forth in a fee
letter dated as of the Closing Date between the Borrower and the Agent.
2.12 ADMINISTRATIVE FEES. The Borrower agrees to pay to the Agent on the
Closing Date, for its own account, certain administrative fees set forth in a
fee letter dated as of the Closing Date between the Borrower and the Agent.
2.13 VOLUNTARY CONVERSION OF ADVANCES. The Borrower may on any Business
Day, upon written notice (a
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"Conversion/Continuation Notice") given to the Agent not later than 12:00
noon, Los Angeles time, on the second Business Day before the date of the
proposed conversion and subject to the provisions of Section 3.1(c), convert
any Advance into an Advance of another Type; PROVIDED, HOWEVER, that, with
respect to a conversion from a Fixed Rate Loan into a Reference Rate Loan,
any such conversion shall be made on, and only on, the last day of the
Interest Period for such Loan. Each such notice of a conversion shall,
within the restrictions specified above, specify (i) the Loan to be
converted, (ii) the Type of Loan into which such Loan is to be converted and
(iii) the requested date for such conversion. Upon receipt of any such
notice the Agent shall promptly notify each Lender thereof. Any part of
outstanding Fixed Rate Loans and Reference Rate Loans may be converted as
provided herein, provided (a) no Loan may be converted into a Fixed Rate Loan
after the date that is one month prior to the Facility Termination Date and
(b) the Borrower shall not have the right to continue or convert to a Fixed
Rate Loan if a Default shall have occurred and be continuing. However, if
the Borrower shall fail to give any required notices described above in this
Section or if such continuation is not permitted pursuant to the preceding
sentence, such Loans shall be automatically converted to Reference Rate Loans
on the last day of such then-expiring Interest Period and shall be continued
in Dollars or the Optional Currency in which last denominated.
2.14 NOTICE OF BORROWING. The Borrower shall give the Agent irrevocable
telephonic notice (promptly followed by written notice substantially in the form
of Exhibit D attached hereto) (which telephonic notice must be received by the
Agent prior to 10:30 a.m., Los Angeles time, on the proposed Borrowing Date or,
if all or any part of the Loans are requested to be made as Fixed Rate Loans or
Loans in an Optional Currency, three Business Days prior to each proposed
Borrowing Date) requesting that the Lenders make the Loans on the proposed
Borrowing Date and specifying (i) the aggregate amount of Loans requested to be
made (which must be in an aggregate amount equal to at least $1,000,000 (or the
Dollar Equivalent of such amount if made in an Optional Currency) or an integral
multiple of $100,000 (or the Dollar Equivalent of such amount if made in an
Optional Currency)) (or, if less, the then Available Commitment), (ii) subject
to Section 2.5, whether the Loans are (iii) if the Loans are to be entirely or
partly Fixed Rate Loans, the respective amounts of each such Type of Loan and
the respective lengths of the Interest Periods therefor and (iv) if the Loans
are to be partly or entirely Loans in an Optional Currency, the respective
amounts of each Optional Currency. Each Loan in an Optional Currency must have
a Dollar Equivalent at least equal to $1,000,000 or the remaining balance of the
Available Commitment, if less. On receipt of such telephonic notice, the Agent
shall promptly notify each Lender thereof no later than 10:30 a.m., Los Angeles
time, on the date of receipt of such telephonic notice. On the proposed
Borrowing Date, not later
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than 1:00 p.m., Los Angeles time, each Lender shall make available to the
Agent at its office specified in Section 15.1 such Lender's Commitment
Percentage of the aggregate borrowing amount (as determined in accordance
with Section 2.4) in immediately available funds and in Dollars or the
Optional Currency requested. Not later than 1:30 p.m., Los Angeles time, on
the date of such Loans and upon fulfillment of the applicable conditions set
forth in Section 4, the Agent shall make such Loans available to the Borrower
in immediately available funds. Each notice pursuant to this Section 2.14
shall be irrevocable and binding on the Borrower. The Agent may, in the
absence of notification from any Lender that such Lender has not made its
Commitment Percentage available to the Agent, on such date, credit the
account of the Borrower on the books of such office of the Agent with the
aggregate amount of Loans.
2.15 COMMITMENT OBLIGATIONS. Neither the Agent nor any Lender shall be
responsible for the obligation or Available Commitment of any other Lender
hereunder, nor will the failure of any Lender to comply with the terms of this
Agreement relieve any other Lender or the Borrower of their obligations under
this Agreement and the Notes. Nothing herein shall be deemed to relieve any
Lender from its obligation to fulfill its Commitments hereunder or to prejudice
any rights which the Borrower may have against any Lender as a result of any
default by such Lender hereunder.
2.16 INTEREST. A Reference Rate Loan shall bear interest on the
outstanding principal amount thereof, for each day from and including the date
such Loan is made or is converted from a Fixed Rate Loan into a Reference Rate
Loan pursuant to Section 2.13 to (but not including) the date it becomes due or
is converted into a Fixed Rate Loan pursuant to Section 2.13 hereof, at a rate
per annum equal to the Reference Rate for such day. Changes in the rate of
interest on any Loan maintained as a Reference Rate Loan will take effect
simultaneously with each change in the Reference Rate. Each Fixed Rate Loan
shall bear interest from and including the first day of the Interest Period
applicable thereto to (but not including) the last day of such Interest Period
at the Fixed Rate determined as applicable to such Fixed Rate Loan.
2.17 RATES APPLICABLE AFTER DEFAULT. Notwithstanding anything to the
contrary contained herein, during the continuance of an Event of Default no Loan
may be made as, converted into or continued as a Fixed Rate Loan. During the
continuance of an Event of Default each Loan shall bear interest at a rate per
annum equal to the Reference Rate plus 2% per annum. All such interest shall be
payable on demand of the Agent.
2.18 METHOD OF PAYMENT. All payments of the Obligations hereunder shall be
made, without setoff, deduction, or counterclaim, in immediately available funds
in Dollars or the
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Optional Currency in which the Loan was made to the Agent at the address
specified pursuant to Article 15, or at any other Applicable Lending Office
of the Agent specified in writing by the Agent to the Borrower, by 2:00 p.m.,
Los Angeles time, on the date when due and shall be applied ratably by the
Agent among the Lenders. Each payment delivered to the Agent for the account
of any Lender shall be delivered promptly by the Agent to such Lender in the
same type of funds that the Agent received at its address specified pursuant
to Article 15 or at any Applicable Lending Office specified in a notice
received by the Agent from such Lender. The Agent is hereby authorized (but
not obligated) to charge the accounts of the Borrower maintained with Sanwa
for each payment of principal, interest and fees as it becomes due hereunder.
2.19 TELEPHONIC NOTICES. The Borrower hereby authorizes the Lenders and
the Agent to borrow Loans and to convert or continue Loans and effect selections
of Types of Loans based on telephonic notices made by any Person or Persons the
Agent or any Lender in good faith believes to be acting on behalf of the
Borrower. The Borrower agrees to deliver promptly to the Agent a written
confirmation, if such confirmation is requested by the Agent or any Lender, of
each telephonic notice signed by an Authorized Officer. If the written
confirmation differs in any material respect from the action taken by the Agent
and the Lenders, the records of the Agent and the Lenders shall govern absent
manifest error.
2.20 INTEREST PAYMENT DATES; INTEREST AND FEE BASIS. Interest accrued on
each Reference Rate Loan shall be payable in arrears on the first Business Day
of each calendar month, commencing with the first such date to occur after the
Closing Date, on any date on which Reference Rate Loan is prepaid, whether due
to acceleration or otherwise, and at maturity. Interest accrued on that portion
of the outstanding principal amount of any Reference Rate Loan converted into a
Fixed Rate Loan on a day other than an interest payment date shall be payable on
the date of conversion. Interest accrued on each Fixed Rate Loan shall be
payable on the last day of its applicable Interest Period, on any date on which
the Fixed Rate Loan is prepaid, whether by acceleration or otherwise, and at
maturity.
Interest on Fixed Rate Loans and fees shall be calculated for actual days
elapsed on the basis of a 360-day year and interest on Reference Rate Loans
shall be calculated for actual days elapsed on the basis of 365-day year.
Interest shall be payable for the day a Loan is made but not for the day of any
payment on the amount paid if payment is received prior to 2:00 p.m., Los
Angeles time, at the place of payment. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of payment of
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interest; PROVIDED, HOWEVER, that, if such extension would cause any payment
of interest on or principal of any Fixed Rate Loan to be made in the next
following calendar month, then such payment shall instead be made on the next
preceding Business Day, and such shortened time shall in such case be used in
the computation of payment of interest.
2.21 NOTIFICATION OF LOAN, INTEREST RATES, PREPAYMENTS AND COMMITMENT
REDUCTIONS. Promptly after receipt thereof, the Agent will notify each Lender
of the contents of a borrowing notice, Conversion/Continuation Notice and
repayment notice received by it hereunder. The Agent will notify each Lender of
the interest rate applicable to each Loan promptly upon determination of such
interest rate and will give each Lender prompt notice of each change in the
Reference Rate.
Each determination of an interest rate by the Agent pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrower and
the Lenders in the absence of manifest error.
2.22 APPLICABLE LENDING OFFICES. Subject to Section 3.3, each Lender
may book its Loans at any Applicable Lending Office selected by such Lender
and may change its Applicable Lending Office from time to time. All terms of
this Agreement shall apply to any such Applicable Lending Office and the
Notes shall be deemed held by each Lender for the benefit of such Applicable
Lending Office. Each Lender may, by written or telex notice to the Agent and
the Borrower, designate an Applicable Lending Office through which the Loans
will be made by it and for whose account Loan payments are to be made.
2.23 NON-RECEIPT OF FUNDS BY THE AGENT. Unless the Borrower or a Lender,
as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (i) in the case of a Lender, the
proceeds of a Loan or (ii) in the case of the Borrower, a payment of principal,
interest or fees to the Agent for the account of the Lenders, that it does not
intend to make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption.
If such Lender or the Borrower, as the case may be, has not in fact made such
payment to the Agent, the recipient of such payment shall, on demand by the
Agent, repay to the Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date such
amount was so made available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to (a) in the case of payment by a Lender, the
overnight federal funds effective rate (as published by the Board of Governors
of the Federal Reserve System as in effect from time to time) for such day or
(b) in the case of payment by the Borrower, the interest rate applicable to the
relevant Loan.
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2.24 WITHHOLDING TAX EXEMPTION. Subject to Section 3.3, at least five
Business Days prior to the first date on which interest or fees are payable
hereunder for the account of any Lender, each Lender that is not incorporated
under the laws of the United States of America, or a state thereof, agrees
that it will deliver to the Borrower and the Agent two duly completed copies
of United States Internal Revenue Service Form 1001 or 4224, certifying in
either case that such Lender is entitled to receive payments under this
Agreement and the Notes without deduction or withholding of any United States
federal income taxes. Each Lender which so delivers a Form 1001 or 4224
further undertakes to deliver to the Borrower and the Agent two additional
copies of such form (or a successor form) on or before the date that such
form expires (currently, three successive calendar years for Form 1001 and
one calendar year for Form 4224) or becomes obsolete or after the occurrence
of any event requiring a change in the most recent forms so delivered by it,
and such amendments thereto or extensions or renewals thereof as may be
reasonably requested by the Borrower or the Agent, in each case certifying
that such Lender is entitled to receive payments under this Agreement and the
Notes without deduction or withholding of any United States federal income
taxes, unless an event (including without limitation any change in treaty,
law or regulation) has occurred prior to the date on which any such delivery
would otherwise be required which renders all such forms inapplicable or
which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender advises the Borrower and the Agent
that it is not capable of receiving payments without any deduction or
withholding of United States federal income tax.
2.25 OPTIONAL PREPAYMENT. The Borrower may at any time and from time
to time, prepay the Loans, in whole or in part, without premium or penalty
(except amounts required by Section 3.1), upon at least three Business Days'
irrevocable written notice, in the case of Fixed Rate Loans, and upon at
least one Business Day's irrevocable written notice, in the case of Reference
Rate Loans, from the Borrower to the Agent, specifying the date and amount of
prepayment and whether the prepayment is of Fixed Rate Loans, Reference Rate
Loans or a combination thereof, the amount allocable to each. Any prepayment
of a Fixed Rate Loan on a day other than the last day of an Interest Period
applicable thereto shall also be subject to the payment of amounts due under
Section 3.1 hereof. Upon receipt of any such notice from the Borrower, the
Agent shall promptly notify each Lender thereof. If any such notice is
given, the amount specified in such notice shall be due and payable by the
Borrower on the date specified therein, together with accrued interest to
such date on the amount prepaid. Partial prepayments of Loans shall be in an
aggregate principal amount of $1,000,000 (or the Dollar Equivalent thereof if
denominated in an Optional Currency) or in increments of $100,000 above such
amount. Optional prepayments shall be applied as directed by
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the Borrower and, in the absence of such direction, as the Agent shall
determine.
2.26 OPTIONAL CURRENCY DOLLAR EQUIVALENT. For all purposes of this
Agreement, the amount in one currency which shall be equivalent on any
particular date to a specified amount in another currency shall be that
amount (as conclusively ascertained by the Agent absent manifest error) in
the first currency which is or could be purchased by the Agent (in accordance
with its normal banking practices) with such specified amount in the second
currency in the foreign currency deposit markets for delivery on such date at
the spot rate of exchange prevailing at or about 11:00 a.m., Los Angeles
time, on such date.
In the event that any portion of the funds available under the terms of
this Agreement is denominated in one or more Optional Currencies, the Dollar
Equivalent of such portion of the funds shall be calculated pursuant to the
above paragraph by the Agent at the time the Borrower request any Loan or
Letter of Credit and otherwise no less frequently that once per week. The
amount so determined shall then be added to the amount already outstanding in
Dollars for the purpose of determining the remaining Aggregate Available
Commitment and any required repayments hereunder.
2.27 MANDATORY PREPAYMENTS.
(i) If at any time the aggregate principal amount of all Loans
outstanding (including Loans in any Optional Currency calculated at the
Dollar Equivalent thereof), the aggregate Letter of Credit Amount of all
Letters of Credit outstanding and the aggregate amount of unreimbursed
drawings under all Letters of Credit shall exceed the lesser of (a) the
Aggregate Commitment and (b) the Borrowing Base, whether as a result of
fluctuations in currency exchange rates or otherwise, the Borrower shall pay
immediately upon demand made by the Agent all amounts (calculated at the
Dollar Equivalent, if applicable) required in order to reduce such amounts
outstanding to the lesser of (a) the Aggregate Commitment and (b) the
Borrowing Base, and if no Loans are then outstanding, shall deposit with the
Agent cash collateral in an amount equal to the amount by which the aggregate
Letter of Credit Amounts of all Letters of Credit outstanding exceeds the
lesser of (a) the Aggregate Commitment and (b) the Borrowing Base. If any
such prepayment would result in the Borrower being obligated to pay
breakfunding costs under Section 3.1(i), the Borrower may elect to deposit
such prepayment amounts in a cash collateral account with the Agent (for the
benefit of the Lenders), which amounts the Agent shall apply to reduce
outstanding Loans at the end of relevant Interest Periods.
(ii) If at any time the aggregate principal amount of the outstanding
Loans (calculating all amounts denominated in
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Optional Currencies at their Dollar Equivalent) extended in Optional
Currencies shall exceed $10,000,000, whether as a result of fluctuations in
currency exchange rates or otherwise, the Borrower shall pay immediately upon
demand by the Agent all amounts required in order to reduce such amount
outstanding to $10,000,000 (or the Dollar Equivalent of Loans outstanding in
Optional Currencies). If any such prepayment would result in the Borrower
being obligated to pay breakfunding costs under Section 3.1(i), the Borrower
may elect to deposit such prepayment amounts in a cash collateral account
with the Agent (for the benefit of the Lenders), which amounts the Agent
shall apply to reduce outstanding Loans at the end of relevant Interest
Periods.
(iii) If at any time the aggregate Letter of Credit Amount of all
Letters of Credit outstanding and the aggregate amount of unreimbursed drawings
under all Letters of Credit shall exceed $8,000,000 for whatever reason, the
Borrower shall immediately deposit with the Agent cash collateral in an amount
equal to the amount by which the aggregate Letter of Credit Amount of all
Letters of Credit outstanding and any aggregate amount of unreimbursed drawings
under all Letters of Credit shall exceed $8,000,000. If any such prepayment
would result in the Borrower being obligated to pay breakfunding costs under
Section 3.1(i), the Borrower may elect to deposit such prepayment amounts in a
cash collateral account with the Agent (for the benefit of the Lenders), which
amounts the Agent shall apply to reduce outstanding Loans at the end of
relevant Interest Periods.
(iv) Upon a sale, or a combination of sales, lease transfer or other
disposition of the assets of the Borrower (other than sales in the ordinary
course of business which ordinary course shall include, among other things, the
purchase and sale of access switches and circuits) which results in receipts by
the Borrower in an aggregate amount equal to at least $2,000,000 of either (1)
cash proceeds and/or (2) repayment of any Debt owing to the Borrower resulting
from any such sale or combination of sale of assets, the Borrower shall prepay
the Loans in amount equal to 100% of such cash proceeds or Debt repaid (net of
reasonable and customary costs of sale and related income tax expense) in excess
of $2,000,000. All such prepayments shall be applied in accordance with Section
2.28.
2.28 APPLICATION OF REPAYMENTS. All repayments of principal made pursuant
to Section 2.27 (except as expressly set forth in Sections 2.27(i), (ii) and
(iii)) shall be applied, in the absence of instruction by the Borrower, first to
the principal of Reference Rate Loans and then to the principal of Fixed Rate
Loans. Each partial repayment shall be allocated among the Lenders in
proportion, as nearly as practicable, to their respective Commitment
Percentages, with adjustments to the
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extent practicable, to equalize any prior repayments not exactly in
proportion.
Notwithstanding the rights given to the Borrower pursuant to California
Civil Code Sections 1479 and 2822 or equivalent provisions in the laws in the
State of California, to designate how payments will be applied, the Borrower
hereby waives such rights and the Agent shall have the right in its sole
discretion, other than as specifically set forth herein, to determine the order
and method of application of payments to outstanding Obligations and to revise
such application prospectively or retroactively at its discretion.
2.29 INTEREST LIMITATION. Notwithstanding any other term of this Agreement
or any Note or any other Loan Document or any other document referred to herein
or therein, the maximum amount of interest which may be charged to or collected
from any person liable hereunder or under any Note by the Lenders shall be
absolutely limited to, and shall in no event exceed, the maximum amount of
interest which could lawfully be charged or collected under applicable law,
except that the maximum of all amounts constituting interest under applicable
law, howsoever computed shall never exceed as to any Person liable therefor such
lawful maximum, in any term of this Agreement, any Note, any Loan Document or
any other document referred to herein or therein which could be construed as
providing for interest in excess of such lawful maximum shall be and hereby is
made expressly subject to and modified by the provisions of this Section.
ARTICLE 3
CHANGE IN CIRCUMSTANCES
3.1 YIELD PROTECTION.
(i) If any repayment of principal of, or conversion of, any Fixed
Rate Loan is made other than on the last day of an Interest Period therefor, as
a result of a prepayment, payment or conversion, or an acceleration of the
maturity of the Loan pursuant to Section 10, or for any other reason, or if the
Borrower shall fail to borrow a Fixed Rate Loan after requesting one, then the
Borrower shall, upon demand by the Agent pay to the Lenders any amounts required
to compensate them for any additional losses, costs or expenses that they may
reasonably incur as a result of such repayment, conversion or failure to borrow,
including any loss (including loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by a Lender to fund or maintain such Fixed Rate Loan.
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(ii) Subject to Section 3.3, if, due to either (a) the introduction
of or any change in or in the interpretation of any Governmental Rule or (b)
the compliance by the Lenders with any Governmental Rule (whether or not
having the force of law), there is any increase in the cost to the Lenders of
agreeing to make, making, funding or maintaining any Fixed Rate Loan, then
the Borrower shall from time to time, upon written demand by the Agent, pay
to the Agent additional amounts sufficient to compensate the Lenders for such
increased cost. A certificate as to the amount of such increased cost,
submitted to the Borrower by the Agent, shall be conclusive and binding for
all purposes, absent manifest error.
(iii) Subject to Section 3.3, notwithstanding any other provision of
this Agreement, if the introduction of or any change in or in the interpretation
of any Governmental Rule makes it unlawful, or any Governmental Person asserts
that it is unlawful, for any Lender to perform its obligations hereunder to make
Fixed Rate Loans or to continue to fund or maintain Fixed Rate Loans hereunder,
then, on notice thereof and demand therefor by the Agent to the Borrower, (a)
the obligation of such Lender to make Fixed Rate Loans and to convert Reference
Rate Loans into Fixed Rate Loans shall terminate and (b) the Borrower shall
forthwith prepay in full that portion of the Fixed Rate Loans of such Lender
then outstanding, together with interest accrued thereon, unless the Borrower,
within five Business Days of such notice and demand, converts such portion of
Fixed Rate Loans into Reference Rate Loans in accordance with Section 2.13.
(iv) Subject to Section 3.3, if, with respect to any Fixed Rate Loan,
the Agent notifies the Borrower that the Fixed Rate for such Loan will not
adequately reflect the cost to one or more Lenders (as determined by such
Lender(s) in good faith on the basis of market conditions then in effect) of
making, funding or maintaining such Loan, then (a) such Loan will automatically,
on the last day of the then existing Interest Period therefor, convert into a
Reference Rate Loan and (b) the obligation of the affected Lender to make, or to
convert Reference Rate Loans into Fixed Rate Loans shall be suspended until the
Agent notifies the Borrower that the circumstances causing such suspension no
longer exist.
3.2 TAXES. Subject to Section 3.3, all payments by or on behalf of the
Borrower hereunder shall be made without set-off or counterclaim and in such
amounts as may be necessary in order that all such payments (after deduction or
withholding for or on account of any present or future taxes, levies, imposts,
duties or other charges of whatsoever nature imposed by any Governmental Person,
other than any tax on or measured by the overall net income of the Agent or a
Lender pursuant to the income tax laws of the United States, the jurisdiction
where the Agent's or such Lender's principal office is located or any political
subdivision thereof (collectively, the "Taxes")) shall
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not be less than the amounts otherwise specified to be paid hereunder. A
certificate as to any additional amounts payable to the Agent or a Lender
hereunder submitted to the Borrower by the Agent shall show in reasonable
detail the amount payable to the Agent or a Lender and the calculations used
to determine in good faith such amount and shall be conclusive absent
manifest error. Any amounts payable by the Borrower hereunder with respect
to past payments shall be due within ten days following receipt by the
Borrower of such certificate from the Agent; and such amounts payable with
respect to future payments shall be due concurrently with such future
payments. With respect to each deduction or withholding for or on account of
any Taxes, the Borrower shall promptly furnish to the Agent such
certificates, receipts and other documents as may be required (in the
reasonable judgment of the Agent) to establish any tax credit to which a
Lender may be entitled. The agreements and obligations of the Borrower under
this paragraph shall survive the payment in full of the Loans.
3.3 REPLACEMENT OF LENDERS. If the Borrower is obligated to pay to any
Lender (other than the Agent) any amount under Sections 3.1 or 3.2 or if any
Lender requests that its Fixed Rate Loans be converted into Reference Rate Loans
pursuant to Section 3.1, the Borrower may, so long as no Default or Event of
Default then exists, replace such Lender with another Lender which meets all of
the qualifications of being an Eligible Assignee and which complies with the
provisions of Section 14.3. The Borrower may, in the absence of replacing any
such Lender, request that such Lender designate another of its existing
facilities as the Applicable Lending Office for making Fixed Rate Loans or take
other reasonable action, if such designation or other action would avoid the
need for, or reduce the amount of, compensation to be paid by the Borrower
hereunder to such Lender. No Lender will be required to take any action which
in its good faith judgment is disadvantageous to such Lender.
ARTICLE 4
CONDITIONS PRECEDENT
4.1 INITIAL LOAN OR LETTER OF CREDIT. The Lenders shall not be required
to make their initial Loans or participate in the initial Letter of Credit
unless the Borrower has furnished to the Agent or unless the following shall be
in effect:
(i) this Agreement, the Notes and the Security Agreement, duly executed by
the Borrower, together with appropriate UCC-1 Financing Statements and original
stock certificates accompanied by stock powers executed in blank;
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(ii) Certificate of Incorporation certified by the Secretary of
State of Delaware and Bylaws of the Borrower certified by the Secretary of
the Borrower;
(iii) Resolutions of the Board of Directors of the Borrower
approving the execution, delivery and performance by the Borrower, of the
Loan Documents to which the Borrower is a party, certified by the Secretary
of the Borrower, to be true and correct and in full force and effect;
(iv) an Incumbency Certificate of the Borrower;
(v) a favorable legal opinion of counsel to the Borrower,
substantially in the form attached hereto as Exhibit F;
(vi) UCC search reports acceptable to the Agent;
(vii) a Borrowing Base Certificate as of the end of the prior
calendar month;
(viii) all fees and expenses to be paid on the Closing Date;
(ix) no statute, rule, regulation, order, decree or preliminary or
permanent injunction of any court or administrative agency or, to the best
knowledge of the Borrower, any such action threatened by any Person, shall be
in effect that prohibits the Lenders from consummating the transactions
contemplated by this Agreement and the other Loan Documents;
(x) copies of the Borrower's Consolidated and Consolidating
financial statements for the period ending June 30, 1997;
(xi) there shall not have been any material adverse change to the
syndication markets for credit facilities similar to this Agreement and there
shall not have occurred and be continuing a material disruption of or
material adverse change in financial, banking or capital markets which would
have an adverse effect on such syndication market, as determined by the Agent
in its sole discretion;
(xii) favorable results (as determined by the Agent) of a prefunding
field exam of all of the Borrower's property; and
(xiii) such other documents, instruments and opinions as the Agent,
any Lender or its respective counsel may have reasonably requested.
4.2 ALL LOANS. The Lenders shall not be required to make any Loan
(including the initial Loan) hereunder unless the Borrower shall have
furnished to the Agent with sufficient copies for the Lenders:
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(i) a duly completed certificate (which may be included in the
notice of borrowing) executed by an Authorized Officer of the Borrower
certifying that:
(a) there exists no Default or Event of Default;
(b) the representations and warranties contained in Article 5
hereof are true and correct in all material respects as of the Borrowing
Date except to the extent any such representation or warranty is stated to
relate solely to an earlier date, in which case such representation or
warranty shall be true and correct in all material respects on and as of
such earlier date; and
(c) no event has occurred, or condition exists, which could
reasonably be expected to have a Material Adverse Effect.
(ii) such other documents as the Agent, any Lender or its respective
counsel may have reasonably requested.
4.3 ALL LETTERS OF CREDIT. The Agent shall not be required to
issue any Letter of Credit and the Lenders shall not be required to
participate in any Letter of Credit (including the initial Letter of Credit)
hereunder unless the Borrower shall have has furnished to the Agent with
sufficient copies for the Lenders:
(i) a completed Letter of Credit Request with regard to each such
Letter of Credit;
(ii) all fees to be paid to the Agent in connection with each
Letter of Credit shall have been paid; and
(iii) such other documents as the Agent, any Lender or its
respective counsel may have reasonably requested.
Any Letter of Credit Request delivered to the Agent shall be deemed a
representation and warranty to the Agent and the Lenders that:
(i) there exists no Default or Event of Default;
(ii) the representations and warranties contained in Article 5
hereof are true and correct in all material respects as of the issuance date
of each Letter of Credit except to the extent any such representation or
warranty is stated to relate solely to an earlier date, in which case such
representation or warranty shall be true and correct on and as of such
earlier date; and
(iii) no event has occurred, or condition exists, which could
reasonably be expected to have a Material Adverse Effect.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1 AUTHORIZATION. The execution, delivery and performance by the
Borrower of the Loan Documents to which the Borrower is a party are within the
Borrower's corporate powers, have been duly authorized by all necessary
corporate action and do not contravene any applicable law, rule, regulation or
order or any contractual restriction binding on or affecting the Borrower or its
Subsidiaries.
5.2 ENFORCEABILITY. Each Loan Document to which the Borrower is a party
is the legal, valid and binding obligation of the Borrower, enforceable against
the Borrower in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally.
5.3 USE OF PROCEEDS. The Borrower will use the proceeds of the Loans
solely as set forth in Section 7.2. No action has been taken or is currently
planned by the Borrower, or any agent acting on its behalf, which would cause
this Agreement or the Notes to violate Regulation U or any other regulation of
the Board of Governors of the Federal Reserve System or to violate the
Securities and Exchange Act of 1934, in each case as in effect now or as the
same may hereafter be in effect. The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock as one
of its important activities and none of the proceeds of the Loans or Letters of
Credit will be used directly or indirectly for such purpose.
5.4 LITIGATION. Except as disclosed in writing to the Agent, there is no
litigation, tax claim, proceeding, arbitration or dispute pending, or, to the
best knowledge of the Borrower, threatened against or affecting the Borrower or
its Property, an adverse determination in which could have a Material Adverse
Effect.
5.5 FINANCIAL STATEMENTS. The Consolidated financial statements of the
Borrower dated December 31, 1996 and June 30, 1997, copies of which have been
delivered to the Lenders, fairly and accurately reflect the financial condition
of the Borrower and its Subsidiaries as of such date (except to the extent that
the interim financial statements are subject to year-end adjustments and to the
inclusion of additional footnotes), and since such date there has been no
Material Adverse Effect.
5.6 TAXES. The Borrower and each Subsidiary have filed all tax returns
and reports required to be filed and have paid
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all applicable federal, state and local franchise and income taxes which are
set forth on such return.
5.7 SUBSIDIARIES. Schedule 2 hereto contains an accurate list of all of
the presently existing Subsidiaries of the Borrower, setting forth their
respective jurisdictions of incorporation or organization and the percentage of
their respective capital stock or ownership interests owned by the Borrower or
other Subsidiaries. All of the issued and outstanding shares of capital stock
of such Subsidiaries have been duly authorized and issued and are fully paid and
non-assessable.
5.8 ERISA. There are no Unfunded Liabilities of the Borrower. Each
Single Employer Plan complies in all material respects with all applicable
requirements of law and regulations, except to the extent that the failure to
comply therewith does not have a Material Adverse Effect. No Reportable Event
has occurred with respect to any Single Employer Plan, except to the extent that
such Reportable Event has no Material Adverse Effect. Neither the Borrower nor
any Subsidiary (a) is a party to any Multiemployer Plan or (b) has withdrawn
from any Multiemployer Plan, except to the extent such actions do not have a
Material Adverse Effect.
5.9 ACCURACY OF INFORMATION. No written information, exhibit or report
furnished by the Borrower or any of its Subsidiaries to the Agent or to any
Lender in connection with the negotiation of, or compliance with, the Loan
Documents (including projected financial information) contain any material
misstatement of fact or omit to state a material fact or any fact necessary to
make the statements contained therein not misleading in any material respect.
All projected financial information which has been furnished by or on behalf of
the Borrower or any Subsidiary to the Agent or any Lender was, at the time so
furnished, believed by the Borrower to have been prepared in a reasonable manner
and based on reasonable assumptions with respect to the Borrower's business,
provided that no representation is made by the Borrower that the future results
of the Borrower will equal those set forth in such projected financial
information.
5.10 ORGANIZATION AND EXISTENCE. The Borrower is duly organized, validly
existing and in good standing under the laws of the State of Delaware, and it
has the corporate power and authority, and the legal right, to own and operate
its Properties and to conduct the business in which it is currently engaged and
in which it proposes to be engaged after the Closing Date and is duly qualified
as a foreign entity and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of Property or the conduct of its
business requires such qualification except to the extent that the failure to
comply thereunder could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect and is
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in compliance with all Requirements of Law except to the extent that the
failure to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
5.11 CONSENTS. No consent or authorization of, or filing with or other act
by or in respect of, any Governmental Authority, or any other Person is required
in connection with the Loans hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement, the Notes or the
other Loan Documents. The execution, delivery and performance of this
Agreement, the Notes and the other Loan Documents, the Loans, the Letters of
Credit and the use of the proceeds thereof will not violate any Requirement of
Law or contractual obligations of the Borrower or any of its Subsidiaries which
could be reasonably expected to have a Material Adverse Effect and will not
result in, or require, the creation or imposition of any Lien on any of its or
its Properties or revenues pursuant to any such Requirement of Law or
contractual obligation, except pursuant to the Loan Documents or otherwise as
permitted hereunder, which Lien could reasonably be expected to have a Material
Adverse Effect.
5.12 INTELLECTUAL PROPERTY. The Borrower and each of its Subsidiaries
owns, or is licensed to use, all trademarks, tradenames, patents, copyrights,
material permits, licenses or other intangibles necessary for the conduct of its
business as currently conducted without conflict with the rights of others,
except to the extent that the failure to own or license such property could not
reasonably be expected to have a Material Adverse Effect.
5.13 DEFAULT. There exists no Default or Event of Default.
5.14 NATURE OF BUSINESS. Neither the Borrower nor any of its subsidiaries
is engaged in any material business other than as set forth in the Borrower's
registration statement on Form S-1, Registration No. 333-21325, as declared
effective by the SEC on June 12, 1997.
5.15 RANKING OF LOANS. This Agreement and the other Loan Documents to
which the Borrower is party, when executed, and the Loans, when borrowed are and
will be the direct and general obligations of the Borrower. The Borrower's
Obligations hereunder and thereunder will rank at least PARI PASSU in priority
of payment with all other senior Debt, except to the extent otherwise permitted
hereunder.
5.16 INVESTMENT COMPANY ACTS; OTHER REGULATIONS. Neither the Borrower nor
any of its Subsidiaries is an "investment company," or a company "controlled" by
an "investment company," within the meaning of the Investment Company Act of
1940, as amended.
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5.17 ENVIRONMENTAL MATTERS. Except as disclosed to the Agent, the Borrower
and its Subsidiaries are in compliance in all material respects with all
applicable environmental laws, and there is no contamination at, under or about
any of their respective Properties, or violation of any environmental law with
respect to any of their respective Properties or the business conducted at any
of their respective Properties which involves a matter or matters which has
caused or reasonably likely to cause a Material Adverse Effect.
5.18 TITLE. Except for assets which may have been disposed of in the
ordinary course of business, the Borrower has good and marketable title to all
of the Property reflected in its financial statements delivered to the Lenders
and to all Property acquired by the Borrower since the date of said financial
statements, free and clear of all Liens, encumbrances, security interests and
adverse claims except (i) those specifically referred to in said financial
statements, (ii) those permitted by Section 8.8 hereof and (iii) those that
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
5.19 FICTITIOUS NAME FILING NOTICES. The Borrower and each Subsidiary has
provided to the Agent a complete and correct copy of each Fictitious Name Filing
Notices it has made.
ARTICLE 6
FINANCIAL COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1 CAPITAL EXPENDITURES. The Borrower will not, and will not permit any
Subsidiary to, make or commit to make (by way of the acquisition of securities
of a person or entity or otherwise) any Capital Expenditure, except for Capital
Expenditures not exceeding $30,000,000 in aggregate principal amount in 1997 and
not exceeding $40,000,000 in aggregate principal amount for any fiscal year
thereafter of the Borrower.
6.2 MINIMUM TOTAL LEVERAGE RATIO. The Borrower and its Subsidiaries on a
Consolidated Basis shall not permit, at any time, the Total Leverage Ratio to be
greater than 1.75:1.00.
6.3 MINIMUM TANGIBLE NET WORTH. The Borrower and its Subsidiaries on a
Consolidated Basis shall at all times maintain Tangible Net Worth of not less
than $35,000,000 PLUS 50% of cumulative Consolidated Net Income for the period
commencing on June 30, 1997 through the Facility Termination Date. (In the
event that the Borrower and their Subsidiaries have a Consolidated net loss for
any fiscal quarter, Net Income for
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purposes of this Section shall be deemed zero for such fiscal quarter).
6.4 MINIMUM CURRENT RATIO. The Borrower and its Subsidiaries on a
Consolidated Basis shall maintain at all times a ratio of Current Assets to
Current Liabilities of not less than 1.2:1.0.
6.5 MINIMUM CASH FLOW COVERAGE. The Borrower and its Subsidiaries on a
Consolidated Basis shall not permit at any time the Cash Flow Coverage Ratio to
be less than 1.5:1.00.
6.6 PROFITABILITY. The Borrower and its Subsidiaries on a Consolidated
Basis shall not permit more than one quarterly loss in any fiscal year nor shall
it permit any annual loss for any fiscal year.
ARTICLE 7
AFFIRMATIVE COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
7.1 FINANCIAL REPORTING. The Borrower will maintain, for itself and each
Subsidiary, a system of accounting established and administered in accordance
with Agreement Accounting Principles, and furnish to each of the Lenders:
(i) As soon as available and in any event within 45 days after the
end of each quarterly fiscal period of each fiscal year of the
Borrower (except the last fiscal quarter), Consolidated
statements of income, retained earnings and cash flow and
Consolidating Statements of income and retained earnings of the
Borrower and its Consolidated Subsidiaries for such period and
for the period from the beginning of the respective fiscal year
to the end of such period, and the related Consolidated and
Consolidating balance sheets of the Borrower and its Consolidated
Subsidiaries as at the end of such period, setting forth in each
case in comparative form the corresponding Consolidated and
Consolidating figures for the corresponding period in the
preceding fiscal year, accompanied by a certificate of an
Authorized Officer of the Borrower, which certificate shall state
that those Consolidated and Consolidating financial statements
fairly present, respectively, the Consolidated and Consolidating
financial condition and results of operations of the Borrower and
its Consolidated Subsidiaries, in each case in accordance with
Agreement Accounting Principles,
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consistently applied, as at the end of, and for, such period
(subject to normal audit adjustments and to the absence of
footnotes).
(ii) As soon as available and in any event within 90 days after the
end of each fiscal year of the Borrower, Consolidated and
Consolidating statements of income, retained earnings and cash
flow of the Borrower and its Consolidated Subsidiaries for such
fiscal year and the related Consolidated and Consolidating
balance sheets of the Borrower and its Consolidated Subsidiaries
as at the end of such fiscal year, setting forth in each case in
comparative form the corresponding Consolidated and Consolidating
figures for the preceding fiscal year, and accompanied, in the
case of those Consolidated and Consolidating statements and
balance sheet of the Borrower, by a unqualified opinion of
independent certified public accountants of recognized national
standing, which opinion shall state that those Consolidated and
Consolidating financial statements fairly present, respectively,
the Consolidated and Consolidating financial condition and
results of operations of the Borrower and its Consolidated
Subsidiaries as at the end of, and for, such fiscal year in
accordance with Agreement Accounting Principles, consistently
applied.
(iii) Together with the financial statements required in Sections
7.1(i) and (ii), a compliance certificate in substantially the
form of Exhibit B hereto (a "Compliance Certificate") signed by
an Authorized Officer showing the calculations necessary to
determine compliance with this Agreement and stating that no
Default or Event of Default exists, or if any Default or Event of
Default exists, stating the nature and status thereof.
(iv) As soon as possible and in any event within 25 days after the end
of each calendar month, a monthly accounts receivable and payable
aging, together with a Borrowing Base Certificate signed by an
Authorized Officer showing the calculations necessary to
determine compliance with this Agreement and stating that no
Default or Event of Default exists, or if any Default or Event of
Default exists, stating the nature and status thereof.
(v) As soon as possible and in any event within 10 days after either
Borrower knows that any Reportable Event has occurred with
respect to any Single Employer Plan, a statement, signed by an
Authorized
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Officer, describing said Reportable Event and the action which
the Borrower proposes to take with respect thereto.
(vi) As soon as possible and in any event within 10 days after receipt
by the Borrower, a copy of (a) any notice or claim to the effect
that the Borrower or any of its Subsidiaries is or may be liable
to any Person as a result of the release by the Borrower, any of
its Subsidiaries, or any other Person of any toxic or hazardous
waste or substance into the environment and (b) any notice
alleging any violation of any federal, state or local
environmental, health or safety law or regulation by the Borrower
or any of its Subsidiaries, which, in either case, could
reasonably be expected to have a Material Adverse Effect.
(vii) Promptly upon the furnishing thereof to the shareholders of the
Borrower, copies of all financial statements, reports and proxy
statements so furnished.
(viii) Promptly upon the filing thereof, copies of all registration
statements and all other filings and annual, quarterly, monthly
or other regular reports or statutory statements which the
Borrower or any of its Subsidiaries files with the SEC the
Federal Communications Commission or any other regulatory agency.
(ix) As soon as possible and in any event as soon as the Borrower
knows of any litigation or administrative or regulatory
proceeding affecting the Borrower where the amount claimed
against the Borrower or where the granting of relief requested
could be reasonably expected to have a Material Adverse Effect.
(x) As soon as possible and in case within 10 days, any change in
the location of any of the Borrower's places of business or the
establishment of any, or the discontinuance of any existing,
places of businesses.
(xi) Such other statements, lists of property and accounts, budgets,
forecasts, reports or other information (including non-financial
information) as the Agent may from time to time reasonably
request in form satisfactory to the Agent.
(xii) By March 31 of each year, a forecast of the operating results of
the Borrower for such fiscal year and the immediately succeeding
fiscal year, in
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form acceptable to the Agent and accompanied by a certificate of
an Authorized Officer of the Borrower stating that such forecast
has been prepared on the basis of assumptions believed to be
reasonable by such Authorized Officer.
7.2 USE OF PROCEEDS. The Borrower will use the proceeds of the Loans
(i) to finance the conversion of receivables into cash, (ii) to provide standby
letters of credit and foreign exchange capabilities in support of the Borrower's
normal operations and (iii) for working capital and general corporate purposes.
The Borrower will not, nor will they permit any Subsidiary to, use any of the
proceeds of the Loans or Letters of Credit to purchase or carry any "margin
stock" (as defined in Regulation U).
7.3 NOTICE OF DEFAULT. The Borrower will, and will cause each Subsidiary
to, give prompt (but in any case, within 5 Business Days) notice in writing to
the Lenders of the occurrence of any Default or Event of Default and of any
other development, financial or otherwise, which could reasonably be expected to
have a Material Adverse Effect.
7.4 CONDUCT OF BUSINESS. The Borrower will, and will cause each
Subsidiary to, maintain its corporate existence, to carry on and conduct its
business in the telecommunications business and related fields and to do all
things necessary to remain in good standing in its respective jurisdiction of
organization and maintain all requisite authority to conduct its business in
each jurisdiction in which its respective businesses are conducted, except where
the failure to maintain such corporate existence would not result in a Material
Adverse Effect on the Borrower. The Borrower shall not, and shall not permit
any of its Subsidiaries to, make any material change in the nature of its
business as presently conducted; provided that the foregoing shall not be
construed as a limitation on Acquisitions permitted hereunder.
7.5 RECORDS. The Borrower will, and will cause each Subsidiary to, keep
adequate records and books of account, in which full and correct entries shall
be made in accordance with Agreement Accounting Principles of all financial
transactions of the Borrower, its Subsidiaries, its assets and its business.
7.6 INSURANCE. The Borrower will, and will cause each Subsidiary to,
maintain insurance on all its Property in such amounts and covering such risks
as is consistent with sound business practice, and the Borrower will furnish to
the Agent upon request full information as to the insurance carried.
7.7 COMPLIANCE WITH LAWS. The Borrower will, and will cause each
Subsidiary to, comply in all material respects with all applicable laws, rules,
regulations and orders (including without limitation, all applicable
environmental laws and the
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rules and regulations thereunder), such compliance to include, without
limitation, paying before the same become delinquent, all taxes, assessments
and governmental charges imposed upon it or upon its Property, except such
taxes, assessments and governmental charges as are being contested in good
faith by appropriate proceedings and as to which appropriate reserves are
maintained, except where such failure to so comply would not result in a
Material Adverse Effect on the Borrower.
7.8 MAINTENANCE OF PROPERTIES. The Borrower will, and will cause each
Subsidiary to, do all things reasonably necessary to maintain, preserve, protect
and keep its respective Property in good repair, working order and condition,
normal wear and tear excepted, and make all necessary and proper repairs,
renewals and replacements as may be reasonably necessary to conduct its
business.
7.9 INSPECTION/AUDITS. At any reasonable time and from time to time upon
reasonable notice (but, in the absence of any Event of Default, no more than
twice annually), the Borrower will, and will cause each Subsidiary to, permit
the Agent, by its respective representatives and agents, to inspect any of the
Property, corporate books and financial records of the Borrower and each
Subsidiary, to examine and make copies of the books of accounts and other
financial records of the Borrower and each Subsidiary, and to discuss the
affairs, finances and accounts of the Borrower and each Subsidiary with, and to
be advised as to the same by, its respective officers at such reasonable times
and intervals as the Lenders may designate. The Borrower will also, and will
cause its Subsidiaries to, cooperate in an audit of the Property of the Borrower
and its Subsidiaries, all at the Borrower's expense.
ARTICLE 8
NEGATIVE COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
8.1 DEBT. The Borrower will not, nor will it permit any Subsidiary to,
create, incur or suffer to exist any Debt, except:
(i) Debt of the Borrower under the Loan Documents;
(ii) Debt in existence on the date hereof, as set forth on Schedule 3;
(iii) trade Debt incurred in the ordinary course of business;
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(iv) Debt incurred to refinance all or a portion of the Loans and/or
Letters of Credit as long as all proceeds are used to repay the Loans (or
apply as cash collateral for outstanding Letters of Credit), the Debt is not
senior or PARI PASSU in any way to the Loans or the Letters of Credit
remaining outstanding and such Debt does not mature prior to the maturity of
Loans and/or Letters of Credit remaining outstanding;
(v) Debt secured by Liens permitted pursuant to Section 8.8;
(vi) Contingent Liabilities incurred in the ordinary course of the
Borrower's business which does not exceed an aggregate principal amount of
$3,000,000 at any one time outstanding;
(vii) Debt and capital lease obligations for the purpose of acquiring
or financing the acquisition of fixed or capital assets permitted hereunder;
(viii) Debt under operating leases for real or personal property used
in the Borrower's business as presently conducted;
(ix) The endorsement of negotiable instruments for deposit or
collection in the ordinary course of the Borrower's business or presently
conducted; and
(x) Debt owed by a Subsidiary to the Borrower or by the Borrower to
a Subsidiary which does not exceed an aggregate principal amount of
$3,000,000 at any one time outstanding.
8.2 MERGER. The Borrower will not, nor will it permit any Subsidiary
to, enter into any merger, consolidation or amalgamation, or liquidate, wind
up or dissolve itself (or suffer any liquidation or dissolution), or convey,
sell, lease, assign, transfer or otherwise dispose of, all or substantially
all of its Property, business or assets; provided that the Borrower may merge
or consolidate with another Person if (i) the Borrower is the surviving
corporation, (ii) the Borrower will be in pro forma compliance with all
provisions of this Agreement subsequent to such merger or consolidation,
(iii) the Borrower shall have filed an SEC Report (if required to do so by
law) and (iv) the Borrower will not engage in any material line of business
substantially different from that engaged in the Closing Date; provided that
the foregoing shall not be construed as prohibiting the merger of a
Subsidiary into any other Subsidiary or into the Borrower.
8.3 SALE OF ASSETS. The Borrower will not, nor will it permit any
Subsidiary to, lease, sell or otherwise dispose of its respective Property, to
any other Person except for (i) sales of inventory in the ordinary course of
business for fair consideration and (ii) leases, sales or other dispositions of
its respective Property that, together with all other
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Property of the Borrower and its Subsidiaries previously leased, sold or
disposed of (other than inventory in the ordinary course of business) as
permitted by this Section during the term of this Agreement do not require
the Borrower to file an SEC Report; provided that the foregoing shall not be
construed as prohibiting a transfer of assets from a Subsidiary to the
Borrower or the merger of a Subsidiary into any other Subsidiary or into the
Borrower.
8.4 SALE OF ACCOUNTS. Except for retail Accounts generated by the
Borrower and its Subsidiaries in the ordinary course of business, which Accounts
are factored through a local exchange carrier or any authorized billing service,
the Borrower will not, nor will it permit any Subsidiary to, sell or otherwise
dispose of any notes receivable or accounts receivable, with or without
recourse, except that the Borrower or any of its Subsidiaries may assign
accounts receivable (previously expended by the Borrower as bad debts) for
collection, with or without recourse.
8.5 ACQUISITIONS. The Borrower will not, nor will it permit any
Subsidiary to, enter into any agreement, contract, binding commitment or other
arrangement providing for any acquisition, or take any action to solicit the
tender of securities or proxies in respect thereof in order to effect any
acquisition, unless:
(i) the Person to be (or whose assets are to be) acquired does not
oppose such Acquisition and the line or lines of business of the Person to be
acquired are substantially the same as one or more line or lines of business
conducted by the Borrower and its Subsidiaries as of the Closing Date,
(ii) no Default or Event of Default shall have occurred and be
continuing either immediately prior to or immediately after giving effect to
such acquisition on a pro forma basis and
(iii) during the period from and including the Closing Date until the
Facility Termination Date the aggregate consideration for each acquisition shall
not exceed $15,000,000 in principal amount.
8.6 AFFILIATES. The Borrower will not, and will not permit any Subsidiary
to, enter into any transaction (including, without limitation, the purchase or
sale of any Property or service) with, or make any payment or transfer to, any
Affiliate except in the ordinary course of business and pursuant to the
reasonable requirements of the Borrower's or such Subsidiary's business and upon
fair and reasonable terms no less favorable to the Borrower or such Subsidiary
than the Borrower or such Subsidiary would obtain in a comparable arms-length
transaction; provided that the foregoing shall not be construed as prohibiting a
transfer of assets from a Subsidiary to the Borrower or the merger of a
Subsidiary into the Borrower.
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8.7 ERISA. The Borrower will not, and will not permit any Subsidiary, to
have Unfunded Liabilities for any and all Plans maintained for or covering
employees of the Borrower or any Subsidiary to exceed $1,000,000 in the
aggregate at any time.
8.8 ENCUMBRANCES AND LIENS. The Borrower and its Subsidiaries on a
Consolidated Basis will not create, assume or suffer to exist any Lien (other
than for taxes not delinquent) on Property of any kind, whether real, personal
or mixed, now owned or hereafter acquired, or upon the income or profits
thereof, except for (i) minor encumbrances, easements covenants, conditions,
restrictions, encroachments, defects or irregularities in title on real property
which do not materially affect its market value, (ii) existing Liens on the
Borrower's personal property; (iii) future purchase money security interests
encumbering only the property purchased; (iv) statutory liens of bankers,
carriers, warehousemen, mechanics, materialmen, and other similar Liens imposed
by law, which are incurred in the ordinary course of business for sums not more
than 30 days delinquent or being contested in good faith; (v) deposits made in
the ordinary course of business to secure liability to insurance carriers; (vi)
attachment and judgment Liens securing claims less than $250,000 in the
aggregate; and (vii) monetary obligations of the Borrower under any leasing or
similar arrangement which, in accordance with Agreement Accounting Principles,
is classified as a Capitalized Lease.
8.9 LOANS, ADVANCES AND GUARANTIES. The Borrower will not, and will not
permit any Subsidiary to, except in the ordinary course of business as currently
conducted, make any loans or advances, become a guarantor or surety, pledge its
credit or Properties in any manner or extend credit; provided that the foregoing
shall not be construed as a limitation on guaranties or any Liens permitted
hereunder.
8.10 INVESTMENTS. The Borrower will not purchase the Debt of another
Person or entity except as set forth in the Borrower's Corporate Investment
Policy attached hereto as Schedule 4.
8.11 DIVIDENDS AND DISTRIBUTIONS. The Borrower will not, and will not
permit any of its Subsidiaries to, declare or pay any Distribution (other than
Distributions payable solely in common stock, provided that each Subsidiary that
is a wholly-owned Subsidiary of the Borrower may pay Distributions to its
shareholder so long as no Default or Event of Default exists). In addition, the
Borrower shall not, and shall not permit any of its Subsidiaries not to, redeem,
convert, retire or otherwise acquire shares of any class of its capital stock.
The Borrower shall not effect or permit any change in or amendment to any
document or instrument pertaining to the terms of the capital stock of the
Borrower.
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ARTICLE 9
DEFAULTS
The occurrence of any one or more of the following events shall constitute
an "Event of Default":
9.1 PAYMENT DEFAULTS. The Borrower shall fail to pay when due any payment
of principal of any Loan or any reimbursement obligation (with respect to a
drawing under a Letter of Credit) or, within 5 Business Days of when due, or
interest or any other charge or fee required under the terms of this Agreement
or the other Loan Documents.
9.2 REPRESENTATIONS AND WARRANTIES. Any representation or warranty made
by the Borrower under any Loan Document shall prove to have been incorrect or
misleading in any material respect when made.
9.3 OTHER LOAN DOCUMENT DEFAULTS. The Borrower shall fail to perform (i)
any obligation set forth in Sections 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 7.1, 7.2,
7.3, 7.6, 7.7, 7.9, 8.1, 8.2, 8.3, 8.4, 8.5, 8.8, 8.9, 8.10, and 8.11 of this
Agreement; or (ii) any other obligation contained in this Agreement or the other
Loan Documents, and such failure shall continue for 30 days after the earlier of
actual knowledge by the Borrower or written notice thereof from the Agent.
9.4 BANKRUPTCY. (i) The Borrower shall fail to pay its Debts generally as
they become due or shall file any petition or action for relief under any
bankruptcy, insolvency, reorganization, moratorium, creditor composition law, or
any other law for the relief of or relating to debtors; (ii) an involuntary
petition under any bankruptcy law shall be filed against the Borrower and shall
not be stayed, dismissed or discharged within 45 days of filing; or (iii) a
custodian, receiver, trustee, assignee for the benefit or creditors, or other
similar official, shall be appointed to take possession, custody or control of
the Properties of either Borrower and not be dismissed or discharged with 45
days of appointment.
9.5 OTHER AGREEMENTS. The Borrower shall fail to pay when due (whether at
final maturity or as a result of acceleration) principal or interest payments
then due under the terms of any bonds, notes, debentures or other agreements
evidencing, in the aggregate, at least $2,000,000 of Debt (excluding, for
purposes of this calculation, payments required under this Agreement or any of
the other Loan Documents) and such non-payment shall continue beyond any period
of grace provided with respect thereto, or the Borrower shall default in the
observance or performance of any other agreement contained in any such bonds,
notes, debentures or other agreements evidencing indebtedness, and the effect of
such failure or default is to cause the indebtedness evidenced thereby to be
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accelerated by the holders thereof prior to its stated date of maturity.
9.6 ERISA. Any Governmental Person shall take any action under ERISA or
the Borrower fails to meet minimum funding requirements or any other event shall
occur with respect to any Plan, that could have a Material Adverse Effect or
that the unfunded liabilities exceed $250,000.
9.7 JUDGMENTS. A final judgment or order for the payment of money in
excess of $250,000 shall be rendered against the Borrower and the same shall
remain undischarged for a period of 45 days during which execution shall not be
effectively stayed, or any judgment, writ, warrant of attachment, or execution
or similar process, shall be issued or levied against a substantial part of the
Borrower's property and such judgment, writ, warrant of attachment, or execution
or similar process, shall not be released, stayed, vacated, bonded or otherwise
dismissed within 20 days after its issue or levy.
9.8 LOAN DOCUMENTS. Any Loan Document shall fail to remain in full force
or effect or any action shall be taken by the Borrower to discontinue or to
assert the invalidity or unenforceability of any Loan Document.
9.9 CHANGE OF CONTROL. A Change of Control shall have occurred.
9.10 MATERIAL ADVERSE EFFECT. The occurrence of any event or the taking of
any action which results in a Material Adverse Effect on the Borrower.
ARTICLE 10
ACCELERATION, WAIVERS AND AMENDMENTS
10.1 ACCELERATION. If any Event of Default described in Section 9.4 occurs
with respect to the Borrower, the obligations of the Lenders to make Loans and
issue and participate in new Letters of Credit hereunder shall automatically
terminate and the Obligations shall immediately become due and payable without
any election or action on the part of the Agent or any Lender. If any other
Event of Default occurs, the Required Lenders may terminate or suspend the
obligations of the Lenders to make Loans and issue and participate in new
Letters of Credit hereunder, or declare the Obligations to be due and payable,
or both, whereupon the Obligations shall become immediately due and payable,
without presentment, demand, protest or notice of any kind, all of which the
Borrower hereby expressly waives. All Lenders' funded and unfunded obligations
hereunder shall be adjusted on a pro rata basis consistent with its respective
Commitment Percentages.
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10.2 CASH COLLATERAL. To the extent that any Letters of Credit are
outstanding at the time of any Event of Default, the Borrower shall deliver to
the Agent, for the benefit of the Lenders, a cash collateral deposit in an
amount equal to the aggregate Letter of Credit Amount for all Letters of Credit
then outstanding.
10.3 ADDITIONAL REMEDIES. The rights, powers and remedies given to the
Agent and the Lenders hereunder shall be cumulative and not alternative and
shall be in addition to all rights, powers and remedies given to the Agent and
the Lenders by law against the Borrower or any other Person, including but not
limited to any Lender's right of setoff or banker's lien.
10.4 AMENDMENTS. Subject to the provisions of this Article 10, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrower hereunder or waiving any
Default hereunder; provided, however, that no such supplemental agreement shall,
without the consent of each Lender affected thereby:
(i) Extend the maturity of any Loan or Note or forgive all or any
portion of the principal amount thereof, or reduce the rate or
extend the time of payment of interest or fees thereon.
(ii) Reduce the percentage specified in the definition of Required
Lenders.
(iii) Increase the amount of the Commitment of any Lender hereunder or
permit the Borrower to assign its rights under this Agreement.
(iv) Release any of the Property pledged under the Loan Documents.
(v) Amend this Section 10.4.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive payment
of the fees required under Section 14.3(ii) without obtaining the consent of any
other party to this Agreement.
10.5 PRESERVATION OF RIGHTS. No delay or omission of the Lenders or the
Agent to exercise any right under the Loan Documents shall impair such right or
be construed to be a waiver of any Default or an acquiescence therein, and the
making of a Loan notwithstanding the existence of a Default or the inability of
the Borrower to satisfy the conditions precedent to such Loan shall not
constitute any waiver or acquiescence. Any single or
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partial exercise of any such right shall not preclude other or further
exercise thereof or the exercise of any other right, and no waiver, amendment
or other variation of the terms, conditions or provisions of the Loan
Documents whatsoever shall be valid unless in writing signed by the Lenders
required pursuant to Section 10.4, and then only to the extent in such
writing specifically set forth. All remedies contained in the Loan Documents
or by law afforded shall be cumulative and all shall be available to the
Agent and the Lenders until the Obligations have been paid in full.
ARTICLE 11
GENERAL PROVISIONS
11.1 SURVIVAL OF REPRESENTATIONS. All representations and
warranties of the Borrower contained in this Agreement shall survive delivery
of the Notes and the making of the Loans and issuance of the Letters of
Credit herein contemplated.
11.2 GOVERNMENTAL REGULATION. Anything contained in this Agreement
to the contrary notwithstanding, no Lender shall be obligated to extend
credit to the Borrower in violation of any limitation or prohibition provided
by any applicable statute or regulation.
11.3 HEADINGS. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any
of the provisions of the Loan Documents.
11.4 ENTIRE AGREEMENT. The Loan Documents embody the entire
agreement and understanding among the Borrower, the Agent and the Lenders and
supersede all prior agreements and understandings among the Borrower, the
Agent and the Lenders relating to the subject matter thereof.
11.5 SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT. The
respective obligations of the Lenders hereunder are several and not joint and
no Lender shall be the partner or agent of any other (except to the extent to
which the Agent is authorized to act as such). The failure of any Lender to
perform any of its obligations hereunder shall not relieve any other Lender
from any of its obligations hereunder. This Agreement shall not be construed
so as to confer any right or benefit upon any Person other than the parties
to this Agreement and its respective successors and assigns.
11.6 EXPENSES; INDEMNIFICATION. The Borrower shall reimburse the
Agent for any costs, internal charges and out-of-pocket expenses (including
reasonable attorneys' fees and time charges of attorneys for the Agent and
audit expenses), paid or incurred by the Agent in connection with the
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negotiation, documentation and syndication of this Agreement. The Borrower
shall also reimburse the Agent and each Lender for any costs, internal
charges and out-of-pocket expenses (including reasonable attorneys' fees and
time charges of attorneys for the Agent and each Lender) paid or incurred by
the Agent or any Lender in connection with the collection and enforcement of
the Loan Documents. The Borrower further agrees to indemnify the Agent and
each Lender, its directors, officers and employees against all losses,
claims, damages, penalties, judgments, liabilities and expenses (including,
without limitation, all expenses of litigation or preparation therefor
whether or not the Agent or any Lender is a party thereto) which any of them
may pay or incur arising out of or relating to this Agreement, the other Loan
Documents, the transactions contemplated hereby or the direct or indirect
application or proposed application of the proceeds of any Loan or Letter of
Credit hereunder, provided that no Person shall have the right to be
indemnified hereunder for such Person's own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
11.7 NUMBERS OF DOCUMENTS. All statements, notices, closing
documents, and requests hereunder shall be furnished to the Agent with
sufficient counterparts so that the Agent may furnish one to each of the
Lenders.
11.8 SEVERABILITY OF PROVISIONS. Any provision in any Loan
Document that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable,
or invalid without affecting the remaining provisions in that jurisdiction or
the operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are
declared to be severable.
11.9 NONLIABILITY OF LENDERS. The relationship between the
Borrower and the Lenders and the Agent shall be solely that of borrower and
lender. Neither the Agent nor any Lender shall have any fiduciary
responsibilities to the Borrower. Neither the Agent nor any Lender
undertakes any responsibility to the Borrower to review or inform the
Borrower of any matter in connection with any phase of the Borrower's
business or operations.
11.10 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF CALIFORNIA, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
11.11 CONSENT TO JURISDICTION. SUBJECT TO SECTION 11.15 BELOW, THE
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
UNITED STATES FEDERAL OR CALIFORNIA STATE COURT SITTING IN LOS ANGELES IN ANY
ACTION OR
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PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY
WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM SUBJECT TO SECTION 11.15 BELOW, NOTHING HEREIN SHALL LIMIT
THE RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION SUBJECT TO SECTION 11.15
BELOW. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT OR ANY
LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN LOS ANGELES,
CALIFORNIA.
11.12 WAIVER OF JURY TRIAL. SUBJECT TO SECTION 11.15 BELOW, THE
BORROWER, THE AGENT AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
11.13 INTEGRATION CLAUSE. Except for documents and instruments
specifically referenced herein, this Agreement constitutes the entire agreement
among the Agent, the Lenders and the Borrower regarding the Loans and Letters of
Credit and all prior communications verbal or written between the Borrower and
the Agent or any Lender shall be of no further effect or evidentiary value.
11.14 CONFIDENTIALITY. The Lenders shall take normal and reasonable
precautions to maintain the confidentiality of all non-public information
obtained pursuant to the requirements of this Agreement which has been
identified as such by the Borrower but may, in any event, make disclosures (i)
reasonably required by any bona fide transferee, assignee or participant in
connection with the contemplated transfer or assignment of any of the
Commitments or Loans or participations therein or participations in Letters of
Credit, so long as such transferee, assignee or participant agrees to be bound
by the terms hereof or (ii) as required or requested by any governmental agency
or representative thereof or as required pursuant to any legal process or (iii)
to its attorneys and accountants or (iv) as required by law or (v) in connection
with litigation involving any Lender.
11.15 DISPUTE RESOLUTION. It is understood and agreed that upon the
request of any party hereto any dispute, claim, or controversy of any kind,
whether in contract or in tort, statutory or common law, legal or equitable now
existing or hereinafter arising out of, pertaining to or in connection with this
Agreement or the other Loan Documents, or any related
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agreements, documents, or instruments, shall be resolved through final and
binding arbitration administered by Judicial Arbitration & Mediation
Services, Inc. ("J.A.M.S."). The hearing shall be conducted at a location
determined by the arbitrator in Los Angeles, California and shall be
administered by and in accordance with the then existing Rules of Practice
and Procedure of Judicial Arbitration & Mediation Services, Inc., and
judgment upon any award rendered by the arbitrator may be entered by an State
or Federal Court having jurisdiction thereof. The arbitrator shall determine
which is the prevailing party or parties and shall include in the award that
party's or parties' reasonable attorneys' fees and costs. As soon as
practicable after selection of the arbitrator, the arbitrator or his/her
designated representative shall determine a reasonable estimate of
anticipated fees and costs of the arbitrator, and render a statement to each
party setting forth that party's pro-rata share of said fees and costs.
Thereafter each party shall, within ten days of receipt of said statement,
deposit said sum with the arbitrator. Failure of any party to make such a
deposit shall result in a forfeiture by the non-depositing party of the right
to prosecute or defend that claim which is the subject of the arbitration,
but shall not otherwise serve to ▇▇▇▇▇, stay under this paragraph, nor any
other provision of this dispute resolution provision, or limit the right of
any party to obtain provisional or ancillary remedies such as injunctive
relief from any court having jurisdiction before, during or after the
pendency of any arbitration. The institution and maintenance of any action
for the pursuit of provisional or ancillary remedies shall not constitute a
waiver of the right of any party, including the plaintiff, to submit the
controversy or claim to arbitration.
ARTICLE 12
THE AGENT
12.1 APPOINTMENT. Sanwa is hereby appointed Agent hereunder and
under each other Loan Document, and each of the Lenders irrevocably
authorizes the Agent to act as the agent of such Lender. The Agent agrees to
act as such upon the express conditions contained in this Article 12. The
Agent shall not have a fiduciary relationship in respect of the Borrower or
any Lender by reason of this Agreement.
12.2 POWERS. The Agent shall have and may exercise such powers
under the Loan Documents as are specifically delegated to the Agent by the
terms of each thereof, together with such powers as are reasonably incidental
thereto. The Agent shall have no implied duties to the Lenders, or any
obligation to the Lenders to take any action thereunder except any action
specifically provided by the Loan Documents to be taken by the Agent.
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12.3 GENERAL IMMUNITY. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower or any Lender
for any action taken or omitted to be taken by it or them hereunder or under
any other Loan Document or in connection herewith or therewith except for its
or its own gross negligence or willful misconduct.
12.4 NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither the Agent
nor any of its directors, officers, agents or employees shall be responsible
for or have any duty to ascertain, inquire into, or verify (i) any statement,
warranty or representation made in connection with any Loan Document or any
borrowing hereunder; (ii) the performance or observance of any of the
covenants or agreements of any obligor under any Loan Document, including,
without limitation, any agreement by an obligor to furnish information
directly to each Lender; (iii) the satisfaction of any condition specified in
Article 4 except receipt of items required to be delivered to the Agent; or
(iv) the validity, effectiveness or genuineness of any Loan Document or any
other instrument or writing furnished in connection therewith. The Agent
shall have no duty to disclose to the Lenders information that is not
required to be furnished by the Borrower to the Agent at such time, but is
voluntarily furnished by the Borrower to the Agent (either in its capacity as
Agent or in its individual capacity).
12.5 ACTION ON INSTRUCTIONS OF LENDERS. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder
and under any other Loan Document in accordance with written instructions
signed by the Required Lenders, and such instructions and any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders and on
all holders of Notes. The Agent shall be fully justified in failing or
refusing to take any action hereunder and under any other Loan Document
unless it shall first be indemnified to its satisfaction by the Lenders pro
rata against any and all liability, cost and expense that it may incur by
reason of taking or continuing to take any such action.
12.6 EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may execute any
of its duties as Agent hereunder and under any other Loan Document by or
through employees, agents, and attorneys-in-fact and shall not be answerable
to the Lenders, except as to money or securities received by it or its
authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Agent shall be
entitled to advice of counsel concerning all matters pertaining to the agency
hereby created and its duties hereunder and under any other Loan Document.
12.7 RELIANCE ON DOCUMENTS; COUNSEL. The Agent shall be entitled
to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and
correct and to have been signed
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or sent by the proper person or persons, and, in respect to legal matters,
upon the opinion of counsel selected by the Agent, which counsel may be
employees of the Agent.
12.8 AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The Lenders agree
to reimburse and indemnify the Agent ratably in proportion to its respective
Commitments (i) for any other expenses incurred by the Agent on behalf of the
Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents and (ii) for any
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature whatsoever
which may be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of the Loan Documents or any other document
delivered in connection therewith or the transactions contemplated thereby,
or the enforcement of any of the terms thereof or of any such other
documents, provided that no Lender shall be liable for any of the foregoing
to the extent they arise from the gross negligence or willful misconduct of
the Agent. The obligations of the Lenders under this Section 12.8 shall
survive payment of the Obligations and termination of this Agreement.
12.9 RIGHTS AS A LENDER. In the event the Agent is a Lender, the
Agent shall have the same rights and powers hereunder and under any other
Loan Document as any Lender and may exercise the same as though it were not
the Agent, and the term "Lender" or "Lenders" shall, at any time when the
Agent is a Lender, unless the context otherwise indicates, include the Agent
in its individual capacity. The Agent may accept deposits from, lend money
to, and generally engage in any kind of trust, debt, equity or other
transaction, in addition to those contemplated by this Agreement or any other
Loan Document, with the Borrower or any of its Subsidiaries in which the
Borrower or such Subsidiary is not restricted hereby from engaging with any
other Person.
12.10 LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Borrower and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each Lender
also acknowledges that it will, independently and without reliance upon the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
12.11 SUCCESSOR AGENT. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower, such resignation to be
effective upon the appointment
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of a successor Agent or, if no successor Agent has been appointed, forty-five
days after the retiring Agent gives notice of its intention to resign. Upon
any such resignation, the Required Lenders shall have the right to appoint,
with the consent (which shall not be unreasonably withheld) of the Borrower,
if no Default has occurred and is continuing, on behalf of the Borrower and
the Lenders, a successor Agent. If no successor Agent shall have been so
appointed by the Required Lenders within thirty days after the resigning
Agent's giving notice of its intention to resign, then the resigning Agent
may appoint, on behalf of the Borrower and the Lenders, a successor Agent.
If the Agent has resigned and no successor Agent has been appointed, the
Lenders may perform all the duties of the Agent hereunder and the Borrower
shall make all payments in respect of the Obligations to the applicable
Lender and for all other purposes shall deal directly with the Lenders. No
successor Agent shall be deemed to be appointed hereunder until such
successor Agent has accepted the appointment. Any such successor Agent shall
be a commercial bank having capital and retained earnings of at least
$50,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the resigning
Agent. Upon the effectiveness of the resignation of the Agent, the resigning
Agent shall be discharged from its duties and obligations hereunder and under
the Loan Documents. After the effectiveness of the resignation of an Agent,
the provisions of this Article 10 shall continue in effect for the benefit of
such Agent in respect of any actions taken or omitted to be taken by it while
it was acting as the Agent hereunder and under the other Loan Documents.
ARTICLE 13
SETOFF; RATABLE PAYMENTS
13.1 SETOFF. Upon the occurrence and during the continuance of any Event
of Default, the Lenders are 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 any Lender to or for the credit
or the account of the Borrower against any and all obligations of the Borrower
now or hereafter existing under the Loan Documents, irrespective of whether or
not any Lender shall have made any demand under this Agreement and although such
obligations may be unmatured. The rights of the Lenders under this Section are
in addition to other rights and remedies (including other rights of setoff) that
the Lenders may have.
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13.2 RATABLE PAYMENTS. If any Lender, whether by setoff or otherwise, has
payment made to it upon its Loans (other than payments received pursuant to
Section 3.1 or 3.2) in a greater proportion than that received by any other
Lender, such Lender agrees, promptly upon demand, to purchase a portion of the
Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender, whether in connection with
setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral ratably
in proportion to its Loans. In case any such payment is disturbed by legal
process, or otherwise, appropriate further adjustments shall be made.
ARTICLE 14
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
14.1 SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and its respective successors and assigns, except that (i) the Borrower
shall not have the right to assign its rights or obligations under the Loan
Documents and (ii) any assignment by any Lender must be made in compliance with
Section 14.3. Notwithstanding clause (ii) of this Section, any Lender may at
any time, without the consent of the Borrower or the Agent, assign all or any
portion of its rights under this Agreement and its Notes to a Federal Reserve
Bank; provided, however, that no such assignment shall release the transferor
Lender from its obligations hereunder. The Agent and the Borrower may treat the
payee of any Note as the owner thereof for all purposes hereof unless and until
such payee complies with Section 14.3 in the case of an assignment thereof or,
in the case of any other transfer, a written notice of the transfer is filed
with the Agent. Any assignee or transferee of a Note agrees by acceptance
thereof to be bound by all the terms and provisions of the Loan Documents. Any
request, authority or consent of any Person, who at the time of making such
request or giving such authority or consent is the holder of any Note, shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.
14.2 PARTICIPATIONS.
(i) PERMITTED PARTICIPANTS; EFFECT. Any Lender may, in the
ordinary course of its business and in accordance with applicable law, at
any time sell to one or more banks or other entities ("Participants")
participating interests in any Loan owing to such Lender, any Note held
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by such Lender, any Commitment of such Lender or any other interest of such
Lender under the Loan Documents. In the event of any such sale by a Lender
of participating interests to a Participant, such Lender's obligations
under the Loan Documents shall remain unchanged, such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, such Lender shall remain the holder of any such Note for all
purposes under the Loan Documents, all amounts payable by the Borrower
under this Agreement shall be determined as if such Lender had not sold
such participating interests, and the Borrower and the Agent shall continue
to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under the Loan Documents.
(ii) VOTING RIGHTS. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other than
any amendment, modification or waiver with respect to any Loan or
Commitment in which such Participant has an interest which forgives
principal, interest or fees or reduces the interest rate or fees payable
with respect to any such Loan or Commitment or postpones any date fixed for
any regularly-scheduled payment of principal of, or interest or fees on,
any such Loan or Commitment.
(iii) BENEFIT OF SETOFF. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided in
Section 13.1 in respect of its participating interest in amounts owing
under the Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under the Loan
Documents, provided that each Lender shall retain the right of setoff
provided in Section 13.1 with respect to the amount of participating
interests sold to each Participant. The Lenders agree to share with each
Participant, and each Participant, by exercising the right of setoff
provided in Section 11.1, agrees to share with each Lender, any amount
received pursuant to the exercise of its right of setoff, such amounts to
be shared in accordance with Section 13.2 as if each Participant were a
Lender.
14.3 ASSIGNMENTS.
(i) PERMITTED ASSIGNMENTS. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time
assign to one or more Eligible Assignees ("Purchasers") all or any part of
its rights and obligations under the Loan Documents, provided, however,
such assignments must be in a minimum amount at least equal to $2,000,000
and must be on a pro rata basis of all Obligations hereunder; provided,
however, that if such
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Purchaser is a Lender or an Affiliate thereof, no minimum amount shall be
applicable. Such assignment shall be substantially in the form of
Exhibit C hereto or in such other form as may be agreed to by the parties
thereto. The consent of the Borrower and the Agent shall be required prior
to an assignment becoming effective with respect to a Purchaser which is
not a Lender or an Affiliate thereof; provided, however, that if a Default
has occurred and is continuing, the consent of the Borrower shall not be
required. Such consent shall not be unreasonably withheld or delayed.
Each such assignment shall comply with all applicable Governmental Rules.
(ii) EFFECT; EFFECTIVE DATE. Upon (i) delivery to the Agent of a
notice of assignment, substantially in the form attached as Exhibit I to
Exhibit C hereto (a "Notice of Assignment"), together with any consents
required by Section 14.3(i), and (ii) payment of a $3,000 fee to the Agent
for processing such assignment, such assignment shall become effective on
the effective date specified in such Notice of Assignment. The Notice of
Assignment shall contain a representation by the Purchaser to the effect
that it is an Eligible Assignee and that none of the consideration used to
make the purchase of the Commitment and Loans under the applicable
assignment agreement are "plan assets" as defined under ERISA and that the
rights and interests of the Purchaser in and under the Loan Documents will
not be "plan assets" under ERISA. On and after the effective date of such
assignment, such Purchaser shall for all purposes be a Lender party to this
Agreement and any other Loan Document executed by the Lenders and shall
have all the rights and obligations of a Lender under the Loan Documents,
to the same extent as if it were an original party hereto, and no further
consent or action by the Borrower, the Lenders or the Agent shall be
required to release the transferor Lender with respect to the percentage of
the Aggregate Commitment and Loans assigned to such Purchaser. Upon the
consummation of any assignment to a Purchaser pursuant to this
Section 14.3(ii), the transferor Lender, the Agent and the Borrower shall
make appropriate arrangements so that replacement Notes are issued to such
transferor Lender and new Notes or, as appropriate, replacement Notes, are
issued to such Purchaser, in each case in principal amounts reflecting its
Commitment, as adjusted pursuant to such assignment.
14.4 DISSEMINATION OF INFORMATION. The Borrower authorizes each Lender to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its Subsidiaries, provided
that each prospective Transferee
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shall execute and deliver to the Agent a confidentiality agreement (in form
and substance reasonably satisfactory to the Borrower and the Agent).
14.5 TAX TREATMENT. If any interest in any Loan Document is transferred to
any Transferee which is organized under the laws of any jurisdiction other than
the United States or any State thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, to comply with
the provisions of Section 2.21.
ARTICLE 15
NOTICES
15.1 GIVING NOTICE. Except as otherwise permitted by Sections 2.13
and 2.14 with respect to borrowing notices and notices regarding conversion or
continuation of Advances, all notices and other communications provided to any
party hereto under this Agreement or any other Loan Document shall be in writing
or by facsimile and addressed or delivered to the Borrower and the Agent at its
respective addresses set forth below its signature hereto and to each Lender at
its address set forth on Schedule 1 hereto or at such other address as may be
designated by such party in a notice to the other parties. Any notice, if
mailed and properly addressed with postage prepaid, shall be deemed given when
received; any notice, if transmitted by facsimile, shall be deemed given when
transmitted (answerback confirmed in the case of telexes).
15.2 CHANGE OF ADDRESS. The Borrower, the Agent and any Lender may each
change the address for service of notice upon it by a notice in writing to the
other parties hereto.
ARTICLE 16
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This Agreement shall be
effective when it has been executed by the Borrower, the Agent and the Lenders
and each party has notified the Agent by telex or telephone, that it has taken
such action.
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IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have executed
this Agreement as of the date first above written.
STAR TELECOMMUNICATIONS, INC.
By:
-----------------------------
Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Financial Officer
▇▇▇ ▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
SANWA BANK CALIFORNIA,
as Agent and Lender
By:
-----------------------------
Print Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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SCHEDULE 1
LENDERS AND APPLICABLE LENDING OFFICES
LENDER COMMITMENT APPLICABLE LENDING OFFICE
------ ---------- -------------------------
Sanwa Bank $25,000,000 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Agent and Lender
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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FIRST AMENDMENT TO CREDIT AGREEMENT
This First Amendment to Credit Agreement (this "AMENDMENT"), dated as of
March 18, 1998, is entered into among STAR TELECOMMUNICATIONS, INC., a
Delaware corporation (the "BORROWER"), SANWA BANK CALIFORNIA, as the sole
lender party to the Credit Agreement referred to below (the "LENDER") and
SANWA BANK CALIFORNIA, as agent (the "AGENT").
RECITALS
A. The Borrower, the Lender and the Agent previously entered into that
certain Credit Agreement dated as of September 30, 1997 (the "CREDIT
AGREEMENT"). Capitalized terms used herein and not defined shall have the
meanings assigned to them in the Credit Agreement.
B. The Borrower, the Lender and the Agent desire to amend the Credit
Agreement, among other things, to release the collateral pledged in
connection therewith, to revise pricing, to add and amend certain provisions
relating the Borrower's covenants thereunder and to amend the form of the
Compliance Certificate set forth therein.
Accordingly, the parties hereto agree as follows:
AGREEMENT
Section 1. AMENDMENTS TO THE CREDIT AGREEMENT. As of the date of this
Amendment, the Credit Agreement shall be amended as follows:
(a) The definition of the term "Account Debtor" in Section 1.1 of the
Credit Agreement is deleted in its entirety.
(b) The definition of the term "Applicable Margin" in Section 1.1 of the
Credit Agreement is amended in its entirety to read as follows:
"`APPLICABLE MARGIN': for each Fixed Rate Loan, as set forth below:
Applicable
Funded Debt Ratio Level Margin
----------------------- ----------
1 1.375%
2 1.500%
3 1.675%
4 1.750%"
(c) The definition of the term "Borrowing Base" in Section 1.1 of the
Credit Agreement is amended in its entirety to read as follows:
"'BORROWING BASE' shall mean, as at any date, the ▇▇▇▇▇▇ of (i) 55% of
the aggregate Eligible Accounts Receivable and (ii) the Aggregate
Available Commitment."
(d) The definition of the term "Eligible Account Receivable" in Section
1.1 of the Credit Agreement is amended in its entirety to read as follows:
"'ELIGIBLE ACCOUNT RECEIVABLE' means those Accounts, net of finance
charges, which have been earned by performance which are by their terms
due and payable within 31 days, or less, from the date of the invoice,
have been validly assigned to the Agent and strictly comply with all the
Borrower's warranties and representations to the Lenders."
(e) The following definitions are added to Section 1.1 of the Credit
Agreement in the appropriate alphabetical orders:
"'FUNDED DEBT RATIO' means for the Borrower and its Subsidiaries on a
Consolidated Basis, determined as of the end of each fiscal quarter for
the period of the four fiscal quarters then ended, the ratio of Funded
Debt outstanding at such time to EBITDA."
"'FUNDED DEBT RATIO LEVEL' means the following ratio levels: if the
Funded Debt Ratio shall be less than .5:1.00, the Funded Debt Ratio Level
shall be 1; if the Funded Debt Ratio shall be equal to or greater than
.5:1.00 and less than .75:1.00, the Funded Debt Ratio Level shall be 2;
if the Funded Debt Ratio Level shall be equal to or greater than .75:1.00
and less than 1.00:1.00 the Funded Debt Ratio Level shall be 3; and if the
Funded Debt Ratio shall be equal to or greater than 1.00:1.00, the Funded
Debt Ratio Level shall be 4."
(f) The definition of the term "Loan Documents" in Section 1.1 of the
Credit Agreement is amended in its entirety to read as follows:
"'LOAN DOCUMENTS' means this Agreement, any Letter of Credit Requests,
the Letters of Credit and the Notes executed by the Borrower in
connection herewith and any other agreement executed by the Borrower in
connection herewith, as such agreements and documents may be amended,
supplemented and otherwise modified from time to time in accordance with
the terms hereof."
(g) The definition of the term "Security Agreement" in Section 1.1 of
the Credit Agreement is deleted in its entirety.
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(h) The definition of the term "Swap-Check Account" in Section 1.1 of
the Credit Agreement is deleted in its entirety.
(i) The following is added to Section 2.16 of the Credit Agreement as a
new paragraph immediately after the end of the first paragraph thereof.
"For purposes of determining the Applicable Margin for each Fixed Rate
Loan, interest rates shall be calculated on the basis of the Funded Debt
Ratio set forth in the most recent quarterly Compliance Certificate
delivered by the Borrower to the Agent pursuant to Section 7.1(iii),
together with the accompanying required quarterly or annual financial
statements. For accrued and unpaid interest only (no changes being made
for interest payments previously made), changes in interest rates on the
Fixed Rate Loans attributable to changes in the Applicable Margin caused
by changes in the applicable Funded Debt Ratio Level shall be calculated
upon the delivery of a quarterly Compliance Certificate pursuant to
Section 7.1(iii), together with the accompanying required quarterly or
annual financial statements, setting forth such Funded Debt Ratio and the
applicable Funded Debt Ratio Level, and such change shall be effective
from the first day of the Interest Period applicable to such Fixed Rate
Loans subsequent to the delivery of such quarterly Compliance Certificate.
If, for any reason, the Borrower shall fail to deliver a quarterly
Compliance Certificate, together with the accompanying required quarterly
or annual financial statements, setting forth the Funded Debt ratio and
the applicable Funded Debt Ratio Level when due in accordance with
Section 7.1(iii), and such failure shall continue for a period of twenty
days, the Funded Debt Ratio Level shall be deemed to be ▇▇▇▇▇ ▇,
retroactive to the date on which the Borrower should have delivered such
quarterly Compliance Certificate and shall continue until a Compliance
Certificate indicating a different Funded Debt Ratio Level is delivered
to the Agent."
(j) Section 6.4 of the Credit Agreement is amended in its entirety to
read as follows:
"6.4 MINIMUM CURRENT RATIO. The Borrower and its Subsidiaries on a
Consolidated Basis shall maintain at all times a ratio of Current Assets
to Current Liabilities of not less than (i) 1.19:1.00 for the fiscal year
ending as of December 31, 1997 and (ii) 1.20:1.00 at all other times."
(k) Section 6.6 of the Credit Agreement is amended in its entirety to
read as follows:
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"6.6 PROFITABILITY. The Borrower and its Subsidiaries on a Consolidated
Basis shall not permit any quarterly loss in any fiscal year nor shall it
permit any annual loss for any fiscal year."
(1) Section 7.1(iii) of the Credit Agreement is amended in its entirety
to read as follows:
"Together with the financial statements required in Sections 7.1(i) and
(ii), a compliance certificate in substantially the form of Exhibit B
hereto (a "Compliance Certificate"), signed by an Authorized Officer
showing the calculations necessary to determine compliance with this
Agreement (including the Funded Debt Ratio as of the end of the applicable
fiscal quarter for the period of the four fiscal quarters then ended and
the applicable Funded Debt Ratio Level) and stating that no Default or
Event of Default exists, or if any Default or Event of Default exists,
stating the nature and status thereof."
(m) Schedule 5 to the Credit Agreement is deleted in its entirety.
(n) Exhibit B to the Credit Agreement is amended in its entirety as set
forth in Addendum II hereto.
(o) Exhibit B to the Credit Agreement is amended in its entirety as set
forth in Addendum II hereto.
Section 2. TERMINATION OF SECURITY AGREEMENT. Notwithstanding anything
to the contrary in the Security Agreement, the Security Agreement is
terminated as of the date of this Amendment, and the Agent shall file
appropriate UCC Termination Statements and release any collateral pledged in
connection therewith.
Section 3. REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants to the Agent and the Lender (and for the benefit of any other Lender
from time to time party to the Credit Agreement) as follows:
(a) the execution, delivery and performance of this Amendment have been
duly authorized and approved by all necessary action;
(b) this Amendment constitutes the legal, valid and binding obligation
of the Borrower, enforceable against the Borrower in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally:
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(c) the representations and warranties contained in Article 5 of
the Credit Agreement are true and correct on and as of the date hereof as
though made on and as of the date hereof, except to the extent any such
representation or warranty shall be true and correct on and as of such
earlier date; and
(d) no Event of Default or Default has occurred and is continuing.
Section 4. CONDITION PRECEDENTS. The effectiveness of this Amendment as
of the date first above written is subject to the conditions precedent that
the Agent has received (a) this Amendment duly executed by the Borrower
and (b) the financial statements (and unqualified opinions of certified
public accountants) specified in Section 7.1 (ii) of the Credit
Agreement with respect to the fiscal year ending December 31, 1997,
showing no material change from any financial statements or other information
previously provided by the Borrower to the Agent pursuant to the Credit
Agreement.
Section 5. MISCELLANEOUS
(a) Except as expressly set forth herein, all provisions of the Credit
Agreement and the other Loan Documents shall continue in full force and
effect except that each reference to "the Credit Agreement" or words of like
import in any Loan Document shall mean and be a reference to the Credit
Agreement, as amended hereby.
(b) This Amendment may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which counterparts
so executed and delivered shall be deemed to be an original, and all of which
counterparts, taken together, shall constitute but one and the same Amendment.
(c) This Amendment and the rights and obligations of the parties under
this Amendment shall be governed by, and construed and interpreted in
accordance with, the law of the State of California.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed by their respective duly authorized representatives as of the date
first above written.
STAR TELECOMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
--------------------------
Title: CFO
--------------------------
SANWA BANK CALIFORNIA,
as Agent and as the Lender
By: /s/ Rob Keeper
--------------------------
Name: Rob Keeper
--------------------------
Title: V.P.
--------------------------
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