Exhibit 10.1
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CREDIT AGREEMENT
by and among
ORION HEALTHCORP, INC.
and
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
as Borrowers,
THE LENDERS THAT ARE SIGNATORIES HERETO
as the Lenders,
and
WELLS FARGO FOOTHILL, INC.
as the Arranger and Administrative Agent
Dated as of December 1, 2006
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement"), is entered into as
of December 1, 2006, by and among the lenders identified on the
signature pages
hereof (such lenders, together with their respective successors and
permitted
assigns, are referred to hereinafter each individually as a
"Lender" and
collectively as the "Lenders"), WELLS FARGO FOOTHILL, INC., a
California
corporation, as the arranger and administrative agent for the
Lenders (in such
capacity, together with its successors and assigns in such
capacity, "Agent"),
Orion HealthCorp, Inc., a Delaware corporation ("Parent"), and each
of Parent's
Subsidiaries identified on the signature pages hereof (such
Subsidiaries,
together with Parent, are referred to hereinafter each individually
as a
"Borrower", and individually and collectively, jointly and
severally, as the
"Borrowers").
The parties agree as follows:
1.
DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. Capitalized terms used in this Agreement shall
have
the meanings specified therefor on Schedule 1.1.
1.2 Accounting Terms. All accounting terms not specifically
defined
herein shall construed in accordance with GAAP. When used herein,
the term
"financial statements" shall include the notes and schedules
thereto. Whenever
the term "Borrowers" or the term "Parent" is used in respect of a
financial
covenant or a related definition, it shall be understood to mean
Parent and its
Subsidiaries on a consolidated basis, unless the context clearly
requires
otherwise.
1.3 Code. Any terms used in this Agreement that are defined in the
Code
shall be construed and defined as set forth in the Code unless
otherwise defined
herein; provided, however, that to the extent that the Code is used
to define
any term herein and such term is defined differently in different
Articles of
the Code, the definition of such term contained in Article 9 of the
Code shall
govern.
1.4 Construction. Unless the context of this Agreement or any
other
Loan Document clearly requires otherwise, references to the plural
include the
singular, references to the singular include the plural, the terms
"includes"
and "including" are not limiting, and the term "or" has, except
where otherwise
indicated, the inclusive meaning represented by the phrase
"and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in
this Agreement
or any other Loan Document refer to this Agreement or such other
Loan Document,
as the case may be, as a whole and not to any particular provision
of this
Agreement or such other Loan Document, as the case may be. Section,
subsection,
clause, schedule, and exhibit references herein are to this
Agreement unless
otherwise specified. Any reference herein or in any other Loan
Document to the
satisfaction or repayment in full of the Obligations shall mean the
repayment in
full in cash (or cash collateralization in accordance with the
terms hereof) of
all Obligations other than contingent indemnification Obligations
for which no
claim has been threatened or asserted or can be reasonably
identified based on
the then-known facts and circumstances and other than any Bank
Product
Obligations that, at such time, are allowed by the applicable Bank
Product
Provider to remain outstanding and are not required to be repaid or
cash
collateralized pursuant to the provisions of this Agreement. Any
reference in
this Agreement or in any other Loan Document to any agreement,
instrument, or
document shall include all alterations, amendments, changes,
extensions,
modifications, renewals, replacements, substitutions, joinders, and
supplements,
thereto and thereof, as applicable (subject to any restrictions on
such
alterations, amendments, changes, extensions, modifications,
renewals,
replacements, substitutions, joinders, and supplements set forth
herein). Any
reference herein to any Person shall be construed to include such
Person's
successors and assigns. Any requirement of a writing contained
herein or in any
other Loan Document shall be satisfied by the transmission of a
Record and any
Record so transmitted shall constitute a representation and
warranty as to the
accuracy and completeness of the information contained therein.
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1.5 Schedules and Exhibits. All of the schedules and exhibits
attached
to this Agreement shall be deemed incorporated herein by
reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolver
Advances.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender with a Revolver
Commitment agrees
(severally, not jointly or jointly and severally) to make advances
("Advances")
to Borrowers exclusively for Borrowers' working capital needs
(excluding,
however any use in connection with any acquisition, whether or not
constituting
a Permitted Acquisition) in an amount at any one time outstanding
not to exceed
such Lender's Pro Rata Share of an amount equal to the lesser of
(i) the Maximum
Revolver Amount less the Letter of Credit Usage at such time, and
(ii) the
Borrowing Base at such time less the Letter of Credit Usage at such
time.
(b) Anything to the contrary in this Section 2.1
notwithstanding, Agent shall have the right to establish reserves
against the
Borrowing Base in such amounts, and with respect to such matters,
as Agent in
its Permitted Discretion shall deem necessary or appropriate,
including reserves
with respect to (i) sums that Borrowers or their Subsidiaries are
required to
pay under any Section of this Agreement or any other Loan Document
(such as
taxes, assessments, insurance premiums, or, in the case of leased
assets, rents
or other amounts payable under such leases) and have failed to pay,
and (ii)
amounts owing by Borrowers or their Subsidiaries to any Person to
the extent
secured by a Lien on, or trust over, any of the Collateral (other
than a
Permitted Lien), which Lien or trust, in the Permitted Discretion
of Agent
likely would have a priority superior to the Agent's Liens (such as
Liens or
trusts in favor of landlords, warehousemen, carriers, mechanics,
materialmen,
laborers, or suppliers, or Liens or trusts for ad valorem, excise,
sales, or
other taxes where given priority under applicable law) in and to
such item of
the Collateral.
(c) Amounts borrowed pursuant to this Section 2.1 may be repaid
and, subject to the terms and conditions of this Agreement,
reborrowed at any
time during the term of this Agreement. The outstanding principal
amount of the
Advances, together with interest accrued thereon, shall be due and
payable on
the Maturity Date or, if earlier, on the date on which they are
declared due and
payable pursuant to the terms of this Agreement.
2.2 Term
Loans.
(a) Subject to the terms and conditions of this Agreement, on
the Closing Date each Lender with a Term Loan A Commitment agrees
(severally,
not jointly or jointly and severally) to make term loans
(collectively, the
"Term Loan A") to Borrowers in an amount equal to such Lender's Pro
Rata Share
of the Term Loan A Amount. The principal of the Term Loan A shall
be repaid in
monthly installments on the first day of each calendar month as set
forth below:
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Period
Installment Amount
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From
January 1, 2007, through
$26,250
December 31, 2007
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From
January 1, 2008, through
$37,500
December 31, 2008
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From
January 1, 2009, through
$56,250
December 31, 2009
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From January 1, 2010,
until paid in
$75,000
full
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Notwithstanding the foregoing, the outstanding unpaid principal
balance and all
accrued and unpaid interest on the Term Loan A shall be due and
payable on the
earliest of (i) the Maturity Date, (ii) the date of the
acceleration of Term
Loan A in accordance with the terms hereof, and (iii) the date of
termination of
this Agreement pursuant to Section 8.1(c).
(b) Subject to the terms and conditions of this Agreement,
including the conditions precedent set forth in Section 3, each
Lender with a
Term Loan B Commitment (severally, not jointly or jointly and
severally) commits
to make term loans (collectively, the "Term Loan B") to Borrowers
on and after
the date Borrowers deliver to Agent financial statements (without
footnotes and
schedules for the fourth fiscal quarter) for the fiscal quarter
ending December
31, 2006 through and including June 1, 2009, for the exclusive
purpose of any
Borrower making one or more Permitted Acquisitions in an aggregate
amount equal
to such Lender's Pro Rata Share of the Term Loan B Amount; provided
that the
aggregate original principal amount of all loans under Term Loan B
shall not
exceed the Term Loan B Amount. The outstanding principal of the
Term Loan B
shall be repaid in monthly installments on the first day of each
calendar month
as set forth below:
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Period
Installment Amount
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From
January 1, 2007, through
0.584% multiplied by the
December 31, 2007
Aggregate Term Loan B Draw Amount
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From
January 1, 2008, through
0.834% multiplied by the
December 31, 2008
Aggregate Term Loan B Draw Amount
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From
January 1, 2009, through
1.250% multiplied by the
December 31, 2009
Aggregate Term Loan B Draw Amount
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From January 1, 2010,
until paid in
1.667% multiplied by the
full
Aggregate Term Loan B Draw Amount
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Notwithstanding the foregoing, the outstanding unpaid principal
balance and all
accrued and unpaid interest on the Term Loan B shall be due and
payable on the
earliest of (i) the Maturity Date, (ii) the date of the
acceleration of Term
Loan B in accordance with the terms hereof, and (iii) the date of
termination of
this Agreement pursuant to Section 8.1(c). Term Loan A and Term
Loan B shall
hereinafter be referred to collectively as the "Term Loans"). All
principal of,
interest on, and other amounts payable in respect of the Term Loans
shall
constitute Obligations. No amounts paid or prepaid in respect of
the outstanding
principal amount of the Term Loans may be reborrowed.
2.3 Borrowing
Procedures and Settlements.
(a) Procedure for Borrowing. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to
Agent. Unless
Swing Lender is not obligated to make a Swing Loan pursuant to
Section 2.3(b)
below, such notice must be received by Agent no later than 10:00
a.m.
(California time) on the Business Day that is the requested Funding
Date
specifying (i) the amount of such Borrowing, which in the case of a
draw under
Term Loan B must be an amount not less than $1,000,000, (ii) the
requested
Funding Date, which shall be a Business Day, and (iii) in the case
of a draw
under Term Loan B, demonstrating compliance with the conditions
precedent set
forth in Section 3.2; provided, however, that if Swing Lender is
not obligated
to make a Swing Loan as to a requested Borrowing, such notice must
be received
by Agent no later than 10:00 a.m. (California time) on the Business
Day prior to
the date that is the requested Funding Date. At Agent's election,
in lieu of
delivering the above-described written request, any Authorized
Person may give
Agent telephonic notice of such request by the required time. In
such
circumstances, Borrowers agree that any such telephonic notice will
be confirmed
in writing within 24 hours of the giving of such telephonic notice,
but the
failure to provide such written confirmation shall not affect the
validity of
the request.
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(b) Making of Swing Loans. In the case of a request for an
Advance and so long as either (i) the aggregate amount of Swing
Loans made since
the last Settlement Date plus the amount of the requested Advance
does not
exceed $2,000,000, or (ii) Swing Lender, in its sole discretion,
shall agree to
make a Swing Loan notwithstanding the foregoing limitation, Swing
Lender shall
make an Advance in the amount of such Borrowing (any such Advance
made solely by
Swing Lender pursuant to this Section 2.3(b) being referred to as a
"Swing Loan"
and such Advances being referred to collectively as "Swing Loans")
available to
Borrowers on the Funding Date applicable thereto by transferring
immediately
available funds to Borrowers' Designated Account. Each Swing Loan
shall be
deemed to be an Advance hereunder and (except as set forth in
Section 2.3(a))
shall be subject to all the terms and conditions applicable to
other Advances,
except that all payments on any Swing Loan shall be payable to
Swing Lender
solely for its own account. Subject to the provisions of Section
2.3(d)(ii),
Swing Lender shall not make and shall not be obligated to make any
Swing Loan if
Swing Lender has actual knowledge that (i) one or more of the
applicable
conditions precedent set forth in Section 3 will not be satisfied
on the
requested Funding Date for the applicable Borrowing, or (ii) the
requested
Borrowing would exceed the Availability on such Funding Date. Swing
Lender shall
not otherwise be required to determine whether the applicable
conditions
precedent set forth in Section 3 have been satisfied on the Funding
Date
applicable thereto prior to making any Swing Loan. The Swing Loans
shall be
secured by the Agent's Liens, constitute Obligations hereunder, and
bear
interest at the rate applicable from time to time to Advances that
are Base
Rate Loans.
(c) Making
of Loans.
(i) In the event that Swing Lender is not obligated to
make a Swing Loan, then promptly after receipt of a request for a
Borrowing
pursuant to Section 2.3(a), Agent shall notify the Lenders, not
later than 1:00
p.m. (California time) on the Business Day immediately preceding
the Funding
Date applicable thereto, by telecopy, telephone, or other similar
form of
transmission, of the requested Borrowing. Each Lender shall make
the amount of
such Lender's Pro Rata Share of the requested Borrowing available
to Agent in
immediately available funds, to Agent's Account, not later than
10:00 a.m.
(California time) on the Funding Date applicable thereto. After
Agent's receipt
of the proceeds of such Advances or Term Loan B, as the case may
be, Agent shall
make the proceeds thereof available to Administrative Borrower on
the applicable
Funding Date by transferring immediately available funds equal to
such proceeds
received by Agent to Administrative Borrower's Designated Account;
provided,
however, that, subject to the provisions of Section 2.3(d)(ii),
Agent shall not
request any Lender to make, and no Lender shall have the obligation
to make, any
Advance or Term Loan B, as the case may be, if Agent shall have
actual knowledge
that (1) one or more of the applicable conditions precedent set
forth in Section
3 will not be satisfied on the requested Funding Date for the
applicable
Borrowing unless such condition has been waived, or (2) the
requested Borrowing
would exceed the Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender prior to
9:00 a.m. (California time) on the date of a Borrowing, that such
Lender will
not make available as and when required hereunder to Agent for the
account of
Borrowers the amount of that Lender's Pro Rata Share of the
Borrowing, Agent may
assume that each Lender has made or will make such amount available
to Agent in
immediately available funds on the Funding Date and Agent may (but
shall not be
so required), in reliance upon such assumption, make available to
Borrowers on
such date a corresponding amount. If and to the extent any Lender
shall not have
made its full amount available to Agent in immediately available
funds and Agent
in such circumstances has made available to Borrowers such amount,
that Lender
shall on the Business Day following such Funding Date make such
amount available
to Agent, together with interest at the Defaulting Lender Rate for
each day
during such period. A notice submitted by Agent to any Lender with
respect to
amounts owing under this subsection shall be conclusive, absent
manifest error.
If such amount is so made available, such payment to Agent shall
constitute such
Lender's Advance or portion of Term Loan B, as the case may be, on
the date of
Borrowing for all purposes of this Agreement. If such amount is not
made
available to Agent on the Business Day following the Funding Date,
Agent will
notify Administrative Borrower of such failure to fund and, upon
demand by
Agent, Borrowers shall pay such amount to Agent for Agent's
account, together
with interest thereon for each day elapsed since the date of such
Borrowing, at
a rate per annum equal to the interest rate applicable at the time
to the
Advances or Term Loan B, as the case may be, composing such
Borrowing. The
failure of any Lender to make any Advance on any Funding Date shall
not relieve
any other Lender of any obligation hereunder to make an Advance or
fund its
portion of Term Loan B, as the case may be, on such Funding Date,
but no Lender
shall be responsible for the failure of any other Lender to make
the Advance or
fund its portion of Term Loan B, as the case may be, to be made by
such other
Lender on any Funding Date.
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(iii) Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrowers to Agent for the
Defaulting
Lender's benefit, and, in the absence of such transfer to the
Defaulting Lender,
Agent shall transfer any such payments to each other non-Defaulting
Lender
member of the Lender Group ratably in accordance with their
Commitments (but
only to the extent that such Defaulting Lender's Advance or Term
Loan B, as the
case may be, was funded by the other members of the Lender Group)
or, if so
directed by Administrative Borrower and if no Default or Event of
Default had
occurred and is continuing (and to the extent such Defaulting
Lender's Advance
or Term Loan B, as the case may be, was not funded by the Lender
Group), retain
same to be re-advanced to Borrowers as if such Defaulting Lender
had made
Advances or a draw under Term Loan B, as the case may be, to
Borrowers. Subject
to the foregoing, Agent may hold and, in its Permitted Discretion,
re-lend to
Borrowers for the account of such Defaulting Lender the amount of
all such
payments received and retained by Agent for the account of such
Defaulting
Lender. Solely for the purposes of voting or consenting to matters
with respect
to the Loan Documents, such Defaulting Lender shall be deemed not
to be a
"Lender" and such Lender's Commitment shall be deemed to be zero.
This Section
shall remain effective with respect to such Lender until (x) the
Obligations
under this Agreement shall have been declared or shall have become
immediately
due and payable, (y) the non-Defaulting Lenders, Agent, and
Administrative
Borrower shall have waived such Defaulting Lender's default in
writing, or (z)
the Defaulting Lender makes its Pro Rata Share of the applicable
Advance or Term
Loan B, as the case may be, and pays to Agent all amounts owing by
Defaulting
Lender in respect thereof. The operation of this Section shall not
be construed
to increase or otherwise affect the Commitment of any Lender, to
relieve or
excuse the performance by such Defaulting Lender or any other
Lender of its
duties and obligations hereunder, or to relieve or excuse the
performance by
Borrowers of their duties and obligations hereunder to Agent or to
the Lenders
other than such Defaulting Lender. Any such failure to fund by any
Defaulting
Lender shall constitute a material breach by such Defaulting Lender
of this
Agreement and shall entitle Administrative Borrower at its option,
upon written
notice to Agent, to arrange for a substitute Lender to assume the
Commitment of
such Defaulting Lender, such substitute Lender to be acceptable to
Agent in its
Permitted Discretion. In connection with the arrangement of such a
substitute
Lender, the Defaulting Lender shall have no right to refuse to be
replaced
hereunder, and agrees to execute and deliver a completed form of
Assignment and
Acceptance in favor of the substitute Lender (and agrees that it
shall be deemed
to have executed and delivered such document if it fails to do so)
subject only
to being repaid its share of the outstanding Obligations (other
than Bank
Product Obligations, but including an assumption of its Pro Rata
Share of the
Risk Participation Liability) without any premium or penalty of any
kind
whatsoever; provided however, that any such assumption of the
Commitment of such
Defaulting Lender shall not be deemed to constitute a waiver of any
of the
Lender Groups' or Borrowers' rights or remedies against any such
Defaulting
Lender arising out of or in relation to such failure to fund.
(d) Protective Advances and Optional Overadvances.
(A) Agent hereby
is authorized by Borrowers
and the Lenders, from time to time in Agent's sole discretion, (A)
after the
occurrence and during the continuance of a Default or an Event of
Default, or
(B) at any time that any of the other applicable conditions
precedent set forth
in Section 3 are not satisfied, to make Advances to Borrowers on
behalf of the
Lenders that Agent, in its Permitted Discretion deems necessary or
desirable
(1) to preserve or protect the Collateral, or any portion thereof,
(2) to
enhance the likelihood of repayment of the Obligations (other than
the Bank
Product Obligations), or (3) to pay any other amount chargeable to
Borrowers
pursuant to the terms of this Agreement, including Lender Group
Expenses and the
costs, fees, and expenses described in Section 9 (any of the
Advances described
in this Section 2.3(d)(i) shall be referred to as "Protective
Advances").
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(B) Any contrary provision of this Agreement
notwithstanding, the
Lenders hereby authorize Agent or Swing Lender, as
applicable, and either Agent or Swing Lender, as applicable, may,
but is not
obligated to, knowingly and intentionally, continue to make
Advances (including
Swing Loans) to Borrowers notwithstanding that an Overadvance
exists or thereby
would be created, so long as (A) after giving effect to such
Advances, the
outstanding Revolver Usage does not exceed the Borrowing Base by
more than
$1,000,000, and (B) after giving effect to such Advances, the
outstanding
Revolver Usage (except for and excluding amounts charged to the
Loan Account for
interest, fees, or Lender Group Expenses) does not exceed the
Maximum Revolver
Amount. In the event Agent obtains actual knowledge that the
Revolver Usage
exceeds the amounts permitted by the immediately foregoing
provisions,
regardless of the amount of, or reason for, such excess, Agent
shall notify the
Lenders as soon as practicable (and prior to making any (or any
additional)
intentional Overadvances (except for and excluding amounts charged
to the Loan
Account for interest, fees, or Lender Group Expenses) unless Agent
determines
that prior notice would result in imminent harm to the Collateral
or its value),
and the Lenders with Revolver Commitments thereupon shall, together
with Agent,
jointly determine the terms of arrangements that shall be
implemented with
Borrowers intended to reduce, within a reasonable time, the
outstanding
principal amount of the Advances to Borrowers to an amount
permitted by the
preceding paragraph. In such circumstances, if any Lender with a
Revolver
Commitment objects to the proposed terms of reduction or repayment
of any
Overadvance, the terms of reduction or repayment thereof shall be
implemented
according to the determination of the Required Lenders. Each Lender
with a
Revolver Commitment shall be obligated to settle with Agent as
provided in
Section 2.3(e) for the amount of such Lender's Pro Rata Share of
any
unintentional Overadvances by Agent reported to such Lender, any
intentional
Overadvances made as permitted under this Section 2.3(d)(ii), and
any
Overadvances resulting from the charging to the Loan Account of
interest, fees,
or Lender Group Expenses.
(C) Each Protective
Advance and each
Overadvance shall be
deemed to be an Advance hereunder, except that no
Protective Advance or Overadvance shall be eligible to be a LIBOR
Rate Loan and
all payments on the Protective Advances shall be payable to Agent
solely for its
own account. The Protective Advances and Overadvances shall be
repayable on
demand, secured by the Agent's Liens, constitute Obligations
hereunder, and bear
interest at the rate applicable from time to time to Advances that
are Base Rate
Loans. The provisions of this Section 2.3(d) are for the exclusive
benefit of
Agent, Swing Lender, and the Lenders and are not intended to
benefit any
Borrower in any way.
(e) Settlement. It is agreed that each Lender's funded portion
of the Advances, Term Loan A and Term Loan B is intended by the
Lenders to
equal, at all times, such Lender's Pro Rata Share of the
outstanding Advances,
Term Loan A and Term Loan B, respectively. Such agreement
notwithstanding,
Agent, Swing Lender, and the other Lenders agree (which agreement
shall not be
for the benefit of any Borrower) that in order to facilitate the
administration
of this Agreement and the other Loan Documents, settlement among
the Lenders as
to the Advances, Term Loan A and Term Loan B, the Swing Loans, and
the
Protective Advances shall take place on a periodic basis in
accordance with the
following provisions:
(i) Agent shall request settlement ("Settlement") with
the Lenders on a weekly basis, or on a more frequent basis if so
determined by
Agent (1) on behalf of Swing Lender, with respect to the
outstanding Swing
Loans, (2) for itself, with respect to the outstanding Protective
Advances, and
(3) with respect to Borrowers' or their Subsidiaries' Collections
received, as
to each by notifying the Lenders by telecopy, telephone, or other
similar form
of transmission, of such requested Settlement, no later than 2:00
p.m.
(California time) on the Business Day immediately prior to the date
of such
requested Settlement (the date of such requested Settlement being
the
"Settlement Date"). Such notice of a Settlement Date shall include
a summary
statement of the amount of outstanding Advances, Term Loan A, Term
Loan B, Swing
Loans, and Protective Advances for the period since the prior
Settlement Date.
Subject to the terms and conditions contained herein (including
Section
2.3(c)(iii)): (y) if a Lender's balance of the Advances (including
Swing Loans
and Protective Advances), Term Loan A, or Term Loan B exceeds such
Lender's
respective Pro Rata Share of the Advances (including Swing Loans
and Protective
Advances), Term Loan A or Term Loan B as of a Settlement Date, then
Agent shall,
by no later than 12:00 p.m. (California time) on the Settlement
Date, transfer
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in immediately available funds to a Deposit Account of such Lender
(as such
Lender may designate), an amount such that each such Lender shall,
upon receipt
of such amount, have as of the Settlement Date, its respective Pro
Rata Share of
the Advances (including Swing Loans and Protective Advances), Term
Loan A and
Term Loan B, and (z) if a Lender's balance of the Advances
(including Swing
Loans and Protective Advances), Term Loan A or Term Loan B is less
than such
Lender's respective Pro Rata Share of the Advances (including Swing
Loans and
Protective Advances), Term Loan A or Term Loan B as of a Settlement
Date, such
Lender shall no later than 12:00 p.m. (California time) on the
Settlement Date
transfer in immediately available funds to the Agent's Account, an
amount such
that each such Lender shall, upon transfer of such amount, have as
of the
Settlement Date, its respective Pro Rata Share of the Advances
(including Swing
Loans and Protective Advances), Term Loan A and Term Loan B. Such
amounts made
available to Agent under clause (z) of the immediately preceding
sentence shall
be applied against the amounts of the applicable Swing Loans or
Protective
Advances and, together with the portion of such Swing Loans or
Protective
Advances representing Swing Lender's Pro Rata Share thereof, shall
constitute
Advances of such Lenders. If any such amount is not made available
to Agent by
any Lender on the Settlement Date applicable thereto to the extent
required by
the terms hereof, Agent shall be entitled to recover for its
account such amount
on demand from such Lender together with interest thereon at the
Defaulting
Lender Rate.
(ii) In determining whether a Lender's balance of the
Advances, Swing Loans, Protective Advances, Term Loan A, and Term
Loan B is less
than, equal to, or greater than such Lender's respective Pro Rata
Share of the
Advances, Swing Loans, Protective Advances, Term Loan A, and Term
Loan B as of a
Settlement Date, Agent shall, as part of the relevant Settlement,
apply to such
balance the portion of payments actually received in good funds by
Agent with
respect to principal, interest, fees payable by Borrowers and
allocable to the
Lenders hereunder, and proceeds of Collateral. To the extent that a
net amount
is owed to any such Lender after such application, such net amount
shall be
distributed by Agent to that Lender as part of such next
Settlement.
(iii) Between Settlement Dates, Agent, to the extent no
Protective Advances or Swing Loans are outstanding, may pay over to
Swing Lender
any payments received by Agent, that in accordance with the terms
of this
Agreement would be applied to the reduction of the Advances, for
application to
Swing Lender's Pro Rata Share of the Advances. If, as of any
Settlement Date,
Collections of Borrowers or their Subsidiaries received since the
then
immediately preceding Settlement Date have been applied to Swing
Lender's Pro
Rata Share of the Advances other than to Swing Loans, as provided
for in the
previous sentence, Swing Lender shall pay to Agent for the accounts
of the
Lenders, and Agent shall pay to the Lenders, to be applied to the
outstanding
Advances of such Lenders, an amount such that each Lender shall,
upon receipt of
such amount, have, as of such Settlement Date, its Pro Rata Share
of the
Advances. During the period between Settlement Dates, Swing Lender
with respect
to Swing Loans, Agent with respect to Protective Advances, and each
Lender
(subject to the effect of agreements between Agent and individual
Lenders) with
respect to the Advances other than Swing Loans and Protective
Advances, shall be
entitled to interest at the applicable rate or rates payable under
this
Agreement on the daily amount of funds employed by Swing Lender,
Agent, or the
Lenders, as applicable.
(f) Notation. Agent shall record on its books the principal
amount of the Advances, Term Loan A and Term Loan B owing to each
Lender,
including the Swing Loans owing to Swing Lender, and Protective
Advances owing
to Agent, and the interests therein of each Lender, from time to
time and such
records shall, absent manifest error, conclusively be presumed to
be correct and
accurate.
(g) Lenders' Failure to Perform. All Advances or Term Loan B
draws, as the case may be (other than Swing Loans and Protective
Advances) shall
be made by the Lenders contemporaneously and in accordance with
their Pro Rata
Shares. It is understood that (i) no Lender shall be responsible
for any failure
by any other Lender to perform its obligation to make any Advance
or Term Loan
B, as the case may be (or other extension of credit) hereunder, nor
shall any
Commitment of any Lender be increased or decreased as a result of
any failure by
any other Lender to perform its obligations hereunder, and (ii) no
failure by
any Lender to perform its obligations hereunder shall excuse any
other Lender
from its obligations hereunder.
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<PAGE>
2.4
Payments.
(a) Payments by Borrowers.
(i) Except as otherwise expressly provided herein, all
payments by Borrowers shall be made to Agent's Account for the
account of the
Lender Group and shall be made in immediately available funds, no
later than
11:00 a.m. (California time) on the date specified herein. Any
payment received
by Agent later than 11:00 a.m. (California time), shall be deemed
to have been
received on the following Business Day and any applicable interest
or fee shall
continue to accrue until such following Business Day.
(ii) Unless Agent receives notice from Administrative
Borrower prior to the date on which any payment is due to the
Lenders that
Borrowers will not make such payment in full as and when required,
Agent may
assume that Borrowers have made (or will make) such payment in full
to Agent on
such date in immediately available funds and Agent may (but shall
not be so
required), in reliance upon such assumption, distribute to each
Lender on such
due date an amount equal to the amount then due such Lender. If and
to the
extent Borrowers do not make such payment in full to Agent on the
date when due,
each Lender severally shall repay to Agent on demand such amount
distributed to
such Lender, together with interest thereon at the Defaulting
Lender Rate for
each day from the date such amount is distributed to such Lender
until the date
repaid.
(b) Apportionment and Application.
(i) So long as no Event of Default has occurred and is
continuing and except as otherwise provided with respect to
Defaulting Lenders,
all principal and interest payments shall be apportioned ratably
among the
Lenders (according to the unpaid principal balance of the
Obligations to which
such payments relate held by each Lender) and all payments of fees
and expenses
(other than fees or expenses that are for Agent's separate account)
shall be
apportioned ratably among the Lenders having a Pro Rata Share of
the type of
Commitment or Obligation to which a particular fee or expense
relates. All
payments to be made hereunder by Borrowers shall be remitted to
Agent and all
(subject to Section 2.4(b)(iv) hereof) such payments, and all
proceeds of
Collateral received by Agent, shall be applied, so long as no Event
of Default
has occurred and is continuing, to reduce the balance of the
Advances
outstanding and, thereafter, to Borrowers (to be wired to the
Designated
Account) or such other Person entitled thereto under applicable
law.
(ii) At any time that an Event of Default has occurred
and is continuing and except as otherwise provided with respect to
Defaulting
Lenders, all payments remitted to Agent and all proceeds of
Collateral received
by Agent shall be applied as follows:
(A) first, to pay any Lender Group Expenses
(including, without limitation, the reasonable attorneys' fees and
costs) or
indemnities then due to Agent under the Loan Documents, until paid
in full,
(B) second, to pay any fees or premiums then due
to Agent under the Loan Documents until paid in full,
(C) third, to pay interest due in respect of all
Protective Advances until paid in full,
(D) fourth, to pay the principal of all
Protective Advances until paid in full,
(E) fifth, ratably to pay any Lender Group
Expenses (including, without limitation, the reasonable attorneys'
fees and
costs) or indemnities then due to any of the Lenders under the Loan
Documents,
until paid in full,
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(F) sixth, ratably to pay any fees or premiums
then due to any of the Lenders under the Loan Documents until paid
in full,
(G) seventh, ratably to pay interest due in
respect of the Advances (other than Protective Advances), the Swing
Loans, and
the Term Loans until paid in full,
(H) eighth, ratably (i) to pay the principal of
all Swing Loans until paid in full, (ii) to pay the principal of
all Advances
until paid in full, (iii) to Agent, to be held by Agent, for the
ratable benefit
of Issuing Lender and those Lenders having a Revolver Commitment,
as cash
collateral in an amount up to 105% of the Letter of Credit Usage,
(iv) to Agent,
to be held by Agent, for the benefit of the Bank Product Providers,
as cash
collateral in an amount up to the amount of the Bank Product
Reserve established
prior to the occurrence of, and not in contemplation of, the
subject Event of
Default, and (v) to pay the outstanding principal balance of Term
Loan A and
then Term Loan B (in the inverse order of the maturity of the
installments due
thereunder) until the Term Loans are paid in full,
(I) ninth, to pay any other Obligations
(including the provision of amounts to Agent, to be held by Agent,
for the
benefit of the Bank Product Providers, as cash collateral in an
amount up to the
amount determined by Agent in its Permitted Discretion as the
amount necessary
to secure Borrowers' and their Subsidiaries' obligations in respect
of Bank
Products), and
(J) tenth, to Borrowers (to be wired to the
Designated Account) or such other Person entitled thereto under
applicable law.
(iii) Agent promptly shall distribute to each Lender,
pursuant to the applicable wire instructions received from each
Lender in
writing, such funds as it may be entitled to receive, subject to a
Settlement
delay as provided in Section 2.3(e).
(iv) In each instance, so long as no Event of Default
has occurred and is continuing, Section 2.4(b)(i) shall not apply
to any payment
made by Borrowers to Agent and specified by Borrowers to be for the
payment of
specific Obligations then due and payable (or prepayable) under any
provision of
this Agreement.
(v) For purposes of Section 2.4(b)(ii), "paid in full"
means payment of all amounts owing under the Loan Documents
according to the
terms thereof, including loan fees, service fees, professional
fees, interest
(and specifically including interest accrued after the commencement
of any
Insolvency Proceeding), default interest, interest on interest, and
expense
reimbursements, whether or not any of the foregoing would be or is
allowed or
disallowed in whole or in part in any Insolvency Proceeding.
(vi) In the event of a direct conflict between the
priority provisions of this Section 2.4 and any other provision
contained in any
other Loan Document, it is the intention of the parties hereto that
such
provisions be read together and construed, to the fullest extent
possible, to be
in concert with each other. In the event of any actual,
irreconcilable conflict
that cannot be resolved as aforesaid, the terms and provisions of
this Section
2.4 shall control and govern.
(c) Mandatory Prepayments.
(i) If, as of the last day of any month (A) that is
other than a day upon which a Term Loan B is being made, (I) the
sum of the
outstanding principal balance of Term Loan A and the outstanding
principal
balance of Term Loan B on such date plus the Revolver Usage on such
date exceeds
(II) the Borrowing Base Multiple multiplied by the TTM EBITDA (the
"Loan Limit"
and such excess being referred to as the "Limiter Excess"), then
Borrowers shall
immediately prepay the Obligations in accordance with Section
2.4(e)(i) in an
aggregate amount equal to the Limiter Excess or (B) that is a day
upon which a
Term Loan B is being made, (I) the sum of the outstanding principal
balance of
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Term Loan A and the outstanding principal balance of Term Loan B on
such date
after giving effect to the Term Loan B being made on such day, plus
the Revolver
Usage on such date exceeds (II) the Acquisition Multiple multiplied
by the TTM
EBITDA (such excess being referred to as the "Term Limiter
Excess"), then
Borrowers shall immediately prepay the Obligations in accordance
with Section
2.4(e)(i) in an aggregate amount equal to the Term Limiter
Excess.
(ii) As promptly as practicable but in no event later
than the end of the next Business Day upon the receipt by Borrowers
or any of
their Subsidiaries of the proceeds of any voluntary or involuntary
sale or
disposition by Borrowers or any of their Subsidiaries of property
or assets
(including casualty losses or condemnations but excluding sales or
dispositions
which qualify as Permitted Dispositions under clauses (a), (b),
(c), or (d) of
the definition of Permitted Dispositions and excluding sales of
contracts),
Borrowers shall prepay the outstanding principal amount of the
Obligations in
accordance with Section 2.4(e)(ii) in an amount equal to 100% of
the Net Cash
Proceeds (including condemnation awards and payments in lieu
thereof) received
by such Person in connection with such sales or dispositions;
provided that, so
long as (A) no Default or Event of Default shall have occurred and
is
continuing, (B) Administrative Borrower shall have given Agent
prior written
notice of Borrowers' intention to apply such monies to the costs of
replacement
of the properties or assets that are the subject of such sale or
disposition,
(C) the monies are held in a cash collateral account in which Agent
has a
perfected first-priority security interest, and (D) Borrowers or
their
Subsidiaries, as applicable, complete such replacement, purchase,
or
construction within 270 days after the initial receipt of such
monies, Borrowers
and their Subsidiaries shall have the option to apply all of such
monies to the
costs of replacement of the property or assets that are the subject
of such sale
or disposition or the costs of purchase or construction of other
assets useful
in the business of Borrowers and their Subsidiaries unless and to
the extent
that such applicable period shall have expired without such
replacement,
purchase or construction being made or completed, in which case,
any amounts
remaining in the cash collateral account shall be paid to Agent and
applied in
accordance with Section 2.4(e)(ii). Nothing contained in this
Section 2.4(c)(ii)
shall permit Borrowers or any of their Subsidiaries to sell or
otherwise dispose
of any property or assets other than in accordance with Section
6.4.
(iii) As promptly as practicable but in no event later
than the end of the next Business Day upon the receipt by Borrowers
or any of
their Subsidiaries of any Extraordinary Receipts, Borrowers shall
prepay the
outstanding principal amount of the Obligations in accordance with
Section
2.4(e)(ii) in an amount equal to 100% of such Extraordinary
Receipts, net of any
reasonable expenses incurred in collecting such Extraordinary
Receipts.
(iv) As promptly as practicable but in no event later
than the end of the next Business Day upon the issuance of any
stock by any of
the Borrowers or any of their Subsidiaries or the issuance or
incurrence by
Borrowers or any of their Subsidiaries of any Indebtedness (other
than
Indebtedness permitted under Section 6.1(a), (b), (c), (d), or
(e)), Borrowers
shall prepay the outstanding principal amount of the Obligations in
accordance
with Section 2.4(e)(ii) in an amount equal to 100% of the Net Cash
Proceeds
received by such Person in connection with such issuance or
incurrence.
Notwithstanding the foregoing in this Section 2.4 (c)(iv), no
prepayment shall
be required from the proceeds of any issuance of equity so long as
no Event of
Default has occurred and is continuing and either (a) the proceeds
of the equity
issuance are used for a Permitted Acquisition, and (b) the Senior
Leverage Ratio
is less that 1.5:1.0 both immediately before and taking into
account the
Permitted Acquisition. The provisions of this Section 2.4(c)(iv)
shall not be
deemed to be implied consent to any such issuance or incurrence
otherwise
prohibited by the terms and conditions of this Agreement.
(v) Within 10 days of delivery to Agent and the Lenders
of audited annual financial statements pursuant to Section 5.3,
commencing with
the delivery to Agent and the Lenders of the financial statements
for Parent's
fiscal year ended 2006 or, if such financial statements are not
delivered to
Agent and the Lenders on the date such statements are required to
be delivered
pursuant to Section 5.3, 10 days after the date such statements are
required to
be delivered to Agent and the Lenders pursuant to Section 5.3,
Borrowers shall
prepay the outstanding principal amount of the Obligations in
accordance with
Section 2.4(e)(ii) in an amount equal to 35% of the Excess Cash
Flow of
Borrowers and their Subsidiaries for such fiscal year.
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<PAGE>
(vi) Immediately upon the receipt by Borrowers or any of
their Subsidiaries of the proceeds of any voluntary or involuntary
sale or
disposition by Borrowers or any of their contracts, Borrowers shall
prepay the
outstanding principal amount of the Obligations in accordance with
Section
2.4(e)(ii) in an amount equal to 100% of the Net Cash Proceeds
received by such
Person in connection with such sales or dispositions. The
provisions of this
Section 2.4(c)(vi) shall not be deemed to be implied consent to any
sale of any
contract otherwise prohibited by the terms and conditions of this
Agreement.
(vii) No mandatory prepayment made pursuant to this
Section 2.4(c) that results in a partial prepayment of the Loans
shall be
subject to the Applicable Prepayment Premium.
(d) Optional Prepayments. The Borrowers may, upon written
notice
to Agent, without premium or penalty, prepay the Term Loans so long
as both
immediately before and after giving effect to any such prepayment,
the Borrowers
have Excess Availability plus Qualified Cash of not less than
$1,000,000. Any
prepayment made under this Section 2.4(d) must be in a minimum
amount of
$500,000, or any multiple of $500,000 in excess thereof. Written
notice of an
intended prepayment of the Term Loans shall specify the amount of
the prepayment
and the Term Loan to which it should be applied, shall be
irrevocable once
given, and shall be given at least 5 Business Days prior to planned
prepayment
date. Any prepayment under this Section 2.4(d) shall be applied to
the
installments due in respect of the applicable Term Loan in the
inverse order of
their maturity. If, in connection with any prepayment made pursuant
to this
Section 2.4(d), this Agreement is terminated prior to the Maturity
Date, the
Borrowers shall pay to the Agent a fee in an amount equal to the
Applicable
Prepayment Premium; provided, that, absent such termination, any
permitted
prepayment of the Term Loans or reduction of the Revolver Usage
shall not reduce
the determination of the Applicable Prepayment Premium that is
otherwise
applicable under this Section 2.4(d).
(e) Application of Payments.
(i) Each prepayment pursuant to Section 2.4(c)(i) shall,
(A) so long as no Event of Default shall have occurred and be
continuing, be
applied, first, to the outstanding principal amount of the Advances
until paid
in full, second, to cash collateralize the Letters of Credit in an
amount equal
to 105% of the then extant Letter of Credit Usage, third, to the
outstanding
principal amount of Term Loan A until paid in full, fourth, to the
outstanding
principal amount of Term Loan B until paid in full and (B) if an
Event of
Default shall have occurred and be continuing, be applied in the
manner set
forth in Section 2.4(b)(ii). Each such prepayment of the Term Loans
shall be
applied against the remaining installments of principal of the Term
Loans in the
inverse order of maturity.
(ii) Each prepayment pursuant to Section 2.4(c)(ii),
2.4(c)(iii), 2.4(c)(iv), 2.4(c)(v), or 2.4(c)(vi) above shall (A)
so long as no
Event of Default shall have occurred and be continuing, first, to
the
outstanding principal amount of the Term Loan A until paid in full,
second, to
the outstanding principal amount of the Term Loan B until paid in
full, third,
to the outstanding principal amount of the Advances until paid in
full, and
fourth, to cash collateralize the Letters of Credit in an amount
equal to 105%
of the then extant Letter of Credit Usage (with a corresponding
permanent
reduction in the Maximum Revolver Amount), and (B) if an Event of
Default shall
have occurred and be continuing, be applied in the manner set forth
in Section
2.4(b)(ii). Each such prepayment of the Term Loans shall be applied
against the
remaining installments of principal of the Term Loans in the
inverse order of
maturity.
2.5 Overadvances. If, at any time or for any reason, the amount
of
Obligations owed by Borrowers to the Lender Group pursuant to
Section 2.1 or
Section 2.12 is greater than any of the limitations set forth in
Section 2.1 or
Section 2.12, as applicable (an "Overadvance"), Borrowers
immediately shall pay
to Agent, in cash, the amount of such excess, which amount shall be
used by
Agent to reduce the Obligations in accordance with the priorities
set forth in
Section 2.4(b). Borrowers promise to pay the Obligations (including
principal,
interest, fees, costs, and expenses) in Dollars in full on the
Maturity Date or,
if earlier, on the date on which the Obligations are declared due
and payable
pursuant to the terms of this Agreement.
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2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations.
(a) Interest Rates. Except as provided in Section 2.6(c), all
Obligations (except for undrawn Letters of Credit and except for
Bank Product
Obligations) that have been charged to the Loan Account pursuant to
the terms
hereof shall bear interest on the Daily Balance thereof as follows
(i) if the
relevant Obligation is an Advance that is a LIBOR Rate Loan, at a
per annum rate
equal to the LIBOR Rate plus the Applicable Margin, (ii) if the
relevant
Obligation is a portion of the Term Loans that is a LIBOR Rate
Loan, at a per
annum rate equal to the LIBOR Rate plus the Applicable Margin,
(iii) if the
relevant Obligation is a portion of the Term Loans that is a Base
Rate Loan, at
a per annum rate equal to the Base Rate plus the Applicable Margin,
and (iv)
otherwise, at a per annum rate equal to the Base Rate plus the
Applicable
Margin.
(b) Letter of Credit Fee. Borrowers shall pay Agent (for the
ratable benefit of the Lenders with a Revolver Commitment, subject
to any
agreements between Agent and individual Lenders), a Letter of
Credit fee (in
addition to the charges, commissions, fees, and costs set forth in
Section
2.12(e)) which shall accrue at a rate equal to 3.75% per annum
times the Daily
Balance of the undrawn amount of all outstanding Letters of
Credit.
(c) Default Rate. Upon the occurrence and during the
continuation of an Event of Default (and at the election of Agent
or the
Required Lenders),
(i) all Obligations (except for undrawn Letters of
Credit and except for Bank Product Obligations) that have been
charged to the
Loan Account pursuant to the terms hereof shall bear interest on
the Daily
Balance thereof at a per annum rate equal to 2 percentage points
above the per
annum rate otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for in Section
2.6(b) shall be increased to 2 percentage points above the per
annum rate
otherwise applicable hereunder.
(d) Payment. Except as provided to the contrary in Section 2.11
or Section 2.13(a), interest, Letter of Credit fees, and all other
fees payable
hereunder shall be due and payable, in arrears, on the first day of
each month
at any time that Obligations or Commitments are outstanding.
Borrowers hereby
authorize Agent, from time to time, without prior notice to
Borrowers, to charge
all interest and fees (when due and payable), all Lender Group
Expenses (as and
when incurred), all charges, commissions, fees, and costs provided
for in
Section 2.12(e) (as and when accrued or incurred), all fees and
costs provided
for in Section 2.11 (as and when accrued or incurred), and all
other payments as
and when due and payable under any Loan Document (including the
amounts due and
payable with respect to the Term Loans and including any amounts
due and payable
to the Bank Product Providers in respect of Bank Products up to the
amount of
the Bank Product Reserve) to Borrowers' Loan Account, which amounts
thereafter
shall constitute Advances hereunder and shall accrue interest at
the rate then
applicable to Advances that are Base Rate Loans. Any interest not
paid when due
shall be compounded by being charged to the Loan Account and shall
thereafter
constitute Advances hereunder and shall accrue interest at the rate
then
applicable to Advances that are Base Rate Loans.
(e) Computation. All interest and fees chargeable under the
Loan
Documents shall be computed on the basis of a 360 day year for the
actual number
of days elapsed. In the event the Base Rate is changed from time to
time
hereafter, the rates of interest hereunder based upon the Base
Rate
automatically and immediately shall be increased or decreased by an
amount equal
to such change in the Base Rate.
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<PAGE>
(f) Intent to Limit Charges to Maximum Lawful Rate. In no event
shall the interest rate or rates payable under this Agreement, plus
any other
amounts paid in connection herewith, exceed the highest rate
permissible under
any law that a court of competent jurisdiction shall, in a final
determination,
deem applicable. Borrowers and the Lender Group, in executing and
delivering
this Agreement, intend legally to agree upon the rate or rates of
interest and
manner of payment stated within it; provided, however, that,
anything contained
herein to the contrary notwithstanding, if said rate or rates of
interest or
manner of payment exceeds the maximum allowable under applicable
law, then, ipso
facto, as of the date of this Agreement, Borrowers are and shall be
liable only
for the payment of such maximum as allowed by law, and payment
received from
Borrowers in excess of such legal maximum, whenever received, shall
be applied
to reduce the principal balance of the Obligations to the extent of
such excess.
2.7 Cash Management.
(a) At all times, Borrowers shall and shall cause each of their
respective Subsidiaries to establish and maintain cash management
services of a
type and on terms satisfactory to Agent at one or more of the banks
set forth on
Schedule 2.7(a) (each a "Cash Management Bank"), and shall request
in writing
and otherwise take such reasonable steps to ensure that all of
their and their
Subsidiaries' Account Debtors, Payors, and other third parties
forward all
Collections (including payment of the amounts owed by them)
directly to such
Cash Management Bank. All payments on Accounts received directly by
any of the
Borrowers shall be held by each Borrower, in trust, for the benefit
of Agent,
until such amounts are deposited into a Cash Management Account. So
long as no
Default or Event of Default has occurred and is continuing,
Administrative
Borrower may amend Schedule 2.7(a) to add or replace a Cash
Management Bank or
Cash Management Account; provided, however, that (i) such
prospective Cash
Management Bank shall be reasonably satisfactory to Agent, and (ii)
prior to the
time of opening of any Cash Management Account (other than a
replacement
Borrower Collection Account), the Administrative Borrower and such
prospective
Cash Management Bank shall have executed and delivered to Agent a
Cash
Management Agreement and Agent shall have received such
documentation as Agent
may reasonably require to evidence the establishment of the
procedures set forth
in this Section 2.7, including, without limitation, copies of
applicable Payor
Notices. Borrowers (or their Subsidiaries, as applicable) shall
close any of
their Deposit Accounts (and establish any such replacement Deposit
Accounts as
may be deemed necessary by Agent in its Permitted Discretion)
promptly and in
any event within 30 days of notice from Agent that the
creditworthiness of any
Cash Management Bank is no longer acceptable in Agent's reasonable
judgment, or
as promptly as practicable and in any event within 60 days of
notice from Agent
that the operating performance, funds transfer, or availability
procedures or
performance of the Cash Management Bank with respect to the Deposit
Accounts or
Agent's liability under any Cash Management Agreement with such
Cash Management
Bank is no longer acceptable in Agent's reasonable judgment.
(b) Without limiting clause (a) above, within 15 days of the
Closing Date, Administrative Borrower shall establish and
thereafter maintain at
all times the following Deposit Accounts (each, a "Cash Management
Account") at
a Cash Management Bank with respect to Collections: (i) one for the
collection
of Governmental Receivables (the "Borrower Collection Account"),
and (ii) one
for the collection of all other Accounts (the "Agent Collection
Account"). The
Borrower Collection Account shall be an account in the name of
Administrative
Borrower and shall be the property of Borrowers. The Agent
Collection Account
shall be in the name of Agent and shall be the sole and exclusive
property of
Agent.
(c) Promptly following the establishment of the Borrower
Collection Account, Borrowers agree to notify all Payors on
Governmental
Receivables in writing (with a copy to Agent) to remit all payments
directly to
the Borrower Collection Account. Borrowers further agree to use
commercially
reasonable efforts to cause all such Payors to remit payments to
the Borrower
Collection Account at all times thereafter. Each Borrower agrees
that it shall
not deposit or cause to be deposited any funds other than payments
on
Governmental Receivables into the Borrower Collection Account.
(d) Following the establishment of each of the Borrower
Collection Account and the Agent Collection Account, Borrowers
shall deposit or
cause to be deposited promptly, and in any event no later than the
first
Business Day after the date of receipt thereof, all Collections
received by
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Borrowers directly in respect of Governmental Receivables into the
Borrower
Collection Account and all other Collections (including those sent
directly by
their Account Debtors to Borrowers or their Subsidiaries) into the
Agent
Collection Account.
(e) Borrowers agree that, upon Agent's request, with respect to
all of Borrowers' Deposit Accounts, other than the Borrower
Collection Account
and each of the disbursement Deposit Accounts set forth on Schedule
2.7(i), (a)
Borrower will cause each Cash Management Bank to establish and
maintain Cash
Management Agreements with Agent and Borrowers, in form and
substance acceptable
to Agent. Each such Cash Management Agreement shall provide, among
other things,
that (i) the Cash Management Bank will comply with any instructions
(each, a
"Cash Disposition Instruction"), originated by Agent directing the
disposition
of the funds in the applicable Deposit Account without further
consent by
Borrowers or their Subsidiaries, as applicable, (ii) the Cash
Management Bank
has no rights of setoff or recoupment or any other claim against
the applicable
Deposit Account, other than for payment of its service fees and
other charges
directly related to the administration of such Deposit Account and
for returned
checks or other items of payment, and (iii) at any time after which
the Agent so
instructs such Cash Management Bank (a "Cash Sweep Instruction"),
it immediately
will forward by daily sweep all amounts in the applicable Deposit
Account to the
Agent's Account. None of the Borrowers shall have any right to or
interest in
Agent's Account. Notwithstanding anything to the contrary contained
herein, the
Agent agrees that it will not send a Cash Sweep Instruction until
the
occurrence, and during the continuation, of an Event of
Default.
(f) Once the Borrower Collection Account is established,
Administrative Borrower shall instruct the applicable Cash
Management Bank,
pursuant to a standing wire transfer instruction, to automatically
transfer at
the end of each Business Day all amounts in the Borrower Collection
Account to
any of Borrowers' other Deposit Accounts that is subject to a Cash
Management
Agreement; provided that at the written direction of Agent, after
occurrence and
during the continuation of a Event of Default, Administrative
Borrower shall
instruct the applicable Cash Management Bank, pursuant to a
standing wire
transfer instruction, to automatically transfer at the end of each
Business Day
all amounts in the Borrower Collection Account to Agent's Account.
Except as
expressly set forth above, no Borrower (including Administrative
Borrower) shall
change or cancel any such automatic transfer order at any time. No
Borrower
(including Administrative Borrower) may, without the prior written
consent of
Agent, change either the identity of the Cash Management Accounts
or the
instructions to each Payor on the related Account to make its
payments to such
account.
(g) Without limiting Borrowers obligations under clause (c)
above, each Borrower shall notify all Payors using forms of notices
approved by
Agent (collectively, the "Payor Notices") to remit payment to the
appropriate
Cash Management Account, as Agent may from time to time reasonably
request. If
any Payor makes payment in respect of any Account to a location
other than the
applicable Cash Management Account (a "Misdirected Payment"), each
Borrower (at
its own cost and expense) shall (i) use its best efforts to
promptly take all
necessary steps to effect collection of such Misdirected Payment
from any other
Person claiming an interest therein or having possession thereof,
(ii) hold such
payment in trust for Agent, (iii) segregate such payment and not
deposit such
payment in such Borrower's own account, nor commingle such payment
with such
Borrower's own funds or other assets, and (iv) deliver such payment
to a Cash
Management Bank for deposit in the applicable Cash Management
Account no later
than the close of Business on the third Business Day after
receipt.
(h) [Reserved].
(i)
Except for the Borrower Collection Account and the
disbursement Deposit Accounts set forth on Schedule 2.7(i),
following the
delivery of the Cash Management Agreements referenced in clause (e)
above,
Borrowers and their respective Subsidiaries shall not maintain any
Deposit
Accounts that are not subject to Control Agreements or Cash
Management
Agreements, as applicable. Borrowers represent and warrant that
each of the
Deposit Accounts set forth on Schedule 2.7(i) is maintained as a
payroll
disbursement account only and that no funds other than those
necessary to fund
payroll are on deposit therein at any time.
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2.8 Crediting Payments. The receipt of any payment item by
Agent
(whether from transfers to Agent by the Cash Management Banks
pursuant to the
Cash Management Agreements or otherwise) shall not be considered a
payment on
account unless such payment item is a wire transfer of immediately
available
federal funds made to the Agent's Account or unless and until such
payment item
is honored when presented for payment. Should any payment item not
be honored
when presented for payment, then Borrowers shall be deemed not to
have made such
payment and interest shall be calculated accordingly. Anything to
the contrary
contained herein notwithstanding, any payment item shall be deemed
received by
Agent only if it is received into the Agent's Account on a Business
Day on or
before 11:00 a.m. (California time). If any payment item is
received into the
Agent's Account on a non-Business Day or after 11:00 a.m.
(California time) on a
Business Day, it shall be deemed to have been received by Agent as
of the
opening of business on the immediately following Business Day.
2.9 Designated Account. Agent is authorized to make the Advances
and
the Term Loans, and Issuing Lender is authorized to issue the
Letters of Credit,
under this Agreement based upon telephonic or other instructions
received from
anyone purporting to be an Authorized Person or, without
instructions, if
pursuant to Section 2.6(d). Administrative Borrower agrees to
establish and
maintain the Designated Account with the Designated Account Bank
for the purpose
of receiving the proceeds of the Advances requested by Borrowers
and made by
Agent or the Lenders hereunder. Unless otherwise agreed by Agent
and
Administrative Borrower, any Advance, Protective Advance, or Swing
Loan
requested by Borrowers and made by Agent or the Lenders hereunder
shall be made
to the Designated Account.
2.10 Maintenance of Loan Account; Statements of Obligations.
Agent
shall maintain an account on its books in the name of Borrowers
(the "Loan
Account") on which Borrowers will be charged with the Term Loan,
all Advances
(including Protective Advances and Swing Loans) made by Agent,
Swing Lender, or
the Lenders to Borrowers or for Borrowers' account, the Letters of
Credit issued
by Issuing Lender for Borrowers' account, and with all other
payment Obligations
hereunder or under the other Loan Documents (except for Bank
Product
Obligations), including, accrued interest, fees and reasonable
expenses, and
Lender Group Expenses. In accordance with Section 2.8, the Loan
Account will be
credited with all payments received by Agent from Borrowers or for
Borrowers'
account, including all amounts received in the Agent's Account from
any Cash
Management Bank. Agent shall render statements regarding the Loan
Account to
Administrative Borrower, including principal, interest, fees, and
including an
itemization of all charges and expenses constituting Lender Group
Expenses
owing, and such statements, absent manifest error, shall be
conclusively
presumed to be correct and accurate and constitute an account
stated between
Borrowers and the Lender Group unless, within 30 days after receipt
thereof by
Administrative Borrower, Administrative Borrower shall deliver to
Agent written
objection thereto describing the error or errors contained in any
such
statements.
2.11 Fees. Borrowers shall pay to Agent, as and when due and
payable
under the terms of the Fee Letter, the fees set forth in the Fee
Letter.
2.12
Letters of Credit.
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of
Borrowers
(each, an "L/C") or to purchase participations or execute
indemnities or
reimbursement obligations (each such undertaking, an "L/C
Undertaking") with
respect to letters of credit issued by an Underlying Issuer (as of
the Closing
Date, the prospective Underlying Issuer is to be Wells Fargo) for
the account of
Borrowers. Each request for the issuance of a Letter of Credit or
the amendment,
renewal, or extension of any outstanding Letter of Credit, shall be
made in
writing by an Authorized Person and delivered to the Issuing Lender
and Agent
via hand delivery, telefacsimile, or other electronic method of
transmission
reasonably in advance of the requested date of issuance, amendment,
renewal, or
extension. Each such request shall be in form and substance
satisfactory to the
Issuing Lender in its Permitted Discretion and shall specify (i)
the amount of
such Letter of Credit, (ii) the date of issuance, amendment,
renewal, or
extension of such Letter of Credit, (iii) the expiration date of
such Letter of
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Credit, (iv) the name and address of the beneficiary thereof (or
the beneficiary
of the Underlying Letter of Credit, as applicable), and (v) such
other
information (including, in the case of an amendment, renewal, or
extension,
identification of the outstanding Letter of Credit to be so
amended, renewed, or
extended) as shall be necessary to prepare, amend, renew, or extend
such Letter
of Credit. If requested by the Issuing Lender, Borrowers also shall
be an
applicant under the application with respect to any Underlying
Letter of Credit
that is to be the subject of an L/C Undertaking. The Issuing Lender
shall have
no obligation to issue a Letter of Credit if any of the following
would result
after giving effect to the issuance of such requested Letter of
Credit:
(i) the Letter of Credit Usage would exceed the
Borrowing Base less the outstanding amount of Advances, or
(ii) the Letter of Credit Usage would exceed $1,000,000,
or
(iii) the Letter of Credit Usage would exceed the
Maximum Revolver Amount less the outstanding amount of Advances
less the Bank
Product Reserve, and less the aggregate amount of reserves, if any,
established
by Agent under Section 2.1(b).
Borrowers and the Lender Group acknowledge and agree that
certain Underlying Letters of Credit may be issued to support
letters of credit
that already are outstanding as of the Closing Date. Each Letter of
Credit (and
corresponding Underlying Letter of Credit) shall be in form and
substance
acceptable to the Issuing Lender (in the exercise of its Permitted
Discretion),
including the requirement that the amounts payable thereunder must
be payable in
Dollars. If Issuing Lender is obligated to advance funds under a
Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement
to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement
not later
than 11:00 a.m., California time, on the date that such L/C
Disbursement is
made, if Administrative Borrower shall have received written or
telephonic
notice of such L/C Disbursement prior to 10:00 a.m., California
time, on such
date, or, if such notice has not been received by Administrative
Borrower prior
to such time on such date, then not later than 11:00 a.m.,
California time, on
the Business Day that Administrative Borrower receives such notice,
if such
notice is received prior to 10:00 a.m., California time, on the
date of receipt,
and, in the absence of such reimbursement, the L/C Disbursement
immediately and
automatically shall be deemed to be an Advance hereunder and,
initially, shall
bear interest at the rate then applicable to Advances that are Base
Rate Loans.
To the extent an L/C Disbursement is deemed to be an Advance
hereunder,
Borrowers' obligation to reimburse such L/C Disbursement shall be
discharged and
replaced by the resulting Advance. Promptly following receipt by
Agent of any
payment from Borrowers pursuant to this paragraph, Agent shall
distribute such
payment to the Issuing Lender or, to the extent that Lenders have
made payments
pursuant to Section 2.12(b) to reimburse the Issuing Lender, then
to such
Lenders and the Issuing Lender as their interests may appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender with a Revolver Commitment
agrees to
fund its Pro Rata Share of any Advance deemed made pursuant to the
foregoing
subsection on the same terms and conditions as if Borrowers had
requested such
Advance and Agent shall promptly pay to Issuing Lender the amounts
so received
by it from the Lenders. By the issuance of a Letter of Credit (or
an amendment
to a Letter of Credit increasing the amount thereof) and without
any further
action on the part of the Issuing Lender or the Lenders with
Revolver
Commitments, the Issuing Lender shall be deemed to have granted to
each Lender
with a Revolver Commitment, and each Lender with a Revolver
Commitment shall be
deemed to have purchased, a participation in each Letter of Credit,
in an amount
equal to its Pro Rata Share of the Risk Participation Liability of
such Letter
of Credit, and each such Lender agrees to pay to Agent, for the
account of the
Issuing Lender, such Lender's Pro Rata Share of any payments made
by the Issuing
Lender under such Letter of Credit. In consideration and in
furtherance of the
foregoing, each Lender with a Revolver Commitment hereby absolutely
and
unconditionally agrees to pay to Agent, for the account of the
Issuing Lender,
such Lender's Pro Rata Share of each L/C Disbursement made by the
Issuing Lender
and not reimbursed by Borrowers on the date due as provided in
Section 2.12(a),
or of any reimbursement payment required to be refunded to
Borrowers for any
reason. Each Lender with a Revolver Commitment acknowledges and
agrees that its
obligation to deliver to Agent, for the account of the Issuing
Lender, an amount
equal to its respective Pro Rata Share of each L/C Disbursement
made by the
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<PAGE>
Issuing Lender pursuant to this Section 2.12(b) shall be absolute
and
unconditional and such remittance shall be made notwithstanding the
occurrence
or continuation of an Event of Default or Default or the failure to
satisfy any
condition set forth in Section 3. If any such Lender fails to make
available to
Agent the amount of such Lender's Pro Rata Share of each L/C
Disbursement made
by the Issuing Lender in respect of such Letter of Credit as
provided in this
Section, such Lender shall be deemed to be a Defaulting Lender and
Agent (for
the account of the Issuing Lender) shall be entitled to recover
such amount on
demand from such Lender together with interest thereon at the
Defaulting Lender
Rate until paid in full.
(c) Each Borrower hereby agrees to indemnify, save, defend, and
hold the Lender Group harmless from any loss, cost, expense, or
liability (other
than with respect to Excluded Taxes), and reasonable attorneys fees
incurred by
the Lender Group arising out of or in connection with any Letter of
Credit;
provided, however, that no Borrower shall be obligated hereunder to
indemnify
for any loss, cost, expense, or liability to the extent that it is
caused by the
gross negligence or willful misconduct of the Issuing Lender or any
other member
of the Lender Group. Each Borrower agrees to be bound by the
Underlying Issuer's
regulations and interpretations of any Underlying Letter of Credit
or by Issuing
Lender's interpretations of any L/C issued by Issuing Lender to or
for such
Borrower's account, even though this interpretation may be
different from such
Borrower's own, and each Borrower understands and agrees that the
Lender Group
shall not be liable for any error, negligence, or mistake, whether
of omission
or commission, in following Borrowers' instructions or those
contained in the
Letter of Credit or any modifications, amendments, or supplements
thereto. Each
Borrower understands that the L/C Undertakings may require Issuing
Lender to
indemnify the Underlying Issuer for certain costs or liabilities
arising out of
claims by Borrowers against such Underlying Issuer. Each Borrower
hereby agrees
to indemnify, save, defend, and hold the Lender Group harmless with
respect to
any loss, cost, expense (including reasonable attorneys fees), or
liability
incurred by the Lender Group under any L/C Undertaking as a result
of the Lender
Group's indemnification of any Underlying Issuer; provided,
however, that no
Borrower shall be obligated hereunder to indemnify for any loss,
cost, expense,
or liability to the extent that it is caused by the gross
negligence or willful
misconduct of the Issuing Lender or any other member of the Lender
Group. Each
Borrower hereby acknowledges and agrees that neither the Lender
Group nor the
Issuing Lender shall be responsible for delays, errors, or
omissions resulting
from the malfunction of equipment in connection with any Letter of
Credit.
(d) Each Borrower hereby authorizes and directs any Underlying
Issuer to deliver to the Issuing Lender all instruments, documents,
and other
writings and property received by such Underlying Issuer pursuant
to such
Underlying Letter of Credit and to accept and rely upon the Issuing
Lender's
instructions with respect to all matters arising in connection with
such
Underlying Letter of Credit and the related application.
(e) Any and all issuance charges, commissions, fees, and costs
incurred by the Issuing Lender (other than with respect to Excluded
Taxes)
relating to Underlying Letters of Credit shall be Lender Group
Expenses for
purposes of this Agreement and immediately shall be reimbursable by
Borrowers to
Agent for the account of the Issuing Lender; it being acknowledged
and agreed by
each Borrower that, as of the Closing Date, the issuance charge
imposed by the
prospective Underlying Issuer is .825% per annum times the undrawn
amount of
each Underlying Letter of Credit, that such issuance charge may be
changed from
time to time, and that the Underlying Issuer also imposes a
schedule of charges
for amendments, extensions, drawings, and renewals.
(f) If by reason of (i) any change after the Closing Date in
any
applicable law, treaty, rule, or regulation or any change in the
interpretation
or application thereof by any Governmental Authority (other than
with respect to
Excluded Taxes), or (ii) compliance by the Underlying Issuer or the
Lender Group
with any direction, request, or requirement (irrespective of
whether having the
force of law) of any Governmental Authority or monetary authority
including,
Regulation D of the Federal Reserve Board as from time to time in
effect (and
any successor thereto):
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<PAGE>
(i) any reserve, deposit, or similar requirement is or
shall be imposed or modified in respect of any Letter of Credit
issued
hereunder, or
(ii) there shall be imposed on the Underlying Issuer or
the Lender Group any other condition regarding any Underlying
Letter of Credit
or any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or
indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or
maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by
the Lender
Group, then, and in any such case, Agent may, at any time within a
reasonable
period after the additional cost is incurred or the amount received
is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand
such amounts
as Agent may specify to be necessary to compensate the Lender Group
for such
additional cost or reduced receipt, together with interest on such
amount from
the date of such demand until payment in full thereof at the rate
then
applicable to Base Rate Loans hereunder. The determination by Agent
of any
amount due pursuant to this Section, as set forth in a certificate
setting forth
the calculation thereof in reasonable detail, shall, in the absence
of manifest
or demonstrable error, be final and conclusive and binding on all
of the parties
hereto.
2.13
LIBOR Option.
(a) Interest and Interest Payment Dates. In lieu of having
interest charged at the rate based upon the Base Rate, Borrowers
shall have the
option (the "LIBOR Option") to have interest on all or a portion of
the Advances
or the Term Loans be charged (whether at the time when made (unless
otherwise
provided herein), upon conversion from a Base Rate Loan to a LIBOR
Rate Loan, or
upon continuation of a LIBOR Rate Loan as a LIBOR Rate Loan) at a
rate of
interest based upon the LIBOR Rate. Interest on LIBOR Rate Loans
shall be
payable on the earliest of (i) the last day of the Interest Period
applicable
thereto, (ii) the date on which all or any portion of the
Obligations are
accelerated pursuant to the terms hereof, or (iii) the date on
which this
Agreement is terminated pursuant to the terms hereof. On the last
day of each
applicable Interest Period, unless Administrative Borrower properly
has
exercised the LIBOR Option with respect thereto, the interest rate
applicable to
such LIBOR Rate Loan automatically shall convert to the rate of
interest then
applicable to Base Rate Loans of the same type hereunder. At any
time that an
Event of Default has occurred and is continuing, Borrowers no
longer shall have
the option to request that Advances or the Term Loans bear interest
at a rate
based upon the LIBOR Rate and Agent shall have the right to convert
the interest
rate on all outstanding LIBOR Rate Loans to the rate then
applicable to Base
Rate Loans hereunder.
(b) LIBOR Election.
(i)
Administrative Borrower may, at any time and from
time to time, so long as no Event of Default has occurred and is
continuing,
elect to exercise the LIBOR Option by notifying Agent prior to
11:00 a.m.
(California time) at least 3 Business Days prior to the
commencement of the
proposed Interest Period (the "LIBOR Deadline"). Notice of
Administrative
Borrower's election of the LIBOR Option for a permitted portion of
the Advances
or the Term Loan and an Interest Period pursuant to this Section
shall be made
by delivery to Agent of a LIBOR Notice received by Agent before the
LIBOR
Deadline, or by telephonic notice received by Agent before the
LIBOR Deadline
(to be confirmed by delivery to Agent of a LIBOR Notice received by
Agent prior
to 5:00 p.m. (California time) on the same day). Promptly upon its
receipt of
each such LIBOR Notice, Agent shall provide a copy thereof to each
of the
affected Lenders.
(ii) Each LIBOR Notice shall be irrevocable and binding
on Borrowers. In connection with each LIBOR Rate Loan, each
Borrower shall
indemnify, defend, and hold Agent and the Lenders harmless against
any loss,
cost, or expense incurred by Agent or any Lender as a result of (A)
the payment
of any principal of any LIBOR Rate Loan other than on the last day
of an
Interest Period applicable thereto (including as a result of an
Event of
Default), (B) the conversion of any LIBOR Rate Loan other than on
the last day
of the Interest Period applicable thereto, or (C) the failure to
borrow,
convert, continue or prepay any LIBOR Rate Loan on the date
specified in any
LIBOR Notice delivered pursuant hereto (such losses, costs, or
expenses,
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<PAGE>
"Funding Losses"). Funding Losses shall, with respect to Agent or
any Lender, be
deemed to equal the amount determined by Agent or such Lender to be
the excess,
if any, of (1) the amount of interest that would have accrued on
the principal
amount of such LIBOR Rate Loan had such event not occurred, at the
LIBOR Rate
that would have been applicable thereto, for the period from the
date of such
event to the last day of the then current Interest Period therefor
(or, in the
case of a failure to borrow, convert, or continue, for the period
that would
have been the Interest Period therefor), minus (2) the amount of
interest that
would accrue on such principal amount for such period at the
interest rate which
Agent or such Lender would be offered were it to be offered, at the
commencement
of such period, Dollar deposits of a comparable amount and period
in the London
interbank market. A certificate of Agent or a Lender delivered to
Administrative
Borrower setting forth any amount or amounts that Agent or such
Lender is
entitled to receive pursuant to this Section 2.13 shall be
conclusive absent
manifest error.
(iii) Borrowers shall have not more than 5 LIBOR Rate
Loans in effect at any given time. Borrowers only may exercise the
LIBOR Option
for LIBOR Rate Loans of at least $500,000 and integral multiples of
$250,000 in
excess thereof.
(c) Conversion. Borrowers may convert LIBOR Rate Loans to Base
Rate Loans at any time; provided, however, that in the event that
LIBOR Rate
Loans are converted or prepaid on any date that is not the last day
of the
Interest Period applicable thereto, including as a result of any
automatic
prepayment through the required application by Agent of proceeds of
Borrowers'
and their Subsidiaries' Collections in accordance with Section
2.4(b) or for any
other reason, including early termination of the term of this
Agreement or
acceleration of all or any portion of the Obligations pursuant to
the terms
hereof, each Borrower shall indemnify, defend, and hold Agent and
the Lenders
and their Participants harmless against any and all Funding Losses
in accordance
with Section 2.13 (b)(ii) above.
(d) Special Provisions Applicable to LIBOR Rate.
(i) The LIBOR Rate may be adjusted by Agent with respect
to any Lender on a prospective basis to take into account any
additional or
increased costs to such Lender of maintaining or obtaining any
eurodollar
deposits or increased costs, in each case, due to changes in
applicable law
occurring subsequent to the commencement of the then applicable
Interest Period,
including changes in tax laws (except changes of general
applicability in
corporate income tax laws) other than with respect to Excluded
Taxes and changes
in the reserve requirements imposed by the Board of Governors of
the Federal
Reserve System (or any successor), excluding the Reserve
Percentage, which
additional or increased costs would increase the cost of funding or
maintaining
loans bearing interest at the LIBOR Rate. In any such event, the
affected Lender
shall give Administrative Borrower and Agent notice of such a
determination and
adjustment and Agent promptly shall transmit the notice to each
other Lender
and, upon its receipt of the notice from the affected Lender,
Administrative
Borrower may, by notice to such affected Lender (y) require such
Lender to
furnish to Administrative Borrower a statement setting forth the
basis for
adjusting such LIBOR Rate and the method for determining the amount
of such
adjustment, or (z) repay the LIBOR Rate Loans with respect to which
such
adjustment is made (together with any amounts due under Section
2.13(b)(ii)).
(ii) In the event that any change in market conditions
or any law, regulation, treaty, or directive, or any change therein
or in the
interpretation of application thereof, other than with respect to
Excluded
Taxes, shall at any time after the date hereof, in the reasonable
opinion of any
Lender, make it unlawful or impractical for such Lender to fund or
maintain
LIBOR Rate Loans or to continue such funding or maintaining, or to
determine or
charge interest rates at the LIBOR Rate, such Lender shall give
notice of such
changed circumstances to Agent and Administrative Borrower and
Agent promptly
shall transmit the notice to each other Lender and (y) in the case
of any LIBOR
Rate Loans of such Lender that are outstanding, the date specified
in such
Lender's notice shall be deemed to be the last day of the Interest
Period of
such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of
such Lender
thereafter shall accrue interest at the rate then applicable to
Base Rate Loans,
and (z) Borrowers shall not be entitled to elect the LIBOR Option
until such
Lender determines that it would no longer be unlawful or
impractical to do so.
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<PAGE>
(e) No Requirement of Matched Funding. Anything to the contrary
contained herein notwithstanding, neither Agent, nor any Lender,
nor any of
their Participants, is required actually to acquire eurodollar
deposits to fund
or otherwise match fund any Obligation as to which interest accrues
at the LIBOR
Rate. The provisions of this Section shall apply as if each Lender
or its
Participants had match funded any Obligation as to which interest
is accruing at
the LIBOR Rate by acquiring eurodollar deposits for each Interest
Period in the
amount of the LIBOR Rate Loans.
2.14 Capital Requirements. If, after the date hereof, any
Lender
determines that (i) the adoption of or change in any law, rule,
regulation or
guideline regarding capital requirements for banks or bank holding
companies, or
any change in the interpretation or application thereof by any
Governmental
Authority charged with the administration thereof, or (ii)
compliance by such
Lender or its parent bank holding company with any guideline,
request or
directive of any such entity regarding capital adequacy (whether or
not having
the force of law), has the effect of reducing the return on such
Lender's or
such holding company's capital as a consequence of such Lender's
Commitments
hereunder to a level below that which such Lender or such holding
company could
have achieved but for such adoption, change, or compliance (taking
into
consideration such Lender's or such holding company's then existing
policies
with respect to capital adequacy and assuming the full utilization
of such
entity's capital) by any amount deemed by such Lender to be
material, then such
Lender may notify Administrative Borrower and Agent thereof.
Following receipt
of such notice, Borrowers agree to pay such Lender on demand the
amount of such
reduction of return of capital as and when such reduction is
determined, payable
within 90 days after presentation by such Lender of a statement in
the amount
and setting forth in reasonable detail such Lender's calculation
thereof and the
assumptions upon which such calculation was based (which statement
shall be
deemed true and correct absent manifest error). In determining such
amount, such
Lender may use any reasonable averaging and attribution
methods.
2.15
Joint and Several Liability of Borrowers.
(a) Each Borrower is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of
the financial
accommodations to be provided by the Lender Group under this
Agreement, for the
mutual benefit, directly and indirectly, of each Borrower and in
consideration
of the undertakings of the other Borrowers to accept joint and
several liability
for the Obligations.
(b) Each Borrower, jointly and severally, hereby irrevocably
and
unconditionally accepts, not merely as a surety but also as a
co-debtor, joint
and several liability with the other Borrowers, with respect to the
payment and
performance of all of the Obligations (including, without
limitation, any
Obligations arising under this Section 2.15), it being the
intention of the
parties hereto that all the Obligations shall be the joint and
several
obligations of each Borrower without preferences or distinction
among them.
(c) If and to the extent that any Borrower shall fail to make
any payment with respect to any of the Obligations as and when due
or to perform
any of the Obligations in accordance with the terms thereof, then
in each such
event the other Borrowers will make such payment with respect to,
or perform,
such Obligation.
(d) The Obligations of each Borrower under the provisions of
this Section 2.15 constitute the absolute and unconditional, full
recourse
Obligations of each Borrower enforceable against each Borrower to
the full
extent of its properties and assets, irrespective of the validity,
regularity or
enforceability of this Agreement or any other circumstances
whatsoever.
(e) Except as otherwise expressly provided in this Agreement,
each Borrower hereby waives notice of acceptance of its joint and
several
liability, notice of any Advances or Letters of Credit issued under
or pursuant
to this Agreement, notice of the occurrence of any Default, Event
of Default, or
of any demand for any payment under this Agreement, notice of any
action at any
time taken or omitted by Agent or Lenders under or in respect of
any of the
Obligations, any requirement of diligence or to mitigate damages
and, generally,
to the extent permitted by applicable law, all demands, notices and
other
formalities of every kind in connection with this Agreement (except
as otherwise
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provided in this Agreement). Each Borrower hereby assents to, and
waives notice
of, any extension or postponement of the time for the payment of
any of the
Obligations, the acceptance of any payment of any of the
Obligations, the
acceptance of any partial payment thereon, any waiver, consent or
other action
or acquiescence by Agent or Lenders at any time or times in respect
of any
default by any Borrower in the performance or satisfaction of any
term,
covenant, condition or provision of this Agreement, any and all
other
indulgences whatsoever by Agent or Lenders in respect of any of the
Obligations,
and the taking, addition, substitution or release, in whole or in
part, at any
time or times, of any security for any of the Obligations or the
addition,
substitution or release, in whole or in part, of any Borrower.
Without limiting
the generality of the foregoing, each Borrower assents to any other
action or
delay in acting or failure to act on the part of any Agent or
Lender with
respect to the failure by any Borrower to comply with any of its
respective
Obligations, including, without limitation, any failure strictly or
diligently
to assert any right or to pursue any remedy or to comply fully with
applicable
laws or regulations thereunder, which might, but for the provisions
of this
Section 2.15 afford grounds for terminating, discharging or
relieving any
Borrower, in whole or in part, from any of its Obligations under
this Section
2.15, it being the intention of each Borrower that, so long as any
of the
Obligations hereunder remain unsatisfied, the Obligations of each
Borrower under
this Section 2.15 shall not be discharged except by performance and
then only to
the extent of such performance. The Obligations of each Borrower
under this
Section 2.15 shall not be diminished or rendered unenforceable by
any winding
up, reorganization, arrangement, liquidation, reconstruction or
similar
proceeding with respect to any Borrower or any Agent or Lender.
(f) Each Borrower represents and warrants to Agent and Lenders
that such Borrower is currently informed of the financial condition
of Borrowers
and of all other circumstances which a diligent inquiry would
reveal and which
bear upon the risk of nonpayment of the Obligations. Each Borrower
further
represents and warrants to Agent and Lenders that such Borrower has
read and
understands the terms and conditions of the Loan Documents. Each
Borrower hereby
covenants that such Borrower will continue to keep informed of
Borrowers'
financial condition, the financial condition of other guarantors,
if any, and of
all other circumstances which bear upon the risk of nonpayment or
nonperformance
of the Obligations.
(g) Each Borrower waives all rights and defenses arising out of
an election of remedies by Agent or any Lender, even though that
election of
remedies, such as a nonjudicial foreclosure with respect to
security for a
guaranteed obligation, has destroyed Agent's or such Lender's
rights of
subrogation and reimbursement against such Borrower (including, if,
for any
reason the laws of the State of California are applied to the Loan
Documents,
subrogation rights have been destroyed by the operation of Section
580(d) of the
California Code of Civil Procedure or otherwise).
(h) To the extent applicable, each Borrower waives all rights
and defenses that such Borrower may have because the Obligations
are secured by
Real Property. This means, among other things:
(i)
Agent and Lenders may collect from such Borrower
without first foreclosing on any Real or Personal Property
Collateral pledged by
Borrowers.
(ii) If Agent or any Lender forecloses on any Real
Property Collateral pledged by Borrowers:
(A) The amount of the Obligations may be reduced
only by the price for which that collateral is sold at the
foreclosure sale,
even if the collateral is worth more than the sale price, provided,
however,
that nothing in this section shall limit Agent's requirement to
conduct such
sale in a commercially reasonable manner to the extent required
under Article 9
of the Code.
(B) Agent and Lenders may collect from such
Borrower even if Agent or Lenders, by foreclosing on the Real
Property
Collateral, has destroyed any right such Borrower may have to
collect from the
other Borrowers.
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<PAGE>
This is an unconditional and irrevocable waiver of any rights and
defenses such
Borrower may have because the Obligations are secured by Real
Property. These
rights and defenses include, but are not limited to, any rights or
defenses
based upon Section 580a, 580b, 580d or 726 of the California Code
of Civil
Procedure.
(i) The provisions of this Section 2.15 are made for the
benefit
of Agent, Lenders and their respective successors and assigns, and
may be
enforced by it or them from time to time against any or all
Borrowers as often
as occasion therefor may arise and without requirement on the part
of Agent,
Lender, successor or assign first to marshal any of its or their
claims or to
exercise any of its or their rights against any Borrower or to
exhaust any
remedies available to it or them against any Borrower or to resort
to any other
source or means of obtaining payment of any of the Obligations
hereunder or to
elect any other remedy. The provisions of this Section 2.15 shall
remain in
effect until all of the Obligations shall have been paid in full or
otherwise
fully satisfied. If at any time, any payment, or any part thereof,
made in
respect of any of the Obligations, is rescinded or must otherwise
be restored or
returned by Agent or any Lender upon the insolvency, bankruptcy
or
reorganization of any Borrower, or otherwise, the provisions of
this Section
2.15 will forthwith be reinstated in effect, as though such payment
had not been
made.
(j) Each Borrower hereby agrees that it will not enforce any of
its rights of contribution or subrogation against any other
Borrower with
respect to any liability incurred by it hereunder or under any of
the other Loan
Documents, any payments made by it to Agent or Lenders with respect
to any of
the Obligations or any collateral security therefor until such time
as all of
the Obligations have been paid in full in cash. Any claim which any
Borrower may
have against any other Borrower with respect to any payments to any
Agent or
Lender hereunder or under any other Loan Documents are hereby
expressly made
subordinate and junior in right of payment, without limitation as
to any
increases in the Obligations arising hereunder or thereunder, to
the prior
payment in full in cash of the Obligations and, in the event of any
insolvency,
bankruptcy, receivership, liquidation, reorganization or other
similar
proceeding under the laws of any jurisdiction relating to any
Borrower, its
debts or its assets, whether voluntary or involuntary, all such
Obligations
shall be paid in full in cash before any payment or distribution of
any
character, whether in cash, securities or other property, shall be
made to any
other Borrower therefor.
(k) Each Borrower hereby agrees that, after the occurrence and
during the continuance of any Default or Event of Default, the
payment of any
amounts due with respect to the indebtedness owing by any Borrower
to any other
Borrower is hereby subordinated to the prior payment in full in
cash of the
Obligations. Each Borrower hereby agrees that after the occurrence
and during
the continuance of any Default or Event of Default, such Borrower
will not
demand, sue for or otherwise attempt to collect any indebtedness of
any other
Borrower owing to such Borrower until the Obligations shall have
been paid in
full in cash. If, notwithstanding the foregoing sentence, such
Borrower shall
collect, enforce or receive any amounts in respect of such
indebtedness, such
amounts shall be collected, enforced and received by such Borrower
as trustee
for Agent, and such Borrower shall deliver any such amounts to
Agent for
application to the Obligations in accordance with Section
2.4(b).
(l) Each Borrower hereby waives all rights by which such
Borrower might be entitled to require suit on an accrued right of
action in
respect of any of the Obligations or require suit against any other
Borrower or
any Guarantor or any other Person.
(m) Each Borrower, to the extent permitted by applicable law,
waives any rights, benefits, and defenses that are or may become
available to
such Borrower (including by reason of California Civil Code
Sections 2845 and
2850), based on the claim that Agent is required to proceed against
another
Borrower or any other Person, or to proceed against or exhaust any
security held
by Agent at any time, or to first apply any security of any
Borrower to the
discharge of the Obligations, or to pursue any other remedy in
Agent's power
before proceeding against such Borrower hereunder.
22
<PAGE>
(n) Each Borrower, to the extent permitted by applicable law,
waives any and all rights, benefits and defenses (including by
reason of
California Civil Code ss.2849), based on the claim that a surety is
entitled to
the benefit of every security for the performance of the principal
obligation
held by the creditor.
(o) Each Borrower, to the extent permitted by applicable law,
waives any rights and defenses that are or may become available to
such Borrower
by reason of California Civil Code Section 2856(a)(1)-(3),
inclusive, which
includes, without limitation, any rights and defenses which are or
may become
available to such Borrower by reason of California Civil Code
Sections 2787 to
2855, inclusive.
(p) Each Borrower, to the extent permitted by applicable law,
waives any right or defense it may have at law or equity,
(including by reason
of California Code of Civil Procedure Section 580a), to require a
fair market
value hearing or action to determine a deficiency judgment after a
foreclosure.
(q) Each Borrower, to the extent permitted by applicable law,
waives any rights, benefits, and defenses that are or may become
available to
such Borrower to claim that, as a surety, (i) it is not liable if
for certain
reasons there is no liability upon the part of the principal or if
the principal
ceases to become liable (including by reason of California Civil
Code Section
2809) and (ii) its obligations must not be larger nor more
burdensome than that
of the principal (including by reason of California Civil Code
Section 2810).
Any reference to California code sections shall be deemed to
include any
equivalent code provisions under New York law. Without limiting
the
applicability of the equivalent code provisions under New York law,
the
foregoing references to the California Code of Civil Procedure and
the
California Civil Code shall apply if, notwithstanding the
provisions of Section
12, the laws of the State of California are applied to the Loan
Documents;
provided, that the inclusion of such provisions does not affect or
limit in any
way the parties' choice of New York law.
3.
CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Extension of Credit.
The
obligation of each Lender to make its initial extension of credit
provided for
hereunder, is subject to the fulfillment, to the satisfaction of
Agent and each
Lender of each of the conditions precedent set forth on Schedule
3.1 (the making
of such initial extension of credit by a Lender being conclusively
deemed to be
its satisfaction or waiver of the conditions precedent).
3.2 Conditions Precedent to all Extensions of Credit. The
obligation of
the Lender Group (or any member thereof) to make any Advances or
any Term Loan
hereunder (or to extend any other credit hereunder) at any time
shall be subject
to the following conditions precedent:
(a) the representations and warranties contained in this
Agreement or in the other Loan Documents shall be true and correct
in all
material respects (except that such materiality qualifier shall not
be
applicable to any representations and warranties that already are
qualified or
modified by materiality in the text thereof) on and as of the date
of such
extension of credit, as though made on and as of such date (except
to the extent
that such representations and warranties relate solely to an
earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall
either result from
the making thereof;
(c) no injunction, writ, restraining order, or other order of
any nature restricting or prohibiting, directly or indirectly, the
extending of
such credit shall have been issued and remain in force by any
Governmental
Authority against any Borrower, Agent, or any Lender;
(d) no Material Adverse Change shall have occurred since August
31, 2006;
23
<PAGE>
(e) each draw under Term Loan B hereunder shall be subject to
the following conditions precedent:
(i) Agent is in receipt of a third-party quality of
earnings audit in form and substance acceptable to Lenders;
(ii) Agent shall have received evidence satisfactory in
all respects to the Agent that such draw under Term Loan B is to be
used by
Borrowers to finance a Permitted Acquisition;
(iii) Agent shall have received, and be satisfied with,
true and complete copies of all agreements to effect the Permitted
Acquisition,
and any other documents reasonably requested by Agent in connection
therewith,
to be financed with the proceeds of such draw under Term Loan
B;
(iv) the proposed draw under Term Loan B is in an amount
not less than $1,000,000;
(v) any and all agreements, instruments and documents
(including, without limitation, financing statements) required to
be executed,
delivered and/or filed in order to create, in favor of Agent, a
first priority
fully perfected security interest (A) in the case of an asset
purchase, in the
then existing and thereafter arising assets being purchased with
the proceeds of
such draw and (B) in the case of a Stock purchase, the Stock and
the then
existing and thereafter arising assets of such company being
purchased with such
draw, in each case shall have been properly executed, delivered
and/or filed in
each office in each jurisdiction necessary to create in favor of
Agent a first
priority fully perfected security interest in such assets and/or
Stock, and
Agent shall be satisfied, in its sole and absolute discretion, with
the nature
and extent of the rights and remedies afforded Agent under
applicable law;
(vi) this Agreement (including all financial covenants
and all other affirmative and negative covenants) shall have been
amended as
Agent requires in its sole discretion to reflect the Permitted
Acquisition and
the draw under Term Loan B and their impact on Borrowers' business,
assets,
financial condition and prospects; and
(vii) Borrowers shall have delivered, and the Agent
shall have approved of, a certificate in connection with the
Permitted
Acquisition to be financed with the proceeds of such draw under
Term Loan B
reflecting that, on a pro forma basis before and after giving
effect to such
acquisition, the sum of (i) the outstanding Advances, (ii) the
unpaid balance of
Term Loan A, (iii) the unpaid balance of the Term Loan B, and (iv)
the proposed
draw under Term Loan B will not exceed the product of the
Acquisition Multiple
times the Pro Forma TTM EBITDA.
3.3 Term. This Agreement shall continue in full force and effect
for a
term ending on November 30, 2010 (the "Maturity Date"). The
foregoing
notwithstanding, the Lender Group, upon the election of the
Required Lenders,
shall have the right to terminate its obligations under this
Agreement
immediately and without notice upon the occurrence and during the
continuation
of an Event of Default.
3.4 Effect of Termination. On the date of termination of this
Agreement, all Obligations (including contingent reimbursement
obligations of
Borrowers with respect to outstanding Letters of Credit and
including all Bank
Product Obligations) immediately shall become due and payable
without notice or
demand (including (a) either (i) providing cash collateral to be
held by Agent
for the benefit of those Lenders with a Revolver Commitment in an
amount equal
to 105% of the Letter of Credit Usage, or (ii) causing the original
Letters of
Credit to be returned to the Issuing Lender, (b) providing cash
collateral (in
an amount determined by Ag
