Execution Copy

 

TABLE OF CONTENTS

 

		Page
SECTION 1. AMOUNTS AND TERMS OF LOANS		1
1.1	Loans	1
1.2	Interest and Applicable Margins	10
1.3	Fees	13
1.4	Payments	15
1.5	Prepayments	16
1.6	Maturity	17
1.7	Loan Accounts	18
1.8	Yield Protection; Illegality	19
1.9	Taxes/Changes in Laws	20
SECTION 2. AFFIRMATIVE COVENANTS		22
2.1	Compliance With Laws and Contractual Obligations	22
2.2	Insurance	23
2.3	Inspection; Lender Meeting; Books and Records	24
2.4	Organizational Existence	24
2.5	Environmental Matters	24
2.6	Payment of Taxes	25
2.7	Further Assurances	25
2.8	Ratings	26
SECTION 3. NEGATIVE COVENANTS		26
3.1	Indebtedness	26
3.2	Liens and Related Matters	28
3.3	Investments	29
3.4	Contingent Obligations	31
3.5	Restricted Payments	33
3.6	Restriction on Fundamental Changes	34
3.7	Disposal of Assets or Subsidiary Stock	37
3.8	Transactions with Affiliates	38
3.9	Compliance with Laws	38
3.10	Conduct of Business	38
3.11	Changes Relating to Indebtedness and Material Documents	39
3.12	Fiscal Year	39
3.13	Press Release; Public Offering Materials	39
3.14	Limitation on Creation of Subsidiaries	40
3.15	Hazardous Materials	40
3.16	ERISA; Foreign Pension Plans	40
3.17	Sale-Leasebacks	40
3.18	Capital Stock	40
3.19	OFAC	41

 

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SECTION 4. FINANCIAL COVENANTS/REPORTING		41
4.1	Capital Expenditure Limits	41
4.2	Maximum Leverage Ratio	42
4.3	Fixed Charge Coverage Ratio	42
4.4	Financial Statements and Other Reports	43
4.5	Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement	45
SECTION 5. REPRESENTATIONS AND WARRANTIES		46
5.1	Disclosure	46
5.2	No Material Adverse Effect	46
5.3	No Conflict; Governmental Approvals	47
5.4	Organization, Powers, Capitalization and Good Standing	47
5.5	Financial Statements and Budget	48
5.6	Intellectual Property	48
5.7	Investigations, Audits, Etc .	48
5.8	Employee Matters	48
5.9	Solvency	49
5.10	Litigation; Adverse Facts	49
5.11	Use of Proceeds; Margin Regulations	49
5.12	Ownership of Property; Liens	49
5.13	Environmental Matters	50
5.14	ERISA; Foreign Pension Plans	51
5.15	Brokers	52
5.16	Taxes and Tax Returns	52
5.17	Maintenance of Properties; Insurance	53
5.18	Foreign Assets Control Regulations and Anti-Money Laundering	53
5.19	Purchase Documents	53
SECTION 6. DEFAULT, RIGHTS AND REMEDIES		54
6.1	Event of Default	54
6.2	Suspension or Termination of Commitments	56
6.3	Acceleration and other Remedies	56
6.4	Performance by Co-Administrative Agent	57
6.5	Application of Proceeds	57
SECTION 7. CONDITIONS TO LOANS		58
7.1	Conditions to Acquisition Term Loans	58
7.2	Conditions to All Loans	58
SECTION 8. ASSIGNMENT AND PARTICIPATION		59
8.1	Assignment and Participations	59
8.2	Agents	62
8.3	Set Off and Sharing of Payments	71
8.4	Disbursement of Funds	71

 

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8.5	Disbursements of Advances; Payment; Cash Collateral	72
8.6	Lender Credit Decision	74
SECTION 9. MISCELLANEOUS		74
9.1	Indemnities	74
9.2	Amendments and Waivers	75
9.3	Notices	76
9.4	Electronic Transmissions	78
9.5	Failure or Indulgence Not Waiver; Remedies Cumulative	79
9.6	Marshaling; Payments Set Aside	80
9.7	Severability	80
9.8	Lenders’ Obligations Several; Independent Nature of Lenders’ Rights	80
9.9	Headings	80
9.10	Applicable Law	80
9.11	Successors and Assigns	81
9.12	No Fiduciary Relationship; Limited Liability	81
9.13	Construction	81
9.14	Confidentiality	81
9.15	CONSENT TO JURISDICTION	82
9.16	WAIVER OF JURY TRIAL	83
9.17	Survival of Warranties and Certain Agreements	83
9.18	ENTIRE AGREEMENT	83
9.19	Counterparts; Effectiveness	84
9.20	Replacement of Lenders	84
9.21	Delivery of Termination Statements and Mortgage Releases	85
9.22	Subordination of Intercompany Debt	85
9.23	Patriot Act	86
9.24	Joint and Several	86
9.25	Reserved	86
9.26	NO NOVATION	86
9.27	Amendment and Restatement	86

 

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INDEX OF APPENDICES

 

Annexes
Annex A	-	Definitions
Annex B	-	Schedule of Additional Closing Documents
Annex C	-	Pro Forma
Annex D	-	Compliance, Pricing and Excess Cash Flow Certificate
Exhibits
Exhibit 1.1(a)(i)	-	Existing Term Note
Exhibit 1.1(a)(ii)	-	Acquisition Term Note
Exhibit 1.1(b)(i)	-	Revolving Note
Exhibit 1.1(b)(ii)	-	Notice of Revolving Credit Advance
Exhibit 1.1(c)	-	Swing Line Note
Exhibit 1.1(d)	-	Request for Letter of Credit Issuance
Exhibit 1.2(e)	-	Notice of Continuation/Conversion
Exhibit 7.1(D)	-	Master Amendment and Reaffirmation
Exhibit 8.1	-	Assignment Agreement
Schedules
Schedule 1.1(d)	-	Existing Letters of Credit
Schedule 3.1(c)	-	Indebtedness
Schedule 3.2	-	Liens
Schedule 3.3	-	Investments
Schedule 3.4	-	Contingent Obligations
Schedule 3.8	-	Affiliate Transactions
Schedule 5.4(a)	-	Jurisdictions of Organization and Qualifications
Schedule 5.4(b)	-	Capitalization
Schedule 5.6	-	Intellectual Property
Schedule 5.7	-	Investigations and Audits
Schedule 5.8	-	Employee Matters
Schedule 5.10	-	Litigation
Schedule 5.11	-	Use of Proceeds
Schedule 5.12	-	Real Estate
Schedule 5.13	-	Environmental Matters
Schedule 5.14	-	ERISA
Schedule 5.17	-	Insurance

 

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AMENDED AND RESTATED CREDIT AGREEMENT

 

This AMENDED AND RESTATED CREDIT AGREEMENT is dated as of May 1, 2009 and entered into by and among TRANSACTION NETWORK SERVICES, INC., a Delaware corporation (“ Borrower ”), TNS, INC., a Delaware corporation (“ Holdings ”), the financial institutions who are or hereafter become parties to this Agreement as Lenders, SUNTRUST BANK (in its individual capacity “ SunTrust ”), as Agent and Co-Administrative Agent, GENERAL ELECTRIC CAPITAL CORPORATION (in its individual capacity “ GE Capital ”), as Co-Administrative Agent and BANK OF AMERICA, N.A., as Syndication Agent.

 

R E C I T A L S :

 

WHEREAS, Borrower, Holdings, GE Capital Administrative Agent and certain other parties have entered into that certain Credit Agreement dated March 28, 2007 (as amended and in effect immediately prior to the date hereof, the “ Existing Credit Agreement ”);

 

WHEREAS, Co-Administrative Agents, the Lenders, Borrower and Holdings wish to amend and restate the Existing Credit Agreement to (i) make available to Borrower a new term loan to fund the Acquisition (as hereinafter defined) and pay certain expenses in connection therewith, (ii) to appoint SunTrust as Agent, Co-Administrative Agent, L/C Issuer and Swingline Lender and (iii) to make certain other modifications and changes, all as more fully set forth herein on the terms and conditions herein;

 

WHEREAS, it is the intent of the parties hereto that this Agreement not constitute a novation of the obligations and liabilities of the parties under the Existing Credit Agreement and that this Agreement amend, restate and replace in its entirety the Existing Credit Agreement and re-evidence the obligations outstanding on the Restatement Date as contemplated hereby; and

 

WHEREAS, all capitalized terms herein shall have the meanings ascribed thereto in Annex A hereto which is incorporated herein by reference.

 

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, Holdings, Borrower, Lenders and Co-Administrative Agents agree as follows:

 

SECTION 1.

AMOUNTS AND TERMS OF LOANS

 

1.1            Loans .  (a)              Term Loans .

 

(i)             Existing Term Loan .  On the Original Closing Date, Existing Term Lenders made a term loan to Borrower in an aggregate amount equal to $225,000,000 (the “ Existing Term Loan ”).  As of the Restatement Date, the outstanding principal balance of the

 

 

Existing Term Loan is $178,500,000.  Borrower shall repay the outstanding principal amount of the Existing Term Loan through periodic payments on the dates and in the amounts indicated below (“ Existing Term Loan Scheduled Installments ”).

 

Date		Scheduled Installment
June 30, 2009		$	3,346,875
September 30, 2009		$	3,346,875
December 31, 2009		$	3,346,875
March 31, 2010		$	3,346,875
June 30, 2010		$	4,462,500
September 30, 2010		$	4,462,500
December 31, 2010		$	4,462,500
March 31, 2011		$	4,462,500
June 30, 2011		$	4,462,500
September 30, 2011		$	4,462,500
December 31, 2011		$	4,462,500
March 31, 2012		$	4,462,500
June 30, 2012		$	5,578,125
September 30, 2012		$	5,578,125
December 31, 2012		$	5,578,125
March 31, 2013		$	5,578,125
June 30, 2013		$	5,578,125
September 30, 2013		$	5,578,125
December 31, 2013		$	5,578,125
March 28, 2014		$	90,365,625

 

The final installment shall in all events equal the entire remaining principal balance of the Existing Term Loan.  Notwithstanding the foregoing, the outstanding principal balance of the Existing Term Loan shall be due and payable in full on the Term Loan Maturity Date.  Amounts borrowed with respect to the Existing Term Loan and repaid may not be reborrowed.

 

The Existing Term Loan is evidenced by the several promissory notes issued by Borrower in substantially the form of Exhibit 1.1(a)(i)  (as amended, modified, extended, substituted or replaced from time to time, each an “ Existing Term Note ” and, collectively, the “ Existing Term Notes ”).  Each Existing Term Note shall represent the obligation of Borrower to pay the amount of the applicable Existing Term Lender’s Existing Term Loan Commitment, together with interest thereon.

 

(ii)            Acquisition Term Loan . Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of Holdings and Borrower contained herein, each Acquisition Term Lender, severally and not jointly, shall make a term loan to Borrower in one draw on the Restatement Date in an amount equal to its Pro Rata Share of $230,000,000 (the “ Acquisition Term Loan ”).  Borrower shall repay the Acquisition Term

 

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Loan through periodic payments on the dates and in the amounts indicated below (“ Acquisition Term Loan Scheduled Installments ”).

 

Date		Scheduled Installment
June 30, 2009		$	4,312,500
September 30, 2009		$	4,312,500
December 31, 2009		$	4,312,500
March 31, 2010		$	4,312,500
June 30, 2010		$	5,750,000
September 30, 2010		$	5,750,000
December 31, 2010		$	5,750,000
March 31, 2011		$	5,750,000
June 30, 2011		$	5,750,000
September 30, 2011		$	5,750,000
December 31, 2011		$	5,750,000
March 31, 2012		$	5,750,000
June 30, 2012		$	7,187,500
September 30, 2012		$	7,187,500
December 31, 2012		$	7,187,500
March 31, 2013		$	7,187,500
June 30, 2013		$	7,187,500
September 30, 2013		$	7,187,500
December 31, 2013		$	7,187,500
March 28, 2014		$	116,437,500

 

The final installment shall in all events equal the entire remaining principal balance of the Acquisition Term Loan.  Notwithstanding the foregoing, the outstanding principal balance of the Acquisition Term Loan shall be due and payable in full on the Term Loan Maturity Date.  Amounts borrowed under this Section 1.1(a)(ii)  and repaid may not be reborrowed.

 

The Acquisition Term Loan shall be evidenced by promissory notes substantially in the form of Exhibit 1.1(a)(ii)  (as amended, modified, extended, substituted or replaced from time to time, each a “ Acquisition Term Note ” and, collectively, the “ Acquisition Term Notes ”), and, except as provided in Section 1.7 , Borrower shall execute and deliver each Acquisition Term Note to the applicable Acquisition Term Lender.  Each Acquisition Term Note shall represent the obligation of Borrower to pay the amount of the applicable Acquisition Term Lender’s Acquisition Term Loan Commitment, together with interest thereon.

 

(b)            Revolving Loans .

 

(i)             Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of Holdings and Borrower contained herein, each Revolving Lender agrees, severally and not jointly, to make available to Borrower from time to time until the Commitment Termination Date its Pro Rata Share of advances (each a

 

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“ Revolving Credit Advance ”) requested by Borrower hereunder.  The Pro Rata Share of the Revolving Loan of any Revolving Lender (including, without duplication, Swing Line Loans) shall not at any time exceed its separate Revolving Loan Commitment. Revolving Credit Advances may be repaid and reborrowed; provided, that the amount of any Revolving Credit Advance to be made at any time shall not exceed Borrowing Availability.  All Revolving Loans shall be repaid in full on the Commitment Termination Date.  Borrower shall execute and deliver to each Revolving Lender a note to evidence the Revolving Loan Commitment of that Revolving Lender.  Each note shall be in the maximum principal amount of the Revolving Loan Commitment of the applicable Revolving Lender substantially in the form of Exhibit 1.1(b)(i)  (as amended, modified, extended, substituted or replaced from time to time, each a “ Revolving Note ” and, collectively, the “ Revolving Notes ”).  Revolving Loans which are Index Rate Loans may be requested in any amount by written notice delivered by 11:00 a.m. (New York time) one (1) Business Day prior to such funding for funding requests equal to or greater than $5,000,000.  For funding requests for such Loans less than $5,000,000, written notice must be provided by 11:00 a.m. (New York time) on the Business Day on which the Loan is to be made.  All LIBOR Loans require three (3) Business Days prior written notice which notice must be received by 11:00 a.m. (New York time) on such date. Written notices for funding requests shall be in the form attached as Exhibit 1.1(b)(ii)  (“ Notice of Revolving Credit Advance ”).

 

(c)            Swing Line Facility .

 

(i)             Agent shall notify the Swing Line Lender upon Agent’s receipt of any Notice of Revolving Credit Advance.  Subject to the terms and conditions hereof and in reliance upon the representations and warranties of Holdings and Borrower contained herein, the Swing Line Lender may, in its discretion, make available from time to time until the Commitment Termination Date advances (each, a “ Swing Line Advance ”) in accordance with any such notice.  The provisions of this Section 1.1(c)  shall not relieve Revolving Lenders of their obligations to make Revolving Credit Advances under Section 1.1(b) ; provided that if the Swing Line Lender makes a Swing Line Advance pursuant to any such notice, such Swing Line Advance shall be in lieu of any Revolving Credit Advance that otherwise may be made by Revolving Lenders pursuant to such notice.  The aggregate amount of Swing Line Advances outstanding shall not exceed at any time the lesser of (A) the Swing Line Commitment and (B) Borrowing Availability (“ Swing Line Availability ”).  Until the Commitment Termination Date, Borrower may from time to time borrow, repay and reborrow under this Section 1.1(c) .  Each Swing Line Advance shall be made pursuant to a Notice of Revolving Credit Advance delivered by Borrower to Agent in accordance with Section 1.1(b) .  Unless the Swing Line Lender has received at least one (1) Business Day’s prior written notice from Requisite Revolving Lenders instructing it not to make a Swing Line Advance, the Swing Line Lender shall, notwithstanding the failure of any condition precedent set forth in Section 7.2 , be entitled to fund that Swing Line Advance, and to have each Revolving Lender make Revolving Credit Advances in accordance with Section 1.1(c)(iii)  or purchase participating interests in accordance with Section 1.1(c)(iv) .  Notwithstanding any other provision of this Agreement or the other Loan Documents, the Swing Line Loan shall constitute an Index Rate Loan.  Borrower shall repay the aggregate outstanding principal amount of the Swing Line Loan upon demand therefor by Agent. The entire unpaid

 

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balance of the Swing Line Loan shall be immediately due and payable in full in immediately available funds on the Commitment Termination Date if not sooner paid in full.

 

(ii)            Borrower shall execute and deliver to the Swing Line Lender a promissory note to evidence the Swing Line Commitment.  Such note shall be in the principal amount of the Swing Line Commitment of the Swing Line Lender and substantially in the form of Exhibit 1.1(c)  (as amended, modified, extended, substituted or replaced from time to time, the “ Swing Line Note ”).  The Swing Line Note shall represent the obligation of Borrower to pay the amount of the Swing Line Commitment or, if less, the aggregate unpaid principal amount of all Swing Line Advances made to Borrower together with interest thereon as prescribed in Section 1.2 .

 

(iii)           The Swing Line Lender, at any time and from time to time in its sole and absolute discretion, may on behalf of Borrower (and Borrower hereby irrevocably authorizes the Swing Line Lender to so act on its behalf) request each Revolving Lender (including the Swing Line Lender) to make a Revolving Credit Advance to Borrower (which shall be an Index Rate Loan) in an amount equal to that Revolving Lender’s Pro Rata Share of the principal amount of the Swing Line Loan (the “ Refunded Swing Line Loan ”) outstanding on the date such notice is given.  Unless any of the events described in Sections 6.1(f) and 6.1(g)  has occurred (in which event the procedures of Section 1.1(c)(iv)  shall apply) and regardless of whether the conditions precedent set forth in this Agreement to the making of a Revolving Credit Advance are then satisfied, each Revolving Lender shall disburse directly to Agent, its Pro Rata Share of a Revolving Credit Advance on behalf of the Swing Line Lender, prior to 3:00 p.m. (New York time), in immediately available funds on the Business Day next succeeding the date that notice is given.  The proceeds of those Revolving Credit Advances shall be immediately paid to the Swing Line Lender and applied to repay the Refunded Swing Line Loan.

 

(iv)           If, prior to refunding a Swing Line Loan with a Revolving Credit Advance pursuant to Section 1.1(c)(iii) , one of the events described in Sections 6.1(f) or 6.1(g)  has occurred, then, subject to the provisions of Section 1.1(c)(v)  below, each Revolving Lender shall, on the date such Revolving Credit Advance was to have been made for the benefit of Borrower, purchase from the Swing Line Lender an undivided participation interest in the Swing Line Loan in an amount equal to its Pro Rata Share (determined with respect to Revolving Loans) of such Swing Line Loan.  Upon request, each Revolving Lender shall promptly transfer to the Swing Line Lender, in immediately available funds, the amount of its participation interest.

 

(v)            Each Revolving Lender’s obligation to make Revolving Credit Advances in accordance with Section 1.1(c)(iii)  and to purchase participation interests in accordance with Section 1.1(c)(iv)  shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right that such Revolving Lender may have against the Swing Line Lender, Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of any Default or Event of Default; (C) any inability of Borrower to satisfy the conditions precedent to borrowing set forth in this Agreement at any time or (D) any other circumstance, happening or event whatsoever,

 

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whether or not similar to any of the foregoing.  Swing Line Lender shall be entitled to recover, on demand, from each Revolving Lender the amounts required pursuant to Sections 1.1.(c)(iii) or 1.1(c)(iv) , as the case may be.  If any Revolving Lender does not make available such amounts to Agent or the Swing Line Lender, as applicable, the Swing Line Lender shall be entitled to recover such amount on demand from such Revolving Lender, together with interest thereon for each day from the date of non-payment until such amount is paid in full at the Federal Funds Rate for the first two Business Days and at the Index Rate thereafter.

 

(d)            Letters of Credit .  (i) Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of Holdings and Borrower contained herein, the Revolving Loan Commitment may, in addition to advances under the Revolving Loan, be utilized, upon the request of Borrower, for the issuance of Letters of Credit.  On the terms and subject to the conditions contained herein, each L/C Issuer agrees to Issue, at the request of Borrower, in accordance with such L/C Issuer’s usual and customary business practices, Letters of Credit (denominated in Dollars) from time to time on any Business Day during the period from the Restatement Date through the earlier of the Commitment Termination Date and 7 days prior to the date specified in clause (a) of the definition of Commitment Termination Date; provided, however, that such L/C Issuer shall not be under any obligation to Issue any Letter of Credit upon the occurrence of any of the following, after giving effect to such Issuance:

 

(A)           the aggregate outstanding principal balance of Revolving Loans would exceed the Maximum Revolving Loan Balance or the Letter of Credit Obligations for all Letters of Credit would exceed $5,000,000  (the “ L/C Sublimit ”);

 

(B)            the expiration date of such Letter of Credit (1) is not a Business Day, (2) is more than one year after the date of issuance thereof or (3) is later than 7 days prior to the date specified in clause (a) of the definition of Commitment Termination Date; provided, however, that any Letter of Credit with a term not exceeding one year may provide for its renewal for additional periods not exceeding one year as long as (x) each of Borrower and such L/C Issuer have the option to prevent such renewal before the expiration of such term or any such period and (y) neither such L/C Issuer nor Borrower shall permit any such renewal to extend such expiration date beyond the date set forth in clause (3) above; or

 

(C)            (1) any fee due in connection with, and on or prior to, such Issuance has not been paid, (2) such Letter of Credit is requested to be issued in a form that is not acceptable to such L/C Issuer or (3) such L/C Issuer shall not have received, each in form and substance reasonably acceptable to it and duly executed by Borrower (and, if such Letter of Credit is issued for the account of any Subsidiary of Borrower, such Person), the documents that such L/C Issuer generally uses in the ordinary course of its business for the Issuance of letters of credit of the type of such Letter of Credit (collectively, the “ L/C Reimbursement Agreement ”).

 

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(D)           For each such Issuance, the applicable L/C Issuer may, but shall not be required to, determine that, or take notice whether, the conditions precedent set forth in Section 7.2 have been satisfied or waived in connection with the Issuance of any Letter of Credit; provided, however, that no Letter of Credit shall be Issued during the period starting on the first Business Day after the receipt by such L/C Issuer of notice from Agent or the Required Revolving Lenders that any condition precedent contained in Section 7.2 is not satisfied and ending on the date all such conditions are satisfied or duly waived.

 

(E)            Immediately upon the issuance by an L/C Issuer of a Letter of Credit, and without further action on the part of Agent or any of the Lenders, each Revolving Lender shall be deemed to have purchased from such L/C Issuer a participation in such Letter of Credit (or in its obligation under a risk participation agreement with respect thereto) equal to such Revolving Lender’s Pro Rata Share of the aggregate amount available to be drawn under such Letter of Credit.

 

(ii)            Reimbursement .  Borrower shall be irrevocably and unconditionally obligated forthwith without presentment, demand, protest or other formalities of any kind, to reimburse any L/C Issuer on demand in immediately available funds for any amounts paid by such L/C Issuer with respect to a Letter of Credit, including all reimbursement payments, reasonable fees, Charges, and reasonable costs and expenses paid by such L/C Issuer.  Borrower hereby authorizes and directs Agent, at Agent’s option, to debit Borrower’s account (by increasing the outstanding principal balance of the Revolving Credit Advances or Swing Line Advances) in the amount of any payment made by an L/C Issuer with respect to any Letter of Credit.  All amounts paid by an L/C Issuer with respect to any Letter of Credit that are not repaid by Borrower on such Business Day with the proceeds of a Revolving Credit Advance, Swing Line Advance or otherwise shall bear interest payable upon demand at the interest rate applicable to Revolving Loans which are Index Rate Loans plus, at the election of Requisite Revolving Lenders, an additional two percent (2.00%) per annum.  Each Revolving Lender agrees to fund its Pro Rata Share of any Revolving Loan made pursuant to this Section 1.1(d)(ii) .  In the event Agent elects not to debit Borrower’s account and Borrower fails to reimburse the L/C Issuer in full on the date of any payment in respect of a Letter of Credit, Agent shall promptly notify each Revolving Lender of the amount of such unreimbursed payment and the accrued interest thereon and each Revolving Lender, on the next Business Day prior to 3:00 p.m. (New York time), shall deliver to Agent an amount equal to its Pro Rata Share thereof in same day funds.  Each Revolving Lender hereby absolutely and unconditionally agrees to pay to the L/C Issuer upon demand by the L/C Issuer such Revolving Lender’s Pro Rata Share of each payment made by the L/C Issuer in respect of a Letter of Credit and not immediately reimbursed by Borrower or satisfied through a debit of Borrower’s account.  Each Revolving Lender acknowledges and agrees that its obligations pursuant to this subsection in respect of Letters of Credit are absolute and unconditional and shall not be affected by any circumstance whatsoever, including setoff, counterclaim, the occurrence and continuance of a Default or an Event of Default or any failure by Borrower to satisfy any of the conditions set forth in Section 7.2 .  If any Revolving Lender fails to make available to the L/C Issuer the amount of such Revolving Lender’s Pro Rata Share of any payments made by the L/C Issuer in respect of a Letter of Credit

 

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as provided in this Section 1.1(d)(ii) , the L/C Issuer shall be entitled to recover such amount on demand from such Revolving Lender together with interest at the Index Rate.

 

(iii)           Request for Letters of Credit .  Borrower shall give Agent at least three (3) Business Days prior written notice specifying the date a Letter of Credit is requested to be issued, the amount and the name and address of the beneficiary and a description of the transactions proposed to be supported thereby and the expiry date (or extended expiry date) of the Letter of Credit.  Each request by Borrower for the issuance of a Letter of Credit shall be in the form of Exhibit 1.1(d) .  If Agent informs Borrower that the L/C Issuer cannot issue the requested Letter of Credit directly, Borrower may request that L/C Issuer arrange for the issuance of the requested Letter of Credit under a risk participation agreement with another financial institution reasonably acceptable to Agent, L/C Issuer and Borrower.  The issuance of any Letter of Credit under this Agreement shall be subject to satisfaction of the conditions set forth in Section 7.2 and the conditions that the Letter of Credit (i) supports a transaction entered into in the ordinary course of business of Borrower or another transaction permitted by the terms of this Agreement benefiting Borrower or any of its wholly-owned Subsidiaries and (ii) is in a form, is for an amount and contains such terms and conditions as are reasonably satisfactory to the L/C Issuer and, in the case of standby letters of credit, Agent.  The initial notice requesting the issuance of a Letter of Credit shall be accompanied by the form of the Letter of Credit and an application for a letter of credit, if any, then required by the L/C Issuer completed in a manner reasonably satisfactory to such L/C Issuer.  If any provision of any application or reimbursement agreement is inconsistent with the terms of this Agreement, then the provisions of this Agreement, to the extent of such inconsistency, shall control.

 

(iv)           Obligations Absolute .  The obligation of Borrower to reimburse the L/C Issuer, Agent and Lenders for payments made in respect of Letters of Credit issued by the L/C Issuer shall be unconditional and irrevocable and shall be paid under all circumstances strictly in accordance with the terms of this Agreement, including the following circumstances: (a) any lack of validity or enforceability of any Letter of Credit; (b) any amendment or waiver of or any consent or departure from all or any of the provisions of any Letter of Credit or any Loan Document; (c) the existence of any claim, set-off, defense or other right which Borrower, any of its Subsidiaries or Affiliates or any other Person may at any time have against any beneficiary of any Letter of Credit, Agent, any L/C Issuer, any Lender or any other Person, whether in connection with this Agreement, any other Loan Document or any other related or unrelated agreements or transactions; (d) any draft or other document presented under any  Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (e) payment under any Letter of Credit against presentation of a draft or other document that does not substantially comply with the terms of such Letter of Credit; or (f) any other act or omission to act or delay of any kind of any L/C Issuer, Agent, any Lender or any other Person or any other event or circumstance whatsoever that might, but for the provisions of this Section 1.1(d)(iv) , constitute a legal or equitable discharge of Borrower’s obligations hereunder.  Without limiting the generality of the foregoing, it is expressly understood and agreed by Borrower that the absolute and unconditional obligation of Borrower to Agent and Lenders hereunder to reimburse payments made under a Letter of Credit will not be excused by the gross negligence or willful misconduct of the L/C Issuer.

 

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(v)            Obligations of L/C Issuers .  Each L/C Issuer agrees to provide Agent (which, after receipt, Agent shall provide to each Revolving  Lender), in form and substance satisfactory to Agent, each of the following on the following dates: (A) (i) on or prior to any Issuance of any Letter of Credit by such L/C Issuer, (ii) immediately after any drawing under any such Letter of Credit or (iii) immediately after any payment (or failure to pay when due) by Borrower of any related L/C Reimbursement Obligation, notice thereof, which shall contain a reasonably detailed description of such Issuance, drawing or payment; (B) upon the request of Agent (or any Revolving Lender through Agent), copies of any Letter of Credit Issued by such L/C Issuer and any related L/C Reimbursement Agreement and such other documents and information as may reasonably be requested by Agent; (C) on the first Business Day of each calendar week, a schedule of the Letters of Credit Issued by such L/C Issuer, in form and substance reasonably satisfactory to Agent, setting forth the Letter of Credit Obligations for such Letters of Credit outstanding on the last Business Day of the previous calendar week; and (D) promptly following request by Agent, such additional information reasonably requested by Agent from time to time with respect to the Letters of Credit issued by such L/C Issuer.

 

(vi)           Outstanding Letters of Credit .  The Letters of Credit outstanding on the Restatement Date and listed on Schedule 1.1(d)  hereto (the “ Existing Letters of Credit ”) were issued pursuant to the Existing Credit Agreement and were the only letters of credit issued under the Existing Credit Agreement which were outstanding as of the Restatement Date.  Borrower, Issuer and each of the Lenders hereby agree with respect to the Existing Letters of Credit that such Existing Letters of Credit, for all purposes under this Agreement, including, without limitation, Sections 1.1(d)(i) , (d)(ii)  and (d)(v) , shall be deemed to be Letters of Credit governed by the terms and conditions of this Agreement and for purposes of Section 1.3(c)  hereof.  On the last day of the current term of any Existing Letter of Credit which would otherwise be renewed (automatically or otherwise) for one or more additional terms, such Existing Letter of Credit shall be terminated and the Borrower shall, pursuant to the terms of this Section 1.1(d), request that SunTrust, as L/C Issuer, issue a Letter of Credit hereunder to replace such Existing Letter of Credit.

 

(e)            Funding Authorization .  The proceeds of all Loans made pursuant to this Agreement on and subsequent to the Restatement Date are to be funded by Agent by wire transfer to the account designated by Borrower below (the “ Disbursement Account ”):

 

Bank:		Chevy Chase Bank
ABA No.:		255071981
Bank Address:		6200 Chevy Chase Drive
		Laurel, MD 20707
Account No.:		500-431622-8
Reference:		To the account of Transaction Network Services, Inc.

 

Borrower shall provide Agent with written notice of any change in the foregoing instructions at least three (3) Business Days before the desired effective date of such change.

 

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1.2           Interest and Applicable Margins .

 

(a)           Borrower shall pay interest to Agent, for the ratable benefit of Lenders, in accordance with the various Loans being made by each Lender (or in the case of the Swing Line Loan, for the benefit of the Swing Line Lender), in arrears on each applicable Interest Payment Date, at the following rates:  (i) with respect to the Revolving Credit Advances which are designated as Index Rate Loans (and for all other Obligations not otherwise set forth below), the Index Rate plus the Applicable Revolver Index Margin per annum or, with respect to Revolving Credit Advances which are designated as LIBOR Loans, the applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum; (ii) with respect to such portion of the Term Loans designated as Index Rate Loans, the Index Rate plus the Applicable Term Loan Index Margin per annum or, with respect to such portion of the Term Loans designated as LIBOR Loans, the applicable LIBOR Rate plus the Applicable Term Loan LIBOR Margin per annum; and (iii) with respect to the Swing Line Loan, the Index Rate plus the Applicable Revolver Index Margin per annum.

 

As of the Restatement Date, the Applicable Margins are as follows:

 

Applicable Revolver Index Margin		5.00	%
Applicable Revolver LIBOR Margin		6.00	%
Applicable Term Loan Index Margin		5.00	%
Applicable Term Loan LIBOR Margin		6.00	%

 

The Applicable Margins shall be adjusted (up or down) prospectively on a quarterly basis as determined by Holdings’ and its Subsidiaries’ consolidated financial performance, commencing with the first day of the first calendar month that occurs more than one (1) day after delivery of Borrower’s quarterly Financial Statements to Agent for the Fiscal Quarter ending June 30, 2009.  Adjustments in Applicable Margins will be determined by reference to the following grids:

 

If Leverage Ratio is:		Level of Applicable Margins:
³ 3.00		Level I
³ 2.50 and < 3.00		Level II
³ 2.00 and < 2.50		Level III
< 2.00		Level IV

 

		Applicable Margins
		Level I		Level II		Level III		Level IV
Applicable Revolver Index Margin		5.00	%	4.75	%	4.50	%	4.25	%
Applicable Revolver LIBOR Margin		6.00	%	5.75	%	5.50	%	5.25	%

 

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		Applicable Margins
		Level I		Level II		Level III		Level IV
Applicable Term Loan Index Margin		5.00	%	5.00	%	5.00	%	5.00	%
Applicable Term Loan LIBOR Margin		6.00	%	6.00	%	6.00	%	6.00	%

 

All adjustments in the Applicable Margins after June 30, 2009 shall be implemented quarterly on a prospective basis, for each calendar quarter commencing at least one (1) day after the date of delivery to Agent of the quarterly unaudited Financial Statements evidencing the need for an adjustment.  Concurrently with the delivery of those Financial Statements, Borrower shall deliver to Agent a certificate, signed by its chief financial officer or other officer acceptable to Agent, setting forth in reasonable detail the basis for the continuance of, or any change in, the Applicable Margins.  Failure to timely deliver such Financial Statements shall, in addition to any other remedy provided for in this Agreement, result in an increase in the Applicable Margins to the highest level set forth in the foregoing grid, until the first day following the delivery of those Financial Statements demonstrating that such an increase is not required.  If any Event of Default has occurred and is continuing at the time any reduction in the Applicable Margins is to be implemented, that reduction shall be deferred until the first day following the date on which all Events of Default are waived or cured.

 

(b)           If any payment on any Loan becomes due and payable on a day other than a Business Day, the maturity thereof will be extended to the next succeeding Business Day (except as set forth in the definition of LIBOR Period) and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension.

 

(c)           All computations of Fees calculated on a per annum basis and interest shall be made by Agent on the basis of a 360-day year, other than computations of interest based on the Index Rate, which shall be made by Agent on the basis of a 365/6-day year, in each case for the actual number of days occurring in the period for which such Fees and interest are payable.  The Index Rate is a floating rate determined for each day.  Each determination by Agent of an interest rate and Fees hereunder shall be final, binding and conclusive on Borrower, absent manifest error.

 

(d)           So long as (i) an Event of Default has occurred and is continuing under Section 6.1(a), (f) or (g)  and without notice of any kind, or (ii) any other Event of Default has occurred and is continuing and at the election of Requisite Lenders confirmed by written notice from Agent to Borrower, the interest rates applicable to the Loans and the Letter of Credit Fee shall be increased by two percentage points (2%) per annum above the rates of interest or the rate of such Fee otherwise applicable hereunder (“ Default Rate ”), and all outstanding Obligations shall bear interest at the Default Rate applicable to such Obligations.  Interest and Letter of Credit Fees at the Default Rate shall accrue from either (A) in the case of Events of Default described in clause (i) above, the date of the Event of Default or (B) in the case of an Event of Default described in clause (ii) above, the date such Lenders make the election referred to in the first sentence or, at the option of the Requisite Lenders, the latest of (i) the initial date of such Event of Default, (ii) the date thirty (30) days prior to the date of election by the Requisite Lenders or (iii) the last day of the most recently ended Fiscal Quarter of Holdings and shall

 

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continue until that Event of Default is cured or waived and shall be payable upon demand, but in any event, shall be payable on the next regularly scheduled payment date set forth herein for such Obligation.

 

(e)           Borrower shall have the option to (i) request that any Revolving Credit Advance be made as a LIBOR Loan, (ii) convert at any time all or any part of outstanding Loans (other than the Swing Line Loan) from Index Rate Loans to LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan, subject to payment of the LIBOR Breakage Fee in accordance with Section 1.3(d)  if such conversion is made prior to the expiration of the LIBOR Period applicable thereto, or (iv) continue all or any portion of any Loan (other than the Swing Line Loan) as a LIBOR Loan upon the expiration of the applicable LIBOR Period and the succeeding LIBOR Period of that continued Loan shall commence on the first day after the last day of the LIBOR Period of the Loan to be continued.  Any Loan or group of Loans having the same proposed LIBOR Period to be made or continued as, or converted into, a LIBOR Loan must be in a minimum amount of $5,000,000 and integral multiples of $100,000 in excess of such amount.  Any such election must be made by 1:00 p.m. (New York time) on the 3rd Business Day prior to (1) the date of any proposed Revolving Credit Advance which is to bear interest at the LIBOR Rate, (2) the end of each LIBOR Period with respect to any LIBOR Loans to be continued as such, or (3) the date on which Borrower wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR Period designated by Borrower in such election.  If no election is received with respect to a LIBOR Loan by 1:00 p.m. (New York time) on the 3rd Business Day prior to the end of the LIBOR Period with respect thereto, that LIBOR Loan shall be converted to an Index Rate Loan at the end of its LIBOR Period.  Borrower must make such election by notice to Agent in writing, by fax or overnight courier or based on telephonic instructions of Borrower (which instructions shall be promptly confirmed in writing by Borrower).  In the case of any conversion or continuation, such election must be made pursuant to a written notice (a “ Notice of Conversion/Continuation ”) in the form of Exhibit 1.2(e) .  No Loan shall be made, converted into or continued as a LIBOR Loan, if an Event of Default has occurred and is continuing and Requisite Lenders have determined not to make or continue any Loan as a LIBOR Loan as a result thereof.

 

(f)            Notwithstanding any other provision contained in this Agreement, after giving effect to any Borrowing, or to any continuation or conversion of any Loans, there shall not be more than seven (7) different LIBOR Periods in effect.

 

(g)           Notwithstanding anything to the contrary set forth in this Section 1.2 , if a court of competent jurisdiction determines in a final order that the rate of interest payable hereunder exceeds the highest rate of interest permissible under law (the “ Maximum Lawful Rate ”), then so long as the Maximum Lawful Rate would be so exceeded, the rate of interest payable hereunder shall be equal to the Maximum Lawful Rate; provided , however , that if at any time thereafter the rate of interest payable hereunder is less than the Maximum Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum Lawful Rate until such time as the total interest received by Agent, on behalf of Lenders, is equal to the total interest that would have been received had the interest rate payable hereunder been (but for the operation of this paragraph) the interest rate payable since the Restatement Date as otherwise provided in this

 

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Agreement.  Thereafter, interest hereunder shall be paid at the rate(s) of interest and in the manner provided in Sections 1.2(a) through (f) , unless and until the rate of interest again exceeds the Maximum Lawful Rate, and at that time this paragraph shall again apply.  In no event shall the total interest received by any Lender pursuant to the terms hereof exceed the amount that such Lender could lawfully have received had the interest due hereunder been calculated for the full term hereof at the Maximum Lawful Rate.  If the Maximum Lawful Rate is calculated pursuant to this paragraph, such interest shall be calculated at a daily rate equal to the Maximum Lawful Rate divided by the number of days in the year in which such calculation is made.  If, notwithstanding the provisions of this Section 1.2(g) , a court of competent jurisdiction shall determine by a final, non-appealable order that a Lender has received interest hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent permitted by applicable law, promptly apply such excess as specified in Section 1.5(e)  and thereafter shall refund any excess to Borrower or as such court of competent jurisdiction may otherwise order.

 

1.3           Fees .

 

(a)           Fee Letter .  Borrower shall pay to SunTrust, individually, the Fees specified in that certain fee letter dated as of February 20, 2009 among Borrower, SunTrust Robinson Humphrey, Inc. and SunTrust (the “ SunTrust Fee Letter ”), at the times specified for payment therein.

 

(b)           Unused Line Fee .  As additional compensation for the Revolving Lenders, Borrower shall pay to Agent, for the ratable benefit of such Lenders, in arrears, on the first Business Day of each Fiscal Quarter prior to the Commitment Termination Date and on the Commitment Termination Date, a fee for Borrower’s non-use of available funds (the “ Applicable Unused Line Fee ”) in an amount equal to the Applicable Unused Line Fee Margin per annum as determined below multiplied by the difference between (x) the Maximum Amount (as it may be reduced from time to time) and (y) the average for the period of the daily closing balances of the Revolving Loan and the Swing Line Loan outstanding during the period for which such Applicable Unused Line Fee is due.  As of the Restatement Date, the Applicable Unused Line Fee Margin is 0.50%.  The Applicable Unused Line Fee Margin shall be adjusted (up or down) prospectively on a quarterly basis as determined by Holdings’ and its Subsidiaries’ consolidated financial performance, commencing with the first day of the first calendar month that occurs more than one (1) day after delivery of Borrower’s quarterly Financial Statements to Agent for the Fiscal Quarter ending June 30, 2009.  Adjustments in Applicable Unused Line Fee Margin will be determined by reference to the following grids:

 

If Leverage Ratio is:		Level of Applicable Unused Line Fee Margins:
< 2.0		Level I
³ 2.0		Level II

 

		Level I		Level II
Applicable Unused Line Fee Margin		0.375	%	0.50	%

 

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All adjustments in the Applicable Unused Line Fee Margin after June 30, 2009 shall be implemented quarterly on a prospective basis, for each calendar quarter commencing at least one (1) day after the date of delivery to Agent of the quarterly unaudited Financial Statements evidencing the need for an adjustment.  Concurrently with the delivery of those Financial Statements, Borrower shall deliver to Agent a certificate, signed by its chief financial officer or another officer acceptable to Agent, setting forth in reasonable detail the basis for the continuance of, or any change in, the Applicable Unused Line Fee Margin.  Failure to timely deliver such Financial Statements shall, in addition to any other remedy provided for in this Agreement, result in an increase in the Applicable Unused Line Fee Margin to the highest level set forth in the foregoing grid, until the first day following the delivery of those Financial Statements demonstrating that such an increase is not required.  If any Event of Default has occurred and is continuing at the time any reduction in the Applicable Unused Line Fee Margin is to be implemented, that reduction shall be deferred until the first day following the date on which all Events of Default are waived or cured.

 

(c)           Letter of Credit Fees .  Borrower agrees to pay to Agent (i) for the benefit of each L/C Issuer with respect to each outstanding Letter of Credit issued by such L/C Issuer, a fronting fee in an amount equal to 0.25% multiplied by the maximum amount available from time to time to be drawn under each such Letter of Credit, (ii) for the benefit of Revolving Lenders and without duplication of costs and expenses otherwise payable to Agent or Lenders hereunder, all reasonable costs and expenses incurred by Agent or any Lender on account of such Letter of Credit Obligations, and (iii) for the benefit of Revolving Lenders for each month during which any Letter of Credit Obligation shall remain outstanding, a fee (the “ Letter of Credit Fee ”) in an amount equal to the Applicable Revolver LIBOR Margin from time to time in effect multiplied by the maximum amount available from time to time to be drawn under the applicable Letter of Credit.  Such fees shall be paid to Agent for the benefit of the L/C Issuers and Revolving Lenders, as the case may be, in arrears, on the first Business Day of each Fiscal Quarter and on the Commitment Termination Date.  In addition, Borrower shall pay to any L/C Issuer, on demand, such fees (including all per annum fees), charges and expenses of such L/C Issuer in respect of the issuance, negotiation, acceptance, amendment, transfer and payment of such Letter of Credit or otherwise payable pursuant to the application and related documentation under which such Letter of Credit is issued.

 

(d)           LIBOR Breakage Fee .  Upon (i) any failure by Borrower to make any borrowing of, or to convert or continue any LIBOR Loan following Borrower’s delivery to Agent of any LIBOR Loan request in respect thereof, or (ii) any payment of a LIBOR Loan on any day that is not the last day of the LIBOR Period applicable thereto (regardless of the source of such prepayment and whether voluntary, by acceleration or otherwise), Borrower shall pay Agent, for the benefit of all Lenders that funded or were prepared to fund any such LIBOR Loan, the LIBOR Breakage Fee.

 

(e)           Expenses and Attorneys Fees .  Any action taken by any Credit Party under or with respect to any Loan Document shall be at the expense of such Credit Party, and neither

 

14

 

any Co-Administrative Agent nor any other Secured Party shall be required under any Loan Document to reimburse any Credit Party or any Subsidiary of any Credit Party therefor except as expressly provided therein.  Borrower agrees to promptly pay all reasonable out-of-pocket fees, charges, costs and expenses incurred by a Co-Administrative Agent in connection with any matters contemplated by or arising out of the Loan Documents, in connection with the examination, review, due diligence investigation, documentation, negotiation, closing or syndication of the transactions contemplated herein and in connection with the continued administration of the Loan Documents including any amendments, modifications, terminations, consents and waivers, any other document prepared in connection therewith or the consummation and administration of any transaction contemplated therein, in each case including reasonable attorneys’ fees and expenses.  Borrower agrees to promptly pay all reasonable fees, charges, costs and expenses (including reasonable fees, charges, costs and expenses of attorneys, auditors (whether internal or external), appraisers, consultants and advisors) incurred by a Co-Administrative Agent in connection with any amendment, waiver, consent with respect to the Loan Documents, Event of Default, work-out or action to enforce any Loan Document or to collect any payments due from Borrower or any of its Subsidiaries.  In addition, in connection with any work-out or action to enforce any Loan Document or to collect any payments due from Borrower or any of its Subsidiaries, Borrower agrees to promptly pay all reasonable fees, charges, costs and expenses incurred by Lenders, including, without limitation, reasonable attorney fees for one (1) counsel acting for all Lenders other than Co-Administrative Agents.  All fees, charges, costs and expenses for which Borrower is responsible under this Section 1.3(e)  shall be deemed part of the Obligations when incurred, payable upon demand or in accordance with the final sentence of Section 1.4 and secured by the Collateral.

 

1.4           Payments .  All payments by Borrower of the Obligations shall be without deduction, defense, setoff or counterclaim and shall be made in Dollars in same day funds and, except as expressly provided in Section 1.1(d)(ii) , delivered to Agent, for the benefit of Co-Administrative Agents and Lenders, as applicable, by wire transfer to the following account or such other place as Agent may from time to time designate in writing.

 

Sun Trust Bank

ABA#:  061-000-104

Credit:  Agency Services Operating Account

Acct #:  1000022220783

Attn:  Agency Services

Reference:  Transaction Network Services, Inc.

 

Borrower shall receive credit on the day of receipt for funds received by Agent by 2:00 p.m. (New York time).  In the absence of timely receipt, such funds shall be deemed to have been paid on the next Business Day.  Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, the payment may be made on the next succeeding Business Day and such extension of time shall be included in the computation of the amount of interest and Fees due hereunder.

 

15

 

Borrower hereby authorizes Lenders to, and Lenders may, make Revolving Credit Advances or Swing Line Advances, on the basis of their Pro Rata Shares, for the payment of Scheduled Installments, interest, Fees and expenses, Letter of Credit reimbursement obligations and any amounts required to be deposited with respect to outstanding Letter of Credit Obligations pursuant to Sections 1.5(f) or 6.3 . Upon the making of such Revolving Credit Advances or Swing Line Advances the Borrower shall be deemed to have made the representations and reaffirmations set forth in the last sentence of Section 7.2 upon the making thereof.

 

1.5           Prepayments .

 

(a)           Voluntary Prepayments of Loans .  At any time, Borrower may prepay the Loans, in whole or in part, without premium or penalty subject to the payment of (i) LIBOR Breakage Fees, if applicable and (ii) the Prepayment Premium (as defined below), if applicable.  If Borrower prepays a Term Loan in whole or in part at any time prior to the first anniversary of the Restatement Date with the proceeds directly or indirectly of first lien debt financing containing terms similar to the terms governing the facilities set forth in Section 1.1 hereof, then, at the time of such prepayment, Borrower shall pay to Agent for the ratable benefit of the applicable Term Lenders a prepayment premium equal to 1.00% times the principal amount of the Term Loans so prepaid (the “ Prepayment Premium ”).  Prepayments of the Loans under this Section 1.5(a)  shall be applied first to any fees owed as a result of such prepayment and then as directed by Borrower.

 

(b)           Prepayments from Excess Cash Flow .  If Holdings’ Leverage Ratio at the end of any Fiscal Year is greater than 1.50 to 1.00 (determined by reference to the Compliance, Pricing and Excess Cash Flow Certificate delivered pursuant to Section 4.4(l)  for such Fiscal Year), commencing with the Fiscal Year ended December 31, 2009, within five (5) Business Days after such certificate is required to be delivered, Borrower shall prepay the Loans in an amount equal to (i) 50% of Excess Cash Flow for such Fiscal Year if the Leverage Ratio is greater than 2.00 to 1.00 or (ii) 25% of the Excess Cash Flow for such Fiscal Year if the Leverage Ratio is less than or equal to 2.00 to 1.00 and is greater than 1.50 to 1.00, in each case, minus voluntary prepayment of Term Loans made during such Fiscal Year; provided, that in no event will the prepayment required hereunder exceed Domestic Cash Availability.  Prepayments under this Section 1.5(b)  shall be applied first to Scheduled Installments of principal of the Term Loans on a pro rata basis until the Term Loans are paid in full, and second to reduce the outstanding principal balance of the Revolving Loans, with concurrent permanent reduction of the Revolving Loan Commitment if and to the extent a Default or Event of Default has occurred and is continuing at the time of such prepayments.

 

(c)           Prepayments from Asset Dispositions .  Immediately upon receipt of any Net Proceeds from an Asset Disposition or sale-leaseback transaction in either case in excess of $2,000,000 for any single transaction or series of related transactions during any Fiscal Year, Borrower shall apply such Net Proceeds first to Scheduled Installments of principal of the Term Loans on a pro rata basis until the Term Loans are paid in full, and second to reduce the outstanding principal balance of the Revolving Loans, with concurrent permanent reduction of

 

16

 

the Revolving Loan Commitment if and to the extent a Default or Event of Default has occurred and is continuing at the time of such prepayments.  Notwithstanding the foregoing so long as no Event of Default exists at the time of receipt of such Net Proceeds, Borrower or any Subsidiary may reinvest all remaining Net Proceeds of an Asset Disposition or sale-leaseback transaction within one hundred eighty (180) days (or in the case of Net Proceeds received in respect of the loss, damage, destruction, casualty or condemnation of any assets of Borrower or its Subsidiaries, two hundred seventy (270) days) in productive fixed assets of a kind then used or usable in the business of Borrower or its Subsidiaries.  If Borrower does not intend to so reinvest such Net Proceeds or if the applicable period set forth in the immediately preceding sentence expires without Borrower having reinvested such Net Proceeds, Borrower shall prepay the Term Loans in an amount equal to such remaining Net Proceeds applied first to Scheduled Installments of principal of the Term Loans on a pro rata basis until the Term Loans are paid in full, and second to reduce the outstanding principal balance of the Revolving Loans, with concurrent permanent reduction of the Revolving Loan Commitment if and to the extent a Default or Event of Default has occurred and is continuing at the time of such prepayments.

 

(d)           Reserved .

 

(e)           All Prepayments .  Considering each type of Loan being prepaid separately, any such prepayment shall be applied first to Index Rate Loans of the type required to be prepaid before application to LIBOR Loans of the type required to be prepaid, in each case in a manner which minimizes any resulting LIBOR Breakage Fee.

 

(f)            Letter of Credit Obligations .  In the event any Letters of Credit are outstanding at the time that the Revolving Loan Commitment is terminated, Borrower shall deposit with Agent for the benefit of all Revolving Lenders cash in an amount equal to 105% of the aggregate outstanding Letter of Credit Obligations to be available to Agent to reimburse payments of drafts drawn under such Letters of Credit and pay any Fees and expenses related thereto.

 

1.6           Maturity .

 

(a)           The principal amount of the Term Loans shall be paid in installments in the amounts and on the dates set forth in Section 1.1(a)  hereof.

 

(b)           Borrower shall repay to the Lenders in full on the date specified in clause (a) of the definition of “Commitment Termination Date” the aggregate principal amount of the Revolving Loan and Swing Line Loans outstanding on such date.

 

(c)           All of the Obligations shall become due and payable as otherwise set forth herein, but in any event all of the remaining Obligations shall become due and payable upon the Term Loan Maturity Date.  Until the Termination Date, Agent shall be entitled to retain the Liens on the Collateral granted under the Collateral Documents and the ability to exercise all rights and remedies available to it under applicable laws and Co-Administrative Agents shall be entitled to retain their respective abilities to exercise all rights and remedies available to them under the Loan Documents.  Notwithstanding anything contained in this Agreement to the contrary, upon

 

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any termination of the Revolving Loan Commitment, all of the Obligations shall be due and payable.

 

1.7           Loan Accounts .

 

(a)           Agent, on behalf of the Lenders, shall record on its books and records the amount of each Loan made, the interest rate applicable, all payments of principal and interest thereon and the principal balance thereof from time to time outstanding.  Agent shall deliver to Borrower on a monthly basis a loan statement setting forth such record for the immediately preceding month.  Unless Borrower notifies Agent in writing of any objection to any such accounting (specifically describing the basis for such objection) within forty-five (45) days after the date thereof, such record shall, absent manifest error, be conclusive evidence of the amount of the Loans made by the Lenders to Borrower and the interest and payments thereon.  Any failure to so record or any error in doing so, or any failure to deliver such loan statement shall not, however, limit or otherwise affect the obligation of Borrower hereunder (and under any Note) to pay any amount owing with respect to the Loans or provide the basis for any claim against Agent.

 

(b)           Agent, acting as agent of Borrower solely for tax purposes and solely with respect to the actions described in this Section 1.7(b) , shall establish and maintain at its address referred to in Section 9.3 (or at such other address as Agent may notify Borrower) (A) a record of ownership (the “Register”) in which Agent agrees to register by book entry the interests (including any rights to receive payment hereunder) of Agent, each Lender and each L/C Issuer in the Term Loans, Revolving Loans, Swing Loans and Letter of Credit Obligations, each of their obligations under this Agreement to participate in each Loan, Letter of Credit and L/C Reimbursement Obligations, and any assignment of any such interest, obligation or right and (B) accounts in the Register in accordance with its usual practice in which it shall record (1) the names and addresses of the Lenders and the L/C Issuers (and each change thereto pursuant to Sections 8.1 and 9.20 ), (2) the Commitments of each Lender, (3) the amount of each Loan and each funding of any participation described in clause (A) above, for LIBOR Rate Loans, the Interest Period applicable thereto, (4) the amount of any principal or interest due and payable or paid, (5) the amount of the L/C Reimbursement Obligations due and payable or paid in respect of Letters of Credit and (6) any other payment received by Agent from Borrower and its application to the Obligations.

 

(c)           Notwithstanding anything to the contrary contained in this Agreement, the Loans (including any Notes evidencing such Loans and, in the case of Revolving Loans, the corresponding obligations to participate in Letter of Credit Obligations and Swing Loans) and the Letter of Credit reimbursement obligations are registered obligations, the right, title and interest of the Lenders and the L/C Issuers and their assignees in and to such Loans or Letter of Credit reimbursement obligations, as the case may be, shall be transferable only upon notation of such transfer in the Register and no assignment thereof shall be effective until recorded therein.  This Section 1.7 and Section 8.1 shall be construed so that the Loans and Letter of Credit reimbursement obligations are at all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the IRC.

 

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(d)            The Credit Parties, Agent, the Lenders and the L/C Issuers shall treat each Person whose name is recorded in the Register as a Lender or L/C Issuer, as applicable, for all purposes of this Agreement.  Information contained in the Register with respect to any Lender or any L/C Issuer shall be available for access by Borrower, Agent, such Lender or such L/C Issuer at any reasonable time and from time to time upon reasonable prior notice.  No Lender or L/C Issuer shall, in such capacity, have access to or be otherwise permitted to review any information in the Register other than information with respect to such Lender or L/C Issuer unless otherwise agreed by Agent.

 

1.8            Yield Protection; Illegality .

 

(a)            Capital Adequacy and Other Adjustments .  In the event that any Lender shall have determined that the adoption after the date which is the 180 th  day prior to the Restatement Date of any law, treaty, governmental (or quasi-governmental) rule, regulation, guideline or order regarding capital adequacy, reserve requirements or similar requirements or compliance by any Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy, reserve requirements or similar requirements (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) from any central bank or governmental agency or body having jurisdiction does or shall have the effect of increasing the amount of capital, reserves or other funds required to be maintained by such Lender or any corporation controlling such Lender and thereby reducing the rate of return on such Lender’s or such corporation’s capital as a consequence of its obligations hereunder, then Borrower shall from time to time within fifteen (15) days after notice and demand from such Lender (together with the certificate referred to in the next sentence and with a copy to Agent) pay to Agent, for the account of such Lender, additional amounts sufficient to compensate such Lender for such reduction; provided that the respective Lender shall not be entitled to receive additional amounts pursuant to this Section 1.8(a)  for periods prior to the 180th day before the receipt of such notice and demand.  A certificate as to the amount of such cost and showing the basis of the computation of such cost submitted by such Lender to Borrower and Agent shall, absent manifest error, be final, conclusive and binding for all purposes.

 

(b)            Increased LIBOR Funding Costs; Illegality .  Notwithstanding anything to the contrary contained herein, if the introduction of or any change in any law, rule, regulation, treaty or directive (or any change in the interpretation thereof) shall make it unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for any Lender to agree to make or to make or to continue to fund or maintain any LIBOR Loan, then, unless that Lender is able to make or to continue to fund or to maintain such LIBOR Loan at another branch or office of that Lender without, in that Lender’s opinion, adversely affecting it or its Loans or the income obtained therefrom, on notice thereof and demand therefor by such Lender to Borrower through Agent, (i) the obligation of such Lender to agree to make or to make or to continue to fund or maintain LIBOR Loans shall terminate and (ii) Borrower shall forthwith prepay in full all outstanding LIBOR Loans owing to such Lender, together with interest accrued thereon, unless Borrower, within five (5) Business Days after the delivery of such notice and demand, converts all LIBOR Loans into Index Rate Loans. If, after the date which is the 180 th  

 

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day prior to the Restatement Date, the introduction of, change in or interpretation of any law, rule, regulation, treaty or directive would impose or increase reserve requirements (other than as taken into account in the definition of LIBOR) and the result of any of the foregoing is to increase the cost to Agent or any such Lender of issuing any Letter of Credit or making or continuing any Loan hereunder, as the case may be, or to reduce any amount receivable hereunder by such Agent or Lender, then Borrower shall from time to time within fifteen (15) days after notice and demand from Agent (together with the certificate referred to in the next sentence) pay to Agent, for itself or for the account of all such affected Lenders, as applicable, additional amounts sufficient to compensate Agent and such Lenders for such increased cost or reduced amount.  A certificate as to the amount of such cost and showing the basis of the computation of such cost submitted by Agent on behalf of all such affected Lenders to Borrower shall, absent manifest error, be final, conclusive and binding for all purposes.

 

(c)            Reserves on LIBOR Rate Loans .  Borrower shall pay to each Lender, as long as such Lender shall be required under regulations of the Federal Reserve Board to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional costs on the unpaid principal amount of each LIBOR Loan equal to actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive absent demonstrable error), payable on each date on which interest is payable on such Loan provided Borrower shall have received at least fifteen (15) days’ prior written notice (with a copy to Agent) of such additional interest from the Lender.  If a Lender fails to give notice fifteen (15) days prior to the relevant Interest Payment Date, such additional interest shall be payable fifteen (15) days from receipt of such notice.

 

1.9            Taxes/Changes in Laws .

 

(a)            No Deductions .  Any and all payments or reimbursements made hereunder or under any other Loan Document shall be made free and clear of and without deduction for, and Borrower agrees to indemnify Agent and each Lender against, any and all Charges, taxes, levies, imposts, deductions or withholdings, and all liabilities with respect thereto of any nature whatsoever imposed by any taxing authority, excluding such taxes to the extent imposed on Agent’s or a Lender’s net income by the United States or by the jurisdiction in which Agent or such Lender is organized or otherwise conducts business.  If Borrower shall be required by law to deduct any such amounts from or in respect of any sum payable hereunder to any Lender or Agent, then the sum payable hereunder shall be increased as may be necessary so that, after making all required deductions, such Lender or Agent receives an amount equal to the sum it would have received had no such deductions been made.  In addition, Borrower agrees to pay, and authorizes Agent to pay in its name, any stamp, documentary, excise or property tax, charges or similar levies imposed by any applicable requirement of law or Governmental Authority and all liabilities with respect thereto (including by reason of any delay in payment thereof), in each case arising from the execution, delivery or registration of, or otherwise with respect to, any Loan Document or any transaction contemplated therein (collectively, “Other Taxes”).  Within 30 days after the date of any payment of Taxes or Other Taxes by any Credit Party, Borrower

 

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shall furnish to Agent, at its address referred to in Section 9.3 , the original or a certified copy of a receipt evidencing payment thereof.

 

(b)            Changes in Law .  In the event that, subsequent to the date which is the 90 th  day prior to the Restatement Date, (1) any changes in any existing law, regulation, treaty or directive or in the administration, interpretation or application thereof, (2) any new law, regulation, treaty or directive enacted or any administration, interpretation or application thereof, or (3) compliance by either Co-Administrative Agent or any Lender with any request, guideline or directive (whether or not having the force of law) from any Governmental Authority:

 

(i)             does or shall subject either Co-Administrative Agent or any Lender to any tax of any kind whatsoever with respect to this Agreement, the other Loan Documents or any Loans made or Letters of Credit issued hereunder, or change the basis of taxation of payments to either Co-Administrative Agent or any Lender of principal, fees, interest or any other amount payable hereunder (except for net income taxes, or franchise taxes imposed in lieu of net income taxes, imposed generally by federal, state or local taxing authorities with respect to interest or commitment Fees or other Fees payable hereunder or changes in the rate of tax on the overall net income of such Co-Administrative Agent or such Lender); or

 

(ii)            does or shall impose on either Co-Administrative Agent or any Lender any other condition or increased cost in connection with the transactions contemplated hereby or participations herein; and the result of any of the foregoing is to increase the cost to any such Co-Administrative Agent or any such Lender of issuing or maintaining any Letter of Credit or making or continuing any Loan hereunder, as the case may be, or to reduce any amount receivable hereunder or under any other Loan Document, then, in any such case, Borrower shall promptly pay to such Co-Administrative Agent or such Lender, upon its demand, any additional amounts necessary to compensate such Co-Administrative Agent or such Lender, on an after-tax basis, for such additional cost or reduced amount receivable, as determined by such Co-Administrative Agent or such Lender with respect to this Agreement or the other Loan Documents.  If such Co-Administrative Agent or such Lender becomes entitled to claim any additional amounts pursuant to this Section 1.9(b) , it shall promptly notify Borrower of the event by reason of which such Co-Administrative Agent or such Lender has become so entitled within 90 days of such event.  A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by such Co-Administrative Agent or such Lender to Borrower (with a copy to Agent, if applicable) shall, absent manifest error, be final, conclusive and binding for all purposes.

 

(c)            Foreign Lenders .  Prior to becoming a Lender under this Agreement on or prior to the date on which any such form or certification expires or becomes obsolete, after the occurrence of any event requiring a change in the most recent form or certification previously delivered by it pursuant to this clause and within fifteen (15) days after a reasonable written request of Borrower or Agent (or in the case of an SPV or a participation, the relevant Lender) from time to time thereafter, each such Person or Lender that is not in each case a “United States person” (as such term is defined in IRC Section 7701(a)(30)) for U.S. federal income tax purposes (a “ Foreign Lender ”) shall provide to Borrower and Agent (and in the case of an SPV

 

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or a participation, the relevant Lender), if it is legally entitled to, two completed originals of each of the following, as applicable:  (A) Forms W-8ECI (claiming exemption from U.S. withholding tax because the income is effectively connected with a U.S. trade or business), W-8BEN (claiming exemption from, or a reduction of, U.S. withholding tax under an income tax treaty) and/or W-8IMY or any successor forms, (B) in the case of a Foreign Lender claiming exemption under Sections 871(h) or 881(c) of the Code, Form W-8BEN (claiming exemption from U.S. withholding tax under the portfolio interest exemption) or any successor form and a certificate in form and substance acceptable to Agent that such Foreign Lender is not (1) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (2) a “10 percent shareholder” of Borrower within the meaning of Section 881(c)(3)(B) of the Code or (3) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code or (C) any other applicable document prescribed by the IRS certifying as to the entitlement of such Foreign Lender to such exemption from United States withholding tax or reduced rate with respect to all payments to be made to such Foreign Lender under the Loan Documents (a “ Certificate of Exemption ”).  If a Foreign Lender is entitled to an exemption with respect to payments to be made to such Foreign Lender under this Agreement and does not provide a Certificate of Exemption to Borrower and Agent within the time periods set forth in the preceding sentence, Borrower shall withhold taxes from payments to such Foreign Lender at the applicable statutory rates and Borrower shall not be required to pay any additional amounts as a result of such withholding, provided that all such withholding shall cease upon delivery by such Foreign Lender of a Certificate of Exemption to Borrower and Agent.

 

(d)            U.S. Lenders .  Each Lender other than a Foreign Lender shall (A) on or prior to the date such Person becomes a Lender hereunder, (B) on or prior to the date on which any such form or certification expires or becomes obsolete, (C) after the occurrence of any event requiring a change in the most recent form or certification previously delivered by it pursuant to this clause (d) and (D) from time to time if requested by Borrower or Agent (or, in the case of a participant or SPV, the relevant Lender), provide Agent and Borrower (and, in the case of a participant or SPV, the relevant Lender) with two completed originals of Form W-9 (certifying that such Lender is entitled to an exemption from U.S. backup withholding tax) or any successor form.  Each Lender having sold a participation in any of its Obligations or identified an SPV as such to Agent shall collect from such participant or SPV the documents described in this clause (d) and provide them to Agent.

 

SECTION 2.
AFFIRMATIVE COVENANTS

 

Each of Borrower and Holdings jointly and severally agrees that from and after the date hereof and until the Termination Date:

 

2.1            Compliance With Laws and Contractual Obligations .  Holdings and Borrower will, and will cause each of Borrower’s Subsidiaries to, (a) comply with (i) the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority (including, without limitation, laws, rules, regulations and orders relating to taxes, employer and employee

 

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contributions, securities, employee retirement and welfare benefits, environmental protection matters and employee health and safety) as now in effect and which may be imposed in the future in all jurisdictions in which Holdings, Borrower or any of Borrower’s Subsidiaries is now doing business or may hereafter be doing business and (ii) the obligations, covenants and conditions contained in all Contractual Obligations of Holdings, Borrower or any of Borrower’s Subsidiaries other than in the case of (i) or (ii) where such noncompliance could not be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect, and (b) maintain or obtain all licenses, qualifications and permits now held or hereafter required to be held by Holdings, Borrower or any of Borrower’s Subsidiaries, for which the loss, suspension, revocation or failure to obtain or renew, could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.  This Section 2.1 shall not preclude Holdings, Borrower or any of Borrower’s Subsidiaries from contesting any taxes or other payments so long as (x) they are being diligently contested in good faith in a manner which stays enforcement thereof, (y) if appropriate, expense provisions for such taxes or other payments have been recorded in conformity with GAAP, subject to Section 3.2 and (z) no Lien (other than a Permitted Encumbrance) in respect thereof has been created.

 

2.2            Insurance .  Holdings and Borrower will, and will cause each of Borrower’s Subsidiaries to, maintain or cause to be maintained, with financially sound and reputable insurers, public liability and property damage insurance with respect to its business and properties and the business and properties of its Subsidiaries against loss or damage of the kinds customarily carried or maintained by corporations of established reputation engaged in similar businesses and in amounts reasonably acceptable to Co-Administrative Agents and will deliver evidence thereof to each Co-Administrative Agent.  Holdings and Borrower shall cause Agent, pursuant to endorsements and/or assignments in form and substance reasonably satisfactory to Co-Administrative Agents, to be named as lender’s loss payee in the case of casualty insurance, additional insured in the case of all liability insurance and assignee in the case of all business interruption insurance, if any, in each case for the benefit of Co-Administrative Agents and Lenders.  In the event Holdings or any of its Subsidiaries fails to provide Co-Administrative Agents with evidence of the insurance coverage required by this Agreement, either Co-Administrative Agent may purchase insurance at Holdings’ or Borrower’s expense to protect Agent’s interests in the Collateral.  This insurance may, but need not, protect the interests of Holdings or any of its Subsidiaries.  The coverage purchased by a Co-Administrative Agent may not pay any claim made by Holdings or any of its Subsidiaries or any claim that is made against Holdings or any of its Subsidiaries in connection with the Collateral.  Holdings or Borrower may later cancel any insurance purchased by a Co-Administrative Agent, but only after providing Co-Administrative Agents with evidence that Holdings or Borrower has obtained insurance as required by this Agreement.  If a Co-Administrative Agent purchases insurance for the Collateral, Holdings and Borrower will be responsible for the costs of that insurance, including interest and other Charges imposed by such Co-Administrative Agent in connection with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance.  The costs of the insurance may be added to the Obligations.  The costs of the insurance may be more than the cost of insurance Holdings or Borrower is able to obtain on its own.

 

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2.3            Inspection; Lender Meeting; Books and Records .  (a)   Each of Holdings and Borrower will, and will cause each of their Subsidiaries to, permit any authorized representatives of either Co-Administrative Agent to visit, audit and inspect any of the properties of Holdings, Borrower or any of their Subsidiaries, including such parties’ financial and accounting records, and to make copies and take extracts therefrom, and to discuss such parties’ affairs, finances and business with such parties’ officers and certified public accountants, at such reasonable times during normal business hours and as often as may be reasonably requested (collectively, a “ Field Review ”); provided that, unless a Default or Event of Default has occurred and is continuing, (i) each Co-Administrative Agent shall be limited to two (2) Field Reviews per Fiscal Year and (ii) Borrower shall not be responsible for reimbursement of a Co-Administrative Agent for the costs thereof for any Field Review of any person that is not a Credit Party or for more than one (1) Field Review per Fiscal Year of any Credit Party made by such Co-Administrative Agent.  Representatives of each Lender will be permitted to accompany representatives of a Co-Administrative Agent during each visit, inspection and discussion referred to in the immediately preceding sentence.  Without in any way limiting the foregoing, Holdings and Borrower will, and will cause each other Credit Party to, participate and will cause key management personnel of each Credit Party to participate in a meeting with Co-Administrative Agents and Lenders at least once during each year, which meeting shall be held at such time and such place as may be reasonably requested by mutual agreement of the Co-Administrative Agents.

 

(b)            Each of Holdings and Borrower will, and will cause each of their Subsidiaries to, keep proper books of record and account in which full, true and correct, in all material respects, entries shall be made of all material dealings and transactions in relation to its business and activities to the extent necessary to prepare the consolidated financial statements of Holdings and its Subsidiaries in conformity with GAAP.

 

2.4            Organizational Existence .  Borrower will at all times preserve and keep in full force and effect its organizational existence and all rights and franchises material to its business.  Except as otherwise permitted by Section 3.6 or except as could not reasonably be expected to have a Material Adverse Effect, Holdings will, and Borrower will cause each of Borrower’s Subsidiaries to, at all times preserve and keep in full force and effect its organizational existence and all rights and franchises material to its business.

 

2.5            Environmental Matters .  Each of Holdings and Borrower will, and will cause each of Borrower’s Subsidiaries and each other Person within its control to: (a) conduct its operations and keep and maintain its Real Estate in compliance with all Environmental Laws and Environmental Permits other than noncompliance that could not reasonably be expected to have a Material Adverse Effect; (b) implement any and all investigation, remediation, removal and response actions that are appropriate or necessary to maintain the value and marketability of the Real Estate or to otherwise comply in all material respects with Environmental Laws and Environmental Permits pertaining to the presence, generation, treatment, storage, use, disposal, transportation or Release of any Hazardous Material on, at, in, under, above, to, from or about any of its Real Estate; (c) notify each Co-Administrative Agent promptly after such Person becomes aware of any violation of Environmental Laws or Environmental Permits or any Release on, at, in, under, above, to, from or about any Real Estate that is reasonably likely to

 

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result in Environmental Liabilities to Holdings, Borrower or any of Borrower’s Subsidiaries in excess of $1,000,000; and (d) promptly forward to each Co-Administrative Agent a copy of any order, notice of actual or alleged violation or liability, request for information or any communication or report received by such Person in connection with any such violation or Release or any other matter relating to any Environmental Laws or Environmental Permits that could reasonably be expected to result in Environmental Liabilities to Holdings, Borrower or any of Borrower’s Subsidiaries in excess of $1,000,000, in each case whether or not the Environmental Protection Agency or any Governmental Authority has taken or threatened any action in connection with any such violation, Release or other matter.  If Co-Administrative Agents at any time have a reasonable basis to believe that there may be a violation of any Environmental Laws or Environmental Permits by Holdings, Borrower, any Subsidiary of Borrower or any Person under Borrower’s control or any Environmental Liability arising thereunder, or a Release of Hazardous Materials on, at, in, under, above, to, from or about any of its Real Estate, that, in each case, could reasonably be expected to have a Material Adverse Effect, then Holdings and Borrower shall, and shall cause each Subsidiary of Borrower to, upon a Co-Administrative Agent’s written request (i) cause the performance of such environmental audits including subsurface sampling of soil and groundwater, and preparation of such environmental reports, at Borrower’s expense, as such Co-Administrative Agent may from time to time reasonably request, which shall be conducted by reputable environmental consulting firms reasonably acceptable to Co-Administrative Agents and shall be in form and substance reasonably acceptable to Co-Administrative Agents, (ii) if the Credit Parties fail to perform (or cause to be performed) any environmental audit under clause (i) of this sentence within a reasonable time after receiving a written request from a Co-Administrative Agent, Credit Parties shall permit Co-Administrative Agents or their representatives to have access to all Real Estate for the purpose of conducting such environmental audits and testing as Co-Administrative Agents deem appropriate, including subsurface sampling of soil and groundwater.  Borrower shall reimburse Co-Administrative Agents for the costs of such audits and tests and the same will constitute a part of the Obligations secured hereunder.

 

2.6            Payment of Taxes .  Each Credit Party shall timely pay and discharge (or cause to be paid and discharged) all material taxes, assessments and governmental and other charges or levies imposed upon it or upon its income or profits, or upon property belonging to it; provided that such Credit Party shall not be required to pay any such tax, assessment, charge or levy that is being contested in good faith by appropriate proceedings and for which the affected Credit Party shall have set aside on its books adequate reserves with respect thereto in conformance with GAAP.

 

2.7            Further Assurances .

 

(a)            Holdings and Borrower shall, shall cause each Domestic Subsidiary to and, to the extent required under Section 2.7(c) , shall cause each Foreign Subsidiary to, from time to time, execute such guaranties, financing statements, documents, security agreements and reports as either Co-Administrative Agent or Requisite Lenders at any time may reasonably request to evidence, perfect or otherwise implement the guaranties and security for repayment of the Obligations contemplated by the Loan Documents.

 

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(b)            In the event Holdings or any of the Domestic Subsidiaries acquires a fee interest in real property after the Restatement Date (other than the Lacey Property), Holdings or Borrower shall, or shall cause the respective Domestic Subsidiary to, deliver to Agent a fully executed mortgage or deed of trust over such real property in form and substance reasonably satisfactory to Co-Administrative Agents, together with such title insurance policies, surveys, appraisals, evidence of insurance, legal opinions, environmental assessments and other documents and certificates as shall be reasonably required by Co-Administrative Agents.

 

(c)            Each of Holdings and Borrower shall (i) cause each Person, upon its becoming a Domestic Subsidiary of Holdings or Borrower (provided that this shall not be construed to constitute consent by any of the Lenders to any transaction not expressly permitted by the terms of this Agreement), promptly to guaranty the Obligations and to grant to Agent, for the benefit of Co-Administrative Agents and Lenders, a security interest in the real, personal and mixed property of such Person to secure the Obligations and (ii) pledge, or cause to be pledged, to Agent, for the benefit of Co-Administrative Agents and Lenders, all of the Stock of each Domestic Subsidiary and the Stock of any Foreign Subsidiary, to secure the Obligations; provided that the pledge of Stock of any Foreign Subsidiary of Borrower or any Domestic Subsidiary shall be limited to sixty-five percent (65%) of all classes of voting Stock of such Subsidiary and one hundred percent (100%) of all other classes of Stock in the case of First-Tier Foreign Subsidiaries and shall not be required for other Foreign Subsidiaries; provided , further , that no Foreign Subsidiary of Borrower shall be required to pledge any Stock or other property pursuant to this Section 2.7 , and; provided , even further , that the certificates representing the Stock of any Foreign Subsidiary that is not a Credit Party shall not be required to be delivered to Agent unless an Event of Default has occurred and is continuing.  The documentation for such guaranty, security and pledge shall be substantially similar to the Loan Documents executed concurrently herewith with such modifications as are reasonably requested by Co-Administrative Agents.

 

2.8            Ratings .

 

Borrower shall at all times maintain a corporate credit rating from S&P and a corporate family rating from Moody’s.

 

SECTION 3.
NEGATIVE COVENANTS

 

Each of Holdings and Borrower jointly and severally agrees that from and after the date hereof and until the Termination Date:

 

3.1            Indebtedness .  Holdings and Borrower shall not and shall not cause or permit Borrower’s Subsidiaries directly or indirectly to create, incur, assume, or otherwise become or remain directly or indirectly liable with respect to any Indebtedness (other than pursuant to a Contingent Obligation permitted under Section 3.4 ) except:

 

(a)            the Obligations;

 

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(b)            (i) intercompany Indebtedness arising from loans made by Borrower to any Domestic Subsidiary that is a Guarantor or made by any Domestic Subsidiary to Borrower or any other Domestic Subsidiary that is a Guarantor and (ii) intercompany Indebtedness arising from loans made by any Foreign Subsidiary to Borrower or any of Borrower’s Subsidiaries and (iii) intercompany Indebtedness arising from loans made by Borrower or any Domestic Subsidiary to any Foreign Subsidiary provided that, in the case of clause (iii), (A) the sum of (1) the aggregate principal amount of such loans described in such clause (iii) made (and not yet repaid) in the then current Fiscal Year plus (2) the aggregate amount of other Investments pursuant to Section 3.3(l)  in such Fiscal Year made by Borrower or any Domestic Subsidiary in any Foreign Subsidiary plus (3) the aggregate amount of Contingent Obligations incurred by Borrower or any Domestic Subsidiary for the benefit of any Foreign Subsidiary in such Fiscal Year pursuant to Sections 3.4(g)  and (h)  which remain outstanding at such time does not exceed the Foreign Investment Basket for such Fiscal Year and (B) no Event of Default exists at the time of the making of any such intercompany loan or would result therefrom;

 

(c)            Indebtedness of Borrower and its Subsidiaries outstanding on the Restatement Date and listed on Schedule 3.1(c)  hereto and any Indebtedness resulting from the refinancing of any such Indebtedness; provided , however , that (i) the principal amount of any such refinancing Indebtedness (as determined as of the date of the incurrence of such refinancing Indebtedness in accordance with GAAP) does not exceed the principal amount of the Indebtedness refinanced thereby on such date plus the amount of (A) any contractually stated call and/or redemption premium, if any, and (B) any transaction fees, in each case, paid in connection with the refinancing of such outstanding Indebtedness, (ii) the weighted average life to maturity of such Indebtedness is not decreased, (iii) the obligor(s) with respect to such refinancing Indebtedness are the same Persons which are obligors with respect to the Indebtedness refinanced thereby, and (iv) in the case of any such refinancing Indebtedness, (A) the covenants, defaults and similar provisions applicable to such refinancing Indebtedness or obligations are no more restrictive in any material respect than the provisions contained in this Agreement and do not conflict with, or cause a breach of, any provision of this Agreement or any other Loan Document and (B) such refinancing Indebtedness is otherwise upon terms and subject to definitive documentation which is customary for Indebtedness of this type incurred by a similarly situated borrower;

 

(d)            Indebtedness of Borrower or any of its Subsidiaries under (i) Interest Rate Agreements entered into to protect Borrower or any of its Subsidiaries against fluctuations in interest rates in respect of Indebtedness otherwise permitted under this Agreement or (ii) Other Hedging Agreements providing protection against fluctuations in currency values or in the price of commodities and raw materials in connection with Borrower’s or any of its Subsidiaries’ operations so long as such Other Hedging Agreements are used for business purposes and not for speculative purposes;

 

(e)            Indebtedness of Borrower or any of its Subsidiaries consisting of (i) Capital Lease Obligations, (ii) debt incurred to finance the cost (including the cost of construction) of acquisition of property and/or (iii) Indebtedness of a Subsidiary of Borrower outstanding on the date such Person becomes a Subsidiary pursuant to a Permitted Acquisition

 

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(other than Indebtedness issued as consideration in, or to provide any portion of the funds utilized to consummate, such Permitted Acquisition) (collectively, “ Purchase Money Indebtedness ”), provided the aggregate principal amount of all Indebtedness described in clauses (i), (ii) and (iii) shall not exceed $10,000,000 at any time outstanding (the “ Purchase Money Basket” );

 

(f)             Contingent Obligations permitted under Section 3.4 ;

 

(g)            unsecured, Subordinated Debt of Holdings evidenced by promissory notes in form and substance reasonably satisfactory to Agent in an aggregate principal amount not exceeding $5,000,000 at any time outstanding and issued solely as consideration for the repurchase or redemption of any Stock of Holdings held by any officers or managers of Holdings or any of its Subsidiaries;

 

(h)            unsecured Indebtedness of Holdings owing to Borrower to evidence any advances made by Borrower to Holdings solely for the purposes set forth in Sections 3.5(a) , and 3.5(c) ;

 

(i)             customary earn-out obligations owing by Holdings or any Subsidiary in connection with any Permitted Acquisition, provided that such Indebtedness shall constitute Subordinated Debt and shall be on such other terms and conditions reasonably satisfactory to Co-Administrative Agents;

 

(j)             unsecured, Subordinated Debt of Holdings or any Subsidiary issued as consideration for any Permitted Acquisition, provided that (i) after such Permitted Acquisition and after giving effect thereto on a pro forma basis, no Default or Event of Default shall then exist, (ii) such Subordinated Debt is on terms and conditions reasonably satisfactory to Co-Administrative Agents, and (iii) such Indebtedness shall not have any principal payments due prior to March 28, 2015;

 

(k)            Indebtedness of any Foreign Subsidiaries to Persons other than Borrower or any Subsidiary in support of the working capital needs of such Foreign Subsidiary not to exceed $10,000,000 in the aggregate at any time outstanding; and

 

(l)             any other unsecured Indebtedness not to exceed $5,000,000 in the aggregate at any time outstanding.

 

3.2            Liens and Related Matters .

 

(a)            No Liens .  Holdings and Borrower shall not and shall not cause or permit Borrower’s Subsidiaries to directly or indirectly create, incur, assume or permit to exist any Lien on or with respect to any property or asset of Holdings, Borrower, or any such Subsidiary, whether now owned or hereafter acquired, or any income or profits therefrom, except Permitted Encumbrances (including, without limitation, those Liens constituting Permitted Encumbrances existing on the Restatement Date and renewals and extensions thereof, as set forth on Schedule 3.2 ).

 

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(b)            No Negative Pledges .  Holdings and Borrower shall not and shall not cause or permit Borrower’s Subsidiaries to directly or indirectly enter into or assume any agreement (other than the Loan Documents) prohibiting the creation or assumption of any Lien upon its properties or assets, whether now owned or hereafter acquired, other than (i) agreements governing Purchase Money Indebtedness or Indebtedness incurred under Section 3.1(k)  otherwise permitted hereby so long as such prohibition or limitation shall apply only against the assets financed thereby and to proceeds thereof; (ii) provisions restricting subletting or assignment under any lease governing a leasehold interest or lease of personal property: (iii) restrictions with respect to a Subsidiary imposed pursuant to any agreement which has been entered into for the sale or disposition of all or substantially all of the equity interests or assets of such Subsidiary, so long as such sale or disposition of all or substantially all of the equity interests or assets of such Subsidiary is permitted under this Agreement; and (iv) restrictions on assignments or sublicensing of licensed Intellectual Property.

 

(c)            No Restrictions on Subsidiary Distributions to Borrower .  Except as provided herein or except pursuant to agreements relating to Indebtedness incurred under Section 3.1(k) , Holdings and Borrower shall not and shall not cause or permit Borrower’s Subsidiaries to directly or indirectly create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any such Subsidiary to: (1) pay dividends or make any other distribution on any of such Person’s Stock owned by Borrower or any other Subsidiary; (2) pay any Indebtedness owed to Borrower or any other Subsidiary; (3) make loans or advances to Borrower or any other Subsidiary; or (4) except in respect of transfers of property or assets financed or licensed pursuant to agreements governing Purchase Money Indebtedness or Licenses permitted hereby, transfer any of its property or assets to Borrower or any other Subsidiary.

 

(d)            Purchase Money Indebtedness .  If requested by a lender of Purchase Money Indebtedness in connection with an extension of credit to Borrower or any Subsidiary which is otherwise permitted by this Agreement, any Lien or security interest of Agent for the benefit of the Lenders in or upon the asset(s) being acquired by Borrower or any Subsidiary and financed by such lender of Purchase Money Indebtedness may be released or expressly subordinated to the Lien or security interest therein of such lender of Purchase Money Indebtedness on terms and conditions reasonably acceptable to Co-Administrative Agents and such lender of Purchase Money Indebtedness, which terms may include an agreement by Co-Administrative Agents not to foreclose upon the asset(s) being financed by the lender of Purchase Money Indebtedness without the prior written consent of such lender of Purchase Money Indebtedness, and the Lenders hereby severally authorize Co-Administrative Agents to enter into such an agreement.

 

3.3            Investments .  Holdings and Borrower shall not and shall not cause or permit Borrower’s Subsidiaries to directly or indirectly make or own any Investment in any Person except:

 

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(a)            Borrower and its Subsidiaries may make and own Investments in Cash Equivalents and hold cash in deposit accounts or securities accounts in the ordinary course of business;

 

(b)            Holdings and its Subsidiaries may make intercompany loans to each other to the extent permitted under Sections 3.1(b) and (h) ;

 

(c)            Borrower and its Subsidiaries may hold the Investments existing on the Restatement Date and identified on Schedule 3.3 , plus any additions thereto otherwise permitted by this Section 3.3 ;

 

(d)            Borrower and its Subsidiaries may acquire and hold Investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business;

 

(e)            Borrower and its Subsidiaries may enter into Interest Rate Agreements and Other Hedging Agreements as permitted under Section 3.1 ;

 

(f)             Borrower and its Subsidiaries may make deposits made in the ordinary course of business consistent with past practices to suppliers or servicers and to secure the performance of leases;

 

(g)            Borrower and its Subsidiaries may incur guarantees permitted by Section 3.4 ;

 

(h)            Borrower and its Subsidiaries may make loans and advances to employees for moving, entertainment, travel and other similar expenses of Borrower and its Subsidiaries in the ordinary course of business not to exceed $2,000,000 in the aggregate at any time outstanding;

 

(i)             (i) Holdings may make Investments in Borrower, (ii) Borrower may make Investments in any Subsidiary that is a Guarantor and any Subsidiary that is a Guarantor may make Investments in any other Subsidiary that is a Guarantor, and (iii) any Subsidiary that is not a Guarantor may make Investments in any other Subsidiary that is not a Guarantor.

 

(j)             Borrower and its Subsidiaries may hold Investments consisting of non-cash consideration received in connection with Asset Dispositions permitted under Section 3.7(b)(iii) ;

 

(k)            Borrower and its Subsidiaries may effect Permitted Acquisitions in accordance with the requirements of Section 3.6 ;

 

(l)             Borrower and its Domestic Subsidiaries may make Investments in any Foreign Subsidiary so long as (i) the sum of (A) the aggregate amount of such Investments made in the then current Fiscal Year plus (B) the aggregate amount of intercompany Indebtedness

 

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pursuant to Section 3.1(b)(iii)  incurred in such Fiscal Year by Foreign Subsidiaries and not yet repaid plus (C) the aggregate amount of Contingent Obligations incurred by Borrower or any Domestic Subsidiary for the benefit of any Foreign Subsidiary in such Fiscal Year pursuant to Sections 3.4(g)  and ( h ) which remain outstanding at such time does not exceed the Foreign Investment Basket for such Fiscal Year and (ii) no Event of Default exists at the time of the making of any such Investment or would result therefrom;

 

(m)           Holdings may hold promissory notes issued by any officer or employee of Holdings or any of its Subsidiaries solely as consideration for the purchase of Holdings Common Stock;

 

(n)            Borrower may create new Subsidiaries in accordance with Section 3.14 so long as any Investment made in any new Foreign Subsidiary is otherwise permitted by this Section 3.3 ;

 

(o)            Borrower and its Subsidiaries may make Investments constituting endorsements for collection or deposit in the ordinary course of business;

 

(p)            Borrower and its Subsidiaries may make other Investments not expressly permitted by clauses (a) through (o) above so long as (i) both before and after giving effect to such Investment on a Pro Forma Basis, Borrower is in compliance with the covenants set forth in Section 4.2 and 4.3 and Borrower has a pro forma Leverage Ratio of not more than 1.5 to 1.0 and (ii) such Investments do not exceed (1) $10,000,000 in the aggregate in any Fiscal Year or (2) $25,000,000 in the aggregate at any time outstanding; and

 

(q)            Borrower and it Subsidiaries may make other Investments not expressly permitted by clauses (a) through (p) above, so long as such Investments do not exceed (i) $5,000,000 in the aggregate in any Fiscal Year or (ii) $12,500,000 in the aggregate at any time outstanding.

 

 

3.4            Contingent Obligations .  Holdings and Borrower shall not and shall not cause or permit Borrower’s Subsidiaries to directly or indirectly create or become or be liable with respect to any Contingent Obligation except:

 

(a)            Letter of Credit Obligations;

 

(b)            those resulting from endorsement of negotiable instruments for collection in the ordinary course of business;

 

(c)            those existing on the Restatement Date and described in Schedule 3.4 ;

 

(d)            those arising under indemnity agreements to title insurers to cause such title insurers to issue to Agent mortgagee title insurance policies;

 

(e)            those arising with respect to customary indemnification obligations or purchase price (including purchase price adjustments as a result of working capital tests)

 

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adjustments incurred in connection with Asset Dispositions permitted hereunder, Permitted Acquisitions or the Acquisition;

 

(f)             those incurred in the ordinary course of business with respect to surety and appeal bonds, performance and return-of-money bonds and other similar obligations;

 

(g)            those incurred with respect to Indebtedness permitted by Section 3.1 , provided that (i) any such Contingent Obligation is subordinated to the Obligations to the same extent as the Indebtedness to which it relates is subordinated to the Obligations, (ii) the sum of (A) the aggregate amount of such Contingent Obligations incurred in such Fiscal Year by Borrower or the Domestic Subsidiaries for the benefit of any Foreign Subsidiary which remain outstanding at such time plus (B) the aggregate amount of Contingent Obligations incurred by Borrower or any Domestic Subsidiary for the benefit of any Foreign Subsidiary in such Fiscal Year pursuant to Section 3.4(h)  which remain outstanding, plus (C) the aggregate amount of intercompany Indebtedness pursuant to Section 3.1(b)(iii)  incurred in such Fiscal Year by Foreign Subsidiaries and not yet repaid plus (D) the aggregate amount of Investments pursuant to Section 3.3(l)  in such Fiscal Year by Borrower or any Domestic Subsidiary in any Foreign Subsidiary does not exceed the Foreign Investment Basket for such Fiscal Year, (iii) except as provided in clause (ii) above, neither Borrower nor any Guarantor may incur Contingent Obligations under this clause (g) in respect of Indebtedness of any Person that is not the Borrower or a Guarantor and no other Subsidiary of Borrower may incur Contingent Obligations under this clause (g) in respect of Indebtedness of any Person that is not a Subsidiary of Borrower and (iv) no Event of Default may exist at the time of the incurrence of such Contingent Obligation or would result therefrom;

 

(h)            those incurred for the benefit of any Subsidiary of Borrower (other than those incurred with respect to Indebtedness permitted by Section 3.1 ) if the primary obligation is not prohibited by this Agreement, provided that (i) any such Contingent Obligation is subordinated to the Obligations to the same extent as the primary obligation to which it relates is subordinated to the Obligations, (ii) the sum of (A) the aggregate amount of such Contingent Obligations incurred in such Fiscal Year by Borrower or any Domestic Subsidiary for the benefit of any Foreign Subsidiary which remain outstanding at such time plus (B) the aggregate amount of Contingent Obligations incurred by Borrower or any Domestic Subsidiary for the benefit of any Foreign Subsidiary in such Fiscal Year pursuant to Section 3.4(g)  which remain outstanding, plus (C) the aggregate amount of intercompany Indebtedness pursuant to Section 3.1(b)(iii)  incurred in such Fiscal Year by Foreign Subsidiaries and not yet repaid plus (D) the aggregate amount of Investments pursuant to Section 3.3(l)  in such Fiscal Year by Borrower or any Domestic Subsidiary in any Foreign Subsidiary does not exceed the Foreign Investment Basket for such Fiscal Year and (iii) no Event of Default exists at the time of the incurrence of such Contingent Obligation or would result therefrom; and

 

(i)             any other Contingent Obligations not expressly permitted by clauses (a) through (h) above, so long as any such other Contingent Obligations, in the aggregate at any time outstanding, do not exceed $4,000,000.

 

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3.5            Restricted Payments .  Holdings and Borrower shall not and shall not cause or permit Borrower’s Subsidiaries to directly or indirectly declare, order, pay, make or set apart any sum for any Restricted Payment, except that:

 

(a)            Borrower may make payments and distributions to Holdings that are used by Holdings to pay federal, state and local income taxes then due and owing and interest and penalties with respect thereto, franchise taxes and other similar licensing expenses, Inside Directors’ fees not to exceed $100,000 per director in any Fiscal Year of Borrower, directors’ fees to directors other than Inside Directors consistent with fees paid by other similarly situated public companies, directors’ and officers’ insurance premiums, claims for indemnification made by an officer or director in accordance with applicable law and pursuant to the organizational documents of the relevant Credit Party, accounting expenses, de minimis corporate expenses, expenses related to filings with the SEC and other Governmental Authorities, in each case incurred in the ordinary course of business; provided that Borrower’s aggregate contribution to taxes as a result of the filing of a consolidated or combined return by Holdings shall not be greater, nor the aggregate receipt of tax benefits less, than they would have been had Borrower not filed a consolidated or combined return with Holdings; provided further that any material refund not applied to future tax liabilities shall be promptly returned by Holdings to Borrower;

 

(b)            Wholly-owned Subsidiaries of Borrower or another Credit Party may make Restricted Payments to their direct parents and non wholly-owned Subsidiaries of Borrower or another Credit Party may make Restricted Payments pro rata to the holders of their Stock; provided that, (i) the Borrower may not make Restricted Payments to Holdings under this clause (b) and (ii) Transaction Network Services (Bermuda) Ltd. may not make Restricted Payments to the holders of its Stock so long as it is not a wholly-owned Subsidiary of Borrower or another Credit Party;

 

(c)            Borrower may pay dividends to Holdings to permit Holdings to repurchase Stock owned by employees of Borrower whose employment with Borrower and its Affiliates has been terminated and to repurchase Stock remitted back to Holdings by employees of Borrower with respect to restricted stock units of such employees, provided that such dividend payments shall not exceed $5,000,000 in any fiscal year and provided that no Event of Default exists at the time of such Restricted Payment or would occur as a result thereof (provided that (i) the foregoing proviso shall not apply to amounts expended by Holdings pursuant to this clause (c) solely from (x) cash proceeds received from new issuances of Holdings Common Stock if received substantially contemporaneously with and used solely to effect a redemption of an executive’s Stock and (y) the proceeds of key man life insurance if the proceeds are used to repurchase the Stock described above from a deceased or incapacitated employee or manager, and (ii) Holdings may repurchase Holdings Common Stock from management of Borrower or any Subsidiary through the cancellation of Indebtedness owing by such officer or manager);

 

(d)            To the extent that such payments are Restricted Payments, any payments or distributions made by Holdings or any of its Subsidiaries to employees under Section 2.02(a)(vi) and Section 6.01(e) of the Purchase Agreement (as in effect on the Restatement Date) in an amount not to exceed $2,300,000; and

 

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(e)            In addition to the Stock repurchases permitted by the foregoing clause (c), Borrower may make Restricted Payments to Holdings to permit Holdings to make dividends to its stockholders and repurchase its Stock, so long as such Restricted Payments, when aggregated with all Restricted Payments previously made after the Restatement Date pursuant to this Section 3.5(e) , do not exceed an amount equal to 20% of the sum of (i) cumulative positive Net Income of Borrower and its Subsidiaries for the period from January 1, 2009 through the end of the most recent Fiscal Quarter or Fiscal Year for which Borrower has delivered the financial statements required pursuant to Section 4.5(a)  or (b)   plus (ii) non-cash stock compensation expense as the result of any grant of Stock to any employees or management of Holdings, Borrower or any of their Subsidiaries for such period plus (iii) amortization associated with intangible assets of Holdings, Borrower or any of their Subsidiaries for such period; provided, that (A) any such Restricted Payment may not be made prior to the date which is eighteen months following the Restatement Date, (B) at the time of such Restricted Payment there shall exist no Default or Event of Default, (C) both before and after giving effect to such Restricted Payment on a Pro Forma Basis, Borrower is in compliance with the covenants set forth in Sections 4.2 and 4.3 and has a pro forma Leverage Ratio of not more than 1.5 to 1.0, and (D) after giving effect to such Restricted Payment, at least $15,000,000 of Required Availability would exist.

 

3.6            Restriction on Fundamental Changes .

 

Holdings and Borrower shall not and shall not cause or permit Borrower’s Subsidiaries to directly or indirectly:  (a) amend, modify or waive any term or provision of its organizational documents, including its articles of incorporation, certificates of designations pertaining to preferred stock, by-laws, partnership agreement or operating agreement unless required by law except if such amendment, modification, or waiver could not reasonably be expected to have an adverse effect on Co-Administrative Agents or Lenders or affect in any respect any Liens in favor of Agent and Lenders; (b) enter into any transaction of merger or consolidation except (i) pursuant to a Permitted Acquisition, or (ii) upon not less than five (5) Business Days prior written notice to Agent, any Subsidiary of Borrower may be merged with or into any wholly-owned Subsidiary of Borrower so long as if either such Subsidiary was a Guarantor prior to such merger, the surviving Subsidiary is a Guarantor; (c) liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution); provided that any liquidation, wind-up or dissolution of Transaction Network Services (Bermuda) Ltd. shall be permitted hereunder so long as any assets held by such entity at the time of such liquidation, wind-up or dissolution are disposed of in accordance with Section 3.7 hereof; or (d) acquire by purchase or otherwise all or any substantial part of the business or assets of, or a business line, unit or division of, any other Person except pursuant to the Acquisition or a Permitted Acquisition or any Investment permitted under Section 3.3(p)  or Section 3.3(q) .

 

Notwithstanding the foregoing, Borrower or its Subsidiaries may acquire all or substantially all of the assets or Stock of, or a business line, unit or division of, any Person (the “ Target ”) (in each case, a “ Permitted Acquisition ”) subject to the satisfaction of each of the following conditions or waiver thereof by the Requisite Lenders:

 

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(i)             Each Co-Administrative Agent shall receive at least 15 Business Days’ prior written notice of such proposed Permitted Acquisition, which notice shall include a reasonably detailed description of such proposed Permitted Acquisition;

 

(ii)            such Permitted Acquisition shall only involve a business (a) of the type engaged in by Borrower and its Subsidiaries as of the Restatement Date, (b) substantially similar to the business engaged in by Borrower and its Subsidiaries as of the Restatement Date or (c) that transports on behalf of third parties data communications and which business would not subject either Co-Administrative Agent or any Lender to regulatory or third party approvals in connection with the exercise of its rights and remedies under this Agreement or any other Loan Documents other than approvals applicable to the exercise of such rights and remedies with respect to Borrower prior to such Permitted Acquisition;

 

(iii)           such Permitted Acquisition shall be consensual and shall have been approved by the Target’s board of directors;

 

(iv)           no additional Indebtedness, Guaranteed Indebtedness, Contingent Obligations or other liabilities other than Purchase Money Indebtedness permitted pursuant to Section 3.1(e)(iii)  shall be incurred, assumed or otherwise be reflected on a consolidated balance sheet of Borrower and Target after giving effect to such Permitted Acquisition, except (A) Loans made hereunder, and (B) ordinary course trade payables, accrued expenses and other Indebtedness of the Target to the extent permitted by Section 3.1 or 3.4 ;

 

(v)            (A) both before or after giving effect to the proposed Permitted Acquisition on a Pro Forma Basis, Borrower is in compliance with the financial covenants set forth in Sections 4.2 and 4.3 , and (B)(1) if either before or after giving effect to the proposed Permitted Acquisition on a Pro Forma Basis, Borrower has a pro forma Leverage Ratio of more than 2.0 to 1.0, the aggregate consideration (I) in connection with any single Permitted Acquisition shall not exceed $20,000,000, (II) in connection with Permitted Acquisitions in any Fiscal Year shall not exceed $30,000,000 and (III) in connection with all Permitted Acquisitions since the Restatement Date shall not exceed $75,000,000, or (2) if both before and after giving effect to the proposed Permitted Acquisition on a Pro Forma Basis, Borrower has a pro forma Leverage Ratio of not more than 2.0 to 1.0, the aggregate consideration (I) in connection with any single Permitted Acquisition shall not exceed $30,000,000, and (II) in connection with all Permitted Acquisitions since the Restatement Date shall not exceed $100,000,000, in each case, excluding up to $15,000,000 per acquisition of consideration paid in the form of Holdings Common Stock and including all transaction costs and all Indebtedness, liabilities and Contingent Obligations incurred or assumed in connection therewith or otherwise reflected on a consolidated balance sheet of Borrower and Target.

 

(vi)           the business and assets acquired in such Permitted Acquisition shall be free and clear of all Liens (other than Permitted Encumbrances);

 

(vii)          at or prior to the closing of any Permitted Acquisition, Agent will be granted a first priority perfected Lien (to the extent required by the Collateral Documents and

 

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subject to Permitted Encumbrances) in all assets acquired pursuant thereto or in the assets and Stock of the Target as and to the extent required by Section 2.7(c) , and Holdings and Borrower and the Target shall have executed such documents and taken such actions as may be required by Agent in connection therewith;

 

(viii)         concurrently with delivery of the notice referred to in clause (i)  above, Borrower shall have delivered to each Co-Administrative Agent, in form and substance reasonably satisfactory to Co-Administrative Agents:

 

(A)           a pro forma consolidated balance sheet, income statement and cash flow statement of Holdings and its Subsidiaries (the “ Acquisition Pro Forma ”), based on recent financial statements, which shall be complete and shall fairly present in all material respects the assets, liabilities, financial condition and results of operations of Holdings and its Subsidiaries in accordance with GAAP consistently applied, but taking into account such Permitted Acquisition and the funding of all Loans in connection therewith, and such Acquisition Pro Forma shall reflect that (x) average daily Required Availability for the 60-day period preceding the consummation of such Permitted Acquisition would have exceeded $5,000,000 on a pro forma basis (after giving effect to such Permitted Acquisition and all Loans funded in connection therewith as if made on the first day of such period) and the Acquisition Projections (as hereinafter defined) shall reflect that such Required Availability of $5,000,000 shall continue for at least 60 days after the consummation of such Permitted Acquisition and (y) on a pro forma basis, no Event of Default has occurred and is continuing or would result after giving effect to such Permitted Acquisition and Holdings and its Subsidiaries would have been in compliance with the financial covenants set forth in Section 4  for the four quarter period reflected in the Compliance, Pricing, and Excess Cash Certificate most recently delivered to Agent pursuant to Section 4.4(l)  prior to the consummation of such Permitted Acquisition (after giving effect to such Permitted Acquisition and all Loans funded in connection therewith as if made on the first day of such period);

 

(B)            solely in respect of any Permitted Acquisition where the total aggregate consideration exceeds $10,000,000, projections covering the 1 year period commencing on the date of such Permitted Acquisition setting forth in form and substance reasonably satisfactory to Co-Administrative Agents the anticipated results of operations of the Target and Holdings and its Subsidiaries (the “ Acquisition Projections ”) based upon historical financial data for the Target of a recent date reasonably satisfactory to Co-Administrative Agents; which Acquisition Projections shall evidence that on a pro forma basis, after giving effect to any add-backs approved by Co-Administrative Agents, (i) EBITDA for the four quarter period immediately following such Permitted Acquisition will be at least $1 greater than if such acquisition had not occurred and (ii) Holdings and its Subsidiaries shall continue to be in compliance with the financial covenants set forth in Section 4 for the 1 year period thereafter;

 

(C)            a certificate of the chief financial officer (or another officer acceptable to Co-Administrative Agents) of Borrower to the effect that:  (v) Holdings and its Subsidiaries when taken as a whole will be Solvent upon the consummation of the Permitted Acquisition; (w) the Acquisition Pro Forma fairly presents in all material respects the financial

 

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condition of Holdings and its Subsidiaries (on a consolidated basis) as of the date thereof after giving effect to the Permitted Acquisition; (y) the Acquisition Projections are a reasonable estimate of the future financial performance of Holdings and its Subsidiaries subsequent to the date thereof based upon the historical performance of Holdings and its Subsidiaries and Target and (z) Holdings and its Subsidiaries have completed their due diligence investigation with respect to the Target and such Permitted Acquisition, which investigation was conducted in a manner similar to that which would have been conducted by a prudent purchaser of a comparable business and the results of which investigation were delivered to each Co-Administrative Agent;

 

(ix)            at least five (5) Business Days prior to the date of such Permitted Acquisition, each Co-Administrative Agent shall have received, in form and substance reasonably satisfactory to Co-Administrative Agents, copies of the acquisition agreement and related agreements and instruments, and all opinions, certificates, lien search results, copies of all environmental reports and memoranda related thereto to the extent prepared in connection with such Permitted Acquisition, and other documents reasonably requested by Co-Administrative Agents, including those specified in Section 2.7 ; and

 

(x)             at the time of such Permitted Acquisition and after giving effect thereto, no Default or Event of Default has occurred and is continuing.

 

3.7            Disposal of Assets or Subsidiary Stock .  Holdings and Borrower shall not and shall not cause or permit any Credit Party to directly or indirectly convey, sell, lease, sublease, transfer or otherwise dispose of, or grant any Person an option to acquire, in one transaction or a series of related transactions, any of its property, business or assets, whether now owned or hereafter acquired, except for (a) sales of  inventory and equipment in good faith to customers for fair value in the ordinary course of business and dispositions of obsolete or worn out equipment not used or useful in the business; (b) Asset Dispositions by Borrower and Subsidiaries of Borrower that are Credit Parties (excluding sales of Accounts and Stock of any of Holdings’ Subsidiaries) if all of the following conditions are met:  (i) the market value of assets sold or otherwise disposed of in any single transaction or series of related transactions does not exceed $7,500,000 and the aggregate market value of assets sold or otherwise disposed of in any Fiscal Year does not exceed $10,000,000; (ii) the consideration received is at least equal to the fair market value of such assets; (iii) at least 85% of the consideration received is cash; (iv) the Net Proceeds of such Asset Disposition are applied as required by Section 1.5(c) ; (v) after giving effect to the Asset Disposition and the repayment of Indebtedness with the proceeds thereof, Holdings and its Subsidiaries are in compliance on a pro forma basis with the covenants set forth in Section 4 recomputed for the most recently ended quarter for which information is available; and (vi) no Default or Event of Default then exists or would result from such Asset Disposition; (c) Investments made to the extent permitted by Section 3.3 ; (d) leases, licenses, subleases and sublicenses in the ordinary course of business and provided such lease, license, sublease or sublicense does not materially interfere with the conduct of the business of such Credit Party or any other Credit Party; (e) liquidations of Cash Equivalents in the ordinary course of business and consistent with past practices; and (f) sales or discounts, in each case without recourse and in the ordinary course of business, of Accounts arising in the ordinary course of business (i) which are overdue, or (ii) which Borrower may reasonably determine are difficult to collect, but in each

 

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case only in connection with the compromise or collection thereof consistent with customary industry practice (and not as part of any bulk sale or financing of receivables).

 

3.8            Transactions with Affiliates .  Holdings and Borrower shall not and shall not cause or permit the other Credit Parties to directly or indirectly enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any management, consulting, investment banking, advisory or other similar services) with any Affiliate or with any director, officer or employee of any Credit Party, except (a) as set forth on Schedule 3.8 , (b) transactions in the ordinary course of and pursuant to the reasonable requirements of the business of any such Credit Party or any of its Subsidiaries and upon fair and reasonable terms that are no less favorable to any such Credit Party or any of its Subsidiaries than would be obtained in a comparable arm’s length transaction with a Person that is not an Affiliate, (c) payment of reasonable compensation to officers and employees for services actually rendered to any such Credit Party or any of its Subsidiaries (including the issuance of Holdings Common Stock to management employees of Borrower or its Subsidiaries), (d) payment of directors’ fees, (e) transactions expressly permitted by Sections 3.3(h)  and 3.5 , and (f) transactions among the Credit Parties expressly permitted by this Agreement.

 

3.9            Compliance with Laws .  Each Credit Party (i) is in compliance with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority (including, without limitation, Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56) and the obligations, conditions and covenants contained in all Contractual Obligations other than those laws, rules, regulations, orders and provisions of such Contractual Obligations the noncompliance with which could not be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect, and (ii) maintains all licenses, qualifications and permits for which the loss, suspension, revocation or failure to obtain or maintain could reasonably be expected to have a Material Adverse Effect.

 

3.10          Conduct of Business .

 

(a)            The Credit Parties shall not and shall not cause or permit their Subsidiaries to directly or indirectly engage in any business other than a business (a) of the type engaged in by Borrower and the other Credit Parties as of the  Restatement Date, (b) substantially similar to the business engaged in by Borrower and the other Credit Parties as of the  Restatement Date, or (c) that transports on behalf of third parties data communications.

 

(b)            Holdings will engage in no business other than (i) its ownership of the Stock of Borrower, (ii) its declaration and payment of the Restricted Payments permitted under Section 3.5 and activities incidental thereto and (iii) the issuance of Stock to the extent not prohibited by Section 3.18 .  Notwithstanding the foregoing, Holdings may engage in those activities that are incidental to (A) the maintenance of its corporate existence in compliance with applicable law, and its status as a publicly held company (B) legal, tax and accounting matters in connection with any of the foregoing activities, (C) entering into, and performing its obligations

 

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under, the Loan Documents to which it is a party and (D) entering into, and performing its obligations under transactions expressly permitted to be entered into by Holdings hereunder.

 

3.11          Changes Relating to Indebtedness and Material Documents .  Holdings and Borrower shall not and shall not cause or permit Borrower’s Subsidiaries to directly or indirectly change or amend the terms of any of its Indebtedness permitted by Section 3.1(c) , (i)  or (j) :  (A) having an outstanding principal balance in excess of $10,000,000 if the effect of such amendment is to: (i) increase the interest rate on such Indebtedness by more than 3.00% over the amount set forth in the original documentation governing such Indebtedness; (ii) accelerate the dates upon which payments of principal or interest are due on or increase the principal amount of or change the redemption or prepayment provisions of such Indebtedness or, directly or indirectly, voluntarily purchase, redeem, defease or prepay any principal of, premium, if any, interest or other amount payable in respect of any such Indebtedness, other than Indebtedness secured by a Permitted Encumbrance if the asset securing such Indebtedness has been sold or otherwise disposed of in accordance with Section 3.7(b) ; (iii) add or make more restrictive any event of default or any covenant with respect to such Indebtedness; or (iv) change or amend any other term if such change or amendment would materially increase the obligations of the obligor or confer additional material rights on the holder of such Indebtedness in a manner adverse to Holdings or any of its Subsidiaries or Lenders; or (B) which is Subordinated Debt if the effect of such amendment is to: (i) change the subordination provisions thereof (or the subordination terms of any guaranty thereof); or (ii) increase the portion of interest payable in cash with respect to any Indebtedness for which interest is payable by the issuance of payment-in-kind notes or is permitted to accrue.

 

(b)            Holdings and Borrower shall not and shall not cause or permit Borrower’s Subsidiaries to, directly or indirectly, change, amend, supplement or otherwise modify (pursuant to a waiver or otherwise) the terms and conditions of any of the Purchase Documents without the prior written consent of Co-Administrative Agents if such change could reasonably be expected to have a material adverse effect on Co-Administrative Agents or Lenders or affect in any material respect any Liens or any Collateral in favor of Agent on behalf of the Lenders.

 

3.12          Fiscal Year .  Each of Holdings and Borrower shall not change its Fiscal Year or permit any of Borrower’s Subsidiaries to change its respective Fiscal Years.

 

3.13          Press Release; Public Offering Materials .  Holdings and Borrower each agrees that neither it nor its Affiliates will issue any press releases or other public disclosure using the name of SunTrust or its affiliates or referring to this Agreement, the other Loan Documents or the Related Transactions Documents without at least two (2) Business Days’ prior notice to SunTrust and without the prior written consent of SunTrust unless, except as set forth below, such Person is required to do so under law and then, in any event, such Person will consult (unless prohibited by law) with SunTrust before issuing such press release or other public disclosure; provided however, such Person need not obtain such written consent to use SunTrust’s name to refer to this Agreement to the extent such disclosure is in connection with a prospectus, proxy statement or other securities filing with the SEC or other Governmental Authority.

 

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3.14          Limitation on Creation of Subsidiaries .  Holdings and Borrower shall not and shall not permit Borrower’s Subsidiaries to directly or indirectly establish, create or acquire any new Subsidiary, except that Borrower or any of its Subsidiaries may acquire, pursuant to a Permitted Acquisition, establish or create one or more wholly-owned Subsidiaries and transfer assets to such newly established or created Subsidiaries so long as the provisions of Section 2.7 are complied with and, in the case of an Investment in one or more Foreign Subsidiaries, the provisions of Section 3.3(1)  have been complied with.

 

3.15          Hazardous Materials .  Holdings and Borrower shall not and shall not cause or permit Borrower’s Subsidiaries to cause or permit a Release of any Hazardous Material on, at, in, under, above, to, from or about any of the Real Estate where such Release would (a) violate in any respect, or form the basis for any Environmental Liabilities by the Credit Parties or any of their Subsidiaries under, any Environmental Laws or Environmental Permits or (b) otherwise adversely impact the value or marketability of any of the Real Estate or any of the Collateral, other than in the case of (a) or (b), such violations or Environmental Liabilities that could not reasonably be expected to have a Material Adverse Effect.

 

3.16          ERISA; Foreign Pension Plans .

 

(a)            Holdings and Borrower shall not and shall not cause or permit any ERISA Affiliate to cause or permit to occur an ERISA Event to the extent such ERISA Event could reasonably be expected to have a Material Adverse Effect.

 

(b)            Holdings and Borrower shall not and shall not cause or permit their Subsidiaries to establish, maintain and operate any Foreign Pension Plan that is not in compliance with all the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority or the respective requirements of the governing documents for such Foreign Pension Plan, where the failure to comply could reasonably be expected to have a Material Adverse Effect.

 

3.17          Sale-Leasebacks .  Holdings and Borrower shall not and shall not cause or permit any of their Subsidiaries to engage in any sale-leaseback, synthetic lease or similar transaction involving any of its assets; provided that Holdings, Borrower or any of their Subsidiaries shall be able to enter into any sale-leaseback transaction involving the Lacey Property so long as the proceeds of such transaction are applied in accordance with Section 1.5 (c).

 

3.18          Capital Stock .

 

(a)            Holdings will not issue (i) any preferred stock other than Permitted Holdings Preferred Stock or (ii) any redeemable common stock; and

 

(b)            Holdings will not permit any Subsidiary of Holdings to issue any Stock (including by way of sales of treasury stock) or any options or warrants to purchase, or securities convertible into, Stock, except (i) for transfers and replacements of the then outstanding shares of Stock,  (ii) for stock splits, stock dividends and additional issuances which do not decrease the percentage ownership of Holdings or any of its Subsidiaries in any class of the Stock of

 

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Borrower or such Subsidiary, (iii) in the case of Foreign Subsidiaries of Borrower, to qualify directors to the extent required under applicable law, (iv) Subsidiaries of Borrower formed after the Restatement Date pursuant to Section 3.14 may issue Stock to Borrower or the respective Subsidiary of Borrower which owns such Stock in accordance with the requirements of Section 3.14 and (v) any Foreign Subsidiary formed after the Restatement Date pursuant to Section 3.14 may issue Stock to Borrower, any Subsidiary and any other investor if the Investment in such Foreign Subsidiary by Borrower and its Subsidiaries is made in accordance with Section 3.3 .  All Stock issued in accordance with this Section 3.18(b)  shall, to the extent required by a Pledge Agreement, be delivered to Agent and pledged pursuant to a Pledge Agreement.

 

3.19          OFAC .  No Credit Party shall, and no Credit Party shall permit any of its Subsidiaries to (i) become a person whose property or interests in property are blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit or Support Terrorism (66 Fed. Reg. 49079(2001), (ii) engage in any dealings or transactions prohibited by Section 2 of such executive order, or be otherwise knowingly associated with any such person in any  manner violative of Section 2, (iii) be a person on the list of Specially Designated Nationals and Blocked Persons (an “ SDN ”) under the U.S. Department of Treasury’s Office of Foreign Assets Control (“ OFAC ”) regulations, or (iv) conduct business with an SDN or in a country in violation of an economic sanctions program of the United States administered by OFAC or any successor agency (a “ Sanctions Program ”).

 

SECTION 4.
FINANCIAL COVENANTS/REPORTING

 

Borrower covenants and agrees that from and after the date hereof until the Termination Date, Borrower shall perform and comply with, and shall cause each of the other Credit Parties to perform and comply with, all covenants in this Section 4 applicable to such Person.

 

4.1            Capital Expenditure Limits .

 

(a)            Borrower and its Subsidiaries on a consolidated basis shall not make Capital Expenditures during any Fiscal Year that exceed the amount set forth in the table below opposite the applicable Fiscal Year (the “ Capex Limit ”); provided , however , that the Capex Limit for each subsequent Fiscal Year referenced below (commencing with the 2010 Fiscal Year) will be increased, if at all, by the positive amount equal to the lesser of (i) 50% of the Capex Limit then in effect for the immediately preceding Fiscal Year (after giving effect to any increase pursuant to this provision), and (ii) the amount (if any), equal to the difference obtained by taking the Capex Limit then in effect for the immediately preceding Fiscal Year (after giving effect to any increase pursuant to this provision) minus the actual amount of any Capital Expenditures expended during such preceding Fiscal Year (the “ Carry Over Amount ”); provided , further , the Carry Over Amount for purposes of measuring compliance herewith for the 2009 Fiscal Year shall be deemed to be $0.

 

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(b)            Notwithstanding the foregoing, Borrower and its Subsidiaries may make additional Capital Expenditures (which Capital Expenditures will not be included in any determination under the foregoing clause (a)) as follows: (i) Capital Expenditures with the Net Proceeds received by Borrower or any of its Subsidiaries from any Asset Disposition so long as such Capital Expenditures are to be made or contractually committed to be made within 180 days (or in the case of Net Proceeds received in respect of the loss, damage, destruction, casualty or condemnation of any assets of Borrower or its Subsidiary, 270 days) following the date of such Asset Disposition or to replace or restore any properties or assets in respect to which such Net Proceeds were paid to the extent such Net Proceeds are not required to be applied to repay the Term Loan pursuant to Section 1.5(c) ; and (ii) Capital Expenditures constituting the Acquisition or any Permitted Acquisition.

 

4.2            Maximum Leverage Ratio .  Holdings, Borrower and its Subsidiaries on a consolidated basis shall have, at the end of each Fiscal Quarter set forth below, a Leverage Ratio as of the last day of such Fiscal Quarter and for the 12-month period then ended of not more than the following:

 

2.80 to 1.0 for the Fiscal Quarter ending March 31, 2009;

3.25 to 1.0 for the Fiscal Quarter ending June 30, 2009;

3.25 to 1.0 for the Fiscal Quarter ending September 30, 2009;

3.00 to 1.0 for the Fiscal Quarter ending December 31, 2009;

3.00 to 1.0 for the Fiscal Quarter ending March 31, 2010;

2.75 to 1.0 for the Fiscal Quarter ending June 30, 2010;

2.75 to 1.0 for the Fiscal Quarter ending September 30, 2010;

2.50 to 1.0 for the Fiscal Quarter ending December 31, 2010;

2.50 to 1.0 for the Fiscal Quarter ending March 31, 2011;

2.25 to 1.0 for the Fiscal Quarter ending June 30, 2011;

2.25 to 1.0 for the Fiscal Quarter ending September 30, 2011;

2.25 to 1.0 for the Fiscal Quarter ending December 31, 2011;

2.00 to 1.0 for each Fiscal Quarter ending thereafter.

 

4.3            Fixed Charge Coverage Ratio.

 

Holdings, Borrower and its Subsidiaries on a consolidated basis shall have a Fixed Charge Coverage Ratio of not less than 1.20 to 1.00 as of the last day of each Fiscal Quarter and for the 12-month period then ended.

 

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4.4            Financial Statements and Other Reports .  Holdings and Borrower will maintain, and cause each of its Subsidiaries to maintain, a system of accounting established and administered in accordance with sound business practices to permit preparation of Financial Statements in conformity with GAAP (it being understood that quarterly Financial Statements are not required to have footnote disclosures).  Borrower will deliver each of the Financial Statements and other reports described below in electronic form to Agent and Agent will deliver, or cause to be delivered, copies thereof to the Lenders:

 

(a)            Quarterly Financials .  Not later than the earlier of (i) 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year of Holdings (commencing with the Fiscal Quarter ended March 31, 2009), and (ii) the public filing with the SEC of Holdings’ Form 10-Q for each such Fiscal Quarter, Borrower will deliver to Agent a copy of such Form 10-Q for such Fiscal Quarter and, to the extent not included therein, (1) the consolidated balance sheets of Holdings and its Subsidiaries, as at the end of such Fiscal Quarter, and the related consolidated statements of income, stockholders’ equity and cash flow for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year of Holdings to the end of such Fiscal Quarter and (2) a report setting forth in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year; provided that the filing with the SEC by Holdings of its quarterly report on Form 10-Q for the applicable Fiscal Quarter within the time period set forth in this Section 4.4(a)  shall satisfy the requirements of this Section 4.4(a) .

 

(b)            Year-End Financials .  Not later than the earlier of (A) 90 days after the end of each Fiscal Year of Holdings (commencing with the Fiscal Year ended December 31, 2009) and (B) the public filing with the SEC of Holdings’ Form 10-K for such Fiscal Year, Borrower will deliver to Agent a copy of such Form 10-K for such Fiscal Year and, to the extent not included therein, (1) the consolidated balance sheets of Holdings and its Subsidiaries, as at the end of such year, and the related consolidated statements of income, stockholders’ equity and cash flow for such Fiscal Year, and (2) a report with respect to the consolidated Financial statements from a firm of Certified Public Accountants selected by Borrower and reasonably acceptable to Agent, which report shall be prepared in accordance with Statement of Auditing Standards No. 58 (the “ Statement ”) “Reports on Audited Financial Statements” and such report shall be “Unqualified” (as such term is defined in such Statement); provided that the filing with the SEC by Holdings of its annual report on Form 10-K for the applicable Fiscal Year within the time period set forth in this Section 4.4(b)  shall satisfy the requirements of this Section 4.4(b) .

 

(c)            Reserved .

 

(d)            Appraisals .  From time to time, if Agent or any Lender determines that obtaining appraisals is necessary in order for Agent or such Lender to comply with applicable laws or regulations, Agent will, at Borrower’s expense, obtain appraisal reports in form and substance and from appraisers satisfactory to Agent stating the then current fair market values of all or any portion of the Real Estate owned by Credit Parties.  In addition to the foregoing, at Borrower’s expense, at any time while and so long as an Event of Default shall have occurred and be continuing, and in the absence of an Event of Default not more than once during each calendar year, Agent may obtain appraisal reports in form and substance and from appraisers

 

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satisfactory to Agent stating the then current market values of all or any portion of the Real Estate and personal property owned by any of the Credit Parties.

 

(e)            Budget .  As soon as available and in any event no later than sixty (60) days after the last day of each of Holdings’ Fiscal Years, Borrower will deliver a Budget of Holdings and its Subsidiaries for the forthcoming Fiscal Year, prepared on a quarter by quarter basis.

 

(f)             Reserved .

 

(g)            Events of Default, Etc .  Promptly upon any Responsible Officer of Holdings or Borrower obtaining knowledge of any of the following events or conditions, Borrower shall deliver copies of all notices given or received by Borrower or Holdings or any of their respective Subsidiaries with respect to any such event or condition and a certificate of Borrower’s chief executive officer specifying the nature and period of existence of such event or condition and what action Holdings, Borrower or any of their respective Subsidiaries has taken, is taking and proposes to take with respect thereto (1) any condition or event that constitutes, or which could reasonably be expected to result in the occurrence of, an Event of Default or Default, (2) any notice that any Person has given to Borrower or any of its Subsidiaries or any other action taken with respect to a claimed default or event or condition of the type referred to in Section 6.1(b) ,  (3) any notice given or action taken in respect of a claimed material default or breach of the Purchase Documents and any claim for indemnification or reimbursement made with respect to the Purchase Documents by any party thereto, or (4) any event or condition that could reasonably be expected to result in any Material Adverse Effect.

 

(h)            Litigation .  Promptly upon any Responsible Officer of Holdings or Borrower obtaining knowledge of (1) the institution of any action, charge, claim, demand, suit, proceeding, petition, governmental investigation, tax audit or arbitration now pending or threatened against or affecting any Credit Party or any of its Subsidiaries or any property of any Credit Party or any of its Subsidiaries (“ Litigation ”) not previously disclosed by Borrower to Co-Administrative Agents or (2) any material development in any action, suit, proceeding, governmental investigation or arbitration at any time pending against or affecting any Credit Party or any of its Subsidiaries or any property of any Credit Party or any of its Subsidiaries which, in each case, could reasonably be expected to have a Material Adverse Effect, Borrower will promptly give notice thereof to each Co-Administrative Agents and provide such other information as may be reasonably available to them to enable Co-Administrative Agents and their counsel to evaluate such matter.

 

(i)             Notice of Corporate and other Changes .  Borrower shall provide prompt written notice of (1) any change after the Restatement Date in the authorized and issued Stock of any Credit Party (other than Holdings) or any Subsidiary of any Credit Party (other than any change in the authorized and issued Stock of such Subsidiary held by Borrower or any of its Subsidiaries) or any amendment to the articles or certificate of incorporation, by-laws, partnership agreement or other organizational documents of any Credit Party, (2) any Subsidiary created or acquired by any Credit Party or any of its Subsidiaries after the Restatement Date,

 

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such notice, in each case, to identify the applicable jurisdictions, capital structures or Subsidiaries, as applicable, (3) any changes to the list of Subsidiaries that are Credit Parties, (4) any amendment, supplement or other modification to any of the Purchase Documents, (5) the occurrence of any ERISA Event that alone, or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of Holdings and its Subsidiaries in an aggregate amount exceeding $2,000,000, and (6) any other event that occurs after the Restatement Date which would cause any of the representations and warranties in Section 5 of this Agreement (except to the extent such representation or warranty is made only as of the Restatement Date) or in any other Loan Document to be untrue or misleading in any material respect.  The foregoing notice requirement shall not be construed to constitute consent by any of the Lenders to any transaction referred to above which is not expressly permitted by the terms of this Agreement.

 

(j)             Customer Concentration .  Borrower shall provide prompt written notice if any customer which was one of Borrower’s and its Subsidiaries’ largest five (5) customers on a consolidated basis in terms of revenue in the prior Fiscal Year gives notice that it intends to cancel its contract or significantly reduce its usage of services (or Borrower has reason to believe that such usage will be so reduced) if as a result thereof such customer could reasonably be expected to cease to be one of Borrower’s and its Subsidiaries’ largest ten (10) customers on a consolidated basis in the then current Fiscal Year.

 

(k)            Other Information .  With reasonable promptness, Borrower will deliver such other information and data with respect to Holdings or any Subsidiary of Holdings as from time to time may be reasonably requested by a Co-Administrative Agent.

 

(l)             Compliance, Pricing and Excess Cash Flow Certificate .  Together with each delivery of Financial Statements of Holdings and its Subsidiaries pursuant to Sections 4.4(a) and (b) , Borrower will deliver a fully and properly completed Compliance, Pricing and Excess Cash Flow Certificate (in substantially the same form as Annex D (the “ Compliance, Pricing and Excess Cash Flow Certificate ”) signed by Borrower’s chief executive officer, chief financial officer or other officer acceptable to Agent; provided that the Excess Cash Flow portion of such certificate is only required to be delivered annually.

 

4.5            Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement .  For purposes of this Agreement, all accounting terms not otherwise defined herein shall have the meanings assigned to such terms in conformity with GAAP.  Financial statements and other information furnished to Agent pursuant to Section 4.4 or any other section (unless specifically indicated otherwise) shall be prepared in accordance with GAAP as in effect at the time of such preparation; provided that to the extent an Accounting Change results in a material change in the method of accounting in the financial statements required to be furnished to Agent hereunder or in the calculation of financial covenants, standards or terms contained in this Agreement, the parties hereto agree to enter into good faith negotiations to amend such provisions so as equitably to reflect such changes to the end that the criteria for evaluating the financial condition and performance of the Credit Parties will be the same after such changes as they were before such changes; and if the parties fail to agree on the amendment of such

 

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provisions, Borrower will furnish financial statements in accordance with such changes but shall provide calculations for all financial covenants, perform all financial covenants and otherwise observe all financial standards and terms in accordance with applicable accounting principles and practices in effect immediately prior to such changes; provided further that Borrower shall prepare footnotes to the Financial Statements required to be delivered hereunder that show the differences between the Financial Statements delivered (which reflect such Accounting Changes) and the basis for calculating financial covenant compliance (without reflecting such Accounting Changes).   All such adjustments described in clause (c) of the definition of the term Accounting Changes resulting from expenditures made subsequent to the Restatement Date (including capitalization of costs and expenses or payment of pre-Restatement Date liabilities) shall be treated as expenses in the period the expenditures are made.

 

SECTION 5.
REPRESENTATIONS AND WARRANTIES

 

To induce Agent and Lenders to enter into the Loan Documents, to make Loans and to issue or cause to be issued Letters of Credit, Holdings and Borrower, jointly and severally, represent, warrant and covenant to Agent and each Lender that the following statements are and, after giving effect to the Related Transactions and the Acquisition, will remain true, correct and complete until the Termination Date:

 

5.1            Disclosure .  (a)      To the knowledge of any Responsible Officer of Holdings or Borrower, no representation or warranty of any Credit Party contained in this Agreement, the Financial Statements referred to in Section 5.5 , the other Related Transactions Documents or any other document, certificate or written statement furnished to Agent or any Lender by or on behalf of any such Person for use in connection with the Loan Documents or the Related Transactions Documents when taken as a whole contains any untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances in which the same were made.

 

(b)            As of the Restatement Date, immediately prior to giving effect to this Agreement on the Restatement Date, (i) each representation and warranty of any Credit Party set forth in the Existing Credit Agreement was true and correct in all material respects (without duplication of any materiality qualifier contained therein and except with respect to any representation or warranty that was as of a date certain in which case such representation or warranty was true and correct in all material respects as of such date (without duplication of any materiality qualifier contained therein) and (ii) no “Default” or “Event of Default” (as each such term was defined in the Existing Credit Agreement) had occurred and was continuing under or with respect to the Existing Credit Agreement.

 

5.2            No Material Adverse Effect .  Since December 31, 2008, there have been no events or changes in facts or circumstances affecting Holdings or any of its Subsidiaries which had or could reasonably be expected to have a Material Adverse Effect and that have not been disclosed herein or in the attached Disclosure Schedules.

 

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5.3            No Conflict; Governmental Approvals .  The consummation of the Related Transactions does not and will not violate or conflict with any laws, rules, regulations or orders of any Governmental Authority or violate, conflict with, result in a breach of, or constitute a default (with due notice or lapse of time or both) under any Contractual Obligation or organizational documents of Holdings or any of its Subsidiaries except if such violations, conflicts, breaches or defaults have not had and could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.  The execution, delivery and performance by Holdings and Borrower of this Agreement, and by each Credit Party of the other Loan Documents to which it is a party do not require any consent or approval of, registration or filing with, or any action by, any Governmental Authority or any other Person except those as have been obtained or made and are in full force and effect or where the failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

5.4            Organization, Powers, Capitalization and Good Standing .

 

(a)            Organization and Powers .  Holdings and each of its Subsidiaries is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and qualified to do business in all states where such qualification is required except where failure to be so qualified could not reasonably be expected to have a Material Adverse Effect.  The (i) jurisdiction of organization of Holding and each of its Subsidiaries and (ii) jurisdictions in which Holdings and each of its Subsidiaries is as of the Restatement Date qualified to do business are set forth on Schedule 5.4(a) .  Holdings and each of its Subsidiaries has all requisite organizational power and authority to own and operate its properties, to carry on its business as now conducted and proposed to be conducted, to enter into each Related Transactions Document to which it is a party and to incur the Obligations, grant liens and security interests in the Collateral and carry out the Related Transactions.  As of the Restatement Date, the Subsidiaries of Holdings that are Credit Parties are indicated as such on Schedule 5.4(a) .

 

(b)            Capitalization .  As of the Restatement Date:  (i) the authorized Stock of Holdings and each of its Subsidiaries is as set forth on Schedule 5.4(b) ; (ii) all issued and outstanding Stock of Holdings and each of its Subsidiaries is duly authorized and validly issued, fully paid and nonassessable, and such Stock was issued in compliance in all material respects with all applicable state, federal and foreign laws concerning the issuance of securities; (iii) all issued and outstanding Stock of Borrower and each of its Subsidiaries is free and clear of all Liens other than those in favor of Agent for the benefit of Agent and Lenders; (iv) the identity of the holders of the Stock of each of Borrower and its Subsidiaries and the percentage of their fully-diluted ownership of the Stock of each of Borrower and its Subsidiaries is set forth on Schedule 5.4(b) ; and (v) no Stock of Borrower or any of its Subsidiaries, other than those described above, are issued and outstanding.  Except as provided in Schedule 5.4(b) , as of the Restatement Date, there are no preemptive or other outstanding rights, options, warrants, conversion rights or similar agreements or understandings for the purchase or acquisition from Holdings or any of its Subsidiaries of any Stock of any such entity.

 

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(c)            Binding Obligation .  This Agreement is, and the other Related Transactions Documents when executed and delivered will be, the legally valid and binding obligations of the applicable parties thereto, each enforceable against each of such parties, as applicable, in accordance with their respective terms except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and the effects of general principles of equity.

 

5.5            Financial Statements and Budget .  All Financial Statements concerning Holdings, Borrower and their respective Subsidiaries which have been or will hereafter be furnished to Agent pursuant to this Agreement have been or will be prepared in accordance with GAAP consistently applied (except as disclosed therein) and do or will present fairly in all material respects the financial condition of the entities