CREDIT AGREEMENT

Exhibit 10.26

$30,000,000

CREDIT AGREEMENT

among

MARCHEX, INC.,

as Borrower,

The Several Lenders from Time to Time Parties Hereto,

and

U.S. BANK NATIONAL ASSOCIATION,

as Administrative Agent and Issuing Lender

Dated as of April 1, 2008

[* * *] Certain information in this agreement has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

TABLE OF CONTENTS

 

 

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The exhibits and schedules to this agreement have been omitted. Borrower will furnish supplementally a copy of any exhibit or schedule to the Securities and Exchange Commission upon request.

SCHEDULES

 

 

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CREDIT AGREEMENT

THIS CREDIT AGREEMENT, dated as of April 1, 2008 (this “Agreement”), is made and entered into among MARCHEX, INC., a Delaware corporation (“Borrower”), the several banks and other financial institutions or entities from time to time parties to this Agreement (“Lenders”), and U.S. BANK NATIONAL ASSOCIATION, as administrative agent (“Administrative Agent”).

The parties agree as follows:

ARTICLE I. DEFINITIONS

 

1.1

Defined Terms

As used in this Agreement, the terms listed in this Section 1.1 shall have the respective meanings set forth in this Section 1.1.

“Adjustment Date” has the meaning set forth in the definition of Applicable Margin.

“Administrative Agent” means U.S. Bank National Association, together with its affiliates, as the arranger of the Revolving Commitments and as Administrative Agent for Lenders under this Agreement and the other Loan Documents, together with any of its successors.

“Affiliate” means, as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10 percent or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

“Aggregate Exposure” means, with respect to any Lender at any time, an amount equal to (a) until the Closing Date, the amount of such Lender’s Revolving Commitment at such time and (b) thereafter, the amount of such Lender’s Revolving Commitment then in effect or, if the Revolving Commitment has been terminated, the amount of such Lender’s Revolving Extensions of Credit then outstanding.

“Aggregate Exposure Percentage” means, with respect to any Lender at any time, the ratio (expressed as a percentage) of such Lender’s Aggregate Exposure at such time to the Aggregate Exposure of all Lenders at such time.

“Agreement” has the meaning set forth in the preamble to this Agreement.

“Applicable Margin” means the rates per annum set forth below based upon the Consolidated Leverage Ratio:

 

 

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Changes in the Pricing Levels resulting from changes in the Consolidated Leverage Ratio shall become effective on the date (the “Adjustment Date”) that is three Business Days after the date on which financial statements are delivered to Lenders pursuant to Section 6.1 and shall remain in effect until the next change to be effected pursuant to this paragraph; provided that, Pricing Level 1 shall apply from the Closing Date until the initial first Adjustment Date after the date of this Agreement; provided , further , that in the event that the financial statements for Borrower’s fourth fiscal quarter are not delivered until after the delivery of the financial statements for Borrower’s first fiscal quarter for the following fiscal year, the financial statements for Borrower’s first fiscal quarter for the following fiscal year shall govern the Pricing Level until the financial statements for Borrower’s second fiscal quarter are delivered. If any financial statements referred to above are not delivered within the time periods specified in Section 6.1, then, until the date that is three Business Days after the date on which such financial statements are delivered, Pricing Level 3 and the provisions of Section 4.5 shall apply. In addition, at all times while an Event of Default shall have occurred and be continuing, Pricing Level 3 shall apply. Each determination of the Consolidated Leverage Ratio pursuant to the above shall be made in a manner consistent with the determination thereof pursuant to Section 7.1.

“Application” means an application, in such form as Issuing Lender may specify from time to time, requesting Issuing Lender to issue a Letter of Credit.

“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“Assignee” has the meaning set forth in Section 11.6(b).

“Assignment and Assumption” means an Assignment and Assumption Agreement, substantially in the form of Exhibit A.

“Available Revolving Commitment” means, as to any Lender at any time, an amount equal to the excess, if any, of (a) such Lender’s Revolving Commitment then in effect over (b) such Lender’s Revolving Extensions of Credit then outstanding.

“Benefited Lender” has the meaning set forth in Section 11.7(a).

“Board” means the Board of Governors of the Federal Reserve System of the United States (or any successor).

 

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“Borrower” has the meaning set forth in the preamble hereto.

“Borrowing Date” means any Business Day specified by Borrower as a date on which Borrower requests the Lenders to make Revolving Loans hereunder.

“Business” has the meaning set forth in Section 8.16(b).

“Business Day” means any day other than a Saturday, Sunday or other day that commercial banks in Seattle, Washington or New York City are authorized or required by law to close.

“Capital Lease Obligations” means, as to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.

“Capital Stock” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person other than a corporation and any and all warrants, rights or options to acquire any of the foregoing.

“Cash Equivalents” means (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of 12 months or less from the date of acquisition issued by any Lender or by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $500,000,000; (c) commercial paper of an issuer rated at least A-1 by Standard & Poor’s Ratings Services (“S&P”) or P-1 by Moody’s Investors Service, Inc. (“Moody’s”), or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within six months from the date of acquisition; (d) repurchase obligations of any Lender or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 30 days, with respect to securities issued or fully guaranteed or insured by the United States government; (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s; (f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this definition; (g) money market mutual or similar funds that invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition; or (h) money market funds that (i) comply with the criteria set forth in Rule 2a-7 of the SEC under the Investment Company Act of 1940, as amended, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000.

 

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“Change of Control” means an event or series of events by which (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding the Permitted Holders, any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of equity securities of Borrower representing more than 40 percent of the total voting power of the Capital Stock of Borrower entitled to vote for the election of members of the board of directors or equivalent governing body of Borrower on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right); or (b) during any period of 24 consecutive months, a majority of the members of the board of directors or other equivalent governing body of Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved or ratified by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved or ratified by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body.

“Closing Date” means the date on which the conditions precedent set forth in Section 5.1 shall have been satisfied, which date is April 1, 2008.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Collateral” means all property of the Loan Parties, now owned or hereafter acquired, upon which a Lien is purported to be created by any Security Document; provided , however , the Collateral shall not include, and the Administrative Agent’s Lien shall not extend to: (a) more than 66 percent of the issued and outstanding Capital Stock entitled to vote owned or held of record by Borrower in any Excluded Foreign Subsidiary, (c) specific equipment and related software subject to the Permitted Liens of lenders or lessors providing financing for the acquisition of such property and (d) any contract, instrument or chattel paper in which Borrower has any right, title or interest if and to the extent such contract, instrument or chattel paper includes a provision containing a restriction on assignment such that the creation of a security interest in the right, title or interest of Borrower therein would be prohibited and would, in and of itself, cause or result in a default thereunder enabling another person party to such contract, instrument or chattel paper to enforce any remedy with respect thereto; provided , however , that the foregoing exclusion shall not apply if (i) such prohibition has been waived or such other person has otherwise consented to the creation hereunder of a security interest in such contract, instrument or chattel paper, or (ii) such prohibition would be rendered ineffective pursuant to Sections 9-407(a) or 9-408(a) of the Uniform Commercial

 

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Code, as applicable and as then in effect in any relevant jurisdiction, or any other applicable law (including the bankruptcy code) or principles of equity); provided further that immediately upon the ineffectiveness, lapse or termination of any such provision, the term “Collateral” shall include, and Borrower shall be deemed to have granted a security interest in, all its rights, title and interests in and to such contract, instrument or chattel paper as if such provision had never been in effect; and provided further that the foregoing exclusion shall in no way be construed so as to limit, impair or otherwise affect Lender’s unconditional continuing security interest in and to all rights, title and interests of Borrower in or to any payment obligations or other rights to receive monies due or to become due under any such contract, instrument or chattel paper and in any such monies and other proceeds of such contract, instrument or chattel paper.

“Commonly Controlled Entity” means an entity, whether or not incorporated, that is under common control with Borrower within the meaning of Section 4001 of ERISA or is part of a group that includes Borrower and that is treated as a single employer under Section 414 of the Code.

“Compliance Certificate” means a certificate duly executed by a Responsible Officer substantially in the form of Exhibit B.

“Consolidated EBITDA” means, for the relevant period, Borrower’s net income (or net loss), excluding any extraordinary gains or losses and taxes associated therewith, plus interest expense (net of interest income), income tax expense, depreciation, amortization and non-cash stock compensation that constitutes a charge against income and other non-cash charges to income for the relevant period, all determined on a consolidated basis in accordance with GAAP. If during the relevant period Borrower or any Subsidiary shall have made a Permitted Acquisition, Consolidated EBITDA for such period shall be calculated after giving pro forma effect thereto as if such Permitted Acquisition occurred on the first day of such period.

“Consolidated EBITDAR” means, for the relevant period, Borrower’s net income (or net loss), excluding any extraordinary gains or losses and taxes associated therewith, plus (a) interest expense (net of interest income), income tax expense, depreciation, amortization, rent expense and non-cash stock compensation that constitutes a charge against income and other non-cash charges to income for the relevant period, less (b) cash taxes paid during the relevant period, and cash dividends paid during the relevant period and maintenance capital expenditures (which shall be deemed to be an amount equal to 50 percent of depreciation expense related to fixed assets), all determined on a consolidated basis in accordance with GAAP. If during the relevant period Borrower or any Subsidiary shall have made a Permitted Acquisition, Consolidated EBITDAR for such period shall be calculated after giving pro forma effect thereto as if such Permitted Acquisition occurred on the first day of such period.

“Consolidated Fixed Charge Coverage Ratio” means the ratio of Consolidated EBITDAR to Consolidated Fixed Charges.

“Consolidated Fixed Charges” means, for the relevant period, the sum of Borrower’s cash interest expense and rent expense determined on a consolidated basis in accordance with GAAP, plus Consolidated Synthetic Debt Amortization.

 

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“Consolidated Leverage Ratio” means the ratio of Consolidated Total Funded Debt to Consolidated EBITDA.

“Consolidated Synthetic Debt Amortization” means an amount equal to the sum of (a) 20 percent of the amount of the Total Revolving Commitments as of the last day of the relevant period, (b) principal reduction payments for a one-year period on Borrower’s consolidated Indebtedness for borrowed money (other than the Revolving Loans) that was outstanding as of the last day of the relevant period, based upon, for each component of such Indebtedness, the actual amortization schedule provided for in the documents evidencing each component of such Indebtedness and (c) the principal component of payments for a one-year period on Borrower’s consolidated Capital Lease Obligations outstanding as of the last day of the relevant period, based upon, for each component of such Capital Lease Obligations, the actual amortization schedule provided for in the documents evidencing each component of such Capital Lease Obligations.

“Consolidated Total Funded Debt” means, as of the date of determination, the aggregate principal amount of all Indebtedness of Borrower, determined on a consolidated basis in accordance with GAAP, but in any event, excluding obligations for undrawn amounts under outstanding letters of credit and contingent reimbursement obligations under surety bonds.

“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

“Daily Reset LIBOR Rate Loan” has the meaning set forth in Section 2.4(a).

“Default” means any of the events specified in Article IX, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

“Disposition” means, with respect to any property, any sale, lease, sale and leaseback, assignment, conveyance, transfer or other disposition thereof. The terms “Dispose” and “Disposed of” shall have correlative meanings.

“Dollars” and “$” mean dollars in lawful currency of the United States.

“Domain Name” means a sequence of alphanumeric characters that specifies a group of online resources and forms part of the corresponding Internet address used to, among other functions, identify one or more internet protocol addresses. “Domain Name” shall include all generic top level domain (gTLD) and country code top-level domain (ccTLD) now existing or hereafter created and all rights, priorities and privileges relating to such Domain Name, Domain Name registration, license and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

“Domestic Subsidiary” means any Subsidiary of Borrower organized under the laws of any jurisdiction within the United States.

 

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“Environmental Laws” means any and all foreign, Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or other Requirements of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time hereafter be in effect.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“Event of Default” means any of the events specified in Article IX, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

“Excluded Foreign Subsidiary” means any Foreign Subsidiary in respect of which either (a) the pledge of all of the Capital Stock of such Subsidiary as Collateral or (b) the guaranteeing by such Subsidiary of the Obligations could reasonably be expected to result in adverse tax consequences to Borrower.

“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal, for each day during such period, to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day for such transactions received by Administrative Agent from three Federal funds brokers of recognized standing selected by it.

“Fee Payment Date” means (a) the 10th day following the last day of each March, June, September and December and (b) the last day of the Revolving Commitment Period.

“Foreign Subsidiary” means any Subsidiary of Borrower that is not a Domestic Subsidiary.

“Funding Office” means the office of Administrative Agent specified in Section 11.2 or such other office as may be specified from time to time by Administrative Agent as its funding office by written notice to Borrower and Lenders.

“GAAP” means generally accepted accounting principles in the United States as in effect from time to time. In the event that any “Accounting Change” (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then Borrower and Administrative Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to reflect equitably such Accounting Changes with the desired result that the criteria for evaluating Borrower’s financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made. Until such time as such an amendment shall have been executed and delivered by Borrower, Administrative Agent and the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred. “Accounting Changes” refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC.

 

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“Governmental Authority” means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization (including the National Association of Insurance Commissioners).

“Group Members” means the collective reference to Borrower and its respective Subsidiaries.

“Guarantee and Collateral Agreement” means the Guarantee and Collateral Agreement to be executed and delivered by Borrower and each Subsidiary Guarantor, substantially in the form of Exhibit C.

“Guarantee Obligation” means, as to any Person (the “guaranteeing person”), any obligation, including a reimbursement, counter indemnity or similar obligation, of the guaranteeing person that guarantees or in effect guarantees, or which is given to induce the creation of a separate obligation by another Person (including any bank under any letter of credit) that guarantees or in effect guarantees, any Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided , however , that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made or (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by Borrower in good faith.

“Guarantors” means the collective reference the Subsidiary Guarantors and any other guarantor of the Obligations.

 

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“Indebtedness” means, of any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of such Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under or in respect of acceptances, letters of credit, surety bonds or similar arrangements, (g) the liquidation value of all mandatorily redeemable preferred Capital Stock of such Person, (h) all Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (g) above, (i) all obligations of the kind referred to in clauses (a) through (h) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation, and (j) for the purposes of Article IX(e) only, all obligations of such Person in respect of Swap Agreements. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor.

“Insolvency” means, with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.

“Insolvent” pertains to a condition of Insolvency.

“Intellectual Property” means the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses, trademarks, trademark licenses, technology, know-how and processes, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

“Interest Differential” means that sum equal to the greater of zero or the financial loss incurred by Lenders resulting from prepayment, calculated as the difference between the amount of interest Lenders would have earned (from like investments in the Money Markets as of the first day of the LIBOR Rate Loan had prepayment not occurred and the interest Lenders will actually earn (from like investments in the Money Markets as of the date of prepayment) as a result of the redeployment of funds from the prepayment.

“Investments” has the meaning set forth in Section 9.8.

“Issuing Lender” means U.S. Bank National Association or any affiliate thereof in its capacity as issuer of any Letter of Credit.

“L/C Commitment” means $30,000,000.

“L/C Obligations” means, at any time, an amount equal to the sum of (a) the aggregate then undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit that have not then been reimbursed pursuant to Section 3.5.

 

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“L/C Participants” means, with respect to any Letter of Credit, the collective reference to all Lenders other than Issuing Lender of such Letter of Credit.

“Lenders” has the meaning set forth in the preamble hereto.

“Letters of Credit” has the meaning set forth in Section 3.1(a).

“LIBOR Rate Loan” has the meaning set forth in Section 2.4(a).

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having substantially the same economic effect as any of the foregoing).

“Loan Documents” means this Agreement, the Security Documents, the Notes and any amendment, waiver, supplement or other modification to any of the foregoing.

“Loan Parties” means each Group Member that is a party to a Loan Document.

“Loan Period” means the period commencing on the advance date of the applicable LIBOR Rate Loan and ending on the numerically corresponding day 1, 2, 3 or 6 months thereafter matching the interest rate term selected by the Borrower; provided , however , (a) if any Loan Period would otherwise end on a day which is not a New York Banking Day, then the Loan Period shall end on the next succeeding New York Banking Day unless the next succeeding New York Banking Day falls in another calendar month, in which case the Loan Period shall end on the immediately preceding New York Banking Day; or (b) if any Loan Period begins on the last New York Banking Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of the Loan Period), then the Loan Period shall end on the last New York Banking Day of the calendar month at the end of such Loan Period.

“Material Adverse Effect” means a material adverse effect on (a) the business, property, operations or financial condition of Borrower and its Subsidiaries taken as a whole or (b) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of Administrative Agent or Lenders hereunder or thereunder.

“Material Loan Party” and “Material Loan Parties” means, individually or collectively, Borrower and each Material Subsidiary that is a party to a Loan Document.

“Material Subsidiary” means any Subsidiary, that as of any date of determination, that (a) represents more than 3 percent of the consolidated total assets, as determined in accordance with GAAP, (b) represents more than 3 percent of the consolidated total revenues of Borrower and its Subsidiaries, as determined in accordance with GAAP or (c) owns Domain Names with a fair market value (as determined in good faith by Borrower) in excess of $20,000,000.

 

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“Materials of Environmental Concern” means any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.

“Money Markets” refers to one or more wholesale funding markets available to and selected by Administrative Agent, including negotiable certificates of deposit, commercial paper, eurodollar deposits, bank notes, federal funds, interest rate swaps or others.

“Multiemployer Plan” means a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“Net Cash Proceeds” means the cash proceeds received by Borrower and its Subsidiaries as consideration for a Disposition of intangible assets, net of reasonable and customary selling expenses, including reasonable commissions, legal, accounting and other professional and transactional fees, transfer and similar taxes and Borrower’s good faith estimate of income taxes paid or payable in connection with such Disposition.

“New York Banking Day” means any day (other than a Saturday or Sunday) on which commercial banks are open for business in New York, New York.

“Non-Excluded Taxes” has the meaning set forth in Section 4.11(a).

“Non-U.S. Lender” has the meaning set forth in Section 4.11(d).

“Notes” means the collective reference to any promissory note evidencing any Revolving Loan and issued pursuant to the terms of this Agreement.

“Obligations” means the unpaid principal of and interest on (including interest accruing after the maturity of the Revolving Loans and Reimbursement Obligations and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Revolving Loans and all other obligations and liabilities of Borrower to Administrative Agent or to any Lender (or, in the case of Specified Swap Agreements, any affiliate of any Lender), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document, the Letters of Credit, any Specified Swap Agreement or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including all fees, charges and disbursements of counsel to Administrative Agent or to any Lender that are required to be paid by Borrower pursuant hereto) or otherwise.

“Other Taxes” means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

 

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“Participant” has the meaning set forth in Section 11.6(c).

“PBGC” means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor).

“Permitted Acquisition” means an acquisition of all or substantially all of the assets or of the assets constituting a line of business or substantially all of the Capital Stock of any Person where (a) no Default or Event of Default shall have occurred and be continuing on the date such Permitted Acquisition is consummated, before or after giving effect thereto, (b) the business acquired (or Person acquired) is principally engaged in the same line of business (or a business reasonably incidental or complementary thereto) as Borrower, (c) [***] and (d) a Responsible Officer of Borrower shall have delivered to Administrative Agent a Pro Forma Compliance Certificate. “Pro Forma Compliance Certificate” means a certificate to Administrative Agent certifying as to the accuracy of clauses (a) through (e) above and providing a detailed computation of compliance with clause (c) above.

“Permitted Holders” means (i) Russell C. Horowitz, John Keister, Ethan A. Caldwell and Peter Christothoulou and members of their respective families, and (ii) trusts solely for the benefit of the foregoing, (iii) the guardian or conservator of any of the foregoing who is adjudged disabled or incompetent by a court of competent jurisdiction; and (iv) any limited partnership, limited liability partnership or limited liability company in which any of the foregoing holds all of the shares of capital stock of Borrower.

“Permitted Liens” has the meaning set forth in Section 7.3.

“Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

“Plan” means, at a particular time, any employee benefit plan that is covered by ERISA and in respect of which Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Properties” has the meaning set forth in Section 8.16(a).

“Register” has the meaning set forth in Section 13.6(b).

“Regulation U” means Regulation U of the Board as in effect from time to time.

“Reimbursement Obligation” means the obligation of Borrower to reimburse Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of Credit.

[* * *] Certain information in this agreement has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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“Reorganization” means, with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA.

“Required Lenders” means, at any time, the holders of more than 50 percent of (a) until the Closing Date, the Total Revolving Commitments then in effect and (b) if the Revolving Commitments have been terminated, the Total Revolving Extensions of Credit then outstanding. For purposes of this definition, the aggregate principal amount of Letters of Credit issued by Issuing Lender shall be considered to be owed to Lenders ratably in accordance with their respective Revolving Commitments.

“Requirement of Law” means, as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“Responsible Officer” means the chief executive officer, president, chief financial officer vice president-accounting, vice president-financial operations of the applicable Loan Party, but in any event, with respect to financial matters, the chief financial officer of the applicable Loan Party.

“Restricted Payments” has the meaning set forth in Section 9.6.

“Revolving Commitment” means, as to any Lender, the obligation of such Lender, if any, to make Revolving Loans and participate in Letters of Credit in an aggregate principal and/or face amount not to exceed the amount set forth under the heading “Revolving Commitment” opposite such Lender’s name on Schedule 1.1 or in the Assignment and Assumption pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof.

“Revolving Commitment Period” means the period from and including the Closing Date to the Revolving Termination Date.

“Revolving Extensions of Credit” means, as to any Lender at any time, an amount equal to the sum of (a) the aggregate principal amount of all Revolving Loans held by such Lender then outstanding and (b) such Lender’s Revolving Percentage of the L/C Obligations then outstanding.

“Revolving Facility” means the Revolving Commitments and the extensions of credit made thereunder.

“Revolving Loans” has the meaning set forth in Section 2.1.

“Revolving Note” has the meaning set forth in Section 2.3 hereof and includes all renewals, replacements and amendments thereof.

 

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“Revolving Percentage” means, as to any Lender at any time, the percentage which such Lender’s Revolving Commitment then constitutes of the Total Revolving Commitments or, at any time after the Revolving Commitments shall have expired or terminated, the percentage that the aggregate principal amount of such Lender’s Revolving Loans then outstanding constitutes of the aggregate principal amount of the Revolving Loans then outstanding, provided , that, in the event that the Revolving Loans are paid in full prior to the reduction to zero of the Total Revolving Extensions of Credit, the Revolving Percentages shall be determined in a manner designed to ensure that the other outstanding Revolving Extensions of Credit shall be held by Lenders on a comparable basis.

“Revolving Termination Date” means the earlier of (a) April 1, 2011 or (b) the date that all Obligations are paid in full and the Revolving Commitments are terminated.

“SEC” means the Securities and Exchange Commission, any successor thereto and any analogous Governmental Authority.

“Security Documents” means the collective reference to the Guarantee and Collateral Agreement and all other security documents hereafter delivered to Administrative Agent granting a Lien on any property of any Person to secure the obligations and liabilities of any Loan Party under any Loan Document.

“Single Employer Plan” means any Plan that is covered by Title IV of ERISA, but that is not a Multiemployer Plan.

“Solvent” or “Solvency” when used with respect to any Person, means that, as of any date of determination, (a) the amount of the “present fair saleable value” of the assets of such Person will, as of such date, exceed the amount of all “liabilities of such Person, contingent or otherwise”, as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the liability of such Person on its debts as such debts become absolute and matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business, and (d) such Person will be able to pay its debts as they mature. For purposes of this definition, (i) “debt” means liability on a “claim”, and (ii) “claim” means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.

“Specified Swap Agreement” means any Swap Agreement entered into by Borrower and any Lender or affiliate thereof in respect of interest rates or currency exchange rates.

“Subsidiary” means as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time

 

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owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of Borrower.

“Subsidiary Guarantor” means each Material Subsidiary of Borrower other than any Excluded Foreign Subsidiary.

“Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option, interest rate cap or collar, or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of Borrower or any of its Subsidiaries shall be a “Swap Agreement”.

“Total Revolving Commitments” means, at any time, the aggregate amount of the Revolving Commitments then in effect. The original amount of the Total Revolving Commitments is $30,000,000.

“Total Revolving Extensions of Credit” means, at any time, the aggregate amount of the Revolving Extensions of Credit of the Lenders outstanding at such time.

“Transferee” means any Assignee or Participant.

“United States” means the United States of America.

“Wholly-Owned Subsidiary” means, as to any Person, any other Person all of the Capital Stock of which (other than directors’ qualifying shares required by law) is owned by such Person directly and/or through other Wholly-Owned Subsidiaries.

“Wholly-Owned Subsidiary Guarantor” means any Subsidiary Guarantor that is a Wholly-Owned Subsidiary of Borrower.

 

1.2

Other Definitional Provisions; Rules of Construction

(a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Documents or any certificate or other document made or delivered pursuant hereto or thereto.

(b) As used herein and in the other Loan Documents, and any certificate or other document made or delivered pursuant hereto or thereto, (i) accounting terms relating to any Group Member not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP, (ii) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (iii) the word “incur” shall be construed to mean incur, create, issue, assume, become liable in respect of or suffer to exist (and the words “incurred” and “incurrence” shall have correlative meanings), (iv) the words “asset” and “property” shall be

 

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construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, Capital Stock, securities, revenues, accounts, leasehold interests and contract rights, and (v) references to agreements or other Contractual Obligations shall, unless otherwise specified, be deemed to refer to such agreements or Contractual Obligations as amended, supplemented, restated or otherwise modified from time to time.

(c) The words “hereof”, “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.

(d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

(e) Provisions of the Loan Documents apply to successive events and transactions.

(f) In the event of any inconsistency between the provisions of this Agreement and the provisions of any of the other Loan Documents, the provisions of this Agreement govern.

 

1.3

Incorporation of Exhibits

All references to “Exhibits” contained herein are references to exhibits attached hereto, the terms and conditions of which are made a part hereof for all purposes.

ARTICLE II. REVOLVING COMMITMENTS

 

2.1

Revolving Commitments

Subject to the terms and conditions hereof, each Lender severally agrees to make revolving credit loans (“Revolving Loans”) to Borrower from time to time during the Revolving Commitment Period in an aggregate principal amount at any one time outstanding which, when added to such Lender’s Revolving Percentage of the L/C Obligations then outstanding, does not exceed the amount of such Lender’s Revolving Commitment. During the Revolving Commitment Period Borrower may use the Revolving Commitments by borrowing, prepaying the Revolving Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof.

 

2.2

Use of Proceeds

The proceeds of the Revolving Loans shall be used by Borrower to finance Permitted Acquisitions, to repurchase Borrower’s Capital Stock, to refinance existing Indebtedness and for general business purposes.

 

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2.3

Revolving Notes

Borrower agrees that upon notice by any Lender to Borrower (with a copy of such notice to Administrative Agent) to the effect that a promissory note or other evidence of indebtedness is required or appropriate in order for such Lender to evidence (whether for purposes of pledge, enforcement or otherwise) the Revolving Loans owing to, or to be made by, such Lender, Borrower shall promptly execute and deliver to such Lender, with a copy to Administrative Agent, a Revolving Note in substantially the form of Exhibit D hereto, payable to the order of such Lender in a principal amount equal to the Revolving Commitment of such Lender (each promissory note issued hereunder, as amended, endorsed or replaced, shall be a “Revolving Note,” and collectively, the “Revolving Notes”).

 

2.4

Interest Rate

(a) Interest on the outstanding principal balance of the Revolving Loans shall accrue at one of the following per annum rates selected by Borrower (i) upon notice to Administrative Agent, the Applicable Margin plus the one-month LIBOR rate quoted by Administrative Agent from Reuters Screen LIBOR01 Page or any successor thereto, which shall be that one-month LIBOR rate in effect and reset each New York Banking Day, adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation (a “Daily Reset LIBOR Rate Loan”); or (ii) upon a minimum of two New York Banking Days prior notice, the Applicable Margin plus the 1, 2, 3 or 6-month LIBOR rate quoted by Administrative Agent from Reuters Screen LIBOR01 Page or any successor thereto (which shall be the LIBOR rate in effect two New York Banking Days prior to commencement of the advance), adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation (a “LIBOR Rate Loan”). No LIBOR Rate Loan may extend beyond the Revolving Termination Date. In any event, if the Loan Period for a LIBOR Rate Loan should happen to extend beyond t the Revolving Termination Date, such LIBOR Rate Loan must be prepaid at the Revolving Termination Date. If a LIBOR Rate Loan is prepaid prior to the end of the Loan Period for such loan, whether voluntarily or because prepayment is required due to the Revolving Termination Date or due to acceleration of the upon default or otherwise, Borrower agrees to pay all of Lenders’ costs, expenses and Interest Differential (as determined by Administrative Agent) incurred as a result of such prepayment. Because of the short-term nature of this facility, Borrower agrees that the Interest Differential shall not be discounted to its present value. Any prepayment of a LIBOR Rate Loan shall be in an amount equal to the remaining entire principal balance of such LIBOR Rate Loan.

(b) In the event Borrower does not timely select another interest rate option at least two New York Banking Days before the end of the Loan Period for a LIBOR Rate Loan, Administrative Agent may at any time after the end of the Loan Period convert the LIBOR Rate Loan to a Daily Reset LIBOR Rate Loan, but until such conversion, the funds advanced under the LIBOR Rate Loan shall continue to accrue interest at the same rate as the interest rate in effect for such LIBOR Rate Loan prior to the end of the Loan Period; provided that in such event, a new Loan Period shall not be in effect.

(c) Administrative Agent’s internal records of applicable interest rates shall be determinative in the absence of manifest error.

(d) Each LIBOR Rate Loan shall be in a minimum principal amount of $1,000,000. The aggregate number of LIBOR Rate Loans in effect at any one time may not exceed five.

 

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(e) Subject to the provisions set forth in clauses (a) through (d) of this Section 2.4 in the event Borrower does not timely select another interest rate option at least two New York Banking Days before the end of the Loan Period for a LIBOR Rate Loan, Borrower may at any time after the end of the Loan Period request Administrative Agent to convert such LIBOR Rate Loan to a Daily Reset LIBOR Rate Loan or may, upon a minimum of two New York Banking Days prior notice, request a LIBOR Rate Loan and Administrative Agent shall promptly honor such request.

 

2.5

Repayment

(a) Interest on the Revolving Loans is payable to Administrative Agent for the ratable benefit of each Lender beginning April 1, 2008, and on the same date of each consecutive month thereafter, plus a final interest payment with the final payment of principal.

(b) Principal of the Revolving Loans is payable to Administrative Agent for the ratable benefit of each Lender on the Revolving Termination Date.

 

2.6

Procedure for Revolving Loan Borrowing

Borrower may borrow under the Revolving Commitments during the Revolving Commitment Period on any Business Day, provided that Borrower shall give Administrative Agent irrevocable written notice (including notices by facsimile and email), which notice must be received by Administrative Agent prior to 10:00 a.m., Seattle time, two Business Days prior to the requested Borrowing Date, specifying (a) the amount of Revolving Loans to be borrowed and (b) the requested Borrowing Date. Each borrowing under the Revolving Commitments shall be in a minimum amount of $1,000,000. Upon receipt of any such notice from Borrower, Administrative Agent shall promptly notify each Lender thereof. Each Lender will make the amount of its pro rata share of each borrowing available to Administrative Agent for the account of Borrower at the Funding Office prior to 12:00 Noon, Seattle time, on the Borrowing Date requested by Borrower in funds immediately available to Administrative Agent. Such borrowing will then be made available to Borrower by Administrative Agent crediting the account of Borrower on the books of such office with the aggregate of the amounts made available to Administrative Agent by Lenders and in like funds as received by Administrative Agent.

 

2.7

Commitment Fees

Borrower agrees to pay to Administrative Agent for the account of each Lender an unused commitment fee for the period from and including the Closing Date hereof to the last day of the Revolving Commitment Period (or, if earlier, the Revolving Termination Date) computed at the Unused Commitment Fee Rate set forth in the definition of “Applicable Margin” on the average daily amount of the Available Revolving Commitment of such Lender during the period for which payment is made, payable quarterly in arrears on each Fee Payment Date, commencing on the first such date to occur after the date hereof. The unused commitment fee shall be calculated on a 360-day year for the actual number of days elapsed.

 

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2.8

Termination or Reduction of Revolving Commitments

Borrower shall have the right, upon not less than three Business Days’ notice to Administrative Agent, to terminate the Revolving Commitments or, from time to time, to reduce the amount of the Revolving Commitments; provided that no such termination or reduction of Revolving Commitments shall be permitted if, after giving effect thereto and to any prepayments of the Revolving Loans made on the effective date thereof, the Total Revolving Extensions of Credit would exceed the Total Revolving Commitments. Any such reduction shall be in an amount equal to $1,000,000, or a whole multiple thereof, and shall reduce permanently the Revolving Commitments then in effect.

ARTICLE III. LETTERS OF CREDIT

 

3.1

L/C Commitment

(a) Subject to the terms and conditions hereof, Issuing Lender, in reliance on the agreements of the other Lenders set forth in Section 3.4(a), agrees to issue letters of credit (“Letters of Credit”) for the account of Borrower on any Business Day during the Revolving Commitment Period in such form as may be approved from time to time by Issuing Lender; provided that Issuing Lender shall have no obligation to issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C Obligations would exceed the L/C Commitment or (ii) the aggregate amount of the Available Revolving Commitments would be less than zero. Each Letter of Credit shall (i) be denominated in Dollars and (ii) expire no later than the earlier of (x) the one-year anniversary of its date of issuance and (y) the date that is five Business Days prior to the Revolving Termination Date, provided that any Letter of Credit with a one-year term may provide for the renewal thereof for additional one - year periods (which shall in no event extend beyond the date referred to in clause (y) above).

(b) Issuing Lender shall not at any time be obligated to issue any Letter of Credit if such issuance would conflict with, or cause Issuing Lender or any L/C Participant to exceed any limits imposed by, any applicable Requirement of Law.

 

3.2

Procedure for Issuance of Letter of Credit

Borrower may from time to time request that Issuing Lender issue a Letter of Credit by delivering to Issuing Lender at its address for notices specified herein an Application therefor, completed to the satisfaction of Issuing Lender, and such other certificates, documents and other papers and information as Issuing Lender may request. Upon receipt of any Application, Issuing Lender will process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue the Letter of Credit requested thereby (but in no event shall Issuing Lender be required to issue any Letter of Credit earlier than three Business Days after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed to by Issuing Lender and Borrower. Issuing Lender shall furnish a copy of such Letter of Credit to Borrower promptly following the issuance thereof. Issuing Lender shall promptly furnish to Administrative Agent, which shall in turn promptly furnish to Lenders, notice of the issuance of each Letter of Credit (including the amount thereof).

 

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3.3

Fees and Other Charges

(a) Borrower will pay a fee for each Letter of Credit at a per annum rate equal to the Unused Commitment Fee Rate set forth in the definition of “Applicable Margin” then in effect under the Revolving Facility of the face amount of each Letter of Credit ( provided that the minimum fee shall be $300), shared ratably among Lenders and payable quarterly in arrears on each Fee Payment Date after the issuance date. In addition, Borrower shall pay to Issuing Lender for its own account a fronting fee at a per annum rate .125 percent of the undrawn and unexpired amount of each Letter of Credit issued by Issuing Lender, payable quarterly in arrears on each Fee Payment Date after the issuance date.

(b) In addition to the foregoing fees, Borrower shall pay or reimburse Issuing Lender for such normal and customary costs and expenses as are incurred or charged by Issuing Lender in issuing, negotiating, effecting payment under, amending or otherwise administering any Letter of Credit.

 

3.4

L/C Participations

(a) Issuing Lender irrevocably agrees to grant and hereby grants to each L/C Participant, and, to induce Issuing Lender to issue Letters of Credit, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from Issuing Lender, on the terms and conditions set forth below, for such L/C Participant’s own account and risk an undivided interest equal to such L/C Participant’s Revolving Percentage in Issuing Lender’s obligations and rights under and in respect of each Letter of Credit and the amount of each draft paid by Issuing Lender thereunder. Each L/C Participant agrees with Issuing Lender that, if a draft is paid under any Letter of Credit for which Issuing Lender is not reimbursed in full by Borrower in accordance with the terms of this Agreement, such L/C Participant shall pay to Issuing Lender upon demand at Issuing Lender’s address for notices specified herein an amount equal to such L/C Participant’s Revolving Percentage of the amount of such draft, or any part thereof, that is not so reimbursed. Each L/C Participant’s obligation to pay such amount shall be absolute and unconditional and shall not be affected by any circumstance, including (i) any setoff, counterclaim, recoupment, defense or other right that such L/C Participant may have against Issuing Lender, Borrower or any other Person for any reason whatsoever, (ii) the occurrence or continuance of a Default or an Event of Default or the failure to satisfy any of the other conditions specified in Article V, (iii) any adverse change in the condition (financial or otherwise) of Borrower, (iv) any breach of this Agreement or any other Loan Document by Borrower, any other Loan Party or any other L/C Participant or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.

(b) If any amount required to be paid by any L/C Participant to Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion of any payment made by Issuing Lender under any Letter of Credit is paid to Issuing Lender within three Business Days after the date such payment is due, such L/C Participant shall pay to Issuing Lender on demand an amount equal to the product of (i) such amount, times (ii) the daily average Federal Funds Rate during the period from and including the date such payment is required to the date on which such payment is immediately available to Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. If any such amount required to be paid by any L/C Participant

 

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pursuant to Section 3.4(a) is not made available to Issuing Lender by such L/C Participant within three Business Days after the date such payment is due, Issuing Lender shall be entitled to recover from such L/C Participant, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to Revolving Loans under the Revolving Facility. A certificate of Issuing Lender submitted to any L/C Participant with respect to any amounts owing under this Section shall be conclusive in the absence of manifest error.

(c) Whenever, at any time after Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant its pro rata share of such payment in accordance with Section 3.4(a), Issuing Lender receives any payment related to such Letter of Credit (whether directly from Borrower or otherwise, including proceeds of collateral applied thereto by Issuing Lender), or any payment of interest on account thereof, Issuing Lender will distribute to such L/C Participant its pro rata share thereof; provided , however , that in the event that any such payment received by Issuing Lender shall be required to be returned by Issuing Lender, such L/C Participant shall return to Issuing Lender the portion thereof previously distributed by Issuing Lender to it.

 

3.5

Reimbursement Obligation of Borrower

If any draft is paid under any Letter of Credit, Borrower shall reimburse Issuing Lender for the amount of (a) the draft so paid and (b) any taxes, fees, charges or other costs or expenses incurred by Issuing Lender in connection with such payment, not later than 12:00 Noon, Seattle time, on (i) the Business Day that Borrower receives notice of such draft, if such notice is received on such day prior to 10:00 a.m., Seattle time, or (ii) if clause (i) above does not apply, the Business Day immediately following the day that Borrower receives such notice. Each such payment shall be made to Issuing Lender at its address for notices referred to herein in Dollars and in immediately available funds. Interest shall be payable on any such amounts from the date on which the relevant draft is paid until payment in full at the default rate set forth in Section 4.5.

 

3.6

Obligations Absolute

Borrower’s obligations under this Article III shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment that Borrower may have or have had against Issuing Lender, any beneficiary of a Letter of Credit or any other Person. Borrower also agrees with Issuing Lender that Issuing Lender shall not be responsible for, and Borrower’s Reimbursement Obligations under Section 3.5 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of Borrower against any beneficiary of such Letter of Credit or any such transferee. Issuing Lender shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of Issuing Lender. Borrower agrees that any action taken or omitted by Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct, shall be binding on Borrower and shall not result in any liability of Issuing Lender to Borrower.

 

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3.7

Letter of Credit Payments

If any draft shall be presented for payment under any Letter of Credit, Issuing Lender shall promptly notify Borrower of the date and amount thereof. The responsibility of Issuing Lender to Borrower in connection with any draft presented for payment under any Letter of Credit shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are substantially in conformity with such Letter of Credit.

 

3.8

Applications

To the extent that any provision of any Application related to any Letter of Credit is inconsistent with the provisions of this Article III, the provisions of this Article III shall apply.

ARTICLE IV. GENERAL PROVISIONS RELATING TO REVOLVING LOANS

 

4.1

Manner of Payment

All payments (including prepayments) to be made by Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 12:00 Noon, Seattle time, on the due date thereof to Administrative Agent, for the account of Lenders, at the Funding Office, in Dollars and in immediately available funds. Borrower hereby authorizes Administrative Agent to charge any of its demand deposit accounts for all interest, principal and fee payments that Borrower is obligated to pay pursuant to this Agreement and pursuant to fee arrangements with Administrative Agent. Administrative Agent shall distribute such payments to Lenders promptly upon receipt in like funds as received. Whenever any payment to be made becomes due and payable on a day that is not a Business Day, such payment may be made on the next succeeding Business Day and such extension of time shall in such case be included in computing interest on such payment.

 

4.2

Statements

Administrative Agent shall send Borrower statements of all amounts due hereunder; the statements shall be considered correct and conclusively binding, absent manifest error, on Borrower unless Borrower notifies Administrative Agent to the contrary within 30 days of receipt of any statement that Borrower claims to be incorrect. Borrower agrees that accounting entries made by Administrative Agent with respect to Borrower’s loan accounts shall constitute evidence of all Revolving Loans made under and payments made on any of the Revolving Facilities. Without limiting the methods by which Administrative Agent may otherwise be entitled by applicable law to make demand for payment of the Revolving Loans upon Borrower, Borrower agrees that any statement, invoice or payment notice from

 

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Administrative Agent to Borrower with respect to any principal or interest obligation of Borrower to Administrative Agent shall be deemed to be a demand for payment in accordance with the terms of such statement, invoice or payment notice. Under no circumstances shall a demand by Administrative Agent for partial payment of principal or interest or both be construed as a waiver by Administrative Agent of its right thereafter to demand and receive payment (in part or in full) of any remaining principal or interest obligation.

 

4.3

Book Entry Loan Account

Administrative Agent shall establish a book entry loan account for each of the Revolving Loans in which Administrative Agent will make debit entries of all Revolving Loans pursuant to the terms of this Agreement. Administrative Agent will also record in the applicable loan account, in accordance with customary banking practices, all interest and other charges, expenses and other items properly chargeable to Borrower, if any, together with all payments made by Borrower on account of the Indebtedness evidenced by Borrower’s respective loan accounts and all other sums credited to the respective loan accounts. The debit balance of Borrower’s respective loan accounts shall reflect the amount of Borrower’s Indebtedness to Lenders from time to time by reason of advances, charges, payments or credits.

 

4.4

Computations of Interest

All computations of interest and fees that are computed on a per annum basis shall be based on a 360-day year for the actual number of days elapsed.

 

4.5

Default Interest

Upon the occurrence and during the continuance of any Event of Default, Administrative Agent may, at its option, raise the interest rate charged on the Revolving Loans to a rate of up to 2 percent per annum plus the interest rate that would otherwise be applicable thereto, from the date of the occurrence of the Event of Default until the Event of Default is cured or waived by pursuant to the terms of this Agreement or, absent cure or waiver, until the Revolving Loans are repaid in full.

 

4.6

Maximum Interest Rate

Notwithstanding any provision contained herein or in the Notes, the total liability of Borrower for payment of interest pursuant hereto, including late charges, shall not exceed the maximum amount of interest permitted by applicable law to be charged, collected or received from Borrower; and if any payments by Borrower include interest in excess of that maximum amount, Administrative Agent shall apply the excess first to reduce the unpaid balance of the Revolving Loans, then to reduce the balance of any other Indebtedness of Borrower to Lenders. If there is no such Indebtedness, the excess shall be returned to Borrower.

 

4.7

Late Charge

If any payment of principal or interest required under any of the Revolving Loans is 15 days or more past due, Borrower will be charged a late charge of 5 percent of the delinquent payment or $5, whichever is greater, for each such late payment. The 15-day period provided for herein shall not be construed as a waiver of any Default or Event of Default resulting from any late payment under any of the Revolving Loans.

 

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4.8

Optional Prepayments

Borrower shall have the right, at any time, to prepay the whole or portions of the Revolving Loans. In such event, (a) any prepayment of any Daily Reset LIBOR Rate Loan shall be without prepayment charges and (b) any prepayment of all or any portion of any LIBOR Rate Loan whether voluntarily, by acceleration or otherwise shall be accompanied by a payment to Lenders of the Interest Differential due in accordance with Section 2.4(a). All prepayments shall be applied first to accrued interest on the Revolving Loans and then to the outstanding principal balance of the Revolving Loans in the inverse order of maturity. Partial prepayments of Revolving Loans shall be in a minimum amount of $1,000,000.

 

4.9

Pro Rata Treatment and Payments

(a) Each borrowing by Borrower from Lenders hereunder, each payment by Borrower on account of any commitment fee and any reduction of the Revolving Commitments of Lenders shall be made pro rata according to the respective Revolving Percentages of Lenders.

(b) Each payment (including each prepayment) by Borrower on account of principal of and interest on the Revolving Loans shall be made pro rata according to the respective outstanding principal amounts of the Revolving Loans then held by Lenders.

(c) Unless Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its share of such borrowing available to Administrative Agent, Administrative Agent may assume that such Lender is making such amount available to Administrative Agent, and Administrative Agent may, in reliance upon such assumption in its sole discretion, make available to Borrower a corresponding amount. If such amount is not made available to Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to Administrative Agent, on demand, such amount with interest thereon, at a rate equal to the greater of (i) the Federal Funds Rate and (ii) a rate determined by Administrative Agent in accordance with banking industry rules on interbank compensation, for the period until such Lender makes such amount immediately available to Administrative Agent. A certificate of Administrative Agent submitted to any Lender with respect to any amounts owing under this paragraph shall be conclusive in the absence of manifest error. If such Lender’s share of such borrowing is not made available to Administrative Agent by such Lender within three Business Days after such Borrowing Date, Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to Revolving Loans, on demand, from Borrower.

(d) Unless Administrative Agent shall have been notified in writing by Borrower prior to the date of any payment due to be made by Borrower hereunder that Borrower will not make such payment to Administrative Agent, Administrative Agent may assume that Borrower is making such payment, and Administrative Agent may, but shall not be required to, in reliance upon such assumption in its sole discretion, make available to Lenders their

 

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respective pro rata shares of a corresponding amount. If such payment is not made to Administrative Agent by Borrower within three Business Days after such due date, Administrative Agent shall be entitled to recover, on demand, from each Lender to which any amount which was made available pursuant to the preceding sentence, such amount with interest thereon at the rate per annum equal to the daily average Federal Funds Rate. Nothing herein shall be deemed to limit the rights of Administrative Agent or any Lender against Borrower.

 

4.10

Requirements of Law

(a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof:

(i) shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any Application or any Revolving Loans made by it, or change the basis of taxation of payments to such Lender in respect thereof (except for Non-Excluded Taxes covered by Section 4.11 and changes in the rate of tax on the overall net income of such Lender);

(ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender that is not otherwise included in the determination of the LIBOR rate provided for in Section 2.4; or

(iii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender, by an amount that such Lender deems to be material, of making, converting into, continuing or maintaining Revolving Loans or issuing or participating in Letters of Credit, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, Borrower shall promptly pay such Lender, upon its demand, any additional amounts nece