Accounts Receivable Management and Security Agreement - BNY Financial Corp. and TMP Worldwide Inc.
AMENDED AND RESTATED ACCOUNTS RECEIVABLE MANAGEMENT
AND SECURITY AGREEMENT
This Amended and Restated Accounts Receivable Management and Security
Agreement is made as of June 27, 1996 by and between BNY FINANCIAL CORPORATION
("BNY"), each of the undersigned financial institutions and the various other
financial institutions which become Lenders hereunder (BNY and each of the other
financial institutions collectively, the "Lenders" and individually a "Lender"),
BNY as agent for the Lenders (BNY in such capacity, the "Agent") and TMP
WORLDWIDE INC. ("Borrower"), a Delaware corporation.
BACKGROUND
Borrower and BNY are parties to (i) an Accounts Receivable Management
and Security Agreement made as of March 14, 1994 (as same has been amended,
modified or supplemented from time to time, the "Original ARM Agreement").
Borrower is presently indebted to BNY under the Original ARM Agreement in the
aggregate principal sum of $80,250,272.20 (including all outstanding Letters of
Credit) plus all interest accrued thereon. Borrower has requested and BNY has
agreed to amend, by restating in full, the terms of the Original ARM Agreement.
The parties intend (a) that all amounts advanced or financial accommodations
provided pursuant to the Original ARM Agreement will remain outstanding and all
security interests and liens granted pursuant to the Existing Loan Documents
shall remain in full force and effect and not be limited but rather shall be
expanded and ratified by this Agreement and the Ancillary Agreements to be for
the benefit of all Lenders and to secure all Loans (as defined herein) and (b)
to restate and amend the Original ARM Agreement on the terms and conditions
hereafter set forth. The parties further intend that the terms and conditions
of all existing and future Loans (as hereafter defined) and Collateral (as
hereafter defined) interests shall be governed by this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings and the terms and conditions contained herein, the parties hereto
agree as follows:
A. AMENDMENT AND RESTATEMENT
As of the date of this Agreement, the terms, conditions, covenants,
agreements, representations and warranties contained in the Original ARM
Agreement shall be deemed amended and restated in their entirety as follows and
the Original ARM Agreement shall be consolidated with and into and superseded by
this Agreement; PROVIDED, HOWEVER, that nothing contained in this Agreement
shall impair, limit or affect the liens and security interests heretofore
granted, pledged and/or assigned to Agent for the ratable benefit of Lenders as
security for Borrower's Obligations to Lenders under the Original ARM Agreement.
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1. (A) GENERAL DEFINITIONS. When used in this Agreement, the
following terms shall have the following meanings:
"ACQUISITION" shall have the meaning set forth in paragraph 12(m).
"ADJUSTMENT PERCENTAGE" means the percentage derived by dividing (a)
Free Cash Flow measured on a rolling four Fiscal Quarter Basis as at the end of
each Fiscal Quarter by (b) $100,000,000.
"AFFILIATE" of any Person means (a) any Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, or (b) any Person who is a director
or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of
any Person described in clause (a) above. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (i) to vote 5% or
more of the securities having ordinary voting power for the election of
directors of such Person, or (ii) to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
"AFFILIATE RECEIVABLES" means and includes all of each Scheduled
Affiliate's now owned or hereafter acquired accounts and contract rights,
instruments, insurance proceeds, documents, chattel paper, letters of credit and
each Scheduled Affiliate's rights to receive payment thereunder, any and all
rights to the payment or receipt of money or other forms of consideration of any
kind at any time now or hereafter owing or to be owing to a Scheduled Affiliate,
all proceeds thereof and all files in which any Scheduled Affiliate has any
interest whatsoever containing information identifying or pertaining to any of a
Scheduled Affiliate's Receivables, together with all of such Scheduled
Affiliate's rights to any merchandise which is represented thereby, and all of
such Scheduled Affiliate's right, title, security and guaranties with respect to
each Affiliate Receivable, including, without limitation, all rights of stoppage
in transit, replevin and reclamation and all rights as an unpaid vendor.
"ALTERNATE BASE RATE" means, for any day, a rate per annum equal to
the higher of (i) the Prime Rate in effect on such day and (ii) the Federal
Funds Rate in effect on such day plus 1/2 of 1%.
"ALTERNATE BASE RATE LOAN" shall mean any Loan that bears interest
based upon the Alternate Base Rate.
"ANCILLARY AGREEMENTS" means all agreements, instruments, and
documents including, without limitation, mortgages, pledges, powers of attorney,
consents, assignments, contracts, notices, security agreements, trust agreements
whether heretofore, concurrently, or hereafter executed by or on behalf of
Borrower or delivered to Agent or any Lender, relating to the Original ARM
Agreement, this Agreement or to the transactions contemplated by this Agreement.
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"ANNUAL MINIMUM" means $450,000,000.
"APPLICABLE MARGIN" means, with respect to Alternate Base Rate Loans,
Eurodollar Rate Loans and LIBOR Rate Loans the percentages which, when added to
or subtracted from the Alternate Base Rate, the Eurodollar Rate, or the LIBO
Floating Rate, as the case may be, comprise the Contract Rate and are referenced
in and are subject to adjustment as provided under section 5(a)(vi) hereof.
"BANK" means The Bank of New York.
"BNY OVERADVANCES" shall have the meaning set forth in Section 2(c).
"BORROWER ON A CONSOLIDATED BASIS" means the combination in accordance
with the GAAP of (i) the consolidation in accordance with GAAP of the accounts
and other items of Borrower and its consolidated Subsidiaries (ii) the
consolidation in accordance with GAAP of the accounts and other items of WCI and
its consolidated subsidiaries and (iii) the combination in accordance with GAAP
of the accounts and other items of all Scheduled Affiliates (other than as
included in preceding clauses (i) and (ii).
"BUSINESS DAY" shall mean with respect to Eurodollar Rate Loans, any
day on which commercial banks are open for domestic and international business,
including dealings in Dollar deposits in London, England and New York, New York
and with respect to all other loans, any day other than a day on which
commercial banks in New York are authorized or required by law to close.
"CALENDAR YEAR" shall mean each twelve month period beginning on
January 1 and ending on December 31.
"CHANGE OF CONTROL" shall mean the occurrence of any event (whether in
one or more transactions and including any merger or consolidation of or with
MEI or Borrower or a Scheduled Affiliate or sale of all or substantially all of
the property or assets of MEI or Borrower or a Scheduled Affiliate) which
results in a transfer of control of MEI or Borrower or a Scheduled Affiliate to
a Person other than the Original Owner or a Person controlled by the Original
Owner. For purposes of this definition, "control of Borrower or MEI or a
Scheduled Affiliate" shall mean the power, direct or indirect (x) to vote 50% or
more of the securities having ordinary voting power for the election of
directors of Borrower or an Affiliate or (y) to direct or cause the direction of
the management and policies of Borrower or an Affiliate by contract or
otherwise.
"CLOSING DATE" means June 27, 1996 or such other date as may be agreed
upon by the parties hereto.
"COLLATERAL" means and includes:
(A) all Inventory;
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(B) all Equipment;
(C) all General Intangibles;
(D) all Receivables;
(E) all books, records, ledgercards, files, correspondence,
computer programs, tapes, disks and related data processing software (owned by
Borrower or in which it has an interest) which at any time evidence or contain
information relating to (A), (B), (C) and (D) above or are otherwise necessary
or helpful in the collection thereof or realization thereupon;
(F) documents of title, policies and certificates of insurance,
securities, chattel paper, other documents or instruments evidencing or
pertaining to (A), (B), (C), (D) and (E) above;
(G) all guaranties, liens on real or personal property, leases,
and other agreements and property granted to Borrower or a Scheduled Affiliate
which in any way secure or relate to (A), (B), (C), (D), (E) and (F) above, or
are acquired for the purpose of securing and enforcing any item thereof;
(H) (i) all cash held as cash collateral to the extent not
otherwise constituting Collateral, all other cash or property at any time on
deposit with or held by Agent or any Lender for the account of Borrower (whether
for safekeeping, custody, pledge, transmission or otherwise), (ii) all present
or future deposit accounts (whether time or demand, interest or non-interest
bearing) of Borrower with Lender or any other Person including those to which
any such cash may at any time and from time to time be credited, (iii) all
investments and reinvestments (however evidenced) of amounts from time to time
credited to such accounts, and (iv) all interest, dividends, distributions and
other proceeds payable on or with respect to (x) such investments and
reinvestments and (y) such accounts; and
(I) all products and proceeds of (A), (B), (C), (D), (E), (F),
(G) and (H) above (including, but not limited to, all claims to items referred
to in (A), (B), (C), (D), (E), (F), (G) and (H) above) and all claims of
Borrower against third parties (x) for (i) loss of, damage to, or destruction
of, and (ii) payments due or to become due under leases, rentals and hires of,
any or all of (A), (B), (C), (D), (E), (F), (G) and (H) above and (y) proceeds
to Borrower and unearned premiums of Borrower with respect to policies of
insurance in whatever form.
"COMMITMENT PERCENTAGE" of any Lender shall mean the percentage set
forth below such Lender's name on the signature page hereof as same may be
adjusted upon any assignment by a Lender pursuant to Section 15 hereof.
"COMMITMENT TRANSFER SUPPLEMENT" shall mean a document in the form of
EXHIBIT 15 hereto, properly completed and otherwise in form and substance
satisfactory to Agent by which the Purchasing
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Lender purchases and assumes a portion of the obligation of Lenders to make
Loans under this Agreement.
"CONFORMING EQUITY EVENT" shall have the meaning set forth in Section
5(a)(vi).
"CONTRACT RATE" means an interest rate per annum equal to the (i) sum
of the Alternate Base Rate plus the Applicable Margin with respect to Alternate
Base Rate Loans, (ii) sum of the Eurodollar Rate PLUS the Applicable Margin with
respect to Eurodollar Rate Loans and (iii) sum of LIBO Floating Rate plus the
Applicable Margin with respect to LIBO Rate Loans.
"CONTRACT YEAR" means the twelve month period beginning on the Closing
Date or on the anniversary of the Closing Date in any year.
"CORPORATE RESTRUCTURE" means the proposed restructuring in one or
more consolidation, merger, acquisition, dissolution or liquidation actions and
in a manner reasonably acceptable to the Agent as being not adverse to the
interests of the Lenders, of the business, assets or operations of the Borrower,
MEI, WCI and certain of the Subsidiaries and Affiliates of each of them.
"CURRENT ASSETS" at a particular date, means all cash, cash
equivalents, accounts and inventory of Borrower on a Consolidated Basis and all
other items which would, in conformity with GAAP, be included under current
assets on a balance sheet of Borrower on a Consolidated Basis as at such date;
PROVIDED, HOWEVER, that such amounts shall not include (a) any amounts for any
indebtedness owing by Borrower or any Affiliate to Borrower or another
Affiliate, unless such indebtedness arose in connection with the sale of goods
or other property in the ordinary course of business and would otherwise
constitute current assets in conformity with GAAP, (b) any shares of stock
issued by Borrower or any Affiliate to Borrower or another Affiliate, (c) the
cash surrender value of any life insurance policy (d) any assets which would be
classified as intangible assets under GAAP, or (e) any prepaid expenses.
"CURRENT LIABILITIES" at a particular date, means all amounts which
would, in conformity with GAAP, be included under current liabilities on a
balance sheet of Borrower as at such date, but in any event including, without
limitation, the amounts of (a) all indebtedness payable on demand, or, at the
option of the Person to whom such indebtedness is owed, not more than twelve
(12) months after such date, (b) any payments in respect of any indebtedness
(whether installment, serial maturity, sinking fund payment or otherwise)
required to be made not more than twelve (12) months after such date, (c) all
reserves in respect of liabilities or indebtedness payable on demand or, at the
option of the Person to whom such indebtedness is owed, not more than twelve
(12) months after such date, the validity of which is contested at such date,
and (d) whether or not in conformity with GAAP (i) all accruals for federal or
other taxes measured by income payable within a twelve (12) month period and
(ii) all Revolving Credit Advances.
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"CUSTOMER" means and includes the account debtor with respect to any
Receivable or Affiliate Receivable and/or the prospective purchaser of goods,
services or both with respect to any contract or contract right, and/or any
party who enters into or proposes to enter into any contract or other
arrangement with Borrower or any Scheduled Affiliate, pursuant to which Borrower
or any Scheduled Affiliate is to deliver any personal property or perform any
services.
"CYCLE BILLING" means billings made by Borrower or a Scheduled
Affiliate to a Customer on the basis of equal monthly installments, the first
installment to be billed as of the first month following the "closing date" for
submission of advertisements on behalf of such Customer to the applicable
directory, each in an amount equal to between 1/2 and 1/12 of the billings to
such Customer with respect to the applicable directory; PROVIDED that Borrower
or such Scheduled Affiliate may not change the billing rate with respect to
specific services rendered.
"DEFAULT RATE" means a rate equal to two (2%) percent per annum in
excess of the Alternate Base Rate.
"DISPUTE" means any cause asserted for nonpayment of any Receivable or
Affiliate Receivable, including without limitation, any alleged defense,
counterclaim, offset, dispute or other claim (real or merely asserted) whether
arising from or relating to the sale of goods or rendition of services or
arising from or relating to any other transaction or occurrence.
"DOLLAR" and the sign "$" shall mean lawful money of the United States
of America.
"DOMESTIC PERSONS" means any Financial Party or any Subsidiary of any
Financial Party (i) which has been formed or incorporated pursuant to the laws
of a state or commonwealth of the United States of America or (ii) as to which
no less than 90% of the value of such party's assets are located in the United
States of America.
"DOMESTIC WORKING CAPITAL" means Working Capital as calculated solely
with respect to Domestic Persons.
"ELIGIBLE RECEIVABLES" means and includes each Receivable and
Affiliate Receivable (1) for which BNY performs accounts receivable management
with respect thereto and (2) which conforms to the following criteria: (a) the
rendition of services has been completed; (b) services shall not have been
rejected or disputed by the Customer and there shall not have been asserted any
offset, defense, counterclaim, or Dispute with respect to such Receivable or
Affiliate Receivable; (c) it continues to be in full conformity with the
representations and warranties made by Borrower or applicable Subsidiary or
Affiliate to Lenders with respect thereto; (d) Agent is, and continues to be, in
the good faith exercise of its reasonable discretion satisfied with the credit
standing of the Customer in relation to the amount of credit extended; (e) it is
documented by an invoice in a form approved by Agent (evidence of
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which has been received by the Agent or, in Agent's sole discretion, has been
sent to but not yet received by the Agent) and shall not be unpaid more than:
(x)(i) sixty (60) days from due date where Borrower is performing the collection
function and (ii) ninety (90) days from due date where Agent is performing the
collection function, (y)(i) ninety (90) days from invoice date where Borrower is
performing the collection function and (ii) one hundred and twenty (120) days
from invoice date where Agent is performing the collection function; all with
respect to regular billing and (z) three hundred sixty (360) days from the first
invoice date with respect to Cycle Billing; (f) less than 75% of the unpaid
amount of invoices due from such Customer remain unpaid more than ninety (90)
days from due date; (g) it is not evidenced by chattel paper or an instrument of
any kind with respect to or in payment of the Receivable or Affiliate Receivable
unless such instrument is duly endorsed to and in possession of Agent or
represents a check in payment of a Receivable or Affiliate Receivable; (h) if
the Customer is located outside of the United States or Canada, the services
which gave rise to such Receivable or Affiliate Receivable were provided after
receipt by Borrower or Affiliate from or on behalf of the Customer of an
irrevocable letter of credit, assigned and delivered to Agent and confirmed by a
financial institution acceptable to Agent and is in form and substance
acceptable to Agent, payable in the full amount of the Receivable or Affiliate
Receivable in United States dollars at a place of payment located within the
United States; (i) such Receivable or Affiliate Receivable is not subject to any
lien, other than Permitted liens; (j) it does not arise out of transactions with
any employee, officer, agent, director, stockholder or Affiliate of Borrower or
any Affiliate; (k) it is payable to Borrower or an Affiliate; (l) if the
Receivable or Affiliate Receivable arises out of a sale to any Person to which
Borrower or an Affiliate is indebted, the amount of such indebtedness, and any
anticipated indebtedness, may in the Agent's sole discretion be deducted in
determining the face amount of such Receivable or Affiliate Receivable; (m) it
is net of any returns, discounts, claims, credits and allowances; (n) if the
Receivable or Affiliate Receivable arises out of contracts between Borrower or
an Affiliate and the United States, any state, or any department, agency or
instrumentality of any of them, Borrower or Affiliate has so notified Agent, in
writing, prior to the creation of such Receivable, and, if Agent so requests,
there has been compliance with any governmental notice or approval requirements,
including without limitation, compliance with the Federal Assignment of Claims
Act; (o) it is a good and valid account representing an undisputed bona fide
indebtedness incurred by the Customer therein named, for a fixed sum as set
forth in the invoice relating thereto with respect to work, labor and/or
services rendered by Borrower or an Affiliate; (p) (i) such Affiliate Receivable
arises out of a sale or rendition of services by an Affiliate or Subsidiary that
(x) has executed and delivered a Guaranty and Guarantor Security Agreement, (y)
is majority owned or controlled by Andrew McKelvey, Borrower or a Guarantor and
(ii) Agent shall have received evidence, in form and substance satisfactory to
it (including, without limitation, a certificate of ownership executed by the
Secretary of Borrower with respect to Andrew McKelvey's share
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ownership of Borrower and each Affiliate and Subsidiary) that Andrew McKelvey,
Borrower or the applicable Guarantor is the majority owner of the applicable
Affiliate or Subsidiary; (q) is a Receivable and/or Affiliate Receivable for
which BNY is performing record keeping services pursuant to this Agreement; and
(r) is otherwise satisfactory to Agent as determined in good faith by Agent in
the reasonable exercise of its discretion.
"EQUIPMENT" means and includes all of Borrower's now owned or
hereafter acquired and owned equipment, machinery and goods (excluding
Inventory), whether or not constituting fixtures, including, without limitation:
plant and office equipment, tools, dies, parts, data processing equipment,
furniture and trade fixtures, trucks, trailers, loaders and other vehicles and
all replacements and substitutions therefore and all accessions thereto.
"EQUITY EVENT" shall mean the receipt of cash proceeds by Borrower
resulting from an initial public offering of the capital stock of any Financial
Party.
"EURODOLLAR RATE LOAN" shall mean a Loan at any time that bears
interest based on the Eurodollar Rate.
"EURODOLLAR RATE" shall mean for any Eurodollar Rate Loan for the then
current Interest Period relating thereto the rate per annum (such Eurodollar
Rate to be adjusted to the next higher 1/100 of one (1%) percent) equal to the
quotient of (a) LIBOR, divided by (b) a number equal to 1.00 minus the aggregate
of the rates (expressed as a decimal) of reserve requirements current on the day
that is two Business Days prior to the beginning of the Interest Period
(including without limitation basic, supplemental, marginal and emergency
reserves) under any regulation promulgated by the Board of Governors of the
Federal Reserve System (or any other governmental authority having jurisdiction
of the Bank) as in effect from time to time, dealing with reserve requirements
prescribed for Eurocurrency funding including any reserve requirements with
respect to "Eurocurrency liabilities" under Regulation D of the Board of
Governors of the Federal Reserve System.
"EVENT OF DEFAULT" means the occurrence of any of the events set forth
in paragraph 18.
"EXISTING LOAN DOCUMENTS" shall mean collectively, the Original ARM
Agreement and all other documents, instruments and agreements executed and
delivered in connection therewith.
"FEDERAL FUNDS RATE" means, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day which is a Business Day, the average of quotations for such
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day on such transactions received by Bank from three Federal funds brokers of
recognized standing selected by Bank.
"FINANCIAL PARTY" and collectively, "FINANCIAL PARTIES" means
Borrower, WCI, MEI, any Scheduled Affiliate and (without duplication) any
Subsidiary of Borrower, WCI or MEI which is a Scheduled Affiliate.
"FISCAL QUARTER" means each quarterly accounting period of Borrower
during any Fiscal Year.
"FOREIGN INDEBTEDNESS" means Indebtedness incurred by a Financial
Party which is not a Domestic Person.
"FORMULA AMOUNT" shall have the meaning set forth in paragraph 2(b).
"FREE CASH FLOW" means, with respect to any applicable period, the net
income of Borrower and its Subsidiaries and WCI and its Subsidiaries on a
combined basis (excluding extraordinary gains or losses) plus depreciation and
amortization charges for such period minus capital expenditures paid during such
period and minus (without duplication) all cash payments made during such a
period with respect to acquisitions permitted hereunder.
"GAAP" means generally accepted accounting principles, practices and
procedures in effect from time to time.
"GENERAL INTANGIBLES" means and includes all of Borrower's now owned
or hereafter acquired general intangibles as said term is defined in the Uniform
Commercial Code in effect in the State of New York including, without
limitation, trademarks, tradenames, tradestyles, trade secrets, equipment
formulation, manufacturing procedures, quality control procedures, product
specifications, patents, patent applications, copyrights, registrations,
contract rights, choses in action, causes of action, corporate or other business
records, inventions, designs, goodwill, claims under guarantees, licenses,
franchises, tax refunds, tax refund claims, computer programs, computer data
bases, computer program flow diagrams, source codes, object codes, customer
lists and all other intangible property of every kind and nature.
"GUARANTOR" means individually, each of the Persons listed on SCHEDULE
1(B) and any other Person who may hereafter guarantee payment or performance of
the whole or any part of the Obligations and "GUARANTORS" means collectively all
such Persons.
"GUARANTOR SECURITY AGREEMENTS" means collectively, each Security
Agreement executed by a Guarantor in favor of Agent, as same may be amended,
modified, supplemented or ratified from time to time.
"GUARANTY AGREEMENTS" means collectively, (i) (x) Amended and Restated
Guaranties and (y) Guaranties dated March 14, 1994 which are executed by each
Guarantor in favor of Agent and (ii)
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such other Guaranties as shall be executed and delivered hereafter from time to
time by a Guarantor.
"HAZARDOUS SUBSTANCE" means, without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated byphenyls, petroleum and petroleum products,
methane, hazardous materials, hazardous wastes, hazardous or toxic substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, ET SEQ.), RCRA, Articles 15 and 27 of
the New York State Environmental Conservation Law or any other applicable
Environmental Law and in the regulations adopted pursuant thereto.
"INCIPIENT EVENT OF DEFAULT" means any act or event which, with the
giving of notice or passage of time or both, would constitute an Event of
Default.
"INDEBTEDNESS" means as to any Person (without duplication):
(a) any indebtedness for borrowed money which such Person has
directly or indirectly created, incurred or assumed; and
(b) any indebtedness, whether or not for borrowed money, secured by
any Lien in respect of property owned by such Person, whether or not such Person
has assumed or become liable for the payment of such indebtedness; and
(c) any indebtedness, whether or not for borrowed money, including
any capital lease obligation, with respect to which such Person has become
directly or indirectly liable and which represents or has been incurred to
finance the purchase price (or a portion thereof) of any property or services or
business acquired by such Person, whether by purchase, consolidation, merger or
otherwise (excluding accounts payable incurred in the ordinary course of
business, if (i) such accounts payable are not more than 150 days past due or
(ii) such accounts payable are more than 150 days past due, are being contested
in good faith, and would not, in accordance with GAAP, appear as Indebtedness on
a balance sheet of such person; and
(d) any indebtedness of any other Person of the character referred to
in subdivision (a), (b) or (c) of this definition with respect to which the
Person whose Debt is being determined has become liable by way of a guaranty.
"INTEREST PERIOD" shall mean the period provided for any Eurodollar
Rate Loan pursuant to Section 4(b).
"INVENTORY" means and includes all of Borrower's now owned or
hereafter acquired goods, merchandise and other personal property, wherever
located, to be furnished under any contract of service or held for sale or
lease, all raw materials, work in process, artwork, finished goods and materials
and supplies (including but not limited to art supplies) of any kind, nature or
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description which are or might be used or consumed in Borrower's business or
used in selling or furnishing such goods, merchandise and other personal
property, and all documents of title or other documents representing them.
"LENDER SETTLEMENT DATE" shall mean the Closing Date and thereafter
Wednesday of each week unless such day is not a Business Day in which case it
shall be the next succeeding Business Day.
"LETTERS OF CREDIT" shall have the meaning set forth in Section 2(m).
"LETTER OF CREDIT FEES" shall have the meaning set forth in Section
5(b).
"LC RESERVE" shall mean an amount at any time equal to the aggregate
face amount of outstanding Letters of Credit.
"LIBO FLOATING RATE" shall mean the average of the daily LIBO Rate in
effect for the month for which such election is made under this Agreement.
"LIBO RATE" shall mean, relative to any day, the rate of interest
equal to the rate per annum listed in the Wall Street Journal on such day as the
LIBO Rate for a period equal to one month.
"LIBO RATE ADVANCE" shall mean the Loans or any portion thereof
bearing interest at a rate of interest determined by reference to the LIBO
Floating Rate.
"LIBOR" shall mean for any Eurodollar Rate Loan for the then current
Interest Period relating thereto, the rate per annum quoted by the Bank two (2)
Business Days prior to the first day of such Interest Period for the offering by
the Bank to prime commercial banks in the London interbank Eurodollar market of
Dollar deposits in immediately available funds for a period equal to such
Interest Period and in an amount equal to the amount of such Eurodollar Rate
Loan.
"LOAN SALE" shall have the meaning set forth in Section 5(b)(iii).
"LOANS" means the Revolving Credit Advances, Letters of Credit and all
other extensions of credit hereunder.
"MATURED FUNDS RATE" means the rate of interest, announced by BNY from
time to time, as the rate applicable to matured funds, such rate to be adjusted
automatically on the effective date of any change in such rate as announced by
BNY.
"MAXIMUM LOAN AMOUNT" means (a) $100,000,000 minus (b) the outstanding
amount of loans and advances made by BNY/Cafco Financial Corporation to National
Directory Advertising Programs, Inc.
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"MEDIA BILLING RECEIVABLES" means Receivables which arise following
delivery to the customer of (i) a copy of the advertisement which appears in the
directory publication and (ii) a copy of the invoice from the directory
publisher.
"MEI" means McKelvey Enterprises, Inc., a New York corporation.
"MINIMUM VOLUME CHARGES" shall have the meaning set forth in Section
5(e)(ii).
"NET FACE AMOUNT" of Receivables or Affiliate Receivables means the
gross face invoice amount thereof, less returns, discounts (the calculation of
which shall be determined by Agent where optional terms are given), anticipation
or any other unilateral deductions taken by Customers, and credits and
allowances to Customers of any nature.
"OBLIGATIONS" means and includes all Loans, all advances, debts,
liabilities, obligations, covenants and duties owing by Borrower to (a) all
Lenders (other than BNY) direct or indirect, absolute or contingent, due or to
become due, contractual or tortious, liquidated or unliquidated, whether
existing by operation of law or otherwise now existing or hereafter arising
under or as a result of this Agreement and the Ancillary Agreements, together
with all reasonable expenses and reasonable attorneys fees chargeable to
Borrower's account or incurred by a Lender in connection with Borrower's account
whether provided for herein or in any Ancillary Agreement and (b) BNY (or any
corporation that directly or indirectly controls or is controlled by or is under
common control with BNY) of every kind and description (whether or not evidenced
by any note or other instrument and whether or not for the payment of money or
the performance or non-performance of any act), direct or indirect, absolute or
contingent, due or to become due, contractual or tortious, liquidated or
unliquidated, whether existing by operation of law or otherwise now existing or
hereafter arising including, without limitation, any debt, liability or
obligation owing from Borrower to others which BNY may have obtained by
assignment or otherwise and further including, without limitation, all interest,
charges or any other payments Borrower is required to make by law or otherwise
arising under or as a result of this Agreement and the Ancillary Agreements,
together with all reasonable expenses and reasonable attorneys' fees chargeable
to Borrower's account or incurred by Lender in connection with Borrower's
account whether provided for herein or in any Ancillary Agreement.
"ORIGINAL OWNER" means Andrew McKelvey.
"PARTICIPATION YEAR" shall mean the twelve month period commencing as
of the first day of the month in which the first Loan Sale occurs.
"PARTIAL YEAR" shall have the meaning set forth in Section 5(e)(ii).
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"PAST DUE PAYABLES" shall mean all accounts payable of Borrower and
Scheduled Affiliates that (i) remain unpaid beyond their respective originally
granted terms or (ii) have begun to accrue interest.
"PERMITTED LIENS" means (i) liens of carriers, warehousemen, mechanics
and materialmen incurred in the ordinary course of business securing sums not
overdue; (ii) liens incurred in the ordinary course of business in connection
with workmen's compensation, unemployment insurance or other forms of
governmental insurance or benefits, relating to employees, securing sums (a) not
overdue or (b) being diligently contested in good faith provided that adequate
reserves with respect thereto are maintained on the books of Borrower in
conformity with GAAP, (iii) liens in favor of Agent, (iv) liens for taxes (a)
not yet due or (b) being diligently contested in good faith, provided that
adequate reserves with respect thereto are maintained on the books of Borrower
in conformity with GAAP, (v) liens placed on equipment or on any fixed assets
within 180 days of their acquisition to secure a portion of the purchase price
thereof provided (x) any such lien shall not encumber any other property of
Borrower and (y) the aggregate amount of indebtedness secured by such liens
incurred as a result of such purchases during any fiscal year shall not exceed
the amount provided for in Section 12(p) hereof and (vi) liens specified on
SCHEDULE 1(A) hereto.
"PERMITTED OVERADVANCES" shall have the meaning set forth in Section
2(c).
"PERMITTED PERIOD" shall have the meaning provided in Section 2(c)
hereof.
"PERSON" means an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
"PRIME RATE" means the prime commercial lending rate of Bank as
publicly announced in New York, New York to be in effect from time to time, such
rate to be adjusted automatically, without notice, on the effective date of any
change in such rate. This rate of interest is determined from time to time and
is neither tied to any external rate of interest or index nor does it
necessarily reflect the lowest rate of interest actually charged to any
particular class or category of customers.
"PURCHASING LENDER" shall have the meaning set forth in Section 15
hereof.
"RECEIVABLES" means and includes all of Borrower's now owned or
hereafter acquired accounts and contract rights (including Affiliate Receivables
acquired by Borrower), instruments, insurance proceeds, documents, chattel
paper, letters of credit and Borrower's rights to receive payment thereunder,
any and all rights to the payment or receipt of money or other forms of
consideration of any kind at any time now or hereafter owing or to be owing to
Borrower, all proceeds thereof and all files in which Borrower has
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any interest whatsoever containing information identifying or pertaining to any
of Borrower's Receivables, together with all of Borrower's rights to any
merchandise which is represented thereby, and all Borrower's right, title,
security and guaranties with respect to each Receivable, including, without
limitation, all rights of stoppage in transit, replevin and reclamation and all
rights as an unpaid vendor.
"RECEIVABLES ADVANCE RATE" shall have the meaning set forth in the
definition of Receivables Availability.
"RECEIVABLES AVAILABILITY" means the amount of Revolving Credit
Advances against Eligible Receivables Lenders may from time to time during the
term of this Agreement make available to Borrower up to 90% ("Receivables
Advance Rate") of the net face amount of the Eligible Receivables; PROVIDED,
HOWEVER, that the maximum amount of Revolving Credit Advances outstanding at any
time against Media Billing Receivables shall not exceed $10,000,000.
"REPORTS" shall have the meaning set forth in Section 14.
"REQUIRED LENDERS" shall mean Lenders holding at least fifty-one
percent (51%) in aggregate principal amount of the Loans outstanding at that
time.
"RETAINED GOODS" shall have the meaning set forth in Section 8(h).
"REVOLVING CREDIT ADVANCES" shall mean all Loans made hereunder other
than Letters of Credit.
"SCHEDULED AFFILIATES" shall mean those Affiliates which (i) are
currently parties to that certain Assignment Agreement (the "Assignment
Agreement") dated as of January 1, 1992 by and among Borrower and each of the
Affiliates named therein and (ii) are Guarantors hereunder, which Affiliates are
listed on SCHEDULE 1(B) hereto as well as those Affiliates that hereafter become
Guarantors and Scheduled Affiliates hereunder upon written notice to Agent and
execution of all necessary documentation by such Affiliate.
"SETTLEMENT DATE" means two (2) Business Days after the day on which
the applicable Receivable or Affiliate Receivable is actually collected by
Agent.
"SUBORDINATED DEBT" means any debt subordinated to Lenders upon terms
and conditions satisfactory to Agent in its sole discretion and pursuant to
agreements in form and substance satisfactory to Agent and its counsel in all
respects.
"SUBSIDIARY" of any Person means a corporation or other entity 50% or
more of whose shares of stock or other ownership interests having ordinary
voting power (other than stock or other ownership interests having such power
only by reason of the happening of a contingency) to elect a majority of the
directors of such corporation, or other Persons performing similar functions for
such entity, are owned, directly or indirectly, by such Person.
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"TANGIBLE NET WORTH" at a particular date means (a) the aggregate
amount of all assets of Borrower on a Consolidated Basis as may be properly
classified as such in accordance with GAAP consistently applied (including such
assets owned on the Closing Date as are properly classified as intangible assets
under GAAP, less (b) the aggregate amount of all liabilities of the Borrower on
a Consolidated Basis. Notwithstanding the foregoing, for purposes of
calculating Tangible Net Worth, the maximum amount of Intangibles may not exceed
the greater of (i) $65,000,000 or (ii) (a) 20% or (b) 30% (following the
occurrence of a Conforming Equity Event) of the amount of all of the assets and
any excess shall not be included in the calculation of Tangible Net Worth.
"TERM" means the Closing Date through the fifth anniversary thereof
subject to acceleration upon the occurrence of an Event of Default hereunder or
other termination hereunder.
"TOTAL LIABILITIES" at a particular date means all Indebtedness of
Borrower on a Consolidated Basis as at such date.
"VOLUME" shall have the meaning set forth in Section 5(e)(ii).
"WCI" means Worldwide Classified Inc., a Delaware corporation.
"WEEK" shall mean the time period commencing with a Wednesday and
ending on the following Tuesday.
"WORKING CAPITAL" at a particular date means the excess, if any, of
Current Assets over Current Liabilities at such date.
(B) ACCOUNTING TERMS. Any accounting terms used in this Agreement
which are not specifically defined shall have the meanings customarily given
them in accordance with GAAP.
(C) OTHER TERMS. All other terms used in this Agreement and defined
in the Uniform Commercial Code as adopted in the State of New York, shall have
the meaning given therein unless otherwise defined herein.
2. ACCOUNTS RECEIVABLES MANAGEMENT; LOANS; LETTERS OF CREDIT.
(a) BNY for itself and not in its capacity as Agent shall perform
accounts receivable management and record keeping services for Borrower. The
procedure manual BNY has delivered to Borrower describes BNY's current practices
and procedures regarding its accounts receivable management and record keeping
services. BNY reserves the right to vary such practices and procedures from
time to time in its sole discretion. BNY's liability to Borrower for any
alleged failure on BNY's part to provide adequate accounts receivable management
and record keeping services shall be expressly limited to a refund of
commissions paid by Borrower during the period of such alleged failure and BNY
shall have no liability of any kind whatsoever for consequential or other
damages
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or penalties based upon any such alleged failure on BNY's part unless BNY shall
have significantly and materially adversely departed from its published
practices and procedures. In such event, Borrower may, upon one hundred twenty
(120) days prior written notice, terminate BNY's right and obligation to provide
collection services regarding Borrower's accounts receivable provided that such
termination shall not affect BNY's right to continue to conduct accounts
receivable management for Borrower PROVIDED, HOWEVER, that Borrower shall
continue to pay BNY the fees provided for in Section 5(e) less an amount equal
to the actual decrease in BNY's costs and expenses as a result of the
termination of its obligation to perform collection functions with respect to
the Receivables and/or Affiliate Receivables. Notwithstanding anything to the
contrary contained herein, so long as no Event of Default shall have occurred
hereunder, in the event that Borrower shall have (i) acquired Receivables and/or
Affiliate Receivables or (ii) entered into transactions with new Customers which
give rise to Receivables or Affiliate Receivables and, in either case, the
Receivables or Affiliate Receivables have an average face amount of $1,000 or
less, Borrower may elect not to have BNY perform accounts receivable management
and/or record keeping services with respect to such Receivables or Affiliate
Receivables, PROVIDED that Borrower shall remit the proceeds of such Receivables
or Affiliate Receivables to a blocked account maintained by Borrower in
accordance with Section 22 hereof.
(b) Subject to the terms and conditions set forth herein and in the
Ancillary Agreements, each Lender, severally and not jointly, shall make
Revolving Credit Advances to Borrower from time to time during the Term which,
in aggregate amounts outstanding at any time equal such Lender's Commitment
Percentage of the lesser of (x) the Maximum Loan Amount less the aggregate
amount of outstanding Letters of Credit or (y) an amount equal to the sum of:
(i) Receivables Availability, MINUS
(ii) the aggregate amount of outstanding Letters of Credit, MINUS
(iii) such reserves as Agent may reasonably deem proper and
necessary from time to time including, without limitation, the LC Reserve.
The sum of 2(b)(i), minus (ii) minus (iii) shall be referred to as the
"Formula Amount".
(c) Notwithstanding the limitations set forth above, Lenders retain
the right to lend Borrower from time to time such amounts in excess of such
limitations as Lenders may determine in their sole discretion. The term
"Permitted Overadvances" means (i) involuntary overadvances that may result from
time to time due to the fact that any borrowing formulas set forth in this
Agreement were unintentionally exceeded (whether at the time of any Loan or at
the time of the issuance of any Letter of Credit or otherwise) for any reason
(other than the Agent's gross negligence or willful misconduct), including
Collateral believed to be eligible in fact
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being or becoming ineligible or the return of uncollected checks or other items
applied to the reduction of the Loans or other Obligations, as well as
overadvances made by the Agent without Lenders' consent for up to two weeks
after discovering the unintentional overadvance, provided that the Agent does
not during that period voluntarily increase the amount by which the borrowing
formulas had been exceeded as of the start of that period, and (ii) (x)
voluntary overadvances made by the Agent in its sole discretion which shall not
cause the Obligations to exceed the borrowing formulas by the lesser of (x) 10%
of the amount permitted to be borrowed under Section 2(b) or (y) $8,000,000 at
any one time outstanding, or (c) be with the consent of all Lenders and (y)
voluntary overadvances made by BNY in its sole discretion ("BNY Overadvances")
which shall (i) be designated by BNY as a BNY Overadvance, (ii) be due and
payable to BNY on demand (subject to the last sentence of this Section (c)),
(iii) not exceed $5,000,000 at any time outstanding, (iv) be secured by the
Collateral on a basis junior to all other Obligations of Borrower hereunder and
(v) not result in the then aggregate Revolving Credit Advances outstanding
exceeding the Maximum Amount. Any such Permitted Overadvances in excess of
$1,000,000 (other than with respect to a BNY Overadvance) may remain outstanding
for no more than ten (10) Business Days in any thirty (30) day period. To the
extent any Permitted Overadvances are made (other than with respect to a BNY
Overadvance), each Lender shall bear its Commitment Percentage thereof. BNY
shall not demand repayment of a BNY Overadvance, unless after giving effect to
such repayment the then aggregate outstanding principal balance of outstanding
Loans (including any Permitted Overadvances) is less than the lesser of (A) the
Maximum Loan Amount or (B) the Formula Amount
(d) RESERVED
(e) Borrower acknowledges that the good faith exercise of Agent's
discretionary rights hereunder may result during the Term in one or more
increases or decreases in the Receivables Advance Rate and Borrower hereby
consents to any such increases or decreases which may limit or restrict advances
requested by Borrower, including, without limitation, any decreases in the
Receivables Advance Rate imposed by Agent in the event Borrower shall have
terminated BNY's obligation to perform accounts receivable management for
Borrower pursuant to Section 2(a) hereof.
(f) On the date that any interest, fees, costs, charges or
commissions to Agent or any Lender are due, Borrower shall thereby be deemed to
have requested, and Agent is hereby authorized at its discretion to make and
charge to Borrower's account, a Revolving Credit Advance to Borrower as of such
date in an amount equal to such unpaid interest, fees, costs, charges or
commissions.
(g) Any sums expended by Agent or any Lender due to Borrower's
failure to perform or comply with its obligations under this Agreement,
including but not limited to the payment of taxes, insurance premiums or
leasehold obligations, shall be charged to Borrower's account as a Revolving
Credit Advance and added to the Obligations.
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(h) Agent will account to Borrower monthly with a statement of all
Loans and other advances, charges and payments made pursuant to this Agreement,
and such account rendered by Agent shall be deemed final, binding and conclusive
unless Agent is notified by Borrower in writing to the contrary within thirty
(30) days of the date each account was rendered specifying the item or items to
which objection is made.
(i) During the Term, Borrower may borrow, prepay and reborrow
Revolving Credit Advances, all in accordance with the terms and conditions
hereof.
(j) The aggregate balance of Loans outstanding at any time shall not
exceed the Maximum Loan Amount. The aggregate balance of Revolving Credit
Advances outstanding at any time shall not exceed the Formula Amount.
(k) Subject to the terms and conditions hereof, Agent shall (a) issue
or cause the issuance of Letters of Credit ("Letters of Credit") PROVIDED,
HOWEVER, that Agent will not be required to issue or cause to be issued any
Letters of Credit to the extent that the face amount of such Letters of Credit
would then cause the sum of (i) the outstanding Revolving Credit Advances PLUS
(ii) outstanding Letters of Credit (with the requested Letter of Credit being
deemed to be outstanding for purposes of this calculation) to exceed the lesser
of (x) the Maximum Loan Amount or (y) the Formula Amount which is calculated as
if the requested Letter of Credit has been issued. The maximum amount of
outstanding Letters of Credit shall not exceed $5,000,000 in the aggregate at
any time. All disbursements or payments related to Letters of Credit shall be
deemed to be Revolving Credit Advances and shall bear interest at the applicable
Contract Rate; Letters of Credit that have not been drawn upon shall not bear
interest. Letters of Credit shall be subject to the terms and conditions set
forth in the Letter of Credit and Security Agreement attached hereto as EXHIBIT
2(l).
(l) Borrower may request Agent to issue or cause the issuance of a
Letter of Credit by delivering to Agent, Agent's standard form of Letter of
Credit and Security Agreement together with Bank's standard form of Letter of
Credit Application (collectively, the "Letter of Credit Application"), completed
to the satisfaction of Agent; and, such other certificates, documents and other
papers and information as Agent may reasonably request.
(m) Each Letter of Credit shall, among other things, (i) provide for
the payment of sight drafts when presented for honor thereunder in accordance
with the terms thereof and when accompanied by the documents described therein
and (ii) have an expiry date not later than twelve (12) months after such Letter
of Credit's date of issuance and in no event later than the last day of the
Term. Each Letter of Credit Application and each Letter of Credit shall be
subject to the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500, and any
amendments or revision
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thereof and, to the extent not inconsistent therewith, the laws of the State of
New York.
(n) In connection with the issuance of any Letter of Credit Borrower
shall indemnify, save and hold Agent and each Lender harmless from any loss,
cost, expense or liability, including, without limitation, payments made by
Agent and any Lender, and expenses and reasonable attorneys' fees incurred by
Agent or any Lender arising out of, or in connection with, any Letter of Credit
to be issued or created for Borrower. Borrower shall be bound by Agent's or any
issuing or accepting bank's regulations and good faith interpretations of any
Letter of Credit issued or created for Borrower's account, although this
interpretation may be different from Borrower's own; and, neither Agent nor any
Lender, the bank which opened the Letter of Credit, nor any of its
correspondents shall be liable for any error, negligence, or mistakes, whether
of omission or commission, in following Borrower's instructions or those
contained in any Letter of Credit or of any modifications, amendments or
supplements thereto or in issuing or paying any Letter of Credit, except for
Agent's or any Lender's or such correspondents' willful misconduct.
(o) Borrower shall authorize and direct any bank which issues a
Letter of Credit at the Agent's direction to name Borrower as the "Account
Party" therein and to deliver to Agent all instruments, documents, and other
writings and property received by the bank pursuant to the Letter of Credit and
to accept and rely upon Agent's instructions and agreements with respect to all
matters arising in connection with the Letter of Credit, the application
therefor or any acceptance therefor.
(p) In connection with all Letters of Credit issued or caused to be
issued by Agent under this Agreement, Borrower hereby appoints Agent, or its
designee, as its attorney, with full power and authority (i) to sign and/or
endorse Borrower's name upon any warehouse or other receipts, letter of credit
applications and acceptances; (ii) to sign Borrower's name on bills of lading;
(iii) to clear Inventory through the United States of America Customs Department
("Customs") in the name of Borrower or Agent or Agent's designee, and to sign
and delivery to Customs officials powers of attorney in the name of Borrower for
such purpose; and (iv) to complete in Borrower's name or Agent's, or in the name
of Agent's designee, any order, sale or transaction, obtain the necessary
documents in connection therewith, and collect the proceeds thereof. Neither
Agent nor its attorneys will be liable for any acts or omissions nor for any
error of judgment or mistakes of fact or law, except for Agent's or its
attorney's willful misconduct. This power, being coupled with an interest, is
irrevocable as long as any Letters of Credit remain outstanding.
(q) Each Lender shall to the extent of the percentage amount equal to
the product of such Lender's Commitment Percentage times the aggregate amount of
all unreimbursed reimbursement obligations with respect to the Letters of Credit
be deemed to have irrevocably purchased an undivided participation in each such
unreimbursed reimbursement obligation. In the event that at the
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time a disbursement is made the unpaid balance of Revolving Credit Advances
exceeds or would exceed, with the making of such disbursement, the lesser of the
Maximum Loan Amount or the Formula Amount, and such disbursement is not
reimbursed by Borrower within two (2) Business Days, the Agent shall promptly
notify each Lender and upon the Agent's demand each Lender shall pay to the
Agent such Lender's proportionate share of such unreimbursed disbursement
together with such Lender's proportionate share of the Agent's unreimbursed
costs and expenses relating to such unreimbursed disbursement. Upon receipt by
the Agent of a repayment from Borrower of any amount disbursed by the Agent for
which the Agent had already been reimbursed by the Lenders, the Agent shall
deliver to each of the Lenders that Lender's pro rata share of such repayment.
Each Lender's participation commitment shall continue until the last to occur of
any of the following events: (A) the Agent ceases to be obligated to issue
Letters of Credit hereunder; (B) no Letter of Credit issued hereunder remains
outstanding and uncancelled or (C) all Persons (other than Borrower) have been
fully reimbursed for all payments made under or relating to Letters of Credit.
3. REPAYMENT OF LOANS.
(a) Subject to the provisions of Section 2(c) hereof, Borrower shall
be required to (i) make a mandatory prepayment hereunder at any time that the
aggregate outstanding principal balance of the Loans made by Lenders to Borrower
hereunder is in excess of the lesser of the (x) Maximum Loan Amount or (y)
Formula Amount in an amount equal to such excess, and (ii) repay on the
expiration of the Term (x) the then aggregate outstanding principal balance of
Revolving Credit Advances made by any Lender to Borrower hereunder together with
accrued and unpaid interest, fees, charges and commissions and (y) all other
amounts owed any Lender under this Agreement and the Ancillary Agreements.
(b) Subject to Section 2(c) hereof with respect to BNY Overadvances,
each payment (including each prepayment) by Borrower on account of the principal
of and interest on the Revolving Credit Advances, shall be applied to the
Revolving Credit Advances pro rata according to the Commitment Percentages of
the Lenders. Except as expressly provided herein, all payments (including
prepayments) to be made by Borrower on account of principal, interest and fees
shall be made without set-off or counterclaim and shall be made to the Agent on
behalf of the Lenders, in each case on or prior to 1:00 P.M., New York time, in
Dollars and in immediately available funds.
(c) Unless the Agent shall have been notified by telephone, confirmed
in writing, by any Lender that such Lender will not make the amount which would
constitute its Commitment Percentage of the Loans available to the Agent, the
Agent may (but shall not be obligated to) assume that such Lender shall make
such amount available to the Agent and, in reliance upon such assumption, make
available to Borrower a corresponding amount. The Agent will promptly notify
Borrower of its receipt of any such notice from a Lender. If such amount is
made available to the
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Agent on a date after a Lender Settlement Date, such Lender shall pay to the
Agent on demand an amount equal to the product of (i) the daily average federal
funds rate (computed on the basis of a year of 360 days) during such period as
quoted by the Agent, times (ii) such amount, times (iii) the number of days from
and including such Lender Settlement Date to the date on which such amount
becomes immediately available to the Agent. A certificate of the Agent
submitted to any Lender with respect to any amounts owing under this paragraph
(e) shall be conclusive, in the absence of manifest error. If such amount is
not in fact made available to the Agent by such Lender within three (3) Business
Days after such Lender Settlement Date, the Agent shall be entitled to recover
such an amount, with interest thereon at the rate per annum then applicable to
Revolving Credit Advances hereunder, on demand from Borrower; PROVIDED, HOWEVER,
that the Agent's right to such recovery shall not prejudice or otherwise
adversely affect Borrower's rights (if any) against such Lender.
4. PROCEDURE FOR REVOLVING CREDIT ADVANCES.
(a) The Borrower may by written notice to Agent request a borrowing of
Revolving Credit Advances prior to 1:00 P.M. New York time on the Business Day
of its request to incur, on that day, a Revolving Credit Advance. Such notice
shall specify that portion of the Advances then being requested which are to be
Alternate Base Rate Loans or LIBO Rate Loans. All Revolving Credit Advances
shall be disbursed from whichever office or other place Agent may designate from
time to time and, together with any and all other Obligations of Borrower to
Lenders, shall be charged to the Borrower's account on Agent's books. The
proceeds of each Revolving Credit Advance made by the Lenders shall be made
available to the Borrower on the day so requested by way of credit to the
Borrower's operating account maintained with such bank as Borrower designated to
Agent. Any and all Obligations due and owing hereunder may be charged to
Borrower's account and shall constitute Revolving Credit Advances.
(b) Notwithstanding the provisions of (a) above, in the event
Borrower desires to obtain a Eurodollar Rate Loan, it shall give Agent at least
three (3) Business Days' prior written notice; specifying (i) the date of the
proposed borrowing (which shall be a Business Day), (ii) the type of borrowing
and the amount on the date of such Advance to be borrowed, which amount shall be
(x) a minimum amount of $10,000,000 and in integral multiples of $1,000,000 with
respect to Eurodollar Rate Loans and (iii) the duration of the first Interest
Period therefor. Interest Periods for a Eurodollar Rate Loan shall be for one,
two, three or six months. No more than eight (8) Eurodollar Rate Loans may be
outstanding at any time.
(c) Each Interest Period of a Eurodollar Rate Loan shall commence on
the date such Eurodollar Rate Loan is made and shall end on such date as
Borrower may elect as set forth in (b)(iii) above provided that:
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(i) any Interest Period which would otherwise end on a day which
is not a Business Day shall be the next preceding or succeeding Business Day as
is the Bank's custom in the market to which such Eurodollar Rate Loan relates;
(ii) no Interest Period shall end after the last day of the Term;
and
(iii) any Interest Period which begins on a day for which there is
no numerically corresponding day in the calendar month during which such
Interest Period is to end, shall (subject to clause (i) above) end on the last
day of such calendar month.
Borrower shall elect the initial Interest Period applicable to a
Eurodollar Rate Loan by its notice of borrowing given to the Agent pursuant to
Section 4(b) or by its notice of conversion given to the Agent pursuant to
Section 4(d), as the case may be. Borrower shall elect the duration of each
succeeding Interest Period by giving irrevocable written notice to the Agent of
such duration not less than three (3) Business Days prior to the last day of the
then current Interest Period applicable to such Eurodollar Rate Loan. If the
Agent does not receive timely notice of the Interest Period elected by Borrower,
Borrower shall be deemed to have elected to convert to an Alternate Base Rate
Loan subject to Section 4(d) hereinbelow.
(d) Provided that no Event of Default shall have occurred and be
continuing, Borrower may, convert any Loan into a Loan of another type in the
same aggregate principal amount provided that (i) any conversion of a Eurodollar
Rate Loan shall be made only on the last Business Day of the then current
Interest Period applicable to such Eurodollar Rate Loan and (ii) any conversion
of an Alternate Base Rate Loan or LIBO Rate Loan into a Eurodollar Loan may be
made only upon three (3) Business Days prior written notice as provided in
Section 4(b) above. If Borrower desires to convert a Loan, it shall give Agent
written notice, specifying the date of such conversion, the Loans to be
converted and if the conversion is to a Eurodollar Rate Loan, the duration of
the first Interest Period therefor.
(e) At its option and upon three (3) Business Days' prior written
notice, Borrower may prepay the Advances in whole at any time, with accrued
interest on the principal being prepaid to the date of such repayment in the
event that any prepayment of a Eurodollar Rate Loan is required or permitted on
a date other than the last Business Day of the then current Interest Period with
respect thereto, and Borrower shall indemnify the Agent and Lenders therefor in
accordance with Section 4(f) hereof.
(f) Borrower shall indemnify the Agent and Lenders and hold the Agent
and Lenders harmless from and against any and all losses or expenses that Agent
and Lenders may sustain or incur as a consequence of any prepayment or any
default by Borrower in the payment of the principal of or interest on any
Eurodollar Rate Loan or failure by Borrower to complete a borrowing of, a
prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof
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has been given, including (but not limited to) any interest payable by the Agent
or Lenders to lenders of funds obtained by it in order to make or maintain its
Eurodollar Rate Loans hereunder.
(g) Notwithstanding any other provision hereof, if any applicable
law, treaty, regulation or directive, or any change therein or in the
interpretation or application thereof, shall make it unlawful for any Lender
(for purposes of this subsection (g), the term "Lender" shall include any Lender
and the office or branch where any Lender or any corporation or bank controlling
such Lender makes or maintains any Eurodollar Rate Loans to make or maintain its
Eurodollar Rate Loans), the obligation of the Lender to make Eurodollar Rate
Loans hereunder, shall forthwith be cancelled and Borrower shall, if any
affected Eurodollar Rate Loans are then outstanding, promptly upon request from
the Lender, either pay all such affected Eurodollar Rate Loans or convert such
affected Eurodollar Rate Loans into Loans of another type. If any such payment
or conversion of any Eurodollar Rate Loan is made on a day that is not
applicable to such Eurodollar Rate Loan, Borrower shall pay the Lender, upon the
Lender's request, such amount or amounts as may be necessary to compensate the
Lender for any loss or expense sustained or incurred by the Lender in respect of
such Eurodollar Rate Loan as a result of such payment or conversion, including
(but not limited to) any interest or other amounts payable by the Lender to
lenders of funds obtained by the Lender in order to make or maintain such
Eurodollar Rate Loan. A certificate as to any additional amounts payable
pursuant to the foregoing sentence submitted by the Lender to Borrower shall be
conclusive absent manifest error.
5. INTEREST; FEES; COMMISSIONS.
(a) Interest.
(i) Except as modified by paragraph 5(a)(iii) below, interest on
Revolving Credit Advances shall be paid to Agent for the benefit of the Lenders
in arrears on the last day of each month with respect to Alternate Base Rate
Loans, Eurodollar Rate Loans and LIBO Rate Loans. Interest charges shall be
computed on the actual principal of Revolving Credit Advances outstanding during
the month (the "Monthly Advances") at a rate per annum equal to the applicable
Contract Rate. Whenever subsequent to the date of this Agreement, the Alternate
Base Rate is increased or decreased, the applicable Contract Rate for Alternate
Base Rate Loans shall be similarly changed without notice or demand of any kind
by an amount equal to the amount of such change in the Alternate Base Rate
during the time such change or changes remain in effect.
(ii) Interest shall be computed on the basis of actual days
elapsed over a 360-day year.
(iii) Upon the occurrence and during the continuance of an Event
of Default, at the Agent's option interest shall be payable at the Default
Rate.
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(iv) Notwithstanding the foregoing, in no event shall interest
exceed the maximum rate permitted under any applicable law or regulation, and if
any provision of this Agreement or an Ancillary Agreement is in contravention of
any such law or regulation, such provision shall be deemed amended to provide
for interest at said maximum rate and any excess amount shall either be applied,
at Lender's option, to the outstanding Loans in such order as Lender shall
determine or refunded by Lender to Borrower.
(v) Borrower shall pay principal, interest and all other
amounts payable hereunder, or under any Ancillary Agreement, without any
deduction whatsoever, including, but not limited to, any deduction for any set-
off or counterclaim.
(vi) The Applicable Margin shall be (a) zero percent (0%)
with respect to Alternate Base Rate Loans, (b) two and one half percent (2.5%)
with respect to Eurodollar Rate Loans, and (c) two and one-half percent (2.5%)
with respect to LIBO Rate Loans provided however the Applicable Margin shall be
adjusted to the applicable amounts set forth below (subject to imposition of the
Default Rate as provided herein) based upon the corresponding Adjustment
Percentage as set forth below and as reflected in the most recent financial
statements delivered pursuant to section 11(a) or 11(b) hereof (commencing with
delivery of the audited financial statements for the fiscal year ending December
31, 1996). Each such adjustment shall take effect (if at all) as of the first
day of the first month following the date that the applicable financial
statements described in the immediately preceding sentence were received by
Agent and shall remain in effect until the latest date delivery of financial
statements are received pursuant to Section 11(a) or (b) hereof that demonstrate
a change in the Adjustment Percentage whereupon, (subject to imposition of the
Default Rate as provided herein), the Applicable Margin shall be decreased or
increased, as the case may be, to the applicable amounts set forth below:
APPLICABLE MARGIN APPLICABLE MARGIN
WITH RESPECT TO WITH RESPECT APPLICABLE MARGIN
ADJUSTMENT ALTERNATE BASE TO EURODOLLAR WITH RESPECT TO
PERCENTAGE RATE LOANS RATE LOANS LIBO RATE LOANS
---------- ------------------ ------------------ -------------------
Greater than 8% - 1% +150 +150
Equal to or less
than 8% but greater
than 7% - 1/2% +200 +200
Equal to or less
than 7% but greater
than 2% - 0 +250 +250
Equal to or less
than 2% but greater
than 1% + 1/2% +300 +300
Equal to or less
than 1% + 1% +350 +350
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Notwithstanding the foregoing, upon the occurrence of an Equity Event
pursuant to which Borrower receives cash proceeds of $60,000,000 or more
("Conforming Equity Event"), the Applicable Margin shall no longer be decreased
or increased based upon the Adjustment Percentage but rather shall be adjusted
to the applicable amounts set forth below as of the first day of the month
following the month in which the Conforming Equity Event occurs:
APPLICABLE MARGIN APPLICABLE MARGIN
AMOUNT OF WITH RESPECT TO WITH RESPECT APPLICABLE MARGIN
CONFORMING ALTERNATE BASE TO EURODOLLAR WITH RESPECT TO
EQUITY EVENT RATE LOANS RATE LOANS LIBO RATE LOANS
------------ ------------------ ------------------ ------------------
$75,000,000 or
more - 1% +150 +150
$60,000,000 to
$74,999,999 - 1/2% +200 +200
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(b) Fees.
(i) UNUSED LINE FEE. In the event the average closing
daily unpaid balances of all Revolving Credit Advances (which, for these
purposes shall include the aggregate face amount of all outstanding Letters
of Credit) hereunder during any calendar month is less than ($100,000,000)
for such month, Borrower shall pay to Agent a fee at a rate per annum equal
to (a) one-half of one percent (1/2%) or (b) one-quarter of one percent
(.25%) following the occurrence of a Conforming Equity Event on the amount by
which $100,000,000 exceeds such average daily unpaid balance. Such fee shall
be calculated on the basis of a year of 360 days and actual days elapsed, and
shall be charged to Borrower's account on the first day of each month with
respect to the prior month.
(ii) COLLATERAL MONITORING FEE. Upon Agent's performance of
any collateral monitoring - namely any field examination, collateral analysis or
other business analysis, the need for which is to be determined by Agent and
which monitoring is undertaken by Agent or for Agent's benefit, an amount equal
to Agent's then daily fee for such services which as of the Closing Date is $750
per day, per person, for each person reasonably employed to perform such
monitoring together with all costs, disbursements and expenses incurred by the
Agent and the person performing such collateral monitoring shall be charged to
Borrower's account, provided, that, so long as no Event of Default or Incipient
Event of Default has occurred and the prior field examinations are not
determined to be inadequate, in Agent's sole discretion, such fee shall not
exceed $75,000 during any Contract Year. Notwithstanding the foregoing,
following the occurrence of a Conforming Equity Event, Lender shall conduct such
field examinations only on a quarterly basis, provided that no such limitation
shall apply (a) following the occurrence and during the continuation of an Event
of Default or (b) if the last preceding field examination was unsatisfactory.
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(iii) COLLATERAL AGENT FEE. Borrower shall pay Agent an
annual collateral agent fee of $25,000 following the sale, assignment or
transfer of any of the Obligations ("Loan Sale") to any other financial
institutions which shall be payable in full on the first day of the month
following the month in which such Loan Sale occurs and on each 12 month
anniversary date of such day thereafter during the term hereof; PROVIDED,
HOWEVER, following the occurrence of a Conforming Equity Event such fee shall
be decreased to $15,000 per annum. Such fee shall be deemed earned in full
on the date when same is due and payable hereunder and shall not be subject
to rebate or proration upon termination of this Agreement for any reason.
(iv) LETTER OF CREDIT FEES. Borrower shall pay Agent (i)
(A) for issuing or causing the issuance of a standby Letter of Credit, a fee
computed at a rate per annum of one and one-half percent (1.50%) on the
outstanding amount thereof from time to time and (B) for issuing or causing
the issuance of a Letter of Credit that is not a standby Letter of Credit, a
fee equal to 1/4% of the original and each increase in the face amount
thereof for each 30 days or part thereof of its term (the fees set forth in
(A) and (B) referred to as "Letter of Credit Fees") and (ii) Bank's other
customary charges payable in connection with Letters of Credit as in effect
from time to time (which charges shall be furnished to Borrower by Agent upon
request). Such fees and charges shall be payable (i) in the case of any
Letter of Credit, on its opening (ii) in the case of a standby Letter of
Credit, (A) monthly thereafter in advance and (B) upon each increase in the
outstanding amount thereof and (iii) in the case of any Letter of Credit that
is not a standby Letter of Credit, at the time of each increase in face
amount thereof. Any such charge in effect at the time of a particular
transaction shall be the charge for that transaction, notwithstanding any
subsequent change in Bank's prevailing charges for that type of transaction.
All Letter of Credit Fees payable hereunder shall be deemed earned in full on
the date when the same are due and payable hereunder and shall not be subject
to rebate or proration upon the termination of this Agreement for any reason.
(v) CLOSING FEE. Borrower shall pay to Agent for the
ratable benefit of Lenders on the Closing Date a Closing Fee in the amount of
$200,000.
(vi) PERMITTED OVERADVANCE FEE. For each "Excess
Permitted Overadvance" a fee equal to the product of (a) $5,000 multiplied by
(b) the number of days in such month during which Excess Permitted
Overadvances were outstanding may, in Agent's sole discretion, be charged.
Such fee shall be paid on the last day of each month. For purposes of this
clause (vi) an Excess Permitted Overadvance shall be deemed to exist on any
day (other than during any two periods of five consecutive days in each month
when the Borrower may have outstanding Permitted Overadvances of not more
than $5,000,000) when the Borrower's Permitted Overadvances (other than BNY
Overadvances) exceed $1,000,000. Notwithstanding the foregoing, no such Fee
shall be charged with respect to one Excess Permitted Overadvance per month
which is eliminated within three
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Business Days of its occurrence. If such Excess Permitted Overadvance is not
eliminated within such period, any fee which is charged shall be calculated for
each day during that month on which an Excess Permitted Overadvance occurred.
(vii) EURODOLLAR RATE LOAN FEE. For each Eurodollar Rate Loan
that is made by Lenders hereunder, Borrower shall pay a fee to Agent of $250.00
at the time of making any such Loan, which such fee shall be subject to increase
by Agent from time to time.
(c) INCREASED COSTS. In the event that any applicable law, treaty or
governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by any Lender (for purposes of this Section
5(c), the term "Lender" shall include any Lender and any corporation or bank
controlling Lender) with any request or directive (whether or not having the
force of law) from any central bank or other financial, monetary or other
authority, shall:
(i) subject any Lender to any tax of any kind whatsoever
with respect to this Agreement or change the basis of taxation of payments to
any Lender of principal, fees, interest or any other amount payable hereunder
or under any Ancillary Agreements (except for changes in the rate of tax on
the overall net income of any Lender by the jurisdiction in which it
maintains its principal office);
(ii) impose, modify or hold applicable any reserve, special
deposit, assessment or similar requirement against assets held by, or
deposits in or for the account of, advances or loans by, or other credit
extended by, any office of any Lender, including (without limitation)
pursuant to Regulation D of the Board of Governors of the Federal Reserve
System; or
(iii) impose on any Lender any other condition with respect to
this Agreement or any Ancillary Agreements;
and the result of any of the foregoing is to increase the cost to any Lender of
making, renewing or maintaining its Loans hereunder by an amount that any Lender
deems to be material or to reduce the amount of any payment (whether of
principal, interest or otherwise) in respect of any of the Loans by an amount
that any Lender deems to be material, then, in any case Borrower shall promptly
pay such Lender, upon its demand, such additional amount as will compensate such
Lender for such additional cost or such reduction, as the case may be. Agent
shall certify the amount of such additional cost or reduced amount to Borrower,
and such certification shall be conclusive absent manifest error.
(d) CAPITAL ADEQUACY.
(i) In the event that Agent shall have determined that any
applicable law, rule, regulation or guideline regarding capital adequacy, 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
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interpretation or administration thereof, or compliance by Lender (for purposes
of this Section 5(d), the term "Lender" shall include any Lender and any
corporation or bank controlling any Lender) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on any Lender's capital as a consequence of its
obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's policies with respect to capital adequacy) by an amount deemed by
such Lender to be material, then, from time to time, Borrower shall pay upon
demand to such Lender such additional amount or amounts as will compensate such
Lender for such reduction. In determining such amount or amounts, such Lender
may use any reasonable averaging or attribution methods. The protection of this
Section shall be available to such Lender regardless of any possible contention
of invalidity or inapplicability with respect to the applicable law, regulation
or condition.
(ii) A certificate of Agent setting forth such amount or
amounts as shall be necessary to compensate Lender with respect to Section 5(d)
hereof when delivered to Borrower shall be conclusive absent manifest error.
(e) COMMISSION.
(i) Borrower shall pay to BNY monthly, for its own account
and not in its capacity as Agent hereunder, on the fifteenth day of each month,
a commission at the rate of (x) .225% of the gross face amount of each invoice
assigned to BNY evidencing the first $400,000,000 in aggregate Receivables and
Affiliate Receivables purchased hereunder in any Calendar Year, (y) .175% of the
gross face amount of each invoice assigned to BNY evidencing Receivables and
Affiliate Receivables in excess of $400,000,000 but no more than $500,000,000 in
aggregate Receivables and Affiliate Receivables for any Calendar Year and (z)
.125% of the gross face amount of each invoice assigned to BNY evidencing
Receivables and Affiliate Receivables in excess of $500,000,000 in aggregate
Receivables and Affiliate Receivables for any Calendar Year. In the event that
Borrower acquires a majority of the capital stock or all or substantially all of
the assets of another Person not theretofore a Scheduled Affiliate and the sales
to invoice ratio with respect to the Receivables and/or Affiliate Receivables
acquired in connection with such Transaction shall increase BNY's costs of
managing the Receivables and Affiliate Receivables hereunder, Borrower shall
negotiate, in good faith, an increase in the commissions payable by Borrower
under this Section 5(e) with respect to the Receivables and/or Affiliate
Receivables so acquired. If Borrower and BNY shall not agree on the increased
fee, Borrower (rather than BNY) shall thereafter be obligated to perform any
collection function with respect to the Receivables and/or Affiliate Receivables
so acquired and BNY shall only be obligated to perform record keeping services
with respect to the Receivables and/or Affiliate Receivables; PROVIDED, HOWEVER,
Borrower shall pay BNY .15% of the gross face amount of each
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invoice assigned to BNY evidencing the Receivables and/or Affiliate Receivables
so acquired. Further, in the event that at the end of any month the average
billings per Customer have decreased by more than 25% in the aggregate from the
average billings per Customer in existence on March 31, 1994, Borrower shall
negotiate, in good faith, an increase in the commissions payable by Borrower
under this Section 5(e). If Borrower and BNY shall not agree on the increased
fee, BNY shall have the right to terminate its obligation to perform any
collection function and remain responsible only for record keeping services, for
which Borrower shall pay BNY a fee equal to .15% of the gross face amount of
each invoice assigned to BNY evidencing the Receivables and/or Affiliate
Receivables so serviced.
(ii) Notwithstanding anything contained in the foregoing
subsection (i) to the contrary, the aggregate amount of Receivables and
Affiliate Receivables with respect to which Borrower shall be obligated to pay
commissions hereunder and which Borrower shall be obligated to assign to Agent
hereunder ("Volume") shall not be less than the Annual Minimum for each year
during the Term (a "Contract Year") or that part of the Contract Year during
which this Agreement is in effect in the event of termination prior to the end
of a Contract Year (a "Partial Year"). In the event the Volume during any
Contract Year or Partial Year, as applicable, is less than the Annual Minimum,
then BNY shall charge Borrower's account in an amount equal to the amount by
which the commission on the Annual Minimum exceeds the commission on the Volume
for the Contract Year or Partial Year, as applicable. The foregoing amounts
which BNY shall charge to Borrower's account are hereinafter referred to as
"Minimum Volume Charges." BNY shall compute the Minimum Volume Charges on a
calendar quarterly basis and charge Borrower's account for the same on the first
day of the month following the end of such calendar quarter or on the first day
of the month following the effective date of termination of this Agreement in
the case of a Partial Year.
(f) MATURED FUNDS. On the last day of each month during the Term,
BNY shall credit Borrower's account with interest at the Matured Funds Rate in
effect during such month on the average daily balance during such month of any
amounts payable by BNY to Borrower hereunder which are not drawn by Borrower on
the Settlement Date.
5A. CONDITION TO ALL LOANS.
Notwithstanding any other provisions contained in this Agreement, the
making of each Revolving Credit Advance and issuance of a Letter of Credit
provided for in this Agreement shall be conditioned upon the satisfaction of the
matters set forth in this SECTION 5A, and each request by Borrower for a
Revolving Credit Advance or Letter of Credit shall constitute a representation
to Agent and the Lenders that each such condition set forth below has been met
or satisfied.
(A) WARRANTIES AND REPRESENTATIONS. All of the warranties and
representations contained in this Agreement or any Ancillary Agreement shall be
true and correct in all material respects on and as of the date of such
Revolving Credit Advance on
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issuance of Letters of Credit as if made on such date and each request for a
Revolving Credit Advance or Letter of Credit shall constitute an affirmation by
Borrower that such warranties and representations are then true and correct in
all material respects in each case, except to the extent that such warranties
and representations either relate to an earlier date or shall be untrue or
incorrect solely as a result of occurrences permitted under this Agreement or
are consented to by Agent or the Required Lenders in writing.
(B) NO DEFAULT. No Event of Default shall have occurred or will
result from such Revolving Credit Advance or issuance of Letter of Credit and no
Incipient Event of Default shall have occurred which may become an Event of
Default or will result from such Revolving Credit Advance or issuance of Letter
of Credit.
6. SECURITY INTEREST.
(a) To secure the prompt payment to Lenders of the Obligations,
Borrower hereby acknowledges, confirms and agrees that Agent has and shall
continue to have for the benefit of the Lenders a continuing security interest
in and upon all Collateral heretofore granted to Agent pursuant to the Original
ARM Agreement and, to the extent not otherwise granted to or held by Agent,
hereby assigns, pledges and grants to Agent, for the benefit of the Lenders, a
continuing security interest in and to the Collateral, whether now owned or
existing or hereafter acquired or arising and wheresoever located (whether or
not the same is subject to Article 9 of the Uniform Commercial Code). All of
the Borrower's ledger sheets, files, records, books of account, business papers
and documents relating to the Collateral shall, until delivered to or removed by
Agent, be kept by Borrower in trust for Agent until all Obligations have been
paid in full. Each confirmatory assignment schedule or other form of assignment
hereafter executed by Borrower shall be deemed to include the foregoing grant,
whether or not the same appears therein.
(b) Agent may file one or more financing statements disclosing
Agent's security interest in the Collateral without Borrower's signature
appearing thereon or Agent may sign on Borrower's behalf as provided in
paragraph 13 hereof. The parties agree that a carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement. If
any Receivable or Affiliate Receivable becomes evidenced by a promissory note or
any other instrument for the payment of money, Borrower will immediately deliver
such instrument to Agent appropriately endorsed. Borrower will execute any and
all documents reasonably requested by Agent to Borrower to effectuate the
assignment of any and all tax refunds payable to Borrower including, without
limitation, powers of attorney.
7. REPRESENTATIONS CONCERNING THE COLLATERAL. Borrower represents
and warrants (each of which such representations and warranties shall be deemed
repeated upon the making of each request for a Revolving Credit Advance and made
as of the time of each and every Revolving Credit Advance hereunder):
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(a) all the Collateral (i) is owned by Borrower free and clear of all
claims, liens, security interests and encumbrances (including without limitation
any claims of infringement) except (A) those in Agent's favor and (B) Permitted
Liens and (ii) is not subject to any agreement prohibiting the granting of a
security interest or requiring notice of or consent to the granting of a
security interest;
(b) all Receivables and Affiliate Receivables (i) represent complete
bona fide transactions which require no further act under any circumstances on
Borrower's part to make such Receivables or Affiliate Receivable payable by
Customers other than the acts which must reasonably and promptly in the ordinary
course be taken by Borrower in connection with Cycle Billings and Media Billings
Receivables with respect to billing and delivery of invoices, (ii) to the best
of Borrower's knowledge, are not subject to any present, future or contingent
Disputes and (iii) do not represent bill and hold sales, consignment sales,
guaranteed sales, sale or return or other similar understandings or obligations
of any Scheduled Affiliate or Subsidiary of Borrower.
(c) that the Borrower and the Scheduled Affiliates ("Obligated
Party") are solely responsible for payment of all advertising purchased by the
Obligated Party from such media source and that the media source has no recourse
against the Customer of an Obligated Party with respect to any such payment.
8. COVENANTS CONCERNING THE COLLATERAL. During the Term, Borrower
covenants that it shall:
(a) not dispose of any of the Collateral whether by sale, lease or
otherwise except for the disposition or transfer of obsolete and worn-out
Equipment in the ordinary course of business during any fiscal year only to the
extent that (x) (i) the proceeds of any such disposition are used or committed
to be used to acquire replacement Equipment which is subject to Agent's first
priority security interest and (ii) which has a fair market value not less than
the Equipment which was disposed or transferred or (y) the proceeds of which are
remitted to Agent in reduction of the Obligations;
(b) not encumber, mortgage, pledge, assign or grant any security
interest in any Collateral or any of Borrower's other assets to anyone other
than Agent except (i) Permitted Liens and (ii) as set forth on SCHEDULE 1(A)
attached hereto and made a part hereof;
(c) place notations upon Borrower's books of account and any
quarterly or annual financial statement prepared by Borrower to disclose Agent's
security interest in the Collateral;
(d) defend the Collateral against the claims and demands of all
parties.
(e) keep and maintain the Equipment in good operating condition,
except for ordinary wear and tear, and shall make all
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necessary repairs and replacements thereof so that the value and operating
efficiency shall at all times be maintained and preserved. Borrower shall not
permit any such items to become a fixture to real estate or accessions to other
personal property;
(f) not extend the payment terms of any Receivable without prompt
notice thereof to Agent;
(g) perform all other steps requested by Lender to create and
maintain in Agent's favor a valid perfected first security interest in all
Collateral; and
(h) Borrower shall promptly upon request provide Agent with duplicate
originals of all credits which Borrower issues to its Customers and immediately
notify Agent of any merchandise returns or Disputes. Borrower shall settle all
Disputes at no cost or expense to Lenders. Should Agent so elect, upon the
occurrence of any Event of Default, Agent may at any time in its discretion (i)
withdraw Borrower's authority to issue credits to its Customers without Agent's
prior written consent; (ii) litigate Disputes or settle them directly with
Customers on terms acceptable to Agent; or (iii) direct Borrower to set aside
and identify as Agent's property any returned or repossessed merchandise or
other goods which by sale resulted in Receivables or Affiliate Receivables
theretofore assigned to Agent ("Retained Goods"). All Retained Goods (and the
proceeds thereof) shall be (A) held by Borrower in trust for Agent as Agent's
property, (B) subject to Agent's security interest hereunder and (C) disposed of
only in accordance with Agent's express written instructions.
9. COLLECTION AND MAINTENANCE OF COLLATERAL AND RECORDS.
Agent may at any time verify Receivables or Affiliate Receivables
utilizing an audit control company or any other agent of Agent. Agent will
endeavor to conduct such verifications without disclosing its relationship with
Borrower and shall have no liability to Borrower in the event of such disclosure
except as a direct result of Agent's gross (not mere) negligence or willful
misconduct. Agent or Agent's designee may notify Customers, at any time at
Agent's sole discretion, of Agent's security interest in Receivables or
Affiliate Receivables, collect them directly and charge the collection costs and
expenses to Borrower's account, but, unless and until Agent does so or gives
Borrower other instructions, Borrower shall instruct all of its Customers to
make payments on account of Receivables or Affiliate Receivables to an account
under Agent's dominion and control at such bank as Agent may designate, as
provided by the terms of Section 23. To the extent Borrower receives any
payments on account of Receivables or Affiliate Receivables, it shall hold such
payments for Agent's benefit in trust as Agent's trustee and immediately deliver
them to Agent in their original form with all necessary endorsements or, as
directed by Agent, deposit such payments as directed by Agent pursuant to
Section 22 hereof. Agent will credit (conditional upon final collection) all
such payments to Borrower's account on the Settlement Date. Promptly after the
creation of any Receivables or
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Affiliate Receivables, Borrower shall provide Agent with schedules describing
all Receivables or Affiliate Receivables created or acquired by Borrower and
shall execute and deliver confirmatory written assignments of such Receivables
or Affiliate Receivables to Agent, but Borrower's failure to execute and deliver
such schedules or written confirmatory assignments of such Receivables or
Affiliate Receivables shall not affect or limit Agent's security interest or
other rights in and to the Receivables or Affiliate Receivables. Borrower shall
furnish, at Agent's request, copies of contracts, invoices or the equivalent,
any original shipping and delivery receipts for all merchandise sold or services
rendered including, without limitation, copies of all "tear sheets" (i.e.,
copies of all advertisements placed for Customers) and such other documents and
information as Agent may require. All of Borrower's invoices shall bear the
terms stated on the applicable customer order, as submitted to Agent, and no
change from the original terms of such Customer order shall be made without the
prior written consent of Agent. Borrower shall provide Agent on a monthly
(within ten (10) days after the end of each month), or more frequent basis, as
requested by Agent, a summary report of Borrower's current Inventory, unbilled
Receivables, Receivables subject to Cycle Billing, Media Billing Receivables and
accounts payable reports, certified as true and accurate by Borrower's President
or Chief Financial Officer, as well as an aged trial balance of Borrower's
existing accounts payable. Borrower shall provide Agent, as requested by Agent,
such other schedules, documents and/or information regarding the Collateral as
Agent may require.
10. INSPECTIONS. At all times during normal business hours, Agent
shall have the right to (a) visit and inspect Borrower's properties and the
Collateral, (b) inspect, audit and make extracts from Borrower's relevant books
and records, including, but not limited to, management letters prepared by
independent accountants, and (c) discuss with Borrower's principal officers, and
independent accountants, Borrower's business, assets, liabilities, financial
condition, results of operations and business prospects. Borrower will deliver
to Agent any instrument necessary for Agent to obtain records from any service
bureau maintaining records for Borrower.
11. FINANCIAL INFORMATION. The Financial Parties shall provide
Lenders (a) as soon as available, but in any event within (i) one hundred five
(105) days or (ii) ninety (90) days in the event of a Conforming Equity Event
after the end of each fiscal year of the Financial Parties, a balance sheet as
at the end of such fiscal year and the related statements of income, retained
earnings and changes in cash flow for such fiscal year with respect to (1)
Borrower and its Subsidiaries on a consolidated and consolidating basis, (2) WCI
and its Subsidiaries on a consolidated and consolidating basis, (3) Scheduled
Affiliates (without duplication) on a combining and combined basis, and (4) MEI
on a consolidated basis, setting forth in comparative form the figures as at the
end of and for the previous fiscal year with respect to the Financial Parties on
a similar basis, which shall have been reported on by independent certified
public accountants who shall
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be satisfactory to Agent and shall be accompanied by an unqualified audit report
issued by such independent certified public accountants PROVIDED, THAT, with
respect to Scheduled Affiliates, an audit report shall be required only with
respect to a Scheduled Affiliate (exclusive of the reporting Persons described
in (1) (2) and (4) above) which has assets, as reflected on its then most
current balance sheet having a value in excess of $10,000,000; (b) as soon as
available, but in any event within (i) sixty (60) days or (ii) forty five (45)
days in the event of a Conforming Equity Event, after the close of each quarter,
the balance sheet as at the end of such quarter and the related statements of
income, retained earnings and changes in cash flow for such quarter with respect
to (1) Borrower and its Subsidiaries on a consolidated basis, (2) WCI and its
Subsidiaries on a consolidated basis, (3) Borrower and WCI on a combined basis,
(4) Scheduled Affiliates (without duplication) on a consolidating basis, and (5)
MEI on a consolidated basis, which have been internally prepared by the Chief
Financial Officer for each Financial Party. All financial statements required
under (a) and (b) above shall be prepared in accordance with GAAP, subject to
year-end adjustments in the case of quarterly statements. Together with the
financial statements furnished pursuant to (a) above Borrower shall deliver a
certificate of Borrower's certified public accountants addressed to Agent
stating that (i) they have caused this Agreement and the Ancillary Agreements to
be reviewed and (ii) in making the examination necessary for the issuance of
such financial statements, nothing has come to their attention to lead them to
believe that any Event of Default or Incipient Event of Default exists and, in
particular, they have no knowledge of any Event of Default or Incipient Event of
Default or, if such is not the case, specifying such Event of Default or
Incipient Event of Default and its nature, when it occurred and whether it is
continuing. At the times the financial statements are furnished pursuant to (a)
and (b) above and at the end of each month during the Term, a certificate of
Borrower's Chief Financial Officer shall be delivered to Agent stating that to
the best knowledge of such officer no Event of Default or Incipient Event of
Default exists, or, if such is not the case, specifying such Event of Default or
Incipient Event of Default and its nature, when it occurred, whether it is
continuing and the steps being taken by Borrower with respect to such event. If
any internally prepared financial information, including that required under
this paragraph, is unsatisfactory in any manner to Agent, Agent may request that
Borrower's independent certified public accountants review same. In addition,
Borrower shall provide Agent with such other reports and documents as shall be
reasonably requested including, but not limited to, reports to stockholders, any
documents filed with any governmental agencies or stock exchanges and any
management letters received by Borrower from its accountants.
In addition to the foregoing financial statements, each Financial
Party shall furnish Agent prior to the beginning of each fiscal year commencing
with fiscal year 1997, a month by month projected operating budget and cash flow
for such fiscal year (including an income statement for each month and a balance
sheet as at the end of the last month in each fiscal quarter), such
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projections to be accompanied by a certificate signed by Borrower's President or
Chief Financial Officer to the effect that such projections have been prepared
on the basis of sound financial planning practice consistent with past budgets
and financial statements and that such officer has no reason to question the
reasonableness of any material assumptions on which such projections were
prepared.
12. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS. Borrower
represents and warrants (each of which such representations and warranties shall
be deemed repeated upon the making of a request for a Revolving Credit Advance
and made as of the time of each Revolving Credit Advance made hereunder), and
covenants that:
(a) Borrower is a corporation duly organized and validly existing
under the laws of the State of Delaware and duly qualified and in good standing
in every other state or jurisdiction in which the nature of Borrower's business
requires such qualification;
(b) the execution, delivery and performance of this Agreement and the
Ancillary Agreements (i) have been duly authorized, (ii) are not in
contravention of Borrower's certificate of incorporation, by-laws or of any
indenture, agreement or undertaking to which Borrower is a party or by which
Borrower is bound and (iii) are within Borrower's corporate powers;
(c) this Agreement and the Ancillary Agreements executed and
delivered by Borrower are Borrower's legal, valid and binding obligations,
enforceable in accordance with their terms;
(d) it keeps and will continue to keep all of its books and records
concerning the Collateral at Borrower's executive offices located at the
addresses set forth on SCHEDULE 12(d) hereof and will not move such books and
records (x) outside the continental United States or (y) to any location other
than as set forth on SCHEDULE 12(d) without giving Agent at least thirty (30)
days prior written notice;
(e) (i) the operation of Borrower's business is and will
continue to be in compliance in all material respects with all applicable
federal, state and local laws, including but not limited to all applicable
environmental laws and regulations and Borrower shall not engage in any business
activity which has been adjudicated to have violated an applicable state or
federal statute relative to health, safety or public morals.
(ii) Borrower will establish and maintain a system to assure
and monitor continued compliance with all applicable environmental laws, which
system shall include, if applicable, periodic reviews of such compliance.
(iii) In the event the Borrower obtains, gives or receives
notice of any release or threat of release of a reportable quantity of any
Hazardous Substances on its property (any such event being hereinafter referred
to as a "Hazardous Discharge") or
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receives any notice of violation, request for information or notification that
it is potentially responsible for investigation or cleanup of environmental
conditions on its property, demand letter or complaint, order, citation, or
other written notice with regard to any Hazardous Discharge or violation of any
environmental laws affecting its property or Borrower's interest therein (any of
the foregoing is referred to herein as an "Environmental Complaint") from any
Person or entity, including any state agency responsible in whole or in part for
environmental matters in the state in which such property is located or the
United States Environmental Protection Agency (any such person or entity
hereinafter the "Authority"), then the Borrower shall, within five (5) Business
Days, give written notice of same to the Agent detailing facts and circumstances
of which the Borrower is aware giving rise to the Hazardous Discharge or
Environmental Complaint and periodically inform Agent of the status of the
matter. Such information is to be provided to allow the Agent to protect its
security interest in the Collateral and is not intended to create nor shall it
create any obligation upon the Agent with respect thereto.
(iv) Borrower shall respond promptly to any Hazardous
Discharge or Environmental Complaint and take all necessary action in order to
safeguard the health of any Person and to avoid subjecting the Collateral to any
lien, charge, claim or encumbrance. If Borrower shall fail to respond promptly
to any Hazardous Discharge or Environmental Complaint or Borrower shall fail to
comply with any of the requirements of any environmental laws, the Agent may,
but without the obligation to do so, for the sole purpose of protecting the
Agent's interest in Collateral: (A) give such notices or (B) enter onto
Borrower's property (or authorize third parties to enter onto such property) and
take such actions as the Agent (or such third parties as directed by the Agent)
deem reasonably necessary or advisable, to clean up, remove, mitigate or
otherwise deal with any such Hazardous Discharge or Environmental Complaint.
All reasonable costs and expenses incurred by the Agent (or such third parties)
in the exercise of any such rights, including any sums paid in connection with
any judicial or administrative investigation or proceedings, fines and
penalties, together with interest thereon from the date expended at the Default
Rate for Revolving Credit Advances shall be paid upon demand by the Borrower,
and until paid shall be added to and become a part of the Obligations secured by
the Liens created by the terms of this Agreement or any other agreement between
Agent and Borrower.
(v) Borrower shall defend and indemnify the Lenders and hold
the Lenders harmless from and against all loss, liability, damage and expense,
claims, costs, fines and penalties, including attorney's fees, suffered or
incurred by the Agent under or on account of any environmental laws, including,
without limitation, the assertion of any lien thereunder, with respect to any
Hazardous Discharge, the presence of any hazardous substances affecting
Borrower's property, whether or not the same originates or emerges from
Borrower's property or any contiguous real estate, including any loss of value
of the Collateral as a result of the foregoing
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except to the extent such loss, liability, damage and expense is attributable to
any Hazardous Discharge resulting from actions on the part of the Agent. The
Borrower's obligations under this paragraph 12(e) shall arise upon the discovery
of the presence of any Hazardous Substances on the Borrower's property, whether
or not any federal, state, or local environmental agency has taken or threatened
any action in connection with the presence of any hazardous substances. The
Borrower's obligation and the indemnifications hereunder shall survive the
termination of this Agreement.
(vi) For purposes of paragraph 12(e) all references to
Borrower's property shall be deemed to include all of Borrower's right, title
and interest in and to all owned and/or leased premises;
(f) based upon the Employee Retirement Income Security Act of 1974
("ERISA"), and the regulations and published interpretations thereunder: (i)
Borrower has not engaged in any Prohibited Transactions as defined in paragraph
406 of ERISA and paragraph 4975 of the Internal Revenue Code, as amended; (ii)
Borrower has met all applicable minimum funding requirements under paragraph 302
of ERISA in respect of its plans; (iii) Borrower has no knowledge of any event
or occurrence which would cause the Pension Benefit Guaranty Corporation to
institute proceedings under Title IV of ERISA to terminate any employee benefit
plan(s); (iv) Borrower has no fiduciary responsibility for investments with
respect to any plan existing for the benefit of persons other than Borrower's
employees; and (v) Borrower has not withdrawn, completely or partially, from any
multi-employer pension plan so as to incur liability under the Multiemployer
Pension Plan Amendments Act of 1980;
(g) it is solvent, able to pay its debts as they mature, has capital
sufficient to carry on its business and all businesses in which it is about to
engage and the fair saleable value of its assets (calculated on a going concern
basis) is in excess of the amount of its liabilities;
(h) there is no pending or threatened litigation, actions or
proceeding which are reasonably likely to materially and adversely affect the
Borrower's business, assets, operations, condition or prospects, financial or
otherwise, or the Collateral or the ability of Borrower to perform this
Agreement;
(i) all balance sheets and income statements which have been
delivered to Agent fairly, accurately and properly state Borrower's financial
condition on a basis consistent with that of previous financial statements and
there has been no material adverse change in Borrower's financial condition as
reflected in such statements since the date thereof and such statements do not
fail to disclose any fact or facts which might materially and adversely affect
Borrower's financial condition;
(j) (x) it possesses all of the licenses, patents, copyrights,
trademarks, tradenames and permits necessary to conduct
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its business, (y) there has been no assertion or claim of violation or
infringement with respect thereof and (z) all such licenses, patents,
copyrights, trademarks, tradenames and permits are listed on SCHEDULE 12(J);
(k) it will pay or discharge when due all taxes, assessments and
governmental charges or levies imposed upon it;
(l) it will promptly inform Agent in writing of: (i) the commencement
of all proceedings and investigations by or before and/or the receipt of any
notices from, any governmental or nongovernmental body and all actions and
proceedings in any court or before any arbitrator against or in any way
concerning any of Borrower's properties, assets or business, which might singly
or in the aggregate, have a materially adverse effect on Borrower; (ii) any
amendment of Borrower's certificate of incorporation or by-laws; (iii) any
change in Borrower's business, assets, liabilities, condition (financial or
otherwise), results of operations or business prospects which has had or might
have a materially adverse effect on Borrower; (iv) any Event of Default or
Incipient Event of Default; (v) any default or any event which with the passage
of time or giving of notice or both would constitute a default under any
agreement for the payment of money to which Borrower is a party or by which
Borrower or any of Borrower's properties may be bound which would have a
material adverse effect on Borrower's business, operations, property or
condition (financial or otherwise) or the Collateral; (vi) any change in the
location of Borrower's executive offices; (vii) any change in the location of
Borrower's Inventory or Equipment from the locations listed on SCHEDULE 12(l)
attached hereto, (viii) any change in Borrower's corporate name; (ix) any
material delay in Borrower's performance of any of its obligations to any
material Customer; (x) any assertion of any material claims, offsets,
counterclaims or Disputes by any Customer; (xi) any material allowances, credits
and/or other monies granted by it to any Customer; (xii) all material adverse
information relating to the financial condition of any account debtor; and
(xiii) any material return of goods;
(m) it will not nor will any Other Financial Party (i) create, incur,
assume or suffer to exist any indebtedness (exclusive of trade debt) whether
secured or unsecured other than (x) their indebtedness to Lenders, (y)
indebtedness for capital expenditures permitted under Section 12(p) and (z) as
set forth on SCHEDULE 12(m) attached hereto and made a part hereof; (ii)
declare, pay or make any dividend or distribution in cash on any shares of their
common stock or preferred stock or apply any of their funds, property or assets
to the purchase, redemption or other retirement of any of their common or
preferred stock other than with respect to (1) payment of a cash dividend on
preferred stock of MEI not to exceed $210,000 during any fiscal year of MEI or
(2) following the occurrence of a Conforming Equity Event, the redemption of not
more than $6,000,000 of presently outstanding preferred stock; (iii) directly or
indirectly, prepay any indebtedness for borrowed money (other than to Agent), or
repurchase, redeem, retire or otherwise acquire any of their indebtedness except
concurrently with the occurrence of a
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Conforming Equity Event, they shall be permitted to prepay up to an aggregate of
$5,000,000 of such indebtedness; (iv) make advances, loans or extensions of
credit to any Person other than (a) loans, advances or extensions of credit to
Affiliates not to exceed in the aggregate outstanding at any one time (i) with
respect to MEI, (1) $22,000,000, during the 1996 Fiscal year and (2) $16,000,000
any time thereafter, provided, that at any time following an Equity Event, the
foregoing amounts shall be reduced solely with respect to MEI by an amount equal
to the net proceeds realized in connection with such Equity Event and (ii) with
respect to any Affiliate other than MEI, (1) $14,000,000 during the 1996 fiscal
Year, (2) $12,000,000 during the 1997 Fiscal year, (3) $10,000,000 during the
1998 Fiscal year and (4) $9,000,000 at any time thereafter, and (b) an advance
to National Media Holding Company, Inc. in the original principal sum of
$1,700,000; (v) become either directly or contingently liable upon the
obligations of any Person by assumption, endorsement or guaranty thereof or
otherwise other than the endorsement of checks in the ordinary course of
business except (i) as listed on Schedule 12(m) and (ii) with respect to the
issuance of the guaranties of indebtedness of foreign Affiliates provided that
at any time, the maximum aggregate outstanding amount of indebtedness secured by
all such guaranties which are not guaranties of collection and which were not in
the sole judgment of the Agent incurred by foreign Affiliates on a fully secured
basis shall not exceed $20,000,000; (vi) enter into any merger, consolidation or
other reorganization ("Merger") with or into any other Person or permit any
other Person to consolidate with or merge with it unless (a) Borrower shall be
the surviving Person in such Merger, consolidation or reorganization (other than
in connection with the Corporate Restructure), (b) such surviving Person shall
have a financial condition, in Agent's reasonable judgment, equal to or better
than Borrower had before such event (c) the surviving Person shall be in
compliance on a pro forma basis with respect to each and every financial
covenant set forth in Sections 11(n)(q)(r)(s)(t) after giving effect to such
Merger as of the end of the fiscal quarter immediately preceding the fiscal
quarter in which such Merger is taking place and (d) no Event of Default shall
have occurred and then be continuing; (vii) form any Subsidiary unless such
Subsidiary expressly joins in this Agreement as a borrower and becomes jointly
and severally liable for the obligations of Borrower hereunder or enter into any
partnership, joint venture or similar arrangement which requires contributions
of cash or assets by any Financial Party in an amount greater than $250,000 per
year; (viii) materially change the nature of the business in which it is
presently engaged; (ix) change its fiscal year or make any changes in accounting
treatment and reporting practices without prior written notice to Agent except
as required by GAAP or in the tax reporting treatment or except as required by
law; (x) except as provided in Section 12(m)(xiii), enter into any transaction
with any Affiliate (other than a Scheduled Affiliate), except in ordinary course
on arms-length terms; (xi) bill Receivables under any name except the present
name of the Borrower or such other tradenames as may be set forth on SCHEDULE
12(m) hereto; (xii) acquire all or a portion of the assets or stock of any
Person (in one or more transactions) ("Acquisition") which Acquisitions (1)
result in an aggregate purchase price in excess of
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(A) $20,000,000 in cash and $7,000,000 in unsecured note obligations during the
fiscal year ending December 31, 1996, and (B) $6,000,000 in cash and $7,000,000
in unsecured note obligations during any other fiscal year, provided that the
cash component shall be increased to $12,000,000 and the unsecured note
component to $15,000,000 following the occurrence of a Conforming Equity Event,
(2) involves a Person other than a Person engaged solely in the business of
recruitment advertising or national yellow page advertising other classified
advertising (or "internet") related business ("Permitted business") and (3)
increases the aggregate face amount of outstanding Receivables of Borrower and
Affiliate Receivables by more than 10% from the level existing immediately prior
to such acquisition; or (xiii) purchase any accounts receivable from any
Affiliate except in the ordinary course on arms-length terms. For purposes of
clause (xii) above, unsecured shall mean that the note obligations are not
secured by any assets of a Financial Party other than the capital stock of the
person being acquired.
(n) it shall not at any time permit Tangible Net Worth to be less
than the following amounts at the end of each fiscal quarter during the
following periods:
Period Amount
------ ------
1/1/96 through 12/31/96 $ 4,000,000
1/1/97 through 12/31/97 $16,000,000
1/1/98 through 12/31/98 $26,000,000
1/1/99 through 12/31/99 $38,000,000
1/1/00 and at all times thereafter $50,000,000;
provided, that at any time from and after an Equity Event, the amounts set forth
above shall be increased by an amount equal to the proceeds of the Equity Event
multiplied by 75%;
(o) all financial projections of Borrower's performance prepared by
Borrower or at Borrower's direction and delivered to Agent will represent, at
the time of delivery to Agent, Borrower's best estimate of Borrower's future
financial performance and will be based upon assumptions which are reasonable in
light of Borrower's past performance and then current business conditions;
(p) the Financial Parties will not make capital expenditures in any
fiscal year in an aggregate amount (exclusive of any fair market lease payments
or any fair market purchase option exercise payments made with respect to the
Falcon Fifty Aircraft which as of June 26, 1996 was being leased by EPI Aviation
Inc.) in excess of (a) $6,000,000 during the fiscal year ending December 31,
1996, or (b) $5,000,000 during any other fiscal year, PROVIDED, THAT, in the
event of a Conforming Equity Event such amount shall be (i) $10,000,000 during
the fiscal year in which a Conforming Equity Event occurs and the next
succeeding fiscal year and (ii) $6,000,000 during any fiscal year thereafter
(PROVIDED, FURTHER, that at least fifty percent of such expenditures must be
financed);
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(q) it shall not at any time permit any deficit in its Working
Capital or Domestic Working Capital to be more than the following amounts at the
end of each fiscal quarter during the following periods:
Period Amount
------ ------
1/1/96 through 12/31/96 ($75,000,000)
1/1/97 through 12/31/97 ($65,000,000)
1/1/98 through 12/31/98 ($65,000,000)
1/1/99 through 12/31/99 ($60,000,000)
1/1/00 and all times thereafter ($35,000,000)
provided, that at any time from and after an Equity Event, the amounts set forth
above shall be adjusted by an amount equal to the proceeds of the Equity Event
multiplied by fifty (50%) percent;
(r) it shall cause to be maintained a ratio of Current Assets to
Current Liabilities of not less than the following ratios at the end of each
fiscal quarter during the following periods:
Date Ratio
---- -----
1/1/96 through 12/31/96 .70 to 1.0
1/1/97 through 12/31/97 .70 to 1.0
1/1/98 through 12/31/98 .75 to 1.0
1/1/99 through 12/31/99 .80 to 1.0
1/1/00 through 12/31/00 .85 to 1.0
1/1/01 and each fiscal
year thereafter 1.0 to 1.0
provided, that at any time from and after an Equity Event the ratio shall not be
less than 1.0 to 1.0 and (2) less than 1.0 to 1.0 with respect to a ratio
calculated solely with respect to Domestic Persons;
(s) it will not permit the ratio of the earnings of Borrower on a
Consolidated Basis before interest, taxes, depreciation, amortization and
business non-compete expenses to total interest expense (cash and accrued
interest) of Borrower on a Consolidated Basis or such ratio as calculated solely
with respect to Domestic Persons to be less than 2.0 to 1.0 (or 2.5 to 1.0
following the occurrence of a Conforming Equity Event) at the end of any fiscal
quarter with respect to the immediately preceding four fiscal quarters then
ending;
(t) Neither Borrower on a Consolidated Basis nor Domestic Persons
will incur a loss before taxes of more than $1,500,000 for any six month period
ending the last day of any calendar month;
(t-1) the amount of Foreign Indebtedness outstanding at any time
shall not exceed the Tangible Net Worth of Borrower on a Consolidated Basis as
of such date;
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(u) none of the proceeds of the Loans hereunder will be used
directly or indirectly to "purchase" or "carry" "margin stock" or to repay
indebtedness incurred to "purchase" or "carry" "margin stock" within the
respective meanings of each of the quoted terms under Regulation G of the Board
of Governors of the Federal Reserve System as now and from time to time
hereafter in effect;
(v) it will bear the full risk of loss from any loss of any nature
whatsoever with respect to the Collateral. At it's own cost and expense in
amounts and with carriers acceptable to Agent, it shall (i) keep all its
insurable properties and properties in which it has an interest insured against
the hazards of fire, flood, sprinkler leakage, those hazards covered by extended
coverage insurance and such other hazards, and for such amounts, as is customary
in the case of companies engaged in businesses similar to Borrower's including,
without limitation, business interruption insurance; (ii) maintain a bond in
such amounts as is customary in the case of companies engaged in businesses
similar to Borrower's insuring against larceny, embezzlement or other criminal
misappropriation of insured's officers and employees who may either singly or
jointly with others at any time have access to the assets or funds of Borrower
either directly or through authority to draw upon such funds or to direct
generally the disposition of such assets; (iii) maintain public and product
liability insurance against claims for personal injury, death or property damage
suffered by others; (iv) maintain all such workmen's compensation or similar
insurance as may be required under the laws of any state or jurisdiction in
which Borrower is engaged in business; (v) obtain no later than December 31,
1996 and thereafter maintain a life insurance policy covering the life of Andrew
McKelvey ("AM") in the face amount of at least $5,000,000 which shall be
collaterally assigned to Agent for the ratable benefit of Lenders pursuant to
agreement in form and substance satisfactory to Agent, PROVIDED, THAT this
covenant shall be deemed waived if AM is found to be uninsurable by at least
three insurance carriers reasonably satisfactory to Agent and PROVIDED, FURTHER
that in the event of a Conforming Equity Event during fiscal year 1996, this
requirement shall be waived; (vi) furnish Agent with (x) copies of all policies
upon Agent's request and evidence of the maintenance of such policies at least
thirty (30) days before any expiration date, and (y) appropriate loss payable
endorsements in form and substance satisfactory to Agent, naming Agent as loss
payee and providing that as to Agent the insurance coverage shall not be
impaired or invalidated by any act or neglect of Borrower and the insurer will
provide Agent with at least thirty (30) days notice prior to cancellation.
Borrower shall instruct the insurance carriers that in the event of any loss
thereunder, the carriers shall make payment for such loss to Agent and not to
Borrower and Agent jointly. If any insurance losses are paid by check, draft or
other instrument payable to Borrower and Agent jointly, Agent may endorse
Borrower's name thereon and do such other things as Agent may deem advisable to
reduce the same to cash. Agent is hereby authorized to adjust and compromise
claims. All loss recoveries received by Agent upon any such insurance may be
applied to the Obligations, in such order as Agent in its sole discretion shall
determine. Any surplus shall be paid by Agent to Borrower or applied as may be
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otherwise required by law. Any deficiency thereon shall be paid by Borrower to
Agent, on demand;
(w) will not acquire the Receivables of a Person which are not
comparable to the current Receivables of Borrower and Affiliated Receivables
with respect to credit quality and payment terms and eligibility;
(x) not more than 10% of yellow pages publisher media payables
will be more than 60 days past due and not more than 10% of newspaper and
similar media accounts payable of either Borrower, MEI or WCI will be more than
30 days past due;
(y) Borrower will cause each of (i) its Scheduled Affiliates and
Subsidiaries, (ii) the Scheduled Affiliates and Subsidiaries of Andrew McKelvey,
(iii) each Guarantor and (iv) any other Scheduled Affiliate or Subsidiary of any
Financial Party, to execute and deliver to Agent (x) a Guaranty Agreement and
Guaranty Security Agreement and (y) an agreement, in form and substance
satisfactory to Agent, pursuant to which one hundred percent (100%) of its
issued and outstanding shares of capital stock is pledged to Agent together with
all Stock Certificates and stock powers relating thereto; provided however there
shall not be required the pledge of capital stock of Borrower or MEI;
(z) it has (i) advised its certified public accountants that Agent
and the Lenders will be relying on all financial and other information prepared
by such accountants and (ii) authorized its accountants to confer directly from
time to time with Agent;
(aa) Borrower shall, at the discretion of Agent, enter into a
contract with Tear Pages, Unlimited or its successor which is reasonably
satisfactory to Agent in all respects providing for delivery of Tearsheets
directly to Agent at Agent's request a copy of which shall be delivered to
Lender within sixty (60) days of the Closing Date;
(ab) other than as permitted pursuant to Section 12(m) hereof it
shall not nor shall any other Financial Party purchase or acquire obligations or
stock of, or any other interest in, or make any investment in any entity, except
(A) obligations issued or guaranteed by the United States of America or any
agency thereof, (B) commercial paper with maturities of not more than 180 days
and a published rating of not less than A-1 or P-1 (or the equivalent rating),
(C) certificates of time deposit and bankers' acceptances having maturities of
not more than 180 days and repurchase agreements backed by United States
government securities of a commercial bank if (x) such bank has a combined
capital and surplus of at least $500,000,000, or (y) its debt obligations, or
those of a holding company of which it is a subsidiary, are rated not less than
A (or the equivalent rating) by a nationally recognized investment rating
agency, (D) U.S. money market funds that invest solely in obligations issued or
guaranteed by the United States of America or an Agency thereof, (E) Eurodollar
time deposits with financial institutions with a published rating of not less
than A-1 or P-1 (or the equivalent rating), (F) notes evidencing amounts due
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from customers provided such notes have been delivered to Agent as additional
Collateral and (G) investments not in excess of $2,500,000 ($5,000,000 after the
occurrence of a Conforming Equity Event) in the aggregate at any time
outstanding which consist of cash or cash equivalents and which are made by a
Financial Party in the ordinary course of business; and
(ac) Agent shall be given a right to bid on each and every
institutional financing in excess of $2,500,000 hereafter sought by a Financial
Party.
13. POWER OF ATTORNEY. Borrower hereby appoints Agent or any other
Person whom Agent may designate as Borrower's attorney, with power to: (i)
endorse Borrower's name on any checks, notes, acceptances, money orders, drafts
or other forms of payment or security that may come into any Lender's
possession; (ii) sign Borrower's name on any invoice or bill of lading relating
to any Receivables, drafts against Customers, schedules and assignments of
Receivables, notices of assignment, financing statements and other public
records, verifications of account and notices to or from Customers; (iii) verify
the validity, amount or any other matter relating to any Receivable by mail,
telephone, telegraph or otherwise with Customers; (iv) execute customs
declarations and such other documents as may be required to clear Inventory
through Customs; (v) do all things necessary to carry out this Agreement, any
Ancillary Agreement and all related documents; and (vi) on or after the
occurrence and continuation of an Event of Default, notify the post office
authorities to change the address for delivery of Borrower's mail to an address
designated by Agent, and to receive, open and dispose of all mail addressed to
Borrower. Borrower hereby ratifies and approves all acts of the attorney.
Neither Agent nor the attorney will be liable for any acts or omissions or for
any error of judgment or mistake of fact or law. This power, being coupled with
an interest, is irrevocable so long as any Receivable which is assigned to Agent
or in which Agent has a security interest remains unpaid and until the
Obligations have been fully satisfied.
14. EXPENSES. Borrower shall pay all of BNY's out-of-pocket costs
and expenses, including without limitation reasonable fees and disbursements of
counsel retained or employed by BNY and appraisers, in connection with the
preparation, execution and delivery of this Agreement and the Ancillary
Agreements, and in connection with the prosecution or defense of any action,
contest, dispute, suit or proceeding concerning any matter in any way arising
out of, related to or connected with this Agreement or any Ancillary Agreement.
Borrower shall also pay all of Lender's and each Lender's out-of-pocket costs
and expenses, including without limitation reasonable fees and disbursements of
counsel retained or employed by Agent, in connection with (a) the preparation,
execution and delivery of any waiver, any amendment thereto or consent proposed
or executed in connection with the transactions contemplated by this Agreement
or the Ancillary Agreements, (b) Agent's obtaining performance of the
Obligations under this Agreement and any Ancillary Agreements, including, but
not limited to, the enforcement or defense of Agent's security interests,
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assignments of rights and liens hereunder as valid perfected security interests,
(c) any attempt to inspect, verify, protect, collect, sell, liquidate or
otherwise dispose of any Collateral, and (d) any consultations in connection
with any of the foregoing. Borrower shall also pay Agent's then standard price
for furnishing Borrower or its designees copies of any statements, records,
files or other data (collectively, "Reports") requested by Borrower or its
designees, other than reports of the kind furnished to Borrower and Agent's
other borrowers on a regular, periodic basis in the ordinary course of Agent's
business or such reports as Borrower would have generated itself were it
conducting its own accounts receivable management. Borrower shall also pay
Agent's customary bank charges, including, without limitation, all wire transfer
fees incurred by Agent, for all bank services performed or caused to be
performed by Agent for Borrower at Borrower's request. All such costs and
expenses together with all filing, recording and search fees, taxes and interest
payable by Borrower to Agent shall be payable on demand and shall be secured by
the Collateral. If any tax by any governmental authority is or may be imposed
on or as a result of any transaction between Borrower and Agent which Agent is
or may be required to withhold or pay, Borrower agrees to indemnify and hold
Lender and each Lender harmless in respect of such taxes, and Borrower will
repay to Agent the amount of any such taxes which shall be charged to Borrower's
account; and until Borrower shall furnish Agent with indemnity therefor (or
supply Agent with evidence satisfactory to it that due provision for the payment
thereof has been made), Agent may hold without interest any balance standing to
Borrower's credit and Agent shall retain its security interests in any and all
Collateral. Borrower hereby acknowledges that Agent shall not be liable in any
manner whatsoever for any selling expenses, orders, purchases or contracts of
any kind resulting from any transaction between Borrower and any other Person
and Borrower hereby indemnifies and holds Agent harmless with respect thereto,
which indemnity shall survive termination of this Agreement.
15. ASSIGNMENT BY A LENDER. (a) This Agreement shall be binding
upon and inure to the benefit of Borrower, Agent, each Lender, all future
holders of the Loans and their respective successors and assigns, except that
Borrower may not assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of Agent and each Lender.
(b) Borrower acknowledges that in the regular course of commercial
banking business one or more Lenders may at any time and from time to time sell
participating interests in the Loans to other financial institutions (each such
transferee or purchaser of a participating interest, a "Transferee"). Each
Transferee may exercise all rights of payment (including without limitation
rights of set-off) with respect to the portion of such Loans held by it or other
Obligations payable hereunder as fully as if such Transferee were the direct
holder thereof provided that Borrower shall not be required to pay to any
Transferee more than the amount which it would have been required to pay to the
Lender which granted an interest in its Loans or other Obligations payable
hereunder to such Transferee had such Lender retained such interest in the Loans
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hereunder or other Obligations payable hereunder and in no event shall Borrower
be required to pay any such amount arising from the same circumstances and with
respect to the same Loans or other Obligations payable hereunder to both such
Lender and such Transferee. Borrower hereby grants to any Transferee a
continuing security interest in any deposits, moneys or other property actually
or constructively held by such Transferee as security for the Transferee's
interest in the Loans.
(c) Any Lender may sell, assign or transfer all or any part of its
rights under this Agreement and the Ancillary Agreements to one or more
additional banks or financial institutions which are able to make Eurodollar
Rate Loans and Fixed Rate Loans with the prior written consent of the Agent and
one or more of such additional banks or financial institutions may commit to
make Loans hereunder (each a "Purchasing Lender"), pursuant to a Commitment
Transfer Supplement, executed by a Purchasing Lender, the transferor Lender, and
Agent and delivered to Agent for recording. Upon such execution, delivery,
acceptance and recording, from and after the transfer effective date determined
pursuant to such Commitment Transfer Supplement, (i) Purchasing Lender
thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder with a Commitment Percentage as set forth therein, and (ii) the
transferor Lender thereunder shall, to the extent provided in such Commitment
Transfer Supplement, be released from its obligations under this Agreement, the
Commitment Transfer Supplement creating a novation for that purpose. Such
Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of the Commitment Percentages and
the Maximum Loan Amount, if any, arising from the purchase by such Purchasing
Lender of all or a portion of the rights and obligations of such transferor
Lender under this Agreement and the Ancillary Agreements. Agent shall notify
Borrower of the addition of any Purchasing Lender. Borrower hereby consents to
the addition of such Purchasing Lender and the resulting adjustment of the
Commitment Percentages arising from the purchase by such Purchasing Lender of
all or a portion of the rights and obligations of such transferor Lender under
this Agreement and the Ancillary Agreements. Borrower shall execute and deliver
such further documents and do such further acts and things in order to
effectuate the foregoing.
(d) Agent shall maintain at its address a copy of each Commitment
Transfer Supplement delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Loans owing to each Lender from
time to time. The entries in the Register shall be conclusive, in the absence
of manifest error, and Borrower, Agent and Lenders may treat each Person whose
name is recorded in the Register as the owner of the Loans recorded therein for
the purposes of this Agreement. The Register shall be available for inspection
by the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice. Agent shall receive a fee in the amount of $2,500
payable by the
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applicable Purchasing Lender upon the effective date of each transfer or
assignment to such Purchasing Lender.
(e) Borrower authorizes each Lender to disclose to any Transferee
or Purchasing Lender and any prospective Transferee or Purchasing Lender any and
all financial information in such Lender's possession concerning Borrower which
has been delivered to such Lender by or on behalf of Borrower pursuant to this
Agreement or in connection with such Lender's credit evaluation of Borrower and
each Purchasing Lender and any Transferee shall hold all non-public information
obtained pursuant to the requirements of this Agreement in accordance with
applicable federal and state securities laws and its customary procedures for
handling confidential information of this nature; PROVIDED, HOWEVER each
Purchasing Lender or Transferee may disclose such confidential information (a)
to its examiners, affiliates, outside auditors, counsel and other professional
advisors, (b) to any other prospective Transferees, and (c) as required or
requested by any governmental authority or representative thereof or pursuant to
legal process.
16. WAIVERS. Borrower waives presentment and protest of any
instrument and notice thereof, notice of default and all other notices to which
Borrower might otherwise be entitled.
17. TERM OF AGREEMENT. (A) This Agreement shall continue in full
force and effect until the expiration of the Term unless terminated by either
party as provided herein. The Term shall be automatically extended for
successive periods of one (1) year each unless either party shall have provided
the other with a written notice of termination, at least ninety (90) days prior
to the expiration of the initial Term or any renewal Term, PROVIDED, HOWEVER,
that Borrower may terminate this Agreement at any time upon one hundred twenty
(120) days' prior written notice ("Termination Date") (such written notice shall
not be given by Borrower more than once during any rolling twelve month period).
Upon and concurrently with such termination, Borrower shall be obligated to pay
to Agent (solely for Agent's benefit and not for the benefit of the Lenders), a
termination fee as follows:
(a) If at the time of such termination Borrower has not received at
least $75,000,000 from Conforming Equity Event, the fees will be as set forth in
Column "Fee-A" below:
TERMINATION OCCURS BETWEEN: FEE-A FEE-B
-------------------------- ----- -----
June 27, 1996 through June 30, 1997 $3,000,000 $1,000,000
July 1, 1997 through June 30, 1998 2,000,000 1,000,000
July 1, 1998 through June 30, 1999 1,000,000 1,000,000
July 1, 1999 through June 30, 2000 500,000 1,000,000
July 1, 2000 through June 30, 2001 -0- 1,000,000
(b) If, at the time of termination, Borrower has received at least
$75,000,000 from a Conforming Equity Event, such fee shall be as set forth in
Column "Fee-B" above, PROVIDED, HOWEVER if termination occurs during the twelve
month period
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following the date any other financial institution becomes a Lender hereunder
("New Lender") Borrower shall also pay a fee of $200,000 to Agent to be
distributed by Agent in its sole discretion among all such New Lenders.
(B) Prior to any such termination, Borrower shall provide Lenders a
good faith opportunity to match the terms of any proposed replacement financing
and Borrower shall revoke any termination notice previously sent if Lenders
proposed pricing proposal is within 25 basis points of the all-in cost of the
replacement financing. For purposes of this comparison, the required
termination fee shall be included as an additional cost of the replacement
financing; PROVIDED, HOWEVER, that for purposes of this calculation, such fee
shall be amortized over the lesser of (a) the term of the replacement financing
and (b) three years.
18. EVENTS OF DEFAULT. The occurrence of any of the following
shall constitute an Event of Default:
(a) failure to make payment of any of the Obligations when required
hereunder;
(b) failure to pay any taxes when due unless such taxes are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves have been provided on Borrower's books;
(c) failure to perform under and/or committing any breach of this
Agreement or any Ancillary Agreement or any other agreement between Borrower and
Agent which (except with respect to Sections 12(m), (n), (p), (q), (r), (s),
(t), (t)(1) and (u) hereof) such failure or breach is not cured within 10
business days following receipt of notice of such failure or breach from Agent;
(d) occurrence of a default under any agreement to which Borrower
is a party with third parties which has a material adverse affect upon
Borrower's business, operations, property or condition (financial or otherwise)
including all leases for any premises where Inventory or Equipment is located;
(e) any representation, warranty or statement made by Borrower
hereunder, in any Ancillary Agreement, any certificate, statement or document
delivered pursuant to the terms hereof, or in connection with the transactions
contemplated by this Agreement should when made be false or misleading in any
material respect;
(f) an attachment or levy is made upon any of Borrower's assets
having an aggregate value in excess of (i) 250,000 or (ii) $1,000,000 following
the occurrence of a Conforming Equity Event or a judgment is rendered against
Borrower or any of Borrower's property involving a liability of more than
$100,000, which shall not have been vacated, discharged, stayed or bonded
pending appeal within thirty (30) days from the entry thereof;
(g) Agent shall have notified Borrower of any change in Borrower's
condition or affairs (financial or otherwise) which in
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Agent's good faith opinion impairs the Collateral or the ability of Borrower to
perform its Obligations;
(h) any lien created hereunder or under any Ancillary Agreement for
any reason ceases to be or is not a valid and perfected lien having a first
priority interest;
(i) if Borrower shall (i) apply for or consent to the appointment
of, or the taking of possession by, a receiver, custodian, trustee or liquidator
of itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of creditors, (iii) commence a voluntary case under
the federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated
a bankrupt or insolvent, (v) file a petition seeking to take advantage of any
other law providing for the relief of debtors, (vi) acquiesce to, or fail to
have dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (vii) take any action for the
purpose of effecting any of the foregoing;
(j) Borrower shall admit in writing its inability, or be generally
unable to pay its debts as they become due or cease operations of its present
business;
(k) any Subsidiary or any Guarantor (or any Affiliate whose
accounts receivable are Affiliate Receivables hereunder) shall (i) apply for or
consent to the appointment of, or the taking possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part of
its property, (ii) admit in writing its inability, or be generally unable, to
pay its debts as they become due or cease operations of its present business,
(iii) make a general assignment for the benefit of creditors, (iv) commence a
voluntary case under the federal bankruptcy laws (as now or hereafter in
effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vii) acquiesce to, or fail to have dismissed, within thirty (30) days, any
petition filed against it in any involuntary case under such bankruptcy laws, or
(viii) take any action for the purpose of effecting any of the foregoing;
(l) any Affiliate (other than an Affiliate whose accounts
receivable are Affiliate Receivables hereunder) shall (i) apply for or consent
to the appointment of, or the taking possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property,
(ii) admit in writing its inability, or be generally unable, to pay its debts as
they become due or cease operations of its present business, (iii) make a
general assignment for the benefit of creditors, (iv) commence a voluntary case
under the federal bankruptcy laws (as now or hereafter in effect), (v) be
adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (vii) acquiesce
to, or fail to have dismissed, within thirty (30) days, any petition filed
against it in any involuntary case under such bankruptcy laws, or (viii) take
any action for the purpose of effecting any of
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the foregoing and the occurrence of any of the foregoing shall have a material
adverse impact on the Borrower, the Collateral or the ability of Borrower to
perform its obligations;
(m) Borrower directly or indirectly sells, assigns, transfers,
conveys, or suffers or permits to occur any sale, assignment, transfer or
conveyance of any assets of Borrower in excess of $500,000 (or $1,000,000 at any
time after the occurrence of a Conforming Equity Event) in the aggregate or any
interest therein, except as permitted herein;
(n) Agent shall have notified Borrower that it in good faith deems
itself insecure or unsafe or shall fear diminution in value, removal or waste of
the Collateral;
(o) a default that has not been cured within any applicable grace
period by Borrower in the payment, when due, of any principal of or interest on
any indebtedness for money borrowed exceeding (i) $500,000 or (ii) $1,000,000 at
any time after the occurrence of a Conforming Equity Event;
(p) if any Guarantor attempts to terminate, challenges the validity
of, or its liability under any Guaranty Agreement or Guarantor Security
Agreement;
(q) should any Guarantor default in its obligations under any
Guaranty Agreement or any Guarantor Security Agreement or if any proceeding
shall be brought to challenge the validity, binding effect of any Guaranty
Agreement or any Guarantor Security Agreement, or should any Guarantor breach
any representation, warranty or covenant contained in any Guaranty Agreement or
any Guarantor Security Agreement or should any Guaranty Agreement or Guarantor
Security Agreement cease to be a valid, binding and enforceable obligation;
(r) any Change of Control; or
(s) Andrew McKelvey shall cease to be involved in the day to day
operations of Borrower's operations.
19. REMEDIES. (a) Upon the occurrence of (i) an Event of Default
pursuant to paragraph 18(i) herein, all Obligations shall be immediately due and
payable and this Agreement shall be deemed terminated; (ii) upon the occurrence
and continuation of any other of the Events of Default, Agent shall have the
right to demand repayment in full of all Obligations, whether or not otherwise
due and (iii) the filing of a petition against any Borrower in any involuntary
case under any state or federal bankruptcy laws the obligations of the Lenders
to make Loans hereunder shall be terminated other than as may be required by
appropriate order of the bankruptcy court having jurisdiction over the Borrower.
Until all Obligations have been fully satisfied, Agent shall retain its security
interest in all Collateral. Agent shall have, in addition to all other rights
provided herein, the rights and remedies of a secured party under the Uniform
Commercial Code, and under other applicable law, all other legal and equitable
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rights to which Agent may be entitled, including without limitation, the right
to take immediate possession of the Collateral, to require Borrower to assemble
the Collateral, at Borrower's expense, and to make it available to Agent at a
place designated by Agent which is reasonably convenient to both parties and to
enter any of the premises of Borrower or wherever the Collateral shall be
located, with or without force or process of law, and to keep and store the same
on said premises until sold (and if said premises be the property of Borrower,
Borrower agrees not to charge Agent for storage thereof for a period up to at
least sixty (60) days after sale or disposition of said Collateral). Further,
Agent may, at any time or times after default by Borrower, sell and deliver all
Collateral held by or for Agent at public or private sale for cash, upon credit
or otherwise, at such prices and upon such terms as Agent, in Agent's sole
discretion, deems advisable or Agent may otherwise recover upon the Collateral
in any commercially reasonable manner as Agent, in its sole discretion, deems
advisable. Except as to that part of the Collateral which is perishable or
threatens to decline speedily in nature or is of a type customarily sold on a
recognized market, the requirement of reasonable notice shall be met if such
notice is mailed postage prepaid to Borrower at Borrower's address as shown in
Agent's records, at least ten (10) days before the time of the event of which
notice is being given. Agent may be the purchaser at any sale, if it is public.
In connection with the exercise of the foregoing remedies, Agent is granted
permission to use all of Borrower's trademarks, tradenames, tradestyles,
patents, patent applications, licenses, franchises and other proprietary rights
which are used in connection with (a) Inventory for the purpose of disposing of
such Inventory and (b) Equipment for the purpose of completing the manufacture
of unfinished goods. The proceeds of sale shall be applied first to all costs
and expenses of sale, including attorneys' fees, and second to the payment (in
whatever order Agent elects) of all Obligations. Agent will return any excess
to Borrower and Borrower shall remain liable to Agent for any deficiency.
20. WAIVER; CUMULATIVE REMEDIES. Failure by Agent to exercise any
right, remedy or option under this Agreement or any supplement hereto or any
other agreement between Borrower and Agent or delay by Agent in exercising the
same, will not operate as a waiver; no waiver by Agent will be effective unless
it is in writing and then only to the extent specifically stated. Agent's
rights and remedies under this Agreement will be cumulative and not exclusive of
any other right or remedy which Agent may have.
21. APPLICATION OF PAYMENTS. Borrower irrevocably waives the right
to direct the application of any and all payments at any time or times hereafter
received by Agent from or on Borrower's behalf and Borrower hereby irrevocably
agrees that Agent shall have the continuing exclusive right to apply and reapply
any and all payments received at any time or times hereafter against Borrower's
Obligations hereunder in such manner as Agent may deem advisable notwithstanding
any entry by Agent upon any of Agent's books and records.
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22. DEPOSITORY ACCOUNTS. Any payment received by Borrower on
account of any Collateral shall be held by Borrower in trust for Agent and
Borrower shall promptly deliver same in kind to Agent or deposit all such
payments into a cash collateral account at such bank as Agent may designate for
application to payment of the Obligations. Borrower shall also execute such
further documents as Agent may deem necessary to establish such an account and
all funds deposited in such account shall immediately be deemed Agent's
property.
23. LOCK BOX ACCOUNTS. Borrower shall instruct all of its
Customers to make such payments on account of Receivables to an account under
Agent's dominion and control at Bank or at such bank as Agent may designate.
Borrower shall also execute such further documents as Agent may deem necessary
to establish such an account and all funds deposited in such account shall
immediately be deemed Agent's property.
24. REVIVAL. Borrower further agrees that to the extent Borrower
makes a payment or payments to Agent, which payment or payments or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy act, state or federal law, common law or equitable cause,
then, to the extent of such payment or repayment, the obligation or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if said payment had not been made.
25. NOTICES. Any notice or request hereunder may be given to
Borrower or Agent at the respective addresses set forth below or as may
hereafter be specified in a notice designated as a change of address under this
paragraph. Any notice or request hereunder shall be given by registered or
certified mail, return receipt requested, or by overnight mail or by telecopy
(confirmed by mail). Notices and requests shall be, in the case of those by
mail or overnight mail, deemed to have been given when deposited in the mail or
with the overnight mail carrier, and, in the case of a telecopy, when confirmed.
Notices shall be provided as follows:
If to the Agent: BNY Financial Corporation
1290 Avenue of the Americas
New York, New York 10104
Attention: Robert Grbic
Jean Siegel
Frank Imperato
Telephone: (212) 408-7292
Telecopier: (212) 408-4384
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with a copy to: Hahn & Hessen LLP
350 Fifth Avenue
New York, New York 10118
Attention: Daniel J. Krauss, Esq.
Telephone: (212) 736-1000
Telecopier: (212) 594-7167
If to the Borrower: TMP Worldwide Inc.
1633 Broadway, 33rd Floor
New York, New York 10019
Attention: Thomas G. Collison
Telephone: (212) 977-5400
Telecopier: (212) 940-3972
With a copy to: Donovan Leisure Newton & Irvine
30 Rockefeller Plaza
New York, New York 10112
Attention: John McCann, Esq.
Telephone: (212) 632-3000
Telecopier: (212) 632-3321
26. GOVERNING LAW AND WAIVER OF JURY TRIAL. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. AGENT SHALL HAVE THE RIGHTS AND REMEDIES OF A SECURED PARTY
UNDER APPLICABLE LAW INCLUDING, BUT NOT LIMITED TO, THE UNIFORM COMMERCIAL CODE
OF NEW YORK. BORROWER AGREES THAT ALL ACTIONS AND PROCEEDINGS RELATING DIRECTLY
OR INDIRECTLY TO THIS AGREEMENT OR ANY ANCILLARY AGREEMENT OR ANY OTHER
OBLIGATIONS SHALL BE BROUGHT IN THE FEDERAL DISTRICT COURT OF THE SOUTHERN
DISTRICT OF NEW YORK OR, AT AGENT'S OPTION, IN ANY OTHER COURTS LOCATED IN NEW
YORK STATE OR ELSEWHERE AS AGENT MAY SELECT AND THAT SUCH COURTS ARE CONVENIENT
FORUMS AND BORROWER SUBMITS TO THE PERSONAL JURISDICTION OF SUCH COURTS.
BORROWER WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS THAT SERVICE OF PROCESS
UPON BORROWER MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, DIRECTED TO BORROWER AT BORROWER'S ADDRESS APPEARING ON AGENT'S
RECORDS, AND SERVICE SO MADE SHALL BE DEEMED COMPLETED TWO (2) DAYS AFTER THE
SAME SHALL HAVE BEEN SO MAILED. BOTH PARTIES HERETO WAIVE THE RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING BETWEEN BORROWER AND AGENT AND BORROWER
WAIVES THE RIGHT TO ASSERT IN ANY ACTION OR PROCEEDING INSTITUTED BY AGENT WITH
REGARD TO THIS AGREEMENT OR ANY OF THE OBLIGATIONS ANY OFFSETS OR COUNTERCLAIMS
WHICH IT MAY HAVE.
27. LIMITATION OF LIABILITY. Borrower acknowledges and understands
that in order to assure repayment of the Obligations hereunder Agent may be
required to exercise any and all of Agent's rights and remedies hereunder and
agrees that neither Agent nor any of Agent's agents shall be liable for acts
taken or omissions made in connection herewith or therewith except for actual
bad faith.
28. ENTIRE UNDERSTANDING. (a) This Agreement and the documents
executed concurrently herewith contain the entire understanding between the
Borrower, Agent and each Lender and supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof. Any promises,
representations, warranties or guarantees not herein contained and
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hereinafter made shall have no force and effect unless in writing, signed by the
Borrower's, the Agent's and each Lender's respective officers. Neither this
Agreement nor any portion or provisions hereof may be changed, modified,
amended, waived, supplemented, discharged, cancelled or terminated orally or by
any course of dealing, or in any manner other than by an agreement in writing,
signed by the party to be charged. Borrower acknowledges that it has been
advised by counsel in connection with the execution of this Agreement and
Ancillary Agreements and is not relying upon oral representations or statements
inconsistent with the terms and provisions of this Agreement.
(b) The Required Lenders, the Agent with the consent in writing of
the Required Lenders, and the Borrower may, subject to the provisions hereof,
from time to time enter into written supplemental agreements to this Agreement
or the Ancillary Agreements executed by the Borrower, for the purpose of adding
or deleting any provisions or otherwise changing, varying or waiving in any
manner the rights of the Lenders, the Agent or the Borrower thereunder or the
conditions, provisions or terms thereof of waiving any Event of Default
thereunder, but only to the extent specified in such written agreements;
provided, however, that no such supplemental agreement shall, without the
consent of all the Lenders:
(i) increase the Commitment Percentage of any Lender.
(ii) increase the Maximum Loan Amount, any sublimits
hereunder or the Receivables Advance Rate.
(iii) extend the maturity of any note or the due date for any
amount payable hereunder, or decrease the rate of interest or reduce any fee
payable by Borrower to Lenders pursuant to this Agreement.
(iv) alter the definition of the term Required Lenders or
alter, amend or modify this Section 28.
(v) release any Collateral during any calendar year having
an aggregate value in excess of $250,000.
(vi) change the rights and duties of the Agent.
Any such supplemental agreement shall apply equally to each of the Lenders and
shall be binding upon the Borrower, the Lenders, the Agent and all future
holders of the Obligations. In the case of any waiver, the Borrower, the Agent
and the Lenders shall be restored to their former positions and rights, and any
Event of Default waived shall be deemed to be cured and not continuing, but no
waiver of a specific Event of Default shall extend to any subsequent Event of
Default (whether or not the subsequent Event of Default is the same as the Event
of Default which was waived), or impair any right consequent thereon.
29. MODIFICATION. This Agreement and the Ancillary Agreements
constitute the complete agreement between the parties
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<PAGE>
with respect to the subject matter hereof and thereof and may not be modified,
altered or amended except by an agreement in writing signed by the parties
hereto and thereto.
30. SEVERABILITY. Wherever possible each provision of this
Agreement or the Ancillary Agreements shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this
Agreement or the Ancillary Agreements shall be prohibited by or invalid under
applicable law such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions thereof.
31. CAPTIONS. All captions are and shall be without substantive
meaning or content of any kind whatsoever.
32. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which taken together shall constitute one and the same
instrument.
33. CONSTRUCTION. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
34. (a) AGREEMENT AMONG AGENT AND LENDERS. Each Lender hereby
designates BNY to act as Agent for such Lender under this Agreement and the
Ancillary Agreements. Each Lender hereby irrevocably authorizes Agent to take
such action on its behalf under the provisions of this Agreement and the
Ancillary Agreements and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of Agent
by the terms hereof and thereof and such other powers as are reasonably
incidental thereto and Agent shall hold all Collateral, payments of principal
and interest, fees (except the fees set forth in Sections 5(b)(ii), 5(b)(iii)
and 5(e), charges and collections (without giving effect to any collection days)
received pursuant to this Agreement, for the ratable benefit of Lenders. Agent
may perform any of its duties hereunder by or through its agents or employees.
As to any matters not expressly provided for by this Agreement Agent shall not
be required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding; PROVIDED, HOWEVER, that Agent shall not be
required to take any action which exposes Agent to liability or which is
contrary to this Agreement or the Ancillary Agreements or applicable law unless
Agent is furnished with an indemnification reasonably satisfactory to Agent with
respect thereto.
(b) Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and the Ancillary Agreements. Neither
Agent nor any of its officers, directors, employees or agents shall be (i)
liable for any action
-55-
<PAGE>
taken or omitted by them as such hereunder or in connection herewith, unless
caused by their gross negligence (but not mere negligence) or willful misconduct
or gross (not mere) negligence, or (ii) responsible in any manner for any
recitals, statements, representations or warranties made by Borrower or any
officer thereof contained in this Agreement, or in any of the Ancillary
Agreements or in any certificate, report, statement or other document referred
to or provided for in, or received by Agent under or in connection with, this
Agreement or any of the Ancillary Agreements or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, or
any of the Ancillary Agreements or for any failure of Borrower to perform its
obligations hereunder. Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any of the
Ancillary Agreements, or to inspect the properties, books or records of
Borrower. The duties of Agent as respects the Loans to Borrower shall be
mechanical and administrative in nature; Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Lender; and nothing in this
Agreement, expressed or implied, is intended to or shall be so construed as to
impose upon Agent any obligations in respect of this Agreement except as
expressly set forth herein.
(c) Notwithstanding anything to the contrary contained herein,
commencing with the first Business Day following the Closing Date, each
borrowing of Revolving Credit Advances shall be advanced by the Agent and each
payment by Borrower on account of Revolving Credit Advances shall be applied
first to those Revolving Credit Advances made by the Agent. On or before 1:00
P.M., New York time, on each Lender Settlement Date commencing with the first
Lender Settlement Date following the Closing Date, the Agent and the Lenders
shall make certain payments as follows: (I) if the aggregate amount of new
Revolving Credit Advances made by the Agent during the preceding Week exceeds
the aggregate amount of repayments applied to outstanding Revolving Credit
Advances during such preceding Week, then each Lender shall provide the Agent
with funds in an amount equal to its Commitment Percentage of the difference
between (w) such Revolving Credit Advances and (x) such repayments and (II) if
the aggregate amount of repayments applied to outstanding Revolving Credit
Advances during such Week exceeds the aggregate amount of new Revolving Credit
Advances made during such Week, then Agent shall provide each Lender with its
Commitment Percentage of the difference between (y) such repayments and (z) such
Revolving Credit Advances.
(i) Each Lender shall be entitled to earn interest at the
applicable Contract Rate on outstanding Revolving Credit Advances which it has
funded.
(ii) Promptly following each Lender Settlement Date, the
Agent shall submit to each Lender a certificate with respect to payments
received and Loans made during the Week immediately preceding such Settlement
Date. Such certificate of the Agent shall be conclusive in the absence of
manifest error.
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<PAGE>
(d) If any Lender or Participant (a "benefitted Lender") shall at
any time receive any payment of all or part of its Loans or interest thereon, or
receive any Collateral in respect thereof (whether voluntarily or involuntarily
or by set-off) in a greater proportion than any such payment to and Collateral
received by any other Lender, if any, in respect of such other Lender's Loans,
or interest thereon, and such greater proportionate payment or receipt of
Collateral is not expressly permitted hereunder, such benefitted Lender shall
purchase for cash from the other Lenders such portion of each such other
Lender's Loans, or shall provide such other Lender with the benefits of any such
Collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Lender to share the excess payment or benefits of such Collateral or
proceeds ratably with each of the Lenders; PROVIDED, HOWEVER, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
benefitted Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest. Each
Lender so purchasing a portion of another Lender's Loans may exercise all rights
of payment (including, without limitation, rights of set-off) with respect to
such portion as fully as if such Lender were the direct holder of such portion.
(e) Independently and without reliance upon Agent or any other
Lender, each Lender has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of Borrower in connection
with the making and the continuance of the Loans hereunder and the taking or not
taking of any action in connection herewith, and (ii) its own appraisal of the
creditworthiness of Borrower. Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Lender with any credit
or other information with respect thereto, whether coming into its possession
before making of the Loans or at any time or times thereafter except as shall be
provided by Borrower pursuant to the terms hereof. Agent shall not be
responsible to any Lender for any recitals, statements, information,
representations or warranties herein or in any agreement, document, certificate
or a statement delivered in connection with or for the execution, effectiveness,
genuineness, validity, enforceability, collectability or sufficiency of this
Agreement or any Ancillary Agreement, or of the financial condition of Borrower,
or be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Agreement, the
Note, the Ancillary Agreements or the financial condition of Borrower, or the
existence of any Event of Default or any Default.
Agent may resign on sixty (60) days' written notice to each of Lenders
and Borrower and upon such resignation, the Required Lenders will promptly
designate a successor Agent reasonably satisfactory to Borrower.
Any such successor Agent shall succeed to the rights, powers and
duties of Agent, and the term "Agent" shall mean such successor agent effective
upon its appointment, and the former Agent's rights, powers and duties as Agent
shall be terminated, without any other or further act or deed on the part of
such former
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<PAGE>
Agent. After any Agent's resignation as Agent, the provisions of this Section
34 shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement.
(f) If Agent shall request instructions from Lenders with respect
to any act or action (including failure to act) in connection with this
Agreement or any Ancillary Agreement, Agent shall be entitled to refrain from
such act or taking such action unless and until Agent shall have received
instructions from the Required Lenders; and Agent shall not incur liability to
any Person by reason of so refraining. Without limiting the foregoing, Lenders
shall not have any right of action whatsoever against Agent as a result of its
acting or refraining from acting hereunder in accordance with the instructions
of the Required Lenders.
(g) Agent shall be entitled to rely, and shall be fully protected
in relying, upon any note, writing, resolution, notice, statement, certificate,
telex, teletype or telecopier message, cablegram, order or other document or
telephone message believed by it to be genuine and correct and to have been
signed, sent or made by the proper person or entity, and, with respect to all
legal matters pertaining to this Agreement and the Ancillary Agreements and its
duties hereunder, upon advice of counsel selected by it. Agent may employ
agents and attorneys-in-fact and shall not be liable for the default or
misconduct of any such agents or attorneys-in-fact selected by Agent with
reasonable care.
(h) Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder or under the Ancillary
Agreements, unless Agent has received notice from a Lender or Borrower referring
to this Agreement or the Ancillary Agreements, describing such Default or Event
of Default and stating that such notice is a "notice of default". In the event
that Agent receives such a notice, Agent shall give notice thereof to Lenders.
Agent shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by the Required Lenders; PROVIDED, THAT, unless and
until Agent shall have received such directions, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of Lenders.
(i) To the extent Agent is not reimbursed and indemnified by
Borrower, each Lender will reimburse and indemnify Agent in proportion to its
respective portion of the Loans (or, if no Loans are outstanding, according to
its Commitment Percentage), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, fees or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against Agent in performing its duties
hereunder, including, but not limited to fees in connection with Paragraph
5(b)(ii) hereof, in the event such fees exceed $75,000 and Borrower is not
responsible for such fees pursuant to such Paragraph, or in any way relating to
or arising out of this Agreement or any Ancillary Agreement, PROVIDED THAT,
Lenders shall not be liable for any portion of such liabilities, obligations,
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<PAGE>
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent's gross negligence (but not mere negligence)
or willful misconduct or gross (not mere) negligence.
(j) With respect to the obligation of Agent to lend under this
Agreement, the Loans made by it shall have the same rights and powers hereunder
as any other Lender and as if it were not performing the duties as Agent
specified herein; and the term "Lender" or any similar term shall, unless the
context clearly otherwise indicates, include Agent in its individual capacity as
a Lender. Agent may engage in business with Borrower as if it were not
performing the duties specified herein, and may accept fees and other
consideration from Borrower for services in connection with this Agreement or
otherwise without having to account for the same to Lenders.
(k) To the extent Agent receives documents and information from
Borrower pursuant to the terms of this Agreement, Agent will promptly furnish
such documents and information to Lenders.
(l) Without prejudice to their respective obligations to the
Lenders under the other provisions of this Agreement, Borrower hereby undertakes
with Agent to pay to Agent from time to time on demand all amounts from time to
time due and payable by it for the account of Agent or the Lenders or any of
them pursuant to this Agreement to the extent not already paid. Any payment
made pursuant to any such demand shall PRO TANTO satisfy Borrower's obligations
to make payments for the account of the Lenders or the relevant one or more of
them pursuant to this Agreement.
35. DELIVERIES. Notwithstanding the method of delivery of any document,
certificate, report or other writing delivered hereunder by Borrower or any of
its officers or directors, such items shall be deemed to have been delivered by
United States mail.
36. ADDITIONAL DOCUMENTS. Execute and deliver to Agent, upon request,
such documents and agreements as Agent may, from time to time, reasonably
request to carry out the purposes, terms or conditions of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year first above written.
WITNESS TMP WORLDWIDE INC.
/s/ James J. Bergin By: /s/ Thomas G. Collison
------------------------ --------------------------
James J. Bergin Name: Thomas G. Collison
Title:
BNY FINANCIAL CORPORATION
By: /s/ Joe Grimaldi
--------------------------
Name:
Title:
Commitment Percentage: 100%
-----
AGREED AND ACCEPTED:
McKELVEY ENTERPRISES, INC.
By: /s/ Thomas G. Collison
-------------------------
Name: Thomas G. Collison
Title:
WORLDWIDE CLASSIFIED INC.
By: /s/ Thomas G. Collison
-------------------------
Name: Thomas G. Collison
Title:
-60-
<PAGE>
SCHEDULES
Schedule 1(A) - Permitted Liens
Schedule 1(B) - Scheduled Affiliates
Schedule 12(d) - Record Locations
Schedule 12(j) - Licenses, Patents, Trademarks and Copyrights
Schedule 12(l) - Inventory Locations
Schedule 12(m) - Permitted Indebtedness
Permitted Guaranties
Tradestyles
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<PAGE>
TMP WORLDWIDE INC.
PERMITTED LIENS SCHEDULE 1 (A)
EQUIPMENT CAPITALIZED & OPERATING LEASES
AMPLICON 517,622.91
AT&T 17,041.91
GE CAPITAL 29,273.50
GE CAPITAL 106,520.05
GRAYBAR FINANCIAL 15,940.45
LEASETECH 943,983.00
MOTOROLA 206,587.64
SIEMENS 581,596.40
SIEMENS 45,735.98
QUALITY BUSINESS SYSTMENS 1,170.07
TOTAL 2,465,471.91
<PAGE>
TMP WORLDWIDE INC. Schedule 12 (d)
FINANCIAL RECORDS LOCATIONS
1633 Broadway
New York, N.Y. 10019
4701 West Schroeder Drive
Milwaukee, WI 53223
5 Marine View Plaza
Hoboken, N.J. 07030
NDAP Division
184 Front Street East
Suite 201
Toronto, Canada ON M5A 4N3
313 Congress Street
Boston, MA 02210
3032 Bunker Hill Lane
Santa Clara, CA 95054
CALA
63 rue de Bresoles
Montreal, Quebec H2Y 1V7
MSI
600 International Drive
Mount Olive, N.J. 07828
<PAGE>
TMP WORLDWIDE INC.
Schedule 12(J)
LICENSES, PATENTS, TRADEMARKS AND COPYRIGHTS
Service Mark
The Monster Board-Registered Trademark- (granted June 18, 1996)
Copyright of Text
Online Career Center - Resumes (granted November 29, 1995)
Online Career Center - Jobs (granted November 29, 1995)
Service Marks Pending
The Monster Board's Be The Boss-SM-
The Monster Board's MedSearch-SM-
TMP Worldwide Inc.-SM-
Patent Application Pending
The Monster Board-Registered Trademark-
<PAGE>
SCHEDULE 12 (1)
INVENTORY LOCATIONS
NONE
<PAGE>
TMP WORLDWIDE INC.
Page 1 of 2
PERMITTED INDEBTEDNESS Schedule 12 (M)
B. Hodes 93,113.00
DMI 15,941.00
McDougal 328,016.00
Subtotal 437,070.00
Consulting Agreements
Archibald & Loomis 111,582.00
Canady 135,249.00
Mclaughlin 270,000.00
Bernard Hodes 75,000.00
John Stimac 375,000.00
Kahse 60,500.00 per year for life
Subtotal 966,831.00
Employment Agreements
Canady 2,579,200.00
Woodward 350,000.00
Albertson 40,292.00
Snyder 40,356.00
Subtotal 3,009,848.00
Non Compete Agreements
DMI Bernard Hodes 75,000.00
<PAGE>
Page 2 of 2
Guarantees
A. Marx 35,000.00
S.F. Neal 100,000.00
Unger & Assoc. 40,496.00
B. Dorskind 49,328.00
Elite Solutions 46,875.00
FCB 150,000.00
Keever 66,000.00
Rogers 7,438,345.00
Target 128,112.00
KSD 318,610.00
KSD 725,417.00
KSD 158,484.00
West 287,100.00
BB&L 517,065.00
Adion 1,420,000.00
HGI 1,905,433.00
Adion (Kerasiotes) 98,333.00
Cala Acquisition 223,535.00
Cala 1,043,758.00
Admasters Braggins 37,000.00
DSE Gould 82,667.00
KSD Chatelain 4,000.00
Garcia-Virginia 36,129.00
Adion Kerasoites 221,250.00
Admasters Braggins 454,138.00
DSE Gould 476,178.00
MMS Marx 350,000.00
Waltz 105,000.00
Sid Richardson 2,805,000.00
Subtotal 19,323,253.00
<PAGE>
Exhibit 10.102
(part 2)
AMENDMENT NO. 1
TO
AMENDED AND RESTATED ACCOUNTS RECEIVABLE MANAGEMENT
AND SECURITY AGREEMENT
THIS AMENDMENT NO. 1 ("Amendment") is entered into as of August 29, 1996,
by and between TMP Worldwide, Inc., a Delaware corporation ("Borrower") and BNY
Financial Corporation, as Agent (as hereinafter defined).
BACKGROUND
Pursuant to an Amended and Restated Accounts Receivable Management and
Security Agreement dated as of June 27, 1996 (as amended, supplemented or
otherwise modified from time to time, the "Loan Agreement") by and among
Borrower, BNY Financial Corporation ("BNY"), each of the other financial
institutions named therein or which are now or which hereafter become parties
thereto (BNY and such financial institutions, the "Lenders") and BNY as agent
for the Lenders (BNY in such capacity the "Agent"), Lenders and Agent agreed to
provide Borrower with certain financial accommodations.
Borrower has requested that Agent amend certain provisions of the Loan
Agreement and Agent is willing to do so on the terms and conditions hereafter
set forth.
NOW, THEREFORE, in consideration of any loan or advance or grant of credit
heretofore or hereafter made to or for the account of Borrower by Lenders, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS. All capitalized terms not otherwise defined herein shall
have the meanings given to them in the Loan Agreement.
2. AMENDMENT TO LOAN AGREEMENT. Subject to satisfaction of the
conditions precedent set forth in Section 3 below, the Loan Agreement is hereby
amended as follows:
2.1. All references to and provisions concerning "Eurodollar Rate" and
"Eurodollar Rate Loan" in the Loan Agreement shall be deleted and Borrower
agrees that obtaining a Eurodollar Rate Loan pursuant to the Loan Agreement
shall no longer be an option thereunder.
2.2. Section 1.2 of the Loan Agreement is hereby amended as follows:
<PAGE>
(a) the following defined term is hereby added in the appropriate
alphabetical order:
""DILUTION" shall mean, with respect to any period, the percentage
obtained by dividing (a) the sum of chargebacks PLUS credit memos
issued for such period as determined by Agent, by (b) the sum of
collections, chargebacks, open deduction and credit memos issued for
such period."
(b) the definition of "Applicable Margin" is hereby amended by deleting
the word "LIBOR" on the second sentence thereof and replacing it with "LIBO" in
its place and stead.
(c) the definition of "LIBO Rate Advance" is hereby amended by deleting
the word "Advance" on the first line thereof and replacing it with "Loans" in
its place and stead.
2.3. Section 5(b)(ii) is hereby amended by (a) placing a period after the
word "account" on the eleventh line thereof and (b) deleting the remainder of
such paragraph.
2.4. Section 5(b) is hereby further amended by adding the following
subsection at the end thereof:
"(viii) ADDITIONAL FEE. In the event that a Conforming Equity Event
shall not occur by December 31, 1996, Borrower shall pay to Agent for the
ratable benefit of Lenders a fee equal to $25,000 which shall be due and payable
no later than December 31, 1996."
2.5. Section 12(n) is hereby amended by deleting the chart therein and
replacing it with the following chart:
Period Amount
------ ------
1/1/96 through 12/30/96 ($ 24,000,000)
12/31/96 through 12/30/97 ($ 14,000,000)
12/31/97 through 12/30/98 ($ 5,000,000)
12/31/98 through 12/30/99 $ 14,000,000
12/31/99 through 12/30/00 $ 40,000,000
12/31/00 through 12/30/01 $ 85,000,000
12/31/01 and at all times $120,000,000
thereafter
2.6. Section 12(q) is hereby amended by deleting the chart therein and
replacing it with the following chart:
Period Amount
------ ------
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<PAGE>
1/1/96 through 12/30/96 ($100,000,000)
12/31/96 through 12/30/97 ($100,000,000)
12/31/97 through 12/30/98 ($ 95,000,000)
12/31/98 through 12/30/99 ($ 80,000,000)
12/31/99 through 12/30/00 ($ 60,000,000)
12/31/00 through 12/30/01 ($ 10,000,000)
12/31/01 and at all times $ 30,000,000
thereafter
2.7. Section 12(r) is hereby amended by deleting the chart therein and
replacing it with the following chart:
Period Ratio
------ -----
1/1/96 through 12/30/96 .65 to 1.00
12/31/96 through 12/30/97 .65 to 1.00
12/31/97 through 12/30/98 .70 to 1.00
12/31/98 through 12/30/99 .75 to 1.00
12/31/99 through 12/30/00 .80 to 1.00
12/31/00 through 12/30/01 .85 to 1.00
12/31/01 and at all times 1.00 to 1.00
thereafter
2.8. Section 12(t) is hereby amended by (a) inserting an "(i)" immediately
before "$1,500,000" on the third line thereof and (b) by adding the following
language immediately before the ";" at the end thereof:
"and (ii) $2,000,000 for any three month period ending the last day of
any calendar month."
2.9. Section 12(y) is hereby amended by adding the following language at
the end thereof:
"provided, further, that such stock pledge agreements, Stock
Certificates and stock powers must be delivered to Agent no later than November
30, 1996;"
2.10. Section 12 is hereby amended by adding the following new
subsection at the end thereof:
"(ad) Dilution shall not exceed ten percent (10%), on a cumulative
basis, for any three month period ending the last day of any calendar month (as
determined by Agent in the good faith exercise of its sole discretion)."
2.11. Section 18(j) of the Loan Agreement is hereby amended by
inserting "either orally or" immediately after the word "admit" on the first
line thereof.
-3-
<PAGE>
2.12. Section 18(n) of the Loan Agreement is hereby amended in its
entirety to provide as follows:
"(n) INTENTIONALLY OMITTED."
2.13. Section 18(r) of the Loan Agreement is hereby amended in its
entirety to provide as follows:
"at any time prior to the occurrence of a Conforming Equity Event,
there shall occur a Change of Control;"
2.14. Section 18(s) of the Loan Agreement is hereby amended by adding
the following language at the beginning thereof:
"at any time prior to the occurrence of a Conforming Equity Event,"
2.15. Section 18 of the Loan Agreement is hereby amended by inserting
the following new subsections at the end thereof:
"(t) Borrower or another person involved in the media industry (such
person to be mutually agreed upon by Borrower and Agent) shall advise Lender
that there is a change in (i) the laws, regulations or rules regulating the
media industry or in the interpretation or application of such laws, regulations
or rules, (ii) the technology utilized by the media industry or (iii) the
organization of or policies and procedures employed by the media industry, which
shall have a material adverse impact on Borrower and its operations.
(u) Any of Borrower's eight largest yellow pages publishers, which at
any time singularly account for more than 20% of the outstanding aggregate
amount of payables then due from Borrower to all of its yellow pages publishers,
require payment by Borrower to such publisher less than 40 days after issuance
from the invoice date thereof.
(v) Any of Borrower's newspaper publishers, which at any time
singularly account for more than 15% of the outstanding aggregate amount of
payables then due from Borrower to all of its newspaper publishers, require
payment by Borrower to such publisher less than 25 days after issuance from the
invoice date thereof.
(w) More than twenty percent (20%) of the aggregate amount of
Receivables and Affiliate Receivables shall at any time not constitute Eligible
Receivables as determined by Agent in the good faith exercise of its sole
discretion.
-4-
<PAGE>
(x) As of the end of any fiscal year, Borrower and the Scheduled
Affiliates shall have lost customers during the course of such fiscal year which
in the aggregate accounted for more than 10% of sales for such fiscal year (such
calculation to take into account the addition of new customers during such
fiscal year).
(y) At any time following the occurrence of a Conforming Equity
Event, Andrew McKelvey shall be indebted to Borrower for money borrowed in an
amount in excess of $2,000,000."
3. CONDITIONS OF EFFECTIVENESS. This Amendment shall become effective as
of August 29, 1996, when and only when Agent shall have received four (4) copies
of this Amendment executed by Borrower and consented and agreed to by each
Guarantor and such other certificates, instruments, documents, agreements and
opinions of counsel as may be required by Agent or its counsel, each of which
shall be in form and substance satisfactory to Agent and its counsel.
4. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants as follows:
(a) This Amendment and the Loan Agreement, as amended hereby,
constitute legal, valid and binding obligations of Borrower and are
enforceable against Borrower in accordance with their respective terms.
(b) Upon the effectiveness of this Amendment, Borrower hereby
reaffirms all covenants, representations and warranties made in the Loan
Agreement to the extent the same are not amended hereby and agree that all
such covenants, representations and warranties shall be deemed to have been
remade as of the effective date of this Amendment.
(c) No Event of Default or Default has occurred and is continuing or
would exist after giving effect to this Amendment No. 1.
(d) Borrower has no defense, counterclaim or offset with respect to
the Loan Agreement.
5. EFFECT ON THE LOAN AGREEMENT.
(a) Upon the effectiveness of SECTION 2 hereof, each reference in the
Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of
like import shall mean and be a reference to the Loan Agreement as amended
hereby.
-5-
<PAGE>
(b) Except as specifically amended herein, the Loan Agreement, and
all other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of Lenders or Agents, nor
constitute a waiver of any provision of the Loan Agreement, or any other
documents, instruments or agreements executed and/or delivered under or in
connection therewith.
6. GOVERNING LAW. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns and
shall be governed by and construed in accordance with the laws of the State of
New York.
7. HEADINGS. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
8. COUNTERPARTS. This Amendment may be executed by the parties hereto in
one or more counterparts, each of which shall be deemed an original and all of
which taken together shall be deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, this Amendment No. 1 has been duly executed as of the
day and year first written above.
TMP WORLDWIDE, INC.
By: /s/ Thomas G. Collison
-----------------------------------------
Name: Thomas G. Collison
---------------------------------------
Title: Vice Chairman
--------------------------------------
BNY FINANCIAL CORPORATION, as Agent
By: /s/ Robert Grbic
-----------------------------------------
Name: /s/ Robert Grbic
---------------------------------------
Title: Senior Vice President
--------------------------------------
CONSENTED AND AGREED TO:
McKelvey Enterprises, Inc. Worldwide Classified Inc.
By:/s/ Thomas G. Collison By:/s/ Thomas G. Collison
---------------------- ---------------------------
Its:Vice President Its:Secretary
--------------------- --------------------------
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<PAGE>
BBL Acquisition Corp. Woodward Inc.
By:/s/ Thomas G. Collison By:/s/ Thomas G. Collison
---------------------- ---------------------------
Its:Secretary Its:Secretary
--------------------- --------------------------
National Directory Advertising Directory Services
Programs Inc. (Canada) International Corp.
By:/s/ Thomas G. Collison By:/s/ Thomas G. Collison
---------------------- ---------------------------
Its:Secretary Its:Secretary
--------------------- --------------------------
Woodward Direct Inc. EPI Aviation, Inc.
By:/s/ Thomas G. Collison By:/s/ Thomas G. Collison
---------------------- ---------------------------
Its:Secretary Its:Secretary
--------------------- --------------------------
TMP Wordwide Recruitment Inc. YPMS Acquisition, Inc.
By:/s/ Thomas G. Collison By:/s/ Thomas G. Collison
---------------------- ---------------------------
Its:Secretary Its:Vice President
--------------------- --------------------------
InterDirect Inc. AHK Capital Corp.
By:/s/ Thomas G. Collison By:/s/ Thomas G. Collison
---------------------- ---------------------------
Its:Secretary Its:Vice President
--------------------- --------------------------
TMP Medical Listings, Inc. CPC Acquisition Corp.
By:/s/ Thomas G. Collison By:/s/ Thomas G. Collison
---------------------- ---------------------------
Its:Secretary Its:Secretary
--------------------- --------------------------
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<PAGE>
BTD Acquisition, Inc. Rogers Acquisition Corp.
By:/s/ Thomas G. Collison By:/s/ Thomas G. Collison
---------------------- ---------------------------
Its:Secretary Its:Vice President
--------------------- --------------------------
Deutsch, Shea & Evans, Inc. General Directory Advertising Inc.
By:/s/ Thomas G. Collison By:/s/ Thomas G. Collison
---------------------- ---------------------------
Its:Vice President Its:Vice President
--------------------- --------------------------
MSI-Market Support International, Chalam Advertising, Inc.
Inc.
By:/s/ Thomas G. Collison By:/s/ Thomas G. Collison
---------------------- ---------------------------
Its:Treasurer Its:Secretary
--------------------- --------------------------
HGI Acquisition Corp.
By:/s/ Thomas G. Collison
----------------------
Its:Vice President
---------------------
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