Loan Agreement - Raymond Karsan Associates Inc. and Fleet National Bank
LOAN AGREEMENT
BY AND BETWEEN
RAYMOND KARSAN ASSOCIATES, INC.
AND
FLEET NATIONAL BANK, AS AGENT AND A LENDER
AND
THE OTHER FINANCIAL INSTITUTIONS
HEREAFTER PARTIES HERETO
$10,000,000 SECURED REVOLVING CREDIT LOAN
DECEMBER 27, 1999
<PAGE>
INDEX TO
LOAN AGREEMENT
Page
----
ARTICLE 1. DEFINITIONS AND ACCOUNTING AND OTHER TERMS........................................... 1
--------- ------------------------------------------
Section 1.1. Certain Defined Terms.............................................................. 1
----------- ---------------------
Section 1.2. Accounting Terms................................................................... 19
----------- ----------------
Section 1.3. Other Terms........................................................................ 19
----------- -----------
ARTICLE 2. AMOUNT AND TERMS OF THE LOANS........................................................ 19
--------- -----------------------------
Section 2.1. The Loans.......................................................................... 19
----------- ---------
Section 2.1.0. The Revolving Credit Loans....................................................... 19
------------- --------------------------
Section 2.2. Interest and Fees on the Loans..................................................... 21
----------- ------------------------------
Section 2.2.1. Interest......................................................................... 21
------------- --------
Section 2.2.2. Fees............................................................................. 22
------------- ----
Section 2.2.3. Increased Costs - Capital........................................................ 22
------------- -------------------------
Section 2.3. Notations.......................................................................... 23
----------- ---------
Section 2.4. Computation of Interest............................................................ 23
----------- -----------------------
Section 2.5. Time of Payments and Prepayments in Immediately Available Funds.................... 23
----------- ---------------------------------------------------------------
Section 2.5.1. Time............................................................................. 24
------------- ----
Section 2.5.2. Setoff, etc...................................................................... 25
------------- -----------
Section 2.5.3. Unconditional Obligations and No Deductions...................................... 25
------------- -------------------------------------------
Section 2.6. Prepayment and Certain Payments.................................................... 28
----------- -------------------------------
Section 2.6.1. Mandatory Payments............................................................... 28
------------- ------------------
Section 2.6.2. Voluntary Prepayments............................................................ 29
------------- ---------------------
Section 2.6.3. Prepayment of Libor Loans........................................................ 29
------------- -------------------------
Section 2.6.4. Permanent Reduction of Commitment................................................ 29
------------- ---------------------------------
Section 2.7. Payment on Non-Business Days....................................................... 30
----------- ----------------------------
Section 2.8. Use of Proceeds.................................................................... 30
----------- ---------------
Section 2.9. Special Libor Loan Provisions...................................................... 30
----------- -----------------------------
Section 2.9.1. Requests......................................................................... 30
------------- --------
Section 2.9.2. Libor Loans Unavailable.......................................................... 30
------------- -----------------------
Section 2.9.3. Libor Lending Unlawful........................................................... 31
------------- ----------------------
Section 2.9.4. Additional Costs on Libor Loans.................................................. 32
------------- -------------------------------
Section 2.9.5. Libor Funding Losses............................................................. 33
------------- --------------------
Section 2.9.6. Banking Practices................................................................ 34
------------- -----------------
Section 2.9.7. Borrower's Options on Unavailability or Increased Cost of Libor Loans........... 34
------------- ----------------------------------------------------------------------
Section 2.9.8. Assumptions Concerning Funding of Libor Loans.................................... 35
------------- ---------------------------------------------
Section 2.10. Interest Rate Protection........................................................... 35
------------ ------------------------
ARTICLE 3. CONDITIONS OF LENDING................................................................ 35
--------- ---------------------
Section 3.1. Conditions Precedent to the Commitment and to all Loans............................ 35
----------- -------------------------------------------------------
Section 3.1.1. The Commitment and Initial Loans................................................. 36
------------- --------------------------------
Section 3.1.2. The Commitment and the Loans..................................................... 39
------------- ----------------------------
ARTICLE 4. REPRESENTATIONS AND WARRANTIES.......................................................... 40
---------- -----------------------------
Section 4.1. Representations and Warranties of the Borrower...................................... 40
----------- ----------------------------------------------
Section 4.1.1. Organization and Existence....................................................... 40
------------- --------------------------
Section 4.1.2. Authorization and Absence of Defaults............................................ 40
-------------- -------------------------------------
Section 4.1.3. Acquisition of Consents.......................................................... 40
-------------- -----------------------
i
<PAGE>
Section 4.1.4. Validity and Enforceability........................................................ 41
------------- ---------------------------
Section 4.1.5. Financial Information.............................................................. 41
------------- ---------------------
Section 4.1.6. No Litigation...................................................................... 41
------------- -------------
Section 4.1.7. Regulation U....................................................................... 42
------------- ------------
Section 4.1.8. Absence of Adverse Agreements...................................................... 42
------------- -----------------------------
Section 4.1.9. Taxes.............................................................................. 42
------------- -----
Section 4.1.10. ERISA.............................................................................. 42
-------------- -----
Section 4.1.11. Ownership of Properties............................................................ 43
-------------- -----------------------
Section 4.1.12. Accuracy of Representations and Warranties......................................... 44
-------------- ------------------------------------------
Section 4.1.13. No Investment Company.............................................................. 44
-------------- ---------------------
Section 4.1.14. Solvency, etc...................................................................... 44
-------------- -------------
Section 4.1.15. Approvals.......................................................................... 44
-------------- ---------
Section 4.1.16. Ownership Interests................................................................ 44
-------------- -------------------
Section 4.1.17. Licenses, Registrations, Compliance with Laws, etc................................. 44
-------------- --------------------------------------------------
Section 4.1.18. Principal Place of Business; Books and Records..................................... 45
-------------- ----------------------------------------------
Section 4.1.19. Subsidiaries....................................................................... 45
-------------- ------------
Section 4.1.20. Copyright.......................................................................... 45
-------------- ---------
Section 4.1.21. Environmental Compliance........................................................... 45
-------------- ------------------------
Section 4.1.22. Material Agreements, etc........................................................... 46
-------------- ------------------------
Section 4.1.23. Patents, Trademarks and Other Property Rights...................................... 46
-------------- ---------------------------------------------
Section 4.1.24. Related Transaction Documents...................................................... 46
-------------- -----------------------------
Section 4.1.25. Material Adverse Effect............................................................ 46
-------------- -----------------------
Section 4.1.26. Year 2000.......................................................................... 46
-------------- ---------
Section 4.1.27. Location of Material Assets........................................................ 47
-------------- ---------------------------
ARTICLE 5. COVENANTS OF THE BORROWER.......................................................... 47
--------- -------------------------
Section 5.1. Affirmative Covenants of the Borrower Other than Reporting Requirements............ 47
----------- -----------------------------------------------------------------------
Section 5.1.1. Payment of Taxes, etc.............................................................. 47
------------- ---------------------
Section 5.1.2. Maintenance of Insurance........................................................... 47
------------- ------------------------
Section 5.1.3. Preservation of Existence, etc..................................................... 48
------------- ------------------------------
Section 5.1.4. Compliance with Laws, etc.......................................................... 48
------------- -------------------------
Section 5.1.5. Visitation Rights.................................................................. 48
------------- -----------------
Section 5.1.6. Keeping of Records and Books of Account............................................ 48
------------- ---------------------------------------
Section 5.1.7. Maintenance of Properties, etc..................................................... 49
------------- ------------------------------
Section 5.1.8. Post-Closing Items................................................................. 49
------------- ------------------
Section 5.1.9. Other Documents, etc............................................................... 49
-------------- --------------------
Section 5.1.10. Minimum EBITDA..................................................................... 49
-------------- --------------
Section 5.1.11. Minimum Debt Service Coverage Ratio................................................ 49
-------------- -----------------------------------
Section 5.1.12(A) Maximum Ratio of Total Indebtedness for Borrowed Money to EBITDA.................. 49
----------------- ----------------------------------------------------------------
Section 5.1.12(B) Maximum Ratio of Senior Indebtedness for Borrowed Money to EBITDA................. 50
----------------- ------------------------------------------------------------------
Section 5.1.13. Officer's Certificates and Requests................................................ 50
-------------- -----------------------------------
Section 5.1.14. Depository......................................................................... 50
-------------- ----------
Section 5.1.15. Chief Executive Officer............................................................ 50
-------------- -----------------------
Section 5.1.16. Notice of Purchase of Real Estate, Leases, etc..................................... 51
-------------- ----------------------------------------------
Section 5.1.17. Additional Assurances.............................................................. 51
-------------- ---------------------
Section 5.1.18. Commercial Finance Examination..................................................... 51
-------------- ------------------------------
Section 5.1.19. Environmental Compliance........................................................... 51
-------------- ------------------------
Section 5.1.20. Remediation........................................................................ 52
-------------- -----------
Section 5.1.21. Site Assessments................................................................... 52
-------------- ----------------
Section 5.1.22. Indemnity.......................................................................... 52
-------------- ---------
Section 5.1.23. Trademarks, Copyrights, etc........................................................ 52
-------------- ---------------------------
Section 5.1.24. Key-Man Insurance.................................................................. 52
-------------- -----------------
Section 5.2. Negative Covenants of the Borrower................................................. 53
------------- ----------------------------------
Section 5.2.1. Liens, etc......................................................................... 53
------------- ----------
ii
<PAGE>
Section 5.2.2. Assumptions, Guaranties, etc. of Indebtedness of Other Persons..................... 54
------------- --------------------------------------------------------------
Section 5.2.3. Acquisitions, Dissolution, etc..................................................... 54
------------- ------------------------------
Section 5.2.4. Change in Nature of Business....................................................... 55
------------- ----------------------------
Section 5.2.5. Ownership.......................................................................... 55
------------- ---------
Section 5.2.6. Sale and Leaseback; Synthetic Leases............................................... 55
------------- ------------------------------------
Section 5.2.7. Sale of Accounts, etc.............................................................. 55
------------- ---------------------
Section 5.2.8. Indebtedness....................................................................... 55
------------- ------------
Section 5.2.9. Other Agreements................................................................... 56
------------- ----------------
Section 5.2.10. Payment or Prepayment of Equity or Subordinated Debt............................... 56
-------------- ----------------------------------------------------
Section 5.2.11. Dividends, Payments and Distributions.............................................. 57
-------------- -------------------------------------
Section 5.2.12. Investments in or to Other Persons................................................. 57
-------------- ----------------------------------
Section 5.2.13. Transactions with Affiliates....................................................... 57
-------------- ----------------------------
Section 5.2.14. Change of Fiscal Year.............................................................. 57
-------------- ---------------------
Section 5.2.15. Subordination of Claims............................................................ 57
-------------- -----------------------
Section 5.2.16. Compliance with ERISA.............................................................. 57
-------------- ---------------------
Section 5.2.17. [Intentionally omitted.]........................................................... 58
-------------- ------------------------
Section 5.2.18. Hazardous Material................................................................. 58
-------------- ------------------
Section 5.2.19. Other Restrictions on Liens or Dividends........................................... 58
-------------- ----------------------------------------
Section 5.2.20 Limitation on Creation of Subsidiaries, etc........................................ 58
-------------- -------------------------------------------
Section 5.3. Reporting Requirements............................................................... 58
----------- ----------------------
ARTICLE 6. EVENTS OF DEFAULT....................................................................... 60
--------- -----------------
Section 6.1. Events of Default.................................................................... 60
----------- -----------------
ARTICLE 7. REMEDIES OF LENDERS..................................................................... 62
--------- -------------------
ARTICLE 8. AGENT................................................................................... 63
--------- -----
Section 8.1. Appointment.......................................................................... 63
----------- -------------
Section 8.2. Powers; General Immunity............................................................. 63
----------- --------------------------
Section 8.2.1. Duties Specified................................................................... 63
------------- ----------------
Section 8.2.2. No Responsibility For Certain Matters.............................................. 64
------------- -------------------------------------
Section 8.2.3. Exculpatory Provisions............................................................. 64
------------- ----------------------
Section 8.2.4. Agent Entitled to Act as Lender.................................................... 64
------------- -------------------------------
Section 8.3. Representations and Warranties; No Responsibility for Appraisal of Creditworthiness.. 65
----------- -----------------------------------------------------------------------------------
Section 8.4. Right to Indemnity................................................................... 65
----------- --------------------
Section 8.5. Payee of Note Treated as Owner....................................................... 65
----------- --------------------------------
Section 8.6. Resignation by Agent................................................................. 66
----------- ----------------------
Section 8.7. Successor Agent...................................................................... 66
----------- -----------------
ARTICLE 9. MISCELLANEOUS........................................................................... 66
--------- -------------
Section 9.1. Consent to Jurisdiction and Service of Process....................................... 66
----------- ----------------------------------------------
Section 9.2. Rights and Remedies Cumulative....................................................... 67
----------- ------------------------------
Section 9.3. Delay or Omission not Waiver......................................................... 68
----------- ----------------------------
Section 9.4. Waiver of Stay or Extension Laws..................................................... 68
----------- --------------------------------
Section 9.5. Amendments, etc...................................................................... 68
----------- ---------------
Section 9.6. Addresses for Notices, etc........................................................... 69
----------- --------------------------
Section 9.7. Costs, Expenses and Taxes............................................................ 70
----------- -------------------------
Section 9.8. Participations....................................................................... 70
----------- --------------
Section 9.9. Binding Effect; Assignment........................................................... 71
----------- --------------------------
Section 9.10. Actual Knowledge..................................................................... 71
------------ ----------------
Section 9.11. Substitutions and Assignments........................................................ 71
------------ -----------------------------
Section 9.12. Payments Pro Rata.................................................................... 73
------------ -----------------
Section 9.13. Indemnification...................................................................... 74
------------ ---------------
iii
<PAGE>
Section 9.14 Confidential Information........................................................... 75
------------- ------------------------
Section 9.15. Governing Law...................................................................... 76
------------- -------------
Section 9.16. Severability of Provisions......................................................... 76
------------- --------------------------
Section 9.17. Headings........................................................................... 76
------------- --------
Section 9.18. Counterparts....................................................................... 76
------------- ------------
iv
<PAGE>
SCHEDULE OF EXHIBITS
EXHIBIT 1.1 EQUITY INVESTMENTS, OWNERSHIP INTERESTS, SUBSIDIARIES AND
SUBORDINATED DEBT
EXHIBIT 1.2 EQUITY RELATED TRANSACTION DOCUMENTS
EXHIBIT 1.4 FORM OF INTEREST RATE ELECTION
EXHIBIT 1.5 FORM OF REVOLVING CREDIT NOTE
EXHIBIT 1.8 PERMITTED ENCUMBRANCES
EXHIBIT 1.9 PRO RATA SHARES, AGENT'S AND LENDERS' NOTICE ADDRESSES AND
WIRE TRANSFER INSTRUCTIONS
EXHIBIT 1.10 FORM OF REQUEST
EXHIBIT 1.12 PROJECTIONS
EXHIBIT 2.1.0 FORM OF BORROWING BASE CERTIFICATE
EXHIBIT 3.1.1.8 PERMITTED INDEBTEDNESS AND CAPITALIZED LEASES
EXHIBIT 3.1.1.10 FORM OF COMPLIANCE CERTIFICATE
EXHIBIT 4.1.1 FOREIGN QUALIFICATIONS
EXHIBIT 4.1.2 AUTHORIZATIONS
EXHIBIT 4.1.3 CONSENTS
EXHIBIT 4.1.6 LITIGATION
EXHIBIT 4.1.8 ADVERSE AGREEMENTS
EXHIBIT 4.1.9 TAXES
EXHIBIT 4.1.11 REAL PROPERTY
EXHIBIT 4.1.17 GOVERNMENTAL PERMITS
EXHIBIT 4.1.20 COPYRIGHTS
EXHIBIT 4.1.21 HAZARDOUS WASTE
EXHIBIT 4.1.22 MATERIAL CONTRACTS
EXHIBIT 4.1.23 INTELLECTUAL PROPERTY
EXHIBIT 4.1.27 LOCATION OF MATERIAL ASSETS
EXHIBIT 5.2.2 GUARANTIES
EXHIBIT 5.2.13 TRANSACTIONS WITH AFFILIATES
EXHIBIT 9.11.1 FORM OF ASSIGNMENT AND ACCEPTANCE
v
<PAGE>
LOAN AGREEMENT
RAYMOND KARSAN ASSOCIATES, INC., a Pennsylvania corporation with a
principal place of business at 170 South Warner Road, Suite 110, Wayne,
Pennsylvania 19087 (hereinafter the "Borrower"), FLEET NATIONAL BANK, a national
banking association organized under the laws of the United States and having an
office at 100 Federal Street, Boston, Massachusetts 02110 (hereinafter sometimes
the "Agent" as Agent for itself and each of the other Lenders who now and/or
hereafter become parties to this Agreement pursuant to the terms of Section 9.11
------------
hereof (the "Lenders"), sometimes in each of its capacities "Fleet" and
sometimes in its capacity as a Lender, "Lender", and such Lenders, hereby agree
as follows:
ARTICLE 1.
DEFINITIONS AND ACCOUNTING AND OTHER TERMS
Section 1.1. Certain Defined Terms. As used in this Agreement, the
------------ ---------------------
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Adjusted Libor Rate" means, with respect to any Libor Loan to be made by
-------------------
the Lenders for the Interest Period applicable to such Libor Loan, the interest
rate per annum determined by the Agent (fixed throughout such Interest Period
((subject to adjustments for the Libor Rate Reserve Percentage)) and rounded
upwards, if necessary, to the next 1/16 of 1%) which is equal to the quotient of
(i) the rate of interest determined by the Agent to be the average of the
interest rates per annum at which Dollar deposits in immediately available funds
are offered to each Reference Lender by first-class banks in the London
interbank market at approximately 11:00 a.m., London time, two Business Days
prior to the Business Day on which such Interest Period begins, in an amount
approximately equal to the principal amount of such Libor Loan, for a period of
time equal to such Interest Period and (ii) a number equal to the number one
minus the Libor Rate Reserve Percentage. The "Libor Rate Reserve Percentage"
applicable to any Interest Period means the average of the maximum effective
rates (expressed as a decimal) of the statutory reserve requirements (without
duplication, but including, without limitation, basic, supplemental, marginal
and emergency reserves) applicable to each Reference Lender during such Interest
Period under regulations of the Board of Governors of the Federal Reserve System
(or any successor), including without limitation Regulation D or any other
regulation dealing with maximum reserve requirements which are applicable to
each Reference Lender with respect to its "Eurocurrency Liabilities", as that
term may be defined from time to time by the Board of Governors of the Federal
Reserve System (or any successor) or are otherwise imposed by the Board of
Governors of the Federal Reserve System (or any successor) and which in any
other respect relate directly to the funding of loans bearing interest at rates
based on the interest rates at which Dollar deposits in immediately available
funds are offered to banks by first-class banks in the London interbank market.
If any Reference Lender fails to provide its offered quotation to the Agent, the
Adjusted Libor Rate shall be determined on the basis of the offered quotation of
the other Reference Lender. The Adjusted Libor Rate shall be adjusted
automatically on and as of the effective date of any change in the Libor Rate
Reserve Percentage.
<PAGE>
"Advance" and "Advances" means the funding by any Lender of all or a
------- --------
portion of the Loans in accordance with this Agreement.
"Affiliate" means singly and collectively, the New Stockholders and any
---------
Person (other than a Subsidiary) which, directly or indirectly, is in control
of, is controlled by, or is under common control with, the Borrower. For
purposes of this definition, a Person shall be deemed to be "controlled by"
another Person and "control" shall be deemed to exist if the latter Person
possesses, directly or indirectly, power either to (i) vote 10% or more of the
securities having ordinary voting power for the election of directors of such
Person or (ii) direct or cause the direction of the management and policies of
such Person whether by contract or otherwise, and the legal representative,
successor or assign of any such Person.
"Agent" means Fleet or any other Person which is at the time in question
-----
serving as the agent under the terms of Article 8 hereof and the other Financing
Documents.
"Agreement" means this loan agreement, as the same may from time to time be
---------
amended.
"A.M." means a time from and including 12 o'clock midnight to and excluding
----
12 o'clock noon on any Business Day using Eastern Standard (Daylight Savings)
time.
"Applicable Margin" means for the period commencing on the Closing Date and
-----------------
ending on the fifth Business Day after the Agent's receipt of the quarterly
financial statements for the Borrower's June 30, 2001 fiscal quarter pursuant to
Section 5.3.3, a per annum percentage equal to the percentages specified for
-------------
Level III below, and thereafter as of any date, so long as no Event of Default
exists and subject to the next-to-last sentence of this definition, the
applicable per annum percentage set forth below; provided that if any Event of
Default exists the applicable per annum percentage shall be that specified for
Level III.
------------------------------------------------------------------------
Level Total Funded Debt Effective LIBOR Unused
to EBITDA Prime Margin Fee
Margin
------------------------------------------------------------------------
I *1.0 0% 2.0% .30%
II **1.0 & *2.0 .50% 2.50% .40%
III ***2.0 1.00% 3.00% .50%
_____________
* less than sign
** greater than or equal to sign
*** greater than sign
Any change in the Applicable Margin required pursuant to the foregoing
shall become effective on the fifth Business Day after the Agent receives the
Borrower's financial statement for the Borrower's fiscal quarter or year-end, as
the case may be, in question; provided, however, that each of the above-
referenced interest rates or Unused Fees shall remain in effect only so long as
Borrower qualifies therefor and provided further, however, that interest rate
and Unused Fee reductions shall become final only on the basis of Borrower's
annual audited financial statements and in the event that such annual audited
financial statements establish that the Borrower was not entitled to a rate
reduction which was previously granted, the Borrower shall, upon written demand
by the Agent, repay to the Agent for the account of each Lender an amount equal
to the excess of interest or Unused Fee at the rate which should have been
charged based
2
<PAGE>
on such annual audited financial statements and the rate actually charged on the
basis of Borrower's quarterly financial statement(s) (provided that in the event
of a dispute as to the appropriate fiscal quarter as to which any adjustment
should be allocated, the decision of the independent accountants of the Borrower
shall be made in accordance with GAAP and shall be binding upon the Agent, the
Lenders and the Borrower absent manifest error); and provided further, however,
that in the event that Borrower fails to provide any financial statement on a
timely basis in accordance with Section 5.3.2 or 5.3.3, any interest rate
------------- -----
increase payable as a result thereof shall be retroactively effective to the
date on which the financial statement in question should have been received by
the Agent in accordance with Section 5.3.2 or 5.3.3, and the Borrower shall pay
------------- -----
any amount due as a result thereof upon written demand from the Agent. The Agent
shall send the Borrower written acknowledgment of each change in the Applicable
Margin in accordance with the Agent's customary procedures as in effect from
time to time, but the failure to send such acknowledgment shall have no effect
on the effectiveness or applicability of the foregoing provisions of this
definition or Borrower's obligations with respect to payment and calculation of
interest on the Loans.
"Authorized Representative" means such senior personnel of the Borrower as
-------------------------
shall be duly authorized and designated in writing by the Borrower to execute
documents, instruments and agreements on its behalf and to perform the functions
of Authorized Representative under any of the Financing Documents.
"Borrowed Money" means any obligation to repay funded Indebtedness, any
--------------
Indebtedness evidenced by the Financing Documents, notes, bonds, debentures,
guaranties or similar obligations including without limitation the Loans and any
obligation to pay money under a conditional sale or other title retention
agreement, the net aggregate rentals payable under any Capitalized Lease
Obligation, Deferred Taxes, any Letter of Credit, any reimbursement obligation
for any Letter of Credit and any obligations in respect of banker's and other
acceptances or similar obligations.
"Borrower" has the meaning assigned in the first paragraph of this
--------
Agreement.
"Borrowing Base" means an amount equal to the sum of: (a) eighty percent
--------------
(80%) of the Net Outstanding Amount of Eligible Receivables and (b) the lesser
of (i) $3,000,000 and (ii) the product of EBITDA for the most recent Borrower
fiscal quarter and the three immediately preceding Borrower fiscal quarters
multiplied by 2.5; provided that the amount under this clause (ii) for
Borrower's fiscal quarter ending September 30, 1999, shall be EBITDA for such
Borrower fiscal quarter and the two immediately preceding Borrower fiscal
quarters multiplied by 1.3 and that product shall be multiplied by 2.5.
"Budget" has the meaning assigned to such term in Section 5.3.7.
------ ------- -----
"Business Condition" means the financial condition, business, assets,
------------------
liabilities and operations of a Person.
"Business Day" means (i) for all purposes other than as covered by clause
------------
(ii) below, any day on which banks in Boston, Massachusetts, Philadelphia,
Pennsylvania or New York, New York are not authorized or required by applicable
law to close; and (ii) with respect to all notices
3
<PAGE>
and determinations in connection with, and payments of principal and interest
on, Libor Loans, any day which is a Business Day described in clause (i) and
which is also a day for trading by and between banks in Dollar deposits in the
London interbank market.
"Capital Expenditures" means all expenditures paid or incurred by the
--------------------
Borrower or any Subsidiary in respect of (i) the acquisition, construction,
improvement or replacement of land, buildings, machinery, equipment, any other
fixed assets or leaseholds and (ii) to the extent related to and not included in
(i) above, materials, contract labor and direct labor, which expenditures have
been or should be, in accordance with GAAP, capitalized on the books of the
Borrower or such Subsidiary. Where a fixed asset is acquired by a lease which
is required to be capitalized pursuant to Statement of Financial Accounting
Standards number 13 or any successor thereto, the amount required to be
capitalized in accordance therewith shall be considered to be an expenditure in
the year such asset is first leased.
"Capitalized Lease Obligations" means all lease obligations which have been
-----------------------------
or should be, in accordance with GAAP, capitalized on the books of the lessee.
"Capitalized Software Development Costs" means the Borrower's and any
--------------------------------------
Subsidiaries' costs of software and web site development which are capitalized
on the financial statements and books and records of the Person incurring such
costs.
"Cash Equivalent Investments" means any Investment in (i) direct
---------------------------
obligations of the United States or any agency, authority or instrumentality
thereof, or obligations guaranteed by the United States or any agency, authority
or instrumentality thereof, whether or not supported by the full faith and
credit of, a right to borrow from or the ability to be purchased by the United
States; (ii) commercial paper rated in the highest grade by a nationally
recognized statistical rating agency or which, if not rated, is issued or
guaranteed by any issuer with outstanding long-term debt rated A or better by
any nationally recognized statistical rating agency; (iii) demand and time
deposits with, and certificates of deposit and bankers acceptances issued by,
any office of the Agent, any Lender or any other bank or trust company which is
organized under the laws of the United States or any state thereof and has
capital, surplus and undivided profits aggregating at least $500,000,000, the
outstanding long-term debt of which or of the holding company of which it is a
subsidiary is rated A or better by any nationally recognized statistical rating
agency; (iv) any short-term note which has a rating of MIG-2 or better by
Moody's Investors Service Inc. or a comparable rating from any other nationally
recognized statistical rating agency; (v) any municipal bond or other
governmental obligation (including without limitation any industrial revenue
bond or project note) which is rated A or better by any nationally recognized
statistical rating agency; (vi) any other obligation of any issuer, the
outstanding long-term debt of which is rated A or better by any nationally
recognized statistical rating agency; (vii) any repurchase agreement with any
financial institution described in clause (iii) above, relating to any of the
foregoing instruments and fully collateralized by such instruments; (viii)
shares of any open-end diversified investment company that has its assets
invested only in investments of the types described in clause (i) through (vii)
above at the time of purchase and which maintains a constant net asset value per
share; and (ix) shares of any open-end diversified investment company registered
under the Investment Company Act of 1940, as amended, which maintains a constant
net asset value per share in accordance with regulations of the Securities &
Exchange Commission, has aggregate net assets of not less than
4
<PAGE>
$50,000,000 on the date of purchase and either derives at least 95% of its gross
income from interest on or gains from the sale of investments of the type
described in clauses (i) through (vii), above or has at least 85% of the
weighted average value of its assets invested in investments of such types;
provided that the purchase of any shares in any particular investment company
shall be limited to an aggregate amount owned at any one time of $500,000. Each
Cash Equivalent Investment shall have a maturity of less than one year at the
time of purchase; provided that the maturity of any repurchase agreement shall
be deemed to be the repurchase date and not the maturity of the subject security
and that the maturity of any variable or floating rate note subject to
prepayment at the option of the holder shall be the period remaining (including
any notice period remaining) before the holder is entitled to prepayment.
"Change of Control" means, (a) at any time the Parent ceases to own 100% of
-----------------
the Borrower, (b) at any time prior to the completion of an initial public
offering including a Qualified Initial Public Offering, any one of the following
events: (i) any change in the ownership of the Parent such that the New
Stockholders, Senior Executives and Karsan in the aggregate own less than 50.1%
of the equity interests in the Parent or (ii) any decrease in any of the voting
rights in the Parent now held by the New Stockholders, Senior Executives and
Karsan such that they cease to collectively hold 50.1% or more of the voting
rights in the Parent, and (c) after completion of an initial public offering of
capital stock of the Parent including a Qualified Initial Public Offering, any
one of the following events:
(i) any "person" or "group" (each as used in Sections 13(d)(3) and
14(d)(2) of the Securities Exchange Act of 1934, as amended from time to time)
either (A) becomes the "beneficial owner" (as defined in Rule 13d-3 of the
Exchange Act), directly or indirectly, of voting capital stock of the Parent (or
securities convertible into or exchangeable for such voting capital stock)
representing 20% or more of the combined voting power of all voting capital
stock of the Parent (on a fully diluted basis) or (B) otherwise has the ability,
directly or indirectly, to elect a majority of the board of directors of the
Parent; or
(ii) during any period of up to 24 consecutive months, commencing on the
Closing Date, individuals who at the beginning of such 24-month period were
directors of the Parent shall cease for any reason (other than (A) the death,
disability or retirement of a director or (B) the death, disability or
retirement of an officer of the Parent that is serving as a director at such
time so long as another officer of the Parent replaces such Person as a
director) to constitute a majority of the board of directors of the Parent; or
(iii) any Person or two or more Persons acting in concert shall have
acquired by contract or otherwise, or shall have entered into a contract or
arrangement that, upon consummation thereof, will result in its or their
acquisition of the power to exercise, directly or indirectly, a controlling
influence on the management or policies of the Parent.
"Closing Date" means the date on which all of the conditions precedent set
------------
forth in Section 3.1 of this Agreement have been satisfied and the initial
-----------
advance of the Loan is funded in accordance with this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
----
time.
5
<PAGE>
"Commitment" means Revolving Credit Loan Commitment.
----------
"Commonly Controlled Entity" means a Person, whether or not incorporated,
--------------------------
which is under common control with the Borrower within the meaning of section
414(b) or (c) of the Code.
"Debt Service Coverage Ratio" means the ratio of (i) EBITDA minus all
----------------------------- -----
Capital Expenditures and paid during each Borrower fiscal quarter during the
period in question, and taxes paid and taxes unpaid but payable during each
Borrower fiscal quarter during the period in question to (ii) Total Debt
Service.
"Default" means an event or condition which with the giving of notice or
-------
lapse of time or both would become an Event of Default.
"Deferred Taxes" means the income taxes payable by the Borrower and
----------------
incurred on account of Borrower's December 17, 1999 required change from cash
basis accounting for tax purposes to accrual basis accounting for tax purposes.
"Discharged Rights and Obligations" shall have the meaning assigned to such
---------------------------------
term in Section 9.11.4.
--------------
"Dollars" and the sign "$" mean lawful money of the United States of
-------
America.
"EBITDA" means, for any fiscal period, Net Income plus, to the extent
------ ----
accounted for in Net Income, (i) Interest Expense, (ii) taxes, (iii)
depreciation, (iv) amortization, (v) without duplication, other noncash charges
and non-recurring extraordinary costs incurred by the Borrower and any
Subsidiaries prior to December 31, 1999 in connection with closing of the Loans,
the Related Transactions and discontinued operations, (vi) without duplication,
other non-cash charges and non-recurring extraordinary costs incurred by the
Borrower in connection with closing Permitted Acquisitions, (vii) an amount of
reasonable cash charges and cash non-recurring extraordinary costs incurred by
the Borrower in connection with closing each Permitted Acquisition and which is
acceptable to the Agent, and (viii) other pro forma reductions of expenses on
the income statements of a Person acquired in a Permitted Acquisition relating
to excess compensation and related items which is acceptable to the Agent, less,
----
to the extent accounted for in Net Income, (ix) Capitalized Software Development
Costs, (x) pro forma increases of expenses on the income statements of a Person
acquired in a Permitted Acquisition as may be reasonably advisable to comply
with sound business and investment practices and which are acceptable to the
Agent, and (xi) Permitted Acquisition earn out and other post-closing purchase
price payments for such period, all determined on an accrual and consolidated
basis in accordance with GAAP and all for the Borrower fiscal quarter in
question and the immediately preceding three Borrower fiscal quarters. If the
period in question includes a Borrower fiscal quarter in which a Permitted
Acquisition occurred, EBITDA shall be calculated on a Pro Forma Basis for the
Borrower fiscal quarters included in such period through the Borrower fiscal
quarter in which the Permitted Acquisition occurred.
"Effective Prime" means the Prime Rate plus the Applicable Margin for Prime
---------------
Rate Loans.
6
<PAGE>
"Eligible Receivables" means accounts receivable of the Borrower evidencing
--------------------
Indebtedness of Persons to the Borrower for goods actually sold and delivered or
services actually performed in the ordinary course of business by the Borrower
to or for such Person, as to which goods or services no written notice has been
received by Borrower from such Person that alleges a breach by the Borrower of
its obligation to deliver such goods and/or services and which accounts
receivable have been outstanding for less than ninety (90) days since their
respective invoicing dates, but excluding, however, (i) accounts receivable
owing by officers, directors, shareholders or employees of Borrower, (ii)
accounts receivable with respect to which goods are placed on consignment,
guaranteed sale, "bill and hold" or other terms by reason of which the payment
by the account debtor may be conditional, (iii) accounts receivable owing by the
United States or any agency, department or instrumentality thereof unless such
accounts are freely assignable to the Agent under the United States Assignment
of Claims Act and the Borrower has separately assigned each such account to the
Agent in compliance with such Act, (iv) accounts receivable owing by any
Subsidiary or Affiliate (other than Parthenon Investors, L.P. so long as
accounts receivable owing by said Affiliate constitute less than 5% of
Borrower's accounts receivable of Borrower, (v) accounts receivable with respect
to which Borrower or any Subsidiary or Affiliate (other than Parthenon
Investors, L.P. so long as accounts receivable owing by said Affiliate
constitute less than 5% of Borrower's accounts receivable is liable to the
account debtor for goods sold or services provided to Borrower or any Subsidiary
or Affiliate (other than, to the extent excepted above, Parthenon Investors
L.P.'s) by such account debtor to the extent of Borrower's or any Subsidiary's
or Affiliate's liability to such account debtor, (vi) accounts receivable which
are due and payable to Borrower from an account debtor located outside the
United States of America unless the Agent shall have, in its sole discretion,
specifically approved such receivable, (vii) any accounts receivable as to which
the account debtor has claimed in writing any setoff or any dispute as to the
amount owing by the account debtor to the extent of the amount in dispute,
(viii) any accounts receivable subject to any Lien other than pursuant to the
Security Documents, (ix) any accounts receivable owing by any Person which is
insolvent and/or the subject of any bankruptcy, receivership or other insolvency
proceeding, (x) accounts receivable owing by a Person, 20% or more of whose
accounts receivable owing to the Borrower have been outstanding for ninety (90)
days or more, and (xi) any accounts receivable deemed by the Agent in the
Agent's sole discretion exercised in good faith difficult to collect or
uncollectible.
"Environmental Law" shall mean any statute, ordinance, code, law, or
-----------------
regulation or any other requirement enacted or adopted by any Governmental
Authority relating to pollution or protection of public health, safety or
welfare or the environment, including without limitation (i) those relating to
emissions, discharges, releases or threatened releases of Hazardous Materials
into the environment (including ambient air, surface water, ground water or
land), or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials and
(ii) the Clean Air Act, 42 U.S.C. Section 2001, et seq., the Federal Water
-- ----
Pollution Control Act, 33 U.S.C. Section 1247, et seq., the Resource
-- ---
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., the
-- ---
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Section 9601, et seq., the Toxic Substance Control Act, 42 U.S.C. Section
-- ---
2501, et seq., and any state law counterparts, including the law of nuisance and
-- ---
strict liability.
7
<PAGE>
"Equity" means the Investments in Dollars by the New Stockholders in the
------
Parent and by the Parent in the Borrower, made on or prior to the date of this
Agreement in the aggregate amount of not less than $22,000,000 as set forth in
Exhibit 1.1.
-----------
"Equity Documents" means, collectively, all documents entered into by the
----------------
Parent, the Borrower, the Old Stockholders and/or any of the New Stockholders in
connection with the investment of the Equity.
"ERISA" means the Employee Retirement Income Security Act of 1974 as
-----
amended from time to time.
"Events of Default" has the meaning assigned to that term in Section 6.1 of
----------------- -----------
this Agreement.
"Exhibit" means, when followed by a letter, the exhibit attached to this
-------
Agreement bearing that letter and by such reference fully incorporated in this
Agreement.
"Facility Fee" means, the closing fee payable by the Borrower in accordance
------------
with Section 2.2.2 and the Fee Letter.
-------------
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upward, if necessary, to the nearest 1/16th of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York, provided that (i) if such day is not a
--------
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next succeeding Business Day as so published, and (ii) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate quoted to the Agent on such
day on such transactions as determined by the Agent in its discretion exercised
in good faith.
"Fee Letter" means that certain fee letter dated as of December 14, 1999
----------
between the Borrower and the Agent regarding certain fees payable by the
Borrower.
"Financing Documents" means, collectively, this Agreement, each Note, the
-------------------
Security Documents, the Fee Letter, the Post-Closing Letter, any Letter of
Credit, any Letter of Credit Agreement, any agreement with any Lender providing
any interest rate protection arrangement and each other agreement, instrument or
document now or hereafter executed in connection herewith or therewith.
"GAAP" means generally accepted accounting principles in effect from time
----
to time in the United States of America.
"Governmental Authority" means the United States of America, any state,
----------------------
commonwealth, territory, or possession thereof, and any political subdivision or
quasigovernmental authority of any of the same, including any court, tribunal,
department, bureau, commission or board.
8
<PAGE>
"Hazardous Material" shall mean any substance or material defined or
------------------
designated as a hazardous or toxic waste, hazardous or toxic material, hazardous
or toxic substance, or other similar term, by any Environmental Law.
"Indebtedness" means, as to any Person and whether recourse is secured by
------------
or is otherwise available against all or only a portion of the assets of such
Person and whether or not contingent, but without duplication:
(i) every obligation of such Person for Borrowed Money.
(ii) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (including without
limitation securities repurchase agreements and any earn-outs or similar
obligations with respect to Permitted Acquisitions, but excluding trade
accounts payable or accrued liabilities arising in the ordinary course of
business which are not overdue or which are being contested in good faith);
(iii) every obligation of such Person under any synthetic lease,
being treated as an operating lease under GAAP and as a loan or financing
for United States income tax purposes;
(iv) all sales by such Person of (A) accounts or general intangibles
for money due or to become due, (B) chattel paper, instruments or documents
creating or evidencing a right to payment of money or (C) other receivables
(collectively "receivables"), whether pursuant to a purchase facility or
otherwise, other than in connection with the disposition of the business
operations of such Person relating thereto or a disposition of defaulted
receivables for collection and not as a financing arrangement, and together
with any obligation of such Person to pay any discount, interest, fees,
indemnities, penalties, recourse, expenses or other amounts in connection
therewith;
(v) every obligation of such Person (an "equity related purchase
obligation") to purchase, redeem, retire or otherwise acquire for value any
shares of capital stock of any class issued by such Person, any warrants,
options or other rights to acquire any such shares, or any rights measured
by the value of such shares, warrants, options or other rights; provided
that until exercised the put possessed by Parthenon Capital, L.P. pursuant
to that certain Investor Put Agreement dated as of December 16, 1999 shall
not be deemed an equity related purchase obligation;
(vi) every obligation of such Person under any forward contract,
futures contract, swap, option or other financing agreement or arrangement
(including, without limitation, caps, floors, collars and similar
agreements), the value of which is dependent upon interest rates, currency
exchange rates, commodities or other indices (a "derivative contract");
(vii) every obligation in respect of Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to
the extent that such Person is liable therefor as a result of such Person's
ownership interest in or other relationship
9
<PAGE>
with such entity, except to the extent that the terms of such Indebtedness
provide that such Person is not liable therefor;
(viii) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guarantying or otherwise
acting as surety for, any obligation of a type described in any of clauses
(i) through (vii) (the "primary obligation") of another Person (the
"primary obligor"), in any manner, whether directly or indirectly, and
including, without limitation, any obligation of such Person (A) to
purchase or pay (or advance or supply funds for the purchase of) any
security for the payment of such primary obligation, or (B) to purchase
property, securities or services for the purpose of assuring the payment of
such primary obligation, or (C) to maintain working capital, equity capital
or other financial statement condition or liquidity of the primary obligor
so as to enable the primary obligor to pay such primary obligation; and
(ix) the Deferred Taxes.
The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (u) any Indebtedness, issued at a price that is
less than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with GAAP, (v) any
Capitalized Lease shall be the principal component of the aggregate of the
rentals obligation under such Capitalized Lease payable over the term thereof
that is not subject to termination by the lessee, (w) any sale of receivables
shall be the amount of unrecovered capital or principal investment of the
purchaser (other than the Borrower or any of its wholly-owned Subsidiaries)
thereof, excluding amounts representative of yield or interest earned on such
investment, (x) any synthetic lease shall be the stipulated loss value,
termination value or other equivalent amount, (y) any derivative contract shall
be the maximum amount of any termination or loss payment required to be paid by
such Person if such derivative contract were, at the time of determination, to
be terminated by reason of any event of default or early termination event
thereunder, whether or not such event of default or early termination event has
in fact occurred and (z) any equity related purchase obligation shall be the
maximum fixed redemption or purchase price thereof inclusive of any accrued and
unpaid dividends to be comprised in such redemption or purchase price.
"Ineligible Securities" means Securities which may not be underwritten or
---------------------
dealt in by member banks of the Federal Reserve System under Section 16 of the
Banking Act of 1993 (12 U.S.C. (S)24, Seventh), as amended.
"Interest Adjustment Date" means (i) as to any Prime Rate Loan to be
------------------------
converted to a Libor Loan the Business Day elected by the Borrower in its
applicable Interest Rate Election, but being not less than three (3) Business
Days after the receipt by the Agent before 12:00 o'clock P.M. on a Business Day
of an Interest Rate Election electing the Libor Rate as the interest rate on
such Loan; and (ii) as to any Libor Loan, the last Business Day of the Interest
Period pertaining to such Libor Loan.
"Interest Expense" means,(a) with respect to any fiscal quarter commencing
----------------
with the Borrower fiscal quarter ending December 31, 2000, the aggregate amount
required to be accrued by the Borrower and any Subsidiaries in such fiscal
quarter for interest, fees (excluding,
10
<PAGE>
however, the Facility Fee being paid to the Agent for the account of Fleet on
the Closing Date), charges and expenses, however characterized, on its
Indebtedness, including, without limitation, all such interest, fees, charges
and expenses required to be accrued with respect to Indebtedness under the
Financing Documents, and (b) with respect to the Borrower fiscal quarter ending
December 31, 1999 the sum of the following amounts all determined as of December
31, 1999 (i) the product of the outstanding principal balance of the Loans times
the Prime Rate plus 1%; (ii) the product of the outstanding amount of
Capitalized Leases times 10%; (iii) the product of the total amount of the
seller's notes listed on Exhibit 3.1.1.8 as carried on Borrower's books times
---------------
the effective yield on such notes and (iv) the product of the total amount of
the terminated employee notes listed on Exhibit 3.1.1.8 as carried on Borrower's
---------------
books excluding the note payable to Barry Raymond times the effective yield on
such notes, (c) with respect to the Borrower fiscal quarter ending March 31,
2000 the product of the amount of interest expense defined in clause (a) hereof
for such Borrower fiscal quarter times 4, (d) for the Borrower fiscal quarter
ending June 30, 2000 the product of the amount of interest expense defined in
clause (a) hereof for such Borrower fiscal quarter and the Borrower fiscal
quarter ending March 31, 2000 times 2 and (e) with respect to the Borrower
fiscal quarter ending September 30, 2000 the product of the amount of interest
expense defined in clause (a) hereof for such Borrower fiscal quarter and the
Borrower fiscal quarters ending March 31, 2000 and June 30, 2000 times 1.3, all
of the foregoing being determined in accordance with GAAP. If the period in
question includes a Borrower fiscal quarter in which a Permitted Acquisition
occurred, Interest Expense shall be calculated on a Pro Forma Basis for the
Borrower fiscal quarters included in such period through the Borrower fiscal
quarter in which the Permitted Acquisition occurred.
"Interest Period" means:
---------------
With respect to each Libor Loan:
(i) initially, the period commencing on the date of such Libor Loan
and ending one, two, three, six or such greater number of months
thereafter as may be acceptable to all of the Lenders and as the Borrower
may elect in the applicable Interest Rate Election and subject to Section
-------
2.9; and
---
(ii) thereafter, each period commencing on the last day of the
immediately preceding Interest Period applicable to such Libor Loan and
ending one, two, three, six or such greater number of months thereafter as
may be acceptable to all of the Lenders and as the Borrower may elect in
the applicable Interest Rate Election and subject to Section 2.9;
-----------
provided that clauses (i) and (ii) of this definition are subject to the
-------- ----
following:
(A) any Interest Period (other than an Interest Period determined pursuant
to clause (C) below) which would otherwise end on a day which is not a Business
Day shall be extended to the next succeeding Business Day unless such Business
Day falls in another calendar month, in which case such Interest Period shall
end on the immediately preceding Business Day;
(B) any Interest Period which 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
11
<PAGE>
such Interest Period) shall, subject to clause (C) below, end on the last
Business Day of a calendar month; and
(C) no Interest Period shall end after the Revolving Credit Repayment
Date; and
(D) with respect to all Libor Loans, no more than six (6) Interest Periods
may be in effect at any time.
"Interest Rate Election" means the Borrower's irrevocable telecopied or
----------------------
telephonic notice of election, which shall be promptly confirmed by a written
notice of election that Effective Prime or the Libor Rate shall apply to all or
any portion of the Loans, which shall, subject to this Agreement, be effective
on the next Interest Adjustment Date, such telecopied or telephonic notice and
written confirmation thereof to be in the form of Exhibit 1.4 and to be received
-----------
by the Agent prior to 12:00 o'clock P.M. on a Business Day and at least three
(3) Business Days prior to an Interest Adjustment Date in the case of a Libor
Loan, and by 12:00 p.m. on an Interest Adjustment Date in the case of a Prime
Rate Loan (or four (4) Business Days in the case of an Interest Rate Election as
to which the consent of the Lenders is required), each such Interest Rate
Election, subject to the terms of this Agreement to apply to the Advance or the
Loan referred to in such Interest Rate Election or to effect a change in the
interest rate on the applicable portion of the Loans then outstanding, as
applicable, with respect to which such Interest Rate Election was made, such
change to occur on the Interest Adjustment Date next succeeding receipt of such
Interest Rate Election by the Agent. Any Interest Rate Election received by the
Agent after 12 o'clock P.M. on a Business Day shall be deemed, for all purposes
of this Agreement to have been received prior to 12 o'clock P.M. on the next
succeeding Business Day.
"Investment" means any investment in any Person whether by means of a
----------
purchase of capital stock, notes, bonds, debentures or other evidences of
Indebtedness and/or by means of a capital or partnership contribution, loan,
deposit, advance or other means, excluding amounts due from customers for
services or products delivered or sold in the ordinary course of business.
"Karsan" means Noorudin Karsan, of Bryn Mawr, Pennsylvania.
------
"Lender" means Fleet, or any financial institution which hereafter becomes
------
a party hereto pursuant to the terms of Section 9.11, each in their individual
------------
capacity, and "Lenders" means Fleet and each of such financial institutions.
"Letter of Credit" means an irrevocable stand-by or commercial letter of
----------------
credit issued by the Agent for the account of the Borrower pursuant to a Letter
of Credit Agreement subject to and in accordance with this Agreement.
"Letter of Credit Agreement" means an application and agreement for stand-
--------------------------
by or commercial letter of credit in such form as may at any time be customarily
required by the Agent for its issuance of stand-by or commercial letters of
credit.
"Libor Loan" means any portion of any Loan bearing interest at the Libor
----------
Rate.
12
<PAGE>
"Libor Rate" means, for any Interest Period, the Adjusted Libor Rate in
----------
effect on the first day of such Interest Period (subject to adjustment as
provided in the definition of Adjusted Libor Rate) plus the Applicable Margin
for Libor Loans from time to time in effect.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other) or other security agreement
or preferential arrangement of any kind or nature whatsoever (including without
limitation any conditional sale or other title retention agreement and any
Capitalized Lease Obligation) having substantially the same economic effect as
any of the foregoing and the filing of any financing statement under the
applicable Uniform Commercial Code or comparable law of any jurisdiction in
respect of any of the foregoing.
"Loans" and "Loan" means at any time the outstanding principal amount of
----- ----
Indebtedness owed to the Lenders or to any Lender, as the context may require
pursuant to this Agreement.
"Majority Lenders" means Lenders holding an aggregate Pro Rata Share of the
----------------
outstanding principal balance of the Loans in an amount equal to or in excess of
50.1% of the total outstanding principal balance of the Loans and if there is no
outstanding principal balance of the Loans, Lenders having at least 50.1% of the
Commitment.
"Material Adverse Effect" means material adverse effect on (i) the ability
-----------------------
of the Borrower and any Subsidiaries taken as a whole to fulfill their
obligations under any of the Financing Documents or (ii) the Business Condition
of the Borrower and any Subsidiaries taken as a whole.
"Multiemployer Plan" means a multiemployer plan as defined in Section
------------------
4001(a)(3) of ERISA.
"Net Income" means, for any fiscal period, the net after tax income (loss)
----------
of the Borrower and any Subsidiaries for such period determined on an accrual
and consolidated basis in accordance with GAAP.
"Net Outstanding Amount of Eligible Receivables" means the net amount of
----------------------------------------------
Eligible Receivables outstanding after eliminating from the aggregate amount of
outstanding Eligible Receivables all payments, adjustments and credits
applicable thereto.
"New Stockholders" means the entities listed under the heading "New
----------------
Stockholders" on Exhibit 1.1.
-----------
"Note" means any promissory note of the Borrower payable to the order of a
----
Lender and substantially in the form of Exhibit 1.5 and evidencing all or a
-------- ---
portion of the Loan and "Notes" means all of the Notes, collectively.
"Obligations" mean any and all Indebtedness, obligations and liabilities of
-----------
the Parent, the Borrower and/or any Subsidiaries under any of the Financing
Documents to any one or more of the Lenders and/or the Agent of every kind and
description, absolute or contingent, due or to become due, whether for payment
or performance, now existing or hereafter arising, including, without
limitation, all Loans, interest, taxes, fees, charges, and expenses under the
Financing
13
<PAGE>
Documents and attorneys' fees chargeable to the Parent, the Borrower and/or any
Subsidiaries or incurred by any of the Lenders and/or the Agent under any of the
Financing Documents.
"Officer's Certificate" means a certificate signed by an Authorized
---------------------
Representative and delivered to the Agent on behalf of the Lenders.
"Old Stockholders" means the stockholders of the Parent immediately prior
----------------
to the New Stockholders becoming Stockholders of the Parent.
"Parent" means Raymond Karsan Holdings, Inc., a Pennsylvania corporation.
--------
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant
----
to subtitle A of Title IV of ERISA.
"P.M." means a time from and including 12 o'clock noon on any Business Day
----
to the end of such Business Day using Eastern Standard (Daylight Savings) time.
"Permitted Acquisition" has the meaning assigned to such term in Section
--------------------- -------
5.2.3.
-----
"Permitted Encumbrances" means each Lien granted pursuant to any of the
----------------------
Security Documents, those Liens, security interests and defects in title
permitted under Section 5.2.1 and those Liens listed on Exhibit 1.8.
------------- -----------
"Person" means an individual, corporation, partnership, limited liability
------
company, joint venture, trust, or unincorporated organization, or a government
or any agency or political subdivision thereof.
"Plan" means an employee benefit plan as defined in Section 3(3) of ERISA
----
maintained for employees of the Borrower or any Commonly Controlled Entity.
"Post-Closing Letter" means that certain letter agreement between the
-------------------
Borrower and the Agent dated the Closing Date and listing certain post-closing
actions to be completed by the Borrower.
"Premises" has the meaning assigned to such term in Section 4.1.21.1.
-------- ----------------
"Prime Rate" means the higher of (i) the floating rate of interest per
----------
annum designated from time to time by the Agent as being its "prime rate" of
interest, such interest rate to be adjusted on the effective date of any change
thereof by the Agent, it being understood that such rate of interest may not be
the lowest rate of interest from time to time charged by the Agent and (ii) the
Federal Funds Rate plus one-half percent (.50%), such interest rate to be
adjusted on the effective date of any change thereof by the Federal Reserve Bank
of New York.
"Prime Rate Loan(s)" means any portion of the Loans bearing interest at
------------------
Effective Prime.
"Pro Forma Basis" means a basis for making accounting calculations
---------------
following a Permitted Acquisition, in which Indebtedness for Borrowed Money (or,
in the case of Interest
14
<PAGE>
Expense, all Indebtedness) and EBITDA for the fiscal quarter immediately
preceding the fiscal quarter in which such Permitted Acquisition occurred and
each of the immediately preceding three Borrower fiscal quarters are calculated
taking into account the audited historical financial results of the Person so
acquired (or, to the extent such financial results are unaudited, such unaudited
results shall have been prepared in a manner which is reasonably acceptable to
the Agent) and the Borrower and its Subsidiaries for the Borrower fiscal quarter
immediately preceding the Borrower fiscal quarter in which the Permitted
Acquisition occurred and the immediately preceding three Borrower fiscal
quarters after giving effect on a pro forma basis to such Permitted Acquisition
and assuming that such Permitted Acquisition had been consummated at the
beginning of such four Borrower fiscal quarter period in the manner described in
(i), (ii) and (iii) below:
(i) all Indebtedness (whether under this Agreement or otherwise) and
any other balance sheet adjustments incurred or made in connection with the
Permitted Acquisition shall be deemed to have been incurred or made on the
first day of such four Borrower fiscal quarter period, and all Indebtedness
of the Person acquired or to be acquired in such Permitted Acquisition
which was or will have been repaid in connection with the consummation of
the Permitted Acquisition shall be deemed to have been repaid concurrently
with the date on which the incurrence of the Indebtedness is deemed to have
been incurred in connection with the Permitted Acquisition as set forth
above;
(ii) all Indebtedness assumed to have been incurred pursuant to
preceding clause (i) shall be deemed to have borne interest at the sum of
(a) the arithmetic mean of (x) the Libor Rate for Libor Loans having an
Interest Period of one month in effect on the first day of such four
Borrower fiscal-quarter period and (y) the Libor Rate for Libor Loans
having an Interest Period of one month in effect on the last day of such
four Borrower fiscal quarter period plus (b) the Applicable Margin for
----
Revolving Credit Loans then in effect (after giving effect to the Permitted
Acquisition on a pro forma basis); and
(iii) other reasonable cost savings, expenses and other income
statement or operating statement adjustments which are attributable to the
change in ownership and/or management resulting from such Permitted
Acquisition as may be approved by the Agent in writing in the Agent's
discretion shall be deemed to have been realized on the first day of such
four Borrower fiscal-quarter period.
"Projections" means the Borrower's written projections of Borrower's 4-year
-----------
future performance on a consolidated basis delivered to the Agent prior to the
Closing and attached to this Agreement as Exhibit 1.12.
------------
"Pro Rata Share" means (i) with respect to the Commitment, each Lender's
--------------
percentage share of the Commitment as set forth immediately opposite such
Lender's name on Exhibit 1.9, and (ii) with respect to the Loans, each Lender's
-----------
percentage share of the aggregate outstanding principal balance of the Loans and
"Pro Rata Shares" means such percentage shares of the Lenders.
15
<PAGE>
"Qualified Initial Public Offering" means the Parent, the Borrower and/or
---------------------------------
any Subsidiary filing a Form S-1 or any other form of registration statement
then available for registration with the Securities and Exchange Commission or
otherwise conducting an initial public offering of any class of the Parent's,
the Borrower's or any Subsidiary's securities, which such offering generates
$30,000,000 or more in net proceeds and results in a price per share of $5.00
or more (subject to adjustment for stock splits, stock dividends,
recapitalizations and the like).
"Reference Lender(s)" means the Agent unless the Agent resigns said
-------------------
responsibility, at which time and thereafter such term means one or two Lenders
selected by the Agent in its discretion from time to time as a reference lender
for purposes of determining the Adjusted Libor Rate.
"Related Funds" means, with respect to any Lender which is a fund that
-------------
invests in loans, any other fund that invests in loans and is managed by the
same investment advisor as such Lender or by an affiliate of such Lender.
"Related Transactions" means the Parent's and the Borrower's receipt of the
--------------------
Equity, the Parent's or the Borrower's repurchase of certain capital stock from
certain of the Old Stockholders on or prior to the Closing Date, the Borrower's
issuance of capital stock to the Parent, and the Parent's issuance of capital
stock to the New Stockholders, the completion of the merger of International
Holding Company, Inc. and Insurance Services, Inc. into the Borrower, the
completion of the conditions precedent to the Parent's and the receipt of the
Equity as set forth in the Related Transaction Documents and any other
transactions described in the Related Transaction Documents.
"Related Transaction Documents" means the documents listed on Exhibit 1.2.
----------------------------- -----------
"Reportable Event" shall have the meaning assigned to that term in Section
----------------
4043 of ERISA for which the requirement of 30 days' notice to the PBGC has not
been waived by the PBGC.
"Request" means a written request for the Loans in the form of Exhibit
------- -------
1.10, received by the Agent on behalf of the Lenders from the Borrower in
accordance with this Agreement, specifying the date on which the Borrower
desires such Loans and the disbursement instructions of the Borrower with
respect thereto.
"Revolving Credit Loan" means the revolving credit loans to be made by the
---------------------
Lenders to the Borrower from time to time in the maximum outstanding principal
amount of the Revolving Credit Loan Commitment, all subject and pursuant to
Section 2.1.0.
-------------
"Revolving Credit Loan Commitment" means the Lenders' several commitments
--------------------------------
to make Revolving Credit Loans to the Borrower in accordance with Section 2.1.0
-------------
and this Agreement and in the maximum outstanding amount of each Lender's Pro
Rata Share of the lesser of (i) the Borrowing Base and (ii) $10,000,000, as such
amount may be reduced pursuant to Section 2.6.4, provided, however, that until
-------------
the Agent provides written notice to the Borrower that the Agent has received
(a) Borrower's audited financial statements for Borrower's 1999 fiscal year and
(b) a commercial finance examination of the Borrower and any Subsidiaries, each
of which must be
16
<PAGE>
in form and substance reasonably satisfactory to Agent and that items (a) and
(b) are satisfactory to Agent, the maximum amount available under this clause
(ii) shall be $7,000,000, as such amount may be reduced pursuant to Section
2.6.4. -------
-----
"Revolving Credit Note" means each revolving credit note of the Borrower,
---------------------
payable to the order of a Lender in the form of Exhibit 1.5 hereto evidencing
-----------
the Indebtedness of the Borrower to such Lender with respect to the Revolving
Credit Loan.
"Revolving Credit Repayment Date" means the earlier to occur of (i)
-------------------------------
December 27, 2002 and (ii) such earlier date on which the Revolving Credit Loan
becomes due and payable pursuant to the terms hereof.
"Section" means, when followed by a number, the section or subsection of
-------
this Agreement bearing that number.
"Section 20 Subsidiary" means a subsidiary of the bank holding company
---------------------
controlling any Lender, which subsidiary has been granted authority by the
Federal Reserve Board to underwrite and deal in certain Ineligible Securities.
"Security Documents" means any and all documents, instruments and
------------------
agreements now or hereafter providing security for the Loans and any other
Indebtedness of the Parent, the Borrower or any Subsidiary to any of the Lenders
and/or the Agent, including without limitation the following documents,
instruments and agreements between the Agent and the Parent or the Borrower or
any Subsidiary: any mortgages on and collateral assignments of real property
interests (fee, leasehold and easement) of the Borrower and any Subsidiary
granting Liens thereon; landlord lien waivers and consents as may be reasonably
requested by the Agent; bank deposit consent letters; security agreements
granting first Liens on all Parent's, Borrower's and any Subsidiary's fixtures
and tangible and intangible personal property including without limitation any
copyrights, trademarks, servicemarks, patents and any applications therefor;
collateral assignments of Borrower's and any Subsidiary's contracts, licenses,
permits, easements and leases; a guaranty of the Obligations by the Parent; any
Subordination Agreement; any guaranty by a Subsidiary; any pledge of the capital
stock of the Borrower or any Subsidiary; casualty and liability insurance
policies providing coverage to the Agent for the benefit of the Lenders;
collateral assignment of keyman life insurance on Borrower's chief executive
officer; UCC-1 financing statements or similar filings perfecting the above-
referenced security interests, pledges and assignments, all as executed,
delivered to and accepted by the Agent on or prior to the Closing Date or
subsequent to the Closing Date as may be required by this Agreement, as any of
the foregoing may be amended in writing by the Agent and any other party or
parties thereto.
"Selling Lender" shall have the meaning assigned to such term in Section
-------------- -------
9.11.1.
------
"Senior Executives" means the Persons listed under the heading "Senior
-----------------
Executive Stockholders" on Exhibit 1.1.
-----------
"Single Employer Plan" means any Plan as defined in Section 4001(a)(15) of
--------------------
ERISA.
"Stockholders" means, collectively, the Old Stockholders and the New
------------
Stockholders.
17
<PAGE>
"Stock Option Plan" means that plan to be established as soon as possible
-----------------
after the Closing Date pursuant to which Borrower may grant options to members
of the Borrower's management, including options to acquire 7,000 shares of Class
A Common Stock to be granted to individuals designated by the Borrower's Board
of Directors following the Closing Date.
"Subordinated Creditor" means the holders of the Subordinated Debt.
---------------------
"Subordinated Debt" means any Indebtedness of the Borrower, the Parent or
-----------------
any Subsidiary which is subordinated to the Obligations pursuant to a
Subordination Agreement.
"Subordination Agreement" means any agreement in form and substance
-----------------------
acceptable to the Majority Lenders in their discretion pursuant to which
Indebtedness of the Borrower, the Parent and/or any Subsidiary is subordinated
to the Obligations.
"Subsidiary" means any corporation or entity other than the Borrower of
----------
which more than 50% of the outstanding capital stock or voting interests or
rights having ordinary voting power to elect a majority of the board of
directors or other managers of such entity (irrespective of whether or not at
the time capital stock or voting interests or rights of any other class or
classes of such Person shall or might have voting power upon the occurrence of
any contingency) is at the time directly or indirectly owned by the Borrower or
by the Borrower and/or one or more Subsidiaries or the management of which
corporation or entity is under control of the Borrower and/or any other
Subsidiary, directly or indirectly through one or more Persons and any other
Person which, under GAAP, should at any time for financial reporting purposes be
consolidated or combined with the Borrower and/or any other Subsidiary.
"Substituted Lender" has the meaning set forth in Section 9.11 hereof.
------------------ ------ ----
"Substitution Agreement" has the meaning assigned to such term in Section
---------------------- -------
9.11.1.
------
"Total Debt Service" means, at any date of determination, the sum of (i)
------------------
Interest Expense, (ii) scheduled and mandatory principal payments for the four
successive Borrower fiscal quarters beginning with the first Borrower fiscal
quarter after the Borrower fiscal quarter ending with the date of determination
in question due on account of any Indebtedness of the Borrower, but excluding
any mandatory payments of principal required pursuant to Sections 2.6.1.2,
----------------
2.6.1.3, 2.6.1.4 and 2.6.1.5, and (iii) the Deferred Taxes for the period in
------- ------- -------
question, all of the foregoing being calculated for the most recent Borrower
fiscal quarter and the three immediately preceding Borrower fiscal quarters on a
consolidated basis in accordance with GAAP. If the period in question
includes a Borrower fiscal quarter in which a Permitted Acquisition occurred,
Total Debt Service shall be calculated on a Pro Forma Basis for the Borrower
fiscal quarters included in such period through the Borrower fiscal quarter in
which the Permitted Acquisition occurred.
"Unused Amount" has the meaning assigned to such term in Section 2.2.2.
------------- -------------
"Unused Fees" has the meaning assigned to such term in Section 2.2.2.
----------- -------------
18
<PAGE>
Section 1.2. Accounting Terms. All accounting terms not specifically
----------- ----------------
defined herein shall be construed in accordance with GAAP, calculations of
amounts for the purposes of calculating any financial covenants or ratios
hereunder shall be made in accordance with GAAP applied on a basis consistent
with those used in the Borrower's financial statements referred to in Section
-------
4.1.5 (other than departures therefrom not material in their impact), and all
-----
financial data submitted pursuant to this Agreement shall be prepared in
accordance with GAAP (except, in the case of unaudited financial statements, the
absence of footnotes and that such statements are subject to changes resulting
from year-end adjustments made in accordance with GAAP).
Section 1.3. Other Terms. References to "Articles", "Sections",
----------- -----------
"subsections" and "Exhibits" shall be to Sections, subsections and Exhibits and
of this Agreement unless otherwise specifically provided. In this Agreement,
"hereof," "herein," "hereto," "hereunder" and the like mean and refer to this
Agreement as a whole and not merely to the specific section, paragraph or clause
in which the respective word appears; words importing any gender include the
other genders; references to "writing" include printing, typing, lithography and
other means of reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be followed by the
words "without limitation"; references to agreements and other contractual
instruments shall be deemed to include subsequent amendments, assignments, and
other modifications thereto, but only to the extent such amendments, assignments
and other modifications are not prohibited by the terms of this Agreement or any
other Financing Document; references to Persons include their respective
permitted successors and assigns or, in the case of governmental Persons,
Persons succeeding to the relevant functions of such Persons; and all references
to statutes and related regulations shall include any amendments of same and any
successor statutes and regulations.
ARTICLE 2.
AMOUNT AND TERMS OF THE LOANS
Section 2.1. The Loans.
----------- ---------
Section 2.1.0. The Revolving Credit Loans. Each of the Lenders
------------- --------------------------
severally agrees, subject to the terms and conditions of this Agreement, to make
Advances of Revolving Credit Loans to the Borrower from time to time after
receipt by the Agent from time to time before the Revolving Credit Repayment
Date of, and at the times provided for in, a Request and an Interest Rate
Election from the Borrower in accordance with this Agreement, during the period
commencing on the Closing Date and ending on the Business Day immediately
preceding the Revolving Credit Repayment Date, in an aggregate principal amount
at any one time outstanding not to exceed the lesser of (i) such Lender's Pro
Rata Share of the Revolving Credit Loan Commitment less (ii) in each case, such
Lender's Pro Rata Share of the aggregate outstanding stated amount of any
Letters of Credit and, without duplication, Letter of Credit Agreements and any
unreimbursed amounts drawn thereunder.
Promptly after receipt of a Request and Interest Rate Election, Agent shall
notify each Lender by telephone, telex or telecopy of the proposed borrowing.
Subject to the immediately preceding paragraph, each Lender agrees that after
its receipt of notification from Agent of
19
<PAGE>
Agent's receipt of a Request and Interest Rate Election, such Lender shall send
its Pro Rata Share (or such portion thereof as may be necessary to provide Agent
with such Pro Rata Share in Dollars and in immediately available funds, without
consideration or use of any contra accounts of any Lender) of the requested Loan
by wire transfer to Agent so that Agent receives such Pro Rata Share in Dollars
and in immediately available funds not later than 12:00 P.M. (Boston,
Massachusetts time) on the first day of the Interest Period for any such
requested Libor Loan and on the Business Day for such Advance set forth in
Borrower's Request for any such requested Prime Rate Loan, and Agent shall
advance funds to the Borrower by depositing such funds in Borrower's account
with the Agent upon Agent's receipt of such Pro Rata Shares in the amount of the
Pro Rata Shares of such Loan in Agent's possession. Unless Agent shall have been
notified by any Lender (which notice may be telephonic if confirmed promptly in
writing) prior to the first day of the Interest Period in respect of any Loan
which such Lender is obligated to make under this Agreement, that such Lender
does not intend to make available to Agent such Lender's Pro Rata Share of such
Loan on such date, Agent may assume that such Lender has made such amount
available to Agent on such date and Agent in its sole discretion may, but shall
not be obligated to, make available to the Borrower a corresponding amount on
such date. If such corresponding amount is not in fact made available to Agent
by such Lender, Agent shall be entitled to recover such corresponding amount
from such Lender promptly upon demand by Agent together with interest thereon,
for each day from such date until the date such amount is paid to Agent, at the
Federal Funds Rate for three (3) Business Days and thereafter at the interest
rate on the Loan in question. If such Lender does not pay such corresponding
amount forthwith upon Agent's demand therefor, Agent shall promptly notify the
Borrower and the Borrower shall promptly pay such corresponding amount to Agent.
Nothing contained in this Section shall be deemed to relieve any Lender from its
obligation to fulfill its obligations hereunder or to prejudice any rights which
the Borrower may have against any Lender as a result of any default by such
Lender hereunder.
Throughout the term of the Revolving Credit Loans, $2,000,000 of the
Revolving Credit Loan Commitment and principal amount of the Revolving Credit
Loans may, at the Borrower's request and with the Agent's approval which shall
not be unreasonably withheld or delayed, be made available to the Borrower prior
to the Revolving Credit Repayment Date by issuance of Letters of Credit having
an expiration date prior to the earlier to occur of (a) the first anniversary
date of the date of issuance of any such Letter of Credit or (b) three (3)
Business Days prior to the Revolving Credit Repayment Date, reasonably promptly
after submission by the Borrower to the Agent of a Letter of Credit Agreement,
duly completed and executed by the Borrower and otherwise in form and substance
satisfactory to the Agent. The Borrower shall pay upon demand by the Agent such
fees and costs as the Agent may from time to time establish for issuance,
transfer, amendment and negotiation of each Letter of Credit and shall pay to
the Agent for the Agent's account upon issuance of any Letter of Credit an
annual Letter of Credit fee in an amount equal to the product of (i) the stated
amount of each Letter of Credit multiplied by (ii) the Applicable Margin then in
effect with respect to any Revolving Credit Loan which is a Libor Loan such per
annum fee being pro rated for the term of any Letter of Credit which is other
than a full year in length. In the event that the Borrower shall fail to
reimburse the Agent under any Letter of Credit or Letter of Credit Agreement,
and any outstanding Indebtedness of the Borrower relating thereto, the Agent
shall promptly notify each Lender of the unreimbursed amount together with
accrued interest thereon, and each Lender agrees to purchase, and it shall be
deemed to have purchased, a participation in such Letter of Credit or Letter of
Credit
20
<PAGE>
Agreement and such Indebtedness in an amount equal to its Pro Rata Share of the
unpaid amount together with unpaid interest thereon. Upon one (1) Business Day's
notice from the Agent, each Lender shall deliver to the Agent an amount equal to
its respective participation in same day funds, at the place and on the date and
by the time notified by the Agent. The obligation of each Lender to deliver to
the Agent an amount equal to its respective participation pursuant to the
foregoing sentence shall be absolute and unconditional and such remittance shall
be made notwithstanding the occurrence or continuation of an Event of Default or
the failure to satisfy any condition set forth in Article III of this Agreement.
As soon as is practicable following the close of each month after the
Closing Date and in any event within fifteen (15) days thereafter, the Borrower
will submit to the Agent a borrowing base certificate in the form of Exhibit
-------
2.1.0 or on such other form as the Agent may from time to time prescribe, which
-----
certificate shall contain information adequate to identify accounts receivable
which the Borrower wishes to include in Eligible Receivables. During the
continuance of a Default or Event of Default, the Borrower shall also, if the
Lender so requests, accompany such information with assignments of accounts in
form and substance satisfactory to the Lender which assignments shall give the
Lender full power to collect, compromise or otherwise deal with the assigned
accounts as the sole owner thereof. Concurrently with each of such reports, and
immediately if material in amount, the Borrower shall notify the Lender of each
return or adjustment, rejection, repossession or loss, theft or damage of or to
merchandise represented by Eligible Receivables or any other collateral for any
Indebtedness of the Borrower to the Lender and of any credit, adjustment or
dispute arising in connection with the goods or services represented by Eligible
Receivables. All payments on Eligible Receivables and all adjustments and
credits with respect thereto, whether unilateral, negotiated or otherwise, shall
be immediately reflected in the Net Outstanding Amount of Eligible Receivables.
Section 2.2. Interest and Fees on the Loans.
----------- ------------------------------
Section 2.2.1. Interest. Interest shall accrue and be paid currently
------------- --------
on the Loans at Effective Prime or the Libor Rate for each of the Loans'
Interest Periods in accordance with the Borrower's Interest Rate Elections for
the Loans subject to and in accordance with the terms and conditions of this
Agreement and the Note(s); provided that if a Default or an Event of Default
exists and is continuing, no Interest Rate Election electing the Libor Rate
shall be effective and any Prime Rate Loan shall bear interest, payable on
demand, at Effective Prime plus, so long as an Event of Default exists and is
continuing, four percent (4.0%) and each Libor Loan shall bear interest, payable
on demand, at the Libor Rate plus four percent (4.0%); all of the foregoing
being applicable until such Default or Event of Default is cured or waived and
an Interest Rate Election electing the Libor Rate for such Loan or portion
thereof which is effective in accordance with this Agreement is submitted to the
Agent. The Borrower shall pay such interest to the Agent for the pro rata
account of each Lender in arrears on the Loans (including without limitation
Libor Loans) outstanding from time to time after the Closing Date, such payments
to be made monthly on the last Business Day of each calendar month commencing
January 31, 2000 and on the Interest Adjustment Date for Libor Loans. In the
event no Interest Rate Election has been made by the Borrower with respect to
any Loan or Advance (or an Interest Rate Election shall have expired without an
effective substitute Interest Rate Election), Effective Prime shall be the rate
applicable to such Loan or Advance. All provisions of each Note and any other
agreements between the Borrower and the Lenders are expressly subject to the
condition
21
<PAGE>
that in no event, whether by reason of acceleration of maturity of the
Indebtedness evidenced by any Note or otherwise, shall the amount paid or agreed
to be paid to the Lenders which is deemed interest under applicable law exceed
the maximum permitted rate of interest under applicable law (the "Maximum
Permitted Rate"), which shall mean the law in effect on the date of this
Agreement, except that if there is a change in such law which results in a
higher Maximum Permitted Rate, then each Note shall be governed by such amended
law from and after its effective date. In the event that fulfillment of any
provision of any Note, or this Agreement or any document, instrument or
agreement providing security for any Note results in the rate of interest
charged under any Note being in excess of the Maximum Permitted Rate, the
obligation to be fulfilled shall automatically be reduced to eliminate such
excess. If, notwithstanding the foregoing, any Lender receives an amount which
under applicable law would cause the interest rate under any Note to exceed the
Maximum Permitted Rate, the portion thereof which would be excessive shall
automatically be deemed a prepayment of and be applied to the unpaid principal
balance of such Note to the extent of then outstanding Prime Rate Loans and not
a payment of interest and to the extent said excessive portion exceeds the
outstanding principal amount of Prime Rate Loans, said excessive portion shall
be repaid to the Borrower.
Section 2.2.2. Fees. On the Closing Date the Borrower shall pay the
------------- ----
Facility Fee to the Agent for the accounts of the Lenders and then and
thereafter shall pay certain other fees to the Agent for the Agent's account all
in accordance with the Fee Letter. In addition, on the last Business Day of
each March, June, September and December commencing March 30, 2000 and
continuing through the Revolving Credit Repayment Date, the Borrower shall pay
to the Agent for the pro rata account of each Lender, a fee ("Unused Fees") in
an amount equal to the Applicable Margin times the amount, if any, by which the
average actual daily amount of the component of the Revolving Credit Loan
Commitment contained in clause (ii) of the definition of such Commitment for the
quarterly period just ended (or in the case of the first such payment, the
period from the Closing Date to the date such payment is due) exceeds the
average of the actual daily outstanding principal balances of the Revolving
Credit Loans plus the average of the actual daily aggregate outstanding stated
----
amounts of any Letters of Credit and, without duplication, Letter of Credit
Agreements, and any unreimbursed amounts thereunder (the "Unused Amount").
Section 2.2.3. Increased Costs - Capital. If, after the date hereof,
------------- -------------------------
any Lender shall have reasonably determined that the adoption after the date
hereof of any applicable law, governmental rule, regulation or order regarding
capital adequacy of banks or bank holding companies, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Lender or such Lender's holding
company with any policy, guideline, directive or request regarding capital
adequacy (whether or not having the force of law and whether or not failure to
comply therewith would be unlawful) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the capital of such Lender or such Lender's holding company as a consequence
of the obligations hereunder of such Lender to a level below that which such
Lender could have achieved but for such adoption, change or compliance (taking
into consideration the policies of such Lender or such Lender's holding company
with respect to capital adequacy immediately before such adoption, change or
compliance and assuming that the capital of such Lender or such Lender's holding
company was fully utilized prior to such
22
<PAGE>
adoption, change or compliance) by an amount reasonably deemed by such Lender to
be material, then such Lender shall notify the Agent and the Borrower thereof
and the Borrower shall pay to the Agent for the account of such Lender from time
to time as specified by such Lender such additional amounts as shall be
sufficient to compensate such Lender for such reduced return, each such payment
to be made by the Borrower within five (5) Business Days after each demand by
such Lender; provided that the liability of the Borrower to pay such costs shall
only accrue with respect to costs accruing from and after the 90th day prior to
the date of each such demand. A certificate in reasonable detail of one of the
officers of such Lender describing the event giving rise to such reduction and
setting forth the amount to be paid to such Lender hereunder and a computation
of such amount shall accompany any such demand and shall, in the absence of
manifest error, be conclusive. In determining such amount, such Lender shall act
reasonably and will use any reasonable averaging and attribution methods. If the
Borrower shall, as a result of the requirements of this Section 2.2.3 above, be
-------------
required to pay any Lender the additional costs referred to above and the
Borrower, in its sole discretion, shall deem such additional amounts to be
material, the Borrower shall have the right to substitute another bank
satisfactory to the Agent for such Lender which has certified the additional
costs to the Borrower, and the Agent shall use reasonable efforts at no cost to
the Agent to assist the Borrower to locate such substitute bank. Any such
substitution shall take place in accordance with Section 9.11 and shall
------------
otherwise be on terms and conditions reasonably satisfactory to the Agent, and
until such time as such substitution shall be consummated, the Borrower shall
continue to pay such additional costs. Upon any such substitution, the Borrower
shall pay or cause to be paid to the Lender that is being replaced, all
principal, interest (to the date of such substitution) and other amounts owing
hereunder to such Lender and such Lender will be released from liability
hereunder.
Section 2.3. Notations. At the time of (i) the making of each Advance
----------- ---------
evidenced by any Note, (ii) each change in the interest rate under any Note
effected as a result of an Interest Rate Election; and (iii) each payment or
prepayment of any Note, each Lender may enter upon its records an appropriate
notation evidencing (a) such Lender's Pro Rata Share of the Loans and (b) the
interest rate and Interest Adjustment Date applicable thereto or (c) such
payment or prepayment (voluntary or involuntary) of principal and (d) in the
case of payments or prepayments (voluntary or involuntary) of principal, the
portion of the applicable Loan which was paid or prepaid. No failure to make
any such notation shall affect the Borrower's unconditional obligations to repay
the Loans and all interest, fees and other sums due in connection with this
Agreement and/or any Note in full, nor shall any such failure, standing alone,
constitute grounds for disproving a payment of principal by the Borrower.
However, in the absence of manifest error, such notations and each Lender's
records containing such notations shall constitute presumptive evidence of the
facts stated therein, including, without limitation, the outstanding amount of
such Lender's Pro Rata Share of the Loans and all amounts due and owing to such
Lender at any time. Any such notations and such Lender's records containing
such notations may be introduced in evidence in any judicial or administrative
proceeding relating to this Agreement, the Loans or any Note.
Section 2.4. Computation of Interest. Interest due under this Agreement
----------- -----------------------
and any Note shall be computed on the basis of a year of 360 days for the actual
number of days elapsed.
Section 2.5. Time of Payments and Prepayments in Immediately Available
----------- ---------------------------------------------------------
Funds.
-----
23
<PAGE>
Section 2.5.1. Time. All payments and prepayments of principal,
------------- ----
fees, interest and any other amounts owed from time to time under this Agreement
and/or under each Note shall be made to the Agent for the pro rata account of
each Lender at the address referred to in Section 9.6 in Dollars and in
-----------
immediately available funds prior to 12:00 o'clock P.M. on the Business Day that
such payment is due, provided that the Borrower hereby authorizes and instructs
the Agent to charge against the Borrower's accounts with the Agent on each date
on which a payment is due hereunder and/or under any Note and on any subsequent
date if and to the extent any such payment is not made when due an amount up to
the principal, interest and fees due and payable to the Lenders, the Agent or
any Lender hereunder and/or under any Note and such charge shall be deemed
payment hereunder and under the Note(s) in question to the extent that
immediately available funds are then in such accounts. The Agent shall use
reasonable efforts in accordance with the Agent's customary procedures to give
subsequent notice of any such charge to the Borrower, but the failure to give
such notice shall not affect the validity of any such charge. To the extent
that immediately available funds are then in such accounts, the failure of the
Agent to charge any such account or the failure of the Agent to charge any such
account prior to 12 o'clock P.M. shall not be basis for an Event of Default
under Section 6.1.1 and any amount due on the Loans on such date shall be deemed
-------------
paid; provided that the Agent shall have the right to charge any such account on
any subsequent date for such unpaid payment and an Event of Default shall exist
if sufficient immediately available funds are not in such accounts on the date
the Agent so charges such account after the expiration of any applicable cure
period. In the event of any charge against the Borrower's accounts by the Agent
pursuant to the immediately preceding sentence, the Agent shall use reasonable
efforts to provide notice to the Borrower of such charge in accordance with the
Agent's customary procedures, but the failure to provide such notice shall not
in any way be a basis for any liability of the Agent nor shall such failure
adversely affect the validity and effectiveness of any such action by the Agent.
Any such payment or prepayment which is received by the Agent in Dollars and in
immediately available funds after 12 o'clock P.M. on a Business Day shall be
deemed received for all purposes of this Agreement on the next succeeding
Business Day unless the failure by Agent to receive such funds prior to 12
o'clock P.M. is due to Agent's failure to charge the account of Borrower prior
to 12 o'clock P.M., except that solely for the purpose of determining whether a
Default or Event of Default has occurred under Section 6.1.1, any such payment
-------------
or prepayment, if received by the Agent prior to the close of the Agent's
business on a Business Day, shall be deemed received on such Business Day. All
payments of principal, interest, fees and any other amounts which are owing to
any or all of the Lenders or the Agent hereunder and/or under any of the Notes
that are received by the Agent in immediately available Dollars prior to 12:00
o'clock P.M. on any Business Day shall, to the extent owing to the Lenders other
than the Agent, be sent by wire transfer by the Agent to any such other Lenders
(in each case, without deduction for any claim, defense or offset of any type)
before 3:00 o'clock P.M. on the same Business Day. Each such wire transfer
shall be addressed to each Lender in accordance with the wire instructions set
forth in Exhibit 1.9 hereto. The amount of each payment wired by the Agent to
-----------
each such Lender shall be such amount as shall be necessary to provide such
Lender with its Pro Rata Share of such payment (without consideration or use of
any contra accounts of any Lender), or with such other amount as may be owing to
such Lender in accordance with this Agreement (in each case, without deduction
for any claim, defense or offset of any type). Each such wire transfer shall be
sent by the Agent only after the Agent has received immediately available
Dollars from or on behalf of the Borrower and each such wire transfer shall
provide each Lender
24
<PAGE>
receiving same with immediately available Dollars on receipt by such Lender. Any
such payments of immediately available Dollars received by the Agent after 12:00
o'clock P.M. and before 3:00 o'clock P.M. on any Business Day shall be forwarded
in the same manner by the Agent to such Lender(s) as soon as practicable on said
Business Day, and if any such payments of immediately available Dollars are
received by the Agent after 3:00 o'clock P.M. on a Business Day, the Agent shall
so forward same to such Lender(s) before 10:00 o'clock A.M. on the immediately
succeeding Business Day.
Section 2.5.2. Setoff, etc. Borrower and any Subsidiaries hereby
------------- -----------
grant to the Agent and each Lender a Lien, security interest and right of setoff
as security for all Obligations to the Agent and such Lender whether now
existing or hereafter arising. Regardless of the adequacy of any collateral for
any of the Obligations, and subject to the provisions of Article 7 upon the
---------
occurrence and during the continuance of any Event of Default, each Lender is
hereby authorized at any time and from time to time, without prior notice to the
Borrower (any such notice being expressly waived by the Borrower), to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) credits, collateral and property at any time in the possession ,
custody, safekeeping or control of such Lender or any entity under the control
of any Lender's holding company or in transit to any of them and any other
Indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower against any and all of the Obligations of the Borrower
irrespective of whether or not such Lender shall have made any demand under this
Agreement or any Note and although such Obligations may be unmatured. Each such
Lender agrees to promptly notify the Borrower and the Agent after any such
setoff and application; provided that the failure to give such notice shall not
affect the validity of such setoff and application. Promptly following any
notice of setoff received by the Agent from a Lender pursuant to the foregoing,
the Agent shall notify each other Lender thereof. The rights of each Lender
under this Section 2.5.2 are in addition to all other rights and remedies
-------------
(including, without limitation, other rights of setoff) which such Lender may
have and are subject to Section 9.12. ANY AND ALL RIGHTS TO REQUIRE THE AGENT
------------
OR ANY LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE LOANS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH
RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER OR ANY
GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
Section 2.5.3. Unconditional Obligations and No Deductions.
------------- -------------------------------------------
Section 2.5.3.1 The Borrower's obligation to make all payments
---------------
provided for in this Agreement and the other Financing Documents shall be
unconditional. Each such payment shall be made without deduction for any claim,
defense or offset of any type, including without limitation any withholdings and
other deductions on account of income or other taxes (except to the extent
provided in Section 2.5.3.2) and regardless of whether any claims, defenses or
---------------
offsets of any type exist.
Section 2.5.3.2. (a) Any and all payments by the Borrower to or for
---------------
the account of any Lender or the Agent hereunder or under any other Financing
Document shall be made free and clear of and without deduction for any and all
present or future taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto,
25
<PAGE>
excluding, in the case of each Lender and the Agent, taxes imposed on its
income, and franchise taxes imposed on it, by the jurisdiction under the laws of
which such Lender (or its applicable lending office) or the Agent (as the case
may be) is organized or any political subdivision thereof, other than to the
extent such income or franchise tax is imposed solely as a result of the
activities of the Agent or a Lender pursuant to or in respect of this Agreement
or any of the other Financing Documents (all such non-excluded taxes, duties,
levies, imposts, deductions, charges, withholdings, and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable under this Agreement or
any other Financing Document to any Lender or the Agent,(i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
-------
2.5.3.2) such Lender or the Agent receives an amount equal to the sum it would
-------
have received had no such deductions been made, (ii) the Borrower shall make
such deductions, (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law, and (iv) the Borrower shall furnish to the Agent, at its address referred
to in Section 9.6 hereof, the original or a certified copy of a receipt
-----------
evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or future
stamp or documentary taxes and any other excise or property taxes or charges or
similar levies which arise from any payment made under this Agreement or any
other Financing Document or from the execution or delivery of, or otherwise with
respect to, this Agreement or any other Loan Document (hereinafter referred to
as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and the Agent for the full
amount of Taxes and Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 2.5.3.2) paid by such Lender or the Agent (as the case may be) and
---------------
any liability (including penalties, interest, and expenses) arising therefrom or
with respect thereto.
(d) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the Borrower
or the Agent (but only so long as such Lender remains lawfully able to do so),
shall provide the Borrower and the Agent with (i) a properly completed Internal
Revenue Service Form 1001 or 4224, as appropriate, or any successor form
prescribed by the Internal Revenue Service, certifying that such Lender is
entitled to benefits under an income tax treaty to which the United States is a
party which reduces the rate of withholding tax on payments of interest or
certifying that the income receivable pursuant to this Agreement is effectively
connected with the conduct of a trade or business in the United States, (ii) a
properly completed Internal Revenue Service Form W-8 or W-9, as appropriate, or
any successor form prescribed by the Internal Revenue Service, certifying that
such Lender is exempt from United States backup withholding, and (iii) any other
form or certificate required by any taxing authority (including any certificate
required by Sections 871(h) and 881(c) of the Internal Revenue Code), certifying
that such Lender is entitled to an exemption from or a reduced rate of tax on
payments pursuant to this Agreement or any of the other Financing Documents.
26
<PAGE>
(e) For any period with respect to which a Lender has failed to provide the
Borrower and the Agent with the appropriate form pursuant to Section 2.5.3.2(d)
hereof (unless such failure is due to a change in treaty, law, or regulation
occurring subsequent to the date on which a form originally was required to be
provided), such Lender shall not be entitled to indemnification under Section
-------
2.5.3.2(a) or 2.5.3.2(b) hereof with respect to Taxes imposed by the United
------------------------
States; provided, however, that should a Lender, which is otherwise exempt from
or subject to a reduced rate of withholding tax, become subject to Taxes because
of its failure to deliver a form required hereunder, the Borrower shall take
such steps as such Lender shall reasonably request and at such Lender's cost to
assist such Lender to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Lender pursuant to this Section 2.5.3.2, then such Lender will
agree to use reasonable efforts to change the jurisdiction of its applicable
lending office so as to eliminate or reduce any such additional payment which
may thereafter accrue if such change, in the judgment of such Lender, is not
otherwise disadvantageous to such Lender. Alternatively, in the event of such
an additional cost, the Borrower shall have the right to substitute another bank
satisfactory to the Agent, and the Agent and such Lender shall use reasonable
efforts at no cost to the Agent and such Lender to assist the Borrower to locate
and effect the substitution in favor of such substitute bank. Any such
substitution shall take place in accordance with Section 9.11 and shall
------------
otherwise be on terms and conditions reasonably satisfactory to the Agent, and
until such time as such substitution shall be consummated, the Borrower shall
continue to pay such additional costs. Upon any such substitution, the Borrower
shall pay or cause to be paid to the Lender that is being replaced, all
principal, interest (to the date of such substitution) and other amounts owing
hereunder to such Lender and such Lender will be released from liability
hereunder.
(g) Within thirty (30) days after the date of any payment of Taxes, the
Borrower shall furnish to the Agent the original or a certified copy of a
receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.5.3.2 shall survive until the first anniversary of the Repayment
---------------
Date.
(i) If the Borrower makes any additional payment to any Lender pursuant to
this Section 2.5.3.2 in respect of any Taxes, and such Lender determines that it
---------------
has received (i) a refund of such Taxes, or (ii) a credit against, relief or
remission for, or a reduction in the amount of, any tax or other governmental
charge as a result of any deduction or credit for any Taxes with respect to
which it has received payments under this Section 2.5.3.2, such Lender shall, to
---------------
the extent that it can do so without prejudice to the retention of such refund,
credit, relief, remission or reduction, pay to the Borrower such amount as shall
be reasonably determined by such Lender to be solely attributable to the
deduction or withholding of such Taxes. If such Lender later determines that it
was not entitled to such refund, credit, relief, remission or reduction to the
full extent of any payment made pursuant to the first sentence of this Section
-------
2.5.3.2(i), the Borrower shall upon demand of such Lender promptly repay the
----------
amount of such overpayment. Nothing in this Section 2.5.3.2(i) shall be
------------------
construed as requiring such Lender to conduct its business or to arrange or
alter in any respect its tax or financial affairs so that it is entitled to
receive such a refund, credit or reduction or as allowing any Person to inspect
any records, including tax returns, of such Lender.
27
<PAGE>
Section 2.6. Prepayment and Certain Payments.
----------- -------------------------------
Section 2.6.1. Mandatory Payments.
------------- ------------------
Section 2.6.1.1. In addition to each other principal payment
---------------
required hereunder, the outstanding principal balances of the Revolving Credit
Loans shall be repaid on the Revolving Credit Repayment Date.
Section 2.6.1.2. The Borrower shall take such action as may be
---------------
necessary to cause the repayment provisions of Section 5.1.24 to be fulfilled.
--------------
Section 2.6.1.3. In the event that the Borrower or any
------------------
Subsidiary is entitled to receive, collectively, proceeds from any casualty
insurance policies maintained by any of them on account of any interest of the
Borrower and/or any Subsidiary in any property, which proceeds are in an
aggregate amount in excess of $250,000 during the term of this Agreement, such
proceeds shall be received by the Agent and, to the extent that such proceeds
result from a casualty to property of the Borrower and/or any Subsidiary, so
long as no Default or Event of Default exists and is continuing and the Borrower
elects to repair, replace or restore such property, such proceeds shall be
released to the Borrower subject to reasonable procedures and conditions
established by the Agent to the extent necessary to so repair, replace or
restore such property within 4 months (or as soon as reasonably practicable if
such restoration, replacement or repair is not susceptible to being completed
within 4 months) from the date of receipt of such proceeds by the Agent and to
the extent such proceeds are not so used or do not result from such a casualty.
The amount of such proceeds shall permanently reduce the Commitment and to the
extent that the outstanding principal balance of the Loans exceeds the
Commitment as so reduced, the Borrower shall make a prepayment of the Loans for
the accounts of the Lenders in accordance with their Pro Rata Shares upon
written notice from the Agent.
Section 2.6.1.4. In the event that the Borrower and/or any
---------------
Subsidiary sells, assigns or otherwise transfers title to any asset other than
in the ordinary course of its business for net cash proceeds in the aggregate
since the Closing Date in excess of $250,000, the amount of such proceeds shall
permanently reduce the Commitment and to the extent that the outstanding
principal balance of the Loans exceeds the Commitment as so reduced, the
Borrower shall make a prepayment of the Loans for the accounts of the Lenders in
accordance with their Pro Rate Shares upon written notice from the Agent,
provided, however, that Borrower may sell any of its equipment which is
obsolete, worn-out or no longer used or useful in Borrower's business and
Borrower may use the proceeds of such sale to purchase other equipment which is
useful or necessary in the operation of Borrower's business.
Section 2.6.1.5. In the event that the Borrower and/or any
---------------
Subsidiary files a Form S-1 or any other form of registration statement then
available for registration with the Securities and Exchange Commission (other
than an offering on Form S-8 in respect of employee stock options) or otherwise
conducts a Qualified Initial Public Offering of any class of the Borrower's or
any Subsidiary's securities, the Borrower and/or such Subsidiary upon receipt of
the net aggregate cash consideration from the sale of any such registered shares
of its capital stock shall prepay to the Agent for the accounts of the Lenders
in accordance with their Pro Rata
28
<PAGE>
Shares an amount of the outstanding principal balances of the Loans in an amount
equal to that amount necessary to reduce the Borrower's ratio of total
Indebtedness for Borrowed Money to EBITDA to less than 1.0:1.0, and the
Commitment shall be permanently reduced to an amount which, if fully outstanding
as Loans and Letters of Credit and, without duplication, Letter of Credit
Agreements or unreimbursed amounts drawn thereunder would result in such ratio
being less than 1.0:1.0.
Section 2.6.1.6. If at any time the aggregate principal amount
---------------
of the Revolving Credit Loans plus the aggregate outstanding stated amounts of
any Letters of Credit and, without duplication, Letter of Credit Agreements and
any unreimbursed amounts drawn thereunder shall exceed the Revolving Credit Loan
Commitment, the Borrower shall immediately pay to the Agent in immediately
available Dollars the amount of such excess.
Section 2.6.1.7. Any amounts repaid by the Borrower and/or any
---------------
Subsidiary under this Section 2.6.1 shall be paid without premium or penalty.
-------------
In the event that any payment or prepayment of a Libor Loan under this Section
-------
2.6.1 is received on a date other than the last day of an Interest Period, such
-----
payment or prepayment shall be held by the Agent in a separate account and be
pledged to the Agent as collateral for the Obligations of the Borrower arising
in connection with the Financing Documents until the last day of the then
current Interest Period, at which time the Agent shall apply such payment or
prepayment, for the account of the Lenders in accordance with their Pro Rata
Shares, to the outstanding Libor Loans for which such day is an Interest
Adjustment Date.
Section 2.6.2. Voluntary Prepayments. All or any portion of the
------------- ---------------------
unpaid principal balance of the Loans (other than portions of any Loans
constituting Libor Loans) may be prepaid at any time, without premium or
penalty, by giving the Agent at least 1 Business Day's prior written notice of
such prepayment and by a payment to the Agent for the accounts of the Lenders
in accordance with their Pro Rata Shares of such prepayment in immediately
available Dollars by the Borrower; provided that each such partial payment or
prepayment of principal of the Loans shall be in a principal amount of at least
$500,000 or an integral multiple of $100,000 in excess thereof.
Section 2.6.3. Prepayment of Libor Loans. Notwithstanding anything
------------- -------------------------
to the contrary contained in any Note or in any other agreement executed in
connection herewith or therewith, the Borrower shall be permitted to prepay any
portion of the Loans constituting Libor Loans only in accordance with Section
-------
2.9 hereof.
---
Section 2.6.4. Permanent Reduction of Commitment. At the Borrower's
------------- ---------------------------------
option the Commitment and the Revolving Credit Loan Commitment may be
permanently and irrevocably reduced in whole or in part by an amount of at least
$500,000 and to the extent in excess thereof in integral multiples of $100,000
at any time; provided that (i) the Borrower gives the Agent written notice of
the exercise of such option at least three (3) Business Days prior to the
effective date thereof, (ii) the aggregate outstanding balance of the Loans, if
any, does not exceed the Commitment and the aggregate outstanding balance of the
Revolving Credit Loans, plus the aggregate outstanding amount of any Letters of
Credit or Letter of Credit Agreement and any unreimbursed drawn amounts
thereunder, if any, does not exceed the Revolving Credit Loan Commitment, both
as so reduced in any such case on the effective date of such reduction
29
<PAGE>
and (iii) the Borrower is not, and after giving effect to such reduction, would
not be in violation of Section 2.6.3. Any such reduction shall concurrently
-------------
reduce the Dollar amount of each Lender's Pro Rata Share of the Commitment and
the Revolving Credit Loan Commitment.
Section 2.7. Payment on Non-Business Days. Whenever any payment to be
----------- ----------------------------
made hereunder or under any Note shall be stated to be due on a day other than a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
payment of fees, if any, and interest under this Agreement and under such Note.
Section 2.8. Use of Proceeds. (a) The Borrower shall use the proceeds of
----------- ---------------
the Loans to pay costs incurred by the Borrower in connection with the closing
of the Loans, to refinance certain outstanding Indebtedness for Borrowed Money
owing by the Borrower to Fleet, for Borrower's working capital needs and for
Investments permitted by Section 5.2.12. The Borrower shall obtain any Letters
--------------
of Credit solely for working capital and general corporate purposes.
(b) No portion of the proceeds of any Loans is to be used, and
no portion of any Letter of Credit is to be obtained, for the purpose of (a)
knowingly purchasing, or providing credit support for the purchase of,
Ineligible Securities from a Section 20 Subsidiary during any period in which
such Section 20 Subsidiary makes a market in such Ineligible Securities, (b)
knowingly purchasing, or providing credit support for the purchase of, during
the underwriting or placement period, any Ineligible Securities being
underwritten or privately placed by a Section 20 Subsidiary, or (c) making, or
providing credit support for the making of, payments of principal or interest on
Ineligible Securities underwritten or privately placed by a Section 20
Subsidiary and issued by or for the benefit of the Borrower or any Subsidiary or
other Affiliate of the Borrower.
Section 2.9. Special Libor Loan Provisions. The Libor Loans shall be
----------- -----------------------------
subject to and governed by the following terms and conditions:
Section 2.9.1. Requests. Each Request accompanied by an Interest
------------- --------
Rate Election selecting the Libor Rate must be received by the Agent in
accordance with the definition of Interest Rate Election.
Section 2.9.2. Libor Loans Unavailable. Notwithstanding any other
------------- -----------------------
provision of this Agreement, if, prior to or on the date on which all or any
portion of the Loans is to be made as or converted into a Libor Loan, any of the
Lenders (or the Agent with respect to (ii) below) shall reasonably determine
(which determination shall be conclusive and binding on the Borrower), that
(i) Dollar deposits in the relevant amounts and for the relevant
Interest Period are not offered to such Lender in the London interbank
market,
(ii) by reason of circumstances affecting the London interbank
market, adequate and reasonable means do not exist for ascertaining the
Adjusted Libor Rate, or
30
<PAGE>
(iii) the Adjusted Libor Rate shall no longer represent the effective
cost to such Lender for Dollar deposits in the London interbank market for
reasons other than the fact, standing alone, that the Adjusted Libor Rate is
based on an averaging of rates determined by the Agent and that such
Lender's rate may exceed such average,
such Lender may elect not to accept any Interest Rate Election electing a Libor
Loan and such Lender shall notify the Agent by telephone or telex thereof,
stating the reasons therefor, not later than the close of business on the second
Business Day prior to the date on which such Libor Loan is to be made. The
Agent shall promptly give notice of such determination and the reason therefor
to the Borrower, and all or such portion of the Loans, as the case may be, which
are subject to any of Section 2.9.2 (i), (ii) through (iii) as a result of such
-------------
Lender's determination shall be made as or converted into, as the case may be,
Prime Rate Loans and such Lender shall have no further obligation to make Libor
Loans, until further written notice to the contrary is given by the Agent to the
Borrower. If such circumstances subsequently change so that such Lender shall
no longer be so affected, such Lender's obligation to make or maintain its Pro
Rata Share of all or any portion of the Loans as Libor Loans shall be reinstated
when such Lender obtains actual knowledge of such change of circumstances and
promptly after obtaining such actual knowledge such Lender shall forward written
notice thereof to the Agent. After receipt of such notice, the Agent shall
promptly forward written notice thereof to the Borrower. Upon or after receipt
by the Borrower of such written notice, the Borrower may submit an Interest Rate
Election in accordance with this Agreement electing an Interest Period ending no
later than the Interest Adjustment Date for the then current Interest Period for
the other Lenders' Pro Rata Shares of Libor Loans and electing the Libor Rate
for such Lenders' or Lender's Pro Rata Share(s) of the Loans as to which such
Lender's or Lenders' obligation(s) to make or maintain its or their Pro Rata
Share(s) of the Loans as Libor Loans was suspended and such Pro Rata Share(s)
shall be converted to Libor Loans in accordance with this Agreement. During any
period throughout which any of the Lenders has or have no obligation to make or
maintain its or their Pro Rata Share(s) of the Loans as Libor Loans, no Interest
Rate Elections electing the Libor Rate shall be effective with regard to the
Loans to the extent of the Pro Rata Share(s) of such Lender(s), but shall be
effective as to the other Lenders.
Section 2.9.3. Libor Lending Unlawful. In the event that any change
------------- ----------------------
in applicable laws or regulations (including the introduction of any new
applicable law or regulation) or in the interpretation thereof (whether or not
having the force of law) by any governmental or other regulatory authority
charged with the administration thereof, shall make it unlawful for any of the
Lenders to make or continue to maintain its Pro Rata Share of all or any portion
of the Loans as Libor Loans, each such Lender shall promptly notify the Agent by
telephone or telex thereof, and of the reasons therefor, and the obligation of
such Lender to make or maintain its Pro Rata Share of the Loans or such portion
thereof as Libor Loans shall, upon the happening of such event, terminate and
the Agent shall, by telephonic notice to the Borrower, declare that such
obligation has so terminated with respect to such Lender, and such Pro Rata
Share of the Loans or any portion thereof to the extent then maintained as Libor
Loans, shall, on the last day on which such Lender can lawfully continue to
maintain such Pro Rata Share of the Loans or any portion thereof as Libor Loans,
automatically convert into Prime Rate Loans without additional cost to the
Borrower. If circumstances subsequently change so that such Lender shall no
longer be so affected, such Lender's obligation to make or maintain its Pro Rata
Share of all or any portion of the Loans as Libor Loans shall be reinstated when
such Lender
31
<PAGE>
obtains actual knowledge of such change of circumstances, and promptly after
obtaining such actual knowledge such Lender shall forward written notice thereof
to the Agent. After receipt of such notice, the Agent shall promptly forward
written notice thereof the Borrower. Upon or after receipt by the Borrower of
such written notice, the Borrower may submit an Interest Rate Election in
accordance with this Agreement electing an Interest Period ending no later than
the Interest Adjustment Date for the then current Interest Period for the other
Lenders' Pro Rata Shares of Libor Loans and electing the Libor Rate for such
Lenders' or Lender's Pro Rata Share(s) of the Loans as to which such Lender's or
Lenders' obligation(s) to make or maintain its or their Pro Rata Share(s) of the
Loans as Libor Loans was suspended and such Pro Rata Share(s) shall be converted
to Libor Loans in accordance with this Agreement. During any period throughout
which any of the Lenders has or have no obligation to make or maintain its or
their Pro Rata Share(s) of the Loans as Libor Loans, no Interest Rate Elections
electing the Libor Rate shall be effective with regard to the Loans to the
extent of the Pro Rata Share(s) of such Lender(s), but shall be effective as to
the other Lenders.
Section 2.9.4. Additional Costs on Libor Loans. The Borrower further
------------- -------------------------------
agrees to pay to the Agent for the account of the applicable Lender or Lenders
such amounts as will compensate any of the Lenders for any increase in the cost
to such Lender of making or maintaining (or of its obligation to make or
maintain) all or any portion of its Pro Rata Share of the Loans as Libor Loans
and for any reduction in the amount of any sum receivable by such Lender under
this Agreement in respect of making or maintaining all or any portion of such
Lender's Pro Rata Share of the Loans as Libor Loans, in either case, from time
to time by reason of:
(i) any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, such
Lender, under or pursuant to any law, treaty, rule, regulation (including,
without limitation, any Regulations of the Board of Governors of the Federal
Reserve System) or requirement in effect on or after the date hereof, any
interpretation thereof by any governmental authority charged with
administration thereof or by any central bank or other fiscal or monetary
authority or other authority, or any requirement imposed by any central bank
or such other authority whether or not having the force of law; or
(ii) any change in (including the introduction of any new) applicable
law, treaty, rule, regulation or requirement or in the interpretation
thereof by any official authority, or the imposition of any requirement of
any central bank, whether or not having the force of law, which shall
subject such Lender to any tax (other than taxes on net income imposed on
such Lender), levy, impost, charge, fee, duty, deduction or withholding of
any kind whatsoever or change the taxation of such Lender with respect to
making or maintaining all or any portion of its Pro Rata Share of the Loans
as Libor Loans and the interest thereon (other than any change which
affects, and to the extent that it affects, the taxation of net income of
such Lender); provided, that with respect to any withholding the foregoing
shall not apply to any withholding tax described in sections 1441, 1442 or
3406 of the Code, or any succeeding provision of any legislation that
amends, supplements or replaces any such section, or to any tax, levy,
impost, duty, charge, fee, deduction or withholding that results from any
noncompliance by a Lender with any federal, state or foreign law or from any
failure by a Lender to file or furnish any report, return, statement or form
the filing or
32
<PAGE>
furnishing of which would not have an adverse effect on such Lender and
would eliminate such tax, impost, duty, deduction or withholding;
In any such event, such Lender shall promptly notify the Agent thereof, and of
the reasons therefor, and the Agent shall promptly notify the Borrower thereof
in writing stating the reasons provided to the Agent by such Lender therefor and
the additional amounts required to fully compensate such Lender for such
increased or new cost or reduced amount as reasonably determined by such Lender.
Such additional amounts shall be payable on each date on which interest is to be
paid hereunder or, if there is no outstanding principal amount under any of the
Notes, within 10 Business Days after the Borrower's receipt of said notice.
Such Lender's certificate as to any such increased or new cost or reduced amount
(including calculations, in reasonable detail, showing how such Lender computed
such cost or reduction) shall be submitted by the Agent to the Borrower and
shall, in the absence of manifest error, be conclusive. In determining any such
amount, the Lender(s) may use any reasonable averaging and attribution methods.
Notwithstanding anything to the contrary set forth above, the Borrower shall not
be obligated to pay any amounts pursuant to this Section 2.9.4 as a result of
-------------
any requirement or change referenced above with respect to any period prior to
the one hundred and eightieth (180th) day prior to the date on which the
Borrower is first notified thereof (other than any amounts which relate to any
such requirement or change which is adopted with retroactive effect in which
case the Borrower shall be obligated to pay all such amounts accrued from the
date as of which such requirement or change is retroactively effective) unless
the failure to give such notice within such one hundred and eighty (180) day
period resulted from reasonable circumstances beyond such Lender's reasonable
control.
Section 2.9.5. Libor Funding Losses. In the event that any payment
------------- --------------------
or prepayment of a Libor Loan is received on a date other than the last day of
an Interest Period, such payment or prepayment shall be held by the Agent in a
separate account and be pledged to the Agent as collateral for the obligations
of the Borrower arising in connection with this Agreement, the Notes and the
other Financing Documents until the end of the then current Interest Period, at
which time the Agent shall apply such payment or prepayment, for the accounts of
the Lenders in accordance with their Pro Rata Shares, to the outstanding Libor
Loans. Notwithstanding the foregoing, in the event any of the Lenders shall
incur any loss or expense (including, without limitation, any loss or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund or maintain all or any portion of the Loans as
Libor Loans) as a result of:
(i) payment or prepayment by the Borrower of all or any portion of
any Libor Loan on a date other than the Interest Adjustment Date for such
Libor Loan, for any reason; provided, however that this clause shall not be
deemed to grant the Borrower any right to convert a Libor Loan to a Prime
Rate Loan prior to the end of any Interest Period or to imply such right;
(ii) conversion of all or any portion of any Libor Loan on a day
other than the last day of an Interest Period applicable to such Loan to a
Prime Rate Loan for any reason including, without limitation, acceleration
of the Loans upon or after an Event of Default, any Interest Rate Election
or any other cause whether voluntary or involuntary and whether
33
<PAGE>
or not referred to or described in this Agreement, other than any such
conversion resulting solely from application of Sections 2.9.2 or 2.9.3 by
-------------- -----
any Lender; or
(iii) any failure by the Borrower to borrow the Loans as Libor Loans
on the date specified in any Interest Rate Election selecting the Libor
Rate, other than any such failure resulting solely from application of
Sections 2.9.2 or 2.9.3 by any Lender;
-------------- -----
such Lender shall promptly notify the Agent thereof, and of the reasons
therefor. Upon the request of the Agent, the Borrower shall pay directly to the
Agent for the account of such Lender such amount as will (in the reasonable
determination of such Lender, which shall be conclusive in the absence of
manifest error) reimburse such Lender for such loss or expense. Each Lender
shall furnish to the Borrower, upon written request from the Borrower received
by the Agent, a written statement setting forth the computation of any such
amounts payable to such Lender under this Section 2.9.5.
-------------
Section 2.9.6. Banking Practices. Each Lender agrees that upon the
------------- -----------------
occurrence of any of the events described in Sections 2.2.3 and/or 2.9.2, 2.9.4
-------------- ----- -----
or 2.9.5, such Lender will exercise all reasonable efforts to take such
-----
reasonable actions at no expense to such Lender or the Borrower (other than
reasonable expenses which are covered by the Borrower's advance deposit of funds
with such Lender for such purpose, or if such Lender agrees, which the Borrower
has agreed to pay or reimburse to such Lender in full upon demand), in
accordance with such Lender's usual banking practices in such situations and
subject to any statutory or regulatory requirements applicable to such Lender,
as such Lender may take without the consent or participation of any other Person
to, in the case of an event described in Sections 2.2.3 and/or 2.9.4 or 2.9.5,
-------------- ----- -----
mitigate the cost of such events to the Borrower and, in the case of an event
described in Sections 2.9.2(i), (ii) or (iii), to seek Dollar deposits in any
----------------- ---- -----
other interbank Libor market in which such Lender regularly participates and in
which the applicable determination(s) described in Sections 2.9.2(i), (ii) or
----------------- ----
(iii), as the case may be, does not apply.
-----
Section 2.9.7. Borrower's Options on Unavailability or Increased Cost
------------- ------------------------------------------------------
of Libor Loans. n the event that any Lender's Pro Rata Share of all or any
--------------
portion of the Libor Loans becomes subject, under Sections 2.9.4 or 2.9.5, to
-------------- -----
additional costs, the Borrower shall have the option, subject to the other terms
and conditions of this Agreement, to convert such Lender's Pro Rata Share to a
Prime Rate Loan by making Interest Rate Elections for Interest Periods which (i)
end on the Interest Adjustment Date for such Libor Loan or (ii) end on Business
Days occurring prior to such Interest Adjustment Date, in which case, at the end
of the last of such Interest Periods any such Libor Rate Loan shall
automatically convert to a Prime Rate Loan and the Borrower shall have no
further right to make an Interest Rate Election with respect to such Prime Rate
Loan other than an Interest Rate Election which is effective on the Interest
Adjustment Date for such Libor Loan. The Borrower's options set forth in this
Section 2.9.7 may be exercised, if and only if the Borrower pays, concurrently
-------------
with delivery to the Agent of each such Interest Rate Election and thereafter in
accordance with Sections 2.9.4, 2.9.5 and 2.9.6 all amounts provided for therein
-------------- ----- -----
to the Agent in accordance with this Agreement.
If the Borrower shall, as a result of the requirements of Section
-------
2.9.4 above, be required to pay any Lender the additional costs referred to
-----
therein, but not be required to pay such additional costs to the other Lender or
Lenders and the Borrower, in its sole discretion, shall
34
<PAGE>
deem such additional amounts to be material or in the event that Libor Loans
from a Lender are unavailable to the Borrower as a result solely of the
provisions of Sections 2.9.2, 2.9.3 or 2.9.4, but are available from the other
-------------- ----- -----
Lender or Lenders, the Borrower shall have the right to substitute another bank
satisfactory to the Agent for such Lender which is entitled to such additional
costs or which is relieved from making Libor Loans and the Agent shall use
reasonable efforts (with all reasonable costs of such efforts by the Agent to be
borne by the Borrower) to assist the Borrower to locate such substitute bank.
Any such substitution shall take place in accordance with Section 9.11 and
------------
otherwise be on terms and conditions reasonably satisfactory to the Agent, and
until such time as such substitution shall be consummated, the Borrower shall
continue to pay such additional costs and comply with the above-referenced
Sections. Upon any such substitution, the Borrower shall pay or cause to be paid
to the Lender that is being replaced, all principal, interest (to the date of
such substitution) and other amounts owing hereunder to such Lender and such
Lender will be released from liability hereunder.
Section 2.9.8. Assumptions Concerning Funding of Libor Loans. The
------------- ---------------------------------------------
calculation of all amounts payable to the Lenders under this Section 2.9 shall
-----------
be made as though each Lender actually funded its relevant Libor Loans through
the purchase of a deposit in the London interbank market bearing interest at the
Libor Rate in an amount equal to that Libor Loan and having a maturity
comparable to the relevant Interest Period and through the transfer of such
deposit from an offshore office of such Lender to a domestic office of such
Lender in the United States of America; provided, however, that each Lender may
fund each of its Libor Loans in any manner it sees fit and the foregoing
assumption shall be utilized solely for the calculation of amounts payable under
this Section 2.9.
-----------
Section 2.10. Interest Rate Protection. On or before the 30/th/ day after
------------ ------------------------
the outstanding principal balance of the Loans plus the stated amount of any
Letters of Credit and, without duplication, Letter of Credit Agreements and
unreimbursed amounts drawn thereunder first exceeds $5,000,000, the Borrower
shall enter into an interest rate protection arrangement with the Agent covering
not less than 50% of such outstanding amount. Such interest rate protection
arrangement may consist of any one or a combination of the following: (i) the
purchase of an interest rate swap arrangement covering such Loans and such
Letter of Credit amounts effectively converting the Borrower's interest payment
obligations with respect to such portion of the Loans and Letter of Credit
amounts to a fixed rate per annum equal to the then Libor Rate, plus two percent
(2%) for a term expiring not earlier than the second anniversary of the date of
such interest rate swap arrangement or (ii) the purchase of an interest rate cap
covering such Loans and such Letter of Credit amounts at a cap rate per annum
equal to the then Libor Rate, plus two percent (2%) for a term expiring not
earlier than said second anniversary date. The other terms and conditions of
any such interest rate swap or interest rate cap shall be reasonably
satisfactory to the Majority Lenders.
ARTICLE 3.
CONDITIONS OF LENDING
Section 3.1. Conditions Precedent to the Commitment and to all Loans.
----------- -------------------------------------------------------
35
<PAGE>
Section 3.1.1. The Commitment and Initial Loans. The Commitment and
------------- --------------------------------
the obligation of the Lenders to make the initial Advances of the Loans and/or
to issue any Letter of Credit or Letter of Credit Agreement are subject to
performance by the Borrower of all of its Obligations under this Agreement and
to the satisfaction of the conditions precedent that all legal matters incident
to the transactions contemplated hereby or incidental to the Loans shall be
reasonably satisfactory to counsel for the Agent and that the Lenders shall have
received on or before the Closing Date all of the following, each dated the
Closing Date or another date acceptable to the Lenders and each to be in form
and substance reasonably satisfactory to the Agent or if any of the following is
not a deliverable, the satisfaction of such condition in form and substance
reasonably satisfactory to the Agent:
Section 3.1.1.1. The Financing Documents, including, without
---------------
limitation, those hereinafter set forth and the Borrower's and the Parent's
certificate of incorporation or other organizational documents, by-laws and each
agreement or instrument relating thereto.
Section 3.1.1.2. Certificate of the secretary, clerk or similar
---------------
officer of the Borrower and Parent certifying as to the resolutions of the
shareholders or board of directors of the Borrower, Parent and each Subsidiary
authorizing and approving each of the Financing Documents to which the Borrower,
Parent and each Subsidiary is a party and other matters contemplated hereby and
certifying as to the names and signatures of the Authorized Representative(s) of
the Borrower, Parent and each Subsidiary authorized to sign each Financing
Document to be executed and delivered by or on behalf of the Borrower, Parent
and each Subsidiary. The Agent and the Lenders may conclusively rely on each
such certificate until the Agent shall receive a further certificate canceling
or amending the prior certificate and submitting the signatures of the
Authorized Representative(s) named in such further certificate.
Section 3.1.1.3. Favorable opinions of Pepper, Hamilton, LLP,
---------------
counsel for the Borrower and the Parent, in form and substance reasonably
satisfactory to the Agent.
Section 3.1.1.4. An Officer's Certificate stating that:
---------------
Section 3.1.1.4.1. The representations and warranties
-----------------
contained in Section 4.1 and/or contained in any of the other Financing
-----------
Documents are correct on and as of the Closing Date as though made on and as of
such date; and
Section 3.1.1.4.2. No Default or Event of Default has
-----------------
occurred and is continuing, or would result from the making of the Loans.
Section 3.1.1.5. Certificates of good standing or legal
---------------
existence of the secretaries of state (or equivalent officials) of the states
(or jurisdictions) of organization and qualification of and covering the
Borrower and Parent dated reasonably near the Closing Date.
Section 3.1.1.6. Evidence that (i) the ownership interests in
---------------
the Parent, the Borrower and such Subsidiary are as set forth in Exhibit 1.1,
-----------
(ii) the New Stockholders have invested the Equity in the Parent and the Parent
has invested the Equity in the Borrower on or prior to the Closing Date, as set
forth on Exhibit 1.1 and (iii) that except for receipt and application of
-----------
certain proceeds of the Loans, the Related Transactions have been completed in
36
<PAGE>
accordance with the Related Transaction Documents without any waiver or
amendment of any term or condition contained therein without the prior written
approval of the Lenders, and in compliance with any applicable laws and
necessary governmental authority approvals.
Section 3.1.1.7. A Request and an Interest Rate Election.
---------------
Section 3.1.1.8. All documents, instruments and agreements
---------------
necessary to terminate, cancel and discharge the documents, instruments and
agreements evidencing or securing any and all existing Indebtedness of the
Borrower and any Subsidiary party to any of the Financing Documents and Liens
securing such Indebtedness other than those listed in Exhibit 3.1.1.8.
---------------
Section 3.1.1.9. Payment to the Agent and the Lenders of the
---------------
fees specified in this Agreement or in the Fee Letter as being payable on the
Closing Date and all reasonable out-of-pocket costs and expenses incurred by the
Agent and Fleet in connection with the transactions contemplated hereby,
including, but not limited to, reasonable outside legal expenses and any
accounting fees, auditing fees, appraisal fees, and other fees associated with
any independent analyses of the Borrower, the Parent and any Subsidiary and
evidence that all other reasonable fees and costs payable by the Borrower and
the Parent in connection with the transactions contemplated by the Financing
Documents and completed on the Closing Date have been paid in full.
Section 3.1.1.10. An Officer's Certificate in the form of
----------------
Exhibit 3.1.1.10, duly completed and reflecting, inter alia, compliance by the
---------------- ----------
Borrower as of the opening of business on the first Business Day after the
Closing Date but based on the Borrower's financial information as of the last
day of the Borrower's most recent fiscal quarter, adjusted to give effect to the
Loans made on the Closing Date and completion of the Related Transactions to be
completed on or prior to the Closing Date, with the financial covenants provided
for herein.
Section 3.1.1.11. Such other information about the Borrower, the
----------------
Parent, any Subsidiaries and/or their Business Condition as the Lenders may
reasonably request.
Section 3.1.1.12. True copies of, and/or true copies of any
----------------
revisions to, the financial statements, the Projections, the PWC due diligence
book, the pro forma Closing Date financial statements giving effect to the Loans
and the Equity to be received on or prior to the Closing Date and completion of
the other Related Transactions to be completed on or prior to the Closing Date,
and other information provided pursuant to Section 4.1.5 and certification by
-------------
the Borrower of the Projections.
Section 3.1.1.13. Certificates of fire, business interruption,
----------------
liability and extended coverage insurance policies, each such policy to name the
Agent as mortgagee and loss payee and, on all liability policies, as additional
insured.
Section 3.1.1.14. True descriptions of any pending or threatened
----------------
litigation against or by Borrower, the Parent or any Subsidiary.
37
<PAGE>
Section 3.1.1.15. Evidence that all necessary material third
----------------
party consents to the Related Transactions and the Loans have been obtained and
remain in effect without the imposition of any terms or condition not reasonably
acceptable to the Lenders and all required filings with any governmental
authority have been duly completed.
Section 3.1.1.16. The financial statements described in Section
---------------- -------
4.1.5 together with the Borrower's pro forma Closing Date balance sheet. Such
------
financial statements shall be accompanied by an Officer's Certificate of the
chief financial officer of the Borrower to the effect that (i) the
representations of the Borrower set forth in Section 4.1.14 are accurate as of
--------------
the Closing Date and (ii) that no Material Adverse Effect has occurred since the
date of the Borrower's most recent audited financial statements delivered to the
Lenders except as set forth or reflected in the financial statements described
in Section 4.1.5 or otherwise disclosed in writing and acceptable to the Agent.
-------------
Section 3.1.1.17. True copies of (i) the Equity Documents, (ii)
----------------
all other documents, instruments and agreements relating to the Borrower's and
the Parent's capital structures and (iii) the Related Transaction Documents.
Section 3.1.1.18. The fact that the representations and
----------------
warranties of the Borrower contained in Article 4, infra, and in each of the
-----
other Financing Documents are true and correct in all material respects on and
as of the Closing Date except as altered hereafter by actions not prohibited
hereunder. The Borrower's delivery of each Note and Letter of Credit Agreement
to the Lenders and of each Request to the Agent shall be deemed to be a
representation and warranty by the Borrower as of the date thereof to such
effect.
Section 3.1.1.19. That there has been no enactment of any law or
----------------
regulation by any Governmental Authority which would make it (i) unlawful, or
(ii) prevent, restrain or impose conditions which the Lenders determine to be
adverse, in any respect as to the foregoing, to the making of the Loans and/or
the completion of the Related Transactions.
Section 3.1.1.20. A completed Year 2000 questionnaire covering
----------------
the Borrower and any Subsidiaries.
Section 3.1.1.21. The Security Documents, after the completion
----------------
of any required filings or recordations, will grant to the Agent perfected,
first priority security interests or mortgages subject only to Permitted
Encumbrances, as the case may be, with respect to the collateral identified
therein and the Agent shall received the favorable opinions of counsel referred
to in Section 3.1.1.3 above with respect to such perfection. The Agent shall
---------------
also have received such searches, landlord consents, access agreements and/or
title insurance commitments as reasonably requested by the Agent, all in form
and substance reasonably satisfactory to the Agent and/or its counsel. Without
limiting the generality of the foregoing, the Agent shall be reasonably
satisfied with the terms and conditions of all real property leases in which the
Borrower and any Subsidiary party to any Financing Document has a leasehold
interest, including the terms of such leaseholds and the assumability of the
lessee's obligations thereunder upon the transfer of or foreclosure upon of the
Borrower's or any such Subsidiary's leasehold interest.
38
<PAGE>
Section 3.1.1.22. No Material Adverse Effect has occurred and
----------------
there shall exist no action, suit, investigation, litigation or proceeding
pending or threatened in any court or before any arbitrator or Governmental
Authority that could reasonably be expected to result in a Material Adverse
Effect.
Section 3.1.1.23. All information and materials supplied to the
----------------
Agent prior to the date hereof shall be true and correct in all material
aspects; and no additional information shall have come to the attention of the
Agent or the Lenders that is inconsistent in any material respect with the
information and materials supplied to the Agent prior to the date hereof or that
could reasonably be expected to have a Material Adverse Effect.
Section 3.1.2. The Commitment and the Loans. The Commitment and the
------------- ----------------------------
obligation of each Lender to make or maintain its Pro Rata Share of any Advance
or Loan and/or to issue any Letter of Credit or Letter of Credit Agreement are
subject to performance by the Borrower of all its obligations under this
Agreement and to the satisfaction of the following further conditions precedent:
(a) The fact that, immediately prior to and upon the making of each
Loan, no Event of Default or Default shall have occurred and be continuing;
(b) The fact that the representations and warranties of the Borrower
contained in Article 4, infra and in each of the other Financing Documents, are
-----
true and correct in all material respects on and as of the date of each Advance
or Loan except as altered hereafter by actions consented to or not prohibited
hereunder. The Borrower's delivery of the Notes to the Lenders and of each
Letter of Credit Agreement and Request to the Agent shall be deemed to be a
representation and warranty by the Borrower as of the date of such Advance or
Loan as to the facts specified in Sections 3.1.2(a) and (b);
----------------- ---
(c) Receipt by Agent on or prior to the Business Day specified in the
definition of Interest Rate Election of a written Request stating the amount
requested for the Loan or Advance in question and an Interest Rate Election for
such Loan or Advance, all signed by a duly authorized officer of the Borrower on
behalf of the Borrower;
(d) That there exists no law or regulation by any governmental
authority having jurisdiction over the Agent or any of the Lenders which would
make it unlawful in any respect for such Lender to make its Pro Rata Share of
the Loan or Advance, including, without limitation, Regulations U, T and X of
the Board of Governors of the Federal Reserve System; and
(e) No Material Adverse Effect has occurred.
39
<PAGE>
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of the Borrower. The Borrower
----------- ----------------------------------------------
represents and warrants to the Agent and the Lenders that, after giving effect
to the Loans and the application of the proceeds thereof (which representations
and warranties shall survive the making of the Loans) as follows:
Section 4.1.1. Organization and Existence. The Borrower, the Parent
------------- --------------------------
and any Subsidiary is a corporation, duly organized, validly existing and in
good standing under the laws of the state (or applicable jurisdiction) of its
incorporation or organization and is duly qualified to do business in all
jurisdictions in which such qualification is required, all as noted on Exhibit
-------
4.1.1, except where failure to so qualify could not reasonably be expected to
-----
have a Material Adverse Effect, and has all requisite power and authority to
conduct its business, to own its properties and to execute and deliver, and to
perform all of its obligations under the Financing Documents.
Section 4.1.2. Authorization and Absence of Defaults. Except as
------------- -------------------------------------
described on Exhibit 4.1.2, the execution, delivery to the Agent and/or the
-------------
Lenders and performance by the Borrower, the Parent and any Subsidiary of the
Financing Documents and Related Transaction Documents have been duly authorized
by all necessary corporate and governmental action and do not and will not (i)
require any consent or approval of the shareholders or board of directors of the
Borrower, the Parent or any Subsidiary which has not been obtained, (ii) violate
any provision of any law, rule, regulation (including, without limitation,
Regulations U and X of the board of governors of the federal reserve system),
order, writ, judgment, injunction, decree, determination or award presently in
effect having applicability to the Borrower, the Parent and/or any Subsidiary
and/or the articles of organization or by-laws, as applicable, of the Borrower,
the Parent and/or any Subsidiary, (iii) result in a material breach of or
constitute a material default under any indenture or loan or credit agreement or
any other agreement, lease or instrument to which the Borrower, the Parent
and/or any Subsidiary is or are a party or parties or by which it or they or
its or their properties may be bound or affected; or (iv) result in, or require,
the creation or imposition of any Lien on any of the Borrower's, the Parent's
and/or any Subsidiary's respective properties or revenues other than Liens
granted to the Agent by any of the Financing Documents securing the Obligations.
The Borrower, the Parent and any Subsidiary are in compliance with any such
applicable law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award or any such indenture, other agreement, lease or
instrument, except where the failure to be in compliance could not reasonably be
expected to have a Material Adverse Effect.
Section 4.1.3. Acquisition of Consents. Except as noted on Exhibit
------------- ----------------------- -------
4.1.3, no authorization, consent, approval, license, exemption of or filing or
-----
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, other than those which
have been obtained, is or will be necessary to the valid execution and delivery
to the Agent and/or the Lenders or performance by the Borrower, the Parent or
any Subsidiary party thereto of any Financing Documents and each of the
foregoing which has been obtained is in full force and effect.
40
<PAGE>
Section 4.1.4. Validity and Enforceability. Each of the Financing
------------- ---------------------------
Documents when delivered hereunder will constitute the legal, valid and binding
obligations of each of the Borrower, the Parent and any Subsidiary which is or
are a party thereto enforceable against the Borrower, the Parent and any
Subsidiary which is or are a party thereto in accordance with their respective
terms except as the enforceability thereof may be limited by the effect of
general principles of equity and bankruptcy and similar laws affecting the
rights and remedies of creditors generally.
Section 4.1.5. Financial Information. The following information with
------------- ---------------------
respect to the Borrower has heretofore been furnished to the Agent:
Section 4.1.5.1. Audited annual financial statements of the
---------------
Borrower for the periods ended December 31, 1996, December 31, 1997, December
31, 1998, and final audited financial statements for the period ended June 30,
1999 and the accompanying management letter; and
Section 4.1.5.2. Interim, consolidated balance sheets of the
---------------
Borrower and any Subsidiaries as of the end of the most recent fiscal quarter
prior to the Closing for which such statements are available and the related
statements of income and cash flows and shareholders' equity, such balance
sheets and statements to be prepared and certified by an Authorized
Representative in an Officer's Certificate as having been prepared in accordance
with GAAP except for footnotes and year-end adjustments, and to be in form
reasonably satisfactory to the Agent;
Section 4.1.5.3. The Projections.
---------------
Section 4.1.5.4. The pro forma financial statements of the
---------------
Borrower as of the Closing Date provided pursuant to Section 3.1.1.12.
----------------
Each of the financial statements referred to above in Section
4.1.5.1 and 4.1.5.2 was prepared in accordance with GAAP (subject, in the case
------- -------
of interim statements, to the absence of footnotes and normal year-end
adjustments) applied on a consistent basis, except as stated therein. To the
best of the Borrower's knowledge, each of the financial statements referred to
above in Sections 4.1.5.1, 4.1.5.2 and 4.1.5.4 fairly presents the financial
---------------- ------- -------
condition or pro forma financial condition, as the case may be, of the Person
being reported on at such dates and is complete and correct in all material
respects and no Material Adverse Effect has occurred since the date thereof. The
Projections were prepared by the Borrower in good faith.
Section 4.1.6. No Litigation. There are no actions, suits or
------------- -------------
proceedings pending or, to the knowledge of the Borrower, threatened against or
affecting the Borrower, the Parent and/or any Subsidiary which is a party to any
of the Financing Documents or any of their properties before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which if determined adversely to the Borrower, the Parent
and/or any such Subsidiary would draw into question the legal existence of the
Borrower, the Parent and/or any such Subsidiary and/or the validity,
authorization and/or enforceability of any of the Financing Documents and/or any
provision thereof and/or could not reasonably be
41
<PAGE>
expected to have a Material Adverse Effect except those matters, if any,
described on Exhibit 4.1.6 none of which, in Borrower's good faith opinion, will
-------------
(i) have such Material Adverse Effect or (ii) draw into question (a) the legal
existence of the Borrower, the Parent and/or any such Subsidiary or (b) the
validity, authorization and/or enforceability of any of the Financing Documents
and/or any provision thereof.
Section 4.1.7. Regulation U. The Borrower is not engaged in the
------------- ------------
business of extending credit for the purpose of purchasing or carrying "margin
stock" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR Part 221), does not own and has no present
intention of acquiring any such margin stock or a "margin security" within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
(12 CFR, Part 207). None of the proceeds of the Loans will be used directly or
indirectly by the Borrower for the purpose of purchasing or carrying, or for the
purpose of reducing or retiring any Indebtedness which was originally incurred
to purchase or carry, any such margin security or margin stock or for any other
purpose which might constitute the transaction contemplated hereby a "purpose
credit" within the meaning of said Regulation U, or cause this Agreement to
violate any other regulation of the Board of Governors of the Federal Reserve
System or the Securities and Exchange Act of 1934, as amended, or any rules or
regulations promulgated under either said statute.
Section 4.1.8. Absence of Adverse Agreements. Neither the Borrower,
------------- -----------------------------
the Parent nor any Subsidiary is a party to any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
corporate or partnership restriction which could reasonably be expected to have
a Material Adverse Effect.
Section 4.1.9. Taxes. The Borrower, the Parent and each Subsidiary
------------- -----
has filed all tax returns (federal, state and local) required to be filed and
paid all taxes shown thereon to be due, including interest and penalties, except
for those taxes, if any, which are being contested in good faith and by
appropriate proceedings, and for which proper reserve or other provision has
been made in accordance with GAAP and except where any failure to file or pay
could not reasonably be expected to have a Material Adverse Effect on the
Borrower, the Parent or any Subsidiary and except as described in Exhibit 4.1.9.
-------------
Section 4.1.10. ERISA. Borrower and any Commonly Controlled Entity
-------------- -----
do not maintain or contribute to any Plan which is not in substantial
compliance with ERISA, or any Single Employer Plan which has incurred any
accumulated funding deficiency within the meaning of sections 412 and 418 of
the Code or which has applied for or obtained a waiver from the Internal
Revenue Service of any minimum funding requirement under section 412 of the
Code. Borrower and any Commonly Controlled Entity have not incurred any
liability to the PBGC in connection with any Plan covering any employees of
Borrower or any Commonly Controlled Entity in amount exceeding Fifty Thousand
Dollars ($50,000) in the aggregate or ceased operations at any facility or
withdrawn from any Plan in a manner which could subject any of them to liability
under sections 4062(e), 4063 or 4064 of ERISA in amount exceeding Fifty
Thousand Dollars ($50,000) in the aggregate, and know of no facts or
circumstance which might give rise to any liability of Borrower or any Commonly
Controlled Entity to the PBGC under Title IV of ERISA in amount exceeding Fifty
Thousand Dollars ($50,000) in the aggregate. Borrower and any Commonly
Controlled Entity have not incurred any withdrawal
42
<PAGE>
liability in amount exceeding Fifty Thousand Dollars ($50,000) in the aggregate
(including but not limited to any contingent or secondary withdrawal liability)
within the meaning of sections 4201 and 4202 of ERISA, to any Multiemployer
Plan, and no event has occurred, and there exists no condition or set of
circumstances known to the Borrower, which presents a risk of the occurrence of
any withdrawal from or the partition, termination, reorganization or insolvency
of any Multiemployer Plan which could result in any liability to a Multiemployer
Plan in amount exceeding Fifty Thousand Dollars ($50,000) in the aggregate.
Except for payments for which the minimum funding requirement has
been waived under section 412 of the Code, full payment has been made of all
amounts which Borrower and any Commonly Controlled Entity are required to have
paid as contributions to any Plan under applicable law or under any plan or any
agreement relating to any Plan to which Borrower or any Commonly Controlled
Entity is a party. Borrower and each Commonly Controlled Entity have made
adequate provision for reserves to meet contributions that have not been made
because they are not yet due under the terms of any Plan or related agreements.
Neither Borrower nor any Commonly Controlled Entity has any knowledge,
nor do any of them have any reason to believe, that any Reportable Event which
could result in a liability or liabilities of Fifty Thousand Dollars ($50,000)
or more in the aggregate has occurred with respect to any Plan.
Section 4.1.11. Ownership of Properties.
-------------- -----------------------
Section 4.1.11.1. Except for Permitted Encumbrances, Borrower,
----------------
the Parent and any Subsidiary has good title to all of its properties and assets
free and clear of all restrictions and Liens of any kind other than those which
could not reasonably be expected to have a Material Adverse Effect or a material
adverse effect on the validity, authorization and/or enforceability of the
Financing Documents and/or any provision thereof.
Section 4.1.11.2. Exhibit 4.1.11 accurately and completely lists
---------------- --------------
the location of all real property owned or leased by Borrower, the Parent or any
Subsidiary. Borrower, the Parent and each Subsidiary enjoys quiet possession
under all material leases of real property to which it is a party as a lessee,
and all of such leases are valid, subsisting and, to Borrower's knowledge, in
full force and effect.
Section 4.1.11.3. To Borrower's knowledge, except as specified in
----------------
Exhibit 4.1.11, none of the real property occupied by Borrower, the Parent or
--------------
any Subsidiary is located within any federal, state or municipal flood plain
zone.
Section 4.1.11.4. Except as set forth in Exhibit 4.1.11, all of
---------------- --------------
the material properties used in the conduct of the Borrower's, the Parent's and
each Subsidiary's business (i) are in good repair, working order and condition
(reasonable wear and tear excepted) and reasonably suitable for use in the
operation of Borrower's, and each Subsidiary's business; and (ii) to Borrower's
knowledge are currently operated and maintained, in all material respects, in
accordance with the requirements of applicable governmental authorities.
43
<PAGE>
Section 4.1.12. Accuracy of Representations and Warranties. None of
-------------- ------------------------------------------
Borrower's representations or warranties set forth in this Agreement or in any
document or certificate furnished pursuant to this Agreement or in connection
with the transactions contemplated hereby contains any untrue statement of a
material fact or omits to state a material fact necessary to make any statement
of fact contained herein or therein, in light of the circumstances under which
it was made, not misleading; except that unless provided otherwise any such
document or certificate which is dated speaks as of the date stated and not the
present.
Section 4.1.13. No Investment Company. Neither the Borrower, the
-------------- ---------------------
Parent nor any Subsidiary is an "investment company" or a company "controlled"
by an "investment company" as such terms are defined in the Investment Company
Act of 1940, as amended, which is required to register thereunder.
Section 4.1.14. Solvency, etc. After giving effect to the
-------------- -------------
consummation of each Loan outstanding and to be made under this Agreement as of
the time this representation and warranty is given, the Borrower (a) will be
able to pay its debts as they become due, (b) will have funds and capital
sufficient to carry on its business and all businesses in which it is about to
engage, and (c) will own property in the aggregate having a value both at fair
valuation and at fair saleable value in the ordinary course of the Borrower's
business greater than the amount required to pay its Indebtedness, including for
this purpose unliquidated and disputed claims. The Borrower will not be
rendered insolvent by the execution and delivery of this Agreement and the
consummation of any transactions contemplated herein.
Section 4.1.15. Approvals. Except as set forth in Exhibit 4.1.3, all
-------------- --------- -------------
approvals required from all Persons including without limitation all
governmental authorities with respect to the Financing Documents have been
obtained.
Section 4.1.16. Ownership Interests. The schedule of ownership
-------------- -------------------
interests in the Borrower, the Parent and any Subsidiaries set forth in Exhibit
-------
1.1 is true, accurate and complete and the Investments to be made for all
---
ownership interests disclosed therein have in fact been fully paid in
immediately available Dollars after giving effect to the closing of the Related
Transactions.
Section 4.1.17. Licenses, Registrations, Compliance with Laws, etc.
-------------- --------------------------------------------------
Exhibit 4.1.17 accurately and completely describes all permits, governmental
--------------
licenses, registrations and approvals, material to carrying out of Borrower's,
the Parent's and each of the Subsidiaries' (other than, while not a party to any
of the Financing Documents, Borrower's United Kingdom Subsidiary) businesses as
presently conducted and as required by law or the rules and regulations of any
Governmental Authority or foreign governmental agency, body, instrumentality or
commission having jurisdiction over the Borrower, the Parent or any of the
Subsidiaries, including but not limited to the United States Environmental
Protection Agency, the United States Department of Labor, the United States
Occupational Safety and Health Administration, the United States Equal
Employment Opportunity Commission, the Federal Trade Commission and the United
States Department of Justice and analogous and related state and foreign
agencies. All existing authorizations, licenses and permits are in full force
and effect, are duly issued in the name of, or validly assigned to the Borrower,
the Parent or a Subsidiary and the Borrower, the Parent or a Subsidiary has full
power and authority to operate
44
<PAGE>
thereunder. There is no material violation or material failure of compliance or,
to Borrower's knowledge, allegation of such violation or failure of compliance
on the part of the Borrower, the Parent or any Subsidiary with any of the
foregoing permits, licenses, registrations, approvals, rules or regulations and
there is no action, proceeding or investigation pending or to the knowledge of
the Borrower threatened nor has the Borrower, the Parent or any Subsidiary
received any notice of such which might result in the termination or suspension
of any such permit, license, registration or approval which in any case could be
reasonably expected to have a Material Adverse Effect.
Section 4.1.18. Principal Place of Business; Books and Records. The
-------------- ----------------------------------------------
Borrower's chief executive offices are located at Borrower's addresses set forth
in Section 9.6. All of the Borrower's books and records are kept at one or more
-----------
of its addresses set forth in Section 9.6.
-----------
Section 4.1.19. Subsidiaries. The Borrower has only the Subsidiaries
-------------- ------------
identified on Exhibit 1.1.
-----------
Section 4.1.20. Copyright. Except as set forth in Exhibit 4.1.20 the
-------------- --------- --------------
Borrower, the Parent and any Subsidiary have not violated any of the provisions
of the Copyright Revision Act of 1976, 17 U.S.C. 101, et seq. Each of them has
-- ---
filed all registration statements, notices and statements of account and all
necessary supplements and adjustment schedules thereto with the United States
Copyright Office and has made all payments to the United States Copyright Office
that are required. Exhibit 4.1.20 accurately and completely sets forth all
--------------
copyrights held by the Borrower, the Parent or any of the Subsidiaries and
contains exceptions to the representations contained in this Section 4.1.20. To
--------------
the best of Borrower's knowledge, no claim of infringement of a copyright by the
Borrower, the Parent or any Subsidiary has been made or threatened by any other
Person. The Borrower, the Parent and any Subsidiary have not allocated revenues
in any manner inconsistent with the rules and regulations of the Copyright
Office.
Section 4.1.21. Environmental Compliance. Neither the Borrower nor,
-------------- ------------------------
to the knowledge of the Borrower, any other Person:
Section 4.1.21.1. has ever caused, permitted, or suffered to
----------------
exist any Hazardous Material to be spilled, placed, held, located or disposed of
on, under, or about, any of the facilities owned, leased or used by the
Borrower, the Parent or any Subsidiary (the "Premises"), or from the Premises
into the atmosphere, any body of water, any wetlands, or on any other real
property, nor to Borrower's knowledge does any Hazardous Material exist on,
under or about the Premises other than as disclosed on Exhibit 4.1.21, or in
--------------
respect of Hazardous Material used or disposed of in compliance with law;
Section 4.1.21.2. has any knowledge that any of the Premises has ever
----------------
been used (whether by the Borrower or, to the knowledge of the Borrower, by any
other Person) as a treatment, storage or disposal (whether permanent or
temporary) site for any Hazardous Material as defined in 42 U.S.C.A. 6901, et
--
seq. (the Resource Recovery and Conservation Act); and
---
Section 4.1.21.3. has any knowledge of any notice of violation, Lien
----------------
or other notice issued by any Governmental Authority with respect to the
environmental condition
45
<PAGE>
of the Premises or any other property occupied by the Borrower, the Parent or
any Subsidiary or any other property which was included in the property
description of the Premises or such other real property within the preceding
three years except as disclosed to the Agent.
Section 4.1.22. Material Agreements, etc. Exhibit 4.1.22 attached
-------------- ------------------------ --------------
hereto accurately and completely lists all material agreements to which the
Borrower, the Parent or any of the Subsidiaries are a party including without
limitation all software licenses, and all material construction, engineering,
consulting, employment, management, operating and related agreements, if any,
which are presently in effect. All of the material agreements to which
Borrower, the Parent or any Subsidiary is a party, are legally valid, binding,
and, to Borrower's knowledge, in full force and effect and neither the Borrower,
the Parent, any of the Subsidiaries nor, to Borrower's knowledge, any other
parties thereto are in material default thereunder.
Section 4.1.23. Patents, Trademarks and Other Property Rights.
-------------- ---------------------------------------------
Exhibit 4.1.23 attached hereto contains a complete and accurate schedule of all
--------------
registered trademarks, registered copyrights and patents of the Borrower, the
Parent and/or any of the Subsidiaries, and pending applications therefor, and
all other intellectual property in which the Borrower, the Parent and/or any of
the Subsidiaries has any rights other than "off-the-shelf" software which is
generally available to the general public at retail. Except as set forth in
Exhibit 4.1.23, the Borrower, the Parent and any Subsidiaries own, possess, or
--------------
have licenses to use all the patents, trademarks, service marks, trade names,
copyrights and non-governmental licenses, and all rights with respect to the
foregoing, necessary for the conduct of their respective businesses as now
conducted, without, to the Borrower's knowledge any conflict with the rights of
others with respect thereto.
Section 4.1.24. Related Transaction Documents. The Borrower has,
-------------- -----------------------------
prior to the date hereof, delivered to the Lenders true copies of the Related
Transaction Documents, and each and every amendment or modification thereto and,
except for receipt and application of certain proceeds of the Loans, the Related
Transactions have been completed in accordance with the Related Transaction
Documents, without any waiver or amendment of any term or condition contained
therein without the prior written approval of the Lenders, and in compliance
with any applicable laws and necessary governmental authority approvals.
.
Section 4.1.25. Material Adverse Effect. No Material Adverse Effect
-------------- -----------------------
has occurred and there exists no action, suit, investigation, litigation or
proceeding pending or threatened in any court or before any arbitrator or
governmental or regulatory agency or authority that could reasonably be expected
to result in a Material Adverse Effect.
Section 4.1.26. Year 2000. On the basis of comprehensive review and
-------------- ---------
assessment undertaken by the Borrower of the Borrowers' and its Subsidiaries'
computer applications and an assessment by the Borrower of its and its
Subsidiaries' material suppliers, vendors and customers, the Borrower reasonably
believes that the "Year 2000 Problem" (that is, the risk that computer
applications used by any person may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999) will not result in a Material Adverse Effect.
46
<PAGE>
Section 4.1.27. Location of Material Assets. The only locations
-------------- ---------------------------
where the Borrower, the Parent or any Subsidiary has assets having a value of
$50,000 or more measured by the higher of book and fair market value are and
will listed on Exhibit 4.1.27.
--------------
ARTICLE 5.
COVENANTS OF THE BORROWER
Section 5.1. Affirmative Covenants of the Borrower Other than Reporting
----------- ----------------------------------------------------------
Requirements. From the date hereof and thereafter for so long as there is
------------
Indebtedness of the Borrower to any Lender and/or the Agent under any of the
Financing Documents or any part of the Commitment is in effect, the Borrower
will, with respect to itself and, unless noted otherwise below, with respect to
the Parent and each of its Subsidiaries, ensure that the Parent and each
Subsidiary will, unless the Majority Lenders shall otherwise consent in writing:
Section 5.1.1. Payment of Taxes, etc. Pay and discharge all taxes
------------- ---------------------
and assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims for the same which, if
unpaid, might become a Lien upon any of its properties, provided that (unless
and until foreclosure, restraint, sale or any similar proceeding is pending and
is not stayed, discharged or bonded within 30 days after commencement) the
Borrower shall not be required to pay any such tax, assessment, charge, levy or
claim which is being contested in good faith and by proper proceedings and for
which proper reserve or other provision has been made in accordance with GAAP,
unless failure to pay could reasonably be expected to result in a Material
Adverse Effect.
Section 5.1.2. Maintenance of Insurance. Maintain on the collateral
------------- ------------------------
under any of the Security Documents insurance against loss by fire, hazards
included within the term "extended coverage", and such other hazards, casualties
and contingencies as the Agent may from time to time require, in an amount
equal to the greater of (i) $1,000,000 or (ii) one hundred percent (100%) of the
--
replacement cost of the collateral under any of the Security Documents and
business interruption insurance in the amount of at least $200,000. All
policies of such insurance and all renewals thereof shall be in form and
substance acceptable to Agent, shall be made payable in case of loss to the
Agent as loss payee and mortgagee and shall contain an endorsement requiring
thirty (30) days prior written notice to the Agent prior to cancellation or
change in the coverage, scope or amount of any such policies. Borrower shall
also keep in full force and effect a policy of public liability insurance
against claims of bodily injury, death or property damage occurring in any
building in which the limits of liability shall not be less than One Million
Dollars ($1,000,000) per person and One Million Dollars ($1,000,000) per
accident, together with an excess liability policy in the amount of Five
Million Dollars ($5,000,000) which shall be in addition to the limits above set
forth. Borrower shall increase the limits of such liability insurance to such
higher amounts as the Agent may from time to time reasonably require.
Certificates of all such insurance shall be delivered to the Agent concurrently
with the execution and delivery of this Agreement, and thereafter all renewal or
replacement certificates shall be delivered to the Agent not less than thirty
(30) days prior to the expiration date of the policy to be renewed or replaced,
accompanied by evidence satisfactory to the Agent that all
47
<PAGE>
premiums payable with respect to such policies have been paid by Borrower.
Borrower shall have the right of free choice in the selection of the agent or
the insurer through or by which the insurance required hereunder is to be
placed; provided, however, said insurer has at all times a general
policyholders' rating of A or A+ in Best's latest rating guide. Furthermore, the
Agent shall have the right and is hereby constituted and appointed the true and
lawful attorney irrevocable of Borrower, in the name and stead of Borrower, but
in the uncontrolled discretion of said attorney, (i) to adjust, sue for,
compromise and collect any amounts due under such insurance policies in the
event of loss and (ii) to give releases for any and all amounts received in
settlement of losses under such policies; and the same shall, subject to Section
-------
2.6.1.3 of this Agreement, at the option of the Agent, be applied, after first
-------
deducting the costs of collection, on account of any Indebtedness the payment of
which is secured by any of the Financing Documents, whether or not then due, or,
notwithstanding the claims of any subsequent lienor, be used or paid over to
Borrower in accordance with reasonable procedures established by the Agent for
use in repairing or replacing any damaged or destroyed collateral under any of
the Security Documents.
Section 5.1.3. Preservation of Existence, etc. Preserve and maintain
------------- ------------------------------
in full force and effect its legal existence, and all material rights,
franchises and privileges in the jurisdiction of its organization, preserve and
maintain all material licenses, governmental approvals, trademarks, patents,
trade secrets, copyrights and trade names owned or possessed by it and which are
necessary or, in the reasonable business judgment of the Borrower, desirable in
view of its business and operations or the ownership of its properties and
qualify or remain qualified as a foreign corporation in each jurisdiction in
which such qualification is necessary or, in its reasonable business judgment,
desirable in view of its business and operations and ownership of its properties
except where the failure to so qualify could not reasonably be expected to have
a Material Adverse Effect.
Section 5.1.4. Compliance with Laws, etc. Comply with the
------------- -------------------------
requirements of all present and future applicable laws, rules, regulations and
orders of any governmental authority having jurisdiction over it and/or its
business including, without limitation, regulations of the United States
Copyright Office and the Copyright Royalty Tribunal, except where the failure to
comply could not be reasonably expected to have a Material Adverse Effect.
Section 5.1.5. Visitation Rights. Permit, during normal business
------------- -----------------
hours and upon the giving of reasonable notice, the Agent, the Lenders and any
agents or representatives thereof, to examine and make copies of (at Borrower's
cost and expense) and abstracts from the records and books of account of, and
visit the properties of the Borrower and any Subsidiary to discuss the affairs,
finances and accounts of the Borrower or any Subsidiary with any of their
partners, officers or management level employees and/or any independent
certified public accountant of the Borrower and/or any Subsidiary.
Section 5.1.6. Keeping of Records and Books of Account. Keep
------------- ---------------------------------------
adequate records and books of account, in which complete entries will be made in
accordance with GAAP and with applicable requirements of any governmental
authority having jurisdiction over the Borrower and/or any Subsidiary in
question, reflecting all financial transactions.
48
<PAGE>
Section 5.1.7. Maintenance of Properties, etc. Maintain and preserve
------------- ------------------------------
all of its properties necessary or useful in the proper conduct of its business,
in good working order and condition, ordinary wear and tear excepted, and in
accordance with each of the Security Documents.
Section 5.1.8. Post-Closing Items. Complete in a timely fashion all
------------- ------------------
actions required in the Post-Closing Letter.
Section 5.1.9. Other Documents, etc. Except as otherwise required by
------------- --------------------
this Agreement, pay, perform and fulfill all of its material obligations and
covenants under each material document, instrument or agreement to which it is a
party including, without limitation, the Related Transaction Documents; provided
that so long as the Borrower or any Subsidiary is contesting any claimed default
by it or them under any of the foregoing by proper proceedings conducted in good
faith and for which any proper reserve or other provision in accordance with and
to the extent required by GAAP has been made, such default shall not be deemed a
violation of this covenant.
Section 5.1.10. Minimum EBITDA. Have positive EBITDA for each period
-------------- --------------
consisting of Borrower's most recent fiscal quarter and the immediately
preceding Borrower fiscal quarter of not less than each amount set forth below
for the Borrower fiscal quarter(s) listed opposite the amount in question:
Borrower Fiscal Quarter(s) Ending Amount
--------------------------------- ------
December 31, 1999 $3,949,000
March 31, 2000 $3,605,000
June 30, 2000 $3,657,000
September 30, 2000 $4,328,000
December 31, 2000 $4,745,000
March 31, 2001 $4,561,000
June 30, 2001 $4,395,000
September 30, 2001 $4,887,000
December 31, 2001 and each Borrower $5,379,000
fiscal quarter end thereafter
Section 5.1.11. Minimum Debt Service Coverage Ratio. Maintain a Debt
-------------- -----------------------------------
Service Coverage Ratio of not less than 1.25:1.00, such ratio to be measured at
each Borrower fiscal quarter end for the rolling four Borrower fiscal quarter
period consisting of the Borrower fiscal quarter then ending and the three
immediately preceding Borrower fiscal quarters.
Section 5.1.12(A). Maximum Ratio of Total Indebtedness for Borrowed
----------------- ------------------------------------------------
Money to EBITDA. Maintain at the end of each fiscal quarter of the Borrower in
---------------
each period set forth below a ratio of (i) total Indebtedness for Borrowed Money
of the Borrower and its Subsidiaries on a consolidated basis as of the last day
of such fiscal quarter to (ii) EBITDA for the rolling four Borrower fiscal
quarter period consisting of such fiscal quarter and the three immediately
preceding Borrower fiscal quarters of not greater than the ratio set forth below
opposite such period:
49
<PAGE>
Borrower Fiscal Quarters Ending Ratio
------------------------------- -----
December 31, 1999 through 2.50:1.00
December 31, 2000
March 31, 2001 through 2.00:1.00
December 31, 2001
March 31, 2002 through 1.75:1.00
June 30, 2002
September 30, 2002 1.50:1.00
and thereafter
Section 5.1.12(B). Maximum Ratio of Senior Indebtedness for Borrowed
----------------- -------------------------------------------------
Money to EBITDA. Maintain at the end of each Borrower fiscal Money to EBITDA.
---------------
quarter in each period set forth below a ratio of (i) total Indebtedness for
Borrowed Money owing to the Agent and the Lenders of the Borrower and its
Subsidiaries plus the sum of Capitalized Lease Obligations, obligations under
Indebtedness secured by a Lien on any asset of the Borrower or any Subsidiary,
the seller notes listed on Exhibit 3.1.1.8 and the terminated employee notes
---------------
listed on Exhibit 3.1.1.8, to the extent that such seller notes and terminated
---------------
employee notes do not qualify as Subordinated Indebtedness, all on a
consolidated basis as of the last day of such fiscal quarter to (ii) EBITDA for
the rolling four Borrower fiscal quarter period consisting of such fiscal
quarter and the three immediately preceding Borrower fiscal quarters of not
greater than the ratio set forth below opposite such period:
Borrower Fiscal Quarters Ending Ratio
------------------------------- -----
December 31, 1999 through 2.00:1.00
December 31, 2000
March 31, 2001 through 1.50:1.00
December 31, 2001
March 31, 2002 through 1.25:1.00
June 30, 2002
September 30, 2002 1.00:1.00
and thereafter
Section 5.1.13. Officer's Certificates and Requests. Provide each
-------------- -----------------------------------
Officer's Certificate required under this Agreement and each Request so that the
Officer's statements contained therein are accurate and complete in all material
respects. Certificates and Requests.
Section 5.1.14. Depository. Use the Agent as a principal depository of
-------------- ----------
Borrower's funds.
Section 5.1.15. Chief Executive Officer. Maintain Karsan as chief
-------------- -----------------------
executive officer of the Borrower and as the Person with principal executive,
operating and management responsibility for the Borrower's business or obtain a
replacement of comparable experience and training in the Borrower's industry
within 180 days of his ceasing to act in such capacity.
50
<PAGE>
Section 5.1.16. Notice of Purchase of Real Estate, Leases, etc..
-------------- -----------------------------------------------
Promptly notify the Agent in the event that (i) the Borrower shall purchase any
real estate or enter into any lease of real estate or of equipment material to
the operation of the Borrower's business and (ii) the Borrower or any Subsidiary
shall have more than $50,000 (measured at the greater of book value or fair
market value) of assets in any jurisdiction in which the Agent does not have a
perfected Lien on such assets, supply the Agent with a copy of the related
purchase agreement or of such lease, as the case may be, and if requested by the
Agent, execute and deliver, or cause to be executed and delivered, to the Agent
for the benefit of the Lenders a deed of trust, UCC-1 financing statement,
mortgage, assignment or other document, together with landlord consents, in the
case of leased property, reasonably satisfactory in form and substance to the
Agent, granting a valid first Lien (subject only to any Permitted Encumbrances
on such real property, leasehold or assets as security for the Financing
Documents; provided, however that with respect to any Subsidiaries which are
Subsidiaries on the Closing Date the Borrower shall comply with the Post-Closing
Letter and only if any such Subsidiary's business has not been discontinued on
or prior to February 29, 2000, the Borrower shall then cause any such Subsidiary
to guaranty the Obligations and secure such guaranty with a first priority
(subject only to Permitted Encumbrances) perfected Lien on all such Subsidiary's
assets unless any such Subsidiary is organized under the laws of a nation other
than the United States, in which case only a pledge of 65% of such foreign
Subsidiary's capital stock shall be required.
Section 5.1.17. Additional Assurances. From time to time hereafter,
-------------- ---------------------
execute and deliver or cause to be executed and delivered, such additional
instruments, certificates and documents, and take all such actions, as the Agent
shall reasonably request for the purpose of implementing or effectuating the
provisions of the Financing Documents, and upon the exercise by the Agent of any
power, right, privilege or remedy pursuant to the Financing Documents which
requires any consent, approval, registration, qualification or authorization of
any governmental authority or instrumentality, exercise and deliver all
applications, certifications, instruments and other documents and papers that
the Agent may be so required to obtain. In addition, upon receipt of an
affidavit of an officer of any Lender as to the loss, theft, destruction or
mutilation of any of such Lender's Notes or any Security Document which is not
of public record, and, in the case of any such loss, theft, destruction or
mutilation, upon cancellation of any such Note or Security Document, Borrower
will issue, in lieu thereof, a replacement Note or Security Document in the same
principal amount thereof and otherwise of like tenor.
Section 5.1.18. Commercial Finance Examination. Permit the Agent and
-------------- ------------------------------
its agents, at any time and in the sole discretion of the Agent or at the
request of the Majority Lenders but not more often than once per year absent the
existence of an Event of Default, to conduct commercial finance examinations of
the Borrower's business, the cost of which, not to exceed $10,000 per
examination, shall be borne by the Borrower and the first of which shall be
conducted within sixty (60) days after the Closing Date.
Section 5.1.19. Environmental Compliance. Comply strictly and in all
-------------- ------------------------
material respects with the requirements of all federal, state, and local
environmental laws; notify the Lenders promptly in the event of any spill of
Hazardous Material materially affecting the Premises occupied by the Borrower
from time to time; forward to the Lenders promptly any written notices relating
to such matters received from any governmental agency; and pay promptly when due
any uncontested fine or assessment against the Premises.
51
<PAGE>
Section 5.1.20. Remediation. Immediately contain and remove any
-------------- -----------
Hazardous Material found on the Premises in compliance with applicable laws and
at the Borrower's expense, subject however, to the right of the Agent, at the
Agent's option but at the Borrower's expense, to have an environmental engineer
or other representative review the work being done.
Section 5.1.21. Site Assessments. Promptly upon the request of the
-------------- ----------------
Agent, based upon the Agent's reasonable belief that a material Hazardous Waste
or other environmental problem exists with respect to any Premises, provide the
Agent with a Phase I environmental site assessment report and, if Agent finds a
reasonable basis for further assessment in such Phase I assessment, a Phase II
environmental site assessment report, or an update of any existing report, all
in scope, form and content and performed by such company as may be reasonably
satisfactory to the Agent.
Section 5.1.22. Indemnity. Indemnify, defend, and hold the Agent and
-------------- ---------
the Lenders harmless from and against any claim, cost, damage (including without
limitation consequential damages), expense (including without limitation
reasonable attorneys' fees and expenses), loss, liability, or judgment now or
hereafter arising as a result of any claim for environmental cleanup costs, any
resulting damage to the environment and any other environmental claims against
the Borrower, any Subsidiary, the Lenders and/or the Agent arising out of the
transactions contemplated by this Agreement, or any of the Premises except for
claims arising solely out of conditions first existing and created after the
Borrower, the Parent and any Subsidiary completely vacated and has had no
presence on the Premises in question and arising solely out of activities of
Persons other than the Parent, the Borrower, any Subsidiaries, any Affiliates
and any agent, representative, employee, member, partner, officer or director of
any of the Borrower, the Parent, any Subsidiaries and any Affiliate. The
provisions of this Section shall continue in effect and shall survive (among
other events), until the applicable statute of limitations has expired, any
termination of this Agreement, foreclosure, a deed in lieu transaction, payment
and satisfaction of the Obligations of Borrower, and release of any collateral
for the Loans.
Section 5.1.23. Trademarks, Copyrights, etc. Concurrently with the
-------------- ---------------------------
acquisition of any trademark, tradename, copyright, patent or service mark
collaterally assign and grant a first priority perfected Lien thereon to the
Agent pursuant to documents in form and substance reasonably satisfactory to the
Agent.
Section 5.1.24. Key-Man Insurance. Borrower shall maintain in force,
-------------- -----------------
until canceled or modified with the written consent of the Majority Lenders, an
insurance policy on the life of Karsan in the amount of $6,000,000 and within 90
days of the Closing Date, $10,000,000 naming the Borrower as owner and
beneficiary and collaterally assigned to the Agent and the proceeds of which
shall be paid to the Agent for the accounts of the Lenders in accordance with
their Pro Rata Shares to be applied to payment of the principal of the Loans and
the Commitment shall be permanently reduced by said amount of the proceeds. The
obligations of the Borrower pursuant to this Section 5.1.24 shall terminate upon
--------------
the consummation of a Qualified Initial Public Offering.
52
<PAGE>
Section 5.2. Negative Covenants of the Borrower. From the date hereof and
----------- ----------------------------------
thereafter for so long as there is Indebtedness of the Borrower to any Lender
and/or the Agent under any of the Financing Documents or any part of the
Commitment is in effect, the Borrower will not, with respect to itself and,
unless noted otherwise below, with respect to the Parent and each of the
Subsidiaries, will ensure that the Parent and each such Subsidiary will not,
without the prior written consent of the Majority Lenders:
Section 5.2.1. Liens, etc. Create, incur, assume or suffer to exist
------------- ----------
any Lien of any nature, upon or with respect to any of its properties, now owned
or hereafter acquired, or assign as collateral or otherwise convey as
collateral, any right to receive income, except that the foregoing restrictions
shall not apply to any Liens:
Section 5.2.1.1. For taxes, assessments or governmental charges
---------------
or levies on property if the same shall not at the time be delinquent or
thereafter can be paid without penalty or interest, or (if foreclosure,
distraint, sale or other similar proceedings shall not have been commenced or if
commenced not stayed, bonded or discharged within 30 days after commencement)
are being contested in good faith and by appropriate proceedings diligently
conducted and for which proper reserve or other provision has been made in
accordance with and to the extent required by GAAP;
Section 5.2.1.2. Imposed by law, such as landlords', carriers',
---------------
warehousemen's and mechanics' liens, bankers' set off rights and other similar
Liens arising in the ordinary course of business for sums not yet due or being
contested in good faith and by appropriate proceedings diligently conducted and
for which proper reserve or other provision has been made in accordance with and
to the extent required by GAAP;
Section 5.2.1.3. Arising in the ordinary course of business out
---------------
of pledges or deposits under worker's compensation laws, unemployment insurance,
old age pensions, or other social security or retirement benefits, or similar
legislation;
Section 5.2.1.4. Arising from or upon any judgment or award,
---------------
provided that such judgment or award is being contested in good faith by proper
appeal proceedings and only so long as execution thereon shall be stayed;
Section 5.2.1.5. Those set forth on Exhibit 1.8;
--------------- -----------
Section 5.2.1.6. Those now or hereafter granted pursuant to the
---------------
Security Documents or otherwise now or hereafter granted to the Agent for the
benefit of the Lenders as collateral for the Loans and/or Borrower's other
Obligations arising in connection with or under any of the Financing Documents;
Section 5.2.1.7. Deposits to secure the performance of bids,
---------------
trade contracts (other than for Borrowed Money), leases, statutory obligations,
surety bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of the Borrower's or any Subsidiary's business;
53
<PAGE>
Section 5.2.1.8. Easements, rights of way, restrictions and other
---------------
similar encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of business by any Borrower or any
Subsidiary;
Section 5.2.1.9. Liens securing Indebtedness permitted to exist
---------------
under Section 5.2.8.3; provided that the Lien securing any such Indebtedness is
---------------
limited to the item of property purchased or leased in each case;
Section 5.2.1.10. UCC-1 financing statements filed solely for
----------------
notice or precautionary purposes by lessors under operating leases which do not
secure Indebtedness and which are limited to the items of equipment leased
pursuant to the lease in question; and
Section 5.2.2. Assumptions, Guaranties, etc. of Indebtedness of
------------- ------------------------------------------------
Other Persons. Assume, guarantee, endorse or otherwise become directly or
-------------
contingently liable in connection with any obligation or Indebtedness of any
other Person, except:
Section 5.2.2.1. Guaranties by endorsement of negotiable
---------------
instruments for deposit or collection or similar transactions in the ordinary
course of business;
Section 5.2.2.2. Assumptions, guaranties, endorsements and
---------------
contingent liabilities within the definition of Indebtedness and permitted by
Section 5.2.8; and
-------------
Section 5.2.2.3. Those set forth on Exhibit 5.2.2.
--------------- -------------
Section 5.2.3. Acquisitions, Dissolution, etc. Acquire, in one or a
------------- ------------------------------
series of transactions, all or any substantial portion of the assets or
ownership interests in another Person, or dissolve, liquidate, wind up, merge or
consolidate or combine with another Person or sell, assign, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) any
material assets, whether now owned or hereafter acquired, provided that during
the term of this Agreement Borrower can sell up to an aggregate of $100,000 of
assets other than accounts receivable and intellectual property including
without limitation any trade secrets, proprietary information, copyrights,
patents, trademarks or any applications therefor, software and source and object
codes relating thereto or any of the Borrower's or any Subsidiary's interests in
real property other than assets which are replaced within 30 days of any asset
sale, assignment, lease or disposition with assets of like kind, usefulness and
value; provided, however, that subsequent to satisfaction of the conditions
necessary to increasing the maximum Revolving Credit Loan Commitment to
$10,000,000 as contained in the definition thereof and with the prior written
consent of the New Stockholders, the Borrower shall be permitted to acquire all
or any portion of the assets of or ownership interests in another Person (by
merger, consolidation or otherwise so long as the Borrower survives) having
aggregate (for all such acquisitions since the Closing Date but excluding the
Related Transactions) consideration not to exceed $2,000,000 in cash and total
consideration including shares of Borrower's capital stock if (a) at the time of
any such acquisition the Borrower shall provide or grant or cause to be provided
or granted to the Agent a guaranty of the Obligations by any Subsidiary
resulting from any such acquisition and in any event a first priority perfected
Lien (subject only to Permitted Encumbrances) on the assets or
54
<PAGE>
ownership interests acquired, including without limitation the assets owned by
any Subsidiary, to the extent that the Agent does not already have such a Lien
and (b) that prior to the consummation of any such acquisition, Borrower shall
submit to the Agent a compliance certificate on a consolidated Pro Forma Basis
(including the to-be-acquired assets and any assumed liabilities or if ownership
interests are acquired, the to-be-acquired Person if such Person is to be a
Subsidiary and if not, the to-be-acquired ownership interests, all measured as
set forth below in this Section 5.2.3), which compliance certificate on a Pro
-------------
Forma Basis shall indicate that no Default or Event of Default exists or would
exist following consummation of the acquisition and that the Borrower would be
in compliance with (on a consolidated basis including the to-be-acquired assets
and any assumed liabilities or if ownership interests are acquired, the to-be-
acquired Person if such Person is to be a Subsidiary and if not, the to-be-
acquired ownership interests), Sections 5.1.10, 5.1.11, 5.1.12(A) and 5.1.12(B)
--------------- ------ --------- ---------
on a Pro Forma Basis following consummation of the acquisition, including the
to-be-acquired assets, Person or ownership interests and the operating results
thereof on the same basis and for the same periods as the Borrower is measured
for each such covenant, respectively and, in the event that any such acquisition
is for total consideration exceeding $1,000,000, the Borrower shall have
provided the Agent at least 14 days prior to the closing of the acquisition in
question with audited financial statements for the Person being acquired as of
the last day of the most recent fiscal quarter ending prior to such acquisition
of the Person being acquired; and provided, further that any financing provided
by any of the sellers in any such acquisition, including without limitation
Indebtedness, deferred compensation, noncompetition payments and "earnouts" or
other deferred or contingent purchase price payments shall be unsecured,
nonamortizing, constitute Subordinated Debt and shall mature at least 120 days
after the Revolving Credit Repayment Date (each, a "Permitted Acquisition") and
provided further that Borrower may make the Investments permitted under Section
-------
5.2.12.
------
Section 5.2.4. Change in Nature of Business. Make any material
------------- ----------------------------
change in the nature of its business.
Section 5.2.5. Ownership. Cause or permit the occurrence of any
------------- ---------
Change of Control.
Section 5.2.6. Sale and Leaseback; Synthetic Leases. Enter into any
------------- ------------------------------------
sale and leaseback arrangement with any lender or investor enter into any lease
treated as an operating lease under GAAP and as a loan or financing for United
States income tax purposes, or enter into any leases except in the normal course
of business at reasonable rents comparable to those paid for similar leasehold
interests in the area.
Section 5.2.7. Sale of Accounts, etc. Sell, assign, discount or
------------- ---------------------
dispose in any way of any accounts receivable, promissory notes or trade
acceptances held by the Borrower or any Subsidiary, with or without recourse,
except in the ordinary course of the Borrower's or any Subsidiary's business.
Section 5.2.8. Indebtedness. Incur, create, become or be liable
------------- ------------
directly or indirectly in any manner with respect to or permit to exist any
Indebtedness except:
Section 5.2.8.1. Indebtedness under the Financing Documents;
---------------
55
<PAGE>
Section 5.2.8.2. Indebtedness with respect to trade payable
---------------
obligations and other normal accruals and customer deposits in the ordinary
course of business not yet due and payable in accordance with customary trade
terms or with respect to which the Borrower or any Subsidiary is contesting in
good faith the amount or validity thereof by appropriate proceedings and then
only to the extent such person has set aside on its books adequate reserves
therefor in accordance with and to the extent required by GAAP;
Section 5.2.8.3. Indebtedness with respect to Capitalized Lease
---------------
Obligations and purchase money Indebtedness with respect to real or personal
property in an aggregate amount outstanding at any time not to exceed
$1,500,000; provided that the amount of any purchase money Indebtedness does not
exceed 90% of the lesser of the cost or fair market value of the asset purchased
with the proceeds of such Indebtedness;
Section 5.2.8.4. Unsecured Indebtedness in an aggregate amount
---------------
outstanding at any time not to exceed $250,000;
Section 5.2.8.5. Indebtedness listed on Exhibit 3.1.1.8 and
--------------- ---------------
Subordinated Debt;
Section 5.2.8.6. Indebtedness owing by the Borrower to any
---------------
Subsidiary which is a guarantor of the Obligations or by any Subsidiary which is
a guarantor of the Obligations to the Borrower or any other Subsidiary which is
a guarantor of the Obligations; provided, however, that any Indebtedness owing
by the Borrower or any Subsidiary to an Affiliate or a Subsidiary which is not a
guarantor of the Obligations shall be subordinated to the Obligations on terms
and conditions satisfactory to the Majority Lenders.
Section 5.2.8.7. Indebtedness permitted by Section 5.2.2.
--------------- -------------
Section 5.2.8.8. Indebtedness outstanding as a refinancing of
---------------
Indebtedness permitted under another clause of this Section 5.2.8 other than
-------------
Sections 5.2.8.2 or 5.2.8.8; provided that such Indebtedness as refinanced
---------------- -------
continues to qualify as permitted Indebtedness under the clause of this Section
-------
5.2.8 under which the refinanced Indebtedness was permitted under this Section
----- -------
5.2.8.
-----
Section 5.2.9. Other Agreements. Amend any of the terms or
------------- ----------------
conditions of any of the Related Transaction Documents in a manner materially
adverse to the Agent or any of the Lenders, its certificate of incorporation,
bylaws (or comparable applicable charter or governance document), the
Subordination Agreement, any other subordination agreement or any indenture,
agreement, document, note or other instrument evidencing, securing or relating
to any other Indebtedness permitted under Section 5.2.8.
-------------
Section 5.2.10. Payment or Prepayment of Equity or Subordinated Debt.
-------------- ----------------------------------------------------
Make any payment or prepayment of any principal of or interest on or any
payment, prepayment, redemption, defeasance, sinking fund payment, other
repayment of principal or capital or deposit for the purpose of any of the
foregoing on or in connection with any Subordinated Debt (other than regularly
scheduled payments of interest so long as no Default or Event of Default
exists),
56
<PAGE>
the Equity or any other equity or ownership interests in the Borrower, or make
any payment or prepayment of interest or principal on the terminated employee
notes or seller notes listed on Exhibit 3.1.1.8 if a Default or Event of Default
---------------
exists or would exist immediately after any such payment or prepayment or at the
end of the Borrower fiscal quarter in which any such payment or prepayment was
made.
Section 5.2.11. Dividends, Payments and Distributions. Declare or
-------------- -------------------------------------
pay any dividends, management fees or like fees or make any other distribution
of cash or property or both to any of the Stockholders other than (i)
reasonable compensation, (ii), without duplication, bonuses in accordance with
the Borrower's past practice, all for services rendered to the Borrower and/or
any Subsidiary and (iii) up to $75,000 per Borrower fiscal year in management
fees to one or more of the New Stockholders or use any of its assets for
payment, purchase, conversion, redemption, retention, acquisition or retirement
of any beneficial interest in the Borrower or set aside or reserve assets for
sinking or like funds for any of the foregoing purposes, make any other
distribution by reduction of capital or otherwise in respect of any beneficial
interest in the Borrower or permit any Subsidiary which is not a wholly-owned
Subsidiary so to do.
Section 5.2.12. Investments in or to Other Persons. Make or commit
-------------- ----------------------------------
to make any Investment in or to any other Person (including, without limitation,
any Subsidiary) other than (i) advances to employees for business expenses not
to exceed $10,000 in the aggregate outstanding for any one employee and not to
exceed $50,000 in the aggregate outstanding at any one time to all such
employees, (ii) other employee loans not to exceed $100,000 in the aggregate
outstanding at any one time to all such employees, (iii) Cash Equivalent
Investment, (iv) Investments in accounts, contract rights and chattel paper (as
defined in the Uniform Commercial Code) and notes receivable, arising or
acquired in the ordinary course of business, (v) Investments described on
Exhibit 5.2.2 and (vi) Permitted Acquisitions.
-------------
Section 5.2.13. Transactions with Affiliates. Except as contemplated
-------------- ----------------------------
by the Equity Documents and Related Transaction Documents, engage in any
transaction or enter into any agreement with an Affiliate, or in the case of
Affiliates or Subsidiaries, with the Borrower or another Affiliate or
Subsidiary, except in the ordinary course of business, as permitted by any other
provision of this Agreement and then only on an arm's length basis except as set
forth on Exhibit 5.2.13.
--------------
Section 5.2.14. Change of Fiscal Year. Change its accounting
-------------- ---------------------
policies, reporting practices or its fiscal year from those in effect on the
Closing Date.
Section 5.2.15. Subordination of Claims. Subordinate any present or
-------------- -----------------------
future claim against or obligation of another Person, except as ordered in a
bankruptcy or similar creditors' remedy proceeding of such other Person.
Section 5.2.16. Compliance with ERISA. With respect to Borrower and
-------------- ---------------------
any Commonly Controlled Entity (a) withdraw from or cease to have an obligation
to contribute to, any Multiemployer Plan so as to result in any material
liability of the Borrower or any Commonly Controlled Entity to PBGC or to any
Multiemployer Plan, (b) engage in any "prohibited transaction" (as defined in
Section 4975 of the Code) involving any Plan which
57
<PAGE>
would result in a material liability of the Borrower or any Commonly Controlled
Entity for an excise tax or civil penalty in connection therewith, (c) except
for any deficiency caused by a waiver of the minimum funding requirement under
sections 412 and/or 418 of the Code, as described above, incur or suffer to
exist any material "accumulated funding deficiency" (as defined in section 302
of ERISA and section 412 of the Code) of the Borrower or any Commonly Controlled
Entity, whether or not waived, involving any Single Employer Plan, (d) incur or
suffer to exist any Reportable Event or the appointment of a trustee or
institution of proceedings for appointment of a trustee for any Single Employer
Plan if, in the case of a Reportable Event, such event continues unremedied for
ten (10) days after notice of such Reportable Event pursuant to sections
4043(a), (c) or (d) of ERISA is given, if in the reasonable opinion of the
Majority Lenders any of the foregoing is likely to result in a material
liability of the Borrower or any Commonly Controlled Entity, (e) permit the
assets held under any Plan to be insufficient to protect all accrued benefits,
(f) allow or suffer to exist any event or condition, which presents a material
risk of incurring a material liability of the Borrower or any Commonly
Controlled Entity to PBGC by reason of termination of any such Plan or (g) cause
or permit any Plan maintained by Borrower and/or any Commonly Controlled Entity
to be out of compliance with ERISA. For purposes of this Section 5.2.16
--------------
"material liability" shall be deemed to mean any liability of Fifty Thousand
Dollars ($50,000) or more in the aggregate.
Section 5.2.17. [Intentionally omitted.].
--------------
Section 5.2.18. Hazardous Material. Become involved, or permit, to
-------------- ------------------
the extent reasonably possible after the exercise by the Borrower of reasonable
due diligence and preventive efforts, any tenant of its real property to become
involved, in any operations at such real property generating, storing,
disposing, or handling Hazardous Material or any other activity that could lead
to the imposition on the Borrower or the Agent or any Lender, or any such real
property of any material liability or Lien under any environmental laws.
Section 5.2.19. Other Restrictions on Liens or Dividends. Enter into
-------------- ----------------------------------------
any agreement or otherwise agree to or grant any restriction substantially
similar to the provisions of Section 5.2.1 hereof or which would otherwise have
-------------
the effect of prohibiting, restricting, impeding or interfering with the
creation subsequent to the Closing Date of additional Liens to secure the
Obligations.
Section 5.2.20. Limitation on Creation of Subsidiaries, etc..
-------------- --------------------------------------------
Establish, create or acquire any Subsidiary other than as a result of a
Permitted Acquisition or become the general partner in any general partnership.
Section 5.3. Reporting Requirements. From the date hereof and thereafter
----------- ----------------------
for so long as the Borrower is indebted to any Lender and/or the Agent under any
of the Financing Documents, the Borrower will, unless the Majority Lenders shall
otherwise consent in writing, furnish or cause to be furnished to the Agent for
distribution to the Lenders:
Section 5.3.1. As soon as possible and in any event upon acquiring
-------------
knowledge of an Event of Default or Default, continuing on the date of such
statement, the written statement of an Authorized Representative setting forth
details of such Event of Default or Default and the actions which the Borrower
has taken and proposes to take with respect thereto;
58
<PAGE>
Section 5.3.2. As soon as practicable after the end of each Borrower
-------------
fiscal year and in any event within 90 days after the end of each such fiscal
year, consolidated and consolidating balance sheets of the Borrower and any
Subsidiaries as at the end of such year, and the related statements of income
and cash flows or shareholders' equity of the Borrower and any Subsidiaries
setting forth in each case the corresponding figures for the preceding fiscal
year, such statements to be certified by a firm of independent certified public
accountants selected by Borrower and reasonably acceptable to the Majority
Lenders, to be accompanied by a true copy of said auditors' management letter,
if one was provided to the Borrower, and to contain a statement to the effect
that such accountants have examined Sections 5.1.10 through 5.1.12(B) and that
--------------- ---------
no Default or Event of Default exists on account of Borrower's failure to have
been in compliance therewith on the date of such statement;
Section 5.3.3. As soon as is practicable after the end of each fiscal
-------------
quarter of each Borrower fiscal year and in any event within 45 days thereafter,
consolidated balance sheets of the Borrower and any Subsidiaries as of the end
of such period and the related statements of income and cash flows and
shareholders' equity of the Borrower and any Subsidiaries, subject to changes
resulting from year-end adjustments, together, subject to Section 5.3.7, with a
-------------
comparison to the Budget for the applicable period, such balance sheets and
statements to be prepared and certified by an Authorized Representative in an
Officer's Certificate as having been prepared in accordance with GAAP except for
footnotes and year-end adjustments, and to be in form reasonably satisfactory to
the Agent;
Section 5.3.4. Simultaneously with the furnishing of each of the
-------------
year-end consolidated and consolidating financial statements of the Borrower and
any Subsidiaries to be delivered pursuant to Section 5.3.2 and each of the
-------------
consolidated quarterly statements of the Borrower and the Subsidiaries to be
delivered pursuant to Section 5.3.3 an Officer's Certificate of an Authorized
-------------
Representative which shall contain a statement in the form of Exhibit 3.1.1.10
----------------
to the effect that no Event of Default or Default has occurred, without having
been waived in writing, or if there shall have been an Event of Default not
previously waived in writing pursuant to the provisions hereof, or a Default,
such Officer's Certificate shall disclose the nature thereof and the actions the
Borrower has taken and prepare to take with respect thereto. Each such
Officer's Certificate shall also contain a calculation of and certify to the
accuracy of the amounts required to be calculated in the financial covenants of
the Borrower contained in this Agreement and described in Exhibit 3.1.1.10;
----------------
Section 5.3.5. Promptly after the commencement thereof, notice of all
-------------
material actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Borrower and/or any Subsidiary;
Section 5.3.6. The borrowing base certificates required pursuant to
-------------
Section 2.1 hereof;
-----------
Section 5.3.7. On or before January 31 of each fiscal year of the
-------------
Borrower, an updated proposed budget, prepared on a quarterly basis, and updated
financial projections for the Borrower and any Subsidiaries on a consolidated
basis (together, the "Budget") for such fiscal
59
<PAGE>
year, setting forth in detail reasonably satisfactory to the Agent the projected
results of operations of the Borrower and any Subsidiaries on a consolidated
quarterly basis, detailed Capital Expenditures plan and stating underlying
assumptions and accompanied by a written statement of an Authorized
Representative certifying as to the approval of such Budget by Borrower's board
of directors.
Section 5.3.8. Such other information respecting the Business
-------------
Condition of the Borrower or any Subsidiaries as the Agent or any Lender may
from time to time reasonably request;
Section 5.3.9. Written notice of the fact and of the details of any
-------------
sale or transfer of any ownership interest in the Borrower or any Subsidiary
given promptly after the Borrower acquires knowledge thereof; provided, however,
that this clause shall not be deemed to constitute or imply any consent to any
such sale or transfer;
Section 5.3.10. Prompt written notice of loss of any of the chief
--------------
executive officer, chief operating officer, chief financial officer, senior vice
president of sales and any team leader or any Material Adverse Effect and an
explanation thereof and of the actions the Borrower and/or such Subsidiary
propose to take with respect thereto; and
Section 5.3.11. Written notice of the following events, as soon as
--------------
possible and in any event within 15 days after the Borrower knows or has reason
to know thereof: (i) the occurrence or expected occurrence of any Reportable
Event with respect to any Plan, or (ii) the institution of proceedings or the
taking or expected taking of any other action by PBGC or the Borrower or any
Commonly Controlled Entity to terminate, withdraw or partially withdraw from any
Plan and, with respect to any Multiemployer Plan, the Reorganization (as defined
in Section 4241 of ERISA) or Insolvency (as defined in Section 4245 of ERISA) of
such Multiemployer Plan and in addition to such notice, deliver to the Agent
whichever of the following may be applicable: (a) an Officer's Certificate
setting forth details as to such Reportable Event and the action that the
Borrower or Commonly Controlled Entity proposes to take with respect thereto,
together with a copy of any notice of such Reportable Event that may be required
to be filed with PBGC, or b) any notice delivered by PBGC evidencing its intent
to institute such proceedings or any notice to PBGC that such Plan is to be
terminated, as the case may be.
ARTICLE 6.
EVENTS OF DEFAULT
Section 6.1. Events of Default. The Borrower shall be in default under
----------- -----------------
each of the Financing Documents, upon the occurrence of any one or more of the
following events ("Events of Default"):
Section 6.1.1. If the Borrower shall fail to make due and punctual
-------------
payment of any principal, fees, interest and/or other amounts payable under this
Agreement as provided in any Note and/or in this Agreement when the same is due
and payable except that it shall not be an
60
<PAGE>
Event of Default if any interest, fees and/or other amounts (excluding
principal) is paid within 5 days after it is due and payable, whether at the due
date thereof or at a date fixed for prepayment or if the Borrower shall fail to
make any such payment of fees, interest, principal and/or any other amount under
this Agreement and/or under any Note on the date when such payment becomes due
and payable by acceleration;
Section 6.1.2. If the Borrower or any Subsidiary shall make an
-------------
assignment for the benefit of creditors, or shall fail generally to pay its
debts as they become due, or shall admit in writing its inability to pay its
debts as they become due or shall file a voluntary petition in bankruptcy, or
shall file any petition or answer seeking any reorganization, arrangement,
composition, adjustment, liquidation, dissolution or similar relief under the
present or any future federal bankruptcy laws or other applicable federal, state
or other statute, law or regulation, or shall seek or consent to or acquiesce in
the appointment of any trustee, receiver or liquidator of it or of all or any
substantial part of its properties, or if partnership or corporate action shall
be taken for the purpose of effecting any of the foregoing; or
Section 6.1.3. To the extent not described in Section 6.1.2, (i) if
------------- -------------
the Borrower or any Subsidiary shall be the subject of a bankruptcy proceeding,
or (ii) if any proceeding against any of them seeking any reorganization,
arrangement, composition, adjustment, liquidation, dissolution, or similar
relief under the present or any future federal bankruptcy law or other
applicable federal, foreign, state or other statute, law or regulation shall be
commenced, or (iii) if any trustee, receiver or liquidator of any of them or of
all or any substantial part of any or all of their properties shall be appointed
without their consent or acquiescence; provided that in any of the cases
described above in this Section 6.1.3, such proceeding or appointment shall not
-------------
be an Event of Default if the Borrower or the Subsidiary in question shall cause
such proceeding or appointment to be discharged, vacated, dismissed or stayed
within sixty (60) days after commencement thereof; or
Section 6.1.4. If final judgment or judgments aggregating more than
-------------
$250,000 shall be rendered against the Borrower or any Subsidiary and shall
remain undischarged, unstayed or unpaid for an aggregate of thirty (30) days
(whether or not consecutive) after entry thereof; or
Section 6.1.5. If the Borrower or any Subsidiary shall default (after
-------------
giving effect to any applicable grace period) in the due and punctual payment of
the principal of or interest on any Indebtedness exceeding in the aggregate
$250,000 (other than the Loans), or if any default shall have occurred and be
continuing after any applicable grace period under any mortgage, note or other
agreement evidencing, securing or providing for the creation of such
Indebtedness, which results in the acceleration of such Indebtedness or which
permits, or with the giving of notice would permit, any holder or holders of any
such Indebtedness to accelerate the stated maturity thereof; or
Section 6.1.6. If there shall be a default in the performance of the
-------------
Borrower's obligations under Section 5.1.3 (insofar as such Section requires the
-------------
preservation of the corporate existence of the Borrower or any Subsidiary), any
of Sections 5.1.2, 5.1.10 through 5.1.12(B) or Section 5.2 of this Agreement or
-------------- ------ --------- -----------
under any covenant, representation or warranty contained in
61
<PAGE>
any of the Security Documents for which no cure period is provided in such
Security Document; or
Section 6.1.7. If there shall be any Default in the performance of
-------------
any covenant or condition contained in this Agreement or in any of the other
Financing Documents to be observed or performed pursuant to the terms hereof or
any Financing Document, as the case may be, or to the extent such Default would
have a Material Adverse Effect, by the Borrower under any of the Related
Transaction Documents, other than a covenant or condition referred to in any
other subsection of this Section 6.1 and such Default shall continue unremedied
-----------
or unwaived, (i) in the case of any covenant or condition contained in Section
-------
5.3, for fifteen (15) Business Days, or (ii) in the case of any other covenant
---
or condition for which no other grace period is provided, for thirty (30) days,
or (iii) in the case of any other covenant or condition for which another grace
period is provided, for such grace period, or (iv) if any of the representations
and warranties made or deemed made by the Borrower to the Agent and/or any
Lender pursuant to any of the Financing Documents proves to have been false or
misleading in any material respect when made and such falseness or misleading
representation or warranty would be reasonably likely to have a material
adverse effect on the Agent or any Lender or their rights and remedies or a
Material Adverse Effect; or
Section 6.1.8. If there shall be any attachment of any deposits or
-------------
other property of the Borrower and/or any Subsidiary in the possession of any
Lender or any attachment of any other property of the Borrower and/or any
Subsidiary in an amount exceeding $250,000, which shall not be discharged,
vacated or stayed within thirty (30) days of the date of such attachment; or
Section 6.1.9. Any certification of the financial statements,
-------------
furnished to the Agent pursuant to Section 5.3.2, shall contain any
-------------
qualification; provided, however, that such qualifications will not be deemed an
Event of Default if in each case (i) such certification shall state that the
examination of the financial statements covered thereby was conducted in
accordance with generally accepted auditing standards, including but not limited
to all such tests of the accounting records as are considered necessary in the
circumstances by the independent certified public accountants preparing such
statements, (ii) such financial statements were prepared in accordance with GAAP
and (iii) such qualification does not involve the "going concern" status of the
entity being reported upon.
ARTICLE 7.
REMEDIES OF LENDERS
Upon the occurrence and during the continuance of any one or more of the
Events of Default, the Agent, at the request of the Majority Lenders, shall, by
written notice to the Borrower, declare the obligation of the Lenders to make or
maintain the Loans to be terminated, whereupon the same and the Commitment shall
forthwith terminate, and the Agent, at the request of the Majority Lenders,
shall, by notice to the Borrower, declare the entire unpaid principal amount of
each Note and all fees and interest accrued and unpaid thereon and/or under this
Agreement, and/or any of the other Financing Documents and any and all other
Indebtedness
62
<PAGE>
under this Agreement, each Note and/or any of the other Financing Documents to
the Agent and/or any of the Lenders and/or to any holder of all or any portion
of each Note to be forthwith due and payable, whereupon each Note, and all such
accrued fees and interest and other such Indebtedness shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower;
provided, however, that upon the occurrence of an Event of Default under
Sections 6.1.2 or 6.1.3, all of the unpaid principal amount of each Note, all
-------------- -----
fees and interest accrued and unpaid thereon and/or under this Agreement and/or
under any of the other Financing Documents and any and all other such
Indebtedness of the Borrower to any of the Lenders and/or to any such holder
shall thereupon be due and payable in full without any need for the Agent and/or
any Lender to make any such declaration or take any action and the Lenders'
obligations to make the Loans shall simultaneously terminate. The Agent shall,
in accordance with the votes of the Majority Lenders, exercise all remedies on
behalf of and for the account of each Lender and on behalf of its respective Pro
Rata Share of the Loans, its Note and Indebtedness of the Borrower owing to it
or any of the foregoing, including, without limitation, all remedies available
under or as a result of this Agreement, the Notes or any of the other Financing
Documents or any other document, instrument or agreement now or hereafter
securing any Note without any such exercise being deemed to modify in any way
the fact that each Lender shall be deemed a separate creditor of the Borrower to
the extent of its Note and Pro Rata Share of the Loans and any other amounts
payable to such Lender under this Agreement and/or any of the other Financing
Documents and the Agent shall be deemed a separate creditor of the Borrower to
the extent of any amounts owed by the Borrower to the Agent.
ARTICLE 8.
AGENT
Section 8.1. Appointment. The Agent is hereby appointed as administrative
----------- -----------
and collateral agent, hereunder and each Lender hereby authorizes the Agent to
act under the Financing Documents as its Agent hereunder and thereunder,
respectively. The Agent agrees to act as such upon the express conditions
contained in this Article 8. The provisions of this Article 8 are solely for
the benefit of the Agent, and, except as expressly provided in Section 8.6,
-----------
neither the Borrower nor any third party shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement and the other Financing Documents to which the Agent
is a party, the Agent shall act solely as Agent of the Lenders and does not
assume nor shall the Agent be deemed to have assumed any obligation towards or
relationship of agency or trust with or for the Borrower, any of the
Stockholders, any Affiliate or any Subsidiary.
Section 8.2. Powers; General Immunity.
----------- ------------------------
Section 8.2.1. Duties Specified. Each Lender irrevocably authorizes
------------- ----------------
the Agent to take such action on such Lender's behalf, including, without
limitation, to execute and deliver the Financing Documents to which the Agent is
a party and to exercise such powers hereunder and under the Financing Documents
and other instruments and agreements referred to herein as are specifically
delegated to the Agent by the terms hereof and thereof, together with such
powers as
63
<PAGE>
are reasonably incidental thereto. The Agent shall have only those duties and
responsibilities which are expressly specified in this Agreement or in any of
the Financing Documents and may perform such duties by or through its agents or
employees. The duties of the Agent shall be mechanical and administrative in
nature; and the Agent shall not have by reason of this Agreement or any of the
Financing Documents a fiduciary relationship in respect of any Lender; and
nothing in this Agreement or any of the Security Documents, expressed or
implied, is intended to or shall be so construed as to impose upon the Agent any
obligations in respect of this Agreement or any of the Financing Documents or
the other instruments and agreements referred to herein except as expressly set
forth herein or therein.
Section 8.2.2. No Responsibility For Certain Matters. The Agent
------------- -------------------------------------
shall not be responsible to any Lender for the execution, effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of any of
the Financing Documents or any other document, instrument or agreement now or
hereafter executed in connection herewith or therewith, or for any
representations, warranties, recitals or statements made herein or therein or
made in any written or oral statement or in any financial or other statements,
instruments, reports, certificates or any other documents in connection herewith
or therewith by or on behalf of the Borrower, any of the Affiliates, and/or any
Subsidiary to the Agent or any Lender, or be required to ascertain or inquire as
to the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained herein or therein or as to the use of the
proceeds of the Loans or of the existence or possible existence of any Default
or Event of Default.
Section 8.2.3. Exculpatory Provisions. Neither the Agent nor any of
------------- ----------------------
its officers, directors, employees or agents shall be liable to any Lender for
any action taken or omitted hereunder or under any of the Financing Documents,
or in connection herewith or therewith unless caused by its or their gross
negligence or willful misconduct. If the Agent shall request instructions from
Lenders with respect to any action (including the failure to take an action) in
connection with any of the Financing Documents, the Agent shall be entitled to
refrain from taking such action unless and until the Agent, shall have received
instructions from the Majority Lenders (or all of the Lenders if the action
requires their consent). Without prejudice to the generality of the foregoing,
(i) the Agent shall be entitled to rely, and shall be fully protected in
relying, upon any communication, instrument or document believed by it to be
genuine and correct and to have been signed or sent by the proper person or
persons, and shall be entitled to rely and shall be protected in relying on
opinions and judgments of attorneys (who may be attorneys for the Borrower, any
of the Affiliates, and/or any Subsidiary), accountants, experts and other
professional advisors selected by it; and (ii) no Lender shall have any right of
action whatsoever against the Agent as a result of the Agent acting or (where so
instructed) refraining from acting under any of the Financing Documents or the
other instruments and agreements referred to herein in accordance with the
instructions of the Majority Lenders (or all of the Lenders if the action
requires their consent). The Agent shall be entitled to refrain from exercising
any power, discretion or authority vested in it under any of the Financing
Documents or the other instruments and agreements referred to herein unless and
until it has obtained the instructions of the Majority Lenders (or all of the
Lenders if the action requires their consent).
Section 8.2.4. Agent Entitled to Act as Lender. The agency hereby
------------- -------------------------------
created shall in no way impair or affect any of the rights and powers of, or
impose any duties or obligations upon, Fleet in its individual capacity as a
Lender hereunder. With respect to its participation in
64
<PAGE>
the Loans and the Commitment, Fleet shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
performing the duties and functions delegated to it hereunder, and the term
"Lender" or "Lenders" or any similar term shall, unless the context clearly
otherwise indicates, include Fleet in its individual capacity. The Agent and its
affiliates may accept deposits from, lend money to and generally engage in any
kind of banking, trust, financial advisory or other business with the Borrower,
any of the Stockholders, or any Affiliate or Subsidiary as if it were not
performing the duties specified herein, and may accept fees and other
consideration from the Borrower and/or any of such other Persons for services in
connection with this Agreement and otherwise without having to account for the
same to Lenders.
Section 8.3. Representations and Warranties; No Responsibility for
----------- -----------------------------------------------------
Appraisal of Creditworthiness. Each Lender represents and warrants that it has
-----------------------------
made its own independent investigation of the financial condition and affairs of
the Borrower, the Stockholders and any Subsidiaries of any of them in connection
with the making of the Loans hereunder and has made and shall continue to make
its own appraisal of the creditworthiness of the Borrower, the Stockholders and
the Subsidiaries. The Agent shall not have any duty or responsibility, either
initially or on a continuing basis, to make any such investigation or any such
appraisal on behalf of Lenders or to provide any Lender with any credit or other
information with respect thereto whether coming into its possession before the
making of any Loan or any time or times thereafter (except for information
received by the Agent under Section 5.3 hereof which the Agent will promptly
-----------
forward to the Lenders), and the Agent shall further not have any responsibility
with respect to the accuracy of or the completeness of the information provided
to any of the Lenders.
Section 8.4. Right to Indemnity. Each Lender severally agrees to
----------- ------------------
indemnify the Agent proportionately to its Pro Rata Share of the Loans, to the
extent the Agent shall not have been reimbursed by or on behalf of the Borrower,
for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including, without
limitation, counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in performing its duties hereunder or in any way relating to or arising
out of this Agreement and/or any of the other Financing Documents; provided that
--------
no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or willful misconduct.
If any indemnity furnished to the Agent for any purpose shall, in the opinion of
the Agent, be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished.
Section 8.5. Payee of Note Treated as Owner. The Agent may deem and treat
----------- ------------------------------
the payee of any Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment or transfer thereof shall have been
filed with the Agent. Any request, authority or consent of any person or entity
who, at the time of making such request or giving such authority or consent, is
the holder of any Note shall be conclusive and binding on any subsequent holder,
transferee or assignee of that Note or of any Note or Notes issued in exchange
for such Note.
65
<PAGE>
Section 8.6. Resignation by Agent.
----------- --------------------
Section 8.6.1. The Agent may resign from the performance of all its
-------------
functions and duties under the Financing Documents at any time by giving 30
days' prior written notice to the Borrower and each of the Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent, of
appointment pursuant to Sections 8.6.2 and 8.6.3 below or as otherwise provided
-------------- -----
below.
Section 8.6.2. Upon any such notice of resignation, the Majority
-------------
Lenders shall appoint a successor Agent, who shall be a Lender and, so long as
no Default or Event of Default exists and is continuing, who shall be reasonably
satisfactory to the Borrower and in any event shall be an incorporated bank or
trust company with a combined surplus and undivided capital of at least Five
Hundred Million Dollars ($500,000,000).
Section 8.6.3. If a successor Agent shall not have been so appointed
-------------
within said 30 day period, the resigning Agent, with the consent of the
Borrower, which shall not be unreasonably withheld or delayed, shall then
appoint a successor Agent, who shall be a Lender and who shall serve as the
Agent, until such time, if any, as the Majority Lenders, and so long as no
Default or Event of Default exists and is continuing, with the consent of the
Borrower, which shall not be unreasonably withheld or delayed, appoint a
successor Agent as provided above.
Section 8.6.4. If no successor Agent has been appointed pursuant to
-------------
Sections 8.6.2 or 8.6.3 by the 40th day after the date such notice of
-------------- -----
resignation was given by the resigning Agent, the resigning Agent's resignation
shall become effective and the Majority Lenders shall thereafter perform all the
duties of the resigning Agent under the Financing Documents including without
limitation directing the Borrower on how to submit Requests and Interest Rate
Elections and otherwise on administration of the Agent's duties under the
Financing Documents and the Borrower shall comply therewith so long as such
directions do not have a Material Adverse Effect on the Borrower or any
Subsidiary until such time, if any, as the Majority Lenders, and so long as no
Default or Event of Default exists and is continuing, with the consent of the
Borrower, which shall not be unreasonably withheld or delayed, appoint a
successor Agent, as provided above.
Section 8.7. Successor Agent. Upon the acceptance of any appointment as
----------- ---------------
the Agent hereunder by a successor Agent, that successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent and the retiring Agent, shall be discharged from its
duties and obligations as the Agent under the Financing Documents. After any
retiring Agent's resignation hereunder as the Agent the provisions of this
Article 8 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was the Agent under the Financing Documents.
ARTICLE 9.
MISCELLANEOUS
Section 9.1. Consent to Jurisdiction and Service of Process.
----------- ----------------------------------------------
66
<PAGE>
Section 9.1.1. Except to the extent prohibited by applicable law, the
-------------
Borrower irrevocably:
Section 9.1.1.1. agrees that any suit, action, or other legal
---------------
proceeding arising out of any of the Financing Documents or any of the Loans may
be brought in the courts of record of the Commonwealth of Massachusetts or any
other state(s) in which any of the Borrower's or any Subsidiary's assets are
located or the courts of the United States located in the Commonwealth of
Massachusetts or any other state(s) in which any of the Borrower's or any
Subsidiary's assets are located;
Section 9.1.1.2. consents to the jurisdiction of each such court
---------------
in any such suit, action or proceeding; and
Section 9.1.1.3. waives any objection which it may have to the laying
---------------
of venue of such suit, action or proceeding in any of such courts.
For such time as any of the Indebtedness of the Borrower to any Lender
and/or the Agent shall be unpaid in whole or in part and/or the Commitment is in
effect, the Borrower irrevocably designates the registered agent or agent for
service of process of the Borrower as reflected in the records of the Secretary
of State of the Commonwealth of Pennsylvania as its registered agent, and, in
the absence thereof, the Secretary of State of the Commonwealth of Pennsylvania
as its agent to accept and acknowledge on its behalf service of any and all
process in any such suit, action or proceeding brought in any such court and
agrees and consents that any such service of process upon such agent and written
notice of such service to the Borrower by registered or certified mail shall be
taken and held to be valid personal service upon the Borrower regardless of
where the Borrower shall then be doing business and that any such service of
process shall be of the same force and validity as if service were made upon it
according to the laws governing the validity and requirements of such service in
each such state and waives any claim of lack of personal service or other error
by reason of any such service. Any notice, process, pleadings or other papers
served upon the aforesaid designated agent shall, within three (3) Business Days
after such service, be sent by the method provided therefor under Section 9.6 to
-----------
the Borrower at its address set forth in this Agreement. BORROWER, AGENT AND
LENDERS MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT
TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT, ANY NOTE OR ANY OTHER LOAN DOCUMENTS
CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT,
COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR EACH OF THE LENDERS TO
ENTER INTO THIS AGREEMENT, ACCEPT ITS NOTE AND MAKE THE LOANS.
Section 9.2. Rights and Remedies Cumulative. No right or remedy conferred
----------- ------------------------------
upon or reserved to the Agent and/or the Lenders in any of the Financing
Documents is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given under any of the Financing
Documents or now or hereafter existing at law or in equity or otherwise. The
67
<PAGE>
assertion or employment of any right or remedy under any of the Financing
Documents, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 9.3. Delay or Omission not Waiver. No delay in exercising or
----------- ----------------------------
failure to exercise by the Agent and/or the Lenders of any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by any of the Financing
Documents or by law to the Agent and/or any of the Lenders may be exercised
from time to time, and as often as may be deemed expedient, by the Agent and/or
any of the Lenders.
Section 9.4. Waiver of Stay or Extension Laws. The Borrower covenants (to
----------- --------------------------------
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of any of the Financing
Documents; and the Borrower (to the extent that it may lawfully do so) hereby
expressly waives all benefit and advantage of any such law and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Agent and/or any of the Lenders, but will suffer and permit the execution of
every such power as though no such law had been enacted, except to the extent
the Agent or any Lender is guilty of willful misconduct or gross negligence.
Section 9.5. Amendments, etc. No amendment, modification, termination, or
----------- ---------------
waiver of any provision of any of the Financing Documents nor consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be in a written notice given to the Borrower by the Agent and
consented to in writing by the Majority Lenders (or by the Agent acting alone if
any specific provision of this Agreement provides that the Agent, acting alone,
may grant such amendment, modification, termination, waiver or departure) and
the Agent shall give any such notice if the Majority Lenders so consent or
direct the Agent to do so; provided, however, that any such amendment,
modification, termination, waiver or consent shall require a written notice
given to the Borrower by the Agent and consented to in writing by all of the
Lenders if the effect thereof is to (i) change any of the provisions affecting
the interest rate or fees on the Loans so as to reduce said interest rate or
fees, (ii) extend or modify the Commitment, (iii) discharge or release the
Borrower from its obligation to repay all principal due under the Loans or
release any collateral or guaranty for the Loans, (iv) change any Lender's Pro
Rata Share of the Commitment or the Loans, (v) modify this Section 9.5, (vi)
-----------
change the definition of Majority Lenders, (vii) extend any scheduled due date
for payment of principal, interest or fees or (viii) permit the Borrower to
assign any of its rights under or interest in this Agreement, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. Any amendment or modification of this
Agreement must be signed by the Borrower, the Agent and at least all of the
Lenders consenting thereto who shall then hold the Pro Rata Shares of the Loans
required for such amendment or modification under this Section 9.5 and the Agent
-----------
shall sign any such amendment if such Lenders so consent or direct the Agent to
do so provided that any Lender dissenting therefrom shall be given an
opportunity to sign any such amendment or modification. Any amendment of any of
the Security Documents must be signed by each of the parties thereto. No notice
to or demand on the Borrower and no consent, waiver or departure from the terms
of this Agreement granted by
68
<PAGE>
the Agent and/or the Lenders in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances.
Section 9.6. Addresses for Notices, etc. All notices, requests, demands
----------- --------------------------
and other communications provided for hereunder (other than those which, under
the terms of this Agreement, may be given by telephone, which shall be effective
when received verbally) shall be in writing (including telecopied communication)
and mailed (provided that in the case of items referred to in the next-to-last
sentence of Section 9.1 and the items set forth below as requiring a copy to
-----------
legal counsel for the Borrower, the Agent or a Lender, such items shall be
mailed by overnight courier for delivery the next Business Day), telecopied or
delivered to the applicable party at the addresses indicated below:
If to the Borrower:
Raymond Karsan Associates, Inc.
170 South Warner Road
Suite 110
Wayne, PA 19087
Attn: Chief Financial Officer
Telecopy: (610) 971-2435
With a copy to (if given pursuant to any of Sections 5.3.1, 5.3.5, 5.3.9,
-------------- ----- -----
5.3.10 and 5.3.11):
------ ------
Pepper Hamilton, LLP
3000 Two Logan Square
18/th/ & Arch Streets
Philadelphia, PA 19103
Attn: Lisa R. Jacobs, Esq.
Telecopy: (215) 981-4750
If to Fleet as the Agent and/or a Lender:
Fleet National Bank
Mailstop: 01-08-08
100 Federal Street
Boston, MA 02110
Attn: Daniel A. Head, Jr., Senior Vice President
Telecopy: (617) 434-0819
69
<PAGE>
With a copy to (if given pursuant to any of Sections 5.3.1, 5.3.5, 5.3.9,
-------------- ----- -----
5.3.10 and 5.3.11)
------ ------
Hinckley, Allen & Snyder LLP
28 State Street
Boston, MA 02109
Attention: Malcolm Farmer III
Telecopy: (617) 345-9020
If to any other Lender, to the address set forth on Exhibit 1.9.
-----------
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party complying as to the delivery with the
terms of this Section. All such notices, requests, demands and other
communications shall be effective when received. Requests, certificates, other
items provided pursuant to Section 5.3 and other routine mailings or notices
-----------
need not be accompanied by a copy to legal counsel for the Lenders or the
Borrower.
Section 9.7. Costs, Expenses and Taxes. The Borrower agrees to pay on
----------- -------------------------
demand after receipt of an invoice describing services performed and
disbursements incurred and covering estimated future disbursements and services
the reasonable fees and out-of-pocket expenses of Messrs. Hinckley, Allen &
Snyder LLP, counsel for the Agent and of any local counsel retained by the Agent
in connection with the preparation, execution, delivery, syndication and
administration of the Financing Documents and the Loans. The Borrower agrees to
pay on demand all reasonable costs and expenses (including without limitation
reasonable attorneys' fees) incurred by the Agent and/or any Lender, upon or
after the occurrence and during the continuance of any Default or Event of
Default, if any, in connection with the enforcement of any of the Financing
Documents and any amendments, waivers or consents with respect thereto. In
addition, the Borrower shall pay on demand any and all stamp and other taxes and
fees payable or determined to be payable in connection with the execution and
delivery of the Financing Documents, and agrees to save the Lenders and the
Agent harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes or fees, except
those resulting from the Lenders' or Agent's gross negligence or willful
misconduct.
Section 9.8. Participations. Subject to compliance with the proviso in
----------- --------------
the first sentence of Section 9.11, any Lender may sell participations in all or
------------
part of the Loans made by it and/or its Pro Rata Share of the Commitment or any
other interest herein to a financial institution having at least $500,000,000 of
assets, in which event the participant shall not have any rights under any of
the Financing Documents (the participant's rights against such Lender in respect
of that participation to be those set forth in the Agreement executed by such
Lender in favor of the participant relating thereto) and all amounts payable by
the Borrower hereunder or thereunder shall be determined as if such Lender had
not sold such participation. Such Lender may furnish any information concerning
the Borrower and any Subsidiary in the possession of such Lender from time to
time to participants (including prospective participants); provided that such
Lender and any participant comply with the proviso in Section 9.11.7 as if any
--------------
such participant was a Substituted Lender.
70
<PAGE>
Section 9.9. Binding Effect; Assignment. This Agreement shall be binding
----------- --------------------------
upon and inure to the benefit of the Borrower, the Agent and the Lenders and
their respective successors and assigns, except that the Borrower shall not have
the right to assign its rights hereunder or any interest herein without the
prior written consent of the Agent and the Lenders. This Agreement and all
covenants, representations and warranties made herein and/or in any of the other
Financing Documents shall survive the making of the Loans, the execution and
delivery of the Financing Documents and shall continue in effect so long as any
amounts payable under or in connection with any of the Financing Documents or
any other Indebtedness of the Borrower to the Agent and/or any Lender remains
unpaid or the Commitment remains outstanding; provided, however, that Sections
--------
2.2.3 and 9.7 shall, except to the extent agreed to in a pay-off letter by the
----- ---
Agent and the Lenders in their complete discretion, survive and remain in full
force and effect for 90 days following repayment in full of all amounts payable
under or in connection with all of the Financing Documents and any other such
Indebtedness.
Section 9.10. Actual Knowledge. For purposes of this Agreement, neither
------------ ----------------
the Agent nor any Lender shall be deemed to have actual knowledge of any fact or
state of facts unless the senior loan officer or any other officer responsible
for the Borrower's account established pursuant to this Agreement at the Agent
or such Lender, shall, in fact, have actual knowledge of such fact or state of
facts or unless written notice of such fact shall have been received by the
Agent or such Lender in accordance with Section 9.6.
-----------
Section 9.11. Substitutions and Assignments. Upon the request of any
------------ -----------------------------
Lender, the Agent and such Lender may assign or pledge all or any portion of
such Lender's Pro Rata Share of the Commitment and the Loans to an affiliate or
Related Fund of such Lender (so long as such affiliate or Related Fund is at
least adequately capitalized under any applicable federal regulations) or to
another Lender and may, subject to the terms and conditions hereinafter set
forth and with the prior written consent of the Agent and, so long as no Default
or Event of Default exists, the Borrower which shall not be unreasonably
withheld or delayed, take the actions set forth below to substitute one or more
other funds or financial institutions having at least $500,000,000 in assets and
being at least adequately capitalized under applicable federal regulations (all
of the foregoing assignees other than a Federal Reserve Bank being hereinafter
called a "Substituted Lender") as a Lender or Lenders hereunder having an amount
------------------
of the Loans as specified in the relevant Assignment and Acceptance executed in
connection therewith; provided that no Lender, together with any affiliate or
Related Fund of such Lender, shall have or shall assign a Pro Rata Share of the
Commitment and the Loans in the aggregate of less than 25% and Fleet and/or its
affiliates shall retain for their own account at least 51% of the Revolving
Credit Loan Commitment.
Section 9.11.1. In connection with any such substitution the
--------------
Substituted Lender and the Agent shall enter into a Assignment and Acceptance in
the form of Exhibit 9.11.1 hereto (an "Assignment and Acceptance") pursuant to
--------------
which such Substituted Lender shall be substituted for the Lender requesting the
substitution in question (any such Lender being hereinafter referred to as a
"Selling Lender") to the extent of the reduction in the Selling Lender's portion
of the Loans specified therein. In addition, such Substituted Lender shall
assume such of the obligations of each Selling Lender under the Financing
Documents as may be specified in such Assignment and Acceptance and this
Agreement shall be amended by execution and delivery of each Substitution
Agreement to include such Substituted Lender as a Lender for all
71
<PAGE>
purposes under the Financing Documents and to substitute for the then existing
Exhibit 1.9 to this Agreement a new Exhibit 1.9 in the form of Schedule A to
----------- -----------
such Assignment and Acceptance setting forth the portion of the Loans belonging
to each Lender following execution thereof. The Agent, each Selling Lender and
the Borrower shall countersign and accept delivery of each Assignment and
Acceptance.
Section 9.11.2. Without prejudice to any other provision of this
--------------
Agreement, each Substituted Lender shall, by its execution of an Assignment and
Acceptance, agree that neither the Agent nor any Lender is any way responsible
for or makes any representation or warranty as to: (a) the accuracy and/or
completeness of any information supplied to such Substituted Lender in
connection therewith, (b) the financial condition, creditworthiness, affairs,
status or nature of the Borrower, any of the Affiliates and/or any of the
Subsidiaries or the observance by the Borrower, or any other party of any of its
obligations under this Agreement or any of the other Financing Documents or (c)
the legality, validity, effectiveness, adequacy or enforceability of any of the
Financing Documents.
Section 9.11.3. The Agent shall be entitled to rely on any Assignment
--------------
and Acceptance delivered to it pursuant to this Section 9.11 which is complete
------------
and regular on its face as to its contents and appears to be signed on behalf of
the Substituted Lender which is a party thereto, and the Agent shall have no
liability or responsibility to any party as a consequence of relying thereon and
acting in accordance with and countersigning any such Assignment and Acceptance.
The effective date of each Assignment and Acceptance shall be the date specified
as such therein and each Lender prior to such effective date shall, for all
purposes hereunder, be deemed to have and possess all of their respective rights
and obligations hereunder up to 12:00 o'clock Noon on the effective date
thereof.
Section 9.11.4. Upon delivery to the Agent of any Assignment and
--------------
Acceptance pursuant to and in accordance with this Section 9.11 and acceptance
------------
thereof by the Agent (which delivery shall be evidenced and accepted exclusively
and conclusively by the Agent's countersignature thereon pursuant to the terms
hereof without which such Assignment and Acceptance shall be ineffective): (i)
except as provided hereunder and in Section 9.11.5, the respective rights of
--------------
each Selling Lender and the Borrower against each other under the Financing
Documents with respect to the portion of the Loans being assigned or delegated
shall be terminated and each Selling Lender and the Borrower shall each be
released from all further obligations to the other hereunder with respect
thereto (all such rights and obligations to be so terminated or released being
referred to in this Section 9.11 as "Discharged Rights and Obligations"); and
------------
(ii) the Borrower and the Substituted Lender shall each acquire rights against
each other and assume obligations towards each other which differ from the
Discharged Rights and Obligations only in so far as the Borrower and the
Substituted Lender have assumed and/or acquired the same in place of the Selling
Lender in question; and (iii) the Agent, the Substituted Lender and the other
Lenders shall acquire the same rights and assume the same obligations between
themselves as they would have acquired and assumed had such Substituted Lender
been an original party to this Agreement as a Lender possessing the Discharged
Rights and Obligations acquired and/or assumed by it in consequence of the
delivery of such Assignment and Acceptance to the Agent.
72
<PAGE>
Section 9.11.5. Discharged Rights and Obligations shall not include,
--------------
and there shall be no termination or release pursuant to this Section 9.11 of
------------
(i) any rights or obligations arising pursuant to any of the Financing Documents
in respect of the period or in respect of payments hereunder made during the
period prior to the effective date of the relevant Assignment and Acceptance or,
(ii) any rights or obligations relating to the payment of any amount which has
fallen due and not been paid hereunder prior to such effective date or rights or
obligations for the payment of interest, damages or other amounts becoming due
hereunder as a result of such nonpayment.
Section 9.11.6. With respect to any substitution of a Substituted
--------------
Lender taking place after the Closing Date, the Borrower shall issue to such
Substituted Lender and to such Selling Lender, new Notes reflecting the
inclusion of such Substituted Lender as a Lender and the reduction in the
respective Loans of such Selling Lender, such new Notes to be issued against
receipt by the Borrower of the existing Notes of such Lender. The Selling
Lender or the Substituted Lender shall pay to the Agent for its own account an
assignment fee in the amount of $3,000 for each assignment hereunder, which
shall be payable at or before the effective date of the assignment.
Section 9.11.7. Each Lender may furnish to any financial institution
--------------
having at least $500,000,000 in assets which such Lender proposes to make a
Substituted Lender or to a Substituted Lender any information concerning such
Lender, the Borrower, Stockholders and any Subsidiary in the possession of that
Lender from time to time; provided that any Lender providing any confidential
information about the Borrower, any of the Stockholders and/or any Subsidiary to
any such financial institution shall first obtain such financial institution's
agreement to keep confidential any such confidential information in accordance
with Section 9.14.
------------
Section 9.11.8. In addition to the foregoing, the Agent and each
--------------
Lender may at any time pledge all or any portion of its rights to or under the
Financing Documents, including any portion of the Notes, to any of the twelve
Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12
U.S.C. Section 341. No such pledge or the enforcement thereof shall release the
Agent or such Lender from its obligations hereunder or under any of the other
Financing Documents.
Section 9.12. Payments Pro Rata. The Agent agrees that promptly after its
------------ -----------------
receipt of each payment from or on behalf of the Borrower in respect of any
obligations of the Borrower hereunder it shall distribute such payment to the
Lenders pro rata based upon their respective Pro Rata Shares, if any, of the
obligations with respect to which such payment was received. Each of the
Lenders agrees that, if it should receive any amount hereunder (whether by
voluntary payment, by realization upon security, by the exercise of the right of
setoff under Section 2.5.2 or otherwise or banker's lien, by counterclaim or
-------------
cross action, by the enforcement of any right under the Financing Documents, or
otherwise), which is applicable to the payment of the Obligations of a sum which
with respect to the related sum or sums received by other Lenders is in a
greater proportion than the total amount of such Obligation then owed and due to
such Lender bears to the total amount of such Obligation then owed and due to
all of the Lenders immediately prior to such receipt, except for any amounts
received pursuant to Section 2.2.3, then such Lender receiving such excess
-------------
payment shall purchase for cash without recourse or warranty from the
73
<PAGE>
other Lenders an interest in the Obligations of the Borrower to such Lenders in
such amount as shall result in a proportional participation by all the Lenders
in such amount; provided further, however, that if all or any portion of such
excess amount is thereafter recovered from such Lender, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
Section 9.13. Indemnification. The Borrower irrevocably agrees to and
------------ ---------------
does hereby indemnify and hold harmless Agent and each of the Lenders, their
agents or employees and each Person, if any, who controls any of the Agent and
the Lenders within the meaning of Section 15 of the Securities Act of 1933, as
amended, and each and all and any of them (the "Indemnified Parties"), against
any and all losses, claims, actions, causes of action, damages or liabilities
(including any amount paid in settlement of any action, commenced or threatened
and any amount described in Section 8.4) (collectively, the "Damages"), joint or
-----------
several, to which they, or any of them, may become subject under statutory law
or at common law, and to reimburse the Indemnified Parties for any legal or
other out-of-pocket expenses reasonably incurred by it or them in connection
with investigating, preparing for or defending against any of the Indemnified
Parties, insofar as such losses, claims, damages, liabilities or actions arise
out of or are related to any act or omission of the Borrower and/or any
Subsidiary with respect to any of (i) the Related Transactions, (ii) any of the
Financing Documents, (iii) any of Loans, (iv) any use made or proposed to be
made with the proceeds of the Loans, (v) any acquisition or proposed acquisition
or any other similar business combination or proposed business combination by
the Borrower and/or any of its Subsidiaries and/or its Affiliates (whether by
acquisition or exchange of capital stock or other securities or by acquisition
of all or substantially all of the assets of any Person), (vi) any offering of
securities by the Borrower and/or any Subsidiary after the date hereof and/or in
connection with the Securities and Exchange Act of 1933 and/or (vii) any failure
to comply with any applicable federal, state or foreign governmental law, rule,
regulation, order or decree, including without limitation, any Damages which
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact with respect to matters relative to any of the foregoing
contained in any document distributed in connection therewith, or the omission
or alleged omission to state in any of the foregoing a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, but excluding any Damages to the extent arising
from or due to, as determined in a final nonappealable judgment by a court of
competent jurisdiction, the gross negligence or willful misconduct of any of the
Indemnified Parties; provided, however, that notwithstanding the foregoing, no
Indemnified Party shall have any liability (whether direct or indirect, in
contract or tort of otherwise) to the Borrower, any Affiliates or any
Subsidiaries or to their respective security holders or creditors except for
direct (as opposed to consequential) damages determined in a final nonappealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct. In the case of an
investigation, litigation or proceeding to which the indemnity described in this
paragraph applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by the Borrower, any
Affiliates or any Subsidiary or to their respective security holders or
creditors or an Indemnified Party or an Indemnified Party is otherwise a party
thereto and whether or not the Related Transaction and the transactions
contemplated by the Financing Documents are consummated.
74
<PAGE>
Promptly upon receipt of notice of the commencement of any action, or
information as to any threatened action against any of the Indemnified Parties
in respect of which indemnity or reimbursement may be sought from the Borrower
on account of the agreement contained in this Section 9.13, notice shall be
------------
given to the Borrower in writing of the commencement or threatening thereof,
together with a copy of all papers served, but the omission so to notify the
Borrower of any such action shall not release the Borrower from any liability
which it may have to such Indemnified Parties unless, and only to the extent
that, such omission materially prejudiced Borrower's ability to defend against
such action.
In case any such action shall be brought against any of the Indemnified
Parties, the Borrower shall be entitled to participate in (and, to the extent
that it shall wish, to select counsel and to direct) the defense thereof at its
own expense. Any of the Indemnified Parties shall have the right to employ its
or their own counsel in any case, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless the employment of such
counsel shall have been authorized in writing by the Borrower in connection with
the defense of such action or the Borrower shall not have employed counsel to
have charge of the defense of such action or such Indemnified Party shall have
received an opinion from an independent counsel that there may be defenses
available to it which are different from or additional to those available to the
Borrower (in which case the Borrower shall not have the right to direct the
defense of such action on behalf of such Indemnified Party), in any of which
events the same shall be borne by the Borrower. If any Indemnified Party
settles any claim or action with respect to which the Borrower has agreed to
indemnify such Indemnified Party pursuant to the terms hereof, the Borrower
shall have no liability pursuant to this Section 9.13 to such Indemnified Party
------------
with respect to such claim or action unless the Borrower shall have consented in
writing to the terms of such settlement.
The provisions of Section 9.13 shall be effective only to the fullest
------------
extent permitted by law. The provisions of this Section 9.13 shall continue in
------------
effect and shall survive (among other events), until the applicable statute of
limitations has expired, any termination of this Agreement, foreclosure, a deed
in lieu transaction, payment and satisfaction of the Obligations of Borrower,
and release of any collateral for the Loans.
Section 9.14. Confidential Information. The Lenders and the Agent shall,
------------ ------------------------
with respect to any and all financial statements or other reports or documents
delivered by or on behalf of the Borrower or any related parties to the Lenders
or the Agent pursuant to Section 5.3 and any other information provided to any
Lender or the Agent (other than in a public forum, including an analyst's
meeting and other than any such information which is publicly available other
than solely as a result of disclosure by the Agent or any of the Lenders) and to
the extent that such information therein contained or provided has not
theretofore otherwise been disclosed in such a manner as to render such
information no longer confidential (other than as a result of disclosure by the
Agent or a Lender in violation of its obligation hereunder), employ reasonable
procedures designed to maintain the confidential nature of the information
therein contained; provided, however, that any Lender or the Agent may disclose
or disseminate such information to: (a) such Lender's or the Agent's respective
employees, agents, attorneys and accountants who would ordinarily have access to
such information in the normal course of the performance of their duties in
connection with the administration of the Loans; (b) such third parties as such
Lender or the Agent may, in its discretion, deem reasonably necessary in
connection with or in
75
<PAGE>
response to (i) compliance with any law, ordinance or governmental order,
regulation, rule, subpoena, or investigation, or (ii) any order, decree,
judgment, subpoena, notice of discovery or similar ruling or pleading issued,
filed, served or purported on its face to be issued, filed or served (x) by or
under authority of any court, tribunal, arbitration board or any governmental
agency, commission, authority board or similar entity or (y) in connection with
any proceeding, case or matter pending (or on its face purported to be pending)
before any court, tribunal, arbitration board or any governmental agency,
commission, authority, board or similar entity; provided that without notice to
the Borrower, the Agent and any Lender may disclose such information to bank
examiners of governmental agencies having regulatory authority over the Agent or
such Lender in question in connection with such examiner's examinations of Agent
or such Lender's books and records, or (iii) collection by judicial proceeding
of any of the Indebtedness now or hereafter owing by the Borrower and/or any
Subsidiary to the Agent and/or any of the Lenders or enforcement of any rights
or remedies now or hereafter possessed by Agent and/or any of the Lenders
pursuant to this Agreement, any of the Notes or any of the other Financing
Documents; (c) subject to Section 9.11, any prospective purchaser (including an
------------
affiliate of any Lender), in connection with the resale or proposed resale by it
of any portion of its Notes or other participation in its Pro Rata Share of the
Loans; provided that the prospective participant has signed an agreement binding
such participant under this Section 9.14 as if it were a Lender; and (d) any
------------
entity utilizing such information to rate or classify any Lender's or the
Agent's debt or equity securities for sale to the public; provided that such
rating agency has agreed to keep such information confidential pursuant to an
agreement reasonably satisfactory to the Borrower.
Section 9.15. Governing Law. This Agreement and each Note shall be
------------ -------------
governed by, and construed in accordance with, the laws of The Commonwealth of
Massachusetts without regard to such state's conflict of laws rules.
Section 9.16. Severability of Provisions. Any provision of this Agreement
------------ --------------------------
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 9.17. Headings. Article and Section headings in this Agreement
------------ --------
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
Section 9.18. Counterparts. This Agreement may be executed and delivered
------------ ------------
in any number of counterparts each of which shall be deemed an original, and
this Agreement shall be effective when at least one counterpart hereof has been
executed by each of the parties hereto.
76
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument by their respective officers thereunto duly
authorized, as of December 27th, 1999.
In the presence of: RAYMOND KARSAN ASSOCIATES, INC.
/s/ Michele Camacho By: /s/ Donald Volk
-------------------------- --------------------------
Name: Donald Volk
Title: Chief Financial Offical
In presence of: FLEET NATIONAL BANK, as Agent for the
Lenders and as a Lender
/s/ [ILLEGIBLE] By: /s/ Daniel G. Head, Jr.
-------------------------- --------------------------
Name: Daniel G. Head, Jr.
Title: Senior Vice President
77