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CREDIT AGREEMENT
AMONG
AMAZON.COM, INC.,
DEUTSCHE BANK AG, NEW YORK BRANCH
AS ADMINISTRATIVE AGENT,
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
ARRANGED BY
DEUTSCHE MORGAN GRENFELL, INC.
DATED AS OF DECEMBER 23, 1997
"[ * ]" = omitted, confidential material, which material has been separately
filed with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
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TABLE OF CONTENTS
CONTENTS
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ARTICLE I DEFINITIONS ............................................................. 1
1.1 Certain Defined Terms .............................................. 1
1.2 Other Interpretive Provisions ...................................... 20
1.3 Accounting Principles .............................................. 21
ARTICLE II THE CREDIT ............................................................. 21
2.1 Amounts and Terms of Commitment .................................... 21
2.2 Loan Accounts ...................................................... 22
2.3 Funding of Loans ................................................... 22
2.4 Conversion and Continuation Elections .............................. 22
2.5 Optional Prepayments ............................................... 24
2.6 Mandatory Prepayments of Loans ..................................... 24
2.7 Repayment .......................................................... 25
2.8 Interest ........................................................... 26
2.9 Fees ............................................................... 26
2.10 Computation of Fees and Interest ................................... 27
2.11 Payments by the Borrower ........................................... 27
2.12 Payments by the Lenders to the Agent ............................... 28
2.13 Sharing of Payments, Etc. .......................................... 28
2.14 Security ........................................................... 29
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY ................................ 29
3.1 Taxes .............................................................. 29
3.2 Illegality ......................................................... 30
3.3 Increased Costs and Reduction of Return ............................ 31
3.4 Funding Losses ..................................................... 32
3.5 Inability to Determine Rates ....................................... 33
3.6 Certificates of Lenders ............................................ 33
3.7 Survival ........................................................... 33
ARTICLE IV CONDITIONS PRECEDENT ................................................... 33
4.1 Conditions of Loans ................................................ 33
4.2 Conditions to Continuations/Conversions ............................ 36
ARTICLE V REPRESENTATIONS AND WARRANTIES .......................................... 36
5.1 Corporate Existence and Power ...................................... 36
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5.2 Corporate Authorization; No Contravention .......................... 37
5.3 Governmental Authorization ......................................... 37
5.4 Binding Effect ..................................................... 37
5.5 Litigation ......................................................... 38
5.6 No Default ......................................................... 38
5.7 ERISA Compliance ................................................... 38
5.8 Use of Proceeds; Margin Regulations ................................ 39
5.9 Title to Properties ................................................ 39
5.10 Taxes .............................................................. 39
5.11 Financial Condition ................................................ 40
5.12 Environmental Matters .............................................. 40
5.13 Collateral Documents ............................................... 41
5.14 Regulated Entities ................................................. 42
5.15 No Burdensome Restrictions ......................................... 42
5.16 Copyrights, Patents, Trademarks and Licenses, Etc. ................. 42
5.17 Subsidiaries ....................................................... 42
5.18 Insurance .......................................................... 42
5.19 Solvency ........................................................... 43
5.20 Full Disclosure .................................................... 43
ARTICLE VI AFFIRMATIVE COVENANTS .................................................. 43
6.1 Financial Statements ............................................... 43
6.2 Certificates; Other Information .................................... 44
6.3 Notices ............................................................ 45
6.4 Preservation of Corporate Existence, Etc. .......................... 46
6.5 Maintenance of Property ............................................ 47
6.6 Insurance .......................................................... 47
6.7 Payment of Obligations ............................................. 48
6.8 Compliance with Laws ............................................... 48
6.9 Compliance with ERISA .............................................. 48
6.10 Inspection of Property and Books and Records ....................... 48
6.11 Environmental Laws ................................................. 49
6.12 Use of Proceeds .................................................... 49
6.13 Swap Contracts ..................................................... 50
6.14 Further Assurances ................................................. 50
ARTICLE VII NEGATIVE COVENANTS .................................................... 52
7.1 Limitation on Liens ................................................ 52
7.2 Disposition of Assets .............................................. 54
7.3 Consolidations and Mergers ......................................... 55
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7.4 Loans and Investments .............................................. 55
7.5 Limitation on Indebtedness ......................................... 56
7.6 Transactions with Affiliates ....................................... 57
7.7 Use of Proceeds .................................................... 57
7.8 Contingent Obligations ............................................. 58
7.9 Lease Obligations .................................................. 58
7.10 Restricted Payments ................................................ 59
7.11 ERISA .............................................................. 59
7.12 Change in Business ................................................. 60
7.13 Accounting Changes ................................................. 60
7.14 Financial Covenants ................................................ 60
7.15 Subordinated Debt .................................................. 61
7.16 Non-Material Subsidiaries .......................................... 62
ARTICLE VIII EVENTS OF DEFAULT .................................................... 62
8.1 Event of Default ................................................... 62
8.2 Remedies ........................................................... 66
8.3 Rights Not Exclusive ............................................... 66
8.4 Certain Financial Covenant Defaults ................................ 67
8.5 Non-Material Subsidiaries .......................................... 67
8.6 Acquired Subsidiaries .............................................. 67
ARTICLE IX THE AGENT .............................................................. 67
9.1 Appointment and Authorization ...................................... 67
9.2 Delegation of Duties ............................................... 68
9.3 Liability of Agent ................................................. 68
9.4 Reliance by Agent .................................................. 68
9.5 Notice of Default .................................................. 69
9.6 Credit Decision .................................................... 69
9.7 Indemnification of Agent ........................................... 70
9.8 Agent in Individual Capacity ....................................... 71
9.9 Successor Agent .................................................... 71
9.10 Withholding Tax .................................................... 71
9.11 Collateral Matters ................................................. 73
ARTICLE X MISCELLANEOUS ........................................................... 74
10.1 Amendments and Waivers ............................................. 74
10.2 Notices ............................................................ 75
10.3 No Waiver; Cumulative Remedies ..................................... 76
10.4 Costs and Expenses ................................................. 76
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10.5 Borrower Indemnification ........................................... 77
10.6 Marshalling; Payments Set Aside .................................... 77
10.7 Successors and Assigns ............................................. 78
10.8 Assignments, Participations, Etc. .................................. 78
10.9 Confidentiality .................................................... 80
10.10 Set-off ............................................................ 81
10.11 Automatic Debits of Fees ........................................... 81
10.12 Notification of Addresses, Lending Offices, Etc. ................... 82
10.13 Counterparts ....................................................... 82
10.14 Severability ....................................................... 82
10.15 No Third Parties Benefited ......................................... 82
10.16 Governing Law and Jurisdiction ..................................... 82
10.17 Waiver of Jury Trial ............................................... 83
10.18 Entire Agreement ................................................... 83
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SCHEDULES
Schedule 2.1 Commitments and Pro Rata Shares
Schedule 5.5 Litigation
Schedule 5.7 ERISA
Schedule 5.11 Permitted Liabilities
Schedule 5.12 Environmental Matters
Schedule 5.16 Subsidiaries and Minority Interests
Schedule 5.17 Insurance Matters
Schedule 6.14 Financing Statement Filing Schedule
Schedule 7.1 Permitted Liens
Schedule 7.5 Permitted Indebtedness
Schedule 7.8 Contingent Obligations
Schedule 10.2 LIBOR and Domestic Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Conversion/Continuation
Exhibit B Form of Compliance Certificate
Exhibit C Form of Legal Opinion of Borrower's Counsel
Exhibit D Form of Assignment and Acceptance
Exhibit E Form of Promissory Note
Exhibit F Form of Warrant
Exhibit G Form of Consent of Lessors/Warehousemen
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CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of December 23, 1997, among
Amazon.com, Inc., a Delaware corporation (the "Borrower"), the several financial
institutions from time to time party to this Agreement (collectively, the
"Lenders"; individually, a "Lender"), and Deutsche Bank AG, New York Branch, as
administrative agent for the Lenders.
WHEREAS, the Lenders have agreed to make available to the Borrower a
secured term loan facility upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINED TERMS
The following terms have the following meanings:
"Acquisition" means any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (a) the acquisition
of all or substantially all of the assets of a Person, or of any business or
division of a Person, (b) the formation or acquisition of all or any portion of
the capital stock, partnership interests, membership interests or equity of any
Person, or otherwise, resulting in a Joint Venture or causing any Person to
become a Subsidiary, or (c) a merger or consolidation or any other combination
with another Person (other than a Person that is a Subsidiary) provided that the
Borrower or the Subsidiary is the surviving entity.
"Affiliate" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, membership interests, by contract,
or otherwise.
"Agent" means Deutsche Bank in its capacity as administrative agent for
the Lenders hereunder, and any successor administrative agent arising under
Section 9.9.
"Agent-Related Persons" means Deutsche Bank and any successor agent
arising under Section 9.9, together with their respective Affiliates (including,
in the
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case of Deutsche Bank, the Arranger), and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and Affiliates.
"Agent's Payment Office" means the address for payments set forth on the
signature page hereto in relation to the Agent, or such other address as the
Agent may from time to time specify.
"Agreement" means this Credit Agreement.
"Arranger" means Deutsche Morgan Grenfell, Inc., a Delaware corporation.
"Assignee" has the meaning specified in subsection 10.8(a).
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the reasonable
allocated cost of internal legal services and all disbursements of internal
counsel.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. Section 101, et seq.).
"Base Rate" means, for any day, the higher of:
(a) 0.50% per annum above the latest Federal Funds Rate; and (b)
the rate of interest in effect for such day as publicly announced from
time to time by Deutsche Bank in New York, New York, as its "prime
lending rate." The "prime lending rate" shall mean the rate announced by
Deutsche Bank from time to time as its prime lending rate for secured
commercial loans within the United States (but is not intended to be the
lowest rate of interest charged by Deutsche Bank in connection with
extensions of credit to debtors.)
Any change in the prime rate announced by Deutsche Bank shall take
effect at the opening of business on the day specified in the public
announcement of such change.
"Base Rate Loan" means a Loan that bears interest based on the Base
Rate.
"Borrowing" means a borrowing hereunder consisting of Loans of the same
Type made to the Borrower on the same day by the Lenders under Article II, and,
other than in the case of Base Rate Loans, having the same Interest Period.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required by law to
close
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and, if the applicable Business Day relates to any LIBOR Rate Loan, means such a
day on which dealings are carried on in the London interbank market.
"Capital Adequacy Regulation" means any guideline, request or directive
of any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditure Component" shall mean, with respect to the fiscal
years described below, the lower of Limit A and Limit B set forth below:
FISCAL YEAR LIMIT A LIMIT B
[ * ]
in each case, where "Sales" means revenues on a GAAP basis for the relevant
period as reported (or to be reported) on annual financial statements filed with
the SEC or in connection with delivery of financial information under Section
6.1 hereof if such financial statements are no longer filed by the Borrower with
the SEC.
"Cash Equivalents" means (i) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (ii) certificates of deposit,
eurodollar time deposits, overnight bank deposits, bankers' acceptances and
repurchase agreements of any Lender or any other commercial bank whose unsecured
long-term debt obligations are rated at least A-1 by Standard & Poor's Ratings
Service Group, a division of the McGraw Hill Companies, Inc., and any successor
thereto ("S&P") or A3 by Moody's Investors Service, Inc. having maturities of
one year or less from the date of acquisition, and (iii) commercial paper rated
at least A-1 by S&P or P-1 by Moody's Investors Service, Inc., or carrying an
equivalent rating by a nationally recognized rating agency, if both of the two
named rating agencies cease publishing ratings of investments.
"CERCLA" has the meaning specified in the definition of "Environmental
Laws."
"Change of Control" means the occurrence of the following: (a) any
single person or single entity or group of persons acting in concert that is not
a significant shareholder of the Borrower as of the date of closing acquires 20%
or more of the
--------------
[ * ] Confidential Treatment Requested
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issued and outstanding stock of the Borrower and (b) the aggregate percentage of
the issued and outstanding stock of the Borrower owned by Jeffrey Bezos, his
immediate family (which only includes his spouse, his parents, his children, his
siblings and his aunts and uncles) and their heirs which are members of his
immediate family, trusts and other entities established for and controlled by
Jeffrey Bezos and his immediate family and funds controlled by Kleiner Perkins
Caufield & Byers is less than 40% in the aggregate.
"Closing Date" means the date on which all conditions precedent set
forth in Section 4.1 are satisfied or waived by all Lenders (or, in the case of
subsection 4.1(e), waived by the Person entitled to receive such payment).
"Code" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"Collateral" means all property and interests in property and proceeds
thereof now owned or hereafter acquired by the Borrower and its Subsidiaries in
or upon which a Lien now or hereafter exists in favor of the Lenders, or the
Agent on behalf of the Lenders, whether under this Agreement or under any other
documents executed by any such Person and delivered to the Agent or the Lenders.
"Collateral Documents" means, collectively, (i) the Security Agreement,
and all other security agreements, mortgages, deeds of trust, patent and
trademark assignments, lease assignments, guarantees and other similar
agreements between the Borrower or any Subsidiary and the Lenders or the Agents
for the benefit of the Lenders now or hereafter delivered to the Lenders or the
Agent pursuant to or in connection with the transactions contemplated hereby,
and all financing statements (or comparable documents now or hereafter filed in
accordance with the Uniform Commercial Code or comparable law) against the
Borrower or any Subsidiary as debtor in favor of the Lenders or the Agent for
the benefit of the Lenders as secured party, and (ii) any amendments,
supplements, modifications, renewals, replacements, consolidations,
substitutions and extensions of any of the foregoing.
"Commitment" means seventy-five million dollars ($75,000,000).
"Commitment Letter" means that certain letter dated as of November 7,
1997, among the Arranger, the Agent and the Borrower.
"Compliance Certificate" means a certificate substantially in the form
of Exhibit B.
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"Contingent Obligation" means, as to any Person, any direct or indirect
liability of that Person, whether or not contingent, with or without recourse,
(a) with respect to any Indebtedness, lease, dividend, letter of credit or other
obligation (the "primary obligations") of another Person (the "primary
obligor"), including any obligation of that Person (i) to purchase, repurchase
or otherwise acquire such primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any such primary
obligation, or to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
item, level of income or financial condition of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (iv) otherwise to assure or hold
harmless the holder of any such primary obligation against loss in respect
thereof (each, a "Guaranty Obligation"); (b) with respect to any Surety
Instrument issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments; (c) to purchase any
materials, supplies or other property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other property, or for
such services, shall be made regardless of whether delivery of such materials,
supplies or other property is ever made or tendered, or such services are ever
performed or tendered, or (d) in respect of any Swap Contract. The amount of any
Contingent Obligation shall, in the case of Guaranty Obligations, be deemed
equal to the stated or determinable amount of the primary obligation in respect
of which such Guaranty Obligation is made or, if not stated or if
indeterminable, the maximum reasonably anticipated liability in respect thereof,
and in the case of other Contingent Obligations, shall be equal to the maximum
reasonably anticipated liability in respect thereof.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.
"Conversion/Continuation Date" means any date on which, under Section
2.4, the Borrower (a) converts Loans of one Type to another Type, or (b)
continues as Loans of the same Type, but with a new Interest Period, Loans
having Interest Periods expiring on such date.
"Debt Consideration" means, with respect to any Acquisition or
Investment, the aggregate amount, without duplication, of all Indebtedness and
Contingent Obligations which would appear on a balance sheet of the Person
subject to such
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Acquisition or Investment immediately after giving effect to such Acquisition or
Investment to the extent such Indebtedness or Contingent Obligation is a
recourse obligation of the Person making such Investment or consummating such
Acquisition.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"Deutsche Bank" means Deutsche Bank AG, New York Branch, the New York
Branch of Deutsche Bank AG, a German banking corporation.
"Disposition" means (i) the sale, lease, conveyance or other disposition
of property, other than sales or other dispositions expressly permitted under
subsection 7.2(a) or 7.2(b), and (ii) the sale or transfer by the Borrower or
any Subsidiary of the Borrower of any equity securities issued by any Subsidiary
of the Borrower and held by such transferor Person.
"Dollars," "dollars" and "$" each mean lawful money of the United
States.
"EBITDA" means, with respect to the Borrower and its Subsidiaries for
any applicable period, Net Income for such period, plus, to the extent deducted
in determining Net Income for such period, the aggregate amount of (i) Interest
Expense, (ii) federal, state, local, foreign income and business and occupation
taxes and up to $150,000 of Delaware franchise taxes per fiscal year paid by the
Borrower and (iii) depletion, depreciation and amortization of tangible and
intangible assets (including, without limitation, amortization of unearned
compensation in respect of stock options to the extent reported in accordance
with GAAP in the Borrower's consolidated statements of cash flows).
"Eligible Assignee" means (i) a commercial bank organized under the laws
of the United States, or any state thereof, and having a combined capital and
surplus of at least $100,000,000; (ii) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or agency located in the
country in which it is organized or another country which is also a member of
the OECD; (iii) a Person that is primarily engaged in the business of commercial
banking and that is (A) a Subsidiary of a Lender, (B) a Subsidiary of a Person
of which a Lender is a Subsidiary, or (C) a Person of which a Lender is a
Subsidiary; or (iv) a finance company, insurance company, other financial
institution or fund, reasonably acceptable to the Agent, which has a combined
capital and surplus in excess of
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$100,000,000, which is regularly engaged in making, purchasing or investing in
loans of the type proposed to be assigned to such assignee; provided, however,
that no Eligible Assignee shall be an Affiliate or competitor of the Borrower,
or an Affiliate of such competitor.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment or threat to public health, personal injury (including
sickness, disease or death), property damage, natural resources damage, or
otherwise alleging liability or responsibility for damages (punitive or
otherwise), cleanup, removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of relief, resulting from
or based upon the presence, placement, discharge, emission or release (including
intentional and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental, placement, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in, or from property used
by the Borrower, whether or not owned by the Borrower.
"Environmental Laws" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authorities, in each case
relating to environmental, health, safety and land use matters; including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), the Clean Air Act, the Federal Water Pollution Control Act of 1972,
the Solid Waste Disposal Act, the Federal Resource Conservation and Recovery
Act, the Toxic Substances Control Act, and the Emergency Planning and Community
Right-to-Know Act.
"Equity Consideration" shall mean, in connection with an Acquisition or
Investment, the value (determined as of the date of such Acquisition or
Investment) of all common equity of the Borrower used as consideration in making
such Acquisition or Investment.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and, solely for purposes of provisions herein
relating to Section 412 of the Code, Sections 414(m) and (o) of the Code).
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"ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Borrower or any ERISA Affiliate.
"Eurodollar Reserve Percentage" has the meaning specified in the
definition of "LIBOR Rate."
"Event of Default" means any of the events or circumstances specified in
Section 8.1.
"Event of Loss" means, with respect to any property, any of the
following: (a) any loss, destruction or damage of such property; (b) any pending
or threatened institution of any proceedings for the condemnation or seizure of
such property or for the exercise of any right of eminent domain; or (c) any
actual condemnation, seizure or taking, by exercise of the power of eminent
domain or otherwise, of such property, or confiscation of such property or the
requisition of the use of such property.
"Exchange Act" means the Securities and Exchange Act of 1934, and
regulations promulgated thereunder.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on
that day by each of three leading brokers of Federal funds transactions in New
York City selected by the Agent.
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"FRB" means the Board of Governors of the Federal Reserve System, and
any Governmental Authority succeeding to any of its principal functions.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guaranty Obligation" has the meaning specified in the definition of
"Contingent Obligation."
"Hazardous Materials" means all those substances that are regulated by,
or which may form the basis of liability under, any Environmental Law, including
all substances identified under any Environmental Law as a pollutant,
contaminant, hazardous waste, hazardous constituent, special waste, hazardous
substance, hazardous material, or toxic substance, or petroleum or petroleum
derived substance or waste.
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than trade
payables entered into in the ordinary course of business on terms of not more
than 180 days); (c) all non-contingent reimbursement or payment obligations with
respect to Surety Instruments; (d) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced incurred
in connection with the acquisition of property, assets or businesses; (e) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
property acquired by the Person (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property); (f) all obligations with respect to
capital leases; (g) all net obligations with respect to Swap Contracts; (h) all
indebtedness referred to in clauses (a) through (g) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any
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Lien upon or in property (including accounts and contracts rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness; and (i) all Guaranty Obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses (a)
through (g) above.
"Indemnified Liabilities" has the meaning specified in Section 10.5.
"Indemnified Person" has the meaning specified in Section 10.5.
"Independent Auditor" has the meaning specified in subsection 6.1(a).
"Insolvency Proceeding" means (a) any case, action or proceeding before
any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; undertaken under U.S. Federal, state or foreign law, including
the Bankruptcy Code.
"Interest Expense" means, for any applicable period, the aggregate
consolidated interest expense (both cash and non-cash and determined without
regard to original issue discount) of the Borrower and its Subsidiaries for such
period, as determined in accordance with GAAP, including, to the extent
allocable to interest expense in accordance with GAAP, (i) all other fees paid
or owed with respect to the issuance or maintenance of Contingent Obligations
(including letters of credit of the Borrower and its Subsidiaries), (ii) net
costs or benefits under Swap Contracts of the Borrower and its Subsidiaries and
(iii) the portion of any payments made in respect of obligations in respect of
capitalized leases of the Borrower and its Subsidiaries allocable to interest
expense.
"Interest Margin" means
(i) with respect to Base Rate Loans, 1.50%; and
(ii) with respect to LIBOR Rate Loans, 3.50%;
provided that in each instance the Interest Margin shall increase by 0.50%
following the sixth month anniversary of the disbursement of Loans hereunder.
"Interest Payment Date" means, as to any Loan other than a Base Rate
Loan, the last day of each Interest Period applicable to such Loan and, as to
any Base Rate Loan, the last Business Day of each calendar quarter and each date
such Loan is converted into another Type of Loan; provided, however, that if any
Interest Period
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<PAGE> 17
for a LIBOR Rate Loan exceeds three months, the date that falls three months
after the beginning of such Interest Period and after each Interest Payment Date
thereafter is also an Interest Payment Date.
"Interest Period" means, as to any LIBOR Rate Loan, the period
commencing on the Conversion/Continuation Date on which the Loan is converted
into or continued as a LIBOR Rate Loan, and ending on the date one, two, three
or six months thereafter as selected by the Borrower in its Notice of
Conversion/Continuation;
provided that:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the following
Business Day unless, in the case of a LIBOR Rate Loan, the result of such
extension would be to carry such Interest Period into another calendar month, in
which event such Interest Period shall end on the preceding Business Day;
(ii) any Interest Period pertaining to a LIBOR Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period; and
(iii) no Interest Period shall extend beyond the Maturity Date.
"Investment" means any investment, ownership or similar interest in any
Person, whether by means of share purchase, capital, equity or similar
contribution, including, without limitation, any Acquisition, and "Investment"
shall include any loan or advance (including any Contingent Liability with
respect thereto), time deposit or otherwise (excluding commission, travel and
similar advances to officers and employees made in the ordinary course of
business and excluding trade receivables owing to the Borrower or its
Subsidiaries in the ordinary course of business and on terms no less favorable
to the Borrower and its Subsidiaries than would be obtained in an arms-length
transaction with Persons which are not Affiliates of the Borrower). The original
amount of any Investment shall be the original principal or capital amount
thereof and shall, if made by the transfer or exchange or property other than
cash, be deemed to have been made in an original principal or capital amount
equal to the fair market value of such property.
"IRS" means the Internal Revenue Service, and any Governmental Authority
succeeding to any of its principal functions under the Code.
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<PAGE> 18
"Joint Venture" means a corporation, partnership, limited liability
company, joint venture or other similar legal arrangement (whether created by
contract or conducted through a separate legal entity) now or hereafter formed
by the Borrower or any of its Subsidiaries with one or more other Persons in
order to conduct a common venture or enterprise with such Person.
"Lender" has the meaning specified in the introductory clause hereto.
"Lending Office" means, as to any Lender, the office or offices of such
Lender specified as its "Lending Office" or "Domestic Lending Office" or "LIBOR
Lending Office," as the case may be, on Schedule 10.2, or such other office or
offices as the Lender may from time to time notify the Borrower and the Agent.
"LIBOR Rate" means, for any Interest Period, with respect to LIBOR Rate
Loans comprising part of the same Borrowing, the rate of interest per annum
(rounded upward to the next 1/16th of 1%) determined by the Agent as follows:
LIBOR Rate = LIBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal, rounded upward to
the next 1/100th of 1%) in effect on such day (whether or not applicable to any
Lender) under regulations issued from time to time by the FRB for determining
the maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"); and
"LIBOR" means the rate of interest per annum determined by the Agent as
the rate of interest at which dollar deposits in the approximate amount of the
amount of the Loan to be made or continued as, or converted into, a LIBOR Rate
Loan and for the relevant Interest Period therefor as quoted on the Telerate
Page 3750 (as defined herein) as of 11:00 a.m. (London time) on the day two (2)
Business Days before the commencement of such Interest Period. If Telerate Page
3750 is not available, such rate of interest shall be that quoted by the
Reference Bank and having a maturity comparable to such Interest Period as would
be offered to major banks in the London interbank market at their request at
approximately 11:00 a.m. (London time) two Business Days prior to the
commencement of such Interest Period.
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<PAGE> 19
The LIBOR Rate shall be adjusted automatically as to all LIBOR Rate
Loans then outstanding as of the effective date of any change in the Eurodollar
Reserve Percentage.
"LIBOR Rate Loan" means a Loan that bears interest based on the LIBOR
Rate.
"Lien" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment for security purposes, charge, encumbrance, lien
(statutory or other) of any kind or nature whatsoever in respect of any property
(including those created by, arising under or evidenced by any conditional sale
or other title retention agreement, the interest of a lessor under a capital
lease, any financing lease having substantially the same economic effect as any
of the foregoing, or the filing of any financing statement naming the owner of
the asset to which such lien relates as debtor, under the Uniform Commercial
Code or any comparable law) and any contingent or other agreement to provide any
of the foregoing, but not including the interest of a lessor under an operating
lease.
"Loan" means an extension of credit by a Lender to the Borrower under
Article II, and may be a Base Rate Loan or a LIBOR Rate Loan (each, a "Type" of
Loan).
"Loan Documents" means this Agreement, any Notes, the Warrants, the
Collateral Documents, the Commitment Letter and all other documents delivered to
the Agent or any Lender in connection herewith.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Borrower or the Borrower and its
Subsidiaries taken as a whole; (b) a material impairment of the ability of the
Borrower or any Subsidiary to perform under any Loan Document and to avoid any
Event of Default; or (c) a material adverse effect upon (i) the legality,
validity, binding effect or enforceability against the Borrower or any
Subsidiary of any Loan Document, or (ii) the perfection or priority of any Lien
granted under any of the Collateral Documents; provided, an effect described in
the preceding clauses (a), (b), and (c) shall constitute a "Material Adverse
Effect" only if it could reasonably be expected to materially impair the ability
or legally enforceable obligation of the Borrower or any Subsidiary to perform
its obligations under the Loan Documents or otherwise deprive the Lenders or any
one of them of the practical realization of the principal benefits intended
thereby.
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<PAGE> 20
"Material Subsidiary" means, at any time, any Subsidiary which has not
been designated by the Borrower as a "Non-Material Subsidiary" pursuant to
Section 7.16.
"Maturity Date" means the earlier of (i) December 23, 2000 and (ii) the
date the Obligations are accelerated pursuant to Section 8.2 hereof.
"Minimum Cash Balance" shall mean the sum of (a) the difference of (i)
[ * ] 1 less (ii) cash interest payments that have already been paid hereunder
in respect of the Loans plus (b) the positive difference, if any, of (i) the
aggregate of all Special Investments after the date hereof less (ii) the
aggregate of all Special Investment Returns after the date hereof.
"Multiemployer Plan" means a "multiemployer plan," within the meaning of
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes,
is making, or is obligated to make contributions or, during the preceding three
calendar years, has made, or been obligated to make, contributions.
"Net Income" means, for any applicable period, the aggregate of all
amounts which, in accordance with GAAP, would be included as net income (or net
loss (including any extraordinary losses)) on a consolidated statement of income
of the Borrower and its Subsidiaries for such period; provided, however, that
"Net Income" shall exclude (i) the effect of any extraordinary or other
non-recurring non-cash gain outside the ordinary course of business and (ii) any
write-up in the value of any asset (to the extent such write-up exceeds any
write-down taken in connection with the same transaction or event which gave
rise to such write-up).
"Net Issuance Proceeds" means, as to any issuance of debt for borrowed
money or equity by any Person, cash and Cash Equivalent proceeds and instruments
received or receivable by such Person in connection therewith, net of reasonable
out-of-pocket costs and expenses paid or incurred in connection therewith in
favor of any Person not an Affiliate of such Person, such costs and expenses not
to exceed 5% of the gross proceeds of such issuance.
"Net Proceeds" means, as to any Disposition by a Person, proceeds in
cash, checks or other Cash Equivalent financial instruments as and when received
by such Person, net of: (a) the direct costs relating to such Disposition
excluding amounts payable to such Person or any Affiliate of such Person, (b)
sale, use or other
-----------
[ * ] Confidential Treatment Requested
1 To be increased by the percentage that facility is in excess of $75
million.
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<PAGE> 21
transaction taxes (including capital gains taxes) paid or payable by such Person
as a direct result thereof, and (c) amounts required to be applied to repay
principal, interest and prepayment premiums and penalties on Indebtedness
secured by a Lien on the asset which is the subject of such Disposition to the
extent such Lien is permitted hereunder. "Net Proceeds" shall also include
proceeds paid on account of any Event of Loss, net of (i) all money actually
applied to repair or reconstruct the damaged property or property affected by
the condemnation or taking, (ii) all of the costs and expenses reasonably
incurred in connection with the collection of such proceeds, award or other
payments, and (iii) any amounts retained by or paid to parties having superior
rights to such proceeds, awards or other payments.
"Non-Material Subsidiary" means any Subsidiary which is designated as
such by the Borrower pursuant to Section 7.16.
"Note" means a promissory note executed by the Borrower in favor of a
Lender pursuant to subsection 2.2(b), in substantially the form of Exhibit E.
"Notice of Conversion/Continuation" means a notice in substantially the
form of Exhibit A.
"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by the Borrower to
any Lender, the Agent, or any Indemnified Person, whether direct or indirect
(including those acquired by assignment), absolute or contingent, due or to
become due, now existing or hereafter arising.
"Organization Documents" means, for any corporation, the certificate or
articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such corporation,
any shareholder rights agreement, and all applicable resolutions of the board of
directors (or any committee thereof) of such corporation pertaining to the Loan
Documents.
"Other Taxes" means any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder or from the execution, delivery or registration of,
or otherwise with respect to, this Agreement or any other Loan Documents.
"Participant" has the meaning specified in subsection 10.8(d).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under ERISA.
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<PAGE> 22
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Borrower sponsors, maintains, or
to which it makes, is making, or is obligated to make contributions, or in the
case of a multiple employer plan (as described in Section 4064(a) of ERISA) has
made contributions at any time during the immediately preceding five (5) plan
years.
"Permitted Liens" has the meaning specified in Section 7.1.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Borrower sponsors or maintains or to which the Borrower makes,
is making, or is obligated to make contributions and includes any Pension Plan.
"Pro Rata Share" means, as to any Lender at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such
time of such Lender's Commitment divided by the combined Commitments of all
Lenders.
"Reference Bank" means Deutsche Bank.
"Reportable Event" means, any of the events set forth in Section 4043(c)
of ERISA or the regulations thereunder, other than any such event for which the
30-day notice requirement under ERISA has been waived by statute, regulation or
otherwise.
"Required Cash Balance" shall mean the lesser of (i) [ * ] and (ii) the
Minimum Cash Balance.
"Required Lenders" means at any time at least two Lenders then holding
at least 51% of the then aggregate unpaid principal amount of the Loans, or, if
no such principal amount is then outstanding, at least two Lenders then having
Pro Rata Shares equal to at least 51% of the Commitments.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
------------
[ * ] Confidential Treatment Requested
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<PAGE> 23
"Responsible Officer" means the chief executive officer or the president
of the Borrower, or any other officer having substantially the same authority
and responsibility; or, with respect to compliance with financial covenants, the
chief financial officer or the treasurer of the Borrower, or any other officer
having substantially the same authority and responsibility.
"Restricted Person" shall mean any Person (a) which has not executed a
guaranty as described in Section 6.14(d), (b) which has not executed a security
agreement as described in Section 6.14(d) granting a perfected first priority
security interest (subject only to Permitted Liens other than those described in
Section 7.1(i)) in substantially all of the property of such Person (including,
without limitation, all material property of such Person) in favor of the Agent
for the benefit of the Lenders, or (c) the stock or other equity interests of
which, to the extent owned, directly or indirectly, by the Borrower and its
Affiliates, has not been pledged, to the Agent for the benefit of the Lenders
pursuant to a pledge agreement as described in Section 6.14(d) which pledge
agreement grants in favor of the Agent a perfected first priority pledge
agreement (subject only to Permitted Liens other than those described in Section
7.1(i)), in each case of clauses (a), (b) and (c) of this definition, whether or
not such Person is a Subsidiary of the Borrower.
"SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
"Special Investment" shall mean, without duplication, each of the
following: (a) Investments in Restricted Persons (excluding Investments to the
extent made by the Borrower using Equity Consideration and including any Debt
Consideration in respect thereof) and, (b) Investments consisting of the
assumption or incurrence of Indebtedness by the Borrower, or any Subsidiary
which is not Restricted Person, permitted under Section 7.5(h).
"Special Investment Return" shall mean, without duplication, each of the
following: (a) the amount of all proceeds, dividends, or distributions (in each
case to the extent consisting of cash and Cash Equivalents) received by the
Borrower, or any Subsidiary which is not a Restricted Person, in respect of a
Special Investment made by the Borrower or such Subsidiary, as the case may be,
and applied, to extent required pursuant thereto in accordance with Section 2.6,
but limited in the aggregate to the extent of the original amount of such
Special Investment, (b) the amount of any Special Investment (if of the type
described in clause (a) of the definition thereof) to the extent the Person in
which such Special Investment was made ceases to be a Restricted Person and (c)
the amount of any Special Investment consisting of a Contingent Obligation
permitted under Section 7.8(e) to the extent the underlying obligation is
satisfied, not by the Borrower, but by the primary obligor thereof, or
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<PAGE> 24
another Person which is not the Borrower or an Affiliate of the Borrower. For
purposes of clause (b) of this definition, the amount of a Special Investment
shall be deemed reduced from the original amount thereof by all proceeds,
dividends and distributions received by the Borrower as described in clause (a)
of this definition.
"Solvent" means, as to any Person at any time, that (a) the fair value
of the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code and, in the alternative, for purposes of the New
York Uniform Fraudulent Transfer Act; (b) the present fair saleable value of the
property of such Person is not less than the amount that will be required to pay
the probable liability of such Person on its debts as they become absolute and
matured; (c) such Person is able to realize upon its property and pay its debts
and other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business; (d) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (e) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"Subordinated Debt" shall mean Indebtedness of the Borrower which is
subordinated to the Obligations of the Borrower and the Subsidiaries hereunder
in right of payment, exercise of remedies or both, on terms and conditions
reasonably acceptable to the Agent and the Required Lenders.
"Subsidiary" of a Person means any corporation association, partnership,
limited liability company, joint venture or other business entity of which more
than 50% of the voting stock membership interests or other equity interests (in
the case of Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of the Borrower.
"Surety Instruments" means all letters of credit (including standby and
commercial), banker's acceptances, bank guaranties, shipside bonds, surety bonds
and similar instruments.
"Swap Contract" means any agreement (including any master agreement and
any agreement, whether or not in writing, relating to any single transaction)
that is an interest rate swap agreement, basis swap, forward rate agreement,
commodity swap, commodity option, equity or equity index swap or option, bond
option, interest rate
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<PAGE> 25
option, forward foreign exchange agreement, rate cap, collar or floor agreement,
currency swap agreement, cross-currency rate swap agreement, swaption, currency
option or any other, similar agreement (including any option to enter into any
of the foregoing).
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, such taxes (including
income taxes or franchise taxes) as are imposed on or measured by each Lender's
net income by the jurisdiction (or any political subdivision thereof) under the
laws of which such Lender or the Agent, as the case may be, is organized or
maintains a lending office.
"Telerate Page 3750" means the display designated as "Page 3750" on the
Telerate Service (or other such page as may replace Page 3750 on that service or
such other service as may be nominated by the British Bankers' Association as
the information vendor for the purpose of displaying British Bankers'
Association Interest Settlement Rates for U.S. Dollar deposits).
"Type" has the meaning specified in the definition of "Loan."
"UCC" means the Uniform Commercial Code as in effect in the State of New
York.
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.
"United States" and "U.S." each means the United States of America.
"Warrants" shall mean, the warrants for Common Stock, $0.01 par value,
of the Borrower, substantially in the form of Exhibit F, to be delivered to
Agent for the benefit of the Lenders in proportion to their respective Pro Rata
Shares, in three series, for 75,000 shares, 225,000 shares and 450,000 shares,
respectively.
"Wholly-Owned Subsidiary" means any corporation in which (other than
directors' qualifying shares required by law) 100% of the capital stock of each
class having ordinary voting power, and 100% of the capital stock of every other
class, in each case, at the time as of which any determination is being made, is
owned, beneficially and of record, by the Borrower, or by one or more of the
other Wholly-Owned Subsidiaries, or both.
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<PAGE> 26
1.2 OTHER INTERPRETIVE PROVISIONS
(a) The meanings of defined terms are equally applicable to the singular
and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words refer to
this Agreement as a whole and not to any particular provision of this Agreement;
and subsection, Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified date
to a later specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding," and the word "through" means "to
and including."
(iv) The term "property" includes any kind of property or asset,
real, personal or mixed, tangible or intangible.
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Borrower
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<PAGE> 27
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Lenders or the Agent merely because of the
Agent's or Lenders' involvement in their preparation.
(h) Each reference hereunder to Subsidiaries is effective at such time
and to the extent that the Borrower has existing Subsidiaries (as defined
herein).
1.3 ACCOUNTING PRINCIPLES
(a) Unless the context otherwise clearly requires, all accounting terms
not expressly defined herein shall be construed, and all financial computations
required under this Agreement shall be made, in accordance with GAAP,
consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Borrower.
(c) In the event that GAAP changes during the term of this Agreement
such that the covenants contained in Section 7.14 would then be calculated in a
different manner or with different components or with components which are
calculated differently, (i) the parties hereto agree to enter into negotiations
with respect to amendments to this Agreement to conform those covenants as
criteria for evaluating the Borrower's and its Subsidiaries' financial condition
to substantially the same criteria as were effective prior to such change in
GAAP, and (ii) the Borrower shall be deemed to be in compliance with the
affected covenants contained in Section 7.14 during the 60 days following any
change in GAAP if and to the extent that the Borrower would have been in
compliance therewith under GAAP as in effect immediately before such change;
provided, however, that this paragraph shall not be deemed to require the
Borrower, the Agent or the Lenders to agree to modify any provision of this
Agreement or any of the other Loan Documents to reflect any such change to GAAP
and, if, after such 60 days, the parties, in their sole discretion, fail to
reach agreement on such modifications, the terms of this Agreement will remain
unchanged and the compliance by the Borrower with the covenants contained in
Section 7.14 will be calculated in accordance with GAAP as in effect immediately
before such change.
ARTICLE II
THE CREDIT
2.1 AMOUNTS AND TERMS OF COMMITMENT
Each Lender severally agrees, on the terms and conditions set forth
herein, to make a single loan to the Borrower (each such loan, a "Loan") on the
Closing Date in
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<PAGE> 28
an amount not to exceed such Lender's Pro Rata Share of the Commitment. Amounts
borrowed hereunder which are repaid or prepaid by the Borrower may not be
reborrowed.
2.2 LOAN ACCOUNTS
(a) The Loan made by each Lender shall be evidenced by one or more loan
accounts or records maintained by such Lender in the ordinary course of
business. The loan accounts or records maintained by the Agent and each Lender
shall be conclusive absent manifest error of the amount of the Loans made by the
Lenders to the Borrower and the interest and payments thereon. Any failure so to
record or any error in doing so shall not, however, limit or otherwise affect
the obligation of the Borrower hereunder to pay any amount owing with respect to
the Loans.
(b) Upon the request of any Lender made through the Agent, the Loans
made by such Lender may be evidenced by one or more Notes, instead of loan
accounts. Each such Lender shall endorse on the schedules annexed to its Note(s)
the date, amount and maturity of the Loan made by it and the amount of each
payment of principal made by the Borrower with respect thereto. Each such Lender
is irrevocably authorized by the Borrower to endorse its Note(s) and each
Lender's record shall be conclusive absent manifest error; provided, however,
that the failure of a Lender to make, or an error in making, a notation thereon
with respect to any Loan shall not limit or otherwise affect the obligations of
the Borrower hereunder or under any such Note to such Lender.
2.3 FUNDING OF LOANS
(a) Each Lender will make the amount of its Pro Rata Share of the
Commitment available to the Agent for the account of the Borrower at the Agent's
Payment Office by 1:00 p.m. (New York City time) on the Closing Date in funds
immediately available to the Agent. The proceeds of all such Loans will then be
made available to the Borrower by the Agent by wire transfer in accordance with
written instructions provided to the Agent by the Borrower of like funds as
received by the Agent.
(b) During the first three (3) Business Days following the Closing Date,
all Loans shall be Base Rate Loans.
2.4 CONVERSION AND CONTINUATION ELECTIONS
(a) The Borrower may, upon irrevocable written notice to the Agent in
accordance with subsection 2.4(b):
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<PAGE> 29
(i) elect, as of any Business Day, in the case of Base Rate
Loans, or as of the last day of the applicable Interest Period, in the case of
any other Type of Loans, to convert any such Loans (or any part thereof in an
amount not less than $1,000,000, or that is in an integral multiple of $500,000
in excess thereof) into Loans of any other Type; or
(ii) elect, as of the last day of the applicable Interest Period,
to continue as LIBOR Rate Loans any Loans having Interest Periods expiring on
such day (or any part thereof in an amount not less than $1,000,000, or that is
in an integral multiple of $500,000 in excess thereof).
(b) The Borrower shall deliver a Notice of Conversion/Continuation to be
received by the Agent not later than 1:00 p.m. (New York City time) at least (i)
three Business Days in advance of the Conversion/Continuation Date, if the Loans
are to be converted into or continued as LIBOR Rate Loans; and (ii) one Business
Day in advance of the Conversion/Continuation Date, if the Loans are to be
converted into Base Rate Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be converted or renewed;
(C) the Type of Loans resulting from the proposed conversion or
continuation; and
(D) other than in the case of conversions into Base Rate Loans,
the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to LIBOR
Rate Loans, the Borrower has failed to select timely a new Interest Period to be
applicable to such LIBOR Rate Loans, or if any Event of Default then exists, the
Borrower shall be deemed to have elected to convert such LIBOR Rate Loans into
Base Rate Loans effective as of the expiration date of such Interest Period.
(d) The Agent will promptly notify each Lender of its receipt of a
Notice of Conversion/Continuation, or, if no timely notice is provided by the
Borrower, the Agent will promptly notify each Lender of the details of any
automatic conversion. All conversions and continuations shall be made ratably
according to the respective outstanding principal amounts of the Loans with
respect to which the notice was given held by each Lender.
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(e) Unless the Required Lenders otherwise agree, during the existence of
an Event of Default, the Borrower may not elect to have a Loan converted into or
continued as a LIBOR Rate Loan.
(f) After giving effect to any conversion or continuation of Loans,
there may not be more than three different Interest Periods in effect.
2.5 OPTIONAL PREPAYMENTS
Subject to Section 3.4, the Borrower may, at any time or from time to
time, upon not less than one Business Day's (in the case of Base Rate Loans) or
three Business Days' (in the case of LIBOR Rate Loans) notice to the Agent
(which in either case shall be irrevocable one Business Day prior to the
proposed prepayment date), ratably prepay Loans in whole or in part, in minimum
amounts of $1,000,000 or any multiple of $500,000 in excess thereof. Such notice
of prepayment shall specify the date and amount of such prepayment and the
Type(s) of Loans to be prepaid. The Agent will promptly notify each Lender of
its receipt of any such notice, and of such Lender's Pro Rata Share of such
prepayment. If such notice is given by the Borrower and not rescinded in writing
by the Borrower more than one Business Day prior to the proposed prepayment
date, the Borrower shall make such prepayment and the payment amount specified
in such notice shall be due and payable on the date specified therein, together
with accrued interest to each such date on the amount prepaid and any amounts
required pursuant to Section 3.4.
2.6 MANDATORY PREPAYMENTS OF LOANS
(a) Asset Dispositions. If the Borrower or any Subsidiary shall at any
time or from time to time make or agree to make a Disposition then (i) the
Borrower shall promptly notify the Agent of such proposed Disposition (including
the amount of the estimated Net Proceeds to be received by the Borrower or such
Subsidiary in respect thereof) and (ii) promptly upon, and in no event later
than 90 days after, receipt by the Borrower or the Subsidiary of the Net
Proceeds of such Disposition, the Borrower shall prepay the Loans in an
aggregate amount equal to the amount of such Net Proceeds; provided, however,
that no such prepayment shall be required to the extent, in each case, such Net
Proceeds are used within 90 days of receipt thereof to purchase replacement
assets; provided further, that such notice and prepayment shall be required only
if (A) such Net Proceeds exceed $500,000 or (B) the aggregate of all Net
Proceeds theretofore received by the Borrower and not reinvested or used to make
a prepayment hereunder exceeds $1,000,000 in any fiscal year.
(b) Event of Loss. If the Borrower or any Subsidiary shall at any time
or from time to time suffer an Event of Loss, then (i) the Borrower shall
promptly notify
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the Agent of such Event of Loss (including the amount of the estimated Net
Proceeds to be received by the Borrower or such Subsidiary in respect thereof)
and (ii) promptly upon, and in no event later than two (2) Business Days after,
receipt by the Borrower or the Subsidiary of the Net Proceeds of such Event of
Loss, the Borrower shall, to the extent not inconsistent with any lease to which
the Borrower is bound, either (A) prepay the Loans in an aggregate amount equal
to the amount of such Net Proceeds or (B) deposit an aggregate amount equal to
the amount of such Net Proceeds into a blocked interest bearing account
maintained with the Agent pending release for usage by the Borrower in a manner,
and during the time, specified in the proviso below; provided, however, that no
such prepayment shall be required to the extent, in each case, such Net Proceeds
are used within 90 days, or provision for use within 180 days is made, of
receipt thereof to repair, replace or restore the assets, if any, relating to
such Event of Loss; provided further, that such notice and prepayment shall be
required only if (i) such Net Proceeds exceed $500,000 or (ii) the aggregate of
all Net Proceeds theretofore received by the Borrower and not reinvested or used
to make a prepayment hereunder exceeds $1,000,000 in any fiscal year.
(c) Equity or Debt Issuance. If the Borrower shall issue new common or
preferred equity, or shall incur additional Indebtedness (other than
Indebtedness permitted under Sections 7.5(b), (c), (e) or (f)), the Borrower
shall promptly notify the Agent of the estimated Net Issuance Proceeds of such
issuance or incurrence to be received by the Borrower in respect thereof.
Promptly upon, and in no event later than 3 days after, receipt by the Borrower
of Net Issuance Proceeds of such issuance or incurrence, the Borrower shall
prepay the Loans in an aggregate amount equal to 50% of the amount of such Net
Issuance Proceeds.
(d) General. Any prepayments pursuant to this Section 2.6 shall be
applied first to any Base Rate Loans then outstanding and then to LIBOR Rate
Loans with the shortest Interest Periods remaining; provided, however, that if
the amount of Base Rate Loans then outstanding is not sufficient to satisfy the
entire prepayment requirement, the Borrower may, at its option, place any
amounts which it would otherwise be required to use to prepay LIBOR Rate Loans
on a day other than the last day of the Interest Period therefor in an
interest-bearing account pledged to the Agent for the benefit of the Lenders
until the end of such Interest Period at which time such pledged amounts will be
applied to prepay such LIBOR Rate Loans. The Borrower shall pay, together with
each prepayment under this Section 2.6, accrued interest on the amount prepaid
and any amounts required pursuant to Section 3.4.
2.7 REPAYMENT
The Borrower shall repay the Loans in full, together with all accrued
and unpaid interest thereon, on the Maturity Date.
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2.8 INTEREST
(a) Each Loan shall bear interest on the outstanding principal amount
thereof from the Closing Date at a rate per annum equal to the LIBOR Rate or the
Base Rate, as the case may be (and subject to the Borrower's right to convert to
other Types of Loans under Section 2.4), plus the Interest Margin.
(b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of Loans
under Section 2.5 or 2.6 for the portion of the Loans so prepaid and upon
payment (including prepayment) in full thereof and, during the existence of any
Event of Default, interest shall be paid on demand of the Agent at the request
or with the consent of the Required Lenders.
(c) Notwithstanding subsection (a) of this Section, while any Event of
Default exists or after acceleration, the Borrower shall pay interest (after as
well as before entry of judgment thereon to the extent permitted by law) on the
principal amount of all outstanding Loans, at a rate per annum which is
determined by adding 2% per annum to the Interest Margin then in effect for such
Loans; provided, however, that, on and after the expiration of any Interest
Period applicable to any LIBOR Rate Loan outstanding on the date of occurrence
of such Event of Default or acceleration, the principal amount of such Loan
shall, during the continuation of such Event of Default or after acceleration,
bear interest at a rate per annum equal to the Base Rate plus 3.5% (or, if later
than six (6) months after the disbursement of Loans hereunder, plus 4%).
(d) Anything herein to the contrary notwithstanding, the obligations of
the Borrower to any Lender hereunder shall be subject to the limitation that
payments of interest shall not be required, for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Lender would be contrary to the provisions of
any law applicable to such Lender limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Lender, and in such
event the Borrower shall pay such Lender interest at the highest rate permitted
by applicable law.
2.9 FEES
(a) Arrangement, Agency Fees. The Borrower shall pay a syndication and
underwriting fee to the Arranger and to Deutsche Bank, for their respective
accounts, and shall pay an agency fee to the Agent for the Agent's own account,
as required by the Commitment Letter.
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2.10 COMPUTATION OF FEES AND INTEREST
(a) All computations of interest for Base Rate Loans when the Base Rate
is determined by Deutsche Bank's "prime lending rate" shall be made on the basis
of a year of 365 or 366 days, as the case may be, and actual days elapsed. All
other computations of fees and interest shall be made on the basis of a 360-day
year and actual days elapsed (which results in more interest being paid than if
computed on the basis of a 365-day year). Interest and fees shall accrue during
each period during which interest or such fees are computed from the first day
thereof to the last day thereof.
(b) Each determination of an interest rate by the Agent shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. The Agent will, at the request of the Borrower or any Lender,
deliver to the Borrower or the Lender, as the case may be, a statement showing
the quotations used by the Agent in determining any interest rate and the
resulting interest rate.
(c) The Reference Bank shall use its best efforts to furnish quotations
of rates to the Agent as contemplated hereby.
2.11 PAYMENTS BY THE BORROWER
(a) All payments to be made by the Borrower shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly provided
herein, all payments by the Borrower shall be made to the Agent for the account
of the Lenders at the Agent's Payment Office, and shall be made in dollars and
in immediately available funds, no later than 2:00 p.m. (New York City time) on
the date specified herein. The Agent will promptly distribute to each Lender its
Pro Rata Share (or other applicable share as expressly provided herein) of such
payment in like funds as received. Any payment received by the Agent later than
2:00 p.m. (New York City time) shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall continue to
accrue.
(b) Subject to the provisions set forth in the definition of "Interest
Period" herein, whenever any payment is due on a day other than a Business Day,
such payment shall be made on the following Business Day, and such extension of
time shall in such case be included in the computation of interest or fees, as
the case may be.
(c) Unless the Agent receives notice from the Borrower prior to the date
on which any payment is due to the Lenders that the Borrower will not make such
payment in full as and when required, the Agent may assume that the Borrower has
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made such payment in full to the Agent on such date in immediately available
funds and the Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrower has not made such
payment in full to the Agent, each Lender shall repay to the Agent on demand
such amount distributed to such Lender, together with interest thereon at the
Federal Funds Rate for each day from the date such amount is distributed to such
Lender until the date repaid.
2.12 PAYMENTS BY THE LENDERS TO THE AGENT
(a) Unless the Agent receives notice from a Lender on or prior to the
Closing Date that such Lender will not make available on the Closing Date to the
Agent for the account of the Borrower the amount of that Lender's Pro Rata Share
of the Commitment, the Agent may assume that each Lender has made such amount
available to the Agent in immediately available funds on the Closing Date and
the Agent may (but shall not be so required), in reliance upon such assumption,
make available to the Borrower on such date a corresponding amount. If and to
the extent any Lender shall not have made its full amount available to the Agent
in immediately available funds and the Agent in such circumstances has made
available to the Borrower such amount, that Lender shall on the Business Day
following the Closing Date make such amount available to the Agent, together
with interest at the Federal Funds Rate for each day during such period. A
notice of the Agent submitted to any Lender with respect to amounts owing under
this subsection (a) shall be conclusive, absent manifest error. If such amount
is so made available, such payment to the Agent shall constitute such Lender's
Loan on the Closing Date for all purposes of this Agreement.
(b) The failure of any Lender to make any Loan on the Closing Date shall
not relieve any other Lender of any obligation hereunder to make a Loan on the
Closing Date, but no Lender shall be responsible for the failure of any other
Lender to make the Loan to be made by such other Lender on the Closing Date.
2.13 SHARING OF PAYMENTS, ETC.
If, other than as expressly provided elsewhere herein, any Lender shall
obtain on account of the Loans made by it any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) in
excess of its Pro Rata Share, such Lender shall immediately (a) notify the Agent
of such fact, and (b) purchase from the other Lenders such participations in the
Loans made by them as shall be necessary to cause such purchasing Lender to
share the excess payment pro rata with each of them; provided, however, that if
all or any portion of such excess payment is thereafter recovered from the
purchasing Lender, such purchase shall to
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that extent be rescinded and each other Lender shall repay to the purchasing
Lender the purchase price paid therefor, together with an amount equal to such
paying Lender's ratable share (according to the proportion of (i) the amount of
such paying Lender's required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off, but subject to Section 10.10) with respect to
such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation. The Agent will keep records (which
shall be conclusive and binding in the absence of manifest error) of
participations purchased under this Section and will in each case notify the
Lenders following any such purchases or repayments.
2.14 SECURITY
All obligations of the Borrower and the Subsidiaries under this
Agreement, the Notes and all other Loan Documents shall be secured in accordance
with the Collateral Documents.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 TAXES
(a) Any and all payments by the Borrower to each Lender or the Agent
under this Agreement and any other Loan Document shall be made free and clear
of, and without deduction or withholding for any Taxes. In addition, the
Borrower shall pay all Other Taxes.
(b) The Borrower agrees to indemnify and hold harmless each Lender and
the Agent for the full amount of Taxes or Other Taxes (including any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section)
paid by the Lender or the Agent and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Payment under this indemnification shall be made within 30 days after
the date the Lender or the Agent makes written demand therefor.
(c) If the Borrower shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender or the Agent, then:
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(i) the sum payable shall be increased as necessary so that after
making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section) such
Lender or the Agent, as the case may be, receives an amount equal to the sum it
would have received had no such deductions or withholdings been made;
(ii) the Borrower shall make such deductions and withholdings;
(iii) the Borrower shall pay the full amount deducted or withheld
to the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) the Borrower shall also pay to each Lender or the Agent for
the account of such Lender, at the time interest is paid, all additional amounts
which the respective Lender specifies as necessary to preserve the after-tax
yield the Lender would have received if such Taxes or Other Taxes had not been
imposed.
(d) Within 30 days after the date of any payment by the Borrower of
Taxes or Other Taxes, the Borrower shall furnish the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Agent.
(e) If the Borrower is required to pay additional amounts to any Lender
or the Agent pursuant to subsection (c) of this Section, then such Lender shall
use reasonable efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Borrower which may thereafter accrue, if such change
in the judgment of such Lender is not otherwise disadvantageous to such Lender.
3.2 ILLEGALITY
(a) If any Lender reasonably determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Lender or its applicable Lending Office to make
LIBOR Rate Loans, then, on notice thereof by the Lender to the Borrower through
the Agent, any obligation of that Lender to make LIBOR Rate Loans shall be
suspended until the Lender notifies the Agent and the Borrower that the
circumstances giving rise to such determination no longer exist.
(b) If a Lender reasonably determines that it is unlawful to maintain
any LIBOR Rate Loan, the Borrower shall, upon its receipt of notice of such fact
and
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demand from such Lender (with a copy to the Agent), prepay in full such LIBOR
Rate Loans of that Lender then outstanding, together with interest accrued
thereon and amounts required under Section 3.4, either on the last day of the
Interest Period thereof, if the Lender may lawfully continue to maintain such
LIBOR Rate Loans to such day, or immediately, if the Lender may not lawfully
continue to maintain such LIBOR Rate Loan. If the Borrower is required to so
prepay any LIBOR Rate Loan, then concurrently with such prepayment, the Borrower
shall borrow from the affected Lender, in the amount of such repayment, a Base
Rate Loan.
(c) If the obligation of any Lender to make or maintain LIBOR Rate Loans
has been so terminated or suspended, the Borrower may elect, by giving notice to
the Lender through the Agent that all Loans which would otherwise be made by the
Lender as LIBOR Rate Loans shall be instead Base Rate Loans.
(d) Before giving any notice to the Agent under this Section, the
affected Lender shall designate a different Lending Office with respect to its
LIBOR Rate Loans if such designation will avoid the need for giving such notice
or making such demand and will not, in the judgment of the Lender, be illegal or
otherwise disadvantageous to the Lender.
3.3 INCREASED COSTS AND REDUCTION OF RETURN
(a) If any Lender reasonably determines that, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance by that Lender with any guideline or request
from any central bank or other Governmental Authority (whether or not having the
force of law), there shall be any increase in the cost to such Lender of
agreeing to make or making, funding or maintaining any LIBOR Rate Loans, then
the Borrower shall be liable for, and shall from time to time, upon demand (with
a copy of such demand to be sent to the Agent), pay to the Agent for the account
of such Lender, additional amounts as are sufficient to compensate such Lender
for such increased costs.
(b) If any Lender shall have reasonably determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration of
any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance by the Lender (or its Lending Office) or any corporation controlling
the Lender with any Capital Adequacy Regulation, affects or would affect the
amount of capital required or expected to be maintained by the Lender or any
corporation controlling the Lender and (taking into consideration such Lender's
or such corporation's policies with respect to capital adequacy and such
Lender's desired return on capital) reasonably
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determines that the amount of such capital is increased as a consequence of its
Commitment, loans, credits or obligations under this Agreement, then, upon
demand of such Lender to the Borrower through the Agent, the Borrower shall pay
to the Lender, from time to time as specified by the Lender, additional amounts
sufficient to compensate the Lender for such increase.
3.4 FUNDING LOSSES
The Borrower shall reimburse each Lender and hold each Lender harmless
from any loss (excluding consequential damages consisting of lost profits) or
expense which the Lender may sustain or incur as a consequence of:
(a) the failure of the Borrower to make on a timely basis any payment of
principal of any LIBOR Rate Loan;
(b) the failure of the Borrower to borrow the Loans on the Closing Date,
or to continue or convert a Loan after the Borrower has given (or is deemed to
have given) a Notice of Conversion/Continuation;
(c) the failure of the Borrower to make any prepayment in accordance
with any notice delivered under Section 2.5;
(d) the prepayment (including pursuant to Sections 2.5 and 2.6) or other
payment (including after acceleration thereof) of a LIBOR Rate Loan on a day
that is not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.4 of any LIBOR Rate Loan to
a Base Rate Loan on a day that is not the last day of the relevant Interest
Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its LIBOR Rate Loans or from fees payable to
terminate the deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Borrower to the Lenders under this Section
and under subsection 3.3(a), each LIBOR Rate Loan made by a Lender (and each
related reserve, special deposit or similar requirement) shall be conclusively
deemed to have been funded at the LIBOR used in determining the LIBOR Rate for
such LIBOR Rate Loan by a matching deposit or other borrowing in the interbank
eurodollar market for a comparable amount and for a comparable period, whether
or not such LIBOR Rate Loan is in fact so funded.
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3.5 INABILITY TO DETERMINE RATES
If the Agent reasonably determines that for any reason adequate and
reasonable means do not exist for determining the LIBOR Rate for any requested
Interest Period with respect to a proposed LIBOR Rate Loan, or that the LIBOR
Rate applicable pursuant to subsection 2.8(a) for any requested Interest Period
with respect to a proposed LIBOR Rate Loan does not adequately and fairly
reflect the cost to the of funding such Loan, the Agent will promptly so notify
the Borrower and each Lender. Thereafter, the obligation of the Lenders to make
or maintain LIBOR Rate Loans hereunder shall be suspended until the Agent
revokes such notice in writing, which it shall do promptly when possible. Upon
receipt of such notice, the Borrower may revoke any Notice of
Conversion/Continuation then submitted by it. If the Borrower does not revoke
such Notice, the Lenders shall make, convert or continue the Loans, as proposed
by the Borrower, in the amount specified in the applicable notice submitted by
the Borrower, but such Loans shall be made, converted or continued as Base Rate
Loans instead of LIBOR Rate Loans.
3.6 CERTIFICATES OF LENDERS
Any Lender claiming reimbursement or compensation under this Article III
shall deliver to the Borrower (with a copy to the Agent) a certificate setting
forth in reasonable detail the amount payable to the Lender hereunder and such
certificate shall be conclusive and binding on the Borrower in the absence of
manifest error.
3.7 SURVIVAL
The agreements and obligations of the Borrower in this Article III shall
survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 CONDITIONS OF LOANS
The obligation of each Lender to make its Loan hereunder is subject to
the condition that the Agent has received on or before the Closing Date all of
the following, in form and substance satisfactory to the Agent and each Lender,
and in sufficient copies for each Lender:
(a) Credit Agreement and Notes. This Agreement, the Notes and the
Warrants executed by each party thereto;
(b) Resolutions; Incumbency.
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(i) Copies of the resolutions of the board of directors of the
Borrower and each Subsidiary that may become party to a Loan Document
authorizing the transactions contemplated hereby, certified as of the Closing
Date by the Secretary or an Assistant Secretary of such Person; and
(ii) A certificate of the Secretary or Assistant Secretary or an
executive officer of the Borrower, and each Subsidiary that may become party to
a Loan Document certifying the names and true signatures of the officers of the
Borrower or such Subsidiary authorized to execute, deliver and perform, as
applicable, this Agreement, and all other Loan Documents to be delivered by it
hereunder;
(c) Organization Documents; Good Standing. Each of the following
documents:
(i) the articles or certificate of incorporation and the bylaws
of the Borrower and each Subsidiary party to any Loan Document as in effect on
the Closing Date, certified by the Secretary or Assistant Secretary of the
Borrower or such Subsidiary as of the Closing Date; and
(ii) a good standing certificate for the Borrower and each
Subsidiary party to any Loan Document from the Secretary of State (or similar,
applicable Governmental Authority) of its state of incorporation and each state
where the Borrower or such Subsidiary is qualified to do business as a foreign
corporation as of a recent date;
(d) Legal Opinions. An opinion of Perkins Coie - Seattle, counsel to the
Borrower and addressed to the Agent and the Lenders, substantially in the form
of Exhibit C;
(e) Payment of Fees. Evidence of payment by the Borrower of all accrued
and unpaid fees, costs and expenses to the extent then due and payable on the
Closing Date, together with Attorney Costs of Deutsche Bank to the extent
invoiced prior to or on the Closing Date; including any such costs, fees and
expenses arising under or referenced in Sections 2.9 and 10.4;
(f) Collateral Documents. The Collateral Documents, executed by the
Borrower, in appropriate form for recording, where necessary, together with:
(i) copies of all UCC-l financing statements filed, registered or
recorded to perfect the security interests of the Agent for the benefit of the
Lenders, or other evidence satisfactory to the Agent that there has been filed,
registered or
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recorded all financing statements and other filings, registrations and
recordings necessary and advisable to perfect the Liens of the Agent for the
benefit of the Lenders in accordance with applicable law (provided that filings
to be made in connection with Intellectual Property Collateral (as defined in
the Security Agreement) shall be made within seven days after the Closing Date);
(ii) written advice relating to such Lien and judgment searches
as the Agent shall have requested, and such termination statements or other
documents as may be necessary to confirm that the Collateral is subject to no
other Liens in favor of any Persons (other than Permitted Liens);
(iii) funds sufficient to pay any filing or recording tax or fee
in connection with any and all UCC-1 financing statements; and
(iv) evidence that all other actions necessary or, in the
reasonable opinion of the Agent or the Lenders, desirable, to perfect and
protect the first priority security interest created by the Collateral Documents
and to enhance the Agent's ability to preserve and protect its interests in and
access to the Collateral, have been taken;
(g) Insurance Policies. Standard lenders' payable endorsements with
respect to the insurance policies or other instruments or documents evidencing
insurance coverage on the properties of the Borrower in accordance with
Section 6.6;
(h) Certificate. A certificate signed by a Responsible Officer, dated as
of the Closing Date, stating that:
(i) the representations and warranties contained in Article V are
true and correct on and as of such date, as though made on and as of such date;
(ii) no Default or Event of Default exists or would result from
making the Loans under Article II; and
(iii) there has occurred since September 30, 1997, no event or
circumstance that has resulted or could reasonably be expected to result in a
Material Adverse Effect; and
(i) Other Documents. Such other approvals, opinions, documents or
materials as the Agent or any Lender may reasonably request.
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4.2 CONDITIONS TO CONTINUATIONS/CONVERSIONS
The obligation of each Lender to continue or convert any Loan under
Section 2.4 is subject to the satisfaction of the following conditions precedent
on the relevant Conversion/Continuation Date:
(a) Notice of Conversion/Continuation. The Agent shall have
received a Notice of Conversion/Continuation;
(b) Continuation of Representations and Warranties. The
representations and warranties in Article V shall be true and correct on and as
of such Conversion/Continuation Date with the same effect as if made on and as
of such Conversion/Continuation Date (except to the extent such representations
and warranties solely and expressly refer to an earlier date, in which case they
shall be true and correct as of such earlier date); and
(c) No Existing Default. No Default or Event of Default shall
exist or shall result from such continuation or conversion.
Each Notice of Conversion/Continuation submitted by the Borrower
hereunder shall constitute a representation and warranty by the Borrower
hereunder, as of the date of each such notice and as of each
Conversion/Continuation Date, as applicable, that the conditions in Section 4.2
are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Agent and each Lender that:
5.1 CORPORATE EXISTENCE AND POWER
The Borrower and each of its Subsidiaries:
(a) is a corporation, partnership, limited liability company or
similar entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and to execute, deliver, and perform its obligations under the Loan Documents;
(c) is duly qualified as a foreign corporation, partnership,
limited liability company or similar entity and is licensed and in good standing
under the laws
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of each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification or license; and
(d) is in compliance with all Requirements of Law; except, in
each case referred to in clause (c) or clause (d), to the extent that the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.
5.2 CORPORATE AUTHORIZATION; NO CONTRAVENTION
The execution, delivery and performance by the Borrower and its
Subsidiaries of this Agreement and each other Loan Document to which such Person
is party, have been duly authorized by all necessary corporate, partnership,
limited liability company or similar entity action, and do not and will not:
(a) contravene the terms of any of that Person's Organization
Documents;
(b) conflict with or result in any breach or contravention of, or
the creation of any Lien under, any document evidencing any Contractual
Obligation to which such Person is a party or any order, injunction, writ or
decree of any Governmental Authority to which such Person or its property is
subject; or
(c) violate any Requirement of Law.
5.3 GOVERNMENTAL AUTHORIZATION
No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority (except for recordings or
filings in connection with the Liens granted to the Agent under the Collateral
Documents and except for state and federal securities laws filings in connection
with the issuance of the Warrants that may be required) is necessary or required
in connection with the execution, delivery or performance by, or enforcement
against, the Borrower or any of its Subsidiaries of the Agreement or any other
Loan Document.
5.4 BINDING EFFECT
This Agreement and each other Loan Document to which the Borrower or any
of its Subsidiaries is a party constitute the legal, valid and binding
obligations of the Borrower and any of its Subsidiaries to the extent it is a
party thereto, enforceable against such Person in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
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5.5 LITIGATION
Except as specifically disclosed in Schedule 5.5, as of the date of this
Agreement there are no actions, suits, proceedings, claims or disputes pending,
or to the best knowledge of the Borrower, threatened or contemplated, at law, in
equity, in arbitration or before any Governmental Authority, against the
Borrower, or its Subsidiaries or any of their respective properties which:
(a) purport to affect or pertain to this Agreement or any other
Loan Document, or any of the transactions contemplated hereby or thereby; or
(b) if determined adversely to the Borrower or its Subsidiaries,
would reasonably be expected to have a Material Adverse Effect.
No injunction, writ, temporary restraining order or any order of any
nature has been issued by any court or other Governmental Authority purporting
to enjoin or restrain the execution, delivery or performance of this Agreement
or any other Loan Document, or directing that the transactions provided for
herein or therein not be consummated as herein or therein provided.
5.6 NO DEFAULT
No Default or Event of Default exists or would result from the incurring
of any Obligations by the Borrower or from the grant or perfection of the Liens
of the Agent and the Lenders on the Collateral. As of the Closing Date, neither
the Borrower nor any Subsidiary is in default under or with respect to any
Contractual Obligation in any respect which, individually or together with all
such defaults, could reasonably be expected to have a Material Adverse Effect,
or that would, if such default had occurred after the Closing Date, create an
Event of Default under subsection 8.1(e).
5.7 ERISA COMPLIANCE
Except as specifically disclosed in Schedule 5.7:
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS and to the best knowledge of the
Borrower, nothing has occurred which would cause the loss of such qualification.
The Borrower and each ERISA Affiliate has made all required contributions to any
Plan subject to Section 412 of the Code, and no application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Plan.
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(b) There are no pending or, to the best knowledge of Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to result in a Material Adverse
Effect.
(c)(i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v)
neither the Borrower nor any ERISA Affiliate has engaged in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA, which in the case of each
of the foregoing clauses (i) through (v) could reasonably be expected to have a
Material Adverse Effect.
5.8 USE OF PROCEEDS; MARGIN REGULATIONS
The proceeds of the Loans are to be used solely for the purposes set
forth in and permitted by Section 6.12 and Section 7.7. Neither the Borrower nor
any Subsidiary is generally engaged in the business of purchasing or selling
Margin Stock or extending credit for the purpose of purchasing or carrying
Margin Stock.
5.9 TITLE TO PROPERTIES
The Borrower and each Subsidiary have good record and marketable title
in fee simple to, or valid leasehold interests in, all real property necessary
or used in the ordinary conduct of their respective businesses, except for such
defects in title which could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect. As of the Closing Date, the
property of the Borrower and its Subsidiaries is subject to no Liens, other than
Permitted Liens.
5.10 TAXES
The Borrower and its Subsidiaries have filed all Federal and other
material tax returns and reports required to be filed, and have paid all Federal
and other material taxes, assessments, fees and other governmental charges
levied or imposed upon them or their properties, income or assets otherwise due
and payable, except those which
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are being contested in good faith by appropriate proceedings and for which
adequate reserves have been provided in accordance with GAAP. There is no
proposed tax assessment against the Borrower or any Subsidiary that would, if
made, have a Material Adverse Effect.
5.11 FINANCIAL CONDITION
(a) The unaudited consolidated financial statements of the Borrower and
its Subsidiaries dated September 30, 1997, and the related consolidated
statements of income or operations, shareholders' equity and cash flows for the
fiscal quarter ended on that date:
(i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein, subject to ordinary, good faith year-end audit adjustments;
(ii) fairly present the financial condition of the Borrower and
its Subsidiaries as of the date thereof and results of operations for the period
covered thereby; and
(iii) except as specifically disclosed in Schedule 5.11, show all
material indebtedness and other liabilities, direct or contingent, of the
Borrower and its consolidated Subsidiaries as of the date thereof, including
liabilities for taxes, material commitments and Contingent Obligations.
(b) Since September 30, 1997, there has been no Material Adverse Effect.
5.12 ENVIRONMENTAL MATTERS
(a) Except as specifically disclosed in Schedule 5.12, the on-going
operations of the Borrower and each of its Subsidiaries comply in all respects
with all Environmental Laws, except such non-compliance which would not (if
enforced in accordance with applicable law) result in liability in excess of
$2,000,000 in the aggregate.
(b) Except as specifically disclosed in Schedule 5.12, the Borrower and
each of its Subsidiaries have obtained all licenses, permits, authorizations and
registrations required under any Environmental Law ("Environmental Permits") and
necessary for their respective ordinary course operations, all such
Environmental Permits are in good standing, and the Borrower and each of its
Subsidiaries are in compliance with all material terms and conditions of such
Environmental Permits except to the extent the failure to have such
Environmental Permits or to comply therewith could not reasonably be expected to
have a Material Adverse Effect.
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(c) Except as specifically disclosed in Schedule 5.12, none of the
Borrower, any of its Subsidiaries or any of their respective present property or
operations, is subject to any outstanding written order from or agreement with
any Governmental Authority, nor subject to any judicial or docketed
administrative proceeding, respecting any Environmental Law, Environmental Claim
or Hazardous Material, which would if adversely determined, result in a
liability or in economic loss in excess of $2,000,000 in the aggregate.
(d) Except as specifically disclosed in Schedule 5.12, there are no
Hazardous Materials or other conditions or circumstances existing with respect
to any property of the Borrower or any Subsidiary, or arising from operations
prior to the Closing Date, of the Borrower or any of its Subsidiaries that would
reasonably be expected to give rise to Environmental Claims with a potential
liability of the Borrower and its Subsidiaries in excess of $2,000,000 in the
aggregate for any such condition, circumstance or property. In addition, (i)
neither the Borrower nor any Subsidiary has any underground storage tanks (x)
that are not properly registered or permitted under applicable Environmental
Laws, or (y) that are leaking or disposing of Hazardous Materials off-site, and
(ii) the Borrower and its Subsidiaries have notified all of their employees of
the existence, if any, of any health hazard arising from the conditions of their
employment and have met all notification requirements under Title III of CERCLA
and all other Environmental Laws.
5.13 COLLATERAL DOCUMENTS
(a) As of the date hereof, the provisions of each of the Collateral
Documents are effective to create in favor of the Agent for the benefit of the
Lenders, a legal, valid and enforceable security interest in all right, title
and interest of the Borrower and its Subsidiaries in the collateral described
therein; and financing statements have been delivered to the Agent for filing in
the offices in all of the jurisdictions listed in the schedule to the Security
Agreement and executed Patent Assignments, Trademarks Assignments and Copyright
Assignments have been delivered to the Agent for filing in the U.S. Patent and
Trademark Office and the U.S. Copyright Office and upon the filing of such
assignments and such financing statements in such offices, the Agent, for the
benefit of the Lenders, will have a perfected first priority security interest
(subject only to Permitted Liens) in the collateral described thereon in which a
security interest may be perfected by the filing of such financing statements or
assignments, and upon delivery of those items of Collateral for which physical
possession is the method for perfection, the Agent, for the benefit of the
Lenders will have a valid, first priority security interest thereon.
(b) All representations and warranties of the Borrower and any of its
Subsidiaries party thereto contained in the Collateral Documents are true and
correct.
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5.14 REGULATED ENTITIES
None of the Borrower, any Person controlling the Borrower, or any
Subsidiary, is an "Investment Company" within the meaning of the Investment
Company Act of 1940. The Borrower is not subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, any state public utilities code, or any other Federal or state
statute or regulation limiting its ability to incur Indebtedness.
5.15 NO BURDENSOME RESTRICTIONS
As of the date of this Agreement, neither the Borrower nor any
Subsidiary is a party to or bound by any Contractual Obligation, or subject to
any restriction in any Organization Document, or any Requirement of Law, which
could reasonably be expected to have a Material Adverse Effect.
5.16 COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES, ETC.
The Borrower or its Subsidiaries own or are licensed or otherwise have
the right to use all of the patents, trademarks, service marks, trade names,
copyrights, contractual franchises, authorizations and other rights that are
reasonably necessary for the operation of their respective businesses, without
conflict with the rights of any other Person. To the best knowledge of the
Borrower, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by the Borrower or any Subsidiary infringes upon any rights held by
any other Person. Except as specifically disclosed in Schedule 5.5, no claim or
litigation regarding any of the foregoing is pending or threatened, and no
patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of the Borrower,
proposed, which, in either case, could reasonably be expected to have a Material
Adverse Effect.
5.17 SUBSIDIARIES
As of the date of this Agreement, the Borrower has no Subsidiaries other
than those specifically disclosed in part (a) of Schedule 5.17 hereto and has no
Investments in any other corporation or entity other than those specifically
disclosed in part (b) of Schedule 5.17.
5.18 INSURANCE
Except as specifically disclosed in Schedule 5.18, the properties of the
Borrower and its Subsidiaries are insured with financially sound and reputable
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insurance companies not Affiliates of the Borrower, in such amounts, with such
deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where
the Borrower or such Subsidiary operates.
5.19 SOLVENCY
The Borrower and each of its Material Subsidiaries are Solvent.
5.20 FULL DISCLOSURE
None of the representations or warranties made by the Borrower or any
Subsidiary in the Loan Documents as of the date such representations and
warranties are made or deemed made, and none of the statements contained in any
exhibit, report, statement or certificate furnished by or on behalf of the
Borrower or any Subsidiary in connection with the Loan Documents (including the
offering and disclosure materials delivered by or on behalf of the Borrower to
the Lenders prior to the Closing Date), contains any untrue statement of a
material fact or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading as of the time when made or delivered.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, unless the Required
Lenders waive compliance in writing:
6.1 FINANCIAL STATEMENTS
The Borrower shall deliver to the Agent, in form and detail reasonably
satisfactory to the Agent and the Required Lenders, with sufficient copies for
each Lender:
(a) as soon as available, but not later than 95 days after the
end of each fiscal year, a copy of the audited consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such year and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, and accompanied by the opinion of Ernst & Young
LLP or another nationally recognized independent public accounting firm
("Independent Auditor") which report shall state
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that such consolidated financial statements present fairly the financial
position for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years with the exception of changes noted therein. Such
opinion shall not be qualified or limited because of a restricted or limited
examination by the Independent Auditor of any material portion of the Borrower's
or any Subsidiary's records;
(b) as soon as available, but not later than 50 days after the
end of each of the first three fiscal quarters of each fiscal year a copy of the
unaudited consolidated balance sheet (including a statement of stockholders'
equity) of the Borrower and its Subsidiaries as of the end of such quarter and
the related consolidated statements of income and cash flows for the period
commencing on the first day and ending on the last day of such quarter, and
certified by a Responsible Officer as fairly presenting, in accordance with GAAP
(subject to normal good faith year-end audit adjustments), the financial
position and the results of operations of the Borrower and the Subsidiaries;
(c) concurrent with the delivery of each of the reports required
under clauses (a) and (b) above, a good faith reasonable estimate by the
Borrower for the Non-Material Subsidiaries of such Non-Material Subsidiaries'
(i) total (gross) revenues (on a consolidated basis) for the four fiscal quarter
period ending as of the report date and (ii) total assets (on a consolidated
basis), as of the last day of the fiscal quarter ending as of the report date,
reported on a net book value basis; provided, that any Non-Material Subsidiary
which has less than four fiscal quarters of financial information shall
annualize the financial results of its operations for purposes of this
Section 6.1(c).
6.2 CERTIFICATES; OTHER INFORMATION
The Borrower shall furnish to the Agent, with sufficient copies for each
Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 6.1(a), a certificate of the Independent Auditor
stating that in making the examination necessary therefor no knowledge was
obtained of any Default or Event of Default, except as specified in such
certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and (b), a Compliance Certificate executed by
a Responsible Officer;
(c) promptly, copies of all financial statements and reports that
the Borrower sends to its shareholders, and copies of all financial statements
and regular,
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periodical or special reports (including Forms 10K, 10Q and 8K) that the
Borrower or any Subsidiary may make to, or file with, the SEC;
(d) promptly, such additional information regarding the business,
financial or corporate affairs of the Borrower or any Subsidiary as the Agent,
at the request of any Lender, may from time to time reasonably request; and
(e) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and (b) and immediately prior to each
Acquisition or Investment resulting in a Person becoming a Subsidiary, a
certification of a Responsible Officer specifying which of the Subsidiaries of
the Borrower are Non-Material Subsidiaries and demonstrating compliance w