Back to top

REVOLVING CREDIT AND SECURITY AGREEMENT

Revolving Credit Agreement

REVOLVING CREDIT 
AND 
SECURITY AGREEMENT | Document Parties: APAC CUSTOMER SERVICES, INC | PNC BANK, NATIONAL ASSOCIATION You are currently viewing:
This Revolving Credit Agreement involves

APAC CUSTOMER SERVICES, INC | PNC BANK, NATIONAL ASSOCIATION

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.
Title: REVOLVING CREDIT AND SECURITY AGREEMENT
Governing Law: New York     Date: 5/6/2008
Industry: Business Services     Law Firm: Moore Van;Duane Morris     Sector: Services

50 of the Top 250 law firms use our Products every day
 
Exhibit 10.1
REVOLVING CREDIT
AND
SECURITY AGREEMENT
PNC BANK, NATIONAL ASSOCIATION
(AS LENDER AND AS AGENT)
WITH
APAC CUSTOMER SERVICES, INC.
(BORROWER)
MAY 5, 2008
PNC Capital Markets LLC,
Sole Lead Arranger and Book Runner

 

 


 
TABLE OF CONTENTS
         
ARTICLE I DEFINITIONS
    1  
1.1. Accounting Terms
    1  
1.2. General Terms
    1  
1.3. Uniform Commercial Code Terms
    27  
1.4. Certain Matters of Construction
    28  
 
       
ARTICLE II ADVANCES, PAYMENTS
    29  
2.1. Advances
    29  
2.2. Procedure for Advances Borrowing
    30  
2.3. Disbursement of Advance Proceeds
    32  
2.4. Repayment of Advances
    32  
2.5. Repayment of Excess Advances
    33  
2.6. Statement of Account
    33  
2.7. Letters of Credit
    33  
2.8. Issuance of Letters of Credit
    33  
2.9. Requirements For Issuance of Letters of Credit
    34  
2.10. Disbursements, Reimbursement
    34  
2.11. Repayment of Participation Advances
    35  
2.12. Documentation
    36  
2.13. Determination to Honor Drawing Request
    36  
2.14. Nature of Participation and Reimbursement Obligations
    36  
2.15. Indemnity
    38  
2.16. Liability for Acts and Omissions
    38  
2.17. Additional Payments
    40  
2.18. Manner of Borrowing and Payment
    40  
2.19. Mandatory Prepayments
    41  
2.20 Application of Payments Prior to an Event of Default
    42  
2.21. Reduction of Maximum Revolving Advance Amount
    42  
2.22. Use of Proceeds
    42  
2.23. Defaulting Lender
    42  
2.24. Removal of Lenders
    43  
 
       
ARTICLE III INTEREST AND FEES
    44  
3.1. Interest
    44  
3.2. Letter of Credit Fees
    45  
3.3. Facility Fee
    46  
3.4. Fee Letter
    46  
3.5. Computation of Interest and Fees
    46  
3.6. Maximum Charges
    46  
3.7. Increased Costs
    46  
3.8. Basis For Determining Interest Rate Inadequate or Unfair
    47  
3.9. Capital Adequacy
    48  
3.10. Gross Up for Taxes
    49  
3.11. Withholding Tax Exemption
    49  
3.12. Survival of Obligations
    50  

 

i


 
         
ARTICLE IV COLLATERAL: GENERAL TERMS
    50  
4.1. Security Interest in the Collateral
    50  
4.2. Perfection of Security Interest
    50  
4.3. Disposition of Collateral
    51  
4.4. Preservation of Collateral
    51  
4.5. Ownership of Collateral
    52  
4.6. Defense of Agent’s and Lenders’ Interests
    52  
4.7. Books and Records
    53  
4.8. Financial Disclosure
    53  
4.9. Compliance with Laws
    53  
4.10. Inspection of Premises; Appraisals
    53  
4.11. Insurance
    54  
4.12. Failure to Pay Insurance
    54  
4.13. Payment of Taxes
    55  
4.14. Payment of Leasehold Obligations
    55  
4.15. Receivables
    55  
4.16. Reserved
    58  
4.17. Reserved
    58  
4.18. Exculpation of Liability
    58  
4.19. Environmental Matters
    58  
4.20. Financing Statements
    59  
4.21 Voting Rights in Respect of Subsidiary Stock
    60  
4.22 Dividend and Distribution Rights in Respect of Subsidiary Shares
    60  
4.23. Reduction of Credit Enhancement Letter of Credit
    60  
4.24. Release of Credit Enhancement Letter of Credit
    61  
 
       
ARTICLE V REPRESENTATIONS AND WARRANTIES
    61  
5.1. Authority
    61  
5.2. Formation and Qualification
    62  
5.3. Survival of Representations and Warranties
    62  
5.4. Tax Returns
    62  
5.5. Financial Statements
    63  
5.6. Entity Name and Locations
    63  
5.7. O.S.H.A. and Environmental Compliance
    64  
5.8. Solvency; No Litigation, Violation, Indebtedness or Default
    64  
5.9. Patents, Trademarks, Copyrights and Licenses
    65  
5.10. Licenses and Permits
    66  
5.11. Default of Indebtedness
    66  
5.12. No Default
    66  
5.13. No Burdensome Restrictions
    66  
5.14. No Labor Disputes
    66  
5.15. Margin Regulations
    67  
5.16. Investment Company Act
    67  
5.17. Disclosure
    67  
5.18. Delivery of Subordinated Documentation
    67  
5.19. Swaps
    67  
5.20. Conflicting Agreements
    68  
5.21. Application of Certain Laws and Regulations
    68  
5.22. Business and Property of Borrower
    68  
5.23. Section 20 Subsidiaries
    68  

 

ii


 
         
5.24. Anti-Terrorism Laws
    68  
5.25. Trading with the Enemy
    69  
5.26. Commercial Tort Claims
    69  
5.27. Partnership and Limited Liability Company Interests
    69  
5.28. Material Contracts
    69  
 
       
ARTICLE VI AFFIRMATIVE COVENANTS
    70  
6.1. Payment of Fees
    70  
6.2. Conduct of Business and Maintenance of Existence and Assets
    70  
6.3. Violations
    70  
6.4. Government Receivables
    70  
6.5. Fixed Charge Coverage Ratio
    71  
6.6. Execution of Supplemental Instruments
    71  
6.7. Payment of Indebtedness
    71  
6.8. Standards of Financial Statements
    71  
6.9. Leasehold Agreements
    71  
6.10. Interest Rate Hedge
    71  
6.11. Dissolution of Subsidiaries
    72  
 
       
ARTICLE VII NEGATIVE COVENANTS
    72  
7.1 Merger, Consolidation, Acquisition and Sale of Assets
    72  
7.2. Creation of Liens
    72  
7.3. Guarantees
    72  
7.4 Investments
    73  
7.5. Loans
    73  
7.6. Capital Expenditures
    73  
7.7. Dividends
    73  
7.8. Indebtedness
    74  
7.9. Nature of Business
    74  
7.10. Transactions with Affiliates
    74  
7.11. Leases
    75  
7.12. Subsidiaries
    75  
7.13. Fiscal Year and Accounting Changes
    75  
7.14. Pledge of Credit
    75  
7.15. Amendment of Organizational Documents
    75  
7.16. Compliance with ERISA
    75  
7.17. Prepayment of Indebtedness
    76  
7.18. Anti-Terrorism Laws
    76  
7.19. Membership/Partnership Interests
    76  
7.20. Trading with the Enemy Act
    77  
7.21. Subordinated Obligations
    77  
7.22. Other Agreements
    77  
7.23 Additional Negative Pledges
    77  
7.24. Additional Bank Accounts
    77  
 
       
ARTICLE VIII CONDITIONS PRECEDENT
    78  
8.1. Conditions to Initial Advances
    78  

 

iii


 
         
8.2. Conditions to Each Advance
    83  
 
       
ARTICLE IX INFORMATION AS TO BORROWER
    83  
9.1. Disclosure of Material Matters
    83  
9.2 Schedules
    84  
9.3. Environmental Reports
    84  
9.4. Litigation
    84  
9.5. Material Occurrences
    84  
9.6. Government Receivables
    85  
9.7. Annual Financial Statements
    85  
9.8. Quarterly Financial Statements
    85  
9.9. Other Reports
    85  
9.10. Additional Information
    85  
9.11. Projected Operating Budget
    86  
9.12. Variances From Operating Budget
    86  
9.13. Notice of Suits, Adverse Events
    86  
9.14. ERISA Notices and Requests
    87  
9.15. Additional Documents
    87  
 
       
ARTICLE X EVENTS OF DEFAULT
    87  
10.1. Nonpayment
    87  
10.2. Breach of Representation
    88  
10.3. Financial Information
    88  
10.4. Judicial Actions
    88  
10.5. Noncompliance
    88  
10.6. Judgments
    89  
10.7. Bankruptcy
    89  
10.8. Inability to Pay
    89  
10.9. Affiliate Bankruptcy
    89  
10.10. Material Adverse Effect
    89  
10.11. Lien Priority
    89  
10.12. Subordinated Documentation Default
    90  
10.13. Cross Default
    90  
10.14. Breech of Guaranty
    90  
10.15. Change of Control
    90  
10.16. Invalidity
    90  
10.17. Licenses
    90  
10.18. Seizures
    91  
10.19. Pension Plans
    91  
10.20. Credit Enhancement Letter of Credit
    91  
 
       
ARTICLE XI LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT
    91  
11.1. Rights and Remedies
    91  
11.2. Agent’s Discretion
    93  
11.3. Setoff
    93  
11.4. Rights and Remedies not Exclusive
    93  
11.5. Allocation of Payments After Event of Default
    94  

 

iv


 
         
ARTICLE XII WAIVERS AND JUDICIAL PROCEEDINGS
    95  
12.1. Waiver of Notice
    95  
12.2. Delay
    95  
12.3. Jury Waiver
    95  
 
       
ARTICLE XIII EFFECTIVE DATE AND TERMINATION
    96  
13.1. Term
    96  
13.2. Termination
    96  
 
       
ARTICLE XIV REGARDING AGENT
    97  
14.1. Appointment
    97  
14.2. Nature of Duties
    97  
14.3. Lack of Reliance on Agent and Resignation
    98  
14.4. Certain Rights of Agent
    98  
14.5. Reliance
    99  
14.6. Notice of Default
    99  
14.7. Indemnification
    99  
14.8. Agent in its Individual Capacity
    99  
14.9. Delivery of Documents
    100  
14.10. Borrower’s Undertaking to Agent
    100  
14.11. No Reliance on Agent’s Customer Identification Program
    100  
14.12. Other Agreements
    100  
 
       
ARTICLE XV MISCELLANEOUS
    101  
15.1. Governing Law
    101  
15.2. Entire Understanding
    101  
15.3. Successors and Assigns; Participations; New Lenders
    103  
15.4. Application of Payments
    106  
15.5. Indemnity
    106  
15.6 Notice
    107  
15.7. Survival
    109  
15.8. Severability
    109  
15.9. Expenses
    109  
15.10. Injunctive Relief
    109  
15.11. Damages
    109  
15.12. Captions
    110  
15.13. Counterparts; Facsimile Signatures
    110  
15.14. Construction
    110  
15.15. Confidentiality; Sharing Information
    110  
15.16. Publicity
    111  
15.17. Certifications From Banks and Participants; USA PATRIOT Act
    111  
15.18. Credit Enhancement Letter of Credit Draw Condition
    111  

 

v


 
List of Exhibits and Schedules
     
Exhibits
   
 
   
Exhibit 1.2
  Borrowing Base Certificate
Exhibit 1.2(a)
  Compliance Certificate
Exhibit 2.1(a)
  Revolving Credit Note
Exhibit 5.5(a)
  Pro Forma Balance Sheet
Exhibit 5.5(b)
  Financial Projections
Exhibit 8.1(k)
  Financial Condition Certificate
Exhibit 15.3
  Commitment Transfer Supplement
 
   
Schedules
   
 
   
Schedule 1.2
  Permitted Encumbrances
Schedule 4.5
  Equipment and Inventory Locations; Place of Business; Chief Executive Office; Locations of Real Property
Schedule 4.15(h)
  Deposit and Investment Accounts
Schedule 5.2(a)
  States of Formation, Qualification and Good Standing
Schedule 5.2(b)
  Subsidiaries; Ownership
Schedule 5.4
  Federal Tax Identification Number
Schedule 5.8(b)
  Litigation
Schedule 5.8(d)
  Plans
Schedule 5.9
  Intellectual Property; Challenges to Use
Schedule 5.28
  Material Contracts
Schedule 7.8
  Indebtedness

 

vi


 
REVOLVING CREDIT
AND
SECURITY AGREEMENT
Revolving Credit and Security Agreement dated as of May 5, 2008 among APAC CUSTOMER SERVICES, INC., a corporation under the laws of the State of Illinois (“ Borrower ”), the financial institutions which are now or which hereafter become a party hereto (collectively, the “ Lenders ” and individually a “ Lender ”) and PNC BANK, NATIONAL ASSOCIATION (“ PNC ”), as agent for Lenders (PNC, in such capacity, the “ Agent ”).
IN CONSIDERATION of the mutual covenants and undertakings herein contained, Borrower, Lenders and Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Accounting Terms .
All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with GAAP, applied on a consistent basis, as in effect from time to time, except as otherwise specifically prescribed herein. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in this Agreement or any Other Document, and Borrower or the Required Lenders shall so request, Agent, Lenders and Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that , until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) Borrower shall provide to Agent and the Lenders financial statements and other documents required under this Agreement or any Other Document or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.
1.2. General Terms .
For purposes of this Agreement the following terms shall have the following meanings:
Accountants ” shall have the meaning set forth in Section 9.7 hereof.
Advance Rate ” shall mean:
(i) 85% of Billed Eligible Receivables, plus

 

1


 
(ii) the lesser of (A) 85% of Unbilled Eligible Receivables or (B) $20,000,000 in the aggregate at any one time.
Advances ” shall mean Advances made pursuant to Section 2.1 hereof.
Affiliate ” shall mean any Person which, directly or indirectly through one or more intermediate controls, is controlled by, or is under common control with such Person. For purposes of this definition, (A) control of a Person shall mean the power, direct or indirect, to vote 10% or more of the Equity Interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for any such Person, and (B) Person (who is an individual), with respect to the Borrower, shall mean directors and executive officers of Borrower.
Agent ” shall have the meaning set forth in the preamble to this Agreement and shall include its successors and assigns.
Agreement ” shall mean this Revolving Credit and Security Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time.
Alternate Base Rate ” shall mean, for any day, a rate per annum equal to the higher of (i) the Base Rate in effect on such day and (ii) the Federal Funds Open Rate in effect on such day plus 1/2 of 1%.
Anti-Terrorism Laws ” shall mean any Applicable Laws relating to terrorism or money laundering, including Executive Order No. 13224, the USA PATRIOT Act, the Applicable Laws comprising or implementing the Bank Secrecy Act, and the Applicable Laws administered by the United States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing Applicable Laws may from time to time be amended, renewed, extended, or replaced).
Applicable Law ” shall mean all laws, rules and regulations applicable to the Person, conduct, transaction, covenant, Other Document or contract in question, including all applicable common law and equitable principles; all provisions of all applicable state, federal and foreign constitutions, statutes, rules, regulations and orders of any Governmental Body, and all orders, judgments and decrees of all courts and arbitrators.
Applicable Margin ” for:
(a) Advances that are in excess of the Advance Rate (other than Advances in connection with Out-of-Formula Loans the Applicable Margin for which shall be determined in accordance with clause (b) of this definition) that are Eurodollar Rate Loans shall mean 1.50% and that are Domestic Rate Loans shall mean 0%; and

 

2


 
(b) (i) Advances that are Eurodollar Rate Loans, and (ii) Advances that are Domestic Rate Loans, shall mean the appropriate applicable percentages corresponding to the Fixed Charge Coverage Ratio in effect as of the most recent Calculation Date (as defined below) as shown in the table set forth below:
                     
                Applicable  
        Applicable Margin     Margin for  
    Fixed Charge Coverage   for Eurodollar Rate     Domestic Rate  
Level   Ratio   Loans     Loans  
1  
<1.50 to 1.0
    2.50 %     0.50 %
2  
³ 1.50 to 1.0 but <1.75 to 1.0
    2.25 %     0.25 %
3  
³ 1.75 to 1.0
    2.00 %     0 %
With respect to the Applicable Margin determined in accordance with clause (b) of this definition, the Applicable Margin shall be determined and adjusted quarterly on the date (each a “ Calculation Date ”) which is the first day of the first calendar month after the date on which Borrower provides the quarterly officer’s certificate for each fiscal quarter in accordance with the provisions of Section 9.8; provided , however , that (i) the initial Applicable Margin shall be based on Level 1 (as shown above) and shall remain at Level 1 until the first Calculation Date subsequent to Agent’s receipt and review of Borrower’s audited fiscal year-end financial statements for the fiscal year ended on or about December 31, 2008, and, thereafter, the Level shall be determined by the Fixed Charge Coverage Ratio for the immediately preceding fiscal quarter, and (ii) if Borrower fails to provide the officer’s certificate to Agent for any fiscal quarter as required by and within the time limits set forth in Section 9.8, the Applicable Margin from the applicable date of such failure shall be based on Level 1 until the date the appropriate officer’s certificate is provided, whereupon the Level shall be determined by the Fixed Charge Coverage Ratio for the immediately preceding fiscal quarter. Except as set forth above, each Applicable Margin shall be effective from one Calculation Date until the next Calculation Date.
Appraisal ” shall mean an appraisal performed by an appraiser satisfactory to Agent, in form and substance reasonably satisfactory to Agent.
Atalaya ” shall mean, collectively, (i) Atalaya Funding II, LP and (ii) Atalaya Administrative LLC.
Atalaya Warrant ” shall mean that certain Warrant dated January 31, 2007, issued by Borrower in favor of Atalaya, as amended, restated, supplemented or otherwise modified from time to time.
Authority ” shall have the meaning set forth in Section 4.19(b).
Availability Reserve ” shall mean an availability reserve of $1,000,000.

 

3


 
Base Rate ” shall mean the base commercial lending rate of PNC as publicly announced to be in effect from time to time, such rate to be adjusted automatically, without notice, on the effective date of any change in such rate. This rate of interest is determined from time to time by PNC as a means of pricing some loans to its customers and is neither tied to any external rate of interest or index nor does it necessarily reflect the lowest rate of interest actually charged by PNC to any particular class or category of customers of PNC.
Benefitted Lender ” shall have the meaning set forth in Section 2.18(d).
Blocked Accounts ” shall have the meaning set forth in Section 4.15(h).
Blocked Account Bank ” shall have the meaning set forth in Section 4.15(h).
Blocked Person ” shall have the meaning set forth in Section 5.24(b) hereof.
Billed Eligible Receivables ” shall mean Eligible Receivables that have been billed or invoiced by Borrower.
Borrower ” shall have the meaning set forth in the preamble to this Agreement and shall extend to all permitted successors and assigns of such Person.
Borrower’s Account ” shall have the meaning set forth in Section 2.6.
Borrowing Base Certificate ” shall mean a certificate in substantially the form of Exhibit 1.2 duly executed by a Duly Authorized Officer and delivered to Agent, appropriately completed, by which such officer shall certify to Agent the Formula Amount and calculation thereof as of the date of such certificate.
Business Day ” shall mean any day other than Saturday or Sunday or a legal holiday on which commercial banks are authorized or required by law to be closed for business in East Brunswick, New Jersey and, if the applicable Business Day relates to any Eurodollar Rate Loans, such day must also be a day on which dealings are carried on in the London interbank market.
Capital Expenditures ” shall mean expenditures made or liabilities incurred for the acquisition of any fixed assets or improvements, replacements, substitutions or additions thereto which have a useful life of more than one year, including the total principal portion of Capitalized Lease Obligations, which, in accordance with GAAP, would be classified as capital expenditures minus to the extent otherwise constituting Capital Expenditures during such period in accordance with the definition hereof, the aggregate amount of incentive payments or reimbursement payments received by Borrower or any of its Subsidiaries in connection with real estate transactions from any landlords of Borrower or any of its Subsidiaries, including, but not limited to, improvements made to such real estate for the benefit of Borrower or any of its Subsidiaries and not resulting in net out-of-pocket expenditures by Borrower or any of its Subsidiaries.
Capital Stock ” shall mean (i) in the case of a corporation, capital stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (iii) in the case of a partnership, partnership interests (whether general or limited), (iv) in the case of a limited liability company, membership interests and (v) any other equity interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

 

4


 
Capitalized Lease Obligation ” shall mean any Indebtedness of Borrower represented by obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.
Cash Equivalents ” means, as at any date, (a) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than twelve months from the date of acquisition, (b) U.S. Dollar denominated time deposits and certificates of deposit of (i) any Lender, (ii) any domestic commercial bank of recognized standing having capital and surplus in excess of $500,000,000 or (iii) any bank whose short-term commercial paper rating from Standard & Poor’s Ratings Services (together with any successor thereto, “S&P) is at least A-1 or the equivalent thereof or from Moody’s Investors Service, Inc.(together with any successor thereto, “Moody’s”) is at least P-1 or the equivalent thereof (any such bank being an “Approved Bank”), in each case with maturities of not more than 270 days from the date of acquisition, (c) commercial paper and variable or fixed rate notes issued by any Approved Bank (or by the parent company thereof) or any variable rate notes issued by, or guaranteed by, any domestic corporation rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or better by Moody’s and maturing within six months of the date of acquisition, (d) repurchase agreements entered into by any Person with a bank or trust company (including any of the Lenders) or recognized securities dealer having capital and surplus in excess of $500,000,000 for direct obligations issued by or fully guaranteed by the United States in which such Person shall have a perfected first priority security interest (subject to no other Liens) and having, on the date of purchase thereof, a fair market value of at least 100% of the amount of the repurchase obligations and (e) Investments, classified in accordance with GAAP as current assets, in money market investment programs registered under the Investment Company Act of 1940 which are administered by reputable financial institutions having capital of at least $500,000,000 and the portfolios of which are limited to Investments of the character described in the foregoing subdivisions (a) through (d).
Cash Management Products ” shall mean any one or more of the following types of services or facilities extended to Borrower by Agent, any Lender or any Affiliate of Agent or a Lender in reliance on Agent’s or such Lender’s agreement to indemnify such Affiliate: (i) Automated Clearing House (ACH) transactions and other similar money transfer services; (ii) cash management, including controlled disbursement and lockbox services; (iii) establishing and maintaining deposit accounts; and (iv) credit cards or stored value cards.
Cash Taxes ” shall mean, for any period, the federal, state and local taxes of a Person based on income and business activity payable in the actual cash during such period.
CERCLA ” shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq.

 

5


 
Change of Control ” shall mean (a) the occurrence of any event (whether in one or more transactions) which results in a Person who is not an Original Owner acquiring control of Borrower or (b) any merger or consolidation of or with Borrower or sale of all or substantially all of the property or assets of Borrower which results in a Person who is not an Original Owner acquiring control of Borrower. For purposes of this definition, “control of Borrower” shall mean the power, direct or indirect (x) to vote 50% or more of the Equity Interests having ordinary voting power for the election of directors (or the individuals performing similar functions) of Borrower or (y) to direct or cause the direction of the management and policies of Borrower by contract or otherwise.
Charges ” shall mean all taxes, charges, fees, imposts, levies or other assessments, including all net income, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation and property taxes, custom duties, fees, assessments, liens, claims and charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts, imposed by any taxing or other authority, domestic or foreign (including the Pension Benefit Guaranty Corporation or any environmental agency or superfund), upon the Collateral, Borrower or any of its Affiliates.
Closing Date ” shall mean May 5, 2008 or such other date as may be agreed to by the parties hereto.
Code ” shall mean the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.
Collateral ” shall mean and include:
(a) all Receivables;
(b) all Equipment;
(c) all General Intangibles;
(d) all Inventory;
(e) all Investment Property;
(f) all Subsidiary Stock;

 

6


 
(g) all of Borrower’s right, title and interest in and to, whether now owned or hereafter acquired and wherever located, (i) its respective goods and other property including, but not limited to, all merchandise returned or rejected by Customers, relating to or securing any of the Receivables; (ii) all of Borrower’s rights as a consignor, a consignee, an unpaid vendor, mechanic, artisan, or other lienor, including stoppage in transit, setoff, detinue, replevin, reclamation and repurchase; (iii) all additional amounts due to Borrower from any Customer relating to the Receivables; (iv) other property, including warranty claims, relating to any goods securing the Obligations; (v) all of Borrower’s assignable contract rights, rights of payment which have been earned under a contract right, instruments (including promissory notes), documents, chattel paper (including electronic chattel paper), warehouse receipts, deposit accounts, letters of credit and money; (vi) each commercial tort claim in existence as of the date hereof and in which a security interest is hereafter granted to Agent by Borrower pursuant to the provision of Section 4.1 or otherwise; (viii) all letter of credit rights (whether or not the respective letter of credit is evidenced by a writing); (ix) all supporting obligations; and (x) any other goods, personal property or real property now owned or hereafter acquired in which Borrower has expressly granted a security interest or may in the future grant a security interest to Agent hereunder, or in any amendment or supplement hereto or thereto, or under any other agreement between Agent and Borrower;
(h) all of Borrower’s ledger sheets, ledger cards, files, correspondence, records, books of account, business papers, computers, computer software (owned by Borrower or in which it has an interest), computer programs, tapes, disks and documents relating to (a), (b), (c), (d), (e), (f) or (g) of this Paragraph; and
(i) all of Borrower’s cash and cash equivalents; and
(j) all proceeds and products of (a), (b), (c), (d), (e), (f), (g), (h) and (i) in whatever form, including, but not limited to: cash, deposit accounts (whether or not comprised solely of proceeds), certificates of deposit, insurance proceeds (including hazard, flood and credit insurance), negotiable instruments and other instruments for the payment of money, chattel paper, security agreements, documents, eminent domain proceeds, condemnation proceeds and tort claim proceeds.
Commitment Percentage ” shall mean for any Lender party to this Agreement on the Closing Date, the percentage set forth below such Lender’s name on the signature page hereof as same may be adjusted upon any assignment by a Lender pursuant to Section 15.3 (c) or (d) hereof, and for any Lender that becomes a party to this Agreement pursuant to a Commitment Transfer Supplement or Modified Commitment Transfer Supplement, the percentage set forth on Schedule 1 to such Commitment Transfer Supplement or Modified Commitment Transfer Supplement, as applicable.
Commitment Transfer Supplement ” shall mean a document in the form of Exhibit 15.3 hereto, properly completed and otherwise in form and substance satisfactory to Agent by which the Purchasing Lender purchases and assumes a portion of the obligation of Lenders to make Advances under this Agreement.

 

7


 
Compliance Certificate ” shall mean a compliance certificate substantially in the form attached hereto as Exhibit 1.2 (a) to be signed by a Duly Authorized Officer, which shall state that, based on an examination sufficient to permit such officer to make an informed statement, (i) no Default or Event of Default exists, or if such is not the case, specifying such Default or Event of Default, its nature, when it occurred, whether it is continuing and the steps being taken by Borrower with respect to such default and, such certificate shall have appended thereto calculations which set forth Borrower’s compliance with the requirements or restrictions imposed by Sections 6.5, 7.6 and 7.11; and (ii) that to the best of such officer’s knowledge, Borrower is in compliance in all material respects with all federal, state and local Environmental Laws, or if such is not the case, specifying all areas of non-compliance and the proposed action Borrower will implement in order to achieve full compliance. The Compliance Certificate will only be required to contain the information in clause (ii) if Borrower acquires a fee interest in any Real Property.
Consents ” shall mean all filings and all licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Bodies and other third parties, domestic or foreign, necessary to carry on Borrower’s business or necessary (including to avoid a conflict or breach under any agreement, instrument, other document, license, permit or other authorization) for the execution, delivery or performance of this Agreement, the Other Documents, the Subordinated Documentation, including any Consents required under all applicable federal, state or other Applicable Law.
Controlled Group ” shall mean, at any time, the Borrower and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control and all other entities which, together with Borrower, are treated as a single employer under Section 414 of the Code.
Credit Enhancement Amount ” shall mean the lesser of (i) the Required Credit Enhancement Amount and (ii) the face amount of any Credit Enhancement Letter of Credit or any cash or Cash Equivalents held by the Agent as collateral securing the Obligations in substitution therefore.
Credit Enhancement Letter of Credit ” shall mean a Letter of Credit provided by TCS for the benefit of Agent in form and substance reasonably acceptable to Agent, including any replacements or substitutions to such Letter of Credit, in form and substance reasonably acceptable to Agent.
Credit Enhancement Letter of Credit Draw Condition ” shall mean the earlier of (i) ninety (90) days following an Event of Default and the acceleration of the Obligations under Section 11.1 or (ii) thirty (30) days prior to expiration of the Credit Enhancement Letter of Credit unless (a) evidence that such Credit Enhancement Letter of Credit will be extended is provided to Agent; (b) a draft of a substitute Letter of Credit with a stated amount equal to or greater than the Required Enhancement Amount at such time, and otherwise reasonably satisfactory to Agent is provided to Agent; or (c) Borrower provides sufficient cash or Cash Equivalents as collateral to Agent in substitution therefore in an amount equal to or greater than the Required Credit Enhancement Amount at such time.
Customer ” shall mean and include the account debtor with respect to any Receivable and/or the prospective purchaser of goods, services or both with respect to any contract or contract right, and/or any party who enters into or proposes to enter into any contract or other arrangement with Borrower, pursuant to which Borrower is to deliver any personal property or perform any services.

 

8


 
Default ” shall mean an event, circumstance or condition which, with the giving of notice or passage of time or both, would constitute an Event of Default.
Default Rate ” shall have the meaning set forth in Section 3.1 hereof.
Defaulting Lender ” shall have the meaning set forth in Section 2.23(a) hereof.
Depository Accounts ” shall have the meaning set forth in Section 4.15(h) hereof.
Dollar ” and the sign “$” shall mean lawful money of the United States of America.
Domestic Rate Loan ” shall mean any Advance that bears interest based upon the Alternate Base Rate.
Domestic Subsidiaries ” shall mean, with respect to any Person, any Subsidiary of such Person which is incorporated or organized under the laws of any state of the United States or the District of Columbia.
Drawing Date ” shall have the meaning set forth in Section 2.10(b) hereof.
Duly Authorized Officer ” shall mean a treasurer, vice president, chief financial officer, chief executive officer or other officer designated from time to time by Borrower’s Board of Directors and reasonably acceptable to Agent.
EBITDA ” shall mean for any period, for Borrower, the sum of (i) Net Income for such period, plus (ii) all Interest Expense for such period, plus (iii) all charges against income of Borrower for such period for federal, state and local taxes expenses, plus (iv) depreciation expenses for such period, plus (v) amortization expenses for such period, plus (vi) any extraordinary, unusual or non-recurring non-cash expenses or losses (including losses on sales of assets outside of the Ordinary Course of Business) during such period, plus (vii) any restructuring and other charges, as separately identified and reported on Borrower’s audited financial statements, incurred during the period beginning with the second quarter of the Borrower’s 2008 fiscal year and ending with the fourth quarter of the Borrower’s 2008 fiscal year, not to exceed $2,000,000 in aggregate over this period, plus (viii) costs associated with the expensing of stock options, minus (ix) any extraordinary, unusual or non-recurring non-cash income or gains (including gains on the sale of assets outside of the Ordinary Course of Business) during such period, in each case, only to the extent included in the statement of net income for such period. Notwithstanding the foregoing, EBITDA for the first fiscal quarter of the Borrower’s 2008 fiscal year shall be deemed to be $3,434,000.

 

9


 
Eligible Receivables ” shall mean and include with respect to Borrower, each Receivable of Borrower arising in the Ordinary Course of Business and which Agent, in its Permitted Discretion, shall deem to be an Eligible Receivable, based on such considerations as Agent may from time to time deem appropriate. A Receivable shall not be deemed eligible unless such Receivable is subject to Agent’s first priority perfected security interest and no other Lien (other than Permitted Encumbrances) and, other than with respect to Unbilled Eligible Receivables, is evidenced by an invoice or other documentary evidence reasonably satisfactory to Agent. In addition, no Receivable shall be an Eligible Receivable if:
(a) it arises out of a sale made by Borrower to an Affiliate of Borrower or to a Person controlled by an Affiliate of Borrower;
(b) with respect to Billed Eligible Receivables, it is due or unpaid more than (i) ninety (90) days after the original invoice date or (ii) sixty (60) days after the original due date;
(c) with respect to Unbilled Eligible Receivables, it is more than sixty (60) days old;
(d) fifty percent (50%) or more of the Receivables from such Customer are not deemed Eligible Receivables hereunder;
(e) any covenant, representation or warranty contained in this Agreement with respect to such Receivable has been breached;
(f) the Customer shall (i) apply for, suffer, or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or call a meeting of its creditors, (ii) admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, any petition which is filed against it in any involuntary case under such bankruptcy laws, or (viii) take any action for the purpose of effecting any of the foregoing;
(g) the sale is to a Customer outside the continental United States of America, unless the sale is on letter of credit, guaranty or other acceptance terms, in each case acceptable to Agent in its sole credit judgment exercised in good faith;
(h) the sale to the Customer is on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment or any other repurchase or return basis or is evidenced by chattel paper;
(i) Agent believes, in its Permitted Discretion, that collection of such Receivable is insecure or that such Receivable may not be paid by reason of the Customer’s financial inability to pay;

 

10


 
(j) the Customer is the United States of America, any state or any department, agency or instrumentality of any of them, unless Borrower assigns its right to payment of such Receivable to Agent pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other applicable statutes or ordinances;
(k) the goods giving rise to such Receivable have not been delivered to and accepted by the Customer or the services giving rise to such Receivable have not been performed by Borrower and accepted by the Customer or the Receivable otherwise does not represent a final sale;
(l) the Receivables of the Customer exceed a concentration limit determined by Agent, in its Permitted Discretion, to the extent such Receivable exceeds such limit; provided, however, any concentration limit established by Agent shall not be less than 20% and Agent shall provide Borrower with prior notice of the establishment of any such concentration limit;
(m) the Receivable is subject to any asserted or threatened offset, deduction, defense, dispute, or counterclaim (but only as to that portion of the Receivable subject to such asserted or threatened offset, deduction, defense, dispute or counterclaim), the Customer is also a creditor or supplier of Borrower (but only as to that portion of the Receivable that does not exceed the amount owed by Borrower to such creditor or supplier) or the Receivable is contingent in any respect or for any reason;
(n) Borrower has made any agreement with any Customer for any deduction therefrom, except for discounts or allowances made in the Ordinary Course of Business, all of which discounts or allowances are reflected in the calculation of the face value of each respective invoice related thereto;
(o) any return, rejection or repossession of the merchandise has occurred or the rendition of services has been disputed; or
(p) such Receivable is not payable to Borrower.
Environmental Complaint ” shall have the meaning set forth in Section 4.19(b) hereof.
Environmental Laws ” shall mean all federal, state and local environmental, land use, zoning, health, chemical use, safety and sanitation laws, statutes, ordinances and codes relating to the protection of the environment and/or governing the use, storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances and the rules, regulations, policies, guidelines, interpretations, decisions, orders and directives of federal, state and local governmental agencies and authorities with respect thereto.

 

11


 
Equipment ” shall mean and include all of Borrower’s goods (other than Inventory) whether now owned or hereafter acquired and wherever located including all equipment, machinery, apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts, accessories and all replacements and substitutions therefor or accessions thereto.
Equity Interests ” of any Person shall mean any and all shares, rights to purchase, options, warrants, general, limited or limited liability partnership interests, member interests, participation or other equivalents of or interest in (regardless of how designated) equity of such Person, whether voting or nonvoting, including common stock, preferred stock, convertible securities or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).
ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time and the rules and regulations promulgated thereunder.
Eurodollar Rate ” shall mean for any Eurodollar Rate Loan for the then current Interest Period relating thereto the interest rate per annum determined by Agent by dividing (the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which U.S. dollar deposits are offered by leading banks in the London interbank deposit market), or the rate which is quoted by another source selected by the Agent which has been approved by the British Bankers’ Association as an authorized information vendor for the purpose of displaying rates at which U.S. dollar deposits are offered by leading banks in the London interbank deposit market (an “Alternate Source”), at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period as the London interbank offered rate for U.S. Dollars for an amount comparable to such Eurodollar Rate Loan and having a borrowing date and a maturity comparable to such Interest Period (or if there shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or any Alternate Source, a comparable replacement rate determined by Agent at such time (which determination shall be conclusive absent manifest error)), by (ii) a number equal to 1.00 minus the Reserve Percentage. The Eurodollar Rate may also be expressed by the following formula:
         
 
  Average of London interbank offered rates quoted by    
 
  Bloomberg as shown on    
Eurodollar Rate =
  Bloomberg page    
 
  BBAM1
 
   
 
  1.00 – Reserve Percentage    
The Eurodollar Rate shall be adjusted with respect to any Eurodollar Rate Loan that is outstanding on the effective date of any change in the Reserve Percentage as of such effective date. The Agent shall give prompt notice to the Borrower of the Eurodollar Rate as determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error.
Eurodollar Rate Loan ” shall mean an Advance at any time that bears interest based on the Eurodollar Rate.

 

12


 
Event of Default ” shall have the meaning set forth in Article X hereof.
Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.
Executive Order No. 13224 ” shall mean the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
Existing Lenders ” shall mean, collectively, Atalaya and LaSalle Bank National Association.
Federal Funds Effective Rate ” for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed and rounded upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate” as of the date of this Agreement; provided, if such Federal Reserve Bank (or its successor) does not announce such rate on any day, the “Federal Funds Effective Rate” for such day shall be the Federal Funds Effective Rate for the last day on which such rate was announced.
Federal Funds Open Rate ” shall mean the rate per annum determined by Agent in accordance with its usual procedures (which determination shall be conclusive absent manifest error) to be the “open” rate for federal funds transactions as of the opening of business for federal funds transactions among members of the Federal Reserve System arranged by federal funds brokers on such day, as quoted by Garvin Guybutler Corporation, any successor entity thereto, or any other broker selected by Agent, as set forth on the applicable Telerate display page; provided, however; that if such day is not a Business Day, the Federal Funds Open Rate for such day shall be the “open” rate on the immediately preceding Business Day, or if no such rate shall be quoted by a Federal funds broker at such time, such other rate as determined by Agent in accordance with its usual procedures.
Fee Letter ” shall mean the fee letter dated April 23, 2008 between Borrower and PNC.
Fixed Charge Coverage Ratio ” shall mean and include, with respect to the applicable fiscal period, the ratio of (a) EBITDA for such fiscal period minus Capital Expenditures of Borrower made during such fiscal period which are not funded by borrowed money (other than proceeds of Advances) minus Cash Taxes paid by Borrower during such fiscal period minus any cash dividends or distributions made by Borrower during such fiscal period to (b) the sum of all Funded Debt Payments made during such fiscal period.
Foreign Subsidiary ” of any Person, shall mean any Subsidiary of such Person that is not organized or incorporated in the United States or any State or territory thereof.

 

13


 
Formula Amount ” shall mean, as of any date of determination, an amount equal to (a) the sum of the (i) Advance Rate plus (ii) the Credit Enhancement Amount minus (b) the sum of the (i) aggregate Maximum Undrawn Amount of all Letters of Credit Outstanding, (ii) the Restructuring Reserve, (iii) the Availability Reserve and (iv) any additional reserves established by Agent in its Permitted Discretion.
Funded Debt Payments ” shall mean and include for any fiscal period all cash actually expended by Borrower to make (a) interest payments on any Advances hereunder, plus (b) capitalized lease payments, plus (c) payments with respect to any Indebtedness for borrowed money.
GAAP ” shall mean generally accepted accounting principles in the United States of America in effect from time to time.
General Intangibles ” shall mean and include all of Borrower’s general intangibles, whether now owned or hereafter acquired, including all payment intangibles, all choses in action, causes of action, corporate or other business records, inventions, designs, patents, patent applications, equipment formulations, manufacturing procedures, quality control procedures, trademarks, trademark applications, service marks, trade secrets, goodwill, copyrights, design rights, software, computer information, source codes, codes, records and updates, registrations, licenses, franchises, customer lists, tax refunds, tax refund claims, computer programs, all claims under guaranties, security interests or other security held by or granted to Borrower to secure payment of any of the Receivables by a Customer (other than to the extent covered by Receivables) all rights of indemnification and all other intangible property of every kind and nature (other than Receivables).
Governmental Acts ” shall have the meaning set forth in Section 2.15.
Governmental Body ” shall mean any nation or government, any state or other political subdivision thereof or any entity, authority, agency, division or department exercising the legislative, judicial, regulatory or administrative functions of or pertaining to a government.
Guarantor ” shall mean APAC Customer Services of Iowa, L.L.C. and any other Person who may hereafter guarantee payment or performance of the whole or any part of the Obligations and “Guarantors” means collectively all such Persons.
Guarantor Security Agreement ” shall mean any Security Agreement executed by any Guarantor in favor of Agent securing the Guaranty of such Guarantor.
Guaranty ” shall mean any guaranty of the obligations of Borrower executed by a Guarantor in favor of Agent for its benefit and for the ratable benefit of Lenders.
Hazardous Discharge ” shall have the meaning set forth in Section 4.19(b) hereof.

 

14


 
Hazardous Substance ” shall mean, without limitation, any flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or related materials as defined in CERCLA, the Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of the New York State Environmental Conservation Law or any other applicable Environmental Law and in the regulations adopted pursuant thereto.
Hazardous Wastes ” shall mean all waste materials subject to regulation under CERCLA, RCRA or applicable state law, and any other applicable Federal and state laws now in force or hereafter enacted relating to hazardous waste disposal.
Hedge Liabilities ” shall have the meaning provided in the definition of “Lender-Provided Interest Rate Hedge”.
Indebtedness ” of a Person at a particular date shall mean all obligations of such Person which in accordance with GAAP would be classified upon a balance sheet as liabilities (except capital stock and surplus earned or otherwise) and in any event, without limitation by reason of enumeration, shall include all indebtedness, debt and other similar monetary obligations of such Person whether direct or guaranteed, and all premiums, if any, due at the required prepayment dates of such indebtedness, and all indebtedness secured by a Lien on assets owned by such Person, whether or not such indebtedness actually shall have been created, assumed or incurred by such Person. Any indebtedness of such Person resulting from the acquisition by such Person of any assets subject to any Lien shall be deemed, for the purposes hereof, to be the equivalent of the creation, assumption and incurring of the indebtedness secured thereby, whether or not actually so created, assumed or incurred.
Ineligible Security ” shall mean any security which may not be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.
Intellectual Property ” shall mean property constituting under any Applicable Law a patent, patent application, copyright, trademark, service mark, trade name, mask work, trade secret or license or other right to use any of the foregoing.
Intellectual Property Claim ” shall mean the assertion by any Person of a claim (whether asserted in writing, by action, suit or proceeding or otherwise) that Borrower’s ownership, use, marketing, sale or distribution of any Inventory, Equipment, Intellectual Property or other property or asset is violative of any ownership of or right to use any Intellectual Property of such Person.
Interest Expense ” shall mean for any period interest expense, net of cash interest income, of Borrower for such period, as determined in accordance with GAAP.
Interest Period ” shall mean the period provided for any Eurodollar Rate Loan pursuant to Section 2.2(b).

 

15


 
Interest Rate ” shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus the Applicable Margin with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus the Applicable Margin with respect to Eurodollar Rate Loans.
Interest Rate Hedge ” shall mean an interest rate exchange, collar, cap, swap, adjustable strike cap, adjustable strike corridor or similar agreements entered into by the Borrower or its Subsidiaries in order to provide protection to, or minimize the impact upon, the Borrower, any Guarantor and/or their respective Subsidiaries of increasing floating rates of interest applicable to Indebtedness.
Inventory ” shall mean and include all of Borrower’s now owned or hereafter acquired goods, merchandise and other personal property, wherever located, to be furnished under any consignment arrangement, contract of service or held for sale or lease, all raw materials, work in process, finished goods and materials and supplies of any kind, nature or description which are or might be used or consumed in Borrower’s business or used in selling or furnishing such goods, merchandise and other personal property, and all documents of title or other documents representing them.
Investment Property ” shall mean and include all of Borrower’s now owned or hereafter acquired securities (whether certificated or uncertificated), securities entitlements, securities accounts, commodities contracts and commodities accounts.
ISP98 Rules ” shall have the meaning set forth in Section 2.8(b) hereof.
Issuer ” shall mean PNC in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder.
Lender ” and “ Lenders ” shall have the meaning ascribed to such term in the preamble to this Agreement and shall include each Person which becomes a transferee, successor or assign of any Lender.
Lender Default ” shall have the meaning set forth in Section 2.23(a).
Lender-Provided Interest Rate Hedge ” shall mean an Interest Rate Hedge which is provided by any Person (or affiliate of such Person) that was a Lender at the time it entered into such Interest Rate Hedge, whether or not such Person has ceased to be a Lender under this Agreement and with respect to which Agent confirms meets the following requirements: such Interest Rate Hedge (i) is documented in a standard International Swap Dealer Association Agreement, (ii) provides for the method of calculating the reimbursable amount of the provider’s credit exposure in a reasonable and customary manner, and (iii) is entered into for hedging (rather than speculative) purposes. The liabilities of Borrower to the provider of any Lender-Provided Interest Rate Hedge (the “ Hedge Liabilities ”) shall be “Obligations” hereunder, guaranteed obligations under the Guaranty and secured obligations under the Guarantor Security Agreement and otherwise treated as Obligations for purposes of each of the Other Documents. The Liens securing the Hedge Liabilities shall be pari passu with the Liens securing all other Obligations under this Agreement and the Other Documents.

 

16


 
Letter of Credit Application ” shall have the meaning set forth in Section 2.8(a).
Letter of Credit Borrowing ” shall have the meaning set forth in Section 2.10(d).
Letter of Credit Documents ” shall mean, with respect to any Letter of Credit, such Letter of Credit, any amendments thereto, any documents delivered in connection therewith, any application therefor, and any agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (i) the rights and obligations of the parties concerned or at risk or (ii) any collateral security for such obligations.
Letter of Credit Fees ” shall have the meaning set forth in Section 3.2.
Letter of Credit Sublimit ” shall mean $5,000,000 (specifically excluding the Credit Enhancement Letter of Credit).
Letters of Credit ” shall mean any standby letter of credit issued hereunder. For the avoidance of doubt, the term “Letters of Credit” does not include the Credit Enhancement Letter of Credit.
License Agreement ” shall mean any agreement between Borrower and a Licensor pursuant to which Borrower is authorized to use any Intellectual Property in connection with the manufacturing, marketing, sale or other distribution of any Inventory of Borrower or otherwise in connection with Borrower’s business operations.
Licensor ” shall mean any Person from whom Borrower obtains the right to use (whether on an exclusive or non-exclusive basis) any Intellectual Property in connection with Borrower’s manufacture, marketing, sale or other distribution of any Inventory or otherwise in connection with Borrower’s business operations.
Licensor/Agent Agreement ” shall mean an agreement between Agent and a Licensor, in form and content satisfactory to Agent, by which Agent is given the unqualified right, vis-a-vis such Licensor, to enforce Agent’s Liens with respect to and to dispose of Borrower’s Inventory with the benefit of any Intellectual Property applicable thereto, irrespective of Borrower’s default under any License Agreement with such Licensor.
Lien ” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, security interest, lien (whether statutory or otherwise), Charge, claim or encumbrance, or preference, priority or other security agreement or preferential arrangement held or asserted in respect of any asset of any kind or nature whatsoever including any conditional sale or other title retention agreement, any lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction.

 

17


 
Lien Waiver Agreement ” shall mean an agreement which is executed in favor of Agent by a Person who owns or occupies premises at which any Collateral may be located from time to time and by which such Person shall waive any Lien that such Person may ever have with respect to any of the Collateral and shall authorize Agent from time to time to enter upon the premises to inspect or remove the Collateral from such premises or to use such premises to store or dispose of such Collateral.
Material Adverse Effect ” shall mean a material adverse effect on (a) the condition (financial or otherwise), results of operations, assets, business or properties of Borrower or any Guarantor, (b) Borrower’s ability to pay when due or perform the Obligations in accordance with the terms thereof, (c) the value of the Collateral, or Agent’s Liens on the Collateral or the priority of any such Lien or (d) the validity or enforceability of this Agreement.
Material Contract ” shall mean any contract, agreement, permit or license, written or oral, of a Borrower the failure to comply with which could reasonably be expected to have a Material Adverse Effect.
Maximum Revolving Advance Amount ” shall mean $40,000,000.
Maximum Undrawn Amount ” shall mean with respect to any outstanding Letter of Credit, the amount of such Letter of Credit that is or may become available to be drawn, including all automatic increases provided for in such Letter of Credit, whether or not any such automatic increase has become effective.
Modified Commitment Transfer Supplement ” shall have the meaning set forth in Section 15.3(d).
Multiemployer Plan ” shall mean a “multiemployer plan” as defined in Sections 3(37) and 4001(a)(3) of ERISA.
Multiple Employer Plan ” shall mean a Plan which has two or more contributing sponsors (including the Borrower or any member of the Controlled Group) at least two of whom are not under common control, as such a plan is described in Section  4064 of ERISA.
Net Income ” shall mean for any period, the net income (or loss) of Borrower, determined in accordance with GAAP; provided , that there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of Borrower or is merged into or consolidated with the Borrower, (b) the net income (or deficit) of any Person (other than a Subsidiary of Borrower) in which the Borrower has an ownership interest, except to the extent that any such income is actually received by Borrower in the form of dividends or similar distributions and (c) the undistributed earnings of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is at the time prohibited by the terms of any agreement to which such Person is a party or by which it or any of its property is bound, any of such Person’s organizational documents or other legal proceedings binding upon such Person or any of its property or to which such Person or any of its property is subject.

 

18


 
Non-Defaulting Lender ” shall have the meaning set forth in Section 2.23(b).
Note ” shall mean the Revolving Credit Note.
Obligations ” shall mean and include the Advances, any other loans and advances or extensions of credit made or to be made by any Lender to Borrower, or to others for Borrower’s account, in each case pursuant to the terms and provisions of this Agreement, together with interest thereon (including interest which accrues after the commencement of any bankruptcy or similar case, whether or not such post-petition interest is allowed in such case) and, including, without limitation, any reimbursement obligation or indemnity of Borrower on account of Letters of Credit and all other obligations in respect of Letters of Credit and all indebtedness, fees, liabilities and obligations that may at any time be owing by Borrower to any Lender (or an Affiliate of a Lender) or Agent, in each case pursuant to this Agreement or any Other Document, whether now in existence or incurred by Borrower from time to time hereafter, whether unsecured or secured by pledge of, Lien upon or security interest in any of Borrower’s assets or property or the assets or property of any other Person, whether arising out of overdrafts or deposit or other accounts or electronic funds transfers (whether through automated clearing houses or otherwise) or out of Agent or any Lender’s non-receipt of or inability to collect funds or otherwise not being made whole in connection with depository transfer check or other similar arrangements, whether such indebtedness is absolute or contingent, joint or several, matured or unmatured, direct or indirect and whether Borrower is liable to such Lender (or an Affiliate of a Lender) for such indebtedness as principal, surety, endorser, guarantor or otherwise. Obligations shall also include any other indebtedness owing to any Lender (or an Affiliate of a Lender) by Borrower under this Agreement and the Other Documents, all liabilities and obligations arising under Lender-Provided Interest Rate Hedges owing from Borrower to any Lender, or any Affiliate of a Lender (or any Person that was a Lender or an affiliate of a Lender at the time such Lender-Provided Interest Rate Hedge was entered into), permitted hereunder, and all liabilities and obligations now or hereafter arising from or in connection with any Cash Management Products.
Ordinary Course of Business ” shall mean the ordinary course of Borrower’s business as conducted on the Closing Date.
Original Owners ” shall mean Theodore G. Schwartz.
Other Documents ” shall mean the Note, the Fee Letter, any Guaranty, any Guarantor Security Agreement, any Lender-Provided Interest Rate Hedge, any Letter of Credit Document and any and all other agreements, instruments and documents, including guaranties, pledges, powers of attorney, consents, interest or currency swap agreements or other similar agreements and all other writings heretofore, now or hereafter executed by Borrower or any Guarantor and/or delivered to Agent or any Lender in respect of the transactions contemplated by this Agreement other than the Subordinated Documentation.
Out-of-Formula Loans ” shall have the meaning set forth in Section 15.2(b).

 

19


 
Parent ” of any Person shall mean a corporation or other entity owning, directly or indirectly at least 50% of the shares of stock or other ownership interests having ordinary voting power to elect a majority of the directors of the Person, or other Persons performing similar functions for any such Person.
Participant ” shall mean each Person who shall be granted the right by any Lender to participate in any of the Advances and who shall have entered into a participation agreement in form and substance satisfactory to such Lender.
Participation Advance ” shall have the meaning set forth in Section 2.10(d).
Participation Commitment ” shall mean each Lender’s obligation to buy a participation of the Letters of Credit issued hereunder as provided in Section 2.10(c).
Payment Office ” shall mean initially Two Tower Center Boulevard, East Brunswick, New Jersey 08816; thereafter, such other office of Agent, if any, which it may designate by notice to Borrower and to each Lender to be the Payment Office.
PBGC ” shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor.
Pension Benefit Plan ” shall mean at any time any employee pension benefit plan (including a Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code and either (i) is maintained by any member of the Controlled Group for employees of any member of the Controlled Group; or (ii) has at any time within the preceding five years been maintained by any entity which was at such time a member of the Controlled Group for employees of any entity which was at such time a member of the Controlled Group.
Permitted Currency Hedge Agreements ” shall mean currency hedge agreements entered into by Borrower in the Ordinary Course of Business.
Permitted Discretion ” shall mean a determination made in the exercise of reasonable (from the perspective of a secured asset-based lender) business judgment.
Permitted Encumbrances ” shall mean:
(a) Liens in favor of Agent for the benefit of Agent and Lenders;
(b) Liens for Charges not delinquent or being Properly Contested, but only if the Lien shall have no effect on the priority of the Liens in favor of Agent or the value of the assets in which Agent has such a Lien and a stay of enforcement of any such Lien shall be in effect;
(c) Liens disclosed in the financial statements referred to in Section 5.5, the existence of which Agent has consented to in writing;

 

20


 
(d) deposits or pledges to secure obligations under worker’s compensation, social security or similar laws, or under unemployment insurance;
(e) deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, surety and appeal bonds and other obligations of like nature arising in the Ordinary Course of Business;
(f) Liens arising by virtue of the rendition, entry or issuance against Borrower, or any property of Borrower, of any judgment, writ, order, or decree for so long as each such Lien (i) is in existence for less than thirty (30) consecutive days after it first arises or is being Properly Contested and (ii) is at all times junior in priority to any Liens in favor of Agent;
(g) mechanics’, workers’, materialmen’s, carriers’, repairmens’ or other like Liens arising in the Ordinary Course of Business with respect to obligations which are not due or which are being contested in good faith by Borrower;
(h) Liens securing Permitted Purchase Money Indebtedness, provided that (i) such Liens shall be created substantially simultaneously with the acquisition of the asset acquired with such Indebtedness, (ii) such Liens do not at any time encumber any property other than the property financed by such Indebtedness, (iii) the amount of Indebtedness secured thereby is not increased and (iv) the principal amount of Indebtedness secured by any such Lien shall at no time exceed 100% of the original purchase price of such property;
(i) easements, rights-of-way, restrictions and other similar encumbrances or Liens incurred in the Ordinary Course of Business which, in the aggregate, are not substantial in amount and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business on the property subject to such encumbrances;
(j) Liens securing the Subordinated Documentation;
(k) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;
(l) Liens of sellers of good arising under Article 2 of the Uniform Commercial Code;
(m) Liens on cash equivalents relating to banker’s liens, rights of set-off or similar rights as to deposit securities accounts and liens of a collection bank arising under Section 4-210 of the Uniform Commercial Code on items in the course of collection;
(n) any interest or title of a lessor or a sublessor under any operating lease or any capitalized lease; and
(o) Liens disclosed on Schedule 1.2.

 

21


 
Permitted Purchase Money Indebtedness ” shall mean Purchase Money Indebtedness of Borrower which is incurred after the date of this Agreement and which is secured by no Lien or only by a Purchase Money Lien; provided that (a) the aggregate principal amount of such Purchase Money Indebtedness outstanding at any time shall not exceed $250,000 (including any such Indebtedness on Schedule 7.8), (b) such Indebtedness when incurred shall not exceed the purchase price of the asset(s) financed, and (c) no such Indebtedness shall be refinanced for a principal amount in excess of the principal balance outstanding thereon at the time of such refinancing.
Person ” shall mean any individual, sole proprietorship, partnership, corporation, business trust, joint stock company, trust, unincorporated organization, association, limited liability company, limited liability partnership, institution, public benefit corporation, joint venture, entity or Governmental Body (whether federal, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or department thereof).
Philippines Accounts ” shall mean the four accounts identified as the “Foreign Bank Accounts” on Schedule 4.15(h) or any successor accounts.
Plan ” shall mean any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Benefit Plan), maintained for employees of Borrower or any member of the Controlled Group or any such Plan to which Borrower or any member of the Controlled Group is required to contribute on behalf of any of its employees.
PNC ” shall have the meaning set forth in the preamble to this Agreement and shall extend to all of its successors and assigns.
Pro Forma Balance Sheet ” shall have the meaning set forth in Section 5.5(a) hereof.
Pro Forma Financial Statements ” shall have the meaning set forth in Section 5.5(b) hereof.
Projections ” shall have the meaning set forth in Section 5.5(b) hereof.
Properly Contested ” shall mean, in the case of any Indebtedness of any Person (including any taxes) that is not paid as and when due or payable by reason of such Person’s bona fide dispute concerning its liability to pay same or concerning the amount thereof, (i) such Indebtedness is being properly contested in good faith by appropriate proceedings promptly instituted and diligently conducted; (ii) such Person has established appropriate reserves as shall be required in conformity with GAAP; (iii) the non-payment of such Indebtedness will not have a Material Adverse Effect and will not result in the forfeiture of any assets of such Person; (iv) no Lien is imposed upon any of such Person’s assets with respect to such Indebtedness unless such Lien is at all times junior and subordinate in priority to the Liens in favor of the Agent (except only with respect to property taxes that have priority as a matter of applicable state law) and enforcement of such Lien is stayed during the period prior to the final resolution or disposition of such dispute; (v) if such Indebtedness results from, or is determined by the entry, rendition or issuance against a Person or any of its assets of a judgment, writ, order or decree, enforcement of such judgment, writ, order or decree is stayed pending a timely appeal or other judicial review; and (vi) if such contest is abandoned, settled or determined adversely (in whole or in part) to such Person, such Person forthwith pays such Indebtedness and all penalties, interest and other amounts due in connection therewith.

 

22


 
Properly Contested for Taxes ” shall mean (i) such taxes are being properly contested in good faith by appropriate proceedings promptly instituted and diligently conducted; and (ii) appropriate reserves as shall be required in conformity with GAAP have been established.
Purchase Money Indebtedness ” shall mean and include (i) Indebtedness (other than the Obligations) of Borrower for the payment of all or any part of the purchase price of any Equipment, (ii) any Indebtedness (other than the Obligations) of Borrower incurred at the time of or within thirty (30) days prior to or one hundred twenty (120) days after the acquisition of any Equipment for the purpose of financing all or any part of the purchase price thereof (whether by means of a loan agreement, capitalized lease or otherwise), and (iii) any renewals, extensions or refinancings (but not any increases in the principal amounts) thereof outstanding at the time.
Purchase Money Lien ” shall mean a Lien upon Equipment which secures Purchase Money Indebtedness, but only if such Lien shall at all times be confined solely to the fixed assets acquired through the incurrence of the Purchase Money Indebtedness secured by such Lien and shall not encumber any other property of Borrower, and such Lien constitutes a purchase money security interest under the Uniform Commercial Code.
Purchasing CLO ” shall have the meaning set forth in Section 15.3(d) hereof.
Purchasing Lender ” shall have the meaning set forth in Section 15.3(c) hereof.
Questionnaire ” shall mean the Documentation Information Questionnaire and the responses thereto provided by Borrower and delivered to Agent.
RCRA ” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., as same may be amended from time to time.
Real Property ” shall mean all real property owned and leased by Borrower and identified on Schedule 4.5 hereto.
Receivables ” shall mean and include, as to Borrower, all of Borrower’s accounts, contract rights, instruments (including those evidencing indebtedness owed to Borrower by its Affiliates), documents, chattel paper (including electronic chattel paper), general intangibles relating to accounts, drafts and acceptances, credit card receivables and all other forms of obligations owing to Borrower arising out of or in connection with the sale or lease of Inventory or the rendition of services, all supporting obligations, guarantees and other security therefor, whether secured or unsecured, now existing or hereafter created, and whether or not specifically sold or assigned to Agent hereunder.

 

23


 
Reimbursement Agreement ” shall mean that certain Reimbursement and Security Agreement of even date herewith by and between Borrower and TCS, as the same may be amended, restated, supplement or otherwise modified from time to time.
Reimbursement Obligation ” shall have the meaning set forth in Section 2.10(b) hereof.
Release ” shall have the meaning set forth in Section 5.7(c)(i) hereof.
Register ” shall have the meaning set forth in Section 15.3(e).
Reportable Event ” shall mean a reportable event described in Section 4043(b) of ERISA or the regulations promulgated thereunder.
Required Credit Enhancement Amount ” shall mean $9,000,000, as such amount may be reduced pursuant to the terms of Section 4.23 or 4.24 hereof.
Required Lenders ” shall mean Lenders holding sixty-six and two-thirds percent (66-2/3%) of the Commitment Percentage; provided , however , if there are fewer than three (3) Lenders (including any Defaulting Lender), Required Lenders shall mean all Lenders (other than any Defaulting Lender).
Reserve Percentage ” shall mean as of any day the maximum percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including supplemental, marginal and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as “ Eurocurrency Liabilities ”).
Restructuring Reserve ” shall mean a $1,500,000 restructuring reserve on the Closing Date that will be reduced quarterly to an amount equal to the lesser of (i) $1,500,000 and (ii) the accrued but unpaid scheduled restructuring payments by Borrower.
Revolving Credit Note ” shall mean the promissory notes referred to in Section 2.1(a) hereof.
SEC ” shall mean the Securities and Exchange Commission or any successor thereto.
Section 20 Subsidiary ” shall mean the Subsidiary of the bank holding company controlling PNC, which Subsidiary has been granted authority by the Federal Reserve Board to underwrite and deal in certain Ineligible Securities.
Securities Act ” shall mean the Securities Act of 1933, as amended.

 

24


 
Settlement Date ” shall mean the Closing Date and thereafter Wednesday or Thursday of each week or more frequently if Agent deems appropriate unless such day is not a Business Day in which case it shall be the next succeeding Business Day.
Subordinated Documentation ” shall mean the Reimbursement Agreement and any and all other agreements, instruments and documents, and all other writings heretofore, now or hereafter, now or hereafter executed by Borrower or any Guarantor in respect of the transaction contemplated by the Reimbursement Agreement.
Subordinated Obligations ” shall mean the “Reimbursement Obligations” as such term is defined in the Reimbursement Agreement.
Subordination Agreement ” shall mean the Intercreditor and Subordination Agreement of even date herewith among Agent, Borrower and TCS.
Subsidiary ” of any Person shall mean a corporation or other entity of whose Equity Interests having ordinary voting power (other than Equity Interests having such power only by reason of the happening of a contingency) to elect a majority of the directors of such corporation, or other Persons performing similar functions for such entity, are owned, directly or indirectly, by such Person.
Subsidiary Stock ” shall mean:
(a) one hundred percent 100% of the issued and outstanding Equity Interests of any Domestic Subsidiary of Borrower and 65% of each class of the issued and outstanding Equity Interests entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) (“ Voting Equity ”) and 100% of each class of the issued and outstanding Equity Interests not entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) (“ Non-Voting Equity ”) of each Foreign Subsidiary (but only to the extent that the pledge of such Non-Voting Equity would not cause the Obligations to be treated as “United States property” of such Foreign Subsidiary within the meaning of Treas. Reg. Section 1.956-2), in each case together with the certificates (or other agreements or instruments), if any, representing such Equity Interests, and all options and other rights, contractual or otherwise, with respect thereto (collectively, the “ Pledge Capital Stock ”), including, but not limited to, the following:
(y) subject to the percentage restrictions described above, all shares, securities, membership interests or other equity interests representing a dividend on any of the Pledged Capital Stock, or representing a distribution or return of capital upon or in respect of the Pledged Capital Stock, or resulting from a stock split, revision, reclassification or other exchange therefor, and any subscriptions, warrants, rights or options issued to the holder of, or otherwise in respect of, the Pledged Capital Stock; and
(z) without affecting the obligations of Borrower under any provision prohibiting such action hereunder, in the event of any consolidation or merger involving the issuer of any Pledged Capital Stock and in which such issuer is not the surviving entity, all shares of each class of the Equity Interests of the successor entity formed by or resulting from such consolidation or merger;

 

25


 
(b) Subject to the percentage restrictions described above, any and all other Capital Stock owned by Borrower in any Domestic Subsidiary or any Foreign Subsidiary; and
(c) All proceeds and products of the foregoing, however and whenever acquired and in whatever form.
Term ” shall have the meaning set forth in Section 13.1 hereof.
Termination Event ” shall mean (i) a Reportable Event with respect to any Plan or Multiemployer Plan; (ii) the withdrawal of Borrower or any member of the Controlled Group from a Plan or Multiemployer Plan during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to terminate a Plan in a distress termination described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan or Multiemployer Plan; (v) any event or condition (a) which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan, or (b) that may result in termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of Borrower or any member of the Controlled Group from a Multiemployer Plan.
Toxic Substance ” shall mean and include any material present on the Real Property which has been shown to have significant adverse effect on human health or which is subject to regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et seq., applicable state law, or any other applicable Federal or state laws now in force or hereafter enacted relating to toxic substances. “Toxic Substance” includes but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.
Trading with the Enemy Act ” shall mean the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any enabling legislation or executive order relating thereto.
Transaction Costs ” shall mean the fees, costs and expenses payable by Borrower in connection with the transactions contemplated by this Agreement, the Other Documents, the Subordinated Documents and all amendments, restatements, supplements or other modifications to each of the foregoing (including without limitation, any and all (i) prepayment premiums and other fees payable to the Existing Lenders and (ii) closing fees, amendment fees and other fees payable in connection with any of the foregoing).
Transactions ” shall have the meaning set forth in Section 5.5 hereof.
Transferee ” shall have the meaning set forth in Section 15.3(d) hereof.
TCS ” shall mean TCS Global Holdings, L.P., a Nevada limited partnership.

 

26


 
UCP ” shall have the meaning set forth in Section 2.8(b) hereof.
Unbilled Eligible Receivables ” shall mean an Eligible Receivable not yet evidenced by an invoice but projected to be invoiced within sixty (60) days after the last date of the service giving rise to such Eligible Receivable based upon documentation reasonably satisfactory to Agent in its Permitted Discretion.
Undrawn Availability ” at a particular date shall mean an amount equal to (a) the lesser of (i) the Formula Amount or (ii) the Maximum Revolving Advance Amount, minus (b) the sum of (i) the outstanding amount of Advances plus (ii) all amounts due and owing to Borrower’s trade creditors which are outstanding more than sixty (60) days after their due date (excluding the rent due the Philippines landlord) plus (iii) fees and expenses for which Borrower is liable but which have not been paid or charged to Borrower’s Account.
Uniform Commercial Code ” shall have the meaning set forth in Section 1.3 hereof.
USA PATRIOT Act ” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
Voting Stock ” shall mean, with respect to any Person, Capital Stock issued by such Person the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of such a contingency.
Website Posting ” shall mean any site on the World Wide Web.
Week ” shall mean the time period commencing with the opening of business on a Wednesday and ending on the end of business the following Tuesday.
1.3. Uniform Commercial Code Terms .
All terms used herein and defined in the Uniform Commercial Code as adopted in the State of New York from time to time (the “ Uniform Commercial Code ”) shall have the meaning given therein unless otherwise defined herein. Without limiting the foregoing, the terms “accounts”, “chattel paper”, “instruments”, “general intangibles”, “payment intangibles”, “supporting obligations”, “securities”, “investment property”, “documents”, “deposit accounts”, “software”, “letter of credit rights”, “inventory”, “equipment” and “fixtures”, as and when used in the description of Collateral shall have the meanings given to such terms in Articles 8 or 9 of the Uniform Commercial Code. To the extent the definition of any category or type of collateral is expanded by any amendment, modification or revision to the Uniform Commercial Code, such expanded definition will apply automatically as of the date of such amendment, modification or revision.

 

27


 
1.4. Certain Matters of Construction .
The terms “herein”, “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision. All references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement. Any pronoun used shall be deemed to cover all genders. Wherever appropriate in the context, terms used herein in the singular also include the plural and vice versa. All references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations. Unless otherwise provided, all references to any instruments or agreements to which Agent is a party, including references to any of the Other Documents, shall include any and all modifications or amendments thereto and any and all extensions or renewals thereof. All references herein to the time of day shall mean the time in New York, New York. Unless otherwise provided, all financial calculations shall be performed with Inventory valued on a first-in, first-out basis. Whenever the words “including” or “include” shall be used, such words shall be understood to mean “including, without limitation” or “include, without limitation”. A Default or Event of Default shall be deemed to exist at all times during the period commencing on the date that such Default or Event of Default occurs to the date on which such Default or Event of Default is waived in writing pursuant to this Agreement or, in the case of a Default, is cured within any period of cure expressly provided for in this Agreement; and an Event of Default shall “continue” or be “continuing” until such Event of Default has been waived in writing by the Required Lenders. Any Lien referred to in this Agreement or any of the Other Documents as having been created in favor of Agent, any agreement entered into by Agent pursuant to this Agreement or any of the Other Documents, any payment made by or to or funds received by Agent pursuant to or as contemplated by this Agreement or any of the Other Documents, or any act taken or omitted to be taken by Agent, shall, unless otherwise expressly provided, be created, entered into, made or received, or taken or omitted, for the benefit or account of Agent and Lenders. Wherever the phrase “to the best of Borrower’s knowledge” or words of similar import relating to the knowledge or the awareness of Borrower are used in this Agreement or Other Documents, such phrase shall mean and refer to (i) the actual knowledge of a senior officer of Borrower or (ii) the knowledge that a senior officer would have obtained if he had engaged in good faith and diligent performance of his/her duties. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or otherwise within the limitations of, another covenant shall not avoid the occurrence of a Default if such action is taken or condition exists. In addition, all representations and warranties hereunder shall be given independent effect so that if a particular representation or warranty proves to be incorrect or is breached, the fact that another representation or warranty concerning the same or similar subject matter is correct or is not breached will not affect the incorrectness of a breach of a representation or warranty hereunder.

 

28


 
ARTICLE II
ADVANCES, PAYMENTS
2.1. Advances .
(a) Amount of Advances
Subject to the terms and conditions set forth in this Agreement including Section 2.1(b), each Lender, severally and not jointly, will make Advances to Borrower in aggregate amounts not to exceed the lesser of (x) the Maximum Revolving Advance Amount less the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit or (y) an amount equal to the sum of:
(i) the Advanced Rate, plus
(ii) the Credit Enhancement Amount, minus
(iii) the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit, minus
(iv) the Restructuring Reserve, minus
(v) the Availability Reserve, minus
(vi) such other reserves as Agent may deem proper and necessary from time to time in its Permitted Discretion and with prior notice to Borrower.
The amount of Advances set forth above for each Lender shall not exceed such Lender’s Commitment Percentage.
The Advances shall be evidenced by one or more secured promissory notes (collectively, the “ Revolving Credit Note ”) substantially in the form attached hereto as Exhibit 2.1(a).
(b) Discretionary Rights .
The Advance Rate may be increased or decreased by Agent at any time and from time to time in its Permitted Discretion with ninety (90) days prior notice to Borrower. Borrower consents to any such increases or decreases and acknowledges that decreasing the Advance Rate or increasing or imposing reserves may limit or restrict Advances requested by Borrower. The rights of Agent under this subsection are subject to the provisions of Section 15.2(b).

 

29


 
2.2. Procedure for Advances Borrowing .
(a) Borrower may notify Agent prior to 12:30 p.m. (New York time) on a Business Day of Borrower’s request to incur, on that day, an Advance hereunder (such notification may be made in writing, by telephone, by facsimile or other electronic transmission). Should any amount required to be paid as interest hereunder, or as fees or other charges under this Agreement or any other agreement with Agent or Lenders, or with respect to any other Obligation, become due, same shall be deemed a request for a Revolving Advance as of the date such payment is due, in the amount required to pay in full such interest, fee, charge or Obligation under this Agreement and such request shall be irrevocable.
(b) Notwithstanding the provisions of subsection (a) above, in the event Borrower desires to obtain a Eurodollar Rate Loan, Borrower shall give Agent written notice by no later than 12:30 p.m. on the day which is three (3) Business Days prior to the date such Eurodollar Rate Loan is to be borrowed, specifying (i) the date of the proposed borrowing (which shall be a Business Day), (ii) the type of borrowing and the amount on the date of such Advance to be borrowed, which amount shall be in an aggregate principal amount that is not less than $1,000,000 and at an integral multiples of $100,000, in excess thereof, and (iii) the duration of the first Interest Period therefor. Interest Periods for Eurodollar Rate Loans shall be for one, two, three or six months; provided, if an Interest Period would end on a day that is not a Business Day, it shall end on the next succeeding Business Day unless such day falls in the next succeeding calendar month in which case the Interest Period shall end on the next preceding Business Day. No Eurodollar Rate Loan shall be made available to Borrower during the continuance of a Default or an Event of Default. After giving effect to each requested Eurodollar Rate Loan, including those which are converted from a Domestic Rate Loan under Section 2.2(d), there shall not be outstanding more than six (6) Eurodollar Rate Loans, in the aggregate.
(c) Each Interest Period of a Eurodollar Rate Loan shall commence on the date such Eurodollar Rate Loan is made and shall end on such date as Borrower may elect as set forth in subsection (b)(iii) above provided that the exact length of each Interest Period shall be determined in accordance with the practice of the interbank market for offshore Dollar deposits and no Interest Period shall end after the last day of the Term.
Borrower shall elect the initial Interest Period applicable to a Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section 2.2(d), as the case may be. Borrower shall elect the duration of each succeeding Interest Period by giving irrevocable written notice to Agent of such duration not later than 12:30 p.m. (New York time) on the day which is three (3) Business Days prior to the last day of the then current Interest Period applicable to such Eurodollar Rate Loan. If Agent does not receive timely notice of the Interest Period elected by Borrower, Borrower shall be deemed to have elected to convert to a Domestic Rate Loan subject to Section 2.2(d) hereinbelow.
(d) On the last Business Day of the then current Interest Period applicable to any outstanding Eurodollar Rate Loan, or on any Business Day with respect to Domestic Rate Loans, Borrower may convert any such loan into a loan of another type in the same aggregate principal amount provided that any conversion of a Eurodollar Rate Loan shall be made only on the last Business Day of the then current Interest Period applicable to such Eurodollar Rate Loan and any conversion to a Eurodollar Rate Loan may be done if no Event of Default has occurred and is continuing.

 

30


 
If Borrower desires to convert a loan, Borrower shall give Agent written notice by no later than 12:30 p.m. (New York time) (i) on the day which is three (3) Business Days’ prior to the date on which such conversion is to occur with respect to a conversion from a Domestic Rate Loan to a Eurodollar Rate Loan, or (ii) on the day which is one (1) Business Day prior to the date on which such conversion is to occur with respect to a conversion from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying, in each case, the date of such conversion, the loans to be converted and if the conversion is from a Domestic Rate Loan to any other type of loan, the duration of the first Interest Period therefor.
(e) At its option and upon written notice given prior to 12:30 p.m. (New York time) at least three (3) Business Days’ prior to the date of such prepayment, Borrower may prepay the Eurodollar Rate Loans in whole at any time or in part from time to time with accrued interest on the principal being prepaid to the date of such repayment. Borrower shall specify the date of prepayment of Advances which are Eurodollar Rate Loans and the amount of such prepayment. In the event that any prepayment of a Eurodollar Rate Loan is required or permitted on a date other than the last Business Day of the then current Interest Period with respect thereto, Borrower shall indemnify Agent and Lenders therefor in accordance with Section 2.2(f) hereof.
(f) Borrower shall indemnify Agent and Lenders and hold Agent and Lenders harmless from and against any and all losses or expenses that Agent and Lenders may sustain or incur as a consequence of any prepayment, conversion of or any default by Borrower in the payment of the principal of or interest on any Eurodollar Rate Loan or failure by Borrower to complete a borrowing of, a prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof has been given, including, but not limited to, any interest payable by Agent or Lenders to lenders of funds obtained by it in order to make or maintain its Eurodollar Rate Loans hereunder. A certificate (with reasonable detail supporting such information contained therein) as to any additional amounts payable pursuant to the foregoing sentence submitted by Agent or any Lender to Borrower shall be conclusive absent manifest error.
(g) Notwithstanding any other provision hereof, if any Applicable Law, treaty, regulation or directive, or any change therein or in the interpretation or application thereof, shall make it unlawful for any Lender (for purposes of this subsection (g), the term “Lender” shall include any Lender and the office or branch where any Lender or any corporation or bank controlling such Lender makes or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate Loans, the obligation of Lenders to make Eurodollar Rate Loans hereunder shall forthwith be cancelled and Borrower shall, if any affected Eurodollar Rate Loans are then outstanding, promptly upon request from Agent, either pay all such affected Eurodollar Rate Loans or convert such affected Eurodollar Rate Loans into loans of another type. If any such payment or conversion of any Eurodollar Rate Loan is made on a day that is not the last day of the Interest Period applicable to such Eurodollar Rate Loan, Borrower shall pay Agent, upon Agent’s request, such amount or amounts as may be necessary to compensate Lenders for any loss or expense sustained or incurred by Lenders in respect of such Eurodollar Rate Loan as a result of such payment or conversion, including (but not limited to) any interest or other amounts payable by Lenders to lenders of funds obtained by Lenders in order to make or maintain such Eurodollar Rate Loan. A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by Lenders to Borrower shall be conclusive absent manifest error.

 

31


 
(h) The Borrower’s obligations and indemnifications under this Section 2.2 shall survive the termination of this Agreement.
2.3. Disbursement of Advance Proceeds .
All Advances shall be disbursed from whichever office or other place Agent may designate from time to time and, together with any and all other Obligations of Borrower to Agent or Lenders, shall be charged to Borrower’s Account on Agent’s books. During the Term, Borrower may use the Advances by borrowing, prepaying and reborrowing, all in accordance with the terms and conditions hereof. The proceeds of each Revolving Advance requested by Borrower or deemed to have been requested by Borrower under Section 2.2(a) hereof shall, with respect to requested Advances to the extent Lenders make such Advances, be made available to Borrower on the day so requested by way of credit to Borrower’s operating account at PNC, or such other bank as Borrower may designate following notification to Agent, in immediately available federal funds or other immediately available funds or, with respect to Advances deemed to have been requested by Borrower, be disbursed to Agent to be applied to the outstanding Obligations giving rise to such deemed request.
2.4. Repayment of Advances .
(a) The Advances shall be due and payable in full on the last day of the Term subject to earlier prepayment as herein provided.
(b) Borrower recognizes that the amounts evidenced by checks, notes, drafts or any other items of payment relating to and/or proceeds of Collateral may not be collectible by Agent on the date received. Subject to Section 2.4(c), all items of payment shall be deemed applied by Agent against outstanding Obligations on the Business Day Agent receives such payment. With respect to payments received by Agent in any form (other than payments via wire or electronic depository check or other immediately available funds) the applicable Interest Rate shall be charged until such payment constitutes good funds in Agent’s account. Agent is not, however, required to credit Borrower’s Account for the amount of any item of payment which is unsatisfactory to Agent and Agent may charge Borrower’s Account for the amount of any item of payment which is returned to Agent unpaid.
(c) All payments of principal, interest and other amounts payable hereunder, or under any of the Other Documents shall be made to Agent at the Payment Office not later than 1:00 P.M. (New York time) on the due date therefor in lawful money of the United States of America in federal funds or other funds immediately available to Agent. Agent shall have the right to effectuate payment on any and all Obligations due and owing hereunder by charging Borrower’s Account or by making Advances as provided in Section 2.2 hereof.
(d) Borrower shall pay the Obligations when due, without any deduction for any setoff or counterclaim.

 

32


 
2.5. Repayment of Excess Advances .
The aggregate balance of Advances outstanding at any time in excess of the maximum amount of Advances permitted hereunder shall be immediately due and payable without the necessity of any demand, at the Payment Office, whether or not a Default or Event of Default has occurred.
2.6. Statement of Account .
Agent shall maintain, in accordance with its customary procedures, a loan account (“ Borrower’s Account ”) in the name of Borrower in which shall be recorded the date and amount of each Advance made by Agent and the date and amount of each payment in respect thereof; provided, however, the failure by Agent to record the date and amount of any Advance shall not adversely affect Agent or any Lender. Each month, Agent shall send to Borrower a statement showing the accounting for the Advances made, payments made or credited in respect thereof, and other transactions between Agent and/or the Lenders and Borrower, during such month. The monthly statements shall be deemed correct and binding upon Borrower in the absence of manifest error and shall constitute an account stated between Lenders and Borrower unless Agent receives a written statement of Borrower’s specific exceptions thereto within thirty (30) days after such statement is received by Borrower. The records of Agent with respect to the Borrower’s Account shall be conclusive evidence absent manifest error of the amounts of Advances and other charges thereto and of payments applicable thereto.
2.7. Letters of Credit .
Subject to the terms and conditions hereof, Agent shall issue or cause the issuance of Letters of Credit for the account of Borrower; provided, however, that Agent will not be required to issue or cause to be issued any Letters of Credit to the extent that the issuance thereof would then cause the sum of (i) the outstanding Advances plus (ii) the Maximum Undrawn Amount of all outstanding Letters of Credit to exceed the lesser of (x) the Maximum Revolving Advance Amount or (y) the Formula Amount. The Maximum Undrawn Amount of all outstanding Letters of Credit shall not exceed in the aggregate at any time the Letter of Credit Sublimit. All disbursements or payments related to Letters of Credit shall be deemed to be Domestic Rate Loans consisting of Advances and shall bear interest at the Interest Rate for Domestic Rate Loans.
2.8. Issuance of Letters of Credit .
(a) Borrower may request Agent to issue or cause the issuance of a Letter of Credit by delivering to Agent, at the Payment Office, prior to 2:00 p.m. (New York time), at least three (3) Business Days’ prior to the proposed date of issuance, Agent’s form of Letter of Credit Application (the “ Letter of Credit Application ”) completed to the reasonable satisfaction of Agent; and, such other certificates, documents and other papers and information as Agent may reasonably request. Borrower also has the right to give instructions and make agreements with respect to any application, any applicable letter of credit and security agreement, any applicable letter of credit reimbursement agreement and/or any other applicable agreement, any letter of credit and the disposition of documents, disposition of any unutilized funds, and to agree with Agent upon any amendment, extension or renewal of any Letter of Credit.

 

33


 
(b) Each Letter of Credit shall, among other things, (i) provide for the payment of sight drafts, other written demands for payment, or acceptances of usance drafts when presented for honor thereunder in accordance with the terms thereof and when accompanied by the documents described therein and (ii) have an expiry date not later than twelve (12) months after such Letter of Credit’s date of issuance and in no event later than the last day of the Term; provided, however, a Letter of Credit may provide for automatic extensions of its expiration date for one (1) or more year periods, so long as the issuer thereof has the right to terminate the Letter of Credit at the end of each one (1) year period and no extension period extends past the Term. Each standby Letter of Credit shall be subject either to the Uniform Customs and Practice for Documentary Credits as most recently published by the International Chamber of Commerce at the time a Letter of Credit is issued (“UCP”) or the International Standby Practices (ISP98-International Chamber of Commerce Publication Number 590) (“ISP98 Rules”), as determined by Agent, and each trade Letter of Credit shall be subject to UCP.
(c) Agent shall notify Lenders of the request by Borrower for a Letter of Credit hereunder.
2.9. Requirements For Issuance of Letters of Credit .
Borrower shall authorize and direct any Issuer to name Borrower as the “Applicant” or “Account Party” of each Letter of Credit. If Agent is not the Issuer of any Letter of Credit, Borrower shall authorize and direct the Issuer to deliver to Agent all instruments, documents, and other writings and property received by the Issuer pursuant to the Letter of Credit and to accept and rely upon Agent’s instructions and agreements with respect to all matters arising in connection with the Letter of Credit.
2.10. Disbursements, Reimbursement .
(a) Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from Agent a participation in such Letter of Credit and each drawing thereunder in an amount equal to such Lender’s Commitment Percentage of the maximum face amount of such Letter of Credit and the amount of such drawing, respectively.
(b) In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, Agent will promptly notify Borrower. Provided that it shall have received such notice, Borrower shall reimburse (such obligation to reimburse Agent shall sometimes be referred to as a “ Reimbursement Obligation ”) Agent prior to 2:00 p.m., New York time, on the following Business Day that an amount is paid by Agent under any Letter of Credit (each such date, a “ Drawing Date ”) in an amount equal to the amount so paid by Agent. In the event Borrower fails to reimburse Agent for the full amount of any drawing under any Letter of Credit by 2:00 p.m., New York time, on the Drawing Date, Agent will promptly notify each Lender thereof, and Borrower shall be deemed to have requested that a Domestic Rate Loan be made by the Lenders to be disbursed on the Drawing Date under such Letter of Credit, subject to Section 8.2 hereof. Any notice given by Agent pursuant to this Section 2.10(b) may be oral if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

 

34


 
(c) Each Lender shall upon any notice pursuant to Section 2.10(b) make available to Agent an amount in immediately available funds equal to its Commitment Percentage of the amount of the drawing, whereupon the participating Lenders shall (subject to Section 2.10(d)) each be deemed to have made a Domestic Rate Loan to Borrower in that amount. If any Lender so notified fails to make available to Agent the amount of such Lender’s Commitment Percentage of such amount by no later than 2:00 p.m., New York time on the Drawing Date, then interest shall accrue on such Lender’s obligation to make such payment, from the Drawing Date to the date on which such Lender makes such payment (i) at a rate per annum equal to the Federal Funds Rate during the first three days following the Drawing Date and (ii) at a rate per annum equal to the rate applicable to Domestic Rate Loans on and after the fourth day following the Drawing Date. Agent will promptly give notice of the occurrence of the Drawing Date, but failure of Agent to give any such notice on the Drawing Date or in sufficient time to enable any Lender to effect such payment on such date shall not relieve such Lender from its obligation under this Section 2.10(c), provided that such Lender shall not be obligated to pay interest as provided in Section 2.10(c) (i) and (ii) until and commencing from the date of receipt of notice from Agent of a drawing.
(d) With respect to any unreimbursed drawing that is not converted into a Domestic Rate Loan to Borrower in whole or in part as contemplated by Section 2.10(b), because of Borrower’s failure to satisfy the conditions set forth in Section 8.2 (other than any notice requirements) or for any other reason, Borrower shall be deemed to have incurred from Agent a borrowing (each a “ Letter of Credit Borrowing ”) in the amount of such drawing. Such Letter of Credit Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the rate per annum applicable to a Domestic Rate Loan. Each Lender’s payment to Agent pursuant to Section 2.10(c) shall be deemed to be a payment in respect of its participation in such Letter of Credit Borrowing and shall constitute a “Participation Advance” from such Lender in satisfaction of its Participation Commitment under this Section 2.10.
Each Lender’s Participation Commitment shall continue until the last to occur of any of the following events: (x) Agent ceases to be obligated to issue or cause to be issued Letters of Credit hereunder; (y) no Letter of Credit issued or created hereunder remains outstanding and uncancelled and (z) all Persons (other than the Borrower) have been fully reimbursed for all payments made under or relating to Letters of Credit.
2.11. Repayment of Participation Advances .
(a) Upon (and only upon) receipt by Agent for its account of immediately available funds from Borrower (i) in reimbursement of any payment made by the Agent under the Letter of Credit with respect to which any Lender has made a Participation Advance to Agent, or (ii) in payment of interest on such a payment made by Agent under such a Letter of Credit, Agent will pay to each Lender, in the same funds as those received by Agent, the amount of such Lender’s Commitment Percentage of such funds, except Agent shall retain the amount of the Commitment Percentage of such funds of any Lender that did not make a Participation Advance in respect of such payment by Agent.

 

35


 
(b) If Agent is required at any time to return to Borrower, or to a trustee, receiver, liquidator, custodian, or any official in any insolvency proceeding, any portion of the payments made by Borrower to Agent pursuant to Section 2.11(a) in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each Lender shall, on demand of Agent, forthwith return to Agent the amount of its Commitment Percentage of any amounts so returned by Agent plus interest at the Federal Funds Effective Rate.
2.12. Documentation .
Borrower agrees to be bound by the terms of the Letter of Credit Application and by Agent’s interpretations of any Letter of Credit issued for Borrower’s account and by Agent’s written regulations and customary practices relating to letters of credit, though Agent’s interpretations may be different from Borrower’s own. In the event of a conflict between the Letter of Credit Application and this Agreement, this Agreement shall govern. It is understood and agreed that, except in the case of gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment), Agent shall not be liable for any error, negligence and/or mistakes, whether of omission or commission, in following Borrower’s instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto.
2.13. Determination to Honor Drawing Request .
In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, Agent shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit and that any other drawing condition appearing on the face of such Letter of Credit has been satisfied in the manner so set forth.
2.14. Nature of Participation and Reimbursement Obligations .
Each Lender’s obligation in accordance with this Agreement to make the Advances or Participation Advances or fund a Letter of Credit Borrowing as a result of a drawing under a Letter of Credit, and the obligations of Borrower to reimburse Agent upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Section 2.14 under all circumstances, including the following circumstances:
(i) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against Agent, Borrower or any other Person for any reason whatsoever;

 

36


 
(ii) the failure of Borrower or any other Person to comply, in connection with a Letter of Credit Borrowing, with the conditions set forth in this Agreement for the making of an Advance, it being acknowledged that such conditions are not required for the making of a Letter of Credit Borrowing or the obligation of the Lenders to make Participation Advances under Section 2.10;
(iii) any lack of validity or enforceability of any Letter of Credit;
(iv) any claim of breach of warranty that might be made by Borrower or any Lender against the beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment, counterclaim, crossclaim, defense or other right which Borrower or any Lender may have at any time against a beneficiary, any successor beneficiary or any transferee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), Agent or any Lender or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between Borrower or any Subsidiaries of Borrower and the beneficiary for which any Letter of Credit was procured);
(v) the lack of power or authority of any signer of (or any defect in or forgery of any signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy, enforceability or genuineness of any draft, demand, instrument, certificate or other document presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in connection with any Letter of Credit, or the transport of any property or provisions of services relating to a Letter of Credit, in each case even if Agent or any of Agent’s Affiliates has been notified thereof;
(vi) payment by Agent under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit;
(vii) the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services relating to a Letter of Credit;
(viii) any failure by the Agent or any of Agent’s Affiliates to issue any Letter of Credit in the form requested by Borrower, unless the Agent has received written notice from Borrower of such failure within three (3) Business Days after the Agent shall have furnished Borrower a copy of such Letter of Credit and such error is material and no drawing has been made thereon prior to receipt of such notice;
(ix) any Material Adverse Effect on Borrower or any Guarantor;
(x) any breach of this Agreement or any Other Document by any party thereto;

 

37


 
(xi) the occurrence or continuance of an insolvency proceeding with respect to Borrower or any Guarantor;
(xii) the fact that a Default or Event of Default shall have occurred and be continuing;
(xiii) the fact that the Term shall have expired or this Agreement or the Obligations hereunder shall have been terminated; and
(xiv) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.
2.15. Indemnity .
In addition to amounts payable as provided in Section 15.5, the Borrower hereby agrees to protect, indemnify, pay and save harmless Agent and any of Agent’s Affiliates that have issued a Letter of Credit from and against any and all claims, demands, liabilities, damages, taxes, penalties, interest, judgments, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of internal counsel) which the Agent or any of Agent’s Affiliates may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit, other than as a result of (A) the gross negligence or willful misconduct of the Agent as determined by a final and non-appealable judgment of a court of competent jurisdiction or (b) the wrongful dishonor by the Agent or any of Agent’s Affiliates of a proper demand for payment made under any Letter of Credit, except if such dishonor resulted from any act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Body (all such acts or omissions herein called “ Governmental Acts ”). The foregoing obligations and the indemnifications hereunder shall survive the termination of this Agreement.
2.16. Liability for Acts and Omissions .
As between Borrower and Agent and Lenders, Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the respective foregoing, Agent shall not be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if Agent shall have been notified thereof); (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of Borrower against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among Borrower and any beneficiary of any Letter of Credit or any such transferee;

 

38


 
(iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of Agent, including any governmental acts, and none of the above shall affect or impair, or prevent the vesting of, any of Agent’s rights or powers hereunder. Nothing in the preceding sentence shall relieve Agent from liability for Agent’s gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment) in connection with actions or omissions described in such clauses (i) through (viii) of such sentence. In no event shall Agent or Agent’s Affiliates be liable to the Borrower for any indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including without limitation attorneys’ fees), or for any damages resulting from any change in the value of any property relating to a Letter of Credit.
Without limiting the generality of the foregoing, Agent and each of its Affiliates (i) may rely on any oral or other communication believed in good faith by Agent or such Affiliate to have been authorized or given by or on behalf of the applicant for a Letter of Credit, (ii) may honor any presentation if the documents presented appear on their face substantially to comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by Agent or its Affiliates; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may settle or adjust any claim or demand made on Agent or its Affiliate in any way related to any order issued at the applicant’s request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each an “ Order ”) and honor any drawing in connection with any Letter of Credit that is the subject of such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit.
In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by Agent under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith and without gross negligence (as determined by a court of competent jurisdiction in a final non-appealable judgment), shall not put Agent under any resulting liability to Borrower or any Lender.

 

39


 
2.17. Additional Payments .
Any sums expended by Agent or any Lender due to Borrower’s failure to perform or comply with its obligations under this Agreement or any Other Document including Borrower’s obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be charged to Borrower’s Account as an Advance and added to the Obligations.
2.18. Manner of Borrowing and Payment .
(a) Each borrowing of Advances shall be advanced according to the applicable Commitment Percentages of Lenders.
(b) Each payment (including each prepayment) by Borrower on account of the principal of and interest on the Advances, shall be applied to the Advances pro rata according to the applicable Commitment Percentages of Lenders. Except as expressly provided herein, all payments (including prepayments) to be made by Borrower on account of principal, interest and fees shall be made without set off or counterclaim and shall be made to Agent on behalf of the Lenders to the Payment Office, in each case on or prior to 1:00 P.M., New York time, in Dollars and in immediately available funds.
(c) (i) Notwithstanding anything to the contrary contained in Sections 2.18(a) and (b) hereof, commencing with the first Business Day following the Closing Date, each borrowing of Advances shall be advanced by Agent and each payment by Borrower on account of Advances shall be applied first to those Advances advanced by Agent. On or before 1:00 P.M., New York time, on each Settlement Date commencing with the first Settlement Date following the Closing Date, Agent and Lenders shall make certain payments as follows: (I) if the aggregate amount of new Advances made by Agent during the preceding Week (if any) exceeds the aggregate amount of repayments applied to outstanding Advances during such preceding Week, then each Lender shall provide Agent with funds in an amount equal to its applicable Commitment Percentage of the difference between (w) such Advances and (x) such repayments and (II) if the aggregate amount of repayments applied to outstanding Advances during such Week exceeds the aggregate amount of new Advances made during such Week, then Agent shall provide each Lender with funds in an amount equal to its applicable Commitment Percentage of the difference between (y) such repayments and (z) such Advances.
(ii) Each Lender shall be entitled to earn interest at the applicable Interest Rate on outstanding Advances which it has funded.
(iii) Promptly following each Settlement Date, Agent shall submit to each Lender a certificate with respect to payments received and Advances made during the Week immediately preceding such Settlement Date. Such certificate of Agent shall be conclusive in the absence of manifest error.

 

40


 
(d) If any Lender or Participant (a “ Benefited Lender ”) shall at any time receive any payment of all or part of its Advances, or interest thereon, or receive any Collateral in respect thereof (whether voluntarily or involuntarily or by set-off) in a greater proportion than any such payment to and Collateral received by any other Lender, if any, in respect of such other Lender’s Advances, or interest thereon, and such greater proportionate payment or receipt of Collateral is not expressly permitted hereunder, such Benefited Lender shall purchase for cash from the other Lenders a participation in such portion of each such other Lender’s Advances, or shall provide such other Lender with the benefits of any such Collateral, or the proceeds thereof, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such Collateral or proceeds ratably with each of the other Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. Each Lender so purchasing a portion of another Lender’s Advances may exercise all rights of payment (including rights of set-off) with respect to such portion as fully as if such Lender were the direct holder of such portion.
(e) Unless Agent shall have been notified by telephone, confirmed in writing, by any Lender that such Lender will not make the amount which would constitute its applicable Commitment Percentage of the Advances available to Agent, Agent may (but shall not be obligated to) assume that such Lender shall make such amount available to Agent on the next Settlement Date and, in reliance upon such assumption, make available to Borrower a corresponding amount. Agent will promptly notify Borrower of its receipt of any such notice from a Lender. If such amount is made available to Agent on a date after such next Settlement Date, such Lender shall pay to Agent on demand an amount equal to the product of (i) the daily average Federal Funds Rate (computed on the basis of a year of 360 days) during such period as quoted by Agent, times (ii) such amount, times (iii) the number of days from and including such Settlement Date to the date on which such amount becomes immediately available to Agent. A certificate of Agent submitted to any Lender with respect to any amounts owing under this paragraph (e) shall be conclusive, in the absence of manifest error. If such amount is not in fact made available to Agent by such Lender within three (3) Business Days after such Settlement Date, Agent shall be entitled to recover such an amount, with interest thereon at the rate per annum then applicable to such Advances hereunder, on demand from Borrower; provided, however, that Agent’s right to such recovery shall not prejudice or otherwise adversely affect Borrower’s rights (if any) against such Lender.
2.19. Mandatory Prepayments .
(a) Subject to Section 4.3 hereof, when Borrower sells or otherwise disposes of any Collateral other than Inventory in the Ordinary Course of Business, Borrower shall repay the Advances in an amount equal to the net proceeds of such sale (i.e., gross proceeds less the reasonable costs of such sales or other dispositions), such repayments to be made promptly but in no event more than one (1) Business Day following receipt of such net proceeds, and until the date of payment, such proceeds shall be held in trust for Agent; provided, that so long as (i) no Event of Default has occurred and is continuing, (ii) Borrower shall have given Agent prior written notice of Borrower’s intention to apply such monies to the costs of replacement of the properties or assets that are the subject of such sale or disposition or the cost of purchase or construction of other assets useful in the business of Borrower or its Subsidiaries, (iii) the monies are held in a deposit account in which Agent has a perfected first-priority security interest, and (iv) Borrower or its Subsidiaries, as applicable, complete such replacement, purchase, or construction within one hundred twenty (120) days after the initial receipt of such monies, Borrower and its Subsidiaries shall have the option to apply such monies to the costs of replacement of the assets that are the subject of such sale or disposition unless and to the extent that such applicable period shall have expired without such replacement, purchase or construction being made or completed. The foregoing shall not be deemed to be implied consent to any such sale otherwise prohibited by the terms and conditions hereof. Such repayments shall be applied to the Advances in such order as Agent may determine, subject to Borrower’s ability to reborrow Advances in accordance with the terms hereof.

 

41


 
2.20 Application of Payments Prior to an Event of Default .
Agent agrees that any repayment of the Advances prior to an Event of Default shall be applied first to Advances that are in excess of the Advance Rate.
2.21. Reduction of Maximum Revolving Advance Amount .
Borrower may from time to time permanently reduce the aggregate Maximum Revolving Advance Amount in part (in minimum aggregate amounts of $1,000,000 (or, if less, the full remaining amount of the Maximum Revolving Advance Amount)) upon five (5) Business Days’ prior written notice from Borrower to the Agent; provided, however, no such reduction shall be made which would reduce the Maximum Revolving Advance Amount to an amount less than the aggregate principal amount of Obligations outstanding under this Agreement or under the Other Documents. The Lenders Commitment Percentage of Advances shall automatically terminate on the last day of the Term. The Maximum Revolving Advance Amounts of each Lender shall automatically terminate on the last day of the Term. The Agent shall promptly notify each of the Lenders of receipt by the Agent of any notice from Borrower pursuant to this Section 2.21.
2.22. Use of Proceeds .
(a) Borrower shall apply the proceeds of Advances to (i) repay existing indebtedness of the Borrower, (ii) pay fees and expenses relating to this transaction, (iii) provide for its working capital needs and reimburse drawings under Letters of Credit, (iv) finance Capital Expenditures, and (v) for other general corporate purposes of Borrower.
(b) Without limiting the generality of Section 2.22(a) above, neither the Borrower, the Guarantor nor any other Person which may in the future become party to this Agreement or the Other Documents as Borrower, intends to use nor shall they use any portion of the proceeds of the Advances, directly or indirectly, for any purpose in violation of the Trading with the Enemy Act.
2.23. Defaulting Lender .
(a) Notwithstanding

SITE SEARCH

AGREEMENTS / CONTRACTS

Document Title:

Entire Document: (optional)

Governing Law:(optional)
 

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Close this window