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Exhibit 10.10
$15,500,000 US REVOLVING FACILITY
$4,000,000 CANADIAN REVOLVING FACILITY
$14,000,000 US TERM LOAN
$6,500,000 CANADIAN TERM LOAN
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
AMONG
CORRPRO COMPANIES, INC
CCFC, INC.
OCEAN CITY RESEARCH CORP.
CORRPRO INTERNATIONAL, INC.,
AS US BORROWER,
COMMONWEALTH SEAGER HOLDINGS LTD.
CORRPRO CANADA, INC.
BORZA INSPECTIONS LTD.
AS CANADIAN BORROWER,
CAPITAL SOURCE FINANCE, LLC
AS AGENT AND A US LENDER
CSE FINANCE, INC.
AS A CANADIAN LENDER
AND
THE OTHER US LENDERS AND CANADIAN LENDERS SIGNATORIES HERETO
DATED AS OF
MARCH 30, 2004
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I.
DEFINITIONS.............................................................................................
2
II. LOANS;
PAYMENTS; INTEREST; AND
COLLATERAL..............................................................
2
2.1 The
Revolving
Facilities......................................................................
2
2.2 The
Revolving Notes;
Maturity.................................................................
4
2.3 Interest
on the Revolving
Notes...............................................................
4
2.4 Revolving
Facility Disbursements; Requirement to Deliver Borrowing
Certificate................ 5
2.5 Standby
Letters of
Credit.....................................................................
6
2.6 Term
Loans; Term
Notes........................................................................
10
2.7 Interest
on Term
Loans........................................................................
11
2.8 Scheduled
Repayment of the Term Loans;
Maturity...............................................
11
2.9 Promise to
Pay; Manner of
Payment.............................................................
12
2.10
Repayment of Excess Revolving
Advances........................................................
12
2.11
Voluntary and Mandatory
Prepayments...........................................................
13
2.12
Payments by
Agent.............................................................................
15
2.13
Grant of Security Interest;
Collateral........................................................
16
2.14
Collateral
Administration.....................................................................
18
2.15
Power of
Attorney.............................................................................
20
2.16
Collections; Repayment; Borrowing and
Lockbox.................................................
20
2.17
Notes.........................................................................................
23
2.18
Replacement of Lost
Notes.....................................................................
23
2.19
Reallocation of
Commitments...................................................................
23
2.20
Discretionary Bulge
Commitment................................................................
23
2.21
Several
Obligations...........................................................................
24
2.22
Credit Party Representation;
Reliance.........................................................
24
III. FEES AND OTHER
CHARGES.................................................................................
25
3.1 Commitment
Fee................................................................................
25
3.2 Unused
Line
Fees..............................................................................
25
3.3 Collateral
Management
Fee.....................................................................
25
3.4 Yield
Maintenance
Fee.........................................................................
26
3.5 Standby
Letter of Credit
Fees.................................................................
26
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3.6
Computation of Fees; Lawful
Limits............................................................
27
3.7
Default Rate of
Interest......................................................................
28
3.8
Acknowledgement of Joint and Several
Liability................................................
28
IV. CONDITIONS
PRECEDENT...................................................................................
29
4.1 Conditions
to Initial Advance, Funding the Term Loans and
Closing............................. 29
4.2 Conditions
to Each Revolving Advance and Funding of the Term
Loans............................ 33
V.
REPRESENTATIONS AND
WARRANTIES.........................................................................
34
5.1
Organization and
Authority....................................................................
34
5.2 Loan
Documents and Related
Documents..........................................................
34
5.3
Subsidiaries, Capitalization and Ownership
Interests.......................................... 35
5.4
Properties....................................................................................
35
5.5 Other
Agreements..............................................................................
36
5.6
Litigation....................................................................................
36
5.7 Hazardous
Materials...........................................................................
37
5.8 Tax
Returns; Governmental
Reports.............................................................
37
5.9 Financial
Statements and
Reports..............................................................
37
5.10
Compliance with Law;
Business.................................................................
37
5.11
Intellectual
Property.........................................................................
39
5.12
Permits;
Labor................................................................................
39
5.13
No Default;
Solvency..........................................................................
40
5.14
Disclosure....................................................................................
40
5.15
Existing Indebtedness; Investments, Guarantees and Certain
Contracts.......................... 40
5.16
Affiliated
Agreements.........................................................................
41
5.17
Insurance.....................................................................................
41
5.18
Foreign Assets Control Regulations and Anti-Money
Laundering.................................. 41
5.19
Names; Location of Offices, Records and Collateral; Deposit
Accounts and Investment
Property......................................................................................
41
5.20
Non-Subordination.............................................................................
42
5.21
Legal Investments; Use of Proceeds; Tax
Regulations........................................... 42
5.22
Broker's or Finder's
Commissions..............................................................
42
5.23
Survival......................................................................................
43
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VI.
AFFIRMATIVE
COVENANTS..................................................................................
43
6.1 Financial
Statements, Reports and Other
Information........................................... 43
6.2 Payment of
Obligations........................................................................
46
6.3 Conduct of
Business and Maintenance of Existence and
Assets................................... 47
6.4 Compliance
with Legal and Other
Obligations...................................................
47
6.5
Insurance.....................................................................................
47
6.6 True
Books....................................................................................
48
6.7
Inspection; Periodic
Audits...................................................................
48
6.8 Further
Assurances; Post
Closing..............................................................
48
6.9 Payment of
Indebtedness.......................................................................
49
6.10
Lien
Searches.................................................................................
49
6.11
Use of
Proceeds...............................................................................
50
6.12
Collateral Documents; Security Interest in
Collateral......................................... 50
6.13
Taxes and Other
Charges.......................................................................
52
6.14
Future Leases; Future Real
Estate.............................................................
53
6.15
Canadian Pension Plans and Benefit
Plans......................................................
53
VII. NEGATIVE
COVENANTS.....................................................................................
54
7.1 Financial
Covenants...........................................................................
54
7.2
Indebtedness..................................................................................
55
7.3
Liens.........................................................................................
57
7.4
Investments; Investment Property; New Facilities or Collateral;
Subsidiaries.................. 58
7.5 Dividends;
Redemptions;
Equity................................................................
59
7.6
Transactions with
Affiliates..................................................................
60
7.7 Charter
Documents; Fiscal Year; Use of Proceeds; Insurance Policies;
Disposition of
Collateral; Taxes; Trade
Names................................................................
60
7.8 Transfer
of
Assets............................................................................
61
7.9 Contingent
Obligations........................................................................
62
7.10
Truth of
Statements...........................................................................
62
7.11
Payment on
Debt...............................................................................
62
7.12
Modifications of
Agreements...................................................................
63
7.13
Intellectual
Property.........................................................................
63
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7.14
Certain
Agreements............................................................................
63
7.15
Applications under
CCAA.......................................................................
64
VIII. EVENTS OF
DEFAULT......................................................................................
64
8.1 Certain
Agreements............................................................................
64
IX. RIGHTS AND
REMEDIES AFTER
DEFAULT......................................................................
67
9.1 Rights and
Remedies...........................................................................
67
9.2
Application of
Proceeds.......................................................................
70
9.3 Rights to
Appoint
Receiver....................................................................
71
9.4 Blocked
Accounts..............................................................................
71
9.5 Rights and
Remedies not
Exclusive.............................................................
71
X.
WAIVERS AND JUDICIAL
PROCEEDINGS.......................................................................
72
10.1
Waivers.......................................................................................
72
10.2
Delay; No Waiver of
Defaults..................................................................
72
10.3
Jury
Waiver...................................................................................
72
10.4
Amendment and
Waivers.........................................................................
73
XI. EFFECTIVE
DATE AND
TERMINATION.........................................................................
74
11.1
Effectiveness and
Termination.................................................................
74
11.2
Survival......................................................................................
74
XII. AGENCY
PROVISIONS......................................................................................
74
12.1
Agent.........................................................................................
75
12.2
US Agent and Canadian
Agent...................................................................
80
12.3
Set-off and Sharing of
Payments...............................................................
80
12.4
Disbursement of
Funds.........................................................................
81
12.5
Settlements; Payments and
Information.........................................................
81
12.6
Dissemination of
Information..................................................................
83
12.7
Consents......................................................................................
83
XIII.
MISCELLANEOUS..........................................................................................
84
13.1
Governing Law; Jurisdiction; Service of Process;
Venue........................................ 84
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13.2
Successors and Assigns; Assignments and
Participations........................................ 84
13.3
Application of
Payments.......................................................................
87
13.4
Indemnity.....................................................................................
88
13.5
Notice........................................................................................
89
13.6
Severability; Captions; Counterparts; Facsimile
Signatures.................................... 89
13.7
Expenses......................................................................................
89
13.8
Entire
Agreement..............................................................................
90
13.9
Approvals and
Duties..........................................................................
91
13.10
Confidentiality and
Publicity.................................................................
91
13.11
Release of
Collateral.........................................................................
93
13.12 No
Consequential
Damages......................................................................
93
13.13
Conflict......................................................................................
93
13.14
Replacement of
Lenders........................................................................
93
XIV.
GUARANTY...............................................................................................
94
14.1
Guaranty......................................................................................
94
14.2
Guaranty
Absolute.............................................................................
94
14.3
Waiver........................................................................................
95
14.4
Continuing Guaranty;
Assignments..............................................................
95
14.5
Subrogation...................................................................................
96
14.6
Canadian
Guarantors...........................................................................
96
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REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
THIS REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT (this
"AGREEMENT"), dated as of March 30, 2004,
is entered into by and among CORRPRO
COMPANIES, INC., an Ohio corporation
("PARENT"), CCFC, INC., a Nevada
corporation, OCEAN CITY RESEARCH CORP., a
New Jersey corporation and CORRPRO
INTERNATIONAL, INC., a Delaware corporation
(together, "US BORROWER");
COMMONWEALTH SEAGER HOLDINGS LTD., a
corporation amalgamated under the laws of
the Province of Alberta, Canada and a
Foreign Wholly-Owned Subsidiary of Parent,
CORRPRO CANADA, INC., a corporation
amalgamated under the laws of the Province
of Alberta, Canada and BORZA INSPECTIONS
LTD., a corporation amalgamated under
the laws of the Province of Alberta, Canada
(together, "CANADIAN BORROWER") (US
Borrower and Canadian Borrower sometimes
hereinafter are referred to
individually as a "BORROWER" and
collectively as "BORROWERS"); CAPITALSOURCE
FINANCE LLC, a Delaware limited liability
company (in its individual capacity,
"CAPITALSOURCE"), as administrative,
payment and collateral agent for the
Lenders (CapitalSource, in such capacities,
"AGENT"); and the LENDERS from time
to time parties hereto.
WHEREAS, the Credit Parties have requested that Lenders make
available
to (a) US Borrower (i) a revolving credit
facility (the "US REVOLVING FACILITY")
in a maximum principal amount at any time
outstanding of up to the US Revolving
Facility Maximum Amount in effect from time
to time, the amount of which,
initially, shall be Fifteen Million Five
Hundred Thousand Dollars ($15,500,000),
and (ii) a term loan in an aggregate
original principal amount of Fourteen
Million Dollars ($14,000,000), and (b)
Canadian Borrower (i) a revolving credit
facility (the "CANADIAN REVOLVING
FACILITY") in a maximum principal amount at
any time outstanding of up to the Canadian
Revolving Facility Maximum Amount in
effect from time to time, the amount of
which, initially, shall be Four Million
Dollars ($4,000,000), and (ii) a term loan
in an aggregate original principal
amount of Six Million Five Hundred Thousand
Dollars ($6,500,000), the proceeds
of each of which shall be used by the
Borrowers, each a service provider, to
refinance existing indebtedness incurred in
the purchase or generation of
receivables and thereafter for the purchase
or generation of receivables; and
WHEREAS, Lenders are willing to make the Revolving Facilities and
the
Term Loans available to Borrowers upon the
terms and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other
good
and valuable consideration, the receipt,
sufficiency and adequacy of which
hereby are acknowledged, the Credit
Parties, Agent and Lenders hereby agree as
follows:
<PAGE>
I.
DEFINITIONS
For purposes of the Loan Documents and all Annexes thereto, in
addition
to the definitions above and elsewhere in
this Agreement or the other Loan
Documents, the terms listed in Annex I and
Appendix A hereto shall have the
meanings assigned to such terms in Annex I
and Appendix A, respectively, which
are incorporated herein and made a part
hereof. All capitalized terms used which
are not specifically defined shall have
meanings provided in Article 9 of the
UCC or the PPSA, as the context may dictate
or require, in each case as in
effect on the date hereof to the extent the
same are used or defined therein.
Unless otherwise specified herein or in
Appendix A, this Agreement and any
agreement or contract referred to herein or
in Appendix A shall mean such
agreement or contract as modified, amended
or supplemented from time to time,
subject to any applicable restrictions.
Unless otherwise specified, as used in
the Loan Documents or in any certificate,
report, instrument or other document
made or delivered pursuant to any of the
Loan Documents, all accounting terms
not defined in Appendix A or elsewhere in
this Agreement shall have the meanings
assigned to such terms in and shall be
interpreted in accordance with GAAP as in
effect from time to time; provided that, if
any change in GAAP results in a
change in the calculation of the financial
covenants or interpretation of the
related provisions of this Agreement or any
other Loan Document, then the Credit
Parties and Agent agree to amend such
provisions of this Agreement so as to
equitably reflect such changes in GAAP with
the desired result that the criteria
for evaluating the Credit Parties'
financial condition shall be the same after
such change in GAAP as if such change had
not been made. All dollars referred to
in this Agreement shall be U.S. Dollars
unless otherwise expressly stated.
II. LOANS;
PAYMENTS; INTEREST; AND COLLATERAL
2.1 THE
REVOLVING FACILITIES
(a) Subject to
the provisions of this Agreement, each US Revolving
Lender agrees to make available its Pro
Rata Share of US Revolving Advances to
US Borrower under the US Revolving Facility
from time to time during the Term;
provided, that (i) the Pro Rata Share of
the US Revolving Advances of any US
Revolving Lender shall not at any time
exceed its separate Commitment under the
US Revolving Facility, and (ii) the
aggregate amount of all US Revolving
Advances at any time outstanding under the
US Revolving Facility shall not
exceed the US Revolving Facility Maximum
Amount then in effect. The "US
REVOLVING FACILITY MAXIMUM AMOUNT" at any
time shall be equal to the lesser of:
(x) the value,
in U.S. Dollars, of eighty-five
percent (85%) of US Borrower's Eligible Receivables in the US
Borrowing
Base, minus (i) amounts reserved pursuant to this Agreement and
(ii)
the undrawn face amount of US Standby Letters of Credit to the
extent
they have not been cash collaterilized, plus the Additional
Amount
(such calculated amount being referred to herein as the "US
AVAILABILITY"); and
(y) the US
Revolving Facility Cap then in
effect.
The obligations of US Revolving Lenders
under the US Revolving Facility shall be
several, and
2
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not joint or joint and several, up to the
amount of the Commitments under the US
Revolving Facility. The US Revolving
Facility is a revolving credit facility
which may be drawn, repaid and redrawn from
time to time as permitted under this
Agreement. Any determination as to whether
there is US Availability within the
US Borrowing Base for requested US
Revolving Advances shall be made by Agent in
its Permitted Discretion and is final and
binding upon US Borrower. Unless
otherwise permitted by Agent, each US
Revolving Advance shall be in an amount of
at least One Hundred Thousand Dollars
($100,000). Subject to the provisions of
this Agreement, US Borrower may request US
Revolving Advances up to and
including, and to the extent the aggregate
outstanding principal amount thereof
does not exceed, the US Revolving Facility
Maximum Amount in effect from time to
time. US Revolving Advances under the US
Revolving Facility may automatically be
made for the payment of interest on the US
Term Loan, the US Revolving Facility
and other US Obligations on the date when
due to the extent available and as
provided for herein if such US Obligations
are not directly paid by the US
Borrower when due. No Credit Party may at
any time increase, reduce or otherwise
adjust the US Revolving Facility Cap
without the prior written consent of Agent
and US Requisite Lenders. Agent shall have
the right to establish and readjust
from time to time, in its Permitted
Discretion, reserves against the US
Borrowing Base, which reserves shall have
the effect of reducing the amounts
otherwise eligible to be disbursed to US
Borrower under the US Revolving
Facility pursuant to this Agreement and,
commencing September 30, 2004, in the
event that and for so long as the
obligations of Parent under the letter from
Parent to National Westminster Bank PLC
dated February 25, 2003 are not
terminated in form and substance
satisfactory to Agent in its Permitted
Discretion, Agent shall establish a reserve
against US Availability equal to the
liabilities of Parent and its subsidiaries
under the Facilities referred to in
such letter, as determined from time to
time by Agent in its Permitted
Discretion.
(b) Subject to
the provisions of this Agreement, each Canadian
Revolving Lender agrees to make available
its Pro Rata Share of Canadian
Revolving Advances to Canadian Borrower
under the Canadian Revolving Facility
from time to time during the Term;
provided, that (i) the Pro Rata Share of the
Canadian Revolving Advances of any Canadian
Revolving Lender shall not at any
time exceed its separate Commitment under
the Canadian Revolving Facility, and
(ii) the aggregate amount of all Canadian
Revolving Advances at any time
outstanding under the Canadian Revolving
Facility shall not exceed the Canadian
Revolving Facility Maximum Amount then in
effect. The "CANADIAN REVOLVING
FACILITY MAXIMUM AMOUNT" at any time shall
be equal to the lesser of:
(x) the value
in U.S. Dollars of eighty-five
percent (85%) of Canadian Borrower's Eligible Receivables in
the
Canadian Borrowing Base, minus (i) amounts reserved pursuant to
this
Agreement and (ii) the undrawn face amount of Canadian Standby
Letters
of Credit to the extent they have not been cash collaterilized
(such
calculated amount being referred to herein as the "CANADIAN
AVAILABILITY"); and
(y) the Canadian Revolving Facility Cap then in
effect.
The obligations of Canadian Revolving
Lenders under the Canadian Revolving
Facility shall be several, and not joint or
joint and several, up to the amount
of the Commitments under the Canadian
Revolving Facility. The Canadian Revolving
Facility is a revolving credit facility
3
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which may be drawn, repaid and redrawn from
time to time as permitted under this
Agreement. Any determination as to whether
there is Canadian Availability within
the Canadian Borrowing Base for requested
Canadian Revolving Advances shall be
made by Agent in its Permitted Discretion
and is final and binding upon Canadian
Borrower. Unless otherwise permitted by
Agent, each Canadian Revolving Advance
shall be in an amount of at least Fifty
Thousand Dollars ($50,000). Subject to
the provisions of this Agreement, Canadian
Borrower may request Canadian
Revolving Advances up to and including, and
to the extent the aggregate
outstanding principal amount thereof does
not exceed, the Canadian Revolving
Facility Maximum Amount in effect from time
to time. Canadian Revolving Advances
under the Canadian Revolving Facility may
automatically be made for the payment
of interest on the Canadian Term Loan, the
Canadian Revolving Facility, and
other Canadian Obligations on the date when
due to the extent available and as
provided for herein if such Canadian
Obligations are not directly paid by
Canadian Borrower when due. No Credit Party
may at any time increase, reduce or
otherwise adjust the Canadian Revolving
Facility Cap without the prior written
consent of Agent and Canadian Requisite
Lenders. Agent shall have the right to
establish and readjust from time to time,
in its Permitted Discretion, reserves
against the Canadian Borrowing Base, which
reserves shall have the effect of
reducing the amounts otherwise eligible to
be disbursed to Canadian Borrower
under the Canadian Revolving Facility
pursuant to this Agreement.
2.2 THE
REVOLVING NOTES; MATURITY
(a) All
Revolving Advances under the Revolving Facilities
shall be evidenced by the Revolving Notes,
payable to the order of each
Revolving Lender in the principal amount of
the Commitment of such Revolving
Lender under the Revolving Facilities, duly
executed and delivered by US
Borrower or Canadian Borrower, as
applicable. The US Revolving Notes shall
evidence the aggregate Indebtedness of US
Borrowers to US Revolving Lenders
resulting from US Revolving Advances under
the US Revolving Facilities from time
to time. The Canadian Revolving Notes shall
evidence the aggregate Indebtedness
of Canadian Borrowers to Canadian Revolving
Lenders resulting from Canadian
Revolving Advances under the Canadian
Revolving Facilities from time to time.
Each Revolving Lender hereby is authorized,
but is not obligated, to enter the
amount of such Revolving Lender's Pro Rata
Share of each Revolving Advance under
either Revolving Facility, and the amount
of each payment or prepayment of
principal or interest thereon in the
appropriate spaces on the reverse of or on
an attachment to such Revolving Lender's
Revolving Note(s). Agent will account
to Borrowers monthly with a statement of
Revolving Advances under each Revolving
Facility, and any charges and payments made
pursuant to this Agreement, and in
the absence of manifest error, such
accounting rendered by Agent shall be deemed
final, binding and conclusive unless Agent
is notified by Borrowers in writing
to the contrary within fifteen (15)
calendar days of Receipt of each accounting,
which notice shall be deemed an objection
only to items specifically objected to
therein.
(b) All
amounts outstanding under the Revolving Notes and
all other Obligations under the Revolving
Facilities shall be due and payable in
full, if not earlier in accordance with
this Agreement, on the Maturity Date.
2.3 INTEREST
ON THE REVOLVING NOTES
4
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Subject to Section 3.7, Interest on outstanding Revolving
Advances under the Revolving Notes shall be
payable monthly in arrears on the
first day of each calendar month commencing
May 1, 2004 at an annual rate equal
to the Prime Rate plus one and
three-quarters percent (1.75%) calculated on the
basis of a 360-day year and for the actual
number of calendar days elapsed in
each interest calculation period. Interest
accrued on each Revolving Advance
under the Revolving Notes shall be due and
payable on the first day of each
calendar month, in accordance with the
procedures provided for in Section 2.9,
commencing May 1, 2004 and continuing until
the later of the expiration of the
Term and the full performance and
indefeasible payment in full in cash of the
Obligations and termination of this
Agreement.
2.4 REVOLVING
FACILITY DISBURSEMENTS; REQUIREMENT TO DELIVER
BORROWING CERTIFICATE
(a) So long as
no Default or Event of Default shall have
occurred and be continuing, US Borrower may
give Agent irrevocable written
notice requesting a US Revolving Advance
under the US Revolving Facility by
delivering to Agent not later than 12:00
noon (New York City time) at least one
(1) but not more than four (4) Business
Days before the proposed Business Day on
which such requested US Revolving Advance
is to be made (the "US REVOLVING
ADVANCE BORROWING DATE"), a completed
Borrowing Certificate requesting such US
Revolving Advance accompanied by relevant
supporting documentation set forth in
the most recent Monthly Borrowing
Certificate (as adjusted pursuant to Section
2.14(d)) satisfactory to Agent in its
Permitted Discretion, which shall (a)
specify the proposed US Revolving Advance
Borrowing Date of such US Revolving
Advance, (b) specify the principal amount
of such requested US Revolving
Advance, (c) certify the matters contained
in Section 4.2 and, to the extent
applicable, provide calculations evidencing
satisfaction of the conditions set
forth in Section 4.2 and (d) specify the
other items and information required in
each Borrowing Certificate; provided,
however, that with respect to any such
Borrowing Certificate provided by US
Borrowers to Agent during a month, US
Borrowers shall not be required to update
the calculation of Eligible
Receivables set forth in the Borrowing
Certificate provided by US Borrowers to
Agent at the beginning of such month unless
Agent so requests in its Permitted
Discretion. On each US Revolving Advance
Borrowing Date, US Borrower irrevocably
authorizes Agent and Lenders to disburse
the proceeds of the requested US
Revolving Advance to the applicable
account(s) of US Borrower specified in the
applicable Borrowing Certificate, each of
which accounts shall constitute one or
more of the accounts set forth on Schedule
2.4 that is the subject of a Bank
Agency Agreement (as such Schedule 2.4 may
be supplemented or otherwise updated
from time to time by written notice by US
Borrower to Agent), in all cases for
credit to US Borrower via Federal funds
wire transfer no later than 3:00 p.m.
(New York City time). Notwithstanding
anything to the contrary in this
Agreement, Agent and Lenders shall be
entitled to rely upon the authority of any
authorized officer of US Borrower for
communications with and instructions from
US Borrower until Agent has actually
received written notice from US Borrower
that such officer no longer has such
authority.
(b) So long as
no Default or Event of Default shall have
occurred and be continuing, Canadian
Borrower may give Agent irrevocable written
notice requesting a Canadian Revolving
Advance under the Canadian Revolving
Facility by delivering to Agent not later
than 12:00 noon (New York City time)
at least one (1) but not more than four (4)
Business Days
5
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before the proposed Business Day on which
such requested Canadian Revolving
Advance is to be made (the "CANADIAN
REVOLVING ADVANCE BORROWING DATE"), a
completed Borrowing Certificate requesting
such Canadian Revolving Advance
accompanied by relevant supporting
documentation satisfactory to Agent in its
Permitted Discretion, which shall (a)
specify the proposed Canadian Revolving
Advance Borrowing Date of such Canadian
Revolving Advance, (b) specify the
principal amount of such requested Canadian
Revolving Advance, (c) certify the
matters contained in Section 4.2 and, to
the extent applicable, provide
calculations evidencing satisfaction of the
conditions set forth in Section 4.2
and (d) specify the other items and
information required in each Borrowing
Certificate; provided, however, that with
respect to any such Borrowing
Certificate provided by Canadian Borrowers
to Agent during a month, Canadian
Borrowers shall not be required to update
the calculation of Eligible
Receivables set forth in the Borrowing
Certificate provided by Canadian
Borrowers to Agent at the beginning of such
month unless Agent so requests in
its Permitted Discretion. On each Canadian
Revolving Advance Borrowing Date,
Canadian Borrower irrevocably authorizes
Agent and Lenders to disburse the
proceeds of the requested Canadian
Revolving Advance to the applicable
account(s) of Canadian Borrower specified
in the applicable Borrowing
Certificate, each of which accounts shall
constitute one or more of the accounts
set forth on Schedule 2.4 that is the
subject of a Bank Agency Agreement (as
such Schedule 2.4 may be supplemented or
otherwise updated from time to time by
written notice by Canadian Borrower to
Agent), in all cases for credit to
Canadian Borrower via Federal funds wire
transfer no later than 3:00 p.m. (New
York City time). Notwithstanding anything
to the contrary in this Agreement,
Agent and Lenders shall be entitled to rely
upon the authority of any authorized
officer of Canadian Borrower for
communications with and instructions from
Canadian Borrower until Agent has actually
received written notice from Canadian
Borrower that such officer no longer has
such authority.
(c) On the
fifteenth (15th) Business Day of each calendar
month during the Term (and more frequently
if Agent shall so request in its
Permitted Discretion but in no event more
often than one (1) time per week
unless an Event of Default exists) until
the Obligations are irrevocably paid in
cash in full and this Agreement is
terminated, (i) Canadian Borrower shall
deliver to Agent a Borrowing Certificate
(the "CANADIAN MONTHLY BORROWING
CERTIFICATE") and (ii) US Borrower shall
deliver to Agent a Borrowing
Certificate (the "US MONTHLY BORROWING
CERTIFICATE" and together with the
Canadian Monthly Borrowing Certificate the
"MONTHLY BORROWING CERTIFICATE").
2.5 STANDBY
LETTERS OF CREDIT
(a) Subject to
the terms and conditions hereof, Agent
shall
(i) from time
to time during the Term issue or
cause the US L/C Issuer to issue US Standby Letters of Credit for
the
account of US Borrower; provided, however, that Agent will not
be
required to
issue or to cause to be issued any US Standby Letters of
Credit to the extent that the issuance of such US Standby Letters
of
Credit would then cause the sum of the outstanding US Revolving
Advances and all outstanding US Letter of Credit Obligations to
the
extent such US Letter of Credit Obligations are not cash
collateralized
to exceed the US Revolving Facility Maximum Amount then in effect
(with
the requested US Standby Letters of Credit being deemed to be
outstanding for the
6
<PAGE>
purposes of calculating US Availability). The maximum amount of
outstanding US Standby Letters of Credit under the US Revolving
Facility shall not exceed Five Million Five Hundred Thousand
Dollars
($5,500,000) in the aggregate at any time. Each disbursement or
payment
by the US L/C Issuer or Agent of an amount drawn under US
Standby
Letters of Credit shall be deemed to be a US Revolving Advance
and
shall bear interest at the Applicable Rate for US Revolving Notes.
US
Standby Letters of Credit that have not been drawn upon shall not
bear
interest.
(ii)
from time to time during the Term issue or
cause the Canadian L/C Issuer to issue Canadian Standby Letters
of
Credit for the account of Canadian Borrower; provided, however,
that
Agent will not be required to issue or to cause to be issued
any
Canadian Standby Letters of Credit to the extent that the issuance
of
such Canadian Standby Letters of Credit would then cause the sum of
the
outstanding Canadian Revolving Advances and all outstanding
Canadian
Letter of Credit Obligations to the extent such Canadian Letter
of
Credit Obligations are not cash collateralized to exceed the
Canadian
Revolving Facility Maximum Amount then in effect (with the
requested
Canadian Standby Letters of Credit being deemed to be outstanding
for
the purposes of calculating Canadian Availability). The maximum
amount
of outstanding Canadian Standby Letters of Credit under the
Canadian
Revolving Facility shall not exceed One Million Five Hundred
Thousand
Dollars ($1,500,000) in the aggregate at any time. Each
disbursement or
payment by the Canadian L/C Issuer or Agent of an amount drawn
under
Canadian Standby Letters of Credit shall be deemed to be a
Canadian
Revolving Advance and shall bear interest at the Applicable Rate
for
Canadian Revolving Notes. Canadian Standby Letters of Credit that
have
not been drawn upon shall not bear interest.
(b)
The US Borrower
and the Canadian Borrower may from
time to time upon notice not later than
11:00 a.m., New York City time, at least
three (3) Business Days in advance, request
Agent to assist such Borrower in
establishing or opening a Standby Letter of
Credit by delivering to Agent, the
L/C Issuer's standard form of standby
letter of credit application (the "STANDBY
LETTER OF CREDIT APPLICATION") completed to
the satisfaction of the US L/C
Issuer or Canadian L/C Issuer,
respectively, and such other certificates,
documents and other papers and information
as Agent or US L/C Issuer or Canadian
L/C Issuer, respectively may reasonably
request.
(c) Each
Standby Letter of Credit shall, among other
things, (i) provide for the payment of
sight drafts when presented for honor
thereunder in accordance with the terms
thereof and when accompanied by the
documents described therein and (ii) have
an expiry date not later than twelve
(12) months after such Standby Letter of
Credit's date of issuance and in no
event later than the last day of the Term.
Each Standby Letter of Credit
Application and each Standby Letter of
Credit shall be subject to the Uniform
Customs and Practice for Documentary
Credits (1993 Revision), International
Chamber of Commerce Publication No. 500,
and any amendments or revision thereof.
(d) In
connection with the issuance of any Standby Letter
of Credit issued on behalf of US Borrower,
US Borrower shall indemnify, save and
hold Agent, each Lender and each US L/C
Issuer harmless from any loss, cost,
expense or liability, including,
without
7
<PAGE>
limitation, payments made by Agent, any
Lender or any US L/C Issuer, and
reasonable expenses and reasonable
attorneys' fees incurred by Agent, any Lender
or any US L/C Issuer arising out of, or in
connection with, any Standby Letter
of Credit to be issued for the account of
such Borrower, except as such loss,
cost, expense or liability results from
such Person's gross negligence, bad
faith or willful misconduct. US Borrower
shall be bound by the US L/C Issuer's
regulations and good faith interpretations
of any Standby Letter of Credit
issued or created for US Borrower's
account, although this interpretation may be
different from US Borrower's own; and,
neither Agent nor any Lender, any US L/C
Issuer, nor any of its correspondents shall
be liable for any error, negligence,
or mistakes, whether of omission or
commission, in following US Borrower's
instructions or those contained in any
Standby Letter of Credit or of any
modifications, amendments or supplements
thereto or in issuing or paying any
Standby Letter of Credit, except for
Agent's, any Lender's, such US L/C Issuer's
or such correspondents' gross negligence,
bad faith or willful misconduct.
(e) In
connection with the issuance of any Standby Letter
of Credit issued on behalf of Canadian
Borrower, Canadian Borrower shall
indemnify, save and hold Agent, each Lender
and each Canadian L/C Issuer
harmless from any loss, cost, expense or
liability, including, without
limitation, payments made by Agent, any
Lender or any Canadian L/C Issuer, and
reasonable expenses and reasonable
attorneys' fees incurred by Agent, any Lender
or any Canadian L/C Issuer arising out of,
or in connection with, any Standby
Letter of Credit to be issued for the
account of such Borrower, except as such
loss, cost, expense or liability results
from such Person's gross negligence,
bad faith or willful misconduct. Canadian
Borrower shall be bound by the
Canadian L/C Issuer's regulations and good
faith interpretations of any Standby
Letter of Credit issued or created for
Canadian Borrower's account, although
this interpretation may be different from
Canadian Borrower's own; and, neither
Agent nor any Lender, any Canadian L/C
Issuer, nor any of its correspondents
shall be liable for any error, negligence,
or mistakes, whether of omission or
commission, in following Canadian
Borrower's instructions or those contained in
any Standby Letter of Credit or of any
modifications, amendments or supplements
thereto or in issuing or paying any Standby
Letter of Credit, except for
Agent's, any Lender's, such Canadian L/C
Issuer's or such correspondents' gross
negligence or willful misconduct.
(f) US
Borrower shall authorize and direct the US L/C
Issuer to name US Borrower as the "Account
Party" therein and to deliver to
Agent all instruments, documents, and other
writings and property received by
the US L/C Issuer pursuant to the Standby
Letters of Credit and to accept and
rely upon Agent's instructions and
agreements with respect to all matters
arising in connection with the Standby
Letters of Credit and the applications
therefor. Canadian Borrower shall authorize
and direct the Canadian L/C Issuer
to name Canadian Borrower as the "Account
Party" therein and to deliver to Agent
all instruments, documents, and other
writings and property received by the
Canadian L/C Issuer pursuant to the Standby
Letters of Credit and to accept and
rely upon Agent's instructions and
agreements with respect to all matters
arising in connection with the Standby
Letters of Credit and the applications
therefor.
(g) Each
Revolving Lender shall to the extent of its Pro
Rata Share of the aggregate amount of all
disbursements made with respect to the
Standby Letters of Credit be deemed to have
irrevocably purchased an undivided
participation in each Revolving Advance
8
<PAGE>
made as a consequence of such disbursement.
If at the time a disbursement is
made the unpaid balance of Revolving
Advances exceeds or would exceed, with the
making of such disbursement, the maximum
amounts permitted under this Agreement
and if such disbursement is not reimbursed
by Borrowers within two (2) Business
Days, then Agent shall promptly notify each
Revolving Lender, and upon Agent's
demand each Revolving Lender shall pay to
Agent such Revolving Lender's Pro Rata
Share of such unreimbursed disbursement
together with such Revolving Lender's
Pro Rata Share of Agent's unreimbursed
costs and expenses relating to such
unreimbursed disbursement. Upon receipt by
Agent of a repayment from Borrowers
of any amount disbursed by Agent for which
Agent had already been reimbursed by
the Lenders, Agent shall deliver to each of
the Revolving Lenders that Revolving
Lender's Pro Rata Share of such repayment.
Each Revolving Lender's participation
commitment shall continue until the last to
occur of any of the following
events: (A) Agent ceases to be obligated to
issue or to cause the issuance of
Standby Letters of Credit hereunder; (B) no
Standby Letter of Credit issued
hereunder remains outstanding and
uncancelled; or (C) all Persons (other than
Borrowers) have been fully reimbursed for
all payments made under or relating to
Standby Letters of Credit.
(h) The
obligations of a Revolving Lender to make
payments to the Agent for the account of
the Agent or any L/C Issuer with
respect to a Standby Letter of Credit shall
be irrevocable, without any
qualification or exception whatsoever and
shall be made in accordance with the
terms and conditions of this Agreement
under all circumstances, including,
without limitation, any of the following
circumstances:
(i) Nany lack
of validity or enforceability of
this Agreement or any of the Loan
Documents;
(ii)
the existence of any claim, setoff, defense
or other right that Borrowers may have at
any time against a beneficiary named
in such Standby Letter of Credit or any
transferee of such Standby Letter of
Credit (or any Person for which any such
transferee may be acting), the Agent,
L/C Issuer, any Lender, or any other
person, whether in connection with this
Agreement, such Standby Letter of Credit,
the transactions contemplated herein
or any related transactions (including any
underlying transactions between
Borrower or any other party and the
beneficiary named in such Standby Letter of
Credit);
(iii) any
draft, certificate or any other document
presented under such Standby Letter of
Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or
any statement therein being untrue or
inaccurate in any respect;
(iv)
the surrender or impairment of any security
for the performance or observance of any of
the terms of this Agreement or any
of the Loan Documents;
(v) any
failure by the Agent to provide any
notices required pursuant to this Agreement
relating to such Standby Letter of
Credit;
(vi)
any payment by the L/C Issuer under any of
the Standby Letters of Credit against
presentation of a draft or certificate
which does not comply with the terms of
such
9
<PAGE>
Standby Letter of Credit (if, in the good
faith opinion of the L/C Issuer, such
prepayment is deemed to be appropriate);
or
(vii) the
occurrence and continuation of any
Default or Event of Default;
provided, however, that after paying in
full its reimbursement obligation
hereunder, nothing herein shall adversely
affect the right of Borrowers or any
Lender, as the case may be, to commence any
proceeding against such L/C Issuer
for any wrongful disbursement made by such
L/C Issuer under a Standby Letter of
Credit as a result of acts or omissions
constituting gross negligence, bad faith
or willful misconduct on the part of such
L/C issuer.
2.6 TERM
LOANS; TERM NOTES
(a) Subject to
the terms and conditions set forth in this
Agreement, each US Term Lender agrees to
loan to US Borrower on the Closing Date
its Pro Rata Share of the US Term Loan,
which, in the aggregate, equals an
original principal amount of Fourteen
Million Dollars ($14,000,000); provided
however that the amount of the Pro Rata
Share of the US Term Loan of any US Term
Lender shall not at any time exceed its
separate Commitment. The US Term Loan is
not a revolving credit facility and may not
be drawn, repaid and redrawn. Any
repayments of principal on the US Term Loan
shall be applied to permanently
reduce such US Term Loan. The obligations
of the US Term Lenders hereunder are
several and not joint or joint and several.
The US Term Loan shall be evidenced
by Term Notes, payable to the order of each
US Term Lender in the principal
amount of the related Commitment of the
applicable US Term Lender, duly executed
and delivered by US Borrower. Each US Term
Lender hereby is authorized, but is
not obligated, to enter the amount of such
US Term Lender's Pro Rata Share of
outstanding principal of the US Term Loan
and the amount of each payment or
prepayment of principal and interest
thereon on the reverse of or on an
attachment to such US Term Lender's Term
Note. On the Closing Date, US Borrower
irrevocably authorizes Agent and US Term
Lenders to disburse the proceeds of the
US Term Loan to the applicable account(s)
of US Borrower set forth on Schedule
2.4, in all cases for credit to US
Borrower, via Federal funds wire transfer.
(b) Subject to
the terms and conditions set forth in this
Agreement, each Canadian Term Lender agrees
to loan to Canadian Borrower on the
Closing Date its Pro Rata Share of the
Canadian Term Loan, which, in the
aggregate, equals an original principal
amount of Six Million Five Hundred
Thousand Dollars ($6,500,000); provided
however that the amount of the Pro Rata
Share of the Canadian Term Loan of any
Canadian Term Lender shall not at any
time exceed its separate Commitment. The
Canadian Term Loan is not a revolving
credit facility and may not be drawn,
repaid and redrawn. Any repayments of
principal on the Canadian Term Loan shall
be applied to permanently reduce such
Canadian Term Loan. The obligations of the
Canadian Term Lenders hereunder are
several and not joint or joint and several.
The Canadian Term Loan shall be
evidenced by Term Notes, payable to the
order of each Canadian Term Lender in
the principal amount of the related
Commitment of the applicable Canadian Term
Lender, duly executed and delivered by
Canadian Borrower. Each Canadian Term
Lender hereby is authorized, but is not
obligated, to enter the amount of such
Canadian Term Lender's
10
<PAGE>
Pro Rata Share of outstanding principal of
the Canadian Term Loan and the amount
of each payment or prepayment of principal
and interest thereon on the reverse
of or on an attachment to such Canadian
Term Lender's Term Note. On the Closing
Date, Canadian Borrower irrevocably
authorizes Agent and Canadian Term Lenders
to disburse the proceeds of the Canadian
Term Loan to the applicable account(s)
of Canadian Borrower set forth on Schedule
2.4, in all cases for credit to
Canadian Borrower, via Federal funds wire
transfer no.
2.7 INTEREST
ON TERM LOANS
(a) Subject to
Section 3.7, Interest on the outstanding
principal balance of the Term Loans under
the Term Notes shall be payable in
cash monthly in arrears on the first day of
each calendar month at an annual
rate equal to the greater of (i) the Prime
Rate, plus 3.50% and (ii) 7.5%,
calculated on the basis of a 360-day year
and shall be charged for the actual
number of calendar days elapsed in each
interest calculation period. Interest
accrued on the Term Loans shall be due and
payable in cash in arrears on the
first day of each calendar month commencing
on May 1, 2004, and continuing until
the later of the expiration of the Term and
the full performance and
indefeasible payment in full in cash of the
Term Loans and all Obligations
related thereto.
(b) Revolving
Advances under the US Revolving Facility
may be made for the payment of interest and
principal on the Term Loans and
other Obligations on the date when due as
provided for herein if such
Obligations are not directly paid by a
Borrower. Revolving Advances under the
Canadian Revolving Facility may be made for
the payment of interest and
principal on the Canadian Term Loan and
other Canadian Obligations on the date
when due as provided for herein if such
Canadian Obligations are not directly
paid by Canadian Borrower.
2.8 SCHEDULED
REPAYMENT OF THE TERM LOANS; MATURITY
(a) Payment of
the outstanding principal balance under
the US Term Loan (in addition to the
interest payments) and all other amounts
(other than interest) outstanding under the
US Term Loan shall be made by the US
Borrower in cash monthly in arrears on the
first day of each calendar month
during the periods indicated below in the
respective amounts set forth below:
<TABLE>
<CAPTION>
Monthly Payment Date
Monthly Principal Payment
<S>
<C>
May 1, 2004 to and including March 1, 2005
$159,090.91
April 1, 2005 to and including March 1,
2006
$204,166.67
April 1, 2006 to and including March 1,
2007
$233,333.33
April 1, 2007 to and including March 1,
2008
$262,500.00
April 1, 2008 to and including March 1,
2009
$320,833.33
</TABLE>
11
<PAGE>
The unpaid principal amount of the US Term Loan and all other
Obligations under the US Term Loan shall be
due and payable in full, and the
related Term Notes shall mature, if not
earlier in accordance with this
Agreement, on the Maturity Date.
(b) Payment of
the outstanding principal balance under
the Canadian Term Loan (in addition to the
interest payments) and all other
amounts (other than interest) outstanding
under the Canadian Term Loan shall be
made by Canadian Borrower in cash monthly
in arrears on the first day of each
calendar month during the periods indicated
below in the respective amounts set
forth below:
<TABLE>
<CAPTION>
Monthly Payment Date
Monthly Principal Payment
<S>
<C>
May 1, 2004 to and including March 1, 2005
$ 68,181.82
April 1, 2005 to and including March 1,
2006
$ 87,500.00
April 1, 2006 to and including March 1,
2007
$100,000.00
April 1, 2007 to and including March 1,
2008
$112,500.00
April 1, 2008 to and including March 1,
2009
$137,500.00
</TABLE>
The unpaid principal amount of the Canadian Term Loan and all
other Obligations under the Canadian Term
Loan shall be due and payable in full,
and the related Term Notes shall mature, if
not earlier in accordance with this
Agreement, on the Maturity Date.
2.9 PROMISE TO
PAY; MANNER OF PAYMENT.
Each Credit Party absolutely and unconditionally promises to
pay, when due and payable pursuant hereto,
principal, interest and all other
amounts and Obligations payable by such
Credit Party hereunder and under any
other Loan Document, without any right of
rescission and without any deduction
whatsoever (subject to Section 6.13),
including any deduction for set-off,
recoupment or counterclaim, notwithstanding
any damage to, defects in or
destruction of the Collateral or any other
event, including obsolescence of any
property or improvements. Any payments made
by the Credit Parties (other than
payments automatically paid through
Revolving Advances under a Revolving
Facility as provided herein) shall be made
only by wire transfer on the date
when due, without offset, deduction or
counterclaim, in Dollars, in immediately
available funds to such account as may be
indicated in writing by Agent to
Borrowers from time to time. Any such
payment received after 2:00 p.m. New York
City time on any date shall be deemed
received on the following Business Day.
Whenever any payment hereunder shall be
stated to be due or shall become due and
payable on a day other than a Business Day,
the due date thereof shall be
extended to, and such payment shall be made
on, the next succeeding Business
Day, and such extension of time in such
case shall be included in the
computation of payment of any interest (at
the interest rate then in effect
during such extension) and/or fees, as the
case may be.
2.10
REPAYMENT OF EXCESS REVOLVING ADVANCES
12
<PAGE>
Any balance of Revolving Advances under the Revolving
Facilities outstanding at any time in
excess of the US Revolving Facility
Maximum Amount or the Canadian Revolving
Facility Maximum Amount, as applicable,
shall be due and payable by the respective
Borrower on the date of delivery of
the Borrowing Certificate which sets forth
such excess balance or within two
Business Days of written notice to such
Borrower from Agent of such excess
balance, in each case without the necessity
of any demand, at the Payment
Office, whether or not a Default or Event
of Default has occurred and is
continuing and in the manner specified in
Section 2.11(d) below and,
notwithstanding any other provision of this
Agreement, such over-advance shall
be an Event of Default. For clarification
purposes, no advance made by any
Lender under Section 2.20 shall be deemed a
Revolving Advance for purposes of
this Section 2.10.
2.11
VOLUNTARY AND MANDATORY PREPAYMENTS
(a) In
addition to and without limiting any provision of
any Loan Document
(i) if a
Change of Control or the consummation
of a Public Offering of securities by
Parent, other than an offering of
securities for an employee benefit plan on
SEC Form S-8 or a successor form,
that realizes at least $14,000,000 in net
proceeds to the Parent occurs that has
not been consented to in writing by Agent
prior to the consummation thereof, on
or prior to the date of such Change of
Control or Public Offering, Borrowers
shall prepay the Loans and all other
Obligations in full in cash together with
accrued interest thereon to the date of
prepayment, the applicable Yield
Maintenance Fee and all other amounts owing
to Agent and Lenders under the Loan
Documents.
(ii)
if any Credit Party or any of its
Subsidiaries, in any transaction or series
of transactions: (A) sells any assets
or other properties (other than (x) sales
of assets permitted under Sections
7.8(a)(i), (ii), (iii) and (vi), (y)
proceeds from sales of assets pending as of
the date hereof and set forth on Schedule
2.11 hereto and (z) other sales of
assets, the fair market value of which does
not exceed $250,000 in any fiscal
year of Borrowers, that are promptly (and
in any event within one hundred eighty
(180) days) replaced with assets of a kind
used or to be used in the Business of
such Credit Party or Subsidiary purchased
or otherwise acquired with the
proceeds of such asset sales); (B) sells or
issues any equity securities,
capital stock or ownership interests in
connection with or as part of a Public
Offering; (C) receives any property damage
insurance award or any other
insurance loss proceeds (but excluding
reimbursement of defense costs or other
similar expenses) that are not used
promptly (and in any event within one
hundred eighty (180) days) after receipt to
repair or replace the property or
assets covered thereby; it being agreed and
understood that such repair and
replace rights shall apply solely if no
Default or Event of Default exists and
solely to such awards and proceeds to the
extent not exceeding $250,000 in the
aggregate during any fiscal year of
Borrowers; or (D) incurs any Indebtedness
other than, so long as no Default or Event
of Default has occurred and is
continuing or would be cause by or result
therefrom, Permitted Indebtedness,
then Borrowers shall apply 100% of the Net
Proceeds thereof to the payment of
the Obligations in accordance with Section
2.11(d); provided, that, pending any
such reinvestment with respect to clause
(A) or (C) above, such Net Proceeds
shall be either used to repay Revolving
Advances (in which case the making of
all future Revolving Advances shall be
subject to the terms and conditions of
this
13
<PAGE>
Agreement) or held by the applicable Credit
Party in an account of such Credit
Party subject to a Bank Agency Agreement
and such Net Proceeds deposited therein
shall be used by Borrowers solely for
reinvestment as and to the extent
permitted herein or otherwise shall be
delivered promptly to Agent, for
distribution to the Lenders, as a
prepayment of the Obligations, to be applied
in accordance with Section 2.11(d).
(b) In
addition and notwithstanding any other provisions
of this Agreement or any Loan Document,
until the Term Loans and Obligations
relating thereto are indefeasibly paid in
full in cash and performed, fifty
percent (50%) of Borrowers' Excess Cash
Flow for each fiscal year (commencing
with the fiscal year of Borrowers ending
March 31, 2005) shall be paid by
Borrowers to Agent, for the ratable benefit
of Term Lenders. Such payments shall
be made on the date of delivery to Agent of
Borrowers' annual audited financial
statements, but in any event not later than
ninety (90) days after the end of
the fiscal year to which such Excess Cash
Flow relates. All amounts payable
pursuant to this Section 2.11(b) shall be
applied by Agent, for the ratable
account of Term Lenders, to reduce the
Obligations related to the Term Loans in
accordance with Section 2.11(d).
(c) Subject to
the terms of this Section 2.11 and Section
3.4, and without limiting the requirements
under the other provisions of this
Section 2.11, Borrowers may prepay to
Agent, for the ratable benefit of the
applicable Term Lenders, the outstanding
principal amount of the Term Loans and
all other Obligations related thereto, in
whole or in part at any time. In
connection with any such prepayment and as
a condition thereto, the Borrowers
shall pay to Agent, for the ratable benefit
of the applicable Term Lenders, as
yield maintenance for the loss of bargain
and not as a penalty, an amount equal
to the applicable Yield Maintenance Fee
pursuant to Section 3.4. Borrowers may
make such prepayments subject to the
following conditions:
(i) If
Borrowers elect to make any prepayment of
the Term Loans pursuant to this Section 2.11(c), Borrowers shall
give
notice of such prepayment to Agent not less than five (5) Business
Days
but no more than forty-five (45) Business Days prior to the date
such
prepayment is made, specifying (i) the date on which such
prepayment is
to be made, (ii) the Loans to be prepaid and the amount of such
prepayment, (iii) the Yield Maintenance Fee, if any, and
accrued
interest and fees applicable to such prepayment and (iv) to the
extent
such prepayment is conditioned on the consummation of any
transaction,
the condition to be satisfied prior to such prepayment . Such
notice
shall be accompanied by a certificate of the chief financial
officer,
controller or chief executive officer of Borrowers, on behalf
of
Borrowers, that such payment is being made in compliance with
this
Section
2.11(c). Notice of prepayment having --------------- been so
given, the aggregate principal amount of the Term Loans, as the
case
may be, so specified to the prepaid, together with accrued interest
and
the applicable Yield Maintenance Fee, if any, thereon, shall become
due
and payable on the prepayment date set forth in such notice,
provided
that any transaction upon which the prepayment is conditioned as
set
forth in such notice has been consummated.
(ii)
All prepayments made pursuant to this
Section 2.11(c) shall be made in accordance with Section 2.9 and
shall
be designated as a prepayment pursuant to
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this Section 2.11(c) on such wire. Except for prepayments made
pursuant
hereto in accordance with Section 7.1, the amount of any
particular
prepayment shall not be less than $250,000 or multiples of $100,000
in
excess thereof.
(iii)
Anything herein contained to the contrary
notwithstanding, the Agent, in its sole and absolute discretion,
may
require all or any portion of voluntary prepayments made by
Borrowers
of
Term Loans to be applied to the principal balance of the US
Term
Loan and any related US Obligations prior to the application
thereof to
the Canadian Term Loan and related Canadian Obligations.
(d) Subject to
Section 2.11(c)(iii) above, any
prepayments made pursuant to Section
2.11(a), (b) or (c) shall be applied to the
Obligations as follows: first, to all then
unpaid fees and expenses of Agent and
Lenders under the Loan Documents, including
the Yield Maintenance Fee, if any,
applicable to such prepayment; second, to
all accrued and unpaid interest on the
Loans; third, to the principal balance
under the US Term Loan and Canadian Term
Loan (pro rata based upon the outstanding
principal balance thereof immediately
prior to such prepayment) to be applied to
remaining principal payments on a pro
rata basis (provided, however, that
prepayments made pursuant to Section 2.11(b)
shall be applied first to the principal
balance under the Canadian Term Loan
until the principal balance of the Canadian
Term Loan is reduced by $500,000 as
a result of such prepayments made pursuant
to Section 2.11(b)); and fourth to
the principal amount of the Revolving Loans
(in each case with a corresponding
reduction in the US Revolving Facility Cap
and the Canadian Revolving Facility
Cap, respectively), pro rata to such Loans
based on the outstanding principal
balances thereof (or on such other basis as
the Agent may elect, in its sole and
absolute discretion); provided, however,
that the reduction of the principal
balance of the Loans shall not affect the
timing of principal payments required
under this Agreement but shall reduce such
payments on a pro rata basis.
Notwithstanding anything contained in this
Section 2.11 to the contrary, if any
balance of US Revolving Advances under the
US Revolving Facility outstanding
exceed the US Revolving Facility Maximum
Amount or any balance of Canadian
Revolving Advances under the Canadian
Revolving Facility outstanding exceed the
Canadian Revolving Facility Maximum Amount,
at the time a payment is due under
Section 2.11(a), such payment shall be
applied first to eliminate such excess
Revolving Advances and then shall be
applied according to the provisions set
forth above.
(e)
Anything herein
contained to the contrary
notwithstanding, to the extent that
Canadian Borrower directly (and not by way
of dividend, capital contribution, loan or
otherwise) receives any of the
proceeds described in Sections 2.11(a) or
(b) (such proceeds, collectively,
"FOREIGN DISPOSITION PROCEEDS"), and
Borrowers have delivered to Agent evidence
satisfactory to Agent that any material
incremental tax liability would result
from the application of proceeds set forth
in the preceding paragraph, then, in
lieu of prepaying the Obligations in the
order of priority set forth in the
preceding paragraph, Canadian Borrower
shall be permitted to use Foreign
Disposition Proceeds received by it to
first prepay Canadian Obligations to the
extent outstanding, provided such proceeds
are otherwise applied in the order
dictated by and otherwise in accordance
with the terms of this Agreement.
2.12
PAYMENTS BY AGENT
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Should any amount required to be paid under any Loan Document be
unpaid
beyond any applicable cure period, such
amount may be paid by Agent, for the
account of Lenders, which payment shall be
deemed a request for a US Revolving
Advance under the US Revolving Facility
(or, if relating to a Canadian
Obligation, at Agent's option, a request
for a Canadian Revolving Advance under
the Canadian Revolving Facility) as of the
date such payment is due, and each
Borrower irrevocably authorizes
disbursement of any such funds to Agent, for the
benefit of Lenders, by way of direct
payment of the relevant amount, interest or
Obligations without necessity of any demand
in accordance with Section 2.9
whether or not a Default or an Event of
Default has occurred or is continuing.
No payment or prepayment of any amount by
Agent, Lenders or any other Person
shall entitle any Person to be subrogated
to the rights of Agent and/or Lenders
under any Loan Document unless and until
the Obligations have been fully
performed and indefeasibly paid in full in
cash and this Agreement has been
terminated. Any sums expended or amounts
paid by Agent and/or Lenders as a
result of any Credit Party's failure to
pay, perform or comply with any Loan
Document or any of the Obligations may be
charged to US Borrower's account as a
US Revolving Advance under the US Revolving
Facility (or, if relating to a
Canadian Obligation, at Agent's option, as
a Canadian Revolving Advance under
the Canadian Revolving Facility) and added
to the respective Obligations.
2.13
GRANT OF SECURITY INTEREST; COLLATERAL
(a) To secure
the payment and performance of the
Obligations of each US Credit Party, such
US Credit Party hereby grants to
Agent, for the benefit of itself and the
Lenders, a valid, perfected and
continuing first priority (subject, with
respect to property or assets covered
by Priority Permitted Liens, such Priority
Permitted Liens) security interest in
and Lien upon, and pledges to Agent, for
the benefit of itself and the Lenders,
all of its right, title and interest in and
to and upon all of such US Credit
Party's assets and property (unless the US
Requisite Lenders otherwise permit in
writing in their sole and absolute
discretion), whether now owned or hereafter
acquired, including, without limitation,
all of the following property and
interests in property of such US Credit
Party:
(i) all of
such Credit Party's tangible personal
property, including, without limitation, all present and future
Goods,
Inventory and Equipment (including items of equipment which are
or
become Fixtures), Computer Hardware and Software, now owned or
hereafter acquired;
(ii)
all of such US Credit Party's intangible
personal property, including, without limitation, all present
and
future Accounts, securities, Contract Rights, Permits, General
Intangibles, Chattel Paper, Investment Property, Intellectual
Property,
Documents, Instruments, Deposit Accounts, Letter-of-Credit Rights
and
Supporting Obligations, rights to the payment of money or other
forms
of consideration of any kind, tax refunds and insurance
proceeds
(including, without limitation, proceeds of any life insurance
policy,
but excluding benefits payable to employees under employee
benefit
plans), now owned or hereafter acquired, and all intangible and
tangible personal property relating to or arising out of any of
the
foregoing;
16
<PAGE>
(iii) all
of such US Credit Party's interests in
owned and leased real property;
(iv)
all of such US Credit Party's present and
future
Government Contracts and rights thereunder and the related
Government Accounts and proceeds thereof, now or hereafter owned
or
acquired by such US Credit Party; provided, however, that Agent
shall
not have a security interest in any rights under any Government
Contract of such US Credit Party or in the related Government
Account
where the taking of such security interest would be a violation of
an
express prohibition contained in such Government Contract (for
purposes
of this limitation, the fact that a Government Contract is subject
to,
or otherwise refers to, Title 31,Section 203 or Title 41,Section 15
of
the United States Code shall not be deemed an express
prohibition
against assignment thereof) or is prohibited by applicable law;
and
(v) any and
all additions to any of the
foregoing, and any and all replacements, products and proceeds
(including insurance proceeds but excluding benefits payable to
employees under employee benefits plans) of any of the
foregoing.
(b) In
addition to the foregoing, subject to Section
2.13(e) below, to secure the payment and
performance of the Obligations of each
US Credit Party, such US Credit Party, has
pledged, hereby pledges and shall
pledge to Agent, for its benefit and the
benefit of the Lenders, all of the
securities it owns in any Subsidiary
pursuant to the Pledge Agreement to which
it is a party.
(c) Each
Credit Party shall promptly notify Agent of any
Commercial Tort Claims in which such Credit
Party has an interest arising after
the Closing Date and shall provide all
necessary information concerning each
such Commercial Tort Claim, or upon any and
all Commercial Tort Claims upon
request by Agent, and make all necessary
filings with respect thereto to perfect
Agent's (for its benefit and the benefit of
the Lenders) first priority security
interest therein.
(d) Each
Credit Party has full right and power to grant
to Agent, for the benefit of itself and the
Lenders, a perfected, first priority
(other than with respect to property or
assets covered by Priority Permitted
Liens) security interest and Lien in the
Collateral pursuant to this Agreement.
Upon the execution and delivery of this
Agreement and the Canadian Security
Agreement, as applicable, and upon the
filing of the necessary financing
statements and/or appropriate filings
and/or delivery of the necessary
certificates evidencing an equity interest,
control and/or possession, as
applicable, without any further action,
Agent, for the benefit of itself and the
Lenders, will have a good, valid and first
priority (other than with respect to
property or assets covered by Priority
Permitted Liens) and perfected Lien and
security interest in the Collateral,
subject to no transfer or other
restrictions not otherwise permitted
hereunder or Liens of any kind in favor of
any other Person except for Permitted
Liens. No financing statement or other
similar statement or instrument relating to
any of the Collateral is on file in
any public office except those (i) on
behalf of Agent, for the benefit of itself
and the Lenders, and/or (ii) in connection
with Permitted Liens. Each Credit
Party represents and
17
<PAGE>
warrants to Agent and Lenders that it is
not party to any agreement, document or
instrument that conflicts with this Section
2.13.
(e) Notwithstanding
anything to the contrary contained in
this Section 2.13, no Foreign Subsidiary of
US Borrower constituting a
"controlled foreign corporation," as
defined in Section 957 of the Code, shall
be required to deliver any guaranty of the
US Obligations or grant a security
interest in any of its Property to secure
any such guaranty, and neither US
Borrower nor any of its Subsidiaries shall
be required to pledge voting equity
securities constituting more than
sixty-five percent (65%) (or other applicable
greater percentage) of the total combined
voting power of all classes of voting
equity securities of any such Foreign
Subsidiary of US Borrower as security for
the US Obligations, to the extent, in any
such case, such guaranty or granting,
or a pledge of additional equity
securities, would result in material and
adverse tax consequences to US Borrower
under Section 956 of the Code as
determined by Agent and the Requisite
Lenders in their Permitted Discretion.
(f) To secure
the payment and performance of the Canadian
Obligations by each Canadian Credit Party,
Canadian Borrower and its Foreign
Subsidiaries that are Canadian Guarantors
have executed and delivered to and for
the benefit of Agent, for the benefit of
itself and the Lenders, the Canadian
Security Agreement.
2.14
COLLATERAL ADMINISTRATION
(a) All
Collateral (except Deposit Accounts and
Collateral in the possession of Agent)
shall at all times be kept by the Credit
Parties at the locations from time to time
set forth on Schedule 5.19B hereto,
and shall not, without thirty (30) calendar
days' prior written notice to Agent,
be moved therefrom other than to another
such location (except for movement of
equipment, inventory and related assets for
performance of services in the
ordinary course of business), and in any
case, (i) with respect to Collateral
owned by US Credit Parties, shall not be
moved outside the United States, and
(ii) with respect to Collateral owned by
Canadian Credit Parties, shall not be
moved outside the United States or Canada.
In addition, except for movement of
equipment, inventory and related assets for
performance of services in the
ordinary course of business, Borrowers
shall not transfer any Collateral with
fair market value of more than $100,000,
individually or in the aggregate,
whether in one transaction or a series of
transactions, to any location for
which a Landlord Waiver and Consent has not
been obtained, without the prior
written consent of Agent. Whether or not an
Event of Default has occurred, any
of Agent's officers, employees,
representatives or agents shall have the right,
upon reasonable notice (unless an Event of
Default exists) at any time during
normal business hours, in the name of
Agent, or any designee of Agent or any
Credit Party, to verify the validity,
amount or any other matter relating to the
Collateral. Each Credit Party shall
cooperate fully with Agent in an effort to
facilitate and promptly conclude such
verification process. In addition to and
notwithstanding any provision of any Loan
Document, Agent shall have the right
at all times after the occurrence and
during the continuance of an Event of
Default to notify Persons owing Accounts to
any Credit Party that its Accounts
have been assigned to Agent and to collect
such Accounts directly in its own
name and to charge collection costs and
expenses, including reasonable
attorney's fees, to the Credit Parties. The
Credit Parties shall use
commercially
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<PAGE>
reasonable efforts to ensure collection of
their respective Accounts for Agent,
for the account of Lenders.
(b) As and
when determined by Agent in its Permitted
Discretion, Agent will perform the searches
described in clauses (i) and (ii)
below against each Credit Party, all at the
Credit Parties' expense: (i) UCC,
PPSA or similar foreign searches with the
Secretary of State and local filing
offices or other applicable Governmental
Authorities' offices of each
jurisdiction where any Credit Party is
organized and/or maintains its respective
executive offices, a place of business or
assets; and (ii) judgment, federal tax
lien and corporate and partnership tax lien
searches, in each jurisdiction
searched under clause (i) above.
Notwithstanding the foregoing, Agent shall not
conduct such searches more frequently than
four times during any twelve (12)
month period unless an Event of Default has
occurred and is continuing.
(c) Each
Credit Party shall notify Agent of the existence
of, and promptly deliver to Agent upon its
request, all items for which Agent
must receive possession to obtain a
perfected Lien and security interest and all
notes, certificates, and documents of
title, Chattel Paper, warehouse receipts,
Instruments, and any other similar
Instruments constituting Collateral, in each
case to the extent not already in
possession of Agent.
(d) Each
Credit Party shall, and shall cause each of its
Subsidiaries to, keep accurate and complete
records of the Collateral and all
payments and collections thereon and shall
submit such records to Agent on such
periodic bases as Agent may request in its
Permitted Discretion. In addition if
Accounts of Credit Parties in an aggregate
face amount in excess of $500,000
become ineligible because they fall within
one of the specified categories of
ineligibility set forth in the definition
of Eligible Receivables, Credit
Parties shall notice Agent of such
occurrence no later than five Business Days
following such occurrence and the Borrowing
Base and the applicable Monthly
Borrowing Certificate shall thereupon be
adjusted to reflect such occurrence. If
requested by Agent upon or at any time
after the occurrence and during the
continuance of an Event of Default, each
Credit Party shall, and shall cause
each of its Subsidiaries to, execute and
deliver to Agent formal written
assignments of all of its respective
Accounts as Agent may request, including
all Accounts created since the date of the
last assignment, together with copies
of claims, invoices and/or other
information related thereto. To the extent that
collections from such assigned Accounts
exceed the amount of the Obligations,
such excess amount shall not accrue
interest in favor of any Credit Party.
(e) Each
Credit Party (i) upon request by Agent after the
occurrence and during the continuance of an
Event of Default, shall provide
prompt written notice to its current
bank(s) to transfer all items, collections
and remittances to the Concentration
Account (or any other account designated by
Agent), (ii) upon request by Agent after
the occurrence and during the
continuance of an Event of Default, shall
provide prompt written notice to each
Account Debtor that Agent, for itself and
the benefit of the Lenders, has been
granted a lien and security interest in,
upon and to all Accounts payable by
such Account Debtor, (iii) shall direct or
shall have directed each Account
Debtor to make payments to the appropriate
Blocked Account, in each case not
later than ten (10) calendar days after the
Person becomes an Account Debtor,
and hereby authorizes Agent and/or Lenders,
upon any failure to send such
directions within the applicable time
period, to send any and all similar
notices and directions or notice to
such
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Account Debtors and, after the occurrence
and during the continuance of an Event
of Default, to collect such Accounts
directly in its own name and to charge
collection costs and expenses to the Credit
Parties, and (iv) shall do anything
further that may be lawfully required by
Agent to secure Agent, for the benefit
of itself and Lenders, and effectuate the
intentions of the Loan Documents.
2.15
POWER OF ATTORNEY
Agent is hereby irrevocably made, constituted and appointed
the true and lawful attorney for each
Credit Party (without requiring Agent to
act as such) with full power of
substitution to do the following: (i) after the
occurrence and during the continuance of an
Event of Default, endorse the name
of such Credit Party upon any and all
checks, drafts, money orders and other
instruments for the payment of money that
are payable to such Credit Party and
constitutes collection on such Credit
Party's Accounts; (ii) execute and/or file
in the name of such Credit Party any
financing statements, amendments to
financing statements, schedules to
financing statements, releases or
terminations thereof or other instruments
(and such Credit Party hereby waives
any right to file any of the foregoing
until the Obligations are indefeasibly
paid in full in cash and this Agreement is
terminated (unless otherwise
permitted by the Requisite Lenders), (iii)
execute and/or file in the name of
such Credit Party assignments, instruments,
documents, schedules and statements
that it is obligated to give Agent under
any of the Loan Documents; (iv) execute
and/or file such documents as may be
necessary to register and/or otherwise
perfect Agent's (for the benefit of the
Lenders) Lien on such Credit Party's
owned motor vehicles; (v) do such other and
further acts and deeds in the name
of any such Credit Party that Agent may
deem necessary or desirable in its
Permitted Discretion to enforce, make,
create, maintain, continue or enforce or
perfect Agent's, for the benefit of itself
and Lenders, security interest or
lien or rights in any Collateral; and (vi)
do such other and further acts and
deeds in the name of such Credit Party that
Agent may deem necessary in its
Permitted Discretion to enforce Agent's,
for the benefit of itself and Lenders,
security interest or lien or rights in any
Collateral. In addition, if any
Credit Party breaches its obligations
hereunder to direct payments of Accounts
or the proceeds of any other Collateral to
the appropriate Blocked Account,
Agent, as the irrevocably made, constituted
and appointed true and lawful
attorney for such Person pursuant to this
paragraph, may, by the signature or
other act of any of Agent's officers or
authorized signatories (without
requiring any of them to do so), direct any
foreign, federal, state or private
payor or fiscal intermediary to pay
proceeds of Accounts or any other Collateral
to the appropriate Blocked Account. Said
appointment shall create in Agent, for
its benefit and the benefit of Lenders, a
power coupled with an interest.
2.16
COLLECTIONS; REPAYMENT; BORROWING AND LOCKBOX
(a) As to the
Credit Parties other than the Canadian Credit
Parties,
(i) Each such
Credit Party shall establish and
maintain a lockbox together with a blocked account (individually
and
collectively, the "US BLOCKED ACCOUNTS") with one or more banks
acceptable to Agent (each, a "LOCKBOX BANK"), and shall execute
with
each Lockbox Bank one or more agreements acceptable to Agent
(individually and collectively, the "LOCKBOX AGREEMENT"), and
such
other agreements
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related thereto as Agent may require. In such event, each such
Credit
Party shall ensure that all collections of its Accounts and all
other
cash payments received by such Credit Party are paid and
delivered
directly from Account Debtors and other Persons into the US
Blocked
Accounts.
(ii)
The Lockbox Agreements shall provide that
the Lockbox Banks immediately will transfer all funds paid into the
US
Blocked Accounts into a depository account or accounts maintained
by
Agent or an Affiliate of Agent at such bank as Agent may
communicate to
each Credit Party from time to time (the "US CONCENTRATION
ACCOUNT").
Notwithstanding and without limiting any other provision of any
Loan
Document, Agent shall apply, on a daily basis, all funds
transferred
into the US Concentration Account pursuant to the Lockbox
Agreements
and this Section 2.16 to the Obligations in such order and manner
as
determined by Agent. Further, under such circumstances, to the
extent
that any Account collections of any Credit Party or any other
cash
payments received by any Credit Party are not sent directly to the
US
Blocked
Account but are received by any Credit Party or any Affiliate
of any Credit Party, such collections and proceeds shall be held
in
trust for the benefit of Agent and Lenders and promptly remitted
(and
in any event within one (1) Business Day), in the form received, to
the
US Blocked Account for immediate transfer to the US
Concentration
Account. All funds transferred to the US Concentration Account
for
application to the Obligations under the US Revolving Facility
shall be
applied when available to reduce the Obligations under the US
Revolving
Facility, but, for purposes of calculating interest hereunder,
shall be
subject to a two (2) Business Day clearance period. If as the
result of
collections of Accounts and/or any other cash payments received by
any
Credit Party pursuant to this Section 2.16 a credit balance exists
with
respect to the US Concentration Account, such credit balance shall
not
accrue interest in favor of any Credit Party.
(iii)
Without limiting the foregoing, and in
addition thereto, on or prior to the Closing Date, or at any
time
thereafter, Agent and each such Credit Party shall enter into a
bank
agency agreement, in a form acceptable to Agent in its
Permitted
Discretion (a "BANK AGENCY AGREEMENT"), with each financial
institution
with which such Credit Party maintains from time to time any
deposit
accounts (general or special). Pursuant to the Bank Agency
Agreements
and pursuant hereto, the applicable Credit Party grants and shall
grant
to Agent a continuing lien upon, and security interest in, all
such
accounts and all funds at any time paid, deposited, credited or
held in
such accounts (whether for collection, provisionally or otherwise)
or
otherwise in the possession of such financial institutions, and
each
such financial institution shall act as Agent's agent in
connection
therewith. Following the Closing Date, no such Credit Party
shall
establish any deposit account with any financial institution
unless,
prior thereto, Agent and such Credit Party shall have entered into
a
Bank Agency Agreement with such financial institution.
(b) As to the
Canadian Credit Parties,
(i) Each
Canadian Credit Party will establish
blocked accounts with a bank acceptable to Agent (individually
and
collectively, the "CANADIAN BLOCKED
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ACCOUNTS" and together with the US Block Accounts, the "BLOCKED
ACCOUNTS"). In such event, each such Credit Party shall ensure that
all
collections of its Accounts and all other cash payments received
by
such Credit Party are paid and delivered directly from Account
Debtors
and other Persons into the Canadian Blocked Accounts.
(ii)
The Canadian Credit Parties will transfer
all funds received into a Canadian Blocked Account. The
agreements
governing such accounts will provide that all funds so deposited
will
be transferred into a depository account or accounts maintained
by
Agent or an Affiliate of Agent at such bank as Agent may
communicate to
the Canadian Credit Parties and the bank from time to time (the
"CANADIAN CONCENTRATION ACCOUNT") at any time and in the amount
designated by the Agent by written notice to the Canadian
Credit
Parties and the bank requiring either (i) either that a sweep occur
at
a set amount and on a set day or (ii) that thereafter the Agent
requires a daily cash sweep. Notwithstanding and without limiting
any
other provision of any Loan Document, Agent shall apply the
funds
transferred into the Canadian Concentration Account pursuant to
this
Section 2.16 to the Canadian Obligations of the Canadian Credit
Parties
in such order and manner as determined by Agent. Monthly or at
such
other period as shall the Agent request, the Canadian Borrower
shall
advise the Agent as to the deposits made and Agent shall track
the
deposits to the Canadian Blocked Account by the Canadian Credit
Parties
against available amounts for advance based on the Canadian
Borrowing
Base and will notionally consider the Canadian Revolving Loan
to
revolve as if applied and re-advanced based on such calculation for
the
purposes of this Agreement. Further, under such circumstances, to
the
extent that any Account collections of any Canadian Credit Party or
any
other cash
payments received by any Canadian Credit Party are not sent
directly to the Canadian Blocked Account but are received by
any
Canadian Credit Party or any Affiliate of any Canadian Credit
Party,
such collections and proceeds shall be held in trust for the
benefit of
Agent and Lenders and promptly remitted (and in any event within
one
(1) Business Day), in the form received, to the Canadian
Blocked
Account. Funds will be transferred to the Canadian
Concentration
Account for application to the Canadian Obligations (other than
the
Canadian Term Loans) upon notice given by the Agent to the
Canadian
Borrower and the bank. It is the intention that notice and
requirement
to transfer funds will be made by the Agent (A) at the times that
the
Canadian Borrower is not in Default and does not have advances
outstanding in excess of the Canadian Borrowing Base, when such
funds
are not required for the immediate business needs of the
Canadian
Borrower and (B) at any time that the Canadian Borrower is in
Default
or has advances outstanding in excess of the Canadian Borrowing
Base,
in amounts and at such times as determined by the Agent. The
Canadian
Borrower will at all times make the payments of interest, fees,
costs
and expenses, and the repayment required if at any time the amount
of
the Obligations under or related to the Canadian Revolving
Loans
exceeds the Canadian Borrowing Base, at the times required under
this
Agreement and failing which the Agent will forthwith notify the
bank
and require sweep and transfer from the Canadian Block Accounts
to
cover such amounts.
(iii) Each
Canadian Credit Party shall and hereby
grants to Agent a continuing lien upon, and security interest in,
all
accounts and all funds at any time paid,
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<PAGE>
deposited, credited or held in such accounts (whether for
collection,
provisionally or otherwise) or otherwise in the possession of
such
financial institutions, and each such financial institution shall
act
as Agent's agent
in connection therewith. Following the Closing Date,
no Canadian Credit Party shall establish any deposit account with
any
financial institution unless, prior thereto, Agent shall be
satisfied
as to its Canadian Blocked Account arrangements and security
interest
as to such account.
2.17
NOTES
Upon Agent's or any Lender's request, and in any event within three
(3)
Business Days of any such request,
Borrowers shall execute and deliver to Agent
new Notes and/or split or divide the Notes
in exchange for then existing Notes
in such smaller amounts or denominations as
Agent or such Lender shall specify
in their respective sole and absolute
discretion; provided, that the aggregate
principal amount of such new, split or
divided Notes does not exceed the
aggregate principal amount of such existing
Notes to be exchanged therefor.
2.18
REPLACEMENT OF LOST NOTES
Upon receipt of evidence reasonably satisfactory to the
relevant
Borrower of the mutilation, destruction,
loss or theft of any Notes and the
ownership thereof, Borrowers shall, upon
the written request of the holder of
such Notes, execute and deliver in
replacement thereof new Notes in the same
form, in the same original principal amount
and dated the same date as the so
mutilated, destroyed, lost or stolen; and
such Notes so mutilated, destroyed,
lost or stolen shall then be deemed no
longer outstanding hereunder. If the
Notes being replaced have been mutilated,
they shall be surrendered to Borrowers
after Agent's receipt of the replacement
Notes; and if such replaced Notes have
been destroyed, lost or stolen, such holder
shall furnish the applicable
Borrower with an indemnity in writing
reasonably acceptable to such Borrower to
save them harmless in respect of such
replaced Note.
2.19
REALLOCATION OF COMMITMENTS
The Credit Parties, Agent and the Lenders agree and acknowledge
that,
on terms and conditions satisfactory to
Borrowers, Agent and each of the
Lenders, any Commitment of any Lender
hereunder for the benefit of either
Borrower may be reallocated and adjusted
from time to time with any other
Commitment or Commitments of such Lender
for the benefit of the other Borrower,
and the outstanding Loans thereunder
reclassified or re-categorized in
connection therewith to evidence or
effectuate any such reallocation and
adjustment, without constituting a
novation, for any purpose, including, without
limitation, for purposes of accurately
reflecting each Borrower's relative
contribution to, or allocable amount or
share of, Borrowers' Consolidated
EBITDA, earnings, revenue, assets and/or
liabilities. For clarification
purposes, any such reallocation and
adjustment shall require the written consent
of each Borrower, Agent and each Lender and
shall not, in any event, result in a
reduction of the aggregate Commitments
contained herein.
2.20
DISCRETIONARY BULGE COMMITMENT
Upon written request of Canadian Borrower (with or without the
consent
of US Borrower
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or any other Credit Party), each Canadian
Lender from time to time may make
additional advances to Canadian Borrower,
in such Canadian Lender's sole and
absolute discretion, the proceeds of which
shall be used by Canadian Borrower
for purposes approved in writing by Agent
and Canadian Lenders. For
clarification purposes, the commitment of
each Canadian Lender evidenced by this
Section 2.20 is strictly a discretionary
commitment of such Canadian Lender and
no Canadian Lender shall have any
obligation to make any advances hereunder (or,
in the event any Canadian Lender shall have
made an prior advance hereunder, any
future advance hereunder). The written
consent of Agent and each Canadian Lender
shall be required as a condition precedent
to the funding or disbursement of any
such advance by any Canadian Lender. In the
event any such advances is made in
accordance with the terms of this
paragraph, such advance shall constitute Loans
and Canadian Obligations hereunder, shall
be secured by the Collateral and the
Security Documents, shall be due and
payable on demand and shall bear interest
from time to time at the highest interest
rate applicable to any Canadian
Obligation in accordance with the terms of
this Agreement. If Agent and Canadian
Lenders approve the making of any such
advance in accordance with the terms
hereof, Canadian Borrower, Agent and
Canadian Lenders shall execute and deliver
such agreements, documents and instruments
as Agent and Canadian Lenders from
time to time request in furtherance of the
intent of this paragraph and to
evidence the advances made pursuant hereto,
each of which shall be in form and
substance satisfactory to Agent and
Canadian Lenders.
2.21
SEVERAL OBLIGATIONS
Anything to the contrary contained in this Agreement or any other
Loan
Document notwithstanding, to the extent any
representation, warranty, covenant
or other provision contained herein or in
such Loan Document that, by its terms,
is made by Borrowers on a joint and several
basis would result in adverse tax
consequences to US Borrower under Section
956 of the Code due to such joint and
several nature with respect to any Credit
Party, as determined by Agent and the
Requisite Lenders in their Permitted
Discretion, such representation, warranty,
covenant or other provision shall be deemed
to be made, without further action
or notice by or on behalf of Agent, any
Lender or any other Person, by each such
Credit Party on a several, and not a joint
basis or a joint and several basis,
to and for the benefit of Agent and each
Lender.
2.22
CREDIT PARTY REPRESENTATION; RELIANCE
Each Credit Party irrevocably appoints Parent as its agent for
all
purposes relevant to this Agreement and all
other Loan Documents, including the
giving and receipt of notices and execution
and delivery of all documents,
instruments, and certificates contemplated
herein and therein and all
modifications hereto and thereto. Any
acknowledgment, consent, direction,
certification, or other action which might
otherwise be valid or effective only
if given, taken or received by all or any
Credit Party acting singly, shall be
valid and effective if given, taken or
received only by Parent, whether or not
any of the other Borrowers joins therein,
and the Agent and the Lenders shall
have no duty or obligation to make further
inquiry with respect to the authority
of Parent under this Section 2.22, provided
that nothing in this Section 2.22
shall limit the effectiveness of, or the
right of the Agent and the Lenders to
require and rely upon, any notice,
document, instrument, certificate,
acknowledgment, consent, direction,
certification, or other action to be
delivered by each Credit Party pursuant to
this Agreement or the other Loan
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Documents. With respect to any action
hereunder, Agent and Lenders may
conclusively rely upon, and shall incur no
liability to any Credit Party in
acting upon, any request or other
communication that Agent or any Lender
reasonably believes to have been given or
made by a Person authorized on such or
any Credit Party's behalf, whether or not
such Person is listed on the
incumbency certificate delivered pursuant
to this Agreement. In each such case,
each Credit Party hereby waives the right
to dispute Agent's and Lenders'
actions based upon such request or other
communication absent manifest error.
III. FEES AND OTHER
CHARGES
3.1 COMMITMENT
FEE
On or before the Closing Date, US Borrower and the Canadian
Borrower,
as applicable, shall pay to Agent (after
giving effect to payments previously
made by Parent to Agent) (a) for the
ratable benefit of the US Revolving
Lenders, a nonrefundable commitment fee
equal to One Hundred Ninety-Three
Thousand Seven Hundred Fifty Dollars
($193,750), (b) for the ratable benefit of
the Canadian Revolving Lenders, a
nonrefundable commitment fee equal to Fifty
Thousand Dollars ($50,000), (c) for the
ratable benefit of the US Term Lenders,
a nonrefundable commitment fee equal to Two
Hundred Eighty Thousand Dollars
($280,000), and (d) for the ratable benefit
of the Canadian Term Lenders, a
nonrefundable commitment fee equal to One
Hundred Thirty Thousand Dollars
($130,000), in each case which fees shall
be deemed fully earned and due and
payable on the Closing Date.
3.2 UNUSED
LINE FEES
US Borrower shall pay to Agent, for the ratable benefit of US
Revolving Lenders, an unused line fee (the
"US REVOLVING UNUSED LINE FEE") in an
amount equal to three-quarters of one
percent (0.75%) per annum of the
difference derived by subtracting (i) the
daily average amount of the balances
under the US Revolving Facility (including
Letter of Credit Obligations)
outstanding during the preceding month from
(ii) the US Revolving Facility Cap
as in effect from time to time. Canadian
Borrower further shall pay to Agent,
for the ratable benefit of the Canadian
Revolving Lenders, an unused line fee
(the "CANADIAN REVOLVING UNUSED LINE FEE"
and together with the US Revolving
Unused Line Fee, the "REVOLVING UNUSED LINE
FEES") in an amount equal to
three-quarters of one percent (0.75%) per
annum of the difference derived by
subtracting (i) the daily average amount of
the balances under the Canadian
Revolving Facility (including Letter of
Credit Obligations) outstanding during
the preceding month from (ii) the Canadian
Revolving Facility Cap as in effect
from time to time. The Revolving Unused
Line Fees shall be payable monthly in
arrears on the first day of each successive
calendar month, commencing with May
1, 2004.
3.3 COLLATERAL
MANAGEMENT FEE
(i) US
Borrower shall pay to Agent, for its own account,
a monthly collateral management fee (the
"US COLLATERAL MANAGEMENT FEE") in an
amount equal to one-half of one percent
(.50%) (per annum) of the daily average
amount of the US Revolving Loans
outstanding
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during the preceding month. The US
Collateral Management Fee shall commence on
the date hereof and shall be payable
monthly in arrears on the first day of each
calendar month commencing May 1, 2004 and
on the expiration or termination of
the US Revolving Loans.
(ii)
Canadian Borrower shall pay to Agent, for its own
account, a monthly collateral management
fee (the "CANADIAN COLLATERAL
MANAGEMENT FEE" and together with the US
Collateral Management Fee, the
"COLLATERAL MANAGEMENT FEE") in an amount
equal to one-half of one percent
(.50%) (per annum) of the daily average
amount of the Canadian Revolving Loans
outstanding during the preceding month. The
Canadian Collateral Management Fee
shall commence on the date hereof and shall
be payable monthly in arrears on the
first day of each calendar month commencing
May 1, 2004 and on the expiration or
termination of the Canadian Revolving
Loans.
(iii)
Notwithstanding the foregoing, the aggregate
Collateral Management Fees due pursuant to
this Section 3.3 during any 12 month
period shall not exceed $30,000.
3.4 YIELD
MAINTENANCE FEE
If on or before March 30, 2006, (a) Borrowers prepay any Term
Loans, in
whole or in part, under Section 2.11(c) or
(b) the Obligations become due and
payable in full resulting (i) from a Change
of Control or (ii) from an automatic
acceleration thereof, or payment or
reduction of any Obligations, on account of
or during any bankruptcy, reorganization or
other proceeding or liquidation or
pursuant to any Debtor Relief Law, then, on
the effective date of any such
prepayment or when due, Borrowers, jointly
and severally, shall pay to Agent,
for the ratable benefit of applicable
Lenders, as yield maintenance for the loss
of bargain and not as a penalty, an amount
equal to the Yield Maintenance Fee
(prior to giving effect to any payment of
Obligations as a result thereof);
provided that the Yield Maintenance Fee due
in connection with clause (b)(ii)
above shall only be due and payable upon a
subsequent Change of Control.
3.5 STANDBY
LETTER OF CREDIT FEES
(i) US
Borrower shall pay to Agent, for the ratable
benefit of the US Revolving Lenders, a
standby letter of credit fee equal to
3.0% per annum (the "US STANDBY LETTER OF
CREDIT FEE") of the aggregate undrawn
face amount of all outstanding US Standby
Letters of Credit issued for the
account of US Borrower, which fee shall be
payable monthly in arrears on each
day that interest under the US Revolving
Facility is payable hereunder. Upon the
occurrence and during the continuance of an
Event of Default, all US Standby
Letter of Credit Fees shall be payable on
demand at a rate equal to the US
Standby Letter of Credit Fee plus 2.0% per
annum, in each case on the aggregate
undrawn face amount of all outstanding US
Standby Letters of Credit issued for
the account of US Borrower. US Borrower
shall also pay on demand the normal and
customary administrative charges for
issuance, amendment, negotiation, renewal
or extension of any US Standby Letter of
Credit imposed by the US L/C Issuer.
(ii)
Canadian Borrower shall pay to Agent, for the ratable
benefit of the Canadian Revolving Lenders,
a standby letter of credit fee equal
to 3.0% per annum (the "CANADIAN STANDBY
LETTER OF CREDIT FEE" and together with
the US Standby Letter of Credit
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Fee, the "STANDBY LETTER OF CREDIT FEES")
of the aggregate undrawn face amount
of all outstanding Canadian Standby Letters
of Credit issued for the account of
Canadian Borrower, which fee shall be
payable monthly in arrears on each day
that interest under the Canadian Revolving
Facility is payable hereunder. Upon
the occurrence and during the continuance
of an Event of Default, all Canadian
Standby Letter of Credit Fees shall be
payable on demand at a rate equal to the
Canadian Standby Letter of Credit Fee plus
2% per annum, in each case as the
aggregate undrawn face amount of all
outstanding Canadian Standby Letters of
Credit issued for the account of Canadian
Borrower. Canadian Borrower shall also
pay on demand the normal and customary
administrative charges for issuance,
amendment, negotiation, renewal or
extension of any Canadian Standby Letter of
Credit imposed by the Canadian L/C
Issuer.
3.6
COMPUTATION OF FEES; LAWFUL LIMITS
(a) All fees
hereunder shall be computed on the basis of
a year of 360 days and for the actual
number of days elapsed in each calculation
period, as applicable.
(b) In no
contingency or event whatsoever, whether by
reason of acceleration or otherwise, shall
the interest and other charges paid
or agreed to be paid to Agent, for the
benefit of Lenders, for the use,
forbearance or detention of money hereunder
exceed the maximum rate permissible
under applicable law which a court of
competent jurisdiction shall, in a final
determination, deem applicable hereto. If,
due to any circumstance whatsoever,
fulfillment of any provision hereof, at the
time performance of such provision
shall be due, shall exceed any such limit,
then, the obligation to be so
fulfilled shall be reduced to such lawful
limit, and, if Agent or Lenders shall
have received interest or any other charges
of any kind which might be deemed to
be interest under applicable law in excess
of the maximum lawful rate, then such
excess shall be applied first to any unpaid
fees and charges hereunder, then to
unpaid principal balance owed by any
Borrower hereunder, and if the then
remaining excess interest is greater than
the previously unpaid principal
balance, Agent and Lenders shall promptly
refund such excess amount to such
Borrower and the provisions hereof shall be
deemed amended to provide for such
permissible rate. The terms and provisions
of this Section 3.6 shall control to
the extent any other provision of any Loan
Document is inconsistent herewith.
(c) For the
purposes of the Interest Act (Canada) and
disclosure thereunder, whenever any
interest or any fee to be paid by a Borrower
hereunder or in connection herewith is to
be calculated on the basis of any
period of time that is less than a calendar
year (the "FIRST RATE"), the yearly
rate of interest to which the rate used in
such calculation is equivalent is the
rate so used multiplied by the actual
number of days in the calendar year in
which the same is to be ascertained and
divided by 360. The rates of interest to
be paid under this Agreement are nominal
rates, and not effective rates or
yields. The principle of deemed
reinvestment of interest does not apply to any
calculation of interest under this
Agreement.
(d) Without
limiting the generality of Section 3.6(b)
above, with respect to the Canadian
Obligations, in no event shall the aggregate
"interest" (as that term is defined in
Section 347 of the Criminal Code
(Canada)) exceed the effective annual rate
of interest on the "credit advanced"
(as defined therein) lawfully permitted
under Section 347 of the Criminal Code
(Canada). The effective annual rate of
interest shall be determined in
accordance with
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<PAGE>
generally accepted actuarial practices and
principles over the term of the
applicable Loan, and in the event of a
dispute, a certificate of a Fellow of the
Canadian Institute of Actuaries appointed
by Agent will be conclusive for the
purposes of such determination.
3.7 DEFAULT
RATE OF INTEREST
Upon the occurrence and during the continuance of any Event of
Default,
the Applicable Rate of interest in effect
at such time with respect to the
Obligations shall be increased by three
percent (3.0%) per annum (the "DEFAULT
RATE") upon written notice of such increase
given by Agent to Borrowers;
provided, that, from and after the
occurrence of any Event of Default under
Section VIII(g) or (h), such increase shall
be automatic and without any notice
from Agent, any Lender or any other Person.
In all such events, and
notwithstanding the date on which
application of the Default Rate is
communicated to Borrowers, the Default Rate
shall accrue from the initial date
of such Event of Default until that Event
of Default is cured or waived in
writing in accordance with the terms hereof
and shall be payable upon demand.
The Lenders shall not be required to (A)
accelerate the maturity of the Loans,
(B) terminate any Commitments or (C)
exercise any other rights or remedies under
the Loan Documents in order to charge
interest hereunder at the Default Rate.
3.8
ACKNOWLEDGEMENT OF JOINT AND SEVERAL LIABILITY
(a) Each US
Borrower acknowledges that it is jointly and
severally liable for all of the US
Obligations under the Loan Documents. Each US
Borrower expressly understands, agrees and
acknowledges that (i) US Borrowers
are all Affiliates, (ii) each US Borrower
desires to have the availability of
one common credit facility instead of
separate credit facilities, (iii) each US
Borrower has requested that the Agent and
the Lenders extend such a common
credit facility on the terms herein
provided, (iv) the Lenders will be lending
against, and relying on a Lien upon, all of
US Borrowers' assets even though the
proceeds of any particular loan made
hereunder may not be advanced directly to a
particular US Borrower, (v) each US
Borrower will nonetheless benefit by the
making of all such loans by each Lender and
the availability of a single credit
facility of a size greater than each could
independently warrant, (vi) all of
the representations, warranties, covenants,
obligations, conditions, agreements
and other terms contained in the Loan
Documents to which any US Borrower is a
party shall be applicable to and shall be
binding upon each US Borrower, and
(vii) the US Borrowers have each executed
the Notes as co-makers of the Notes
and that it would not be able to obtain the
credit provided by the Lenders
hereunder without the financial support
provided by the other US Borrowers.
(b) Each
Canadian Borrower acknowledges that it is
jointly and severally liable for all of the
Canadian Obligations under the Loan
Documents. Each Canadian Borrower expressly
understands, agrees and acknowledges
that (i) Canadian Borrowers are all
Affiliates, (ii) each Canadian Borrower
desires to have the availability of one
common credit facility instead of
separate credit facilities, (iii) each
Canadian Borrower has requested that the
Agent and the Lenders extend such a common
credit facility on the terms herein
provided, (iv) the Lenders will be lending
against, and relying on a Lien upon,
all of Canadian Borrowers' assets even
though the proceeds of any particular
loan made hereunder may not be advanced
directly to a particular Canadian
Borrower, (v) each Canadian Borrower will
nonetheless benefit by the
28
<PAGE>
making of all such loans by each Lender and
the availability of a single credit
facility of a size greater than each could
independently warrant, (vi) all of
the representations, warranties, covenants,
obligations, conditions, agreements
and other terms contained in the Loan
Documents to which any Canadian Borrower
is a party shall be applicable to and shall
be binding upon each Canadian
Borrower, and (vii) the Canadian Borrowers
have each executed the Notes as
co-makers of the Notes and that it would
not be able to obtain the credit
provided by the Lenders hereunder without
the financial support provided by the
other Canadian Borrowers.
IV. CONDITIONS
PRECEDENT
4.1 CONDITIONS
TO INITIAL ADVANCE, FUNDING THE TERM LOANS AND
CLOSING
The obligations of Lenders hereunder, including without limitation,
to
consummate the transactions contemplated
herein and to make the initial
Revolving Advances under the Revolving
Facilities (the "INITIAL REVOLVING
ADVANCES") and fund the Term Loans are
subject, in each case, to the
satisfaction of the following:
(a) each
Credit Party shall have delivered to Agent (i)
the Loan Documents to which it is a party,
each duly executed by an authorized
officer of such Credit Party and the other
parties thereto and (ii) a Borrowing
Certificate for the Initial Revolving
Advances, executed by an authorized
officer of Borrowers;
(b) all in
form and substance satisfactory to Agent in
its Permitted Discretion, Agent shall have
received (i) a report of Uniform
Commercial Code or PPSA financing
statement, tax and judgment lien and similar
searches performed with respect to each
Credit Party and any other Person in
each jurisdiction determined by Agent, and
such report shall show no Liens on
the Collateral (other than Permitted Liens
and Liens to be terminated at
Closing), (ii) each document (including,
without limitation, any Uniform
Commercial Code financing statement (or
similar statements in other
jurisdictions) and Bank Agency Agreements)
required by any Loan Document or
under law or requested by Agent to be
filed, registered or recorded to create,
in favor of Agent, for the benefit of
Lenders, a first priority (other than with
respect to property or assets covered by
Priority Permitted Liens) and perfected
security interest upon the Collateral, and
(iii) evidence of each such filing,
registration or recordation and of the
payment by Borrowers of any necessary
fee, tax or expense relating thereto;
(c) Agent
shall have received (i) the Charter and Good
Standing Documents, all in form and
substance acceptable to Agent, (ii) a
certificate of the corporate secretary or
assistant secretary of each Credit
Party dated the Closing Date, as to the
incumbency and signature of the Persons
executing the Loan Documents and the
Related Documents on behalf of such Credit
Party, in form and substance acceptable to
Agent, (iii) the written legal
opinions of counsel and/or special counsel
for the Credit Parties, including,
without limitation, appropriate Canadian
counsel licensed in such provinces of
Canada as requested by Agent, in each case
in form and substance satisfactory to
Agent and (iv) a certificate executed by an
authorized officer of Borrowers,
which shall constitute a representation and
warranty by Borrowers as of the
Closing Date that the conditions contained
in this Agreement have been
satisfied;
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(d) Agent
shall have received a certificate of the chief
financial officer (or, in the absence of a
chief financial officer, the chief
executive officer) of the Credit Parties,
in form and substance satisfactory to
Agent (the "SOLVENCY CERTIFICATE"),
certifying (i) the solvency of each Credit
Party after giving effect to the
transactions and the Indebtedness contemplated
by the Loan Documents, the Subordinated
Debt issued by the Credit Parties to
American Capital Strategies, Ltd. on the
date hereof and the transactions
contemplated by the Investment Documents,
and (ii) as to such Credit Party's
financial resources and anticipated ability
to meet its obligations and
liabilities as they become due, to the
effect that as of the Closing Date and
the Borrowing Date for the Initial
Revolving Advances and the date of funding of
the Term Loans, and after giving effect to
such transactions and Indebtedness:
(A) the assets and business of such Credit
Party, at a Fair Valuation, exceed
the total liabilities (including
contingent, subordinated, unmatured and
unliquidated liabilities) of such Person,
and (B) no unreasonably small capital
base with which to engage in its
anticipated business exists with respect to
such Credit Party;
(e) Agent
shall have completed examinations, the results
of which shall be satisfactory in form and
substance to Agent, of the
Collateral, the financial statements and
the books, records, business,
obligations, financial condition and
operational state of each Credit Party, and
each Credit Party shall have demonstrated
to Agent's satisfaction in its
Permitted Discretion that (i) its
operations comply, in all respects, with
applicable federal, state, provincial
foreign and local laws, statutes and
regulations, (ii) its operations are not
the subject of any governmental
investigation, evaluation or any remedial
action which could result in any
expenditure or liability deemed material by
Agent, in its Permitted Discretion,
and (iii) it has no liabilities or
obligations (whether contingent or otherwise)
not permitted hereunder that are deemed
material by Agent, in its Permitted
Discretion;
(f) Agent
shall have received (or shall be satisfied that
it will receive simultaneously with the
funding of the Term Loans and/or Initial
Revolving Advances, as applicable) all
fees, charges and expenses due and
payable to Agent and Lenders on or prior to
the Closing Date pursuant to the
Loan Documents;
(g) all in
form and substance satisfactory to Agent in
its Permitted Discretion, Agent shall have
received such consents, approvals and
agreements from such third parties as Agent
and its counsel shall determine in
their Permitted Discretion are necessary or
desirable with respect to (i) the
Loan Documents and/or the transactions
contemplated thereby, (ii) claims against
any Credit Party or any of the Collateral,
and/or (iii) agreements, documents or
instruments to which any Credit Party is a
party or by which any of its
properties or assets are bound or subject,
including without limitation Landlord
Waivers and Consents only with respect to
each property lease by any Credit
Party for the properties located in
Conyers, Georgia, Belle Chase, Louisiana,
Houston, Texas, Sand Springs, Oklahoma and
San Leandro, California and for each
other property lease, if any, for which the
consent of the landlord is needed in
connection with any change of control of
the tenant;
(h) Each
Borrower shall be in compliance with Section 7.7
and Section 6.5, and Agent shall have
received original certificates of all such
required insurance policies and confirmed
that they are in effect and that the
premiums then due and owing with respect
thereto
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have been paid in full and naming only the
Agent, for the benefit of itself and
Lenders, as sole beneficiary or loss payee
and additional insured, as
appropriate;
(i) Agent
shall have received (i) an ALTA mortgagee's
policy of title insurance (ALTA Revised
1987 Form or such other form acceptable
to Agent) in favor of Agent with respect to
each parcel of Real Estate located
in the United States, issued by a title
company and in an amount satisfactory to
Agent in its Permitted Discretion, showing
that the applicable Credit Party is
the owner of such parcel and has good and
marketable title thereto and insuring
that the Mortgage covering such parcel
constitutes a valid Lien on such parcel,
subject only to Permitted Liens and other
matters approved by Agent in its
Permitted Discretion, each such policy to
be in such form and containing such
endorsements as may be required by Agent in
its Permitted Discretion and (ii)
evidence that all premiums with respect to
such title insurance policies shall
have been paid in full by Borrowers;
(j) Agent
shall have received a survey of each parcel of
Real Estate and the real estate subject to
any leasehold estate identified on
Schedule 4.1(a) in sufficient detail to
permit the elimination of any survey
exceptions to the title policy insuring the
Lien of such Mortgage and otherwise
satisfactory to Agent in its Permitted
Discretion;
(k) all
corporate and other proceedings, documents,
instruments and other legal matters in
connection with the transactions
contemplated by the Loan Documents and the
Related Documents (including, but not
limited to, those relating to corporate and
capital structures of each Credit
Party) shall be satisfactory to Agent in
its Permitted Discretion;
(l) neither
any Credit Party nor any principal or key
management personnel of any Credit Party
shall have been indicted or under
active investigation by an U.S. Attorney
and comparable Canadian authorities for
a felony crime;
(m) the Credit
Parties shall have established the Blocked
Account(s) pursuant to Section 2.16;
(n) Agent
shall have received copies of all Permits in
form and substance satisfactory to Agent in
its Permitted Discretion required
for Credit Parties to conduct the business
in which it is currently engaged or
is contemplated, pursuant to the Loan
Documents, the absence of which would
reasonably be excepted to be, have or
result in a Material Adverse Effect;
(o) all in
form and substance satisfactory to Agent in
its Permitted Discretion, Agent shall have
received evidence (i) of repayment in
full and termination of all liabilities and
obligations of the Credit Parties to
Bank One, N.A., the Royal Bank of Canada
and The Prudential Insurance Company of
America and all related documents,
agreements and instruments and of all Liens
and Uniform Commercial Code or PPSA
financing statements and similar statements
relating thereto, including, without
limitation, any Liens and/or Uniform
Commercial Code financing statements
covering or relating to any assets or
properties of any equity holders of any
Credit Party, (ii) of release and
termination of, or Agent's authority to
release and terminate, any and all Liens
and/or Uniform Commercial Code or PPSA
financing
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statements and similar statements in, on,
against or with respect to any of the
Collateral (other than Permitted Liens),
and (iii) that any and all existing
lockbox arrangements are terminated;
(p) there
shall not have occurred any Material Adverse
Change or Material Adverse Effect from that
which was reflected on the financial
statements provided to Agent or any
liabilities or obligations of any nature
with respect to any Credit Party which
could reasonably be expected to be, have
or result in a Material Adverse Effect;
(q) Agent
shall have received final unaudited financial
statements of the Credit Parties on a
consolidated, consolidating and pro-forma
basis for the nine (9)-month period ending
and as of December 31, 2003, in form
and substance acceptable to Agent;
(r) Credit
Parties shall have implemented a cash
collection system in form and substance
acceptable to Agent in its Permitted
Discretion;
(s) Credit
Parties shall have entered into the Employment
Agreements they are a party to;
(t) Agent
shall have received from each Credit Party a
completed IRS Form 8821;
(u) Agent
shall have received (i) executed Subordination
Agreements from all parties thereto (other
than Agent) and (ii) certified copies
of each of the following; each of which
shall be satisfactory to Agent: (a) the
Management Services Agreement; and (b) the
leases of real property to which a
Credit Party is a party;
(v) Agent
shall have received evidence satisfactory to
Agent that Adjusted EBITDA (as set forth in
Exhibit C) of Borrowers, on a
consolidated basis, for the twelve
(12)-month period ending on February 28, 2004
is at least Twelve Million Two Hundred
Fifty Thousand Dollars ($12,250,000);
(w) Agent
shall have completed a pre-closing audit to
determine the liquidity of Borrowers
accounts receivable and a bring-down of the
procedures performed in connection with the
September 30, 2003 financial
statements of Borrowers, and the results of
that audit will be satisfactory to
Agent in its Permitted Discretion;
(x) Agent
shall have received evidence satisfactory to
Agent that Parent has received proceeds in
connection with the pending
divestiture of Parent's Middle East
operations such that the Net Proceeds are at
least $2,500,000;
(y) Agent
shall have received evidence satisfactory to
Agent of the issuance of no more than
$14,000,000 of Indebtedness permitted
under Section 7.2(e), on terms reasonably
acceptable to Agent;
(z) upon
making the Initial Advance of the Revolving
Loans on the Closing Date, the Borrowers
shall have US Availability and Canadian
Availability of at least $5,000,000 in the
aggregate;
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(aa)
Credit Parties shall have obtained credit insurance
for foreign receivables, on terms
satisfactory to Agent in its Permitted
Discretion, in the amount of not less than
$1,500,000; and
(bb)
Regarding the Investment and the transactions
contemplated thereby:
(i) Agent
shall have received from Parent
certified copies of the applicable Investment Documents and
such
Investment Documents shall be satisfactory to Agent in its
Permitted
Discretion, and all other information, agreements, instruments,
certificates or evidence requested by Agent that all conditions
precedent to the completion of the Investment shall have been
satisfied, and as additional security for the Obligations, Parent
shall
have assigned to Agent all of their respective rights and
remedies
under the applicable Investment Documents; and
(ii)
Agent shall have received evidence that the
Investment of at least $13,000,000 (at least a majority of which
was
provided by the Sponsor) shall have been consummated (or will
be
consummated simultaneously with the Initial Revolving
Advances).
4.2 CONDITIONS
TO EACH REVOLVING ADVANCE AND FUNDING OF THE TERM
LOANS
The obligations of Lenders to make any Revolving Advance
(including,
without limitation, the Initial Revolving
Advances) and/or to fund the Term
Loans are subject to the satisfaction, in
the sole judgment of Agent, of the
following additional conditions
precedent:
(a) the Credit
Parties shall have delivered to Agent, in
the case of any Revolving Advance, a
Borrowing Certificate for such Advance with
necessary supporting documentation and
executed by an authorized officer of
Borrowers, which shall constitute a
representation and warranty by the Credit
Parties as of the US Revolving Advance
Borrowing Date or the Canadian Revolving
Advance Borrowing Date, which shall
constitute a representation and warranty by
all Credit Parties as of such Borrowing
Date that the conditions contained in
this Section 4.2 and in Section 4.1 have
been satisfied;
(b) each of
the representations and warranties made by
each Credit Party and each other Person
party thereto (other than Agent and
Lenders) in or pursuant to the Loan
Documents shall be accurate in all material
respects before and after giving effect to
funding of the Term Loans and/or the
making of such Revolving Advance (except
for those representations and
warranties made as of a specific date, and
no Default or Event of Default shall
have occurred and be continuing or
otherwise would exist or arise after giving
effect to the requested Advance and/or Term
Loans on such date;
(c)
immediately after giving effect to the requested
Revolving Advance, the aggregate
outstanding principal amount of US Revolving
Advances and Canadian Revolving Advances
shall not exceed the US Revolving
Facility Maximum Amount or the Canadian
Revolving Facility Maximum Amount,
respectively, then in effect and Agent
shall have received a duly completed
Borrowing Certificate in accordance with
the terms hereof setting forth
availability under the respective Revolving
Facility as of a date not more than
five (5) days prior
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to the respective US Revolving Advance
Borrowing Date or Canadian Revolving
Advance Borrowing Date and, after giving
effect to such Revolving Advance, the
outstanding principal balance of the US
Revolving Advances and Canadian
Revolving Advances does not exceed the US
Revolving Facility Maximum Amount or
the Canadian Revolving Facility Maximum
Amount, respectively; and
(d) Agent
shall have received all fees, charges and
expenses payable to Agent and/or Lenders on
or prior to such date pursuant to
the Loan Documents.
V.
REPRESENTATIONS AND WARRANTIES
Each Credit Party, jointly and severally, represents and warrants
as of
the Closing Date, each Revolving Facility
Borrowing Date and the date of funding
of the Term Loans as follows:
5.1
ORGANIZATION AND AUTHORITY
Each Credit Party is a corporation, partnership or limited
liability
company, as the case may be, duly organized
or formed, validly existing and in
good standing under the laws of its state
or province of formation. Each Credit
Party (a) has all requisite corporate,
partnership or limited liability company
power and authority to own its properties
and assets (including, without
limitation, the Collateral) and to carry on
its business as now being conducted
and as contemplated in the Loan Documents,
(b) as of the Closing Date, is duly
qualified to do business in the
jurisdictions set forth on Schedule 5.1, which
are all of the jurisdictions in which
failure so to qualify could reasonably be
expected to be, have or result in a
Material Adverse Effect, and (c) has all
requisite corporate, partnership or limited
liability company power and
authority (i) to execute, deliver and
perform the Loan Documents to which it is
a party, (ii) with respect to Borrowers, to
borrow hereunder, (iii) to
consummate the transactions contemplated
under the Loan Documents, and (iv) to
grant the Liens with regard to the
Collateral pursuant to the Security Documents
to which it is a party. No Credit Party is
an "investment company" registered or
required to be registered under the
Investment Company Act of 1940, as amended,
or is controlled by such an "investment
company."
5.2 LOAN
DOCUMENTS AND RELATED DOCUMENTS
The execution, delivery and performance by each Credit Party of
the
Loan Documents to which it is a party, and
the consummation of the transactions
contemplated thereby, (a) have been duly
authorized by all requisite corporate,
partnership or limited liability company
action of such Credit Party and have
been duly executed and delivered by or on
behalf of such Credit Party; (b) do
not violate any provisions of (i) any
applicable law, statute, rule, regulation,
ordinance or tariff, (ii) any order of any
Governmental Authority binding on
such Credit Party or any of its properties,
or (iii) the certificate or articles
of incorporation, amalgamation or
continuance or bylaws (or any other equivalent
governing agreement or document) of such
Credit Party, or any agreement between
such Credit Party and its shareholders,
members, partners or equity owners or
among any such shareholders, members,
partners or equity owners; (c) except as
set forth in Schedule 5.2, are not in
conflict with, and do not result in a
breach or
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default of or constitute an event of
default, or an event, fact, condition or
circumstance which, with notice or passage
of time, or both, would constitute or
result in a conflict, breach, default or
event of default under, any indenture,
agreement or other instrument to which such
Credit Party is a party, or by which
the properties or assets of such Credit
Party are bound, the effect of which
could reasonably be expected to be, have or
result in a Material Adverse Effect;
(d) except as set forth in the Loan
Documents will not result in the creation or
imposition of any Lien of any nature upon
any of the properties or assets of any
Credit Party; and (e) except for filings in
connection with the perfection of
Agent's Liens, do not require the consent,
approval or authorization of, or
filing, registration or qualification with,
any Governmental Authority or any
other Person. When executed and delivered,
each of the Loan Documents to which
such Credit Party is a party will
constitute the legal, valid and binding
obligation of each Credit Party,
enforceable against such Credit Party in
accordance with its terms, subject to the
effect of any applicable bankruptcy,
moratorium, insolvency, reorganization or
other similar law affecting the
enforceability of creditors' rights
generally and to the effect of general
principles of equity which may limit the
availability of equitable remedies
(whether in a proceeding at law or in
equity).
5.3
SUBSIDIARIES, CAPITALIZATION AND OWNERSHIP INTERESTS
No Credit Party has any Subsidiaries other than those Persons
listed as
Subsidiaries on Schedule 5.3. Schedule 5.3
sets forth the authorized and issued
capitalization of each Credit Party, and
the number and class of equity
securities and/or ownership, voting or
partnership interests issued and
outstanding of such Credit Party and the
beneficial and record owners thereof
(including options, warrants, convertible
notes and other rights to acquire any
of the foregoing) as of the Closing Date.
The outstanding equity securities
and/or ownership, voting or partnership
interests of each Credit Party have been
duly authorized and validly issued and is
fully paid and nonassessable and each
Person listed on Schedule 5.3 as of the
Closing Date owns beneficially and of
record all of the equity securities it is
listed as owning free and clear of any
Liens other than Liens created by the Loan
Documents. Schedule 5.3 also lists
the directors, members, managers and/or
partners of each Credit Party as of the
Closing Date. Except as listed on Schedule
5.3 as of the Closing Date, no Credit
Party (a) owns any Investment Property, (b)
owns any interest or participates or
engages in any joint venture, partnership
or similar arrangements with any
Person, (c) is a party to or has knowledge
of any agreements restricting the
transfer of its equity securities, (d) has
issued any rights which can be
convertible into or exchangeable or
exercisable for any of its equity
securities, or any rights to subscribe for
or to purchase, or any options for
the purchase of, or any agreements
providing for the issuance (contingent or
otherwise) of, or any calls, commitments or
claims of any character relating to,
any of its equity securities or any
securities convertible into or exchangeable
or exercisable for any of its equity
securities or (e) is subject to any
obligation (contingent or otherwise) to
repurchase or otherwise acquire or
retire any of its equity securities or
other convertible rights or options or
debt securities.
5.4
PROPERTIES
Except as set forth on Schedule 5.4, each Credit Party is the
sole
owner and has good, valid and marketable
title to, or a valid leasehold interest
in, license of, or right to use, all of its
properties and assets, including the
Collateral, whether personal or real, free
and clear of all
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Liens other than Permitted Liens. Schedule
5.4 lists as of the Closing Date (i)
the locations of the chief executive office
of each Credit Party and all other
locations of Collateral and all books and
records in connection therewith or in
any way relating thereto or evidencing the
Collateral, (ii) identifies the
common address and use of each such
location, (iii) indicates whether such
location is owned or leased by such Credit
Party or whether such Credit Party is
entitled to occupy or use such location by
virtue of a license or easement, (iv)
if such location is leased, describes the
parties to and date of such lease and
the name and current address of the
landlord under the lease, (v) if such
location is owned, sets forth a complete
and accurate legal description for such
location and (vi) if such Credit Party
occupies or uses such location by virtue
of a license or easement agreement,
describes such license or easement agreement
with reasonable specificity. Each Credit
Party enjoys peaceful and undisturbed
possession under all such leases as of the
Closing Date and such leases are
valid and subsisting and are in full force
and effect. As of the Closing Date
all tangible personal property and tangible
assets of each Credit Party are in
good repair, working order and condition
(normal wear and tear excepted) and are
suitable and adequate for the uses for
which they are being used or are
intended.
5.5 OTHER
AGREEMENTS
No Credit Party is (a) a party to any judgment, order or decree or
any
agreement, document or instrument, or
subject to any restriction, which would
materially adversely affect its ability to
execute and deliver, or perform
under, any Loan Document or to pay the
Obligations, (b) in default in the
performance, observance or fulfillment of
any obligation, covenant or condition
contained in any agreement, document or
instrument to which it is a party or to
which any of its properties or assets are
subject, which default would
reasonably be expected to be, have or
result in a Material Adverse Effect, nor
is there any event, fact, condition or
circumstance which, with notice or
passage of time or both, would constitute
or result in a conflict, breach,
default or event of default under, any of
the foregoing which would reasonably
be expected to be, have or result in a
Material Adverse Effect, or (c) a party
or subject to any agreement, document or
instrument with respect to, or
obligation to pay any, service or
management fee with respect to, the ownership,
operation, leasing or performance of any of
its business other than the
Management Services Agreement and service
and licensing agreements in the
ordinary course of business.
5.6
LITIGATION
Except as set forth on Schedule 5.6, there is no action, suit,
proceeding or investigation pending or, to
its knowledge, threatened against any
Credit Party that (a) questions or could
reasonably be expected to prevent or
affect the validity of any of the Loan
Documents or the right of such Credit
Party to enter into any Loan Document or to
consummate the transactions
contemplated thereby or (b) could
reasonably be expected to be, have or result
in, either individually or in the
aggregate, any Material Adverse Change or
Material Adverse Effect. No Credit Party is
aware that there is any basis for
the foregoing. No Credit Party is a party
or subject to any order, writ,
injunction, judgment or decree of any
Governmental Authority. As of the Closing
Date, there is no action, suit, proceeding
or investigation initiated by any
Credit Party currently pending. Except as
disclosed in the financial statements
most recently delivered
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to Agent hereunder, no Credit Party has any
existing accrued and/or unpaid
Indebtedness to any Governmental Authority
or any other governmental payor.
5.7 HAZARDOUS
MATERIALS
Except as set forth on Schedule 5.7, each Credit Party is in
compliance
in all material respects with all
applicable Environmental Laws. Except as set
forth on Schedule 5.7, no Credit Party has
been notified of any action, suit,
proceeding or investigation (a) relating in
any way to compliance by or
liability of such Credit Party under any
Environmental Laws, (b) which otherwise
deals with any Hazardous Substance or any
Environmental Law, or (c) which seeks
to suspend, revoke or terminate any
license, permit or approval necessary for
the generation, handling, storage,
treatment or disposal of any Hazardous
Substance.
5.8 TAX
RETURNS; GOVERNMENTAL REPORTS
Each Credit Party (a) has filed all federal, state, foreign ,
provincial and local tax returns and other
reports which are required by law to
be filed by such Credit Party, and (b)
except as set forth on Schedule 5.8, has
paid all taxes, assessments, fees and other
governmental charges, including,
without limitation, payroll and other
employment related taxes, in each case
that are due and payable, except only for
items that such Credit Party is
currently contesting in good faith and for
which adequate reserves have been
established.
5.9 FINANCIAL
STATEMENTS AND REPORTS
All financial statements and financial information relating to
any Credit Party that have been or may
hereafter be delivered to Agent by any
Credit Party (a) except as set forth on
Schedule 5.9, are and will be accurate
and complete in accordance with GAAP, (b)
consistent with the books of account
and records of Credit Parties, (c) have
been and will be prepared in accordance
with GAAP on a consistent basis throughout
the indicated periods, except that
the unaudited financial statements contain
no footnotes or year-end adjustments,
and (d) present fairly in all material
respects the consolidated financial
condition, assets and liabilities and
results of operations of the Borrowers and
their Consolidated Subsidiaries at the
dates and for the relevant periods
indicated in accordance with GAAP on a
basis consistently applied. Except as set
forth on Schedule 5.9, the Credit Parties
have no material obligations or
liabilities of any kind not disclosed in
such financial information or
statements, and since the date of the most
recent financial statements submitted
to Agent, there has not occurred any
Material Adverse Change or Material Adverse
Effect or, to Credit Parties' knowledge,
any other event or condition that could
reasonably be expected to be, have or
result in a Material Adverse Effect.
5.10
COMPLIANCE WITH LAW; BUSINESS
Each Credit Party (a) except as set forth on Schedule 5.10, is
in compliance with all laws, statutes,
rules, regulations, ordinances and
tariffs of any Governmental Authority
applicable to such Credit Party, the
Business and/or such Credit Party's assets
or operations, including, without
limitation, ERISA and any laws or
regulations pertaining to the Business, and
(b) is not in violation of any order of any
Governmental Authority or other
board or tribunal, except, in the case of
both (a) and (b), where noncompliance
or violation could not reasonably be
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expected to be, have or result in a
Material Adverse Effect. To the Credit
Parties' knowledge, there is no event,
fact, condition or circumstance which,
with notice or passage of time, or both,
would constitute or result in any
noncompliance with, or any violation of,
any of the foregoing, in each case
except where noncompliance or violation
could not reasonably be expected to be,
have or result in a Material Adverse
Effect. No Credit Party has received any
notice that any Credit Party is not in
material compliance in any respect with
any of the requirements of any of the
foregoing. No Credit Party has (i) engaged
in any Prohibited Transactions as defined
in Section 406 of ERISA and Section
4975 of the Code, (ii) failed to meet any
applicable minimum funding
requirements under Section 302 of ERISA in
respect of its plans and no funding
requirements have been postponed or
delayed, (iii) knowledge of any event or
occurrence which would cause the Pension
Benefit Guaranty Corporation to
institute proceedings under Title IV of
ERISA to terminate any of the employee
benefit plans, (iv) any fiduciary
responsibility under ERISA for investments
with respect to any plan existing for the
benefit of Persons other than its
employees or former employees, or (v)
withdrawn, completely or partially, from
any multi-employer pension plans so as to
incur liability under the
MultiEmployer Pension Plan Amendments of
1980. With respect to each Credit
Party, there exists no event described in
Section 4043 of ERISA, excluding
Subsections 4043(b)(2) and 4043(b)(3)
thereof, for which the thirty (30)-day
notice period contained in 12 C.F.R.
Section 2615.3 has not been waived. With
respect to each scheme or arrangement
mandated by a government other than the
United States providing for post-employment
benefits (each, a "FOREIGN
GOVERNMENT SCHEME OR ARRANGEMENT") and with
respect to each employee benefit
plan maintained or contributed to by any
Credit Party that is not subject to
United States law providing for
post-employment benefits (each, a "FOREIGN
PLAN"): (i) all employer and employee
contributions required by law or by the
terms of any Foreign Government Scheme or
Arrangement or any Foreign Plan have
been made, or, if applicable, accrued, in
accordance with normal accounting
practices; (ii) the liability of each
Credit Party with respect to a Foreign
Plan is reflected in accordance with normal
accounting practices on the
financial statements of such Credit Party,
as the case may be; (iii) each
Foreign Plan is funded in accordance with
applicable law; and (iv) each Foreign
Plan required to be registered has been
registered and has been maintained in
good standing with applicable regulatory
authorities. Each Credit Party has
maintained in all material respects all
records required to be maintained by any
applicable Governmental Authority. No
Credit Party has engaged, or does engage,
directly or indirectly, in any business
other than the Business.
As of the Closing Date, Schedule 5.10A lists all Canadian Benefit
Plans
and Canadian Pension Plans currently
maintained or contributed to by each Credit
Party. The Canadian Pension Plans are duly
registered under the Income Tax Act
and all other applicable laws which require
registration. Each Credit Party has
complied with and performed all of its
obligations in all material respects
under and in respect of the Canadian
Pension Plans and Canadian Benefit Plans
under the terms thereof, any funding
agreements and all applicable laws
(including any fiduciary, funding,
investment and administration obligations).
All employer and employee payments,
contributions or premiums to be remitted,
paid to or in respect of each Canadian
Pension Plan or Canadian Benefit Plan
have been paid in a timely fashion in
accordance with the terms thereof, any
funding agreement and all applicable laws.
There have been no improper
withdrawals or applications of the assets
of the Canadian Pension Plans or the
Canadian Benefit Plans. Except as set forth
on Schedule 5.10A, there are no
outstanding disputes concerning the assets
of the Canadian Pension Plans or the
Canadian Benefit Plans. Except as set forth
on
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Schedule 5.10A, each of the Canadian
Pension Plans is fully funded on a solvency
basis (using actuarial methods and
assumptions which are consistent with the
valuations last filed with the applicable
Governmental Authorities and which are
consistent with generally accepted
actuarial principles).
5.11
INTELLECTUAL PROPERTY
Except as set forth on Schedule 5.11, as of the Closing Date or
as
thereafter otherwise disclosed in writing
to Agent from time to time, no Credit
Party owns, licenses or utilizes any
registered patents, patent applications,
registered trademarks, trademark
applications, registered service marks, service
mark applications, registered copyrights or
copyright applications, or any
material trade names, software or licenses.
Each Credit Party owns directly, or
is entitled to use by license or otherwise,
all Intellectual Property of any
Person used in, necessary for or material
to the conduct of such Credit Party's
businesses. All such items listed on
Schedule 5.11 as of the Closing Date are
and, at all times after the Closing Date
(except to the extent no longer deemed
necessary for or material to the conduct of
the businesses of the Credit Parties
in the good faith business judgment of the
Credit Parties) will be: (a)
subsisting and have not been adjudged
invalid or unenforceable, in whole or
part, (b) valid and enforceable, and (c) in
full force and effect and not in
known conflict with the rights of any
Person. Each Credit Party has made all
filings and recordations necessary in the
exercise of reasonable and prudent
business judgment to protect its interest
in the material components of the
Intellectual Property of such Credit Party
in the United States Patent and
Trademark Office, the United States
Copyright Office and in corresponding
offices throughout the world, as
appropriate in the exercise of reasonable and
prudent business judgment by the Credit
Parties based on the Credit Parties'
operations. Each Credit Party has performed
and will continue to perform all
acts and has paid and will continue to pay
all required fees and taxes to
maintain each and every item of the
Intellectual Property of such Credit Party
in full force and effect throughout the
world, as applicable, except such items
of Intellectual Property as are no longer
deemed necessary for or material to
the conduct of the businesses of the Credit
Parties in the reasonable business
judgment of the Credit Parties. No
litigation is pending or, to the knowledge of
each Credit Party, threatened which
contains allegations respecting the
validity, enforceability, infringement or
ownership of any of the Intellectual
Property of such Credit Party. No Credit
Party is in breach of or default under
the provisions of any of the foregoing, nor
is there any event, fact, condition
or circumstance which, with notice or
passage of time or both, would constitute
or result in a conflict, breach, default or
event of default under, any of the
foregoing which would reasonably be
expected to be, have or result in a Material
Adverse Effect.
5.12
PERMITS; LABOR
Except as set forth on Schedule 5.12, each Credit Party is in
compliance with and has all Permits
necessary or required by applicable law or
Governmental Authority for the operation of
its Business as presently conducted
and as proposed to be conducted except
where noncompliance, violation or lack
thereof could not reasonably be expected to
be, have or result in a Material
Adverse Effect. All Permits necessary or
required by applicable law or
Governmental Authority for the operation of
Credit Parties' businesses are in
full force and effect and not in known
conflict with the rights of others,
except where such conflict or lack of
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being in full force and effect could not
reasonably be expected to be, have or
result in a Material Adverse Effect. No
Credit Party (a) is in breach of or
default under the provisions of any of the
foregoing, nor is there any event,
fact, condition or circumstance which, with
notice or passage of time or both,
would constitute or result in a conflict,
breach, default or event of default
under, any of the foregoing which could
reasonably be expected to be, have or
result in a Material Adverse Effect, and
(b) is nor has been involved in any
labor dispute, strike, walkout or union
organization.
5.13
NO DEFAULT; SOLVENCY
There does not exist any Default or Event of Default. Each Credit
Party
is and, after giving effect to the
transactions and the Indebtedness
contemplated by the Loan Documents, the
Indebtedness permitted under Section
7.2(e) issued by the Credit Parties to
American Capital Strategies, Ltd. on the
date hereof and the transactions
contemplated by the Investment Documents, and
after the funding of each Revolving Advance
and the Term Loans, will be solvent
and able to meet its obligations and
liabilities as they become due, and the
assets and business (as a going concern) of
such Credit Party, at a Fair
Valuation, exceed the total liabilities
(including contingent, subordinated,
unmatured and unliquidated liabilities) of
such Credit Party, and no
unreasonably small capital base with which
to engage in its anticipated business
exists with respect to such Credit
Party.
5.14
DISCLOSURE
No Loan Document nor any other written agreement, document,
certificate, or statement furnished to
Agent or any Lender by or on behalf of
any Credit Party or any Sponsor in
connection with the transactions contemplated
by or pursuant to the Loan Documents, nor
any representation or warranty made by
any Credit Party or any Sponsor in any Loan
Document, contains any untrue
statement of material fact or omits to
state any fact necessary to make the
factual statements therein taken as a whole
not materially misleading in light
of the circumstances under which it was
furnished. There is no fact known to any
Credit Party or, to the best knowledge of
the Credit Parties, any Sponsor which
has not been disclosed to Agent in writing
which could reasonably be expected to
be, have or result in a Material Adverse
Effect.
5.15
EXISTING INDEBTEDNESS; INVESTMENTS, GUARANTEES AND CERTAIN
CONTRACTS
Except for Permitted Indebtedness or as otherwise expressly
permitted
under this Agreement, no Credit Party (a)
has outstanding Indebtedness, (b) is
subject or party to any mortgage, note,
indenture, indemnity or guarantee of,
with respect to or evidencing any
Indebtedness of any other Person, and/or (c)
owns or holds any equity or long-term debt
investments in, nor has any
outstanding advances to or any outstanding
guarantees for, the obligations of,
or any outstanding borrowings from, any
other Person. Each Credit Party has
performed all material obligations required
to be performed by such Credit Party
pursuant to or in connection with any
Permitted Indebtedness and there has
occurred no breach, default or event of
default under any document evidencing
any such items or any fact, circumstance,
condition or event which, with the
giving of notice or passage of time or
both, would constitute or result in a
breach, default or event of default
thereunder. Except for Permitted
Indebtedness and actions
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permitted under Section 7.4, no Credit
Party, directly or indirectly, has made,
and there does not exist, any loans,
advances or guarantees to or for the
benefit of any Person or agreements to
assume, guarantee, endorse, contingently
agree to purchase or otherwise become
liable for or upon or incur any obligation
of any Person.
5.16
AFFILIATED AGREEMENTS
Except as set forth on Schedule 5.16, (i) as of the Closing Date
there
are no, and after the Closing Date except
as permitted by Section 7.6 there will
be no, existing or proposed agreements,
arrangements, understandings or
transactions between any Credit Party and
any of such Credit Party's current or
former officers, members, managers,
directors, stockholders, partners, other
interest holders, employees, or Affiliates
or any members of their respective
families, and (ii) to each Credit Party's
knowledge, none of the foregoing
Persons as of the Closing Date were, or
after the Closing Date except as
permitted by Section 7.6 will be, directly
or indirectly, indebted to or have
any direct or indirect ownership,
partnership or voting interest in, any
Affiliate of any Credit Party or any Person
with which any Credit Party has a
business relationship or which competes
with any Credit Party (except that any
such Persons may own stock in (but not
exceeding two percent (2%) of the
outstanding capital stock of) any publicly
traded company that may compete with
any Credit Party.
5.17
INSURANCE
Each Credit Party has in full force and effect such insurance
policies
as may be required pursuant to Section 6.5
hereof. All such insurance policies
as of the Closing Date are listed and
described on Schedule 5.17.
5.18
FOREIGN ASSETS CONTROL REGULATIONS AND ANTI-MONEY LAUNDERING
(a) OFAC. No
Credit Party (i) is a person whose property
or interest in property is blocked or
subject to blocking pursuant to Section 1
of Executive Order 13224 of September 23,
2001 Blocking Property and Prohibiting
Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)), (ii) engages
in any dealings or transactions
prohibited by Section 2 of such executive
order, or is otherwise associated with
any such person in any manner violative of
Section 2, or (iii) is a person on
the list of Specially Designated Nationals
and Blocked Persons or subject to the
limitations or prohibitions under any other
U.S. Department of Treasury's Office
of Foreign Assets Control regulation or
executive order.
(b) Patriot
Act. Each Credit Party is in compliance, in
all material respects, with the Patriot
Act. No part of the proceeds of the
Loans will be used, directly or indirectly,
for any payments to any governmental
official or employee, political party,
official of a political party, candidate
for political office, or anyone else acting
in an official capacity, in order to
obtain, retain or direct business or obtain
any improper advantage, in violation
of the United States Foreign Corrupt
Practices Act of 1977, as amended.
5.19
NAMES; LOCATION OF OFFICES, RECORDS AND COLLATERAL; DEPOSIT
ACCOUNTS AND INVESTMENT PROPERTY
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During the preceding five (5) years, no Credit Party has nor, to
the
Credit Party's knowledge, any of its
predecessors, have conducted business under
or used any name (whether corporate,
partnership or assumed) other than as shown
on Schedule 5.19A. The Credit Parties
maintain their respective places of
business and chief executive offices only
at the locations set forth on Schedule
5.19B or, after the Closing Date, as
additionally disclosed to Agent in writing
in accordance with Section 7.4, and all
Accounts of such Credit Party arise,
originate and are located, and all of the
Collateral and all books and records
in connection therewith or in any way
relating thereto or evidencing the
Collateral are located and shall be only,
in and at such locations. All of the
Collateral is located only in the United
States or in Canada. Schedule 5.19B
lists all of each Credit Party's Deposit
Accounts and Investment Property as of
the Closing Date.
5.20
NON-SUBORDINATION
Except to the extent due to actions by the Lenders, the Obligations
are
not subordinated in any way to any other
obligations of any Credit Party or to
the rights of any other Person.
5.21
LEGAL INVESTMENTS; USE OF PROCEEDS; TAX REGULATIONS
(a) The Credit
Parties are not engaged in the business of
extending credit for the purpose of
purchasing or carrying any "margin stock" or
"margin security" (within the meaning of
Regulations T, U or X issued by the
Board of Governors of the Federal Reserve
System), and no proceeds of the Loans
will be used to purchase or carry any
margin stock or margin security or to
extend credit to others for the purpose of
purchasing or carrying any margin
stock or margin security.
(b) No Credit
Party intends to treat the Loans, the Commitments
and/or any letters of credit and related
transactions as being a "reportable
transaction" (within the meaning of
Treasury Regulation Section 1.6011-4). In
the event any Credit Party determines to
take any action inconsistent with such
intention, it will promptly notify Agent
thereof. If any Credit Party so
notifies Agent, such Credit Party
acknowledges that one or more of the Lenders
may treat its Loans, Commitments and/or its
interest in letters of credit as
part of a transaction that is subject to
Treasury Regulation Section 301.6112-1,
and such Lender or Lenders, as applicable,
will maintain the lists and other
records required by such Treasury
Regulation.
5.22
BROKER'S OR FINDER'S COMMISSIONS
Except for the one-time closing fee payable pursuant to the terms
of
the Preferred Stock Purchase Agreement not
to exceed $500,000, fees payable
under the Management Services Agreement to
the extent permitted by this
Agreement and fees payable at Closing to
Brown, Gibbons, Lang and Company not to
exceed $1,470,000, which are the sole
responsibility of Parent to pay, no
broker's or finder's or placement fee or
commission will be payable to any
broker or agent engaged by any Credit Party
or any of its officers, directors or
agents with respect to the issue of the
Notes or the transactions contemplated
by this Agreement or the Investment
Documents other than fees payable to Agent
and the Lenders. Each Credit Party, jointly
and severally, agrees to indemnify
Agent and Lenders and hold them harmless
from
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against any claim, demand or liability for
broker's or finder's or placement
fees or similar commissions, whether or not
payable by the Credit Parties,
alleged to have been incurred in connection
with such transactions, other than
any broker's or finder's fees payable to
Persons engaged by Agent or Lenders
without the knowledge of the Credit
Parties.
5.23
SURVIVAL
Each Credit Party agrees that the representations and
warranties
contained herein and the other Loan
Documents are made with the knowledge and
intention that Agent and Lenders are
relying and will rely thereon. All such
representations and warranties will survive
the execution and delivery of this
Agreement, the Closing and the making of
any and all Revolving Advances and/or
the funding of the Term Loans.
VI.
AFFIRMATIVE COVENANTS
Each Credit Party, jointly and severally, covenants and agrees
that, until full performance and
satisfaction, and indefeasible payment in full
in cash, of all the Obligations and
termination of this Agreement:
6.1 FINANCIAL
STATEMENTS, REPORTS AND OTHER INFORMATION
(a) FINANCIAL
REPORTS. The Credit Parties shall furnish
to Agent (i) as soon as available and in
any event within ninety (90) calendar
days after the end of each fiscal year of
Borrowers, audited annual consolidated
financial statements and unaudited annual
consolidating financial statements of
Borrowers and their Consolidated
Subsidiaries, including the notes thereto,
consisting of consolidated and
consolidating balance sheets at the end of such
completed fiscal year and the related
consolidated and consolidating statements
of income, retained earnings, cash flows
and owners' equity for such completed
fiscal year, which financial statements
shall be prepared and certified without
qualification by KPMG, LLP or any other
independent certified public accounting
firm satisfactory to Agent in its Permitted
Discretion and accompanied by
related management letters, if available,
(ii) as soon as available and in any
event within forty-five (45) calendar days
after the end of each fiscal quarter
of Borrowers (other than the last fiscal
quarter of each fiscal year), unaudited
consolidated and consolidating financial
statements of Borrowers and their
Consolidated Subsidiaries consisting of a
balance sheet and statements of
income, retained earnings and cash flows
and owners' equity as of the end of the
immediately preceding fiscal quarter, (iii)
together with each Monthly Borrowing
Certificate, a separate detailed aging and
categorization of the Borrowers'
accounts receivable and accounts payable
and such other supporting documentation
with respect to the figures and information
in the Borrowing Certificate as
Agent shall request in its Permitted
Discretion, and (iv) as soon as available
and in any event within thirty (30)
calendar days after the end of each calendar
month (other than the last calendar month
of a fiscal quarter), unaudited
consolidated and consolidating financial
statements of Borrowers and their
Consolidated Subsidiaries consisting of a
balance sheet and statements of
income, retained earnings, cash flows and
owners' equity as of the end of the
immediately preceding calendar month. All
such financial statements shall be
prepared in accordance with GAAP
consistently applied with prior periods
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(subject, as to interim statements, to lack
of footnotes and year-end
adjustments). With each quarterly and
annual financial statement, Borrowers
shall also deliver a compliance certificate
of its chief financial officer on
behalf of Borrowers in the form of Exhibit
B hereto (each, a "COMPLIANCE
CERTIFICATE"). Such certificate shall be
accompanied by the calculations
necessary to show compliance with the
financial covenants set forth in Section
7.1 and Annex I in a form satisfactory to
the Agent in its Permitted Discretion.
(b) OTHER
MATERIALS. The Credit Parties shall furnish to
Agent as soon as available, and in any
event within ten (10) calendar days after
the preparation or issuance thereof or such
other time as set forth below, as
applicable: (i) within thirty (30) calendar
days after the end of each calendar
month, a monthly operating report for each
Credit Party, which report shall
include a detailed comparison of the actual
year-to-date operating results
against (A) the projected operating budget
for the current fiscal year, if any,
and (B) the actual operating results for
the same period during the prior
calendar year, in each case inclusive of
profit and loss statements, (ii) copies
of any reports submitted to the Credit
Parties by their independent accountants
in connection with any interim audit of the
books of such Person or any of its
Affiliates and copies of each management
control letter provided by such
independent accountants, and (iii) such
additional information, documents,
statements, reports and other materials as
Agent may request in its Permitted
Discretion from time to time. The Credit
Parties shall furnish to Agent not less
than thirty (30) calendar days prior to the
commencement of each fiscal year in
the Term, a list setting forth the location
of the Collateral.
(c) NOTICES.
The Credit Parties shall promptly, and in
any event upon the earlier to occur of (y)
five (5) Business Days after any
Credit Party or any authorized officer of
any Credit Party obtains knowledge
thereof and (z) ten (10) Business Days
after the occurrence thereof, notify
Agent in writing of (i) any pending or
threatened litigation, suit,
investigation, arbitration, dispute
resolution proceeding or administrative or
regulatory proceeding brought or initiated
by or against any Credit Party or
otherwise affecting or involving or
relating to any Credit Party or any Credit
Party's property or assets to the extent
(A) the amount in controversy exceeds
$250,000 individually or $500,000 in the
aggregate for all such events, or (B)
to the extent any of the foregoing seeks
injunctive relief against a Credit
Party which could reasonably be expected to
be, have or result in a Material
Adverse Effect, (ii) any Default or Event
of Default, which notice shall specify
the nature and status thereof, the period
of existence thereof and what action
is proposed to be taken with respect
thereto, (iii) any other development,
event, fact, circumstance or condition that
could reasonably be expected to be,
have or result in a Material Adverse
Effect, in each case describing the nature
and status thereof and the action proposed
to be taken with respect thereto,
(iv) any matter(s) in the amount of
$250,000, individually or $500,000 in the
aggregate, in existence at any one time
adversely affecting the value,
enforceability or collectibility of any of
the Collateral, (v) any notice given
or received by any Credit Party to or from
any other lenders of Indebtedness of
any such Credit Party in the amount of not
less than $100,000 individually or
$250,000 in the aggregate, and shall
furnish to Agent a copy of such notice,
(vi) receipt of any notice or request from
any Governmental Authority regarding
any liability or claim of liability in the
amount equal to or exceeding $250,000
individually or $500,000 in the aggregate,
(vii) receipt of any notice by any
Credit Party regarding termination of any
lease of real property (other than by
expiration of the term) or any senior
executive, (viii) if any Account or other
Collateral becomes evidenced or secured
by
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an Instrument or Chattel Paper, (ix) the
filing, recording or assessment of any
federal, state, local or foreign tax liens
securing an amount of not less than
$250,000 individually or $500,000 in the
aggregate against the Collateral or any
Credit Party, (x) any action taken or
threatened to be taken by any Governmental
Authority (or any notice of any of the
foregoing) with respect to any Credit
Party which could reasonably be expected to
be, have or result in a Material
Adverse Effect or with respect to any
Collateral, (xi) any change in the
corporate or legal name or the organization
identification number of any Credit
Party, (xii) the loss, termination or
expiration of any contract to which any
Credit Party is a party or by which its
properties or assets are subject or
bound, which could reasonably be expected
to be, have or result in a Material
Adverse Effect, (xiii) any event or
occurrence materially affecting any Foreign
Government Scheme or Arrangement or Foreign
Plan, (xiv) as soon as possible, and
in any event within thirty (30) days after
the Credit Parties know or have
reason to know thereof, notice of (A) the
establishment by the Credit Parties of
any Plan, (B) the commencement by the
Credit Parties of contributions to a
Multiemployer Plan, (C) any failure by the
Loan Parties or any of their ERISA
Affiliates to make contributions required
by Section 302 of ERISA (whether or
not such requirement is waived pursuant to
Section 303 of ERISA), or (D) the
occurrence of any Reportable Event with
respect to any Plan or Multiemployer
Plan for which the reporting requirement is
not waived, together with a
statement of an officer setting forth
details as to such Reportable Event and
the action which the Loan Parties propose
to take with respect thereto, together
with a copy of the notice of such
Reportable Event given to the PBGC if any such
notice was provided by the Loan Parties,
and (ii) promptly after receipt
thereof, a copy of any notice the Loan
Parties may receive from the PBGC
relating to the intention of the PBGC to
terminate any Plan or Multiemployer
Plan, or to appoint a trustee to administer
any Plan or Multiemployer Plan,
and/or (xv) promptly after receipt thereof,
a copy of any notice of withdrawal
liability from any Multiemployer Plan.
(d) CONSENTS.
The Credit Parties shall obtain and deliver
to Agent from time to time all required
consents, approvals and agreements from
such third parties as Agent shall determine
are necessary or desirable in its
Permitted Discretion and that are
satisfactory to Agent in its Permitted
Discretion with respect to (i) the Loan
Documents and the transactions
contemplated thereby, (ii) claims against
any Credit Party or the Collateral,
and/or (iii) any agreements, consents,
documents or instruments to which any
Credit Party is a party or by which any
properties or assets of any Credit Party
or any of the Collateral is or are bound or
subject, including, without
limitation, Landlord Waivers and Consents
with respect to leases.
(e) OPERATING
BUDGET. Borrowers shall furnish to Agent on
or prior to the Closing Date and for each
fiscal year of Borrowers thereafter
not less than thirty (30) calendar days
prior to the commencement of such fiscal
year, consolidated and consolidating month
by month projected operating budgets,
projections, profit and loss statements,
income statements, balance sheets and
cash flow reports of and for the Credit
Parties for such upcoming fiscal year
(including an income statement for and a
balance sheet as at the end of each
month), and annual projections for the
fiscal years remaining in the Term, in
each case prepared in accordance with GAAP
consistently applied with prior
periods (subject to lack of footnotes and
year-end adjustments); and within ten
(10) days after any material update or
amendment of any such plan or forecast, a
copy of such update or amendment, including
a description of and reasons for
such update or amendment. Each such
projection, update or amendment shall be
accompanied by a written certificate signed
by the Credit Parties' chief
financial officer to the effect that it has
been
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prepared on the basis of the Credit
Parties' historical financial statements and
records, together with the assumptions set
forth in such projection and that it
reflects expectations, after reasonable
analysis, of the Credit Parties'
management as to the matters set forth
therein.
(f)
SHAREHOLDER / PARTNER REPORTS AND GOVERNMENT FILINGS.
Parent shall furnish to Agent, concurrently
with the sending or filing thereof,
a copy of any proxy statements, financial
statements or reports which Parent has
made available to its shareholders in their
capacity as shareholders and a copy
of any material regular, periodic and
special reports or registration statements
which any Credit Party files with the
Securities and Exchange Commission, any
stock exchange or any Governmental
Authority.
(g) DEPOSIT
ACCOUNTS, OTHER ACCOUNTS AND INVESTMENT
PROPERTY. The Credit Parties shall (i)
promptly, and in any event no later than
five (5) Business Days before any Credit
Party (A) establishes any Deposit
Account, securities account, money market
account or any similar account, or (B)
becomes the owner of any Investment
Property, in each case, on and with respect
to which Agent, for itself and the benefit
of the Lenders, does not have a
perfected, first priority Lien, notify
Agent of such, and (ii) prior to such
establishment, or, with respect to any such
Investment Property, promptly after
such ownership, deliver to Agent a fully
executed Bank Agency Agreement or other
documentation to perfect Agent's, for its
benefit and the benefit of the
Lenders, Lien thereon, in each case in form
and substance acceptable to Agent in
its Permitted Discretion.
(h)
INTELLECTUAL PROPERTY. The Credit Parties shall
furnish to Agent within thirty (30)
calendar days after June 30 and December 31
of each year, a report specifying any
material Intellectual Property interests
acquired by, obtained by, or licensed to
any Credit Party during the six
(6)-month period then ended, and shall
deliver to Agent, within ten (10)
Business Days, documentation to perfect
Agent's, for its benefit and the benefit
of the Lenders, Lien in such Intellectual
Property, in each case in form and
substance acceptable to Agent in its
Permitted Discretion.
(i) PAYROLL
TAXES. Without limiting or being limited by
any other provision of any Loan Document,
the Credit Parties shall retain and
use a third-party acceptable to Agent in
its Permitted Discretion to process,
manage and pay the payroll taxes of the
Credit Parties and shall cause to be
delivered to Agent within fifteen (15)
calendar days after the end of each
calendar month, a report of such payroll
taxes of the Credit Parties for the
immediately preceding calendar month and
evidence of payment thereof. Agent
acknowledges and agrees that ADP Payroll
Services, Inc., the current provider of
such services to the Credit Parties, is
acceptable as of the date hereof.
(j)
LANDLORD
WAIVERS AND CONSENTS. The Credit Parties
shall furnish to Agent within five (5)
calendar days after the end of each
calendar month, commencing for the month
ended May 31, 2004, a report specifying
the aggregate fair market value of the
Collateral located at any leased location
for which a Landlord Waiver and Consent has
not been obtained, in form and
substance acceptable to Agent in its
Permitted Discretion.
6.2 PAYMENT OF
OBLIGATIONS
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The US Credit Parties shall make full and timely indefeasible
payment
in cash of the principal of and interest on
the Loans, Revolving Advances and
all other Obligations when due and payable.
The Canadian Credit Parties shall
make full and timely indefeasible payment
in cash of the principal of and
interest on the Canadian Loans, Canadian
Revolving Advances and all other
Obligations relating to the Canadian Loans
when due and payable.
6.3 CONDUCT OF
BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS
Each Credit Party shall (a) conduct its business in accordance
with
good business practices customary to its
industry, (b) engage principally in the
same or similar lines of business
substantially as heretofore conducted, (c)
collect its Accounts in the ordinary course
of business, (d) maintain all of its
material properties, assets and equipment
used or useful in its business in good
repair, working order and condition (normal
wear and tear excepted and except as
may be disposed of in the ordinary course
of business and in accordance with the
terms of the Loan Documents), (e) from time
to time make all necessary repairs,
renewals and replacements thereof, (f)
maintain and keep, or cause to be
maintained and kept, in full force and
effect its existence and all material
Permits and qualifications to do business
and good standing in its jurisdiction
of formation and each other jurisdiction in
which the ownership or lease of
property or the nature of its business
makes such Permits or qualification
necessary, and in which failure to maintain
such Permits or qualification could
reasonably be expected to be, have or
result in a Material Adverse Effect; (g)
remain in good standing and maintain
operations in all jurisdictions in which
currently located, except where the failure
to remain in good standing or
maintain operations would not reasonably be
expected to be, have or result in a
Material Adverse Effect, and (h) maintain,
comply with and keep in full force
and effect its existence and all
Intellectual Property necessary to conduct the
Business the loss of which or failure to
maintain could reasonably be expected
to be, have or result in a Material Adverse
Effect.
6.4 COMPLIANCE
WITH LEGAL AND OTHER OBLIGATIONS
Each Credit Party shall (a) comply with all laws, statutes,
rules,
regulations, ordinances and tariffs of all
Governmental Authorities applicable
to it or its business, assets or
operations, (b) pay all taxes, assessments,
fees, governmental charges, claims for
labor, supplies, rent and all other
obligations or liabilities of any kind,
except liabilities being contested in
good faith and against which adequate
reserves have been established, (c)
subject to its right to contest in good
faith by appropriate proceedings,
perform in accordance with its terms each
contract, agreement or other
arrangement to which it is a party or by
which it or any of the Collateral is
bound, and (d) properly file all reports
required to be filed with any
Governmental Authority, except under
clauses (a), (b), (c), and/or (d) where the
failure to comply, pay, file or perform
would not reasonably be expected to be,
have or result in a Material Adverse
Effect.
6.5
INSURANCE
Each Credit Party shall (a) keep all of its insurable
properties and assets adequately insured in
all material respects against
losses, damages and hazards as are
customarily insured against by businesses
engaging in similar activities or lines of
business or owning similar assets or
properties and at
