UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 16, 2008
PAR TECHNOLOGY CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-09720 16-1434688
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
PAR Technology Park, 8383 Seneca Turnpike, New Hartford, NY 13413-4991
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (315) 738-0600
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Not applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
Item 1.02 Termination of a Material Definitive Agreement.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Agrrangement of a Registrant.
On June 16, 2008, the Company terminated its existing credit facilities
with J.P. Morgan Chase, N.A., NBT Bank, N.A., and Alliance Bank, N.A. consisting
of $20,000,000 in working capital lines of credit and a $5,550,000 term loan and
entered into a new three-year agreement with these banks. The terms of the new
agreement provide for up to $20,000,000 of working capital lines of credit and
escalating principal payments through 2012 on the $5,550,000 term loan. The new
agreement bears interest at the applicable bank rate or at the Company's option,
at the LIBOR rate plus the applicable interest rate spread. This new facility is
secured by certain assets of the Company. The new agreement provides for
customary covenants including, without limitation, covenants regarding leverage
ratio, fixed charge coverage ratio and net worth and provides for acceleration
upon the occurrence of customary events of defaults, including, without
limitation, bankruptcy and failure to pay installments of principal or interest.
Exhibits
10.1 Credit Agreement
10.2 Pledge and Security Agreement
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PAR TECHNOLOGY CORPORATION
Date: June 20, 2008 By: /s/ Ronald J. Casciano
------------------------------------
Ronald J. Casciano
Vice President, Chief Financial
Officer and Treasurer
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
10.1 Credit Agreement
10.2 Pledge and Security Agreement
Exhibit 10.1
[OBJECT OMITTED]][GRAPHIC OMITTED]
CREDIT AGREEMENT
dated as of
June 16, 2008
among
PAR TECHNOLOGY CORPORATION,
as Borrower
The Loan Guarantors Party Hereto,
The Lenders Party Hereto
and
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
TABLE OF CONTENTS
ARTICLE I
Definitions
SECTION 1.01. Defined Terms................................................
SECTION 1.02. Classification of Loans and Borrowings.......................
SECTION 1.03. Terms Generally..............................................
SECTION 1.04. Accounting Terms; GAAP.......................................
ARTICLE II
The Credits
SECTION 2.01. Commitments..................................................
SECTION 2.02. Loans and Borrowings.........................................
SECTION 2.03. Requests for Revolving Borrowings............................
SECTION 2.04. [Intentionally omitted]......................................
SECTION 2.05. [Intentionally omitted]......................................
SECTION 2.06. [Intentionally omitted]......................................
SECTION 2.07. Funding of Borrowings........................................
SECTION 2.08. Interest Elections...........................................
SECTION 2.09. Termination and Reduction of Commitments.....................
SECTION 2.10. Repayment and Amortization of Loans; Evidence of Debt........
SECTION 2.11. Prepayment of Loans..........................................
SECTION 2.12. Fees.........................................................
SECTION 2.13. Interest.....................................................
SECTION 2.14. Alternate Rate of Interest...................................
SECTION 2.15. Increased Costs..............................................
SECTION 2.16. Break Funding Payments.......................................
SECTION 2.17. Taxes........................................................
SECTION 2.18. Payments Generally; Allocation of Proceeds;
Sharing of Set-offs..........................................
SECTION 2.19. Returned Payments............................................
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers.........................................
SECTION 3.02. Authorization; Enforceability................................
SECTION 3.03. Governmental Approvals; No Conflicts.........................
SECTION 3.04. Financial Condition; No Material Adverse Change..............
SECTION 3.05. Properties...................................................
SECTION 3.06. Litigation and Environmental Matters.........................
SECTION 3.07. Compliance with Laws and Agreements..........................
SECTION 3.08. Investment Company Status....................................
SECTION 3.09. Taxes........................................................
SECTION 3.10. ERISA........................................................
SECTION 3.11. Disclosure...................................................
SECTION 3.12. Material Agreements..........................................
SECTION 3.13. Solvency.....................................................
SECTION 3.14. Insurance....................................................
SECTION 3.15. Capitalization and Subsidiaries..............................
SECTION 3.16. Security Interest in Collateral..............................
SECTION 3.17. Employment Matters...........................................
SECTION 3.18. Affiliate Transactions.......................................
SECTION 3.19. Common Enterprise............................................
ARTICLE IV
Conditions
SECTION 4.01. Effective Date...............................................
SECTION 4.02. Each Loan....................................................
ARTICLE V
Affirmative Covenants
SECTION 5.01. Financial Statements; Borrowing Base and Other Information...
SECTION 5.02. Notices of Material Events...................................
SECTION 5.03. Existence; Conduct of Business...............................
SECTION 5.04. Payment of Obligations.......................................
SECTION 5.05. Maintenance of Properties....................................
SECTION 5.06. Books and Records; Inspection Rights.........................
SECTION 5.07. Compliance with Laws.........................................
SECTION 5.08. Use of Proceeds..............................................
SECTION 5.09. Insurance....................................................
SECTION 5.10. Casualty and Condemnation....................................
SECTION 5.11. Depository Banks.............................................
SECTION 5.12. Additional Collateral; Further Assurances....................
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness.................................................
SECTION 6.02. Liens........................................................
SECTION 6.03. Fundamental Changes..........................................
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions....
SECTION 6.05. Asset Sales..................................................
SECTION 6.06. Sale and Leaseback Transactions..............................
SECTION 6.07. Swap Agreements..............................................
SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness........
SECTION 6.09. Transactions with Affiliates.................................
SECTION 6.10. Restrictive Agreements.......................................
SECTION 6.11. Amendment of Material Documents...............................
SECTION 6.12. Leverage Ratio...............................................
SECTION 6.13 Fixed Charge Coverage Ratio...................................
SECTION 6.14. Minimum Net Worth............................................
ARTICLE VII
Events of Default
ARTICLE VIII
The Administrative Agent
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices......................................................
SECTION 9.02. Waivers; Amendments..........................................
SECTION 9.03. Expenses; Indemnity; Damage Waiver...........................
SECTION 9.04. Successors and Assigns.......................................
SECTION 9.05. Survival.....................................................
SECTION 9.06. Counterparts; Integration; Effectiveness.....................
SECTION 9.07. Severability.................................................
SECTION 9.08. Right of Setoff..............................................
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process...
SECTION 9.10. WAIVER OF JURY TRIAL.........................................
SECTION 9.11. Headings.....................................................
SECTION 9.12. Confidentiality..............................................
SECTION 9.13. Several Obligations; Nonreliance; Violation of Law............
SECTION 9.14. USA PATRIOT Act..............................................
SECTION 9.15. Disclosure...................................................
SECTION 9.16. Appointment for Perfection...................................
SECTION 9.17. Interest Rate Limitation.....................................
ARTICLE X
Loan Guaranty
SECTION 10.01. Guaranty....................................................
SECTION 10.02. Guaranty of Payment.........................................
SECTION 10.03. No Discharge or Diminishment of Loan Guaranty...............
SECTION 10.04. Defenses Waived.............................................
SECTION 10.05. Rights of Subrogation.......................................
SECTION 10.06. Reinstatement; Stay of Acceleration.........................
SECTION 10.07. Information.................................................
SECTION 10.08. Termination.................................................
SECTION 10.09. Taxes.......................................................
SECTION 10.10. Maximum Liability...........................................
SECTION 10.11. Contribution................................................
SECTION 10.12. Liability Cumulative........................................
SCHEDULES:
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Commitment Schedule
Schedule 3.05 -- Properties
Schedule 3.06 -- Disclosed Matters
Schedule 3.14 -- Insurance
Schedule 3.15 -- Capitalization and Subsidiaries
Schedule 3.18 -- Affiliated Transactions
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.10 -- Existing Restrictions
EXHIBITS:
Exhibit A -- Form of Assignment and Assumption
Exhibit B -- Form of Opinion of Borrower's Counsel
Exhibit C -- Form of Compliance Certificate
CREDIT AGREEMENT dated as of June 16, 2008 (as it may be amended or
modified from time to time, this "Agreement"), among Par Technology Corporation,
the Loan Guarantors party hereto, the Lenders party hereto, and JPMorgan Chase
Bank, N.A., as Administrative Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.
"Account" has the meaning assigned to such term in the Security Agreement.
"Account Debtor" means any Person obligated on an Account.
"Acquisition" means any transaction, or any series of related transactions,
consummated on or after the Effective Date, by which the Borrower or any of its
Subsidiaries (a) acquires any going business or all or substantially all of the
assets of any Person, whether through purchase of assets, merger or otherwise,
(b) directly or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority (in number of
votes) of the Equity Interests of a Person which has ordinary voting power for
the election of directors or other similar management personnel of a Person
(other than Equity Interests having such power only by reason of the happening
of a contingency), or (c) directly or indirectly acquires (in one transaction or
as the most recent in a series of transactions) a majority of the outstanding
Equity Interests of a Person.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means JPMorgan Chase Bank, N.A., in its capacity as
administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire in a
form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Aggregate Credit Exposure" means, at any time, the aggregate Credit
Exposure of all the Lenders.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
Prime Rate in effect on such day. Any change in the Alternate Base Rate due to a
change in the Prime Rate shall be effective from and including the effective
date of such change in the Prime Rate.
"Applicable Percentage" means, with respect to any Lender, (a) with respect
to Revolving Loans, a percentage equal to a fraction the numerator of which is
such Lender's Revolving Commitment and the denominator of which is the aggregate
Revolving Commitment of all Revolving Lenders (if the Revolving Commitments have
terminated or expired, the Applicable Percentages shall be determined based upon
such Lender's share of the aggregate Revolving Exposures at that time), (b) with
respect to the Term Loan, a percentage equal to a fraction the numerator of
which is such Lender's outstanding principal amount of the Term Loan and the
denominator of which is the aggregate outstanding amount of the Term Loan of all
Term Lenders and (c) with respect to the Aggregate Credit Exposure, a percentage
based upon its share of the Aggregate Credit Exposure and the unused
Commitments.
"Applicable Rate" means, for any day, with respect to any ABR Loan or
Eurodollar Revolving Loan, or with respect to the commitment fees payable
hereunder, as the case may be, the applicable rate per annum set forth below
under the caption "ABR Spread", "Eurodollar Spread" or "Commitment Fee Rate", as
the case may be, based upon the Borrower's Leverage Ratio as of the most recent
determination date, provided that until the delivery to the Administrative
Agent, pursuant to Section 5.01, of the Borrower's consolidated financial
information for the Borrower's first fiscal quarter ending after the Effective
Date, the "Applicable Rate" shall be the applicable rate per annum set forth
below in Category 6:
--------------------------------- ----------- ----------- -----------
Leverage Ratio ABR Eurodollar Commitment
Spread Spread Fee Rate
--------------------------------- ----------- ----------- -----------
Category 1 0% 1.00% .25%
= 1.0 to 1.0
--------------------------------- ----------- ----------- -----------
Category 2 0% 1.25% .325%
> 1.0 to 1.0 but = 1.75 to 1.0
--------------------------------- ----------- ----------- -----------
Category 3 0% 1.50% .40%
> 1.75 to 1.0 but = 2.50 to 1.0
--------------------------------- ----------- ----------- -----------
Category 4 0% 1.75% .475%
> 2.50 to 1.0 but = 3.00 to 1.0
--------------------------------- ----------- ----------- -----------
Category 5 .25% 2.50% .625%
> 3.00 to 1.0 but = 4.00 to 1.0
--------------------------------- ----------- ----------- -----------
Category 6 .375% 3.00% .75%
> 4.00 to 1.0
--------------------------------- ----------- ----------- -----------
For purposes of the foregoing, (a) the Applicable Rate shall be determined
as of the end of each fiscal quarter of the Borrower based upon the Borrower's
annual or quarterly consolidated financial statements delivered pursuant to
Section 5.01 and (b) each change in the Applicable Rate resulting from a change
in the Leverage Ratio shall be effective during the period commencing on and
including the date of delivery to the Administrative Agent of such consolidated
financial statements indicating such change and ending on the date immediately
preceding the effective date of the next such change, provided that the Leverage
Ratio shall be deemed to be in Category 6 (A) at any time that an Event of
Default has occurred and is continuing or (B) at the option of the
Administrative Agent or at the request of the Majority Lenders if the Borrower
fails to deliver the annual or quarterly consolidated financial statements
required to be delivered by it pursuant to Section 5.01, during the period from
the expiration of the time for delivery thereof until such consolidated
financial statements are delivered.
"Approved Fund" has the meaning assigned to such term in Section 9.04.
"Assignment and Assumption" means an assignment and assumption entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.
"Availability" means, at any time, an amount equal to (a) the lesser of the
Revolving Commitment and the Borrowing Base minus (b) the Revolving Exposure of
all Revolving Lenders, all as determined by the Administrative Agent.
"Availability Period" means the period from and including the Effective
Date to but excluding the earlier of the Revolving Loan Maturity Date and the
date of termination of the Commitments.
"Available Revolving Commitment" means, at any time, the Revolving
Commitment then in effect minus the Revolving Exposure of all Revolving Lenders
at such time.
"Banking Services" means each and any of the following bank services
provided to any Loan Party by Chase or any of its Affiliates: (a) commercial
credit cards, (b) stored value cards and (c) treasury management services
(including, without limitation, controlled disbursement, automated clearinghouse
transactions, return items, overdrafts and interstate depository network
services).
"Banking Services Obligations" of the Loan Parties means any and all
obligations of the Loan Parties, whether absolute or contingent and howsoever
and whensoever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor) in connection
with Banking Services.
"Board" means the Board of Governors of the Federal Reserve System of the
United States of America.
"Borrower" means Par Technology Corporation, a Delaware corporation.
"Borrowing" means (a) Revolving Loans of the same Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect, and (b) the Term Loan made on the date
hereof and, in the case of Eurodollar Loans, as to which a single Interest
Period is in effect.
"Borrowing Base" means, at any time, the sum of (a) 85% of the Borrower's
Eligible Accounts at such time, plus (b) 50% of the Borrower's Eligible
Inventory consisting of raw materials, valued at the lower of cost or market
value, determined on a first-in-first-out basis, at such time, plus (c) 35% of
the Borrower's Eligible inventory consisting of finished goods, valued at the
lower of cost or market value, determined on a first-in-first-out basis, at such
time, less (d) the amount of all L/C Obligations. The maximum amount of
Inventory which may be included as part of the Borrowing Base shall not exceed
50% of the Borrowing Base.
"Borrowing Base Certificate" means a certificate, signed and certified as
accurate and complete by a Financial Officer of the Borrower, in form acceptable
to the Administrative Agent in its sole discretion.
"Borrowing Request" means a request by the Borrower for a Revolving
Borrowing in accordance with Section 2.02.
"Business Day" means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York are authorized or required by law to remain
closed; provided that, when used in connection with a Eurodollar Loan, the term
"Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"Change in Control" means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), of shares
representing more than 20% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the Borrower; (b) occupation of a
majority of the seats (other than vacant seats) on the board of directors of the
Borrower by Persons who were neither (i) nominated by the board of directors of
the Borrower nor (ii) appointed by directors so nominated; or (c) the
acquisition of direct or indirect Control of the Borrower by any Person or group
other than the executive management of the Borrower.
"Change in Law" means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by any Lender with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"Chase" means JPMorgan Chase Bank, N.A., a national banking association, in
its individual capacity, and its successors.
"Class", when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are Revolving Loans or the
Term Loan.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means any and all property owned, leased or operated by a
Person covered by the Collateral Documents and any and all other property of any
Loan Party, now existing or hereafter acquired, that may at any time be or
become subject to a security interest or Lien in favor of the Administrative
Agent, on behalf of itself and the Lenders, to secure the Secured Obligations.
"Collateral Access Agreement" has the meaning assigned to such term in the
Security Agreement.
"Collateral Documents" means, collectively, the Security Agreement, and any
other documents granting a Lien upon the Collateral as security for payment of
the Secured Obligations.
"Collection Account" has the meaning assigned to such term in the Security
Agreement.
"Commitment" means, with respect to each Lender, the sum of such Lender's
Revolving Commitment and Term Loan Commitment. The initial amount of each
Lender's Commitment is set forth on the Commitment Schedule, or in the
Assignment and Assumption pursuant to which such Lender shall have assumed its
Commitment, as applicable.
"Commitment Schedule" means the Schedule attached hereto identified as
such.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Credit Exposure" means, as to any Lender at any time, the sum of (a) such
Lender's Revolving Exposure at such time, plus (b) an amount equal to the
aggregate principal amount of its Term Loan outstanding at such time.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.
"Document" has the meaning assigned to such term in the Security Agreement.
"dollars" or "$" refers to lawful money of the United States of America.
"EBITDA" means, for any period, Net Income for such period plus (a) without
duplication and to the extent deducted in determining Net Income for such
period, the sum of (i) Interest Expense for such period, (ii) income tax expense
for such period, and (iii) all amounts attributable to depreciation and
amortization expense for such period, minus (b) without duplication and to the
extent included in Net Income, (i) all amounts attributable to any reappraisal,
revaluation or write-up of assets, and (ii) any extraordinary or non-recurring
gains or income and any non-cash items of income for such period, all calculated
for the Borrower and its Subsidiaries on a consolidated basis in accordance with
GAAP.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Eligible Accounts" means, at any time, the Accounts of the Borrower other
than any Account:
(a) which is not subject to a first priority perfected security
interest in favor of the Administrative Agent;
(b) which is subject to any Lien other than (i) a Lien in favor of the
Administrative Agent and (ii) a Permitted Encumbrance which does not have
priority over the Lien in favor of the Administrative Agent;
(c) with respect to which is unpaid more than 90 days after the date
of the original invoice therefor or more than 60 days after the original
due date, or which has been written off the books of the Borrower or
otherwise designated as uncollectible; provided that Accounts unpaid more
than 90 days but less than 120 days from the date of original invoice which
are not more than 60 days past due may be included in Eligible Accounts in
an amount not exceeding $5,000,000 in the aggregate;
(d) which is owing by an Account Debtor for which more than 50% of the
Accounts owing from such Account Debtor and its Affiliates are ineligible
pursuant to clause (c) above;
(e) which is owing by an Account Debtor (other than McDonald's
Corporation or a wholly owned subsidiary thereof) to the extent the
aggregate amount of Accounts owing from such Account Debtor and its
Affiliates to the Borrower exceeds 10% of the aggregate Eligible Accounts;
(f) with respect to which any covenant, representation, or warranty
contained in this Agreement or in the Security Agreement has been breached
or is not true;
(g) which (i) does not arise from the sale of goods or performance of
services in the ordinary course of business, (ii) is not evidenced by an
invoice or other documentation satisfactory to the Administrative Agent
which has been sent to the Account Debtor, (iii) represents a progress
billing, (iv) is contingent upon the Borrower's completion of any further
performance, (v) represents a sale on a bill-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment, cash-on-delivery or any
other repurchase or return basis or (vi) relates to payments of interest;
(h) for which the goods giving rise to such Account have not been
shipped to the Account Debt or or for which the services giving rise to
such Account have not been performed by the Borrower or if such Account was
invoiced more than once;
(i) with respect to which any check or other instrument of payment has
been returned uncollected for any reason;
(j) which is owed by an Account Debtor which has (i) applied for,
suffered, or consented to the appointment of any receiver, custodian,
trustee, or liquidator of its assets, (ii) has had possession of all or a
material part of its property taken by any receiver, custodian, trustee or
liquidator, (iii) filed, or had filed against it, any request or petition
for liquidation, reorganization, arrangement, adjustment of debts,
adjudication as bankrupt, winding-up, or voluntary or involuntary case
under any state or federal bankruptcy laws, (iv) has admitted in writing
its inability, or is generally unable to, pay its debts as they become due,
(v) become insolvent, or (vi) ceased operation of its business;
(k) which is owed by any Account Debtor which has sold all or a
substantially all of its assets;
(l) which is owed by an Account Debtor which (i) does not maintain its
chief executive office in the U.S. or (ii) is not organized under
applicable law of the U.S. or any state of the U.S., unless, in either
case, such Account is backed by a letter of credit acceptable to the
Administrative Agent which is in the possession of, has been assigned to
and is directly drawable by the Administrative Agent;
(m) which is owed in any currency other than U.S. dollars;
(n) which is owed by (i) the government (or any department, agency,
public corporation, or instrumentality thereof) of any country other than
the U.S. unless such Account is backed by a Letter of Credit acceptable to
the Administrative Agent which is in the possession of the Administrative
Agent, or (ii) the government of the U.S., or any department, agency,
public corporation, or instrumentality thereof, unless the Federal
Assignment of Claims Act of 1940, as amended (31 U.S.C. ss 3727 et seq. and
41 U.S.C. ss 15 et seq.), and any other steps necessary to perfect the Lien
of the Administrative Agent in such Account have been complied with to the
Administrative Agent's satisfaction;
(o) which is owed by any Affiliate, employee, officer, director, agent
or stockholder of any Loan Party;
(p) which is owed by an Account Debtor or any Affiliate of such
Account Debtor to which any Loan Party is indebted, but only to the extent
of such indebtedness or is subject to any security, deposit, progress
payment, retainage or other similar advance made by or for the benefit of
an Account Debtor, in each case to the extent thereof;
(q) which is subject to any counterclaim, deduction, defense, setoff
or dispute;
(r) which is evidenced by any promissory note, chattel paper, or
instrument; provided that an Account which is secured by a security
interest in the goods sold shall not be considered ineligible for that
reason alone;
(s) which is owed by an Account Debtor located in any jurisdiction
which requires filing of a "Notice of Business Activities Report" or other
similar report in order to permit the Borrower to seek judicial enforcement
in such jurisdiction of payment of such Account, unless the Borrower has
filed such report or qualified to do business in such jurisdiction;
(t) with respect to which the Borrower has made any agreement with the
Account Debtor for any reduction thereof (other than discounts and
adjustments given in the ordinary course of business), to the extent of the
agreed upon reduction, or any Account which was partially paid and the
Borrower created a new receivable for the unpaid portion of such Account;
(u) which does not comply in all material respects with the
requirements of all applicable laws and regulations, whether Federal, state
or local, including without limitation the Federal Consumer Credit
Protection Act, the Federal Truth in Lending Act and Regulation Z of the
Board;
(v) which is for goods that have been sold under a purchase order or
pursuant to the terms of a contract or other agreement or understanding
(written or oral) that indicates or purports that any Person other than the
Borrower has or has had an ownership interest in such goods, or which
indicates any party other than the Borrower as payee or remittance party;
(w) which was created on cash on delivery terms; or
(x) which the Administrative Agent reasonably determines may not be
paid by reason of the Account Debtor's inability to pay or which the
Administrative Agent otherwise reasonably determines is unacceptable for
any reason whatsoever.
In the event that an Account which was previously an Eligible Account
ceases to be an Eligible Account hereunder, the Borrower shall notify the
Administrative Agent thereof on and at the time of submission to the
Administrative Agent of the next Borrowing Base Certificate. In determining the
amount of an Eligible Account, the face amount of an Account may, in the
Administrative Agent's sole discretion, be reduced by, without duplication, to
the extent not reflected in such face amount, (i) the amount of all accrued and
actual discounts, claims, credits or credits pending, promotional program
allowances, price adjustments, finance charges or other allowances (including
any amount that the Borrower may be obligated to rebate to an Account Debtor
pursuant to the terms of any agreement or understanding (written or oral)) and
(ii) the aggregate amount of all cash received in respect of such Account but
not yet applied by the Borrower to reduce the amount of such Account.
"Eligible Inventory" means, at any time, raw material and finished goods
Inventory of the Borrower other than Inventory:
(a) which is not subject to a first priority perfected Lien in favor
of the Administrative Agent;
(b) which is subject to any Lien other than (i) a Lien in favor of the
Administrative Agent and (ii) a Permitted Encumbrance which does not have
priority over the Lien in favor of the Administrative Agent;
(c) which is, in the Administrative Agent's opinion, slow moving,
obsolete, unmerchantable, defective, used, unfit for sale, not salable at
prices approximating at least the cost of such Inventory in the ordinary
course of business or unacceptable due to age, type, category and/or
quantity;
(d) with respect to which any covenant, representation, or warranty
contained in this Agreement or the Security Agreement has been breached or
is not true and which does not conform to all standards imposed by any
Governmental Authority;
(e) in which any Person other than the Borrower shall (i) have any
direct or indirect ownership, interest or title to such Inventory or (ii)
be indicated on any purchase order or invoice with respect to such
Inventory as having or purporting to have an interest therein;
(f) which constitutes work-in-process, samples, prototypes, displays
or display items, bill-and-hold goods, goods that are returned or marked
for return, repossessed goods, defective or damaged goods, goods held on
consignment, or goods which are not of a type held for sale in the ordinary
course of business;
(g) which is not located in the U.S. or is in transit with a common
carrier from vendors and suppliers;
(h) which is located in any location leased by the Borrower where, in
each instance, more than $75,000 of inventory is located unless (i) the
lessor has delivered to the Administrative Agent a Collateral Access
Agreement or (ii) a reserve for rent, charges, and other amounts due or to
become due with respect to such facility has been established by the
Administrative Agent in its sole discretion;
(i) which is located in any third party warehouse or is in the
possession of a bailee (other than a third party processor) where, in each
instance, more than $75,000 is located and is not evidenced by a Document,
unless (i) such warehouseman or bailee has delivered to the Administrative
Agent a Collateral Access Agreement and such other documentation as the
Administrative Agent may require or (ii) an appropriate reserve has been
established by the Administrative Agent in its sole discretion;
(j) which is being processed offsite at a third party location or
outside processor, or is in-transit to or from said third party location or
outside processor;
(k) which is a discontinued product or component thereof;
(l) which is the subject of a consignment by the Borrower as
consignor;
(m) which is perishable;
(n) which contains or bears any intellectual property rights licensed
to the Borrower unless the Administrative Agent is satisfied that it may
sell or otherwise dispose of such Inventory without (i) infringing the
rights of such licensor, (ii) violating any contract with such licensor, or
(iii) incurring any liability with respect to payment of royalties other
than royalties incurred pursuant to sale of such Inventory under the
current licensing agreement;
(o) which is not reflected in a current perpetual inventory report of
the Borrower;
(p) for which reclamation rights have been asserted by the seller; or
(q) which the Administrative Agent otherwise reasonably determines is
unacceptable for any reason whatsoever.
In the event that Inventory which was previously Eligible Inventory ceases
to be Eligible Inventory hereunder, the Borrower shall notify the Administrative
Agent thereof on and at the time of submission to the Administrative Agent of
the next Borrowing Base Certificate.
"Environmental Laws" means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to health
and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"Equity Interests" means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
equity interest.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under Section
414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article VII.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) income or franchise taxes imposed on
(or measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located and (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower is located.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal accounting
officer, treasurer or controller of the Borrower.
"Fixed Charge Coverage Ratio" means, the ratio, determined as of the end of
each of fiscal quarter of the Borrower for the most-recently ended four fiscal
quarters, of (a) EBITDA to (b) the current maturities of long-term Indebtedness
plus interest expense, all calculated for the Borrower and its Subsidiaries on a
consolidated basis in accordance with GAAP.
"Funding Account" has the meaning assigned to such term in Section 4.01(g).
"GAAP" means generally accepted accounting principles in the United States
of America.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
"Guaranteed Obligations" has the meaning assigned to such term in Section
10.01.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person,
(i) all obligations, contingent or otherwise, of such Person as an account party
in respect of letters of credit and letters of guaranty, and (j) all
obligations, contingent or otherwise, of such Person in respect of bankers'
acceptances. The Indebtedness of any Person shall include the Indebtedness of
any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Interest Election Request" means a request by the Borrower to convert or
continue a Revolving Borrowing in accordance with Section 2.07.
"Interest Expense" means, with reference to any period, total interest
expense (including that attributable to Capital Lease Obligations) of the
Borrower and its Subsidiaries for such period with respect to all outstanding
Indebtedness of the Borrower and its Subsidiaries (including all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and net costs under Swap Agreements in respect of
interest rates to the extent such net costs are allocable to such period in
accordance with GAAP), calculated on a consolidated basis for the Borrower and
its Subsidiaries for such period in accordance with GAAP.
"Interest Payment Date" means (a) with respect to any ABR Loan, the first
day of each calendar month and the Revolving Loan Maturity Date and Term Loan
Maturity Date (as applicable), and (b) with respect to any Eurodollar Loan, the
last day of the Interest Period applicable to the Borrowing of which such Loan
is a part and, in the case of a Eurodollar Borrowing with an Interest Period of
more than three months' duration, each day prior to the last day of such
Interest Period that occurs at intervals of three months' duration after the
first day of such Interest Period and the Revolving Loan Maturity Date and Term
Loan Maturity Date (as applicable).
"Interest Period" means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect; provided, that (i) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, in the case of a Eurodollar
Borrowing only, such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day and (ii) any Interest Period pertaining to a Eurodollar
Borrowing that commences on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the last calendar
month of such Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period. For purposes hereof, the date of a
Borrowing initially shall be the date on which such Borrowing is made and, in
the case of a Revolving Borrowing, thereafter shall be the effective date of the
most recent conversion or continuation of such Borrowing.
"Inventory" has the meaning assigned to such term in the Security
Agreement.
"L/C Obligations" of the Loan Parties means any and all reimbursement, cash
collateral and other obligations of the Loan Parties, whether absolute or
contingent and howsoever and whensoever created, arising, evidenced or acquired
in connection with letters of credit issued by any of the Lenders.
"Lenders" means the Persons listed on the Commitment Schedule and any other
Person that shall have become a party hereto pursuant to an Assignment and
Assumption, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Assumption.
"Leverage Ratio" means, on any date, the ratio of (a) Indebtedness on such
date to (b) EBITDA for the period of four consecutive fiscal quarters ended on
such date (or, if such date is not the last day of a fiscal quarter, ended on
the last day of the fiscal quarter most recently ended prior to such date).
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Reuters Screen LIBOR01 Page (or on any
successor or substitute page of such Service, or any successor to or substitute
for such Service, providing rate quotations comparable to those currently
provided on such page of such Service, as determined by the Administrative Agent
from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period, as the rate for dollar deposits with a maturity comparable to
such Interest Period. In the event that such rate is not available at such time
for any reason, then the "LIBOR Rate" with respect to such Eurodollar Borrowing
for such Interest Period shall be the rate at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.
"Loan Documents" means this Agreement, any promissory notes issued pursuant
to the Agreement, the Collateral Documents, the Loan Guaranty, and all other
agreements, instruments, documents and certificates identified in Section 4.01
executed and delivered to, or in favor of, the Administrative Agent or any
Lenders and including all other pledges, powers of attorney, consents,
assignments, contracts, notices, letter of credit agreements and all other
written matter whether heretofore, now or hereafter executed by or on behalf of
any Loan Party, or any employee of any Loan Party, and delivered to the
Administrative Agent or any Lender in connection with the Agreement or the
transactions contemplated thereby. Any reference in the Agreement or any other
Loan Document to a Loan Document shall include all appendices, exhibits or
schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to the Agreement or such Loan Document as
the same may be in effect at any and all times such reference becomes operative.
"Loan Guarantor" means each Loan Party (other than the Borrower).
"Loan Guaranty" means Article X of this Agreement.
"Loan Parties" means the Borrower, the Borrower's existing domestic
Subsidiaries and any other Subsidiary who becomes a party to this Agreement in
the future, and their successors and assigns.
"Loans" means the loans and advances made by the Lenders pursuant to this
Agreement.
"Long-Term Debt" means any Indebtedness that, in accordance with GAAP,
constitutes (or, when incurred, constituted) a long-term liability.
"Majority Lenders" means, at any time, Lenders having Credit Exposure and
unused Commitments representing at least 51% of the sum of the total Credit
Exposure and unused Commitments at such time.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Borrower and the Subsidiaries taken as a whole, (b) the ability of any Loan
Party to perform any of its obligations under the Loan Documents to which it is
a party, (c) the Collateral, or the Administrative Agent's Liens (on behalf of
itself and the Lenders) on the Collateral or the priority of such Liens, or
(d) the rights of or benefits available to the Administrative Agent or the
Lenders thereunder.
"Material Indebtedness" means Indebtedness (other than the Loans), or
obligations in respect of one or more Swap Agreements, of any one or more of the
Borrower and its Subsidiaries in an aggregate principal amount exceeding
$250,000. For purposes of determining Material Indebtedness, the "obligations"
of the Borrower or any Subsidiary in respect of any Swap Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting agreements)
that the Borrower or such Subsidiary would be required to pay if such Swap
Agreement were terminated at such time.
"Maximum Liability" has the meaning assigned to such term in Section 10.10.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Income" means, for any period, the consolidated net income (or loss)
of the Borrower and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP; provided that there shall be excluded (a) the income (or
deficit) of any Person accrued prior to the date it becomes a Subsidiary or is
merged into or consolidated with the Borrower or any of its Subsidiaries, (b)
the income (or deficit) of any Person (other than a Subsidiary) in which the
Borrower or any of its Subsidiaries has an ownership interest, except to the
extent that any such income is actually received by the Borrower or such
Subsidiary in the form of dividends or similar distributions and (c) the
undistributed earnings of any Subsidiary to the extent that the declaration or
payment of dividends or similar distributions by such Subsidiary is not at the
time permitted by the terms of any contractual obligation (other than under any
Loan Document) or Requirement of Law applicable to such Subsidiary.
"Net Proceeds" means, with respect to any event, (a) the cash proceeds
received in respect of such event including (i) any cash received in respect of
any non-cash proceeds (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or purchase
price adjustment receivable or otherwise, but excluding any interest payments),
but only as and when received, (ii) in the case of a casualty, insurance
proceeds and (iii) in the case of a condemnation or similar event, condemnation
awards and similar payments, net of (b) the sum of (i) all reasonable fees and
out-of-pocket expenses paid to third parties (other than Affiliates) in
connection with such event, (ii) in the case of a sale, transfer or other
disposition of an asset (including pursuant to a sale and leaseback transaction
or a casualty or a condemnation or similar proceeding), the amount of all
payments required to be made as a result of such event to repay Indebtedness
(other than Loans) secured by such asset or otherwise subject to mandatory
prepayment as a result of such event and (iii) the amount of all taxes paid (or
reasonably estimated to be payable) and the amount of any reserves established
to fund contingent liabilities reasonably estimated to be payable, in each case
during the year that such event occurred or the next succeeding year and that
are directly attributable to such event (as determined reasonably and in good
faith by a Financial Officer).
"Net Worth" means the total of shareholders' or partnership equity of a
Person as it appears on the balance sheet of such Person, minus minority
interests in its Subsidiaries, and without regard to unrealized gains or losses
due to foreign currency fluctuations. In the case of the Borrower, its Net Worth
shall be measured on a consolidated basis with its consolidated Subsidiaries.
"Non-Paying Guarantor" has the meaning assigned to such term in Section
10.11.
"Obligated Party" has the meaning assigned to such term in Section 10.02.
"Obligations" means all unpaid principal of and accrued and unpaid interest
on the Loans, all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations of the Loan Parties to the Lenders or to any
Lender, the Administrative Agent, or any indemnified party arising under the
Loan Documents.
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
"Participant" has the meaning set forth in Section 9.04.
"Paying Guarantor" has the meaning assigned to such term in Section 10.11.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Permitted Acquisition" means any Acquisition by the Borrower or its
Subsidiaries in a transaction that satisfies each of the following requirements:
(a) such Acquisition is not a hostile or contested acquisition;
(b) the business acquired in connection with such Acquisition is (i)
located in the U.S., (ii) organized under U.S. and applicable state laws,
and (iii) not engaged, directly or indirectly, in any line of business
other than the businesses in which the Borrower or its Subsidiary are
engaged on the Effective Date and any business activities that are
substantially similar, related, or incidental thereto;
(c) both before and after giving effect to such Acquisition, each of
the representations and warranties herein is true and correct (except (i)
any such representation or warranty which relates to a specified prior date
and (ii) to the extent the Administrative Agent has been notified in
writing by the Borrower that any representation or warranty is not correct
and the Majority Lenders have explicitly waived in writing compliance with
such representation or warranty) and no Default exists, will exist, or
would result therefrom;
(d) as soon as available, but not less than thirty days prior to such
Acquisition, the Borrower has provided the Administrative Agent (i) notice
of such Acquisition and (ii) a copy of all business and financial
information reasonably requested by the Administrative Agent including pro
forma financial statements and statements of cash flow;
(e) if such Acquisition is an acquisition of the Equity Interests of a
Person, the Acquisition is structured so that the acquired Person shall
become a wholly-owned Subsidiary of the Borrower and, a Guarantor of the
Obligations, on terms and conditions satisfactory to the Bank;
(f) if such Acquisition is an acquisition of assets, the Acquisition
is structured so that the Borrower or a Subsidiary who is or shall become,
on terms and conditions satisfactory to the Administrative Agent, a
Guarantor of the Obligations shall acquire such assets;
(g) if such Acquisition is an acquisition of Equity Interests, such
Acquisition will not result in any violation of Regulation U;
(h) neither Borrower or its Subsidiary shall, as a result of or in
connection with any such Acquisition, assume or incur any direct or
contingent liabilities (whether relating to environmental, tax, litigation,
or other matters) that could have a Material Adverse Effect or any
Indebtedness that is not permitted by this Agreement;
(i) in connection with an Acquisition of the Equity Interests of any
Person, all Liens (other than Permitted Encumbrances) on property of such
Person shall be terminated unless the Majority Lenders otherwise consent,
and in connection with an Acquisition of the assets of any Person, all
Liens (other than Permitted Encumbrances) on such assets shall be
terminated, unless the Majority Lenders otherwise consent;
(j) the Borrower shall certify (and provide the Administrative Agent
with a pro forma calculation in form and substance reasonably satisfactory
to the Administrative Agent) to the Lenders that, after giving effect to
the completion of such Acquisition, the Leverage Ratio on a pro forma basis
shall be less than or equal to 3.25 to 1; and
(k) the Borrower shall certify (and provide the Administrative Agent
with a pro forma calculation in form and substance reasonably satisfactory
to the Administrative Agent) to the Lenders that, after giving effect to
the completion of such Acquisition, the then total aggregate outstanding
principal balance of Indebtedness incurred in connection with all Permitted
Acquisitions occurring in the immediately preceding four fiscal quarters,
including the current fiscal quarter, does not exceed $15,000,000.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
and other like Liens imposed by law, arising in the ordinary course of
business and securing obligations that are not overdue by more than 30 days
or are being contested in compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary course
of business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Article VII; and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Borrower or any Subsidiary;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed
by the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of any commercial bank organized
under the laws of the United States of America or any State thereof which
has a combined capital and surplus and undivided profits of not less than
$500,000,000;
(d) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into
with a financial institution satisfying the criteria described in
clause (c) above; and
(e) money market funds that (i) comply with the criteria set forth in
Securities and Exchange Commission Rule 2a-7 under the Investment Company
Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody's and (iii) have
portfolio assets of at least $5,000,000,000.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plan" means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Prepayment Event" means:
(a) any sale, transfer or other disposition (including pursuant to a
sale and leaseback transaction) of any property or asset of any Loan Party
constituting Collateral, other than dispositions described in
Section 6.05(a); or
(b) any casualty or other insured damage to, or any taking under power
of eminent domain or by condemnation or similar proceeding of, any property
or asset of any Loan Party constituting Collateral.
"Prime Rate" means the rate of interest per annum publicly announced from
time to time by Chase as its prime rate in effect at its principal office in New
York City; each change in the Prime Rate shall be effective from and including
the date such change is publicly announced as being effective.
"Register" has the meaning set forth in Section 9.04.
'Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Requirement of Law" means, as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, 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.
"Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other property) with respect to any Equity Interests in the
Borrower or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such Equity Interests in the Borrower or any option, warrant or other right
to acquire any such Equity Interests in the Borrower.
"Revolving Commitment" means, with respect to each Lender, the commitment,
if any, of such Lender to make Revolving Loans, expressed as an amount
representing the maximum possible aggregate amount of such Lender's Revolving
Exposure hereunder, as such commitment may be reduced from time to time pursuant
to (a) Section 2.09 and (b) assignments by or to such Lender pursuant to Section
9.04. The initial amount of each Lender's Revolving Commitment is set forth on
the Commitment Schedule, or in the Assignment and Assumption pursuant to which
such Lender shall have assumed its Revolving Commitment, as applicable. The
initial aggregate amount of the Lenders' Revolving Commitments is $20,000,000.
"Revolving Exposure" means, with respect to any Lender at any time, the sum
of the outstanding principal amount of such Lender's Revolving Loans.
"Revolving Lender" means, as of any date of determination, a Lender with a
Revolving Commitment or, if the Revolving Commitments have terminated or
expired, a Lender with Revolving Exposure.
"Revolving Loan" means a Loan made pursuant to Section 2.01(a).
"Revolving Loan Maturity Date" means three years from the date of this
Agreement or any earlier date on which the Revolving Commitments are reduced to
zero or otherwise terminated pursuant to the terms hereof.
"S&P" means Standard & Poor's Ratings Services, a division of The McGraw
Hill Companies, Inc.
"Secured Obligations" means all Obligations, together with all (i) Banking
Services Obligations, (ii) L/C Obligations owing to one or more Lenders, and
(iii) Swap Obligations owing to one or more Lenders or their respective
Affiliates; provided that at or prior to the time that any transaction relating
to an L/C Obligation or Swap Obligation is executed, the Lender party thereto
(other than Chase) shall have delivered written notice to the Administrative
Agent that such a transaction has been entered into and that it constitutes a
Secured Obligation entitled to the benefits of the Collateral Documents.
"Security Agreement" means that certain Pledge and Security Agreement,
dated as of the date hereof, between the Loan Parties and the Administrative
Agent, for the benefit of the Administrative Agent and the Lenders, and any
other pledge or security agreement entered into, after the date of this
Agreement by any other Loan Party (as required by this Agreement or any other
Loan Document), or any other Person, as the same may be amended, restated or
otherwise modified from time to time.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBOR Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"Subordinated Indebtedness" of a Person means any Indebtedness of such
Person the payment of which is subordinated to payment of the Secured
Obligations to the written satisfaction of the Administrative Agent.
"subsidiary" means, with respect to any Person (the "parent") at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.
"Subsidiary" means any direct or indirect subsidiary of the Borrower or a
Loan Party, as applicable.
"Supermajority Lenders" means, at any time, Lenders having Credit Exposure
and unused Commitments representing at least 66?% of the sum of the total Credit
Exposure and unused Commitments at such time.
"Swap Agreement" means any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement involving, or
settled by reference to, one or more rates, currencies, commodities, equity or
debt instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions; provided that no phantom
stock or similar plan providing for payments only on account of services
provided by current or former directors, officers, employees or consultants of
the Borrower or the Subsidiaries shall be a Swap Agreement.
"Swap Obligations" of a Person means any and all obligations of such
Person, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (a) any and all Swap
Agreements, and (b) any and all cancellations, buy backs, reversals,
terminations or assignments of any Swap Agreement transaction.
"Taxes" means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
"Term Lenders" means, as of any date of determination, Lenders having a
Term Loan Commitment.
"Term Loan Commitment" means (a) as to any Term Lender, the aggregate
commitment of such Term Lender to make the Term Loan as set forth in the
Commitment Schedule or in the most recent Assignment and Assumption executed by
such Term Lender and (b) as to all Term Lenders, the aggregate commitment of all
Term Lenders to make the Term Loan, which aggregate commitment is $5,550,000 on
the date of this Agreement. After advancing the Term Loan, each reference to a
Term Lender's Term Loan Commitment shall refer to that Term Lender's Applicable
Percentage of the Term Loan.
"Term Loan" means the Term Loan extended by the Lenders to the Borrower
pursuant to
Section 2.01(b) hereof.
"Term Loan Maturity Date" means August 1, 2012.
"Transactions" means the execution, delivery and performance by the
Borrower of this Agreement, the borrowing of Loans and other credit extensions,
the use of the proceeds thereof.
"Type", when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBOR Rate or the Alternate Base Rate.
"UCC" means the Uniform Commercial Code as in effect from time to time in
the State of Illinois or any other state the laws of which are required to be
applied in connection with the issue of perfection of security interests.
"Unliquidated Obligations" means, at any time, any Secured Obligations (or
portion thereof) that are contingent in nature or unliquidated at such time,
including any Secured Obligation that is: (i) an obligation to reimburse a bank
for drawings not yet made under a letter of credit issued by it; (ii) any other
obligation (including any guarantee) that is contingent in nature at such time;
or (iii) an obligation to provide collateral to secure any of the foregoing
types of obligations.
"Withdrawal Liability" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a "Revolving
Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a
"Eurodollar Revolving Loan"). Borrowings also may be classified and referred to
by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a "Eurodollar
Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Majority Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions set forth
herein, each Lender agrees to make (a) Revolving Loans to the Borrower from time
to time during the Availability Period in an aggregate principal amount that
will not result in (i) such Lender's Revolving Exposure exceeding such Lender's
Revolving Commitment or (ii) the total Revolving Exposures exceeding the lesser
of (x) the sum of the total Revolving Commitments or (y) the Borrowing Base, and
(b) a Term Loan to the Borrower on the Effective Date, in an amount equal to
such Lender's Term Loan Commitment by making immediately available funds
available to the Administrative Agent's designated account, not later than 1:00
p.m., New York time. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, prepay and reborrow
Revolving Loans. Amounts repaid in respect of Term Loans may not be reborrowed.
SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be made as part of
a Borrowing consisting of Loans of the same Class and Type made by the Lenders
ratably in accordance with their respective Commitments of the applicable Class.
The Term Loan shall amortize as set forth in Section 2.10.
(b) Subject to Section 2.14, each Revolving Borrowing and Term Borrowing
shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may
request in accordance herewith, provided that all Borrowings made on the
Effective Date must be made as ABR Borrowings but may be converted into
Eurodollar Borrowings in accordance with Section 2.08. Each Lender at its option
may make any Eurodollar Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan; provided that any exercise of such
option shall not affect the obligation of the Borrower to repay such Loan in
accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Revolving Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $100,000 and not less than $500,000. ABR Revolving
Borrowings shall be in an aggregate amount that is an integral multiple of
$50,000 and not less than $50,000; provided that an ABR Revolving Borrowing may
be in an aggregate amount that is equal to the entire unused balance of the
total Revolving Commitments. Borrowings of more than one Type and Class may be
outstanding at the same time; provided that there shall not at any time be more
than a total of fourteen Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the (i) the Revolving Loan Maturity Date, for Revolving Loans, or (ii) the Term
Loan Maturity Date, for the Term Loan.
SECTION 2.03. Requests for Revolving Borrowings. To request a Revolving
Borrowing, the Borrower shall notify the Administrative Agent of such request
either in writing (delivered by hand or facsimile) in a form approved by the
Administrative Agent and signed by the Borrower or by telephone (a) in the case
of a Eurodollar Borrowing, not later than 11:00 a.m., New York time, three
Business Days before the date of the proposed Borrowing or (b) in the case of an
ABR Borrowing, not later than 11:00 a.m., New York time, one Business Day before
the date of the proposed Borrowing. Each such telephonic Borrowing Request shall
be irrevocable and shall be confirmed promptly by hand delivery or facsimile to
the Administrative Agent of a written Borrowing Request in a form approved by
the Administrative Agent and signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.01:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing; and
(iv) in the case of a Eurodollar Borrowing, the initial Interest Period to
be applicable thereto, which shall be a period contemplated by the
definition of the term "Interest Period".
If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period
is specified with respect to any requested Eurodollar Revolving Borrowing, then
the Borrower shall be deemed to have selected an Interest Period of one month's
duration. Provided the Administrative Agent receives the Borrowing Request by
11:00 a.m. New York time, the Administrative Agent shall advise each Lender by
2:00 p.m., New York time on the date of receipt, of the details thereof and of
the amount of such Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. [Intentionally omitted]
SECTION 2.05. [Intentionally omitted]
SECTION 2.06. [Intentionally omitted]
SECTION 2.07. Funding of Borrowings. (a) Each Lender shall make each Loan
to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 1:00 p.m., New York time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders in an amount equal to such Lender's Applicable Percentage;
provided that, the Term Loan shall be made as provided in Section 2.01(b) and
2.02(b). The Administrative Agent will make such Loans available to the Borrower
by crediting the amounts so received, in like funds, to the account designated
by Borrower in the Borrowing Request no later than the end of the Business Day
received.
(b) Provided that notice of a Borrowing Request is given to the Lenders as
provided in Section 2.03, unless the Administrative Agent shall have received
notice from a Lender prior to the proposed date of any Borrowing that such
Lender will not make available to the Administrative Agent such Lender's share
of such Borrowing, the Administrative Agent may assume that such Lender has made
such share available on such date in accordance with paragraph (a) of this
Section and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Borrowing available to the Administrative Agent,
then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to the Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the Federal Funds Effective Rate or,
if such rate is not then available or determinable, a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate applicable
to ABR Loans. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender's Loan included in such Borrowing.
SECTION 2.08. Interest Elections. (a) Each Revolving Borrowing initially
shall be of the Type specified in the applicable Borrowing Request and, in the
case of a Eurodollar Revolving Borrowing, shall have an initial Interest Period
as specified in such Borrowing Request. Thereafter, the Borrower may elect to
convert such Borrowing to a different Type or to continue such Borrowing and, in
the case of a Eurodollar Revolving Borrowing, may elect Interest Periods
therefor, all as provided in this Section. The Borrower may elect different
options with respect to different portions of the affected Borrowing, in which
case each such portion shall be allocated ratably among the Lenders holding the
Loans comprising such Borrowing, and the Loans comprising each such portion
shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall notify
the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or facsimile to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.
(c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each
resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing
or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of
the term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request (but in no
event later than the next Business Day), the Administrative Agent shall advise
each Lender of the details thereof and of such Lender's portion of each
resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Revolving Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid as
provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if
an Event of Default has occurred and is continuing and the Administrative Agent,
at the request of the Majority Lenders, so notifies the Borrower, then, so long
as an Event of Default is continuing (i) no outstanding Revolving Borrowing may
be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid,
each Eurodollar Revolving Borrowing shall be converted to an ABR Borrowing at
the end of the Interest Period applicable thereto.
SECTION 2.09. Termination and Reduction of Commitments. (a) Unless
previously terminated, (i) the Term Loan Commitments shall terminate at 5:00
p.m., New York time, on the Effective Date and (ii) all other Commitments shall
terminate on the Revolving Loan Maturity Date.
(b) The Borrower may at any time terminate the Commitments upon (i) the
payment in full of all outstanding Loans, together with accrued and unpaid
interest thereon, (ii) the payment in full of the accrued and unpaid fees, and
(iii) the payment in full of all reimbursable expenses and other Obligations
together with accrued and unpaid interest thereon.
(c) The Borrower may from time to time reduce the Revolving Commitments;
provided that (i) each reduction of the Revolving Commitments shall be in an
amount that is an integral multiple of $500,000 and not less than $500,000 and
(ii) the Borrower shall not reduce the Revolving Commitments if, after giving
effect to any concurrent prepayment of the Revolving Loans in accordance with
Section 2.10, the sum of the Revolving Exposures would exceed the lesser of the
total Revolving Commitments and the Borrowing Base.
(d) The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Commitments under paragraph (b) or (c) of this Section
at least three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant
to this Section shall be irrevocable; provided that a notice of termination of
the Commitments delivered by the Borrower may state that such notice is
conditioned upon the effectiveness of other credit facilities, in which case
such notice may be revoked by the Borrower (by notice to the Administrative
Agent on or prior to the specified effective date) if such condition is not
satisfied. Any termination or reduction of the Commitments shall be permanent.
Each reduction of the Commitments shall be made ratably among the Lenders in
accordance with their respective Commitments.
SECTION 2.10. Repayment and Amortization of Loans; Evidence of Debt. (a)
The Borrower hereby unconditionally promises to pay to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each
Revolving Loan on the Revolving Loan Maturity Date. The Borrower shall repay the
Term Loan on each date set forth below in the aggregate principal amount set
forth opposite such date (as adjusted from time to time pursuant to Section
2.11(e)):
Principal Payment Date Principal Amount Due
---------------------- --------------------
August 1, 2008 $150,000
November 1, 2008 $225,000
February 1, 2009 $225,000
May 1, 2009 $225,000
August 1, 2009 $225,000
November 1, 2009 $300,000
February 1, 2010 $300,000
May 1, 2010 $300,000
August 1, 2010 $300,000
November 1, 2010 $375,000
February 1, 2011 $375,000
May 1, 2011 $375,000
August 1, 2011 $375,000
November 1, 2011 $450,000
February 1, 2012 $450,000
May 1, 2012 $450,000
August 1, 2012 $450,000
In the event that any payment date set forth above is not a Business Day, the
Borrower shall make the principal payment on the next succeeding Business Day.
To the extent not previously paid, all unpaid Term Loans shall be paid in full
in cash by the Borrower on the Term Loan Maturity Date.
(b) At all times that full cash dominion is in effect pursuant to Section
7.3 of the Security Agreement, on each Business Day, the Administrative Agent
shall apply all funds credited to the Collection Account the previous Business
Day (whether or not immediately available).
(c) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.
(d) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.
(e) The entries made in the accounts maintained pursuant to paragraph (c)
or (d) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.
(f) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Administrative Agent. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.11. Prepayment of Loans. (a) The Borrower shall have the right at
any time and from time to time to prepay any Borrowing in whole or in part,
subject to prior notice in accordance with paragraph (e) of this Section.
(b) In the event and on such occasion that the total Revolving Exposure
exceeds the lesser of (A) the aggregate Revolving Commitments or (B) the
Borrowing Base, the Borrower shall prepay the Revolving Loans in an aggregate
amount equal to such excess.
(c) In the event and on each occasion that any Net Proceeds are received by
or on behalf of any Loan Party in respect of any Prepayment Event, the Borrower
shall, immediately after such Net Proceeds are received by any Loan Party,
prepay the Obligations in an aggregate amount equal to 100% of such Net
Proceeds, provided that if the Borrower shall deliver to the Administrative
Agent a certificate of a Financial Officer to the effect that the Loan Parties
intend to apply the Net Proceeds from such event (or a portion thereof specified
in such certificate), within 90 days after receipt of such Net Proceeds, to
acquire (or replace or rebuild) real property, equipment or other tangible
assets (excluding inventory) to be used in the business of the Loan Parties, and
certifying that no Default has occurred and is continuing, then no prepayment
shall be required pursuant to this paragraph in respect of the Net Proceeds
specified in such certificate; provided that to the extent of any such Net
Proceeds therefrom that have not been so applied by the end of such 90-day
period, at which time a prepayment shall be required in an amount equal to such
Net Proceeds that have not been so applied.
(d) All such amounts pursuant to Section 2.11(b) or (c) (as to any
insurance or condemnation proceeds, to the extent they arise from casualties or
losses to Equipment, Fixtures and real property) shall be applied, first to
prepay the Term Loan (to be applied to installments of the Term Loan in inverse
order of maturity and second to prepay the Revolving Loans with a corresponding
reduction in the Revolving Commitment. All such amounts pursuant to Section
2.11(c) (as to any insurance or condemnation proceeds, to the extent they arise
from casualties or losses to cash or Inventory) shall be applied to prepay the
Revolving Loans with a corresponding reduction in the Revolving Commitment. If
the precise amount of insurance or condemnation proceeds allocable to Inventory
as compared to Equipment, Fixtures and real property is not otherwise
determined, the allocation and application of those proceeds shall be determined
by the Administrative Agent, in its sole discretion.
(e) The Borrower shall notify the Administrative Agent by telephone
(confirmed by facsimile) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Revolving Borrowing, not later than 11:00 a.m., New
York time, three Business Days before the date of prepayment, or (ii) in the
case of prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., New
York time, one Business Day before the date of prepayment. Each such notice
shall be irrevocable and shall specify the prepayment date and the principal
amount of each Borrowing or portion thereof to be prepaid; provided that, if a
notice of prepayment is given in connection with a conditional notice of
termination of the Commitments as contemplated by Section 2.09, then such notice
of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.09. Promptly following receipt of any such notice
relating to a Revolving Borrowing, the Administrative Agent shall advise the
Lenders of the contents thereof. Each partial prepayment of any Revolving
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Revolving Borrowing of the same Type as provided in Section 2.02.
Each prepayment of a Revolving Borrowing shall be applied ratably to the
Revolving Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section 2.13.
SECTION 2.12. Fees. (a) The Borrower agrees to pay to the Administrative
Agent for the account of each Lender a commitment fee, which shall accrue at the
Applicable Rate on the average daily amount of the Available Revolving
Commitment of such Lender during the period from and including the Effective
Date to but excluding the date on which the Lenders' Revolving Commitments
terminate. Accrued commitment fees shall be payable in arrears on the first day
of each January, April, July and October and on the date on which the Revolving
Commitments terminate, commencing on the first such date to occur after the date
hereof. All commitment fees shall be computed on the basis of a year of 360 days
and shall be payable for the actual number of days elapsed.
(b) The Borrower agrees to pay to the Administrative Agent, for its own
account, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent.
(c) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent for distribution, in
the case of commitment fees and participation fees, to the Lenders. Fees paid
shall not be refundable under any circumstances.
SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing shall
bear interest at the Alternate Base Rate plus the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest at
the Adjusted LIBOR Rate for the Interest Period in effect for such Borrowing
plus the Applicable Rate.
(c) Notwithstanding the foregoing, during the occurrence and continuance of
an Event of Default, the Administrative Agent or the Majority Lenders may, at
their option, by notice to the Borrower (which notice may be revoked at the
option of the Majority Lenders notwithstanding any provision of Section 9.02
requiring the consent of "each Lender affected thereby" for reductions in
interest rates), declare that (i) all Loans shall bear interest at 2% plus the
rate otherwise applicable to such Loans as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount outstanding hereunder,
such amount shall accrue at 2% plus the rate applicable to such fee or other
obligation as provided hereunder.
(d) Accrued interest on each Loan (for ABR Loans, accrued through the last
day of the prior calendar month) shall be payable in arrears on each Interest
Payment Date for such Loan and upon termination of the Commitments; provided
that (i) interest accrued pursuant to paragraph (d) of this Section shall be
payable on demand, (ii) in the event of any repayment or prepayment of any Loan
(other than a prepayment of an ABR Revolving Loan prior to the end of the
Availability Period), accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment and (iii) in the
event of any conversion of any Eurodollar Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year of 360
days, except that interest computed by reference to the Alternate Base Rate at
times when the Alternate Base Rate is based on the Prime Rate shall be computed
on the basis of a year of 365 days (or 366 days in a leap year), and in each
case shall be payable for the actual number of days elapsed. The applicable
Alternate Base Rate, Adjusted LIBOR Rate or LIBOR Rate shall be determined by
the Administrative Agent, and such determination shall be conclusive absent
manifest error.
SECTION 2.14. Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBOR Rate or the LIBOR Rate, as
applicable, for such Interest Period; or
(b) the Administrative Agent is advised by the Majority Lenders that
the Adjusted LIBOR Rate or the LIBOR Rate, as applicable, for such Interest
Period will not adequately and fairly reflect the cost to such Lenders (or
Lender) of making or maintaining their Loans (or its Loan) included in such
Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or facsimile as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Revolving Borrowing to, or
continuation of any Revolving Borrowing as, a Eurodollar Borrowing shall be
ineffective, and (ii) if any Borrowing Request requests a Eurodollar Revolving
Borrowing, such Borrowing shall be made as an ABR Borrowing.
SECTION 2.15. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBOR Rate); or
(ii) impose on any Lender or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received or
receivable by such Lender hereunder (whether of principal, interest or
otherwise), then the Borrower will pay to such Lender such additional amount or
amounts as will compensate such Lender for such additional costs incurred or
reduction suffered.
(b) If any Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's holding company, if any, as
a consequence of this Agreement or the Loans made by such Lender to a level
below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts necessary
to compensate such Lender or its holding company, as the case may be, as
specified in paragraph (a) or (b) of this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
(d) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender's right to
demand such compensation; provided that the Borrower shall not be required to
compensate a Lender pursuant to this Section for any increased costs or
reductions incurred more than 270 days prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's intention to claim compensation therefor;
provided further that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the 270-day period referred to above shall be
extended to include the period of retroactive effect thereof.
SECTION 2.16. Break Funding Payments. In the event of (a) the payment of
any principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto, (c) the failure to borrow, convert, continue or
prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section
2.09(d) and is revoked in accordance therewith), or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.19, then,
in any such event, the Borrower shall compensate each Lender for the loss, cost
and expense attributable to such event. In the case of a Eurodollar Loan, such
loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBOR Rate that would have been applicable
to such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
SECTION 2.17. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent or Lender
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent and each Lender,
within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender, as the case may be, on or with respect to any payment by or on account
of any obligation of the Borrower hereunder (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to the Borrower by a Lender, or by the Administrative Agent on its own behalf or
on behalf of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to
the Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
SECTION 2.18. Payments Generally; Allocation of Proceeds; Sharing of
Set-offs. (a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees, or of amounts payable under
Section 2.15, 2.16 or 2.17, or otherwise) prior to 2:00 p.m., New York time, on
the date when due, in immediately available funds, without set-off or
counterclaim. Any amounts received after such time on any date will be deemed to
have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to the
Administrative Agent at its offices at 500 Plum Street, Syracuse, New York or to
such other location as the Administrative Agent may direct in writing, except
that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made
directly to the Persons entitled thereto. The Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof (but in no event
later than the end of the Business Day received if received by 2:00 p.m., New
York time). If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.
(b) Any proceeds of Collateral received by the Administrative Agent (i) not
constituting either (A) a specific payment of principal, interest, fees or other
sum payable under the Loan Documents (which shall be applied as specified by the
Borrower), (B) a mandatory prepayment (which shall be applied in accordance with
Section 2.11) or (C) amounts to be applied from the Collection Account when full
cash dominion is in effect (which shall be applied in accordance with Section
2.10(b)) or (ii) after an Event of Default has occurred and is continuing and
the Administrative Agent so elects or the Majority Lenders so direct, such funds
shall be applied ratably first, to pay any fees, indemnities, or expense
reimbursements including amounts then due to the Administrative Agent from the
Borrower (other than in connection with Banking Services, L/C Obligations or
Swap Obligations), second, to pay any fees or expense reimbursements then due to
the Lenders from the Borrower (other than in connection with Banking Services,
L/C Obligations or Swap Obligations), third, to pay interest then due and
payable on the Loans ratably, fourth, to prepay principal on the Loans and to
payment of any amounts owing with respect to Banking Services, L/C Obligations
and Swap Obligations ratably (with amounts applied to the Term Loans applied to
installments of the Term Loans in inverse order of maturity), and fifth, to the
payment of any other Secured Obligation due to the Administrative Agent or any
Lender by the Borrower. Notwithstanding anything to the contrary contained in
this Agreement, unless so directed by the Borrower, or unless a Default is in
existence, neither the Administrative Agent nor any Lender shall apply any
payment which it receives to any Eurodollar Loan of a Class, except (a) on the
expiration date of the Interest Period applicable to any such Eurodollar Loan or
(b) in the event, and only to the extent, that there are no outstanding ABR
Loans of the same Class and, in any such event, the Borrower shall pay the break
funding payment required in accordance with Section 2.16. The Administrative
Agent and the Lenders shall have the continuing and exclusive right to apply and
reverse and reapply any and all such proceeds and payments to any portion of the
Secured Obligations.
(c) At the election of the Administrative Agent, all payments of principal,
interest, fees, premiums, reimbursable expenses (including, without limitation,
all reimbursement for fees and expenses pursuant to Section 9.03), and other
sums payable under the Loan Documents, may be paid from the proceeds of
Borrowings made hereunder whether made following a request by the Borrower
pursuant to Section 2.03 or a deemed request as provided in this Section or may
be deducted from any deposit account of the Borrower maintained with the
Administrative Agent. The Borrower hereby irrevocably authorizes (i) the
Administrative Agent to make a Borrowing for the purpose of paying each payment
of principal, interest and fees as it becomes due hereunder or any other amount
due under the Loan Documents and agrees that all such amounts charged shall
constitute Loans, and all such Borrowings shall be deemed to have been requested
pursuant to Section 2.03, and (ii) the Administrative Agent to charge any
deposit account of the Borrower maintained with the Administrative Agent for
each payment of principal, interest and fees as it becomes due hereunder or any
other amount due under the Loan Documents.
(d) If any Lender shall, by exercising any right of set-off or counterclaim
or otherwise, obtain payment in respect of any principal of or interest on any
of its Loans resulting in such Lender receiving payment of a greater proportion
of the aggregate amount of its Loans and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value), no later than the end of the
Business Day next succeeding the date of receipt, participations in the Loans of
other Lenders to the extent necessary so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Loans; provided that
(i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be rescinded
and the purchase price restored to the extent of such recovery, without
interest, and (ii) the provisions of this paragraph shall not be construed to
apply to any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans to any assignee or participant, other than to the Borrower or any
Subsidiary or Affiliate thereof (as to which the provisions of this paragraph
shall apply). The Borrower consents to the foregoing and agrees, to the extent
it may effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.
(e) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders hereunder that the Borrower will not make
such payment, the Administrative Agent may assume that the Borrower has made
such payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders the amount due. In such event, if the
Borrower has not in fact made such payment, then each of the Lenders severally
agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the Federal Funds Effective Rate or, if
such rate is not then available or determinable, at a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.
(f) If any Lender shall fail to make any payment required to be made by it
hereunder, then the Administrative Agent may, in its discretion (notwithstanding
any contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations hereunder until all such unsatisfied obligations are fully paid.
SECTION 2.19. Returned Payments. If after receipt of any payment which is
applied to the payment of all or any part of the Obligations, the Administrative
Agent or any Lender is for any reason compelled to surrender such payment or
proceeds to any Person because such payment or application of proceeds is
invalidated, declared fraudulent, set aside, determined to be void or voidable
as a preference, impermissible setoff, or a diversion of trust funds, or for any
other reason, then the Obligations or part thereof intended to be satisfied
shall be revived and continued and this Agreement shall continue in full force
as if such payment or proceeds had not been received by the Administrative Agent
or such Lender. The provisions of this Section 2.19 shall be and remain
effective notwithstanding any contrary action which may have been taken by the
Administrative Agent or any Lender in reliance upon such payment or application
of proceeds. The provisions of this Section 2.19 shall survive the termination
of this Agreement.
ARTICLE III
Representations and Warranties
Each Loan Party represents and warrants to the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Loan Parties and each of
its Subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. Authorization; Enforceability. The Transactions are within
each Loan Party's organizational powers and have been duly authorized by all
necessary organizational actions and, if required, actions by equity holders.
The Loan Documents to which each Loan Party is a party have been duly executed
and delivered by such Loan Party and constitute a legal, valid and binding
obligation of such Loan Party, enforceable in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do
not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as have been obtained
or made and are in full force and effect and except for filings necessary to
perfect Liens created pursuant to the Loan Documents, (b) will not violate any
Requirement of Law applicable to any Loan Party or any of its Subsidiaries, (c)
will not violate or result in a default under any indenture, agreement or other
instrument binding upon any Loan Party or any of its Subsidiaries or its assets,
or give rise to a right thereunder to require any payment to be made by any Loan
Party or any of its Subsidiaries, and (d) will not result in the creation or
imposition of any Lien on any asset of any Loan Party or any of its
Subsidiaries, except Liens created pursuant to the Loan Documents.
SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The
Borrower has heretofore furnished to the Lenders its consolidated balance sheet
and statements of income, stockholders equity and cash flows (i) as of and for
the fiscal year ended December 31, 2007, reported on by KPMG, LLP, independent
public accountants, and (ii) as of and for the fiscal quarter and the portion of
the fiscal year ended March 31, 2008, certified by its chief financial officer.
Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Borrower and
its consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence of
footnotes in the case of the statements referred to in clause (ii) above.
(b) No event, change or condition has occurred that has had, or could
reasonably be expected to have, a Material Adverse Effect, since December 31,
2007.
SECTION 3.05. Properties. (a) As of the date of this Agreement, Schedule
3.05 sets forth the address of each parcel of real property located in the
United States that is owned or leased by each Loan Party containing Collateral
having a value in excess of $75,000. Each of such leases and subleases is valid
and enforceable in accordance with its terms and is in full force and effect,
and no default by any party to any such lease or sublease exists. Each of the
Loan Parties and its Subsidiaries has good and indefeasible title to, or valid
leasehold interests in, all its real and personal property, free of all Liens
other than those permitted by Section 6.02.
(b) Each Loan Party and its Subsidiaries owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
necessary to its business as currently conducted, and the use thereof by the
Loan Parties and its Subsidiaries does not infringe in any material respect upon
the rights of any other Person, and the Loan Parties' rights thereto are not
subject to any licensing agreement or similar arrangement.
SECTION 3.06. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of any Loan Party, threatened
against or affecting the Loan Parties or any of their Subsidiaries (i) as to
which there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve this Agreement or the Transactions.
(b) Except for the Disclosed Matters (i) no Loan Party nor any of its
Subsidiaries has received notice of any claim with respect to any Environmental
Liability or knows of any basis for any Environmental Liability and (ii) and
except with respect to any other matters that, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect, no Loan
Party nor any of its Subsidiaries (1) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or
other approval required under any Environmental Law or (2) has become subject to
any Environmental Liability.
(c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each Loan Party and its
Subsidiaries is in compliance with all Requirements of Law applicable to it or
its property and all indentures, agreements and other instruments binding upon
it or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. No Default has occurred and is continuing.
SECTION 3.08. Investment Company Status. No Loan Party nor any of its
Subsidiaries is an "investment company" as defined in, or subject to regulation
under, the Investment Company Act of 1940.
SECTION 3.09. Taxes. Each Loan Party and its Subsidiaries has timely filed
or caused to be filed all Tax returns and reports required to have been filed
and has paid or caused to be paid all Taxes required to have been paid by it,
except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which such Loan Party or such Subsidiary, as applicable, has
set aside on its books adequate reserves or (b) to the extent that the failure
to do so could not be expected to result in a Material Adverse Effect. No tax
liens have been filed and no claims are being asserted with respect to any such
taxes.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected
to occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $1,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $1,000,000 the fair
market value of the assets of all such underfunded Plans.
SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
Subsidiary is subject, and all other matters known to it, that, individually or
in the aggregate, could reasonably be expected to result in a Material Adverse
Effect. None of the other reports, financial statements, certificates or other
information furnished by or on behalf of the any Loan Party to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or any other Loan Document (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, the Borrower represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time delivered and, if such projected financial
information was delivered prior to the Effective Date, as of the Effective Date.
SECTION 3.12. Material Agreements. No Loan Party is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in (i) any material agreement to which it is a party or
(ii) any agreement or instrument evidencing or governing Indebtedness, other
than defaults which could not reasonably be expected to have a Material Adverse
Effect.
SECTION 3.13. Solvency. Immediately after the consummation of the
Transactions to occur on the Effective Date, (i) the fair value of the assets of
each Loan Party, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (ii) the present fair saleable value of
the property of each Loan Party will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (iii) each Loan Party will be able to pay its debts
and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (iv) each Loan Party will not have
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted after
the Effective Date.
SECTION 3.14. Insurance. Schedule 3.14 sets forth a description of all
property and liability insurance maintained by or on behalf of the Loan Parties
and the Subsidiaries as of the Effective Date. As of the Effective Date, all
premiums in respect of such insurance have been paid. The Borrower believes that
the insurance maintained by or on behalf of the Borrower and the Subsidiaries is
adequate.
SECTION 3.15. Capitalization and Subsidiaries. Schedule 3.15 sets forth (a)
a correct and complete list of the name and relationship to the Borrower of each
and all of the Borrower's Subsidiaries, (b) a true and complete listing of each
class of each of the Borrower's authorized Equity Interests, of which all of
such issued shares are validly issued, outstanding, fully paid and
non-assessable, and owned beneficially and of record by the Persons identified
on Schedule 3.15, and (c) the type of entity of the Borrower and each of its
Subsidiaries. All of the issued and outstanding Equity Interests owned by any
Loan Party has been (to the extent such concepts are relevant with respect to
such ownership interests) duly authorized and issued and is fully paid and
non-assessable.
SECTION 3.16. Security Interest in Collateral. The provisions of this
Agreement and the other Loan Documents create legal and valid Liens on all the
Collateral in favor of the Administrative Agent, for the benefit of the
Administrative Agent and the Lenders, and such Liens constitute continuing Liens
on the Collateral, securing the Secured Obligations, enforceable against the
applicable Loan Party and all third parties, and having priority over all other
Liens on the Collateral except in the case of Permitted Encumbrances, to the
extent any such Permitted Encumbrances would have priority over the Liens in
favor of the Administrative Agent pursuant to any applicable law.
SECTION 3.17. Employment Matters. As of the Effective Date, there are no
strikes, lockouts or slowdowns against any Loan Party or any Subsidiary pending
or, to the knowledge of the Borrower, threatened. The hours worked by and
payments made to employees of the Loan Parties and the Subsidiaries have not
been in violation of the Fair Labor Standards Act or any other applicable
Federal, state, local or foreign law dealing with such matters. All payments due
from any Loan Party or any Subsidiary, or for which any claim may be made
against any Loan Party or any Subsidiary, on account of wages and employee
health and welfare insurance and other benefits, have been paid or accrued as a
liability on the books of the Loan Party or such Subsidiary.
SECTION 3.18. Affiliate Transactions. Except as set forth on Schedule 3.18,
as of the date of this Agreement, there are no existing or proposed agreements,
arrangements, understandings, or transactions between any Loan Party and any of
the officers, members, managers, directors, stockholders, parents, other
interest holders, employees, or Affiliates (other than Subsidiaries) of any Loan
Party or any members of their respective immediate families, and none of the
foregoing Persons are directly or indirectly indebted to or have any direct or
indirect ownership, partnership, or voting interest in any Affiliate of any Loan
Party or any Person with which any Loan Party has a business relationship or
which competes with any Loan Party
SECTION 3.19. Common Enterprise. The successful operation and condition of
each of the Loan Parties is dependent on the continued successful performance of
the functions of the group of the Loan Parties as a whole and the successful
operation of each of the Loan Parties is dependent on the successful performance
and operation of each other Loan Party. Each Loan Party expects to derive
benefit (and its board of directors or other governing body has determined that
it may reasonably be expected to derive benefit), directly and indirectly, from
(i) successful operations of each of the other Loan Parties and (ii) the credit
extended by the Lenders to the Borrower hereunder, both in their separate
capacities and as members of the group of companies. Each Loan Party has
determined that execution, delivery, and performance of this Agreement and any
other Loan Documents to be executed by such Loan Party is within its purpose,
will be of direct and indirect benefit to such Loan Party, and is in its best
interest.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans
hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 9.02):
(a) Credit Agreement and Loan Documents. The Administrative Agent (or
its counsel) shall have received (i) from each party hereto either (A) a
counterpart of this Agreement signed on behalf of such party or (B) written
evidence satisfactory to the Administrative Agent (which may include
facsimile transmission of a signed signature page of this Agreement) that
such party has signed a counterpart of this Agreement and (ii) duly
executed copies of the Loan Documents and such other certificates,
documents, instruments and agreements as the Administrative Agent shall
reasonably request in connection with the transactions contemplated by this
Agreement and the other Loan Documents, including any promissory notes
requested by a Lender pursuant to Section 2.10 payable to the order of each
such requesting Lender and a written opinion of the Loan Parties' counsel,
addressed to the Administrative Agent and the Lenders in substantially the
form of Exhibit B.
(b) Closing Certificates; Certified Certificate of Incorporation; Good
Standing Certificates. The Administrative Agent shall have received (i) a
certificate of each Loan Party, dated the Effective Date and executed by
its Secretary or Assistant Secretary, which shall (A) certify the
resolutions of its Board of Directors, members or other body authorizing
the execution, delivery and performance of the Loan Documents to which it
is a party, (B) identify by name and title and bear the signatures of the
Financial Officers and any other officers of such Loan Party authorized to
sign the Loan Documents to which it is a party, and (C) contain appropriate
attachments, including the certificate or articles of incorporation or
organization of each Loan Party certified as true and correct by the
Secretary or Assistant Secretary, and a true and correct copy of its
by-laws or operating, management or partnership agreement, and (ii) a long
form good standing certificate for each Loan Party from its jurisdiction of
organization.
(c) No Default Certificate. The Administrative Agent shall have
received a certificate, signed by the chief financial officer of the
Borrower, on the initial Borrowing date (i) stating that no Default has
occurred and is continuing, (ii) stating that the representations and
warranties contained in Article III are true and correct as of such date,
and (iii) certifying any other factual matters as may be reasonably
requested by the Administrative Agent.
(d) Fees. The Lenders and the Administrative Agent shall have received
all fees required to be paid, and all expenses for which invoices have been
presented (including the reasonable fees and expenses of legal counsel), on
or before the Effective Date. All such amounts will be paid with proceeds
of Loans made on the Effective Date and will be reflected in the funding
instructions given by the Borrower to the Administrative Agent on or before
the Effective Date.
(e) Lien Searches. The Administrative Agent shall have received the results
of a recent lien search in each of the jurisdictions where assets of the Loan
Parties are located, and such search shall reveal no liens on any of the assets
of the Loan Parties except for liens permitted by Section 6.02 or discharged on
or prior to the Effective Date pursuant to a pay-off letter or other
documentation satisfactory to the Administrative Agent.
(f) Pay-Off Letters. The Administrative Agent shall have received
satisfactory pay-off letters for all existing Indebtedness to be repaid from the
proceeds the initial Borrowing, confirming that all Liens upon any of the
property of the Loan Parties constituting Collateral will be terminated
concurrently with such payment.
(g) Funding Account. The Administrative Agent shall have received a notice
setting forth the deposit account of the Borrower (the "Funding Account") to
which the Lender is authorized by the Borrower to transfer the proceeds of any
Borrowings requested or authorized pursuant to this Agreement.
(h) Collateral Access and Control Agreements. The Administrative Agent
shall have received each (i) Collateral Access Agreement required to be provided
pursuant to Section 4.13 of the Security Agreement, and (ii) Deposit Account
Control Agreement required to be provided pursuant to Section 4.14 of the
Security Agreement.
(i) Borrowing Base Certificate. The Administrative Agent shall have
received a Borrowing Base Certificate which calculates the Borrowing Base as of
the end of the month immediately preceding the Effective Date.
(j) Pledged Notes. The Administrative Agent shall have received each
promissory note (if any) pledged to the Administrative Agent pursuant to the
Security Agreement endorsed (without recourse) in blank (or accompanied by an
executed transfer form in blank) by the pledgor thereof.
(k) Filings, Registrations and Recordings. Each document (including any
Uniform Commercial Code financing statement) required by the Collateral
Documents or under law or reasonably requested by the Administrative Agent to be
filed, registered or recorded in order to create in favor of the Administrative
Agent, for the benefit of the Lenders, a perfected Lien on the Collateral
described therein, prior and superior in right to any other Person (other than
with respect to Liens expressly permitted by Section 6.02), shall be in proper
form for filing, registration or recordation.
(l) Insurance. The Administrative Agent shall have received evidence of
insurance coverage in form, scope, and substance reasonably satisfactory to the
Administrative Agent and otherwise in compliance with the terms of the Security
Agreement.
(m) Other Documents. The Administrative Agent shall have received such
other documents as the Administrative Agent, any Lender or their respective
counsel may have reasonably requested.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans hereunder shall not
become effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior to 2:00 p.m., New York time, on June 16,
2008 (and, in the event such conditions are not so satisfied or waived, the
Commitments shall terminate at such time).
SECTION 4.02. Each Loan. The obligation of each Lender to make a Loan on
the occasion of any Borrowing is subject to the satisfaction of the following
conditions:
(a) The representations and warranties of the Borrower set forth in
this Agreement shall be true and correct on and as of the date of such
Borrowing.
(b) At the time of and immediately after giving effect to such
Borrowing, no Default shall have occurred and be continuing.
(c) After giving effect to any Borrowing, Availability is not less
than zero.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to the matters specified in paragraphs (a),
(b) and (c) of this Section.
Notwithstanding the failure to satisfy the conditions precedent set forth in
paragraphs (a) or (b) of this Section, unless otherwise directed by the Majority
Lenders, the Administrative Agent may, but shall have no obligation to, continue
to make Loans for the ratable account and risk of Lenders from time to time if
the Administrative Agent believes that making such Loans is in the best
interests of the Lenders.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder shall have been paid in
full, each Loan Party executing this Agreement covenants and agrees, jointly and
severally with all of the Loan Parties, with the Lenders that:
SECTION 5.01. Financial Statements; Borrowing Base and Other Information.
The Borrower will furnish to the Administrative Agent and each Lender:
(a) within 120 days after the end of each fiscal year of the Borrower,
its audited consolidated balance sheet and related statements of
operations, stockholders' equity and cash flows as of the end of and for
such year, setting forth in each case in comparative form the figures for
the previous fiscal year, all reported on by KPMG, LLP or other independent
public accountants of recognized national standing (without a "going
concern" or like qualification or exception and without any qualification
or exception as to the scope of such audit) to the effect that such
consolidated financial statements present fairly in all material respects
the financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied;
(b) within 60 days after the end of each of the first three fiscal
quarters of the Borrower, its consolidated balance sheet and related
statements of operations, stockholders' equity and cash flows as of the end
of and for such fiscal quarter and the then elapsed portion of the fiscal
year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet,
as of the end of) the previous fiscal year, all certified by one of its
Financial Officers as presenting fairly in all material respects the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes;
(c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the
Borrower in substantially the form of Exhibit D (i) certifying, in the case
of the financial statements delivered under clause (b), as presenting
fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes, (ii)
certifying as to whether a Default has occurred and, if a Default has
occurred, specifying the details thereof and any action taken or proposed
to be taken with respect thereto, (iii) setting forth reasonably detailed
calculations demonstrating compliance with Sections 6.12, 6.13 and 6.14,
and (iv) stating whether any change in GAAP or in the application thereof
has occurred since the date of the audited financial statements referred to
in Section 3.04 and, if any such change has occurred, specifying the effect
of such change on the financial statements accompanying such certificate;
(d) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during
the course of their examination of such financial statements of any Default
(which certificate may be limited to the extent required by accounting
rules or guidelines);
(e) as soon as available, but in any event not more than 120 days
after the end of each fiscal year of the Borrower, a copy of the plan and
forecast (including a projected consolidated and consolidating balance
sheet, income statement and funds flow statement) of the Borrower for the
new fiscal year (the "Projections") in form reasonably satisfactory to the
Administrative Agent;
(f) as soon as available but in any event within 15 days of the end of
each calendar month, and at such other times as may be requested by the
Administrative Agent, as of the period then ended, a Borrowing Base
Certificate and supporting information in connection therewith, together
with any additional reports with respect to the Borrowing Base as the
Administrative Agent may reasonably request;
(g) at such time or times as may be requested by the Administrative
Agent, as of the period so requested, all delivered in a format acceptable
to the Administrative Agent:
(i) a detailed aging of the Borrower's Accounts (1) including all
invoices aged by invoice date and due date (with an explanation of the
terms offered) and (2) reconciled to the Borrowing Base Certificate
delivered as of such date prepared in a manner reasonably acceptable
to the Administrative Agent, together with a summary specifying the
name, address, and balance due for each Account Debtor;
(ii) a schedule detailing the Borrower's Inventory, in form
satisfactory to the Administrative Agent, (1) by location (showing
Inventory in transit, any Inventory located with a third party under
any consignment, bailee arrangement, or warehouse agreement), by class
(raw material, work-in-process and finished goods), by product type,
and by volume on hand, which Inventory shall be valued at the lower of
cost (determined on a first-in, first-out basis) or market, (2)
including a report of any variances or other results of Inventory
counts performed by the Borrower since the last Inventory schedule
(including information regarding sales or other reductions, additions,
returns, credits issued by Borrower and complaints and claims made
against the Borrower), and (3) reconciled to the Borrowing Base
Certificate delivered as of such date;
(iii) a worksheet of calculations prepared by the Borrower to
determine Eligible Accounts and Eligible Inventory, such worksheets
detailing the Accounts and Inventory excluded from Eligible Accounts
and Eligible Inventory and the reason for such exclusion; and
(iv) a reconciliation of the Borrower's Accounts and Inventory
between the amounts shown in the Borrower's general ledger and
financial statements and the reports delivered pursuant to clauses (i)
and (ii) above;
(h) at such time or times as may be requested by the
Administrative Agent, as of the period so requested, a schedule and
aging of the Borrower's accounts payable, delivered in a format
acceptable to the Administrative Agent;
(i) promptly upon the Administrative Agent's request:
(i) copies of invoices in connection with the invoices issued by
the Borrower in connection with any Accounts, credit memos, shipping
and delivery documents, and other information related thereto;
(ii) copies of purchase orders, invoices, and shipping and
delivery documents in connection with any Inventory or Equipment
purchased by any Loan Party; and
(iii) a schedule detailing the balance of all intercompany
accounts of the Loan Parties;
(j) at such time or times as may be requested by the
Administrative Agent, the Borrower's sales journal, cash receipts
journal (identifying trade and non-trade cash receipts) and debit
memo/credit memo journal;
(k) promptly upon the Administrative Agent's request, copies of
all tax returns filed by any Loan Party with the U.S. Internal Revenue
Service;
(l) at such time or times as may be requested by the
Administrative Agent, a current customer list for the Borrower and its
Subsidiaries, which list shall state the customer's name, mailing
address and phone number and shall be certified as true and correct by
an Financial Officer of the Borrower;
(m) promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials
filed by the Borrower or any Subsidiary with the Securities and
Exchange Commission, or any Governmental Authority succeeding to any
or all of the functions of said Commission, or with any national
securities exchange, as the case may be; and
(n) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of the Borrower or any Subsidiary, or compliance with the
terms of this Agreement, as the Administrative Agent or any Lender may
reasonably request.
SECTION 5.02. Notices of Material Events. The Borrower will
furnish to the Administrative Agent and each Lender prompt written
notice of the following:
(a) the occurrence of any Default;
(b) receipt of any notice of any governmental investigation or
any litigation or proceeding commenced or threatened against any Loan
Party that, if adversely determined, could reasonably be expected to
result in a Material Adverse Effect;
(c) any Lien (other than Permitted Encumbrances) or claim made or
asserted against any of the Collateral;
(d) any loss, damage, or destruction to the Collateral in the
amount of $1,000,000 or more if not fully covered by insurance;
(e) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be
expected to result in liability of the Borrower and its Subsidiaries
in an aggregate amount exceeding $1,000,000; and
(f) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. Each Loan Party will, and
will cause each Subsidiary to, (a) do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its legal existence and the
rights, qualifications, licenses, permits, franchises, governmental
authorizations, intellectual property rights, licenses and permits material to
the conduct of its business, and maintain all requisite authority to conduct its
business in each jurisdiction in which its business is conducted; provided that
the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.03 and (b) carry on and conduct its
business in substantially the same manner and in substantially the same fields
of enterprise as it is presently conducted.
SECTION 5.04. Payment of Obligations. Each Loan Party will, and will cause
each Subsidiary to, pay or discharge all Material Indebtedness and all other
material liabilities and obligations, including Taxes, before the same shall
become delinquent or in default, except where (a) the validity or amount thereof
is being contested in good faith by appropriate proceedings, (b) such Loan Party
or such Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment pending such
contest could not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.05. Maintenance of Properties. Each Loan Party will, and will
cause each Subsidiary to, keep and maintain all property material to the conduct
of its business in good working order and condition, ordinary wear and tear
excepted.
SECTION 5.06. Books and Records; Inspection Rights. Each Loan Party will,
and will cause each Subsidiary to, (i) keep proper books of record and account
in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities and (ii) permit any
representatives designated by the Administrative Agent or any Lender (including
employees of the Administrative Agent, any Lender or any consultants,
accountants, lawyers and appraisers retained by the Administrative Agent), upon
reasonable prior notice, to visit and inspect its properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants, all at such
reasonable times and as often as reasonably requested.
SECTION 5.07. Compliance with Laws. Each Loan Party will, and will cause
each Subsidiary to, comply with all Requirements of Law applicable to it or its
property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.08. Use of Proceeds. The proceeds of the Loans will be used only
for working capital and Permitted Acquisitions. No part of the proceeds of any
Loan will be used, whether directly or indirectly, to finance an acquisition or
for any purpose that entails a violation of any of the Regulations of the Board,
including Regulations T, U and X.
SECTION 5.09. Insurance. Each Loan Party will, and will cause each
Subsidiary to, maintain with financially sound and reputable carriers having a
financial strength rating of at least A+ by A.M. Best Company (a) insurance in
such amounts (with no greater risk retention) and against such risks (including
loss or damage by fire and loss in transit; theft, burglary, pilferage, larceny,
embezzlement, and other criminal activities; business interruption; and general
liability) and such other hazards, as is customarily maintained by companies of
established repute engaged in the same or similar businesses operating in the
same or similar locations and (b) all insurance required pursuant to the
Collateral Documents. The Borrower will furnish to the Lenders, upon request of
the Administrative Agent, information in reasonable detail as to the insurance
so maintained.
SECTION 5.10. Casualty and Condemnation. The Borrower (a) will furnish to
the Administrative Agent and the Lenders prompt written notice of any casualty
or other insured damage to any material portion of the Collateral or the
commencement of any action or proceeding for the taking of any material portion
of the Collateral or interest therein under power of eminent domain or by
condemnation or similar proceeding and (b) will ensure that the Net Proceeds of
any such event (whether in the form of insurance proceeds, condemnation awards
or otherwise) are collected and applied in accordance with the applicable
provisions of this Agreement and the Collateral Documents
SECTION 5.11. Depository Banks The Borrower and each Subsidiary will
maintain one or more of the Lenders as its principal depository bank in the
United States, including for the maintenance of operating, administrative, cash
management, collection activity, and other domestic deposit accounts for the
conduct of its business.
SECTION 5.12. Additional Collateral; Further Assurances. (a) Subject to
applicable law, the Borrower and each Subsidiary that is a Loan Party shall
cause each of its domestic Subsidiaries whose financial results are consolidated
with those of Borrower formed or acquired after the date of this Agreement in
accordance with the terms of this Agreement to become a Loan Party by executing
a joinder agreement becoming a party to this Agreement. Upon execution and
delivery thereof, each such Person (i) shall automatically become a Loan
Guarantor hereunder and thereupon shall have all of the rights, benefits,
duties, and obligations in such capacity under the Loan Documents and (ii) will
grant Liens to the Administrative Agent, for the benefit of the Administrative
Agent and the Lenders, in any property of such Loan Party which constitutes
Collateral.
(b) Without limiting the foregoing, each Loan Party will, and will
cause each Subsidiary to, execute and deliver, or cause to be executed and
delivered, to the Administrative Agent such documents, agreements and
instruments, and will take or cause to be taken such further actions
(including the filing and recording of financing statements and other
documents and such other actions or deliveries of the type required by
Section 4.01, as applicable), which may be required by law or which the
Administrative Agent may, from time to time, reasonably request to carry
out the terms and conditions of this Agreement and the other Loan Documents
and to ensure perfection and priority of the Liens created or intended to
be created by the Collateral Documents, all at the expense of the Loan
Parties.
(c) If any material assets of the same type or nature as those
comprising Collateral are acquired by the Borrower or any Subsidiary that
is a Loan Party after the Effective Date (other than assets constituting
Collateral under the Security Agreement that become subject to the Lien in
favor of the Security Agreement upon acquisition thereof), the Borrower
will notify the Administrative Agent and the Lenders thereof, and, if
requested by the Administrative Agent or the Majority Lenders, the Borrower
will cause such assets to be subjected to a Lien securing the Secured
Obligations and will take, and cause the Subsidiary Loan Parties to take,
such actions as shall be necessary or reasonably requested by the
Administrative Agent to grant and perfect such Liens, including actions
described in paragraph (c) of this Section, all at the expense of the Loan
Parties.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees, expenses and other amounts payable under any
Loan Document have been paid in full, the Loan Parties covenant and agree,
jointly and severally, with the Lenders that:
SECTION 6.01. Indebtedness. No Loan Party will, nor will it permit any
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:
(a) the Secured Obligations;
(b) Indebtedness existing on the date hereof and set forth in
Schedule 6.01 and extensions, renewals and replacements of any such
Indebtedness in accordance with clause (f) hereof;
(c) Indebtedness of the Borrower to any Subsidiary and of any
Subsidiary to the Borrower or any other Subsidiary, provided that (i)
Indebtedness of any Subsidiary that is not a Loan Party to the Borrower or
any Subsidiary that is a Loan Party shall be subject to Section 6.04 and
(ii) Indebtedness of the Borrower to any Subsidiary and Indebtedness of any
Subsidiary that is a Loan Party to any Subsidiary that is not a Loan Party
shall be subordinated to the Secured Obligations on terms reasonably
satisfactory to the Administrative Agent;
(d) Guarantees by the Borrower of Indebtedness of any Subsidiary and
by any Subsidiary of Indebtedness of the Borrower or any other Subsidiary,
provided that (i) the Indebtedness so Guaranteed is permitted by this
Section 6.01, (ii) Guarantees by the Borrower or any Subsidiary that is a
Loan Party of Indebtedness of any Subsidiary that is not a Loan Party shall
be subject to Section 6.04 and (iii) Guarantees permitted under this
clause (d) shall be subordinated to the Secured Obligations of the
applicable Subsidiary on the same terms as the Indebtedness so Guaranteed
is subordinated to the Secured Obligations;
(e) Indebtedness of the Borrower or any Subsidiary incurred to finance
the acquisition, construction or improvement of any fixed or capital assets
(whether or not constituting purchase money Indebtedness), including
Capital Lease Obligations and any Indebtedness assumed in connection with
the acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and replacements
of any such Indebtedness in accordance with clause (f) hereof; provided
that (i) such Indebtedness is incurred prior to or within 90 days after
such acquisition or the completion of such construction or improvement and
(ii) the aggregate principal amount of Indebtedness permitted by this
clause (e) shall not exceed $1,000,000 at any time outstanding;
(f) Indebtedness of the Borrower incurred in connection with a
Permitted Acquisition, provided that, at any point in time the then total
aggregate outstanding principal balance of Indebtedness incurred in
connection with all Permitted Acquisitions occurring in the immediately
preceding four fiscal quarters, including the current fiscal quarter, does
not exceed $15,000,000;
(g) Indebtedness which represents an extension, refinancing, or
renewal of any of the Indebtedness described in clauses (b) and (e) hereof;
provided that, (i) the principal amount or interest rate of such
Indebtedness is not increased, (ii) any Liens securing such Indebtedness
are not extended to any additional property of any Loan Party, (iii) no
Loan Party that is not originally obligated with respect to repayment of
such Indebtedness is required to become obligated with respect thereto,
(iv) such extension, refinancing or renewal does not result in a shortening
of the average weighted maturity of the Indebtedness so extended,
refinanced or renewed, (v) the terms of any such extension, refinancing, or
renewal are not less favorable to the obligor thereunder than the original
terms of such Indebtedness and (iv) if the Indebtedness that is refinanced,
renewed, or extended was subordinated in right of payment to the Secured
Obligations, then the terms and conditions of the refinancing, renewal, or
extension Indebtedness must include subordination terms and conditions that
are at least as favorable to the Administrative Agent and the Lenders as
those that were applicable to the refinanced, renewed, or extended
Indebtedness;
(h) Indebtedness owed to any person providing workers' compensation,
health, disability or other employee benefits or property, casualty or
liability insurance, pursuant to reimbursement or indemnification
obligations to such person, in each case incurred in the ordinary course of
business;
(i) Indebtedness of the Borrower or any Subsidiary in respect of
performance bonds, bid bonds, appeal bonds, surety bonds and similar
obligations, in each case provided in the ordinary course of business; and
(j) L/C Obligations arising under letters of credit issued by one or
more of the Lenders having a face value not exceeding $750,000 in the
aggregate.
SECTION 6.02. Liens. No Loan Party will, nor will it permit any Subsidiary
to, create, incur, assume or permit to exist any Lien on any property or asset
now owned or hereafter acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except:
(a) Liens created pursuant to any Loan Document;
(b) Permitted Encumbrances;
(c) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02;
provided that (i) such Lien shall not apply to any other property or asset
of the Borrower or Subsidiary and (ii) such Lien shall secure only those
obligations which it secures on the date hereof and extensions, renewals
and replacements thereof that do not increase the outstanding principal
amount thereof;
(d) Liens on fixed or capital assets acquired, constructed or improved
by the Borrower or any Subsidiary; provided that (i) such security
interests secure Indebtedness permitted by clause (e) of Section 6.01,
(ii) such security interests and the Indebtedness secured thereby are
incurred prior to or within 90 days after such acquisition or the
completion of such construction or improvement, (iii) the Indebtedness
secured thereby does not exceed 100% of the cost of acquiring, constructing
or improving such fixed or capital assets and (iv) such security interests
shall not apply to any other property or assets of the Borrower or
Subsidiary;
(e) any Lien existing on any property or asset (other than Accounts
and Inventory) prior to the acquisition thereof by the Borrower or any
Subsidiary or existing on any property or asset (other than Accounts and
Inventory) of any Person that becomes a Loan Party after the date hereof
prior to the time such Person becomes a Loan Party; provided that (i) such
Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming a Loan Party, as the case may be,
(ii) such Lien shall not apply to any other property or assets of the Loan
Party and (iii) such Lien shall secure only those obligations which it
secures on the date of such acquisition or the date such Person becomes a
Loan Party, as the case may be and extensions, renewals and replacements
thereof that do not increase the outstanding principal amount thereof; and
(f) any Lien relating to, or in the nature of, a consignment of raw
materials to the Borrower or any Subsidiary, provided (i) the Lien does not
continue in existence once the raw materials are used or acquired by the
Borrower or any Subsidiary and (ii) the consigned materials subject to the
Lien are not included in the Borrowing Base.
Notwithstanding the foregoing, none of the Liens permitted pursuant to this
Section 6.02 may at any time attach to any Loan Party's (1) Accounts, other
than those permitted under clause (a) of the definition of Permitted
Encumbrance and clause (a) above and (2) Inventory, other than those
permitted under clauses (a) and (b) of the definition of Permitted
Encumbrance and clause (a) above.
SECTION 6.03. Fundamental Changes. (a) No Loan Party will, nor will it
permit any Subsidiary to, merge into or consolidate with any other Person, or
permit any other Person to merge into or consolidate with it, or liquidate or
dissolve, except that, if at the time thereof and immediately after giving
effect thereto no Event of Default shall have occurred and be continuing (i) any
Subsidiary of the Borrower may merge into the Borrower in a transaction in which
the Borrower is the surviving corporation, (ii) any Loan Party (other than the
Borrower) may merge into any Loan Party in a transaction in which the surviving
entity is a Loan Party, (iii) any Loan Party (other than the Borrower) may sell,
transfer, lease or otherwise dispose of its assets to another Loan Party, (iv)
any Subsidiary that is not a Loan Party may liquidate or dissolve if the
Borrower determines in good faith that such liquidation or dissolution is in the
best interests of the Borrower and is not materially disadvantageous to the
Lenders, and (v) Any Loan Party may participate in a Permitted Acquisition;
provided that any such merger involving a Person that is not a wholly owned
Subsidiary immediately prior to such merger shall not be permitted unless also
permitted by Section 6.04.
(b) No Loan Party will, nor will it permit any of its Subsidiaries to,
engage to any material extent in any business other than businesses of the type
conducted by the Borrower and its Subsidiaries on the date of execution of this
Agreement and businesses reasonably related thereto.
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions. No
Loan Party will, nor will it permit any Subsidiary to, purchase, hold or acquire
(including pursuant to any merger with any Person that was not a Loan Party and
a wholly owned Subsidiary prior to such merger) any capital stock, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, Guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any other
Person constituting a business unit (whether through purchase of assets, merger
or otherwise), except:
(a) Permitted Investments, subject to control agreements in favor of
the Administrative Agent for the benefit of the Lenders or otherwise
subject to a perfected security interest in favor of the Administrative
Agent for the benefit of the Lenders;
(b) investments by the Borrower and the Subsidiaries existing on the
date hereof in Equity Interests in their respective Subsidiaries;
(c) loans or advances made by the Borrower to any Subsidiary and made
by any Subsidiary to the Borrower or any other Subsidiary;
(d) Guarantees constituting Indebtedness permitted by Section 6.01;
and
(e) Permitted Acquisitions.
SECTION 6.05. Asset Sales. No Loan Party will, nor will it permit any
Subsidiary to, sell, transfer, lease or otherwise dispose of any asset,
including any Equity Interest owned by it, nor will the Borrower permit any
Subsidiary to issue any additional Equity Interest in such Subsidiary (other
than to the Borrower or another Subsidiary in compliance with Section 6.04),
except:
(a) sales, transfers and dispositions of (i) inventory in the ordinary
course of business and (ii) obsolete, worn out or surplus equipment or
property in the ordinary course of business;
(b) sales, transfers and dispositions to the Borrower or any
Subsidiary, provided that any such sales, transfers or dispositions
involving a Subsidiary that is not a Loan Party shall be made in compliance
with Section 6.09;
(c) sales, transfers and dispositions of accounts receivable in
connection with the compromise, settlement or collection thereof;
(d) sale and leaseback transactions permitted by Section 6.06; and
(e) sales of assets in a single transaction (and not part of a series
of transactions) having a fair value of $25,000 or less;
provided that all sales, transfers, leases and other dispositions permitted
hereby shall be made for fair value and for cash consideration.
SECTION 6.06. Sale and Leaseback Transactions. No Loan Party will, nor will
it permit any Subsidiary to, enter into any arrangement, directly or indirectly,
whereby it shall sell or transfer any property, real or personal, used or useful
in its business, whether now owned or hereafter acquired, and thereafter rent or
lease such property or other property that it intends to use for substantially
the same purpose or purposes as the property sold or transferred, except for any
such sale of any fixed or capital assets by the Borrower or any Subsidiary that
is made for cash consideration in an amount not less than the fair value of such
fixed or capital asset and is consummated within 90 days after the Borrower or
such Subsidiary acquires or completes the construction of such fixed or capital
asset.
SECTION 6.07. Swap Agreements. No Loan Party will, nor will it permit any
Subsidiary to, enter into any Swap Agreement, except (a) Swap Agreements entered
into in the ordinary course of business to hedge or mitigate risks to which the
Borrower or any Subsidiary has actual exposure (other than those in respect of
Equity Interests of the Borrower or any of its Subsidiaries), and (b) Swap
Agreements entered into in order to effectively cap, collar or exchange interest
rates (from fixed to floating rates, from one floating rate to another floating
rate or otherwise) with respect to any interest-bearing liability or investment
of the Borrower or any Subsidiary.
SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness. (a) No
Loan Party will, nor will it permit any Subsidiary to, declare or make, or agree
to pay or make, directly or indirectly, any Restricted Payment, or incur any
obligation (contingent or otherwise) to do so, except (i) the Borrower may
declare and pay dividends with respect to its common stock payable solely in
additional shares of its common stock, (ii) Subsidiaries may declare and pay
dividends ratably with respect to their Equity Interests, and (iii) the Borrower
may make Restricted Payments pursuant to and in accordance with stock option
plans or other benefit plans for management or employees of the Borrower and its
Subsidiaries.
(b) No Loan Party will, nor will it permit any Subsidiary to, make or agree
to pay or make, directly or indirectly, any payment or other distribution
(whether in cash, securities or other property) of or in respect of principal of
or interest on any Indebtedness, or any payment or other distribution (whether
in cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any Indebtedness, except:
(i) payment of Indebtedness created under the Loan Documents;
(ii) payment of regularly scheduled interest and principal payments as
and when due in respect of any Indebtedness, other than payments in respect
of the Subordinated Indebtedness prohibited by the subordination provisions
thereof;
(iii) refinancings of Indebtedness to the extent permitted by
Section 6.01; and
(iv) payment of secured Indebtedness that becomes due as a result of
the voluntary sale or transfer of the property or assets securing such
Indebtedness.
SECTION 6.09. Transactions with Affiliates. No Loan Party will, nor will it
permit any Subsidiary to, sell, lease or otherwise transfer any property or
assets to, or purchase, lease or otherwise acquire any property or assets from,
or otherwise engage in any other transactions with, any of its Affiliates,
except (a) transactions that (i) are in the ordinary course of business and
(ii) are at prices and on terms and conditions not less favorable to the
Borrower or such Subsidiary than could be obtained on an arm's-length basis from
unrelated third parties, (b) transactions between or among the Borrower and any
Subsidiary that is a Loan Party not involving any other Affiliate, (c) any
investment permitted by Sections 6.04(c) or 6.04(d), (d) any Indebtedness
permitted under Section 6.01(c), (e) any Restricted Payment permitted by
Section 6.08, (f) loans or advances to employees permitted under Section 6.04,
(g) the payment of reasonable fees to directors of the Borrower or any
Subsidiary who are not employees of the Borrower or any Subsidiary, and
compensation and employee benefit arrangements paid to, and indemnities provided
for the benefit of, directors, officers or employees of the Borrower or its
Subsidiaries in the ordinary course of business and (h) any issuances of
securities or other payments, awards or grants in cash, securities or otherwise
pursuant to, or the funding of, employment agreements, stock options and stock
ownership plans approved by the Borrower's board of directors.
SECTION 6.10. Restrictive Agreements. No Loan Party will, nor will it
permit any Subsidiary to, directly or indirectly, enter into, incur or permit to
exist any agreement or other arrangement that prohibits, restricts or imposes
any condition upon (a) the ability of such Loan Party or any of its Subsidiaries
to create, incur or permit to exist any Lien upon any of its property or assets,
or (b) the ability of any Subsidiary to pay dividends or other distributions
with respect to any shares of its capital stock or to make or repay loans or
advances to the Borrower or any other Subsidiary or to Guarantee Indebtedness of
the Borrower or any other Subsidiary; provided that (i) the foregoing shall not
apply to restrictions and conditions imposed by law or by any Loan Document,
(ii) the foregoing shall not apply to restrictions and conditions existing on
the date hereof identified on Schedule 6.10 (but shall apply to any extension or
renewal of, or any amendment or modification expanding the scope of, any such
restriction or condition), (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided such restrictions and conditions apply
only to the Subsidiary that is to be sold and such sale is permitted hereunder,
(iv) clause (a) of the foregoing shall not apply to restrictions or conditions
imposed by any agreement relating to secured Indebtedness permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Indebtedness and (v) clause (a) of the foregoing shall not
apply to customary provisions in leases and other contracts restricting the
assignment thereof.
SECTION 6.11. Amendment of Material Documents. No Loan Party will, nor will
it permit any Subsidiary to, amend, modify or waive any of its rights under (a)
agreement relating to any Subordinated Indebtedness, or (b) its certificate of
incorporation, by-laws, operating, management or partnership agreement or other
organizational documents, to the extent any such amendment, modification or
waiver would be adverse to the Lenders.
SECTION 6.12. Leverage Ratio. The Borrower will not permit the Leverage
Ratio, determined for any period of four consecutive fiscal quarters measured at
the end of each fiscal quarter to be greater than 5.0 to 1.0 at June 30, 2008
and 4.5 to 1.0 at the end of each subsequent fiscal quarter.
SECTION 6.13 Fixed Charge Coverage Ratio. The Borrower will not permit the
Fixed Charge Coverage Ratio, determined for any period of four consecutive
fiscal quarters ending at the end of each fiscal quarter, to be less than 1.25
to 1.0.
SECTION 6.14. Minimum Net Worth. Borrower will not suffer or permit its Net
Worth at any time to be less than $70,000,000 plus 50% of its Net Income earned
subsequent to December 31, 2005.
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan when and as
the same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee or
any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of three
Business Days;
(c) any representation or warranty made or deemed made by or on behalf of
any Loan Party or any Subsidiary in or in connection with this Agreement or any
Loan Document or any amendment or modification thereof or waiver thereunder, or
in any report, certificate, financial statement or other document furnished
pursuant to or in connection with this Agreement or any Loan Document or any
amendment or modification thereof or waiver thereunder, shall prove to have been
materially incorrect when made or deemed made;
(d) any Loan Party shall fail to observe or perform any covenant, condition
or agreement contained in Section 5.02(a), 5.03 (with respect to a Loan Party's
existence) or 5.08 or in Article VI;
(e) any Loan Party shall fail to observe or perform any covenant, condition
or agreement contained in this Agreement (other than those which constitute a
default under another Section of this Article), and such failure shall continue
unremedied for a period of (i) 5 days after the earlier of knowledge of such
breach or notice thereof from the Administrative Agent (which notice will be
given at the request of any Lender) if such breach relates to terms or
provisions of Section 5.01, 5.02 (other than Section 5.02(a)), 5.03 through
5.07, 5.09, 5.10 or 5.12 of this Agreement or (ii) 30 days after the earlier of
knowledge of such breach or notice thereof from the Administrative Agent (which
notice will be given at the request of any Lender) if such breach relates to
terms or provisions of any other Section of this Agreement;
(f) any Loan Party or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable after
giving effect to applicable grace periods;
(g) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of any Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity;
provided that this clause (g) shall not apply to secured Indebtedness that
becomes due as a result of the voluntary sale or transfer of the property or
assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of a Loan Party or any Subsidiary of any Loan Party or its debts, or of
a substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect
or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any Loan Party or any Subsidiary of any Loan
Party or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered;
(i) any Loan Party or any Subsidiary of any Loan Party shall
(i) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (h) of this
Article, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for such Loan Party or
Subsidiary of any Loan Party or for a substantial part of its assets, (iv) file
an answer admitting the material allegations of a petition filed against it in
any such proceeding, (v) make a general assignment for the benefit of creditors
or (vi) take any action for the purpose of effecting any of the foregoing;
(j) any Loan Party or any Subsidiary of any Loan Party shall become unable,
admit in writing its inability or fail generally to pay its debts as they become
due;
(k) one or more judgments for the payment of money in an aggregate amount
in excess of $1,000,000 shall be rendered against any Loan Party, any Subsidiary
of any Loan Party or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of any Loan Party or any Subsidiary
of any Loan Party to enforce any such judgment or any Loan Party or any
Subsidiary of any Loan Party shall fail within 30 days to discharge one or more
non-monetary judgments or orders which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, which judgments or
orders, in any such case, are not stayed on appeal or otherwise being
appropriately contested in good faith by proper proceedings diligently pursued;
(l) an ERISA Event shall have occurred that, in the opinion of the Majority
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in a Material Adverse Effect;
(m) a Change in Control shall occur;
(n) the occurrence of any "default", as defined in any Loan Document (other
than this Agreement) or the breach of any of the terms or provisions of any Loan
Document (other than this Agreement), which default or breach continues beyond
any period of grace therein provided;
(o) the Loan Guaranty shall fail to remain in full force or effect or any
action shall be taken to discontinue or to assert the invalidity or
unenforceability of the Loan Guaranty, or any Loan Guarantor shall fail to
comply with any of the terms or provisions of the Loan Guaranty to which it is a
party, or any Loan Guarantor shall deny that it has any further liability under
the Loan Guaranty to which it is a party, or shall give notice to such effect;
(p) the Administrative Agent shall for any reason fail to have a valid and
perfected first priority security interest in any Collateral purported to be
covered by the Collateral Documents, except as permitted by the terms of any
Collateral Document, or any Collateral Document shall fail to remain in full
force or effect or any action shall be taken to discontinue or to assert the
invalidity or unenforceability of any Collateral Document, or any Loan Party
shall fail to comply with any of the terms or provisions of any Collateral
Document; or
(q) any material provision of any Loan Document for any reason ceases to be
valid, binding and enforceable in accordance with its terms (or any Loan Party
shall challenge the enforceability of any Loan Document or shall
assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its terms);
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Majority Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower; and
in case of any event with respect to the Borrower described in clause (h) or (i)
of this Article, the Commitments shall automatically terminate and the principal
of the Loans then outstanding, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower. Upon
the occurrence and the continuance of an Event of Default, the Administrative
Agent may, and at the request of the Majority Lenders shall, exercise any rights
and remedies provided to the Administrative Agent under the Loan Documents or at
law or equity, including all remedies provided under the UCC.
ARTICLE VIII
The Administrative Agent
Each of the Lenders hereby irrevocably appoints the Administrative Agent as
its agent and authorizes the Administrative Agent to take such actions on its
behalf, including execution of the other Loan Documents, and to exercise such
powers as are delegated to the Administrative Agent by the terms of the Loan
Documents, together with such actions and powers as are reasonably incidental
thereto.
The bank serving as the Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Loan Parties or any Subsidiary of a Loan Party
or other Affiliate thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations except
those expressly set forth in the Loan Documents. Without limiting the generality
of the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to take
any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the Administrative Agent is required to exercise in writing as directed by
the Majority Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 9.02), and (c)
except as expressly set forth in the Loan Documents, the Administrative Agent
shall not have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to any Loan Party or any of its Subsidiaries
that is communicated to or obtained by the bank serving as Administrative Agent
or any of its Affiliates in any capacity. The Administrative Agent shall not be
liable for any action taken or not taken by it with the consent or at the
request of the Majority Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in
Section 9.02) or in the absence of its own gross negligence or willful
misconduct. The Administrative Agent shall be deemed not to have knowledge of
any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrower or a Lender, and the Administrative Agent
shall not be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty or representation made in or in connection with any
Loan Document, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection with any Loan Document, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth in any Loan Document, (iv) the validity, enforceability,
effectiveness or genuineness of any Loan Document or any other agreement,
instrument or document, (v) the creation, perfection or priority of Liens on the
Collateral or the existence of the Collateral, or (vi) the satisfaction of any
condition set forth in Article IV or elsewhere in any Loan Document, other than
to confirm receipt of items expressly required to be delivered to the
Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and exercise
its rights and powers by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this paragraph, the Administrative Agent may resign at any
time by notifying the Lenders and the Borrower. Upon any such resignation, the
Supermajority Lenders shall have the right, in consultation with the Borrower,
to appoint a successor. If no successor shall have been so appointed by the
Supermajority Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent which shall be a commercial bank or an Affiliate
of any such commercial bank. Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without reliance
upon the Administrative Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Loan Document or
related agreement or any document furnished hereunder or thereunder.
Each Lender hereby agrees that (a) it has requested a copy of each Report
prepared by or on behalf of the Administrative Agent; (b) the Administrative
Agent (i) makes no representation or warranty, express or implied, as to the
completeness or accuracy of any Report or any of the information contained
therein or any inaccuracy or omission contained in or relating to a Report and
(ii) shall not be liable for any information contained in any Report; (c) the
Reports are not comprehensive audits or examinations, and that any Person
performing any field examination will inspect only specific information
regarding the Loan Parties and will rely significantly upon the Loan Parties'
books and records, as well as on representations of the Loan Parties' personnel
and that the Administrative Agent undertakes no obligation to update, correct or
supplement the Reports; (d) it will keep all Reports confidential and strictly
for its internal use, not share the Report with any Loan Party or any other
Person except as otherwise permitted pursuant to this Agreement; and (e) without
limiting the generality of any other indemnification provision contained in this
Agreement, it will pay and protect, and indemnify, defend, and hold the
Administrative Agent and any such other Person preparing a Report harmless from
and against, the claims, actions, proceedings, damages, costs, expenses, and
other amounts (including reasonable attorney fees) incurred by as the direct or
indirect result of any third parties who might obtain all or part of any Report
through the indemnifying Lender.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. (a) Except in the case of notices and other
communications expressly permitted to be given by telephone (and subject to
paragraph (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by facsimile, as follows:
(i) if to any Loan Party, to the Borrower at:
Par Technology Corporation
8383 Seneca Turnpike
New Hartford, New York 13413-4991
Attention: Ronald J. Casciano, Vice President, CFO
and Treasurer
Facsimile No: (315) 738-0411
(ii) if to the Administrative Agent, at:
JPMorgan Chase Bank, N.A.
Bridgewater Place
500 Plum Street, Floor 7
Syracuse, New York 13204
Attention: Frederick K. Miller, Vice President
Facsimile No: (315) 424-1898
(iii) if to any other Lender, to it at its address or facsimile number
set forth in its Administrative Questionnaire.
All such notices and other communications (i) sent by hand or overnight courier
service, or mailed by certified or registered mail, shall be deemed to have been
given when received or (ii) sent by facsimile
shall be deemed to have been given when sent, provided that if not given during
normal business hours for the recipient, shall be deemed to have been given at
the opening of business on the next Business Day for the recipient.
(b) Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications (including e-mail to
addresses specified by each Lender in its Administrative Questionnaire and
internet or intranet websites) pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article II unless otherwise agreed by the Administrative Agent and
the applicable Lender. The Administrative Agent or the Borrower (on behalf of
the Loan Parties) may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications. All such notices and other
communications sent to an e-mail address shall be deemed received upon the
sender's receipt of an acknowledgement from the intended recipient (such as by
the "return receipt requested" function, as available, return e-mail or other
written acknowledgement), provided that if not given during the normal business
hours of the recipient, such notice or communication shall be deemed to have
been given at the opening of business on the next Business Day for the
recipient.
(c) Any party hereto may change its address or facsimile number for notices
and other communications hereunder by notice to the other parties hereto.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent or any Lender in exercising any right or power hereunder or
under any other Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent and the Lenders hereunder and under any
other Loan Document are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of any Loan
Document or consent to any departure by any Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent or any Lender may have
had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any provision
hereof or thereof may be waived, amended or modified except (i) in the case of
this Agreement, pursuant to an agreement or agreements in writing entered into
by the Borrower and the Majority Lenders or, (ii) in the case of any other Loan
Document, pursuant to an agreement or agreements in writing entered into by the
Administrative Agent and the Loan Party or Loan Parties that are parties
thereto, with the consent of the Majority Lenders; provided that no such
agreement shall (i) increase the Commitment of any Lender without the written
consent of such Lender, (ii) reduce or forgive the principal amount of any Loan
or reduce the rate of interest thereon, or reduce or forgive any interest or
fees payable hereunder, without the written consent of each Lender directly
affected thereby, (iii) postpone any scheduled date of payment of the principal
amount of any Loan or any date for the payment of any interest, fees or other
Obligations payable hereunder, or reduce the amount of, waive or excuse any such
payment, or postpone the scheduled date of expiration of any Commitment, without
the written consent of each Lender directly affected thereby, (iv) change
Section 2.18(b) or (d) in a manner that would alter the manner in which payments
are shared, without the written consent of each Lender, (v) increase the advance
rates set forth in the definition of Borrowing Base or add new categories of
eligible assets, without the written consent of each Revolving Lender, (vi)
change any of the provisions of this Section or the definition of "Majority
Lenders" or "Supermajority Lenders" or any other provision of any Loan Document
specifying the number or percentage of Lenders required to waive, amend or
modify any rights thereunder or make any determination or grant any consent
thereunder, without the written consent of each Lender, (vii) release any Loan
Guarantor from its obligation under its Loan Guaranty (except as otherwise
permitted herein or in the other Loan Documents), without the written consent of
each Lender, (viii) except as provided in any Collateral Document, release all
or substantially all of the Collateral, without the written consent of each
Lender, (ix) amend the financial covenants contained in Sections 6.12, 6.13 and
6.14 hereof without the written consent of each Lender, (x) amend any of the
other negative covenants in Article VI hereof without the written consent of the
Supermajority Lenders, (xi) amend subparagraphs (a), (b) or (f) of Section 5.01
hereof without the written consent of the Supermajority Lenders, or (xii) amend
the definitions of "Eligible Accounts" or Eligible Inventory" without the
written consent of each Lender; provided further that no such agreement shall
amend, modify or otherwise affect the rights or duties of the Administrative
Agent hereunder without the prior written consent of the Administrative Agent.
The Administrative Agent may also amend the Commitment Schedule to reflect
assignments entered into pursuant to Section 9.04
(c) The Lenders hereby irrevocably authorize the Administrative Agent, at
its option and in its sole discretion, to release any Liens granted to the
Administrative Agent by the Loan Parties on any Collateral (i) upon the
termination of the all Commitments, payment and satisfaction in full in cash of
all Secured Obligations (other than Unliquidated Obligations), and the cash
collateralization of all Unliquidated Obligations in a manner satisfactory to
each affected Lender, (ii) constituting property being sold or disposed of if
the Loan Party disposing of such property certifies to the Administrative Agent
that the sale or disposition is made in compliance with the terms of this
Agreement (and the Administrative Agent may rely conclusively on any such
certificate, without further inquiry), (iii) constituting property leased to a
Loan Party under a lease which has expired or been terminated in a transaction
permitted under this Agreement, or (iv) as required to effect any sale or other
disposition of such Collateral in connection with any exercise of remedies of
the Administrative Agent and the Lenders pursuant to Article VII. Except as
provided in the preceding sentence, the Administrative Agent will not release
any Liens on Collateral without the prior written authorization of the Majority
Lenders; provided that, the Administrative Agent may in its discretion, release
its Liens on Collateral valued in the aggregate not in excess of $250,000 during
any calendar year without the prior written authorization of the Majority
Lenders. Any such release shall not in any manner discharge, affect, or impair
the Obligations or any Liens (other than those expressly being released) upon
(or obligations of the Loan Parties in respect of) all interests retained by the
Loan Parties, including the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall
pay (i) all reasonable out-of-pocket expenses incurred by the Administrative
Agent and its Affiliates, including the reasonable fees, charges and
disbursements of counsel for the Administrative Agent, in connection with the
credit facilities provided for herein, the preparation and administration of the
Loan Documents or any amendments, modifications or waivers of the provisions of
the Loan Documents (whether or not the transactions contemplated hereby or
thereby shall be consummated), and (ii) all out-of-pocket expenses incurred by
the Administrative Agent or any Lender, including the fees, charges and
disbursements of any counsel for the Administrative Agent or any Lender, in
connection with the enforcement, collection or protection of its rights in
connection with the Loan Documents, including its rights under this Section, or
in connection with the Loans made hereunder, including all such out-of-pocket
expenses incurred during any workout, restructuring or negotiations in respect
of such Loans. All of such costs and expenses may be charged to the Borrower as
Revolving Loans or to another deposit account, all as described in
Section 2.18(c).
(b) The Borrower shall indemnify the Administrative Agent and each Lender,
and each Related Party of any of the foregoing Persons (each such Person being
called an "Indemnitee") against, and hold each Indemnitee harmless from, any and
all losses, claims, damages, penalties, liabilities and related expenses,
including the fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection
with, or as a result of (i) the execution or delivery of the Loan Documents or
any agreement or instrument contemplated thereby, the performance by the parties
hereto of their respective obligations thereunder or the consummation of the
Transactions or any other transactions contemplated hereby, (ii) any Loan or the
use of the proceeds therefrom, (iii) any actual or alleged presence or release
of Hazardous Materials on or from any property owned or operated by the Borrower
or any of its Subsidiaries, or any Environmental Liability related in any way to
the Borrower or any of its Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
penalties, liabilities or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount required to be
paid by it to the Administrative Agent under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent such
Lender's Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
penalty, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent in its capacity as such.
(d) To the extent permitted by applicable law, no Loan Party shall assert,
and each hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
Transactions, any Loan or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly after
written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that (i) the Borrower
may not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by the Borrower without such consent shall be null and void) and
(ii) no Lender may assign or otherwise transfer its rights or obligations
hereunder except in accordance with this Section. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants (to the extent provided in paragraph (c) of this Section) and, to
the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent) any legal or equitable right, remedy or claim under or by
reason of this Agreement.
(b)(i) Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender may assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans at the time owing to it) with the prior written consent (such
consent not to be unreasonably withheld) of:
(A) the Borrower, provided that no consent of the Borrower shall be
required for an assignment to a Lender, an Affiliate of a Lender, an
Approved Fund or, if an Event of Default has occurred and is continuing,
any other assignee;
(B) the Administrative Agent.
(ii) Assignments shall be subject to the following additional conditions:
(A) except in the case of an assignment to a Lender or an Affiliate of
a Lender or an assignment of the entire remaining amount of the assigning
Lender's Commitment or Loans of any Class, the amount of the Commitment or
Loans of the assigning Lender subject to each such assignment (determined
as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 or, in the case of the Term Loan, $1,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, provided that no
such consent of the Borrower shall be required if an Event of Default has
occurred and is continuing;
(B) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations
under this Agreement, provided that this clause shall not be construed to
prohibit the assignment of a proportionate part of all the assigning
Lender's rights and obligations in respect of one Class of Commitments or
Loans;
(C) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee of $3,500; and
(D) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire in which the assignee
designates one or more Credit Contacts to whom all information (which may
contain material non-public information about the Borrower, the Loan
Parties and their Related Parties or their respective securities) will be
made available and who may receive such information in accordance with the
assignee's compliance procedures and applicable laws, including Federal and
state securities laws.
For the purposes of this Section 9.04(b), the term "Approved Fund" has the
following meaning:
"Approved Fund" means any Person (other than a natural person) that is
engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.
(iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this Section, from and after the effective date specified
in each Assignment and Assumption the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this Section 9.04 shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
paragraph (c) of this Section.
(iv) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the
Loans owing to, each Lender pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive, and the Borrower,
the Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and Assumption executed
by an assigning Lender and an assignee, the assignee's completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register; provided that if
either the assigning Lender or the assignee shall have failed to make any
payment required to be made by it pursuant to Section 2.05, 2.06(d) or (e),
2.07(b), 2.18(d) or 9.03(c), the Administrative Agent shall have no obligation
to accept such Assignment and Assumption and record the information therein in
the Register unless and until such payment shall have been made in full,
together with all accrued interest thereon. No assignment shall be effective for
purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.
(c)(i) Any Lender may, without the consent of the Borrower and the
Administrative Agent sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Commitment and the Loans
owing to it); provided that (A) such Lender's obligations under this Agreement
shall remain unchanged, (B) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (C) the
Borrower, the Administrative Agent, and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 9.08 as
though it were a Lender, provided such Participant agrees to be subject to
Section 2.18(c) as though it were a Lender.
(ii) A Participant shall not be entitled to receive any greater payment
under Section 2.15 or 2.17 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower's
prior written consent.
(d) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and unpaid is outstanding and so
long as the Commitments have not expired or terminated. The provisions of
Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Commitments or the termination of this Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by facsimile shall be effective as
delivery of a manually executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of any Loan Document held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions thereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of the Borrower
or such Loan Guarantor against any of and all the Secured Obligations held by
such Lender, irrespective of whether or not such Lender shall have made any
demand under the Loan Documents and although such obligations may be unmatured.
The applicable Lender shall notify the Borrower and the Administrative Agent of
such set-off or application, provided that any failure to give or any delay in
giving such notice shall not affect the validity of any such set-off or
application under this Section. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process.
(a) The Loan Documents (other than those containing a contrary express choice of
law provision) shall be governed by and construed in accordance with the laws of
the State of New York, but giving effect to federal laws applicable to national
banks.
(b) Each Loan Party hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any U.S. Federal or
New York State court sitting in New York State in any action or proceeding
arising out of or relating to any Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Loan Document shall
affect any right that the Administrative Agent or any Lender may otherwise have
to bring any action or proceeding relating to this Agreement or any other Loan
Document against any Loan Party or its properties in the courts of any
jurisdiction.
(c) Each Loan Party hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any other Loan Document in any
court referred to in paragraph (b) of this Section. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the extent required by Requirement of Law or
by any subpoena or similar legal process, (d) to any other party to this
Agreement, (e) in connection with the exercise of any remedies hereunder or any
suit, action or proceeding relating to this Agreement or any other Loan Document
or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section,
to (i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or (ii)
any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to the Loan Parties and their obligations, (g)
with the consent of the Borrower or (h) to the extent such Information
(i) becomes publicly available other than as a result of a breach of this
Section or (ii) becomes available to the Administrative Agent or any Lender on a
non-confidential basis from a source other than the Borrower. For the purposes
of this Section, "Information" means all information received from the Borrower
relating to the Borrower or its business, other than any such information that
is available to the Administrative Agent or any Lender on a non-confidential
basis prior to disclosure by the Borrower; provided that, in the case of
information received from the Borrower after the date hereof, such information
is clearly identified at the time of delivery as confidential. Any Person
required to maintain the confidentiality of Information as provided in this
Section shall be considered to have complied with its obligation to do so if
such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
SECTION 9.13. Several Obligations; Nonreliance; Violation of Law. The
respective obligations of the Lenders hereunder are several and not joint and
the failure of any Lender to make any Loan or perform any of its obligations
hereunder shall not relieve any other Lender from any of its obligations
hereunder. Each Lender hereby represents that it is not relying on or looking to
any margin stock for the repayment of the Borrowings provided for herein.
Anything contained in this Agreement to the contrary notwithstanding, no Lender
shall be obligated to extend credit to the Borrower in violation of any
Requirement of Law.
SECTION 9.14. USA PATRIOT Act. Each Lender that is subject to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the "Act") hereby notifies the Borrower that pursuant to
the requirements of the Act, it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender to
identify the Borrower in accordance with the Act.
SECTION 9.15. Disclosure. Each Loan Party and each Lender hereby
acknowledges and agrees that the Administrative Agent and/or its Affiliates from
time to time may hold investments in, make other loans to or have other
relationships with any of the Loan Parties and their respective Affiliates.
SECTION 9.16. Appointment for Perfection. Each Lender hereby appoints each
other Lender as its agent for the purpose of perfecting Liens, for the benefit
of the Administrative Agent and the Lenders, in assets which, in accordance with
Article 9 of the UCC or any other applicable law can be perfected only by
possession. Should any Lender (other than the Administrative Agent) obtain
possession of any such Collateral, such Lender shall notify the Administrative
Agent thereof, and, promptly upon the Administrative Agent's request therefor
shall deliver such Collateral to the Administrative Agent or otherwise deal with
such Collateral in accordance with the Administrative Agent's instructions.
SECTION 9.17. Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the "Charges"), shall exceed the maximum
lawful rate (the "Maximum Rate") which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
ARTICLE X
Loan Guaranty
SECTION 10.01. Guaranty. Each Loan Guarantor (other than those that have
delivered a separate Guaranty) hereby agrees that it is jointly and severally
liable for, and, as primary obligor and not merely as surety, absolutely and
unconditionally guarantees to the Lenders the prompt payment when due, whether
at stated maturity, upon acceleration or otherwise, and at all times thereafter,
of the Secured Obligations and all costs and expenses including, without
limitation, all court costs and attorneys' and paralegals' fees (including
allocated costs of in-house counsel and paralegals) and expenses paid or
incurred by the Administrative Agent and the Lenders in endeavoring to collect
all or any part of the Secured Obligations from, or in prosecuting any action
against, the Borrower, any Loan Guarantor or any other guarantor of all or any
part of the Secured Obligations (such costs and expenses, together with the
Secured Obligations, collectively the "Guaranteed Obligations"). Each Loan
Guarantor further agrees that the Guaranteed Obligations may be extended or
renewed in whole or in part without notice to or further assent from it, and
that it remains bound upon its guarantee notwithstanding any such extension or
renewal. All terms of this Loan Guaranty apply to and may be enforced by or on
behalf of any domestic or foreign branch or Affiliate of any Lender that
extended any portion of the Guaranteed Obligations.
SECTION 10.02. Guaranty of Payment. This Loan Guaranty is a guaranty of
payment and not of collection. Each Loan Guarantor waives any right to require
the Administrative Agent or any Lender to sue the Borrower, any Loan Guarantor,
any other guarantor, or any other person obligated for all or any part of the
Guaranteed Obligations (each, an "Obligated Party"), or otherwise to enforce its
payment against any collateral securing all or any part of the Guaranteed
Obligations.
SECTION 10.03. No Discharge or Diminishment of Loan Guaranty. (a) Except as
otherwise provided for herein, the obligations of each Loan Guarantor hereunder
are unconditional and absolute and not subject to any reduction, limitation,
impairment or termination for any reason (other than the indefeasible payment in
full in cash of the Guaranteed Obligations), including: (i) any claim of waiver,
release, extension, renewal, settlement, surrender, alteration, or compromise of
any of the Guaranteed Obligations, by operation of law or otherwise; (ii) any
change in the corporate existence, structure or ownership of the Borrower or any
other guarantor of or other person liable for any of the Guaranteed Obligations;
(iii) any insolvency, bankruptcy, reorganization or other similar proceeding
affecting any Obligated Party, or their assets or any resulting release or
discharge of any obligation of any Obligated Party; or (iv) the existence of any
claim, setoff or other rights which any Loan Guarantor may have at any time
against any Obligated Party, the Administrative Agent, any Lender, or any other
person, whether in connection herewith or in any unrelated transactions.
(b) The obligations of each Loan Guarantor hereunder are not subject to any
defense or setoff, counterclaim, recoupment, or termination whatsoever by reason
of the invalidity, illegality, or unenforceability of any of the Guaranteed
Obligations or otherwise, or any provision of applicable law or regulation
purporting to prohibit payment by any Obligated Party, of the Guaranteed
Obligations or any part thereof.
(c) Further, the obligations of any Loan Guarantor hereunder are not
discharged or impaired or otherwise affected by: (i) the failure of the
Administrative Agent or any Lender to assert any claim or demand or to enforce
any remedy with respect to all or any part of the Guaranteed Obligations; (ii)
any waiver or modification of or supplement to any provision of any agreement
relating to the Guaranteed Obligations; (iii) any release, non-perfection, or
invalidity of any indirect or direct security for the obligations of the
Borrower for all or any part of the Guaranteed Obligations or any obligations of
any other guarantor of or other person liable for any of the Guaranteed
Obligations; (iv) any action or failure to act by the Administrative Agent or
any Lender with respect to any collateral securing any part of the Guaranteed
Obligations; or (v) any default, failure or delay, willful or otherwise, in the
payment or performance of any of the Guaranteed Obligations, or any other
circumstance, act, omission or delay that might in any manner or to any extent
vary the risk of such Loan Guarantor or that would otherwise operate as a
discharge of any Loan Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of the Guaranteed Obligations).
SECTION 10.04. Defenses Waived. To the fullest extent permitted by
applicable law, each Loan Guarantor hereby waives any defense based on or
arising out of any defense of the Borrower or any Loan Guarantor or the
unenforceability of all or any part of the Guaranteed Obligations from any
cause, or the cessation from any cause of the liability of the Borrower or any
Loan Guarantor, other than the indefeasible payment in full in cash of the
Guaranteed Obligations. Without limiting the generality of the foregoing, each
Loan Guarantor irrevocably waives acceptance hereof, presentment, demand,
protest and, to the fullest extent permitted by law, any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
person against any Obligated Party, or any other person. The Administrative
Agent may, at its election, foreclose on any Collateral held by it by one or
more judicial or nonjudicial sales, accept an assignment of any such Collateral
in lieu of foreclosure or otherwise act or fail to act with respect to any
collateral securing all or a part of the Guaranteed Obligations, compromise or
adjust any part of the Guaranteed Obligations, make any other accommodation with
any Obligated Party or exercise any other right or remedy available to it
against any Obligated Party, without affecting or impairing in any way the
liability of such Loan Guarantor under this Loan Guaranty except to the extent
the Guaranteed Obligations have been fully and indefeasibly paid in cash. To the
fullest extent permitted by applicable law, each Loan Guarantor waives any
defense arising out of any such election even though that election may operate,
pursuant to applicable law, to impair or extinguish any right of reimbursement
or subrogation or other right or remedy of any Loan Guarantor against any
Obligated Party or any security.
SECTION 10.05. Rights of Subrogation. No Loan Guarantor will assert any
right, claim or cause of action, including, without limitation, a claim of
subrogation, contribution or indemnification that it has against any Obligated
Party, or any collateral, until the Loan Parties and the Loan Guarantors have
fully performed all their obligations to the Administrative Agent and the
Lenders.
SECTION 10.06. Reinstatement; Stay of Acceleration. If at any time any
payment of any portion of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned upon the insolvency, bankruptcy, or
reorganization of the Borrower or otherwise, each Loan Guarantor's obligations
under this Loan Guaranty with respect to that payment shall be reinstated at
such time as though the payment had not been made and whether or not the
Administrative Agent and the Lenders are in possession of this Loan Guaranty. If
acceleration of the time for payment of any of the Guaranteed Obligations is
stayed upon the insolvency, bankruptcy or reorganization of the Borrower, all
such amounts otherwise subject to acceleration under the terms of any agreement
relating to the Guaranteed Obligations shall nonetheless be payable by the Loan
Guarantors forthwith on demand by the Lender.
SECTION 10.07. Information. Each Loan Guarantor assumes all responsibility
for being and keeping itself informed of the Borrower's financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks that
each Loan Guarantor assumes and incurs under this Loan Guaranty, and agrees that
neither the Administrative Agent nor any Lender shall have any duty to advise
any Loan Guarantor of information known to it regarding those circumstances or
risks.
SECTION 10.08. Termination. The Lenders may continue to make loans or
extend credit to the Borrower based on this Loan Guaranty until five days after
it receives written notice of termination from any Loan Guarantor.
Notwithstanding receipt of any such notice, each Loan Guarantor will continue to
be liable to the Lenders for any Guaranteed Obligations created, assumed or
committed to prior to the fifth day after receipt of the notice, and all
subsequent renewals, extensions, modifications and amendments with respect to,
or substitutions for, all or any part of that Guaranteed Obligations.
SECTION 10.09. Taxes. All payments of the Guaranteed Obligations will be
made by each Loan Guarantor free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if any Loan Guarantor shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent or Lender (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Loan Guarantor shall make such deductions and
(iii) such Loan Guarantor shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
SECTION 10.10. Maximum Liability. The provisions of this Loan Guaranty are
severable, and in any action or proceeding involving any state corporate law, or
any state, federal or foreign bankruptcy, insolvency, reorganization or other
law affecting the rights of creditors generally, if the obligations of any Loan
Guarantor under this Loan Guaranty would otherwise be held or determined to be
avoidable, invalid or unenforceable on account of the amount of such Loan
Guarantor's liability under this Loan Guaranty, then, notwithstanding any other
provision of this Loan Guaranty to the contrary, the amount of such liability
shall, without any further action by the Loan Guarantors or the Lenders, be
automatically limited and reduced to the highest amount that is valid and
enforceable as determined in such action or proceeding (such highest amount
determined hereunder being the relevant Loan Guarantor's "Maximum Liability".
This Section with respect to the Maximum Liability of each Loan Guarantor is
intended solely to preserve the rights of the Lenders to the maximum extent not
subject to avoidance under applicable law, and no Loan Guarantor nor any other
person or entity shall have any right or claim under this Section with respect
to such Maximum Liability, except to the extent necessary so that the
obligations of any Loan Guarantor hereunder shall not be rendered voidable under
applicable law. Each Loan Guarantor agrees that the Guaranteed Obligations may
at any time and from time to time exceed the Maximum Liability of each Loan
Guarantor without impairing this Loan Guaranty or affecting the rights and
remedies of the Lenders hereunder, provided that, nothing in this sentence shall
be construed to increase any Loan Guarantor's obligations hereunder beyond its
Maximum Liability.
SECTION 10.11. Contribution. In the event any Loan Guarantor (a "Paying
Guarantor") shall make any payment or payments under this Loan Guaranty or shall
suffer any loss as a result of any realization upon any collateral granted by it
to secure its obligations under this Loan Guaranty, each other Loan Guarantor
(each a "Non-Paying Guarantor") shall contribute to such Paying Guarantor an
amount equal to such Non-Paying Guarantor's "Applicable Percentage" of such
payment or payments made, or losses suffered, by such Paying Guarantor. For
purposes of this Article X, each Non-Paying Guarantor's "Applicable Percentage"
with respect to any such payment or loss by a Paying Guarantor shall be
determined as of the date on which such payment or loss was made by reference to
the ratio of (i) such Non-Paying Guarantor's Maximum Liability as of such date
(without giving effect to any right to receive, or obligation to make, any
contribution hereunder) or, if such Non-Paying Guarantor's Maximum Liability has
not been determined, the aggregate amount of all monies received by such
Non-Paying Guarantor from the Borrower after the date hereof (whether by loan,
capital infusion or by other means) to (ii) the aggregate Maximum Liability of
all Loan Guarantors hereunder (including such Paying Guarantor) as of such date
(without giving effect to any right to receive, or obligation to make, any
contribution hereunder), or to the extent that a Maximum Liability has not been
determined for any Loan Guarantor, the aggregate amount of all monies received
by such Loan Guarantors from the Borrower after the date hereof (whether by
loan, capital infusion or by other means). Nothing in this provision shall
affect any Loan Guarantor's several liability for the entire amount of the
Guaranteed Obligations (up to such Loan Guarantor's Maximum Liability). Each of
the Loan Guarantors covenants and agrees that its right to receive any
contribution under this Loan Guaranty from a Non-Paying Guarantor shall be
subordinate and junior in right of payment to the payment in full in cash of the
Guaranteed Obligations. This provision is for the benefit of both the
Administrative Agent, the Lenders and the Loan Guarantors and may be enforced by
any one, or more, or all of them in accordance with the terms hereof.
SECTION 10.12. Liability Cumulative. The liability of each Loan Party as a
Loan Guarantor under this Article X is in addition to and shall be cumulative
with all liabilities of each Loan Party to the Administrative Agent and the
Lenders under this Agreement and the other Loan Documents to which such Loan
Party is a party or in respect of any obligations or liabilities of the other
Loan Parties, without any limitation as to amount, unless the instrument or
agreement evidencing or creating such other liability specifically provides to
the contrary.
[Signature pages follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
PAR TECHNOLOGY CORPORATION
By: __________________________________________
Name: Ronald J. Casciano
Title: Treasurer
JPMORGAN CHASE BANK, N.A., as Administrative Agent
and as Lender
By: __________________________________________
Name:
Title:
NBT BANK, N.A., as Lender
By: __________________________________________
Name:
Title:
ALLIANCE BANK, N.A., as Lender
By: __________________________________________
Name:
Title:
[Signature Page to Credit Agreement]
The following Persons are signatories to this Agreement in their capacities
as Loan Parties and Loan Guarantors:
PARTECH, INC.
By: ______________________________________
Name: Ronald J. Casciano
Title: Treasurer
PAR SPRINGER-MILLER SYSTEMS, INC.
By: ______________________________________
Name: Ronald J. Casciano
Title: Treasurer
PAR GOVERNMENT SYSTEMS CORPORATION
By: ______________________________________
Name: Ronald J. Casciano
Title: Treasurer
ROME RESEARCH CORPORATION
By: ______________________________________
Name: Ronald J. Casciano
Title: Treasurer
PAR-SIVA CORPORATION
By: ______________________________________
Name: Ronald J. Casciano
Title: Treasurer
Exhibit 10.2
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (as it may be amended or modified from
time to time, the "Security Agreement") is entered into as of June 16, 2008 by
and between Par Technology Corporation, a Delaware corporation, (the "Borrower")
and Partech, Inc., Par Spring-Miller Systems, Inc. Par Government Systems
Corporation, Rome Research Corporation and Par-Siva Corporation (the "Loan
Parties", and, together with the Borrower, the "Grantors"), and JPMorgan Chase
Bank, N.A., in its capacity as administrative agent (the "Administrative Agent")
for the lenders party to the Credit Agreement referred to below.
PRELIMINARY STATEMENT
The Grantors, the Administrative Agent, and the Lenders are entering into a
Credit Agreement dated as of the date hereof (as it may be amended or modified
from time to time, the "Credit Agreement"). Each Grantor is entering into this
Security Agreement in order to induce the Lenders to enter into and extend
credit to the Borrower under the Credit Agreement and to secure the Secured
Obligations of the Borrower and the Secured Obligations of those Grantors who
are Loan Guarantors pursuant to Article X of the Credit Agreement.
ACCORDINGLY, the Grantors and the Administrative Agent, on behalf of the
Lenders, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Terms Defined in Credit Agreement. All capitalized terms used herein
and not otherwise defined shall have the meanings assigned to such terms in the
Credit Agreement.
1.2. Terms Defined in UCC. Terms defined in the UCC which are not otherwise
defined in this Security Agreement are used herein as defined in the UCC.
1.3. Definitions of Certain Terms Used Herein. As used in this Security
Agreement, in addition to the terms defined in the Preliminary Statement, the
following terms shall have the following meanings:
"Accounts" shall have the meaning set forth in Article 9 of the UCC.
"Article" means a numbered article of this Security Agreement, unless
another document is specifically referenced.
"Chattel Paper" shall have the meaning set forth in Article 9 of the UCC.
"Closing Date" means the date of the Credit Agreement.
"Collateral" shall have the meaning set forth in Article II.
"Collateral Access Agreement" means any landlord waiver or other agreement,
in form and substance satisfactory to the Administrative Agent, between the
Administrative Agent and any third party (including any bailee, consignee,
customs broker, or other similar Person) in possession of any Collateral or any
landlord of any Loan Party for any real property where any Collateral is
located, as such landlord waiver or other agreement may be amended, restated, or
otherwise modified from time to time.
"Collateral Deposit Account" shall have the meaning set forth in Section
7.1(a).
"Collateral Report" means any certificate (including any Borrowing Base
Certificate), report or other document delivered by any Grantor to the
Administrative Agent or any Lender with respect to the Collateral pursuant to
any Loan Document.
"Collection Account" shall have the meaning set forth in Section 7.1(b).
"Control" shall have the meaning set forth in Article 8 or, if applicable,
in Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the UCC.
"Copyrights" means, with respect to any Person, all of such Person's right,
title, and interest in and to the following: (a) all copyrights, rights and
interests in copyrights, works protectable by copyright, copyright
registrations, and copyright applications; (b) all renewals of any of the
foregoing; (c) all income, royalties, damages, and payments now or hereafter due
and/or payable under any of the foregoing, including, without limitation,
damages or payments for past or future infringements for any of the foregoing;
(d) the right to sue for past, present, and future infringements of any of the
foregoing; and (e) all rights corresponding to any of the foregoing throughout
the world.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Deposit Account Control Agreement" means an agreement, in form and
substance satisfactory to the Administrative Agent, among any Loan Party, a
banking institution holding such Loan Party's funds, and the Administrative
Agent with respect to collection and control of all deposits and balances held
in a deposit account maintained by any Loan Party with such banking institution.
"Deposit Accounts" shall have the meaning set forth in Article 9 of the
UCC.
"Documents" shall have the meaning set forth in Article 9 of the UCC.
"Equipment" shall have the meaning set forth in Article 9 of the UCC.
"Event of Default" means an event described in Section 5.1.
"Exhibit" refers to a specific exhibit to this Security Agreement, unless
another document is specifically referenced.
"Fixtures" shall have the meaning set forth in Article 9 of the UCC.
"General Intangibles" shall have the meaning set forth in Article 9 of the
UCC.
"Goods" shall have the meaning set forth in Article 9 of the UCC.
"Instruments" shall have the meaning set forth in Article 9 of the UCC.
"Inventory" shall have the meaning set forth in Article 9 of the UCC.
"Investment Property" shall have the meaning set forth in Article 9 of the
UCC.
"Lenders" means the lenders party to the Credit Agreement and their
successors and assigns.
"Letter-of-Credit Rights" shall have the meaning set forth in Article 9 of
the UCC.
"Licenses" means, with respect to any Person, all of such Person's right,
title, and interest in and to (a) any and all licensing agreements or similar
arrangements in and to its Patents, Copyrights, or Trademarks, (b) all income,
royalties, damages, claims, and payments now or hereafter due or payable under
and with respect thereto, including, without limitation, damages and payments
for past and future breaches thereof, and (c) all rights to sue for past,
present, and future breaches thereof.
"Lock Boxes" shall have the meaning set forth in Section 7.1(a).
"Lock Box Agreements" shall have the meaning set forth in Section 7.1(a).
"Patents" means, with respect to any Person, all of such Person's right,
title, and interest in and to: (a) any and all patents and patent applications;
(b) all inventions and improvements described and claimed therein; (c) all
reissues, divisions, continuations, renewals, extensions, and
continuations-in-part thereof; (d) all income, royalties, damages, claims, and
payments now or hereafter due or payable under and with respect thereto,
including, without limitation, damages and payments for past and future
infringements thereof; (e) all rights to sue for past, present, and future
infringements thereof; and (f) all rights corresponding to any of the foregoing
throughout the world.
"Pledged Collateral" means all Instruments, Securities and other Investment
Property of the Grantors, whether or not physically delivered to the
Administrative Agent pursuant to this Security Agreement, provided that
Securities constituting equity interests in the consolidated Subsidiaries of
Borrower or any other Grantor shall not be required to be pledged hereunder and
shall not constitute Pledged Collateral.
"Receivables" means the Accounts, Chattel Paper, Documents, Investment
Property, Instruments and any other rights or claims to receive money which are
General Intangibles or which are otherwise included as Collateral.
"Required Secured Parties" means (a) prior to the date upon which the
Credit Agreement has terminated by its terms and all of the obligations
thereunder have been paid in full, Lenders holding in the aggregate at least a
majority of the total of the Aggregate Credit Exposure, and (b) after the Credit
Agreement has terminated by its terms and all of the Obligations thereunder have
been paid in full (whether or not the Obligations under the Credit Agreement
were ever accelerated), Lenders holding in the aggregate at least a majority of
the aggregate net early termination payments and all other amounts then due and
unpaid from any Grantor to the Lenders under Swap Agreements, Banking Services
Obligations or L/C Obligations remaining outstanding, as determined by the
Administrative Agent in its reasonable discretion.
"Section" means a numbered section of this Security Agreement, unless
another document is specifically referenced.
"Security" has the meaning set forth in Article 8 of the UCC.
"Stock Rights" means all dividends, instruments or other distributions and
any other right or property which the Grantors shall receive or shall become
entitled to receive for any reason whatsoever with respect to, in substitution
for or in exchange for any Equity Interest constituting Collateral, any right to
receive an Equity Interest and any right to receive earnings, in which the
Grantors now have or hereafter acquire any right, issued by an issuer of such
Equity Interest.
"Supporting Obligations" shall have the meaning set forth in Article 9 of
the UCC.
"Trademarks" means, with respect to any Person, all of such Person's right,
title, and interest in and to the following: (a) all trademarks (including
service marks), trade names, trade dress, and trade styles and the registrations
and applications for registration thereof and the goodwill of the business
symbolized by the foregoing; (b) all licenses of the foregoing, whether as
licensee or licensor; (c) all renewals of the foregoing; (d) all income,
royalties, damages, and payments now or hereafter due or payable with respect
thereto, including, without limitation, damages, claims, and payments for past
and future infringements thereof; (e) all rights to sue for past, present, and
future infringements of the foregoing, including the right to settle suits
involving claims and demands for royalties owing; and (f) all rights
corresponding to any of the foregoing throughout the world.
"UCC" means the Uniform Commercial Code, as in effect from time to time, of
the State of New York or of any other state the laws of which are required as a
result thereof to be applied in connection with the attachment, perfection or
priority of, or remedies with respect to, Administrative Agent's or any Lender's
Lien on any Collateral.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
ARTICLE II
GRANT OF SECURITY INTEREST
Each Grantor hereby pledges, assigns and grants to the Administrative
Agent, on behalf of and for the ratable benefit of the Lenders, a security
interest in all of its right, title and interest in, to and under all personal
property and other assets, whether now owned by or owing to, or hereafter
acquired by or arising in favor of such Grantor (including under any trade name
or derivations thereof), and whether owned or consigned by or to, or leased from
or to, such Grantor, and regardless of where located (all of which will be
collectively referred to as the "Collateral"), including:
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Copyrights, Patents and Trademarks;
(iv) all Documents;
(v) all Equipment;
(vi) all Fixtures;
(vii) all General Intangibles;
(viii) all Goods;
(ix) all Instruments;
(x) all Inventory;
(xi) all Investment Property (other than Securities of consolidated
Subsidiaries);
(xii) all cash or cash equivalents;
(xiii) all letters of credit, Letter-of-Credit Rights and Supporting
Obligations;
(xiv) all Deposit Accounts with any bank or other financial institution;
(xv) and all accessions to, substitutions for and replacements, proceeds
(including Stock Rights), insurance proceeds and products of the fore-
going, together with all books and records, customer lists, credit
files, computer files, programs, printouts and other computer
materials and records related thereto and any General Intangibles at
any time evidencing or relating to any of the foregoing;
to secure the prompt and complete payment and performance of the Secured
Obligations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Grantor represents and warrants to the Administrative Agent and the
Lenders that:
3.1. Title, Perfection and Priority. Such Grantor has good and valid rights
in or the power to transfer the Collateral and title to the Collateral with
respect to which it has purported to grant a security interest hereunder, free
and clear of all Liens except for Liens permitted under Section 4.1(e), and has
full power and authority to grant to the Administrative Agent the security
interest in such Collateral pursuant hereto. When financing statements have been
filed in the appropriate offices against such Grantor in the locations listed on
Exhibit H, the Administrative Agent will have a fully perfected first priority
security interest in that Collateral of the Grantor in which a security interest
may be perfected by filing, subject only to Liens permitted under Section
4.1(e).
3.2. Type and Jurisdiction of Organization, Organizational and
Identification Numbers. The type of entity of such Grantor, its state of
organization, the organizational number issued to it by its state of
organization and its federal employer identification number are set forth on
Exhibit A.
3.3. Principal Location. Such Grantor's mailing address and the location of
its place of business (if it has only one) or its chief executive office (if it
has more than one place of business), is disclosed in Exhibit A; such Grantor
has no other places of business except those set forth in Exhibit A.
3.4. Collateral Locations. All of such Grantor's locations in the United
States where Collateral is located are listed on Exhibit A except for those
locations containing Collateral with a value of less than $75,000. All of said
locations are owned by such Grantor except for locations (i) which are leased by
the Grantor as lessee and designated in Part VII(b) of Exhibit A and (ii) at
which Inventory is held in a public warehouse or is otherwise held by a bailee
or on consignment as designated in Part VII(c) of Exhibit A.
3.5. Deposit Accounts. All of such Grantor's Deposit Accounts are listed on
Exhibit B.
3.6. Exact Names. Such Grantor's name in which it has executed this
Security Agreement is the exact name as it appears in such Grantor's
organizational documents, as amended, as filed with such Grantor's jurisdiction
of organization. Except as provided below, such Grantor has not, during the past
five years, been known by or used any other corporate or fictitious name, or
been a party to any merger or consolidation, or been a party to any acquisition.
Par-Siva Corporation was formerly known as PAR Visions Systems Corporation and
Par Springer-Miller Systems, Inc. was formerly known as PSMS Acquisition, Inc.
3.7. Letter-of-Credit Rights and Chattel Paper. Exhibit C lists all
Letter-of-Credit Rights and Chattel Paper of such Grantor. All action by such
Grantor necessary or desirable to protect and perfect the Administrative Agent's
Lien on each item listed on Exhibit C (including the delivery of all originals
and the placement of a legend on all Chattel Paper as required hereunder) has
been duly taken. The Administrative Agent will have a fully perfected first
priority security interest in the Collateral listed on Exhibit C, subject only
to Liens permitted under Section 4.1(e).
3.8. Accounts and Chattel Paper.
(a) The names of the obligors, amounts owing, due dates and other
information with respect to its Accounts and Chattel Paper are and will be
correctly stated in all records of such Grantor relating thereto and in all
invoices and Collateral Reports with respect thereto furnished to the
Administrative Agent by such Grantor from time to time. As of the time when each
Account or each item of Chattel Paper arises, such Grantor shall be deemed to
have represented and warranted that such Account or Chattel Paper, as the case
may be, and all records relating thereto, are genuine and in all respects what
they purport to be.
(b) With respect to its Accounts, except as specifically disclosed on the
most recent Collateral Report, (i) all Accounts are Eligible Accounts; (ii) all
Accounts represent bona fide sales of Inventory or rendering of services to
Account Debtors in the ordinary course of such Grantor's business and are not
evidenced by a judgment, Instrument or Chattel Paper; (iii) there are no
setoffs, claims or disputes existing or asserted with respect thereto and such
Grantor has not made any agreement with any Account Debtor for any extension of
time for the payment thereof, any compromise or settlement for less than the
full amount thereof, any release of any Account Debtor from liability therefor,
or any deduction therefrom except a discount or allowance allowed by such
Grantor in the ordinary course of its business for prompt payment and disclosed
to the Administrative Agent; (iv) to such Grantor's knowledge, there are no
facts, events or occurrences which in any way impair the validity or
enforceability thereof or could reasonably be expected to reduce the amount
payable thereunder as shown on such Grantor's books and records and any
invoices, statements and Collateral Reports with respect thereto; (v) such
Grantor has not received any notice of proceedings or actions which are
threatened or pending against any Account Debtor which might result in any
adverse change in such Account Debtor's financial condition; and (vi) such
Grantor has no knowledge that any Account Debtor is unable generally to pay its
debts as they become due.
(c) In addition, with respect to all of its Accounts, (i) the amounts shown
on all invoices, statements and Collateral Reports with respect thereto are
actually and absolutely owing to such Grantor as indicated thereon and are not
in any way contingent; (ii) no payments have been or shall be made thereon
except payments immediately delivered to a Lock Box or a Collateral Deposit
Account as required pursuant to Section 7.1; and (iii) to such Grantor's
knowledge, all Account Debtors have the capacity to contract.
3.9. Inventory. With respect to any of its Inventory scheduled or listed on
the most recent Collateral Report, (a) such Inventory (other than Inventory in
transit) is located at one of such Grantor's locations set forth on Exhibit A,
(b) no Inventory (other than Inventory in transit) is now, or shall at any time
or times hereafter be stored at any other location except as permitted by
Section 4.1(g), (c) such Grantor has good, indefeasible and merchantable title
to such Inventory and such Inventory is not subject to any Lien or security
interest or document whatsoever except for the Lien granted to the
Administrative Agent, for the benefit of the Administrative Agent and Lenders,
and except for Permitted Encumbrances, (d) except as specifically disclosed in
the most recent Collateral Report, such Inventory is Eligible Inventory of good
and merchantable quality, free from any defects, (e) such Inventory is not
subject to any licensing, patent, royalty, trademark, trade name or copyright
agreements with any third parties which would require any consent of any third
party upon sale or disposition of that Inventory or the payment of any monies to
any third party upon such sale or other disposition other than royalties
incurred pursuant to sale of such Inventory under a current licensing agreement
with a vendor of software imbedded in the Inventory, (f) such Inventory has been
produced in accordance with the Federal Fair Labor Standards Act of 1938, as
amended, and all rules, regulations and orders thereunder and (g) the completion
of manufacture, sale or other disposition of such Inventory by the
Administrative Agent following an Event of Default shall not require the consent
of any Person and shall not constitute a breach or default under any contract or
agreement to which such Grantor is a party or to which such property is subject.
3.10. Intellectual Property. Such Grantor does not have any interest in, or
title to, any Patent, registered Trademark or registered Copyright except as set
forth in Exhibit D. This Security Agreement and the Patent Security Agreement,
Trademark Security Agreement and Copyright Security Agreement are effective to
create a valid and continuing Lien and, upon filing of appropriate financing
statements in the offices listed on Exhibit H and the Patent Security Agreement,
Trademark Security Agreement and Copyright Security Agreement with the United
States Patent and Trademark Office and United States Copyright Office, fully
perfected first priority security interests in favor of the Administrative Agent
on such Grantor's Patents, Trademarks and Copyrights, such perfected security
interests are enforceable as such as against any and all creditors of and
purchasers from such Grantor; and all action necessary or desirable to protect
and perfect the Administrative Agent's Lien on such Grantor's Patents,
Trademarks or Copyrights shall have been duly taken.
3.11. Filing Requirements. None of its Equipment is covered by any
certificate of title, except for the vehicles described in Part I of Exhibit E.
None of the Collateral owned by it is of a type for which security interests or
liens may be perfected by filing under any federal statute except for (a) the
vehicles described in Part II of Exhibit E and (b) Patents, Trademarks and
Copyrights held by such Grantor and described in Exhibit D.
3.12. No Financing Statements, Security Agreements. No financing statement
or security agreement describing all or any portion of the Collateral which has
not lapsed or been terminated naming such Grantor as debtor has been filed or is
of record in any jurisdiction except (a) for financing statements or security
agreements naming the Administrative Agent on behalf of the Lenders as the
secured party, (b) for financing statements or security agreements described on
Schedule 6.02 to the Credit Agreement, and (c) as permitted by Section 4.1(e).
3.13. Pledged Collateral.
(a) Exhibit G sets forth a complete and accurate list of all Pledged
Collateral owned by such Grantor, provided that Securities constituting equity
interests of the consolidated Subsidiaries of the Borrower and any other Grantor
shall not constituted Pledged Collateral and shall not be required to be listed
oh Exhibit G. Such Grantor is the direct, sole beneficial owner and sole holder
of record of the Pledged Collateral listed on Exhibit G as being owned by it,
free and clear of any Liens, except for the security interest granted to the
Administrative Agent for the benefit of the Lenders hereunder. Such Grantor
further represents and warrants that (i) all Pledged Collateral owned by it
constituting an Equity Interest has been (to the extent such concepts are
relevant with respect to such Pledged Collateral) duly authorized, validly
issued, are fully paid and non-assessable, (ii) with respect to any certificates
delivered to the Administrative Agent representing an Equity Interest, either
such certificates are Securities as defined in Article 8 of the UCC as a result
of actions by the issuer or otherwise, or, if such certificates are not
Securities, such Grantor has so informed the Administrative Agent so that the
Administrative Agent may take steps to perfect its security interest therein as
a General Intangible, (iii) all such Pledged Collateral held by a securities
intermediary is covered by a control agreement among such Grantor, the
securities intermediary and the Administrative Agent pursuant to which the
Administrative Agent has Control and (iv) all Pledged Collateral which
represents Indebtedness owed to such Grantor has been duly authorized,
authenticated or issued and delivered by the issuer of such Indebtedness, is the
legal, valid and binding obligation of such issuer and such issuer is not in
default thereunder.
(b) In addition, (i) none of the Pledged Collateral owned by it has been
issued or transferred in violation of the securities registration, securities
disclosure or similar laws of any jurisdiction to which such issuance or
transfer may be subject, (ii) there are existing no options, warrants, calls or
commitments of any character whatsoever relating to such Pledged Collateral or
which obligate the issuer of any Equity Interest included in the Pledged
Collateral to issue additional Equity Interests, and (iii) no consent, approval,
authorization, or other action by, and no giving of notice, filing with, any
governmental authority or any other Person is required for the pledge by such
Grantor of such Pledged Collateral pursuant to this Security Agreement or for
the execution, delivery and performance of this Security Agreement by such
Grantor, or for the exercise by the Administrative Agent of the voting or other
rights provided for in this Security Agreement or for the remedies in respect of
the Pledged Collateral pursuant to this Security Agreement, except as may be
required in connection with such disposition by laws affecting the offering and
sale of securities generally.
(c) Except as set forth in Exhibit G, such Grantor owns 100% of the issued
and outstanding Equity Interests which constitute Pledged Collateral owned by it
and none of the Pledged Collateral which represents Indebtedness owed to such
Grantor is subordinated in right of payment to other Indebtedness or subject to
the terms of an indenture.
ARTICLE IV
COVENANTS
From the date of this Security Agreement, and thereafter until this
Security Agreement is terminated, each Grantor agrees that:
4.1. General.
(a) Collateral Records. Such Grantor will maintain complete and accurate
books and records with respect to the Collateral owned by it, and furnish to the
Administrative Agent, with sufficient copies for each of the Lenders, such
reports relating to such Collateral as the Administrative Agent shall from time
to time request.
(b) Authorization to File Financing Statements; Ratification. Such Grantor
hereby authorizes the Administrative Agent to file, and if requested will
deliver to the Administrative Agent, all financing statements and other
documents and take such other actions as may from time to time be requested by
the Administrative Agent in order to maintain a first perfected security
interest in and, if applicable, Control of, the Collateral owned by such
Grantor. Any financing statement filed by the Administrative Agent may be filed
in any filing office in any UCC jurisdiction and may (i) indicate such Grantor's
Collateral (1) as all assets of the Grantor or words of similar effect,
regardless of whether any particular asset comprised in the Collateral falls
within the scope of Article 9 of the UCC or such jurisdiction, or (2) by any
other description which reasonably approximates the description contained in
this Security Agreement, and (ii) contain any other information required by part
5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any
financing statement or amendment, including (A) whether such Grantor is an
organization, the type of organization and any organization identification
number issued to such Grantor, and (B) in the case of a financing statement
filed as a fixture filing or indicating such Grantor's Collateral as
as-extracted collateral or timber to be cut, a sufficient description of real
property to which the Collateral relates. Such Grantor also agrees to furnish
any such information to the Administrative Agent promptly upon request. Such
Grantor also ratifies its authorization for the Administrative Agent to have
filed in any UCC jurisdiction any initial financing statements or amendments
thereto if filed prior to the date hereof.
(c) Further Assurances. Such Grantor will, if so requested by the
Administrative Agent, furnish to the Administrative Agent, as often as the
Administrative Agent requests, statements and schedules further identifying and
describing the Collateral owned by it and such other reports and information in
connection with its Collateral as the Administrative Agent may reasonably
request, all in such detail as the Administrative Agent may specify. Such
Grantor also agrees to take any and all actions necessary to defend title to the
Collateral against all persons and to defend the security interest of the
Administrative Agent in its Collateral and the priority thereof against any Lien
not expressly permitted hereunder.
(d) Disposition of Collateral. Such Grantor will not sell, lease or
otherwise dispose of the Collateral owned by it except for dispositions
specifically permitted pursuant to Section 6.05 of the Credit Agreement.
(e) Liens. Such Grantor will not create, incur, or suffer to exist any Lien
on the Collateral owned by it except (i) the security interest created by this
Security Agreement, and (ii) other Permitted Encumbrances.
(f) Other Financing Statements. Such Grantor will not authorize the filing
of any financing statement naming it as debtor covering all or any portion of
the Collateral owned by it, except as permitted by Section 4.1(e). Such Grantor
acknowledges that it is not authorized to file any financing statement or
amendment or termination statement with respect to any financing statement
without the prior written consent of the Administrative Agent, subject to such
Grantor's rights under Section 9-509(d)(2) of the UCC.
(g) Locations. Such Grantor will not (i) maintain any Collateral owned by
it at any location in the United States other than those locations listed on
Exhibit A or locations containing Collateral having a value of less than
$75,000, (ii) otherwise change, or add to, such locations without the
Administrative Agent's prior written consent as required by the Credit Agreement
(and if the Administrative Agent gives such consent, such Grantor will
concurrently therewith obtain a Collateral Access Agreement for each such
location to the extent required by the Credit Agreement), or (iii) change its
principal place of business or chief executive office from the location
identified on Exhibit A, other than as permitted by the Credit Agreement.
(h) Compliance with Terms. Such Grantor will perform and comply with all
obligations in respect of the Collateral owned by it and all agreements to which
it is a party or by which it is bound relating to such Collateral.
4.2. Receivables.
(a) Certain Agreements on Receivables. Such Grantor will not make or agree
to make any discount, credit, rebate or other reduction in the original amount
owing on a Receivable or accept in satisfaction of a Receivable less than the
original amount thereof, except that, prior to the occurrence of an Event of
Default, such Grantor may reduce the amount of Accounts arising from the sale of
Inventory in accordance with its present policies and in the ordinary course of
business.
(b) Collection of Receivables. Except as otherwise provided in this
Security Agreement, such Grantor will collect and enforce, at such Grantor's
sole expense, all amounts due or hereafter due to such Grantor under the
Receivables owned by it.
(c) Delivery of Invoices. Such Grantor will deliver to the Administrative
Agent immediately upon its request after the occurrence and during the
continuation of an Event of Default duplicate invoices with respect to each
Account owned by it bearing such language of assignment as the Administrative
Agent shall specify.
(d) Disclosure of Counterclaims on Receivables. If (i) any discount, credit
or agreement to make a rebate or to otherwise reduce the amount owing on any
Receivable owned by such Grantor exists or (ii) if, to the knowledge of such
Grantor, any dispute, setoff, claim, counterclaim or defense exists or has been
asserted or threatened with respect to any such Receivable, and the amount of
such discount, credit, rebate, dispute, setoff, claim, counterclaim or defense
exceeds $25,000 with respect to a single Account Debtor, such Grantor will
promptly disclose such fact to the Administrative Agent in writing. Such Grantor
shall promptly reflect each credit memo and each of the facts required to be
disclosed to the Administrative Agent in accordance with this Section 4.2(d) on
the Borrowing Base Certificates submitted by it.
(e) Electronic Chattel Paper. Such Grantor shall take all steps necessary
to grant the Administrative Agent Control of all electronic chattel paper in
accordance with the UCC and all "transferable records" as defined in each of the
Uniform Electronic Transactions Act and the Electronic Signatures in Global and
National Commerce Act.
4.3. Inventory and Equipment.
(a) Maintenance of Goods. Such Grantor will do all things necessary to
maintain, preserve, protect and keep its Inventory and the Equipment in good
repair and working and saleable condition, except for damaged or defective goods
arising in the ordinary course of such Grantor's business and except for
ordinary wear and tear in respect of the Equipment.
(b) Returned Inventory. If an Account Debtor returns any Inventory to such
Grantor when no Event of Default exists, then such Grantor shall promptly
determine the reason for such return and shall issue a credit memorandum to the
Account Debtor in the appropriate amount. In the event any Account Debtor
returns Inventory to such Grantor when an Event of Default exists, such Grantor,
upon the request of the Administrative Agent, shall: (i) hold the returned
Inventory in trust for the Administrative Agent; (ii) segregate all returned
Inventory from all of its other property; (iii) dispose of the returned
Inventory solely according to the Administrative Agent's written instructions;
and (iv) not issue any credits or allowances with respect thereto without the
Administrative Agent's prior written consent. All returned Inventory shall be
subject to the Administrative Agent's Liens thereon. Whenever any Inventory is
returned, the related Account shall be deemed ineligible to the extent of the
amount owing by the Account Debtor with respect to such returned Inventory and
such returned Inventory shall not be Eligible Inventory.
(c) Inventory Count; Perpetual Inventory System. Such Grantor will conduct
a physical count of its Inventory at least once per Fiscal Year, and after and
during the continuation of an Event of Default, at such other times as the
Administrative Agent requests. Such Grantor, at its own expense, shall deliver
to the Administrative Agent the results of each physical verification, which
such Grantor has made, or has caused any other Person to make on its behalf, of
all or any portion of its Inventory. Such Grantor will maintain a perpetual
inventory reporting system at all times.
(d) Equipment. Such Grantor shall not permit any Equipment to become a
fixture with respect to real property or to become an accession with respect to
other personal property with respect to which real or personal property the
Administrative Agent does not have a Lien. Such Grantor will not, without the
Administrative Agent's prior written consent, alter or remove any identifying
symbol or number on any of such Grantor's Equipment constituting Collateral.
(e) Titled Vehicles. Such Grantor will give the Administrative Agent notice
of its acquisition of any vehicle covered by a certificate of title and deliver
to the Administrative Agent, upon request, the original of any vehicle title
certificate and provide and/or file all other documents or instruments necessary
to have the Lien of the Administrative Agent noted on any such certificate or
with the appropriate state office.
4.4. Delivery of Instruments, Securities, Chattel Paper and Documents. Such
Grantor will (a) deliver to the Administrative Agent immediately upon execution
of this Security Agreement the originals of all Chattel Paper, Securities and
Instruments constituting Collateral owned by it (if any then exist), (b) hold in
trust for the Administrative Agent upon receipt and immediately thereafter
deliver to the Administrative Agent any such Chattel Paper, Securities and
Instruments constituting Collateral, (c) upon the Administrative Agent's
request, deliver to the Administrative Agent (and thereafter hold in trust for
the Administrative Agent upon receipt and immediately deliver to the
Administrative Agent) any Document evidencing or constituting Collateral and (d)
upon the Administrative Agent's request, deliver to the Administrative Agent a
duly executed amendment to this Security Agreement, in the form of Exhibit I
hereto (the "Amendment"), pursuant to which such Grantor will pledge such
additional Collateral. Such Grantor hereby authorizes the Administrative Agent
to attach each Amendment to this Security Agreement and agrees that all
additional Collateral owned by it set forth in such Amendments shall be
considered to be part of the Collateral.
4.5. Uncertificated Pledged Collateral. Such Grantor will permit the
Administrative Agent from time to time to cause the appropriate issuers (and, if
held with a securities intermediary, such securities intermediary) of
uncertificated securities or other types of Pledged Collateral owned by it not
represented by certificates to mark their books and records with the numbers and
face amounts of all such uncertificated securities or other types of Pledged
Collateral not represented by certificates and all rollovers and replacements
therefor to reflect the Lien of the Administrative Agent granted pursuant to
this Security Agreement. With respect to any Pledged Collateral owned by it,
such Grantor will take any actions necessary to cause (a) the issuers of
uncertificated securities which are Pledged Collateral and (b) any securities
intermediary which is the holder of any such Pledged Collateral, to cause the
Administrative Agent to have and retain Control over such Pledged Collateral.
Without limiting the foregoing, such Grantor will, with respect to any such
Pledged Collateral held with a securities intermediary, cause such securities
intermediary to enter into a control agreement with the Administrative Agent, in
form and substance satisfactory to the Administrative Agent, giving the
Administrative Agent Control.
4.6. Pledged Collateral.
(a) Changes in Capital Structure of Issuers. Such Grantor will not (i) to
the extent the Grantor exercises control over the issuer of an Equity Interest
constituting Pledged Collateral (if any), permit or suffer any issuer of an
Equity Interest constituting Pledged Collateral owned by it to dissolve, merge,
liquidate, retire any of its Equity Interests or other Instruments or Securities
evidencing ownership, reduce its capital, sell or encumber all or substantially
all of its assets (except for Permitted Encumbrances and sales of assets
permitted pursuant to Section 4.1(d)) or merge or consolidate with any other
entity, or (ii) vote any such Pledged Collateral in favor of any of the
foregoing.
(b) Issuance of Additional Securities. To the extent a Grantor exercises
control over the issuer of an Equity Interest constituting Pledged Collateral
(if any), such Grantor will not permit or suffer the issuer of an Equity
Interest constituting Pledged Collateral owned by it to issue additional Equity
Interests, any right to receive the same or any right to receive earnings,
except to such Grantor.
(c) Registration of Pledged Collateral. Such Grantor will permit any
registerable Pledged Collateral (if any) owned by it to be registered in the
name of the Administrative Agent or its nominee at any time at the option of the
Required Secured Parties.
(d) Exercise of Rights in Pledged Collateral.
(i) Without in any way limiting the foregoing and subject to clause
(ii) below, such Grantor shall have the right to exercise all voting rights
or other rights relating to the Pledged Collateral owned by it for all
purposes not inconsistent with this Security Agreement, the Credit
Agreement or any other Loan Document; provided however, that no vote or
other right shall be exercised or action taken which would have the effect
of impairing the rights of the Administrative Agent in respect of such
Pledged Collateral.
(ii) Such Grantor will permit the Administrative Agent or its nominee
at any time after the occurrence of an Event of Default, without notice, to
exercise all voting rights or other rights relating to the Pledged
Collateral owned by it, including, without limitation, exchange,
subscription or any other rights, privileges, or options pertaining to any
Equity Interest or Investment Property constituting such Pledged Collateral
as if it were the absolute owner thereof.
(iii) Until an Event of Default has occurred, such Grantor shall be
entitled to collect and receive for its own use all cash dividends and
interest paid in respect of the Pledged Collateral owned by it to the
extent not in violation of the Credit Agreement other than any of the
following distributions and payments (collectively referred to as the
"Excluded Payments"): (A) dividends and interest paid or payable other than
in cash in respect of such Pledged Collateral, and instruments and other
property received, receivable or otherwise distributed in respect of, or in
exchange for, any Pledged Collateral; (B) dividends and other distributions
paid or payable in cash in respect of such Pledged Collateral in connection
with a partial or total liquidation or dissolution or in connection with a
reduction of capital, capital surplus or paid-in capital of an issuer; and
(C) cash paid, payable or otherwise distributed, in respect of principal
of, or in redemption of, or in exchange for, such Pledged Collateral;
provided however, that until actually paid, all rights to such
distributions shall remain subject to the Lien created by this Security
Agreement; and
(iv) All Excluded Payments, whenever paid or made, shall be delivered
to the Administrative Agent to hold as Pledged Collateral and shall, if
received by such Grantor, be received in trust for the benefit of the
Administrative Agent, be segregated from the other property or funds of
such Grantor, and be forthwith delivered to the Administrative Agent as
Pledged Collateral in the same form as so received (with any necessary
endorsement).
4.7. Intellectual Property.
(a) Such Grantor shall notify the Administrative Agent immediately if it
knows or has reason to know that any application or registration relating to any
Patent, Trademark or Copyright (now or hereafter existing) may become abandoned
or dedicated, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any court) regarding such Grantor's ownership of any Patent, Trademark
or Copyright, its right to register the same, or to keep and maintain the same.
(b) In no event shall such Grantor, either directly or through any agent,
employee, licensee or designee, file an application for the registration of any
Patent, Trademark or Copyright with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency
without giving the Administrative Agent prior written notice thereof, and, upon
request of the Administrative Agent, such Grantor shall execute and deliver any
and all security agreements as the Administrative Agent may request to evidence
the Administrative Agent's first priority security interest on such Patent,
Trademark or Copyright, and the General Intangibles of such Grantor relating
thereto or represented thereby.
(c) Such Grantor shall take all actions necessary or requested by the
Administrative Agent to maintain and pursue each application, to obtain the
relevant registration and to maintain the registration of each of its Patents,
Trademarks and Copyrights (now or hereafter existing), including the filing of
applications for renewal, affidavits of use, affidavits of noncontestability and
opposition and interference and cancellation proceedings, unless such Grantor
shall determine that such Patent, Trademark or Copyright is not material to the
conduct of such Grantor's business.
(d) Such Grantor shall, unless it shall reasonably determine that such
Patent, Trademark or Copyright is in no way material to the conduct of its
business or operations, promptly sue for infringement, misappropriation or
dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and shall take such other actions as the
Administrative Agent shall deem appropriate under the circumstances to protect
such Patent, Trademark or Copyright. In the event that such Grantor institutes
suit because any of its Patents, Trademarks or Copyrights constituting
Collateral is infringed upon, or misappropriated or diluted by a third party,
such Grantor shall comply with Section 4.8.
4.8 Commercial Tort Claims. Such Grantor shall promptly, and in any event
within ten Business Days after the same is acquired by it, notify the
Administrative Agent of any commercial tort claim (as defined in the UCC)
acquired by it and, unless the Administrative Agent otherwise consents, such
Grantor shall enter into an amendment to this Security Agreement, in the form of
Exhibit I hereto, granting to Administrative Agent a first priority security
interest in such commercial tort claim.
4.9. Letter-of-Credit Rights. If such Grantor is or becomes the beneficiary
of a letter of credit, it shall promptly, and in any event within ten Business
Days after becoming a beneficiary, notify the Administrative Agent thereof and
cause the issuer and/or confirmation bank to (i) consent to the assignment of
any Letter-of-Credit Rights to the Administrative Agent and (ii) agree to direct
all payments thereunder to a Deposit Account at the Administrative Agent or
subject to a Deposit Account Control Agreement for application to the Secured
Obligations, in accordance with Section 2.18 of the Credit Agreement, all in
form and substance reasonably satisfactory to the Administrative Agent.
4.10. Federal, State or Municipal Claims. Such Grantor will promptly notify
the Administrative Agent of any Collateral which constitutes a claim against the
United States government or any state or local government or any instrumentality
or agency thereof, the assignment of which claim is restricted by federal, state
or municipal law.
4.11. No Interference. Such Grantor agrees that it will not interfere with
any right, power and remedy of the Administrative Agent provided for in this
Security Agreement or now or hereafter existing at law or in equity or by
statute or otherwise, or the exercise or beginning of the exercise by the
Administrative Agent of any one or more of such rights, powers or remedies.
4.12. Insurance. (a) In the event any Collateral is located in any area
that has been designated by the Federal Emergency Management Agency as a
"Special Flood Hazard Area", such Grantor shall purchase and maintain flood
insurance on such Collateral (including any personal property which is located
on any real property leased by such Loan Party within a "Special Flood Hazard
Area"). The amount of flood insurance required by this Section shall be in an
amount equal to the lesser of the total Commitment or the total replacement cost
value of the improvements.
(b) All insurance policies required hereunder and under Section 5.09 of the
Credit Agreement shall name the Administrative Agent (for the benefit of the
Administrative Agent and the Lenders) as an additional insured or as loss payee,
as applicable, and shall contain loss payable clauses or mortgagee clauses,
through endorsements in form and substance satisfactory to the Administrative
Agent, which provide that: (i) all proceeds thereunder with respect to any
Collateral shall be payable to the Administrative Agent; (ii) no such insurance
shall be affected by any act or neglect of the insured or owner of the property
described in such policy; and (iii) such policy and loss payable or mortgagee
clauses may be canceled, amended, or terminated only upon at least thirty days
prior written notice given to the Administrative Agent.
(c) All premiums on any such insurance shall be paid when due by such
Grantor, and copies of the policies delivered to the Administrative Agent. If
such Grantor fails to obtain any insurance as required by this Section, the
Administrative Agent may obtain such insurance at the Borrower's expense. By
purchasing such insurance, the Administrative Agent shall not be deemed to have
waived any Default arising from the Grantor's failure to maintain such insurance
or pay any premiums therefor.
4.13. Collateral Access Agreements. Such Grantor shall use commercially
reasonable efforts to obtain a Collateral Access Agreement, from the lessor of
each leased property, mortgagee of owned property or bailee or consignee with
respect to any warehouse, processor or converter facility or other location
where Collateral is stored or located, which agreement or letter shall provide
access rights, contain a waiver or subordination of all Liens or claims that the
landlord, mortgagee, bailee or consignee may assert against the Collateral at
that location, and shall otherwise be reasonably satisfactory in form and
substance to the Administrative Agent. With respect to such locations or
warehouse space leased as of the Closing Date and thereafter, if the
Administrative Agent has not received a Collateral Access Agreement as of the
Effective Date (or, if later, as of the date such location is acquired or leased
or such later date as the Administrative Agent shall have agreed), Borrower's
Eligible Inventory at that location shall either be excluded from the Borrowing
Base or be subject to such reserves as may be established by the Administrative
Agent, at the option of the Administrative Agent. After the Closing Date, no
real property or warehouse space shall be leased by such Grantor and no
Inventory shall be shipped to a processor or converter under arrangements
established after the Closing Date, unless and until a satisfactory Collateral
Access Agreement shall first have been obtained with respect to such location
and if it has not been obtained, Borrower's Eligible Inventory at that location
shall either be excluded from the Borrowing Base be subject to the establishment
of reserves acceptable to the Administrative Agent, at the option of the
Administrative Agent. Such Grantor shall timely and fully pay and perform its
obligations under all leases and other agreements with respect to each leased
location or third party warehouse where any Collateral is or may be located.
4.14. Deposit Account Control Agreements. Such Grantor will provide to the
Administrative Agent upon the Administrative Agent's request, a Deposit Account
Control Agreement duly executed on behalf of each financial institution holding
a deposit account of such Grantor as set forth in the Security Agreement;
provided that, the Administrative Agent may, in its discretion, defer delivery
of any such Deposit Account Control Agreement, establish a reserve with respect
to any deposit account for which the Administrative Agent has not received such
Deposit Account Control Agreement, and require such Grantor to open and maintain
a new deposit account with a financial institution subject to a Deposit Account
Control Agreement.
4.15. Change of Name or Location; Change of Fiscal Year. Such Grantor shall
not (a) change its name as it appears in official filings in the state of its
incorporation or organization, (b) change its chief executive office, principal
place of business, mailing address, corporate offices or warehouses or locations
at which Collateral is held or stored, or the location of its records concerning
the Collateral as set forth in the Security Agreement, (c) change the type of
entity that it is, (d) change its organization identification number, if any,
issued by its state of incorporation or other organization, or (e) change its
state of incorporation or organization, in each case, unless the Administrative
Agent shall have received at least thirty days prior written notice of such
change and the Administrative Agent shall have acknowledged in writing that
either (1) such change will not adversely affect the validity, perfection or
priority of the Administrative Agent's security interest in the Collateral, or
(2) any reasonable action requested by the Administrative Agent in connection
therewith has been completed or taken (including any action to continue the
perfection of any Liens in favor of the Administrative Agent, on behalf of
Lenders, in any Collateral), provided that, any new location shall be in the
continental U.S. Such Grantor shall not change its fiscal year which currently
ends on December 31.
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
5.1. Events of Default. The occurrence of any one or more of the following
events shall constitute an Event of Default hereunder:
(a) Any representation or warranty made by or on behalf of any Grantor
under or in connection with this Security Agreement shall be materially false as
of the date on which made.
(b) The breach by any Grantor of any of the terms or provisions of Article
IV or Article VII.
(c) The breach by any Grantor (other than a breach which constitutes an
Event of Default under any other Section of this Article V) of any of the terms
or provisions of this Security Agreement which is not remedied within ten days
after such breach.
(d) The occurrence of any "Event of Default" under, and as defined in, the
Credit Agreement.
(e) Any Equity Interest which is included within the Collateral shall at
any time constitute a Security or the issuer of any such Equity Interest shall
take any action to have such interests treated as a Security unless (i) all
certificates or other documents constituting such Security have been delivered
to the Administrative Agent and such Security is properly defined as such under
Article 8 of the UCC of the applicable jurisdiction, whether as a result of
actions by the issuer thereof or otherwise, or (ii) the Administrative Agent has
entered into a control agreement with the issuer of such Security or with a
securities intermediary relating to such Security and such Security is defined
as such under Article 8 of the UCC of the applicable jurisdiction, whether as a
result of actions by the issuer thereof or otherwise.
5.2. Remedies.
(a) Upon the occurrence of an Event of Default, the Administrative Agent
may exercise any or all of the following rights and remedies:
(i) those rights and remedies provided in this Security Agreement, the
Credit Agreement, or any other Loan Document; provided that, this Section
5.2(a) shall not be understood to limit any rights or remedies available to
the Administrative Agent and the Lenders prior to an Event of Default;
(ii) those rights and remedies available to a secured party under the
UCC (whether or not the UCC applies to the affected Collateral) or under
any other applicable law (including, without limitation, any law governing
the exercise of a bank's right of setoff or bankers' lien) when a debtor is
in default under a security agreement;
(iii) give notice of sole control or any other instruction under any
Deposit Account Control Agreement or and other control agreement with any
securities intermediary and take any action therein with respect to such
Collateral;
(iv) without notice (except as specifically provided in Section 8.1 or
elsewhere herein), demand or advertisement of any kind to any Grantor or
any other Person, enter the premises of any Grantor where any Collateral is
located (through self-help and without judicial process) to collect,
receive, assemble, process, appropriate, sell, lease, assign, grant an
option or options to purchase or otherwise dispose of, deliver, or realize
upon, the Collateral or any part thereof in one or more parcels at public
or private sale or sales (which sales may be adjourned or continued from
time to time with or without notice and may take place at any Grantor's
premises or elsewhere), for cash, on credit or for future delivery without
assumption of any credit risk, and upon such other terms as the
Administrative Agent may deem commercially reasonable; and
(v) concurrently with written notice to the applicable Grantor,
transfer and register in its name or in the name of its nominee the whole
or any part of the Pledged Collateral, to exchange certificates or
instruments representing or evidencing Pledged Collateral for certificates
or instruments of smaller or larger denominations, to exercise the voting
and all other rights as a holder with respect thereto, to collect and
receive all cash dividends, interest, principal and other distributions
made thereon and to otherwise act with respect to the Pledged Collateral as
though the Administrative Agent was the outright owner thereof.
(b) The Administrative Agent, on behalf of the Lenders, may comply with any
applicable state or federal law requirements in connection with a disposition of
the Collateral and compliance will not be considered to adversely affect the
commercial reasonableness of any sale of the Collateral.
(c) The Administrative Agent shall have the right upon any such public sale
or sales and, to the extent permitted by law, upon any such private sale or
sales, to purchase for the benefit of the Administrative Agent and the Lenders,
the whole or any part of the Collateral so sold, free of any right of equity
redemption, which equity redemption the Grantor hereby expressly releases.
(d) Until the Administrative Agent is able to effect a sale, lease, or
other disposition of Collateral, the Administrative Agent shall have the right
to hold or use Collateral, or any part thereof, to the extent that it deems
appropriate for the purpose of preserving Collateral or its value or for any
other purpose deemed appropriate by the Administrative Agent. The Administrative
Agent may, if it so elects, seek the appointment of a receiver or keeper to take
possession of Collateral and to enforce any of the Administrative Agent's
remedies (for the benefit of the Administrative Agent and Lenders), with respect
to such appointment without prior notice or hearing as to such appointment.
(e) If, after the Credit Agreement has terminated by its terms and all of
the Obligations have been paid in full, there remain Swap Obligations, Banking
Services Obligations or L/C Obligations outstanding, the Required Secured
Parties may exercise the remedies provided in this Section 5.2 upon the
occurrence of any event which would allow or require the termination or
acceleration of any Swap Obligations , Banking Services Obligations or L/C
Obligations pursuant to the terms thereof.
(f) Notwithstanding the foregoing, neither the Administrative Agent nor the
Lenders shall be required to (i) make any demand upon, or pursue or exhaust any
of their rights or remedies against, any Grantor, any other obligor, guarantor,
pledgor or any other Person with respect to the payment of the Secured
Obligations or to pursue or exhaust any of their rights or remedies with respect
to any Collateral therefor or any direct or indirect guarantee thereof, (ii)
marshal the Collateral or any guarantee of the Secured Obligations or to resort
to the Collateral or any such guarantee in any particular order, or (iii) effect
a public sale of any Collateral.
(g) Each Grantor recognizes that the Administrative Agent may be unable to
effect a public sale of any or all the Pledged Collateral and may be compelled
to resort to one or more private sales thereof in accordance with clause (a)
above. Each Grantor also acknowledges that any private sale may result in prices
and other terms less favorable to the seller than if such sale were a public
sale and, notwithstanding such circumstances, agrees that any such private sale
shall not be deemed to have been made in a commercially unreasonable manner
solely by virtue of such sale being private. The Administrative Agent shall be
under no obligation to delay a sale of any of the Pledged Collateral for the
period of time necessary to permit any Grantor or the issuer of the Pledged
Collateral to register such securities for public sale under the Securities Act
of 1933, as amended, or under applicable state securities laws, even if the
applicable Grantor and the issuer would agree to do so.
5.3. Grantor's Obligations Upon Default. Upon the request of the
Administrative Agent after the occurrence of a Default, each Grantor will:
(a) assemble and make available to the Administrative Agent the Collateral
and all books and records relating thereto at any place or places specified by
the Administrative Agent, whether at a Grantor's premises or elsewhere;
(b) permit the Administrative Agent, by the Administrative Agent's
representatives and agents, to enter, occupy and use any premises where all or
any part of the Collateral, or the books and records relating thereto, or both,
are located, to take possession of all or any part of the Collateral or the
books and records relating thereto, or both, to remove all or any part of the
Collateral or the books and records relating thereto, or both, and to conduct
sales of the Collateral, without any obligation to pay the Grantor for such use
and occupancy;
(c) prepare and file, or cause an issuer of Pledged Collateral to prepare
and file, with the Securities and Exchange Commission or any other applicable
government agency, registration statements, a prospectus and such other
documentation in connection with the Pledged Collateral as the Administrative
Agent may request, all in form and substance satisfactory to the Administrative
Agent, and furnish to the Administrative Agent, or cause an issuer of Pledged
Collateral to furnish to the Administrative Agent, any information regarding the
Pledged Collateral in such detail as the Administrative Agent may specify;
(d) take, or cause an issuer of Pledged Collateral to take, any and all
actions necessary to register or qualify the Pledged Collateral to enable the
Administrative Agent to consummate a public sale or other disposition of the
Pledged Collateral; and
(e) at its own expense, cause the independent certified public accountants
then engaged by each Grantor to prepare and deliver to the Administrative Agent
and each Lender, at any time, and from time to time, promptly upon the
Administrative Agent's request, the following reports with respect to the
applicable Grantor: (i) a reconciliation of all Accounts; (ii) an aging of all
Accounts; (iii) trial balances; and (iv) a test verification of such Accounts.
5.4. Grant of Intellectual Property License. For the purpose of enabling
the Administrative Agent to exercise the rights and remedies under this Article
V at such time as the Administrative Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby (a) grants to the
Administrative Agent, for the benefit of the Administrative Agent and the
Lenders, an irrevocable, nonexclusive license (exercisable without payment of
royalty or other compensation to any Grantor) to use, license or sublicense any
Intellectual property Rights now owned or hereafter acquired by such Grantor,
and wherever the same may be located, and including in such license access to
all media in which any of the licensed items may be recorded or stored and to
all computer software and programs used for the compilation or printout thereof
and (b) irrevocably agrees that the Administrative Agent may sell any of such
Grantor's Inventory directly to any person, including without limitation persons
who have previously purchased the Grantor's Inventory from such Grantor and in
connection with any such sale or other enforcement of the Administrative Agent's
rights under this Security Agreement, may sell Inventory which bears any
Trademark owned by or licensed to such Grantor and any Inventory that is covered
by any Copyright owned by or licensed to such Grantor and the Administrative
Agent may finish any work in process and affix any Trademark owned by or
licensed to such Grantor and sell such Inventory as provided herein.
ARTICLE VI
ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY
6.1. Account Verification. The Administrative Agent may at any time, in the
Administrative Agent's own name, in the name of a nominee of the Administrative
Agent, or in the name of any Grantor communicate (by mail, telephone, facsimile
or otherwise) with the Account Debtors of any such Grantor, parties to contracts
with any such Grantor and obligors in respect of Instruments of any such Grantor
to verify with such Persons, to the Administrative Agent's satisfaction, the
existence, amount, terms of, and any other matter relating to, Accounts,
Instruments, Chattel Paper, payment intangibles and/or other Receivables.
6.2. Authorization for Secured Party to Take Certain Action.
(a) Each Grantor irrevocably authorizes the Administrative Agent at any
time and from time to time in the sole discretion of the Administrative Agent
and appoints the Administrative Agent as its attorney in fact (i) to execute on
behalf of such Grantor as debtor and to file financing statements necessary or
desirable in the Administrative Agent's sole discretion to perfect and to
maintain the perfection and priority of the Administrative Agent's security
interest in the Collateral, (ii) to endorse and collect any cash proceeds of the
Collateral, (iii) to file a carbon, photographic or other reproduction of this
Security Agreement or any financing statement with respect to the Collateral as
a financing statement and to file any other financing statement or amendment of
a financing statement (which does not add new collateral or add a debtor) in
such offices as the Administrative Agent in its sole discretion deems necessary
or desirable to perfect and to maintain the perfection and priority of the
Administrative Agent's security interest in the Collateral, (iv) to contact and
enter into one or more agreements with the issuers of uncertificated securities
which are Pledged Collateral or with securities intermediaries holding Pledged
Collateral as may be necessary or advisable to give the Administrative Agent
Control over such Pledged Collateral, (v) to apply the proceeds of any
Collateral received by the Administrative Agent to the Secured Obligations as
provided in Section 7.3, (vi) to discharge past due taxes, assessments, charges,
fees or Liens on the Collateral (except for such Liens as are specifically
permitted hereunder), (vii) to contact Account Debtors for any reason, (viii) to
demand payment or enforce payment of the Receivables in the name of the
Administrative Agent or such Grantor and to endorse any and all checks, drafts,
and other instruments for the payment of money relating to the Receivables, (ix)
to sign such Grantor's name on any invoice or bill of lading relating to the
Receivables, drafts against any Account Debtor of the Grantor, assignments and
verifications of Receivables, (x) to exercise all of such Grantor's rights and
remedies with respect to the collection of the Receivables and any other
Collateral, (xi) to settle, adjust, compromise, extend or renew the Receivables,
(xii) to settle, adjust or compromise any legal proceedings brought to collect
Receivables, (xiii) to prepare, file and sign such Grantor's name on a proof of
claim in bankruptcy or similar document against any Account Debtor of such
Grantor, (xiv) to prepare, file and sign such Grantor's name on any notice of
Lien, assignment or satisfaction of Lien or similar document in connection with
the Receivables, (xv) to change the address for delivery of mail addressed to
such Grantor to such address as the Administrative Agent may designate and to
receive, open and dispose of all mail addressed to such Grantor, and (xvi) to do
all other acts and things necessary to carry out this Security Agreement; and
such Grantor agrees to reimburse the Administrative Agent on demand for any
payment made or any expense incurred by the Administrative Agent in connection
with any of the foregoing; provided that, this authorization shall not relieve
such Grantor of any of its obligations under this Security Agreement or under
the Credit Agreement.
(b) All acts of said attorney or designee are hereby ratified and approved.
The powers conferred on the Administrative Agent, for the benefit of the
Administrative Agent and Lenders, under this Section 6.2 are solely to protect
the Administrative Agent's interests in the Collateral and shall not impose any
duty upon the Administrative Agent or any Lender to exercise any such powers.
The Administrative Agent agrees that, except for the powers granted in Section
6.2(a)(i), Section 6.2(a)(iii)-(vi) and Section 6.2(a)(xvi), it shall not
exercise any power or authority granted to it unless an Event of Default has
occurred and is continuing.
6.3. Proxy. EACH GRANTOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS THE
ADMINISTRATIVE AGENT AS ITS PROXY AND ATTORNEY-IN-FACT (AS SET FORTH IN SECTION
6.2 ABOVE) WITH RESPECT TO ITS PLEDGED COLLATERAL, INCLUDING THE RIGHT TO VOTE
SUCH PLEDGED COLLATERAL, WITH FULL POWER OF SUBSTITUTION TO DO SO. IN ADDITION
TO THE RIGHT TO VOTE ANY SUCH PLEDGED COLLATERAL, THE APPOINTMENT OF THE
ADMINISTRATIVE AGENT AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO
EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF
SUCH PLEDGED COLLATERAL WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING
WRITTEN CONSENTS OF SHAREHOLDERS, CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND
VOTING AT SUCH MEETINGS). SUCH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND
WITHOUT THE NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY SUCH PLEDGED
COLLATERAL ON THE RECORD BOOKS OF THE ISSUER THEREOF) BY ANY PERSON (INCLUDING
THE ISSUER OF SUCH PLEDGED COLLATERAL OR ANY OFFICER OR AGENT THEREOF), UPON THE
OCCURRENCE OF A DEFAULT.
6.4. Nature of Appointment; Limitation of Duty. THE APPOINTMENT OF THE
ADMINISTRATIVE AGENT AS PROXY AND ATTORNEY-IN-FACT IN THIS ARTICLE VI IS COUPLED
WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE DATE ON WHICH THIS SECURITY
AGREEMENT IS TERMINATED IN ACCORDANCE WITH SECTION 8.14. NOTWITHSTANDING
ANYTHING CONTAINED HEREIN, NEITHER THE ADMINISTRATIVE AGENT, NOR ANY LENDER, NOR
ANY OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES SHALL HAVE ANY DUTY TO EXERCISE ANY RIGHT OR POWER GRANTED
HEREUNDER OR OTHERWISE OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY
FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO, EXCEPT IN RESPECT OF DAMAGES
ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS
FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION; PROVIDED THAT, IN NO
EVENT SHALL THEY BE LIABLE FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR
CONSEQUENTIAL DAMAGES.
ARTICLE VII
COLLECTION AND APPLICATION OF COLLATERAL PROCEEDS; DEPOSIT ACCOUNTS
7.1. Collection of Receivables.
(a) On or before the Closing Date, each Grantor shall (a) execute and
deliver to the Administrative Agent Deposit Account Control Agreements for each
Deposit Account maintained by such Grantor into which all cash, checks or other
similar payments relating to or constituting payments made in respect of
Receivables will be deposited (a "Collateral Deposit Account"), which Collateral
Deposit Accounts are identified as such on Exhibit B. At the request of the
Administrative Agent following an Event of Default, each Grantor shall establish
lock box service (the "Lock Boxes") with the bank(s) set forth in Exhibit B,
which lock boxes shall be subject to irrevocable lockbox agreements in the form
provided by or otherwise acceptable to the Administrative Agent and shall be
accompanied by an acknowledgment by the bank where the Lock Box is located of
the Lien of the Administrative Agent granted hereunder and of irrevocable
instructions to wire all amounts collected therein to the Collection Account (a
"Lock Box Agreement").
(b) At the request of the Administrative Agent following an Event of
Default, each Grantor shall direct all of its Account Debtors to forward
payments directly to Lock Boxes subject to Lock Box Agreements. The
Administrative Agent shall have sole access to the Lock Boxes at all times and
each Grantor shall take all actions necessary to grant the Administrative Agent
such sole access. At no time shall any Grantor remove any item from a Lock Box
or from a Collateral Deposit Account without the Administrative Agent's prior
written consent. If any Grantor should refuse or neglect to notify any Account
Debtor to forward payments directly to a Lock Box subject to a Lock Box
Agreement after notice from the Administrative Agent, the Administrative Agent
shall be entitled to make such notification directly to Account Debtor. If
notwithstanding the foregoing instructions, any Grantor receives any proceeds of
any Receivables, such Grantor shall receive such payments as the Administrative
Agent's trustee, and shall immediately deposit all cash, checks or other similar
payments related to or constituting payments made in respect of Receivables
received by it to a Collateral Deposit Account. At the request of the
Administrative Agent following the occurrence of an Event of Default, all funds
deposited into any Lock Box subject to a Lock Box Agreement or a Collateral
Deposit Account will be swept on a daily basis into a collection account
maintained by the Borrower with the Administrative Agent (the "Collection
Account"). The Administrative Agent shall hold and apply funds received into the
Collection Account as provided by the terms of Section 7.3.
7.2. Covenant Regarding New Deposit Accounts; Lock Boxes. Before opening or
replacing any Collateral Deposit Account, other Deposit Account, or establishing
a Lock Box, each Grantor shall (a) obtain the Administrative Agent's consent in
writing to the opening of such Deposit Account or Lock Box, and (b) cause each
bank or financial institution in which it seeks to open (i) a Deposit Account,
to enter into a Deposit Account Control Agreement with the Administrative Agent
in order to give the Administrative Agent Control of such Deposit Account, or
(ii) a Lock Box, to enter into a Lock Box Agreement with the Administrative
Agent in order to give the Administrative Agent Control of the Lock Box. In the
case of Deposit Accounts or Lock Boxes maintained with Lenders, the terms of
such letter shall be subject to the provisions of the Credit Agreement regarding
setoffs.
7.3. Application of Proceeds; Deficiency. Upon the establishment of a
Collection Account following the occurrence of an Event of Default, all amounts
deposited in the Collection Account shall be deemed received by the
Administrative Agent in accordance with Section 2.18 of the Credit Agreement and
shall, after having been credited to the Collection Account, be applied (and
allocated) by Administrative Agent in accordance with Section 2.10(b) of the
Credit Agreement. The Administrative Agent shall require all other cash proceeds
of the Collateral, which are not required to be applied to the Obligations
pursuant to Section 2.11 of the Credit Agreement, to be deposited in a special
non-interest bearing cash collateral account with the Administrative Agent and
held there as security for the Secured Obligations. No Grantor shall have any
control whatsoever over said cash collateral account. Any such proceeds of the
Collateral shall be applied in the order set forth in Section 2.18 of the Credit
Agreement unless a court of competent jurisdiction shall otherwise direct. The
balance, if any, after all of the Secured Obligations have been satisfied, shall
be deposited by the Administrative Agent into such Grantor's general operating
account with the Administrative Agent. The Grantors shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all Secured Obligations, including any attorneys' fees and
other expenses incurred by Administrative Agent or any Lender to collect such
deficiency.
ARTICLE VIII
GENERAL PROVISIONS
8.1. Waivers. Each Grantor hereby waives notice of the time and place of
any public sale or the time after which any private sale or other disposition of
all or any part of the Collateral may be made. To the extent such notice may not
be waived under applicable law, any notice made shall be deemed reasonable if
sent to the Grantors, addressed as set forth in Article IX, at least ten days
prior to (i) the date of any such public sale or (ii) the time after which any
such private sale or other disposition may be made. To the maximum extent
permitted by applicable law, each Grantor waives all claims, damages, and
demands against the Administrative Agent or any Lender arising out of the
repossession, retention or sale of the Collateral, except such as arise solely
out of the gross negligence or willful misconduct of the Administrative Agent or
such Lender as finally determined by a court of competent jurisdiction. To the
extent it may lawfully do so, each Grantor absolutely and irrevocably waives and
relinquishes the benefit and advantage of, and covenants not to assert against
the Administrative Agent or any Lender, any valuation, stay, appraisal,
extension, moratorium, redemption or similar laws and any and all rights or
defenses it may have as a surety now or hereafter existing which, but for this
provision, might be applicable to the sale of any Collateral made under the
judgment, order or decree of any court, or privately under the power of sale
conferred by this Security Agreement, or otherwise. Except as otherwise
specifically provided herein, each Grantor hereby waives presentment, demand,
protest or any notice (to the maximum extent permitted by applicable law) of any
kind in connection with this Security Agreement or any Collateral.
8.2. Limitation on Administrative Agent's and Lenders' Duty with Respect to
the Collateral. The Administrative Agent shall have no obligation to clean-up or
otherwise prepare the Collateral for sale. The Administrative Agent and each
Lender shall use reasonable care with respect to the Collateral in its
possession or under its control. Neither the Administrative Agent nor any Lender
shall have any other duty as to any Collateral in its possession or control or
in the possession or control of any agent or nominee of the Administrative Agent
or such Lender, or any income thereon or as to the preservation of rights
against prior parties or any other rights pertaining thereto. To the extent that
applicable law imposes duties on the Administrative Agent to exercise remedies
in a commercially reasonable manner, each Grantor acknowledges and agrees that
it is commercially reasonable for the Administrative Agent (i) to fail to incur
expenses deemed significant by the Administrative Agent to prepare Collateral
for disposition or otherwise to transform raw material or work in process into
finished goods or other finished products for disposition, (ii) to fail to
obtain third party consents for access to Collateral to be disposed of, or to
obtain or, if not required by other law, to fail to obtain governmental or third
party consents for the collection or disposition of Collateral to be collected
or disposed of, (iii) to fail to exercise collection remedies against Account
Debtors or other Persons obligated on Collateral or to remove Liens on or any
adverse claims against Collateral, (iv) to exercise collection remedies against
Account Debtors and other Persons obligated on Collateral directly or through
the use of collection agencies and other collection specialists, (v) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi) to
contact other Persons, whether or not in the same business as such Grantor, for
expressions of interest in acquiring all or any portion of such Collateral,
(vii) to hire one or more professional auctioneers to assist in the disposition
of Collateral, whether or not the Collateral is of a specialized nature, (viii)
to dispose of Collateral by utilizing internet sites that provide for the
auction of assets of the types included in the Collateral or that have the
reasonable capacity of doing so, or that match buyers and sellers of assets,
(ix) to dispose of assets in wholesale rather than retail markets, (x) to
disclaim disposition warranties, such as title, possession or quiet enjoyment,
(xi) to purchase insurance or credit enhancements to insure the Administrative
Agent against risks of loss, collection or disposition of Collateral or to
provide to the Administrative Agent a guaranteed return from the collection or
disposition of Collateral, or (xii) to the extent deemed appropriate by the
Administrative Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist the Administrative Agent
in the collection or disposition of any of the Collateral. Each Grantor
acknowledges that the purpose of this Section 8.2 is to provide non-exhaustive
indications of what actions or omissions by the Administrative Agent would be
commercially reasonable in the Administrative Agent's exercise of remedies
against the Collateral and that other actions or omissions by the Administrative
Agent shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section 8.2. Without limitation upon the foregoing,
nothing contained in this Section 8.2 shall be construed to grant any rights to
any Grantor or to impose any duties on the Administrative Agent that would not
have been granted or imposed by this Security Agreement or by applicable law in
the absence of this Section 8.2.
8.3. Compromises and Collection of Collateral. The Grantors and the
Administrative Agent recognize that setoffs, counterclaims, defenses and other
claims may be asserted by obligors with respect to certain of the Receivables,
that certain of the Receivables may be or become uncollectible in whole or in
part and that the expense and probability of success in litigating a disputed
Receivable may exceed the amount that reasonably may be expected to be recovered
with respect to a Receivable. In view of the foregoing, each Grantor agrees that
the Administrative Agent may at any time and from time to time, if an Event of
Default has occurred and is continuing, compromise with the obligor on any
Receivable, accept in full payment of any Receivable such amount as the
Administrative Agent in its sole discretion shall determine or abandon any
Receivable, and any such action by the Administrative Agent shall be
commercially reasonable so long as the Administrative Agent acts in good faith
based on information known to it at the time it takes any such action.
8.4. Secured Party Performance of Debtor Obligations. Without having any
obligation to do so, the Administrative Agent may perform or pay any obligation
which any Grantor has agreed to perform or pay in this Security Agreement and
the Grantors shall reimburse the Administrative Agent for any amounts paid by
the Administrative Agent pursuant to this Section 8.4. The Grantors' obligation
to reimburse the Administrative Agent pursuant to the preceding sentence shall
be a Secured Obligation payable on demand.
8.5. Specific Performance of Certain Covenants. Each Grantor acknowledges
and agrees that a breach of any of the covenants contained in Sections 4.1(d),
4.1(e), 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.12, 4.13, 4.14, 4.15, 5.3, or 8.7
or in Article VII will cause irreparable injury to the Administrative Agent and
the Lenders, that the Administrative Agent and Lenders have no adequate remedy
at law in respect of such breaches and therefore agrees, without limiting the
right of the Administrative Agent or the Lenders to seek and obtain specific
performance of other obligations of the Grantors contained in this Security
Agreement, that the covenants of the Grantors contained in the Sections referred
to in this Section 8.5 shall be specifically enforceable against the Grantors.
8.6. Dispositions Not Authorized. No Grantor is authorized to sell or
otherwise dispose of the Collateral except as set forth in Section 4.1(d) and
notwithstanding any course of dealing between any Grantor and the Administrative
Agent or other conduct of the Administrative Agent, no authorization to sell or
otherwise dispose of the Collateral (except as set forth in Section 4.1(d))
shall be binding upon the Administrative Agent or the Lenders unless such
authorization is in writing signed by the Administrative Agent with the consent
or at the direction of the Required Secured Parties.
8.7. No Waiver; Amendments; Cumulative Remedies. No delay or omission of
the Administrative Agent or any Lender to exercise any right or remedy granted
under this Security Agreement shall impair such right or remedy or be construed
to be a waiver of any Default or an acquiescence therein, and any single or
partial exercise of any such right or remedy shall not preclude any other or
further exercise thereof or the exercise of any other right or remedy. No
waiver, amendment or other variation of the terms, conditions or provisions of
this Security Agreement whatsoever shall be valid unless in writing signed by
the Administrative Agent with the concurrence or at the direction of the Lenders
required under Section 9.02 of the Credit Agreement and then only to the extent
in such writing specifically set forth. All rights and remedies contained in
this Security Agreement or by law afforded shall be cumulative and all shall be
available to the Administrative Agent and the Lenders until the Secured
Obligations have been paid in full.
8.8. Limitation by Law; Severability of Provisions. All rights, remedies
and powers provided in this Security Agreement may be exercised only to the
extent that the exercise thereof does not violate any applicable provision of
law, and all the provisions of this Security Agreement are intended to be
subject to all applicable mandatory provisions of law that may be controlling
and to be limited to the extent necessary so that they shall not render this
Security Agreement invalid, unenforceable or not entitled to be recorded or
registered, in whole or in part. Any provision in any this Security Agreement
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 this Security Agreement are
declared to be severable.
8.9. Reinstatement. This Security Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
any Grantor for liquidation or reorganization, should any Grantor become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of any
Grantor's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Secured Obligations,
or any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the Secured
Obligations, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Secured Obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
8.10. Benefit of Agreement. The terms and provisions of this Security
Agreement shall be binding upon and inure to the benefit of the Grantors, the
Administrative Agent and the Lenders and their respective successors and assigns
(including all persons who become bound as a debtor to this Security Agreement),
except that no Grantor shall have the right to assign its rights or delegate its
obligations under this Security Agreement or any interest herein, without the
prior written consent of the Administrative Agent. No sales of participations,
assignments, transfers, or other dispositions of any agreement governing the
Secured Obligations or any portion thereof or interest therein shall in any
manner impair the Lien granted to the Administrative Agent, for the benefit of
the Administrative Agent and the Lenders, hereunder.
8.11. Survival of Representations. All representations and warranties of
the Grantors contained in this Security Agreement shall survive the execution
and delivery of this Security Agreement.
8.12. Taxes and Expenses. Any taxes (including income taxes) payable or
ruled payable by Federal or State authority in respect of this Security
Agreement shall be paid by the Grantors, together with interest and penalties,
if any. The Grantors shall reimburse the Administrative Agent for any and all
out-of-pocket expenses and internal charges (including reasonable attorneys',
auditors' and accountants' fees and reasonable time charges of attorneys,
paralegals, auditors and accountants who may be employees of the Administrative
Agent) paid or incurred by the Administrative Agent in connection with the
preparation, execution, delivery, administration, collection and enforcement of
this Security Agreement and in the audit, analysis, administration, collection,
preservation or sale of the Collateral (including the expenses and charges
associated with any periodic or special audit of the Collateral). Any and all
costs and expenses incurred by the Grantors in the performance of actions
required pursuant to the terms hereof shall be borne solely by the Grantors.
8.13. Headings. The title of and section headings in this Security
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Security Agreement.
8.14. Termination. This Security Agreement shall continue in effect
(notwithstanding the fact that from time to time there may be no Secured
Obligations outstanding) until (i) the Credit Agreement has terminated pursuant
to its express terms and (ii) all of the Secured Obligations have been
indefeasibly paid and performed in full (or with respect to any outstanding
Letters of Credit, a cash deposit or Supporting Letter of Credit has been
delivered to the Administrative Agent as required by the Credit Agreement) and
no commitments of the Administrative Agent or the Lenders which would give rise
to any Secured Obligations are outstanding.
8.15. Entire Agreement. This Security Agreement embodies the entire
agreement and understanding between the Grantors and the Administrative Agent
relating to the Collateral and supersedes all prior agreements and
understandings between the Grantors and the Administrative Agent relating to the
Collateral.
8.16. CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS)
OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS.
8.17. CONSENT TO JURISDICTION. EACH GRANTOR HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY U.S. FEDERAL OR NEW YORK]STATE COURT
SITTING IN NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT AND EACH GRANTOR 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.
NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER
TO BRING PROCEEDINGS AGAINST ANY GRANTOR IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY GRANTOR AGAINST THE ADMINISTRATIVE
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 THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE
BROUGHT ONLY IN A COURT IN NEW YORK.
8.18. WAIVER OF JURY TRIAL. EACH GRANTOR, THE ADMINISTRATIVE 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 THIS SECURITY AGREEMENT OR
ANY OTHER LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
8.19. Indemnity. Each Grantor hereby agrees to indemnify the Administrative
Agent and the Lenders, and their respective successors, assigns, agents and
employees, from and against any and all liabilities, damages, penalties, suits,
costs, and expenses of any kind and nature (including, without limitation, all
expenses of litigation or preparation therefor whether or not the Administrative
Agent or any Lender is a party thereto) imposed on, incurred by or asserted
against the Administrative Agent or the Lenders, or their respective successors,
assigns, agents and employees, in any way relating to or arising out of this
Security Agreement, or the manufacture, purchase, acceptance, rejection,
ownership, delivery, lease, possession, use, operation, condition, sale, return
or other disposition of any Collateral (including, without limitation, latent
and other defects, whether or not discoverable by the Administrative Agent or
the Lenders or any Grantor, and any claim for Patent, Trademark or Copyright
infringement).
8.20. Counterparts. This Security 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 Security Agreement by signing any
such counterpart.
ARTICLE IX
NOTICES
9.1. Sending Notices. Any notice required or permitted to be given under
this Security Agreement shall be sent by United States mail, telecopier,
personal delivery or nationally established overnight courier service, and shall
be deemed received (a) when received, if sent by hand or overnight courier
service, or mailed by certified or registered mail notices or (b) when sent, if
sent by telecopier (except that, if not given during normal business hours for
the recipient, shall be deemed to have been given at the opening of business on
the next Business Day for the recipient), in each case addressed to the Grantors
at the notice address set forth on Exhibit A, and to the Administrative Agent
and the Lenders at the addresses set forth in accordance with Section 9.01 of
the Credit Agreement.
9.2. Change in Address for Notices. Each of the Grantors, the
Administrative Agent and the Lenders may change the address for service of
notice upon it by a notice in writing to the other parties.
ARTICLE X
THE ADMINISTRATIVE AGENT
JPMorgan Chase Bank, N.A. has been appointed Administrative Agent for the
Lenders hereunder pursuant to Article VIII of the Credit Agreement. It is
expressly understood and agreed by the parties to this Security Agreement that
any authority conferred upon the Administrative Agent hereunder is subject to
the terms of the delegation of authority made by the Lenders to the
Administrative Agent pursuant to the Credit Agreement, and that the
Administrative Agent has agreed to act (and any successor Administrative Agent
shall act) as such hereunder only on the express conditions contained in such
Article VIII. Any successor Administrative Agent appointed pursuant to Article
VIII of the Credit Agreement shall be entitled to all the rights, interests and
benefits of the Administrative Agent hereunder.
[Signature Page Follows]
IN WITNESS WHEREOF, the Grantors and the Administrative Agent have executed
this Security Agreement as of the date first above written.
GRANTORS
PAR TECHNOLOGY CORPORATION
By: _____________________________________
Name: Ronald J. Casciano
Title: Treasurer
PARTECH, INC.
By: _____________________________________
Name: Ronald J. Casciano
Title: Treasurer
PAR SPRINGER-MILLER SYSTEMS, INC.
By: _____________________________________
Name: Ronald J. Casciano
Title: Treasurer
PAR GOVERNMENT SYSTEMS CORPORATION
By: _____________________________________
Name: Ronald J. Casciano
Title: Treasurer
ROME RESEARCH CORPORATION
By: _____________________________________
Name: Ronald J. Casciano
Title: Treasurer
PAR-SIVA CORPORATION
By: _____________________________________
Name: Ronald J. Casciano
Title: Treasurer
ADMINISTRATIVE AGENT
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
By: _____________________________________
Name:
Title: